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Section 1: 8-K (FORM 8-K)

Form 8-K
0001320854 False 0001320854 2020-10-13 2020-10-13 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 13, 2020

_______________________________

FREIGHTCAR AMERICA, INC.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware 000-51237 25-1837219
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)

125 S. Wacker Drive, Suite 1500

Chicago, Illinois 60606

(Address of Principal Executive Offices) (Zip Code)

(800) 458-2235

(Registrant's telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share RAIL Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 

Section 1 – Registrant’s Business and Operations

 
Item 1.01. Entry into a Material Definitive Agreement.
 

Equity Purchase Agreement

 

On October 16, 2020, FreightCar America, Inc. (the “Company”), through its wholly owned subsidiary, FreightCar North America, LLC (f/k/a FCAI Holdings, LLC) (“FreightCar North America”) entered into an equity purchase agreement (the “Equity Purchase Agreement”) with Fasemex, Inc. (the “US Seller”), Fabricaciones y Servicios de México, S.A. de C.V. (“Fasemex Mexico”) and Agben de Mexico, S.A. de C.V. (“Agben” and, together with Fasemex Mexico, the “MX Sellers”, and the MX Sellers, together with the US Seller, the “Sellers”). Pursuant to the Equity Purchase Agreement, FreightCar North America acquired from Sellers 50% of the outstanding equity interests (the “Seller Interests”) of FCA-Fasemex, LLC, a Delaware limited liability company (the “ US JV”), FCA-Fasemex, S. de R.L. de C.V., an entity organized under the laws of Mexico (“Production JV”), and FCA-Fasemex Enterprise, S. de R.L. de C.V., an entity organized under the laws of Mexico (“ Services JV,” and, collectively, with the Production JV and the US JV, the “ JV Companies”).  

 

The JV Companies collectively represented the Company’s joint venture with the Sellers to manufacture railcars in Castaños, Mexico, which was formed in September 2019.  Prior to the execution of the Equity Purchase Agreement, FreightCar North America owned a 50% interest in each of the JV Companies and, as a result of the acquisition of the Seller Interests, the JV Companies are now wholly-owned by FreightCar North America.

 

The consideration for the Seller Interests includes $172,500 in cash and the issuance of an aggregate of 2,257,234 shares of the Company’s common stock, par value $0.01 per share (the “EPA Shares”), to the Sellers. In addition, the Company and certain of its subsidiaries entered into several ancillary agreements as discussed in this Form 8-K.

 

The Equity Purchase Agreement contains certain customary representations, warranties, indemnities and covenants, including a non-competition covenant from the Sellers and their affiliates until the later of three years after closing and such time that the Sellers cease to beneficially own, in the aggregate, common stock of the Company equal to at least 5% of the issued and outstanding shares of the Company’s common stock.

 

The issuance of the EPA Shares by the Company is being made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), because the offer and sale of such securities do not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act.

 

The foregoing description of the Equity Purchase Agreement does not purport to be complete and is qualified by reference to the full text of the Equity Purchase Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

 

Investor Rights Agreement

 

In connection with the Equity Purchase Agreement, the Company entered into an investor rights agreement on October 16, 2020 (the “Investor Rights Agreement”) with the Sellers. Pursuant to the Investor Rights Agreement, the Sellers have the right to designate one nominee for election to the Company’s board of directors (the “Board”) for so long as the Sellers beneficially own in the aggregate, common stock of the Company equal to at least 5% of the issued and outstanding shares of the Company’s common stock. The director nominee initially designated by the Sellers is Mr. Jesus Salvador Gil Benavides and the Board will appoint him to serve as a Class II director effective on or before October 26, 2020. Pursuant to the Investor Rights Agreement, Mr. Jesus Gil will also be retained as the Vice President of Operations of the Company.

 

In addition, the Investor Rights Agreement provides the Sellers with the right to designate a non-voting observer to attend meetings of the Board and of committees of the Board, subject to customary limitations, for so long as the Sellers beneficially own, in the aggregate, common stock of the Company equal to at least 5% of the issued and outstanding shares of the Company’s common stock. The non-voting board observer initially appointed is Mr. Alejandro Gil.

 

The foregoing description of the Investor Rights Agreement does not purport to be complete and is qualified by reference to the full text of the Investor Rights Agreement, which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

 

Lease Agreement

 

On October 16, 2020, Fasemex Mexico entered into a restated lease agreement (the “Lease Agreement”), as lessor, with the Production JV, as lessee, with respect to the Production JV’s manufacturing facility in Castaños, Mexico (the “Facility”). The Lease Agreement replaces the current lease in place between such parties since September 19, 2019.  The Lease Agreement has a term through September 30, 2040.  All obligations under the Lease Agreement are guaranteed by the Company. The Lease Agreement has an expansion option for the Production JV to expand the Facility, at its discretion. The Lease Agreement contains certain customary representations, covenants, and events of default.

 

The foregoing description of the Lease Agreement does not purport to be complete and is qualified by reference to the full text of the Lease Agreement, which is filed as Exhibit 10.3 hereto and is incorporated herein by reference.

 

Royalty Agreement

 

In connection with the Equity Purchase Agreement, on October 16, 2020, the Company entered into a royalty agreement with the Sellers and certain affiliates thereof (the “Royalty Agreement”).  Under the Royalty Agreement, the Company will pay to the Sellers certain royalties on amounts received from sales or leases of new railcars or tank cars built (or refurbished or repaired) at the Facility by the Company for a period of 17 years with respect to each of the first four production lines established by the Company at the Facility. The Royalty Agreement shall end upon the termination of the last applicable 17-year royalty period with respect to a production line, unless terminated earlier in connection with a breach of the Royalty Agreement or the Lease Agreement. In addition, for so long as the Royalty Agreement remains in effect, the Company will pay to the Sellers certain royalties on amounts received from similar railcar production, refurbishing or repair to the extent conducted in the future by the Company in any other manufacturing location in Mexico other than the Facility.

 

The foregoing description of the Royalty Agreement does not purport to be complete and is qualified by reference to the full text of the Royalty Agreement, which is filed as Exhibit 10.4 hereto and is incorporated herein by reference.

 

Term Loan Credit Agreement

 

On October 13, 2020, the Company entered into a Credit Agreement (the “Term Loan Credit Agreement”) by and among the Company, as guarantor, FreightCar North America (“Borrower” and together with the Company and certain other subsidiary guarantors, collectively, the “Loan Parties”), CO Finance LVS VI LLC, as lender (the “Lender”), an affiliate of a corporate credit fund for which Pacific Investment Management Company LLC serves as investment manager, and U.S. Bank National Association, as disbursing agent and collateral agent (“Agent”). Pursuant to the Term Loan Credit Agreement, the Lender extended a term loan credit facility in the principal amount of $40.0 million, consisting of a single term loan to be funded upon the satisfaction of certain conditions precedent set forth in the Term Loan Credit Agreement, including stockholder approval of the issuance of the common stock underlying the Warrant described below (the funding date of such term loan, the “Closing Date”).

 

The Term Loan Credit Agreement has a term ending five years following the Closing Date.  The commitment of the Lender to fund the term loan will terminate if the Closing Date has not occurred by December 31, 2020. The term loan outstanding under the Term Loan Credit Agreement will bear interest, at Borrower’s option and subject to the provisions of the Term Loan Credit Agreement, at Base Rate (as defined in the Term Loan Credit Agreement) or Eurodollar Rate (as defined in the Term Loan Credit Agreement) plus the Applicable Margin for each such interest rate set forth in the Term Loan Credit Agreement.

 

The Term Loan Credit Agreement has both affirmative and negative covenants, including, without limitation, limitations on indebtedness, liens and investments. The Term Loan Credit Agreement also provides for customary events of default.  Pursuant to the terms and conditions set forth in the Term Loan Credit Agreement and the related loan documents, each of the Loan Parties granted to Agent a continuing lien upon all of such Loan Parties’ assets to secure the obligations of the Loan Parties under the Term Loan Credit Agreement.

 

The foregoing description of the Term Loan Credit Agreement does not purport to be complete and is qualified by reference to the full text of the Term Loan Credit Agreement, which is filed as Exhibit 10.5 hereto and is incorporated herein by reference.

 

Warrant

 

In connection with the entry into the Term Loan Credit Agreement, the Company will issue to an affiliate of the Lender (the “Warrantholder”) a warrant (the “Warrant”), issued pursuant to that certain warrant acquisition agreement, dated as of October 13, 2020 (the “Warrant Acquisition Agreement”), by and between the Company and the Lender to purchase a number of shares of the Company’s common stock, par value $0.01 per share, equal to 23% of the outstanding common stock on a fully-diluted basis at the time the Warrant is exercised. The Warrant will be exercisable for a term of ten years from the date of the issuance of the Warrant. The issuance of the Warrant will occur on the Closing Date and is subject to, among other things, approval of the issuance of the Warrant by the Company’s stockholders.

 

Pursuant to the Warrant Acquisition Agreement, for so long as the Warrantholder or its affiliates hold (a) at least 50% of the Warrant or (b) at least 50% of the shares issuable pursuant to the exercise of the Warrant, the Warrantholder shall be entitled to designate for nomination to the Board a director to the Board and a non-voting observer. The Warrantholder will provide, in writing, the name of the initial director nominee (the “Warrantholder Director”) prior to the Closing Date and the Board will appoint him or her to serve as a Class III director effective on the Closing Date.

 

The issuance of the Warrant by the Company to the Warrantholder and the issuance of the common stock issuable upon exercise of the Warrant will be made in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act, because the offer and sale of such securities do not involve a “public offering” as defined in Section 4(a)(2) of the Securities Act.

 

The foregoing description of the Warrant and the Warrant Acquisition Agreement do not purport to be complete and are qualified in their entirely by reference to Warrant Acquisition Agreement and form of Warrant that are filed as Exhibits 10.6 and 10.7 to hereto and are incorporated herein by reference.

 

Registration Rights Agreement

 

In connection with the issuance of the Warrant, the Company and the Lender will enter into a registration rights agreement (the “Registration Rights Agreement”) as of the Closing Date. Pursuant to the Registration Rights Agreement, the Warrantholder may deliver to the Company a written notice (a “Demand”) requiring the Company as soon as reasonably practicable after receiving the Demand, but not more than sixty calendar days following the receipt of the Demand, to file a registration statement (the “Demand Registration Statement”) with respect to all or a portion of the Company’s common stock issuable upon the exercise of the Warrant (referred herein as “Registrable Securities”) with the Securities and Exchange Commission (the “SEC”). The Company will use commercially reasonable efforts to keep the Demand Registration Statement continuously effective (including the preparation and filing of any amendments and supplements necessary for that purpose) until the date on which the Warrantholder consummates the sale of all of the Registrable Shares registered for resale under the Demand Registration Statement or such earlier date on which all Registrable Shares held by the Warrantholder or its affiliates are freely tradeable in a single transaction pursuant to Rule 144.

 

In certain circumstances, and as described in the Registration Rights Agreement, the Warrantholder will have (i) piggyback registration rights with respect to the Registrable Securities and (ii) the right to request that the Company initiate an Underwritten Offering (as defined in the Registration Rights Agreement) of Registrable Securities.

 

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified by reference to the full text of the form of Registration Rights Agreement, which is filed as Exhibit 10.8 hereto and is incorporated herein by reference.

 

Section 2 – Financial Information

 
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure set forth above in Item 1.01 under “Term Loan Credit Agreement” is hereby incorporated by reference into this Item 1.02.

Section 3 – Securities and Trading Markets

 
Item 3.02. Unregistered Sales of Equity Securities.

The disclosure set forth above in Item 1.01 is hereby incorporated by reference into this Item 3.02.

Section 5 – Corporate Governance and Management

 
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The disclosure set forth above in Item 1.01 is hereby incorporated by reference into this Item 5.02.

In connection with the Investor Rights Agreement described in Item 1.01 hereof, on or before October 26, 2020, the Board will increase its size from six to seven directors and appoint Mr. Jesus Gil as a Class II director. Mr. Gil’s term will expire at the 2022 annual meeting of stockholders.

Pursuant to the Investor Rights Agreement described in Item 1.01 hereof, the Company retained Mr. Jesus Gil as its Vice President of Operations. Mr. Gil is presently employed by the Production JV.  The Company expects to modify Mr. Gil’s employment arrangement to a base salary of $265,000 with performance incentives and employee welfare benefits commensurate with individuals having a similar level of responsibility.  Mr. Jesus Gil is subject to a non-compete obligation during the term of his employment and for three years thereafter. 

Mr. Jesus Gil has over 30 years of experience in metal fabrications, and over 20 years of experience in the railcar manufacturing industry. Prior to his appointment, Mr. Jesus Gil held various roles with Grupo Industrial Monclova, S.A. de C.V. (“Grupo Industrial”), a corporation operating in railcar manufacturing, offshore platform fabrication, mining, industrial gases and energy, from 2005 to 2017. These roles included Director of the Industrial Division, Chief Operating Officer and Chief Executive Officer. During this time, he also served as a member of Grupo Industrial’s board of directors. From 1997 to 2005, Mr. Jesus Gil worked for Trinity Industries de Mexico as Plant Manger at the Monclova plant and the General Manager of Monclova-Sabinas. In 2018, he finished a one-year Advanced Executive Management Program (AD-2) at the Instituto Panamericano de Alta Dirección de Empresa (IPADE) in Monterrey, Mexico.  In 1988, he obtained a master’s degree in electrical engineering from Washington University, Saint Louis, Missouri, and in 1986 he received his bachelor’s degree in electronic engineering from the Instituto Tecnológico de Monterrey.

Other than the arrangements disclosed above in Item 1.01 hereof and in this Item 5.02, there are no other arrangements or understandings between Mr. Jesus Gil and any other persons to which he was elected as a director of the Company.

With respect to Item 404(a) of Regulation S-K, there are no relationships or related transactions between Mr. Jesus Gil and the Company that would be required to be reported that are not otherwise reported in this Form 8-K.

Section 8 – Other Events

 
Item 8.01. Other Events.

On October 19, 2020, the Company issued a press release announcing the Company’s entry into the Equity Purchase Agreement and related documents, the Term Loan Credit Agreement and the Warrant Acquisition Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

 
Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits 

Exhibit 10.1      Equity Purchase Agreement, dated October 16, 2020, by and among the Company, FreightCar North America, LLC (f/k/a/ FCAI Holdings, LLC) and Fabricaciones y Servicios de México, S.A. de C.V., Agben de Mexico, S.A. de C.V. and Fasemex, Inc.
Exhibit 10.2   Investor Rights Agreement, dated October 16, 2020, by and between the Company and Fabricaciones y Servicios de México, S.A. de C.V., Agben de Mexico, S.A. de C.V. and Fasemex, Inc..
Exhibit 10.3   Lease Agreement, dated October 16, 2020, by and between Fabricaciones y Servicios de México, S.A. de C.V., as lessor, and FCA-Fasemex, S. de R.L. de C.V., as lessee.
Exhibit 10.4   Royalty Agreement, dated October 16, 2020, by and among the Company and Fabricaciones y Servicios de México, S.A. de C.V., Agben de Mexico, S.A. de C.V. and Fasemex, Inc.
Exhibit 10.5   Term Loan Credit Agreement, dated October 13, 2020, by and among the Company, FreightCar North America, LLC, CO Finance LVS VI LLC and U.S. Bank National Association.*
Exhibit 10.6   Warrant Acquisition Agreement, dated October 13, 2020, by and between the Company and CO Finance LCS VI LLC.*
Exhibit 10.7   Form of Warrant issued by the Company to CO Finance LVS VI LLC.
Exhibit 10.8   Form of Registration Rights Agreement, to be entered into as of the Closing Date, by and between the Company and CO Finance LVS VI LLC.
Exhibit 99.1   Press release of FreightCar America, Inc., dated October 19, 2020.
Exhibit 104   Cover Page Interactive Data File (embedded within the Inline XBRL document).


*Portions of this document have been redacted pursuant to Item 601(b)(10)(iv) or Item 601(a)(6) of Regulation S-K.

 

 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  FREIGHTCAR AMERICA, INC.
     
   
Date: October 19, 2020 By:  /s/ Christopher J. Eppel        
    Christopher J. Eppel
    Vice President, Finance, Chief Financial Officer, Treasurer and Corporate Secretary
   

 

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Section 2: EX-10.1 (EXHIBIT 10.1)

Exhibit 10.1

 

Execution Copy

 

EQUITY PURCHASE AGREEMENT

 

This Equity Purchase Agreement (this “Agreement”) is entered into as of October 16, 2020, by and among FreightCar North America, LLC (f/k/a FCAI Holdings, LLC), a Delaware limited liability company (“Buyer”), Fasemex, Inc. a Texas corporation (“US Seller”), Fabricaciones y Servicios de México, S.A. de C.V., an entity organized under the laws of Mexico (“Fasemex Mexico”), and Agben de Mexico, S.A. de C.V., an entity organized under the laws of Mexico (“Agben” and, together with Fasemex Mexico, “MX Sellers”). US Seller and MX Sellers are sometimes referred to herein individually as “Seller” and collectively as “Sellers,” and Buyer and Sellers are sometimes referred to individually as “Party” and collectively as “Parties.” FreightCar America, Inc., a Delaware corporation (“Parent”), is made party hereto solely for the purposes of Article V, Section 6.2(e) (subject to the limitations and other provisions of Article VI), and Article IX. Capitalized terms used and not otherwise defined herein have the meanings set forth in Annex A. Unless otherwise indicated, Article, Section and Annex references in this Agreement are references to Sections, Articles and Annexes contained in this Agreement.

 

RECITALS

 

A.       The JV Companies (as defined below), collectively, carry out the manufacture, assembly, distribution and production of railcars, railcar parts, or railcar components in the United States of America, Canada and Mexico for commercialization and sale in the Territory (the “Business”).

 

B.       Parent presently owns 100% of the membership interests in Buyer.

 

C.       US Seller presently owns a 50% ownership interest (the “US JV Equity”) in FCA-Fasemex, LLC, a Delaware limited liability company (the “US JV”).

 

D.       Fasemex Mexico presently owns a 43% ownership interest and Agben owns a 7% ownership interest (collectively, the “MX JV Equity” and, together with the US JV Equity, the “JV Equity Interests”) in FCA-Fasemex, S. de R.L. de C.V., an entity organized under the laws of Mexico (“Production JV”), and FCA-Fasemex Enterprise, S. de R.L. de C.V., an entity organized under the laws of Mexico (“Services JV,” and, collectively, with the Production JV, the “MX JV Companies” and, together with the US JV, the “JV Companies”).

 

E.       Buyer desires to acquire from Sellers all of the JV Equity Interests owned by them and each Seller desires to sell, assign, transfer and convey to Buyer all of such Seller’s JV Equity Interest, pursuant to the terms and conditions of this Agreement.

 

AGREEMENT

 

Now, therefore, in consideration of the premises and the representations and warranties and mutual covenants and agreements contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:

 

 

Article I
SALE AND PURCHASE

 

1.1              Sale and Purchase of JV Equity Interests. Upon the terms and subject to the conditions contained in this Agreement, at the Closing Sellers shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Sellers, all of the JV Equity Interests presently owned by Sellers, comprising 50% of the outstanding equity interests of each of the JV Companies, free and clear of all Liens, in exchange for the delivery by Buyer, in accordance with Section 1.2, of the aggregate purchase price consisting of (a) $172,500 (the “Closing Cash”), by wire transfer of immediately available funds within one business day after Closing, and (b) 2,257,234 shares of Parent Common Stock (the “Consideration Shares”), such Closing Cash and Consideration Shares to be allocated to Sellers in proportion to the agreed relative fair market value of the respective JV Equity Interest presently held by each Seller as set forth on Section 1.1 of the Disclosure Schedule.

 

1.2              Consideration Shares. At the Closing, upon the terms and subject to the conditions set forth in this Agreement, Buyer shall (at its election) deliver, or cause to be delivered to each Seller, such Seller’s respective portion of the Consideration Shares by (i) issuance of Consideration Shares in book entry form, or (ii) delivery of an irrevocable instruction letter to Parent’s transfer agent for the delivery of the Consideration Shares in the manner requested by Sellers.

 

1.3              Closing. The closing (the “Closing”) of the purchase and sale of the JV Equity Interest and the other transactions contemplated by this Agreement shall occur on the date hereof, at such time as shall be determined by the Parties, or on such other date and at such other time determined by the Parties (the “Closing Date”). Absent another determination of the Parties, the Closing shall take place at 10:00 a.m., Chicago time, at the offices of Kelley Drye & Warren LLP, 333 W. Wacker, Suite 2600, Chicago, Illinois 60606.

 

1.4              Closing Deliveries.

 

(a)               At or prior to Closing, Sellers shall deliver the following to Buyer, unless waived by Buyer:

 

(i)                 Execution of assignments of the JV Equity Interests in such form agreed by the Parties;

 

(ii)              Resolutions of the boards of managers of each of the JV Companies approving the transactions contemplated in this Agreement and the Associated Agreements and approval of amended and restated operating agreements (or comparable governing documents) of each of the JV Companies, each in such form reasonably acceptable to Buyer (the “JV Company Board Resolutions”), executed by each of the Sellers’ designees on the boards of managers of the JV Companies;

 

(iii)            Resignations of each of each Seller’s designees on the boards of managers of the JV Companies in such form reasonably acceptable to Buyer;

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(iv)             The Investor Rights Agreement, duly executed by each of the Sellers, in such form agreed by the Parties (the “IRA”);

 

(v)               The Amended and Restated Lease, duly executed by Fasemex Mexico, as landlord thereunder, in such form agreed by the Parties (the “A/R Lease”); and

 

(vi)             The Royalty Agreement, duly executed by each of the Sellers, in such form agreed by the Parties (the “Royalty Agreement”); and

 

(vii)          Such other agreements or instruments agreed by the Parties.

 

(b)               At or prior to Closing (except as set forth below), Buyer (or Parent as applicable) shall deliver the following to the Sellers, unless waived by Seller:

 

(i)                 Evidence of delivery of the Consideration Shares consistent with Section 1.2;

 

(ii)              The Closing Cash in accordance with the wire instruction furnished by Sellers, within one business day after Closing;

 

(iii)            The JV Company Board Resolutions executed by each of Buyer’s designees on the boards of managers of the JV Companies;

 

(iv)             The IRA, duly executed by Parent;

 

(v)               The Royalty Agreement, duly executed by Parent; and

 

(vi)             The A/R Lease, duly executed by Projection JV, as tenant; and

 

(vii)          Such other agreements or instruments agreed by the Parties.

 

1.5              Purchase Price Allocation; Tax. The Consideration Shares shall be allocated to each of Sellers in the amounts specified on Section 1.1 of the Disclosure Schedule, which proportions reflect the Parties’ agreement as to the relative fair market values of the JV Equity Interests of Sellers. Any tax (transfer or otherwise) related to the transfer of the JV Equity Interests, if any, shall be borne by Sellers.

 

Article II
REPRESENTATIONS AND WARRANTIES REGARDING EACH SELLER

 

As a material inducement to Buyer and Parent to enter into this Agreement and to consummate the transactions contemplated by this Agreement, each Seller, separately, hereby represents and warrants to Buyer, as of the date of this Agreement, as follows:

 

2.1              Organization and Authority. Each Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the requisite entity power and authority to own, lease and operate its properties and to conduct its business as now conducted by it. Each Seller has all requisite power and authority to enter into this Agreement and the Associated Agreements to which it is a party and to perform its obligations hereunder and thereunder. Each Seller is qualified to do business and is in good standing as a foreign corporation, partnership or other entity, as applicable, in all jurisdictions in which it conducts its business, except where the failure to be so qualified does not and will not, individually or in the aggregate, have a Material Adverse Effect on such Seller or the transactions contemplated by this Agreement.

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2.2              Authorization. The execution, delivery and performance by each Seller of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of each Seller. This Agreement and each of the Associated Agreements have been, in each case to which each Seller is a party, duly executed and delivered by each Seller and constitutes or, in the case of the Associated Agreements, upon execution thereof by all other appropriate parties will constitute, a valid and legally binding obligation of each Seller, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding at equity or at law).

 

2.3              Consents and Approvals; No Conflicts. Except for any consents or approvals contemplated under this Agreement, the execution, delivery and performance by each Seller of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by each Seller of the transactions contemplated hereby and thereby will not: (i) conflict with or result in a breach of any provision of the certificate of formation, operating agreement, certificate of incorporation or bylaws (or equivalent governing documents) of such Seller, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body, (iii) require the consent or approval of any Person (other than a Governmental Body) or violate or conflict with, or result in a breach of any provision of, constitute a default (or an event which with notice or lapse of time or both would become a default) or give to any third party any right of termination, cancellation, amendment or acceleration under, or result in the creation of a Lien on any of the assets of the JV Companies under, any of the terms, conditions or provisions of any contract or license to which such Seller is a party or by which it or its assets or property are bound, or (iv) violate or conflict with any order, writ, injunction, decree, statute, rule or regulation applicable to such Seller.

 

2.4              Ownership. Each Seller has good and marketable title to its respective JV Equity Interests, and is the sole owner of record and beneficial owner of such JV Equity Interests. Such JV Equity Interests are free and clear of any Liens. Each Seller has the full and unrestricted right, power, and authority to sell and transfer such JV Equity Interests to Buyer. Upon delivery of the JV Equity Interests to Buyer and payment by Parent to Sellers of the Consideration Shares therefor, Buyer will acquire good and marketable title to the JV Equity Interests, free and clear of all Liens. Sellers do not own, or have any other ownership interest in the JV Companies, beneficial or otherwise, or possess any right entitling Sellers to receive any such ownership interest in the JV Companies, other than the JV Equity Interests that are being sold to Buyer at the Closing, which in the aggregate comprise 50% of the outstanding equity interests of the JV Companies, on the terms and subject to the conditions contemplated by this Agreement.

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2.5              No Brokers or Finders. No Seller nor any officers, directors, agents, representatives or employees of, or on behalf of, any Seller, has employed any broker or finder or incurred any other liability for any brokerage fees, commissions or finders’ fees in connection with transactions contemplated hereby.

 

2.6              No Pending Proceedings. There is no pending, or to any Seller’s Knowledge threatened, Proceeding against any Seller or any of its Affiliates that challenges, or seeks to restrain, delay, or prohibit the execution, delivery, and performance of this Agreement or the Associated Agreements. There is not in effect any order, judgment, or decree of any Governmental Body against any Seller or any of its Affiliates enjoining, barring, suspending, prohibiting, or otherwise limiting the right of any Seller to execute and deliver this Agreement and the Associated Agreements to which any Seller will be a party or to perform its material obligations hereunder or thereunder.

 

2.7              Legal Matters. There are no Proceedings or Claims pending or, to any Seller’s Knowledge, threatened against any Seller or any Seller’s JV Equity Interest or other assets or properties, or any Orders outstanding against any Seller, in each case that would, either individually or in the aggregate, delay, hinder, prevent or otherwise adversely affect any Seller’s ability to perform any Seller’s obligations under this Agreement and the Associated Agreement to which any Seller will be a party or to consummate the transactions contemplated hereby or thereby.

 

2.8              Securities Representations. Each Seller hereby represents and warrants, and undertakes as follows:

 

(a)               Private Placement. Such Seller is acquiring the Consideration Shares as principal for its own account and not with a view to or for distributing or reselling such Consideration Shares or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Consideration Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute, or regarding the distribution of, such Consideration Shares in violation of the Securities Act or any applicable state securities law (this representation and warranty shall not limit such Seller’s right to sell such Consideration Shares in compliance with applicable US federal and state securities laws).

 

At the time such Seller was offered the Consideration Shares, it was, and as of the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

(b)               Sophisticated Investor. Such Seller, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Consideration Shares, and has so evaluated the merits and risks of such investment. Such Seller is able to bear the economic risk of an investment in the Consideration Shares and, at the present time, is able to afford a complete loss of such investment.

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(c)               Restricted Securities. Each Seller acknowledges that the Consideration Shares are “restricted securities” that have not been registered under the Securities Act or any applicable state securities law. Each Seller further acknowledges that, absent an effective registration statement under the Securities Act covering the resale of the Consideration Shares, the Consideration Shares may only be offered, sold or otherwise transferred (i) to Parent, (ii) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, if applicable, or (iii) pursuant to an exemption from registration under the Securities Act.

 

(d)               Access to Information. Each Seller acknowledges that it has had the opportunity to review this Agreement and any Associated Agreements to which it will be a party (including all exhibits and schedules thereto) and the SEC Documents and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Buyer and Parent concerning the terms and conditions of the offering to it of the Consideration Shares and the merits and risks of investing in the Consideration Shares; (ii) access to information about Buyer and Parent and its financial condition, results of operations, business, properties, management, and prospects sufficient to enable it to evaluate its investment in the Consideration Shares; and (iii) the opportunity to obtain such additional information that Buyer and Parent possesses or can acquire without unreasonable effort or expense that was necessary to make an informed investment decision with respect to the investment in the Consideration Shares.

 

(e)               General Solicitation. The Consideration Shares are not being purchased by any Seller as a result of any advertisement, article, notice or other communication regarding the Consideration Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or, to such Seller’s Knowledge, any other general solicitation or general advertisement.

 

2.9              No Prohibited Transactions. Each Seller has not engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any United States, Mexico, or to each Seller’s Knowledge, international or other anti-money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto (including the International Emergency Economic Powers Act, as amended), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder, as amended, or any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or (ii) in contravention of Executive Order No. 13224 issued by the President of the United States on September 24, 2001 (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“Executive Order 13224”) or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, SEC, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Such Seller is not a Person (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224, (ii) whose name appears on OFAC’s most current list of “Specifically Designed Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit or supports “terrorism,” as that term is defined in Executive Order 13224, or (iv) who, to such Seller’s Knowledge, has not been associated with or is otherwise affiliated with any Person listed above.

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2.10          Compliance with Anti-Bribery Laws. Each Seller has not engaged in any dealing or transactions, directly or indirectly, (i) in contravention of any applicable United States, Mexico, or to each Seller’s Knowledge, international or other anti-corruption or anti-bribery statutes or regulations, including the Foreign Corrupt Practices Act as administered by the U.S. Department of Justice and the SEC, or (ii) in contravention of any applicable United States, Mexico, international or other export controls statutes or regulations, including the U.S. Export Administration Regulations (15 CFR Part 730, et seq.).

 

2.11          Disclosures. No representation or warranty made by any Seller in this Agreement (including this Article II) or in any document delivered in connection herewith (including the Disclosure Schedule) contains any untrue statement of material fact or omits any material fact necessary to make the statements contained herein or therein not misleading.

 

Article III
REPRESENTATIONS AND WARRANTIES REGARDING THE JV COMPANIES

 

As a material inducement to Buyer and Parent to enter into this Agreement and to consummate the transactions contemplated by this Agreement, Sellers, separately, hereby represent and warrant to Buyer and Parent, as of the date of this Agreement, as follows:

 

3.1              Organization and Authority. To Sellers’ Knowledge, the US JV and the MX JV Companies are duly organized, validly existing and in good standing under the laws of their jurisdiction of organization, and have the requisite entity power and authority to own, lease and operate their properties and to conduct their business as now conducted by them. To Sellers’ Knowledge the US JV and the MX JV Companies are qualified to do business and are in good standing as foreign corporations, partnerships or other entities, as applicable, in all jurisdictions in which they conducts their business, except where the failure to be so qualified does not and will not, individually or in the aggregate, have a Material Adverse Effect on the JV Companies or the transactions contemplated by this Agreement.

 

3.2              Undisclosed Liabilities. To the Sellers’ Knowledge, the MX JV Companies have no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except (a) those which are adequately reflected or reserved against in the MX JV Companies’ balance sheets as of June 30, 2020, (b) those which have been incurred in the ordinary course of business consistent with past practice since such date and which are not, individually or in the aggregate, material in amount, and (c) those which do not and will not, individually or in the aggregate, have a Material Adverse Effect on the MX JV Companies or the transactions contemplated by this Agreement.

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3.3              Contracts.

 

(a)               Section 3.3 of the Disclosure Schedule lists each of the Contracts that are material to any MX JV Company (collectively, the “Material Contracts”).

 

(b)               Each Material Contract is valid and binding on the MX JV Company that is party thereto in accordance with its terms and is in full force and effect. None of the MX JV Companies or, to Sellers’ Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer.

 

3.4              Compliance with Laws; Permits and Licenses. Except as set forth in Section 3.4 of the Disclosure Schedule, each of the MX JV Companies is in possession of the franchises, authorizations, accreditations, licenses, permits, certificates, approvals, clearances, consents, registrations, certificates of authority, Orders or similar rights issued, granted or obtained by or from any Governmental Body listed in Section 3.4 of the Disclosure Schedule (collectively, “Permits”). Each of the MX JV Companies is currently in possession of all Permits required under applicable Law, and has complied, and is now complying, with all Laws applicable to their business, properties or assets, except where any failure has not and will not, individually or in the aggregate, have a Material Adverse Effect on the MX JV Companies or the transactions contemplated by this Agreement.

 

3.5              Transactions with Related Persons. Except as set forth in Section 3.5 of the Disclosure Schedule, or as related to the Parent or any of the Parent’s Affiliates, no officer, director, employee or equityholder of any MX JV Company or any of their respective Affiliates, and no member of the “immediate family”, as such term is defined under Rule 16a-1(e) of the Exchange Act of any such person, nor any corporation, partnership, limited liability company or other entity in which any of such Persons has a direct or indirect interest, has, directly or indirectly:

 

(a)               any interest (other than as a holder of not more than one percent (1%) of the issued and outstanding securities of a corporation whose securities are traded on a national securities exchange in which such Person is a passive investor with no involvement in the management or operations thereof) in any Person engaged in the Business;

 

(b)               any interest (other than as a holder of not more than one percent (1%) of the issued and outstanding securities of a corporation whose securities are traded on a national securities exchange in which such Person is a passive investor with no involvement in the management or operations thereof) in any Person which purchases any goods or services from, or sells or furnishes any goods or services to, any JV Company;

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(c)               a beneficial interest in any Contract to which any MX JV Company is a party or by which any MX JV Company or any of their respective assets or properties may be bound or affected (except, with respect to employees of the MX JV Companies, for written employment contracts listed in Section 3.5(c) of the Disclosure Schedule); or otherwise receives any rights or benefits from, or is the beneficiary of any obligations of, any MX JV Company (except, with respect to employees of the MX JV Companies, for employment-related obligations incurred in the Ordinary Course of Business on arms-length terms that are fair to such JV Company); or

 

(d)               any interest or Claim against any of the MX JV Companies or any of their respective assets or properties which could materially and adversely affect such MX JV Company’s assets or properties or title to or right to use its assets or properties, or to conduct the Business. No assets or properties (whether tangible or intangible) of any of the Persons described in this subsection (d) are used by the MX JV Companies in the conduct of the Business except as set forth in Schedule 3.5(d).

 

3.6              No Unauthorized Actions. No Seller has, and to the Sellers’ Knowledge, no officers, directors, employees, agents or other representatives of the MX JV Companies has taken any action with respect to the MX JV Companies without first obtaining the necessary consent in accordance with such MX JV Company’s certificate of formation, operating agreement, certificate of incorporation, bylaws or corresponding powers of attorney (or equivalent governing documents).

 

3.7              Condition and Sufficiency of Assets. To the Sellers’ Knowledge, except as set forth in Section 3.7 of the Disclosure Schedule, the furniture, fixtures, vehicles and other items of tangible personal property of the MX JV Companies are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such furniture, fixtures, vehicles and other items of tangible personal property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The furniture, fixtures, vehicles and other items of tangible personal property currently owned or leased by the MX JV Companies are sufficient for the continued conduct of the MX JV Companies’ business after the Closing in substantially the same manner as conducted prior to the Closing.

 

3.8              No Pending Proceedings. There is no pending, or to any Seller’s Knowledge, threatened, Proceeding against any of the MX JV Companies. There is not in effect any order, judgment, or decree of any Governmental Body against any of the MX JV Companies.

 

3.9              Disclosures. No representation or warranty made by any Seller in this Agreement (including this Article III) or in any document delivered in connection herewith (including the Disclosure Schedule) contains any untrue statement of material fact or omits any material fact necessary to make the statements contained herein or therein not misleading.

 

3.10          Disclaimer of Other Representations and Warranties. BUYER ACKNOWLEDGES THAT NONE OF SELLERS OR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, CONCERNING SELLERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, AND BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES CONCERNING SELLERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

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Article IV
REPRESENTATIONS AND WARRANTIES REGARDING BUYER

 

As a material inducement to Sellers to enter into this Agreement and to consummate the transactions contemplated by this Agreement, Buyer hereby represents and warrants to Sellers, as of the date of this Agreement, as follows:

 

4.1              Organization and Authority. Buyer is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the requisite power and authority to own, lease and operate its properties and to conduct its business as now conducted by it. Buyer has all requisite power and authority to enter into this Agreement and the Associated Agreements to which it is a party and to perform its obligations hereunder and thereunder. Buyer is qualified to do business and is in good standing as a foreign corporation, partnership or other entity, as applicable, in all jurisdictions in which it conducts its business, except where the failure to be so qualified does not and will not, individually or in the aggregate, have a Material Adverse Effect on Buyer.

 

4.2              Authorization. The execution, delivery and performance by Buyer of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Buyer. This Agreement and each of the Associated Agreements have been, in each case to which it is a party, duly executed and delivered by Buyer and constitutes or, in the case of the Associated Agreements, upon execution thereof by all other appropriate parties will constitute, a valid and legally binding obligation of Buyer, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding at equity or at law).

 

4.3              Consents and Approvals; No Conflicts. Except for any consents or approvals contemplated under this Agreement, the execution, delivery and performance by Buyer of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by Buyer of the transactions contemplated hereby and thereby will not: (i) conflict with or result in a breach of any provision of the certificate of formation or operating agreement of Buyer, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body, (iii) require the consent or approval of any Person (other than a Governmental Body) or violate or conflict with, or result in a breach of any provision of, constitute a default (or an event which with notice or lapse of time or both would become a default) or give to any third party any right of termination, cancellation, amendment or acceleration under, or result in the creation of a Lien on any of the assets attributed to the JV Companies under, any of the terms, conditions or provisions of any contract or license to which Buyer is a party or by which it or its assets or property are bound, or (iv) violate or conflict with any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer.

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4.4              No Brokers or Finders. Neither Buyer nor any of its officers, directors or employees, on behalf of Buyer, has employed any broker or finder or incurred any other liability for any brokerage fees, commissions or finders’ fees in connection with transactions contemplated hereby.

 

4.5              No Pending Proceedings. There is no pending, or to Buyer’s Knowledge, threatened, Proceeding against Buyer or any of its Affiliates that challenges, or seeks to restrain, delay, or prohibit the execution, delivery, and performance of this Agreement. There is not in effect any order, judgment, or decree of any Governmental Body against Buyer or any of its Affiliates enjoining, barring, suspending, prohibiting, or otherwise limiting the right of Buyer to execute and deliver this Agreement or to perform its material obligations hereunder.

 

4.6              No Prohibited Transactions. Buyer has not engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any United States, Mexico, or to Buyer’s Knowledge, international or other anti-money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto (including the International Emergency Economic Powers Act, as amended), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder, as amended, or any order issued with respect to anti-money laundering by OFAC, or (ii) in contravention of Executive Order No. 13224 or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, SEC, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Buyer is not a Person (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224, (ii) whose name appears on OFAC’s most current list of “Specifically Designed Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit or supports “terrorism,” as that term is defined in Executive Order 13224, or (iv) who, to Buyer’s Knowledge, has not been associated with or is otherwise affiliated with any Person listed above.

 

4.7              Compliance with Anti-Bribery Laws. Buyer has not engaged in any dealing or transactions, directly or indirectly, (i) in contravention of any applicable United States, Mexico, or to Buyer’s Knowledge, international or other anti-corruption or anti-bribery statutes or regulations, including the Foreign Corrupt Practices Act as administered by the U.S. Department of Justice and the SEC, or (ii) in contravention of any applicable United States, Mexico, international or other export controls statutes or regulations, including the U.S. Export Administration Regulations (15 CFR Part 730, et seq.).

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4.8              Disclosure. No representation or warranty made by Buyer in this Agreement (including this Article IV) or in any document delivered in connection herewith (including the Disclosure Schedule) contains any untrue statement of material fact or omits any material fact necessary to make the statements contained herein or therein not misleading.

 

4.9              Disclaimer of Other Representations and Warranties. SELLERS ACKNOWLEDGE THAT NONE OF BUYER OR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, CONCERNING BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, AND SELLERS ARE NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES CONCERNING BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

Article V
REPRESENTATIONS AND WARRANTIES REGARDING PARENT

 

As a material inducement to Sellers to enter into this Agreement and to consummate the transactions contemplated by this Agreement, Parent hereby represents and warrants to Sellers, as of the date of this Agreement, as follows:

 

5.1              Issuance of the Consideration Shares. The Consideration Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable.

 

5.2              Capitalization. As of October 16, 2020, without giving effect to the Closing, Parent’s authorized capital stock consists of 50,000,000 authorized shares of Parent Common Stock, of which 13,277,845 shares are issued and outstanding, 2,500,000 authorized shares of preferred stock, par value of $0.01, of which none are issued and outstanding. The Consideration Shares represent, in the aggregate, 17% of the issued and outstanding shares of Parent Common Stock immediately prior to Closing. All of the outstanding shares of capital stock of the Parent have been validly issued and are fully paid and non-assessable.

 

5.3              Exchange Act Registration; Trading Market. Parent Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the Trading Market, and other than as disclosed in the SEC Documents, Parent has taken no action designed to, or likely to have the effect of, terminating the registration of Parent Common Stock under the Exchange Act or delisting Parent Common Stock from the Trading Market, nor has Parent received any notification that the SEC or the Trading Market is contemplating terminating such registration or listing.

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5.4              Securities Representations.

 

(a)               Regulation S.

 

(i)                 Parent is a “reporting issuer” (as defined in Regulation S).

 

(ii)              Neither Buyer nor Parent, nor any of their affiliates (as defined in Rule 501 under the Securities Act) nor any person acting on its or their behalf, has engaged in any directed selling efforts (as defined in Regulation S) in the United States in connection with the offering of the Consideration Shares to MX Sellers and Parent has complied with the offering restriction requirements of Regulation S.

 

(iii)            Assuming the accuracy of the representations and warranties of MX Sellers contained in Section 2.8 and their compliance with their agreements set forth in this Agreement, no registration of the Consideration Shares under the Securities Act is required for the offer and sale of the Consideration Shares to MX Sellers in the manner contemplated by this Agreement.

 

(b)               Regulation D.

 

(i)                 Assuming the accuracy of the representations and warranties of US Seller contained in Section 2.8 and its compliance with its agreements set forth in this Agreement, no registration of the Consideration Shares under the Securities Act is required for the offer and sale of the Consideration Shares to US Seller in the manner contemplated by this Agreement.

 

(ii)              None of Parent, its affiliates (as defined in Rule 501(b) of Regulation D promulgated under the Securities Act) or any person acting on its or their behalf (other than US Seller, as to which no representation or warranty is given) has, directly or indirectly, made offers or sales of any security or solicited offers to buy any security which is or would be integrated with the sale of the Consideration Shares in a manner that would require the Consideration Shares to be registered under the Securities Act.

 

(iii)            None of Parent, its affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) or any person acting on its or their behalf (other than US Seller, as to which no representation or warranty is given) has made offers or sales of the Consideration Shares or solicited offers to buy the Consideration Shares by means of any form of “general solicitation” or “general advertising” (within the meaning of Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

5.5              Organization and Authority. The Parent is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has the requisite power and authority to own, lease and operate its properties and to conduct its business as now conducted by it. The Parent has all requisite power and authority to enter into this Agreement and the Associated Agreements, if applicable, to which it is a party and to perform its obligations hereunder and thereunder. The Parent is qualified to do business and is in good standing as a foreign corporation, partnership or other entity, as applicable, in all jurisdictions in which it conducts its business, except where the failure to be so qualified does not and will not, individually or in the aggregate, have a Material Adverse Effect on the Parent.

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5.6              Authorization. The execution, delivery and performance by the Parent of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by the Parent of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Parent. This Agreement and each of the Associated Agreements have been, in each case to which each Seller is a party, duly executed and delivered by the Parent and constitutes or, in the case of the Associated Agreements, upon execution thereof by all other appropriate parties will constitute, a valid and legally binding obligation of the Parent, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding at equity or at law).

 

5.7              Consents and Approvals; No Conflicts. Except as set forth on Section 5.7 of the Disclosure Schedule or any consents or approvals contemplated in this Agreement, the execution, delivery and performance by the Parent of this Agreement and the Associated Agreements, in each case to which it is a party, and the consummation by the Parent of the transactions contemplated hereby and thereby will not: (i) conflict with or result in a breach of any provision of the certificate of incorporation or bylaws of the Parent, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body, by Parent, (iii) require the consent or approval of any Person (other than a Governmental Body) or violate or conflict with, or result in a breach of any provision of, constitute a default (or an event which with notice or lapse of time or both would become a default) or give to any third party any right of termination, cancellation, amendment or acceleration under, or result in the creation of a Lien on any of the assets attributed to the JV Companies under, any of the terms, conditions or provisions of any contract or license to which Parent is a party or by which it or its assets or property are bound, or (iv) violate or conflict with any order, writ, injunction, decree, statute, rule or regulation applicable to the Parent.

 

5.8              Valid Issuance of Consideration Shares. The Consideration Shares have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, the Consideration Shares will be validly issued, fully paid and non-assessable, and the Consideration Shares shall be free and clear of any Liens granted by Parent or its Affiliates.

 

5.9              Right of First Refusal; Stockholders Agreement; Voting and Registration Rights. Except as described in the SEC Documents or as provided in federal or state securities laws or the Delaware General Corporation Law, or as contemplated in this Agreement or the Associated Agreements, there are no provisions of the charter or incorporation documents of Parent, and no material contracts that may: (a) alter or restrict the voting rights of the Sellers with respect to the Consideration Shares in their capacity as stockholders of Parent, (b) require the vote of more than a simple majority of the Parent’s issued and outstanding common stock, voting together as a single class, with respect to any corporate matter to be brought before the holders of common stock for a vote, or (d) entitle any party to nominate or elect any director of Parent or require any of Parent’s stockholders to vote for any such nominee or other person as a director of Parent.

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5.10          No General Solicitation. Neither the Parent nor any other Person acting on Parent’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising with respect to the Consideration Shares, nor have any of such Persons made any offers or sales of any security of Parent or solicited any offers to buy any security of the Parent under circumstances that would require registration of the Consideration Shares under the Securities Act.

 

5.11          SEC Documents. Parent has timely filed, or cured any defect relating to timely filing, all SEC Documents since January 1, 2017. None of Parent’s subsidiaries is required to file periodic reports with the SEC pursuant to the Exchange Act. Each SEC Document (a) as of the time it was filed (or if subsequently amended, when amended), complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and (b) did not, at the time it was filed (or if subsequently amended or superseded by an amendment or other SEC Document, then, on the date of such subsequent filing), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. All agreements to which the Parent is a party or to which the property or assets of Parent are subject, which are required to be described in or filed as exhibits to an SEC report, have been so described or filed.

 

5.12          Financial Statements. The financial statements of the Company included in the SEC Documents comply in all material respects with the rules and regulations of the Securities and Exchange Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of Parent as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

5.13          Absence of Litigation. There is no claim, action, suit, arbitration, investigation or other proceeding pending against, or to Parent’s Knowledge, threatened against or affecting, Parent, any of its subsidiaries or any of their respective properties or, to Parent’s Knowledge, any of their respective officers or directors before any Governmental Body, except for any claim, action, suit, arbitration, investigation or other proceeding that is not expected to have a Material Adverse Effect on the Parent.

 

5.14          Taxes. Parent has properly filed all federal, foreign, state, local, and other tax returns and reports which are required to be filed by them, which returns and reports were properly completed and are true and correct in all material respects, and all material taxes, interest, and penalties due and owing have been timely paid. There are no outstanding waivers or invalid extensions of time with respect to the assessment or audit of any tax or tax return of Parent, or claims now pending or matters under discussion between Parent and any taxing authority in respect of any tax of Parent.

 

5.15          Employee Matters. Parent has disclosed in the SEC Documents any “employee benefit plan” subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which it maintains for employees and is required to be disclosed in the SEC Documents under applicable Law.

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5.16          Compliance with Laws. The Parent is in material compliance with the terms of, all franchises, permits, licenses and other rights and privileges necessary to conduct its present businesses and is in compliance with and has not violated, in any material respect, (a) any judgments, orders, decrees, injunctions or writs applicable to the Parent, or (b) any applicable provisions of any laws, statutes, ordinances, rules or regulations applicable to the conduct of its business.

 

5.17          Absence of Changes. Since the date of the latest SEC Documents and except as contemplated by, or in connection with, this Agreement and the Associated Agreements, there has not been any Material Adverse Effect or any event or events that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on the Parent.

 

5.18          [Reserved].

 

5.19          No Prohibited Transactions. The Parent has not engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any United States, Mexico, or to Parent’s Knowledge, international or other anti-money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto (including the International Emergency Economic Powers Act, as amended), the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder, as amended, or any order issued with respect to anti-money laundering by OFAC, or (ii) in contravention of Executive Order No. 13224 or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, SEC, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Such Seller is not a Person (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224, (ii) whose name appears on OFAC’s most current list of “Specifically Designed Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf), (iii) who commits, threatens to commit or supports “terrorism,” as that term is defined in Executive Order 13224, or (iv) who, to Parent’s Knowledge, has not been associated with or is otherwise affiliated with any Person listed above.

 

5.20          Compliance with Anti-Bribery Laws. The Parent has not engaged in any dealing or transactions, directly or indirectly, (i) in contravention of any applicable United States, Mexico, or to Parent’s Knowledge, international or other anti-corruption or anti-bribery statutes or regulations, including the Foreign Corrupt Practices Act as administered by the U.S. Department of Justice and the SEC, or (ii) in contravention of any applicable United States, Mexico, international or other export controls statutes or regulations, including the U.S. Export Administration Regulations (15 CFR Part 730, et seq.).

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5.21          No Brokers or Finders. Neither Parent, nor any officers, directors, agents, representatives or employees of, or on behalf of, Parent, has employed any broker or finder or incurred any other liability for any brokerage fees, commissions or finders’ fees in connection with transactions contemplated hereby.

 

5.22          Disclosure. No representation or warranty made by Parent in this Agreement (including this Article V) or in any document delivered in connection herewith (including the Disclosure Schedule) contains any untrue statement of material fact or omits any material fact necessary to make the statements contained herein or therein not misleading.

 

5.23          Disclaimer of Other Representations and Warranties. EACH SELLER ACKNOWLEDGES THAT NONE OF BUYER, PARENT OR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, CONCERNING BUYER OR PARENT IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, AND SUCH SELLER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES CONCERNING BUYER OR PARENT IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

Article VI
INDEMNIFICATION

 

6.1              Survival of Representations and Warranties. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is two (2) years from the Closing Date; provided, that the representations and warranties in Sections 2.1, 2.2, 2.4, 2.5, 3.1, 4.1, 4.2, 4.4, 5.1, 5.2, 5.5, 5.6, and 5.8 (collectively, the “Fundamental Representations”) shall survive indefinitely. All covenants and agreements of the Parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

 

6.2              Indemnification of the Parties.

 

(a)               From and after the Closing (but subject to the terms and conditions of this Article VI), each Seller shall indemnify, defend and hold harmless, Buyer, each of Buyer’s Affiliates (including Parent) and each of its and their respective officers, directors, managers, members, partners, equityholders, employees, representatives, agents, successors and assigns (collectively, the “Buyer Indemnitees”) from and against, and pay on behalf of and reimburse each Buyer Indemnitee in respect of all Losses incurred, suffered, sustained or required to be paid, directly or indirectly, by, or sought to be imposed upon, any Buyer Indemnitee arising out of, resulting from or relating to:

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(i)                 any breach of any representation or warranty of such Seller (but not the other Sellers) set forth in Article II;

 

(ii)              any breach of any representation or warranty of such Seller (but not the other Sellers) set forth in Article III;

 

(iii)            the breach of any covenant or agreement made by or to be performed by such Seller (but not the other Sellers) under this Agreement, other than those set forth in Article VIII which shall be governed by Section 6.2(a)(iv) below; and

 

(iv)             the nonperformance or breach of any restrictive covenants of such Seller (but not the other Sellers) set forth in Article VIII.

 

(b)               Sellers’ liability under Section 6.2(a) shall be subject to the following limitations and conditions:

 

(i)                 Sellers shall only be liable for 50% of any Losses under Section 6.2(a)(ii);

 

(ii)              Sellers shall be liable under Section 6.2(a)(i) or 6.2(a)(ii) only after the amount of a Loss claimed by Buyer exceeds $25,000, and then only to the extent of such excess per such particular case (after incorporating the limitation set forth in Section 6.2(b)(i));

 

(iii)            Sellers shall be liable under Section 6.2(a)(i) or 6.2(a)(ii) only after the aggregate amount of all Losses claimed under Section 6.2(a)(i) and 6.2(a)(ii), in the aggregate, exceeds $250,000, and then only to the extent of such excess (after incorporating the limitations set forth in Section 6.2(b)(i) and 6.2(b)(ii));

 

(iv)             Fasemex Mexico shall be liable on a joint and several basis with the other Sellers for any Losses under 6.2(a)(ii) or 6.2(a)(iii);

 

(v)               Each Seller’s aggregate liability under Section 6.2(a) (after incorporating the other conditions set forth in this Section 6.2(b)) shall be limited to 50% of the Closing Value of the Consideration Shares allocated such Seller at Closing under Section 1.1; provided that with respect to Fasemex Mexico, such limitation shall be equal to 50% of the Closing Value of the Consideration Shares allocated to all Sellers at Closing; and

 

(vi)             Notwithstanding anything contained in this Section 6.2(b):

 

(A)             the limitations under Section 6.2(b)(ii), 6.2(b)(iii), and 6.2(b)(v) shall not apply in the case of any inaccuracy or breach of any Fundamental Representation; provided, that each Seller’s aggregate liability shall be limited to 100% of the Closing Value of the Consideration Shares allocated such Seller at Closing under Section 1.1; provided, further, that with respect to Fasemex Mexico, such limitation shall be equal to 100% of the Closing Value of the Consideration Shares allocated to all Sellers at Closing; and

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(B)              none of the limitations under this Section 6.2(b) shall apply in the case of fraud by the Sellers (as determined by a court of competent jurisdiction).

 

(c)               From and after the Closing (but subject to the terms and conditions of this Article VI), Buyer shall indemnify, defend and hold harmless, each Seller and each of the Sellers’ Affiliates and each of its and their respective officers, directors, managers, members, partners, equityholders, employees, representatives, agents, successors and assigns (collectively, the “Seller Indemnitees”) from and against, and pay on behalf of and reimburse each Seller Indemnitee in respect of, all Losses incurred, suffered, sustained or required to be paid, directly or indirectly, by, or sought to be imposed upon, any Seller Indemnitee arising out of, resulting from or relating to:

 

(i)                 any breach of any representation or warranty of Buyer set forth in Article IV; and

 

(ii)              the breach of any covenant or agreement made by or to be performed by Buyer under this Agreement.

 

(d)               Buyer’s liability under Section 6.2(c) shall be limited as follows:

 

(i)                 Buyer shall be liable under Section 6.2(c)(i) only after the amount of a Loss claimed by any or all Sellers exceeds $25,000, and then only to the extent of such excess per such particular case;

 

(ii)              Buyer shall be liable under Section 6.2(c)(i) only after the aggregate amount of all Losses claimed under Section 6.2(c)(i) exceeds $250,000 (after incorporating the limitation set forth in Section 6.2(d)(i)), and then only to the extent of such excess;

 

(iii)            Parent shall be liable on a joint and several basis with Buyer for any Losses under 6.2(c)(i) or 6.2(c)(ii);

 

(iv)             Notwithstanding anything contained in this Section 6.2(d), none of the limitations set forth in this Section 6.2(d) shall apply to any breach by Buyer of one or more Fundamental Representations.

 

(e)               From and after the Closing (but subject to the terms and conditions of this Article VI), Parent shall indemnify, defend and hold harmless each Seller Indemnitee from and against, and pay on behalf of and reimburse each Seller Indemnitee in respect of, any and all Losses incurred, suffered, sustained or required to be paid, directly or indirectly, by, or sought to be imposed upon, any Seller Indemnitee arising out of, resulting from or relating to:

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(i)                 any breach of any representation or warranty of Parent set forth in Article V; and

 

(ii)              the breach of any covenant or agreement made by or to be performed by Parent under this Agreement.

 

(f)                Parent’s liability under Section 6.2(e) shall be limited as follows:

 

(i)                 Parent shall be liable under Section 6.2(e)(i) only after the amount of a Loss claimed by any or all Sellers exceeds $25,000), and then only to the extent of such excess per such particular case;

 

(ii)              Parent shall be liable under Section 6.2(e)(i) only after the aggregate amount of all Losses claimed under Section 6.2(e)(i) (after incorporating the limitation set forth in Section 6.2(f)(i) exceeds $250,000), and then only to the extent of such excess;

 

(iii)            Notwithstanding the foregoing, none of the limitations set forth in this Section 6.2(f) shall apply to any breach by Parent of one or more Fundamental Representations.

 

(g)               In addition to the limitations set forth in Section 6.2(d) and Section 6.2(f), the aggregate liability of Buyer under Section 6.2(c) and Parent under Section 6.2(e) shall be limited to 50% of the aggregate Closing Value of the Consideration Shares issued at Closing under Section 1.1, except in the case of a breach of a Fundamental Representation by Buyer or Parent, in which the aggregate liability of Buyer and Parent shall be limited to 100% of the aggregate Closing Value of the Consideration Shares issued at Closing. None of the limitations under Section 6.2(d) and Section 6.2(f) shall apply in the case of fraud by Buyer or Seller (as determined by a court of competent jurisdiction).

 

6.3              Indemnification Claim Procedure.

 

(a)               If any Buyer Indemnitee or Seller Indemnitee, as applicable (in the capacity as a Person seeking indemnification under this Article VI, the “Indemnified Party”), obtains actual knowledge of any matter not involving a Third Party Claim that the Indemnified Party believes will entitle the Indemnified Party to indemnification from Buyer or any Seller or Sellers under this Article VI (in the capacity as a Person against whom indemnification is sought under this Article VI, the “Indemnifying Party”), the Indemnified Party shall promptly thereafter deliver to the Indemnifying Party a notice thereof (a “Notice of Claim”) describing such matter in reasonable detail and, to the extent reasonably estimable, the estimated Losses resulting therefrom; provided, however, that any failure to give such notification on a timely basis or to provide any particular details therein shall not relieve the Indemnifying Party of its obligation to indemnify any Indemnified Party hereunder except to the extent that such failure to provide, delay in providing or omission of any particular detail actually and materially prejudices the ability of the Indemnifying Party to defend against such matter.

 

(b)               The Indemnifying Party shall respond to the Indemnified Party within thirty (30) days following the date that the Notice of Claim is delivered to pursuant to Section 6.3(a) (the “Response Period”), specifying whether or not the Indemnifying Party disputes the claim(s) described in the Notice of Claim, describe in reasonable detail the basis for each such dispute and include reasonable supporting materials (a “Claim Response”). If Indemnifying Party fails to give a Claim Response within the Response Period, the Indemnifying Party shall be deemed not to dispute the claim(s) described in the related Notice of Claim. If the Indemnifying Party gives a Claim Response within the Response Period but does not in such Claim Response dispute all of the claim(s) made in the related Notice of Claim, the Indemnifying Party shall be deemed not to dispute the undisputed claim(s) described in the related Notice of Claim. If the Indemnifying Party elects not to dispute any claim described in a Notice of Claim, whether by failing to give a timely Claim Response or otherwise, then the amount of Losses alleged in such Notice of Claim shall be conclusively deemed to be an obligation of the Indemnifying Party and the Indemnified Party shall be paid the amount specified in the Notice of Claim as provided in Section 6.5 (it being acknowledged that the amount of any estimated Losses may be revised by the Indemnified Party from time to time as the same are determined, all of which Losses shall be indemnified by the Indemnifying Party). If the Indemnifying Party delivers a Claim Response within the Response Period indicating that the Indemnifying Party disputes one or more of the matters identified in the Notice of Claim, Buyer or Parent, as the case may be, and the applicable Seller or Sellers (with respect to any claim by the Buyer Indemnitees for indemnification pursuant to Section 6.2(a)) shall promptly meet in good faith to resolve the dispute. If Buyer or Parent, as the case may be, and the Sellers, as applicable, do not resolve a dispute regarding a claim within thirty (30) days after the delivery of the Claim Response, either the Indemnifying Party or the Indemnified Party may submit the dispute to a court of competent jurisdiction set forth in Section 9.3(a) for resolution. Upon resolution of such dispute, whether by agreement or by a court of competent jurisdiction, if it is determined that any indemnification payment is required pursuant to this Article VI such amount shall be paid to the Indemnified Party as provided in Section 6.5.

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6.4              Procedures Relating to Indemnification for Third Party Claims. With respect to any matter for which an Indemnified Party is entitled to indemnification from an Indemnifying Party under this Article VI that relates to a Proceeding or Claim by a third party (a “Third Party Claim”), the Indemnified Party shall provide to the Indemnifying Party a Notice of Claim relating to such Third Party Claim promptly after receiving written notification of such Proceeding or Claim; provided, however, that any failure to give such notification on a timely basis shall not relieve the Indemnifying Party of its obligation to indemnify any Indemnified Party hereunder except to the extent that such failure to provide or delay in providing actually and materially prejudices the ability of the Indemnifying Party to defend against such Third Party Claim. The Indemnifying Party will be entitled to participate in the defense of any Third Party Claim that is the subject of a notice given by the Indemnified Party pursuant to this Section 6.4. In addition, upon written notice given by the Indemnified Party twenty (20) days of the notice of such Third Party Claim, the Indemnifying Party will have the right to defend the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party. In such event, the Indemnified Party may retain separate co-counsel at the cost of the Indemnifying Party and participate in the defense of the Third Party Claim. Notwithstanding the foregoing, the Indemnifying Party will not consent to the entry of any judgment or enter into any compromise or settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party unless such judgment, compromise or settlement (i) provides for the payment of money as sole relief for the claimant and (ii) subject to the making of such payment, results in the full and general release of all Indemnified Parties from all liabilities arising from or relating to the Third Party Claim. The Indemnifying Party will not be bound by the entry of any judgment consent to, or any compromise or settlement effected, without its prior written consent. If the Indemnifying Party does not deliver the notice contemplated by this Section 6.4 within twenty (20) days after the Indemnifying Party has received notice of the Third Party Claim pursuant to this Section 6.4, the Indemnified Party may defend, and may consent to the entry of any judgment or enter into any compromise or settlement with respect to, the Third Party Claim, and the Indemnifying Party shall be permitted to participate in such defense at its sole cost and expense.

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6.5              Payment of Amounts Due. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VI, the Indemnifying Party shall satisfy its obligations within five (5) business days of such final, non-appealable adjudication by wire transfer of immediately available funds. The Parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such five (5) business day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to but excluding the date such payment has been made at a rate equal to the prime rate in effect from time to time (as published in The Wall Street Journal) plus two (2) percentage points, until paid in full.

 

6.6              Additional Limitations. Notwithstanding anything contained in this Article VI, in no event will any Indemnified Party be entitled to recover or make a claim for any amounts in respect of, and in no event will “Losses” be deemed to include consequential, exemplary or punitive damages, lost profits or revenues, or business interruption. Furthermore, no Indemnified Party shall be entitled to indemnification or reimbursement under any provisions of this Agreement for any amount to the extent such party has been indemnified or reimbursed for such amount under any other provision of this Agreement or the Ancillary Agreements, or to the extent that recovery has already been made under this Agreement or the Ancillary Agreements in respect of the same subject matter and in the amount of the Loss claimed.

 

6.7              Exclusive Remedy. Notwithstanding anything to the contrary in this Agreement, the indemnification rights set forth in this Article VI shall be the sole and exclusive remedies of: (a) the Buyer Indemnitees for any breach of or inaccuracy in any of the representations and warranties of the Sellers, or any of them, contained in this Agreement; and (b) the Seller Indemnitees for any breach of or inaccuracy in any of the representations and warranties of Buyer or Parent contained in this Agreement. For the avoidance of doubt, (y) the limitation set forth in this Section 6.7 shall not apply to (i) any of the Associated Agreements other than this Agreement, (ii) any breach of this Agreement resulting from fraud, or (iii) any injunctive or equitable remedies of any Party; and (z) to the extent that any matter is subject to indemnification under alternative provisions of this Agreement, an Indemnified Party may seek such indemnification under such alternative provisions of this Agreement, but it may not recover duplicate amounts for its Losses relating to such matter.

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Article VII
OTHER AGREEMENTS AND POST-CLOSING COVENANTS

 

7.1              Fasemex Mexico Supply Agreement. From and after the Closing, Fasemex Mexico and their Affiliates shall have the opportunity to bid to supply fabricated steel component parts and other items to the JV Companies and the Parties shall negotiate in good faith regarding such opportunities.

 

7.2              Restrictions on Consideration Shares; Legends.

 

(a)               The Consideration Shares have not been registered under the Securities Act, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an effective registration or in accordance with Regulation S, if applicable, or pursuant to another exemption from the registration requirements of the Securities Act. Each Seller undertakes that it, its affiliates (as defined in Rule 501 under the Securities Act), and any persons acting on its or their behalf will comply with the restrictions regarding transfers of the Consideration Shares under Rule 144 or another applicable exemption, with respect to US Seller, or Regulation S, with respect to MX Sellers.

 

(b)               The Consideration Shares, when issued and delivered pursuant to this Agreement, will be “restricted securities” as that term is defined in Rule 144 and a restrictive legend or notation in substantially the following form will be placed on the Consideration Shares:

 

For Consideration Shares issued to US Seller:

 

“The securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold except pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with applicable state securities laws as evidenced by a legal opinion of counsel to the transferor to such effect, the substance of which shall be reasonably acceptable to the issuer of such securities.”

 

For Consideration Shares issued to MX Sellers:

 

“The securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until six (6) months after the Closing Date, except in either case in accordance with Regulation S under the Securities Act. No hedging transaction can be conducted with regard to the securities except as permitted by the Securities Act. Terms used above have the meanings given to them by Regulation S.”

 

7.3              Further Assurances. From time to time, as and when requested by Buyer, on the one hand, or any of Sellers, on the other hand, each Party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting Party may reasonably deem necessary or desirable (and at the expense of such requesting Party) to evidence and effectuate the transactions contemplated by this Agreement.

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7.4              Seller Undertakings. If, after the Closing, any Seller or any Affiliate of such Seller identifies any tangible or intangible asset, property or right in its possession that is property of the JV Companies, then such Seller shall convey and deliver, or cause such Affiliate to convey and deliver, such asset, property or right to the appropriate JV Company (or to such JV Company as Buyer may designate), accompanied by appropriate instruments of transfer, but without any further consideration being required from Buyer or any of the JV Companies in connection with such conveyance and delivery.

 

7.5              Release. Except as otherwise set forth in the Termination Agreement, each Party, on its own behalf and on behalf of its Affiliates and any other Person that may claim by, through or under such Party, and/or any its respective Affiliates (each, a “Releasing Party”), hereby irrevocably waives, releases and discharges, as of Closing, each other Party, and their Affiliates (each, a “Released Party”) from any and all Liabilities to such Releasing Party arising prior to the Closing Date, in each case whether arising under any agreement, instrument or understanding or otherwise at law or equity (other than the breach of any of the representations and warranties or the performance of any of the obligations of the Parties arising under this Agreement and the Associated Agreements), and such Releasing Party shall not seek to recover any amounts in connection therewith or thereunder from any Released Party. Notwithstanding the foregoing, no owner of any Seller who continues as an employee in the employment of the Parent or an Affiliate from the Closing Date releases or discharges the Buyer, Parent or any of their Affiliates from (a) any rights to any payments, benefits or reimbursements under such Person’s employment agreement (to the extent such employment agreement is not terminated or superseded) or any Contract with Buyer, Parent, or any of their Affiliates; (b) any rights to vested benefits as a participant under any employee benefit plan; and (c) any statutory claims arising out of or relating to such Persons employment by Buyer or Parent, or any of their Affiliates. For the avoidance of doubt, nothing in this Section 7.5 shall limit the representations, warranties, covenants or indemnification obligations of any Party under this Agreement or the Associated Agreements.

 

Article VIII
RESTRICTIVE COVENANTS

 

8.1              Confidentiality.

 

(a)               All disclosures of trade secrets, know-how, financial information, or other information of a type that is known to be, or that a reasonable person would recognize it to be, confidential made by Buyer or any of its affiliates (as applicable, the “Discloser”) under or in connection with this Agreement or the Associated Agreements, as well as the terms of this Agreement and all Associated Agreements (collectively, the “Confidential Information”), shall be received and maintained in confidence by the recipient (the “Recipient”) and each Recipient shall treat all such Confidential Information as the confidential property of the Discloser and keep it confidential and secure and protect it from unauthorized use or disclosure by using at least the same degree of care as Recipient employs to avoid unauthorized use or disclosure of its own Confidential Information of similar nature, but in no event less than reasonable care. Notwithstanding the foregoing, (1) a Recipient shall be permitted to disclose any Confidential Information if required by applicable law, provided the Recipient provides the Discloser reasonable prior opportunity to comment upon such disclosure to the extent permitted by law and agree to cooperate to take reasonable steps to minimize the extent of any such required disclosure, and (2) Buyer, Parent and their Affiliates may disclose information to the extent required under law in connection with reports, filings, and other documents filed by its Affiliates (including Parent) with the SEC or any other securities regulator, or otherwise required under the rules or regulations of The Nasdaq Stock Market LLC or any other securities exchange or market (each as determined by Buyer or its Affiliates in their sole discretion).

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(b)               The term “Confidential Information” does not include information that (i) was in the public domain prior to the time it was furnished to Recipient or is at the time of the alleged breach (through no willful or improper action or inaction by such Recipient) generally available to the public, (ii) was or becomes available to a Recipient on a non-confidential basis from a source other than Buyer or its Affiliates, provided such other source is not be known by the Recipient to be bound by a confidentiality obligation, (iii) is lawfully known to a Recipient prior to disclosure of the Confidential Information by Buyer or its Affiliates or (iv) is independently developed by a Recipient without any use of any Confidential Information.

 

(c)               Each Recipient’s obligations with respect to the Confidential Information shall continue for a term of three (3) years following the Closing Date.

 

8.2              Restrictive Covenants of Sellers. As a material inducement to Buyer and Parent to enter into this Agreement and to consummate the transactions contemplated by this Agreement, the Sellers hereby agrees as follows:

 

(a)               Competitive Activities. Each Seller shall not, and shall cause each of such Seller’s Affiliates (other than the JV Companies and Buyer) to not, at any time during the Restrictive Period, directly or indirectly in any part of the Territory:

 

(i)                 engage in or assist other in engaging in, own, control, manage, or participate in the ownership, control or management of, or have a material financial interest in, any business engaged in, in whole or in part, the Competitive Activity within the Territory;

 

(ii)              solicit, or assist in the solicitation of, any person having an office or conducting business anywhere within the Territory and to which the JV Companies sold goods or provided services in connection with the Business, for the purpose of selling goods or providing services related to the Competitive Activity or diverting business from the JV Companies; or

 

(iii)            solicit, or assist in the solicitation of, any person employed or engaged by the Parent or the JV Companies in any capacity (as an employee, independent contractor or otherwise) to terminate such employment or other engagement, whether or not such employment or engagement is pursuant to a contract and whether or not such employment or engagement is at will; provided, however, that the advertisement of job openings and use of employee search firms, newspapers, magazines, the internet and other media not directed at the foregoing shall not constitute a breach of this Section 8.2(a)(iii).

 25 

 

Except as set forth in this Section 8.2 or as provided under applicable Law, Parent and Buyer shall not restrict each Seller from engaging in any other businesses or activities and to receive the income and benefits thereof (and Parent and the JV Companies shall have no interest therein by reason of this Agreement or the Associated Agreements), regardless of whether such businesses or activities are similar or competitive to the Parent and/or the JV Companies businesses; provided, that nothing in this paragraph shall limit the fiduciary duties of any designee or representative of one or more of the Sellers on the board of directors of Parent.

 

(b)               Authority for Judicial Enforcement and Revision. Each Seller agrees and acknowledges that the scope, duration and geographical area of the covenants of such Seller set forth in this Section 8.2: are reasonable and necessary to protect the Parent and Buyer. However, the Parties agree that if a court finds the covenants of the Sellers set forth in this Section 8.2 unenforceable due to restrictions unreasonable in scope, duration, geographical area or remedies, then such court shall be allowed to reform the covenants of such Seller set forth in this Section 8.2 so that the restrictions herein are reasonable and this Agreement, and the covenants of such Seller set forth in this Section 8.2, are enforceable.

 

(c)               Remedies. The Sellers acknowledge that if they violate the terms of this Section 8.2 it would be impossible to determine with any reasonable accuracy the amount of damages to the Buyer and its Affiliates, which cannot be adequately compensated in monetary damages. Therefore, Buyer shall have, in addition to, and not in lieu of, any of the other rights and remedies available hereunder, the right to have the provisions of this Section 8.2 specifically enforced by any court of competent jurisdiction by way of an injunction or other equitable relief. Buyer shall not be required to post a bond or other security or to prove actual damages or the inadequacy of monetary damages in connection with its efforts to obtain equitable relief concerning this Section 8.2. The Parties agree that any breach or attempted breach of this Section 8.2 would cause substantial and irreparable damage which would be adequately compensated for by damages. As a result the Buyer and its Affiliates shall be entitled to injunctive relief in the Territory in addition to the monetary damages.

 

Article IX
MISCELLANEOUS

 

9.1              Notices. Any notice or communication required or permitted to be given be any provisions of this Agreement, including but not limited to any consents, shall be in writing and shall be deemed to have been given and received by the Person to whom directed, if properly addressed: (a) when delivered personally to such Person or to an officer or partner of the Person to which directed, (b) upon confirmation of receipt of transmission by email, or (c) two (2) days after being deposited with an internationally recognized overnight courier, delivery charges prepaid for delivery the following day. The addresses for notice are as follows:

 26 

 

  If to Buyer or Parent:

FreightCar North America, LLC

c/o FreightCar America, Inc.

125 South Wacker Drive

Suite 1500

Chicago, Illinois 60606

Attn: Christopher Eppel

Email: [email protected]

 

  with a copy to (which shall not constitute notice):

Kelley Drye & Warren LLP

333 West Wacker Drive, 26th Floor

Chicago, IL 60606

Attn: Andrew Pillsbury

Email: [email protected]

 

  If to Sellers or any Seller:

c/o Fabricaciones y Servicios de Mexico SA de CV.

Carretera 57 Km 178

Castaños Coahuila, 25780 Mexico

Email: [email protected]

 

  with a copy to (which shall not constitute notice):

Romero, Ramos, Quintanilla y Bortoni S.C.

Lazaro Cardenas 435 Despacho 410

Colonia Loma Larga, 66266

San Pedro Garza Garcia, Nuevo Leon, Mexico.

Attn: Francisco Romero

Email: [email protected]

 

Any Party may change its address, email, facsimile number or individual for receiving notice for the purpose of this Section 9.1 by notice to the other given in the manner set forth above.

 

9.2              Governing Law. This Agreement shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the State of Delaware applicable to contracts made in that state, without giving effect to any law, provision or rule that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

9.3              Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)               EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, COUNTY OF COOK, AND ANY APPELLATE COURT THEREFROM OR THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS AND ANY APPELLATE COURT THEREFROM (COLLECTIVELY, THE “Illinois Courts”). EACH PARTY HERE-BY IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND SUBMITS, FOR IT-SELF AND ITS ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY OF THE ILLINOIS COURTS IN RESPECT OF ANY SUCH PROCEEDING. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.1. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 27 

 

(b)               EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING IN ANY OF THE ILLINOIS COURTS. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY OF THE ILLINOIS COURTS. EACH OF THE PARTIES AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

(c)               EACH PARTY AGREES THAT ANY PROCEEDING (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH PROCEEDING.

 

(d)               EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE FOREGOING WAIVERS, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION 9.3(d).

 

(e)               EACH OF THE PARTIES HERETO WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LAWSUIT, ACTION OR PROCEEDING SEEKING ENFORCEMENT OF SUCH PARTY’S RIGHTS UNDER THIS AGREEMENT.

 28 

 

9.4              Further Assurance. In connection with this Agreement and the transactions contemplated hereby, the Parties shall execute and deliver such further documents, and perform such further acts, as may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions contemplated hereunder, as reasonably requested by the other Parties.

 

9.5              Waivers. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

9.6              Rights and Remedies Cumulative. Except as specifically set forth in this Agreement, the rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any Party shall not preclude or waive the right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the Parties may have by law, statute, ordinance or otherwise.

 

9.7              Severability. If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law.

 

9.8              Assignment. Except as expressly set forth in this Agreement, no Party may assign or transfer any of its rights or obligations hereunder without the prior written consent of all of the Parties; provided that Buyer or Parent may assign any rights or obligations hereunder to an Affiliate of either Buyer or Parent. Any proposed assignment in contravention of this Section 9.8 shall be null and void.

 

9.9              Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

9.10          Terminology and Construction. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; and the singular shall include the plural and vice versa. Titles of Articles, Sections, Exhibits, and Disclosure Schedule are for convenience only, and neither limit nor amplify the provisions of this Agreement. Except as specifically provided, references to Articles, Sections, Exhibits, and Disclosure Schedule in this Agreement refer to Articles, Sections, Exhibits, and Disclosure Schedule to, this Agreement. The use herein of the word “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” or “but not limited to,” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. The word “or” shall mean “and/or” unless the context requires otherwise. The words “day,” “month,” and “year” mean, respectively, calendar day, calendar month and calendar year. Any reference to a statute shall include and shall be deemed to be a reference to such statute and to the regulations made pursuant thereto, and all amendments made thereto and enforced from time to time, and to any statute or regulation that may be passed which has the effect of supplementing the statute so referred to or the regulations made pursuant thereto. The Parties agree that the terms and conditions of this Agreement and the Associated Agreements are the result of negotiations between and among them and that neither this Agreement nor any of the Associated Agreements shall be construed in favor of or against any Party by reason of the extent to which such Party or its professional advisors participated in the preparation of such agreements. All references to “$” or “dollar” in this Agreement refer to the currency of the United States.

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9.11          Expenses. Each Party shall be responsible for its own legal, accounting, and other expenses incurred in connection with the negotiations and transactions contemplated by this Agreement and the Associated Agreements.

 

9.12          Entire Agreement. This Agreement and each of the Associated Agreements and exhibits and schedules attached hereto set forth all (and are intended by all Parties hereto to be an integration of all) of the promises, agreements, conditions, understandings, warranties, and representations among the Parties hereto; and there are no promises, agreements, conditions, understandings, warranties, or representations, oral or written, expressed or implied, among them other than as set forth herein. Any amendment to this Agreement must be in writing and will not be effective until it is executed and approved by an authorized representative of each Party.

 

[signature page follows]

 

 

 

 

 

 

 

 

 

 

 30 

 

The Parties have executed and delivered this Equity Purchase Agreement as of the date first written above.

 

  BUYER:
   
  FREIGHTCAR NORTH AMERICA, LLC
   
   
  By: /s/ James R. Meyer
  Name: James R. Meyer
  Title: President
   
   
 
  For purposes of Article V and Article IX and Section 6.2(e) (subject to the limitations and other provisions of Article VI) only:
   
  PARENT:
   
  FREIGHTCAR AMERICA, INC.
   
   
  By: /s/ James R. Meyer
  Name: James R. Meyer
  Title: President and Chief Executive Officer

 

 

 

[Signature Page to Equity Purchase Agreement]

 

 

  SELLERS:
   
  FASEMEX, INC.
   
  By: /s/ Jesus S. Gil
  Name: Jesus S. Gil
  Title: President
   
  FABRICACIONES Y SERVICIOS DE MÉXICO, S.A. DE C.V.
   
  By: /s/ Alejandro Gil
  Name: Alejandro Gil
  Title: Legal Representative
   
  AGBEN DE MEXICO, S.A. DE C.V.
   
  By: /s/ Jesus S. Gil
  Name: Jesus S. Gil
  Title: Owner
   

 

 

 

 

[Signature Page to Equity Purchase Agreement]

 

 

EXHIBIT A

 

DEFINITIONS

 

Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, the specified Person. For the purposes of this definition, the term “control” means (a) the possession, directly or indirectly, of the power to vote ten percent (10%) or more of the securities or other equity interests of a Person having ordinary voting power, (b) the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, by contract or otherwise or (c) being a director, officer, executor, trustee or fiduciary (or their equivalent positions) of a Person or a Person that controls such Person. Notwithstanding the foregoing, the JV Companies shall not be considered Affiliates of any of the Parties prior to Closing, and upon Closing, the JV Companies shall be deemed Affiliates of Buyer and Parent.

 

Agben” has the meaning set forth in the preamble.

 

Agreement” has the meaning set forth in the preamble.

 

Associated Agreements” means all documents and certificates referenced herein to which any of the Parties is a party and which is required to be delivered hereunder, or which is delivered by any Party to another contemporaneously with Closing in connection with the transactions contemplated hereunder.

 

Business” has the meaning set forth in the recitals.

 

Buyer” has the meaning set forth in the preamble.

 

Buyer Indemnitees” has the meaning set forth in Section 6.2(a).

 

“Buyer’s Knowledge” means the actual knowledge of James R. Meyer and Christopher J. Eppel, in each case after reasonable inquiry of their respective direct reports.

 

Claim” means any complaint, allegation, charge, petition, appeal, demand, notice, filing or claim of any kind that commences, alleges a basis to commence or threatens to commence any Proceeding by or before any Governmental Body, or that asserts, alleges a basis to assert or threatens to assert any right, breach, default, violation, noncompliance, termination, cancellation or other action or omission that would reasonably be expected to result in a Loss.

 

Claim Response” has the meaning set forth in Section 6.3(b).

 

Closing” has the meaning set forth in Section 1.3.

 

Closing Date” has the meaning set forth in Section 1.3.

 

Closing Value” means, with respect to shares of Parent Common Stock, the aggregate value of such shares based on the closing price of the Parent Common Stock on the Trading Market on the Closing Date (or the next applicable trading day).

 Exhibit A-1 

 

Common Stock” has the meaning set forth in Section 5.2.

 

Competitive Activities” means the manufacture, assembly, distribution or sales of railcars, railcar parts, or railcar components; provided, however, that the sale of railcar parts or railcar components by Fasemex Mexico or its Affiliates to certain parties as mutually agreed from time to time shall not be considered a “Competitive Activity”. For clarity, “Competitive Activity” includes the assembly or manufacture of any type of railcar.

 

Confidential Information” has the meaning set forth in Section 8.1(a).

 

Consideration Shares” has the meaning set forth in Section 1.1.

 

Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

 

Discloser” has the meaning set forth in Section 8.1(a).

 

Disclosure Schedule” means the disclosure schedule of Sellers, which is incorporated by reference into and made a part of this Agreement.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Executive Order 13224” has the meaning set forth in Section 2.9.

 

Fasemex Mexico” has the meaning set forth in the preamble.

 

Fundamental Representations” has the meaning set forth in Section 6.1.

 

GAAP” means generally accepted accounting principles as used in the United States as in effect at the time any applicable financial statements were or are prepared.

 

Governmental Body” means any federal, state, regional, county, city, local, municipal, foreign or other government or quasi-governmental entity or authority or any department, branch, agency, commission, board, subdivision, bureau, agency, official, political subdivision or other instrumentality of any of the foregoing, any administrative or regulatory body obtaining authority from any of the foregoing, and any court, tribunal, judicial or arbitral body, mediation or conciliation or self-regulatory authority.

 

Indemnified Party” has the meaning set forth in Section 6.3(a).

 

Indemnifying Party” has the meaning set forth in Section 6.3(a).

 

JV Companies” has the meaning set forth in the recitals.

 

JV Equity Interests” has the meaning set forth in the recitals.

 

Law” means any constitutional provision, statute, ordinance, law (including common law), rule, regulation, code, plan, decree, injunction, judgment, Order, ruling, assessment or writ of any Governmental Body, or any legally binding regulatory policy statement (whether or not publicly available), binding standard or guidance or policy, binding directive, or decree of any Governmental Body, in each case as any of the foregoing may be in effect from time to time.

 Exhibit A-2 

 

Liabilities” has the meaning set forth in Section 3.2.

 

Lien” means any lien (including any tax lien), mortgage, security interest, pledge, deposit, option, infringement, charge, claim, deed of trust, hypothecation, mortgage, contingent sale, title retention, lease or sublease, building or use restriction, adverse claim, right or intent, covenant, easement, encroachment, defect, or other matter affecting title, conditional sales agreement, community property interest, or other encumbrance or restriction (including a restriction on transfer such as a right of first refusal) of any nature or kind, whether voluntarily or involuntarily incurred, arising by operation of Law, by contract or otherwise, and including any contract to give any of the foregoing in the future.

 

Losses” means any and all liabilities, Proceedings, Claims, losses, demands, assessments, adjustments, awards, judgments, settlement payments, fines, penalties, taxes, interest, damages, costs, deficiencies, fees, charges and expenses, including any and all reasonable expenses incurred in connection with investigating, defending or asserting any of the foregoing (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel, investigators, consultants, expert witnesses, accountants and other professionals).

 

“Material Adverse Effect” means any change or effect that has a material and adverse effect on (a) the business, operations, financial condition, or assets of the applicable company and its wholly-owned subsidiaries taken as a whole, or (b) the ability of applicable company to perform its obligations under this Agreement.

 

MX JV Equity” has the meaning set forth in the recitals.

 

MX Sellers” has the meaning set forth in the preamble.

 

Notice of Claim” has the meaning set forth in Section 6.3(a).

 

OFAC” has the meaning set forth in Section 2.9.

 

Order” means any judgment, writ, decree, directive, decision, injunction, ruling, stipulation, award, order (including any consent decree or cease and desist order) or determination of any kind issued, promulgated or entered by or with any Governmental Body.

 

Ordinary Course of Business” means, with respect to any action take or omitted to be taken by the JV Companies or by any JV Company, as applicable in the context, that: (a) is consistent in nature, scope and magnitude with the past practices of the JV Companies or such JV Company and is taken in the ordinary course of the normal, day-to-day operations of the JV Companies or such JV Company; (b) does not require authorization by the board of directors or managers or equityholders of the JV Companies or such JV Company (or by any Person or group of Persons exercising similar authority) and does not require any other separate or special authorization of any nature; and (c) is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal, day-to-day operations of other Persons that are engaged in the Business.

 Exhibit A-3 

 

Parent” has the meaning set forth in the recitals.

 

Parent Common Stock” means common stock, par value $0.01 per share, of Parent.

 

“Parent’s Knowledge” means the actual knowledge of James R. Meyer and Christopher J. Eppel, in each case after reasonable inquiry of their respective direct reports.

 

Party” and “Parties” has the meaning set forth in the preamble.

 

Permits” has the meaning set forth in Section 3.4.

 

Person” means a natural person, a partnership, a corporation, a company, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or other form of business enterprise or a Governmental Body.

 

Proceeding” means any suit, action, cause of action (whether at law or in equity), arbitration, audit, hearing, investigation, litigation, claim, complaint, administrative or similar proceeding (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body.

 

Production JV” has the meaning set forth in the recitals.

 

Recipient” has the meaning set forth in Section 8.1(a).

 

Regulation S” means Regulation S promulgated under the Securities Act.

 

Response Period” has the meaning set forth in Section 6.3(b).

 

Restrictive Period” means the period beginning at Closing and ending the later of (a) three (3) years after the Closing Date, and (b) such time when the Sellers and their Affiliates cease to beneficially own, in the aggregate, 5% (five percent) of the issued and outstanding shares of Parent Common Stock (after giving effect to any stock splits, combinations or similar transactions).

 

Rule 144” means Rule 144 promulgated under the Securities Act.

 

SEC” means the U.S. Securities and Exchange Commission.

 

SEC Documents” means all reports, schedules, forms, proxy statements, statements and other documents filed or required to be filed by Parent with the SEC pursuant to the reporting requirements of the Exchange Act (including all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein) during the three (3) years prior to the date hereof.

 

Securities Act” means the Securities Act of 1933, as amended.

 Exhibit A-4 

 

Seller” and “Sellers” each has the meaning set forth in the preamble.

 

Seller Indemnitees” has the meaning set forth in Section 6.2(b).

 

“Seller’s Knowledge” means the actual knowledge of Jesús Gil Benavides, Alejandro Gil Benavides, and Salvador Gil Benavides, in each case after reasonable inquiry of their respective direct reports.

 

Territory” means the United States of America (including Puerto Rico), Canada and Mexico.

 

Third Party Claim” has the meaning set forth in Section 6.4.

 

Trading Market” means the Nasdaq Global Market.

 

US JV” has the meaning set forth in the recitals.

 

US JV Equity” has the meaning set forth in the recitals.

 

US Seller” has the meaning set forth in the preamble.

 

 

 

 

 

Exhibit A-5

 

(Back To Top)

Section 3: EX-10.2 (EXHIBIT 10.2)

Exhibit 10.2

 

Execution Copy

 

INVESTOR RIGHTS AGREEMENT

 

This Investor Rights Agreement (this “Agreement”) is made effective as of October 16, 2020, by and among FreightCar America, Inc., a Delaware corporation (“FCA”), Fabricaciones y Servicios de México, S.A. de C.V., an entity organized under the laws of Mexico (“Fasemex Mexico”), Agben de México, S.A. de C.V., an entity organized under the laws of Mexico (“Agben”) and Fasemex, Inc., a Texas corporation (“US Seller”; each of US Seller, Fasemex Mexico and Agben, an “Investor” and collectively, the “Investors”). FCA and each Investor are referred to hereto as “Party” and collectively, the “Parties”.

 

WHERAS, FCA has agreed to acquire (the “Strategic Transaction”) from the Investors all of the equity interests currently owned by the Investors (collectively, the “Purchased Equity Interests”) of (i) FCA-FASEMEX, S. de R.L., de C.V., an entity organized under the laws of Mexico (“Production JV”), FCA-FASEMEX Enterprise, S. de. R.L., de C.V., an entity organized under the laws of Mexico (“Services JV” and, together with Production JV, the “MX-JV Companies”) and (ii) FCA-Fasemex, LLC, a Delaware limited liability company (the “US JV” and, together with the MX-JV Companies, the “JV Companies”); and

 

WHEREAS, in consideration for the Investors’ agreement to sell the Purchased Equity Interests to FCA, FCA has agreed to provide the Investors with the rights set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the respective covenants and agreements of the Parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), the Parties hereby agree as follows:

 

1.                  Defined Terms

 

For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the meanings set forth below and grammatical variations of such terms shall have the corresponding meanings:

 

(a)Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. For the purposes of this definition, “control” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of Person, whether through the ownership of voting securities, by contract, or otherwise;

 

(b)Agben” has the meaning given to such term in the preamble;

 

(c)Agreement” means this Investor Rights Agreement;

 

(d)Appointment Date” has the meaning given to such term in Section 3(d);

 

(e)Board” means the board of directors of FCA;

 

(f)Business Day” means any day, other than (a) a Saturday, Sunday or statutory holiday in the State of Illinois and (b) a day on which banks are generally closed in the State of Illinois;

 

 

(g)Closing” has the meaning given to such term in Section 3(a);

 

(h)Common Stock” means the Common Stock of the Company, par value $0.01 per share;

 

(i)Confidential Information” means any and all information, in any form or medium, written or oral, whether concerning or relating to FCA, its Affiliates, its and their officers and employees or any third party (whether prepared by FCA or on behalf of FCA or otherwise, and irrespective of the form or means of communication and whether it is labeled or otherwise identified as confidential), that is furnished to or on behalf of the Investors or by or on behalf of FCA at any time, whether before, upon or after the execution of this Agreement, including all oral and written information relating to financial statements, projections, evaluations, plans, programs, customers, suppliers, facilities, equipment and other assets, products, processes, manufacturing, marketing, research and development, trade secrets, knowhow, patent applications that that have not been published, technology and other confidential information and intellectual property of FCA and its Affiliates. “Confidential Information” shall be deemed to include all notes, analyses, studies, interpretations, memoranda and other documents, material or reports (in any form or medium) prepared by the Investors that contain, reflect or are based upon, in whole or part, the information furnished to or on behalf of FCA;

 

(a)Consideration Shares” means 2,257,234 shares of Common Stock issued to the Investors as part of the consideration for the Strategic Transaction.

 

(b)Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, as the same may hereafter be amended from time to time or replaced;

 

(c)Fasemex Mexico” has the meaning given to such term in the preamble;

 

(d)FCA” has the meaning given to such term in the preamble;

 

(e)Investor” or “Investors” have the meanings given to such terms in the preamble;

 

(f)Investors Director” has the meaning given to such term in Section 3(a);

 

(g)Investors Observer” has the meaning given to such term in Section 5(a);

 

(h)JV Companies” has the meaning given to such term in the recitals;

 

(i)Laws” means any and all federal, state, provincial, regional, local, municipal or other laws, statutes, constitutions, principles of common law, resolutions, ordinances, proclamations, directives, codes, edicts, orders, rules, regulations, rulings or requirements issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any governmental entity and includes Securities Laws;
 2 

 

(j)Minimum Percentage” has the meaning given to such term in Section 7.

 

(k)MX-JV Companies” has the meaning given to such term in the recitals;

 

(l)Party” or “Parties” have the meanings given to such terms in the preamble;

 

(m)Person” means and includes any individual, company, limited partnership, general partnership, joint stock company, limited liability company, joint venture, association, company, trust, bank, trust company, pension fund, business trust or other organization, whether or not a legal entity and any governmental entity;

 

(n)Production JV” has the meaning given to such term in the recitals;

 

  (o) Purchased Equity Interests” has the meaning given to such term in the recitals;

 

(p)SEC” means the United States Securities and Exchange Commission;

 

(q)Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, as the same may hereafter be amended from time to time or replaced;

 

(r)Securities Laws” means the Securities Act and the Exchange Act;

 

(s)Services JV” has the meaning given to such term in the recitals;

 

(t)Strategic Transaction” has the meaning given to such term in the recitals;

 

(u)US-JV” has the meaning given to such term in the recitals; and

 

(v)US Seller” has the meaning given to such term in the preamble.

 

2.                  Rules of Construction

 

Except as may be otherwise specifically provided in this Agreement and unless the context otherwise requires, in this Agreement:

 

(a)The terms “Agreement”, “this Agreement”, “hereto”, “hereof”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its entirety and not to any particular provision hereof and include any schedules or exhibits thereto;

 

(b)The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect the construction of this Agreement;

 

(c)Words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include all genders;
 3 

 

(d)The word “including” is deemed to mean “including without limitation”;

 

(e)Any reference to this Agreement means this Agreement as amended, modified, replaced or supplemented from time to time;

 

(f)Any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or replaced, and any reference to a statute shall include any regulations or rules made thereunder;

 

(g)Whenever any action is required to be taken or period of time is to expire on a day other than a Business Day, such action shall be taken or period shall expire on the next following Business Day; and

 

(h)Unless otherwise indicated, section references in this Agreement are references to sections contained in this Agreement.

 

3.                  Board Member Designation Rights

 

(a)At the closing of the Strategic Transaction (the “Closing”) and for so long as the Minimum Percentage is satisfied, the Investors collectively shall be entitled to designate one nominee (the “Investors Director”) for election to the Board. The Investors Director must be an individual reasonably acceptable to FCA eligible to serve as a director of FCA pursuant to applicable Law and to FCA’s applicable corporate governance guidelines. “Reasonably acceptable to FCA” for purposes of the foregoing sentence shall mean that the Investors’ designee for an Investors Director shall satisfy a background check and a prospective board member evaluation customary for corporate board members for U.S. public companies, consistent with FCA’s past practices for the onboarding of new board members (it being understood that Mr. Jesús Gil shall be deemed to satisfy this standard).

 

(b)FCA shall use commercially reasonable efforts to ensure that the nominee for Investors Director is elected to the Board, including soliciting proxies in support of his or her election and taking the same actions taken FCA to ensure the election of the other nominees selected by the Board for election to the Board.

 

(c)In the event the Investors elect an Investors Director other than Mr. Jesús Gil, they shall advise FCA of the identity of the nominee for Investors Director at least 60 (sixty) calendar days prior to any meeting of the stockholders at which the directors of FCA are to be elected or within 10 (ten) calendar days of being notified of the record date for such meeting. If the Investors do not advise FCA of the identity of the nominee for Investors Director prior to such deadline, then the Investors will be deemed to have nominated Mr. Jesús Gil as their incumbent Investors Director.

 

(d)As stated above, the Parties acknowledge that the initial Investors Director shall be Mr. Jesús Gil, who will be appointed to the Board as a Class II Director no later than October 26, 2020 (the “Appointment Date”). FCA acknowledges and agrees that Mr. Jesus Gil satisfies the eligibility requirements set forth in Section 3(a).
 4 

 

(e)The Board shall, effective as of the Appointment Date, (i) increase the size of the Board by one director to seven directors and (B) appoint Mr. Jesus Gil as a Class II Director of FCA with a term expiring at the 2022 annual meeting of stockholders.

 

(f)FCA will, at the 2022 annual meeting of stockholders and at each subsequent annual meeting of stockholders at which Class II Directors are up for election, recommend for nomination and nominate the Investors Director, together with the other persons included in the FCA’s slate of nominees, for election as Class II Directors at such annual meeting.

 

(g)In the event that the Investors Director shall cease to serve as a director of FCA, whether due to his or her death, disability, resignation or removal, FCA shall cause the Board to promptly appoint a replacement Investors Director (who shall be a different person) designated by the Investors to fill the vacancy created by such death, disability, resignation or removal, provided that the Investor remains eligible to designate the Investors Director and that the replacement Investors Director satisfies the eligibility requirements set forth in Section 3(a).

 

(h)The Investors Director shall not be compensated for serving on the Board so long as he or she is an employee or independent contractor of FCA or one of its Affiliates; provided that if the Investors Director’s employment or independent contractor status is terminated for any reason, the Investors Director shall be compensated in an amount equal to the compensation paid to other similarly situated directors on the Board for serving on the Board.

 

(i)FCA shall provide the same indemnification and maintain the same coverage under any policies of directors’ and officers’ insurance, in favor of the Investors Director in his capacity of director to the Board and as the Vice President of Operations of FCA, as stated in Section 4.

 

4.                  Vice President of Operations. Jesus Gil shall be retained as the Vice President of Operations of FCA effective as of the Closing, in accordance with the economic terms and provisions similar to such terms and provisions afforded to Jesus Gil as the Vice President of Operations of the JV Companies or FCA, as applicable, as well as other customary provisions to such officer’s positions.

 

5.                  Board Observer Designation Rights

 

(a)At the Closing and for so long as the Minimum Percentage is satisfied, the Investors shall be entitled collectively to designate Mr. Alejandro Gil or another individual (the “Investors Observer”) who is reasonably acceptable to FCA to attend meetings of the Board, committee meetings of the Board (to the extent such committee meetings are otherwise open to attendance by members of the Board not sitting on such committees and non-independent members of the Board), if permitted by the Chief Executive Officer of FCA, any executive sessions and, if permitted by the Chairman of the Board, any private sessions, as a non-voting observer. The Investors Observer shall not have the right to vote at any meeting of the Board or any committee or be counted towards determining whether there is quorum for such meeting, but shall be entitled to participate in the discussions of the Board or such committee during such meetings.
 5 

 

(b)FCA shall:

 

i.Provide the Investors Observer with notice, if any, of each meeting of the Board (telephonic or otherwise), in the same manner and at the same time as provided to the Board;

 

ii.Provide to the Investors Observer copies of all materials provided to the Board, in the same manner and at the same time as provided to the Board;

 

iii.Provide to the Investors Observer drafts of all resolutions proposed for signature by the Board (in lieu of a meeting) before such resolutions are so signed, in the same manner and at the same time as provided to the Board; and

 

iv.Permit the Investors Observer to attend each meeting of the Board (telephonic or otherwise), including, without limitation, any committee meeting of the Board (to the extent such committee meetings are otherwise open to attendance by members of the Board not sitting on such committees and non-independent members of the Board) or, if permitted, executive or private sessions, as an observer;

 

except with respect to material or resolutions, or attendance at such portions of any such meeting, in which (A) the subject matter relates to a transaction, proceeding or matter in which the Investors or their Affiliates are or may be interested parties, and where the participation in such portion of any such meeting by the Investors Observer or access to the Confidential Information relating to FCA would, upon the advice of counsel, give rise to a conflict of interest between the Investors and FCA, as determined by the Board in its sole discretion, (b) the Board determines, upon the advice of counsel, that such exclusion is reasonably necessary to preserve attorney-client privilege or (C) the Board determines, upon the advice of counsel, that such exclusion is reasonably necessary for FCA or its subsidiaries to comply with their respective confidentiality obligations.

 

(c)The Investors shall advise FCA of the identity of the Investors Observer that they have designated, other than Mr. Alejandro Gil, from time to time (and in each such case, sufficiently in advance to permit FCA to confirm that such proposed Investors Observer satisfies the eligibility requirements of Section 5(a)). As stated above, the Parties acknowledge that the initial Investors Observer shall be Mr. Alejandro Gil.

 

(d)FCA shall not be required to (i) pay any compensation to the Investors Observer at any time or (ii) provide any indemnification, or maintain coverage under any policies of directors’ and officers’ insurance, in favor of the Investors Observer.
 6 

 

(e)The Investors Observer will have the right to attend all meetings of the Board and receive all information provided to members of the Board (including minutes of the board meetings) as if the Investors Observer was a member of the Board; provided that the Investors Observer will only be permitted to attend the executive sessions of the Board at the discretion of the Chief Executive Officer of FCA and the private sessions at the discretion of the Chairman of the Board.

 

6.Compliance with Securities Laws and FCA Insider Trading Policy. Each of the Investors hereby acknowledges and agrees that, from and after the Closing: (a) it is subject to restrictions on its ability to trade in FCA’s securities under the Securities Laws; (b) it is bound by, and agrees to comply with, the Securities Laws as they relate to trading in FCA’s securities; and (c) it will comply with the FCA Insider Trading Policy to the same extent that such policy applies to directors and executive officers of FCA.

 

7.Term. For so long as the Investors collectively hold at least 50% of the Consideration Shares (the “Minimum Percentage”), the Investors collectively shall be entitled to designate (a) the Investor Director for election to the Board pursuant Section 3(a), and (b) the Investors Observer pursuant to Section 5(a).

 

8.Miscellaneous

 

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without regard to principles of conflict of laws. This Agreement may be executed in any number of counterparts (including via facsimile or other electronic transmission), each of which shall be an original, but all of which together shall constitute one instrument. All notices and other communications that are required to be or may be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or by courier or by a national overnight courier services to the relevant Party at the address or facsimile number provided by the Parties from time to time. This Agreement and all the obligations and benefits hereunder shall inure to the successors and permitted assigns of the Parties. No Party may assign any rights or obligations hereunder to any other person without the prior written consent of each other Party. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Parties hereto. This Agreement shall be terminated in all respects if the Closing does not occur for any reason.

 

(b)Time of Essence. Times shall be of the essence of this Agreement.

 

(c)Entire Agreement. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by Parties hereto.

 

(d)Further Assurances. Each Party agrees to take or cause to be taken further actions, and to execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments, and to obtain such consents, as may be reasonably required or requested by the other Parties in order to effectuate fully the purposes, terms and conditions of this Agreement.
 7 

 

(e)Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party hereto. Upon such determination that any term or provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties hereto as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

[Signatures on following pages]

 

 

 

 

 

 

 

 

 

 

 8 

 

IN WITNESS WHEREOF, the undersigned Parties have duly executed this Investor Rights Agreement effective as of the date first written above.

 

 Fabricaciones y servicios de México, S.a. de c.v.
  
   
By:/s/ Alejandro Gil
Name: Alejandro Gil
Title: Legal Representative

 

  Address:  Carretera 57 Km 178
      
     Castaños Coahuila, 25780 Mexico
      
  Phone:    [____________]
  Email:  [____________]

 

 

 

 

 

[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]

 

 

 Agben de México, S.a. de c.v.
  
   
By:/s/ Jesus S. Gil
Name: Jesus S. Gil
Title: Owner

 

  Address:  Carretera 57 Km 178 Int B
      
     Castaños Coahuila, 25780 Mexico
      
  Phone:   [____________]
  Email:  [____________]

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]

 

 

 fasemex, inc.
   
   
By:/s/ Jesus S. Gil
Name: Jesus S. Gil
Title: President

 

  Address:  10205 Oasis St
      
     Ste 320
      
     San Antonio, TX 78216
      
  Phone:  [____________]
  Email:  [____________]

 

 

 

 

 

[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]

 

 

Accepted and agreed to as
of the date first above written:

 

FREIGHTCAR AMERICA, INC.

 

 

By: /s/ James R. Meyer

Name: James R. Meyer

Title: President and Chief Executive Officer

 

Address:  125 S. Wacker Drive, Suite 1500
   Chicago, Illinois 60606
Phone:    800-458-2235
Email:  [email protected]

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]

 

 

(Back To Top)

Section 4: EX-10.3 (EXHIBIT 10.3)

Exhibit 10.3

 

Execution Version

 

CONTRATO DE NOVACIÓN Y REEXPRESIÓN DE CONTRATO DE ARRENDAMIENTO (EL “CONTRATO”) QUE CELEBRAN POR UNA PARTE FABRICACIONES Y SERVICIOS DE MÉXICO, S.A. DE C.V., REPRESENTADA POR EL SEÑOR ALEJANDRO GIL BENAVIDES, EN SU CARÁCTER DE REPRESENTANTE LEGAL DE DICHA SOCIEDAD (INDISTINTAMENTE EL “ARRENDADOR” O LA “ARRENDADORA”), Y FCA-FASEMEX, S. DE R.L. DE C.V., REPRESENTADA POR EL SEÑOR JAMES R. MEYER, EN SU CARÁCTER DE REPRESENTANTE LEGAL DE DICHA SOCIEDAD (INDISTINTAMENTE EL “ARRENDATARIO” O LA “ARRENDATARIA”), AMBAS PARTES CON CAPACIDAD LEGAL PARA OBLIGARSE EN LOS TÉRMINOS DE ESTE CONTRATO, CON LA COMPARECENCIA DE LOS SRES. JESUS SALVADOR GIL BENAVIDES, ALEJANDRO GIL BENAVIDES Y SALVADOR GIL BENAVIDES COMO COPROPIETARIOS Y ARRENDADORES DEL SEGUNDO TERRENO (COMO DICHO TÉRMINO SE DEFINE MÁS ADELANTE), DE CONFORMIDAD CON LAS SIGUIENTES DECLARACIONES Y CLÁUSULAS:

 

 

NOVATION AGREEMENT AND RESTATED LEASE AGREEMENT (THE “AGREEMENT”) ENTERED INTO BY AND BETWEEN FABRICACIONES Y SERVICIOS DE MÉXICO, S.A. DE C.V., REPRESENTED HEREIN BY MR. ALEJANDRO GIL BENAVIDES, IN HIS CAPACITY AS LEGAL REPRESENTATIVE OF SUCH ENTITY (THE “LESSOR”), AND FCA-FASEMEX, S. DE R.L. DE C.V., REPRESENTED HEREIN BY MR. JAMES R. MEYER, IN HIS CAPACITY AS LEGAL REPRESENTATIVE OF SUCH ENTITY (THE “LESSEE”), BOTH PARTIES WITH LEGAL CAPACITY TO BE BOUND PURSUANT TO THE TERMS SET FORTH IN THIS AGREEMENT, WITH THE APPEARANCE OF MESSRS. JESÚS SALVADOR GIL BENAVIDES, ALEJANDRO GIL BENAVIDES AND SALVADOR GIL BENAVIDES AS CO-OWNERS AND LESSORS OF THE SECOND PLOT (AS SUCH TERM IS DEFINED BELOW), PURSUANT TO THE FOLLOWING RECITALS, REPRESENTATIONS AND CLAUSES:

 

A N T E C E D E N T E S:

 

W I T N E S S E T H:

I. Con fecha 13 de septiembre de 2019 (la “Fecha del Primer Contrato de Arrendamiento”), el Arrendador y el Arrendatario celebraron un contrato de arrendamiento, por medio del cual el Arrendador dio en Arrendamiento a la Arrendataria la Propiedad Arrendada (el “Contrato de Arrendamiento”).

 

I. On September 13, 2019 (the “First Lease Date”), Lessor and Lessee entered into a lease agreement, by means of which Lessor leased in favor of Lessee the Leased Property (the “Lease Agreement).

 

II. Con fecha 27 de abril de 2020, el Arrendador y el Arrendatario celebraron el primer convenio modificatorio al Contrato de Arrendamiento, con el objeto de aclarar su intención original en relación a la definición de Propiedad Arrendada y la superficie de los terrenos y el edificio que la comprenden.

 

II.   On April 27, 2020, Lessor and Lessee entered into the first amendment of the Lease Agreement, in order to clarify its original intention as to the definition of Leased Property, and the surface of the plots and building that comprehend it.

 

 

 

D E C L A R A C I O N E S:

 

R E P R E S E N T A T I O N S:

I.       El Arrendador declara, a través de su representante legal, lo siguiente:

 

I. Lessor hereby represents, through its legal representative, that:

A.       Que es una sociedad anónima de capital variable, legalmente constituida en México, según consta en la escritura pública número 93, de fecha 15 de marzo de 1996, otorgada ante la fe del licenciado Rafael Treviño Garza, notario público número 2, con ejercicio en la ciudad de Monclova, Coahuila e inscrita en el Registro Público de la Propiedad de Monclova, Coahuila, bajo el número de partida 3245, folio número 670, libro 51-3º, con fecha 22 de abril de 1996.

 

A.       It is a variable stock corporation (sociedad anónima de capital variable), legally incorporated in Mexico, as shown in public deed number 93, dated March 15, 1996, granted before Mr. Rafael Treviño Garza, notary public number 2, with authority in the city of Monclova Coahuila and recorded before the Public Registry of Property of Monclova, Coahuila, under “partida” number 3245, folio number 670, book 51-3º on April 22, 1996.

 

B.        Que su representante legal goza de las facultades necesarias para la celebración de este Contrato, sin que las mismas le hayan sido limitadas o modificadas de forma alguna, según consta en el poder general para actos de administración, otorgado mediante la escritura pública número 107, de fecha 28 de septiembre de 2004, otorgada ante la fe del licenciado Alejandro Coronado Rodríguez, notario público número 1, en ejercicio en la ciudad de Monclova, Coahuila.

 

B.       Its legal representative has the necessary authority to enter into and execute this Agreement, and that such authority has not been limited or modified in any manner whatsoever, as shown in the general power of attorney for acts of administration, granted by means of public deed number 107, dated September 28, 2004, granted before Mr. Alejandro Coronado Rodríguez, notary public number 1, with authority in the city of Monclova, Coahuila.

 

 

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C. Que (a) es propietario de un predio identificado como fracción 2, con una superficie de 212,793 m2 (doscientos doce mil setecientos noventa y tres metros cuadrados), con domicilio en Tepic 1100, Colonia California, Coahuila, México, C.P. 25870 según consta en la escritura pública número 464, de fecha 12 de junio de 2015 otorgada ante la fe del licenciado Jesús Gilberto Saracho Navarro, notario público número 23 de Monclova, Coahuila, registrada bajo el Folio 107920, libro 1080, sección I, ante el Registro Público de la Propiedad de Monclova, Coahuila (b) mediante el Contrato de Arrendamiento y su convenio modificatorio dio en arrendamiento al Arrendatario, entre otros inmuebles, un terreno que forma parte del inmueble descrito en el inciso (a) que antecede con superficie de 95,072 m2 (noventa y cinco mil setenta y dos metros cuadrados) (el “Primer Terreno”) mismo que se identifica en el plano adjunto al presente Contrato como Anexo “A”, (c) en virtud de cierto contrato de arrendamiento (el “Contrato de Arrendamiento Gil”) es poseedor y tiene autorización de subarrendar un predio identificado como fracción 3, con una superficie de 212,793 m2 (doscientos doce mil setecientos noventa y tres metros cuadrados), con domicilio en Tepic 1100, Colonia California, Coahuila, México, C.P. 25870, según consta (i) en la escritura pública número 1,157,  de fecha 14 de diciembre de 2018, otorgada ante la fe del licenciado Jesús Gilberto Saracho Navarro, notario público número 23, con ejercicio en la ciudad de Monclova, Coahuila e inscrita ante el Registro Público de la Propiedad de Monclova, Coahuila bajo el folio número 107907, libro1080, sección I, y (ii) en el Contrato de Arrendamiento Gil, y (d) mediante el Contrato de Arrendamiento y su convenio modificatorio subarrendó al Arrendatario, entre otros inmuebles, un terreno que forma parte del inmueble descrito en el inciso (c) que antecede con superficie de 69,572 m2 (sesenta y nueve mil quinientos setenta y dos metros cuadrados) (el “Segundo Terreno”) mismo que se identifica en el plano adjunto al presente Contrato como Anexo “B”.

C.       It is (a) the owner of a plot of land identified as fraction 2, with a surface of 212,793 m2 (two hundred and twelve thousand seven hundred ninety three square meters), located at Tepic 1100, Colonia California, Coahuila, México, C.P. 25870, pursuant to public deed number 464, dated June 12, 2015, granted before Mr. Jesús Gilberto Saracho Navarro, Notary Public Number 23 in Monclova, Coahuila, registered under Folio 107920, Book 1080, Section I before the Public Registry of the Property in Monclova, Coahuila, (b) through Lease Agreement and its amendment agreement it leased to Lessee, among other properties, a plot of land that is part of the property described in the preceding paragraph (a), with a surface of 95,072 m2 (ninety five thousand seventy two square meters) (the “First Plot”) which is identified on the blueprint attached to this Agreement as Exhibit “A”, (c) by virtue of a certain lease agreement (the “Gil Lease Agreement”), it is the legal possessor and is authorized to sublease a plot of land identified as fraction 3, with a surface of 212,793 m2 (two hundred and twelve thousand seven hundred ninety three square meters), located at Tepic 1100, Colonia California, Coahuila, México, C.P. 25870, as shown (i) in public deed number 1,157, dated December 14, 2018, granted before Mr. Jesús Gilberto Saracho Navarro, notary public number 23, with authority in the city of Monclova, Coahuila and recorded before the Public Registry of Property of Monclova, Coahuila, under folio number 107907, book 1080, section I, and (ii) in the Gil Lease Agreement, and (d) through Lease Agreement and its amendment agreement it sublet to Lessee, among other properties, a plot of land that is part of the property described in the preceding paragraph (c), with a surface of 69,572 m2 (sixty nine thousand five hundred seventy two square meters) (the “Second Plot”) which is identified on the blueprint attached to this Agreement as Exhibit “B”.

 

 

D.     (a) Es propietario del edificio construido sobre el Primer Terreno y el Segundo Terreno, con una superficie actual aproximada de 28,060.12  m2 (veinte mil ciento sesenta) metros cuadrados equivalente a 302,036.60 ft2 (trescientos dos mil treinta y seis punto sesenta pies cuadrados), con domicilio en Tepic 1100, Colonia California, Coahuila, México, C.P. 25870, dicho edificio identifica en el plano adjunto al presente Contrato como Anexo “C” (el “Edificio”) y (b) mediante el Contrato de Arrendamiento y su convenio modificatorio dio en arrendamiento al Arrendatario, entre otros inmuebles, el Edificio. El Edificio, el Primer Terreno y el Segundo Terreno se denominarán conjuntamente en el presente como la “Propiedad Arrendada”.

D.        (a) It owns the building built on the First Plot and the Second Plot, with a current surface of approximately 28,060.12 m2 (twenty eight thousand and sixty point twelve) square meters equivalent to 302,036.60 ft2 (three hundred two thousand and thirty six point sixty square feet), located at Tepic 1100, Colonia California, Coahuila, México, C.P. 25870, such building is identified on the blueprint attached to this Agreement as Exhibit “C” (the “Building”) and (b) through the Lease Agreement and its amendment agreement it leased to Lessee the Building, among other properties. The Building, the First Plot and the Second Plot shall be jointly referred hereto as the “Leased Property”.

 

 

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E.       Que la Propiedad Arrendada se encuentra libre de gravámenes, cargas, afectaciones o limitaciones de posesión o dominio de cualquier tipo, y al corriente en el pago de todas las contribuciones gubernamentales que le son aplicables.

 

E.       The Leased Property is free from any liens, encumbrances, affectations or limitations of possession or domain of any kind, and is current in the payment of all applicable governmental contributions.

 

F.       Que está registrada ante la Secretaria de Hacienda y Crédito Público, con el Registro Federal de Contribuyentes número FSM960315HU0.

 

F.       It is registered before the Ministry of Finance and Public Credit, with a taxpayer ID number FSM960315HU0.

 

G. Tiene el derecho de subarrendar el Segundo Terreno, bajo los términos y condiciones establecidos en el presente instrumento.

 

G.        It has the right to sublease the Second Plot under the terms and conditions set forth in this instrument.

 

H. La Propiedad Arrendada tiene un uso de suelo autorizado para fines industriales, de conformidad con las normas aplicables en Colonia California, Estado de Coahuila de Zaragoza.

 

H.        The Leased Property has an authorized use of land for industrial purposes in accordance with the applicable regulations in Colonia California, State of Coahuila de Zaragoza.

 

I.        Que la veracidad y exactitud de las declaraciones del Arrendatario contenidas en el capítulo de Declaraciones de este Contrato es uno de sus motivos determinantes para la celebración de este Contrato.

 

I.        That the truthfulness and accuracy of the representations by Lessee, contained in the Representations section of this Agreement is one of its fundamental motives to enter into this Agreement.

 

II. Declara el Arrendatario, a través de su representante legal, lo siguiente:

 

II.       Lessee hereby represents, through its legal representative, that:

 

A. Que es una sociedad anónima de capital variable, legalmente constituida en México, según consta en la escritura pública número 31,100, de fecha 13 de septiembre de 2019, otorgada ante la fe del licenciado Emilio Cárdenas Estrada, notario público número 3, con ejercicio en la ciudad de Monterrey, Nuevo León, e inscrita en el Registro Público de Comercio de la Ciudad de México, bajo el folio número N-2019075492, con fecha 20 de septiembre de 2019.

 

A.       It is a variable stock corporation (sociedad anónima de capital variable), legally incorporated in Mexico, as shown in public deed number 31,100, dated September 13, 2019, granted before Mr. Emilio Cárdenas Estrada, notary public number 3, with authority in the city of Monterrey, Nuevo León, and recorded before the Public Registry of Commerce of México City, under folio number N-2019075492, on September 20, 2019.

 

 

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B. Que su representante legal goza de las facultades necesarias para la celebración de este Contrato, sin que las mismas le hayan sido limitadas o modificadas de forma alguna. B. Its legal representative has the necessary authority to enter into and execute this Agreement, and that such authority has not been limited or amended in any manner whatsoever.
C. Que para cumplir con su objeto social desea que el Arrendador le arriende la Propiedad Arrendada en los términos de este Contrato.

C.       In order to comply with its corporate purpose, it wishes for Lessor to lease the Leased Property pursuant to the terms hereof.

 

D. Los recursos con los que hará frente a sus obligaciones derivadas del presente Contrato provienen de fuentes lícitas conforme a lo establecido en la Ley Nacional de Extinción de Dominio y en los artículos 17 y 18 de la Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita.

D.       The resources with which it shall pay for its obligations arising out of this Agreement come from licit sources pursuant to the provisions set forth in the National Law for Extinction of Domain and articles 17 and 18 of the Federal Law for the Prevention and Identification of Operations with Resources from Illicit Origin.

 

E. Que está registrada ante la Secretaria de Hacienda y Crédito Público, con el Registro Federal de Contribuyentes número FCA190913BC9.

 

E.       It is registered before the Ministry of Finance and Public Credit, with a taxpayer ID number FCA190913BC9.

 

F. Conoce y ha revisado la Propiedad Arrendada y es su voluntad tomarla en arrendamiento de conformidad con los términos y condiciones del presente Contrato.

 

F.        It knows and it has inspected the Leased Property and it agrees to lease it pursuant to the terms and conditions set forth in this Agreement.

 

G.        Que la veracidad y exactitud de las declaraciones del Arrendador contenidas en el capítulo de Declaraciones de este Contrato es uno de sus motivos determinantes para la celebración de este Contrato.

 

G. That the truthfulness and accuracy of the representations by Lessor, contained in the Representations section of this Agreement is one of its fundamental motives to enter into this Agreement.

III. Declaran las partes, a través de sus representantes legales, lo siguiente:

 

III. The parties hereby represent, through their legal representatives, the following:

A. Que es condición esencial y uno de los motivos determinantes de la voluntad de las partes al celebrar el presente Contrato que la Renta se denomine en Dólares.

 

A.       That it is a condition precedent and one of the fundamental motives for the parties to enter into and execute this Agreement, for the Rent to be payable in Dollars.

 

B. Que reconocen que, no obstante, el hecho de que la Renta se denomina y expresa en Dólares, conforme al artículo 8 de la Ley Monetaria de los Estados Unidos Mexicanos, el Arrendatario podrá liberarse de su obligación de pago de la Renta entregando al Arrendador (o a quién sus derechos represente) el equivalente en Pesos al Tipo de Cambio.

 

B.       That they acknowledge that, notwithstanding the fact that the Rent is denominated and expressed in Dollars, pursuant to article 8 of the Monetary Law of the United Mexican States, Lessee may be released from its obligation to pay the Rent by delivering Lessor (or to whom may represent its rights) the equivalent in Pesos at the Exchange Rate.

 

 

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C. Que expresamente reconocen que existe novación de contrato, en virtud de que los acuerdos pactados en este Contrato alteran substancialmente el Contrato de Arrendamiento y su convenio modificatorio, y porque las obligaciones pactadas en el presente instrumento sustituyen las pactadas anteriormente en el mencionado Contrato de Arrendamiento y su convenio modificatorio.

 

D. Que expresamente reconocen que en virtud de la novación se extinguen las obligaciones principales del Contrato de Arrendamiento y su convenio modificatorio; en el entendido que ninguna de las partes hace reserva expresa para impedir la extinción de las obligaciones accesorias del Contrato de Arrendamiento y su convenio modificatorio.

 

E. Que reconocen que es condición esencial y uno de los motivos determinantes de la voluntad de las partes al celebrar el presente Contrato, la capacidad del Arrendatario para dar cumplimiento a sus obligaciones conforme a este Contrato y que el Garante firma y otorga la Garantía en favor del Arrendador.

 

C. That they expressly acknowledge that there is a novation of agreement, since the terms entered into in this Agreement substantially modify the Lease Agreement and its amendment agreement, and because the obligations entered into in this Agreement replace those agreed to previously in the aforementioned Lease Agreement and its amendment agreement.

 

 

D. That they expressly acknowledge that by virtue of the novation the main obligations of the Lease Agreement and its amendment agreement are extinguished; provided however that none of the parties makes an expressed reservation to prevent the extinction of the ancillary obligations of the Lease Agreement and its amendment agreement.

 

E.        That they acknowledge that it is a condition precedent and one of the fundamental motives for the parties to enter into and execute this Agreement, the capacity of Lessee to fulfill its obligations hereunder and that Guarantor signs and delivers the Guaranty in favor of Lessor.

C L A U S U L A S:

 

C L A U S E S:

Cláusula 1. Definiciones.

 

Clause 1. Definitions.

 

Los términos definidos que se utilizan con mayúscula inicial en este Contrato, tienen el significado que se les atribuye a continuación:

 

The defined terms used with initial capital letter in this Agreement, shall have the meaning ascribed to them below:

 

Acciones de Remediación” significa todas las acciones y conjunto de medidas necesarias para cumplir con las Leyes, mismas que pueden contemplar (sujeto a que la Ley lo requiera) en (a) eliminar, reducir, limpiar, remover, tratar, restaurar, contener, abatir, cubrir o de cualquier otra forma ajustar el volumen o cantidad de contaminantes ya sean Materiales Peligrosos, residuos peligrosos o cualesquier otras sustancias contaminantes que hubieran sido liberados al ambiente ocasionando la contaminación de suelos, ya sea al interior o exterior de la Propiedad Arrendada y/o de mantos acuíferos; (b) prevenir o controlar la Emisión de Materiales Peligrosos de tal forma que no migren o pongan en peligro o amenacen poner en peligro la salud pública o el bienestar de las personas o el medio ambiente; y (c) realizar estudios de caracterización de sitio, programas y planes de remediación, investigaciones, restauración y estudios post-remediatorios (o atención de post-limpieza), evaluaciones, pruebas, investigaciones y monitoreo respecto de cualquier inmueble.

Remedial Actions” means all the actions and set of measures that are necessary to comply with the Laws, which may include (as expressly requested by the Laws) to (a) eliminate, reduce, clean, remove, treat, restore, contain, abate, cover or in any other way adjust the volume or amount of pollutants whether Hazardous Materials, hazardous wastes or any other polluting substances- that had been released to the environment causing the pollution of land, whether the interior or exterior of the Leased Property and/or aquifers; (b) prevent or control the Emission of Hazardous Materials in such a way that they do not migrate or pose danger or threat to pose danger to the public health or wellbeing of the persons or the environment; and (c) carry out site characterization studies, repair programs and plans, investigations, restoration and post-repair studies (or attention of post-cleaning), evaluations, testing, investigations and monitoring with respect to any plot of land.

 

   

 

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Arrendador o Arrendadora”, tiene el significado que se le atribuye a dicho término en el proemio de este Contrato.

 

Lessor” has the meaning ascribed to such term in the preamble of this Agreement.

 

Arrendatario o Arrendataria”, tiene el significado que se le atribuye a dicho término en el proemio de este Contrato.

 

Lessee” has the meaning ascribed to such term in the preamble of this Agreement.

 

Autoridad Gubernamental” significa cualquier gobierno federal, estatal, municipal, centralizado o descentralizado, con jurisdicción para ejercer funciones formalmente o materialmente administrativas, legislativas o jurisdiccionales (incluyendo cualquier tribunal).

 

Governmental Authority” means any federal, state, municipal, centralized, decentralized government, with jurisdiction to formally and materially exercise administrative, legislative or judicial functions (including any court of law).

 

Caso de Fuerza Mayor” tiene el significado que se le atribuye a dicho término en la cláusula 11.3 de este Contrato.

 

Force Majeure Event” has the meaning ascribed to such term in clause 11.3 of this Agreement.

Condición Contaminante” significa, respecto de la Propiedad Arrendada, desde la Fecha de Inicio, actos u omisiones en violación a las Leyes que resulten en una Emisión o Daños Ambientales.

 

Contamination Condition” or “Polluting Condition” means, with respect to the Leased Property, from the Commencement Date, acts or omissions in violation of the Laws that result in an Emission or Environmental Damage.

 

Contingencias Ambientales” tiene el significado que se le atribuye a dicho término en la cláusula 18.4 de este Contrato.

 

Environmental Matters” has the meaning ascribed to such term in clause 18.4 of this Agreement.

 

 

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Daños Ambientales” significa cualesquier pérdida, cambio, deterioro, menoscabo, afectación o modificación adversa de los elementos y recursos naturales, sus condiciones físicas, químicas o biológicas o las relaciones de interacción entre dichos elementos y recursos naturales, así como de los servicios ambientales que proporcionan, cuando éstos sean causados por el Arrendatario (o sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad), a partir de la Fecha del Primer Arrendamiento (o antes si tuvo acceso a la Propiedad Arrendada para instalar maquinaria o equipo), y al amparo de las Leyes, consistiendo en, o relacionados con, (a) cualquier Contingencia Ambiental o Condición Contaminante, incluyendo contaminación interna o externa, y el manejo integral de Materiales Peligrosos, residuos peligrosos, materiales tóxicos, sustancias o productos químicos e incluyendo, además, lesiones corporales (incluyendo lesión, enfermedad o muerte); (b) multas, sanciones, sentencias, laudos arbitrales, convenios, procedimientos legales o administrativos, daños, pérdidas, reclamaciones, demandas y contestaciones, así como costos y gastos de investigación, remedición o inspección, que deriven de las Leyes; (c) responsabilidad financiera conforme a las Leyes por costos asociados con cualquier investigación, caracterización, Acción de Remediación, limpieza, extracción, contención, u otro remedio o acción requerido por las Leyes aplicables y por cualesquier daños por desastres naturales; y (d) cualquier otra medida de cumplimiento, correctiva, investigativa o remedial requerida al amparo de las Leyes.

 

Environmental Damage” means any loss, change, deterioration, detriment, affectation or adverse modification of the elements and natural resources, their physical, chemical or biological conditions, or the interaction relations among such elements and natural resources, as well as the environmental services rendered, when these are caused by Lessee (or its Affiliates, successors, sublessees, contractors, subcontractors, employees, visitors, agents, or any other Person under its responsibility), as of the First Lease Date (or earlier if it had access to the Leased Property to install machinery or equipment) and pursuant to the Laws, consisting in, or related to, (a) any Environmental Matters or Polluting Condition, including internal and external pollution, and the comprehensive management of Hazardous Materials, hazardous wastes, toxic materials, chemical products and substances and including, additionally, bodily injuries (including injuries, sickness or death); (b) fines, sanctions, judicial resolutions, arbitral awards, agreements, legal or administrative procedures, damages, losses, claims, lawsuits and statements of defense, as well as costs and expenses for investigation, repair or inspection, derived from the Laws; (c) financial liability pursuant to the Laws for costs associated with any investigation, characterization, Repair Action, cleaning, extraction, contention, or another remedy or action required by the Applicable Laws or for any damages for natural disasters and; (d) any other measures of compliance, correction, investigation or remediation required pursuant to the Laws.

 

Daños y Perjuicios” significa cualesquier pasivos, directos o contingentes, demandas, reclamaciones, acciones, multas, penalizaciones, responsabilidades, actos u omisiones, pérdidas, costos, gastos y, en general, cualesquier daños y perjuicios, de cualquier naturaleza, incluyendo, sin limitar, los honorarios y gastos razonables de sus asesores legales.

 

Damages” means any liabilities, direct or contingent, lawsuits, claims, actions, fines, penalties, responsibilities, acts or omissions, losses, costs, expenses and, in general, any damage or loss or profit, of any nature, including without limitation, the reasonable fees and expenses of attorneys.

 

  8

 

Depósito de Garantía A” significa una cantidad igual a 3 (tres) meses de Renta, más el IVA correspondiente.

 

Depósito en Garantía B” significa USD $2’250,000 menos el Depósito en Garantía A.

 

Depósitos en Garantía” significa conjuntamente el Depósito en Garantía A y el Depósito en Garantía B.

 

Security Deposit A” means the amount equal to three (3) months of Rent, plus the corresponding VAT.

 

Security Deposit B” means USD $2’250,000 less Security Deposit A.

 

Security Deposits” means the Security Deposit A and the Security Deposit B.

Dólares” o “USD$” significa la moneda de curso legal de los Estados Unidos de América.

 

Dollars” or “USD$” means legal currency in the United States of America.

 

Edificio” tiene el significado que se le atribuye a dicho término en la declaración I, apartado D.

 

Building” has the meaning ascribed to such term in recital I, section D hereto.

 

Emisión” significa cualquier tipo de liberación o transferencia de contaminantes al ambiente, propiciados de manera enunciativa por el derrame, fuga, descarga, escape, bombeo, vertido, inyección, depósito, disposición, dispersión, filtración o migración o cualquier otro tipo de Emisión, sea intencional o no, de cualquier Material Peligroso o residuo peligroso, hacia o a través de la atmósfera, aire, suelo, superficie, agua, aguas subterráneas o bienes inmuebles (incluyendo estructuras, edificios y construcciones) y maquinaria y equipos.

 

Emission” means any type of release or transfer or pollutants into the environment, caused without limitation by the spillage, leak, discharge, escape, bombing, pouring, injection, deposit, disposition, dispersion, filtration or migration or any other kind of Emission, whether intentional or not, of any Hazardous Material or hazardous wastes, unto or through the atmosphere, air, soil, surface, water, subterraneous waters or real estate properties (including structures, buildings and constructions) and machinery and equipment.

 

Expropiación” significa cualquier evento o acción que resulte en la privación del derecho de propiedad del Arrendador con respecto a toda o una parte de la Propiedad Arrendada, por cualquier Autoridad Gubernamental, por causa de utilidad pública conforme a la Ley Aplicable.

 

Condemnation” means any event or action resulting in the deprivation of the Lessor, by any Governmental Authority, of the property right with respect to all or portion of the Leased Property by virtue of a cause of public utility pursuant to the Applicable Law.

 

Fecha de Inicio” significa retroactivamente el 1º de octubre de 2020.

 

Commencement Date” means retroactively October 1st, 2020.

 

 

  9

 

Fecha del Primer Arrendamiento” tiene el significado que se le atribuye en el antecedente I de este Contrato.

 

First Lease Date” has the meaning ascribed to such term in recital I of this Agreement.

 

Fecha de Terminación” tiene el significado que se le atribuye a dicho término en la cláusula 17.1 de este Contrato.

 

Filial” significa, respecto de cualquier Persona, cualquier otra Persona que (a) directa o indirectamente controle, sea controlada por, o se encuentre bajo el control común con dicha primera Persona, (b) directa o indirectamente sea titular del 50% (cincuenta por ciento) o más del capital social o derechos como beneficiario de dicha primera Persona, o (c) sea un familiar en relación directa con dicha primera Persona (incluyendo cualquier Persona que directa o indirectamente esté controlada por dicho familiar directo). Para efectos de esta definición, “control” (incluyendo “controlada por” y “bajo control común”), cuando se utilice respecto de cualquier Persona, significará la posesión, directa o indirecta, del poder de dirigir o causar que se dirija la administración y políticas de dicha Persona, ya sea a través de la propiedad de las acciones con derecho a voto, por contrato o de cualquier otra forma.

 

Termination Date” has the meaning ascribed to such term in clause 17.1 of this Agreement.

 

 

Affiliate” means, with respect to any Person, any other Person that (a) directly or indirectly controls, is controlled by, or is under common control with such first Person, (b) directly or indirectly holds 50% (fifty percent) or more of the capital stock or beneficiary rights of such first Person, or (c) is a person related by kinship in straight line with such first Person (including any Person that is directly or indirectly controlled by such straight-line related person). For purposes of this definition, “control” (including “controlled by” and “under common control”), when used with respect to any Person, shall mean the possession, directly or indirectly, of the power to conduct or cause the conduction of the management and policies of such Person, whether through ownership of the shares with voting right, or by contract or in any other way.

Garante” significa la empresa FreightCar America, Inc.

 

Guarantor” means the company FreightCar America, Inc.

 

Garantía” significa la garantía corporativa, suscrita y otorgada por el Garante en esta fecha, en términos sustancialmente similares al formato adjunto al presente Contrato como Anexo “D”.

 

Guaranty” means the corporate guaranty, executed and granted by the Guarantor on this date, in terms substantially similar to the form attached hereto as Exhibit “D”.

 

Interés Moratorio” tiene el significado que se le atribuye a dicho término en la cláusula 4.3 de este Contrato. Default Interest” has the meaning ascribed to such term in clause 4.3 of this Agreement.
 

IVA” significa el Impuesto al Valor Agregado o el impuesto que lo sustituya en el futuro.

 

VAT” means the Value Added Tax or the tax that substitutes in the future.

 

  10

 

Legislación Ambiental” significa cualquier ley federal, estatal, local y otras disposiciones, regulaciones, acuerdos, reglamentos, decretos, ordenes, requerimientos, reglas, lineamientos, procedimientos internos, política, estipulación, parámetros, criterios, estándares y normas oficiales mexicanas, así como cualesquier obligaciones derivadas de permisos, sentencias, laudos, licencias, autorizaciones o concesiones, emitidas por cualesquiera autoridades gubernamentales, en cada caso en relación con salud pública, seguridad e higiene, emisión de ruidos, emisiones luminosas u olores en al medio ambiente, aire, suelo, subsuelo, aguas, aguas subterráneas en la Propiedad Arrendada, contaminación o protección al medio ambiente o a los recursos naturales en general, así como la contaminación (o prevención de la contaminación) de aire, agua, aguas subterráneas, suelo y subsuelo (incluyendo todas aquellas relacionadas con la presencia, uso, producción, generación, manejo, transporte, tratamiento, almacenaje, disposición, distribución, etiquetado, procesamiento, descarga, liberación, control, remediación o limpieza de cualquier Material Peligroso) en vigor durante el Plazo aplicables a la Propiedad Arrendada. Incluye sin limitación alguna la Ley General del Equilibrio Ecológico y la Protección al Ambiente, la Ley Federal de Responsabilidad Ambiental, la Ley de Asentamientos Humanos, Ordenamiento Territorial y Desarrollo Urbano del Estado de Coahuila de Zaragoza, la Ley General para la Prevención y Gestión Integral de los Residuos, Ley para la Prevención y Gestión Integral de Residuos para el Estado de Coahuila de Zaragoza, la Ley de Aguas Nacionales, Ley de Aguas para los Municipios del Estado de Coahuila de Zaragoza, la Ley General de Salud, Ley Estatal de Salud del Estado de Coahuila, Ley de Equilibrio Ecológico y Protección al Ambiente del Estado de Coahuila de Zaragoza, Ley para la Adaptación y Mitigación a los Efecto del Cambio Climático en el Estado de Coahuila de Zaragoza, Ley para Combatir el Ruido en el Estado de Coahuila de Zaragoza, Ley de Protección Civil para el Estado de Coahuila de Zaragoza, y sus correspondientes reglamentos (en su caso), así como las Normas Oficiales Mexicanas: NOM-001-SEMARNAT-1997, NOM-002-SEMARNAT-1996, NOM-052-SEMARNAT-2005, NOM-053-SEMARNAT-1993, NOM-081-SEMARNAT- 1994, NOM-138-SEMARNAT/SSA1-2012, NOM-010-STPS-1999 y NOM-147-SEMARNAT-SSA1-2004 (así como los lineamientos internos utilizados por la Procuraduría Federal de Protección al Ambiente para suelos contaminados y su remediación), así como las modificaciones, reformas y adiciones a las mismas.

 

Environmental Law means any federal, state, local and other regulations, acts, decrees, orders, requirements, rules, guidelines, internal proceedings, policies, stipulations, parameters, criteria, standards and Mexican official norms, as well as any obligations derived from permits, judgements, awards, licenses, authorizations or concessions, issued by any governmental authority, in each case related to public health, security and hygiene, noise emissions, luminous emissions or odor emissions to the environment, air, soil, subsoil, water, underground water, at the Leased Property, contamination or protection to the environment or to the natural resources in general, as well as, the contamination (or pollution prevention) to air, water, underground water, soil and subsoil (including those related to the presence, use, production, generation, handling, transport, treatment, labeling, process, release, control, remediation or cleaning of any Hazardous Materials) in place during the Term and applicable to the Leased Property. Includes without limitation, the General Law of Ecological Equilibrium and Protection of the Environment, Federal Environmental Responsibility Law, Human Settlements, Territorial Organization and Urban Development Law for the State of Coahuila de Zaragoza, the General Law for the Prevent and Integral Action of the Residues, the Law for Integral Action of Residues for the State of Coahuila de Zaragoza, the National Waters Law, the Waters Law for the State of Coahuila de Zaragoza, the General Law of Health, Health Law for the State of Coahuila de Zaragoza, Law of Ecological Balance and Environmental Protection of the State of Coahuila de Zaragoza, Law for Adaptation and Mitigation to the Effects of Climate Change in the State of Coahuila de Zaragoza, Law to Combat Noise in the State of Coahuila de Zaragoza, Civil Protection Law for the State of Coahuila de Zaragoza and its corresponding regulations as applicable), as well as the following Mexican Official Norms: NOM-002-SEMARNAT-1996, NOM-052-SEMARNAT-2005, NOM-053-SEMARNAT-1993, NOM-081-SEMARNAT-1994, NOM-138-SEMARNAT/SS-2003, NOM-010-STPS-1999 y NOM-147-SEMARNAT-SSA1-2004, (as well as the internal regulations used by the Federal Environmental Protection Prosecutor for contaminated soils and its remediation), as well as the modifications, amendments and additions to the same.

 

 

  11

 

Leyes” o “Legislación Aplicable” o “Ley Aplicable” o “Leyes Aplicables” significa todas las leyes, reglamentos, normas oficiales mexicanas, ordenamientos, resoluciones, órdenes, reglas, normas, preceptos, circulares, decretos y cualesquier otras disposiciones emitidas por alguna Autoridad Gubernamental.

 

Laws” or “Applicable Law” or “Applicable Laws” means all the laws, regulations, Mexican official standards, ordinances, resolutions, orders, rules, norms, precepts, circulars, decrees and any other provisions issued by any Governmental Authority.

 

Materiales Peligrosos” significa cualquier elemento, sustancia, compuesto, residuo o mezclas de ellos, que independientemente de su estado físico y de acuerdo a la Ley Aplicable represente un riesgo para el ambiente, la salud o los recursos naturales, por sus características corrosivas, reactivas, explosivas, inflamables o biológico-infecciosas, independientemente de que éstas se encuentren comprendidas dentro de los listados de sustancias sujetas a reporte que publica la Secretaría del Medio Ambiente y Recursos Naturales o su equivalente, incluyendo cualquier mezcla o solución de las mismas, incluyendo particularmente petróleo y todos los derivados del mismo o sus sustitutos sintéticos, asbestos o materiales que contengan asbestos y bifenilos policlorados.

 

Hazardous Materials” means any element, substance, compound, waste or mixture of them, that regardless of their physical state and according to the Applicable Law, represents a risk for the environment, health or natural resources, due to their corrosive, reactive, explosive, flammable or biological-infectious characteristics contained in the list of substances subject to a report published by the Ministry of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales) or its equivalent, including any mixture or solution of the same including particularly petroleum and all derivatives thereof or their synthetic substitutes, asbestos or materials that contain asbestos and polychlorinated biphenyl.

 

Mejoras del Arrendatario” tiene el significado que se le atribuye a dicho término en la cláusula 9.1 de este Contrato.

 

Lessee Improvements” has the meaning ascribed to such term in clause 9.1 of this Agreement.

 

Monto Recibido” significa la indemnización recibida por el Arrendador o el Arrendatario (solo en la medida y por el valor de las Mejoras del Arrendatario o expansiones construidas por el Arrendatario), como resultado de una Expropiación, libre de cualquier pago a terceros y de todos los gastos relacionados con el procedimiento de expropiación e indemnización, incluyendo, sin limitar, los honorarios de abogados.

 

Amount Received” means the indemnification received by Lessor or Lessee (only to the extent of the value of the Improvements and expansions built by Lessee) as a result of a Condemnation, free of any payments to third parties and all the costs related to the expropriation and compensation process, including without limitation, attorneys’ fees.

 

 

  12

 

Persona” significa cualquier individuo, sociedad, compañía, asociación, sociedad civil, sociedad de responsabilidad limitada, asociación en participación, fideicomiso, entidad, Autoridad Gubernamental u otra entidad de cualquier naturaleza que tenga personalidad jurídica. Person” means any individual, corporation, entity, company, association, civil entity, limited liability company, joint venture, trust, Governmental Authority or other entity of any nature with legal capacity.
   

Plazo” tiene el significado que se le atribuye a dicho término en la cláusula 3.1 de este Contrato.

 

Term” has the meaning ascribed to such term in clause 3.1 of this Agreement.

 

Propiedad Arrendada” tiene el significado que se le atribuye a dicho término en la declaración I, apartado D de este Contrato. Leased Property” has the meaning ascribed to such term in recital I, section D of this Agreement.
   

Renta”, tiene el significado que se le atribuye a dicho término en la cláusula 4.1 de este Contrato.

 

Rent” has the meaning ascribed to such term in clause 4.1 of this Agreement.

 

Primer Terreno” tiene el significado que se le atribuye a dicho término en la declaración I, apartado C de este Contrato.

 

First Plot” has the meaning ascribed to such term in recital I, section C of this Agreement.

 

Segundo Terreno” tiene el significado que se le atribuye a dicho término en la declaración I, apartado C de este Contrato.

 

Second Plot” has the meaning ascribed to such term in recital I, section C of this Agreement.

 

Tipo de Cambio” significa el llamado tipo de cambio libre emitido por el Banco de México en la fecha de pago.

 

Exchange Rate” means the denominated free-floating exchange rate issued by the Bank of Mexico on the date of payment.

 

Usos Permitidos” tiene el significado que se le atribuye a dicho término en la cláusula 5.1 de este Contrato.

 

Permitted Uses” has the meaning ascribed to such term in clause 5.1 of this Agreement.

 

  13

 

Cláusula 2. Objeto.

 

2.1       Contrato de Novación. En este acto, las partes expresamente novan el Contrato de Arrendamiento y su convenio modificatorio, alterando substancialmente sus acuerdos, por lo que las obligaciones pactadas en el presente instrumento sustituyen las pactadas anteriormente en el mencionado Contrato de Arrendamiento y su convenio modificatorio.

 

Así mismo, en virtud de la novación pactada, las partes extinguen las obligaciones principales y accesorias del Contrato de Arrendamiento y su convenio modificatorio.

 

2.2       Reexpresión de Contrato. En este acto, en virtud de la novación anteriormente pactada, las partes acuerdan expresamente reexpresar el Contrato de Arrendamiento y su convenio modificatorio, conforme a lo pactado a partir de la cláusula 2.3 y subsecuentes del presente Contrato.

 

Clause 2. Purpose.

 

2.1        Novation Agreement. The parties hereby expressly novate the Leasing Agreement and its amendment agreement, substantially altering their terms, so that the obligations agreed to in this Agreement replace those previously agreed to in the aforementioned Lease Agreement and its amendment agreement.

 

Likewise, by virtue of the agreed to novation, the parties extinguish the main and the ancillary obligations of the Lease Agreement and its amendment agreement

 

2.2.        Restatement of Agreement. By virtue of the previously agreed to novation, the parties hereby expressly agree to restate the Lease Agreement and its amendment agreement, pursuant to the provisions set forth from clause 2.3 and the subsequent clauses of this Agreement.

 

2.3       Arrendamiento. Sujeto a los términos y condiciones de este Contrato, en este acto, el Arrendador le da al Arrendatario el uso y goce temporal de la Propiedad Arrendada, y el Arrendatario, a su vez, se obliga a pagar al Arrendador la Renta a partir de la Fecha de Inicio.

 

2.3       Lease. Subject to the terms and conditions of this Agreement, Lessor hereby grants Lessee the temporary use and enjoyment of the Leased Property, and Lessee hereby agrees to pay Lessor the Rent as of the Commencement Date.

 

2.4 Entrega de Posesión. El Arrendador, por medio del presente entrega al Arrendatario la posesión de la Propiedad Arrendada. Las partes acuerdan expresamente que la aceptación por parte del Arrendatario de la posesión de la Propiedad Arrendada es prueba suficiente de que el Arrendatario ha inspeccionado, recibido y aceptado la posesión de la Propiedad Arrendada en su condición actual y que la Propiedad Arrendada está en buen estado; sin embargo, las partes quedan en el entendido que (a) dentro de 1 (un) año contado a partir de la Fecha de Inicio, el Arrendador deberá haber obtenido los permisos para construir y operar una espuela que conecte la Propiedad Arrendada con las líneas de ferrocarril y haber concluido la construcción de dicha espuela de manera razonablemente satisfactoria para el Arrendatario, y (b) en un plazo de 30 (treinta) días naturales contados a partir de este fecha, el Arrendador preparará y entregará al Arrendatario un certificado de terminación sustancial con una lista de pendientes que deberá construir el Arrendador cuando ambas partes lo determinen. 2.4 Delivery of Possession. Lessor hereby delivers to Lessee the possession of the Leased Property. The parties expressly agree that the acceptance by the Lessee of the possession of the Leased Property is sufficient proof that the Lessee has inspected, received and accepted the possession of the Leased Property in its “as is” condition and that the Leased Property is in good condition; provided however that (a) within 1 (one) year from the Commencement Date Lessor shall have obtained all permits to build and operate a spur to connect the Leased Property to the railroad lines and have completed the construction thereof to  Lessee’s reasonable satisfaction, and (b) within 30 (thirty) calendar days from the date hereof, Lessor shall prepare and deliver to Lessee a substantial completion certificate, which shall include a punch list of pending items that shall be built by Lessor when the parties so agree.

 

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Cláusula 3. Plazo y No Prórroga.

 

 

Clause 3. Term and No Renewal Period.

 

3.1       Plazo. Las partes acuerdan que el presente Contrato es vinculatorio desde esta fecha. El plazo del arrendamiento comenzará en la Fecha de Inicio y concluirá en 20 (veinte) años (el “Plazo”). Dicho Plazo será forzoso para ambas partes.

 

3.1       Term. The parties hereby agree that this Agreement shall be binding from the date hereof. The lease term shall commence on the Commencement Date and will terminate in 20 (twenty) years (the “Term”). Such Term shall be mandatory for both parties.

 

3.2       Prórroga. La Arrendadora no otorga a la Arrendataria derecho a prorrogar el Plazo.

 

Cláusula 4. Renta y Depósito en Garantía.

 

3.2        Renewal Period. Lessor grants Lessee no option to extend the Term.

 

Clause 4. Rent and Security Deposit.

4.1       Monto, Forma y Fecha de Pago de la Renta. (a) A partir de la Fecha de Inicio, el Arrendatario pagará al Arrendador como contraprestación por el uso y goce de la Propiedad Arrendada una renta anual por la cantidad de USD $6.72 (seis Dólares 72/100) por pie cuadrado del Edificio, más el IVA, equivalente a USD $2’028,848.00 (dos millones veintiocho mil ochocientos cuarenta y ocho Dólares 00/100), más el IVA, la cual será pagadera mensualmente por el monto de USD $169,070.66 (ciento sesenta y nueve mil setenta Dólares 66/100), más el IVA (la “Renta”), (b) a partir del 5º (quinto) aniversario de la Fecha de Inicio, el Arrendatario pagará como contraprestación por el uso y goce de la Propiedad Arrendada una renta anual por la cantidad de USD $7.21 (siete Dólares 21/100) por pie cuadrado del Edificio, más el IVA, la cual será pagadera mensualmente, (c) a partir del 10º (décimo) aniversario de la Fecha de Inicio, el Arrendatario pagará como contraprestación por el uso y goce de la Propiedad Arrendada una renta anual por la cantidad de USD $7.64 (siete Dólares 64/100) por pie cuadrado del Edificio, más el IVA, la cual será pagadera mensualmente, y (d) a partir del 15º (décimo quinto) aniversario de la Fecha de Inicio, el Arrendatario pagará como contraprestación por el uso y goce de la Propiedad Arrendada una renta anual por la cantidad de USD $8.10 (ocho Dólares 10/100) por pie cuadrado del Edificio, más el IVA, la cual será pagadera mensualmente (las cantidades pagaderas bajo los incisos (a), (b), (c) y (d) anteriores, según se apliquen en cada uno de los cuatro periodos, en adelante la “Renta”). Las partes acuerdan que, en el caso de cualquier expansión futura al Edificio, el Arrendador cobrará cuando menos la misma renta pagadera por pie cuadrado, en los términos arriba indicados, dependiendo cual Renta sea la aplicable cuando la expansión se termine de construir; en el entendido que en caso que la expansión termine de construirse dentro de los primeros 5 (cinco) años de vigencia, la renta pagadera se calculará a USD $6.80 (seis Dólares 80/100), y no USD $6.72 (seis Dólares 72/100)

 

4.1        Amount, Form and Date of Payment of the Rent. (a) Starting on the Commencement Date, Lessee shall pay Lessor, as consideration for the use and enjoyment of the Leased Property an annual rent of USD$6.72 (six Dollars 72/100) per square foot of the Building, plus the VAT, equivalent to USD $2’028,848.00 (two million twenty eight thousand eight hundred forty eight Dollars 00/100), plus the VAT, which shall be payable on a monthly basis in the amount of USD $169,070.66 (one hundred sixty nine thousand seventy Dollars 66/100), plus the VAT, (the “Rent”), (b) starting on the 5th (fifth) anniversary of the Commencement Date, Lessee shall pay, as consideration for the use and enjoyment of the Leased Property an annual rent of USD$7.21 (seven Dollars 21/100) per square foot of the Building, plus the VAT, which shall be payable on a monthly basis, (c) starting on the 10th (tenth) anniversary of the Commencement Date, Lessee shall pay, as consideration for the use and enjoyment of the Leased Property an annual rent of USD$7.64 (seven Dollars 64/100) per square foot of the Building, plus the VAT, which shall be payable on a monthly basis, and (d) starting on the 15th (fifteenth) anniversary of the Commencement Date, Lessee shall pay, as consideration for the use and enjoyment of the Leased Property an annual rent of USD$8.10 (eight Dollars 10/100) per square foot of the Building, plus the VAT, which shall be payable on a monthly basis (the amounts payable under (a), (b), (c) and (d) above, as they apply in each of the four periods, hereinafter the “Rent”). The parties agree that for any future expansion Lessor shall charge at least the same rent payable per square footage, as stated above, depending on the Rent payable at the time such expansion is finally built; provided that with respect to such expansion finally being built in the first 5 (five) year period, such rent amount shall be calculated off of USD $6.80 (six Dollars 80/100), as opposed to USD $6.72 (six Dollars 72/100).

 

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Toda Renta la pagará el Arrendatario por mensualidades adelantadas, contra la entrega de la factura con los requisitos fiscales aplicables y dentro de los primeros 10 (diez) días hábiles del mes por pagar; con excepción de la Renta del primer mes que se pagará en la fecha del presente Contrato.

All Rents shall be paid by Lessee in advance every month against the delivery of the invoice in compliance with the applicable tax regulations and within the first 10 (ten) business days of the month to pay; with the exception of the first month which shall be payable on the date hereof.

 

Las partes entienden que históricamente han existido devaluaciones significativas en el valor del Peso frente al Dólar, por lo que, es previsible que, en el futuro existan nuevos cambios en la paridad. En esa eventualidad, el Arrendatario será responsable de tomar las providencias y medidas que, a su juicio, estime convenientes con el fin de minimizar su riesgo ante el supuesto previsible de una devaluación cambiaria, de tal forma que si el Arrendatario decide pagar en Pesos, en los términos de la Ley Monetaria, el Arrendatario pagará la cantidad necesaria para que el Arrendador adquiera los mismos Dólares al tipo de cambio vigente en la fecha de cada pago, aunque tenga que pagar cantidades adicionales necesarias para compensar el diferencial en el Tipo de Cambio, de manera que el Arrendador reciba en la fecha de pago la cantidad de Dólares convenida.

 

The parties understand that historically there have been significant devaluations in the value of the Peso versus the Dollar, so it is expected that in the future, there may be new changes in such exchange rates. In this eventuality, Lessee shall be responsible for taking the providences and actions that, to its judgment, deems appropriate in order to minimize the risk in the predictable event of a currency devaluation, so that if Lessee chooses to pay in Pesos, in terms of the Monetary Law, Lessee shall pay the amount required by Lessor to acquire the same amount of Dollars at the exchange rate prevailing on the date of each payment, even if it needs to pay additional necessary amounts to compensate the difference in the Exchange Rate, so that Lessor shall receive, at the date of payment, the amount of Dollars agreed herein.

 

 

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Por otra parte, es la intención de las partes que la Renta pagadera conforme al presente Contrato sea absolutamente neta para el Arrendador a efecto que el presente Contrato produzca durante el Plazo, los rendimientos que éste ha calculado; por lo tanto, las partes expresamente convienen en que el Arrendatario (a) deberá cubrir el gasto y cualquier costo en relación con la propiedad y mantenimiento de la Propiedad Arrendada, (b) deberá pagar el impuesto predial de la Propiedad Arrendada, (c) deberá pagar las pólizas de seguro pactadas en la cláusula 13, y (d) no tendrá derecho a compensar o deducir cualquier cantidad de los pagos de Renta, con excepción de los montos establecidos en el presente instrumento referentes a la reducción de la Renta para reembolsar los Depósitos en Garantía, en los términos pactados en la cláusula 4.5. El Arrendatario en este acto renuncia, de manera expresa e irrevocable, a cualquier derecho a pedir reducciones de Renta o a retener el pago de la Renta previsto en el Código Civil Federal.

 

Moreover, it is the purpose of the parties that the Rent payable hereunder shall be absolutely net to Lessor so that this Agreement shall yield the calculated income during the Term; therefore, it is expressly agreed to by the parties that Lessee shall (a) bear the cost and any and all costs and expenses relating the ownership and maintenance of the Leased Property, (b) pay the real estate tax of the Leased Property, (c) pay the insurance policies agreed to in clause 13, and (d) not be entitled to compensate or deduct any amount from the Rent, other than such amounts set forth herein with respect to the reduction of the Rents to reimburse the Security Deposits as discussed in clause 4.5. Lessee hereby expressly and irrevocably waives the right to request reductions of the Rent or withhold the payment of the Rent established in the Federal Civil Code.

 

 

4.2       Lugar de Pago. La Arrendataria pagará la Renta a través de transferencia electrónica de fondos a la cuenta a nombre de la Arrendadora, conforme a las siguientes instrucciones:

4.2       Place of Payment. Lessee shall pay the Rent by electronic transfer of funds to Lessor’s account, pursuant to the following instructions:

Beneficiary Account: 145580177610002010

Beneficiary Bank: Banco Base SA, IBM

Beneficiary Bank Account: 8900111615

Beneficiary Bank SWIFT: BBSEMXMX

Intermediary Bank: The Bank of New York Mellon

Intermediary Bank ABA: 021000018

Intermediary Bank SWIFT: IRVTUS3N

Intermediary Bank Branch: New York, NY

 

El Arrendatario depositará en esa misma cuenta los Depósitos en Garantía.

 

Beneficiary Account: 145580177610002010

Beneficiary Bank: Banco Base SA, IBM

Beneficiary Bank Account: 8900111615

Beneficiary Bank SWIFT: BBSEMXMX

Intermediary Bank: The Bank of New York Mellon

Intermediary Bank ABA: 021000018

Intermediary Bank SWIFT: IRVTUS3N

Intermediary Bank Branch: New York, NY

 

Lessee shall deposit in the same account the Security Deposits.

 

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La Renta será pagada al Arrendador sin necesidad de aviso ni demanda y sin deducciones, retenciones o diferimientos de especie alguna.

 

The Rent shall be paid to the Lessor without prior notice or demand and without deductions, withholdings or deferrals of any kind.

 

El Arrendador no está obligado a aceptar pagos parciales de Renta y en caso de que lo hiciera, tal circunstancia no significará que hubiera habido modificación respecto de la forma y tiempo de pago convenida en este Contrato. Así mismo, si por cualquier eventualidad el Arrendatario paga al Arrendador la Renta en forma distinta a la estipulada en esta cláusula, las partes no deberán entender por ello la modificación o novación del Contrato, el cual permanecerá en pleno vigor y efecto.

 

Lessor shall not have to accept partial Rent payments and if it does, such circumstance will not imply an amendment regarding the form and time of payment agreed to in this Agreement. Likewise, in the event Lessee pays the Rent to Lessor in a different way than that agreed to in this clause, the parties shall not interpret this as an amendment or novation of the Agreement, which will remain in full force and effect.

 

El Arrendatario está obligado a pagar la Renta y las demás contraprestaciones pactadas, a pesar de que no pueda ocupar o usar la Propiedad Arrendada por cuestiones fiscales, laborales, administrativas u otras que le sean atribuibles o hayan sido decididas por el Arrendatario. Lessee shall continue paying the Rent and any other fees agreed, even in the event it does not occupy or use the Leased Property for tax, labor, administrative or other reasons whatsoever that are attributable to or have been decided by Lessee.
   

4.3       Intereses Moratorios. El Arrendatario pagará un interés moratorio por cada día de retraso en el pago de la Renta o cualquier otra cantidad debida a favor del Arrendador, en los términos del presente Contrato, conforme a la siguiente fórmula: (a) el monto adeudado se multiplicará por el 5% (cinco por ciento) (el “Interés Moratorio”), (b) el resultado de dicha multiplicación se dividirá entre 360 (trescientos sesenta), y (c) el resultado de la división se multiplicará por el número de días de retraso.

 

4.3       Late Payment Interest. Lessee will pay a penalty interest for each day of delay in the payment of the Rent or any other amount due in favor de Lessor, under the terms of this Agreement, according to the following formula: (a) the amount owed shall be multiplied by 5% (five percent) (the “Default Interest”), (b) the result of said multiplication will be divided by 360 (three hundred sixty), and (c) the result of the division will be multiplied by the number of days of delay.

 

El Arrendatario conviene que el cargo por mora que aquí se establece es justo y razonable, cumple con las Leyes Aplicables y constituye un acuerdo expreso entre el Arrendador y el Arrendatario en cuanto a que la compensación que se estima es justa en virtud de los costos y gastos administrativos en que incurrirá el Arrendador en caso de demora en el pago de la Renta u otros gastos por el Arrendatario. El pago de los intereses moratorios es independiente del pago de los Daños y Perjuicios o cualquier pena convencional que aplique conforme a lo dispuesto en este Contrato.

 

Lessee agrees that the penalty interest established herein is fair and reasonable, complies with Applicable Laws and constitutes an express agreement between Lessor and Lessee, since the compensation that is estimated is fair by virtue of the costs and administrative expenses that Lessor will incur in case of delay in the payment of the Rent or other expenses by Lessee. Payment of this penalty interest is independent of payment of Damages or any contractual penalty that applies in accordance with the provisions of this Agreement.

 

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4.5       El Depósito en Garantía. En o antes de los setenta y cinco (75) días contados a partir de la fecha del presente Contrato, el Arrendatario depositará al Arrendador los Depósitos en Garantía. El Arrendatario autoriza expresamente al Arrendador a utilizar discrecionalmente los Depósitos en Garantía, y además a usarlos para cubrir, entre otros gastos, razonablemente documentados y previamente notificados al Arrendatario (a) el pago de servicios, (b) las reparaciones que se tengan que realizar a la terminación del presente Contrato en caso de que el Contrato termine antes de la terminación del Plazo del Depósito en Garantía, (c) el pago de las pólizas de seguros, y (d) el pago de las cuotas de mantenimiento, si lo hubiere. Los Depósitos en Garantía en ningún momento deberán considerarse como pago de Renta futura, ni como pago por adelantado de servicios o cualquier otro adeudo que pudiere tener el Arrendatario, en los términos del presente Contrato.

 

4.5        The Security Deposits. On or before seventy-five (75) days from the date of this Agreement, Lessee shall deposit to Lessor, the Security Deposits. Lessee expressly authorizes Lessor to use the Security Deposits at its own discretion and also to use them to cover, among other expenses, that are reasonably documented and following notice to Lessee (a) the payment of services, (b) the repairs that must be made at the termination of this Agreement in the event the Agreement terminates prior to the expiration of the Security Deposit Term, (c) the payment of insurance policies, and (d) the payment of maintenance fees, if any. The Security Deposits shall not be considered at any time as payment of future Rent, nor as advance payment for services or any other debt that the Lessee may have, under the terms of this Agreement.

 

 

Sin perjuicio del uso de los Depósitos de Garantía por parte del Arrendador para cualquier fin o para pagar los gastos establecidos en el párrafo anterior: (a) el Arrendador reembolsará al Arrendatario el Depósito de Garantía A en 60 (sesenta) meses, a partir de noviembre de 2020, descontando cada mes el mismo monto (esto es, 1/60º del Depósito en Garantía A) de la Renta pagadera mensualmente durante dicho período y (b) el Arrendador reembolsará el Depósito de Garantía B conforme a los términos del Anexo 4.5(b). En el caso de que el Arrendador aplique una parte del Depósito de Garantía para pagar cualquiera de los gastos establecidos en el párrafo anterior, el monto reembolsable del Depósito de Garantía se reducirá en consecuencia. Without prejudice to the use of the Security Deposits by Lessor to any end or to pay the expenses set forth above: (a) Lessor shall reimburse Lessee Security Deposit A in 60 (sixty) months, starting on November, 2020, by deducting each month the corresponding equal amount (i.e., 1/60th of Security Deposit A) from the Rent payable monthly during such period, and (b) Lessor shall reimburse Security Deposit B pursuant to the terms of Schedule 4.5(b). In the event that Lessor applies a portion of the Security Deposit to pay any of the expenses set forth in the previous paragraph, the reimbursable amount of the Security Deposit shall be reduced accordingly.
   

 

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Cláusula 5. Destino; Maquinaria y Equipo; Seguridad.

 

Clause 5. Use of Leased Property; Machinery and Equipment; Security.

 

5.1       Destino de la Propiedad Arrendada. La Arrendataria solamente podrá usar y ocupar la Propiedad Arrendada como una instalación para la fabricación, ensamblado y producción de vagones de tren, partes y componentes de vagones de tren, incluyendo, oficinas administrativas, diseño, ingeniería, empaquetado, ventas, exhibición de productos, prestación de servicios, entrenamiento de personal, almacén, bodega, estacionamiento y/o cualquier otro uso legal, ya sea accesorio o incidental a los anteriores (los “Usos Permitidos”). Sin embargo, las partes quedan en el entendido que dichos usos no podrán (a) estar relacionados con la manufactura, procesamiento, uso, almacenamiento o liberación de Materiales Peligrosos, (b) estar relacionados con la liberación de humos, gases, vapores u olores nocivos, (c) ocasionar la emisión de cualquier ruido más allá del perímetro del Edificio, en cada caso más allá de los parámetros máximos permitidos por las Leyes Aplicables, (d) estar destinados a almacenar, ocultar y/o mezclar bienes de procedencia ilícita o producto de actividades ilícitas que sean instrumento, objeto o producto de un delito (producto de delitos patrimoniales o de delincuencia organizada), que estén siendo utilizados para la comisión de un delito o de cualquier manera relacionados o vinculados con delitos, y (e) violar sustancialmente cualquier Ley Aplicable.

 

5.1       Use of Leased Property. Lessee shall use and occupy the Leased Property as a facility for manufacture, assembly and production of railcars and railcar parts and components, including administrative offices, design, engineering packaging, sales, product showcase, service, staff training, store, warehouse, parking lots and other lawful uses accessory and incidental to the foregoing (the “Permitted Uses”. Provided however that such uses do not and shall not (a) involve the manufacture, processing, use, storage or release of Hazardous Materials, (b) involve the release of any noxious fumes, vapors or odors, (c) cause the emission of any noise beyond the perimeter of the Building, in each case beyond the maximum permitted parameters allowed by Applicable Law, (d) be to keep, hide and/or mix goods coming from or product of illegal activities, that may be an instrument, the subject matter of or the result of a crime (product of white-collar or patrimonial-related crimes or organized criminal activities), that are being used for committing a crime or in any manner related or connected to crimes, and (e) violate any Applicable Law in material respects.

En esta fecha, el Arrendador manifiesta que la Propiedad Arrendada actualmente cuenta con todos los permisos, licencias y/o autorizaciones relevantes conforme a la Ley Aplicable para que el Arrendador haya podido construir una nave industrial en el Primer Terreno y en el Segundo Terreno.

As of the date hereof, Lessor hereby represents that the Leased Property currently has all relevant permits, licenses, and/or authorizations required by Applicable Law in order for Lessor to build an industrial facility on the First Plot and the Second Plot.

 

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El Arrendatario no deberá utilizar u ocupar la Propiedad Arrendada para cualquier actividad u operación distinta sin el consentimiento previo y por escrito del Arrendador, el cual podrá ser rechazado o condicionado, a entera discreción del Arrendador. Las Partes acuerdan que el incumplimiento de esta cláusula 5.1 por el Arrendatario será considerado como causal rescisión del presente Contrato, obligándose el Arrendatario a desocupar y entregar la Propiedad Arrendada al Arrendador sin necesidad de requerimiento alguno.

 

Lessee shall not use or occupy the Leased Property for any other purpose or business without the prior written consent of Lessor, which consent may be withheld or conditioned in Lessor’s reasonable discretion. The Parties hereby agree that the breach of this clause 5.1 by Lessee shall be considered as a cause for termination of this Agreement, Lessee shall vacate and deliver the Leased Property to Lessor with no further requirements.

 

5.2        Legalidad de las Actividades Comerciales. El Arrendatario no realizará ni permitirá ningún acto que pudiese constituir una molestia pública o privada, o que cause daño al Arrendador o a otras personas o que pudiera invalidar cualesquiera pólizas de seguros que actualmente existan o posteriormente se contraten para el Edificio.

 

5.2       Lawfulness of Commercial Activities. Lessee shall not cause or permit any act that may constitute a public or private nuisance, or cause damage to Lessor or other persons or that may invalidate any current insurance policies or those subsequently contracted for the Building.

 

El Arrendatario se obliga a no utilizar la Propiedad Arrendada para fines ilícitos, tales como lavado de dinero u otras actividades delictuosas, o a utilizar la Propiedad Arrendada para la comisión de actividades tipificadas como delitos o ilegales, ni cualquier actividad que pudiera ser objeto del procedimiento de extinción de dominio al que se refiere los artículos 7 y 8 de la Ley Nacional de Extinción de Dominio o cualquier otra ley análoga, liberando desde este momento al Arrendador de cualquier responsabilidad penal, civil o de cualquier otra índole en que pudiera incurrir el Arrendatario por sus actividades desempeñadas en la Propiedad Arrendada.

 

Lessee hereby agrees not to use the Leased Property for illegal purposes such as money laundering, or other criminal activities, or to use the Leased Property to commit criminal or illegal activities, nor any activity that could cause the asset to be the object of forfeiture proceedings referred to in Articles 7 and 8 of the Federal Asset Recovery Law “Ley Nacional de Extinción de Dominio” or any similar law, releasing Lessor in this act from any criminal civil or any other responsibilities that may be incurred by Lessee for its activities in the Leased Property.

 

5.3       Indemnización. En todo caso, el Arrendatario se obliga a indemnizar y mantener al Arrendador en paz y a salvo de cualquier responsabilidad, demanda, acción, Daños y Perjuicios, penas, gastos y/o erogaciones que se le impongan a la Propiedad Arrendada y/o al Arrendador por actos u omisiones del Arrendatario que constituyan una violación a lo dispuesto en esta cláusula 5.

 

5.3        Indemnity. In any case, Lessee agrees to indemnify and hold Lessor harmless from any liability, claims, actions, Damages, penalties, costs and/or expenses that may be imposed to the Leased Property and/or Lessor for acts or omissions of Lessee that constitute a breach to the provisions of clause 5 herein.

 

 

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5.4.        Maquinaria y Equipo Introducida a la Propiedad Arrendada. El Arrendatario reconoce y conviene que toda maquinaria, equipo, mobiliario, vehículo y demás bienes que introduzca o instale en la Propiedad Arrendada, los introduce a su propio riesgo y en todo momento serán responsabilidad única y exclusiva del Arrendatario. Por consiguiente, el Arrendador no asume responsabilidad alguna por cualquier daño, robo o extravío que pudiera sufrir cualquiera de dichos bienes. El Arrendador reconoce que el Arrendatario es el propietario, o tiene la titularidad legal (de conformidad con los arrendamientos financieros y otro financiamiento en el curso normal de operaciones, u otro), sobre dicha maquinaria y equipo y, por lo tanto, el Arrendador no tiene ningún derecho sobre la maquinaria y el equipo, o cualquier otro bien introducido por el Arrendatario en la Propiedad Arrendada, incluso si dicha maquinaria y equipo está adherido al piso. El Arrendador proporcionará inmediatamente, previa solicitud, las certificaciones necesarias y comunes que manifiesten que no existen gravámenes u otras cargas sobre dichos bienes, según lo solicite cualquier fuente de financiamiento del Arrendatario.

 

5.4        Machinery and Equipment. Lessee acknowledges and agrees that all machinery, equipment, furniture, vehicles, manufactured goods and any other goods introduced to or installed by Lessee at the Leased Property, are introduced at its own risk and at all times they shall be the exclusive responsibility of Lessee. Therefore, Lessor shall not assume any liability whatsoever for any damage, theft or loss of any of such goods. Lessor acknowledges that Lessee is the owner, or has legal title (pursuant to capital leases and other financing in the ordinary course of business, or other), on such machinery and equipment and thus, Lessor does not have any right on the machinery and equipment, or any other goods introduced by Lessee in the Leased Property, even if such machinery and equipment is attached to the floor. Lessor shall provide promptly upon request customary acknowledgements of having no liens or other encumbrances on such assets, as may be requested by any financing source of Lessee.

 

5.5        Seguridad de la Propiedad Arrendada. A partir de esta fecha, el Arrendatario será la única parte responsable de contratar los servicios de seguridad que requiera de acuerdo a sus necesidades para el resguardo de la Propiedad Arrendada y de sus contenidos.

 

5.5        Security of the Leased Property. Starting on this date, Lessee shall be the only party responsible for hiring the security services required per its own needs to secure the Leased Property and its contents.

 

Cláusula 6. Otras Erogaciones.

 

Clause 6. Other Expenditures.

 

6.1 Cuotas de Mantenimiento. Las partes quedan en el entendido que en este momento no existen cuotas de mantenimiento pagaderas al Arrendador. Sin embargo, en la eventualidad que en el futuro el Arrendador desarrolle los predios contiguos a la Propiedad Arrendada y construye un desarrollo industrial que requiera el pago de cuotas de mantenimiento, además de la Renta, el Arrendatario deberá pagar mensualmente al Arrendador una cuota de mantenimiento de la Propiedad Arrendada por la cantidad que en ese momento acuerden las partes, más el Impuesto al Valor Agregado. La forma, fecha y lugar de pago de la cuota de mantenimiento, si la hubiere, sería el mismo que el de la Renta. La cuota de mantenimiento, si la hubiere, sería incrementada anualmente. 6.1 Maintenance Fees. The parties understand that at this moment there are no maintenance fees payable to Lessor. However, in the event that in the future Lessor develops the contiguous plots of land to the Leased Property and creates an industrial development that requires the payment of maintenance fees, in addition to the Rent, Lessee shall pay to Lessor the monthly fee for the maintenance of the Leased Property if agreed to at that moment between the parties, plus Value Added Tax. The form, date and place of payment would be the same as the Rent. The maintenance fee, if any, would be increased annually.
   

 

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En caso que las partes acuerden una cuota de mantenimiento, si el Arrendatario no la paga oportunamente, pagará al Arrendador el interés moratorio pactado en la cláusula 4.3.

 

In the event the parties agree on a maintenance fee and Lessee does not pay it on time, he shall pay Lessor the penalty interest agreed upon in clause 4.3.

 

6.2       Impuestos. Cada una de las partes será responsable por el cumplimiento de las obligaciones fiscales que les correspondan por la celebración y ejecución de este Contrato, de acuerdo con lo dispuesto por las Leyes Aplicables durante el Plazo; sin embargo, (a) la Arrendataria pagará el impuesto predial (o su equivalente) que se cause por la Propiedad Arrendada, y (b) el IVA que cause la Renta será trasladado a la Arrendataria en términos de las disposiciones aplicables.

 

6.2       Taxes. Each party shall be responsible for the compliance of the tax obligations imposed on them for the execution and signing of this Agreement, pursuant with the provisions of the Applicable Laws during the Term; however, (a) Lessee shall pay the property tax (or its equivalent) caused by the Leased Property, and (b) the VAT caused by the Rent shall be transferred to Lessee in terms of the applicable provisions.

 

6.3       Servicios Públicos. El Arrendatario será responsable de todos y cada uno de los pagos por el consumo y la contratación de cualesquier servicios públicos (incluyendo, sin limitar, servicios de energía eléctrica, teléfono, gas y agua y drenaje) en la Propiedad Arrendada, así como cualesquier otros servicios contratados por el Arrendatario en la Propiedad Arrendada, incluyendo, sin limitar, cualesquier cuotas de aportación, cuotas por conexión, cuotas por capacidad, depósitos o garantías y el costo incurrido por prolongar las líneas de servicio desde su ubicación existente hasta el punto de conexión al Edificio. El Arrendador no será responsable en ningún caso ante el Arrendatario por la falla en la conexión o suministro de los servicios mencionados anteriormente o por la calidad de los mismos. Al término de este Contrato, el Arrendatario entregará al Arrendador una copia de los recibos correspondientes y, si el Arrendador lo requiere, un certificado de no adeudo emitido por la compañía de servicios que proporcione el servicio.

 

6.3       Utilities. Lessee shall be responsible for any and all payments of the consumption and contracting of any public services (including but not limited to electricity, telephone, gas, water and sewer services) in the Leased Property, and any other services contracted by Lessee in the Leased Property, including, but not limited to any contribution fee, hook-up fees, capacity fees, deposits and guaranties and the cost to extend the service lines from its existing location to the point of connection to the Building. Lessor shall not be responsible in any case before Lessee for the failure in the connection or supply of the utilities above mentioned or for the quality thereof. Upon termination of this Agreement, Lessee shall deliver to Lessor a copy of the corresponding receipts and if Lessor requires it, a non-debt certificate issued by the utility company that provides the service.

 

 

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Cláusula 7. Licencias, Permisos y Autorizaciones.

 

Clause 7. Licenses, Permits and Authorizations.

 

7.1       Permiso de Descargas de Aguas Residuales. El Arrendatario se obliga a obtener a su propio costo el permiso de descargas de aguas residuales (o su equivalente), en caso de ser necesario, y a cumplir con todas las obligaciones al amparo de las Leyes respecto de la descarga de aguas residuales. Así mismo, el Arrendatario se obliga a preparar y entregar al Arrendador y a cualquier Autoridad Gubernamental, según sea razonablemente requerido por el Arrendador o por cualquier Autoridad Gubernamental, reportes sobre el contenido de las aguas residuales descargadas por el Arrendatario.

 

7.1        Discharge of Residual Waters. Lessee agrees to obtain, at its own cost, the residual water discharge license (or its equivalent), if needed, and to comply with each and every obligation contained in the Laws with respect to the discharge of residual waters. Furthermore, Lessee agrees to prepare and deliver to the Lessor or any Governmental Authority, as may be reasonably required by Lessor or by any Governmental Authority, reports on the content of the residual waters discharged by Lessee.

 

El Arrendador tendrá derecho a su costo, de tomar muestras, llevar a cabo estudios o verificaciones de las descargas de aguas residuales del Arrendatario, previa notificación por escrito al Arrendatario, a efecto de cerciorarse que la descarga de aguas residuales no exceda los parámetros máximos permitidos por las Leyes, de manera sustancial, respecto de cualquier elemento, compuesto o sustancia normada o regulada; en el entendido que, si a causa de dichas verificaciones el Arrendador descubre un exceso en los parámetros máximo permitidos por las Leyes, en las aguas residuales, causado por Arrendatario, sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad, el Arrendatario deberá reembolsar al Arrendador todos los costos y gastos incurridos conforme a este párrafo, dentro de los 10 (diez) días naturales siguientes a la entrega del recibo y resultados correspondientes, y el Arrendatario inmediatamente deberá implementar, a su costo y gasto, todas las Acciones de Remediación a fin de reducir los parámetros a niveles aceptables conforme a las Leyes.

 

Lessor shall have the right, at its own cost, to take samples, perform studies or verifications of Lessee’s residual water discharges, upon reasonable previous written notice given to Lessee, in order to verify that the residual water discharges do not exceed the maximum parameters permitted by the Laws, in all material respects, with regard to any element, compound or normed or controlled substance; provided that if due to such verifications, Lessor discovers and demonstrates to Lessee an excess in the maximum parameters permitted by the Laws in the residual waters, caused by Lessee, its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility, Lessee shall reimburse Lessor all reasonable and necessary costs and expenses incurred in terms of this paragraph, within the 10 (ten) calendar days following to the delivery of the corresponding receipt and results and Lessee shall immediately implement at its own cost and expense, all Remedial Actions in order to reduce the parameters to an acceptable level according to the Laws.

 

 

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7.2       Licencias Ambientales. El Arrendatario se obliga a obtener las licencias y permisos ambientales y a cumplir con todas y cada una de las obligaciones al amparo de las Leyes en materia ambiental. Así mismo, el Arrendatario se obliga a preparar y entregar al Arrendador y a cualquier Autoridad Gubernamental, según sea razonablemente requerido por el Arrendador o por cualquier Autoridad Gubernamental, reportes sobre las Emisiones a la atmósfera, la calidad del suelo, la generación de residuos peligrosos por parte del Arrendatario, entre otros temas ambientales.

 

7.2        Environmental Permits. Lessee agrees to obtain all environmental licenses and permits and to comply with each and every obligation under the environmental Laws Furthermore, Lessee agrees to prepare and deliver to the Lessor or any Governmental Authority, as may be reasonably required by Lessor or by any Governmental Authority, reports regarding the Emissions into the atmosphere, soil quality, and hazardous waste generation by Lessee, among other environmental issues.

 

Mediante notificación por escrito al Arrendatario con al menos 3 (tres) días hábiles de anticipación, el Arrendador podrá tomar muestras, llevar a cabo inspecciones periódicas, estudios o verificaciones en la Propiedad Arrendada, a fin de verificar que la Propiedad Arrendada esté libre de Materiales Peligrosos, cuyo manejo integral no se adecúe y realice en total cumplimiento con la Ley. Los costos relacionados con dichas inspecciones, estudios o verificaciones, deberán ser pagados por el Arrendador; en el entendido, sin embargo, que si por virtud de dichas inspecciones, estudios o verificaciones el Arrendador descubre una Condición Contaminante en la Propiedad Arrendada o el Edificio, y demuestra que fue causada por el Arrendatario, sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad, el Arrendatario deberá reembolsar al Arrendador todos los costos y gastos razonables y necesarios incurridos conforme a esta cláusula, dentro de los 10 (diez) días naturales siguientes a la entrega del recibo y resultados correspondientes. Adicionalmente, si por virtud de dicha inspección, el Arrendador descubre una Condición Contaminante, causada durante la ocupación del Arrendatario de la Propiedad Arrendada, el Arrendatario deberá implementar de inmediato, a su propio costo y gasto, toda Acción de Remediación a fin de eliminar cualquier Condición Contaminante, causada por el Arrendatario o sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad, y el Arrendatario acuerda en someterse a programas de autorregulación y de auditoría ambiental o de naturaleza similar ante la Procuraduría Federal de Protección al Ambiente o ante cualquier autoridad que sustituya a la anterior, como el programa de “Industria Limpia” u otro de naturaleza similar, a fin de cumplir con las Leyes y, de ser el caso, con las Acciones de Remediación que fueren necesarias para restablecer las condiciones de la Propiedad Arrendada, incluyendo el pago de multas y otras sanciones administrativas, la implementación de medidas de seguridad, la corrección de irregularidades u otras faltas u omisiones en las que el Arrendatario haya incurrido de acuerdo con las Leyes.

 

Upon not less than 3 (three) business day prior notice to Lessee, Lessor may take samples, perform periodical inspections, studies or verifications at the Leased Property, in order to verify that the Leased Property is free of Hazardous Materials whose integrated management does not fully comply in with the Law. The costs related to the above inspections, studies or verifications, shall be paid by the Lessor; provided, however, that if due to such inspections, studies or verifications Lessor discovers a Contamination Condition in the Leased Property or the Building and demonstrates that it was caused by Lessee or its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility, Lessee shall reimburse Lessor all reasonable and necessary costs and expenses incurred pursuant to this clause, within the 10 (ten) calendar days following to the delivery of the corresponding receipt and results. Additionally, if due to such inspection, Lessor discovers a Contamination Condition, caused by Lessee during Lessee’s occupation of the Leased Property, Lessee shall immediately implement at its own cost and expense, all Remedial Actions in order to eliminate any Contamination Condition caused by Lessee or its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility, and Lessee further agree, to submit to the self-regulation and environmental audit programs or any other similar program thereof before the Federal Bureau for Environmental Protection (Procuraduría Federal de Protección al Ambiente) or any substituting authority thereof, such as “Clean Industry” or any other similar program, in order to fulfill the Laws and, if such is the case, the Remedial Actions that may be necessary to restore the conditions of the Leased Property, including the remediation of fines or other administrative charges, the implementation of security measures, the correction of irregularities or other omissions or failures in which the Lessee might have incurred pursuant to the Laws.

 

 

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7.3       Otras Licencias, Permisos y Autorizaciones para la Operación de la Propiedad Arrendada. Además de lo pactado en las cláusulas 7.1 y 7.2, la Arrendataria será total y exclusivamente responsable de obtener y mantener vigentes durante el tiempo que ocupe la Propiedad Arrendada todos los permisos, licencias y/o autorizaciones que conforme a la Legislación Aplicable sean necesarias para la operación de sus actividades industriales conforme a los Usos Permitidos. Para tal efecto, el Arrendador facilitará al Arrendatario cualquier tipo de documentación solicitada por las autoridades competentes necesaria para efectuar los trámites a que se refiere esta cláusula.

7.3       Other Licenses, Permits and Authorizations for the Operation of the Leased Property. In addition to the covenants included in clauses 7.1 and 7.2 hereof, Lessee shall be fully and solely responsible for obtaining and maintaining in full force and effect, during the time occupying the Leased Property, all permits, licenses and authorizations that under the Applicable Laws are necessary for the operation of its industrial activities pursuant to the Permitted Uses. For such purpose, Lessor shall provide to Lessee any documentation requested by the competent authorities necessary to complete the filings referred herein.

   

El Arrendatario por este medio se obliga a entregar al Arrendador, en un plazo no mayor de diez (10) días naturales siguientes a la solicitud por escrito del Arrendador, copia simple de cada uno de sus permisos, licencias y/o autorizaciones, incluyendo, en su caso, cualquier permiso de tipo ambiental. En caso de que los permisos, licencias y/o autorizaciones aún no hayan sido expedidos, el Arrendatario se considerará en cumplimiento con lo previsto en esta cláusula 7, mediante la presentación de evidencia de que, dichos todos los permisos, licencias y/o autorizaciones están en trámite y que ha presentado toda la documentación y llenado los requisitos correspondientes.

 

Lessee hereby agrees to deliver to Lessor, within a term not exceeding 10 (ten) calendar days following the Landlord’s written request, a copy of each and all permits, licenses and authorizations, including in its case, any permit of environmental nature. In the case that the permits, licenses and authorizations have not yet been issued, Lessee shall be considered in compliance with that set forth in this clause 7, by delivering evidence that said permits, licenses and authorizations have been filed and that it has submitted all corresponding documents and requirements in that regard.

 

 

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7.4       Gastos. Los gastos incurridos para la obtención de las licencias, permisos y/o autorizaciones señaladas en esta cláusula serán por cuenta del Arrendatario.

 

7.4        Expenses. Expenses incurred for obtaining licenses, permits and/or authorizations mentioned in this clause shall be borne by the Lessee.

 

7.5       Incumplimiento. Las partes convienen en que cualquier incumplimiento, sustancial y no subsanado, a lo previsto en esta cláusula 7 por parte del Arrendatario será considerado como una causal de recisión de este Contrato, sin necesitad de resolución judicial alguna y sin liberar al Arrendatario de su responsabilidad. Lo anterior no libera al Arrendatario de sus responsabilidades u obligaciones con cualquier Autoridad Gubernamental respecto a la descarga de sus aguas residuales que puedan ser impuestas por alguna Ley Aplicable; por lo tanto, el Arrendatario será la única parte responsable del cumplimiento de dichas responsabilidades y obligaciones y se obliga a indemnizar y a sacar en paz y a salvo al Arrendador de cualquier responsabilidad o Daños y Perjuicios en relación con las obligaciones del Arrendatario previstas en esta cláusula.

 

7.5        Breach. The parties hereby agree that a material and uncured breach of this clause 7 by Lessee shall be considered as a rescission cause of this Agreement, with no further requirements for a judicial resolution and without releasing Lessee from being liable. The above does not release Lessee from its responsibilities and obligations to any Governmental Authority with respect to the discharge of its residual waters which may be imposed by any Applicable Laws; therefore, Lessee shall be the only responsible party for the fulfillment of these obligations and shall indemnify Lessor and hold it harmless from any liability or Damages derived from or related to the obligations of Lessee under this clause.

 

Cláusula 8. Mantenimiento.

 

Clause 8. Maintenance.

8.1       Mantenimiento del Arrendador. El Arrendador, a su propio costo y gasto, llevará a cabo todas las reparaciones, la estructura de muros, la estructura del techo (incluyendo los miembros de soporte, pero excluyendo el aislamiento de techos y la membrana) del Edificio, que sean necesarios; siempre y cuando dichas reparaciones (a) no sean imputables al Arrendatario o sus Filiales, causahabientes, subarrendatarios, contratistas subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad, por haber sometido estas áreas estructurales a cargas por encima de las cargas de diseño, y que el uso de estos elementos estructurales están siendo estrictamente utilizadas para el propósito para el cual fueron diseñadas, y (b) no sean imputables a la negligencia o mala fe del Arrendatario o de sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad. El Arrendatario deberá notificar por escrito al Arrendador en un plazo que no excederá de 10 (días) días naturales a la fecha en que tenga conocimiento de los daños a la Propiedad Arrendada, la necesidad de que realice algún mantenimiento o reparación conforme a lo dispuesto por esta cláusula.

 

8.1       Maintenance by Lessor. Lessor shall, at its own cost and expense, provide all repairs and replacements of Building foundations, the structure of walls and the structure of the roof (including the support members but without including the ceiling insulation and the membrane) that may be needed; provided that such repairs (a) are not imputable to Lessee, its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility, for subjecting this structural areas to loads over the designed loads, and that the use of these structural elements has been strictly used for the purpose for which they were designed, and (b) are not imputable to the gross negligence or bad faith of the Lessee, its Lessee or its Affiliates, or Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility. Lessee must notify Lessor in writing within a period not exceeding 10 (ten) calendar days from the date it becomes aware of damage to the Leased Property, the need to perform any maintenance or repair in accordance with the provisions of this clause.

 

 

 

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El Arrendador realizará los esfuerzos razonables para minimizar la interferencia con la actividad comercial del Arrendatario en relación con el desempeño de cualquier trabajo descrito en esta cláusula.

 

Lessor shall use reasonable efforts to minimize interference with Lessee’s conduct of business in connection with Lessor’s performance of any work described in this clause.

 

8.2       Mantenimiento del Arrendatario. El Arrendatario, a su propio costo y gasto, deberá mantener y llevar a cabo todas las reparaciones y remplazos no estructurales, incluyendo, los techos, canales y tubos de desagüe limpios y pintados, la pintura interior y exterior del Edificio, la membrana, los sistemas eléctricos, hidráulicos y de aire acondicionado, el aislamiento del Edificio y el sistema de prevención de fuego interior desde la fecha de celebración este Contrato y hasta la desocupación y entrega del Edificio a la entera satisfacción del Arrendador. En el caso de la membrana, en virtud de que esta tiene una garantía por plazo determinado, es necesario que el Arrendatario notifique al Arrendador inmediatamente cualquier problema que observe durante inspecciones rutinarias o mantenimiento del techo. Por último, el Arrendatario no podrá perforar el techo sin el consentimiento previo y por escrito del Arrendador.

 

8.2        Maintenance by Lessee. Lessee shall maintain and carry out, at its own cost and expense, all non-structural repairs and replacements, including keeping the roof, gutters and downspouts clean and painted, the interior and exterior paint of the Building, the membrane, all electric, hydraulic and air conditioning systems and the insulation of the Building, the fire prevention system and the interior from the date of execution of this Agreement until its vacancy and delivery at Lessor’s total satisfaction. Regarding the membrane, as it is guaranteed for a determined term, Lessee must immediately notify Lessor any problems detected during its routine inspections or the maintenance of the roof. Finally, the Lessee may not drill the ceiling without the prior written consent of Lessor.

 

 

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Además de lo anterior, el mantenimiento por parte del Arrendatario se sujetará a lo siguiente: (a) el Arrendatario llevará a cabo todos los mantenimientos necesarios, utilizando personal cualificado por los fabricantes de las instalaciones o equipos, a efecto de mantener vigentes las garantías otorgadas por dichos fabricantes, y (b) si en cualquier momento durante el Plazo el Arrendatario incumple con cualquiera de sus obligaciones de mantenimiento al amparo de este Contrato, previa notificación por escrito con 15 (quince) días naturales de anticipación al Arrendatario (o sin notificación en caso de emergencia) el Arrendador podrá, sin estar obligado a ello y sin liberar al Arrendatario de sus obligaciones, llevar a cabo los actos a los que el Arrendatario está obligado conforme al presente Contrato (exclusivamente a costo y gasto del Arrendatario), para lo cual tendrá derecho a ingresar a la Propiedad Arrendada y llevar a cabo todos los actos necesarios para el caso en particular. Todas las cantidades pagadas por el Arrendador respecto del cumplimiento de dichas obligaciones del Arrendatario deberán ser pagadas por el Arrendatario, en cuanto las mismas sean solicitadas por el Arrendador.

 

Furthermore, the maintenance by Lessee shall be subject to the following: (a) Lessee shall provide such maintenance with personnel qualified by the equipment and installations fabricators that required so, in order to maintain in force the guaranties granted by the fabricators, and (b) if at any time during the Term, Lessee fails to perform any of its maintenance obligations hereunder, Lessor, after 15 (fifteen) calendar days of having given written notice to Lessee to this effect (or without notice in the case of emergency), and without waiving or releasing Lessee from any of its obligations contained in this Agreement, may, but without being obligated to do so, perform acts which Lessee is obligated to perform (at Lessee’s sole cost and expense), and shall be able to enter the Leased Property for such purpose, and to carry out all acts that are necessary in the particular case. Likewise, all sums paid by the Lessor with respect to the performance of said obligations of the Lessee shall be payable by Lessee to Lessor on demand.

 

8.3        Limpieza de la Propiedad Arrendada. En todo caso el Arrendatario será responsable de mantener la Propiedad Arrendada limpia y en buen estado, así como de contratar los servicios de recolección de basura y residuos peligrosos que se requieran de acuerdo a las actividades del Arrendatario en la Propiedad Arrendada.

 

8.3 Cleanliness of the Leased Property. In any case, Lessee shall be responsible of keeping the Leased Property clean and in good condition, as well as to hire those garbage and dangerous residuals generated by the activities of the Lessee at the Leased Property.

Cláusula 9. Mejoras.

 

Clause 9. Modifications.

 

9.1       Mejoras Realizadas por el Arrendatario. El Arrendatario podrá, a su propio costo y gasto, llevar a cabo mejoras menores o cambios a la Propiedad Arrendada, a su propio costo y riesgo, previa notificación por escrito al Arrendador describiendo dichas mejoras, siempre y cuando éstas (a) no alteren o deterioren la estructura de la Propiedad Arrendada, y (b) en suma durante el Plazo, no excedan la cantidad de USD $1’000,000.00 (un millón de Dólares 00/100), siempre y cuando dichas modificaciones o alteraciones no incrementen la superficie bajo techo del Edificio (las “Mejoras del Arrendatario”).

 

9.1       Modifications made by Lessee. Lessee is hereby authorized to make minor modifications or alterations to the Leased Property, at its own cost and risk, with prior written notice to Lessor describing said modifications and so long as said modifications (a) do not alter or deteriorate the structure of the Leased Property, and (b) in the aggregate throughout each calendar year, do not exceed the amount of USD $1’000,000.00 (one million Dollars 00/100) so long as such modification or alterations do not increase the size of Building (“Lessee Improvements”).

 

 

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Salvo por lo expresamente dispuesto anteriormente, el Arrendatario no podrá hacer ninguna otra mejora o cambio a la Propiedad Arrendada, sin el consentimiento previo y por escrito del Arrendador; en el entendido que dicho consentimiento podrá ser denegado por el Arrendador a su entera discreción.

 

Except as expressly provided above, Lessee shall not make any other modifications or alterations to the Leased Property without the written consent of Lessor; in the understanding that such consent may be denied by Lessor in its sole discretion.

 

Cualquier mejora o cambio realizado a la Propiedad Arrendada por parte del Arrendatario deberá llevarse a cabo de manera profesional de primera clase, utilizando únicamente materiales de primera clase, consistentes con el Edificio, y deberá cumplir con todas las reglas del Arrendador y las Leyes.

 

Any modifications or alterations made by Lessee shall be performed in a first-class workmanlike manner, using only first-class grades of materials, consistent with the Building, and shall comply with all of Lessor’s rules and the Laws.

 

El Arrendatario en este acto renuncia, de manera expresa e irrevocable, todos los derechos a solicitar al Arrendador el reembolso por cualquier mejora que realice, incluyendo sin limitar el de las Mejoras del Arrendatario, en los términos previstos en el Código Civil Federal.

 

Lessee hereby expressly and irrevocably waives all rights to request a refund to Lessor for any improvement made, including but not limited to the Lessee Improvements, in accordance with the Federal Civil Code.

 

Las partes convienen que el Arrendador no estará obligado a realizar ninguna inversión, mejora, mantenimiento o adaptación en la Propiedad Arrendada, por lo que la misma será tomado por el Arrendatario en las condiciones que se encuentra, y será el Arrendatario, quién con la previa autorización del Arrendador conforme a los términos de este Contrato, llevará a cabo por su cuenta, costo y responsabilidad todas las mejoras y adecuaciones que la Propiedad Arrendada requiera para el establecimiento de su negocio.

 

The parties agree that Lessor shall not be obligated to make any investment, improvements, maintenance or adaptation to the Leased Property, for it will be delivered to Lessee as is, and the Lessee, with the previous authorization of the Lessor according to the terms set forth in this Agreement, shall carry out at its sole cost, expense and responsibility each and every one of the improvements and modifications required by the Leased Property for the installation of its business.

 

9.2       Remoción de Mejoras del Arrendatario a la Terminación del Contrato. Las mejoras e instalaciones construidas en la Propiedad Arrendada por el Arrendatario, incluyendo sin limitar las Mejoras del Arrendatario, que incorpore permanentemente, deberán ser removidas por el Arrendatario a la Fecha de Terminación. El Arrendatario deberá pagar cualquier gasto, erogación o daño causado a la Propiedad Arrendada al momento de demoler o remover dichas mejoras de las instalaciones, incluyendo sin limitar las Mejoras del Arrendatario. Así mismo, deberá sellar, cortar y cubrir adecuadamente todos los cables, tuberías o ductos con relación a cualquier mejora que el Arrendador instruya al Arrendatario remover. En caso que existan cables, tuberías o ductos incorporados a las paredes o techos, el Arrendatario deberá proporcionar al Arrendador los planos que detallen la ubicación de dichos cables, tuberías o ductos.

 

9.2        Removal of Lessee Improvements upon Termination of the Agreement. All the modifications and installations built in the Leased Property by Lessee, including but not limited to the Lessee Improvements, which are permanently affixed, shall be removed by Lessee at the Expiration Date. Lessee shall pay any expense, expenditure or damage caused to the Leased Property upon demolition or removal of the improvements, the facilities and/or equipment including but not limited to the Lessee Improvements. Likewise, Lessee shall adequately seal, cut and cover all wires, piping or ducts related to any improvement that the Lessor orders to be removed. If any wire, piping or duct is incorporated into the walls or roofs, the Lessee shall provide Lessor with blueprints detailing the location of such wiring, piping or duct.

 

 

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9.3 Letreros. El Arrendador autoriza al Arrendatario a colocar cualquier letrero relacionado con su negocio con la condición de que dichos letreros cumplan con la ley local.

9.3       Signs. Lessor hereby authorizes Lessee the right to erect or place any sign related to its business on the condition that such signs comply with local law.

 

9.4       Ampliaciones del Edificio. En caso que el Arrendatario desee construir alguna ampliación en el Edificio que implique la construcción de pies cuadrados cubiertos bajo techo, las partes acuerdan someterse a lo siguiente:

 

9.4       Expansions to the Building. In the event Lessee wishes to build an expansion to the Building that imply the construction of under roof square footage, the parties hereto agree as follows:

 

(a) El Arrendatario deberá notificarlo por escrito al Arrendador, para que el Arrendador, en un plazo de 30 (treinta) días naturales contados a partir de la fecha en que reciba la notificación, le comunique al Arrendatario si tiene interés en fondear y construir la ampliación,

 

(a) Lessee shall give written notice to Lessor, so that Lessor, in a term of 30 (thirty) calendar days from the date it receives such notice, may let Lessee know if it intends to fund and build such expansion,

 

(b) En caso que el Arrendador decida construir la ampliación, las partes deberán negociar de buena fe los términos y condiciones comunes a esta clase de obras, por un periodo que no exceda los treinta (30) días, en el entendido que, la construcción será con las mismas características del Edificio actual para la manufactura de carros de ferrocarril. Además, en este caso el Arrendador será responsable de obtener todas las licencias, permisos y autorizaciones requeridas por las autoridades federales, estatales o municipales para realizar las construcciones mencionadas, incluyendo sin limitar, manifestaciones de impacto ambiental, informes preventivos, licencias de construcción, terminación de obra, avisos, autorización sanitaria de las autoridades laborales y cualquier otro estudio, permiso, licencia o autorización que requiera la Ley Aplicable a la Propiedad Arrendada o al tipo de obra o instalación a realizar por el Arrendatario en la Propiedad Arrendada, y las pólizas de seguros de responsabilidad y riesgo adecuadas para este tipo de obras. Antes del inicio de las obras correspondientes, el Arrendador entregará al Arrendatario copias de la póliza de seguro y demás documentos antes mencionados. Asimismo, el Arrendador mantendrá dichas licencias, permisos y autorizaciones, pólizas de seguro y demás documentos, vigentes durante el tiempo necesario para realizar las obras o instalaciones relacionadas a la ampliación del Edificio,

 

(b) In the event Lessor decides to build the expansion, the parties shall negotiate in good faith the terms and conditions common to these types of works for a period not to exceed thirty (30) days, provided however that, the construction shall be, of the same characteristics of the current Building for the manufacture of railcars. In addition, in this case Lessor shall be responsible to obtain all licenses, permits and authorizations required by the federal, state or municipal authorities to carry out the related constructions, including without limitation, environmental impact reports, preventive reports, construction licenses, construction termination notices, sanitary authorization by labor authorities and any other study, permit, license or authorization required by Applicable Law to the Leased Property or to the type of work or installation to be carried out by the Lessee at the Leased Property, and the liability and risk insurance policies adequate for such kind of works. Before the commencement of the corresponding works, Lessor shall deliver to Lessee copies of the insurance policy and other documents mentioned above. Likewise, Lessor shall maintain such licenses, permits and authorizations, certificate of insurance and other documents, in effect during the time necessary to carry out the related works or installations for the expansion of the Building,

 

 

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(c) El Arrendatario pagará al Arrendador, de conformidad con la cláusula 4.1, la cantidad anual de Renta por pie cuadrado de la superficie total de la expansión, pagadera en el momento en que dicha expansión esté terminada,

 

(c) Lessee shall pay Lessor, pursuant to clause 4.1, the annual amount of Rent per square foot of the total surface of the expansion, payable in the time such expansion is finished,

 

(d) El Arrendatario le pagará al Arrendador la renta por la ampliación de la misma forma pactada en la cláusula 4 de este Contrato, aplicable para el pago de la Renta,

 

(d) Lessee shall pay Lessor the rent payable for the expansion under the same terms set forth in clause 4 of this Agreement, applicable to the payment of the Rent,

 

(e) El Arrendador no está obligado a construir la ampliación, en cuyo caso, después del periodo de treinta (30) días siguientes a la recepción de la notificación anterior referida en el inciso (a) anterior, el Arrendatario estará automáticamente autorizado para construir la ampliación directamente. El Arrendatario no pagará renta alguna sobre la ampliación del Edificio y las obras que construya serán transferidas por accesión al Arrendador a la terminación por cualquier causa, y el Arrendador no estará obligado a pagar la ampliación o a reembolsar los gastos incurridos por el Arrendatario en la edificación de dichas obras.

 

(e) Lessor shall not be obligated to build the expansion, in which case, following the first thirty (30) day period following receipt of notice in subsection (a) above, Lessee shall be automatically authorized to build the expansion directly. Lessee shall pay no rent whatsoever over the expansion of the Building and the works that builds shall be transferred to Lessor at the termination hereof for any reason whatsoever, and Lessor shall not be obligated to pay the expansion or to reimburse any expenses or costs incurred by Lessee when building such works.

 

 

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(f) En caso de que el Arrendatario construya la ampliación de conformidad con esta cláusula será responsable de obtener todas las licencias, permisos y autorizaciones que se requieran de parte de las autoridades federales, estatales y/o municipales para llevar a cabo las construcciones de que se trate, incluyendo sin limitar, manifestaciones de impacto ambiental, informes preventivos, informes continuos, licencias de construcción, avisos de terminación de obra, licencias sanitarias, autorizaciones de autoridades laborales y cualquier tipo de estudio, permiso, licencia o autorización requerido por la Legislación Aplicable a la Propiedad Arrendada o al tipo de obra o instalación que el Arrendatario pretenda llevar a cabo dentro de ésta, así como de los seguros de responsabilidad y riesgos que sean adecuados a los trabajos de que se trate. Previo al inicio de los trabajos correspondientes, el Arrendatario se obliga a entregar al Arrendador, copias de las pólizas de seguros y demás documentos antes mencionados. Asimismo, el Arrendatario será responsable de mantener dichas licencias, permisos, autorizaciones, seguros y demás documentos vigentes durante el tiempo que sea necesario para llevar a cabo las obras o instalaciones de la ampliación del Edificio.

 

(f) In the event that Lessee builds the expansion pursuant to this clause, then it shall be responsible to obtain all licenses, permits and authorizations required by the federal, state or municipal authorities to carry out the related constructions, including without limitation, environmental impact reports, preventive reports, construction licenses, construction termination notices, sanitary authorization by labor authorities and any other study, permit, license or authorization required by Applicable Law to the Leased Property or to the type of work or installation to be carried out by the Lessee at the Leased Property, and the liability and risk insurance policies adequate for such kind of works. Before the commencement of the corresponding works, the Lessee shall deliver to Lessor copies of the insurance policy and other documents mentioned above. Likewise, Lessee shall maintain such licenses, permits and authorizations, certificate of insurance and other documents, in effect during the time necessary to carry out the related works or installations for the expansion of the Building.

 

Cláusula 10. Expropiación.

 

Clause 10. Condemnation.

 

10.1       Expropiación Total de la Propiedad Arrendada. En caso que la Propiedad Arrendada se vea afectada en su totalidad a causa de una Expropiación, este Contrato terminará sin necesidad de resolución judicial a partir de la fecha de desposesión de la Propiedad Arrendada por parte de la Autoridad Gubernamental. El Arrendatario en este acto renuncia expresamente a exigir al Arrendador el pago de Daños y Perjuicios con motivo de dicha terminación.

 

10.1       Total Condemnation of the Leased Property. In the event that all of the Leased Property shall be subject to Condemnation, this Agreement shall automatically terminate, with no further requirements for a judicial resolution, as of the date of dispossession of the Leased Property by the Governmental Authority. Lessee hereby expressly waives the right to require Lessor the payment of Damages resulting from such termination.

 

 

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10.2       Expropiación Parcial de la Propiedad Arrendada. (a) En caso que el 50% (cincuenta por ciento) o menos de la superficie arrendable del Edificio sea afectada a causa de una Expropiación y el Arrendatario pueda utilizar el Edificio para los mismos fines previos a dicha Expropiación, sin afectación material a sus operaciones comerciales (según sea determinado por un perito neutral designado por las partes), este Contrato continuará en pleno vigor y efecto con las siguientes consecuencias: (i) la superficie arrendada de la Propiedad Arrendada y el Edificio se modificará en la medida en que fue afectada cada una de ellas con motivo de la Expropiación, (ii) la Renta deberá ser ajustada en proporción únicamente a la parte del Edificio afectada a causa de la Expropiación, y (iii) el Plazo terminará respecto de la parte del Edificio afectada a causa de dicha Expropiación, a partir de la fecha de desposesión al Arrendatario. El Arrendatario en este acto renuncia expresamente a exigir al Arrendador el pago de Daños y Perjuicios con motivo de la afectación parcial en el uso y goce de la cosa.

 

10.2       Partial Condemnation of the Leased Property. (a) In the event that 50% (fifty percent) or less of the rentable area of the Building is taken by Condemnation and Lessee can use the Building for the same purpose as prior thereto without material impairment to its business operations (as determined by a neutral, third party expert, reasonably agreed upon by the parties), this Agreement shall continue in full force and effect with the following consequences: (i) the leased area of the Leased Property and the Building shall be amended to the extent that was affected by such Condemnation, (ii) the Rent shall be adjusted in proportion to that portion of the Building taken by such Condemnation, and (iii) the Term shall expire only as to the portion of the Building so taken, effective on the date of dispossession of Lessee. Lessee hereby expressly waives the right to require Lessor the payment of Damages resulting from the partial impairment in the use and enjoyment of the Leased Property.

 

Una vez que el Arrendador reciba la indemnización por Expropiación, deberá hacer todas las reparaciones y mejoras necesarias al Edificio para restaurar el Edificio y la Propiedad Arrendada, a una condición similar a la condición previa a dicha Expropiación, según sea posible y tan pronto como sea posible (en un plazo que no podrá exceder de 6 (seis) meses contados a partir de la fecha en que el Arrendador reciba dicha indemnización por Expropiación). Sin embargo, el Arrendador no estará obligado a gastar en dichas mejoras una cantidad mayor al Monto Recibido por el Arrendador a causa de la Expropiación, y

 

Lessor shall, upon receipt of the award in Condemnation, make all necessary repairs or alterations to the Building to restore the Building and Leased Property to a condition that is as similar to the condition that existed immediately prior to such Condemnation as is reasonably possible as promptly as possible (within a period that may not exceed 6 (six) months from the date on which Lessor receives such Condemnation award). However, Lessor shall not be required to spend for such work an amount in excess of the Amount Received by Lessor due to the Condemnation, and

 

(b) En caso que más del 50% (cincuenta por ciento) de la superficie arrendable del Edificio sea afectada a causa de una Expropiación o que el Arrendatario no puede utilizar el Edificio para los mismos fines previos a dicha Expropiación, sin afectación material a sus operaciones comerciales (según sea determinado por un perito neutral, razonablemente designado por las partes), este Contrato terminará sin necesidad de resolución judicial a partir de la fecha de desposesión de la Propiedad Arrendada por parte de la Autoridad Gubernamental. El Arrendatario en este acto renuncia expresamente a exigir al Arrendador el pago de Daños y Perjuicios con motivo de dicha terminación.

 

(b) In the event that more than 50% (fifty percent) of the rentable area of the Building is taken by Condemnation or Lessee cannot use the Building for the same purpose as before without material impairment to its business operations (as determined by a neutral third party expert, reasonably agreed upon by the parties), this Agreement shall automatically terminated, with no further requirements for a judicial resolution, as of the date of dispossession of the Leased Property by the Governmental Authority. Lessee hereby expressly waives the right to require Lessor the payment of Damages resulting from such termination.

 

 

 

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10.3       Propiedad del Monto Recibido. El Monto Recibido pertenecerá al Arrendador y al Arrendatario, solo en la medida y por el valor de cualquier expansión que construya, de conformidad con los términos del Código Civil Federal y las Leyes Aplicables, excepto en el caso de la cláusula 10.2 (a) del presente.

 

10.3       Property of the Amount Received. The Amount Received will belong to Lessor and Lessee, only to the extent and for the value of any expansions built by Lessee, pursuant to the terms of the Federal Civil Code and related Applicable Laws, except in case of clause 10.2(a) hereof.

 

Cláusula 11. Siniestros.

 

Clause 11. Casualties.

 

11.1       Siniestros Responsabilidad del Arrendador. El Arrendador solamente será responsable de los daños causados por algún siniestro cuya causa sea un vicio oculto de la Propiedad Arrendada que impidan el uso de ella, en los términos establecidos en la Ley Aplicable.

 

11.1       Casualties that are Lessor’s Responsibility. Lessor will only be liable for damages caused by a casualty derived from a hidden defect of the Leased Property that prevent the use of it, under the terms established in the Applicable Law.

 

En el caso de algún siniestro de esta naturaleza las partes se someterán a las siguientes reglas:

 

In the event of any incident of this nature, the parties are subject to the following rules:

 

(a) En un plazo que no excederá de 3 (tres) días hábiles, el Arrendatario notificará el evento al Arrendador y a la compañía de seguros.

 

(a) Within a period not to exceed three (3) business days, Lessee shall notify the incident to the Lessor and the insurance company.

 

(b) Las partes tomarán toda medida preventiva para proteger vidas y prevenir mayores daños a la Propiedad Arrendada, y apoyarán a las Autoridades Gubernamentales y a la compañía de seguros en todo lo que sea necesario para esclarecer y resolver el siniestro.

 

(b) The parties shall take any preventive measure to protect lives and prevent further damages to the Leased Property, and shall support the Governmental Authorities and the insurance company in whatever is necessary to clarify and resolve the incident.

 

(c) Las partes contratarán, de común acuerdo, un perito que determinará las causas del siniestro.

 

(c) The parties shall hire, by mutual agreement, an expert to determine the causes of the accident.

 

 

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(d) Cuando las causas del siniestro sean atribuibles al Arrendador, dentro de un plazo que no excederá de 6 (seis) meses, éste deberá realizar todas las construcciones y/o mejoras necesarias para que el Arrendatario pueda operar como está contemplado en este Contrato, una vez que la compañía de seguros cubra el siniestro. En este caso en que las causas del siniestro sean atribuibles al Arrendador, el pago de la Renta se suspenderá durante todo el tiempo en que dure la construcción de las mejoras para resolver el siniestro, siempre y cuando (i) el Arrendatario suscriba un convenio confirmando la validez de este Contrato y ampliando el Plazo, por el mismo número de días requeridos para restaurar la Propiedad Arrendada a la condición que tenía antes del siniestro, y (ii) el Arrendador obtenga el consentimiento de sus acreedores para dicha restauración, en su caso. Exclusivamente en caso que el siniestro sea  resuelto por el Arrendador conforme a esta cláusula, a satisfacción del Arrendatario, el Arrendatario en este acto éste renuncia expresamente a exigir al Arrendador el pago de Daños y Perjuicios con motivo del siniestro. (d) When the causes of the loss are attributable to Lessor, within a period not to exceed six (6) months, it shall carry out all construction and/or improvements necessary for Lessee to operate as contemplated herein, once the insurance company have covered the loss. In this case where the causes of the loss are attributable to Lessor, the Rent shall be suspended throughout the period in which the improvements are being built to resolve the casualty, provided however (i) Lessee shall sign an agreement confirming the validity of this Agreement and extending the Term by the same number of days required to restore the Leased Property to the condition it had prior to the casualty, and (ii) Lessor shall have received its creditors consent for such restoration, if any. Exclusively in the case that the casualty is resolved by Lessor pursuant to this clause at satisfaction to Lessee, then Lessee hereby expressly waives the right to require Lessor the payment of Damages resulting from the loss.
   

11.2       Siniestros Responsabilidad del Arrendatario. Salvo que el Arrendador sea el responsable de los daños causados por vicios ocultos de la Propiedad Arrendada en los términos de la Ley Aplicable o sean atribuibles a un Caso de Fuerza Mayor, el Arrendatario será responsable por cualquier daño causado a la Propiedad Arrendada.

 

11.2 Casualties that are Lessee’s Responsibilities. Unless Lessor is responsible for the damage caused by hidden defects of construction in terms of Applicable Law or are attributable to a Force Majeure Event, Lessee shall be liable for any damage caused to the Leased Property.

 

En el caso de algún siniestro de esta naturaleza las partes se someterán a las siguientes reglas:

 

In the event of any incident of this nature, the parties are subject to the following rules:

 

(a) En un plazo que no excederá de 3 (tres) días hábiles, el Arrendatario notificará el evento al Arrendador y a la compañía de seguros.

 

(a) Within a period not to exceed three (3) business days, Lessee shall notify the incident to Lessor and the insurance company.

 

(b) Las partes tomarán toda medida preventiva para proteger vidas y prevenir mayores daños a la Propiedad Arrendada, y apoyarán a las Autoridades Gubernamentales y a la compañía de seguros en todo lo que sea necesario para esclarecer y resolver el siniestro.

 

(b) The parties shall take any preventive measure to protect lives and prevent further damages to the Leased Property, and shall support the Governmental Authorities and the insurance company in whatever is necessary to clarify and resolve the incident.

 

 

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(c) Las partes contratarán, de común acuerdo, un perito que determinará las causas del siniestro.

 

(c) The parties shall hire, by mutual agreement, an expert to determine the causes of the incident.

 

(d) Cuando las causas del siniestro sean atribuibles al Arrendatario, dentro de un plazo que no excederá de 6 (seis) meses, éste deberá contratar al Arrendador para que realice todas las construcciones y/o mejoras necesarias para que el Arrendatario pueda operar como está contemplado en este Contrato, una vez que la compañía de seguros cubra el siniestro, siempre y cuando el Arrendador obtenga el consentimiento de sus acreedores para dicha restauración.

 

(d) When the causes of the loss are attributable to Lessee, within a period not to exceed six (6) months, it shall hire Lessor to perform all necessary construction and/or improvements for Lessee to operate as contemplated herein, once the insurance company have cover the loss, provided Lessor should have received its creditors consent for such restoration, if any.

 

En cualquiera de los casos señalados en esta cláusula 11.2, el pago de la Renta no se suspenderá durante todo el tiempo necesario para resolver el siniestro.

 

In any of the events contemplated in this clause 11.2, the payment of the Rent shall not be suspended throughout the period needed to resolve the incident caused by Lessee.

 

11.3       Siniestros Causados por Caso de Fuerza Mayor. En el caso que los daños a la Propiedad Arrendada sean atribuibles a un caso fortuito o caso de fuerza mayor, ninguna de las partes será responsable por cualquier daño causado a la Propiedad Arrendada. Se entiende como caso fortuito o caso de fuerza mayor cualquier evento imprevisible o inevitable causado por la naturaleza o el hombre bajo la Ley Aplicable, siempre que no sea atribuible a ninguna de las partes o sus subsidiarias, sucesores, subarrendatarios, contratistas, subcontratistas, empleados, visitantes, agentes o cualquier Persona bajo su responsabilidad (el "Caso de Fuerza Mayor").

 

11.3       Force Majeure. In the event that the damage of the Leased Property is attributable to an act of god or force majeure event, no party shall be responsible for any damage caused to the Leased Property. Act of god or force majeure is understood as any unforeseeable or unavoidable event caused by nature or man under Applicable Law, as long as it is not attributable to any of the parties or their subsidiaries, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under their responsibility (the “Force Majeure Event”).

 

En el caso de algún siniestro de esta naturaleza las partes se someterán a las siguientes reglas:

 

In the event of any incident of this nature, the parties are subject to the following rules:

 

(a)        Las partes se regirán por las reglas establecidas en los incisos (a), (b) y (c) de la cláusula 11.2.

 

(a)        The parties shall be subject to the rules to set forth in paragraphs (a), (b) and (c) of clause 11.2.

 

 

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(b)        En caso que la Propiedad Arrendada se vea afectada en su totalidad a causa de un siniestro por Caso de Fuerza Mayor, este Contrato terminará sin necesidad de resolución judicial a partir de la fecha en que el perito determine la pérdida total del Edificio. Ninguna de las partes podrá exigir el pago de Daños y Perjuicios con motivo de dicha terminación.

 

(b)        If all the Leased Property is affected because of a Force Majeure Event, this Agreement shall terminate with no further requirements for a judicial resolution, from the date in which the expert determines the total loss of the Building. The parties will not have the right to require the payment of Damages resulting from such termination.

 

(c)        En caso que el 50% (cincuenta por ciento) o menos de la superficie arrendable del Edificio sea afectada a causa de un siniestro por Caso de Fuerza Mayor y el Arrendatario pueda utilizar el Edificio para los mismos fines previos a dicho siniestro, sin afectación a sus operaciones (según sea determinado por un perito neutral designado por las partes), este Contrato continuará en pleno vigor y efecto conforme a lo siguiente: (i) el Arrendador deberá corregir los daños para restaurar la Propiedad Arrendada, incluyendo el Edificio, a una condición similar a su condición previa a dicho siniestro, según sea posible física y técnicamente y en un plazo que no excederá de 6 (seis) meses contado a partir de la fecha en que el Arrendador reciba la indemnización del seguro, (ii) la Renta deberá ser reducida mensualmente en proporción a la parte inutilizable de la Propiedad Arrendada, siempre y cuando la Renta esté cubierta por la póliza de seguro a que se refiere la cláusula 13 de este Contrato, (iii) en la medida que se hagan reparaciones a la Propiedad Arrendada, mismas que incrementen la parte utilizable de ésta, la Renta deberá ser incrementada en proporción, (iv) la obligación del Arrendador de aplicar la indemnización del seguro a la reconstrucción de la Propiedad Arrendada estará sujeta (i’) a la obligación del Arrendatario consistente en suscribir un convenio confirmando la validez de este Contrato y ampliando el Plazo por el mismo número de días requeridos para restaurar la Propiedad Arrendada a la condición que tenía previo al siniestro, y (ii’) en la medida requerida el Arrendador obtenga la autorización de sus acreedores para dicha restauración, si hubiera, y (v) el Arrendador no estará obligado a gastar en las reparaciones una cantidad mayor a la indemnización de seguros recibida por la compañía aseguradora.

 

(c)        In the event that 50% (fifty percent) or less of the leasable area of the Building is affected because of a loss by a Force Majeure Event and Lessee may use the building for the same purpose prior to that sinister, without affecting its operations (as determined by an expert neutral appointed by the parties), this Agreement shall continue in full force and effect, as follows: (i) Lessor must correct the damage in order to restore the Leased Property, including the Building, similar to its condition before de incident such as physically and technically possible and within a period not exceeding six (6) months from the date Lessor receives the insurance compensation (ii) the Rent shall be reduced on a monthly basis in proportion to the unusable part of the Leased Property, as long as the Rent is covered by the insurance policy referred to in clause 13 of this Agreement, (iii) as repairs are made to the Leased Property, which increase the surface of the usable area, the Rent shall be increased accordingly, (iv) Lessor’s obligation to apply the insurance proceeds for the reconstruction of the Leased Property to such effect, is contingent (i’) with Lessee’s obligation of signing an agreement confirming the validity of this Agreement, and extending the Term by the same number of days required to restore the Leased Property to the condition it had prior to the casualty, (ii’) to the extent required, Lessor should have received creditor’s consent for such restoration, if any, and (v) Lessor shall not be required to spend for such work an amount in excess of the amount received as indemnity by the insurance company.

 

 

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(d)        En caso que el 50% (cincuenta por ciento) o más de la superficie arrendable del Edificio sea afectada a causa de un siniestro por Caso de Fuerza Mayor y el Arrendatario ya no pueda utilizar el Edificio para los mismos fines previos a dicho siniestro por la afectación a sus operaciones según sea determinado por un perito neutral designado por las partes, (a) cualquiera de las partes podrá notificar por escrito a la otra parte la terminación del presente Contrato y este Contrato terminará sin necesidad de resolución judicial a partir de la fecha en que la otra parte reciba dicha notificación, sin que ninguna de las partes pueda exigir el pago de Daños y Perjuicios con motivo de dicha terminación, o (b) el Arrendatario podrá solicitar por escrito al Arrendador la reconstrucción del Edificio, en cuyo caso aplicarán las reglas establecidas en esta cláusula 11.3, inciso (c), sub-incisos (i), (ii), (iii), (iv) y (v).

 

(d)        If 50% (fifty percent) or more of the leasable area of the Building is affected because of a loss by a Force Majeure Event and Lessee cannot use the Building for the same purpose prior to that sinister, as determined by an expert designated by both parties, (a) any of the parties may written notify to its counterpart the termination of this Agreement, with no further requirements for a judicial resolution, as of the date of in which the counterpart receives such notification, without having the right to require the payment of Damages as a result of such termination, or (b) Lessee may request in writing to the Lessor the reconstruction of the Building, in which case the rules set out in this clause 11.3, sections (c), sub-sections (i), (ii), (iii), (iv) and (v) shall apply.

 

11.4       Valor de Reposición. El valor de reposición de cualquier daño o destrucción causados por algún siniestro deberá ser determinados de buena fe por el perito que haya sido designado por ambas partes para este Contrato y en coordinación con la compañía de seguros.

 

11.4       Replacement Value. The replacement value of any damage or destruction shall be determined in good faith by an expert appointed by both parties to this Agreement and in coordination with the insurance company.

 

11.5       Pago de Daños al Arrendador. Cualquier cantidad pagadera al Arrendador por daños causados a la Propiedad Arrendada deberá ser reducida de cualquier cantidad pagada al Arrendador por la compañía de seguros.

 

11.5       Payment of Damages to Lessor. Any amounts payable to Lessor for damages caused to the Leased Property shall be reduced by the amount recovered by Lessor from the insurance company.

 

Cláusula 12. RESERVADA.

 

Clause 12. RESERVED.

 

Cláusula 13. Seguros.

 

Clause 13. Insurance.

 

13.1       Las Coberturas. El Arrendatario deberá obtener y mantener en pleno vigor pólizas de seguros que cubran la Propiedad Arrendada del tipo y por las cantidades que se señalan más adelante; en el entendido que, el Arrendatario deberá comprobar al Arrendador todo pago hecho a la(s) compañía(s) de seguros por primas, deducibles y coaseguros en un plazo que no excederá 5 (cinco) días hábiles contados a partir de la fecha en que el Arrendador se lo solicite al Arrendatario.

 

13.1       Coverages. Lessee shall obtain and maintain in force, insurance policies covering the Leased Property of the type and in the amounts referred to hereinafter; provided that Lessee shall prove Lessor for the payment of any premium, deductible and co-insurance to the insurance company within a period not exceeding five (5) working days from the date Lessor requests such information from Lessee.

 

 

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(a)        Seguro que cubra cualquier pérdida o daño de la Propiedad Arrendada incendios, relámpagos, explosiones, inundaciones, huracanes y granizo, aviones, vehículos y humo, terremoto o erupciones volcánicas, huelgas, manifestaciones y vandalismo, incluyendo las cimentaciones, la remoción de escombro y cualesquier otros siniestros que actualmente o más adelante sean cubiertos dentro de la póliza denominada en México como “Cobertura Amplia”, por cantidades suficientes para evitar que el Arrendador se convierta en coasegurado conforme a los términos de las pólizas aplicables, pero en cualquier caso y en todo momento, por cantidades no menores al 100% (cien por ciento) del “valor total asegurable” del Edificio, el cual para efectos de este Contrato será considerado como el costo de reposición del Edificio, equivalente al monto que las partes acuerden por separado dentro de los 30 (treinta) días naturales contados a partir de la fecha de firma del presente instrumento, y dicha cantidad deberá ajustarse anualmente de tal forma que en todo momento represente la totalidad del costo de reposición del Edificio.

 

(a)        Insurance that covers any loss or damage to the Leased Property caused by fire, lightning, explosion, flooding, hurricanes and hail, airplanes, vehicles and smoke, earthquakes or volcanic eruptions, strikes, riots and vandalism, including the foundations, the rubbish removal and any other risks now or hereinafter embraced by the so-called “Extended Coverage” in Mexico, in amounts sufficient to prevent the Lessor or the Lessee from becoming a co-insurer under the terms of the applicable policies, but in any case and at all times, in amounts not less than 100% (one hundred percent) of the “full insurable value” of the Building, which for purposes hereof shall be considered as the replacement cost of the Building equal to such amount that the parties agree on separately within the next 30 (thirty) calendar days from the date hereof, and such amount shall be annually adjusted in such form that represents at all time the total replacement cost of the Building.

 

(b)        Seguro General de Responsabilidad Civil que cubra reclamaciones por lesiones a personas, muerte o daño a propiedad que sucedan en o en los límites de la Propiedad Arrendada por la cantidad mínima que las partes acuerden por separado dentro de los 30 (treinta) días naturales contados a partir de la fecha de firma del presente instrumento, en caso de lesiones o muerte, y por la cantidad mínima que las partes acuerden por separado dentro de los 30 (treinta) días naturales contados a partir de la fecha de firma del presente instrumento, en caso de daño en propiedad.

 

(b)        General Public Liability Insurance, which covers claims for injury to persons or death or property damage that occur in or on the boundaries of the Leased Property for up to that minimum amount that the parties agree on separately within the next 30 (thirty) calendar days from the date hereof for injury or death events, and for that minimum amount that the parties agree on separately within the next 30 (thirty) calendar days from the date hereof for damage to the property.

 

 

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(c) Seguro por daños o pérdidas por el mal funcionamiento de los calentadores (o compresores) o por la explosión interna de los calentadores de alta presión (o compresores) instalados en el Edificio, que forma parte de la Propiedad Arrendada, por las cantidades que el Arrendador ocasional y razonablemente requiera. (c) Insurance against loss or damage caused by malfunction of a boiler (or compressor) or for the internal explosion of a high-pressure boiler (or compressor) installed in the Building, which is part of the Leased Property, in such amounts as the Lessor from time to time reasonably requires.

 

13.2       Reglas Comunes a los Seguros. Las partes se someten a las siguientes reglas en materia de seguros:

 

 

13.2       Common Rules for Insurance. The parties submit to the following insurance rules:

 

(a)        Las pólizas de seguro deberán obtenerse y acreditarse conforme a pólizas de seguro válidas y vigentes, emitidas por aseguradoras autorizadas para operar en México y razonablemente aceptables para el Arrendador.

 

(a)        Any the insurance provided in this clause shall be obtained and evidenced under valid and enforceable policies issued by insurers authorized to do business in Mexico and reasonably acceptable to Lessor.

 

(b)        Todas las pólizas de seguro citadas en esta Cláusula deberán designar al Arrendador como asegurado y/o beneficiario preferente en primer lugar, y el Arrendatario como asegurado adicional o beneficiario preferente en segundo lugar; siendo en cada caso cubiertos sus intereses en la medida del interés asegurable de cada una de las partes.

 

(b)        All insurance policies provided in this clause shall designate the Lessor as insured or beneficiary in first place and Lessee as additional insured or beneficiary in second place limited; in each case, as their interests may appear and to the extent of said party insurable interest.

 

(c)        Las pólizas de seguro deberán contener cláusulas estándares de hipoteca en favor de los acreedores hipotecarios.

 

(c)        Insurance policies should contain standard clauses regarding mortgage in favor of mortgagees.

 

(d)        Cada póliza de seguro deberá incluir (i) un compromiso de la compañía de seguros previendo que dicha póliza no será cancelada sin previo aviso al Arrendador con al menos 30 (treinta) días naturales de anticipación, (ii) que cualquier pérdida pagadera al Arrendador será totalmente pagada, no obstante que el Arrendador haya actuado de manera negligente o dolosa y que como resultado de dicha conducta se cancele total o parcialmente la póliza respectiva, y (iii) una renuncia a ejercer el derecho de subrogación por parte de la compañía de seguros, en favor del Arrendador.

 

(d)        Each insurance certificate shall contain (i) an agreement made by the insurance company, stating that such policy shall not be canceled without at least 30 (thirty) calendar days’ prior notice to the Lessor, (ii) any loss payable to the Lessor will be fully paid, even though Lessor has acted negligently or intentionally and as a result of such conduct the respective policy is canceled in whole or in part, and (iii) a waiver to exercise the right of subrogation by the insurance company, in favor of the Lessor.

 

 

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(e)        En caso de siniestro en la Propiedad Arrendada, que resulte en daños o destrucción al Edificio, el Arrendatario inmediatamente deberá notificar por escrito al Arrendador e inmediatamente iniciar con el procedimiento de ajuste de daños.

 

(e)        In case of casualty to the Leased Property, which results in damage or destruction to the Building, Lessee shall immediately give written notice to the Lessor and immediately begin damage adjustment proceedings.

 

(f) La suma de la indemnización del seguro, que se pagará como resultado por dicho daño o destrucción se pagará como se establece en el presente a fin de restaurar, reparar, reconstruir o remplazar la Propiedad Arrendada, en la medida de lo posible, a su valor, condición y característica original, inmediatamente antes de los daños o destrucción.

(f)        The sum of the insurance moneys that are to be paid as a result of such damage or destruction shall be paid as set forth herein for the purpose of restoring, replacing, rebuilding or repairing the Leased Property as nearly as possible to its original value, condition and character, existing immediately prior to such damage or destruction.

 

Cláusula 14. Enajenación, Cesión y Subarrendamiento.

 

Clause 14. Transfers, Assignment and Subleasing.

 

14.1       Enajenación, Cargas y Gravámenes. La Arrendadora se reserva la facultad de enajenar, cargar y/o gravar la Propiedad Arrendada a (a) los Sres. Jesús Salvador Gil Benavides, Alejandro Gil Benavides y Salvador Gil Benavides, (b) Filiales, o (c) después de un periodo de 5 (cinco) años, a terceros con el consentimiento del Arrendatario, el cual no deberá ser negado sin razón (en el entendido que transmisiones de propiedad a competidores y sus filiales, cuyo negocio principal es la manufactura de carros de tren y partes para los mismos, deberá considerarse razón suficiente para negar dicho consentimiento).

 

En todos los casos, el Arrendador notificará por escrito a la Arrendataria con 30 (treinta) días naturales de anticipación a la fecha en que surtirá efectos la transacción. En los casos señalados en los incisos (a) y (b), la notificación bastará para que el Arrendador ejecute la operación. En el caso del inciso (c), dentro de ese plazo, el Arrendatario deberá otorgar su consentimiento o negarlo sustentando fundadamente las razones de su negativa.

 

En los casos en que proceda la celebración de la transacción, la Arrendadora incluirá en el documento donde se haga constar la operación una disposición que reconozca la existencia y duración del presente Contrato.

 

14.1       Transfers, Charges and Levies. Lessor reserves the right to transfer, charge and/or encumber the Leased Property to (a) Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides, (b) Affiliates, or (c) following an initial period of 5 (five) years, to third parties upon consent of Lessee, which shall not be unreasonable withheld (provided that transfer to competitors and affiliates thereof, whose primary business is the manufacture of railcars and parts thereof, shall be consider reasonable reasons for withholding such consent).

 

In all cases, Lessor shall give Lessee in writing with thirty (30) calendar days prior to the date on which it shall take effect the transaction. In those cases set forth in parentheticals (a) and (b) above, the written notice shall suffice for Lessor to enter into the transaction. In the event set forth in parenthetical (c) above, within that term, Lessee shall grant its consent or deny it properly supporting the reasons of its denial.

 

 

In those cases that the transaction takes place, Lessor shall include in the corresponding instrument documenting the transaction a provision recognizing the existence and the duration of this Agreement.

 

 

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Si lo solicita el Arrendador, el Arrendatario deberá, dentro de los 10 (diez) días hábiles siguientes a que el Arrendador se lo solicite por escrito, suscribir, reconocer y entregar al Arrendador un documento certificando que (a) una copia fiel y exacta de este Contrato se adjunta a dicho documento; (b) el presente Contrato se encuentra en pleno vigor y efecto y sin modificación alguna (o, en su caso, especificando la naturaleza de dicha modificación y adjuntando una copia de la misma); (c) la última fecha de pago de Renta realizado por el Arrendatario; (d) la ausencia de incumplimientos sin subsanar por parte del Arrendador (o, en su caso, una especificación de dichos incumplimientos, si los hubiere); y (e) cualquier otro asunto razonablemente requerido por el Arrendador, cualquier acreedor o posible acreedor del Arrendador o posible adquirente de la Propiedad Arrendada.

 

If requested by Lessor, Lessee shall, within ten (10) business days following the Lessor written request, execute, acknowledge and deliver to Lessor a document certifying that (a) a true and correct copy of this Agreement is attached to such document; (b) this Agreement is in full force and effect without amendment (or, where applicable, specifying the nature of the change and attaching a copy thereof); (c) the last date of payment of Rent by Lessee; (d) the absence of uncured defaults by Lessor (or, where appropriate, a specification of such breaches, if any); and (e) any other matter reasonably required by Lessor, any creditor or potential creditor of Lessor or potential purchaser of the Leased Property.

 

Así mismo, el Arrendatario conviene, a solicitud del Arrendador, en subordinar este Contrato en términos mutuamente aceptables para las partes a toda garantía constituida sobre la Propiedad Arrendada (o cualquier parte de la misma), y deberá celebrar un convenio de subordinación razonablemente aceptable para el Arrendador, según lo solicite por escrito cualquier acreedor o beneficiario de dicha garantía, dentro de los 15 (quince) días hábiles siguientes a dicha solicitud; en el entendido que dicho acreedor o beneficiario convenga en reconocer los derechos del Arrendatario conforme a este Contrato, así como en no interrumpir la posesión, el uso y el goce del Arrendatario respecto de la Propiedad Arrendada, en los términos del presente Contrato, sujeto a la condición consistente en que el Arrendatario esté en total cumplimiento de sus obligaciones conforme a este Contrato.

 

Lessee agrees, at the request of Lessor, to subordinate this Agreement under mutually acceptable terms to the parties to any guarantee placed upon the Leased Property (or any portion thereof), and shall execute into a subordination agreement reasonably acceptable to the Lessor, as requested in writing by any creditor or beneficiary of said guarantee, within 15 (fifteen) business days following said request; provided that such creditor or beneficiary agrees to recognize the Lessee’s rights under this Agreement and to not disturb the possession, use and enjoyment of Lessee with respect to the Leased Property, under this Agreement subject to the condition that Lessee continues to perform its obligations hereunder.

 

 

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En todo caso, las partes quedan en el entendido que, de conformidad con las Leyes, este Contrato subsistirá en pleno vigor y efecto sobre cualquier transmisión de propiedad respecto de la Propiedad Arrendada o la ejecución de cualquier gravamen, a cargo del Arrendador, sobre la misma, y cualquier incumplimiento de pago de dichos gravámenes no afectará de modo alguno los términos de este Contrato. En caso que algún acreedor o beneficiario de garantía o cualquier otra Persona adquiera la Propiedad Arrendada derivado de algún procedimiento de ejecución o de cualquier otra forma, el acreedor, beneficiario o la Persona correspondiente deberá asumir las obligaciones del Arrendador conforme al presente Contrato, como propietario de la Propiedad Arrendada y el Arrendatario conviene en reconocer al nuevo propietario de la Propiedad Arrendada.

 

In any case, the parties are in the understanding that in accordance with the Laws, this Agreement shall remain in full force and effects regarding any transfer of ownership of the Leased Property or the execution of any charge, by Lessor thereon, and any default on those charges shall not affect in any way the terms of this Agreement. If any creditor or beneficiary of a guarantee or any other Person acquires the Leased Property as a result of an enforcement proceeding or otherwise, the creditor, beneficiary or Person concerned must assume the obligations of Lessor hereunder as owner of the Leased Property and Lessee agrees to recognize the new owner of the Leased Property.

 

Las partes quedan en el entendido que los Sres. Jesús Salvador Gil Benavides, Alejandro Gil Benavides y Salvador Gil Benavides se encuentran actualmente en negociaciones con el Arrendador para adquirir el Primer Terreno y el Edificio y asumir determinadas cuentas por pagar del Arrendador con su contratista Filial Fabricación de Cubiertos, SA de CV, que ha estado construyendo partes del Edificio. En caso de que celebren un contrato de compraventa del Primer Terreno y del Edificio (a) el Contrato de Arrendamiento Gil quedará automáticamente terminado porque los arrendadores y arrendatarios de dicho contrato serán los señores Jesús Salvador Gil Benavides, Alejandro Gil Benavides y Salvador Gil Benavides, y (b) el Arrendador y los Sres. Jesús Salvador Gil Benavides, Alejandro Gil Benavides y Salvador Gil Benavides darán aviso al Arrendatario para que se apliquen las reglas establecidas en esta cláusula 14.1 para el reconocimiento de los nuevos arrendadores.

 

The parties understand that Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides currently are in negotiations with Lessor to acquire the First Plot and the Building and to assume certain accounts payable of Lessor with its Affiliate contractor Fabricación de Cubiertos, S.A de C.V, which has been building portions of the Building. In the event they enter into a purchase and sale agreement of the First Plot and the Building (a) the Gil Lease Agreement  will be automatically terminated because the lessors and the lessees under that lease will be Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides, and (b) Lessor and Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides shall give notice to Lessee so that the rules set forth in this clause 14.1 apply for the recognition of the new lessors hereof.  

 

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14.2       Cesión del Arrendador. El Arrendador se reserva el derecho de ceder, en todo o en parte, sus derechos bajo este Contrato a (a) los Sres. Jesús Salvador Gil Benavides, Alejandro Gil Benavides y Salvador Gil Benavides, (b) Filiales, o (c) después de un periodo de 5 (cinco) años, a terceros, incluyendo sin limitar fideicomisos patrimoniales, con el consentimiento del Arrendatario, el cual no deberá ser negado sin razón (en el entendido que transmisiones de propiedad a competidores y sus filiales, cuyo negocio principal es la manufactura de carros de tren y partes para los mismos, deberá considerarse razón suficiente para negar dicho consentimiento).

 

En todos los casos, el Arrendador notificará por escrito a la Arrendataria con 30 (treinta) días naturales de anticipación a la fecha en que surtirá efectos la transacción. En los casos señalados en los incisos (a) y (b), la notificación bastará para que el Arrendador ejecute la operación. En el caso del inciso (c), dentro de ese plazo, el Arrendatario deberá otorgar su consentimiento o negarlo sustentando fundadamente las razones de su negativa.

 

14.2       Assignment by Lessor. Lessor reserves the right to assign, in whole or in part, its rights under this Agreement to (a) Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides, (b) Affiliates, or (c) following an initial period of 5 (five) years, to third parties, including without limitation, estate trusts, upon consent of Lessee, which shall not be unreasonable withheld (provided that transfer to competitors and affiliates thereof, whose primary business is the manufacture of railcars and parts thereof, shall be considered reasonable reasons for withholding such consent).

 

 

In all cases, Lessor shall give Lessee in writing with thirty (30) calendar days prior to the date on which it shall take effect the transaction. In those cases set forth in parentheticals (a) and (b) above, the written notice shall suffice for Lessor to enter into the transaction. In the event set forth in parenthetical (c) above, within that term, Lessee shall grant its consent or deny it properly supporting the reasons of its denial.

 

14.3       Cesión y Subarrendamiento del Arrendatario. La Arrendataria se reserva la facultad de ceder los derechos derivados de este Contrato y/o subarrendar la Propiedad Arrendada a Filiales de la Arrendataria, bastando para ello una previa notificación por escrito a la Arrendadora con 30 (treinta) días naturales de anticipación a la fecha en que la transacción surta efectos; en el entendido que (a) la Garantía deberán permanecer en pleno vigor y efecto, (b) el Arrendatario deberá constituirse como obligado solidario de todas y cada una de las obligaciones relevantes del cesionario o subarrendatario correspondiente, como Arrendatario conforme al presente Contrato, (c) el uso de la Propiedad Arrendada deberá ser consistente con este Contrato, (d) el Arrendatario no podrá otorgar en subarrendamiento la Propiedad Arrendada o ceder sus derechos y obligaciones conforme a este Contrato, a cualquier persona, por un plazo mayor al Plazo remanente, y (e) el Arrendatario no podrá imponer al Arrendador obligación adicional alguna.

 

14.3       Assignment and Subletting by Lessee. Lessee reserves the right to assign its rights under this Agreement and/or sub-lease the Leased Property to Affiliates, with prior written notice to Lessor with thirty (30) calendar days prior to the date on which the transaction shall take effect; in the understanding that (a) the Guarantee shall remain in full force and effect, (b) Lessee shall be established as joint obligor of each and every one of the relevant obligations of the assignee or subtenant, as Lessee under this Agreement, (c) the use of the Leased Property shall be consistent with this Agreement, (d) Lessee shall not sublease the Leased Property or assign its rights and obligations under this Agreement to any person for a period greater than the remaining Term of this Agreement, and (e) Lessee may not impose additional duty to Lessor.

 

 

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El Arrendatario en este acto renuncia, de manera expresa e irrevocable, a sus derechos de subarrendar la Propiedad Arrendada o solicitar la rescisión del presente Contrato si el Arrendador se opone a que el Arrendatario otorgue en subarrendamiento la misma, previstos en el Código Civil Federal. En ese sentido, a menos que la cesión o subarrendamiento sea de los autorizados en el primer párrafo de esta cláusula 14.3, la Arrendataria no podrá ceder los derechos derivados de este contrato y/o subarrendar la Propiedad Arrendada a terceros sin el consentimiento del Arrendador otorgado por escrito. En caso que la Arrendador lo autorice, la Arrendataria se obliga a incluir en el documento donde se haga constar la transacción una disposición que reconozca la existencia y Plazo del presente Contrato.

 

Lessee hereby, expressly and irrevocably waives its right to sublease the Leased Property or request the termination of this Agreement if Lessor opposes to the sublease by Lessee established in the Federal Civil Code. In that regard, unless the assignment or sublease is authorized per the first paragraph of this clause 14.3, Lessee shall not assign the rights under this contract and/or sublease the Leased Property to third parties without the written consent of Lessor. If authorized by Lessor, Lessee shall include in the document where the transaction shall be executed, a provision recognizing the existence and the Term of this Agreement.

 

En todo caso, la Arrendadora se reserva el derecho de optar porque este Contrato se dé por terminado y firmar un nuevo contrato de arrendamiento con el cesionario o el subarrendador, según sea el caso. En esa eventualidad, el Arrendatario no tendrá obligación futura alguna conforme a la nueva relación contractual.

In any case, Lessor reserves the right to opt for the termination of this Agreement and the execution of a new lease agreement with the assignee or subtenant, as the case may be. In that event, Lessee shall have no further obligation under the new contractual relationship.

 

   

14.4       Nulidad. La violación a lo dispuesto en esta cláusula 14, hará nulo cualquier acto ejecutado en contra de lo antes estipulado y dará derechos a la otra parte a rescindir el Contrato sin necesidad de declaración judicial al respecto, y la parte que incumpla responderá por las obligaciones a su cargo.

 

14.4 Severability. The violation of the provisions of this clause 14 shall nullify any act performed against the stipulations set forth herein and shall give rights to the other party to terminate the Agreement without any judicial resolution to that effect, and the breaching party shall be liable to fulfill its obligations.

 

Cláusula 15. Derecho de Preferencia por el Tanto.

 

Clause 15. Right of First Refusal.

 

El Arrendatario en este acto mantiene expresamente al derecho de preferencia por el tanto cuando el Arrendador enajene la Propiedad Arrendada, total o parcialmente, a tercero alguno.

 

Lessee hereby expressly retains the right of first refusal if Lessor transfers the Leased Property, in whole or in part, to a third party.

 

 

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Cláusula 16. Acceso a la Propiedad Arrendada.

 

Clause 16. Access to the Leased Property.

 

En todo momento el Arrendatario deberá permitir al Arrendador y a sus representantes autorizados el acceso a la Propiedad Arrendada, durante días y horas hábiles, a fin de inspeccionar y realizar las obras y reparaciones que sean necesarias, siempre y cuando el Arrendador entregue al Arrendatario una notificación por escrito con al menos 3 (tres) días hábiles de anticipación. El Arrendador deberá tener libre acceso a la Propiedad Arrendada, durante horas hábiles, dentro de los 6 (seis) meses previos a la Fecha de Terminación de este Contrato a fin de mostrar la Propiedad Arrendada a posibles futuros arrendatarios.

 

At all times, Lessee shall permit the Lessor and its authorized representatives access to the Leased Property during business days and hours, with the aim of inspecting and carrying out work and repairs that were necessary, provided that the Lessor has delivered to the Lessee written communication with a minimum anticipation of 3 (three) business days. The Lessor shall have the right to enter the Leased Property at any reasonable time during the usual business hours and at any time within the six (6) months prior to the Termination Date of this Agreement, with the goal of showing the Leased Property to possible future lessees.

 

El Arrendador conviene en que cada uno de dichos accesos se llevarán a cabo de manera razonable y obstruyendo en la menor medida posible las operaciones de negocio del Arrendatario. El Arrendatario tendrá el derecho de tener un representante para acompañar al Arrendador dentro de la Propiedad Arrendada. El acceso del Arrendador conforme a lo dispuesto en esta cláusula no constituirá el desalojo, ya sea total o parcial, del Arrendatario y, por lo tanto, la Renta no será disminuida mientras se realice cualquier obra, mejora, adición o reparación, ya sea por motivo de pérdida, interrupción de las operaciones de negocio del Arrendatario o por cualquier otro motivo.

 

Lessor agrees that each such entry shall be conducted in a reasonable manner and that shall be the least intrusive to Lessee’s business operations. Lessee shall have the right to have a representative accompany Lessor throughout the Leased Property. Lessor’s entry pursuant hereto shall not constitute an eviction of Lessee, in whole or in part, and the Rent shall in no way abate while any alterations, repairs, improvements or additions are being made, whether by reason of loss or interruption of Lessee’s business or otherwise.

 

Cláusula 17. Devolución de la Propiedad Arrendada.

 

Clause 17. Restitution of the Lease Property.

 

17.1       Entrega de la Propiedad Arrendada. Al vencimiento del Plazo o en la fecha de cualquier terminación anticipada (la “Fecha de Terminación”), según sea el caso, la Arrendataria devolverá y entregará el uso y goce de la Propiedad Arrendada a la Arrendadora, sin demora alguna, y en las mismas condiciones de orden y mantenimiento en que el Arrendatario la recibió, salvo por el uso y desgaste.

 

17.1       Restitution of the Leased Property. Upon the expiration of the Term or on the date of any early termination (the “Termination Date”), as applicable, Lessee shall return and deliver the use and enjoyment of the Leased Property to the Lessor, without any delay, under the same conditions of order and maintenance Lessee received, wear and tear except.

 

 

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17.2       Inspección Previa a la Devolución y Acta Entrega - Devolución. Las partes se reunirán en el Edificio dentro de los 30 (treinta) días naturales previos a la Fecha de Terminación, o en la fecha que señale el Arrendador o el Arrendatario, según sea el caso, en caso de terminación anticipada, a fin de verificar la condición de la Propiedad Arrendada. En la Fecha de Terminación, el Arrendatario deberá entregar al Arrendador (a) la evidencia que acredite que todos los servicios de la Propiedad Arrendada han sido debidamente pagados en su totalidad, (b) el estado físico en que el Arrendatario devuelve la Propiedad Arrendada, (c) una memoria fotográfica de la Propiedad Arrendada al momento de la devolución, (d) un inventario detallado de la Propiedad Arrendada y de sus accesorios, (e) la descripción de cualquier reparación que el Arrendatario deba de hacer de la Propiedad Arrendada previa devolución de la misma conforme a lo previsto en este Contrato, (f) la forma en que se cubrirán los gastos derivados de dicha reparación, (g) aquellas obligaciones que subsistirán a la terminación de este Contrato, si hubiera alguna, (h) el monto que el Arrendador mantiene de los Depósitos en Garantía, si los hubiere, (i) la descripción de cualquier ampliación o Mejora del Arrendatario previamente autorizada conforme al presente Contrato y que, en su caso, las partes hubieren previamente acordado por escrito que se quedaran en beneficio de la Propiedad Arrendada, así como un plano de ubicación de dichas ampliaciones o Mejoras del Arrendatario y, en su caso, los manuales, verificaciones, inspecciones, mantenimientos, autorizaciones, pólizas de garantía y servicio y cualquier documento relacionado con lo anterior, y (j) las solicitudes para obtener los certificados emitidos por la Procuraduría Federal de Protección al Ambiente y la Secretaría del Medio Ambiente y Recursos Naturales, por virtud del cual se acredite la baja de las actividades u operaciones del Arrendatario a causa del cierre de sus instalaciones o por cualquier otro motivo.

 

17.2       Inspection prior to the Restitution and Delivery Certificate. The parties shall meet in the Building within 30 (thirty) calendar days prior to Termination Date or on the date specified by Lessor or Lessee, as the case may be, in case of an early termination, to verify the condition of the Leased Property. On the Termination Date, Lessee shall deliver Lessor (a) evidence that all the utility services to the Leased Property have been duly and fully paid, (b) the physical condition in which Lessee is returning the Leased Property, (c) a photographic memory of the Leased Property at the time of being returned, (d) a detailed inventory of the Leased Property and its accessories, (e) the description of any repair that Lessee must make after returning the Leased Property pursuant to that set forth in this Agreement, (f) the manner in which the expenses derived from such repairs shall be covered, (g) those obligations subsisting to the termination of this Agreement, if any, (h) the amount of the Security Deposits being held by the Lessor, if any, (i) the description of any expansion or Lessee’s Improvement previously authorized pursuant to this Agreement and that, if applicable, the parties have previously agreed to in writing to leave as a benefit to the Leased Property, as well as a location plan of such expansion or Lessee’s Improvements, and if applicable, the manuals, verifications, inspections, maintenance, authorizations, guarantees and service policies and any other document related to the above, and (j) the applications to obtain the certificates issued by the Environmental Protection Federal Department (Procuraduría Federal del Medio Ambiente) and the Ministry of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales, that proves the cancelation of Lessee's business or operations due to the closure of its facilities or for any other reason.

 

 

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Así mismo, al finalizar la inspección, el Arrendatario y el Arrendador elaborarán y firmarán un acta de devolución – recepción de la Propiedad Arrendada que contemple el estado en que se devuelve y recibe ésta. Una vez que se firme dicha acta, el Arrendador tomará plena posesión y responsabilidad de la Propiedad Arrendada.

 

Likewise, at the end of the inspection, Lessor and Lessee shall and sign a delivery certificate of the Leased Property which will contemplate the state in which the Leased Property is returned and received. Once such certificate is signed, Lessor will take full possession and responsibility of the Leased Property.

 

17.3       Mejoras y Otras Instalaciones. Las mejoras, incluyendo las Mejoras del Arrendatario y las ampliaciones del Edificio construidas por el Arrendatario, serán removidas en los términos de la cláusula 9 de mejoras del presente Contrato, salvo que el Arrendador acepte que alguna o todas se mantengan. No obstante lo anterior, si por cualquier motivo el Arrendatario abandona cualquier bien o propiedad suya en la Propiedad Arrendada después de la terminación, ya sea anticipada o programada, de este Contrato, se entenderán abandonadas a favor del Arrendador. El Arrendatario reconoce que el Arrendador no incurrirá en responsabilidad alguna frente al Arrendatario o frente a cualquier tercero, al determinar el destino de los bienes abandonados en los términos de este párrafo.

 

17.3       Modification and other Installations. The modifications, including the Lessee Improvements and extensions to the Building built by Lessee, shall be removed pursuant to clause 9 herein, unless Lessor agrees that one or all of them remain. Notwithstanding the foregoing, if for any reason whatsoever Lessee abandons any goods or property at the Leased Property after the termination, whether scheduled or anticipated, of this Agreement, shall be considered abandoned in favor of Lessor. Lessee acknowledges that the Lessor will not incur in any liability before the Lessee or any third party, in determining the destiny of the abandoned property in the terms of this paragraph.

 

A menos que las partes acuerden lo contrario, todos los letreros, inscripciones, celosías e instalaciones de naturaleza similar instalados por el Arrendatario deberán ser removidos antes de la Fecha de Terminación. Igualmente, a menos que las partes acuerden lo contrario, cualquier mobiliario, maquinaria y equipo instalado por el Arrendatario será retirado por el Arrendatario en cualquier momento o a la Fecha de Terminación debiendo el Arrendatario, a su propio costo, reparar los daños causados por la instalación o remoción de los letreros, inscripciones, celosías e instalaciones de naturaleza similar, la instalación o remoción del mobiliario, maquinaria y equipo.

 

Unless otherwise agreed by the parties, all signs, inscriptions, lattices and installations of a similar nature set up by the Lessee shall be removed before the Termination Date. Also, unless otherwise agreed by the parties, all furniture, machinery and business equipment installed by the Lessee shall be removed by Lessee at any time or at the Termination Date and Lessee shall, at its own cost, repair the damage resulting from the installation or removal of said signs, inscriptions, lattices and installations of a similar nature, the installation or removal of furniture, machinery and business equipment.

 

 

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17.4       Ocupación Indebida. Para efectos de este Contrato, las partes considerarán como ocupación indebida la falta de devolución de la Propiedad Arrendada a la Arrendadora a partir del vencimiento o de la Fecha de Terminación del presente Contrato, independientemente de la causa (la “Ocupación Indebida”).

 

17.4       Improper Occupation. For purposes of this Agreement, the parties shall consider as unlawful occupation the failure to vacate and deliver the Leased Property to Lessor at the Termination Date of this Agreement, regardless of the cause (the “Improper Occupation”).

 

 

17.5       Pena Convencional Por Ocupación Indebida. En caso de Ocupación Indebida de la Propiedad Arrendada el Arrendatario deberá (a) pagar al Arrendador mensualmente la renta vigente hasta que el Arrendatario devuelva y entregue la Propiedad Arrendada al Arrendador, con los incrementos de Renta aplicables en términos de este Contrato, y (b) pagar al Arrendador, como pena convencional, a partir de la fecha en que inicie la Ocupación Indebida, en efectivo, mensualmente, en la cuenta bancaria de pago de la Renta, una cantidad equivalente al 100% (cien por ciento) de la Renta mensual en vigor durante los meses que dure la Ocupación Indebida. La forma y lugar de pago de dicha pena convencional serán las mismas acordadas para la Renta. La aceptación de dicho pago por parte del Arrendador no implicará en forma alguna la renuncia del Arrendador a su derecho de recuperar la Propiedad Arrendada.

 

17.5 Contractual Penalty for Improper Occupation. In the event of Improper Occupation of the Leased Property Lessee shall (a) pay the Lessor each month the current Rent until Lessee returns and delivers the Leased Property to Lessor, with the applicable Rent increases agreed to in this Agreement, and (b) pay Lessor, from the day the Improper Occupation begins, as a contractual penalty, in cash, monthly, in the Rent payment bank account, an amount equal to 100% (one hundred percent) of the Rent in effect during the months that the Improper Occupation lasts. The form and place of payment of such contractual penalty shall be the same as the Rent. The receipt of such payment by Lessor shall not imply in any manner whatsoever a waiver by Lessor of any right to recover the Leased Property.

 

 

17.6       Tácita Reconducción. El Arrendatario en este acto renuncia, de manera expresa e irrevocable, a la operación de la tácita reconducción prevista en el Código Civil Federal.

 

17.6       Automatic Renewal. Lessee hereby, expressly and irrevocably, waives to the automatic renewal of the Agreement “tácita reconducción” established in the Federal Civil Code.

 

Cláusula 18. Responsabilidad General de las Partes.

 

Clause 18. General Liability of the Parties.

18.1       Cumplimiento de Ley Aplicable. Cada una de las partes se obliga a cumplir y respetar la Ley Aplicable, sea está presente o futura, que regula las actividades que pretenden realizar en los términos de este Contrato.

 

18.1       Compliance with Applicable Law. Each party agrees to observe and respect the Applicable Law, whether present or future, which regulate the activities that intend to carry out pursuant to this Agreement.

 

 

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18.2       Responsabilidad de las Partes. Cada una de las partes será responsable por cualquier Daño o Perjuicio que, con motivo de su conducta, negligente o dolosa, y/o de las actividades contempladas en este Contrato cause cualquier Persona, la Propiedad Arrendada, el material, maquinaria, equipo o herramientas localizados en la Propiedad Arrendada y a las propiedades adyacentes.

 

18.2       Liability of the parties. Each party shall be responsible for any Damage or injury as a result of their behavior, negligent or intentional, and/or activities contemplated by this Agreement caused to any Person, the Leased Property, material, machinery, equipment or tools located in the Leased Property and adjacent properties.

 

No obstante, cualquier disposición en contrario de este Contrato, la responsabilidad del Arrendador (y de cualquiera de sus causahabientes) hacia el Arrendatario estará limitada al valor de la Propiedad Arrendada. Los accionistas, socios, funcionarios, directores, representantes o empleados del Arrendador no serán responsables en ningún caso.

 

Notwithstanding any provision to the contrary in this Agreement the responsibility of Lessor (and any of his successors) to Lessee shall be limited to the value of the Leased Property. Shareholders, partners, officers, directors, representatives or employees of the Lessor shall not be liable in any case.

 

18.3       Responsabilidad de las Partes con Relación a Actos de Terceros. Cada una de las Partes asume todas las responsabilidades derivadas en sus relaciones con sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad.

 

18.3       Responsibility of the Parties with respect to acts of Third Parties. Each Party shall assume all liabilities arising in its dealings with its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility.

 

18.4       Indemnización. Cada una de las partes se obliga a no perturbar a la otra parte, a sus accionistas, socios, representantes, consejeros, funcionarios y empleados, así como a indemnizarlo y mantenerlo en paz y a salvo de cualesquiera, Daños y Perjuicios, demandas, reclamaciones, juicios, acciones, restituciones y sentencias de cualquier naturaleza, promovidas en su contra con motivo de cualesquier actos u omisiones de la contraparte, sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad.

 

18.4       Indemnity. Each party agrees not to disturb the other party, its shareholders, partners, directors, officers and employees, and to indemnify and hold harmless from any, Damages, demands, claims, suit, action, refunds and statements of any kind, promoted against by reason of any act or omission of the other party, its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility.

 

El Arrendatario en este acto conviene en utilizar la Propiedad Arrendada conforme a las Leyes y se obliga a no perturbar, a indemnizar y sacar en paz y a salvo al Arrendador de cualesquier Daños y Perjuicios, demandas, reclamaciones, juicios, acciones, restituciones y sentencias derivados de Daños Ambientales causados por el Arrendatario, sus Filiales, causahabientes, subarrendatarios, contratistas, subcontratistas, empleados, visitas, agentes, o cualquier Persona bajo su responsabilidad, durante la vigencia del presente Contrato y dentro de, o afectando a, la Propiedad Arrendada o al Arrendador.

 

Lessee hereby agrees to use the Leased Property in accordance with the Laws and agrees not to disturb and to indemnify and hold harmless from any, Damages, demands, claims, suit, action, refunds and statements of any Environmental Damage caused by Lessee, its Affiliates, successors, sub-lessees, contractors, subcontractors, employees, visitors, agents, or any Person under its responsibility, during the term of this Agreement and within or affecting the Leased Property or Lessor.

 

 

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El Arrendatario tendrá la obligación de notificar al Arrendador y mantener al Arrendador informado por escrito (a) de cualquier violación a las leyes ambientales, y (b) del desarrollo y los resultados de cualquier procedimiento judicial o administrativo en el cual el Arrendatario sea una parte relacionado con autorizaciones, permisos, verificaciones, multas, daños, pérdidas, sanciones o acciones en general relacionadas con contingencias ambientales, ya sea de carácter federal, estatal o municipal, incluyendo pero no limitado a impacto ambiental, riesgo ambiental, contaminación del aire, agua o suelo, ruido, Materiales Peligrosos, así como el uso, beneficio o descarga de aguas residuales (conjuntamente, las “Contingencias Ambientales”).

 

Lessee shall have the obligation to notify Lessor and keep Lessor informed in writing of (a) any substantial violation of the environmental laws and (b) the development and results of any judicial or administrative proceeding in which either Lessee is a party related with authorizations, permits, verifications, fines, damages, losses or general actions relating to environmental issues, whether federal, state or municipal, including, but not limited to environmental impact, air, water or soil pollution, noise, Hazardous Materials and use, benefit or discharge of sewage waters (collectively, the “Environmental Matters”).

 

Si cualquier Acción de Remediación es necesaria o conveniente con respecto de alguna Contingencia Ambiental atribuible al Arrendatario bajo este Contrato, el Arrendatario deberá tomar las Acciones de Remediación necesarias o requeridas a efecto que la Propiedad Arrendada cumpla con las leyes ambientales. El Arrendatario deberá llevar a cabo dichas Acciones de Remediación con base en el proceso propuesto por algún laboratorio ambiental de buena reputación en México, con al menos 5 (cinco) años de experiencia relevante en México, y que se encuentre debidamente acreditado por la Procuraduría Federal de Protección al Ambiente, el cual será propuesto por el Arrendatario y previamente aprobado por el Arrendador, cuya aprobación no podrá ser injustificadamente retenida o denegada. El Arrendatario deberá indemnizar, defender y sacar en paz y a salvo al Arrendador y/o a cualquier acreedor del Arrendador de cualquier Daño Ambiental surgiendo de, o en relación con, cualquier Contingencia Ambiental.

 

If any Remedial Action is necessary or appropriate with respect to any Environmental Matters for which Lessee is responsible under this Agreement, Lessee undertakes all such Remedial Actions to have the Leased Property to comply with the environmental laws. Lessee shall develop said Remedial Actions based on the process proposed by a reputable environmental laboratory in Mexico and dully certified by the Federal Bureau for Environmental Protection (Procuraduría Federal de Protección al Ambiente), with at least 5 (five) years of relevant experience in Mexico, which environmental laboratory shall be proposed by Lessee and previously approved by Lessor, which approval shall not be unreasonably denied or withheld. Lessee shall indemnify, defend and hold harmless Lessor and/or any Lessor creditor from any Environmental Damages for, arising out of, or in connection with, any Environmental Matter.

 

 

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Cláusula 19. Responsabilidad Laboral de las Partes.

 

Clause 19. Labor Responsibility of the Parties

 

19.1       Responsabilidad Laboral. Cada una de las partes asumirá la responsabilidad laboral sobre el personal que asigne a la realización de sus obligaciones, conforme a este Contrato, y conviene en cumplir estrictamente con sus respectivas obligaciones como patrón respecto de dicho personal, de conformidad con la Ley Federal del Trabajo, la Ley del Instituto Mexicano del Seguro Social, la Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores y todos los reglamentos y disposiciones de orden laboral aplicables. Cada una de las Partes deberá mantener en el sitio de la construcción copia de los documentos que demuestren el cumplimiento de sus obligaciones pactadas en esta cláusula.

 

19.1        Labor Responsibility. Each party shall assume its labor responsibility over its personnel assigned to carry out its obligations under this Agreement and agrees to comply strictly with its obligations as employer with respect to such personnel in accordance with the Federal Labor Law, the Mexican Social Security Institute Law Institute of the National Housing Fund for Workers Law and all applicable rules and regulations of labor order applicable. Each Party shall keep in the construction site copy of the documents proving the fulfillment of its obligations agreed in this clause.

 

19.2       Indemnización Laboral. El Arrendador conviene en indemnizar y en sacar al Arrendatario en paz y a salvo en caso de cualquier demanda laboral que interponga cualquier trabajador o empleado del Arrendador, así como de cualquier reclamación presentada por el Instituto Mexicano del Seguro Social o el Instituto del Fondo Nacional de la Vivienda para los Trabajadores, por omisión del Arrendador en el pago de las cuotas respectivas. Por su parte, el Arrendatario conviene en indemnizar y en sacar al Arrendador en paz y a salvo en caso de cualquier demanda laboral que interponga cualquier trabajador o empleado del Arrendatario, así como de cualquier reclamación presentada por el Instituto Mexicano del Seguro Social o el Fondo Nacional de la Vivienda para los Trabajadores, por omisión del Arrendatario en el pago de las cuotas respectivas.

 

19.2       Labor Indemnity. Lessor agrees to indemnify and hold Lessee harmless in case of any labor demand claimed by any worker or employee of Lessor, and any complaint by the Mexican Social Security Institute or the Institute of National Fund Workers' Housing, arising from a default of Lessor in the payment of the respective fees. For its part, Lessee agrees to indemnify and hold Lessor harmless in case of any labor demand claimed any worker or employee of Lessee, as well as any complaint by the Mexican Social Security Institute or the National Fund Housing for Workers, arising from a default of Lessee in the payment of the respective fees.

 

 

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Cláusula 20. Garantía.

 

Clause 20. Guarantee.

 

20.1       Fianza Solidaria. Simultáneamente con la firma del presente Contrato, el Arrendador, el Arrendatario y el Garante firmarán la Garantía en los términos del contrato que se adjunta a este instrumento como Anexo “D”. Dicha Garantía deberá ser exigible hasta la Fecha de Terminación.

 

20.1       Guarantee. Simultaneously with the execution of this Agreement, Lessor, Lessee and Guarantor shall sign the Guaranty attached hereto as Exhibit “D”. This guarantee shall be enforceable up to the Termination Date.

 

20.2       Estados Financieros. A petición razonable por escrito del Arrendador, especialmente cuando se lo requiera al Arrendador alguna institución financiera mexicana o del extranjero, el Arrendatario deberá entregar al Arrendador una copia de los estados financieros auditados del Arrendatario y del Garante, correspondientes al año inmediato anterior.

 

20.2       Financial Statements. At Lessor’s reasonable request in writing, especially when required to Lessor by any Mexican or foreign financial institution, Lessee shall deliver to Lessor a copy of the audited financial statements of Lessee and Guarantor, corresponding to the preceding year.

 

 

Cláusula 21. Incumplimiento de las Partes.

 

Clause 21. Events of Default.

21.1       Incumplimiento del Arrendador. En caso que el Arrendador incumpla la Ley Aplicable o las obligaciones pactadas en el texto del Contrato, el Arrendatario podrá (a) demandar el cumplimiento forzoso de las obligaciones y el pago de Daños y Perjuicios o de la pena convencional pactada, si la hubiere, o (b) rescindir el presente Contrato y exigir el pago de Daños y Perjuicios o de la pena convencional pactada, si la hubiere; a menos que el Arrendador subsane el incumplimiento en un término de 30 (treinta) días naturales contados a partir de la notificación del incumplimiento por parte del Arrendatario. En caso que el Arrendador no subsane el incumplimiento, la rescisión operará de pleno derecho sin necesidad de declaración judicial.

 

21.1       Defaults by Lessor. If Lessor fails to comply with Applicable Law or the obligations agreed to herein, Lessee may (a) claim the enforceability of the obligations and payment of Damages, or the agreed contractual penalty, if any or (b) early terminate this Agreement and require payment of Damages or the agreed contractual penalty, if any; unless Lessor cures the breach within a term of 30 (thirty) calendar days following the notification of breach by Lessee. If Lessor does not cure the default, the termination will operate with no further requirements and no need of a judicial resolution.

 

Las partes acuerdan que, para efectos de este Contrato, se consideran como causales de rescisión a favor del Arrendatario, entre otras, las siguientes: The parties agree that for purposes of this Agreement, the following are considered events of default in favor of Lessee, among others:

 

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(a)        La insolvencia del Arrendador o si realiza algún acto en fraude de acreedores o realiza alguna cesión para el beneficio de acreedores o admite por escrito su incapacidad de hacer frente a sus obligaciones vencidas, incluyendo pero no limitado a lo siguiente: que el Arrendador incumpla generalizadamente con el pago de sus obligaciones, conforme al Artículo 9 de la Ley de Concursos Mercantiles y su equivalente de la Legislación Aplicable de los Estados Unidos de América, o admita expresamente su inhabilidad para liquidar la mayoría de sus deudas en lo general; o lleve a cabo una cesión en beneficio de acreedores, o el Arrendador sea declarado en concurso mercantil o suspensión de pagos, entre en estado liquidación o disolución, o que pretenda una orden de suspensión o designación de un síndico, fiduciario, o cualquier otro funcionario interventor del Arrendador o de cualquier parte substancial de sus activos; o el Arrendador, a través de su asamblea de accionistas o consejo de administración o de cualquier otra forma, resuelva mediante los actos corporativos necesarios autorizar cualquiera de los eventos que se describen en este párrafo (a); o cualquier autoridad competente declare una moratoria o suspensión de pagos, por cualquier causa, de las deudas del Arrendador.

 

(a)        If Lessor becomes insolvent, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due or admits in writing its inability to meet its overdue obligations, including but not limited to the following: Lessor’s general failure to pay its obligations, as defined in Article 9 of the Commercial Reorganization and Bankruptcy Law or its equivalent under Applicable Law in the United States of America, or expressly admits its inability to pay its debts in general, or makes an assignment for the benefit of its creditors; or the Lessor is declared in bankruptcy, commercial insolvency, liquidation or dissolution, or that it requests an order of suspension or designation of a trustee, fiduciary or any other intervening officer of the Lessor or any substantial part of its property; or the Lessor, through its shareholders meeting or board of directors or in any other manner, resolves through the necessary corporate acts, to authorize any of the events described in this paragraph (a); or any competent authority declares a stay or payment stop, for any reason, of the Lessor’s debts.

 

(b) En caso que el Contrato de Arrendamiento Gil sea terminado antes del Plazo resultando en una perturbación o daño para el Arrendatario o la imposibilidad de continuar con este Contrato en sus términos. En este caso el Arrendador se compromete a pagar al Arrendatario los daños correspondientes y aplicables, además de todos los demás derechos bajo este Contrato o la Ley Aplicable.

(b)        In the event that the Gil Lease Agreement is terminated before the Term resulting in any disturbance or damage to Lessee, or the impossibility to continue this Agreement in its terms. In this case Lessor hereby agrees to pay to Lessee the corresponding and applicable liquidated damages, in addition to all other rights and remedies under this Agreement or Applicable Law.

 

(c)        Si el Arrendatario no logra construir la espuela para conectar la Propiedad Arrendada a las líneas de ferrocarril y no ha recibido todos los permisos necesarios para esos efectos dentro de un plazo de 12 (doce) meses contados a partir de la fecha de este instrumento.

 

(c)        If Lessor fails to build the spur to connect the Leased Property to the railroad lines and receive all necessary permits related thereto within 12 (twelve) months of the date hereof.

 

21.2       Incumplimiento del Arrendatario. En caso que el Arrendatario incumpla la Ley Aplicable o las obligaciones pactadas en el texto del Contrato, el Arrendador podrá (a) demandar el cumplimiento forzoso de las obligaciones y el pago de la pena convencional pactada, si la hubiere, o (b) rescindir el presente Contrato y exigir la pena convencional pactada; a menos que el Arrendatario subsane el incumplimiento en un término de 90 (noventa) días naturales contados a partir de la notificación del incumplimiento por parte del Arrendador. En caso que no se subsane el incumplimiento, la rescisión operará de pleno derecho sin necesidad de declaración judicial.

 

21.2       Defaults by Lessee. If Lessee fails to comply with Applicable Law or the obligations agreed to herein, Lessor may (a) claim the enforceability of the obligations and payment of the agreed contractual penalty, if any, or (b) early terminate this Agreement and require payment of the agreed contractual penalty; unless Lessee cures the breach within a term of 90 (ninety) calendar days following the notification of breach by Lessor. If Lessee does not cure the default, the termination will operate with no further requirements and no need of a judicial resolution.

 

 

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Las partes acuerdan que, para efectos de este Contrato, se consideran como causales de rescisión a favor del Arrendador, entre otras, las siguientes:

 

The parties agree that for purposes of this Agreement, the following are considered events of default in favor of Lessor, among others:

 

(a)        Si el Arrendatario no cubre al Arrendador, total o parcialmente, algún adeudo, incluyendo sin limitar la Renta, dentro de los treinta (30) días naturales siguientes a su fecha de vencimiento.

 

(a)        If Lessee fails to pay Lessor, in whole or in part, any debt, including without limitation the Rent, within thirty (30) calendar days following the due date.

 

(b)        La insolvencia del Arrendatario y/o del Garante o si realiza algún acto en fraude de acreedores o realiza alguna cesión para el beneficio de acreedores o admite por escrito su incapacidad de hacer frente a sus obligaciones vencidas, incluyendo sin limitar lo siguiente: que el Arrendatario o el Garante incumplan generalizadamente con el pago de sus obligaciones, conforme al Artículo 9 de la Ley de Concursos Mercantiles o su equivalente de la Legislación Aplicable de los Estados Unidos de América, o admita expresamente su inhabilidad para liquidar la mayoría de sus deudas en lo general; o lleve a cabo una cesión en beneficio de acreedores, o el Arrendatario o el Garante sea declarado en concurso mercantil o suspensión de pagos, entre en estado liquidación o disolución, o que pretenda una orden de suspensión o designación de un síndico, fiduciario, o cualquier otro funcionario interventor del Arrendatario, del Garante o de cualquier parte substancial de sus activos; o el Arrendatario o el Garante, a través de su asamblea de accionistas o consejo de administración o de cualquier otra forma, resuelva mediante los actos corporativos necesarios autorizar cualquiera de los eventos que se describen en este párrafo (b); o cualquier autoridad competente declare una moratoria o suspensión de pagos, por cualquier causa, de las deudas del Arrendatario o del Garante.

 

(b)        If Lessee and/or the Guarantor becomes insolvent, makes a transfer in fraud of creditors or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts when due or admits in writing its inability to meet its overdue obligations, including but not limited to the following: Lessee’s or Guarantor’s general failure to pay its obligations, as defined in Article 9 of the Commercial Reorganization and Bankruptcy Law or its equivalent under Applicable Law in the United States of America, or expressly admits its inability to pay its debts in general, or makes an assignment for the benefit of its creditors; or the Lessee or Guarantor is declared in bankruptcy, commercial insolvency, liquidation or dissolution, or that it requests an order of suspension or designation of a trustee, fiduciary or any other intervening officer of the Lessee, Guarantor or any substantial part of its property; or the Lessee or Guarantor, through its shareholders meeting or board of directors or in any other manner, resolves through the necessary corporate acts, to authorize any of the events described in this paragraph (b); or any competent authority declares a stay or payment stop, for any reason, of the Lessee’s or Guarantor’s debts.

 

 

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(c)        La pérdida de la posesión a causa de algún proceso o disposición al amparo de las Leyes, en cuyo caso el Arrendatario inmediatamente deberá devolver al Arrendador la Propiedad Arrendada.

 

(c)        The loss of the Leased Property’s possession arising out of a process or provision contemplated in the Laws, in which case Lessee shall immediately return to Lessor the Leased Property.

 

(d)        Si el Arrendatario desocupa o abandona la Propiedad Arrendada por más de 3 (tres) meses, sin el previo consentimiento del Arrendador, independientemente de que continúe pagando la Renta y cumpla con el resto de sus obligaciones.

 

(d)        If Lessee vacates or abandons the Leased Property for more than 3 (three) months, without the prior written consent of Lessor, regardless of whether it continues to pay the Rent and complies with the rest of its obligations.

 

(e) Si el Arrendatario subarrienda la Propiedad Arrendada a terceros sin la autorización previa y por escrito del Arrendador. (e) If Lessee subleases the Leased Property to third parties, without the prior written consent of Lessor.
   

Salvo por lo expresamente dispuesto en este Contrato, la reposición o el reingreso de la totalidad o cualquier parte de la Propiedad Arrendada no liberará al Arrendatario de sus responsabilidades y obligaciones al amparo de este Contrato.

 

Except as expressly provided in this Agreement, replacement or reinstatement of all or any part of the Leased Property shall not relieve Lessee of their responsibilities and obligations under this Agreement.

 

La omisión o demora del Arrendador en el ejercicio de cualquiera de sus derechos y recursos conforme a este Contrato de ninguna manera deberá interpretarse como una renuncia de los mismos. Así mismo, el ejercicio único o parcial del Arrendador o del Arrendatario, según sea aplicable, de cualquiera de sus derechos y recursos conforme a este Contrato no impedirá el ejercicio futuro de los mismos o el ejercicio de cualquier otro derecho o recurso.

 

The failure or delay by Lessor or Lessee, as applicable, in exercising any of its rights and remedies under this Agreement in no way shall be construed as a waiver thereof. Likewise, the single or partial exercise of Lessor or Lessee, as applicable, of any of its rights and remedies under this Agreement shall preclude the future exercise thereof or the exercise of any other right or remedy.

 

21.3        Pena Convencional en Caso de Rescisión. En caso de incumplimiento del Arrendatario y dicho incumplimiento no ha sido subsanado en el plazo concedido en el primer párrafo de la cláusula 21.2, además del derecho del Arrendador a rescindir el presente Contrato, el Arrendatario pagará como pena convencional al Arrendador, en la fecha de la rescisión, en la cuenta bancaria de pago de la Renta, una cantidad equivalente al (a) 100% (cien por ciento) de la Renta mensual en vigor multiplicada por el número de meses remanentes del Plazo, si los Contratos terminan durante los primeros 10 (diez) años del Plazo, y (b) 80% (ochenta por ciento) de la Renta mensual en vigor multiplicado por el número de meses restantes del Plazo, si los Contratos terminan durante los segundos 10 (diez) años del Plazo.

 

21.3       Contractual Penalty in Case of Termination. In the event that Lessee breaches this Agreement and such breach remains uncured after the period granted to cure such breach set forth in the first paragraph of clause 21.2, besides the right of Lessor to terminate this Agreement, then Lessee shall pay as a contractual penalty to Lessor, on the date of the termination, at the bank account set forth as the place of payment of the Rent, an amount equivalent to (a) 100% (one hundred percent) of the monthly current Rent multiplied by the number of remaining months of the Term, if the Agreements terminates during the first 10 (ten) years of the Term, and (b) 80% (eighty percent) of the monthly current Rent multiplied by the number of remaining months of the Term, if the Agreements terminates during the second 10 (ten) years of the Term.

 

 

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21.4        Posesión en caso de Abandono. Las partes convienen que el hecho de que el Arrendatario abandone la Propiedad Arrendada, conforme a lo pactado en la cláusula 21.2(d), autorizará al Arrendador para que de inmediato y sin necesidad de declaración judicial alguna, tome posesión de la Propiedad Arrendada, con el propósito de evitar deterioro y daños al mismo; así como un perjuicio mayor al Arrendador al quedar la Propiedad Arrendada abandonada y susceptible de ser poseída por cualquier persona sin título legítimo para dicho fin.

 

21.4        Possession in Case of Abandonment. The parties agree that the fact that the Lessee abandons the Leased Property, in terms of clause 21.2(d), shall authorize the Lessor to immediately take possession of the same, without any judicial declaration, in order to avoid damages to the same; as well as to avoid future damages to the Lessor for having the Leased Property abandoned and in conditions of being possessed by any third party without right to do so.

 

Queda convenido que la toma de posesión de la Propiedad Arrendada conforme a lo aquí previsto no relevará al Arrendatario de sus respectivas responsabilidades derivadas de cualquier daño causado a la Propiedad Arrendada hasta la fecha en que el Arrendador tome posesión de la Propiedad Arrendada, pero si respecto de daños causados con posterioridad a la fecha en que el Arrendador hubiere tomado la posesión de la Propiedad Arrendada. Para tales efectos, queda convenido que el Arrendador deberá solicitar la presencia de un fedatario público que haga constar en un instrumento público, el estado en que se encuentra la Propiedad Arrendada al momento en que el Arrendador toma posesión del mismo y un inventario de los bienes existentes dentro de la Propiedad Arrendada en esa fecha. Igualmente, los gastos incurridos por el Arrendador al tomar la posesión de la Propiedad Arrendada en los términos establecidos en esta cláusula 21.4, correrán a cargo del Arrendatario, quien deberá reembolsar dichos costos y gastos al Arrendador dentro de los tres (3) días siguientes a la fecha en que el Arrendatario reciba los comprobantes correspondientes de pago. Las partes reconocen que la obligación de reembolso al Arrendador aquí contenida, se encuentra garantizada también por el Depósito de Garantía.

 

It is hereby agreed that the possession of the Leased Property as set forth herein shall not release the Lessee from its responsibility for any damages suffered by the Leased Property until the date in which the Lessor takes possession of the same, but will do so from those damages caused after such date. To that end, the parties agree that the Lessor must request the presence of a notary public to evidence the state in which the Leased Property are at that time, and to make an inventory of any goods existing within it at such date. Likewise, the expenses incurred by the Lessor in taking possession of the Leased Property in the terms set forth in this clause 21.4 shall be borne by the Lessee, who shall reimburse all such costs and expenses to the Lessor within the three (3) days following the date in which Lessee receives the corresponding proofs of payment. The parties acknowledge that the obligation to reimburse the Lessor contained herein is also covered by the Security Deposit.

 

 

 

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La toma de posesión de la Propiedad Arrendada por parte del Arrendador conforme a esta cláusula, no liberará al Arrendatario de sus responsabilidades ni de aquellas derivadas del incumplimiento de sus demás obligaciones conforme a este Contrato.

 

The possession of the Leased Property by the Lessor pursuant to this clause, shall not release Lessee from its responsibilities and from those arising out of any breach to its obligations hereunder.

 

Para efectos de esta cláusula se entenderá que la Propiedad Arrendada ha sido “abandonada” cuando no haya presencia física de empleados, contratistas, representantes (incluyendo personal de seguridad) o persona alguna que dependa o tenga cualquier tipo de relación contractual o laboral con el Arrendatario dentro de la Propiedad Arrendada por un periodo mayor a 3 (tres) meses. La Propiedad Arrendada se considerará como “abandonada” aunque el Arrendatario continúe pagando la Renta.

 

For the purposes of this clause, the Leased Property shall be considered as “abandoned” when there is no physical presence of employees, contractors, representatives (including security personnel) or any other person depending or having any type of contractual or labor relationship with the Lessee within the Leased Property for a term exceeding 3 (three) months. The Leased Property shall not be considered “abandoned” even if Lessee continues paying the Rent.

 

Cláusula 22. Obligaciones Ambientales.

 

Clause 22. Environmental Obligations.

22.1       Obligaciones Ambientales del Arrendatario. El Arrendatario, a su costa, se obliga a, y garantiza que, durante el Plazo la Propiedad Arrendada será mantenida y las operaciones del Arrendatario en la Propiedad Arrendada serán conducidas de acuerdo a la Legislación Ambiental aplicable al Arrendatario, que el Arrendatario, dentro de los límites permitidos por la Ley Aplicable, no procesará, combinará, de ninguna forma utilizará, almacenará, desechará, derramará, reciclará, introducirá ni permitirá que se introduzca a la Propiedad Arrendada ningún Material Peligroso o considerado como contaminante por la Legislación Ambiental.

 

22.1 Lessee´s Environmental Obligations. Lessee covenants and agrees that, at its own cost, that throughout the Term the Leased Property will be maintained and Lessee’s operation will be conducted in accordance with the Environmental Law applicable to the Lessee, that Lessee, within the limits permitted by the Applicable Law will not process, combine, in any manner use, keep, dispose, spill, recycle or introduce or allow to be introduced at the Leased Property, any Hazardous Materials or any material considered as contaminant by the Environmental Law.

 

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El almacenamiento temporal o permanente de Materiales Peligrosos utilizados en la operación ordinaria del Arrendatario o mantenimiento o limpieza de la Propiedad Arrendada, no implicarán un incumplimiento del Arrendatario conforme a esta cláusula 22.1, siempre y cuando, dichas sustancias sean manejadas con el cuidado debido y se encuentren en volúmenes acordes para su uso, en términos de la Legislación Ambiental.

 

The use or temporary or permanent storage of Hazardous Materials in the ordinary operations of the Lessee, or for maintenance and cleaning of the Leased Property, will not imply a breach by Lessee to this clause 22.1, as long as, such substances are being managed with the due care and in reasonable volumes for their intended use and in accordance with the Environmental Law.

En caso de así requerirlo la Ley Aplicable al negocio o industria del Arrendatario a ser instalado en la Propiedad Arrendada, éste realizará a su cargo todos y cada uno de los estudios de riesgo ambiental, impacto ambiental, reportes previos, reportes continuos, permisos para emisiones al ambiente de cualquier tipo, como generador de residuos y aquellos otros que de conformidad con la Legislación Ambiental se requieran, y deberá entregar al Arrendador copias de dichos documentos dentro de los 10 (diez) días naturales siguientes al requerimiento escrito del Arrendador.

 

In case it is required by the Applicable Law to the business or industry of the Lessee to be conducted in the Leased Property, the Lessee will perform at its expense each and all of the studies of environmental risk and environmental impact, previous or continuous reports, permits for emissions to the environment, as generator of residues, and those others required pursuant to the Environmental Law, and must deliver to Lessor copies of all of said studies within the ten (10) calendar days following the written request of the Lessor.

 

Asimismo, el Arrendatario se obliga a contratar por su cuenta y riesgo, los servicios de disposición de desechos peligrosos que su negocio o industria requiera, debiendo entregar al Arrendador, previa solicitud por escrito de este último, evidencia de que los desechos peligrosos según dicho término se definen en la Legislación Ambiental han sido dispuestos en términos de la Legislación Ambiental.

Likewise, the Lessee hereby agrees to hire and maintain, at its own cost and expense, collection services for hazardous waste that its business or industry requires, having to deliver to Lessor, upon written request by the latter, evidence that hazardous wastes, as they are defined in Environmental Law, have been disposed according to the Environmental Law.

 

El Arrendatario, a su costa, se obliga a entregar al Arrendador dentro de los 30 (treinta) días naturales siguientes a la fecha de terminación, ya sea anticipada o programada, del presente Contrato un estudio ambiental denominado Environmental Site Assessment pase 1, elaborado con base en la norma ASTM E 1527 – 13 en su última edición, emitido por un auditor ambiental independiente, que refleje que durante el Plazo el Arrendatario dio cumplimiento a sus obligaciones derivadas de la Legislación Ambiental, permitiendo en su caso el Arrendador al Arrendatario el acceso a la Propiedad Arrendada únicamente para este fin. En caso de que dicho estudio refleje la necesidad de llevar a cabo estudios adicionales y/o Acciones de Remediación debido a las actividades del Arrendatario durante el Plazo y en su caso la Prorroga, el Arrendatario se obliga a llevar a cabo todos dichos estudios adicionales y/o Acciones de Remediación sólo si son necesarias para que la Propiedad Arrendada cumpla con lo previsto en la Legislación Ambiental.

 

Lessee agrees, at its cost, to provide to Lessor, within the 30 (thirty) calendar days following the termination, whether scheduled or anticipated, of this Agreement, an environmental report known as Environmental Site Assessment phase 1, based on norm ASTM E 1527 – 13 in its last edition, issued by and independent environmental auditor, that will evidence that during the Term the Lessee complied with its obligations derived from the Environmental Law, allowing the Lessee the access to the Leased Property for such purposes. In case that such assessment reflects the need to carry out additional studies and/or Remedial Actions due to the activities of Lessee during the Term and the Renewal Period, Lessee binds itself to make those additional studies and /or Remedial Actions only as necessary for the Leased Property to comply with the Environmental Law.

 

 

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En la medida en que lo exija la Legislación Ambiental, será responsabilidad del Arrendatario el informar a las autoridades ambientales acerca de la terminación, ya sea anticipada o programada, de este Contrato y la suspensión de sus actividades en la Propiedad Arrendada, dando para ello los avisos de abandono de sitio que sean necesarios (en caso de que se requieran), copias de los cuales, junto con los acuerdos de archivo emitidos por las autoridades ambientales, deberán ser entregados al Arrendador.

 

To the extent required by Environmental Law, Lessee shall be responsible for notifying the environmental authorities of the termination, whether scheduled or anticipated of this Agreement and the termination of its activities at the Leased Property, by giving the site abandonment notices that may be necessary (if required), copies of which, along with the corresponding resolutions issued by the environmental authorities, shall be delivered to the Lessor.

 

Además de todo lo anteriormente mencionado, el Arrendatario se obliga a cumplir con las disposiciones referentes a licencias ambientales establecidas en la cláusula 7.2 del presente Contrato y con las disposiciones referentes a indemnización y demás temas ambientales establecidas en la cláusula 18.4 del presente Contrato. In addition to all of the aforementioned, Lessee agrees to comply with the provisions regarding environmental permits established in clause 7.2 of this Agreement and indemnity and other environmental issues established in clause 18.4 of this Agreement.

Cláusula 23. Disposiciones Generales.

 

Clause 23. Miscellaneous.

 

23.1 Unidad de Contrato. Este Contrato y sus anexos incorporan todos los acuerdos de las partes respecto al objeto del presente Contrato. Las partes convienen que los anexos forman parte integral de este Contrato como si se hubieran incluido en el mismo y que este Contrato deberá interpretarse tomando en cuenta el contenido de dichos Anexos.

 

23.1 Entire Agreement.  This Agreement and the exhibits attached hereto contain the entire agreement between the parties regarding the subject matter hereof. The parties hereby agree that the exhibits shall be considered as an integral part of this Agreement as if they were included in it and that this Agreement shall be interpreted taking into account the content of those Exhibits.

 

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23.2        Modificaciones. El presente Contrato únicamente podrá ser modificado mediante instrumento por escrito debidamente firmado por las partes.

 

23.2        Amendments. This Agreement may be amended only by a written instrument duly executed by all of the parties.

 

23.3       Efecto Vinculatorio; Beneficio. Todos los términos de este Contrato se firman en beneficio de, y será obligatorios, para las partes del mismo y sus respectivos causahabientes y cesionarios. Nada en este instrumento, expreso o implícito, tiene el propósito de conferir a cualquier Persona, excepto a las partes de este instrumento, al Garante y a sus respectivos causahabientes y cesionarios, derecho, obligación, recurso o responsabilidad alguna.

 

23.3 Successors and Assignees. All of the terms of this Agreement shall inure to the benefit of and shall be binding upon the parties and their respective permitted successors and assignees.  Nothing in this instrument, express or implied, is intended to confer on any person except the parties to this instrument, the Guarantor and their respective successors and assigns, right, obligation, or liability.

23.4       Notificaciones. Las partes señalan como sus respectivos domicilios convencionales para toda clase de avisos y notificaciones, incluyendo sin limitar interpelaciones judiciales y emplazamientos a juicio relacionados o derivados de este Contrato, mismas que solamente surtirán efectos si se efectúan en persona, por correo certificado con acuse de recibido o de manera fehaciente por conducto de un fedatario público o de la autoridad judicial competente, los siguientes:

 

23.4       Notices. The parties hereby provide as their conventional domicile for any kind of communications and notices, including but not limited to judicial inquiries and emplacements to trial related or under this Agreement, which shall only be binding if delivered in person, by certified mail return receipt requested, or evidenced by a “Fedatario Público” or competent judicial authority, the following:

 

El Arrendador:

 

Fabricaciones y Servicios de México SA de CV.

Carretera 57 Km 178

Castaños, Coahuila, 25780 México

Lessor:

 

Fabricaciones y Servicios de México SA de CV.

Carretera 57 Km 178

Castaños, Coahuila, 25780 México

 

El Arrendatario:

 

FCA-FASEMEX, S. DE R.L. DE C.V

Tepic 1100, Colonia California, Coahuila, México, C.P. 25870

Attn:

 

Lessee:

 

FCA-FASEMEX, S. DE R.L. DE C.V

Tepic 1100, Colonia California, Coahuila, México, C.P. 25870

Attn:

 

 

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Con copia a:

c/o FreightCar America, Inc.

125 South Wacker Drive

Suite 1500, Chicago, IL 60606 USA

Attn: Director Jurídico

 

With a copy to:

c/o FreightCar America, Inc.

125 South Wacker Drive

Suite 1500, Chicago, IL 60606 USA

Attn: General Counsel

 

Mientras las partes no se notifiquen por escrito un cambio de domicilio, las notificaciones o cualquier otra comunicación regular que se hagan en los domicilios indicados, surtirán plenos efectos legales.

 

Unless the parties notify in writing to their counterparts any change of domicile, the service of process or any other regular communication perfected in the above-mentioned domiciles, shall have full force and effect.

 

23.5       Ley Aplicable. Este Contrato estará sujeto y se regirá por la legislación federal mexicana, incluyendo sin limitar el Código Civil Federal.

 

23.5       Governing Law. This Agreement shall be subject to and governed by the Mexican federal law, including the Federal Civil Code.

 

23.6 Tribunales Competentes. Para la interpretación, cumplimiento y exigibilidad de este Contrato, las partes del presente Contrato se someten de manera irrevocable a la exclusiva jurisdicción de los tribunales competentes de Monclova, Coahuila y renuncian a cualquier otra jurisdicción que por razón de su domicilio presente o futuro o por cualquier otra causa pudiera corresponderles.

 

23.6       Applicable Jurisdiction. For matter related to the interpretation and compliance of this Agreement, the parties hereby expressly submit to the jurisdiction of the Civil Courts of Monclova, Coahuila, waiving any other jurisdiction which might be applicable by reason of their present of future domiciles or otherwise.

 

En cualquier procedimiento legal relacionado con este Contrato, la parte vencedora tendrá derecho de recuperar de la parte vencida los gastos y costos razonables y documentados en que hubiera incurrido con motivo del ejercicio de cualesquiera derechos conforme a este Contrato. Ambas partes reconocen que esta constituye una obligación independiente, válida y exigible y que cualquier resolución que sea dictada en relación con cualquiera dicha controversia o procedimiento deberá incluir provisiones al respecto.

 

In any legal proceeding related to this Agreement, the prevailing party shall have the right to recover from the defeated party the reasonable and documented costs and expenses incurred because of the exercise of any rights pursuant to this Agreement. Both parties acknowledge that this is an independent, valid and binding obligation and that any resolution issued about any said controversy or proceeding, must include provisions on this regard.

 

23.7       Ilegalidad de Disposiciones. Si una o más de las disposiciones contenidas en este Contrato o cualquier documento celebrado en relación con el mismo resultan inválidas, ilegales o inaplicables en cualquier aspecto bajo cualquier Ley Aplicable, la validez, legalidad y aplicabilidad de las disposiciones restantes contenidas en el presente de ninguna manera serán afectadas.

 

23.7       Severability. If any one or more of the provisions contained in this Agreement or any document executed in connection herewith shall be invalid, illegal, or unenforceable in any respect under any Applicable Law, the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected.

 

 

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23.8       Gastos. Los gastos incurridos por las partes en la negociación y elaboración del presente instrumento, así como en la elaboración y negociación de los demás actos jurídicos y materiales contemplados en este Contrato, incluyendo honorarios de asesores legales y cualesquiera otro, correrán exclusivamente por cuenta de la parte que hubiera incurrido dichos gastos y que hubiera contratado a dichos asesores, sin que exista responsabilidad alguna a cargo de las otras partes.

 

23.8       Expenses. The expenses incurred by the parties in the negotiation and drafting of this instrument as well as in the preparation and negotiation of legal and material acts referred to herein, including legal fees and any other, shall be borne solely by the part that incurred in such expenses and had hired these consultants, without any liability to the other parties.

 

23.9       Ejemplares. Este Contrato se firma en 2 (dos) ejemplares, cada uno de los cuales se considerará como un original.

 

23.9       Counterparts. This Agreement is executed in 2 (two) counterparts, each one shall be deemed to be an original.

 

23.10       Encabezados. Las partes convienen en que los encabezados contenidos en este Contrato se insertan exclusivamente para referencia y no se considerarán como parte del mismo ni se utilizarán para definir, interpretar o limitar el contenido del Contrato.

 

23.10 Headings. The parties hereby agree that the headings contained herein are provided for convenience only and they shall not be deemed to be part, define, interpret or limit the content of the Agreement.

 

23.11       Idioma. Este Contrato se celebra en inglés y en español; sin embargo, las partes acuerdan que en caso de duda acerca de la interpretación y sentido de este Contrato, la versión en español prevalecerá.

 

23.11 Language. This Agreement is executed both in English and Spanish; nevertheless, the parties agree that in the event of any dispute the Spanish version shall prevail and control.

 

23.12       Lugar de Cumplimiento de Obligaciones. Las partes señalan como lugar de cumplimiento de las obligaciones pactadas en este Contrato, los domicilios convencionales mencionados en la cláusula 23.4; en el entendido que el Arrendatario deberá cumplir sus obligaciones en el domicilio del Arrendador, y el Arrendador deberá cumplir sus obligaciones en el domicilio del Arrendatario, sin necesidad de requerimiento o interpelación judicial.

 

23.12 Place to Fulfill Obligations. The parties hereby designate as a place of fulfillment of the obligations agreed herein, the conventional addresses mentioned in clause 23.4; in the understanding that Lessee shall fulfill its obligations in the address of Lessor, and Lessor must fulfill its obligations in the address of Lessee, without request or judicial interpellation

 

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23.13       Reglas de Interpretación. (a) Los títulos o encabezados que aparecen frente a cada cláusula, inciso o párrafo de este Contrato aparecen sólo para la conveniencia de las partes y no afectarán de modo alguno la interpretación del mismo o el contenido de cada una de dichas cláusulas e incisos, (b) las palabras definidas en singular incluirán el plural y viceversa, los términos definidos en masculino incluyen el femenino y el neutro según el contexto lo requiera, (c) Cuando algún plazo establecido en este Contrato se especifique en días hábiles, se entenderá por estos, cualquier día que: (i) no sea un sábado o un domingo, o (ii) no sea un día en que los bancos que operan en México o en los Estados Unidos de América estén autorizados para cerrar, o (iii) no sea uno de los días marcados como inhábiles por las leyes aplicables en México o de los Estados Unidos America, (d) cualquier referencia a cláusulas, incisos, numerales o párrafos, se refieren a cláusulas, incisos, numerales o párrafos de este Contrato, a menos que expresamente se especifique lo contrario, (e) cualquier referencia a "a este Contrato", "en este Contrato" o "de este Contrato", o similares, significa una referencia al presente Contrato en su totalidad y no a una porción del mismo, a menos que expresamente así se establezca, (f) cualquier referencia a “satisfactorio para”; significa en fondo y forma satisfactorio para la parte a quien se refiera la expresión, a su exclusiva discreción, en cada caso, actuando de forma razonable, (g) Cuando no se establezca un plazo específico para el cumplimiento de alguna obligación contenida en el presente Contrato, se entenderá que el plazo es de 15 (quince) días hábiles, y (h) los plazos conforme a este Contrato comenzarán a correr al día hábil siguiente del acto, hecho, aviso, comunicación o notificación que haya dado comienzo al plazo de que se trate, y terminará a las 12:00 a.m., del día establecido como el último de dicho plazo de acuerdo a este Contrato.

 

23.13 Interpretation Rules. (a) The titles or headings of each cause, section or paragraph herein appear only for the convenience of the parties and will not affect in any manner the legal interpretation of this Agreement or the contents of such clauses and sections, (b) words defined in singular shall include the plural form, and vice versa, terms defined in masculine gender, include the feminine gender and neuter gender, as the context so requires, (c) when any term set forth in this Agreement is specified in business days, it shall be understood as any day that: (i) is not a Saturday or a Sunday, or (ii) is not a day in which the banking institutions that operate in Mexico or the United States of America are authorized to close, or (iii) not a day classified as non-business day by the applicable Mexican or U.S. Laws, (d) any reference to clauses, sections, numbers or paragraphs, refers to clauses, sections, numbers or paragraphs of this Agreement, unless otherwise specifically stated, (e) Any reference to "this Agreement", "in this Agreement", or "from this Agreement", or similar, means a reference to this Agreement as a whole and not to a portion of the same, unless otherwise expressly stated, (f) any reference to “satisfactory to” means in form and substance satisfactory to the party subject matter of the reference, at its exclusive discretion, but in any case, acting reasonably, (g) whenever there is not a mention of a specific term for fulfilling any obligation hereunder, it shall be understood that the term is of 15 (fifteen) business days, and (h) the terms pursuant to this Agreement shall commence on the business day following to the action, fact, notice or communication that started said term and will finish at 12:00 a.m. of the last day of the term pursuant to this Agreement

El presente Contrato se firma a los 16 días del mes de octubre de 2020.

 

 

 

The parties sign and execute this Agreement on October 16, 2020.

 

 

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EL ARRENDADOR/LESSOR

 

 

/s/ Alejandro Gil Benavides

FABRICACIÓN Y SERVICIOS DE MÉXICO, S.A. DE C.V.

Representado por / Represented by: Alejandro Gil Benavides

EL ARRENDATARIO/LESEE

 

 

/s/ James R. Meyer

FCA-FASEMEX, S. DE R.L. DE C.V.

 

Representado por / Represented by: James R. Meyer

   
   
   
 

With the appearance, acknowledgement and agreement of Messrs. Jesús Salvador Gil Benavides, Alejandro Gil Benavides and Salvador Gil Benavides.

 

 

 

 

Por/By: /s/ Jesús Salvador Gil Benavides

Nombre/Name: Jesús Salvador Gil Benavides

 

 

 

 

Por/By: /s/ Alejandro Gil Benavides

Nombre/Name: Alejandro Gil Benavides

 

 

 

 

Por/By: /s/ Salvador Gil Benavides

Nombre/Name: Salvador Gil Benavides

   

 

 

 

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Section 5: EX-10.4 (EXHIBIT 10.4)

Exhibit 10.4

 

Execution Copy

 

ROYALTY AGREEMENT

 

THIS ROYALTY AGREEMENT (the “Agreement”) is made as of October 16, 2020 (the “Effective Date”) by and among FreightCar America, Inc., a Delaware corporation with offices at 125 S. Wacker Drive, Suite 1500, Chicago, Illinois 60606 (“FCA”), Fabricaciones y Servicios de México, S.A. de C.V., an entity formed under the laws of Mexico, with offices at Carretera 57 Km 178, Castaños Coahuila, 25780, Mexico (“Fasemex MX”), Agben de Mexico, S.A. de C.V., an entity organized under the laws of Mexico, with offices at Carretera 57 Km 178, Castaños Coahuila, 25780, Mexico (“Agben”), Industrial Mexicana Fasemex, S.A. de C.V., an entity formed under the laws of Mexico, with offices at Carretera 57 Km 178, Castaños Coahuila, 25780, Mexico (“IM Fasemex”), Proveedora Industrial para el Manejo de Materiales, S.A. de C.V., an entity formed under the laws of Mexico, with offices at Carretera 57 Km 178, Castaños Coahuila, 25780, Mexico (“Proveedora”), and Fasemex, Inc., a Texas corporation with offices at Carretera 57 Km 178, Castaños Coahuila, 25780, Mexico (“Fasemex US”). Fasemex MX, Agben, and Fasemex US are collectively referred to herein as the “Strategic Partners,” and FCA and the Strategic Partners are collectively referred to herein as the “Parties.”

 

RECITALS

 

A.       The Strategic Partners have entered into that certain Equity Purchase Agreement dated as of October 16, 2020 with FreightCar North America, LLC (f/k/a FCAI Holdings, LLC), a Delaware limited liability company (“FCNA”), a wholly-owned subsidiary of FCA (the “EPA”).

 

B.       Pursuant to the EPA, FCNA, will purchase all of the Strategic Partners’ interests in the JV Companies (as such term is defined in the EPA), such that the JV Companies will be indirect wholly owned subsidiaries of FCA following such purchase.

 

C.       As part of consideration for the transactions contemplated under the EPA, FCA shall pay certain royalties, directly or indirectly, to the Strategic Partners, as contemplated herein.

 

AGREEMENT

 

Now, therefore, in consideration of the mutual promises and covenants herein contained, the Parties hereto agrees as follows:

 

1.ROYALTY.

 

(a)               During each applicable Production Line Period (as defined below), FCA will pay to IM Fasemex, Agben and Proveedora (the “Royalty Payees”) (i) 1.2% of FCA’s Railcar Sales Net Revenue (as defined below) and (ii) 1.5% of FCA’s Tank Car Sales Net Revenue (as defined below; the payment specified in this clause (ii) and clause (i) of this sentence, collectively, the “Royalty”) on and subject to the terms and conditions of this Agreement. The Royalty shall be paid to the account specified on Exhibit I attached hereto (the “Account”) for further remittance to the Royalty Payees in the proportions also specified on Exhibit I. FCA’s obligations with respect to any such payment shall be complete when paid to the Account.

 

(b)               During each applicable Production Line Period (as defined below), a Royalty obligation shall accrue, with respect to each Railcar or Tank Car (as such terms are defined below), upon the sale of (i) such new railcar or converted, modified, refurbished or repaired railcar, other than tank cars, to third parties or to FCA for its own leasing fleet (the “Railcars”), or (ii) such new tank car or converted, modified, refurbished or repaired tank car, to third parties or to FCA for its own leasing fleet (the “Tank Cars”) (the Railcars and the Tank Cars, collectively, the “Products”). A Product shall be considered “sold” when such Product is shipped and FCA is paid in full for such Product when sold to third parties or when shipped to FCA when it will use them for its own leasing fleet and “repaired” shall mean programmed repair work, excluding under warranty repair works and normal course field repairs.

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Execution Copy

 

(c)               With respect to (i) the first and second production lines that have been constructed to produce railcars or tank cars at the Castaños facility in Castaños, Mexico (the “Castaños Facility”), a Royalty shall only accrue for a period of seventeen (17) years, commencing retroactively on September 1st, 2020; (ii) the third and fourth production lines, if and when constructed by FCA to produce railcars or tank cars at the Castaños Facility, a Royalty shall only accrue for a period of seventeen (17) years, commencing on the first day of the month during which production commences on the third or fourth lines, whichever is earlier; and (iii) any other production lines constructed by FCA at the Castaños Facility or elsewhere within Mexico, a Royalty shall only accrue for a period of years, commencing on the first day of the month during which production commences on such additional line(s) and ending on the same date that the Royalty obligation for the first and second production lines ended ((i), (ii) and (iii) together, the “Production Line Periods”). It is the understanding of the parties that the third and fourth production lines, if and when constructed by FCA, shall be built at the Castaños Facility if all reasonable conditions necessary to construct and operate these lines are met with the reasonable cooperation of the Parties.

 

(d)               The Royalty shall be calculated in accordance with Sections 1(a) and 1(b) on a calendar quarter basis (the “Royalty Period”) by FCA and shall be payable by FCA no later than thirty (30) calendar days after the end of the preceding full quarterly period. For purposes of clarity, the Royalty calculated for any given Royalty Period will include any deemed sales (pursuant to Section 1(b)), during such Royalty Period.

 

(e)               For each Royalty Period, within fifteen (15) business days of the end of such period, FCA shall provide the Royalty Payees with a written royalty statement. Such royalty statement shall be certified as accurate by a duly authorized officer of FCA reciting (i) the number and types of Railcars or Tank Cars sold (or deemed sold pursuant to Section 1(b)) during the applicable Royalty Period, (ii) the applicable end customers gross invoice, and (iii) the costs of freight, insurance and/or custom duties and fees excluded from Railcar Sales Net Revenue or Tank Car Sales Net Revenue for each shipment.

 

(f)                Railcar Sales Net Revenue” shall mean the gross selling price or other consideration received by FCA from the sale of newly manufactured or converted, modified, refurbished or repaired railcars, other than tank cars, sold to third parties or to FCA for its own leasing fleet. Railcar Sales Net Revenue shall not include out-of-pocket costs of freight, insurance and/or custom duties and fees.

 

(g)               Tank Car Sales Net Revenue” shall mean the gross selling price or other consideration received by FCA from the sale of newly manufactured or converted, modified, refurbished or repaired tank cars sold to third parties or to FCA for its own leasing fleet. Tank Car Sales Net Revenue shall not include out-of-pocket costs of freight, insurance and/or custom duties and fees.

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Execution Copy

 

(h)               All payments due to the Royalty Payees shall be made in United States currency by wire transfer to the Account, unless otherwise specified by them to FCA.

 

2.TERM

 

(a)               The term of this Agreement (the “Term”) shall commence on the Effective Date and end upon the termination of the last applicable Production Line Period, unless terminated earlier pursuant to this Agreement.

 

(b)               FCA shall have the right to immediately terminate this Agreement upon written notice to the Strategic Partners and the Royalty Payees in the event that:

 

i.                        any of the Strategic Partners or the Royalty Payees commits a material breach of any of its obligations under this Agreement, and such breach is not cured within ninety (90) days after written notice to such Party of such breach; or

 

ii.                        Fasemex MX commits a material breach of any of its obligations under that certain Lease Agreement, dated as of even date herewith, by and between Fasemex MX as Lessor and FCA-Fasemex, S. de R.L. de C.V. as Lessee, and such breach is not cured within ninety (90) days after written notice to Fasemex MX of such breach; provided, however, that this Agreement shall not terminate in the event that such Lease Agreement is terminated by mutual agreement of the parties thereto, for any reason whatsoever, prior to its expiration date.

 

3.REPRESENTATIONS AND WARRANTIES

 

(a)               FCA represents and warrants that (i) it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, (ii) has full power and authority to enter into this Agreement and perform its obligations hereunder, and (iii) understands that entering into this Agreement is a condition precedent and one of the fundamental motives for the Strategic Partners to enter into the Associated Agreements.

 

(b)               Each Strategic Partner and Royalty Payee represents and warrants that such Strategic Partner and Royalty Payee: (i) is an entity duly incorporated or organized, as applicable, validly existing, and in good standing under the laws of the State of Texas or under the laws of Mexico, as applicable, and (ii) has full power and authority to enter into this Agreement and perform its obligations hereunder.

 

4.RECORD INSPECTION AND AUDIT

 

(a)               The Royalty Payees shall have the right, upon reasonable notice, to inspect FCA’s books, records, accounts, and all other documents and material in FCA’s possession or control with respect to the subject matter of this Agreement, subject to appropriate confidentiality restrictions, including all information leading to, derived from or related to the Royalties, the Railcar Sales Net Revenue and the Tank Cars Sales Net Revenue. FCA shall maintain proper books, records and accounts with entries that are full, true and correct in all material respects and in conformity with GAAP consistently applied regarding the Royalties, the Railcar Sales Net Revenue and the Tank Cars Sales Net Revenue. FCA will permit any representatives or advisors of the Royalty Payees, upon reasonable prior notice, to inspect, examine and make extracts from its books, records, accounts, and all other documents and material in FCA’s possession or control with respect to the subject matter of this Agreement, and to discuss its calculations, entries and records with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, in each case at the Royalty Payees’ expense; provided that, the Royalty Payees shall not exercise such rights more often than two (2) times during any calendar year absent the existence of an event of default by FCA, in which case the inspection and works related thereto can take place at any reasonable time and shall be at FCA’s expense.

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Execution Copy

 

(b)               All books and records relative to FCA’s obligations hereunder shall be maintained and made accessible to the Royalty Payees for inspection at a location in the United States for at least two (2) years after termination or expiration of this Agreement.

 

5.CONFIDENTIALITY

 

(a)               All disclosures of trade secrets, know-how, financial information, or other information of a type that is known to be, or that a reasonable person would recognize it to be, confidential made by FCA or any of its affiliates (as applicable, the “Discloser”) under or in connection with this Agreement, as well as the terms of this Agreement (collectively, the “Confidential Information”), shall be received and maintained in confidence by the recipient (the “Recipient”) and each Recipient shall treat all such Confidential Information as the confidential property of the Discloser and keep it confidential and secure and protect it from unauthorized use or disclosure by using at least the same degree of care as Recipient employs to avoid unauthorized use or disclosure of its own Confidential Information of similar nature, but in no event less than reasonable care.  Notwithstanding the foregoing, a Recipient shall be permitted to disclose any Confidential Information if required by applicable law, provided the Recipient provides the Discloser reasonable prior opportunity to comment upon such disclosure to the extent permitted by law and agree to cooperate to take reasonable steps to minimize the extent of any such required disclosure.

 

(b)               The term “Confidential Information” does not include information that (i) was in the public domain prior to the time it was furnished to Recipient or is at the time of the alleged breach (through no willful or improper action or inaction by such Recipient) generally available to the public, (ii) was or becomes available to a Recipient on a non-confidential basis from a source other than FCA or its affiliates, provided such other source is not be known by the Recipient to be bound by a confidentiality obligation, (iii) is lawfully known to a Recipient prior to disclosure of the Confidential Information by FCA or its affiliates, or (iv) is independently developed by a Recipient without any use of any Confidential Information.

 

(c)               Each Recipient’s obligations with respect to the Confidential Information shall continue for a term of three (3) years following the termination of this Agreement.

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Execution Copy

 

6.COMPLIANCE WITH LAWS

 

Notwithstanding anything to the contrary, the obligations of the Parties hereto shall be subject to all laws, present and future (including export control laws and regulations) of any government having jurisdiction over the Parties hereto, and to orders, regulations, directions, or requests of any such government. Each Party shall undertake to comply with and be solely responsible for complying with such laws applicable to such Party.

 

7.TAXES

 

Each Party shall otherwise remain responsible for all taxes applicable to such Party and its operations in connection with this Agreement.

 

8.NOTICE AND PAYMENT

 

Any notice or communication required or permitted to be given be any provisions of this Agreement, including any consents, shall be in writing and shall be deemed to have been given and received by the person to whom directed, if properly addressed: (1) when delivered personally to such person or to an officer of the person to which directed, (2) upon confirmation of receipt of transmission by email, or (3) two days after being deposited with an internationally recognized overnight courier, delivery charges prepaid for delivery the following day. The addresses for notice are as follows:

 

  If to Licensor:

FreightCar America, Inc.

125 S. Wacker Drive, Suite 1500

Chicago, IL 60606

Attn: Christopher Eppel

Email: [email protected]

 

  with a copy to (which shall not constitute notice):

Kelley Drye & Warren LLP

333 W. Wacker Dr., 26th Floor

Chicago, IL 60606

Attn: Andrew Pillsbury

[email protected]

 

  If to Strategic Partners and Royalty Payees:

Fabricaciones y Servicios de Mexico SA de CV.

Carretera 57 Km 178

Castaños Coahuila, 25780 Mexico

Email: [email protected]

 

  with a copy to (which shall not constitute notice):

Romero, Ramos, Quintanilla y Bortoni S.C.

Lazaro Cardenas 435 Despacho 410

Colonia Loma Larga, 66266

San Pedro Garza Garcia, Nuevo Leon, Mexico.

Attn: Francisco Romero

Email: [email protected]

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Execution Copy

 

Any Party may change its address, email or individual for receiving notice for the purpose of this Section by notice to the other given in the manner set forth above.

 

9.GOVERNING LAW

 

This Agreement shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the internal laws of the State of Illinois applicable to contracts made in that state, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of Illinois.

 

10.CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.

 

(a)               EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL PROCEEDINGS (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING SHALL BE COMMENCED AND PROSECUTED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS LOCATED IN THE CITY OF CHICAGO, COUNTY OF COOK, AND ANY APPELLATE COURT THEREFROM OR THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS AND ANY APPELLATE COURT THEREFROM (COLLECTIVELY, THE “Illinois Courts”). EACH PARTY HERE-BY IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND SUBMITS, FOR IT-SELF AND ITS ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY OF THE ILLINOIS COURTS IN RESPECT OF ANY SUCH PROCEEDING. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(b)               EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING IN ANY OF THE ILLINOIS COURTS. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY OF THE ILLINOIS COURTS. EACH OF THE PARTIES AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.

 

(c)               EACH PARTY AGREES THAT ANY PROCEEDING (IN CONTRACT, IN TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, ANY RELATIONSHIPS BETWEEN THE PARTIES HEREUNDER AND ANY DISPUTES WITH RESPECT TO ANY OF THE FOREGOING WILL INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUCH PROCEEDING.

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Execution Copy

 

(d)               EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT, SEEK TO ENFORCE THE FOREGOING WAIVERS, (ii) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) SUCH PARTY MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION 10(d).

 

(e)               EACH OF THE PARTIES HERETO WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LAWSUIT, ACTION OR PROCEEDING SEEKING ENFORCEMENT OF SUCH PARTY’S RIGHTS UNDER THIS AGREEMENT.

 

11.SURVIVAL

 

If this Agreement terminates or expires, the provisions of this Agreement which by their nature extend beyond the expiration or termination of this Agreement shall survive, including Sections 1, 4, 5, and 7 through 21.

 

12.FURTHER ASSURANCES

 

In connection with this Agreement and the transactions contemplated hereby, each Party shall execute and deliver such further documents, and perform such further acts, as may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions contemplated hereunder, as reasonably requested by another Party.

 

13.ENTIRE AGREEMENT

 

This Agreement, together with the EPA, contain all agreements among the Parties relating to its subject matter and supersedes and cancels any and all previous contracts or agreements among the Parties with respect thereto. Any other understanding about this Agreement, including additional terms or provisions contained in invoices, shipping papers, or other documents, will be of no force or effect. Any amendment to this Agreement must be in writing and will not be effective until it is executed and approved by an authorized representative of each Party.

 

14.SEVERABILITY

 

If any provision of this Agreement is determined by any legislature, court, or administrative agency to be invalid or unenforceable, every other provision will remain in full force and effect, unless the purposes of this Agreement cannot be achieved. The Parties will use commercially reasonable efforts to substitute a valid, legal, and enforceable provision, which insofar as practical implements the purposes of any provision held invalid, illegal, or unenforceable.

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Execution Copy

 

15.WAIVERS

 

No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

16.ASSIGNMENT

 

This Agreement is deemed to be of a personal nature and neither party may assign, convey, or transfer this Agreement or any right or interest in this Agreement, or delegate or subcontract performance of any obligations hereunder, in whole or in part, to any third party, without the prior written consent of FCA. Any attempt to do so shall be void ab initio.

 

17.NO THIRD-PARTY BENEFICIARIES

 

This Agreement is solely for the benefit of the Parties and their respective permitted successors and assigns. There are no other third-party beneficiaries to this Agreement.

 

18.RELATIONSHIP OF THE PARTIES

 

The relationship between and among the Parties is solely that of independent contractors. Nothing in this Agreement creates a partnership, joint venture, or principal-agent relationship. The Strategic Partners and the Royalty Payees shall not have any authority to create or assume in FCA’s name or on its behalf any obligation, expressed or implied, or to act or purport to act as FCA’s agent or legally empowered representative for any purpose whatsoever. No Party shall be liable to any third party in any way for any engagement, obligation, commitment, contract, representation, transaction, or act or omission to act of another other Party, except as expressly provided herein.

 

19.TERMINOLOGY AND CONSTRUCTION

 

All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; and the singular shall include the plural and vice versa. Titles of Articles, Sections, Exhibits, and Schedules are for convenience only, and neither limit nor amplify the provisions of this Agreement. Except as specifically provided, references to Articles, Sections, Exhibits, and Schedules in this Agreement refer to Articles, Sections, Exhibits, and Schedules to, this Agreement. The use herein of the word “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation,” or “but not limited to,” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. The word “or” shall mean “and/or” unless the context requires otherwise. The words “day,” “month,” and “year” mean, respectively, calendar day, calendar month and calendar year. The Parties agree that the terms and conditions of this Agreement are the result of negotiations between them and that this Agreement shall be construed in favor of or against either Party by reason of the extent to which such Party of its professional advisors participated in the preparation of such agreements.

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Execution Copy

 

20.LIMITATIONS OF LIABILITY

 

Neither Party to this Agreement shall be entitled to recover from the other any special, incidental, consequential or punitive damages.

 

21.COUNTERPARTS

 

This Agreement may be executed in two or more counterparts, each of which shall constitute an original and all of which together shall constitute a single instrument.

 

[Signature Pages Follow]

 

 

 

 

 

 

 

 

 

 

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Execution Copy

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

 

  FCA:
 

FREIGHTCAR AMERICA, INC.

 

 

By: /s/ James R. Meyer

Name: James R. Meyer

Title: President and Chief Executive Officer

 

   
  STRATEGIC PARTNERS AND ROYALTY PAYEES:
 

FABRICACIONES Y SERVICIOS DE MÉXICO, S.A. DE C.V.

 

 

By: /s/ Alejandro Gil

Name: Alejandro Gil

Title: Legal representative

 

 

AGBEN DE MEXICO, S.A. DE C.V.

 

 

By: /s/ Jesus S. Gil

Name: Jesus S. Gil

Title: Owner

 

 

INDUSTRIAL MEXICANA FASEMEX, S.A. DE C.V.

 

 

By: /s/ Alejandro Gil

Name: Alejandro Gil

Title: Legal Representative

 

PROVEEDORA INDUSTRIAL PARA EL MANEJO DE MATERIALES, S.A. DE C.V.

 

 

By: /s/ Salvador Gil Benavides

Name: Salvador Gil Benavides

Title: Legal Representative

 

 

 

 

 

 

Execution Copy

 

 

FASEMEX, INC.

 

 

By: /s/ Jesus S. Gil

Name: Jesus S. Gil

Title: President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Section 6: EX-10.5 (EXHIBIT 10.5)

Exhibit 10.5

 

Execution Version

 

 

 

Certain identified information in this document has been excluded because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed, and has been marked with “[***]” to indicate where omissions have been made.

 

 

 

 

U.S. $40,000,000

 

CREDIT AGREEMENT,

 

dated as of October 13, 2020,

 

among

 

FREIGHTCAR AMERICA, INC.,
as Holdings,

 

FREIGHTCAR NORTH AMERICA, LLC,
as Borrower,

 

THE LENDERS PARTY HERETO FROM TIME TO TIME

 

and

 

U.S. BANK NATIONAL ASSOCIATION,
as Disbursing Agent and Collateral Agent

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Page

Article I DEFINITIONS 1
Section 1.01   Defined Terms 1
Section 1.02   Other Interpretive Provisions 39
Section 1.03   Accounting Terms 40
Section 1.04   Rounding 41
Section 1.05   Times of Day 41
Section 1.06   Currency Equivalents Generally 41
Section 1.07   Rates 41
Section 1.08   Cashless Rolls 42
Section 1.09   Divisions 42
Article II LOANS 42
Section 2.01   Commitments 42
Section 2.02   Procedure for Borrowing 43
Section 2.03   Repayment of Loans 43
Section 2.04   Lenders’ Evidence of Debt; Register; Notes 43
Section 2.05   Fees 44
Section 2.06   Voluntary Prepayments; Call Protection 44
Section 2.07   Mandatory Prepayments 46
Section 2.08   Application of Prepayments 47
Section 2.09   Conversion and Continuation Options 47
Section 2.10   Minimum Amounts and Maximum Number of Eurodollar Tranches 47
Section 2.11   Interest Rates and Payment Dates 48
Section 2.12   Illegality 49
Section 2.13   Inability to Determine Interest Rate; Effect of Benchmark Transition Event 49
Section 2.14   Payments Generally 52
Section 2.15   Increased Costs; Capital Adequacy 53
Section 2.16   Taxes 54
Section 2.17   Breakage Payments 58
Section 2.18   Pro Rata Treatment 58
Section 2.19   Mitigation Obligations; Replacement of Lenders 58
Article III REPRESENTATIONS AND WARRANTIES 60
Section 3.01   Existence, Qualification and Power 60
Section 3.02   Authorization; Enforceability 60
Section 3.03   No Conflicts 60
Section 3.04   Financial Statements; Projections; No Material Adverse Effect 61
Section 3.05   Intellectual Property 62

 

 i 

 

Section 3.06   Properties 63
Section 3.07   Equity Interests and Subsidiaries 64
Section 3.08   Compliance with Laws and Contracts 64
Section 3.09   Litigation 65
Section 3.10   Investment Company Act 65
Section 3.11   Federal Reserve Regulations 65
Section 3.12   Taxes 65
Section 3.13   No Material Misstatements 66
Section 3.14   Labor Matters 66
Section 3.15   ERISA 66
Section 3.16   Environmental Matters 67
Section 3.17   Insurance 68
Section 3.18   Security Documents 68
Section 3.19   Solvency 68
Section 3.20   Anti-Money Laundering and Anti-Corruption 68
Section 3.21   International Trade Laws 69
Section 3.22   Use of Proceeds 69
Section 3.23   Brokers 70
Article IV CONDITIONS PRECEDENT 70
Section 4.01   Conditions to Effectiveness 70
Section 4.02   Conditions to Loans 71
Article V AFFIRMATIVE COVENANTS 75
Section 5.01   Financial Statements 75
Section 5.02   Certificates; Other Information 76
Section 5.03   Notices 78
Section 5.04   Payment of Obligations 80
Section 5.05   Preservation of Existence, Etc 80
Section 5.06   Maintenance of Property 80
Section 5.07   Maintenance of Insurance 80
Section 5.08   Books and Records; Inspection Rights 81
Section 5.09   Compliance with Laws 81
Section 5.10   Compliance with Environmental Laws; Preparation of Environmental Reports 81
Section 5.11   Use of Proceeds 82
Section 5.12   Covenant to Guarantee Obligations and Give Security 82
Section 5.13   Further Assurances 84
Section 5.14   Post-Closing Undertakings 84
Article VI NEGATIVE COVENANTS 84
Section 6.01   Limitation on Indebtedness 84
Section 6.02   Limitation on Liens 87
Section 6.03   Limitation on Fundamental Changes 89

 

 ii 

 

Section 6.04   Limitation on Dispositions 90
Section 6.05   Limitation on Restricted Payments 92
Section 6.06   Limitation on Investments 93
Section 6.07   Limitation on Prepayments; Modifications of Debt Instruments, Certain Material Agreements and Organizational Documents 96
Section 6.08   Limitation on Transactions with Affiliates 96
Section 6.09   Limitation on Sale and Leasebacks 97
Section 6.10   Limitation on Changes in Fiscal Periods 98
Section 6.11   Limitation on Burdensome Agreements 98
Section 6.12   Limitation on Lines of Business 99
Section 6.13   Limitation on Activities of Holdings 99
Section 6.14   Minimum Liquidity Covenant 100
Section 6.15   Limitation on Capital Expenditures 100
Article VII EVENTS OF DEFAULT AND REMEDIES 101
Section 7.01   Events of Default 101
Section 7.02   Remedies Upon Event of Default 103
Section 7.03   Application of Funds 104
Article VIII THE DISBURSING AGENT AND THE COLLATERAL AGENT 104
Section 8.01   Appointment and Authority 104
Section 8.02   Rights as a Lender 105
Section 8.03   Exculpatory Provisions 106
Section 8.04   Reliance by Disbursing Agent 109
Section 8.05   Delegation of Duties 110
Section 8.06   Resignation of the Disbursing Agent or the Collateral Agent 110
Section 8.07   Non-Reliance on Disbursing Agent and Other Lenders 111
Section 8.08   No Other Duties, Etc. 112
Section 8.09   Disbursing Agent May File Proofs of Claim 112
Section 8.10   Collateral and Guaranty Matters 112
Section 8.11   Withholding Tax 115
Section 8.12   No Reliance on Agents’ Customer Identification Program 115
Article IX MISCELLANEOUS 116
Section 9.01   Amendments and Waivers 116
Section 9.02   Notices 117
Section 9.03   No Waiver by Course of Conduct; Cumulative Remedies 120
Section 9.04   Survival of Representations, Warranties, Covenants and Agreements 121
Section 9.05   Payment of Expenses; Indemnity 121
Section 9.06   Successors and Assigns; Participations and Assignments 123
Section 9.07   Sharing of Payments by Lenders; Set-off 126
Section 9.08   Counterparts; Electronic Signatures 127
Section 9.09   Severability 128

 

 iii 

 

Section 9.10   Section Headings 128
Section 9.11   Integration 129
Section 9.12   Governing Law 129
Section 9.13   Submission to Jurisdiction; Waivers 129
Section 9.14   Acknowledgments 130
Section 9.15   Confidentiality 130
Section 9.16   Waiver of Jury Trial 131
Section 9.17   PATRIOT Act Notice 132
Section 9.18   Usury Savings Clause 132
Section 9.19   Payments Set Aside 132
Section 9.20   No Advisory or Fiduciary Responsibility 133
Section 9.21   Judgment Currency 133
Section 9.22   No Publicity 134
Section 9.23   Intercreditor Agreement 134

 

 

 iv 

 

ANNEXES:

 

Annex A  Commitments

 

SCHEDULES:

 

Schedule 1.01(a)  Closing Date Scheduled Material Agreements
Schedule 3.05  Closing Date Intellectual Property Licenses
Schedule 3.06  Closing Date Owned and Leased Real Property
Schedule 3.07  Closing Date Equity Interests
Schedule 3.15  Closing Date ERISA Matters
Schedule 3.16  Closing Date Environmental Matters
Schedule 3.17  Closing Date Insurance
Schedule 3.18  UCC Filing Jurisdictions
Schedule 4.02(a)  Closing Date Security Documents
Schedule 5.14  Post-Closing Undertakings
Schedule 6.01  Closing Date Existing Indebtedness
Schedule 6.02  Closing Date Existing Liens
Schedule 6.06  Closing Date Existing Investments
Schedule 6.08  Closing Date Existing Affiliate Transactions
Schedule 6.11  Closing Date Existing Restrictive Agreements
Schedule 6.13  Closing Date Existing Activities of Holdings

 

EXHIBITS:

 

Exhibit A  Form of Compliance Certificate
Exhibit B  Reserved
Exhibit C  Form of Assignment and Assumption
Exhibit D  Form of Note
Exhibit E-1  Form of U.S. Tax Compliance Certificate
Exhibit E-2  Form of U.S. Tax Compliance Certificate
Exhibit E-3  Form of U.S. Tax Compliance Certificate
Exhibit E-4  Form of U.S. Tax Compliance Certificate
Exhibit F  Form of Borrowing Notice
Exhibit G  Form of Solvency Certificate
Exhibit H  Form of Subordinated Intercompany Note

 

 

 

 v 

 

CREDIT AGREEMENT, dated as of October 13, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), among FreightCar America, Inc., a Delaware corporation (“Holdings”), FreightCar North America, LLC, a Delaware limited liability company (the “Borrower”), the several banks and other financial institutions or entities from time to time parties hereto (the “Lenders”) and U.S. Bank National Association, as disbursing agent for the Lenders (together with its permitted successors and assigns in such capacity, the “Disbursing Agent”) and as collateral agent for the Secured Parties (together with its successors and permitted assigns in such capacity, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Borrower has requested that the Lenders extend credit in the form of Loans on the Closing Date in an aggregate principal amount equal to $40,000,000. The proceeds of the Loans may be used on the Closing Date solely to fund, in part, the Transactions, the Transaction Expenses, to purchase machinery and equipment, to provide for ongoing working capital requirements of the Borrower and its Subsidiaries and for other general corporate purposes, including distributions, of the Borrower and its Subsidiaries;

 

WHEREAS, the Borrower and each other Loan Party desire to secure all of the Obligations by granting to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and Lien upon substantially all of the property and assets of the Borrower and the other Loan Parties, subject to the limitations described herein and in the Security Documents; and

 

WHEREAS, the Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter set forth, the parties hereto hereby agree as follows:

 

Article I
DEFINITIONS

 

Section 1.01        Defined Terms. As used in this Agreement, the terms listed in this Section 1.01 shall have the respective meanings set forth in this Section 1.01.

 

AAR” shall mean The Association of American Railroads (or any successor).

 

Accounting Change” shall mean any change in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the SEC.

 

Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by the Disbursing Agent.

 1 

 

Affiliate” shall mean, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that, the term “Affiliate” shall also include any Person that directly or indirectly owns 10% or more of any class of Equity Interests of the Person specified or that is an officer or director of the Person specified. For the avoidance of doubt, no Lender, solely in its capacity as a holder of Warrants, shall constitute an Affiliate of the Borrower.

 

Agents” shall mean the collective reference to the Disbursing Agent and the Collateral Agent.

 

Agreement” shall have the meaning set forth in the preamble hereto.

 

Anti-Corruption Lawsshall mean all laws, rules, and regulations of any jurisdiction applicable to Holdings, the Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, the Mexican Ley General del Sistema Nacional Anticorrupción, the Mexican Ley General de Responsabilidades Administrativas, and the Mexican Federal Criminal Code and other similar legislation in any other jurisdictions.

 

Anti-Money Laundering Laws” shall mean all applicable financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, which in each case are issued, administered or enforced by any Governmental Authority having jurisdiction over the Borrower or any other Loan Party. For the avoidance of doubt, the term “Anti-Money Laundering Laws” shall include, but shall not be limited to, all laws, rules and regulations of the United States, the United Nations Security Council, the European Union or its Member States, the United Kingdom and Her Majesty’s Treasury, and Germany, relating to bribery, corruption, money laundering or terrorist financing, including, without limitation, the Bank Secrecy Act, 31 U.S.C. section 5311 et seq.; Title III of the USA Patriot Act; 18 U.S.C. section 1956; 18 U.S.C. section 1957; the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations, 31 C.F.R. Part 103; the United Kingdom Proceeds of Crime Act 2002; and the United Kingdom Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and the Mexican Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita and its applicable regulations.

 

Applicable Margin” shall mean a percentage per annum equal to (i) for Eurodollar Loans, 12.5% and (ii) for Base Rate Loans, 11.5%.

 

Applicable Prepayment Premium” shall mean, as of any date of determination, an amount equal to (a) during the period of time from and after the third anniversary of the Closing Date through the fourth anniversary of the Closing Date, 4.0% of the principal amount prepaid or accelerated (including, without limitation, automatic acceleration upon an Event of Default under Section 7.01(f) or Section 7.01(g) or operation of law upon the occurrence of a bankruptcy or insolvency event) and (b) during the period of time from and after the fourth anniversary of the Closing Date, 3.0% of the principal amount prepaid or accelerated (including, without limitation, automatic acceleration upon an Event of Default under Section 7.01(f) or Section 7.01(g) or operation of law upon the occurrence of a bankruptcy or insolvency event).

 2 

 

Approved Electronic Communications” shall mean, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to any Agent or Lender by means of electronic communications pursuant to Section 9.02(b) or Section 9.02(d), including through the Platform.

 

Approved Fund” shall mean any Person that is engaged in making, purchasing, holding or investing in loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Asset Sale” shall mean any Disposition of Property or series of related Dispositions of Property (excluding any Disposition pursuant to Section 6.04(a), Section 6.04(b), Section 6.04(c), Section 6.04(d), Section 6.04(e), Section 6.04(g), Section 6.04(i), Section 6.04(j), Section 6.04(k), Section 6.04(l), Section 6.04(m), Section 6.04(n), Section 6.04(o) or Section 6.04(p)) which yields gross proceeds (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $500,000 with respect to any Disposition or series of related Dispositions and $1,000,000 in the aggregate during any fiscal year of Holdings.

 

Assignment and Assumption” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 9.06), and acknowledged by the Disbursing Agent, in substantially the form of Exhibit C or any other form approved by the Disbursing Agent.

 

Attributable Indebtedness” shall mean, when used with respect to any Sale and Leaseback, as at the time of determination, the present value (discounted at a rate equivalent to the Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided that, if such Sale and Leaseback results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of Capital Lease Obligation.

 

Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.13(b)(iv).

 3 

 

Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

Base Rate” shall mean, for any day, a per annum rate of interest equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50%, (c) the Eurodollar Rate (after giving effect to any Eurodollar Rate “floor”) that would be payable on such day for a Eurodollar Loan with a one-month interest period plus 1.00% and (d) 2.50%; provided that, if the Base Rate determined based on the foregoing is less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar Rate, respectively.

 

Base Rate Loan” shall mean a Loan bearing interest at a rate determined by reference to the Base Rate.

 

Benchmark” shall mean, initially, LIBOR; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBOR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.13(b)(i).

 

Benchmark Replacement” shall mean, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Required Lenders for the applicable Benchmark Replacement Date:

 

(a)       the sum of: (i) Term SOFR and (ii) the related Benchmark Replacement Adjustment;

 

(b)       the sum of: (i) Daily Simple SOFR and (ii) the related Benchmark Replacement Adjustment;

 

(c)       the sum of: (i) the alternate benchmark rate that has been selected by the Required Lenders (in consultation with the Disbursing Agent and the Borrower) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (ii) the related Benchmark Replacement Adjustment;

 

provided that, in the case of clause (a), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Required Lenders in their reasonable discretion and notified to the Disbursing Agent; provided further, that in each case, such Benchmark Replacement shall be administratively feasible for the Disbursing Agent. If the Benchmark Replacement as determined pursuant to clause (a), (b) or (c) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

 4 

 

Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

 

(a)               for purposes of clauses (a) and (b) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Required Lenders and is administratively feasible for the Disbursing Agent:

 

(i)                 the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

 

(ii)       the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

 

(b)       for purposes of clause (c) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Required Lenders (in consultation with the Borrower) for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities;

 

provided that, in the case of clause (a) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Required Lenders in their reasonable discretion and notified to the Disbursing Agent; provided further, that any such screen or other information service shall be administratively feasible for the Disbursing Agent.

 

Benchmark Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Required Lenders decide may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Disbursing Agent in a manner substantially consistent with market practice (or, if the Required Lenders decide that adoption of any portion of such market practice is not administratively feasible or if the Required Lenders determine that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Required Lenders decide is reasonably necessary in connection with the administration of this Agreement); provided that any such changes shall be administratively feasible for the Disbursing Agent.

 5 

 

Benchmark Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:

 

(a)               in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);

 

(b)               in the case of clause (c) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or

 

(c)               in the case of an Early Opt-in Election, the first Business Day after the Rate Election Notice is provided to each of the other parties hereto.

 

For the avoidance of doubt, (x) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (y) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

 

Benchmark Transition Event” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(a)               a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or the published component used in the calculation thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);

 

(b)               a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or

 6 

 

(c)               a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors o such Benchmark (or such component thereof) are no longer representative.

 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

 

Benchmark Unavailability Period” shall mean the period (if any) (a) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.13(b) and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document pursuant to Section 2.13(b).

 

Beneficial Ownership Certification” shall mean a certificate regarding beneficial ownership as required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

 

Board of Governors” shall mean the Board of Governors of the Federal Reserve System of the United States of America, or any successor thereto.

 

Borrower” shall have the meaning set forth in the preamble hereto.

 

Borrowing Notice” shall mean, with respect to any request for borrowing of Loans hereunder, a notice from the Borrower, substantially in the form of, and containing the information prescribed by, Exhibit F, delivered to the Disbursing Agent.

 

Business Day” shall mean (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) with respect to all notices, determinations, fundings and payments in connection with the Eurodollar Rate or any Eurodollar Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

 7 

 

Capital Expenditure Carryover Amount” shall have the meaning set forth in Section 6.15.

 

Capital Expenditures” shall mean, for any period, without duplication, with respect to any Person, (a) any expenditure or commitment to expend money for any purchase or other acquisition of any asset, including capitalized leasehold improvements, which would be classified as a fixed or capital asset on a consolidated balance sheet of such Person prepared in accordance with GAAP and (b) Capital Lease Obligations; provided that, in any event, “Capital Expenditures” shall exclude (a) any such expenditure made in accordance with the terms of this Agreement (i) to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with insurance proceeds, condemnation awards or damage recovery proceeds relating to any such damage, loss, destruction or condemnation, or (ii) with the proceeds of the Disposition of any assets, equity proceeds, or insurance proceeds, (b) any such expenditure to the extent resulting from the trade-in of equipment or other assets, and (c) any Investment permitted hereunder.

 

Capital Lease” shall mean, with respect to any Person, any lease of, or other arrangement conveying the right to use, any property by such Person as lessee that has been or should be accounted for as a capital lease on a balance sheet of such person prepared in accordance with GAAP. For the avoidance of doubt, no operating lease (as determined in accordance with GAAP) shall be considered a Capital Lease.

 

Capital Lease Obligations” shall mean, with respect to any Person, the obligations of such Person to pay rent or other amounts under any Capital Lease, any lease entered into as part of any Sale and Leaseback or any Synthetic Lease, or a combination thereof, which obligations are (or would be, if such Synthetic Lease or other lease were accounted for as a Capital Lease) required to be classified and accounted for as Capital Leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof (or the amount that would be capitalized, if such Synthetic Lease or other lease were accounted for as a Capital Lease) determined in accordance with GAAP.

 

CARES Act” shall mean, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act and applicable rules and regulations, as amended from time to time.

 

Cash Equivalents” shall mean, as at any date of determination, any of the following: (a) marketable securities (i) issued or directly and unconditionally guaranteed as to interest and principal by the government of the United States of America or (ii) issued by any agency of the United States of America and the obligations of which are backed by the full faith and credit of the United States of America, in each case maturing within one year from the date of acquisition; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after the date of acquisition and having a rating of at least A-1 from S&P or at least P-1 from Moody’s; (c) certificates of deposit, time deposits, Eurodollar time deposits or overnight bank deposits having maturities of six months or less from the date of acquisition issued by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (i) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator), (ii) has Tier 1 capital (as defined in such regulations) of not less than $1,000,000,000 and (iii) has a rating of at least AA- from S&P and Aa3 from Moody’s; (d) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the date of acquisition; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (c) of this definition; and (g) shares of money market, mutual or similar funds which (i) invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition; (ii) has net assets of not less than $500,000,000 and (iii) has the highest rating obtainable from either S&P or Moody’s.

 8 

 

Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

Change of Control” shall mean the occurrence of any of the following events:

 

(a)               any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) shall have (x) acquired beneficial ownership or control of 50.1% or more on a fully diluted basis of the voting and/or economic interest in the Equity Interests of Holdings or (y) obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Holdings;

 

(b)               Holdings shall cease to beneficially own and control 100% on a fully diluted basis of each class of outstanding Equity Interests of the Borrower free and clear of all Liens (other than Permitted Equity Liens); or

 

(c)               any “change of control” or similar event (however denominated) shall occur under any indenture or other agreement with respect to Material Indebtedness of any Loan Party.

 9 

 

Closing Date” shall mean the date on which the conditions precedent set forth in Section 4.02 shall have been satisfied or waived.

 

Closing Date Lender” shall mean CO Finance LVS VI LLC.

 

Code” shall mean the Internal Revenue Code of 1986, as amended (unless otherwise provided herein).

 

Collateral” shall mean all Property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document, but in any event excluding Excluded Assets.

 

Collateral Agent” shall have the meaning set forth in the recitals hereto.

 

Commitment” shall mean, as to any Lender, the obligation of such Lender to make a Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Commitment” opposite such Lender’s name on Annex A or, as the case may be, in the Assignment and Assumption pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The aggregate principal amount of the Commitments on the Closing Date is $40,000,000.

 

Common Stock” shall mean the common stock of Holdings, par value $0.01 per share.

 

Common Stock Deemed Outstanding” shall mean the sum of, without duplication, (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock reserved for issuance at such time under any equity incentive plans approved by the board of directors of Holdings, regardless of whether the shares of Common Stock are actually subject to outstanding options or other rights to acquire shares, plus (c) the number of shares of Common Stock issuable upon exercise of any other options, warrants or rights to acquire shares actually outstanding at such time, plus (d) the number of shares of Common Stock issuable upon conversion or exchange of convertible securities actually outstanding at such time, in each case, regardless of whether the options or convertible securities are actually exercisable at such time.

 

Compliance Certificate” shall mean a certificate duly executed by a Responsible Officer of Holdings, substantially in the form of Exhibit A.

 

Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

 

Contractual Obligation” shall mean, with respect to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking (other than a Loan Document) to which such Person is a party or by which it or any of its Property is bound.

 

Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities or by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

 10 

 

Corresponding Tenor” with respect to any Available Tenor shall mean, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

Credit Extension” shall mean the making of a Loan.

 

Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Required Lenders in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Disbursing Agent decides that any such convention is not administratively feasible for the Disbursing Agent, then the Required Lenders may establish another convention in their reasonable discretion, provided that such convention is administratively feasible for the Disbursing Agent.

 

Debtor Relief Laws” shall mean the Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization or similar debtor relief laws of the United States of America or other applicable jurisdictions from time to time in effect.

 

Default” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

 

Disbursing Agent” shall have the meaning set forth in the preamble hereto.

 

Disinterested Director” shall have the meaning set forth in Section 6.08.

 

Disposition” shall mean, with respect to any Property, any sale, lease, sublease, assignment, conveyance, transfer, exclusive license or other disposition thereof (including (i) by way of merger or consolidation, (ii) any Sale and Leaseback and (iii) any Synthetic Lease); and the terms “Dispose” and “Disposed of” shall have correlative meanings.

 

Disqualified Equity Interests” shall mean any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition, (a) require the payment of any dividends (other than dividends payable solely in shares of Qualified Equity Interests), (b) mature or are mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof (other than solely for Qualified Equity Interests), in each case in whole or in part and whether upon the occurrence of any event, pursuant to a sinking fund obligation on a fixed date or otherwise (including as the result of a failure to maintain or achieve any financial performance standards) or (c) are or become convertible into or exchangeable for, automatically or at the option of any holder thereof, any Indebtedness, Equity Interests or other assets other than Qualified Equity Interests, in the case of each of clauses (a), (b) and (c), prior to the date that is 91 days after the Maturity Date at the time of issuance of such Equity Interests (other than (i) following Payment in Full or (ii) upon a “change in control”; provided that any payment required pursuant to this clause (ii) is subject to the prior Payment in Full); provided, however, that if such Equity Interests are issued to any employee or to any plan for the benefit of employees of Holdings, the Borrower or their Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by a Group Member in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.

 11 

 

Disqualified Lender” shall mean (a) any Person that is a competitor of Holdings and its Subsidiaries, which Person has been designated as a “Disqualified Lender” by written notice to Disbursing Agent and the Lenders by Borrower prior to the Closing Date and (b) Affiliates of Persons described in clause (a) above (other than such Affiliates that are bona fide fixed income investors, debt funds, regulated bank entities or unregulated lending entities generally engaged in making, purchasing, holding or otherwise investing in commercial loans, debt securities or similar extensions of credit in the ordinary course of business) that are identified in writing by Borrower to Disbursing Agent and the Lenders prior to the Closing Date; provided, that the inclusion of such Persons as Disqualified Lenders shall not retroactively apply to disqualify any Persons that have previously acquired an assignment or participation in the Loans; provided, further, that the term “Disqualified Lender” shall exclude any Person that Borrower has designated as no longer being a “Disqualified Lender” by written notice delivered to Disbursing Agent and the Lenders from time to time. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that Disbursing Agent will not have any responsibility or obligation of any kind to determine whether any Lender or potential Lender is a Disqualified Lender and Disbursing Agent will have no liability for, or any duty to ascertain or inquire into, monitor or enforce, compliance with assignment or participation provisions with respect to any assignment or participation made to a Disqualified Lender. Disbursing Agent may deliver or furnish the list of Disqualified Lenders to any Lender upon its request.

 

Dollars” or “$” shall mean lawful money of the United States of America.

 

Domestic Foreign Holding Company” shall mean any Domestic Subsidiary that holds no material assets other than Equity Interests (or Equity Interests and Indebtedness) of one or more Foreign Subsidiaries that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

Domestic Subsidiary” shall mean any Subsidiary of Holdings organized under the laws of the United States of America, any State thereof, the District of Columbia, or any other jurisdiction within the United States of America.

 

Early Opt-in Election” shall mean, if the then-current Benchmark is LIBOR, the occurrence of: (a) a notification by the Required Lenders to the Disbursing Agent (with a copy to the Borrower) that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and (b) the joint election by the Borrower and the Required Lenders by affirmative vote to trigger a fallback from LIBOR and the provision by the Borrower of written notice of such election to each of the other parties hereto (the “Rate Election Notice”).

 12 

 

Eligible Assignee” shall mean any Person (other than a Disqualified Lender) that meets the requirements to be an assignee under Section 9.06(b).

 

Eligible Inventory” shall mean, at any time of determination, Inventory owned by a Loan Party which satisfies the general criteria set forth below and which is otherwise acceptable to the Required Lenders in their reasonable discretion (provided, that the Required Lenders may, in their reasonable discretion, change the general criteria for acceptability of Eligible Inventory and shall notify the Borrower of such change promptly thereafter). Inventory shall be deemed to meet the current general criteria if:

 

(a)               it consists of raw materials;

 

(b)               it is in good, new and saleable condition;

 

(c)               it is not slow-moving (defined as inventory units with no usage for 12 months), obsolete, damaged, contaminated, unmerchantable, returned, rejected, discontinued or repossessed;

 

(d)               it is not in the possession of a processor, consignee or bailee, or located on premises leased or subleased to the applicable Loan Party, or on premises subject to a mortgage in favor of a Person other than the Collateral Agent, unless such processor, consignee, bailee or mortgagee or the lessor or sublessor of such premises, as the case may be, has executed and delivered all documentation which the Required Lenders shall require to evidence the subordination or other limitation or extinguishment of such Person’s rights with respect to such Inventory and the Collateral Agent’s right to gain access thereto;

 

(e)               it does not consist of labels, pallets, consigned items, supplies or packaging;

 

(f)                it meets all standards imposed by any Governmental Authority;

 

(g)               it is at all times subject to the Collateral Agent’s duly perfected, first priority security interest and no other Lien except a Permitted Lien;

 

(h)               it is not purchased or manufactured pursuant to a license agreement that is not assignable to the Collateral Agent or any of its permitted assignees, unless such license agreement is satisfactory to the Required Lenders; and

 

(i)                 it is located at the Mexico Facility.

 

Environmental Laws” shall mean any and all applicable laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or other legally binding requirements (including, without limitation, principles of common law) of any Governmental Authority, regulating, relating to or imposing liability or standards of conduct concerning pollution, the preservation or protection of the environment, natural resources or human or employee health and safety (as it relates to exposure to Materials of Environmental Concern), or the generation, manufacture, use, labeling, treatment, storage, handling, transportation or release of, or exposure to, Materials of Environmental Concern.

 13 

 

Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties, attorney or consultant fees or indemnities) resulting from or based upon (a) non-compliance with any Environmental Law or any Environmental Permit, (b) exposure to any Materials of Environmental Concern, (c) Release or threatened Release of any Materials of Environmental Concern, (d) any investigation, remediation, removal, clean-up or monitoring required under Environmental Laws or required by a Governmental Authority (including without limitation Governmental Authority oversight costs that the party conducting the investigation, remediation, removal, clean-up or monitoring is required to reimburse) or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

Environmental Permits” shall mean any and all Permits required under any Environmental Law.

 

Equity Interest” shall mean, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited), if such Person is a limited liability company, membership interests, and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, dividends or distributions of property of, such partnership, whether outstanding on the Closing Date or issued on or after the Closing Date, but excluding debt securities convertible or exchangeable into such equity interests.

 

Equity Offering” shall mean, the sale or issuance (or reissuance) by Holdings or any of its Subsidiaries of any Equity Interests or beneficial interests (common stock, preferred stock, partnership interests, member interests or otherwise) or any options, warrants, convertible securities or other rights to purchase such Equity Interests or beneficial interests.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, the regulations promulgated thereunder and any successor thereto.

 

ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with any Group Member, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 or 303 of ERISA or Section 412 or 430 of the Code, is treated as a single employer under Section 414 of the Code. Any former ERISA Affiliate of the Group Members shall continue to be considered an ERISA Affiliate of the Group Members within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of any Group Member and with respect to liabilities arising after such period for which any Group Member could be liable under the Code or ERISA.

 14 

 

ERISA Event” shall mean (a) a “reportable event” within the meaning of Section 4043(c) of ERISA and the regulations issued thereunder with respect to any Single Employer Plan (excluding those for which the provision for 30 day notice to the PBGC has been waived by regulation in effect on the Closing Date); (b) the material failure to meet the minimum funding standard of Sections 412 or 430 of the Code or Sections 302 or 303 of ERISA with respect to any Single Employer Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Single Employer Plan; (d) the termination of any Single Employer Plan or the withdrawal or partial withdrawal of any Group Member from any Single Employer Plan or Multiemployer Plan; (e) a determination that any Single Employer Plan is, or is expected to be, in “at risk” status (as defined in Section 430 of the Code or Section 303 of ERISA); (f) a determination that any Multiemployer Plan is, or is expected to be, in “critical” or “endangered” status under Section 432 of the Code or Section 305 of ERISA; (g) the receipt by any Group Member or any of their respective ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; (h) the adoption of any amendment to a Single Employer Plan that would require the provision of security pursuant to Section 436(f) of the Code; (i) the receipt by any Group Member or any of their respective ERISA Affiliates of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA; (j) the material failure by any Group Member or any of their respective ERISA Affiliates to make a required contribution to a Multiemployer Plan; (k) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to result in material liability to any Group Member; (l) the imposition of a lien pursuant to Section 430(k) of the Code or Section 303(k) of ERISA or a violation of Section 436 of the Code with respect to any Single Employer Plan; (m) the assertion of a material claim (other than routine claims for benefits) against any Plan other than a Multiemployer Plan or the assets thereof, or against any Group Member or any of their respective ERISA Affiliates in connection with any Plan; or (n) the occurrence of an act or omission which could give rise to the imposition on any Group Member or any of their respective ERISA Affiliates of any material fine, penalty, tax or related charge under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Plan.

 

Eurodollar Base Rate” shall mean, with respect to any Eurodollar Loan for any Interest Period, LIBOR as published by ICE Benchmark Administration Limited, a United Kingdom company (or any other Person that takes over the administration of such rate for Dollars for a period equal in length to such Interest Period), at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that, if such rate is not so published at such time for such Interest Period (an “Impacted Interest Period”) then the Eurodollar Base Rate shall be the Interpolated Rate; provided that, if the Eurodollar Base Rate or any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

 

Eurodollar Loan” shall mean a Loan bearing interest at a rate determined by reference to the Eurodollar Rate.

 

Eurodollar Rate” shall mean, subject to the implementation of a Benchmark Replacement Rate in accordance with Section 2.13(b), with respect to any Eurodollar Loan for any Interest Period, a per annum rate of interest (rounded upward, if necessary, to the next 1/100th of 1.00%) equal to the greater of (a) (i) the Eurodollar Base Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate and (b) 1.50%.

 15 

 

Eurodollar Tranche” shall mean the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date.

 

Event of Default” shall mean any of the events specified in Section 7.01; provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

Excluded Assets” shall mean:

 

(a)               any fee owned Real Property (other than Material Owned Real Property) and any leasehold rights and interests in Real Property;

 

(b)               commercial tort claims where the amount of damages claimed by the applicable Loan Party is less than $500,000;

 

(c)               governmental licenses, state or local franchises, charters and authorizations and any other property and assets to the extent that the Collateral Agent may not validly possess a security interest therein under applicable Requirements of Law (including, without limitation, rules and regulations of any Governmental Authority or agency) or the pledge or creation of a security interest in which would require governmental consent, approval, license or authorization that has not been obtained after the applicable Loan Party has used commercially reasonable efforts to do so, other than to the extent such prohibition or limitation on possessing a security interest therein is rendered ineffective under the UCC or other applicable Requirements of Law notwithstanding such prohibition or limitation;

 

(d)               any lease, license, Permit or agreement to the extent that a grant of a security interest therein (i) is prohibited by applicable Requirements of Law other than to the extent such prohibition is rendered ineffective under the UCC or other applicable Requirements of Law notwithstanding such prohibition or (ii) to the extent and for so long as it would violate or invalidate the terms thereof (in each case, after giving effect to the relevant provisions of the UCC or other applicable Requirements of Law) or would give rise to a termination right of an unaffiliated third party thereunder or require consent of an unaffiliated third party thereunder (except to the extent such provision is overridden by the UCC or other Requirements of Law), in each case, only to the extent that such limitation on such pledge or security interest is otherwise permitted under Section 6.11;

 

(e)               (i) Margin Stock (to the extent a security interest therein would violate the provisions of the regulations of the Board of Governors, including Regulation T, Regulation U or Regulation X) and (ii) Equity Interests in any Person other than Wholly Owned Subsidiaries that cannot be pledged without the consent of unaffiliated third parties (unless such consent has been obtained);

 16 

 

(f)                (i) voting Equity Interests in excess of 65% (or such greater percentage that could not reasonably be expected to cause any material adverse Tax consequences) of the total voting Equity Interests in any Excluded Foreign Subsidiary and (ii) any assets of any Excluded Foreign Subsidiary (including 100% of the Equity Interests in any Subsidiary whose immediate parent is an Excluded Foreign Subsidiary);

 

(g)               any intent-to-use trademark or service mark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto and acceptance thereof by the United States Patent and Trademark Office, to the extent, if any, that, and solely during the period, if any, in which the grant of a security interest therein would impair the validity or enforceability of or void such intent-to-use trademark or service mark application or any registration that may issue therefrom under applicable federal law;

 

(h)               machinery and equipment located at the Shoals Facility that is transferred to the landlord or otherwise disposed of in connection with the Shoals Facility Lease Termination (including any such disposition made by the Mexican Subsidiaries if any of such machinery and equipment is first transferred to them); and

 

(i)                 particular assets if and for so long as, if reasonably agreed by the Required Lenders and the Borrower, the cost of creating a pledge or security interest in such assets exceed the practical benefits to be obtained by the Lenders therefrom;

 

provided, however, that Excluded Assets shall not include any proceeds, substitutions or replacements of any Excluded Assets referred to in clauses (a) through (i) (unless such Proceeds, substitutions or replacements would independently constitute Excluded Assets referred to in clauses (a) through (i)).

 

Excluded Foreign Subsidiary” shall mean, for so long as any such Subsidiary’s status as a Guarantor (or the pledge of such Subsidiary’s Equity Interests or assets) could reasonably be expected to cause material adverse Tax consequences, (a) each Foreign Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code, and (b) each Domestic Foreign Holding Company. For the avoidance of doubt, the definition of Excluded Foreign Subsidiary shall include any Foreign Subsidiaries in existence on the Closing Date (other than the Mexican Subsidiaries).

 

Excluded Perfection Assets” shall mean:

 

(a)               (i) rail cars (other than any rail cars owned by any Loan Party that are leased, or intended to be leased, to third parties, which are required to be perfected), (ii) motor vehicles and other assets (other than rail cars) subject to certificates of title with a book value of less than $100,000 individually and $200,000 in the aggregate and (iii) airplanes;

 

(b)               letter of credit rights, except to the extent constituting support obligations for other Collateral as to which perfection of the security interest in such other Collateral is accomplished solely by the filing of a UCC financing statement or another method that is required by the Security Documents for such other Collateral; and

 17 

 

(c)               particular assets if and for so long as, if reasonably agreed by the Required Lenders and the Borrower, the cost of perfecting a pledge or security interest in such assets exceed the practical benefits to be obtained by the Lenders therefrom.

 

Excluded Subsidiary” shall mean (a) any Subsidiary that is not a Wholly Owned Subsidiary of a Loan Party, (b) any Immaterial Subsidiary, (c) any special purpose securitization vehicle (or similar entity), (d) any captive insurance Subsidiary, (e) any not-for-profit Subsidiary and (f) any Excluded Foreign Subsidiary.

 

Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment or in this Agreement (other than pursuant to an assignment request by the Borrower under Section 2.19) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.16(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

 

Existing Credit Facility” shall mean that certain Credit and Security Agreement dated as of April 12, 2019 among Holdings, JAC Operations, Inc., Freight Car Services, Inc., Johnstown America, LLC, FreightCar Rail Services, LLC, FreightCar Roanoke, LLC and FreightCar Alabama, LLC, as borrowers, FreightCar Short Line, Inc. and the Borrower (f/k/a FCAI Holdings, LLC), as guarantors, and BMO Harris Bank N.A., as Lender, as it may have been amended, restated, supplemented or otherwise modified prior to the Closing Date.

 

Extraordinary Receipts” shall mean any cash received by any Group Member not in the ordinary course of business (and not consisting of Net Cash Proceeds) including, without limitation, pension plan reversions, judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, purchase price adjustments, and indemnity payments to the extent not made to reimburse a payment made by a Group Member, in each case, in excess of $500,000 individually and $1,000,000 in the aggregate during any fiscal year of Holdings.

 

FASB ASC” shall mean the Accounting Standards Codification of the Financial Accounting Standards Board.

 

FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

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Federal Funds Effective Rate” shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (i) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate charged to the Disbursing Agent on such day on such transactions as determined by the Disbursing Agent.

 

Fee Letter” shall mean that certain fee proposal letter provided by U.S. Bank National Association and executed by the Borrower on the Signing Date, as it may be amended, restated, supplemented or otherwise modified.

 

Floor” shall mean the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Eurodollar Rate.

 

Foreign Lender” shall mean a Lender that is not a U.S. Person.

 

Foreign Subsidiary” shall mean any Subsidiary of Holdings that is not a Domestic Subsidiary.

 

Funded Debt” shall mean, with respect to any Person, all Indebtedness of such Person of the types described in clauses (a) through (e) and, solely with respect to letters of credit, bankers’ acceptances and similar facilities that have been drawn but not yet reimbursed, clause (f) of the definition of “Indebtedness”.

 

GAAP” shall mean generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States of America, that are applicable to the circumstances as of the date of determination, consistently applied.

 

Gil Family” shall mean, individually or collectively, as the context may require, Jesus Gil, Alejandro Gil and Salvador Gil and any of their Affiliates.

 

Governmental Authority” shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

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Grantor” shall mean any Loan Party that is party to the Guarantee and Collateral Agreement.

 

Group Member” shall mean each of Holdings, the Borrower and their Subsidiaries (other than any Railcar Leasing Subsidiary) and “Group Members” shall refer to each such Person, collectively.

 

Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral Agreement, to be dated as of the Closing Date and executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor in favor of the Collateral Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

Guarantee Obligation” shall mean, with respect to any Person (the “guaranteeing person”), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit), if to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term “Guarantee Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (1) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (2) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

 

Guarantors” shall mean the collective reference to Holdings, the Borrower and the Subsidiary Guarantors.

 

Holdings” shall have the meaning set forth in the preamble hereto.

 

Highest Lawful Rate” shall mean the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

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Historical Audited Financial Statements” shall mean the audited consolidated balance sheets of Holdings and its Subsidiaries as at the end of the fiscal years ended December 31, 2017, 2018 and 2019 and the related consolidated statements of income or operations, changes in stockholders’ equity and cash flows for such fiscal years, including the notes thereto.

 

Immaterial Subsidiary” shall mean any Subsidiary designated by the Borrower as an Immaterial Subsidiary if and for so long as such Immaterial Subsidiary, together with all other Immaterial Subsidiaries so designated as Immaterial Subsidiaries, does not have (a) total assets at such time exceeding 2.5% of the total assets of Holdings and its Subsidiaries, on a consolidated basis, or (b) total revenues and operating income for the most recent 12-month period for which financial statements are available exceeding 2.5% of the total revenues and operating income for the most recent 12-month period of Holdings and its Subsidiaries, on a consolidated basis; provided that any Subsidiary would not be an Immaterial Subsidiary to the extent the above required terms are not satisfied; provided, further, that the Borrower may undesignate any Immaterial Subsidiary in order to cause the above required terms to be satisfied.

 

Impacted Interest Period” shall have the meaning set forth in the definition of “Eurodollar Base Rate”.

 

Indebtedness” shall mean, of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of Property or services, including seller notes or earn-out obligations appearing on such Person’s balance sheet in accordance with GAAP (other than trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures, loan agreements or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property), (e) all Capital Lease Obligations, Purchase Money Obligations or Attributable Indebtedness of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under bankers’ acceptance, letter of credit or similar facilities, (g) all obligations of such Person in respect of Disqualified Equity Interests of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, but if such obligation has not been assumed, then such obligation shall be valued at the lesser of the amount of such obligation and the fair market value of the property securing such obligation at any time of determination and (j) for the purposes of Section 6.01 and Section 7.01(e) only, all obligations of such Person in respect of Swap Contracts.

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Indemnified Liabilities” shall have the meaning set forth in Section 9.05(b).

 

Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

Indemnitee” shall have the meaning set forth in Section 9.05(b).

 

Intellectual Property” shall mean all rights, priorities, and privileges relating to intellectual property, whether arising under United States of America, state, multinational or foreign laws or otherwise, including, without limitation, copyrights, patents, trademarks, service marks, moral rights, technology, software, source code, know-how, processes, recipes, formulas, trade secrets, confidential information, domain names, and social media accounts; all rights, licenses, and covenants relating to any of the foregoing; and all rights to sue at law or in equity for any infringement, misappropriation, or other impairment of any of the foregoing, including the right to receive all proceeds and damages therefrom.

 

Intellectual Property Security Agreements” shall have the meaning set forth in the Guarantee and Collateral Agreement.

 

Intercreditor Agreement” shall mean that certain Intercreditor Agreement to be dated as of the Closing Date between the Revolving Loan Lender and the Collateral Agent, and acknowledged by the Loan Parties, as it may be amended, restated, supplemented or otherwise modified from time to time.

 

Interest Payment Date” shall mean (a) as to any Eurodollar Loan, the last day of each Interest Period applicable to such Eurodollar Loan and the final maturity date of such Eurodollar Loan; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December to occur while such Loan is outstanding and the Maturity Date.

 

Interest Period” shall mean, with respect to any Eurodollar Loan, the period commencing on the date such Eurodollar Loan is disbursed or converted to or continued as a Eurodollar Loan and ending on the date that is three months thereafter, as selected by the Borrower in its Borrowing Notice; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such next succeeding Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period pertaining to a Eurodollar Loan that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no Interest Period shall extend beyond the Maturity Date.

 

International Trade Laws” shall mean (a) Sanctions; (b) export control and/or import laws and regulations of the United States and other jurisdictions applicable to the Borrower or any of its Affiliates, including the Arms Export Control Act (22 U.S.C. 2778), the International Traffic in Arms Regulations (ITAR) (22 CFR 120-130), the Export Administration Regulations (EAR) (15 CFR 730-774), and the laws and regulations administered by Customs and Border Protection (19 CFR Parts 1-199); and (c) Anti-Corruption Laws.

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Interpolated Rate” shall mean, at any time, for any Impacted Interest Period, the rate per annum (rounded to the same numb