Exhibit 99.1
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MEXICAN STOCK AND ASSET PURCHASE AGREEMENT
DATED AS OF DECEMBER 16, 2001
BY AND BETWEEN
CONEXANT SYSTEMS, INC.
AND
ALPHA INDUSTRIES, INC.
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TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS.....................................................................2
ARTICLE II SALE AND PURCHASE OF STOCK AND ASSETS..........................................12
Section 2.1. Purchase and Sale of Shares and Minority Shares................................12
Section 2.2. Purchase and Sale of Assets....................................................12
Section 2.3. Purchase Price.................................................................13
Section 2.4. Liabilities....................................................................13
Section 2.5. Allocation of Purchase Price...................................................13
ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES........................................14
Section 3.1. Corporate Status, Good Standing and Authorization..............................14
Section 3.2. Authority; Enforceability......................................................14
Section 3.3. Consents; No Conflicts or Violations...........................................14
Section 3.4. Stock of Maquiladora...........................................................15
Section 3.5. Permits........................................................................15
Section 3.6. Compliance with Laws...........................................................16
Section 3.7. Financial Statements...........................................................16
Section 3.8. Absence of Certain Changes or Events...........................................16
Section 3.9. Facility.......................................................................17
Section 3.10. Litigation.....................................................................17
Section 3.11. Maquiladora Employee Matters...................................................17
Section 3.12. Maquiladora Labor Relations....................................................18
Section 3.13. Tax Matters....................................................................18
Section 3.14. Environmental Matters..........................................................19
Section 3.15. Assumed Contracts..............................................................20
Section 3.16. Material Contracts of Maquiladora..............................................20
Section 3.17. No Brokers.....................................................................22
Section 3.18. Title to Properties............................................................22
Section 3.19. Sufficiency of Assets..........................................................22
Section 3.20. Insurance......................................................................22
Section 3.21. Separate Tax Parcel............................................................22
Section 3.22. Utilities, etc.................................................................22
ARTICLE IV PURCHASER'S REPRESENTATIONS AND WARRANTIES.....................................23
Section 4.1. Organization of Purchaser and Minority Purchaser...............................23
Section 4.2. Authority; Enforceability......................................................23
Section 4.3. Consents; No Conflicts or Violations...........................................23
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Page No.
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Section 4.4. Litigation.....................................................................24
Section 4.5. No Brokers.....................................................................24
ARTICLE V COVENANTS......................................................................24
Section 5.1. Access.........................................................................24
Section 5.2. Reasonable Best Efforts........................................................26
Section 5.3. Conduct of Business by Seller and Maquiladora..................................28
Section 5.4. Elimination of Intercompany Accounts...........................................29
Section 5.5. Intercompany Agreements........................................................29
Section 5.6. Mutual Release.................................................................29
Section 5.7. Public Announcements...........................................................31
Section 5.8. Supplements to Schedules.......................................................31
Section 5.9. Insurance......................................................................31
Section 5.10. Transition Services Agreement..................................................33
ARTICLE VI CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS.............................34
Section 6.1. HSR Act........................................................................34
Section 6.2. Mexican Competition Commission Approval........................................34
Section 6.3. No Injunctions or Restraints, Illegality.......................................34
Section 6.4. Completion of the Merger.......................................................34
ARTICLE VII ADDITIONAL CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS..................34
Section 7.1. Conditions to Seller's Obligations.............................................34
Section 7.2. Conditions to Purchaser's Obligations..........................................35
ARTICLE VIII CLOSING........................................................................36
Section 8.1. Deliveries by Seller...........................................................36
Section 8.2. Deliveries by Minority Shareholder.............................................37
Section 8.3. Deliveries by Purchaser........................................................37
Section 8.4. Deliveries by Minority Purchaser...............................................38
ARTICLE IX INDEMNIFICATION................................................................38
Section 9.1. Indemnification by Seller......................................................38
Section 9.2. Indemnification by Purchaser...................................................39
Section 9.3. Limitations on Indemnification Obligations.....................................39
Section 9.4. Procedures Relating to Indemnification.........................................41
Section 9.5. Sole and Exclusive Remedy......................................................43
Section 9.6. Termination of Indemnification Obligations.....................................43
Section 9.7. Effect of Investigation........................................................43
Section 9.8. Tax Matters....................................................................43
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Page No.
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ARTICLE X TAX MATTERS....................................................................44
Section 10.1. Preparation and Filing of Tax Returns..........................................44
Section 10.2. Consistent with Past Practice..................................................44
Section 10.3. Payment of Taxes...............................................................44
Section 10.4. Allocation of Straddle Period Taxes............................................45
Section 10.5. Tax Refunds and Carrybacks.....................................................45
Section 10.6. Tax Indemnification............................................................46
Section 10.7. Notice of Indemnity............................................................48
Section 10.8. Payments.......................................................................48
Section 10.9. Tax Contests...................................................................48
Section 10.10. Cooperation and Exchange of Information........................................49
Section 10.11. Taxes; Profit-Sharing; Customs Duties; Transfer Sales and Use Taxes............49
Section 10.12. Tax Records....................................................................50
Section 10.13. Tax Sharing Agreements.........................................................51
Section 10.14. Dispute Resolution.............................................................51
ARTICLE XI TERMINATION....................................................................52
Section 11.1. Voluntary Termination..........................................................52
Section 11.2. Automatic Termination..........................................................52
Section 11.3. Effect of Termination..........................................................52
ARTICLE XII MISCELLANEOUS..................................................................52
Section 12.1. Assignment.....................................................................52
Section 12.2. Notices........................................................................53
Section 12.3. Choice of Law; Dispute Resolution..............................................54
Section 12.4. Survival of Representations and Warranties and Covenants.......................55
Section 12.5. Limitations on Representations and Warranties..................................55
Section 12.6. Entire Agreement; Waivers......................................................55
Section 12.7. Counterparts...................................................................55
Section 12.8. Severability...................................................................56
Section 12.9. Headings.......................................................................56
Section 12.10. Expenses.......................................................................56
Section 12.11. Amendments.....................................................................56
Section 12.12. Parties in Interest............................................................56
Section 12.13. Schedules and Exhibits.........................................................56
Section 12.14. Controlling Agreement..........................................................56
Section 12.15. Compliance with Bulk Sales Laws................................................57
Section 12.16. Savings Clause.................................................................57
Section 12.17. Cooperation Following the Closing..............................................57
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Schedules
Schedule 1 Certain Executive Officers of Seller
Schedule 2.2(a) Excluded Assets
Schedule 2.2(b) Permitted Encumbrances
Schedule 2.4(a) Assumed Liabilities
Schedule 3.3 Consents Required by Seller
Schedule 3.6 Compliance with Laws
Schedule 3.7 Financial Statements
Schedule 3.8 Certain Changes or Events
Schedule 3.10 Seller Litigation
Schedule 3.11(a) List of Employees
Schedule 3.11(b) Benefit Plans
Schedule 3.12 Labor Relations
Schedule 3.13(b) Tax Proceedings
Schedule 3.13(f) Tax Audits
Schedule 3.14 Environmental Matters
Schedule 3.15 Assumed Contracts
Schedule 3.16 Maquiladora Contracts
Schedule 4.3 Consents Required by Purchaser
Schedule 4.4 Purchaser Litigation
Schedule 5.4 Intercompany Accounts
Schedule 10.6(a) Purchaser Tax Act
Exhibits
Exhibit A Terms of Promissory Note
Exhibit B Terms of Supply Agreement
MEXICAN STOCK AND ASSET PURCHASE AGREEMENT
MEXICAN STOCK AND ASSET PURCHASE AGREEMENT (this "Agreement"),
dated as of December 16, 2001, by and between Conexant Systems, Inc., a
Delaware corporation ("Seller"), and Alpha Industries, Inc., a Delaware
corporation ("Purchaser"). Seller and Purchaser are sometimes hereinafter
collectively referred to as the "Parties" and individually as a "Party."
RECITALS
A. Seller owns 108,096,704 shares (the "Shares") of the issued
and outstanding fixed and variable capital stock of Maquiladora (as defined
herein), which represent approximately 99.9999% of the issued and
outstanding shares of fixed and variable capital stock of Maquiladora; and
Minority Shareholder (as defined herein) owns the remaining 25 issued and
outstanding shares ("Minority Shares" and, together with the Shares, the
"Purchased Shares") of variable capital stock of Maquiladora.
B. Maquiladora conducts its business from the Facility (as
defined herein) located in Mexicali, Baja California, Mexico.
C. Seller owns certain tangible personal property located at
the Facility, including machinery and equipment, that is used by
Maquiladora in the conduct of its business and Seller is a party to certain
contracts relating to Maquiladora.
D. Seller desires to sell all of Seller's right, title and
interest in and to the Shares and the Assets (as defined herein), and
Purchaser desires to purchase the Shares and the Assets, all in accordance
with the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the representations,
warranties, mutual covenants and promises contained herein and for other
good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following terms shall have the
meanings given those terms in this ARTICLE I or in the Section of this
Agreement referenced in the definition provided for such term:
"Actually Realized" shall mean, for purposes of determining the
timing of any Taxes (or related Tax cost or benefit) relating to any
payment, transaction, occurrence or event, the time at which the amount of
Taxes (including estimated Taxes) payable by any Person is increased above
or reduced below, as the case may be, the amount of Taxes that such person
would be required to pay but for the payment, transaction, occurrence or
event.
"Advanced Pricing Agreement" means the proposed transfer
pricing agreement among, Seller, Maquiladora, the United States Internal
Revenue Service and certain Mexican Tax authorities for transactions
between Seller and Maquiladora for the annual tax periods of Maquiladora
commencing January 1, 2000 through January 1, 2004, which has been
submitted to the United States Internal Revenue Service and the appropriate
Mexican Tax authorities.
"Affiliate" of a Person means any other Person that, directly
or indirectly, controls, is controlled by, or is under common control with,
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" is defined in the first paragraph hereof.
"Assembly Agreement" is defined in Section 3.16(i).
"Assets" means all of Seller's right, title and interest in and
to (i) all tangible personal property (other than computer data, documents,
information, files, books and records), including Equipment, owned by
Seller and located at the Facility on the date hereof and used by
Maquiladora in the conduct of its business, together with prepaid expenses
paid by Seller with respect to such tangible personal property and all
third party insurance proceeds (if any) in respect of losses, liabilities
or damage with respect to such property arising out of insured incidents
occurring after the date hereof and prior to the Closing (to the extent
Seller and its Affiliates have no obligation to
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reimburse the insurer for such insurance proceeds), (ii) all tangible personal
property (other than computer data, documents, information, files, books and
records) owned by Seller and located at the Facility on the Closing Date and
used by Maquiladora in the conduct of its business which is acquired by Seller
after the date hereof and prior to the Closing and all third party insurance
proceeds (if any) in respect of losses, liabilities or damage with respect to
such property arising out of insured incidents occurring after the date hereof
and prior to the Closing (to the extent Seller and its Affiliates have no
obligation to reimburse the insurer for such insurance proceeds), (iii) the
Assumed Contracts, (iv) the Books and Records and (v) all third party insurance
proceeds (if any) in respect of losses, liabilities or damage with respect to
the assets or properties of Maquiladora arising out of insured incidents
occurring after the date hereof and prior to the Closing (to the extent Seller
and its Affiliates have no obligation to reimburse the insurer for such
insurance proceeds), but, in each case, excluding (A) the Excluded Assets and
(B) all tangible personal property owned by Seller located at the Facility and
used by Maquiladora in the conduct of its business which is sold or otherwise
disposed of by Seller in the ordinary course of business consistent with past
practice and the terms of this Agreement from and after the date hereof and
prior to the Closing (and all insurance proceeds related to such property).
"Assumed Contracts" means all contracts listed on Schedule 3.15
and all contracts (including purchase orders) of Seller relating to the
Assets or entered into on behalf of Maquiladora (to the extent related to
the Assets) which are entered into after the date hereof and prior to the
Closing in the ordinary course of business consistent with past practice
and the terms of this Agreement.
"Assumed Liabilities" is defined in Section 2.4(a).
"Bailment Agreements" is defined in Section 3.16(ii).
"Benefit Plans" is defined in Section 3.11(b).
"Books and Records" means all documents, information, computer
data, files, books and records (in each case, in whatever form or media,
including electronic media) owned by Seller that relate exclusively to (i)
Maquiladora and its operations or (ii) the Assets, but excluding any
documents, information, files, books and records pertaining to any Excluded
Assets or Excluded Liabilities.
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banks are required or authorized to close in the City of New
York.
"Charter Document" means any of the certificate of
incorporation, bylaws, agreement of limited partnership, operating
agreement or other organizational or
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constitutive document of a Person (including, in the case of a Mexican Person,
the acta constitutiva or estatutos of such Person).
"Claim(s)" means any action, suit, litigation, proceeding,
arbitration or other method of settling disputes or disagreements and any
grievance, complaint, claim, charge, demand, investigation or other similar
matter.
"Claims Made Policies" is defined in Section 5.9(b).
"Closing" means the consummation of the transactions
contemplated by this Agreement on the Closing Date.
"Closing Material Adverse Effect" means any event, change,
circumstance or development that is materially adverse to (i) the ability
of Seller to consummate the transactions contemplated by this Agreement and
the Merger Agreement or (ii) the business, financial condition or results
of operations of Maquiladora, the business, financial condition or results
of operations of the Washington Business and the Assets taken as a whole,
other than, with respect to clause (ii), any event, change, circumstance or
development (A) resulting from any action taken in connection with the
transactions contemplated hereby pursuant to the terms of this Agreement or
the Merger Agreement, (B) relating to the economy or financial markets in
general, (C) relating in general to the industries in which Seller,
Maquiladora and the Washington Business operate and not specifically
relating to Seller, Maquiladora and the Washington Business or (D) relating
to any action or omission of Seller, Maquiladora or Washington or any
Subsidiary of any of them taken with the express prior written consent of
Purchaser.
"Closing Date" is defined in the first paragraph of ARTICLE VIII.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Consent(s)" means any and all consents, waivers, approvals,
authorizations, declarations, filings, recordings, registrations or
exemptions.
"Damages" means any and all losses, Liabilities, claims,
damages, deficiencies, obligations, fines, payments, Taxes, Encumbrances,
and costs and expenses, whether matured or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or
unknown, whenever arising and whether or not resulting from Third Party
Claims (including the costs and expenses of any and all Claims; all amounts
paid in connection with any demands, assessments, judgments, settlements
and compromises relating thereto; interest and penalties with respect
thereto; out-of-pocket expenses and reasonable attorneys', accountants' and
other experts' fees and expenses
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reasonably incurred in investigating, preparing for or defending against any
such Claims or in asserting, preserving or enforcing an Indemnified Party's
rights hereunder; and any losses that may result from the granting of injunctive
relief as a result of any such Claims).
"Dispute" is defined in Section 12.3(b).
"dollars" or "U.S.$" means United States dollars.
"Effective Time" is defined in the Merger Agreement.
"Employee(s)" means any person employed by Maquiladora,
including persons employed on a full-time or part-time basis.
"Encumbrance" means any lien, pledge, easement, security
interest, mortgage, deed of trust, right-of-way, retention of title
agreement or other encumbrance of whatever nature.
"Environmental Claim" is defined in Section 3.14.
"Environmental Law" means any law, rule or regulation
applicable to the Facility enacted as of the Closing Date issued by any
Governmental Authority that asserts authority over Maquiladora or the
Assets regulating or pertaining to protection of human health or the
environment (including soil, surface waters, ground waters, natural
resources, land, stream, sediments, surface or subsurface strata and indoor
and ambient air, or relating to the presence, spillage, discharge, release
or emission of, or contamination and damage from, Hazardous Materials,
including those (i) requiring any Permits, or the renewal thereof, (ii)
regulating the amount, form, manner or storage, transport and/or disposal
of Hazardous Materials or (iii) requiring any record keeping, reporting,
inspection report or notification regarding Hazardous Material to a
Governmental Authority.
"Equipment" means machinery, equipment, furniture, furnishings,
fixtures and other tangible personal property (except Inventory and Books
and Records), including, data processing equipment, motor vehicles, dies,
tools, jigs and office equipment, together with all components and
auxiliary parts and supplies used in connection therewith, and all manuals,
drawings, instructions, warranties and rights with respect thereto.
"Excluded Assets" means the assets specifically set forth on
Schedule 2.2(a), including all Inventory and any and all Intellectual
Property of Seller.
"Excluded Liabilities" is defined in Section 2.4(a).
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"Facility" means the Land and Improvements, including all
easements, licenses, options, insurance proceeds and condemnation awards
and all other rights of Maquiladora in or appurtenant thereto.
"Financial Statements" means the balance sheet of Maquiladora
as of November 23, 2001 and the related statement of income of Maquiladora
for the twelve-month period ended November 23, 2001, together with the
notes thereto.
"Governmental Authority" means any federal, state or local
governmental authority or regulatory body of any nation (including the
United States of America and the United Mexican States ("Mexico")), any
subdivision, agency, commission, board or authority or instrumentality
thereof, or any quasi-governmental or private body asserting, exercising or
empowered to assert or exercise any regulatory authority thereunder and any
Person, directly or indirectly, owned by and subject to the control of any
of the foregoing.
"Hazardous Material" means any hazardous waste, hazardous
material, hazardous substance, petroleum product, oil, toxic substance,
pollutant, contaminant, or other substance that is regulated under any
Environmental Law.
"HSR Act" means the Xxxx Xxxxx Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Improvements" means all buildings, structures, fixtures and
real property improvements located on the Land.
"including" means including without limiting the generality of
what precedes that term.
"Indemnified Party" is defined in Section 9.3(a).
"Indemnifying Party" is defined in Section 9.3(a).
"Indemnity Issue" is defined in Section 10.7.
"Indemnity Reduction Amounts" is defined in Section 9.3(a).
"Injunction" is defined in Section 6.3
"Information" means all records, books, contracts, instruments,
computer data and other data and information (in each case, in whatever
form or medium, including electronic media).
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"Insurance Proceeds" means monies (a) received by an insured
from an insurance carrier, (b) paid by an insurance carrier on behalf of an
insured or (c) received from any third party in the nature of insurance,
contribution or indemnification in respect of any Liability.
"Intellectual Property" means trademarks, service marks, brand
names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or
not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof; and any similar intellectual property or proprietary
rights.
"Inventory" means all raw materials, components, Semiconductor
Wafers, other inputs, work in process and finished goods.
"Land" means that certain parcel of land owned by Maquiladora
commonly known as Ave. Iqnacio Xxxxx Rayon No. 1699, Colonial Xxxxxx,
Mexicali, Baja California, Mexico.
"Law" means all laws, principals of common law, statutes,
constitutions, treaties, rules, regulations, ordinances, codes, ruling,
orders and determinations of any Governmental Authority.
"Liabilities" means any and all claims, debts, liabilities,
commitments and obligations of whatever nature, whether fixed, contingent
or absolute, matured or unmatured, liquidated or unliquidated, accrued or
not accrued, known or unknown, due or to become due, whenever or however
arising and whether or not the same would be required by generally accepted
accounting principles to be reflected as a liability in financial
statements or disclosed in the notes thereto.
"Maquila Decree" is defined in Section 3.6.
"Maquiladora" means Conexant Systems, S.A. de C.V., a sociedad
anonima de capital variable organized under the laws of Mexico.
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"Maquiladora Contracts" means all agreements listed in
Section 3.16.
"Material Adverse Change" or "Material Adverse Effect" means
any event, change, circumstance or development that is materially adverse
to (i) the ability of Seller to consummate the transactions contemplated by
this Agreement or (ii) the business, financial condition or results of
operations of Maquiladora and the Assets taken as a whole, other than, with
respect to clause (ii), any event, change, circumstance or development (A)
resulting from any action taken in connection with the transactions
contemplated hereby pursuant to the terms of this Agreement, (B) relating
to the economy or financial markets in general, (C) relating in general to
the industries in which Seller and Maquiladora operate and not specifically
relating to Seller and Maquiladora or (D) relating to any action or
omission of Seller or Maquiladora or any Subsidiary of either of them taken
with the express prior written consent of Purchaser.
"Merger" is defined in the recitals of the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of
Reorganization, dated as of December 16, 2001, by and among Seller,
Washington and Purchaser.
"Mexican Compensation Requirements" is defined in Section
3.11(a).
"Mexican Competition Commission" means the Mexican Comision
Federal de Competencia established under Chapter IV of the Mexican Economic
Competition Law.
"Mexican Economic Competition Law" means the Mexican Ley
Federal de Competencia Economica published in the Mexican Official Gazette
(Diario Oficial de la Federacion) on December 24, 1992.
"Minority Purchaser" means the Person designated by Purchaser,
in a writing delivered to Seller at least two (2) Business Days prior to
the Closing Date, to purchase the Minority Shares.
"Minority Shareholder" means Xx. Xxxxxxxxxxxx X. Xxxx.
"Minority Shareholder's Contrato de Compra-Venta de Acciones"
is defined in Section 10.12(a).
"Minority Shares" is defined in Recital A.
"Occurrence Basis Policies" is defined in Section 5.9(b).
"Party" and "Parties" are defined in the first paragraph of
this Agreement.
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"Permits" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from
any Governmental Authority, including those relating to environmental
matters.
"Permitted Encumbrance" means (i) in respect of real property,
Encumbrances consisting of zoning or planning restrictions, easements,
Permits or other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from the
value of, or impair the use of, such real property as currently operated,
(ii) Encumbrances for Taxes, assessments or governmental charges or levies
on property not yet due and payable or which are being contested in good
faith and for which appropriate reserves are maintained, (iii) Encumbrances
of landlords, carriers, warehousemen, mechanics and other Encumbrances
imposed by law and incurred in the ordinary course of business, (iv) for
personal property, Encumbrances for purchase money obligations incurred in
the ordinary course of business consistent with past practice, (v)
Encumbrances set forth on Schedule 2.2(b) and (vi) other Encumbrances
(other than mortgages, deeds of trust, title retention agreements or
similar security interests on the Facility) which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
"Person" means an individual, corporation, limited liability
entity, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act), including any
Governmental Authority.
"Policies" means all insurance policies, insurance contracts
and claim administration contracts of any kind of Seller relating to
Maquiladora or the Assets which were or are in effect at any time at or
prior to the Closing, including primary, excess and umbrella, commercial
general liability, fiduciary liability, product liability, automobile,
aircraft, property and casualty, business interruption, directors and
officers liability, employment practices liability, workers' compensation,
crime, errors and omissions, special accident, cargo and employee
dishonesty insurance policies and captive insurance company arrangements,
together with all rights, benefits and privileges thereunder.
"Privileged Information" means, with respect to a Party,
Information regarding the Party or Maquiladora, or any of its operations,
employees, assets or Liabilities (whether in documents or stored in any
other form or known to its employees or agents) that is or may be protected
from disclosure pursuant to the attorney-client privilege, the work product
doctrine or other applicable privileges, that a Party has or may come into
possession of or has obtained or may obtain access to pursuant to this
Agreement or otherwise.
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"Promissory Note" means a promissory note issued by Purchaser
in favor of Seller in a principal amount equal to the Purchase Price,
substantially on the terms attached hereto as Exhibit "A" and in customary
form for transactions of this nature.
"Purchase Price" is defined in Section 2.3.
"Purchased Shares" is defined in Recital A.
"Purchaser" is defined in the first paragraph of this
Agreement.
"Purchaser Indemnified Parties" is defined in Section 9.1.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Schedules" means the disclosure schedules contained in this
Agreement which schedules are attached hereto and incorporated by reference
as if specifically set forth herein.
"SECOFI" is defined in Section 3.5.
"Seller" is defined in the first paragraph of this Agreement.
"Seller Indemnified Parties" is defined in Section 9.2.
"Seller's Contrato de Compra-Venta de Acciones" is defined in
Section 10.12(a).
"Semiconductor Wafers" means silicon and gallium arsenide
wafers, including cut wafers and dies, for the manufacture of
semiconductors supplied to Maquiladora by Seller prior to the Closing Date.
"Shares" is defined in Recital A.
"Straddle Period" is defined in Section 10.1.
"Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is, directly or indirectly, owned or
controlled by
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such Person or by any one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries.
"Supply Agreement" means the Supply Agreement, to be dated as
of the Closing Date, between Seller and Purchaser relating to the provision
by Purchaser to Seller of specified services and the provision by Seller to
Purchaser of other specified services, substantially on the terms attached
hereto as Exhibit "B".
"Tax" and "Taxes" shall mean all forms of taxation, whenever
created or imposed, and whether of the United States or elsewhere, and
whether imposed by a federal, state, municipal, governmental, territorial,
local, foreign or other body, and without limiting the generality of the
foregoing, shall include net income, gross income, gross receipts, sales,
use, value added, ad valorem, transfer, recording, franchise, profits,
license, lease, service, service use, payroll, wage, withholding,
employment, unemployment insurance, workers compensation, social security,
excise, severance, stamp, business license, business organization,
occupation, premium, property, environmental, windfall profits, customs,
duties, alternative minimum, estimated or other taxes, fees, premiums,
assessments or charges of any kind whatever imposed or collected by any
governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such tax or additional
amounts imposed with respect thereto by any Tax authority.
"Tax Proceeding" means any audit, examination, Claim or other
administrative or judicial proceeding relating to Taxes or Tax Returns.
"Tax Return" shall mean any return, filing, questionnaire,
information return, election or other document required or permitted to be
filed, including requests for extensions of time, filings made with respect
to estimated tax payments, claims for refund and amended returns that may
be filed, for any period with any Tax authority (whether domestic or
foreign) in connection with any Tax (whether or not a payment is required
to be made with respect to such filing).
"Third Party Claim" is defined in Section 9.4(a).
"To the knowledge of Seller" or words of similar import with
respect to a fact or matter means the actual knowledge of the executive
officers of Seller listed on Schedule 1 after reasonable inquiry.
"Transition Services Agreement" means the Transition Services
Agreement to be entered into between Seller and Purchaser on or prior to
the Closing Date, relating to the provision by Purchaser to Seller of
specified services.
11
"U.S. Asset Purchase Agreement" means the U.S. Asset Purchase
Agreement, dated December 16, 2001, by and between Seller and Purchaser.
"U.S. GAAP" means generally accepted accounting principles as
applied in the United States as of the date of this Agreement.
"Washington" means Washington Sub, Inc., a Delaware
corporation.
"Washington Business" is defined in the Merger Agreement.
ARTICLE II
SALE AND PURCHASE OF STOCK AND ASSETS
-------------------------------------
Section 2.1. Purchase and Sale of Shares and Minority Shares.
(a) Purchase and Sale of Shares. At the Closing, Seller shall
sell, transfer, convey, assign and deliver to Purchaser, and Purchaser
shall purchase, acquire and accept, the Shares, free and clear of any
Encumbrances.
(b) Purchase and Sale of Minority Shares. At the Closing,
Seller shall cause Minority Shareholder to sell, transfer, convey, assign
and deliver to Minority Purchaser, and Purchaser shall cause Minority
Purchaser to purchase, acquire and accept, the Minority Shares, free and
clear of any Encumbrances.
Section 2.2. Purchase and Sale of Assets. At the Closing,
Seller shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase, acquire and accept, the Assets, as the same shall
exist on the Closing Date, free and clear of any Encumbrances other than
Permitted Encumbrances.
12
Section 2.3. Purchase Price. The purchase price (the "Purchase
Price") to be paid by Purchaser to Seller in consideration for the Shares,
the Minority Shares and the Assets shall be one hundred fifty million
dollars (U.S.$150,000,000), less the purchase paid by Purchaser in
consideration for the purchase of assets under the U.S. Asset Purchase
Agreement, payable, at the election of Purchaser, either (A) by wire
transfer of immediately available funds at the Closing or (B) by delivery
of the Promissory Note at the Closing; provided, however, that if Purchaser
shall elect to pay the Purchase Price pursuant to clause (B), Purchaser
shall provide written notice of such election to Seller no later than
thirty (30) days prior to the Closing Date.
Section 2.4. Liabilities.
(a) Assumption of Liabilities. At the Closing, Purchaser shall
unconditionally assume and agree to pay, perform and discharge in a timely
manner and in accordance with their respective terms those Liabilities of
Seller set forth on Schedule 2.4(a) (the "Assumed Liabilities"). Purchaser
shall not assume hereunder any Liabilities of Seller related to the Assets
that are not Assumed Liabilities (the "Excluded Liabilities").
(b) Liabilities of Maquiladora. Purchaser acknowledges that
subsequent to the Closing, except as specifically provided in Article X,
Maquiladora will retain and be responsible for all Liabilities and
obligations of Maquiladora, including any and all Liabilities or
obligations that relate back to events prior to the Closing Date.
Section 2.5. Allocation of Purchase Price. Purchaser and Seller
mutually agree that the aggregate purchase price to be paid by Purchaser to
Seller under this Agreement and the U.S. Asset Purchase Agreement is one
hundred fifty million dollars (U.S.$150,000,000). As soon as practicable
after the date hereof and prior to the Closing, Purchaser and Seller shall
agree upon a reasonable allocation from such amount to be the purchase
price to be paid by Purchaser to Seller under the U.S. Asset Purchase
Agreement. Purchaser and Seller mutually agree that the Purchase Price and
the Assumed Liabilities hereunder shall be allocated among the Assets, the
Shares and the Minority Shares in the manner required by Section 1060 of
the Code and Treasury Regulations promulgated thereunder. Purchaser and
Seller shall agree upon such allocation prior to the Closing and shall file
Form 8594 with the United States Internal Revenue Service reflecting such
allocation. Neither Seller nor Purchaser shall take a position inconsistent
with such allocation in any Tax Proceeding, in any refund claim, in any
litigation or investigation or otherwise. If a competent Government
Authority adjusts such allocation for any reason, the allocation shall be
deemed to be amended to conform to any such adjustments.
13
ARTICLE III
SELLER'S REPRESENTATIONS AND WARRANTIES
---------------------------------------
Seller hereby represents and warrants to Purchaser as of the
date hereof and as of the Closing Date the following:
Section 3.1. Corporate Status, Good Standing and Authorization.
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, with all
requisite corporate power and authority to own the Shares and the Assets,
except where the failure to have such power and authority, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Maquiladora is a sociedad anonima de capital variable duly
incorporated and validly existing under the law of its jurisdiction of
incorporation, with all requisite corporate power and authority to own and
lease its properties and to conduct its business as presently conducted,
except where the failure to have such power and authority, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Seller and Maquiladora are each duly licensed or qualified
to do business as a foreign corporation in all states or jurisdictions in
which the nature of its business requires such license or qualification,
except where the failure to be so licensed or qualified, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Seller has heretofore delivered to Purchaser complete and correct
copies of Maquiladora's Charter Documents.
Section 3.2. Authority; Enforceability. Seller has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been
duly authorized, executed and delivered by Seller and is a legally valid
and binding obligation of Seller (assuming that this Agreement constitutes
the valid and binding obligation of Purchaser) and is enforceable against
Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and similar Laws relating to or affecting creditors generally or
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 3.3 and Consents which if not obtained
and maintained by Seller, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, there are no
Consents of any Governmental Authority required
14
in connection with (i) Seller's execution and delivery of this Agreement and the
other agreements, documents and instruments to be executed and delivered by
Seller in connection herewith or (ii) the performance by Seller of its
obligations herein or therein or the consummation by Seller of the transactions
contemplated hereby or thereby. Assuming receipt of all of the Consents set
forth on Schedule 3.3 (including any required HSR Act approval, any approval
required by the Mexican Competition Commission under the Mexican Economic
Competition Law and any approval by SECOFI (as defined below) of any change of
any Permits held by Maquiladora), neither the execution or delivery by Seller of
this Agreement nor the consummation by Seller of the transactions contemplated
hereby will, with or without the giving of notice or the lapse of time or both,
conflict with or result in a breach or violation of or give rise to a default or
right of termination, amendment, cancellation or acceleration under (i) any
provision of Seller's or Maquiladora's Charter Documents, (ii) any contract,
agreement, note, bond, mortgage, indenture, lease, license, franchise, permit,
concession, instrument or obligation to which Seller or Maquiladora is a party
or by which any of their respective properties or assets are bound or (iii) any
Law or license or other requirement to which Seller or Maquiladora or their
respective properties or assets is subject, except, in the case of items (ii)
and (iii) above only, for those which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
Section 3.4. Stock of Maquiladora. Maquiladora's Charter
Documents authorize the issuance of 8,750 shares of fixed capital stock and
an unlimited number of shares of variable capital stock, P$1.00 Mexican
Pesos par value, of which 8,750 shares of fixed capital stock and
108,087,979 shares of variable capital stock are issued and outstanding.
Seller owns directly 8,750 shares of fixed capital stock and 108,087,954
shares of variable capital stock and Minority Shareholder owns directly 25
shares of variable capital stock of Maquiladora. All of the capital stock
of Maquiladora has been duly authorized and is validly issued, fully paid
and nonassessable and is owned by Seller and Minority Shareholder free and
clear of all Encumbrances. There are no outstanding subscriptions, options,
warrants, preemptive or contractual rights, voting trusts, privileges or
any agreements to acquire any shares of capital stock of Maquiladora, or
any securities or obligations of any kind convertible or exchangeable into
any class of capital stock of Maquiladora. Maquiladora has no Subsidiaries
and does not own any shares of capital stock or any other securities of any
corporation and does not have any equity interest in any other Person.
Section 3.5. Permits. Seller and Maquiladora have or will have
as of the Closing all Permits which are required in order to allow Seller
to own the Shares and to own and use the Assets in the manner in which it
currently owns and uses such Assets or which are required in order to allow
Maquiladora to own its assets and properties and to conduct its business as
conducted as of the date hereof, including all Permits required from the
Mexican Ministry of Commerce and Industrial Promotion ("SECOFI") or its
15
successor, the Mexican Ministry of the Economy, except, in any such case,
for such Permits, which if not obtained or maintained, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Each of Seller and Maquiladora is and will be in compliance with
each such Permit, except where the failure to so comply, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. No suspension or cancellation of any such Permits is or will be
pending or, to the knowledge of Seller, threatened, except for suspensions
or cancellations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Seller will have
delivered to Purchaser at or prior to Closing a list of all such Permits
held or obtained as of the Closing Date, except for such Permits, which if
not held or obtained, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.6. Compliance with Laws. Except as disclosed on
Schedule 3.6, (i) Maquiladora is in compliance in all material respects
with all applicable Laws, including the Decree for the Development and
Operation of Maquiladora Export Industry, as amended (the "Maquila
Decree"), (ii) Seller is in compliance in all material respects with all
Laws applicable with respect to the Assets and the Shares, except in the
case of (i) or (ii) above, where the failure to so comply, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect, and (iii) to the knowledge of Seller, Maquiladora has not
received within the past twelve (12) months any written notice or
correspondence from any Governmental Authority to the effect that it is not
in compliance with any such applicable Laws, except for such violations
which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
Section 3.7. Financial Statements. Annexed hereto as Schedule
3.7 are true and correct copies of the Financial Statements. The Financial
Statements fairly present the tangible assets and liabilities of
Maquiladora in all material respects as of November 23, 2001 and the
results of operations for the period indicated. Except as set forth on
Schedule 3.7, since November 23, 2001, Maquiladora has not incurred any
liabilities that are of a nature that would be required to be disclosed on
a statement of assets and liabilities of Maquiladora or in the footnotes
thereto prepared in conformity with U.S. GAAP, other than 1iabilities
incurred in the ordinary course of business or that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
Section 3.8. Absence of Certain Changes or Events. Except as
set forth on Schedule 3.8, since November 23, 2001, there has not been any
Material Adverse Change or any event, change, circumstance or development
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Change. Without limiting the generality of the
foregoing, except as set forth on Schedule 3.8, Maquiladora
16
has been operated since November 23, 2001 in the ordinary course of business
consistent with past practice (except as may be expressly contemplated by this
Agreement).
Section 3.9. Facility.
(a) Facility. Maquiladora owns good and marketable title to the
Facility, free and clear of any Encumbrances, except for Permitted
Encumbrances. To Seller's knowledge, there are no condemnation actions
pending against the Facility. There are no material leases, licenses,
concessions or occupancy agreements affecting the Facility. No interest of
Seller or Maquiladora in the Facility is subject to any right of first
refusal or right or option to purchase, lease or license the Facility or
any portion therein.
(b) Zoning. Neither Seller nor, to the knowledge of Seller,
Maquiladora has received notification or correspondence within the past
twelve (12) months that it is in violation of any applicable building,
zoning, health or other law, ordinance or regulation in respect to its
stores, plants or structures or their operations of the Facility, except
for such violations that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.10. Litigation. Except as set forth on Schedule 3.10,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Seller, threatened against Seller, Minority
Shareholder or Maquiladora or its business or operations affecting (i)
Maquiladora or its business or operations, (ii) any of the Assets (iii) the
Purchased Shares or (iv) this Agreement before any court or arbitrator or
any governmental body, agency or official, except for those which, if
adversely determined, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. None of Seller,
Minority Shareholder or Maquiladora is a party to or subject to any
judgment, order, rule, writ, injunction, or decree of any Governmental
Authority or arbitrator which relates to or affects Maquiladora, the Assets
or the Purchased Shares, except as, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
17
Section 3.11. Maquiladora Employee Matters.
(a) Maquiladora Employees; Mexican Compensation Requirements.
Schedule 3.11(a) contains a list of all current Employees of Maquiladora as
of the date hereof. To the knowledge of Seller, Maquiladora is in
compliance with all Mexican laws, rules and regulations with respect to
severance, profit-sharing, Christmas bonus, vacation pay, vacation bonus,
retirement, pension and other employee benefit matters (collectively
"Mexican Compensation Requirements") applicable to its current and former
Employees, except where the failure to so comply, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect.
(b) Benefit Plans. Schedule 3.11(b) lists all material employee
pension benefit plans, employee welfare benefit plans, bonus, stock option,
stock purchase, other equity compensation, deferred compensation, incentive
compensation, severance, employee assistance plans and other employee
fringe benefit plans (collectively, the "Benefit Plans") maintained, or
contributed to, by Maquiladora or Seller for the benefit of any present or
former Employees except for those Benefit Plans (i) required by any Mexican
Governmental Authority and (ii) providing de minimis benefits.
(c) Compliance. To the knowledge of Seller, all employer and
employee contributions to each Benefit Plan required by the terms of such
Benefit Plan have been made, or, if applicable, accrued, in accordance with
Seller's normal accounting practices.
Section 3.12. Maquiladora Labor Relations. Except as stated on
Schedule 3.12, Maquiladora is not a signatory to any collective bargaining
agreement with any trade union or labor organization. Except as,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect, (i) to the knowledge of Seller, Maquiladora is
not engaged in any unfair labor practice, (ii) there is no pending labor
board proceeding of any kind with respect to Maquiladora and (iii) no walk
out, strike or work stoppage by the Employees is in progress nor, to the
knowledge of Seller, has notice of any such walk out, strike or work
stoppage been filed or received by Maquiladora within the past twelve (12)
months.
Section 3.13. Tax Matters.
(a) Tax Returns. All material Tax Returns required to be filed
by Maquiladora or with respect to the Assets have been timely filed. All
such Tax Returns are true, correct and complete, except as, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. All Taxes shown as due and payable by or with respect to
such Tax Returns have been timely paid in full.
(b) No Tax Proceedings. Except as set forth on Schedule
3.13(b), there are no Tax Proceedings presently pending with regard to any
Tax Returns or Taxes of Maquiladora or Taxes related to the Assets, and no
notice has been received from any Governmental Authority of the expected
commencement of such a Tax Proceeding.
(c) No Tax Liens. There are no Encumbrances for any Tax on the
Assets or the assets of Maquiladora, except for Permitted Encumbrances.
(d) No Consolidated Filings. Seller has not made an election
under Code Section 1504(d) to treat Maquiladora as a member of Seller's
affiliated group of
18
corporations filing a consolidated income tax return for United States income
Tax purposes. No liability has been asserted against Maquiladora with respect to
Taxes of any affiliated group within the meaning of Section 1504(a) of the Code
of which Maquiladora has been a member.
(e) No Tax Liability. No liability has been asserted against
Maquiladora with respect to Taxes of any other Person pursuant to any Tax
allocation or sharing agreement with any such Person, or any agreement to
indemnify any such Person with respect to Taxes.
(f) Tax Audits. Schedule 3.13(f) sets forth all income Tax
Returns of Maquiladora that are under audit by the relevant taxing
authority.
(g) None of the Assets is a lease made pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954.
(h) None of the Assets constitute "tax exempt use property"
within the meaning of Section 168(h) of the Code or is "tax exempt bond
financed property" within the meaning of Section 168(g) of the Code.
(i) No Trade or Business. Maquiladora is not engaged in the
conduct of a "trade or business within the United States" within the
meaning of Code Section 864(b).
(j) IRC Code xx.xx. 956, 956A. Maquiladora does not have any of
its earnings invested in United States property within the meaning of Code
Section 956 and does not have "excess passive assets" within the meaning of
Code Section 956A.
Section 3.14. Environmental Matters. Except as disclosed on
Schedule 3.14 and except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, (i) Maquiladora
and the Facility comply with all Environmental Laws, (ii) Maquiladora and
the Facility are not subject to any action, cause of action, or other
proceeding alleging the violation of any Environmental Law or relating to
the presence, or release into the environment, of any Hazardous Material
(collectively, "Environmental Claim"), (iii) Maquiladora has not received
any notice or claim (A) that it is or has been in violation (or potential
violation) of any Environmental Law or (B) alleging that Maquiladora is or
may be responsible for any response, cleanup, or corrective action,
including any remedial investigation/feasibility studies, under any
Environmental Law, which notice is not resolved or otherwise remains
pending, (iv) to Seller's knowledge, Maquiladora and the Facility are not
the subject of any investigation by a Governmental Authority pursuant to an
Environmental Law evaluating whether any remedial action or other response
is needed to respond to spillage, disposal or release or
19
threatened release into the environment of any Hazardous Material, (v)
Maquiladora has not filed any notice under or relating to any such Environmental
Law indicating or reporting any past or present spillage, disposal or release
into the environment of, or treatment, storage or disposal of, any Hazardous
Material which spill, release, treatment, storage or disposal has not been
performed and/or addressed in accordance with Environmental Laws and (vi) to the
knowledge of Seller as of the date hereof, there has been no release of
Hazardous Materials at the Facility that would be reasonably likely to form the
basis of any Environmental Claim against Maquiladora. The representations and
warranties in this Section 3.14 constitute the sole representations and
warranties of Seller concerning environmental matters in this Agreement.
Section 3.15. Assumed Contracts. True and correct copies of all
Assumed Contracts in effect as of the date hereof have been made available
to Purchaser. Prior to Closing, Seller shall have made available to
Purchaser all Assumed Contracts that came into effect after the date
hereof. None of Seller or, to the knowledge of Seller, any other party to
any Assumed Contract, is in default under any Assumed Contract, except for
such defaults that, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. To the knowledge of Seller,
no event has occurred with respect to any Assumed Contract which, with the
lapse of time or the giving of notice or both, would constitute a default
under any Assumed Contract, except for such defaults that, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
Section 3.16. Material Contracts of Maquiladora. Schedule 3.16
sets forth all of the following written agreements, commitments or
contracts of Maquiladora as of the date of this Agreement (collectively,
the "Maquiladora Contracts"):
(i) the assembly agreement with Seller whereby Seller
transfers raw materials, components, parts and other inputs to
Maquiladora and Maquiladora assembles, tests and ships finished
products to Seller (the "Assembly Agreement");
(ii) all gratuitous bailment agreements with Seller whereby
Seller gratuitously transfers equipment, machinery, tools and other
similar capital equipment to be used by Maquiladora to assemble and
test products (the "Bailment Agreements");
(iii) all agreements evidencing indebtedness for borrowed
money in an amount in excess of two hundred fifty thousand dollars
(U.S.$250,000) and all instruments constituting guarantees, sureties
or indemnities of obligations of third parties in an amount in excess
of two hundred fifty thousand dollars (U.S.$250,000);
20
(iv) all agreements restricting Maquiladora from conducting
any business in any geographic location;
(v) all agreements for construction of improvements on the
Facility in excess of two hundred fifty thousand dollars
(U.S.$250,000), individually, or five hundred thousand dollars
(U.S.$500,000), in the aggregate;
(vi) all agreements for the purchase, sale or lease of
capital assets in excess of one hundred thousand dollars
(U.S.$100,000), individually, or five hundred thousand dollars
(U.S.$500,000), in the aggregate;
(vii) all agreements under which termination, severance or
change in control payments may result due to a change of control of
Maquiladora in an amount in excess of fifty thousand dollars
(U.S.$50,000);
(viii) all agreements for the purchase or sale of any
business or any division, material assets or operating unit thereof;
(ix) all agreements with individual Employees providing for
payment in excess of fifty thousand dollars (U.S.$50,000) in any
given year;
(x) all powers of attorney granted by Maquiladora;
(xi) all agreements evidencing loans made by Maquiladora to
any Person, other than Employee advances in the ordinary course of
business consistent with past practice or loans made to Affiliates;
(xii) all agreements committing Maquiladora to use the
services of any vendor, supplier, licensor or licensee providing for
payments in excess of five hundred thousand dollars (U.S.$500,000) in
any given year; and
(xiii) all agreements (other than as set forth in (i)-(xii)
above) that are not cancelable by Seller on notice of ninety (90)
calendar days or less, without any material liability, penalty or
premium or acceleration of any material benefits, and which require
payment by Seller after the date hereof of more than five hundred
thousand dollars (U.S.$500,000) in any given year.
True and correct copies of all Maquiladora Contracts have been
made available to Purchaser. None of Maquiladora or, to the knowledge of
Seller, any other party to any Maquiladora Contract, is in default under
any Maquiladora Contract, except for such defaults that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. To the knowledge of Seller, no event has occurred with respect to
any Maquiladora Contract which, with the lapse of time or the giving of
21
notice or both, would constitute a default or give rise to any right of
termination, amendment, cancellation or acceleration under any Maquiladora
Contract, except for such as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
Section 3.17. No Brokers. Neither this Agreement nor the sale
of the Assets, the Shares or the Minority Shares was induced or procured
through any Person acting on behalf of or representing Seller and no
commissions or any other payment is due to any intermediary in connection
therewith.
Section 3.18. Title to Properties. Seller has good and valid
title to the Assets and Maquiladora has good and valid title to all of its
tangible properties and assets, except, in each case, where the failure to
have such good and valid title, or valid leasehold interest, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.19. Sufficiency of Assets. After giving effect to the
transfers, conveyances and assignments contemplated by this Agreement, the
U.S. Asset Purchase Agreement and the agreements, documents and instruments
executed and delivered pursuant hereto or thereto and after taking into
account any services to be provided to Purchaser and Maquiladora pursuant
to the Transition Services Agreement and the Supply Agreement, except for
the Excluded Assets (other than the Intellectual Property being assigned
pursuant to the U.S. Asset Purchase Agreement) and corporate services
provided by Seller to Maquiladora immediately after the Closing, the assets
of Maquiladora and the Assets will constitute all of the material assets
and rights of Seller and Maquiladora that are necessary to conduct the
operations of Maquiladora substantially as conducted on the date hereof.
Section 3.20. Insurance. Seller maintains insurance coverage in
respect of Maquiladora and the Assets with reputable insurers in such
amounts and covering such risks as is deemed reasonably appropriate for its
business (taking into account the cost and availability of such insurance).
Section 3.21. Separate Tax Parcel. To the knowledge of Seller,
the Facility is designated as one or more separate tax parcels.
Section 3.22. Utilities, etc. The Facility has rights of access
to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service the Facility for its current uses.
22
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser hereby represents and warrants to Seller as of the
date hereof and as of the Closing Date the following:
Section 4.1. Organization of Purchaser and Minority Purchaser.
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Section 4.2. Authority; Enforceability. Purchaser has all
requisite corporate power and authority to enter into this Agreement and
perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Purchaser. This Agreement
has been duly authorized, executed and delivered by Purchaser and is a
legally valid and binding obligation of Purchaser (assuming that this
Agreement constitutes the valid and binding obligation of Seller) and is
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar Laws relating to or affecting
creditors generally or by general equity principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
Section 4.3. Consents; No Conflicts or Violations. Except for
the Consents set forth on Schedule 4.3 and the Consents which if not
obtained and maintained by Purchaser, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on
Purchaser's ability to consummate the transactions contemplated by this
Agreement, there are no Consents of any Governmental Authorities required
in connection with (i) Purchaser's execution and delivery of this Agreement
and the other agreements, documents and instruments to be executed and
delivered by Purchaser in connection herewith or (ii) the performance by
Purchaser of its obligations herein or therein or the consummation by
Seller of the transactions contemplated hereby or thereby. Assuming receipt
of all of the Consents set forth on Schedule 4.3 (including, any required
HSR Act approval and any approval required by the Mexican Competition
Commission under the Mexican Economic Competition Law), neither the
execution or delivery by Purchaser of this Agreement nor the consummation
by Purchaser of the transactions contemplated hereby will, with or without
the giving of notice or the lapse of time or both, conflict with or result
in a breach or violation of or give rise to a default or right of
termination, amendment, cancellation or acceleration
23
under (i) any provision of Purchaser's Charter Documents, (ii) any material
contract, agreement, note, bond, mortgage, indenture, lease, license, franchise,
permit, concession, instrument or obligation to which Purchaser is a party or by
which any of its properties or assets are bound or (iii) any Law or license or
other requirement to which Purchaser or its properties or assets is subject,
except, in the case of items (ii) and (iii) above only, for those which,
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on Purchaser's ability to consummate the transactions
contemplated by this Agreement.
Section 4.4. Litigation. Except as set forth on Schedule 4.4,
there is no action, suit or proceeding or regulatory investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser or Minority
Purchaser affecting this Agreement before any court or arbitrator or any
governmental body, agency or official, except for those which, if adversely
determined, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by this Agreement. Neither
Purchaser nor Minority Purchaser is a party to or subject to any judgment,
order, writ, injunction, or decree of any Governmental Authority or
arbitrator, except as, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on Purchaser's
ability to consummate the transactions contemplated by this Agreement.
Section 4.5. No Brokers. Neither this Agreement nor the
purchase of the Assets, the Shares or the Minority Shares was induced or
procured through any Person acting on behalf of or representing Purchaser
and no commissions or any other payment is due to any intermediary in
connection therewith.
ARTICLE V
COVENANTS
---------
The Parties hereby covenant as follows:
Section 5.1. Access.
(a) Access to Information by Purchaser Prior to Closing. Prior
to Closing, subject to compliance with applicable laws, Seller and
Maquiladora shall, upon reasonable request, afford to Purchaser and its
Representatives reasonable access during normal business hours to all Books
and Records and all books and records of Maquiladora. Purchaser shall
coordinate its requests and activities under this Section 5.1 with Seller's
need for security and will assist Seller in minimizing disruption to
Maquiladora's normal business operations.
24
(b) Access to Information by Purchaser After Closing. From and
after the Closing, Seller will afford to Purchaser and its Representatives
(at Purchaser's expense) reasonable access and duplicating rights during
normal business hours and upon reasonable advance notice to all Books and
Records and all books and records within Seller's possession or control
relating to the Assets or Maquiladora, insofar as such access is reasonably
required by Purchaser.
(c) Access to Books and Records by Seller. Purchaser shall,
following the Closing, give Seller and its Representatives such access,
during normal business hours and upon reasonable prior notice, to the Books
and Records, the books and records of Maquiladora relating to periods prior
to the Closing and such other documents as shall be reasonably necessary
for Seller in connection with its performance of its obligations hereunder
and for any other reasonable purposes, and Purchaser will allow Seller and
its Representatives to make extracts and copies thereof as may be necessary
for such purposes at Seller's expense. Purchaser shall preserve and protect
the Books and Records and the books and records of Maquiladora relating to
periods prior to the Closing in its possession and control for the period
required by the applicable records retention policy of Seller in effect
immediately prior to the Closing. Purchaser shall offer to deliver the
Books and Records and the books and records of Maquiladora relating to
periods prior to the Closing to Seller prior to their destruction or other
disposition.
(d) Production of Witnesses. Subject to Section 5.1(e), after
the Closing, each Party will, and Purchaser will cause Maquiladora to, make
available to the other Party, upon written request and at the cost and
expense of the Party so requesting, its directors, officers, employees and
agents as witnesses to the extent that any such Person may reasonably be
required (giving consideration to business demands of such directors,
officers, employees and agents) in connection with any Claims or
administrative or other proceedings in which the requesting party may from
time to time be involved and relating to the Assets, Maquiladora's business
or operations prior to the Closing or arising in connection with the
relationship between the Parties and/or Maquiladora on or prior to the
Closing Date, provided that the same shall not unreasonably interfere with
the conduct of business by the Party of which the request is made.
(e) Confidentiality. From and after the Closing, each of Seller
and Purchaser shall hold, and shall use reasonable efforts to cause its
Affiliates and Representatives to hold, in strict confidence all
Information concerning the other Party or Maquiladora in its possession or
control prior to the Closing or furnished to it by another Party pursuant
to the Merger and the transactions contemplated thereby and will not
release or disclose such Information to any other Person, except its
Affiliates and its and their Representatives, who will be bound by the
provisions of this Section 5.1(e); provided, however, that any Person may
disclose such Information to the extent that
25
(a) disclosure is compelled by judicial or administrative process or, in the
opinion of such Person's counsel, by other requirements of law (in which case
the Party required to make such disclosure will notify the other Party as soon
as practicable of such obligation or requirement and cooperate with the other
Party to limit the Information required to be disclosed and to obtain a
protective order or other appropriate remedy with respect to the Information
ultimately disclosed) or (b) such Person can show that such Information was (i)
available to such Person on a nonconfidential basis (other than from a Party)
prior to its disclosure by such Person, (ii) in the public domain through no
fault of such Person or (iii) lawfully acquired by such Person from another
source after the time that it was furnished to such Person by the other Party or
its Affiliates, Representatives or Subsidiaries, and not acquired from such
source subject to any confidentiality obligation on the part of such source
known to the acquiror, or on the part of the acquiror. Each Party acknowledges
that it will be liable for any breach of this Section 5.1(e) by its Affiliates,
Representatives and Subsidiaries. Notwithstanding the foregoing, each Party will
be deemed to have satisfied its obligations under this Section 5.1(e) with
respect to any Information (other than Privileged Information) if it exercises
the same care with regard to such Information as it takes to preserve
confidentiality for its own similar Information.
Section 5.2. Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
Party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, and to assist and cooperate
with the other Party in doing or causing to be done, all things necessary,
proper or advisable under this Agreement and applicable laws to consummate
the transactions contemplated by this Agreement as soon as practicable
after the date hereof, including (i) taking all reasonable actions to cause
the conditions set forth in ARTICLES VI and VII to be satisfied as promptly
as practicable, (ii) preparing and filing as promptly as practicable all
documentation to obtain as promptly as practicable all Consents set forth
on Schedules 3.3 and 4.3 and (iii) taking all reasonable steps as may be
necessary to obtain all Consents set forth on Schedules 3.3 and 4.3. In
furtherance and not in limitation of the foregoing, each Party hereto
agrees to make (i) an appropriate filing (if applicable) of a Notification
and Report Form pursuant to the HSR Act and any comparable filings (if
applicable) pursuant to the Mexican Economic Competition Act with respect
to the transactions contemplated hereby as promptly as practicable after
the date hereof and (ii) all other necessary filings with other
Governmental Authorities relating to the transactions contemplated herein,
and, in each case, to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to such
applicable laws or by such Governmental Authorities and to use reasonable
best efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act and the Mexican Economic Competition
26
Act and the receipt of the Consents set forth on Schedules 3.3 and 4.3 under
such other applicable laws or from such Governmental Authorities as soon as
practicable.
(b) Each of Seller and Purchaser shall, in connection with the
efforts referenced in Section 5.2(a) to obtain all Consents set forth on
Schedules 3.3 and 4.3, use its reasonable best efforts to (i) cooperate in
all respects with each other in connection with any filing or submission
and in connection with any investigation or other inquiry, including any
proceeding initiated by a private party, (ii) promptly inform the other
Party of any communication received by such Party from, or given by such
Party to, the Antitrust Division of the Department of Justice (the "DOJ"),
the Federal Trade Commission (the "FTC"), the Mexican Competition
Commission or any other Governmental Authority and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other Party to review any communication given
by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC, the Mexican Competition Commission or
any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other Person, and to the extent appropriate or
permitted by the DOJ, the FTC, the Mexican Competition Commission or such
other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of
the Parties contained in Section 5.2(a) and Section 5.2(b), if any
administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of
any applicable laws, or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Authority which would make transactions
contemplated hereby illegal or would otherwise prohibit or materially
impair or delay the consummation of the transactions contemplated hereby,
each of the Parties shall cooperate in all respects with each other and use
its respective reasonable best efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement
and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable
so as to permit the consummation of the transactions contemplated by this
Agreement.
(d) Notwithstanding the foregoing or any other provision of
this Agreement, nothing in this Section 5.2 shall create an obligation by
the Parties to take
27
any action in addition to the actions required to be taken pursuant to the
Merger Agreement to consummate the Merger.
Section 5.3. Conduct of Business by Seller and Maquiladora.
From the data hereof until the Closing Date, Seller shall (and shall cause
Maquiladora to), except as expressly required or permitted by this
Agreement and except as otherwise consented to in writing by Purchaser:
(i) conduct the business and operations of Maquiladora and
employ the Assets in the ordinary course of business consistent with
past practice, subject to Maquiladora's right to declare and pay cash
dividends to its stockholders in respect of its capital stock prior
to the Closing in accordance with applicable Law;
(ii) not engage Maquiladora or the Assets in any new
material line of business;
(iii) use its commercially reasonable efforts to preserve
intact the business organization of Maquiladora and preserve the
relationships of Maquiladora with its suppliers and others having
business relations with Maquiladora;
(iv) maintain Maquiladora's existence in Mexico;
(v) not amend or modify Maquiladora's Charter Documents in
any material respects;
(vi) not permit Maquiladora to declare, pay or set aside for
payment any dividend or other distribution to its stockholders in
respect of its capital stock, other than the declaration and payment
of cash dividends by Maquiladora to its stockholders in respect of
its capital stock prior to the Closing in accordance with applicable
Law;
(vii) not permit Maquiladora to create any subsidiary,
acquire any capital stock or other equity securities of any
corporation or acquire any equity or ownership interest in any
business or entity;
(viii) not (A) grant, create, incur or suffer to exist any
Encumbrance (other than a Permitted Encumbrance granted, created,
incurred or suffered to exist in the ordinary course of business
consistent with past practice) on the Assets, (B) permit Maquiladora
to grant, create, incur, or suffer to exist any Encumbrance (other
than a Permitted Encumbrance granted, created, incurred or suffered
to exist in the ordinary course of business consistent with past
practice)
28
on the assets of Maquiladora which did not exist on the date hereof or (C)
permit Maquiladora to create, incur or assume any indebtedness for
borrowed money (other than indebtedness to Affiliates);
(ix) not permit Maquiladora to increase in any manner the
base compensation of, or enter into any new bonus or incentive
agreement or arrangement with, any Employees, directors or
consultants other than in the ordinary course of business consistent
with past practice;
(x) not permit Maquiladora to adopt or amend any Benefit
Plan or to increase the benefits provided under any Benefit Plan
other than in the ordinary course of business consistent with past
practice;
(xi) not permit Maquiladora to make any material Tax
election or settle or compromise any material Tax liability, other
than in the ordinary course of business consistent with past practice
or in accordance with Section 10.11(c) of this Agreement; and
(xii) not authorize, or commit or agree to take, any of the
foregoing actions.
Section 5.4. Elimination of Intercompany Accounts. Except as
set forth on Schedule 5.4, Seller (on behalf of itself and each of its
Subsidiaries, other than Maquiladora), on the one hand, and Maquiladora, on
the other hand, shall settle and eliminate, by cancellation or transfer to
the other (in a manner to be determined by Seller), effective as of the
Closing, all intercompany receivables, payables and other balances existing
immediately prior to the Closing between Seller and/or any of Seller's
Subsidiaries (other than Maquiladora), on the one hand, and Maquiladora, on
the other hand. This Section 5.4 shall not affect any rights of any Party
arising under this Agreement or any document, agreement or instrument
entered into pursuant hereto.
Section 5.5. Intercompany Agreements. Effective as of the
Closing, Seller and Maquiladora shall terminate (and, in the case of
Seller, Seller shall cause all of Seller's Subsidiaries to terminate) all
agreements between Seller and/or any of Seller's Subsidiaries, on the one
hand, and Maquiladora, on the other hand, including the Assembly Agreement
and the Bailment Agreements. This Section 5.5 shall not affect any rights
of any Party arising under this Agreement or any document, agreement or
instrument entered into pursuant hereto.
Section 5.6. Mutual Release. Effective as of the Closing and
except as otherwise specifically set forth in this Agreement, each of
Seller, on behalf of itself and each of Seller's Subsidiaries (other than
Maquiladora), on the one hand, shall, and Seller
29
shall cause Maquiladora, on the other hand, to, release and forever discharge
the other Party and its Subsidiaries, and its and their respective officers,
directors, agents, record and beneficial security holders (including trustees
and beneficiaries of trusts holding such securities), advisors and
Representatives (in each case, in their respective capacities as such) and their
respective heirs, executors, administrators, successors and assigns, of and from
all debts, demands, actions, causes of action, suits, accounts, covenants,
contracts, agreements, damages, claims and Liabilities whatsoever of every name
and nature, both in law and in equity, which the releasing party has or ever had
or ever will have, which arise out of or relate to events, circumstances or
actions taken by such other party occurring or failing to occur or any
conditions existing at or prior to the Closing; provided, however, that the
foregoing general release shall not apply to (i) any Liabilities or other
obligations (including Liabilities with respect to payment, reimbursement,
indemnification or contribution) under this Agreement or any other document,
agreement or instrument entered into pursuant to this Agreement or assumed,
transferred, assigned, allocated or arising under this Agreement or any other
document, agreement or instrument entered into pursuant to this Agreement
(including any Liability that the Parties may have with respect to payment,
performance, reimbursement, indemnification or contribution pursuant to this
Agreement or any other document agreement or instrument entered into pursuant to
this Agreement for claims brought against the Parties by third Persons or any
Indemnified Party), and the foregoing release will not affect any Party's right
to enforce this Agreement or any other document agreement or instrument entered
into pursuant to this Agreement in accordance with their respective terms or
(ii) any Liability the release of which would result in the release of any
Person other than a Person released pursuant to this Section 5.6 (provided, that
the Parties agree not to bring suit or permit any of their Subsidiaries to bring
suit against any Party, its Subsidiaries or Affiliates with respect to any
Liability to the extent such Party, its Subsidiaries and Affiliates would be
released with respect to such Liability by this Section 5.6 but for this clause
(ii)).
Each of Seller and Purchaser acknowledges that it has been
advised by its legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Being aware of said Code section, each of Seller, on behalf of itself and
Seller's Subsidiaries, and Purchaser, on behalf of itself and Maquiladora,
hereby expressly waives
30
any rights it may have under California Civil Code Section 1542, as well as any
other statutes or common law principles of similar effect.
Section 5.7. Public Announcements. The Parties shall use
reasonable best efforts to develop a joint communications plan and each
Party shall use reasonable best efforts (i) to ensure that all press
releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications
plan, and (ii) unless otherwise required by applicable laws or by
obligations pursuant to any listing agreement with or rules of any
securities exchange or automated quotation system, to consult with each
other before issuing any press release or, to the extent practicable,
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
Section 5.8. Supplements to Schedules. From time to time up to
the Closing, Seller and Purchaser may supplement or amend the Schedules
after they have been delivered pursuant to this Agreement with respect to
any matter first existing or occurring on or after the date hereof which,
if existing or occurring at or prior to the date hereof, would have been
required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been
rendered inaccurate thereby; provided, however, that if any facts that give
rise to such matter existed or occurred on or before the date hereof, no
such supplement or amendment may be made under this Section 5.8 with
respect thereto. Any such supplement or amendment to any Schedule shall
not, following Closing, constitute a basis for any Claim for
indemnification pursuant to ARTICLE IX; provided, however, that no such
supplement or amendment shall be deemed to cure any breach of any
representations or warranties made pursuant to this Agreement for purposes
of Section 7.1(a) or Section 7.2(a).
Section 5.9. Insurance.
(a) Coverage. Subject to the provisions of this Section 5.9,
coverage of Maquiladora and the Assets under all Policies shall cease as of
the Closing. From and after the Closing, Purchaser will be responsible for
obtaining and maintaining all insurance coverages for the Assets and
Maquiladora. All Policies will be retained by Seller and Seller's
Subsidiaries, together with all rights, benefits and privileges thereunder
(including the right to receive any and all return premiums with respect
thereto), except that Purchaser will have the rights in respect of Policies
to the extent described in Section 5.9(b).
(b) Rights Under Policies. From and after the Closing,
Purchaser and Maquiladora will have no rights with respect to any Policies,
except that (i) Purchaser will have the right to assert claims (and Seller
will use commercially reasonable efforts to assist Purchaser in asserting
claims) for any loss, liability or damage with respect to the
31
Assets or the assets of Maquiladora under Policies with third-party insurers
which are "occurrence basis" insurance policies ("Occurrence Basis Policies")
arising out of insured incidents occurring from the date coverage thereunder
first commenced until the Closing to the extent that the terms and conditions of
any such Occurrence Basis Policies and agreements relating thereto so allow and
(ii) Purchaser will have the right to continue to prosecute claims with respect
to the Assets or the assets of Maquiladora properly asserted with an insurer
prior to the Closing (and Seller will use commercially reasonable efforts to
assist Purchaser in connection therewith) under Policies with third-party
insurers which are insurance policies written on a "claims made" basis ("Claims
Made Policies") arising out of insured incidents occurring from the date
coverage thereunder first commenced until the Closing to the extent that the
terms and conditions of any such Claims Made Policies and agreements relating
thereto so allow, provided, that in the case of both clauses (i) and (ii) above,
(A) all of Seller's reasonable out-of-pocket costs and expenses incurred in
connection with the foregoing are promptly paid by Purchaser, (B) Seller may, at
any time, without liability or obligation to Purchaser (other than as set forth
in Section 5.9(c)), amend, commute, terminate, buy-out, extinguish liability
under or otherwise modify any Occurrence Basis Policies or Claims Made Policies
(and such claims shall be subject to any such amendments, commutations,
terminations, buy-outs, extinguishments and modifications), (C) such claims will
be subject to (and recovery thereon will be reduced by the amount of) any
applicable deductibles, retentions or self-insurance provisions, (D) such claims
will be subject to (and recovery thereon will be reduced by the amount of) any
payment or reimbursement obligations of Seller, any of Seller's Subsidiaries or
any Affiliate of Seller or any of Seller's Subsidiaries in respect thereof and
(E) such claims will be subject to exhaustion of existing aggregate limits.
Seller's obligation to use commercially reasonable efforts to assist Purchaser
in asserting claims under applicable Policies will include using commercially
reasonable efforts in assisting Purchaser to establish its right to coverage
under such Policies (so long as all of Seller's reasonable out-of-pocket costs
and expenses in connection therewith are promptly paid by Purchaser). None of
Seller or Seller's Subsidiaries will bear any Liability for the failure of an
insurer to pay any claim under any Policy. It is understood that any Claims Made
Policies will not provide any coverage to Purchaser for incidents occurring
prior to the Closing but which are asserted with the insurance carrier after the
Closing.
(c) Seller Actions. In the event that after the Closing, Seller
proposes to amend, commute, terminate, buy-out, extinguish liability under
or otherwise modify any Policies under which Purchaser has rights to assert
claims pursuant to Section 5.9(b) in a manner that would adversely affect
any such rights of Purchaser, (i) Seller will give Purchaser prior notice
thereof and consult with Purchaser with respect to such action (it being
understood that the decision to take any such action will be in the sole
discretion of Seller) and (ii) Seller will pay to Purchaser its equitable
share (which shall be determined
32
by Seller in good faith based on the amount of premiums paid by or allocated to
Purchaser or Maquiladora in respect of the applicable Policy) of any net
proceeds actually received by Seller from the insurer under the applicable
Policy as a result of such action by Seller (after deducting Seller's reasonable
costs and expenses incurred in connection with such action).
(d) Administration. From and after the Closing:
(i) Seller or a Subsidiary of Seller, as appropriate, will
be responsible for the Claims Administration with respect to claims
of Seller and Seller's Subsidiaries under Policies; and
(ii) Purchaser will be responsible for the Claims
Administration with respect to claims of Purchaser under Policies.
(e) Insurance Premiums. From and after the Closing, Seller will
pay all premiums (retrospectively-rated or otherwise) as required under the
terms and conditions of the respective Policies in respect of periods prior
to the Closing, whereupon Purchaser will upon the request of Seller,
forthwith reimburse Seller for that portion of such premiums paid by Seller
as are reasonably determined by Seller to be attributable to the Assets or
Maquiladora.
(f) Agreement for Waiver of Conflict and Shared Defense. In the
event that a Policy provides coverage for both Seller and/or a Subsidiary
of Seller, on the one hand, and Purchaser, on the other hand, relating to
the same occurrence, Seller and Purchaser agree to defend jointly and to
waive any conflict of interest necessary to the conduct of that joint
defense. Nothing in this Section 5.9(f) will be construed to limit or
otherwise alter in any way the indemnity obligations of the parties to this
Agreement, including those created by this Agreement, by operation of law
or otherwise.
Section 5.10. Transition Services Agreement. Promptly following
the date hereof, Purchaser and Seller will discuss the scope, nature, term
and pricing of the transition services to be provided by Seller to
Purchaser following the Closing pursuant to the Transition Services
Agreement. Purchaser and Seller will negotiate in good faith with respect
thereto and prior to the Effective Time will enter into the Transition
Services Agreement in a form reasonably satisfactory to Purchaser and
Seller. The Transition Services Agreement will provide that either Party
may terminate any services provided under the Transition Services Agreement
upon such prior written notice as the Parties shall mutually agree prior to
the Closing.
33
ARTICLE VI
CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
------------------------------------
The obligations of Seller and Purchaser to complete the
transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing, of each of the following
conditions precedent; provided, however, that upon consummation of the
Merger, all conditions precedent contained in this ARTICLE VI shall be
deemed fully satisfied for purposes of this ARTICLE VI:
Section 6.1. HSR Act. The waiting period (and any extension
thereof) applicable to the transactions contemplated by this Agreement
under the HSR Act shall have been terminated or shall have expired.
Section 6.2. Mexican Competition Commission Approval. Seller
and Purchaser shall have received the required consent or approval of the
Mexican Competition Commission.
Section 6.3. No Injunctions or Restraints, Illegality. No Laws
shall have been adopted, promulgated or enforced by any Governmental
Authority, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Authority
of competent jurisdiction (an "Injunction") shall be in effect, having the
effect of making the transactions contemplated under this Agreement illegal
or otherwise prohibiting such transactions. No proceeding initiated by any
Governmental Authority seeking, and which is reasonably likely to result in
the granting of, an Injunction shall be pending.
Section 6.4. Completion of the Merger. The Merger shall have
been consummated.
ARTICLE VII
ADDITIONAL CONDITIONS TO
SELLER'S AND PURCHASER'S OBLIGATIONS
------------------------------------
Section 7.1. Conditions to Seller's Obligations. The
obligations of Seller to complete the transactions contemplated by this
Agreement are subject to the satisfaction, on or prior to the Closing, of
each of the following conditions precedent; provided, however, that upon
consummation of the Merger, all conditions precedent
34
contained in this Section 7.1 shall be deemed fully satisfied for purposes of
this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Purchaser contained in this Agreement
shall be true and correct (without giving effect to any qualification or
limitation as to materiality or material adverse effect set forth therein)
in each case as of the date hereof and (except to the extent that such
representations and warranties speak solely as to another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on the ability of Purchaser to consummate the
transactions contemplated in this Agreement.
(b) Performance of Obligations of Purchaser. Purchaser (i)
shall have performed or complied with all agreements and covenants required
to be performed by it under this Agreement at or prior to the Closing Date
that are qualified as to materiality or material adverse effect and (ii)
shall have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified.
Section 7.2. Conditions to Purchaser's Obligations. The
obligations of Purchaser to complete the transactions contemplated by this
Agreement are subject to the satisfaction, on or prior to the Closing, of
each of the following conditions precedent; provided, however, that upon
consummation of the Merger, all conditions precedent contained in this
Section 7.2 shall be deemed fully satisfied for purposes of this ARTICLE VII:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Seller contained in this Agreement shall
have been true and correct (without giving effect to any qualification or
limitation as to materiality or Material Adverse Effect set forth therein)
in each case as of the date hereof and (except to the extent that such
representations and warranties speak solely as to another date) as of the
Closing Date as though made on and as of the Closing Date, except where the
failure of such representations and warranties to be true and correct,
individually or in the aggregate, would not reasonably be expected to have
a Closing Material Adverse Effect.
(b) Performance of Obligations of Seller. Seller (i) shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality or Material Adverse Effect and (ii) shall
have performed or complied in all material respects with all other
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified.
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ARTICLE VIII
CLOSING
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The Closing shall, unless another time and date is agreed to in
writing by the Parties, take place immediately following the Closing (as
defined in the Merger Agreement) under the Merger Agreement and will be
effective immediately following the Effective Time (the time and date of
such Closing being herein called the "Closing Date"). The Closing will take
place at the offices of Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other place as the Parties may agree. On the
Closing Date, the Parties hereto shall deliver the following:
Section 8.1. Deliveries by Seller. At the Closing, Seller shall
deliver to Purchaser the following which in the case of documents, shall be
reasonably satisfactory to Purchaser:
(i) a stock certificate or certificates representing the
Shares, duly endorsed by Seller to Purchaser sufficient to transfer
to Purchaser good and marketable title to the Shares, and evidence
that such transfer to Purchaser of the Shares has been recorded on
the Maquiladora's stock registry book;
(ii) the Seller's Contrato de Compra-Venta de Acciones, duly
executed by Seller, in form and substance reasonably satisfactory to
Purchaser;
(iii) an Assets Xxxx of Sale and Assignment and Assumption
Agreement, duly executed by Seller, in form and substance reasonably
satisfactory to Purchaser;
(iv) the Assets;
(v) the Supply Agreement, duly executed by Seller, in form
and substance reasonably satisfactory to Purchaser;
(vi) the Transition Services Agreement, duly executed by
Seller, in form and substance reasonably satisfactory to Purchaser;
(vii) a duly sworn affidavit of Seller, dated as of the
Closing Date, stating that Seller is not a "foreign person" as that
term is defined in the Code, setting forth Seller's tax
identification numbers and otherwise meeting the requirements of
Section 1445(b)(2) of the Code and the Treasury Regulations
promulgated thereunder; and
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(viii) all documents of title and instruments of conveyance
necessary to transfer record and beneficial ownership to Purchaser of
all Assets which require execution, endorsement or delivery of such a
document under applicable Law in order to vest record or beneficial
ownership thereto in Purchaser.
Section 8.2. Deliveries by Minority Shareholder. At the
Closing, Seller shall cause Minority Shareholder to deliver to Minority
Purchaser the following documents, which shall be reasonably satisfactory
to Purchaser:
(i) a stock certificate or certificates representing the
Minority Shares, duly endorsed by Minority Shareholder sufficient to
transfer to Purchaser good and marketable title to the Minority
Shares to Minority Purchaser, and evidence that such transfer of the
Minority Shares has been recorded on the Maquiladora's stock registry
book;
(ii) the Minority Shareholder's Contrato de Compra-Venta de
Acciones, duly executed by Minority Shareholder, in form and
substance reasonably satisfactory to Purchaser; and
(iii) a duly sworn affidavit of Minority Shareholder, dated
as of the Closing Date, stating that Minority Shareholder is not a
"foreign person" as that term is defined in the Code, setting forth
Minority Shareholder's tax identification numbers and otherwise
meeting the requirements of Section 1445(b)(2) of the Code and the
Treasury Regulations promulgated thereunder.
Section 8.3. Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller the following, which in the case of documents shall
be reasonably satisfactory to Seller:
(i) (A) cash payment of the Purchase Price (via wire
transfer of immediately available funds), pursuant to Section 2.3, or
(B) the Promissory Note, duly executed by Purchaser, in form and
substance reasonably satisfactory to Seller, in which case, Purchaser
shall deliver to Seller at Closing, in addition to the other
deliveries required hereby, (I) a security agreement, duly executed
by Purchaser, in form and substance reasonably satisfactory to Seller
and Purchaser and in customary form for transactions of this nature,
granting Seller a first priority security interest in the security
described on Exhibit "A", (II) such notices, recordings, mortgages,
statements, filings, instruments or other agreements and documents as
Seller may reasonably require to have a perfected first priority
security interest in the security described on Exhibit "A" and (III)
customary opinions of counsel to Purchaser for secured transactions
of this nature reasonably satisfactory to the Parties and their
counsel;
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(ii) the Seller's Contrato de Compra-Venta de Acciones, duly
executed by Purchaser, in form and substance reasonably satisfactory
to Seller;
(iii) an Asset Xxxx of Sale and Assignment and Assumption
Agreement, duly executed by Purchaser, in form and substance
reasonably satisfactory to Seller;
(iv) the Supply Agreement, duly executed by Purchaser, in
form and substance reasonably satisfactory to Seller; and
(v) the Transition Services Agreement, duly executed by
Purchaser, in form and substance reasonably satisfactory to Seller.
Section 8.4. Deliveries by Minority Purchaser. At the Closing,
Purchaser shall cause Minority Purchaser to deliver to the Minority
Shareholder the following, which in the case of documents shall be
reasonably satisfactory to Minority Shareholder:
(i) the Minority Shareholder's Contrato de Compra-Venta de
Acciones duly executed by Minority Purchaser, in form and substance
reasonably satisfactory to Seller.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1. Indemnification by Seller. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
IX, Seller shall indemnify, defend and hold harmless Purchaser and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Purchaser Indemnified Parties")
from and against, and pay or reimburse, as the case may be, the Purchaser
Indemnified Parties for, any Damages, as incurred, suffered by any
Purchaser Indemnified Parties to the extent based upon, arising out of or
relating to the following:
(i) the breach of any representation or warranty of Seller
contained in this Agreement;
(ii) the breach by Seller of any covenant or agreement of
Seller contained in this Agreement;
(iii) the Excluded Liabilities (including the failure of
Seller to pay, perform or otherwise discharge any Excluded Liability
in accordance with its terms); or
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(iv) the Excluded Assets.
Section 9.2. Indemnification by Purchaser. Subject to the
limitations on and procedures for indemnification set forth in this ARTICLE
IX, Purchaser shall indemnify, defend and hold harmless Seller and its
Representatives and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (collectively, the "Seller Indemnified
Parties") from and against, and pay or reimburse, as the case may be, the
Seller Indemnified Parties for, any Damages, as incurred, suffered by any
Seller Indemnified Parties to the extent based upon, arising out of or
relating to the following:
(i) the breach of any representation or warranty of
Purchaser contained in this Agreement;
(ii) the breach by Purchaser of any covenant or agreement of
Purchaser contained in this Agreement; or
(iii) the Assumed Liabilities (including, except as provided
in Section 12.16, the failure of Purchaser to pay, perform or
otherwise discharge any Assumed Liability in accordance with its
terms); or
(iv) any Liabilities of Maquiladora, except to the extent
that Seller is or would be required to indemnify an Indemnified Party
for such Liability under Section 9.1(i) (assuming for purposes of the
determination of whether such indemnification is or would be required
that (A) the indemnification obligation has not terminated under
Section 9.6 and (B) any relevant representations or warranties have
not expired under Section 12.4).
Section 9.3. Limitations on Indemnification Obligations. (a)
The amount which any Party (an "Indemnifying Party") is or may be required
to pay to any Person (an "Indemnified Party") in respect of Damages or
other Liability for which indemnification is provided under this Agreement
shall be reduced by any amounts actually received (including Insurance
Proceeds actually received) by or on behalf of such Indemnified Party (net
of increased insurance premiums and charges to the extent related to
Damages and costs and expenses (including reasonable legal fees and
expenses) incurred by such Indemnified Party in connection with seeking to
collect and collecting such amounts) in respect of such Damages or other
Liability (such net amounts are referred to herein as "Indemnity Reduction
Amounts"). If any Indemnified Party receives any Indemnity Reduction
Amounts in respect of Damages for which indemnification is provided under
this Agreement after the full amount of such Damages has been paid by an
Indemnifying Party or after an Indemnifying Party has made a partial
payment of such Damages and such Indemnity Reduction Amounts exceed the
remaining unpaid balance of such Damages, then the Indemnified Party shall
promptly remit to the Indemnifying Party an
39
amount equal to the excess (if any) of (A) the amount theretofore paid by the
Indemnifying Party in respect of such Damages, less (B) the amount of the
indemnity payment that would have been due if such Indemnity Reduction Amounts
in respect thereof had been received before the indemnity payment was made.
(b) In determining the amount of any indemnity payment under
this Agreement, such amount shall be (i) reduced to take into account any
net Tax benefit realized by the Indemnified Party and its Affiliates
arising from the incurrence or payment by the Indemnified Party or its
Affiliates of any amount in respect of which such payment is made and (ii)
increased to take into account any net Tax cost incurred by the Indemnified
Party and its Affiliates as a result of the receipt or accrual of payments
hereunder (grossed-up for such increase), in each case determined by
treating the Indemnified Party and its Affiliates as recognizing all other
items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt of accrual of any payment hereunder. In
determining the amount of any such Tax benefit or Tax cost, the Indemnified
Party and its Affiliates shall be deemed to be subject to the applicable
Taxes at the maximum statutory rate then in effect. It is the intention of
the Parties to this Agreement that payments made pursuant to this Agreement
are to be treated as relating back to the Closing Date as a purchase price
adjustment, and the Parties shall not take any position inconsistent with
such intention before any Tax authority, except to the extent that a final
determination (as defined in Section 1313 of the Code) with respect to the
recipient party causes any such payment not to be so treated.
(c) No monetary amount will be payable by Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 9.1(i) until the aggregate amount of Damages
actually incurred by the Purchaser Indemnified Parties with respect to such
claims shall exceed on a cumulative basis an amount equal to one million
dollars (U.S.$1,000,000), in which event Seller shall be responsible only
for the amount of such Damages in excess of one million dollars
(U.S.$1,000,000). No monetary amount will be payable by Seller to any
Purchaser Indemnified Party with respect to the indemnification of any
claims pursuant to Section 9.1(i) after the aggregate amount of Damages
actually paid by Seller with respect to such claims shall equal on a
cumulative basis an amount equal to ten million dollars (U.S.$10,000,000).
(d) No monetary amount will be payable by Purchaser to any
Seller Indemnified Party with respect to the indemnification of any claims
pursuant to Section 9.2(i) until the aggregate amount of Damages actually
incurred by the Seller Indemnified Parties with respect to such claims
shall exceed on a cumulative basis an amount equal to one million dollars
(U.S.$1,000,000), in which event Purchaser shall be responsible only for
the amount of such Damages in excess of one million dollars
(U.S.$1,000,000). No monetary amount will be payable by Purchaser to any
Seller
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Indemnified Party with respect to the indemnification of any claims pursuant to
Section 9.2(i) after the aggregate amount of Damages actually paid by Purchaser
with respect to such claims shall equal on a cumulative basis an amount equal to
ten million dollars (U.S.$10,000,000).
Section 9.4. Procedures Relating to Indemnification. (a) If a
claim or demand is made against an Indemnified Party, or an Indemnified
Party shall otherwise learn of an assertion, by any Person who is not a
party to this Agreement (or an Affiliate thereof) as to which an
Indemnifying Party may be obligated to provide indemnification pursuant to
this Agreement (a "Third Party Claim"), such Indemnified Party will notify
the Indemnifying Party in writing, and in reasonable detail, of the Third
Party Claim reasonably promptly after becoming aware of such Third Party
Claim; provided, however, that failure to give such notification will not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure. Thereafter, the Indemnified Party will deliver to the Indemnifying
Party, promptly after the Indemnified Party's receipt thereof, copies of
all material notices and documents (including court papers) received or
transmitted by the Indemnified Party's relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified
Party, the Indemnifying Party will be entitled to participate in or to
assume the defense thereof (in either case, at the expense of the
Indemnifying Party) with counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. Should the Indemnifying
Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof; provided, however, that if in the
Indemnified Party's reasonable judgment a conflict of interest exists in
respect of such claim or if the Indemnifying Party shall have assumed
responsibility for such claim with any reservations or exceptions, such
Indemnified Party will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnified Party
and in that event the reasonable fees and expenses of such separate counsel
(but not more than one separate counsel for all Indemnified Parties
similarly situated) shall be paid by such Indemnifying Party. If the
Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party will have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the
Indemnifying Party will control such defense. The Indemnifying Party will
be liable for the reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the Indemnifying Party has
failed to assume the defense thereof. If the Indemnifying Party assumes the
defense of any Third Party Claim, the Indemnifying Party will promptly
supply to the Indemnified Party copies of all material correspondence and
documents relating to or in
41
connection with such Third Party Claim and keep the Indemnified Party fully
informed of all material developments relating to or in connection with such
Third Party Claim (including providing to the Indemnified Party on request
updates and summaries as to the status thereof). If the Indemnifying Party
chooses to defend a Third Party Claim, the Parties will cooperate in the defense
thereof (such cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnifying Party), which cooperation shall include the
retention in accordance with this Agreement and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(c) No Indemnifying Party will consent to any settlement,
compromise or discharge (including the consent to entry of any judgment) of
any Third Party Claim without the Indemnified Party's prior written consent
(which consent will not be unreasonably withheld); provided, however, that
if the Indemnifying Party assumes the defense of any Third Party Claim, the
Indemnified Party will agree to any settlement, compromise or discharge of
such Third Party Claim which the Indemnifying Party may recommend and which
by its terms obligates the Indemnifying Party to pay the full amount of
Damages in connection with such Third Party Claim and unconditionally and
irrevocably releases the Indemnified Party and its Affiliates completely
from all Liability in connection with such Third Party Claim; provided,
however, that the Indemnified Party may refuse to agree to any such
settlement, compromise or discharge (x) that provides for injunctive or
other non-monetary relief affecting the Indemnified Party or any of its
Affiliates or (y) that, in the reasonable opinion of the Indemnified Party,
would otherwise materially adversely affect the Indemnified Party or any of
its Affiliates. Whether or not the Indemnifying Party shall have assumed
the defense of a Third Party Claim, the Indemnified Party will not (unless
required by law) admit any liability with respect to, or settle, compromise
or discharge, such Third Party Claim without the Indemnifying Party's prior
written consent (which consent will not be unreasonably withheld).
(d) Any claim on account of Damages which does not involve a
Third Party Claim will be asserted by reasonably prompt written notice
given by the Indemnified Party to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnified Party to so
notify the Indemnifying Party will not relieve the Indemnifying Party from
any liability which it may have to such Indemnified Party under this
Agreement, except to the extent that the Indemnifying Party shall have been
actually prejudiced by such failure.
(e) In the event of payment in full by an Indemnifying Party to
any Indemnified Party in connection with any Third Party Claim, such
Indemnifying Party
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will be subrogated to and shall stand in the place of such Indemnified Party as
to any events or circumstances in respect of which such Indemnified Party may
have any right or claim relating to such Third Party Claim against any claimant
or plaintiff asserting such Third Party Claim or against any other Person. Such
Indemnified Party will cooperate with such Indemnifying Party in a reasonable
manner, and at the cost and expense of such Indemnifying Party, in prosecuting
any subrogated right or claim.
Section 9.5. Sole and Exclusive Remedy. The indemnities
contained in this ARTICLE IX and ARTICLE X shall be the sole and exclusive
remedies of the Parties hereto, their Affiliates, successors and assigns
with respect to any and all claims arising out of or relating to this
Agreement, the transactions contemplated hereby, any provision hereof or
the breach or performance thereof.
Section 9.6. Termination of Indemnification Obligations. Except
as set forth in the following sentence, the indemnification obligations of
each of Seller and Purchaser hereunder will survive the Closing, including
surviving the sale or other transfer by any party to this Agreement of any
assets or businesses or the assignment by any party of any Liabilities. The
obligations of each Party to indemnify, defend and hold harmless
Indemnified Parties (i) pursuant to Sections 9.1(i) and 9.2(i), shall
terminate when the applicable representation or warranty expires pursuant
to Section 12.4, (ii) pursuant to Sections 9.1(ii) and 9.2(ii) shall
terminate upon the expiration of all applicable statutes of limitation
(giving effect to any extensions thereof, other than extensions caused by
the applicable Indemnified Party) and (iii) pursuant to Sections 9.1(iii),
9.1(iv), 9.2(iii) and 9.2(iv) shall continue without time limitation and
shall not terminate at any time; provided, however, that as to clauses (i)
and (ii) above, such obligations to indemnify, defend and hold harmless
shall not terminate with respect to any individual claim as to which the
Indemnified Party shall have, before the expiration of the applicable
period, previously delivered a notice (stating in reasonable detail the
basis of such claim) to the Indemnifying Party.
Section 9.7. Effect of Investigation. The right to
indemnification pursuant to Sections 9.1(i) and 9.2(i) shall not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or
after the execution and delivery of this Agreement.
Section 9.8. Tax Matters. Notwithstanding anything in Sections
9.1, 9.2, 9.4 or 9.5 to the contrary, ARTICLE X will be the exclusive
agreement among the Parties with respect to indemnification, procedures and
remedies with respect to Tax matters.
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ARTICLE X
TAX MATTERS
-----------
Section 10.1. Preparation and Filing of Tax Returns. Seller
shall prepare and file or cause to be prepared and filed all Tax Returns
(including amendments thereto) which are required to be filed in respect of
Maquiladora or the Assets for any taxable period ending on or before the
Closing Date and any taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"). Purchaser hereby irrevocably
designates, and agrees to cause each of its Affiliates to designate, Seller
as its agent to take any and all actions necessary or incidental to the
preparation and filing of such Tax Returns. All Tax Returns (including
amendments thereto) required to be filed in respect of Maquiladora or the
Assets for taxable periods beginning after the Closing Date shall be the
responsibility of Purchaser.
Section 10.2. Consistent with Past Practice. Unless Seller and
Purchaser otherwise agree in writing, all Tax Returns (including amendments
thereto) described in Section 10.1 filed after the Closing Date for taxable
periods ending on or before the Closing Date or Straddle Periods, in the
absence of a controlling change in law or circumstances, shall be prepared
on a basis consistent with the elections, accounting methods, conventions
and principles of taxation used for the most recent taxable periods for
which Tax Returns involving similar matters have been filed. Upon request
of Purchaser, Seller shall make available a draft of such Tax Return (or
relevant portions thereof) for review and comment by Purchaser. Subject to
the provisions of this Agreement, all decisions relating to the preparation
of Tax Returns shall be made in the sole discretion of the party
responsible under this Agreement for such preparation.
Section 10.3. Payment of Taxes. Except as otherwise provided in
this Agreement, Seller shall pay or cause to be paid, on a timely basis,
(i) all Taxes due with respect to the Tax liability of Maquiladora for
taxable periods ending on or before the Closing Date or Straddle Periods
and (ii) all Taxes due with respect to the Assets for taxable periods
ending on or before the Closing Date and the portion of any Straddle Period
ending on the Closing Date; provided, however, that Purchaser, on behalf of
Maquiladora, hereby assumes and agrees to pay directly to or at the
direction of Seller, at least five days prior to the date payment
(including estimated payment) thereof is due, the portion of such Taxes for
that portion of any Straddle Period which begins on the day after the
Closing Date (calculated pursuant to Section 10.4) which relates to
Maquiladora or its business, assets or activities. Purchaser shall pay or
cause to be paid, on a timely basis, (i) all Taxes due with respect the Tax
liability of Maquiladora for any taxable period beginning after the Closing
Date and (ii) all Taxes due with respect to the Assets
44
for taxable periods beginning after the Closing Date and the portion of any
Straddle Period beginning on the day after the Closing Date.
Section 10.4. Allocation of Straddle Period Taxes. In the case
of any Straddle Period:
(a) Periodic Taxes. (i) The periodic Taxes of Maquiladora or
its business, assets or activities and the periodic Taxes with respect to
the Assets that are not based on income or receipts (e.g., property Taxes)
for the portion of any Straddle Period which ends on the Closing Date shall
be computed based on the ratio of the number of days in such portion of the
Straddle Period and the number of days in the entire taxable period, and
(ii) the periodic taxes of Maquiladora or its business, assets or
activities and the periodic Taxes with respect to the Assets that are not
based on income or receipts for the portion of any Straddle Period
beginning on the day after the Closing Date shall be computed based on the
ratio of the number of days in such portion of the Straddle Period and the
number of days in the entire taxable period
(b) Non-Periodic Taxes. (i) The Taxes of Maquiladora or its
business, assets or activities for that portion of any Straddle Period
ending on the Closing Date (other than Taxes described in Section 10.4(a)
above), shall be computed on a "closing-of-the-books" basis as if such
taxable period ended as of the close of business on the Closing Date, and
(ii) the Taxes of Maquiladora or its business, assets or activities for
that portion of any Straddle Period beginning after the Closing Date (other
than Taxes described in Section 10.4(a) above), shall be computed on a
"closing-of-the-books" basis as if such taxable period began on the day
after the Closing Date.
Section 10.5. Tax Refunds and Carrybacks.
(a) Retention and Payment of Tax Refunds. Except as otherwise
provided in this Agreement, Seller shall be entitled to retain, and to
receive within ten days after Actually Realized by Purchaser and its
Affiliates, the portion of all refunds or credits of Taxes for which Seller
is liable pursuant to Section 10.3 or Section 10.6(a), and Purchaser shall
be entitled to retain, and to receive within ten days after Actually
Realized by Seller and its Affiliates, the portion of all refunds or
credits of Taxes for which Purchaser is liable pursuant to Section 10.3 or
Section 10.6(b). The amount of any refund or credit of Taxes to which
Seller or Purchaser is entitled to retain or receive pursuant to the
foregoing sentence shall be reduced to take account of any Taxes incurred
by Purchaser and its Affiliates, in the case of a refund or credit to which
Seller is entitled, or Seller and its Affiliates, in the case of a refund
or credit to which Purchaser is entitled, upon the receipt of such refund
or credit.
45
(b) Carrybacks. Unless the parties otherwise agree in writing,
Purchaser shall elect where permitted by law, to carry forward any net
operating loss, net capital loss, charitable contribution or other item
arising after the Closing Date that could, in the absence of such election,
be carried back to a taxable period ending on or before the Closing Date.
Except as otherwise provided in this Agreement, notwithstanding the
provisions of Section 10.5(a), (i) any refund or credit of Taxes resulting
from the carryback of any item of Taxes attributable to Purchaser or its
Affiliates arising in a taxable period beginning after the Closing Date to
a taxable period ending on or before the Closing Date or that portion of
any Straddle Period that ends on the Closing Date shall be for the account
and benefit of Purchaser and its Affiliates, and (ii) any refund or credit
of Taxes resulting from the carryback of any item of Taxes attributable to
Seller or its Affiliates arising in a taxable period beginning after the
Closing Date to a taxable period ending on or before the Closing Date or
that portion of any Straddle Period that ends on the Closing Date shall be
for the account and benefit of Seller and its Affiliates.
(c) Refund Claims. Seller shall be permitted to file at
Seller's sole expense, and Purchaser shall reasonably cooperate with Seller
in connection with, any claims for refund of Taxes to which Seller is
entitled pursuant to this Section 10.5 or any other provision of this
Agreement. Seller shall reimburse Purchaser for any reasonable
out-of-pocket costs and expenses incurred by Purchaser and its
Representatives or Affiliates in connection with such cooperation.
Purchaser shall be permitted to file at Purchaser's sole expense, and
Seller shall reasonably cooperate with Purchaser in connection with, any
claims for refunds of Taxes to which Purchaser is entitled pursuant to this
Section 10.5 or any other provision of this Agreement. Purchaser shall
reimburse Seller for any reasonable out-of-pocket costs and expenses
incurred by Seller and its Representatives and Affiliates in connection
with such cooperation.
Section 10.6. Tax Indemnification.
(a) Seller Indemnification. Seller shall be liable for, and
shall indemnify, defend and hold harmless the Purchaser Indemnified Parties
from and against:
(i) all Taxes of Maquiladora for any taxable period that
ends on or before the Closing Date and the portion of any Straddle
Period ending on the Closing Date;
(ii) all Taxes due with respect to the Assets for taxable
periods ending on or before the Closing Date and the portion of any
Straddle Period ending on the Closing Date;
46
(iii) all Taxes for any Tax period (whether beginning
before, on or after the Closing Date) attributable to the breach by
Seller or its Affiliates of any representation, warranty, covenant or
obligation under this Agreement;
(iv) all liability for a breach by Seller of any
representation, warranty, covenant, or obligation under this
Agreement with respect to Tax matters; and
(v) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Notwithstanding the foregoing, Seller shall not indemnify,
defend or hold harmless the Purchaser Indemnified Parties from any
liability for Taxes attributable to a Purchaser Tax Act. A Purchaser Tax
Act shall mean any action specified in Schedule 10.6 attached hereto.
Seller's obligations under this Section 10.6(a) shall not be subject to the
limitations in Section 9.3 of this Agreement.
(b) Purchaser Indemnification. Purchaser shall be liable for,
and shall indemnify, defend and hold harmless the Seller Indemnified
Parties from and against:
(i) all Taxes of Maquiladora (other than Taxes for which
Seller is obligated to provide indemnification for pursuant to
Section 10.6(a)(i));
(ii) all Taxes due with respect to the Assets (other than
Taxes for which Seller is obligated to provide indemnification
pursuant to Section 10.6(a)(ii));
(iii) all Taxes for any Tax period (whether beginning
before, on or after the Closing Date) attributable to the breach by
Purchaser or its Affiliates of any representation, warranty, covenant
or obligation under this Agreement;
(iv) all liability for a breach by Purchaser of any
representation, warranty, covenant, or obligation under this
Agreement with respect to Tax matters;
(v) all Taxes attributable to a Purchaser Tax Act; and
(vi) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the
foregoing.
Purchaser's obligation under this Section 10.6(b) shall not be
subject to the limitations in Section 9.3 of this Agreement.
47
Section 10.7. Notice of Indemnity. Whenever an Indemnified
Party becomes aware of the existence of an issue raised by any Tax
authority which could reasonably be expected to result in a determination
that would increase the liability for any Tax of the other Party hereto or
any of its Representatives or Affiliates for any Tax period or require a
payment hereunder by the other party (hereinafter an "Indemnity Issue"),
the Indemnified Party shall in good faith promptly give notice to an
Indemnifying Party of such Indemnity Issue. The failure of the Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations under this Agreement, except to the extent such Indemnifying
Party or any of its Representatives or Affiliates is actually prejudiced by
such failure to give notice.
Section 10.8. Payments.
(a) Timing Adjustments. In the event that a final determination
(which shall include the execution of a Form 870-AD or successor form)
results in a timing difference (e.g., an acceleration of income or delay of
deductions) that would increase Seller's liability for Taxes pursuant to
ARTICLE IX or this ARTICLE X or results in a timing difference (e.g., an
acceleration of deductions or delay of income) that would increase
Purchaser's liability for Taxes pursuant to ARTICLE IX or this ARTICLE X,
Purchaser or Seller, as the case may be, will promptly make payments to
Seller or Purchaser as and when Purchaser or Seller (or its Affiliates), as
the case may be, actually realizes any Tax benefits as a result of such
timing difference (or under such other method for determining the present
value of any such anticipated Tax benefits as agreed to by the Parties).
(b) Time for Payment. Any indemnity payment required to be made
pursuant to this Agreement shall be paid within thirty days after the
Indemnified Party makes written demand upon the Indemnifying Party,
provided that in no event shall such payment be required to be made earlier
than five business days prior to the date on which the relevant Taxes
(including estimated Taxes) are required to be paid (or would be required
to be paid if no such Taxes are due) to the relevant Tax authority.
Section 10.9. Tax Contests. The Indemnifying Party and its
Representatives, at the Indemnifying Party's expense, shall be entitled to
participate (a) in all conferences, meetings and proceedings with any Tax
authority, the subject matter of which is or includes an Indemnity Issue
and (b) in all appearances before any court, the subject matter of which is
or includes an Indemnity Issue. The Party who has responsibility for filing
the Tax Return under this Agreement with respect to which there could be an
increase in liability for any Tax or with respect to which a payment could
be required hereunder shall have the right to decide as between the Parties
hereto how such matter is to be dealt with and finally resolved with the
appropriate Tax Authority and shall control all audits and similar
proceedings, provided, however, that if such contest
48
would be reasonably expected to result in a material increase in the tax
liability (i) of Maquiladora or (ii) related to the Assets, for which Purchaser
would be liable, Purchaser may participate in the conduct of such contest and
Seller shall not settle any such contest without the consent of Purchaser, which
consent shall not be unreasonably withheld. If no Tax Return is or was required
to be filed in respect of an Indemnity Issue, the Indemnifying Party shall be
treated as the responsible party with respect thereto. The responsible party
agrees to cooperate in the settlement of any Indemnity Issue with the other
Party and to take such other Party's interests into account.
Section 10.10. Cooperation and Exchange of Information. Each
Party hereto agrees to provide, and to cause each of its Affiliates to
provide, such cooperation and information as such other Party shall
request, on a timely basis, in connection with the preparation or filing of
any Tax Return or claim for Tax refund not inconsistent with this Agreement
or in conducting any Tax audit, Tax dispute, or otherwise in respect of
Taxes or to carry out the provisions of this Agreement, provided, however,
that neither Party shall be obligated to provide the other Party with Tax
Returns, documentation or other information of a proprietary or
confidential nature for purposes of verifying any calculation, and provided
further, that in any such case where one Party does not provide the other
Party with Tax Returns, documentation or information because it is
proprietary or confidential, both Parties shall cooperate in developing
mutually acceptable procedures including retaining a mutually agreeable
accounting firm to review such Tax Returns, documentation or information
for purposes of verifying such calculation.
Section 10.11. Taxes; Profit-Sharing; Customs Duties; Transfer
Sales and Use Taxes.
(a) Mexican Taxes on Sale of Shares, Minority Shares and the
Assets. Seller shall, and shall cause Minority Shareholder to, fully comply
with all Mexican Tax laws in connection with the sale of the Shares, the
Minority Shares and the Assets, respectively, such that Purchaser and the
Minority Purchaser shall not be required to deduct or withhold any amount
from the Purchase Price. Seller agrees to indemnify and hold Purchaser and
Minority Purchaser harmless from and against any Taxes imposed on any gain
from the sale by Seller or Minority Shareholder, respectively, of the
Shares, the Minority Shares or the Assets under this Agreement due to any
Governmental Authority, including any obligation Purchaser or Minority
Purchaser may have to withhold or remit to Mexican Governmental Authorities
Taxes levied on Seller or Minority Shareholder as a result of the sale of
the Shares, the Minority Shares or the Assets under this Agreement. The
Parties agree that the Spanish language stock purchase agreement with
respect to the Shares and the Spanish language stock purchase agreement
with respect to the Minority Shares to be delivered at the Closing as
provided in Section 8.1(ii), Section 8.2(ii), Section 8.3(ii) and Section
8.4(i), shall be used by the Parties, Minority Shareholder and
49
Minority Purchaser for Mexican Tax reporting purposes and that the consideration
set forth in such documents shall be the same as and not in addition to the
Purchase Price.
(b) No Tax Elections. Purchaser shall not make any U.S. federal
income Tax elections with respect to its purchase of the Shares.
(c) Advanced Pricing Agreement; Effect on Taxes and Profit
Sharing. Seller, at its own expense, shall have the sole and exclusive
right, power and authority to negotiate with the appropriate Mexican
Governmental Authorities and enter into the Advanced Pricing Agreement.
Seller agrees to keep Purchaser informed of the status of such negotiations
and shall not enter into the Advanced Pricing Agreement without the consent
of Purchaser, which consent shall not be unreasonably withheld. Maquiladora
shall cooperate with Seller in negotiating and finalizing the Advanced
Pricing Agreement. Purchaser agrees to cause Maquiladora not amend,
supplement or modify the Advanced Pricing Agreement as it would relate to
periods prior to the Closing.
(d) Mexican Customs Duties. Purchaser and Seller will, and
Purchaser will cause Maquiladora after the Closing to, cooperate in good
faith to prepare and execute any and all customs documents required to
legally allow Maquiladora to continue to use the Assets in Mexico, in
accordance with applicable Mexican Law and to file a virtual exportation
and virtual importation pediment to reconcile the open pediments of
Maquiladora at the Closing. Seller shall be responsible for any customs
duties or fees relating to periods prior to the Closing. Purchaser and
Maquiladora will be responsible for any customs duties or fees relating to
periods from and after the Closing.
(e) Transfer, Sales and Use Taxes. Notwithstanding anything to
the contrary in this Agreement, all transfer, documentary, sales, use,
stamp, registration, value added and other similar Taxes and fees
(including any penalties and interest) incurred in connection with the
transactions contemplated by this Agreement shall be shared equally by
Seller and Purchaser. Each Party hereto agrees to file all necessary
documentation (including all Tax Returns) with respect to all such Taxes in
a timely manner. On or before the Closing Date, Purchaser shall provide to
Seller a required sales and use tax purchase exemption certificate or
certificates with respect to the Assets to the extent they constitute (i)
exempt tangible personal property held for resale or for incorporation into
goods to be held for resale, (ii) exempt manufacturing and production
equipment, or (iii) otherwise are exempt from the sales and use tax upon
the provision of an appropriate exemption certificate.
Section 10.12. Tax Records.
(a) The Parties agree to (and to cause each of their Affiliates
to) (i) retain all Tax Returns, related schedules and work papers, and all
material records and
50
other documents as required under Section 6001 of the Code and the regulations
promulgated thereunder relating thereto existing on the date hereof or created
through the Closing Date, for a period of at least ten years following the
Closing Date and (ii) allow the Party to this Agreement, at times and dates
reasonably acceptable to the retaining Party, to inspect, review and make copies
of such records, as the Parties may reasonably deem necessary or appropriate
from time to time. In addition, after the expiration of such ten-year period,
such Tax Returns, related schedules and workpapers, and material records shall
not be destroyed or otherwise disposed of at any time, unless, prior to such
destruction or disposal, (A) the Party proposing to destroy or otherwise dispose
of such records shall provide no less than 30 days' prior written notice to the
other Party, specifying in reasonable detail the records proposed to be
destroyed or disposed of and (B) if a recipient of such notice shall request in
writing prior to the scheduled date for such destruction or disposal that any of
the records proposed to be destroyed or disposed of be delivered to such
requesting Party, the Party proposing the destruction or disposal shall promptly
arrange for the delivery of such requested records at the expense of the Party
requesting such records.
(b) Notwithstanding anything in this Agreement to the contrary,
if any Party fails to comply with the requirements of Section 10.12(a)
hereof, the Party failing so to comply shall be liable for, and shall hold
the other Party, harmless from, any Taxes (including without limitation,
penalties for failure to comply with the record retention requirements of
the Code) and other costs resulting from such Party's failure to comply.
Section 10.13. Tax Sharing Agreements. On the Closing Date, all
Tax sharing agreements and arrangements between (a) Maquiladora, on the one
side, and (b) Seller or any of its Subsidiaries or Affiliates, on the other
side, will be terminated and have no further effect for any taxable year or
period (whether a past, present or future year or period), and no
additional payments will be made thereunder on or after the Closing Date in
respect of a redetermination of Tax liabilities or otherwise.
Section 10.14. Dispute Resolution. Any dispute, claim or
controversy arising out of or relating to any provision of ARTICLE X of
this Agreement will be resolved in accordance with the procedures set forth
in Section 12.3(b) of this Agreement, provided that each such mediator or
arbitrator selected pursuant to such procedures shall have an expertise in
Tax matters.
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ARTICLE XI
TERMINATION
-----------
Section 11.1. Voluntary Termination. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing Date by the mutual written consent of Purchaser
and Seller.
Section 11.2. Automatic Termination. In the event of a
termination of the Merger Agreement, this Agreement shall automatically and
immediately terminate.
Section 11.3. Effect of Termination. In the event of the
termination of this Agreement, all further obligations of the Parties
hereunder shall terminate, and the transactions contemplated hereby shall
be abandoned without further action or liability by any of the Parties
hereto, except that (i) Section 11.3 ("Effect of Termination"), Section
12.2 ("Notices"), Section 12.3 ("Choice of Law, Dispute Resolution"),
Section 12.6 ("Entire Agreement; Waivers"), Section 12.8 ("Severability"),
Section 12.10 ("Expenses"), Section 12.12 ("Parties in Interest") and
Section 12.14 ("Controlling Agreement") shall survive such termination and
(ii) nothing shall relieve any Party hereto from liability for any breach
of this Agreement prior to such termination.
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1. Assignment. No Party to this Agreement will
convey, assign or otherwise transfer any of its rights or obligations under
this Agreement without the prior written consent of the other Party in its
sole and absolute discretion. Notwithstanding the foregoing, any Party may
(without obtaining any consent) assign, delegate or sublicense all or any
portion of its rights and obligations hereunder to (i) the surviving entity
resulting from a merger or consolidation involving such Party, (ii) the
acquiring entity in a sale or other disposition of (A) all or substantially
all of the assets of such Party as a whole, (B) any line of business or
division of such Party, or (C), in the case of Purchaser, the Facility,
(iii) any other Person that is created as a result of a spin-off from, or
similar reorganization transaction of, such Party or any line of business
or division of such Party or (iv) an Affiliate. In the event of an
assignment pursuant to (ii) or (iii) above, the non-assigning Party shall,
at the assigning Party's request, use good faith commercially reasonable
efforts to enter into separate agreements with each of the resulting
entities and take such further actions as may be reasonably required to
assure that the rights and obligations under this Agreement are preserved,
in the aggregate, and divided equitably between such resulting entities.
Any conveyance, assignment or
52
transfer requiring the prior written consent of another Party pursuant to this
Section 12.1 which is made without such consent will be void ab initio. No
assignment of this Agreement will relieve the assigning Party of its obligations
hereunder.
Section 12.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed duly given (a) on the
date of delivery if delivered personally, (b) upon confirmation of receipt
if delivered by telecopy or telefacsimile, (c) on the first Business Day
following the date of dispatch if delivered by a recognized next-day
courier service, or (d) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the Party to receive such notice:
If to Purchaser, to:
Alpha Industries, Inc.
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
Chief Financial Officer
With copies to (not effective for purposes of notice):
Alpha Industries, Inc.
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
General Counsel
or if to Seller, to:
Conexant Systems, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. X'Xxxxxx
Senior Vice President, General
Counsel and Secretary
53
With a copy to (not effective for purposes of notice):
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Section 12.3. Choice of Law; Dispute Resolution.
(a) Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without
giving effect to choice of law principles).
(b) Dispute Resolution. In the event that from and after the
Closing, any dispute, claim or controversy (collectively, a "Dispute")
arises out of or relates to any provision of this Agreement or the breach,
performance, enforcement or validity or invalidity thereof, the designees
of Seller's Chief Executive Officer and Purchaser's Chief Executive Officer
will attempt a good faith resolution of the Dispute within thirty (30) days
after either Party notifies the other Party in writing of the Dispute. If
the Dispute is not resolved within thirty (30) days of the receipt of the
notification, or within such other time as they may agree, the Dispute will
be referred for resolution to Seller's Chief Executive Officer and
Purchaser's Chief Executive Officer. Should they be unable to resolve the
Dispute within thirty (30) days following the referral to them, or within
such other time as they may agree, Seller and Purchaser will then attempt
in good faith to resolve such Dispute by mediation in accordance with the
then-existing CPR Mediation Procedures promulgated by the CPR Institute for
Dispute Resolution, New York City. If such mediation is unsuccessful within
thirty (30) days (or such other period as the Parties may mutually agree)
after the commencement thereof, such Dispute shall be submitted by the
Parties to binding arbitration, initiated and conducted in accordance with
the then-existing American Arbitration Association Commercial Arbitration
Rules, before a single arbitrator selected jointly by Seller and Purchaser,
who shall not be the same person as the mediator appointed pursuant to the
preceding sentence. If Seller and Purchaser cannot agree upon the identity
of an arbitrator within ten (10) days after the arbitration process is
initiated, then the arbitration will be conducted before three arbitrators,
one selected by Seller, one selected by Purchaser and the third selected by
the first two. The arbitration shall be conducted in San Francisco,
California and shall be governed by the United States Arbitration Act, 9
U.S.C. Sections 1-16, and judgment upon the award may be entered by any
court having jurisdiction thereof. The arbitrators shall have case
management authority and shall resolve the Dispute in a final award within
one hundred eighty (180) days from the commencement of the arbitration
action,
54
subject to any extension of time thereof allowed by the arbitrators upon good
cause shown.
Section 12.4. Survival of Representations and Warranties and
Covenants. The respective representations and warranties of the Parties
contained in this Agreement (other than those set forth in the following
sentence) will survive the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the Closing and
will continue in full force and effect until six (6) months after the
Closing Date and will then expire. The representations and warranties of
the Parties contained in Section 3.1, Section 3.2, Section 3.3, Section
3.4, Section 3.9(a), Section 3.13, Section 3.18, Section 4.1, Section 4.2,
and Section 4.3 will survive the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the Closing
and will continue in full force and effect until all applicable statutes of
limitation (including any extensions thereof) have expired and will then
expire. All covenants of the Parties contained in this Agreement will
remain in full force and effect after, and survive, the Closing (other than
those to be performed at or prior to the Closing).
Section 12.5. Limitations on Representations and Warranties.
Except for the representations and warranties set forth in this Agreement,
the Assets, the Shares and the Minority Shares are being sold "AS IS, WHERE
IS, AND WITH ALL FAULTS." EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER CONCERNING THE ASSUMED LIABILITIES, THE ASSETS, THE FACILITY,
THE BUSINESS OR OPERATIONS OF MAQUILADORA OR ANY OTHER MATTER, EXPRESS OR
IMPLIED, ORAL, OR WRITTEN. SELLER HEREBY SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTY OF MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE.
Section 12.6. Entire Agreement; Waivers. This Agreement,
together with all exhibits and Schedules hereto, and the other agreements
and instruments of the Parties delivered in connection herewith constitute
the entire agreement and supersede all prior agreements and understandings
both written and oral, among the Parties with respect to the subject matter
hereof. The failure of any Party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
Section 12.7. Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement. This Agreement may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.
55
Section 12.8. Severability. If any provision of this Agreement
or the application thereof to any Person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
Persons or circumstances other than those as to which it has been held
invalid or unenforceable, will remain in full force and effect and will in
no way be affected, impaired or invalidated thereby. If the economic or
legal substance of the transactions contemplated hereby is affected in any
manner adverse to any Party as a result thereof, the Parties will negotiate
in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the Parties.
Section 12.9. Headings. The headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 12.10. Expenses. Except as otherwise provided in this
Agreement, each of the Parties shall be liable for its own expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement prior to Closing.
Section 12.11. Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Seller
and Purchaser.
Section 12.12. Parties in Interest. This Agreement is binding
upon and is for the benefit of the Parties hereto and their respective
successors and permitted assigns. This Agreement is not made for the
benefit of any Person not a Party hereto, and no Person other than the
Parties hereto or their respective successors and permitted assigns will
acquire or have any benefit, right, remedy or claim under or by reason of
this Agreement, except that the provisions of Sections 9.1, 9.2 and 10.6
hereof shall inure to the benefit of the Persons referred to therein.
Section 12.13. Schedules and Exhibits. Inclusion of an item or
matter on any of the Schedules or Exhibits attached hereto shall not be
deemed to be an admission by any Party that such item or matter is required
to be disclosed in such Schedule or Exhibit. Each disclosure on each
Schedule, to the extent specified therein, qualifies the correspondingly
numbered representation and warranty or covenant contained herein and, to
the extent it is apparent on the face of such disclosure that such
disclosure qualifies another representation or warranty contained herein,
such other representation and warranty.
Section 12.14. Controlling Agreement. In the event of any
inconsistency between the provisions of this Agreement and those of either
Seller's Contrato de
56
Compra-Venta de Acciones or Minority Shareholder's Contrato de Compra-Venta de
Acciones, this Agreement shall be controlling (other than with respect to the
governing law).
Section 12.15. Compliance with Bulk Sales Laws. The Parties
hereby waive compliance with the bulk sales laws and any other similar laws
in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.
Section 12.16. Savings Clause. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Assumed Contract if an assignment or attempted assignment of
the same without the Consent of any other party or parties thereto or other
required Consent would constitute a breach thereof or of any applicable law
or in any way impair the rights of Seller or Purchaser thereunder. If any
such Consent is not obtained or if an attempted assignment would be
ineffective or would impair any rights of either Seller or Purchaser under
any such Assumed Contract that Purchaser would not receive all such rights,
then (x) Seller will use commercially reasonable efforts (it being
understood that such efforts shall not include any requirement of Seller to
pay any consideration or offer or grant any financial accommodation) to
provide or cause to be provided to Purchaser the benefits of any such
Assumed Contract and Seller will promptly pay or cause to be paid to
Purchaser when received all moneys and properties received by Seller with
respect to any such Assumed Contract and (y) to the extent that Purchaser
receives the benefits of such Assumed Contract, Purchaser will pay, perform
and discharge on behalf of Seller all of Seller's Liabilities thereunder in
a timely manner and in accordance with the terms thereof. If and when such
Consents are obtained, the transfer of the applicable Assumed Contract
shall be effected as promptly following the Closing as shall be practicable
in accordance with the terms of this Agreement.
Section 12.17. Cooperation Following the Closing. Following the
Closing, the Parties shall each deliver to the other such further
information and documents and shall execute and deliver to the other such
further instruments and agreements as the other shall reasonably request to
consummate or confirm the transactions provided for in this Agreement, to
accomplish the purpose of this Agreement or to assure to the other the
benefits of this Agreement.
[The remainder of this page is left intentionally blank;
signature page follows]
57
IN WITNESS WHEREOF, each of the Parties listed below has
executed this Mexican Stock and Asset Purchase Agreement as of the day and
year first above written.
CONEXANT SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board and Chief
Executive Officer
ALPHA INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
58
