Exhibit 10.16
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of the 5th day of
November, 1997 ("Effective Date"), by and among ACCURIDE CORPORATION, a Delaware
corporation ("Accuride"), INDUSTRIA AUTOMOTRIZ, S.A. DE C.V., a Mexican
corporation ("IASA"), GRUPO INDUSTRIAL XXXXXXX, X.X., a Mexican corporation
("GIR"), and ACCURIDE DE MEXICO, S.A. DE C.V., a Mexican corporation
("Company").
R E C I T A L S
WHEREAS, Accuride manufactures metal wheels for the automotive industry, at
production facilities located in Henderson, Kentucky, U.S.A. and, through a
subsidiary, in Xxxxxx, Xxxxxxx, Xxxxxx;
WHEREAS, IASA designs, manufactures, markets and sells metal wheels through
its wheel division ("Wheel Division") at IASA's production facilities located in
San Nicolas de los Xxxxx, Nuevo Xxxx, Mexico (the "IASA Plant");
WHEREAS, Accuride and IASA desire to create and realize synergies and
efficiencies, and to develop new technological capabilities, in the production,
marketing and sale of all kinds of steel wheels, rims, side rings, lock rings,
adaptor rings, spacer bands, mounting bands and related components, replacements
and products ("Wheels");
WHEREAS, Accuride and IASA desire to create a joint venture ("Joint
Venture") through which to pursue emerging opportunities in the Wheel market in
Mexico and elsewhere in Latin America, in the United States of America and in
Canada, and in other countries where sufficient demand exists;
WHEREAS, in consideration of the foregoing, Accuride and IASA have
incorporated the Joint Venture as a variable capital corporation under the laws
of the United Mexican States, under the name "Accuride de Mexico, S.A. de C.V.,"
to produce, market and sell Wheels; and
WHEREAS, each of Accuride, IASA, GIR and the Company desires to make
certain covenants, representations, warranties and other agreements, and to
prescribe various conditions, regarding the formation, further capitalization
and operation of the Company.
NOW, THEREFORE, in consideration of the recitals, representations,
warranties, covenants, conditions and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
Definitions; Incorporation of Recitals
SECTION 1.1 Defined Terms. As used herein, the following terms shall have
the definitions set out in Exhibit A attached hereto, and as set out in the main
body of the Agreement, provided, however, that in the event of any conflict
between the definitions in Exhibit A and those set out in the main body of this
Agreement, Exhibit A shall govern.
AAA
Accuride
Accuride/Company Technical Services Agreement
Accuride Tradename and Trademark License
Affiliate
Agreement
Alternate
Annual Business Plan
Arbitration Act
Asset Assignment, Purchase and Sale Agreement
Asset List
Automotive Decree
Bank
Board
Bylaws
Closing
Closing Date
Company
Company Bank Instructions
Company Facility
Company/IASA Equipment Bailment Agreement
Confidential Information
Day
DIARSA
Director
Director General
Distribution Agreements
Effective Date
Escritura Constitutiva
Examiner
Exclusive Mexico/Latin America Commercial Mediator Agreement
Exclusive United States/Canada Commercial Mediator Agreement
Exhibit
Extraordinary Shareholders' Meeting
Fiscal Year
FMVAT
FMVLA
FMVNAT
General Law of Business Organizations
GIR
IASA
IASA Bank Instructions
IASA/Company Technical Services Agreement
IASA Tradename and Trademark License
IASA Plant
Indemnified Party
Indemnifying Party
Initial Business Plan
Inventory
Joint Venture
Labor Plan
Loan
Loan Documents
Loss
Maximum Contingent Labor Liability Assumed
Mexico, D.F. Office Lease
Note 1
Note 2
Note 3
Notice
Notice of Intent to Terminate
Option
Ordinary Shareholders' Meeting
Percentage Interest
Person
Phase-Out Services
Representative
Response Notice
Xxxxxx XXXX
San Xxxxxxx Office Leases
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Security Interest
Security Interest Releases
Servicios AISA
Shareholder
Stock Purchase Agreement
Stock Registry Book
Teller
Term
Usable Inventory
VAT
Wheel
Wheelmaking Equipment
Wheel Division
Wheel Requirements Agreement
SECTION 1.2 Incorporation of Recitals. The parties to this Agreement
hereby acknowledge the accuracy of the recitals hereto and incorporate them
herein by this reference.
ARTICLE II
Purpose and Initial Scope of the Joint Venture;
Corporate Joint Venture Entity
SECTION 2.1 Purpose and Initial Scope of the Joint Venture. The purpose
of the Joint Venture shall be to create and realize synergies and efficiencies
and to develop technological capabilities in the joint production, marketing and
sale of Wheels. Initially, the scope of the Joint Venture shall be to design,
manufacture, purchase, sell, import, export, market, deal in and distribute
Wheels for the light vehicle, heavy truck, trailer, bus and agricultural and
off-road vehicle markets, in Mexico and elsewhere in Latin America, in the
United States of America and Canada, and in other countries where sufficient
demand exists. The Joint Venture shall be authorized to undertake business
activities outside its initial scope only upon the prior unanimous written
approval of both Accuride and IASA.
SECTION 2.2 Corporate Joint Venture Entity. Each of Accuride and IASA
desires and intends that the Joint Venture operate and conduct its business
exclusively in the form of a variable capital corporation incorporated under the
laws of the United Mexican States.
ARTICLE III
The Joint Venture Company
SECTION 3.1 Formation of the Company; Formation Expenses. The parties
acknowledge that the Joint Venture was incorporated by Accuride and IASA under
the name "Accuride de Mexico, S.A. de C.V.," as a sociedad anonima de capital
variable
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under the General Law of Business Organizations, on October 17, 1997,
before Lic. Xxxx Xxxxxx Xxxxx Xxxxx, Xxxxxxxx Publico No. 15 in the Municipality
of Monterrey, Nuevo Xxxx, Mexico. The Company shall bear the costs arising from
its incorporation (such as, for example, Corredor Publico fees and recording
fees); notwithstanding the foregoing, however, each Shareholder shall bear in
full the professional fees it incurs for its own attorneys, accountants and
financial and other advisors in connection with the Company's formation and
organization.
SECTION 3.2 Escritura Constitutiva; Bylaws. A copy of the Escritura
Constitutiva of the Company, which includes the form of Bylaws that was adopted
upon its incorporation, is attached hereto as Exhibit B (Spanish), and an
English translation of the Bylaws only is attached hereto as Exhibit C; but the
English version is provided for convenience only, the Spanish version of the
Bylaws found in the Escritura Constitutiva to be controlling in every case and
to govern in the event of any conflict with this Agreement. The Escritura
Constitutiva was inscribed and registered in the Public Registry of Commerce for
the Municipality of Monterrey, Nuevo Xxxx on October 22, 1997. Neither the
Bylaws nor the Escritura Constitutiva has been amended or otherwise modified as
of the Effective Date.
SECTION 3.3 Corporate Purpose. The corporate purpose of the Company shall
be that which is stated in Article Second of the Bylaws.
SECTION 3.4 Ownership of the Fixed Portion of the Company's Capital Stock.
The fixed portion of the Company's capital stock is in the amount of $50,000
Mexican pesos and is represented by Fifty Thousand (50,000) registered no-par
value common shares. Accuride currently owns Twenty-Five Thousand Five Hundred
(25,500) shares of the fixed capital stock of the Company, and IASA currently
owns the remaining Twenty-Four Thousand Five Hundred (24,500) shares of the
fixed capital stock (in percentage terms, Accuride owns fifty-one percent (51%)
of the Company's fixed capital stock, and IASA owns the remaining forty-nine
percent (49%) thereof); and copies of the certificates representing the shares
of the fixed capital stock of the Company held by Accuride, and by IASA,
respectively, are attached hereto as Exhibit D.
SECTION 3.5 Issuance of the Company's Variable Capital Stock. The Company
shall issue the variable portion of its capital stock as provided in Article IV.
SECTION 3.6 Powers of Attorney. Attached hereto in Exhibit B (as part of
the Escritura Constitutiva) are true and complete copies of all powers of
attorney that have been granted by the Company at any time from its date of
formation through the Effective Date.
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SECTION 3.7 Taxpayer Identification Number. Attached hereto as Exhibit E
is a true and complete copy of the Cedula de Identificacion Fiscal that was
issued to the Company on October 22, 1997 by the Ministry of Finance and Public
Credit, which contains the Mexican federal taxpayer identification number that
has been issued to the Company.
SECTION 3.8 PITEX Application. Attached hereto as F is a true and
complete copy of the Application filed by the Company on October 24, 1997 with
the Ministry of Commerce and Industrial Development to solicit authority for the
Company to operate under the PITEX program.
SECTION 3.9 National Supplier Application. Attached hereto as Exhibit G
is a true and complete copy of the Application filed by the Company on October
24, 1997 with the Ministry of Commerce and Industrial Development for
registration as a National Supplier under the Automotive Decree.
ARTICLE IV
Issuance of Variable Portion of the Company's Capital Stock
and Related Transactions; Initial Business Plan;
Lease of Equipment to IASA; Wheel Requirements Agreement;
Purchase of Servicios Aisa; Office Leases; Commercial
Mediator Agreements; License Agreements; Technical Services Agreements
SECTION 4.1 Issuance of the Variable Portion of the Company's Capital
Stock. At the Closing, immediately upon the execution of this Agreement, the
Shareholders and the Company shall take the actions indicated in Sections 4.1(a)
through (g), in the order indicated, in connection with the issuance of the
variable portion of the Company's capital stock.
(a) Transfer of Wheel Division Business and Assets to the Company.
IASA shall sell, bargain, transfer, convey and assign to the Company, free and
clear of any and all Security Interests, and IASA shall deliver to the Company,
all of the business and all of the assets of IASA that relate primarily to, or
that are or have been used primarily in connection with or by, the Wheel
Division (excluding only interests in real property and accounts receivable of
IASA arising from sales of Wheels produced by the Wheel Division), the
descriptions of the business and assets to be transferred to the Company under
this Section 4.1(a) to be broadly construed and to include all Wheel Division
equipment, machinery, fittings, tools, dies, jigs, hoists, furniture, personal
computers and
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all other similar and related items of tangible personalty, all Wheel
Division removable fixtures, and all Wheel Division automobiles, trucks,
tractors, trailers, forklifts and other vehicles; provided additionally, that
in the case of equipment, machinery and all other items of tangible
personalty used primarily in connection with or by the Wheel Division but
titled in the name of any Person other than IASA, or subject to any Security
Interest, IASA hereby expressly undertakes to correct all such title
deficiencies and to remove such Security Interests so as to be able to convey
to the Company good and marketable title to such assets at Closing; and
provided further, that in the case of trucks and trailers owned by IASA but
subject to any lease or other similar financing arrangement, the Company
shall have the right to take title thereto and assume the corresponding lease
obligations at any time upon at least thirty (30) Days advance Notice to
IASA, at the sole discretion of the Company; and provided further, that the
business and assets transferred by IASA to the Company under this Section
4.1(a) shall include each and every one of the following:
(i) all assets shown on the Asset List attached hereto as
Exhibit H;
(ii) all inventories of IASA relating in any manner to the Wheel
Division, including all inventories of Wheels, of raw materials and supplies, of
purchased and manufactured parts, and of goods, goods-in-progress and finished
goods ("Inventory"), provided, however, that the transfer of Inventory to the
Company under this Section 4.1(a)(ii) shall be subject to the further
requirements of Section 5.1;
(iii) all rights of IASA arising under or in connection with
any and all agreements, contracts, instruments and other binding arrangements
of or relating in any manner to the business or assets of the Wheel Division,
to the extent that the Company agrees to accept such rights, the Company
retaining the right to accept or reject such rights on a case-by-case basis,
at its sole discretion;
(iv) all original books, records, ledgers, files, correspondence,
customer and other lists, plans, equipment manuals, drawings, advertising and
promotional materials, specifications, studies, reports and all other documents
and materials, all information relating in any manner to litigation, product
warranties and claims, human resources, intellectual and industrial property,
product design, engineering, manufacturing, testing or sales, and all other
know-how, trade secrets and other business information of any kind or
description whatsoever, of or relating in any manner to the business or assets
of the Wheel Division, provided, however, that to the extent that it may be
unlawful or otherwise reasonably impractical for IASA to deliver such original
records to the Company, the delivery of exact copies thereof shall be deemed an
acceptable substitute; and
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(v) any and all other business or assets of IASA that relate
primarily to, or that are or have been used primarily in connection with, the
conceptualization, design, tooling, manufacturing, production, packaging,
marketing, sale, export, transportation or delivery of Wheels.
The parties acknowledge and agree that the fair market value of the assets
transferred ("FMVAT") by IASA to the Company in accordance with this Section
4.1(a) shall be Sixteen Million One Hundred Fifty-Seven Thousand Eight Hundred
Dollars (U.S. $16,157,800); and to evidence further the transfer to the Company
of the Wheel Division business and assets, IASA and the Company shall execute
and deliver the Asset Assignment, Purchase and Sale Agreement attached hereto as
Exhibit I, which Asset Assignment, Purchase and Sale Agreement shall govern in
the event of any conflict with this Agreement.
(b) Assumption of Certain Liabilities by the Company. At the Closing,
IASA shall assign to the Company, and the Company shall assume from IASA,
certain indebtedness of IASA, in accordance with and as more particularly
described in the following provisions of this Section 4.1(b):
(i) IASA shall assign to the Company, and the Company shall
assume from IASA, an aggregate of Two Million Five Hundred Fifty-Four Thousand
Seven Hundred Sixty-Two Dollars (U.S. $2,554,762) of indebtedness of IASA, as
follows: (A) Five Hundred Fifty-Four Thousand Three Hundred Seventy-Five Dollars
(U.S. $554,375) of indebtedness to Fina Factor, S.A. de C.V.; (B) One Million
Two Hundred Eleven Thousand Two Hundred Thirty-Four Dollars (U.S. $1,211,234) of
indebtedness to Banca Quadrum, S.A. de C.V.; and (C) Seven Hundred Eighty-Nine
Thousand One Hundred Fifty-Three Dollars (U.S. $789,153) of indebtedness to
Factoraje Bancrecer, S.A. de C.V.;
(ii) IASA shall assign to the Company, and the Company shall
assume from IASA, One Million Dollars (U.S. $1,000,000) of the trade
indebtedness of IASA to Hylsa, S.A. de C.V.;
(iii) IASA shall assign to the Company, and the Company shall
assume from IASA, an aggregate of One Million Two Hundred Thirty-Four
Thousand Six Hundred Thirty-Seven Dollars (U.S. $1,234,637) of indebtedness
of IASA, as follows: (A) Forty Thousand One Hundred Thirty-Seven Dollars
(U.S. $40,137) of indebtedness to Arrendadora Atlas, S.A. de C.V.; (B) Three
Hundred Fifty-Seven Thousand Dollars (U.S. $357,000) of indebtedness to
Arrendadora Serfin, S.A.; and (C) Eight Hundred Thirty-Seven Thousand Five
Hundred Dollars (U.S. $837,500) of indebtedness to Arrendadora Financiera
Quadrum, S.A. de C.V.;
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(iv) IASA shall assign to the Company, and the Company shall
assume from IASA, Nine Hundred Fifty-Five Thousand One Hundred Twenty-Five
Dollars (U.S. $955,125) of indebtedness of IASA to Banca Serfin, S.A.;
(v) IASA shall assign to the Company, and the Company shall
assume from IASA, a total of One Hundred Five Thousand Four Hundred Seventy-Six
Dollars (U.S. $105,476) of indebtedness of IASA to the holders of commercial
paper issued by IASA and currently outstanding; and
(vi) The Company hereby assumes contingent seniority and
severance liabilities in an aggregate amount up to, but not to exceed, Seven
Hundred Thousand Dollars (U.S. $700,000) ("Maximum Contingent Labor Liability
Assumed"), such seniority and severance liabilities, if any, being those that
otherwise would be incurred by IASA under the Mexican federal labor law as a
direct result of the transfer or dislocation of Wheel Division workers arising
from the conveyance hereunder of the business and assets of the Wheel Division
to the Company; provided additionally that the parties intend that the Maximum
Contingent Labor Liability Assumed shall include any and all liabilities of
Servicios AISA, and of Xxxxxx XXXX, that may arise at any time, directly or
indirectly, as a result of or in connection with the transfer or dislocation of
Wheel Division workers (regardless of whether paid on a salaried or hourly
basis) due to the formation of the Joint Venture or of the Company or due to the
conveyance by IASA of the business and assets of the Wheel Division to the
Company; and the parties further intend that IASA shall be and remain solely
responsible for any and all such labor or employment-related liabilities
whatsoever, regardless of which party incurs them in the first instance, to the
extent that such liabilities exceed, individually (as reflected in Exhibit AA)
or in the aggregate, the amount of the Maximum Contingent Labor Liability
Assumed by the Company, all in accordance with and as provided under Article
VIII hereof.
The parties acknowledge and agree that the fair market value of the liabilities
assumed ("FMVLA") by the Company in accordance with this Section 4.1(b) shall be
Six Million Five Hundred Fifty Thousand Dollars (U.S. $6,550,000), consisting of
fixed liabilities in the amount of Five Million Eight Hundred Fifty Thousand
Dollars (U.S. $5,850,000) and contingent liabilities in the amount of Seven
Hundred Thousand Dollars (U.S. $700,000); and the parties further acknowledge
and agree that the fixed liabilities assumed by the Company under Sections
4.1(b)(i) through (v) shall be paid as follows and otherwise as provided in
Section 5.2: (xx) at the Closing, the Company shall execute and deliver
irrevocable instructions ("Company Bank Instructions") to Citibank Mexico, S.A.
(the "Bank") to draw immediately upon the Loan, in the name of the Company, the
sum of Five Million Eight Hundred Fifty Thousand Dollars (U.S. $5,850,000), to
pay immediately One Million Dollars (U.S. $1,000,000) of such draw directly to
Hylsa, S.A. de C.V. (which
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payment shall be deemed to satisfy fully and discharge the indebtedness
assumed by the Company under Section 4.1(b)(ii)), and to transfer immediately
the remaining portion of such draw, in the amount of Four Million Eight
Hundred Fifty Thousand Dollars (U.S. $4,850,000), to the account maintained
by IASA with the Bank; (yy) at the Closing, IASA shall execute and deliver
irrevocable instructions to the Bank ("IASA Bank Instructions") to transfer
immediately from the IASA Bank account to the bank account of IASA at The
Laredo National Bank, Laredo, Texas, account number 00-0000-0, ABA 000000000,
the sum of Four Million Eight Hundred Fifty Thousand Dollars (U.S.
$4,850,000); and (zz) at the Closing, IASA shall execute and deliver
irrevocable instructions to The Laredo National Bank to purchase Mexican
pesos with funds deposited in the above-described account and to transfer
such peso-denominated funds immediately to each of the creditors identified
in Sections 4.1(b)(i)(A) and (B) (but not C), and 4.1(b)(iii), in amounts
sufficient to discharge the peso-denominated indebtedness of IASA thereto (as
specified in letters that IASA obtained from each such creditor and delivered
to the Company prior to the Closing), respectively; provided that, to the
extent that any excess funds may remain in the IASA account at The Laredo
National Bank following the performance by that bank of IASA's instructions
thereto (as set out above), and following the full performance by IASA of all
its obligations under Section 5.2, such excess funds shall be the sole
property of IASA.
(c) Fair Market Value of Net Assets Transferred by IASA to the
Company. The parties hereby acknowledge and agree that the fair market value of
the net assets transferred by IASA to the Company in accordance with Sections
4.1(a) and (b) equals FMVAT minus FMVLA, or Nine Million Six Hundred Seven
Thousand Eight Hundred Dollars (U.S. $9,607,800) ("FMVNAT").
(d) Issuance of Note 1 and Note 2. The Company, in consideration of
its receipt and assumption of the assets and liabilities transferred to it by
IASA in accordance with Sections 4.1(a) and (b), shall issue two promissory
notes to IASA: (I) the first of which ("Note 1") shall be in the original
principal amount of Four Million Seven Hundred Seven Thousand Eight Hundred
Twenty-Two Dollars (U.S. $4,707,822), which is forty-nine percent (49%) of
FMVNAT, and otherwise in the form attached hereto as Exhibit J; and (ii) the
second of which ("Note 2") shall be in the original principal amount of Four
Million Eight Hundred Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars
(U.S. $4,899,978), which is fifty-one percent (51%) of FMVNAT, and otherwise in
the form attached hereto as Exhibit K.
(e) Issuance of Variable Capital Stock to IASA. IASA shall subscribe
for, and the Company shall issue to IASA, forty-nine percent (49%) of the shares
of the variable capital stock of the Company, the exact number of which shall be
determined by an Extraordinary Shareholders' Meeting, in consideration of which,
IASA shall cancel Note 1;
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a copy of the certificate representing the shares of the Company's variable
capital stock issued to IASA, a copy of the Minutes of the Extraordinary
Shareholders' Meeting approving the issuance thereof, and a copy of Note 1
showing the cancellation thereof, all to be attached hereto as Exhibit L.
(f) Purchase of Note 2 by Accuride. Accuride shall purchase Note 2
from IASA, and IASA shall sell, transfer, bargain, convey, assign and negotiate
Note 2 to Accuride, for the sum of Four Million Eight Hundred Ninety-Nine
Thousand Nine Hundred Seventy-Eight Dollars (U.S. $4,899,978).
(g) Issuance of Variable Capital Stock to Accuride. In the final
step leading to the further equity capitalization of the Company under this
Section 4.1, Accuride shall subscribe for, and the Company shall issue to
Accuride, fifty-one percent (51%) of the shares of the variable capital stock of
the Company, the exact number of which shall be determined by an Extraordinary
Shareholders' Meeting, in consideration of which, Accuride shall cancel Note 2;
a copy of the certificate representing the shares of the Company's variable
capital stock issued to Accuride, a copy of the Minutes of the Extraordinary
Shareholders' Meeting approving the issuance thereof, and a copy of Note 2
showing the cancellation thereof, all to be attached hereto as Exhibit M.
SECTION 4.2 Value-Added Tax Payable Upon Transfer of Assets Under Section
4.1(a); Issuance of Note 3. The parties acknowledge and agree that, as a result
of the transfer of assets by IASA to the Company in accordance with Section
4.1(a), value-added tax ("VAT"), in the amount of Mexican pesos that is
equivalent on the Closing Date to Two Million Four Hundred Twenty-Three Thousand
Six Hundred Dollars (U.S. $2,423,670), shall be collected by IASA from the
Company and paid under the VAT law to the applicable Mexican tax authorities;
and to evidence this obligation, at the Closing, the Company shall issue to IASA
a promissory note ("Note 3") in the same principal amount as the amount of the
VAT due and payable, Note 3 to be paid in full on or before December 15, 1997,
to bear interest on the unpaid principal at the same rate as that which would be
applied to IASA as a penalty for late payment of the VAT due, and otherwise to
be in the form attached hereto as Exhibit N.
SECTION 4.3 Initial Business Plan. The Company has adopted, and both
Shareholders hereby formally adopt, ratify and approve, the Initial Business
Plan of the Company attached hereto as Exhibit O, which Initial Business Plan
corresponds to the period from the date of formation of the Company through
December 31, 1998.
SECTION 4.4 Bailment of Certain Equipment. The Company shall deliver
possession to IASA, for the use of IASA (and in the event the Company transfers
Wheel
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Division equipment to any Affiliate of the Company, the Company shall cause
such Affiliate to agree to deliver possession to IASA, for the use of IASA),
and IASA shall receive from the Company or any Affiliate thereof, for nominal
consideration, certain machinery and equipment; and to evidence such bailment
the Company and IASA agree to execute and deliver at Closing the Company/IASA
Equipment Bailment Agreement attached hereto as Exhibit P, which Company/IASA
Equipment Bailment Agreement shall govern in the event of any conflict with
this Agreement.
SECTION 4.5 Wheel Requirements Agreement. IASA agrees to manufacture,
sell, supply and deliver to the Company, free and clear of any and all Security
Interests, all of the Company's requirements of Wheels; provided that the
Company shall have no obligation to purchase any minimum quantity or quantities
of Wheels, nor shall the Company have any obligation to limit its purchases of
Wheels; and provided further, that the Company and IASA shall evidence more
fully the terms and conditions of this Wheel requirements supply arrangement by
executing the form of Wheel Requirements Agreement attached hereto as Exhibit Q,
which Wheel Requirements Agreement shall govern in the event of any conflict
with this Agreement.
SECTION 4.6 Purchase of Servicios AISA. Exclusively in consideration of
the payment of Six Thousand One Hundred Ninety-Nine Dollars (U.S. $6,199) by the
Company to IASA, at the Closing, IASA shall sell, bargain, transfer, convey and
assign to the Company Forty-Nine Thousand Nine Hundred Ninety-Nine (49,999)
shares of the common stock of Servicios AISA, one (1) Peso par value per share,
duly subscribed and paid up, free and clear of any and all Security Interests;
and the Company and IASA shall evidence the terms and conditions of such stock
purchase by executing a Stock Purchase Agreement in substantially the same form
as that which is attached hereto as Exhibit R. Also at the Closing, IASA shall
deliver to the Company the books and records of Servicios AISA. Exclusively in
consideration of the payment of One Dollar (U.S. $1) by the Company's nominee
to GIR, at the Closing, GIR shall sell, bargain, transfer, convey and assign to
the Company's nominee One (1) share of the common stock of Servicios AISA, one
(1) Peso par value per share, duly subscribed and paid up, free and clear of any
and all Security Interests; and the Company's nominee and GIR shall evidence the
terms and conditions of such stock purchase by executing a form of Stock
Purchase Agreement substantially identical to that under which the Company is
acquiring the majority interest in Servicios AISA from IASA, such additional
Stock Purchase Agreement, as well as copies of the certificates evidencing the
Servicios AISA shares being acquired by the Company from IASA and those being
acquired by the Company's nominee from GIR, duly endorsed and delivered to the
Company, also to be attached hereto as part of Exhibit R.
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SECTION 4.7 San Nicolas de los Xxxxx Office Leases. IASA shall rent and
lease to the Company and to Servicios AISA, and the Company and Servicios AISA
shall rent and lease from IASA, for Four Hundred Fifty Dollars (U.S. $450) each
per month, office space located in San Nicolas de los Xxxxx, Nuevo Xxxx, Mexico;
and to evidence the terms and conditions of such leases, the Company and IASA,
and Servicios AISA and IASA, each shall execute a San Nicolas Office Lease in
substantially the same form as that which is attached hereto as Exhibit S, which
San Nicolas Office Leases shall govern in the event of any conflict with this
Agreement.
SECTION 4.8 Mexico, D.F. Office Lease. IASA shall rent and lease to
Servicios AISA, and Servicios AISA shall rent and lease from IASA, office space
located in Mexico, D.F., Mexico; and to evidence the terms and conditions of
such lease, Servicios AISA and IASA shall execute a Mexico, D.F. Office Lease in
the form attached hereto as Exhibit T, which Mexico, D.F. Office Lease shall
govern in the event of any conflict with this Agreement.
SECTION 4.9 Exclusive Commercial Mediator Agreements.
(a) The Company shall engage Accuride to act as the exclusive
commercial mediator of the Company in the United States of America and in
Canada, and to evidence such commercial mediator arrangement Accuride and the
Company shall execute, and IASA shall ratify in writing, the Exclusive United
States/Canada Commercial Mediator Agreement in the form attached hereto as
Exhibit U, which Exclusive United States/Canada Commercial Mediator Agreement
shall govern in the event of any conflict with this Agreement.
(b) Accuride shall engage the Company to act as Accuride's exclusive
commercial mediator in Mexico and elsewhere in Latin America, and to evidence
such commercial mediator arrangement the Company and Accuride shall execute, and
IASA shall ratify in writing, the Exclusive Mexico/Latin America Commercial
Mediator Agreement in the form attached hereto as Exhibit V, which Exclusive
Mexico/Latin America Commercial Mediator Agreement shall govern in the event of
any conflict with this Agreement.
SECTION 4.10 Certain Tradename and Trademark Licenses. Each of Accuride
and IASA hereby grants to the Company a non-exclusive license to use for the
Term of this Agreement its tradename and any and all trademarks it may own that
relate in any manner to products or services connected with the Wheel business;
provided, however, that the Company shall not be authorized to grant any
sublicense of any of the rights granted to the Company under this Section 4.10;
and provided further, that to evidence such licenses, Accuride and the Company
shall execute and deliver at Closing that certain Accuride
12
Tradename and Trademark License, and IASA and the Company shall execute and
deliver at Closing that certain IASA Tradename and Trademark License, both
such license agreements to be attached hereto as Exhibit W.
SECTION 4.11 Accuride/Company Technical Services Agreement. Accuride
hereby agrees to render to and on behalf of the Company, and the Company hereby
agrees to receive and purchase from Accuride, the technical services set out in
the Accuride/Company Technical Services Agreement attached hereto as Exhibit X,
upon the terms and conditions described therein. Accuride and the Company
hereby agree to execute and deliver the Accuride/Company Technical Services
Agreement at Closing, and IASA hereby ratifies it in its capacity as a
Shareholder of the Company.
SECTION 4.12 IASA/Company Technical Services Agreement. IASA hereby agrees
to render to and on behalf of the Company, and the Company hereby agrees to
receive and purchase from IASA, the technical services set out in the
IASA/Company Technical Services Agreement attached hereto as Exhibit Y, upon the
terms and conditions described therein. IASA and the Company hereby agree to
execute and deliver the IASA/Company Technical Services Agreement at Closing,
and Accuride hereby ratifies it in its capacity as a Shareholder of the Company.
ARTICLE V
Certain Other Covenants
SECTION 5.1 Disposition of Usable Inventory and of Non-Usable Inventory.
Immediately upon receipt by the Company of the Inventory transferred to it by
IASA under Section 4.1(a)(ii), Accuride and IASA, acting on behalf of the
Company, reasonably shall determine the extent, if any, to which the Inventory
so received is Usable Inventory:
(a) To the extent that the Inventory received by the Company from
IASA in accordance with Section 4.1(a)(ii) is determined to be Usable Inventory,
then the Company shall accept such Usable Inventory and value it in accordance
with Section 5.1(c). If the value of such Usable Inventory is determined under
Section 5.1(c) to be: (i) less than One Million Three Hundred Thousand Dollars
(U.S. $1,300,000), then, within five (5) Days after the Closing, IASA shall pay
to the Company the amount by which the value of the accepted Usable Inventory is
less than One Million Three Hundred Thousand Dollars (U.S. $1,300,000), plus the
amount of VAT that corresponds to such payment, both in immediately available
funds; (ii) greater than One Million Three Hundred Thousand Dollars (U.S.
$1,300,000), then, within five (5) Days after the Closing, the Company shall
13
pay to IASA the amount by which the value of the accepted Usable Inventory
exceeds One Million Three Hundred Thousand Dollars (U.S. $1,300,000), plus
the amount of VAT that corresponds to such payment, both in immediately
available funds; or (iii) equals One Million Three Hundred Thousand Dollars
(U.S. $1,300,000), then neither the Company nor IASA shall make any payment
to the other under this Section 5.1(a).
(b) To the extent that the Inventory received by the Company from
IASA in accordance with Section 4.1(a)(ii) is determined to be non-Usable
Inventory, then Accuride shall cause the Company to reject and return such
Inventory to IASA, whereupon IASA shall have the following two options only: (I)
IASA at its sole expense may attempt to remanufacture all or any portion of the
rejected Inventory, and to the extent that IASA chooses to do so it shall
present all such remanufactured Inventory to the Company for inspection within
forty-five (45) Days after the date of the prior rejection, whereupon, Accuride,
acting on behalf of the Company, shall determine the extent to which such
remanufactured Inventory is Usable Inventory and cause the Company to purchase
any that is, at the prices set out in Section 5.1(c), provided that all
remanufactured Inventory that is determined to be non-Usable Inventory shall be
destroyed by IASA and sold as scrap; or (ii) to the extent that IASA chooses not
to attempt to remanufacture rejected Inventory, as permitted under Section
5.1(b)(i), IASA shall destroy such rejected Inventory and sell it as scrap.
(c) For all purposes under this Section 5.1, Usable Inventory shall
be valued as follows: (I) for raw-materials Usable Inventory, at the invoice
price plus amounts paid by IASA to have the materials transported to the IASA
Plant; (ii) for Usable Inventory-in-progress, at standard cost; and (iii) for
finished-goods Usable Inventory, at standard cost of finished goods.
SECTION 5.2 Payment by IASA of Certain Indebtedness. The parties
acknowledge that the Company is assuming on the Closing Date certain amounts of
indebtedness of IASA to third parties, as provided in Sections 4.1(b)(i) through
(v). The parties further acknowledge that it has been their intent that, on the
Closing Date, the Company pay directly to the creditors named in Sections
4.1(b)(i) through (v) the amounts of indebtedness assumed by the Company under
those Sections; however, for various logistical reasons, the parties acknowledge
that, as of the Closing Date, payment of the indebtedness to Factoraje
Bancrecer, S.A. de C.V., of the indebtedness to Banca Serfin, S.A. and of the
indebtedness to the holders of certain commercial paper issued by IASA, as
reflected in Sections 4.1(b)(i)(C) and 4.1(b)(iv) and (v), respectively, may not
be feasible, notwithstanding that, upon completion of the transactions described
in Sections 4.1(b)(xx), (yy) and (zz), IASA will have obtained control of the
funds that are to be used to pay such creditors. As a result, IASA hereby
undertakes and agrees to pay, whether from its account
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at The Laredo National Bank or otherwise (and without receiving any funds
from the Company in addition to those transferred in accordance with the
Company Bank Instructions), on or before November 6, 1997 to Banca Serfin,
S.A., on or before November 14, 1997 to the holders of the commercial paper
issued by IASA, and on or before November 30, 1997 to Factoraje Bancrecer,
S.A. de C.V., respectively, in Mexican pesos, the lesser of the following
amounts: (a) the amount of peso-denominated indebtedness of IASA to the
creditor in question; or (b) the amount that, if converted to dollars by The
Laredo National Bank as of the Closing Date, would be sufficient to pay in
full the dollar-denominated indebtedness assumed by the Company under each of
Sections 4.1(b)(i)(C) and 4.1(b)(iv) and (v), respectively; provided,
however, that irrespective of whether amounts actually paid by IASA under
this Section 5.2 to the creditors named in Sections 4.1(b)(i)(C) and
4.1(b)(iv) and (v) are sufficient to discharge the underlying indebtedness of
IASA thereto, all indebtedness assumed by the Company under Sections
4.1(b)(i) through (v) shall be deemed paid in full and discharged when the
Bank performs the Company Bank Instructions; and provided further, that on
each of November 6, 1997 (with respect to the indebtedness to Banca Serfin,
S.A.), November 14, 1997 (with respect to the indebtedness to the holders of
the IASA commercial paper), and November 30, 1997 (with respect to the
indebtedness to Factoraje Bancrecer, S.A. de C.V.), IASA shall deliver to the
Company a Notice stating either that it has paid in full and discharged
IASA's liability to the creditor in question (in which case IASA shall attach
to the Notice a carta finiquito issued by that creditor with respect to the
discharged liability) or, if IASA has not paid in full and discharged such
liability, the Notice shall state the amount actually by IASA to the creditor
in question through the date of the Notice.
SECTION 5.3 Assignment of Certain Distribution and Sales Agency
Agreements. IASA shall assign to the Company all written distribution and sales
agency agreements ("Distribution Agreements") in effect currently between IASA
and any Latin American distributor or other sales agent of Wheels. The Company,
on a case-by-case basis and for good cause only, may refuse to accept assignment
of any one or more such Distribution Agreements. To the extent that the Company
agrees to accept assignment of any particular Distribution Agreement, the
Company shall refrain from terminating it during the Company's first Fiscal
Year. In every case, IASA shall be and remain solely responsible for any and
all costs and liabilities arising in connection with the assignment to the
Company of, or the modification or termination of, any such Distribution
Agreements.
SECTION 5.4 Future Annual Business Plans. Beginning September 15, 1998
and continuing each September 15 thereafter throughout the Term of this
Agreement, the Company shall prepare and propose that the Board adopt, and that
each Shareholder ratify, the Company's Annual Business Plan for the following
Fiscal Year. Each such Annual
15
Business Plan shall consist of a one-year operating plan, a three-year
capital expenditure plan, and a five-year strategic plan.
SECTION 5.5 Right of First Refusal Regarding Certain Future Business
Opportunities Anywhere in Latin America Other Than Mexico.
(a) If Accuride or IASA at any time during the Term of this Agreement
desires to develop or otherwise pursue any opportunity to acquire an existing
wheelmaking business, to form, create or otherwise participate directly or
indirectly in a new or existing wheelmaking joint venture, or to build,
construct, finance or otherwise participate directly or indirectly in any
greenfield wheelmaking plant, anywhere in Latin America other than Mexico, then
that Shareholder first shall be required to offer to share such opportunity with
the other Shareholder upon the same Percentage Interests and other terms and
conditions that are set out in this Agreement with respect to the Company. The
Shareholder desiring to take advantage of such opportunity shall notify the
other Shareholder thereof in writing, and shall include with such Notice a
written description and explanation of all terms, conditions and other
information reasonably necessary to permit the reviewing Shareholder to evaluate
whether to pursue the opportunity, and an irrevocable letter of credit confirmed
by a reasonably acceptable commercial bank in the same country as that where the
opportunity is located, guaranteeing the availability of the funds necessary for
the offering Shareholder to pursue the opportunity. The reviewing Shareholder
shall respond in writing to the offering Shareholder not later than twenty (20)
Days after receipt of such Notice, and in the responding Notice the reviewing
Shareholder in good faith shall state whether it desires to pursue the
opportunity, and if so, the responding Notice shall be accompanied by an
irrevocable letter of credit confirmed by a reasonably acceptable commercial
bank in the same country as that where the opportunity is located, guaranteeing
the availability of the funds necessary for the reviewing Shareholder to pursue
the opportunity.
(b) If the reviewing Shareholder is unable or does not wish to pursue
the opportunity, or if the reviewing Shareholder does not respond as required
within the twenty (20) Day period, then the offering Shareholder shall be free
to pursue the opportunity itself, alone or in combination with any third party
or parties; provided, however, that the following shall constitute conditions
precedent to the participation in, or other pursuit by, either Shareholder of
any such Latin American wheelmaking plant acquisition, joint venture or
greenfield plant outside Mexico: (I) the Shareholder desiring to pursue such
opportunity shall obtain a written agreement reasonably acceptable in form to
Accuride and providing that Accuride shall be the sole and exclusive sales and
distribution agent in the United States of America and Canada for all products
manufactured by such new wheelmaking acquisition, joint venture or greenfield
plant; and (ii) the Shareholder
16
desiring to pursue such opportunity shall obtain a written agreement
reasonably acceptable in form to the Company and providing that the Company
shall be the sole and exclusive sales and distribution agent in Mexico for
all products manufactured by such new wheelmaking acquisition, joint venture
or greenfield plant.
SECTION 5.6 Exclusivity of the Joint Venture's Wheel Operations in Mexico.
During the Term of this Agreement, each of Accuride, IASA and GIR shall conduct
any and all business activities in Mexico that are within the scope of the Joint
Venture exclusively through the Company, and each of Accuride, IASA and GIR
hereby agrees to cause each of its respective subsidiaries and other controlled
Affiliates to do likewise; but nothing in this Section 5.6 shall modify or have
any effect whatsoever upon the obligations of the parties specified in Article X
of this Agreement; and provided further that, notwithstanding the foregoing,
this Section 5.6 shall not be construed to limit the business activities of
Distribuidora Automotriz Xxxxxxx, X.X. de C.V., a Mexican corporation ("DIARSA")
and subsidiary of Trailers de Monterrey, S.A. de C.V., a Mexican corporation and
subsidiary of GIR, to the extent that DIARSA's activities consist of operating
retail outlets in Mexico at which Wheels are offered for sale and sold, so long
as such offers and sales are made only to end-users and small retailers known
in the trade as "sub-distributors," and not to vehicle manufacturers or Wheel
distributors.
SECTION 5.7 Exclusive Option to Purchase Majority Interest in Xxxxxx XXXX.
IASA and GIR hereby grant to the Company and its nominee the exclusive option
("Option") to purchase and acquire upon demand, at any time before December 31,
2005, Fifty Thousand (50,000) shares (which is and shall remain one hundred
percent (100%)) of the issued and outstanding shares of the capital stock of
Xxxxxx XXXX, duly subscribed and paid up, free and clear of any and all Security
Interests, for the sum of Six Thousand Two Hundred Dollars (U.S. $6,200) to be
paid by the Company and its nominee to IASA upon the exercise of the Option; and
upon any such exercise of the Option, the parties shall execute a Stock Purchase
Agreement in substantially the same form as that set out in Exhibit R with
respect to the Company's purchase of shares in Servicios AISA, to evidence the
terms and conditions of the purchase of the Xxxxxx XXXX shares.
SECTION 5.8 Agreement to Grant License of Company-Developed Technology.
Upon demand by any Shareholder at any time during the Term of this Agreement,
the Company shall grant to such Shareholder a non-exclusive, paid-up,
royalty-free license to use any and all patents, inventions and other
technology, if any, developed by and proprietary to the Company; provided,
however, that the Company shall not be authorized to grant any such license to
any Person or Persons other than the Shareholders, and no Shareholder may grant
any sublicense thereof to any other Person without the prior written consent of
the other Shareholder.
17
SECTION 5.9 Purchase of Wheelmaking Equipment by the Company from
Accuride. As contemplated under the Initial Business Plan, the Company shall
purchase from Accuride certain wheelmaking equipment ("Wheelmaking Equipment"),
which is more particularly described in Exhibit Z attached hereto; and to
evidence such purchase of the Wheelmaking Equipment, Accuride and the Company
shall execute an instrument transferring title to the Company upon the following
terms and conditions: (a) the purchase price shall be Two Million Dollars (U.S.
$2,000,000); and (b) the purchase price shall be paid in full not later than one
hundred twenty (120) Days following installation of the Wheelmaking Equipment by
the Company as contemplated under the Initial Business Plan. Upon completion of
the purchase, the Wheelmaking Equipment shall be included in the list of items
delivered in bailment by the Company to IASA, as provided under Section 4.4,
under the Company/IASA Equipment Bailment Agreement.
SECTION 5.10 Agreements Between the Company and a Shareholder. The
Company may enter into and make any agreement with either or both of the
Shareholders for any purpose; provided that any and all such agreements shall be
effected on an arm's-length basis only, with terms no less than favorable to the
Company than those that could be obtained through negotiations with unrelated
third parties, and all such agreements that are not contemplated in the Annual
Business Plan corresponding to the timing of such agreement shall require the
written approval of both Shareholders.
SECTION 5.11 Covenant to Maintain Xxxxxx XXXX Free of Indebtedness; Sole
Exception. During the Term of this Agreement, IASA and GIR covenant and agrees
to keep and maintain Xxxxxx XXXX free and clear of any indebtedness of any kind
to any Person, except such seniority and severance liabilities as may arise
under the Mexican federal labor law in the ordinary course of Xxxxxx AISA's
business.
SECTION 5.12 Potential Future Reimbursement of Import Duties. In the event
that the Company's PITEX program is not amended, and if, as a result, IASA
incurs and actually pays, under applicable Mexican customs laws, import duties
with respect to any of the assets transferred by IASA to the Company under
Section 4.1(a), then the Company shall reimburse such amount or amounts to IASA.
ARTICLE VI
Closing
SECTION 6.1 Closing. The Closing of all transactions contemplated under
this Agreement shall occur on November 5, 1997 the ("Closing Date"), at the
offices of IASA,
18
Avenida Universidad, 1011 Norte, Planta Baja, San Nicolas de los Xxxxx, Nuevo
Xxxx, Mexico.
(a) At the Closing, Accuride, IASA, GIR and the Company shall execute
and deliver to each other, and to certain third parties (to the extent
applicable), original counterparts of the following documents:
(i) this Agreement;
(ii) the Asset Assignment, Purchase and Sale Agreement, and an
invoice attaching a list of all assets transferred thereunder;
(iii) Note 1 (to be issued and canceled at the Closing);
(iv) Note 2 (to be issued and canceled at the Closing);
(v) Minutes of the Extraordinary Shareholders' Meeting of the
Company approving the issuance to Accuride of 38,250,000 shares of the Company's
variable capital common stock, and approving the issuance to IASA of 36,750,000
shares of the Company's variable capital common stock;
(vi) Share certificate evidencing the issuance to Accuride of
38,250,000 shares of the Company's variable capital common stock;
(vii) Share certificate evidencing the issuance to IASA of
36,750,000 shares of the Company's variable capital common stock;
(viii) Note 3;
(ix) the Company/IASA Equipment Bailment Agreement;
(x) the Wheel Requirements Agreement;
(xi) the Stock Purchase Agreement whereby the Company will
purchase 49,999 shares of the capital stock of Servicios AISA from IASA; the
Stock Purchase Agreement whereby the Company will purchase 1 share of the
capital stock of Servicios AISA from GIR; the share certificates evidencing a
total of 50,000 shares of the capital stock of Servicios AISA, duly endorsed by
IASA and GIR for transfer to the Company and the Company's nominee,
respectively; and all books and records of Servicios AISA;
19
(xii) the San Nicolas Office Leases;
(xiii) the Mexico, D.F. Office Lease;
(xiv) the Exclusive United States/Canada Commercial Mediator
Agreement;
(xv) the Exclusive Mexico/Latin America Commercial Mediator
Agreement;
(xvi) the Accuride Tradename and Trademark License;
(xvii) the IASA Tradename and Trademark License;
(xviii) the Accuride/Company Technical Services Agreement; and
(xix) the IASA/Company Technical Services Agreement.
(b) At the Closing, the Company shall execute and deliver to Citibank
Mexico, S.A. (the "Bank") the Loan Documents and the Company Bank Instructions,
irrevocably instructing the Bank to draw upon the Loan in the name of the
Company and to make the transfers described in Section 4.1(b)(xx);
(c) At the Closing, IASA shall execute and deliver to the Bank the
IASA Bank Instructions, irrevocably instructing the Bank to draw upon funds from
the Bank account of IASA and to make the transfers described in Section
4.1(b)(yy);
(d) At the Closing, IASA shall execute and deliver to The Laredo
National Bank instructions irrevocably instructing it to draw upon funds from
the account of IASA therewith and to make the transfers described in Section
4.1(b)(zz);
(e) At the Closing, IASA shall obtain and deliver to the Company any
and all documents ("Security Interest Releases") necessary or appropriate, in
the sole judgment of the Company: (I) to remove, release, terminate and render
of no further force and effect, any and all Security Interests then encumbering
title to any of the assets that are to be transferred to the Company under the
Asset Assignment, Purchase and Sale Agreement, subject only to recording such
Security Interest Releases in the appropriate Public Registries of Property; and
(ii) to invoice and otherwise transfer to the Company, free and clear of any and
all Security Interests, title to any and all of the assets subject to the Asset
Assignment, Purchase and Sale Agreement as to which IASA did not actually hold
title
20
prior to the Closing (such as, for example, equipment or machinery titled in
the name of an equipment lease company), as well as all appropriate invoices
to IASA from the previous titleholders thereof; and
(f) At the Closing, Accuride shall wire transfer the sum of Four
Million Eight Hundred Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars
($4,899,978) to IASA's account at The Laredo National Bank, Laredo, Texas,
account number 00-0000-0, ABA 000000000, which shall pay in full and discharge
Accuride's obligation with respect to the purchase of Note 2 from IASA, as
provided in Section 4.1(f).
ARTICLE VII
Management; Surveillance
SECTION 7.1 Composition and Functions of The Board of Directors. The
Board of Directors of the Company ("Board") shall be constituted and shall
function as follows, and otherwise as provided in Chapter Fourth of the Bylaws:
(a) The Board shall have five (5) members, three (3) of whom shall be
elected by Accuride, and the other two (2) of whom shall be elected by IASA.
Alternate Directors shall be elected in the same manner.
(b) Accuride shall designate one of the Directors it elects to serve
as Chairman of the Board.
(c) IASA shall designate the Secretary of the Board, who may or may
not be a member of the Board; provided that no individual shall be eligible to
serve as Secretary of the Board unless he or she is a continuing full-time
employee of IASA or of GIR.
(d) The Board shall hold regularly scheduled Board meetings every two
(2) months, and otherwise as may be required in accordance with Article
Fifteenth of the Bylaws.
(e) The Shareholder that appoints a Director shall pay all costs
associated with that Director's serving on the Board. The Company shall not
compensate Directors for their service as Directors.
21
(f) The initial Board shall consist of the following individuals:
Xxxxxxx X. Xxxxxxx, Xx. (Chairman), Xxxxxx X. Xxxxxxxx and H. Xxxxx Xxxxxx,
appointed by Accuride; and Xxxxxxxx Xxxxxxx Xxxxxxxx and Xxxx Xxxxxxx
Xxxxxxx, appointed by IASA. The initial Secretary of the Board shall be Lic.
Xxxx Xxxxxx Xxxxx Xxxxx (who shall serve as Secretary only, but shall not be
a member of the Board), appointed by IASA, and the initial Assistant
Secretary shall be H. Xxxxx Xxxxxx.
SECTION 7.2 Board Meetings - Location, Quorum Requirements. Board
meetings may be held anywhere, both within the Republic of Mexico and abroad, as
determined by the Board in accordance with the Bylaws. The presence of at least
three (3) Directors or their respective Alternates shall be required in order
for the Board to act at any Board meeting.
SECTION 7.3 Actions by the Board. All actions of the Board shall be taken
only upon the affirmative vote of at least three (3) Directors or their
respective Alternates; provided, however, that in order to be duly adopted, each
of the following actions shall require the affirmative vote of at least four (4)
Directors or their respective Alternates:
(a) approval of the Annual Business Plan;
(b) contracting indebtedness in an amount that would cause the
Company's total indebtedness to exceed, by at least twenty-five percent (25%) at
any time during the Fiscal Year, the debt limit set out in the corresponding
Annual Business Plan;
(c) any sale of equipment that would cause the aggregate annual
amount of such sales to exceed seven percent (7%) of the inflation-adjusted book
value of the Company's total assets at the time of sale;
(d) approval of any material deviation from the Company's operating
plan or capital expenditure plan;
(e) approval of any settlement of any lawsuit or administrative
proceeding to which the Company is a party and to which any agency, department,
ministry or instrumentality of the United Mexican States or of the State of
Nuevo Xxxx or of any Municipality located in the State of Nuevo Xxxx also is a
party, or with respect to which the Company proposes to pay any amount in excess
of One Million Dollars (U.S. $1,000,000) for the purpose of settlement; and
(f) approval of any agreement between the Company and any Shareholder
that is not contemplated in the Annual Business Plan.
22
Every resolution of the Board shall indicate the manner in which the actions
taken by it shall be implemented.
SECTION 7.4 Officers.
(a) Accuride shall have exclusive authority to appoint and to remove
the Company's Director General, at Accuride's sole discretion. The Director
General may be and remain an employee of Accuride. The initial Director General
of the Company shall be Xxxxxx X. Xxxxxxxx, who shall be authorized to act on
behalf of the Company as set out in the corresponding Power of Attorney attached
hereto under Exhibit B. Each and every individual who may be appointed in the
future by Accuride as Director General of the Company shall be granted a power
of attorney at least as broad as that granted to the initial Director General.
Accuride shall have the right, at its expense, to pay compensation to the
Director General in excess of any budgeted or suggested Director General
compensation set out in the Initial Business Plan or in any future Annual
Business Plan.
(b) Accuride shall have exclusive authority to appoint and to remove
the Company's Director of Finance, at Accuride's sole discretion. The Director
of Finance may be and remain an employee of Accuride. The initial Director of
Finance shall be designated by Accuride in a Notice to be delivered to the
Company and IASA for such purpose as soon as reasonably practicable following
the Closing. The initial Director of Finance shall be authorized to act on
behalf of the Company as set out in the Power of Attorney granted to the
Director General and attached hereto under Exhibit B. Each and every individual
who may be appointed in the future by Accuride as Director of Finance shall be
granted a power of attorney at least as broad as that granted to the initial
Director of Finance. Accuride shall have the right, at its expense, to pay
compensation to the Director of Finance in excess of any budgeted or suggested
Director of Finance compensation set out in the Initial Business Plan or in any
future Annual Business Plan.
(c) The Board shall have authority to create, to appoint individuals
to, and to remove individuals from, any other office of the Company.
SECTION 7.5 General Shareholders' Meetings.
(a) The general meetings of Shareholders constitute the supreme
authority of the Company and, therefore, have unlimited powers to resolve and
ratify the acts and operations of the Company. Resolutions of general
Shareholders' meetings shall be carried out by the Chairman of the Board, unless
such power specifically is delegated by the Shareholders to another individual.
23
(b) General Shareholders' meetings may be Ordinary Shareholders'
Meetings or Extraordinary Shareholders' Meetings. All Shareholders' meetings
must be held at the Company's domicile.
(c) Written resolutions adopted by unanimous decision of the
Shareholders, if confirmed in a dated document signed by each Shareholder or a
duly authorized representative thereof, shall be valid and have the same legal
effect as if such resolutions had been adopted at a duly convened Shareholders'
meeting. Such resolutions shall be signed by the Secretary or by the Assistant
Secretary of the Company and be transcribed in the minute book of the
proceedings of the Shareholder's meetings. The Secretary or the Assistant
Secretary shall deliver a certified copy of all such resolutions to the
Examiners of the Company. Enclosures relating thereto, if any, shall be
attached to the corresponding file.
(d) Ordinary Shareholders' Meetings shall be held at least once every
year, within the first four (4) months of the Fiscal Year, and shall resolve on
the following matters: (I) to discuss, approve or modify the report of the Board
referred to in Article 172 of the General Law of Business Organizations, based
upon the report of the Examiners; (ii) to appoint the Directors and their
Alternates, and the Examiners and their Alternates, as provided in the Bylaws;
(iii) to determine the remuneration, if any, that will be paid to the Directors
and to the Examiners; and (iv) to determine any matter not reserved to
Extraordinary Shareholders' Meetings.
(e) Extraordinary Shareholders' Meetings may be called and held at
any time, in accordance with the Bylaws, to consider any of the matters listed
in Article 182 of the General Law of Business Organizations. Any of the matters
listed in Section 7.3(a) through (f) shall be considered by an Extraordinary
Shareholders' Meeting if submitted thereto.
(f) General Shareholders' Meetings, both Ordinary Shareholders'
Meetings and Extraordinary Shareholders' Meetings, may be held only upon a call
by the Board or by the Examiners, in accordance with Articles 166 and 184, or as
provided in Article 185, of the General Law of Business Organizations.
(g) The call Notice for a general Shareholders' meeting must indicate
the date, time and place for the meeting, state the specific purpose or purposes
for which the meeting is called, provide an agenda for the meeting, and state
whether it is a first, second or later call; and the call Notice must be signed
by the person issuing it. Call Notices must be published in a newspaper of
large circulation in the domicile of the Company at least fifteen (15) Days in
advance of the proposed date of the meeting if it is a first call; and if it
24
is a second call, the Notice must be published within the fifteen (15) Day
period following the proposed date set for the meeting indicated in the first
call and at least five (5) Days in advance of the new proposed date for the
meeting. Call Notices for general Shareholders' meetings shall be delivered
to the Shareholders at their corresponding addresses recorded in the
Company's Stock Registry Book. Each call Notice shall be delivered by hand,
by telefax with acknowledgment of receipt or by courier service, at least
fifteen (15) Days prior to the date of the meeting if on first call, or at
least five (5) Days prior to the date of the meeting if on second call.
Notices shall be effective upon actual receipt at the domicile of the
addressee as shown in the Stock Registry Book.
(h) Notwithstanding Section 7.5(f), if all shares of the capital
stock are represented at a Shareholders' meeting, said meeting shall be deemed
validly held without any prior call.
(i) In order for an Ordinary Shareholders' Meeting to be legally
convened upon first call, at least sixty percent (60%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. In the event an Ordinary Shareholders' Meeting cannot be
held on the date fixed for such purpose, a second call shall be made stating the
circumstances thereof. In order for an Ordinary Shareholders' Meeting to be
legally convened upon second or subsequent calls, at least fifty percent (50%)
of the issued and outstanding shares of the capital stock, duly subscribed and
paid up, must be represented thereat. Resolutions shall be validly adopted at
Ordinary Shareholders' Meetings only upon the affirmative vote of Shareholders
representing a majority of the issued and outstanding shares of the capital
stock.
(j) In order for an Extraordinary Shareholders' Meeting to be legally
convened upon first call, at least seventy-five percent (75%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. In the event an Extraordinary Shareholders' Meeting cannot
be held on the date fixed for such purpose, a second call shall be made stating
the circumstances thereof. In order for an Extraordinary Shareholders' Meeting
to be legally convened upon second or subsequent calls, at least fifty percent
(50%) of the issued and outstanding shares of the capital stock, duly subscribed
and paid up, must be represented thereat. Resolutions shall be validly adopted
at Extraordinary Shareholders' Meetings only upon the affirmative vote of
Shareholders representing more than fifty percent (50%) of the issued and
outstanding shares of the capital stock; except, however, that the affirmative
vote of Shareholders representing at least sixty percent (60%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, shall be
required to approve any amendment to or other modification of the Bylaws, to
approve any capital increase as a result of future capital contributions of any
Shareholder, and to approve any of the matters listed
25
in Section 7.3(a) through (f) that may be submitted for consideration by an
Extraordinary Shareholders' Meeting.
(k) If at a duly convened Shareholders' meeting it is not possible to
resolve on all matters listed in the agenda, due to lack of time, the meeting
may be adjourned and be continued on the next business day, without the need of
a new call.
(l) At all Shareholders' meetings, each Shareholder shall be entitled
to one (1) vote for each share of the capital stock held thereby.
(m) In order for Shareholders to be admitted to Shareholders'
meetings, their names must be recorded in the Stock Registry book as the owners
of the shares represented.
(n) Any Shareholder may be represented at a Shareholders' meeting by
an attorney-in-fact pursuant to a special power of attorney, for which a plain
letter proxy shall suffice.
(o) In order for resolutions to be validly adopted at any
Shareholders' meeting, they must concern and be within the scope of the matters
listed in the agenda of said meeting.
(p) The Chairman shall designate one or more of the Shareholders or
their representatives to act as Tellers, in order for the same to determine
whether the required quorum is present to hold the Shareholders' meeting in
question.
(q) The Secretary or the Assistant Secretary shall attend all
Shareholders' meetings and record minutes of the proceedings of said meetings in
a minute book or books to be kept for such purpose. Minutes shall be prepared
for all Shareholders' meetings, including those not held due to a lack of
quorum. The minutes of each Shareholders' meeting shall be reviewed and signed
by the individuals acting as the Chairman and as the Secretary of the meeting,
by the attending Examiners, and by any duly authorized representative of a
Shareholder who wishes to do so. The documents that evidence that the calls
were made under the terms set forth in the Bylaws, as well as the attendance
list and any other document presented to the meeting, shall be attached to the
minutes. The Secretary and the Assistant Secretary shall have custody of the
minute book of Shareholders' meetings, the Stock Registry Book, and related
books and records. Upon request by any Shareholder, the Secretary or the
Assistant Secretary shall issue copies of the recordings and entries contained
in such books and permit any Shareholder to review them.
26
SECTION 7.6 Surveillance of the Company. The surveillance of the
Company's affairs shall be entrusted to two (2) Examiners, and in their absence
to Alternate Examiners, who shall be appointed and have the powers and duties as
specified in Chapter Sixth of the Bylaws. The reasonable and customary fees and
other expenses of the Examiners shall be borne by the Company.
ARTICLE VIII
Labor Matters
SECTION 8.1 Labor Plan. Attached hereto as Exhibit AA is the Company's
Labor Plan, which: (a) identifies the name and title of all personnel who
currently are employed by Servicios AISA; (b) sets out, alongside the name of
each employee of Servicios AISA the maximum amounts (in United States dollars)
of the contingent severance and seniority liabilities that the parties agree
that the Company is assuming under Section 4.1(b)(vi) with respect to that
individual; and (c) defines the expected future numbers and positions of
individuals, and fixes the maximum number of individual who are expected to be
employed by Servicios AISA or any other Mexican services company that in the
future may be owned or controlled by the Company, based upon the Company's
projection of demand for its products and of the schedule for completion of the
Company Facility referred to in Article IX. Subject to the limitation on
employment levels that are reflected in the Labor Plan, the parties currently
contemplate that Servicios AISA and possibly other services companies that may
be owned or controlled in the future by the Company will employ over time the
individuals who are employed in the business of the Wheel Division as of the
Effective Date of this Agreement.
SECTION 8.2 Costs Associated with the Transfer or Dislocation of Wheel
Division Personnel. Notwithstanding Sections 4.1(b)(vi) and 8.1, IASA and GIR,
jointly and severally, shall effect, and pay all costs attributable to or
incurred or to be incurred in connection with, the transfer or other dislocation
of Wheel Division personnel, whether as a direct or indirect result of the
formation of the Joint Venture or of the establishment of the Company, or of the
transfer of employees from IASA to Servicios AISA or to Xxxxxx XXXX or to any
other services company, including any and all severance, seniority, pension (if
any) and other similar or related benefits or payments that may be required in
accordance with any applicable labor or employment or other contracts or
agreements or pursuant to applicable Mexican laws, statutes, codes, rules and
regulations; provided that, consistent with Sections 4.1(b)(vi) and 8.1, the
Company shall be contingently responsible for the amount of severance and
seniority liabilities listed in Exhibit AA and corresponding to
27
particular employees of Servicios AISA; and in no event shall the aggregate
of such contingent liabilities assumed by the Company exceed the Maximum
Contingent Labor Liability Assumed.
ARTICLE IX
Future Production Facilities
SECTION 9.1 Future Production Facilities. As contemplated in the Initial
Annual Business Plan, the Company plans to construct a new manufacturing
facility ("Company Facility") in the State of Nuevo Xxxx, to serve as its
principal source of Wheel production. The Shareholders contemplate that such
Company Facility should be ready for operation not later than April 1999.
ARTICLE X
Protection of Confidential Information;
Damages for Breach
SECTION 10.1 Protection of Confidential and Proprietary Information of the
Company. The parties acknowledge and agree that the prospects for the present
and future success of the Joint Venture depend upon the protection by the
Company, Accuride, IASA and GIR of the confidential and proprietary business
information, trade secrets, technology and know-how ("Confidential Information")
of the Company, irrespective of the manner in which the Company may obtain it
(e.g., whether developed independently by the Company, obtained from the
Shareholders, or otherwise); and each of the parties acknowledges and agrees
that irreparable harm to the Company will result if any Confidential Information
of the Company is disclosed to any Person that is neither a party to this
Agreement nor a duly authorized representative or agent of any Person that is a
party hereto, or if any of the parties uses Confidential Information anywhere
within the Republic of Mexico for any purpose or in any context other than in
connection with and for the purpose of advancing the legitimate interests of the
Company.
SECTION 10.2 Certain Covenants Regarding the Treatment of Confidential
Information Generally. For the reasons stated in Section 10.1, each the parties
hereby covenants and agrees that it and each and every one of its officers,
directors, partners, members, shareholders, consultants, advisors, lawyers,
accountants, employees, agents and
28
other representatives ("Representatives"), during the period commencing as of
the Effective Date and ending three (3) years following any termination of
this Agreement, shall:
(a) not disclose any Confidential Information of the Company or of
any other party to this Agreement to any Person who is not a party to this
Agreement or a duly authorized Representative of any party hereto; and
(b) maintain and protect, and cause each and every Representative and
other Person under its control to maintain and protect, the confidentiality,
secrecy, integrity and quality of the Confidential Information at issue.
Each party hereto shall be liable for any failure of strict compliance with this
Section 10.2, whether by the party itself or by any of its Representatives;
notwithstanding the foregoing, however, no party shall be held liable for any
unauthorized disclosure of or failure to protect Confidential Information under
this Section 10.2 in cases where: (I) at the time of disclosure, such
Confidential Information was available to the general public in a manner not
involving any breach of this Agreement or of any other Agreement between the
parties, thus rendering such information no longer truly confidential; or (ii)
the information was made available to the disclosing party by a Person not bound
by any covenant of confidentiality with any of the parties hereto with respect
thereto; or (iii) disclosure was compelled by applicable law or the order of any
court of competent jurisdiction.
SECTION 10.3 Certain Activities Deemed Unauthorized Use of Confidential
Information to the Detriment of the Company. Each of Accuride, IASA and GIR
covenants and agrees that, during the period beginning on the Effective Date and
ending three (3) years after any termination of this Agreement, if it or any of
its respective Affiliates (except DIARSA, to the extent that DIARSA operates as
required under Section 5.6) engages, directly or indirectly (other than through
the Company), anywhere within the territory of the United Mexican States, in any
activity or operation involving or relating in any manner whatsoever to
designing, manufacturing, testing, marketing, dealing in, importing, exporting,
selling or distributing Wheels, then such activity or operation shall be deemed
automatically to constitute: (a) an unauthorized use of Confidential Information
of the Company, and therefore a breach of this Agreement; and (b) an injury to
the Company, with no requirement of proof of actual damages, which injury may be
compensated only upon assessment and payment of the damages described in Section
10.4.
SECTION 10.4 Damages for Breach of Covenant to Refrain from Activities
Constituting Unauthorized Use of Confidential Information to the Detriment of
the Company. Any breach of the covenant in Section 10.3 to refrain from making
any unauthorized use of the Confidential Information of the Company shall
empower the
29
Company or the non-breaching Shareholder or Shareholders to claim and obtain
damages from the breaching party as follows:
(a) the Company shall have the right to recover damages from the
breaching party in either of the following amounts, as appropriate: (I) if both
Accuride and IASA were Shareholders of the Company at the time of the breach,
Five Million Dollars (U.S. $5,000,000); or (ii) if only one of Accuride and IASA
was a Shareholder of the Company at the time of the breach, Two Million Five
Hundred Thousand Dollars (U.S. $2,500,000); or
(b) at the sole discretion of at least one Shareholder that has not
breached Section 10.3, and in lieu of the remedy stated in Section 10.4(a), each
non-breaching Shareholder shall have the right to recover directly from the
breaching party the amounts that correspond to the Percentage Interest of such
Shareholder multiplied by the appropriate amount in either Section 10.4(a)(i) or
(ii).
ARTICLE XI
Indemnification and Insurance
SECTION 11.1 General Indemnification of Accuride and the Company by IASA
and GIR. In addition to the other indemnifications under this Article XI, IASA
and GIR, jointly and severally, shall indemnify, defend and save and hold
harmless Accuride, the Company, and their respective officers, directors,
employees and other agents, jointly and severally, from and against any and all
losses, liabilities, adverse claims, causes of action, damages, demands,
contingencies, settlements, fines, assessments, penalties, charges, costs,
obligations and expenses of every kind and description whatsoever (including,
without limitation, attorneys' fees and litigation, arbitration and other
dispute resolution costs), whether known or unknown, foreseen or unforeseen, or
foreseeable or unforeseeable ("Loss"), arising directly or indirectly from, as a
result of or otherwise in connection with the past operations of IASA or the
Wheel Division, the present operations of IASA, the transfer of the business and
assets of the Wheel Division to the Company and the Company's use and employment
thereof in its business, the transfer of any Wheel Division employees to
Servicios AISA and the purchase by the Company and its nominee of Servicios
AISA, the transfer of any Wheel Division employees to Xxxxxx XXXX and any
purchase by the Company of any interest therein, or directly or indirectly from,
as a result of or otherwise in connection with any use by the Company of land or
buildings owned or controlled or previously owned or controlled by IASA or GIR
or any subsidiary or other
30
Affiliate thereof, and, without limiting the generality of the foregoing,
irrespective of whether any such Loss arises in the form of damages for
breach of this Agreement or of any of the Exhibits, damages or Security
Interests for unsatisfied contractual obligations to third parties, unpaid
taxes, obligations arising under the Mexican federal labor or other laws or
in accordance with any applicable labor, employment or other contracts or
agreements, or otherwise. The indemnity obligations under this Section 11.1
shall be construed and applied in the broadest manner permitted under
applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section
11.1 may incur any Loss or Losses of the kind described or referred to
herein.
SECTION 11.2 Products Liability and Warranty Indemnification of Accuride
and the Company by IASA and GIR. In addition to the other indemnifications
under this Article XI, IASA and GIR, jointly and severally, shall indemnify,
defend and save and hold harmless Accuride, the Company and their respective
officers, directors, employees and other agents, jointly and severally, from and
against any and all Losses arising directly or indirectly from, as a result of
or otherwise in connection with any products liability claim, warranty claim, or
both, relating in any way to Wheels manufactured by IASA, except Wheels
manufactured and delivered to the Company under the Wheel Requirement Agreement.
The indemnity obligations under this Section 11.2 shall be construed and applied
in the broadest manner permitted under applicable law and shall survive any
termination of this Agreement for so long as it remains possible that any Person
indemnified under this Section 11.2 may incur any Loss or Losses of the kind
described or referred to herein.
SECTION 11.3 Environmental Indemnification of Accuride and the Company by
IASA and GIR. In addition to the other indemnifications under this Article XI,
IASA and GIR, jointly and severally, shall indemnify, defend and save and hold
harmless Accuride, the Company and their respective officers, directors,
employees and other agents, jointly and severally, from and against any and all
Losses relating to or arising in any manner out of any matter involving
contamination or pollution of any land, site, surface water, ground water, air
or soil, or of equipment or machinery, or of buildings and other structures of
any kind, located at the IASA Plant or in the vicinity thereof.
SECTION 11.4 Products Liability and Warranty Indemnification of IASA and
GIR by Accuride. Accuride shall indemnify, defend and save and hold harmless
IASA, GIR and their respective officers, directors, employees and other agents,
jointly and severally, from and against any and all Losses arising directly or
indirectly from, as a result of or otherwise in connection with any products
liability claim, warranty claim, or both, relating in any way to Wheels
manufactured by Accuride. The indemnity obligations under this Section
31
11.4 shall be construed and applied in the broadest manner permitted under
applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section
11.4 may incur any Loss or Losses of the kind described or referred to
herein.
SECTION 11.5 Products Liability and Warranty Indemnification of Accuride
and IASA by the Company. The Company shall indemnify, defend and save and hold
harmless Accuride and IASA, and their respective officers, directors, employees
and other agents, jointly and severally, from and against any and all Losses
arising directly or indirectly from, as a result of or otherwise in connection
with any products liability claim, warranty claim, or both, relating in any way
to Wheels manufactured by the Company. The indemnity obligations under this
Section 11.5 shall be construed and applied in the broadest manner permitted
under applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section 11.5
may incur any Loss or Losses of the kind described or referred to herein.
SECTION 11.6 Claims for Indemnification. Any party seeking
indemnification under this Article XI (an "Indemnified Party") promptly shall
give Notice to the party from which such indemnification is sought (the
"Indemnifying Party") of any claim, action, proceeding or suit that may give
rise to liability for indemnification; but the failure of an Indemnified Party
to so notify an Indemnifying Party shall not relieve the Indemnifying Party of
any of its obligations under this Article XI, except to the extent that the
Indemnifying Party is actually and materially prejudiced by the failure to
receive timely Notice. Without limiting the generality of the other provisions
of this Article XI, the Indemnifying Party shall assume and be responsible for
all expenses with respect to the defense, settlement, adjustment or compromise
of any claim, action, proceeding or suit as to which this Article XI requires
indemnification; and the Indemnifying Party shall acknowledge in writing to the
Indemnified Party its obligation to indemnify and hold harmless the Indemnified
Party from and against any Losses arising from any such claim, action proceeding
or suit. Any Indemnified Party may, if it so desires, employ counsel at its own
expense to assist in the handling of such matters. Neither an Indemnifying
Party nor an Indemnified Party shall enter into any settlement, adjustment or
compromise of any such claim, action, proceeding or suit, or cease to defend
against the same, without the prior written consent of the other party, which
shall not be unreasonably withheld.
SECTION 11.7 Insurance. The Company shall insure its business and assets
in a manner consistent with prudent risk management practices. From time to
time, the Company may seek advice and expertise from the Shareholders concerning
its insurance and other risk management policies, practices and procedures.
32
ARTICLE XII
Representations and Warranties
SECTION 12.1 Representations and Warranties of Accuride. Accuride hereby
represents and warrants to IASA, GIR and the Company that, as of the Effective
Date, each and every one of the statements contained in this Section 12.1 is
true, correct and complete and does not omit any information necessary or
appropriate to make such statement not misleading or deceptive:
(a) Organization. Accuride is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware;
(b) Authorization of Transaction. Accuride has all requisite
corporate power and authority and has taken all corporate actions necessary to
authorize, execute and deliver this Agreement and the Exhibits and any other
agreements and documents contemplated herein and therein, to consummate the
transactions contemplated herein and therein, and to perform its obligations
hereunder and thereunder;
(c) Binding, Enforceable Agreement and Exhibits. This Agreement and
the Exhibits constitute valid and legally binding obligations of Accuride, and
are fully enforceable in accordance with their terms and conditions,
respectively;
(d) Noncontravention. Neither the execution and delivery of this
Agreement and the Exhibits, nor the consummation of the transactions
contemplated hereby, will: (I) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
of any government, governmental agency or court to which Accuride is subject, or
any provision of the Certificate of Incorporation or Bylaws of Accuride; or (ii)
conflict with, result in a breach of, constitute a default under, result in
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any Notice under, any agreement, contract, lease, license
instrument or other arrangement to which Accuride is a party or by which it is
bound or to which any of its assets is subject, or result in the imposition of
any Security Interest upon any of its assets.
SECTION 12.2 Representations and Warranties of IASA and GIR. Each of IASA
and GIR, jointly and severally, hereby represents and warrants to Accuride and
the Company, jointly and severally, that, as of the Effective Date, each and
every one of the statements contained in this Section 12.2 is true, correct and
complete and does not omit any information necessary or appropriate to make such
statement not misleading or deceptive:
33
(a) Organization. Each of IASA, GIR, Servicios AISA and Xxxxxx XXXX
is a corporation duly organized, validly existing and in good standing under the
laws of the United Mexican States;
(b) Authorization of Transaction. Each of IASA, GIR, Servicios AISA
and Xxxxxx XXXX has all requisite corporate power and authority and has taken
all corporate actions necessary or appropriate to authorize, execute and deliver
this Agreement and the Exhibits and any other agreements and documents
contemplated herein and therein, to consummate the transactions contemplated
herein and therein, and to perform its obligations hereunder and thereunder.
Without limiting the generality of the foregoing, the Boards of Directors, the
shareholders, and the bondholders and other creditors, of each of IASA and GIR,
duly have authorized the execution, delivery and performance of this Agreement
and all Exhibits and other attachments hereto and the individuals executing this
Agreement and the Exhibits on behalf of IASA and GIR, respectively, have been
duly authorized to do so, all as required and otherwise in accordance with
applicable Mexican laws and the bylaws and other governing documents of IASA and
GIR, respectively; and to further evidence certain of such authorizations, IASA
and GIR hereby attach the following documents to this Agreement as Exhibit BB,
and each of IASA and GIR further represents and warrants, jointly and severally,
that none of the following documents has been amended or revoked, but each
remains in full force and effect as of the Effective Date: (I) the Minutes of
the General Shareholders' Meeting of IASA, dated as of March 19, 1997, approving
the execution and delivery by IASA of this Agreement and the Exhibits; (ii) the
Minutes of the Meeting of the Bondholders of IASA, dated as of October 31, 1997,
approving the execution and delivery of this Agreement and the Exhibits and the
release of any and all Security Interests affecting the assets of IASA that are
to be transferred to the Company as provided in Section 4.1(a) of this
Agreement; (iii) the Power of Attorney granted to Ing. Xxxxxxxx Xxxxxxx Xxxxxxxx
by IASA as of December 3, 1996; and (iv) the Power of Attorney granted to
Xxxxxxxx Xxxxxxx Xxxxxxxx by GIR as of October 26, 1981.
(c) Binding, Enforceable Agreement and Exhibits. This Agreement and
the Exhibits constitute valid and legally binding obligation of each of IASA and
GIR, and are fully enforceable in accordance with their terms and conditions,
respectively.
(d) Noncontravention. Neither the execution and delivery of this
Agreement and the Exhibits, nor the consummation of the transactions
contemplated hereby, will: (I) violate any constitution, statute, regulation,
rule, injunction, judgment, norm, standard, order, decree, ruling, charge,
order, opinion or other restriction of any government, governmental agency or
court to which any of IASA or GIR is subject, or any provision of the bylaws of
any of IASA or GIR; or (ii) conflict with, result in a breach of, constitute a
default under, result in acceleration of, create in any party the right to
34
accelerate, terminate, modify or cancel or require any Notice under, any
agreement, contract, lease, license instrument or other arrangement to which
either or both of IASA and GIR are parties or by which either or both are bound
or to which any of the assets of either or both are subject, or result in the
imposition of any Security Interest upon any of the assets of either or both.
(e) Brokers' Fees. Neither IASA nor GIR has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Accuride,
the Company, Servicios AISA or Xxxxxx XXXX could become liable or obligated.
(f) Title to Assets; No Security Interests or Restrictions on
Transfer. IASA has and holds good and marketable title to all of the business
and all of the assets that it is to convey and transfer to the Company by means
of the Asset Assignment, Purchase and Sale Agreement, in accordance with Section
4.1(a) of this Agreement, free and clear of any and all Security Interests,
except those that will be removed by the Company's recording in the appropriate
Public Registries of Property the Security Interest Releases that IASA shall
deliver to the Company at the Closing; and each of IASA and GIR further
represents and warrants, jointly and severally, to Accuride and the Company,
that none of the assets to be transferred to the Company as provided in Section
4.1(a) of this Agreement is subject to any right of first refusal or any other
restriction on transfer of any kind whatsoever.
(g) Servicios AISA; Xxxxxx XXXX . Each of Servicios AISA and Xxxxxx
XXXX has issued 50,000 shares of capital stock, 49,999 shares of each of which
are owned by IASA, free and clear of any and all Security Interests, and 1 share
of each of which is owned by GIR, free and clear of any and all Security
Interests. Each of Servicios AISA and Xxxxxx XXXX is a corporation duly
organized, validly existing, and in good standing under the laws of the United
Mexican States. Each of Servicios AISA and Xxxxxx XXXX is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Servicios AISA and Xxxxxx XXXX
has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged and
in which it presently proposes to engage and to own and use the properties owned
and used by it. IASA has delivered to Accuride correct and complete copies of
the bylaws of Servicios AISA and of Xxxxxx XXXX, current as of the Effective
Date. All of the issued and outstanding shares of the capital stock of each of
Servicios AISA and Xxxxxx XXXX have been duly authorized and are validly issued,
fully paid up, and nonassessable. The minute books, the stock certificate
books, and the stock record books of each of Servicios AISA and Xxxxxx XXXX are
correct and complete. Neither of Servicios AISA or Xxxxxx XXXX is in default
under or in violation of any provision of its bylaws or of any agreement to
which either of them or their assets are
35
subject, and neither has any liabilities of any kind or description other
than normal seniority and severance liabilities that are customary and that
arise in the ordinary course of business under the Mexican federal labor law.
(h) Financial Statements. Attached hereto as Exhibit CC are the
following financial statements: (I) audited consolidated and unaudited
consolidating balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal year ended December 31, 1996, for
IASA, which (including the notes thereto) present fairly the financial condition
of IASA as of such date and the results of operations of IASA for such period,
are correct and complete, and are consistent with the books and records of IASA.
(i) Legal Compliance. Each of IASA, GIR, Servicios AISA and Xxxxxx
XXXX and their respective predecessors and Affiliates has complied with all
applicable laws (including statutes, rules, regulations, codes, norms,
standards, plans, injunctions, judgments, orders, decrees, rulings and charges
thereunder) of the United Mexican States, of the State of Nuevo Xxxx, and of the
Municipality of San Nicolas de los Xxxxx; and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or Notice has been
filed or commenced against any of them alleging any failure so to comply.
(j) Tax Matters.
(i) Each of IASA, GIR and Servicios AISA has filed all tax
returns that it was required to file under the laws of the United Mexican
States, of the State of Nuevo Xxxx and of the Municipality of San Nicolas de los
Xxxxx. All such tax returns were correct and complete in all respects. All
taxes owed by any of IASA, GIR and Servicios AISA (whether or not shown on any
tax return) have been paid. No claim has ever been made by any authority in a
jurisdiction where any of IASA, GIR or Servicios AISA does not file tax returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of any of IASA, GIR, Servicios AISA or
Xxxxxx XXXX that arose in connection with any failure or alleged failure to pay
any tax.
(ii) Each of IASA, GIR, Servicios AISA and Xxxxxx XXXX has
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor or shareholder thereof, or to any other Person.
(iii) No director or officer (or employee responsible for tax
matters) of any of IASA, GIR, Servicios AISA or Xxxxxx XXXX expects any
authority to assess any additional taxes for any period for which tax returns
have been filed. There is no dispute or
36
claim concerning any tax liability of any of IASA, GIR, Servicios AISA or
Xxxxxx XXXX either: (A) claimed or raised by any authority in writing; or
(B) as to which any of the IASA, GIR, Servicios AISA or Xxxxxx XXXX directors
and officers has knowledge based upon personal contact with any agent of such
authority.
(k) IASA Plant. IASA has good and marketable title to the IASA
Plant, free and clear of any Security Interest, easement, covenant or other
restriction except liens arising from bonds secured by certain property of IASA,
including the IASA Plant, and except recorded easements, covenants and other
restrictions that do not impair the current use, occupancy or value or the
marketability of title of the IASA Plant. There are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to the
IASA Plant or other matters affecting adversely the current use, occupancy, or
value thereof. All facilities at the IASA Plant have received all approvals of
governmental authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules and regulations.
(l) Intellectual Property. IASA owns all intellectual and industrial
property necessary or desirable for the operation of its business as presently
conducted. Each item of intellectual property owned or used by IASA immediately
prior to the Closing hereunder and relating in any manner to the Wheel business
will be available for use by the Company on identical terms and conditions
immediately subsequent to the Closing hereunder.
(m) Tangible Assets. IASA owns all buildings, machinery, equipment
and other tangible assets necessary for the conduct of the Wheel Division
business as presently conducted. Each such tangible asset is free from defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used and is
proposed to be used.
(n) Inventory. The Inventory consists of inventories of Wheels, of
raw materials and supplies, of purchased and manufactured parts, and of goods,
goods-in-progress and finished goods, all of which are merchantable and fit for
the purpose for which procured or manufactured, and none of which are
slow-moving, obsolete, damaged or defective.
(o) Litigation. IASA is not subject to any material outstanding
injunction, judgment, order, decree, ruling or charge, and IASA is not a party
or threatened to be made a party to any action, suit, proceeding, hearing or
investigation of, in, or before any court
37
or quasi-judicial or administrative agency of any federal, state, municipal
or foreign jurisdiction or before any arbitrator. No actions, suits,
proceedings, hearings, and investigations in which IASA is involved will
result in any adverse change in the business, financial condition,
operations, results of operations or future prospects of the Wheel Division
business and assets, or of the Company, or of Servicios AISA, or of Xxxxxx
XXXX.
(p) Product Warranty. Each Wheel sold or delivered by IASA has been
in conformity with all applicable contractual commitments and all express and
implied warranties, and IASA has no liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against IASA giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, leased, or delivered by IASA is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale.
(q) No Product Liability. IASA has no liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against IASA giving rise to
any liability) arising out of any injury to individuals or property as a result
of the ownership, possession or use of any Wheel or other product manufactured,
sold, leased, or delivered by IASA or the Wheel Division.
(r) Employees. No executive, key employee or group of employees has
any plans to terminate employment with IASA, Servicios AISA or Xxxxxx XXXX, to
the best of IASA's and GIR's knowledge.
(s) Environment, Health, and Safety. None of IASA, Servicios AISA or
Xxxxxx XXXX has handled or disposed of any substance, arranged for the disposal
of any substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the Company
or Servicios AISA or Xxxxxx XXXX for damage to any site, location or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any environmental, health
or safety law.
(t) GIR is the direct, majority shareholder of IASA, and IASA is a
direct subsidiary of GIR.
(u) Full Disclosure. The representations and warranties contained in
this Section 12.2 do not contain any untrue statement of any fact or omit to
state any fact
38
necessary in order to make the statements and information contained in this
Section 12.2 not misleading.
ARTICLE XIII
Conditions Precedent
SECTION 13.1 Conditions Precedent to Obligations of Accuride. The
obligation of Accuride to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in Section 12.2
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) each of IASA and GIR shall have performed and complied with all
of the covenants made by them hereunder and in the Exhibits, in all material
respects, through the completion of the Closing;
(c) no Security Interest shall encumber the title to any of the
business or assets that IASA is to transfer to the Company as provided in
Section 4.1(a), except such Security Interests as may be released merely by the
Company's recording of Security Interest Releases in the Public Registries of
Property for the appropriate Municipalities corresponding thereto;
(d) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, municipal or other jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would: (I)
prevent consummation of any of the transactions contemplated by this Agreement
or the Exhibits; (ii) cause any of the transactions contemplated by this
Agreement or the Exhibits to be rescinded following consummation; or (iii)
affect adversely the right of the Company to own the Wheel Division business and
assets, to operate the Wheel Division business and to control Servicios AISA and
Xxxxxx XXXX;
(e) the Company shall have obtained the Loan, upon terms and
conditions satisfactory to it, at its sole discretion, and otherwise in
accordance with the Initial Business Plan;
39
(f) all actions to be taken by IASA or GIR in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to Accuride.
Each of Accuride and the Company, or both, may waive any condition precedent
specified in this Section 13.1, but only by executing and delivering to IASA and
GIR a writing clearly stating the scope of the waiver.
SECTION 13.2 Conditions Precedent to Obligations of IASA and GIR. The
obligations of IASA and GIR, respectively, to consummate the transactions to be
performed by them in connection with the Closing are subject to satisfaction of
the following conditions precedent:
(a) the representations and warranties set forth in Section 12.1
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) Accuride shall have performed and complied with all of the
covenants made by it hereunder, and in the Exhibits, in all material respects,
through completion of the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would: (i)
prevent consummation of any of the transactions contemplated by this Agreement
or the Exhibits; or (ii) cause any of the transactions contemplated by this
Agreement or the Exhibits to be rescinded following consummation;
(d) the Company shall have obtained the Loan, upon terms and
conditions satisfactory to it, at its sole discretion, and otherwise in
accordance with the Initial Business Plan;
(e) all actions to be taken by Accuride in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to IASA and GIR.
Each of IASA and GIR may waive any condition precedent specified in this Section
13.2, but only by executing and delivering to Accuride a writing clearly stating
the scope of the waiver.
40
ARTICLE XIV
Term, Termination & Phase-Out
SECTION 14.1 Term. The Term of this Agreement shall commence on the
Effective Date hereof and, unless otherwise terminated sooner, shall end upon
any effective sale or other transfer by one Shareholder of all of its shares of
capital stock of the Company, or following the dissolution and completion of
liquidation of the Company in accordance with Chapter Eighth of the Bylaws,
whichever is first; provided, however, that this Section 14.1 shall not
terminate, limit or otherwise affect any provision of this Agreement that the
parties clearly have indicated should survive for any period that is or may be
longer than the Term of this Agreement.
SECTION 14.2 Restriction on Encumbrance and Transfer of Shares. During
the Term of this Agreement, no Shareholder may grant any Security Interest in or
upon, or otherwise encumber or offer to encumber, any of its shares of capital
stock of the Company, except upon the prior written authorization of both
Shareholders. Except as otherwise provided in Sections 14.3 and 14.4 with
respect to a share transfer resulting from an unresolved fundamental dispute
between the Shareholders, from the Effective Date through December 31, 2000 no
Shareholder may sell, gift, convey, assign, endorse, or otherwise transfer or
offer to transfer, any of its shares of capital stock of the Company. Beginning
January 1, 2001, any Shareholder may transfer its capital stock in the Company
to a third party, but only upon the prior written authorization of the Board,
which shall be granted if the requirements set forth in Article Tenth of the
Bylaws have been met, or upon the written authorization of both Shareholders of
the Company, or by means of a share transfer under Sections 14.3 and 14.4 caused
by an unresolved fundamental dispute between the Shareholders. Any attempted
grant of a Security Interest in or upon, or other encumbrance or offer of
encumbrance in or upon, or any attempted sale, gift, conveyance, assignment,
endorsement or other transfer or offer of transfer of, any of the shares of the
capital stock of the Company, made in breach of any of the provisions of Chapter
Third of the Bylaws, shall be null and void from the beginning.
SECTION 14.3 Fundamental Disagreement Between Shareholders; Notice of
Intent to Terminate.
(a) Upon the occurrence of any dispute between the Shareholders (but
not between any other parties hereto) with respect to any major aspect of the
operation of the Company, the Shareholder that considers itself aggrieved may
request that the matter be placed upon the agenda for consideration by the Board
at the next regularly scheduled Board meeting; and whenever such a request is
made, the Board shall place the matter
41
upon the agenda as requested. If that Board meeting fails to produce a
mutually acceptable resolution of the dispute, then a special Board meeting
automatically shall be called and held not more than forty (40) Days and not
less than thirty (30) Days after the prior Board meeting, the sole purpose of
which shall be to resolve the issue in dispute.
(b) Any fundamental dispute between the Shareholders that has not
been resolved as provided in Section 14.3(a) shall be submitted to mandatory
mediation upon the demand of either Shareholder, any such mediation to be
conducted under the guidance of the American Arbitration Association in Dallas,
Texas U.S.A., the Shareholder that demands the mediation to bear the full
expense of the mediation services, but each Shareholder to bear all other costs
of its own participation in the mediation.
(c) In the event that any mediation under Section 14.3(b) fails to
produce a mutually acceptable resolution to the fundamental disagreement within
thirty (30) Days after the commencement of the mediation, then the aggrieved
Shareholder may, at its discretion, deliver to the other Shareholder a Notice of
Intent to Terminate, which must contain the following information and supporting
documents:
(i) the name of the Shareholder that is delivering the Notice of
Intent to Terminate;
(ii) the date of the Notice of Intent to Terminate;
(iii) the name and address of the Shareholder and its officer
to whom the Notice of Intent to Terminate is being delivered;
(iv) a brief description of the fundamental dispute and the
decisions, if any, of the Board directed at resolving the dispute, and why the
Shareholder considers the results unsatisfactory;
(v) a brief description of the results of the mediation, and why
the Shareholder considers them unsatisfactory;
(vi) a statement that the notifying Shareholder thereby is making
a binding and enforceable offer to sell all (but not less than all) of its
shares of the capital stock of the Company to the other Shareholder (which shall
include a binding and enforceable offer to sell at least one (1) share, but not
more than one percent (1%) of its shares, to any nominee of the other
Shareholder) for a fixed price per share, payable in immediately available
funds, in United States dollars, ten (10) Days after any acceptance of such
offer;
42
(vii) a statement that the notifying Shareholder or its
nominee thereby also is making, simultaneously with the offer referred to in
Section 14.3(c)(vi), a binding and enforceable offer to purchase all (but not
less than all) of the shares of the capital stock of the Company held by the
other Shareholder, at the same fixed price per share as that referred to in
Section 14.3(c)(vi), also payable in immediately available funds, in United
States dollars, ten (10) Days after acceptance of such offer;
(viii) the Notice of Intent to Terminate shall contain the
original signature of an officer of the notifying Shareholder who is duly
authorized on behalf of the notifying Shareholder to make the offers referred
to in Sections 14.3(c)(vi) and (vii); and
(ix) the Notice of Intent to Terminate shall be accompanied by an
irrevocable letter of credit confirmed by a reasonably acceptable commercial
bank in the same country as the domicile of the Shareholder to which the Notice
of Intent to Terminate is being transmitted, such letter of credit to guarantee
full payment of the full purchase price for the shares to the Shareholder
receiving the Notice of Intent to Terminate in the event that such Shareholder
accepts the offer referred to in Section 14.3(c)(vii), the only condition to
drawing upon such letter of credit to be the duly authorized endorsement and
delivery of the corresponding share certificates representing the shares being
sold.
SECTION 14.4 Response to Notice of Intent to Terminate. Within twenty
(20) Days after receiving any Notice of Intent to Terminate containing the
information required in Section 14.3, the responding Shareholder shall deliver
to the notifying Shareholder a Response Notice, which must contain the following
information:
(a) the name of the Shareholder that is responding;
(b) the date of the Response Notice;
(c) the name and address of the Shareholder and its officer to whom
the Response Notice is being delivered;
(d) a statement that the responding Shareholder either accepts the
offer referred to in Section 14.3(c)(vi), or that it accepts the offer referred
to in Section 14.3(c)(vii), and that a binding contract thereby has been formed
for the purchase or sale of shares upon the terms and conditions indicated;
(e) the Response Notice shall contain the original signature of an
officer of the responding Shareholder who is duly authorized on behalf of the
responding Shareholder to accept either of the offers referred to in Section
14.3(c)(vi) and (vii); and
43
(f) if the Response Notice indicates that the responding Shareholder
is accepting the offer referred to in Section 14.3(c)(vi), then the Response
Notice must be accompanied by an irrevocable letter of credit confirmed by a
reasonably acceptable commercial bank in the same country as the domicile of the
Shareholder to which the Response Notice is being transmitted, said letter of
credit to guarantee payment of the full purchase price for the shares to the
Shareholder that receives the Response Notice, the only condition to drawing
upon such letter of credit to be the duly authorized endorsement and delivery of
the corresponding share certificates representing the shares being sold.
In the event that the Shareholder receiving a Notice of Intent to Terminate does
not deliver a Response Notice to the notifying Shareholder within twenty (20)
Days after receipt of the Notice of Intent to Terminate, then for a period of
twenty (20) additional Days the notifying Shareholder again shall notify the
Shareholder that should have responded that the former either will purchase all
the shares of the Company held by the Shareholder that should have responded, or
that it will sell all of its shares of the Company to the Shareholder that
should have responded, at the price previously stated in the Notice of Intent to
Terminate, which additional Notice shall, under the circumstances, constitute
the formation of a binding contract between the Shareholders for the purchase or
sale of such shares.
SECTION 14.5 Closing of Purchase of Shares. The closing of any purchase
or sale transaction for shares of the Company in accordance with this Article
XIV shall be completed not more than thirty (30) Days after the formation of a
binding contract therefor, regardless of how the binding agreement therefor may
be formed under Section 14.4.
SECTION 14.6 Phase-Out Services. In the event of any termination of this
Agreement arising from any sale by one Shareholder of all its shares in the
Company in accordance with Sections 14.3 through 14.5, then the Shareholder that
is selling its shares of stock in the Company shall continue to provide to the
Company, for a period of sixty (60) Days following such transfer, any and all
services that it provided to the Company prior to the transfer ("Phase-Out
Services").
ARTICLE XV
Dispute Resolution
SECTION 15.1 Pre-Arbitration Efforts to Resolve Disputes. Each of
Accuride, IASA, GIR and the Company agrees to attempt in good faith to resolve
any dispute, controversy or claim that may arise in any manner whatsoever with
respect to this Agreement, the Joint
44
Venture, the Company, or any or all other agreements, contracts, arrangements
or other understandings relating in any manner to this Agreement, any of the
Exhibits hereto, or any other document contemplated herein or therein; and
each party hereby designates its chief executive officer as the individual
who has primary authority and responsibility therefor. Each such designated
officer of a party involved in any such dispute, controversy or claim shall
attempt in good faith to resolve such matter within thirty (30) Days after
becoming aware of the dispute.
SECTION 15.2 Requirement of Binding Arbitration; Scope. Each and every
dispute, controversy or claim arising in any manner out of or in any way
relating to any provision of this Agreement (including any Exhibit that contains
data and business information primarily and is not drafted in the form of a
stand-alone contract), or arising in any manner out of or in any way relating to
the validity, interpretation, performance, breach, enforceability or termination
hereof or thereof (including this Article XV), that is not settled amicably
within the thirty (30) Day period referred to in Section 15.1, shall be solely
and finally settled by binding, non-appealable arbitration at Dallas, Texas,
U.S.A. not later than six (6) months following the initial Notice of arbitration
(which Notice shall be given in writing to the party against whom the claim is
being made, and to the arbitration administrator, by the party initiating the
arbitration) in accordance with the International Arbitration Rules of the
American Arbitration Association ("AAA"), as modified by the provisions of this
Article XV.
SECTION 15.3 Selection of Arbitrators. Each and every arbitration
hereunder shall be conducted by a panel of three (3) arbitrators. Accuride
shall select one arbitrator, and IASA and GIR together shall select one
arbitrator, not later than ten (10) Days after the initial Notice of
arbitration. The AAA shall have power to select either or both such arbitrators
if they have not been selected by the parties as required within the time
specified. Not later than twenty (20) Days after the selection and appointment
of the two arbitrators, the two appointees shall choose a third arbitrator to
serve as the chairperson of the arbitration panel. If the two party-appointees
cannot agree regarding the selection of the third arbitrator within such twenty
(20) Day period, then the AAA shall have power to select the third arbitrator.
Each arbitrator appointed to hear any dispute, controversy or claim shall have
no relationship or connection with any party to this Agreement or with any
Affiliate of any party hereto or with legal counsel to any such party or
Affiliate. In the event of the death or disability of an arbitrator, a new
arbitrator shall be selected in the same manner as, and by the same Person or
Persons that selected, the previous arbitrator.
SECTION 15.4 Governing Law and Arbitration Rules. The provisions of this
Article XV, the International Arbitration Rules of the AAA, and the contract and
other substantive laws of the State of Delaware, as modified by the terms of
this Article XV, shall govern the
45
arbitration of any and all disputes arising hereunder or in connection
herewith, and in the event of any conflict between the laws of Delaware and
the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. (1990) (the
"Arbitration Act"), in connection with any arbitration of any dispute
hereunder, it is the express intent of the parties that the substantive laws
of Delaware, as modified by this Article XV, shall govern to the maximum
extent permitted by law; provided, however, that any and all disputes,
controversies and claims arising primarily or entirely out of or in
connection with the interpretation, performance, breach or enforceability of
the Company's Bylaws shall be governed by the substantive laws of the United
Mexican States.
SECTION 15.5 Binding Arbitration. The award rendered in connection with
any arbitration conducted in accordance with this Article XV shall be final and
binding upon the parties, and any judgment upon such award may be entered and
enforced by any court of competent jurisdiction in any country without any
further proceedings on the merits of the case. The parties agree that the award
of the arbitral tribunal shall be the sole and exclusive remedy between them
regarding any and all claims and counterclaims with respect to the subject
matter of the arbitrated dispute. The parties hereby waive all jurisdictional
defenses in connection with any arbitration instituted under this Article XV and
the enforcement of any award or judgment rendered pursuant thereto.
SECTION 15.6 Explanation of Award. Promptly following the rendering of an
order or award in the arbitration of any disputed matter hereunder, the
arbitrators shall issue to the interested parties hereunder a written
explanation in the English language, with a certified translation thereof in the
Spanish language, of the reasons for such order or award and a full statement of
the facts found and the rules of law applied in reaching the decision.
SECTION 15.7 Enforcement of Award. With respect to any award issued by
the arbitrators pursuant to this Agreement, the parties expressly agree: (a) to
the prosecution of an action by one or more parties against any other party or
parties in any court of the United States of America, or in any court of the
State of Nuevo Xxxx or of the United Mexican States located in Monterrey, Nuevo
Xxxx, to confirm and enforce such arbitration award; (b) that any such
arbitration award shall constitute conclusive proof of the validity of the
determinations of the arbitrators underlying such award; and ((c)) that any
court of the United States of America, or any court of the State of Nuevo Xxxx
or of the United Mexican States, may enter judgment upon and enforce such award,
whether pursuant to the Inter-American Convention on International Commercial
Arbitration (9 U.S.C. Section 301-307), the Arbitration Act, the other laws of
the United States of America or of the United Mexican States or of the State of
Nuevo Xxxx, respectively, or otherwise, without any further proceedings on the
merits of the case.
46
SECTION 15.8 Language of Arbitration. All proceedings in any arbitration
conducted hereunder shall be conducted in the English language, and all
documents, exhibits and other evidence submitted in Spanish by any party shall
be accompanied by a certified English translation thereof; provided, however,
that upon request by any party to the arbitration all such proceedings, hearings
and evidence shall be translated simultaneously into the Spanish language for
the convenience of such party.
SECTION 15.9 Discovery; Presentation of Case. Not later than sixty (60)
Days following the delivery of the Notice of arbitration, each side shall
produce and deliver to the arbitrators and to the other parties copies of all
documents and witness testimony upon which it plans to rely, as well as a list
identifying such documents and witnesses, which list shall contain all
information necessary for a full understanding of the legitimate issues raised
in the arbitration, including, without limitation, the following: (a) a written
statement of the factual basis of the claim or defense and the legal theories
upon which each claim or defense is based; (b) the names and addresses of all
individuals, including witnesses whom the disclosing party expects to call to
present testimony or other evidence during the arbitration proceeding and other
individuals whom the party believes may have knowledge or information relevant
to the arbitration, a description of the nature of the knowledge or information
that each such individual is believed to possess, and a summary of each such
witness' expected testimony; ((c)) the names and addresses of all individuals
who have given statements, along with copies of those statements; (d) a written
computation of the measure of damages alleged by the disclosing party and the
documents or summary of the testimony upon which such computation or measure is
based; and (e) the existence, location, custodian and general description of any
relevant documents or other tangible evidence that the disclosing party plans to
use at the arbitration hearing. Each side shall be permitted five (5) hours of
witness depositions, to be allocated as that side sees fit. No interrogatories
or requests for admission shall be permitted. The arbitration hearing shall
take place no later than ninety (90) Days following the initial Notice of
arbitration. Each side shall have no more than ten (10) hours to make its
arguments and present its evidence to the arbitration panel. The parties also
may submit pre- and post-hearing memoranda, each not to exceed twenty (20)
double-spaced pages.
SECTION 15.10 Confidentiality. All papers, documents and other evidence,
whether written or oral, filed with or presented to the arbitrators, shall be
deemed by the parties and the arbitrators to be confidential information. No
party, witness or arbitrator shall disclose in whole or in part to any other
Person any confidential information submitted in connection with arbitration
proceedings hereunder, except to the extent: (a) required by applicable law or
regulation; (b) reasonably necessary to assist counsel in or preparation for
arbitration of the dispute; or ((c)) that such "confidential" information was
previously known or subsequently became known to the disclosing party, without
47
restrictions on disclosure, that it was developed independently by such
disclosing party, or that it became publicly known through no fault of the
disclosing party.
SECTION 15.11 Arbitration Expenses. The non-prevailing party in the
arbitration shall bear the fees and expenses of the arbitrators, the reasonable
costs of arbitration, the expense of any award rendered therein and of its
enforcement, and the reasonable attorneys' fees and expenses of the prevailing
party; and the non-prevailing party shall reimburse the prevailing party for all
such fees, costs and expenses incurred by the prevailing party prior to the date
of the award. All expenses, fees, costs and charges, and any award, shall be
expressed in United States dollars.
SECTION 15.12 Integrated Arbitration Clause. To the extent, if any, that
this Article XV may be deemed a separate contract, independent from this
Agreement, Sections 16.5 and 16.11 (concerning Notices, and governing law,
respectively) shall be deemed incorporated into this Article XV by this
reference.
ARTICLE XVI
General Provisions
SECTION 16.1 Survival of Representations and Warranties. The
representations and warranties in this Agreement and in any other document
executed and delivered in connection with the transactions contemplated herein
shall survive the Closing and remain in full force and effect for the longer of
the following periods: (a) as long as it is possible that any party to this
Agreement could suffer any Loss or Losses of the kind referred to in Article XI;
or (b) five (5) years after the date of any termination of this Agreement.
SECTION 16.2 Public Disclosure. No press release or similar public
announcement or communication shall be made or caused to be made concerning the
execution or performance of this Agreement unless such announcement specifically
has been approved in advance by each of Accuride and IASA, or unless applicable
securities laws require such announcement to be made and the announcing party is
unable to contact and obtain the approval of the other within a reasonable time
using reasonable efforts; but in each such case the announcing party shall send
a copy of the announcement to the other party at its address set out in this
Article XVI.
48
SECTION 16.3 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their successors in interest and any permitted assignees, unless otherwise
expressly provided herein.
SECTION 16.4 Further Assurances. Each of the parties, upon the request of
any other party, shall execute and deliver, or cause to be executed and
delivered, any and all additional documents and instruments, and shall take or
cause to be taken any and all further actions, that are reasonably necessary to
consummate the transactions contemplated hereunder.
SECTION 16.5 Notices. Any and all notices, requests, demands, claims or
other communications or presentations of information ("Notice") required or
permitted under this Agreement shall be given in writing (including facsimile
transmissions) and sent by mail, facsimile, courier or in person, as follows:
(a) if to Accuride, addressed to:
Accuride Corporation
0000 Xxxxx Xxxx
Post Office Box 40
Henderson, Kentucky, U.S.A. 42420-0040
Attention: President
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Dodge Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, X.X.X. 00000
Attention: Vice President and General Counsel
Fax No.: (000) 000-0000
49
(b) if to IASA or GIR, addressed to:
Industria Automotriz, S.A. de C.V.
Avenida Universidad 1011 Norte, Planta Baja
San Xxxxxxx xx xxx Xxxxx, Xxxxx Xxxx
X.X. 00000 Xxxxxx
Attention: Chairman
Fax No.: 00-0-000-0000
with a copy to:
Grupo Industrial Xxxxxxx, X.X.
Avenida Universidad 1004 Norte
San Xxxxxxx xx xxx Xxxxx, Xxxxx Xxxx
X.X. 00000 Xxxxxx
Attention: Chairman
Fax No.: 00-0-000-0000; and
(c) if to the Company, addressed to:
Accuride de Mexico, S.A. de C.V.
Xxxxxxx Xxxxxxxxxxx 0000 Xxxxx, Xxxxxx Xxxx
San Xxxxxxx xx xxx Xxxxx, Xxxxx Xxxx
X.X. 00000 Xxxxxx
Attention: Director General
Each party may specify a different address by giving Notice as aforesaid to the
other parties. All Notices shall be deemed to have been duly given or made when
delivered in person, or five (5) Days after being deposited with DHL Courier or
another similar courier, correctly addressed with postage prepaid, or when sent
by facsimile transmission, correctly addressed and receipt acknowledged. Any
party may change the address to which Notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
Notice in the manner set forth herein.
SECTION 16.6 Exhibits; Headings. All Exhibits to this Agreement shall be
deemed incorporated herein and construed with and as an integral part hereof.
The Article and Section headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation hereof in any
manner whatsoever.
50
SECTION 16.7 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed to be an original, but
all of which, taken together, shall constitute one and the same instrument.
SECTION 16.8 No Assignment. No party shall assign any or all of its
rights under this Agreement to any other Person without the express written
consent of all the other parties hereto, which consent may be withheld for any
or no reason. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and any permitted assignees.
SECTION 16.9 Severability. If any term or other provision of this
Agreement is found by a competent authority to be invalid, illegal or incapable
of being enforced, all other conditions and provisions of this Agreement
nevertheless shall remain in full force and effect. Upon any determination that
any term or other provision hereof is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement to
effect the original intent of the parties as closely as possible.
SECTION 16.10 Amendment; Waiver. This Agreement shall not be amended or
modified except by a writing duly executed by all parties hereto. Any waiver of
any term or condition of this Agreement shall be effective only if in writing
and signed by a duly authorized officer thereof, but no such waiver shall be
construed as a waiver of any subsequent default, misrepresentation or breach of
the same term or condition or as a waiver of any other term or condition of this
Agreement.
SECTION 16.11 Governing Law. Except as otherwise provided in Section
15.4, this Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule of any jurisdiction that would cause the application of
the laws of any jurisdiction other than Delaware. All Exhibits hereto shall be
governed by and construed in accordance with the laws of the jurisdiction
specified therein; provided, however, that in the case of any Exhibit that does
not contain a choice of law provision, the following choice of law rules shall
apply: (a) if such Exhibits contain data and business information only (i.e.,
Exhibits that have not been prepared in the usual form of a stand-alone
contract), they shall be governed by and construed in accordance with the laws
of the State of Delaware; and (b) if such Exhibits constitute stand-alone
contracts, and if they are between only Persons that are of Mexican nationality,
then they shall be governed by and construed in accordance with the laws of the
United Mexican States and of the State of Nuevo Xxxx, Mexico.
SECTION 16.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent
51
or interpretation arises, this Agreement shall be construed as having been
drafted jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state,
municipal or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean "including without limitation."
The singular forms of words used herein shall include the plural, and the
plural shall include the singular, as the context reasonably may require.
The parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating
to the same subject matter (regardless of the relative levels of specificity)
that the party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty or
covenant. All rights and remedies described in or available to any party
under this Agreement shall be cumulative and in addition to all other rights
and remedies thereof, unless otherwise specifically provided herein.
SECTION 16.13 Incorporation of Exhibits. The Exhibits, schedules and any
and all other documents or materials attached to this Agreement are incorporated
herein by reference and made a part hereof; but, to the extent that any Exhibit
contains a governing law provision or arbitration or other dispute resolution
provision, then each such provision of such Exhibit shall be controlling with
respect thereto, and Exhibits that do not contain any such provisions shall be
governed as provided in Section 16.11.
SECTION 16.14 Specific Performance. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event that any
of the provisions of this Agreement are not performed in accordance with their
specific terms, or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce this
Agreement specifically, in addition to any and all other remedies to which it
may be entitled under applicable law.
SECTION 16.15 Compliance with Law. Each and every party to this Agreement
agrees to comply with all applicable laws, statutes, codes, rules and
regulations in the conduct of its business in connection with the transactions
contemplated hereunder.
SECTION 16.16 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, correspondence, undertakings and communications, both written and
oral, among the parties with respect to
52
the subject matter hereof, including that certain Letter of Intent re: Joint
Venture Between Accuride Corporation and Industria Automotriz, S.A., dated
June 30, 1997 and executed by Accuride, IASA and GIR. There are no
restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein.
IN WITNESS WHEREOF, Accuride, IASA, GIR and the Company have entered into
this Agreement as of the date first set forth above.
ACCURIDE CORPORATION,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: President
GRUPO INDUSTRIAL XXXXXXX, X.X.,
a Mexican corporation
By /s/ Xxxxxxxx Xxxxxxx Xxxxxxxx
----------------------------------
Name: Ing. Xxxxxxxx Xxxxxxx Xxxxxxxx
Title: Director General
INDUSTRIA AUTOMOTRIZ, S.A. DE C.V.,
a Mexican corporation
By /s/ Xxxxxxxx Xxxxxxx Xxxxxxxx
---------------------------------
Name: Ing. Xxxxxxxx Xxxxxxx Xxxxxxxx
Title: Chairman of the Board
ACCURIDE DE MEXICO, S.A. DE C.V.,
a Mexican corporation
By /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Director General
53
List of Exhibits
Exhibit Name First Reference
------- ---- ---------------
A Defined Terms Section 1.1
B Escritura Constitutiva of the Company, Sections 3.2, 3.6
including Bylaws and Powers of Attorney
(Spanish)
C Bylaws of the Company (English Section 3.2
translation)
D Share Certificate Issued to Accuride Section 3.4
(25,500 Shares of Fixed Capital Stock
of the Company); and Share Certificate
Issued to IASA (24,500 Shares of Fixed
Capital Stock of the Company)
E Taxpayer Identification Number Section 3.7
(Spanish)
F PITEX Application (Spanish) Section 3.8
G National Supplier Application (Spanish) Section 3.9
H Asset List (Spanish) Section 4.1(a)(I)
I Asset Assignment, Purchase and Sale Section 4.1(a)
Agreement
J Note 1 (Spanish) Section 4.1(d)
K Note 2 (Spanish) Section 4.1(d)
L Share Certificate Issued to IASA Section 4.1(e)
(36,750,000 Shares of Variable Capital
Common Stock of the Company) (Spanish);
Minutes of Extraordinary Shareholders'
Meeting Approving the Issuance Thereof
(Spanish); Copy of Note 1 (canceled)
(Spanish)
M Share Certificate Issued to Accuride Section 4.1(g)
(38,250,000 Shares of Variable Capital
Common Stock of the Company) (Spanish);
Minutes of Extraordinary Shareholders'
Meeting Approving the Issuance Thereof
(Spanish); Copy of Note 2 (canceled)
(Spanish)
N Note 3 (Spanish) Section 4.2
O Initial Business Plan Section 4.3
P Company/IASA Equipment Bailment Section 4.4
Agreement (Spanish)
Q Wheel Requirements Agreement Section 4.5
R Stock Purchase Agreement and Share Section 4.6
Certificate(s) (Company's purchase of
49,999 shares of capital stock of
Servicios AISA); Stock Purchase
Agreement and Share Certificate
(Company's Nominee's Purchase of 1
share of capital stock of Servicios
AISA) (Spanish)
S San Nicolas Office Leases (Spanish) Section 4.7
T Mexico, D.F. Office Lease (Spanish) Section 4.8
U Exclusive United States/Canada Section 4.9(a)
Commercial Mediator Agreement
V Exclusive Mexico/Latin America Section 4.9(b)
Commercial Mediator Agreement
W Accuride Tradename and Trademark Section 4.10
License; IASA Tradename and Trademark
License
X Accuride/Company Technical Services Section 4.11
Agreement
Y IASA/Company Technical Services Section 4.12
Agreement (Spanish)
Z Wheelmaking Equipment Section 5.9
AA Labor Plan Section 8.1
BB Minutes of the General Shareholders' Section 12.2(b)
Meeting of IASA, dated as of March 19,
1997 (Spanish); Minutes of the Meeting
of the Bondholders of IASA, dated as of
October 31, 1997 (Spanish); Power of
Attorney granted to Ing. Xxxxxxxx
Xxxxxxx Xxxxxxxx by IASA as of December
3, 1996 (Spanish); and Power of
Attorney granted to Xxxxxxxx Xxxxxxx
Xxxxxxxx by GIR as of October 26, 1981
CC Financial Statements of IASA Section 12.2(h)
Exhibit A To Joint Venture Agreement
DEFINED TERMS
1. "AAA" shall mean American Arbitration Association.
2. "Accuride" shall mean Accuride Corporation, a Delaware corporation, and any
successor thereto.
3. "Accuride/Company Technical Services Agreement" shall mean the agreement
by and between Accuride and the Company, under which Accuride shall
provide certain technical services to the Company.
4. "Accuride Tradename and Trademark License" shall mean the agreement
whereby Accuride grants to the Company a non-exclusive license to use
for the Term of the Agreement Accuride's tradename and any and all
trademarks it may own that relate in any manner to products or services
connected with the Wheel business.
5. "Affiliate" shall mean and include, with respect to any other Person,
each and every natural person, corporation, partnership, limited
liability company, joint venture, trust, institution, association and
other business entity of any kind or description, whether now existing
or hereafter formed, together with its respective directors, officers,
partners, members, trustees, employees and other agents and its
respective successors and assigns, that directly or indirectly controls,
is controlled by, or is under common control with, such other Person.
6. "Agreement" shall mean the Joint Venture Agreement made as of the
Effective Date, by and among Accuride, IASA, GIR and the Company, to
which this Exhibit A is attached.
7. "Alternate" shall mean, with respect to any official of the Company, the
individual selected and empowered, in accordance with the Bylaws and the
Agreement, to act in the place and stead of such official whenever he or
she is absent or otherwise unable to perform his or her duties.
8. "Annual Business Plan" shall mean the written business plan for the
Company that is to be approved on an annual basis by the Board, and
which is to consist of a one-year operating plan, a three-year capital
expenditure plan and a five-year strategic plan.
9. "Arbitration Act" shall mean the Federal Arbitration Act of the United
States of America, 9 U.S.C. Section 1, et seq. (1990).
10. "Asset Assignment, Purchase and Sale Agreement" shall mean the agreement
attached to the Agreement as Exhibit I, which is more particularly
described in Section 4.1(a) of the Agreement.
11. "Asset List" shall mean the list detailing certain assets that IASA
shall sell, bargain, transfer, convey and assign to the Company at
Closing, free and clear of any and all Security Interests.
12. "Automotive Decree" shall mean the Decreto para el fomento y
modernizacion de la Industria Automotriz, Diario Oficial de la
Federacion, II-XII-89, along with its subsequent amendment, the Decreto
que reforma y adiciona el diverso para el fomento y modernizacion de la
Industria Automotriz, Diario Oficial de la Federacion, 31-V-1995, and
any and all amendments and successors thereto.
13. "Bank" shall mean Citibank Mexico, S.A., the bank from which the Company
has received a commitment to fund the Loan to the Company at Closing.
14. "Board" shall mean the Board of Directors of the Company.
15. "Bylaws" shall mean the Estatutos Sociales of the Company, which have
been formalized and recorded in connection with the formation of the
Company as part of the Escritura Constitutiva, and which describe the
Company's corporate purpose, capitalization and administration.
16. "Closing" shall mean the consummation of the transactions contemplated
in the Agreement and in the Exhibits, as provided in Article VI of the
Agreement.
17. "Closing Date" shall mean the date upon which the Closing shall occur,
which is November 5, 1997.
18. "Company" shall mean Accuride de Mexico, S.A. de C.V., a Mexican
sociedad anonima de capital variable or variable capital corporation,
which is the corporate entity through which the Joint Venture is to
exist and conduct its business, and any successor thereto.
19. "Company Bank Instructions" shall mean the irrevocable written
instructions of the Company to the Bank at Closing to draw upon the Loan
and to transfer funds as provided in Section 4.1(b)(xx) (see also
Section 6.1(b)).
20. "Company Facility" shall mean the manufacturing facility that the
Company plans to construct in the future in the State of Nuevo Xxxx,
which thereafter will serve as the Company's principal source of Wheel
production.
21. "Company/IASA Bailment Agreement" shall mean the personal property
bailment agreement under which the Company shall deliver possession and
use to IASA, for nominal consideration, of certain machinery and
equipment, in accordance with Section 4.4 of the Agreement.
22. "Confidential Information" shall mean any confidential and proprietary
business information, trade secrets, technology and know-how, of any of
the parties to the Agreement.
23. "Day" shall mean a calendar day.
24. "DIARSA" shall mean Distribuidora Automotriz Xxxxxxx, X.X. de C.V., a
Mexican corporation and subsidiary of Trailers de Monterrey, S.A. de
C.V., a Mexican corporation and subsidiary of GIR.
25. "Director" shall mean a member of the Board.
26. "Director General" shall mean the individual with principal management
responsibility for, and authority to control, the day-to-day operations
of the Company as provided in the Power of Attorney granted by the
Company to such individual.
27. "Distribution Agreements" shall mean all written distribution and sales
agency agreements in effect, as of the Effective Date, between IASA and
any Latin American distributor or other sales agent of Wheels.
28. "Effective Date" shall mean the date as of which the transactions
contemplated in the Agreement become effective and binding upon the
parties thereto, which is stated on the first page of the Agreement.
29. "Escritura Constitutiva" shall mean the escritura constitutiva of the
Company, which established the Company as a legal entity and includes a
copy of the Company's Bylaws
and the powers of attorney it has granted through the Effective Date,
which Escritura Constitutiva was inscribed and registered in the Public
Registry of Commerce for the Municipality of Monterrey, Nuevo Xxxx on
October 22, 1997.
30. "Examiner" shall mean each Comisario of the Company, the individual
charged under the Bylaws and the General Law of Business Organizations
with responsibility for surveilling the activities of the Company on
behalf of the Shareholders.
31. "Exclusive Mexico/Latin America Commercial Mediator Agreement" shall
mean the agreement by and between Accuride and the Company under which
Accuride shall engage the Company to act as Accuride's exclusive
commercial mediator in Mexico and elsewhere in Latin America.
32. "Exclusive United States/Canada Commercial Mediator Agreement" shall
mean the agreement by and between Accuride and the Company under which
the Company shall engage Accuride to act as the Company's exclusive
commercial mediator in the United States of America and in Canada.
33. "Exhibit" shall mean any attachment to the Agreement that is intended by
the parties to constitute a part thereof, regardless of whether
denominated as an exhibit, schedule, attachment or otherwise.
34. "Extraordinary Shareholders' Meeting" shall mean any extraordinary
shareholders' meeting of the Company, as such meetings are defined and
described in the General Law of Business Organizations, in the Bylaws,
and in this Agreement.
35. "Fiscal Year" shall mean the fiscal year of the Company, which shall
begin on January 1 and end on December 31 of each year.
36. "FMVAT" shall mean the fair market value of the assets transferred by
IASA to the Company as provided in Section 4.1(a) of the Agreement.
37. "FMVLA" shall mean the fair market value of the liabilities assigned by
IASA and assumed by the Company as provided in Section 4.1(b) of the
Agreement.
38. "FMVNAT" shall mean the fair market value of the net assets transferred
by IASA to the Company, as provided in Sections 4.1(a), (b) and (c) of
the Agreement, which equals FMVAT minus FMVLA.
39. "General Law of Business Organizations" shall mean the Mexican Ley
General de Sociedades Mercantiles, Diario Oficial de la Federacion,
4-VIII-34 and any and all amendments and successors thereto.
40. "GIR" shall mean Grupo Industrial Xxxxxxx, X.X., a Mexican corporation,
and any successor thereto.
41. "IASA" shall mean Industria Automotriz, S.A. de C.V., a Mexican
corporation, and any successor thereto.
42. "IASA Bank Instructions" shall mean the irrevocable written instructions
of IASA to the Bank at Closing to transfer funds from the Bank account
of IASA, as provided in Section 4.1(b)(yy).
43. "IASA/Company Technical Services Agreement" shall mean the agreement by
and between IASA and the Company, under which IASA shall provide certain
technical services to the Company.
44. "IASA Tradename and Trademark License" shall mean the agreement whereby
IASA grants to the Company a non-exclusive license to use for the Term
of this Agreement IASA's tradename and any and all trademarks it may own
that relate in any manner to products or services connected with the
Wheel business.
45. "IASA Plant" shall mean IASA's production facility located in San
Xxxxxxx xx xxx Xxxxx, Xxxxx Xxxx, Xxxxxx.
00. "Indemnified Party" shall mean any party to the Agreement seeking
indemnification under Article XI of the Agreement.
47. "Indemnifying Party" shall mean any party to the Agreement from whom
indemnification is sought under Article XI of the Agreement.
48. "Initial Business Plan" shall mean the initial written business plan for
the Company, which has been formally adopted, ratified and approved by
the Shareholders, and which corresponds to the period from the date of
formation of the Company through December 31, 1998.
49. "Inventory" shall mean all inventory of IASA relating in any manner to
the Wheel Division, including all inventories of Wheels, of raw
materials and supplies, of
purchased and manufactured parts, and of goods, goods-in-progress and
finished goods.
50. "Joint Venture" shall mean the joint venture formed between Accuride and
IASA to produce, market and sell Wheels, with the goal of pursuing
emerging opportunities in the Wheel market in Mexico and elsewhere in
Latin America, in the United States of America and in Canada, and in
other countries where sufficient demand exists.
51. "Labor Plan" shall mean the labor plan of the Company, the contents of
which are specified in Exhibit AA to the Agreement and referenced
in Article VIII of the Agreement.
52. "Loan" shall mean the Loan that the Bank has committed to provide to the
Company at Closing, in the amount of Thirty Million Dollars (U.S.
$30,000,000).
53. "Loan Documents" shall mean any and all documents that are to be
executed by the Bank and the Company to evidence the terms and
conditions of the Loan to be made to the Company by the Bank at the
Closing.
54. "Loss" shall mean and include any and all losses, liabilities, adverse
claims, causes of action, damages, demands, contingencies, settlements,
fines, assessments, penalties, charges, costs, obligations and expenses
of every kind and description whatsoever (including, without limitation,
attorneys' fees and litigation, arbitration and other dispute resolution
costs), whether known or unknown, foreseen or unforeseen, or foreseeable
or unforeseeable.
55. "Maximum Contingent Labor Liability Assumed" shall mean the maximum amount
of contingent liability assumed by the Company for seniority and severance
liabilities, if any, that otherwise would be incurred by IASA under the
Mexican federal labor law as a direct result of the transfer or
dislocation of Wheel Division workers arising from the formation of the
Joint Venture and the conveyance by IASA to the Company under the
Agreement of the business and assets of the Wheel Division; provided
additionally, that the Maximum Contingent Labor Liability Assumed shall
include any and all liabilities of Servicios AISA, and of Xxxxxx XXXX,
that may arise at any time, directly or indirectly, as a result of or in
connection with the transfer or dislocation of Wheel Division workers
(regardless of whether paid on a salaried or hourly basis) due to the
formation of the Joint Venture or of the Company or due to the
conveyance by IASA of the business and assets of the Wheel Division to
the Company; and provided further, that the Maximum Contingent
6
Labor Liability Assumed shall not exceed Seven Hundred Thousand Dollars
(U.S. $700,000).
56. "Mexico, D.F. Office Lease" shall mean the lease agreement under which IASA
shall rent and lease to Servicios AISA office space located in Mexico,
D.F., Mexico.
57. "Note 1" shall mean the promissory note issued by the Company in favor of
IASA in the original principal amount of Four Million Seven Hundred
Seven Thousand Eight Hundred Twenty-Two Dollars (U.S. $4,707,822), such
amount to represent forty-nine percent (49%) of FMVNAT.
58. "Note 2" shall mean the promissory note issued by the Company in favor of
IASA in the original principal amount of Four Million Eight Hundred
Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars (U.S.
$4,899,978), such amount to represent fifty-one percent (51%) of FMVNAT.
59. "Note 3" shall mean the promissory note issued at the Closing by the
Company in favor of IASA in the original principal amount of the VAT
due upon the transfer of assets to the Company described in Section
4.1(a) of the Agreement.
60. "Notice" shall mean any notice, request, demand, claim or other
communication or presentation of information in writing and
transmitted as provided in Section 16.5 of the Agreement.
61. "Notice of Intent to Terminate" shall mean any Notice given in accordance
with Section 14.3(c) of the Agreement.
62. "Option" shall mean the exclusive option granted to the Company by IASA and
GIR under Section 5.7 of the Agreement whereby the Company may purchase
and acquire at any time, upon demand, one hundred percent (100%) of the
issued and outstanding shares of the capital stock of Xxxxxx XXXX.
63. "Ordinary Shareholders' Meeting" shall mean any ordinary shareholders'
meeting of the Company, as such meetings are defined and described in
the General Law of Business Organizations, in the Bylaws and in this
Agreement.
64. "Percentage Interest" shall mean the percentage interest of ownership that
each of Accuride and IASA has in the Company by virtue of its
shareholdings therein, as follows: (a) with respect to Accuride,
fifty-one percent (51%); and (b) with respect to IASA, forty-nine
percent (49%).
7
65. "Person" shall mean and include, without limitation, any natural person,
and any corporation, partnership, limited liability company, joint venture,
trust, institution, association and other business entity of any kind or
description.
66. "Phase-Out Services" shall have the meaning set out in Section 14.6 of the
Agreement.
67. "Representative" shall mean, with respect to any Person, that Person's
officers, directors, partners, members, shareholders, consultants,
advisors, lawyers, accountants, employees, agents and other
representatives.
68. "Response Notice" shall mean any Notice given in accordance with Section
14.4 of the Agreement.
69. "Xxxxxx XXXX" shall mean Xxxxxx XXXX, S.A. de C.V., a Mexican corporation
and subsidiary of IASA, and any successor thereto.
70. "San Nicolas Office Leases" shall mean the lease agreements under which
IASA shall rent and lease to the Company and to Servicios AISA office space
located in San Xxxxxxx xx xxx Xxxxx, Xxxxx Xxxx, Xxxxxx.
00. "Security Interest" shall mean and include, without limitation, any and all
security interests, mortgages, pledges, deposits, deeds of trust,
prendas, gravamenes, hipotecas, liens and other encumbrances of any kind
or description whatsoever, whether arising under the laws of the United
Mexican States or of any State or Municipality thereof, under the laws
of the United States of America or of any State thereof, or under the
laws of any other country or of any political subdivision thereof.
72. "Security Interest Releases" shall mean any and all documents necessary or
appropriate, in the sole judgment of the Company, to remove, release,
terminate and render of no further force or effect any and all Security
Interests encumbering title to any assets that are to be transferred to
the Company by IASA under the Asset Assignment, Purchase and Sale
Agreement, subject only to the recordation thereof in the corresponding
Public Registries of Property.
73. "Servicios AISA" shall mean Servicios AISA, S.A. de C.V., a Mexican
corporation, and any successor thereto.
8
74. "Shareholder" shall mean Accuride or IASA, as the case may be, in its
capacity as a shareholder of the Company.
75. "Stock Purchase Agreement" shall mean the forms of stock purchase agreement
used by the Company and its nominee to purchase at the Closing all of
the issued and outstanding shares of the capital stock of Servicios AISA
from IASA and GIR, respectively.
76. "Stock Registry Book" shall mean the Registro de Acciones of the Company.
77. "Teller" shall mean any person appointed to number or count those present
at a meeting in order to determine whether a quorum is present.
78. "Term" shall have the meaning set out in Section 14.1 of the Agreement.
79. "Usable Inventory" shall mean Inventory that is good, usable and
defect-free, per IASA Wheel specifications, and that reasonably is
determined by Accuride and IASA to be salable within six (6) months after
the Company takes title to it as provided under Section 4.1(a)(ii) of the
Agreement.
80. "VAT" shall mean the value-added tax or impuesto al valor agregado that
arises under the tax laws and accompanying regulations of the United
Mexican States upon the transfer of title to personal property from one
Person to another.
81. "Wheel" shall mean and include any and every kind of steel wheel, rim, side
ring, lock ring, adaptor ring, spacer band, mounting band and related
component, replacement and product.
82. "Wheelmaking Equipment" shall mean that certain wheelmaking equipment
described in Exhibit Z to the Agreement, which is to be purchased by the
Company as described in Section 5.9 of the Agreement.
83. "Wheel Division" shall mean the Wheel design, manufacturing, marketing and
sales division of IASA.
84. "Wheel Requirements Agreement" shall mean the Agreement by and between IASA
and the Company that is attached as Exhibit Q to the Agreement.
9
Exhibit Z to Joint Venture Agreement
WHEELMAKING EQUIPMENT
(See Section 5.9 of Joint Venture Agreement)
1. "Line 427" - A collection of machines, chutes, conveyors and other devices
manufactured and arranged to produce heavy tubeless truck rims from flat raw
material.
U.S. $ 1,000,000
2. "Line 468" - A collection of machines, chutes, conveyors and other devices
manufactured and arranged to assemble and weld discs into wheels and inspect
said wheels.
U.S. $ 400,000
3. "Ring Lines" - A collection of machines, chutes, conveyors and other
devices arranged into lines to manufacture the following products:
Line 430 Continuous Side Ring
Line 431 Split Side Ring
Line 432 Lock Ring
Line 434/476 Corrugated Spacer Band
U.S. $ 600,000
U.S. $1,000,000
400,000
+ 600,000
---------------
Total Purchase Price U.S. $2,000,000
