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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):
February 5, 1999 (January 29, 1999)
MERITOR AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13093 38-3354643
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2135 West Maple Road, Troy, Michigan 48084-7186
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (248) 435-1000
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<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On January 29, 1999, Meritor Automotive, Inc. ("Meritor") and
certain of its wholly-owned subsidiaries completed the acquisition (the
"Acquisition") of substantially all the assets and liabilities of the Heavy
Vehicle Braking Systems business (the "Acquired Business") of LucasVarity plc, a
public limited company organized under the laws of England ("LucasVarity"),
pursuant to the terms of an Umbrella Agreement dated as of November 22, 1998
(the "Acquisition Agreement") among Meritor and certain of its subsidiaries and
LucasVarity and certain of its subsidiaries, which is filed as Exhibit 2.1
hereto, and various related implementing agreements. The purchase price was
US$390,000,000, subject to certain post-closing adjustments as provided in the
Acquisition Agreement, and was arrived at as a result of arms-length
negotiations between Meritor and LucasVarity. The Acquired Business, with
manufacturing plants in the United States and the United Kingdom, manufactures a
variety of brake system components for commercial vehicles including air disc
brakes, hubs, drums and hydraulic brakes. Meritor currently intends to continue
the operations of the Acquired Business and to utilize the assets thereof in
such operations.
The Acquisition was financed in part by borrowings under a new
364-day $300 million senior unsecured acquisition term loan facility provided
pursuant to a Credit Agreement dated as of January 15, 1999 among Meritor, UBS
AG, Stamford Branch, as administrative agent, Warburg Dillon Read LLC, as
arranger, NBD Bank, as documentation agent, and certain other lenders, which is
filed as Exhibit 99.1 hereto. The $90 million balance of the purchase price was
paid with borrowings under Meritor's existing $1 billion senior unsecured
revolving credit facility.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
2.1 Umbrella Agreement dated as of November 22, 1998
among Lucas Industries plc and others, Meritor Heavy
Vehicle Braking Systems (UK) Limited and others,
Meritor and LucasVarity. Omitted schedules and
exhibits, which are listed in the table of contents
to the Umbrella Agreement, will be provided
supplementally to the Securities and Exchange
Commission upon request.
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99.1 Credit Agreement dated as of January 15, 1999 among
Meritor, UBS AG, Stamford Branch, as administrative
agent, Warburg Dillon Read LLC, as arranger, NBD
Bank, as documentation agent, and others.
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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, thereunto duly authorized.
MERITOR AUTOMOTIVE, INC.
(Registrant)
By /s/ David W. Greenfield
-------------------------
David W. Greenfield
Senior Vice President,
General Counsel and
Secretary
Dated: February 5, 1999
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EXHIBIT INDEX
Exhibit Description Sequentially
Number ----------- Numbered
- ------ Page
----
2.1 Umbrella Agreement dated as of November 22, 1998 among
Lucas Industries plc and others, Meritor Heavy Vehicle
Braking Systems (UK) Limited and others, Meritor and
LucasVarity.
99.1 Credit Agreement dated as of January 15, 1999 among
Meritor, UBS AG, Stamford Branch, as administrative
agent, Warburg Dillon Read LLC, as arranger, NBD Bank,
as documentation agent, and others.
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EXHIBIT 2.1
DATED NOVEMBER __22nd__ 1998
(1) LUCAS INDUSTRIES plc and OTHERS
(2) MERITOR HEAVY VEHICLE BRAKING SYSTEMS (UK)
LIMITED and OTHERS
(3) MERITOR AUTOMOTIVE, INC.
(4) LUCASVARITY PLC
UMBRELLA AGREEMENT
relating to the Sale and Purchase of
Assets of LucasVarity's Heavy Vehicle Braking Division
Eversheds
10 Newhall Street
Birmingham
B3 3LX
Ref: SL/36
Tel: 0121 233 2001
Fax: 0121 236 1583
<PAGE>
CONTENTS
1. Definitions
2. Conditions Precedent, Sale and Purchase of HVBS and Exchange of
Documents
3. Consideration
4. Closing
5. Further Obligations
6. Warranties and Indemnities
7. Post Completion Covenants
8. Restrictive Trade Practices Act
9. Purchaser Assurances
10. Interest
11. Waiver
12. Notices
13. Costs
14. Entire Agreement
15. Survival of Certain Provisions
16. Governing Law
17. Announcements
18. Counterparts
19. Assignment; Confidentiality Agreement
20. Guarantee by Purchaser Guarantor
21. Guarantee by Vendor Guarantor
22. No Third Party Beneficiary
23. Extension and Waiver
24. Mutual Co-operation
SCHEDULE 1 Details of the Vendors and the Purchasers
SCHEDULE 2 PART 1 Pro-forma draft Closing Statements and Aggregation
Statement
PART 2 Allocation of purchase price
PART 3 The China Consideration
SCHEDULE 3 Warranties of Vendors
SCHEDULE 4 Warranties of Purchasers and Purchaser Guarantor
SCHEDULE 5 Transaction Documents
SCHEDULE 6 Europe
SCHEDULE 7 Provisions
SCHEDULE 8 Deviations from UK GAAP
SCHEDULE 9 Transitional Arrangements
SCHEDULE 10 Storm Water Actions and Environmental Indemnity
SCHEDULE 11 Varga Licence
SCHEDULE 12 Varga Assets
SCHEDULE 13 Brakes India Licence
SCHEDULE 14 Types of Intercompany Trading Accounts
<PAGE>
THIS AGREEMENT is made on 22nd November 1998
BETWEEN
(1) THE VENDORS Those companies whose names and registered offices or
principal places of business are set out in Part 1 of Schedule 1
(2) THE PURCHASERS Those companies whose names and registered offices
or principal places of business are set out in Part 2 of Schedule 1
(3) THE PURCHASER GUARANTOR Meritor Automotive, Inc., 2135 West Maple
Road, Troy, Michigan, USA 48084-7186
(4) THE VENDOR GUARANTOR LucasVarity plc whose registered office is at
46 Park Street, London W1Y 4DJ
RECITALS
(A) The Vendors carry on respectively the English Activity, the German
Activity and the US Business and own the China Share.
(B) The Vendors have respectively agreed to sell HVBS and the assets
comprised in HVBS, together with the China Share to the Purchasers
on the terms and conditions hereinafter appearing and on the terms
of the Transaction Documents.
(C) In consideration of the Vendors entering into this Agreement in
order to sell HVBS, the assets comprised within HVBS and the China
Share to the Purchasers, the Purchaser Guarantor has agreed to
guarantee performance by the Purchasers of their obligations
hereunder and under each of the Transaction Documents in the manner
hereinafter appearing and otherwise to assume the obligations
imposed on it by this Agreement.
(D) In consideration of the Purchasers entering into this Agreement in
order to buy HVBS, the assets comprised within HVBS and the China
Share from the Vendors, the Vendor Guarantor has agreed to
guarantee performance by the Vendors of their obligations hereunder
and under each of the Transaction Documents in the manner
hereinafter appearing and otherwise to assume the obligations
imposed on it by this Agreement.
NOW THIS AGREEMENT WITNESSES as follows:-
1. DEFINITIONS
In this Agreement (which expression shall include the Recitals of and
Schedules to this Agreement) except where inconsistent with the subject
matter or context:-
1.1 The following words and expressions shall bear the
following meanings respectively:-
"the Accounting Date" 31st January 1998
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"the Accounts" The unaudited management
accounts of the Vendors
comprising the unaudited
balance sheets and profit and
loss accounts of HVBS as at
the Accounting Date copies of
which are annexed to the
Disclosure Schedules
"the Accruals" Any liability (which is not a
Retained Liability) of a
Vendor or a member of the
LucasVarity Group relating to
the English Activity (which
expression shall exclude the
LAO Activity for the purposes
of this definition), the
German Activity or the US
Business, as the case may be,
in any such case to the extent
that it relates thereto which
falls to be settled after the
Closing Date in the course of
carrying on the English
Activity (as aforesaid), the
German Activity or the US
Business, as the case may be,
to the extent that it relates
to the period before opening
of business on the Closing
Date
"Action" Any action, suit or proceeding
at law or in equity,
arbitration, inquiry,
investigation or governmental,
administrative, regulatory or
other proceeding by or before
any arbitrator, court or other
governmental entity
"Activity" or "HVBS" The English Activity, the
German Activity and the US
Business taken together, as
conducted on the date of this
Agreement and at Closing
through or by the LucasVarity
Heavy Vehicle Braking Systems
Division, including that
portion of the business as
conducted now and at Closing
under the name Heavy Vehicle
Braking Systems that was
formerly conducted in the name
of Heavy Duty Braking Systems
"Affiliate" With respect to any Person,
any other Person directly or
indirectly controlling,
controlled by or under
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common control with such
Person. For purposes of the
immediately preceding
sentence, the term "control"
(including, with correlative
meanings, the terms
"controlling", "controlled by"
and "under common control
with"), as used with respect
to any Person, means the
possession, directly or
indirectly, of the power to
direct or cause the direction
of the management and policies
of such Person, whether
through ownership of voting
securities, by contract or
otherwise
"Aftermarket" The market for spare and
replacement parts for
components or sub-assemblies
comprised within the products
of Original Equipment
Manufacturers
"Alternative
Specification" Spare and replacement parts
manufactured to be fit for the
purpose of supply to the
Aftermarket but which have not
been homologated by the
Original Equipment
Manufacturer as original
equipment
"Anti Lock Brake
Systems" or "ABS" Electronic brake control
systems and components of such
systems for controlling wheel
braking to maintain vehicle
stability or traction, or to
brake a vehicle in a
controlled manner, including
other vehicle electronic
systems in communication with
such electronic brake control
systems but excluding EBS
"the Assets" The English Assets, the German
Assets and the US Assets taken
together which,
notwithstanding anything
contained in this Agreement or
the Transaction Documents
(subject to provisions of the
Sale Agreements with respect
to the failure to obtain any
required consents under
Contracts), shall be (i) all
of each member of the
LucasVarity Group's right,
title and
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interest in and to all assets,
property and rights (whether
tangible or intangible, real,
personal or mixed, fixed or
otherwise, and wherever
located, but excluding
registered intellectual
property) that are related
primarily to or used primarily
in the Activity (which
expression shall exclude the
LAO Activity for the purposes
of this paragraph (i)), (ii)
the Registered Intellectual
Property and (iii) the LAO
Assets (as defined in the
English Sale Agreement)
"Brakes India" Brakes India Limited, a
company incorporated in India
under the Companies Act 1956
and having its registered
office at 21 Patullos Road,
Madras, 600 002, India
"Brakes India Licence" The licence to be granted to
Brakes India by the
appropriate member of the
LucasVarity Group on or before
Closing and to be assigned to
a member of the Purchaser
Group at Closing, such licence
to be in the form set out in
Schedule 13
"Business Day" Any day (other than Saturday
or Sunday) on which clearing
banks are open for a full
range of banking transactions
in both London, England and
Detroit, Michigan, USA
"Business Unit" Any part of a member of the
LucasVarity Group or the
business and activities of
such a member or part of such
a member in any such case in
respect of which separate
management accounts have
customarily been prepared by
the LucasVarity Group or the
relevant member
"the China Consideration" The price for the China Share
as set out in Schedule 2 Part
3 (notwithstanding anything to
the contrary contained in the
China Sale
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Agreement)
"the China Sale
Agreement" The agreement of even date
herewith made between (1)
Lucas Industries plc (2)
Huayang Group and (3) Meritor
Automotive, Inc. relating to
the sale and purchase of the
China Share
"the China Share" The 60% equity share in
Huayang owned by Lucas
Industries plc
"the China Warranties" The warranties of Lucas
Industries plc contained in
the China Sale Agreement but
only to the extent that such
warranties relate to Lucas
Industries plc
"Closing" Closing of the sale and
purchase hereby agreed and
agreed pursuant to the English
Sale Agreement, the US Sale
Agreement and the German Sale
Agreement in accordance with
clause 4 and with each such
Agreement and "the Closing
Date" shall be construed as
the opening of business in
London, England on the date on
which Closing takes place.
References in this Agreement
or in any of the English Sale
Agreement, the US Sale
Agreement or the German Sale
Agreement to "Completion"
shall be deemed to be
references to "Closing" and
references to "the Completion
Date" to "the Closing Date"
"the Closing Conditions" The conditions precedent to
Closing set out in clauses 2.1
to 2.3 inclusive below
"Commercial Vehicles" Trucks, buses and trailers
which may be attached to
either of the foregoing
"the Consideration" The aggregate of the Fixed
Price Element, the Net Current
Assets Value and the China
Consideration
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"Consistent" With reference to any
particular asset, liability,
income or expenditure, to the
extent not expressly provided
to the contrary in Schedule 8,
in accordance with UK GAAP
and, provided the same are in
accordance with UK GAAP, the
accounting principles,
policies, practices and
methods consistent with those
used in the preparation of the
Accounts
"the Contracts" The Contracts (as defined in
each of the Sale Agreements)
and the LAO Contracts (as
defined in the English Sale
Agreement) relating to HVBS
and the benefit of which are
sold to the Purchasers
pursuant to the Sale
Agreements (it being
understood that Contracts do
not include unwritten
contracts or arrangements
between or among members of
the LucasVarity Group or
Business Units or with any
Affiliate thereof, other than
such contracts for which the
supply of the relevant goods
or services was completed
prior to Closing and for the
purposes of this definition
electronic contracts shall not
constitute unwritten
contracts)
"the Disclosure
Schedules" or The disclosure schedules
"Disclosure Letters" and/or disclosure letters,
prepared or written by the
Vendors to the Purchasers in
the Agreed Terms, setting out
qualifications to and
exceptions from the Warranties
as given as at the date of
this Agreement and separately
as at Closing as contemplated
by clause 6.2.2
"EBS" Electronic control for full
air brake system
"the English Activity" The Activity, the LAO Activity
and the Shares as each such
term is defined in the English
Sale Agreement and the French
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Transferring Employees
"the English Assets" The Assets and the LAO Assets
the subject of the English
Sale Agreement (and as each
such expression is defined
therein)
"the English
Intellectual Property" The Registered Intellectual
Property, the Unregistered
Intellectual Property, the LAO
Intellectual Property and the
Know-How the subject of the
English Sale Agreement (and as
each such expression is
defined therein)
"the English Plant
Machinery and Equipment" The Plant Machinery and
Equipment the subject of the
English Sale Agreement (and as
defined therein)
"the English Property" The English Property the
subject of the English Sale
Agreement (and as defined
therein)
"the English Purchaser" Meritor Heavy Vehicle Braking
Systems (UK) Limited whose
registered office is at 21
Suttons Park Avenue, Suttons
Business Park, Reading,
Berkshire RG6 1LA
"English Sale Agreement" An agreement of even date
herewith made between (1) the
English Vendor (2) the English
Purchaser (3) Lucas Industries
plc and (4) Lucas France SAS
relating to the sale and
purchase of the English
Activity
"the English
Transferring Employees" The Transferring Employees the
subject of the English Sale
Agreement (and as defined
therein)
"the English Vendor" Lucas Limited, registered
number 872948
"the English Warranties" The warranties of the English
Vendor relating only to the
English Activity contained in
clause 6.1 and Part B of
Schedule 3
"Environment" Any air (including air within
natural or man-made structures
above or
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below ground), water
(including territorial,
coastal and inland waters and
ground water and water in
drains and sewers), and land
(including the seabed or river
bed under any water) surface
land and sub surface land
"Environmental Claim" A claim which the Purchasers
or the Purchaser Guarantor or
any of them is or are entitled
to bring (or would be entitled
to bring but for the
provisions of paragraphs 2.2
or 2.4 of Schedule 10) against
the Vendors, the Vendor
Guarantor or any of them
pursuant to this Agreement for
breach of the Environmental
Warranties and/or in respect
of any liability under the
Environmental Indemnity
"the Environmental
Indemnity" The indemnity given by the
Vendors contained in clause
5.13 and Schedule 10
"Environmental Law" (i) Any applicable law,
statute, rule, regulation
or ordinance in force at
the date of Closing,
including without
limitation common,
criminal or civil law,
statutes and subordinate
legislation, or any
judgment, directive,
order, decree, license,
permit, authorization,
consent or requirement of
or obligation imposed by
a government entity,
relating to pollution or
the protection of the
Environment, including,
without limitation, those
relating to the Release
or threat of Release,
exposure to, or
generation, use,
treatment, storage,
transport or disposal of
any Hazardous Materials
and any planning
conditions on any
planning permission
granted under the Town
and Country Planning Acts
to the extent those
conditions relate to the
control or remediation of
Hazardous Materials, in
each case in force at
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the date of Closing;
(ii) the contaminated land
provisions and water
cleanup provisions
referenced in Part IIA of
the Environmental
Protection Act 1990,
Section 161 A-D of the
Water Resources Act 1991
and the Groundwater
Regulations 1998,
respectively, and any
implementing or other
secondary legislation and
statutory guidance made
or issued thereunder,
whether in force now or
in the future; and
(iii)for the avoidance of
doubt the term
Environmental Law will
include any judgment,
order, obligation,
ruling, decision or
decree made by any
governmental entity in
the future applying
applicable law in force
at the date of Closing to
the conduct of the
Activity, to the Assets
or to the Purchasers or
the Purchaser Guarantor
"the Environmental
Warranties" The warranties contained in
paragraph 15 of Schedule 3,
Part A.
"ERISA" The Employee Retirement Income
Security Act of 1974, as
amended
"Europe" Those countries listed in
Schedule 6
"the Exchange Rates" 1 Pound Sterling to $1.66
DM 1.66 to US$1
Ff 5.56 to US$1
"the Excluded Assets" The Excluded Assets (as
defined in each of the Sale
Agreements) and (i) all rights
in respect of Intercompany
Accounts owed to the English
Activity, the German Activity
or the US Business, as the
case may be (other than
Intercompany Trading
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Accounts to the extent
reflected as an asset on the
Final Closing Statement), (ii)
payments made in advance by or
on behalf of a Vendor or any
other member of the
LucasVarity Group prior to the
Closing Date in the course of
carrying on the LAO Activity
to the extent that such
payments relate to the period
after opening of business on
the Closing Date, except to
the extent the parties agree
to reflect the same as an
asset on the Final Closing
Statement; and (iii) cheques
relating to the English
Activity, the German Activity
or the US Business as the case
may be received by any member
of the LucasVarity Group prior
to the Closing Date or by
banks on behalf of such
members prior to the Closing
Date
"the Fixed Price Element" US$374,000,000 being allocated
as set out in Part 2 of
Schedule 2 among (i) the
freehold property included in
the English Property, (ii) the
US Real Property, (iii) the
Registered Intellectual
Property the subject of the
English Sale Agreement (as
such expression is defined
therein), (iv) the English
Intellectual Property other
than the Registered
Intellectual Property referred
to in paragraph (iii) and (v)
the other Assets (net of
liabilities) which are not
reflected in the Net Current
Assets Value
"the French Transferring
Employees" The persons who at Closing are
part of the English Activity
but employed in France by
Lucas France SAS, a subsidiary
of Lucas Industries plc and
who are listed in Schedule 14
of the English Sale Agreement
"Friction" Drum brake linings and disc
brake pads
"General Warranties" The warranties of the Vendors
contained in clause 6.1 and
Part A of
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Schedule 3
"the German Activity" The Activity as defined in the
German Sale Agreement
"the German Assets" The Assets the subject of the
German Sale Agreement (as
defined therein)
"the German Intellectual
Property" The Intellectual Property and
the Know-How the subject of
the German Sale Agreement (and
as each such expression is
defined therein)
"the German Plant
Machinery and Equipment" The Plant Machinery and
Equipment the subject of the
German Sale Agreement (and as
defined therein)
"the German Purchaser" Meritor Automotive GmbH of
Dieselstrasse 35, 60314
Frankfurt am Main, Germany
"the German Sale
Agreement" An agreement of even date
herewith made between (1) the
German Vendor (2) Lucas
Limited (3) the German
Purchaser and (4) the
Purchaser Guarantor relating
to the sale and purchase of
the German Activity
"the German Transferring
Employees" The Transferring Employees the
subject of the German Sale
Agreement (and as defined
therein)
"the German Vendor" Lucas Automotive GmbH whose
legal seat is at Carl-Spaeter
Strasse, 56070 Koblenz,
Germany
"the German Warranties" The warranties of the German
Vendor relating only to the
German Activity contained in
clause 6.1 and Part C of
Schedule 3
"the Goodwill" The goodwill of the Vendors in
connection with HVBS as sold
to the Purchasers pursuant to
each of the Sale Agreements
"gvw" Gross vehicle weight
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"Hart-Scott-Rodino" The Hart-Scott-Rodino
Antitrust Improvements Act of
1976, or any successor law,
and regulations and rules
issued pursuant to that Act
"Hazardous Materials" Any natural or artificial
substance (whether in solid or
liquid form or in the form of
a gas or vapour) capable of
causing harm (whether alone or
in combination with any other
substance) to any human or any
living organism supported by
the Environment, or capable of
damaging the Environment or
public health, including but
not limited to any pollutants
and any hazardous, toxic,
radioactive, noxious,
corrosive or dangerous
substances
"Heavy Vehicle
Competing Business" The trade or business of being
engaged:-
(a) anywhere in the world in
designing and/or manufacturing
and/or selling for Off Highway
Vehicles full mechanical
and/or hydraulic actuated
braking systems and/or Wheel
End Products
(b) anywhere in the world in
designing and/or manufacturing
and/or selling Wheel End
Products for applications in
full air brake systems
(c) in NAFTA in designing
and/or manufacturing and/or
selling Wheel End Products for
applications in Classes 7 and
8 category Commercial
Vehicles, and also in Classes
5 and 6 category Commercial
Vehicles except that in
Classes 5 and 6 circumstances
described in each of clauses
7.2.3.3 and 7.2.11 shall not
be considered a Heavy Vehicle
Competing Business
(d) in Europe in designing
and/or manufacturing and/or
selling Wheel
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End Products for applications
in Commercial Vehicles with a
gvw of six (metric) tonnes and
above
(e) in the Rest of the World
in designing and/or
manufacturing and/or selling
Wheel End Products for
applications in Commercial
Vehicles with a payload of
three tons and above
"Holding Company" Holding company as defined in
Section 736 of the Companies
Act 1985
"Hose Employees" The Transferring Employees as
defined in the Hoses
Subcontract Agreement
"Hoses Subcontract
Agreement" The Agreement to be entered
into on Closing in the Agreed
Terms made between the English
Vendor and the English
Purchaser for the assembly,
testing and packaging of brake
hoses
"Huayang" Lucas Huayang Vehicle Braking
Company Limited (business
licence number 001904 issued
by the State Administration of
Industry and Commerce) being a
company incorporated in the
Peoples Republic of China
"HVBS" or "the Activity" The English Activity, the
German Activity and the US
Business taken together, as
conducted on the date of this
Agreement and at Closing
through or by the LucasVarity
Heavy Vehicle Braking Systems
Division, including that
portion of the business as
conducted now and at Closing
under the name Heavy Vehicle
Braking Systems that was
formerly conducted in the name
of Heavy Duty Braking Systems
"Indemnitee" Any member of the Purchaser
Group or the Vendor Group who
or which is or are entitled to
indemnification
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under this Agreement, any Sale
Agreement or the China Sale
Agreement
"Independent Accountant" PricewaterhouseCoopers or if
they are unable or unwilling
to act in such capacity,
Arthur Andersen
"Independent Aftermarket" The market for the supply of
spare and replacement parts to
customers other than Original
Equipment Service.
"Intellectual Property" The English Intellectual
Property, the German
Intellectual Property and the
US Intellectual Property
"Intercompany Accounts" All amounts owed at the
opening of business on the
Closing Date by or to any
member of the LucasVarity
Group or any Business Unit to
or by any other member of the
LucasVarity Group or Business
Unit relating to the English
Activity, the German Activity
or the US Business, as the
case may be, including without
limitation any Lucas Internal
Funding
"Intercompany Trading
Accounts" All Intercompany Accounts of
the type set out in Schedule
14 with respect to products or
services sold by or to the
English Activity, the German
Activity or the US Business,
as the case may be in the
ordinary course of business
(but excluding without
limitation any Lucas Internal
Funding)
"the Inventory" All inventory and stocks,
including raw materials and
components, spare parts,
operating supplies,
maintenance and non product
stock, work-in-progress,
finished goods,
bought-in-goods, packaging
materials, packages and
products and services in
intermediate stages of
completion owned (which
expression shall be deemed to
include the same which (i)
incorporate goods or
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materials supplied by a
supplier whether or not
subject to reservation of
title or (ii) has been
supplied on a consignment
stock or sale or return basis)
by a Vendor or any other
member of the LucasVarity
Group at the opening of
business on the Closing Date
for use or sale in connection
with the English Activity
(which expression shall
exclude the LAO Activity for
the purposes of this
definition), the German
Activity or the US Business,
as the case may be, and the
LAO Inventory
"the LAO Assets" The meaning given to such
expression in the English Sale
Agreement
"the LAO Activity" The meaning given to such
expression in the English Sale
Agreement
"the LAO Inventory" The stocks of finished
products, components thereof
and repair parts therefor,
packaging materials and
packages owned (which
expression shall be deemed to
include the same which (i)
incorporate goods or materials
supplied by a supplier subject
to reservation of title or
(ii) have been supplied on a
consignment stock or sale or
return basis) by a Vendor or
any other member of the
LucasVarity Group at the
opening of business on the
Closing Date for sale or use
in connection with the LAO
Activity and including without
limitation such stocks held at
or in the course of transit to
the Fradley Warehouse, the
Neuwied Warehouse, the Blanc
Mesnil Warehouse and the US
Warehouses (as in each case
such location is defined more
particularly in the English
Sale Agreement)
"the Leased Assets" The Leased Assets the subject
of the Sale Agreements (and as
defined
15
<PAGE>
therein) taken together
"Losses" Any and all losses,
liabilities, claims, damages,
costs and expenses, whether or
not resulting from third party
claims, including, without
limitation reasonable
out-of-pocket expenses and
reasonable attorneys',
accountants' and other
experts' fees and expenses
reasonably incurred but
excluding consequential
damages, loss of profit, loss
of business and any other
similar damage or loss (but
including all damages incurred
by a third party which are
payable with respect to third
party claims even if such
damages include consequential
damages, loss of profit, loss
of business and any other
similar damage or loss to the
third party)
"LucasVarity" LucasVarity plc, registered
number 3207774
"LucasVarity Warranties" The warranties on the part of
LucasVarity contained in
clause 6.1 and paragraphs 1,
2, 3 and 19 of Part A of
Schedule 3
"Lucas Aftermarket
Operations" or "LAO" Those parts of the LucasVarity
Group which trade as "Lucas
Aftermarket Operations"
"Lucas Central Treasury" The LucasVarity Treasury
Department presently based at
46 Park Street, London. W1Y
4DJ
"Lucas Internal Funding" All monies due to or from any
member of the LucasVarity
Group relating to the English
Activity, German Activity or
the US Business, as the case
may be from or to the Lucas
Central Treasury which is
either quasi capital or
otherwise owed on capital
account or which had the Lucas
Central Treasury been a bank
would have amounted to an
overdraft
"the LucasVarity Group"
or "the Vendor Group" LucasVarity and any company
16
<PAGE>
which is a Subsidiary or
Subsidiary Undertaking of
LucasVarity for the time being
and from time to time
"LVBS" Those parts of the LucasVarity
Group which trade as
LucasVarity Light Vehicle
Braking Systems or any trading
unit or business of the
LucasVarity Group which
replaces the same
"Material Adverse Effect" A material adverse effect on
the Assets, business or
financial condition of HVBS
taken as a whole except as a
result of any of (i) the
seasonal and cyclical nature
of the automotive (including
Commercial Vehicles and Off
Highway Vehicles) supplier
industry ("the Industry") or
(ii) any change in the general
economic or financial
conditions in the Industry or
(iii) the occurrence or
continuance of any material
disruption of or material
adverse change in worldwide,
US or UK financial, banking or
capital markets since the date
of this Agreement or (iv) any
change resulting from
developments in the Industry
which affects HVBS and also
affects or is capable of
affecting in a substantially
similar manner other companies
or businesses in the Industry,
including without limitation
any strike or other labour
disruption at a customer or
supplier
"NAFTA" Those countries which are
party to the North American
Free Trade Agreement as at the
date of this Agreement
"Net Current Assets
Value" The aggregate of the values of
the Receivables and the
Inventory less the aggregate
of the values of the Payables,
the Accruals and the
Provisions at the opening of
business on the Closing Date,
calculated and determined on a
basis which is
17
<PAGE>
Consistent and agreed or
ascertained in accordance with
clause 3
"OE Market" Original Equipment
Manufacturers or any dealer of
any Original Equipment
Manufacturer in their capacity
as buyers of products for
fitting as original equipment
"Off-Highway Vehicles" Any vehicle not intended to be
driven primarily on public
roads or highways including by
way of example and not
limitation agricultural
tractors, industrial tractors,
material(s) handling
equipment, heavy construction
equipment and forklifts
"Original Equipment
Manufacturer" Any manufacturer or assembler
of transport vehicles,
including, but not limited to
Commercial Vehicles and
Off-Highway Vehicles and any
manufacturer or assembler of
motor cars, sport utility
vehicles, vans, buses,
coaches, forklifts, industrial
vehicles, trucks, tractors
(whether agricultural or
industrial), material(s)
handlers, construction
vehicles or trailers or a
manufacturer of components or
sub-assemblies to be fitted as
original equipment to such
vehicles
"Original Equipment
Service" The market for supplies of
spare and replacement parts to
an Original Equipment
Manufacturer (other than for
fitting as original equipment)
for onward supply to its
Aftermarket customers
"the Other Lucas
Companies" Those companies listed in
Part 3 of Schedule 1 each
being a party to a Transaction
Document
"the Payables" The book and other debts
(which are not Retained
Liabilities) owing by a Vendor
or any other member of the
LucasVarity Group in respect
of the English Activity (which
expression
18
<PAGE>
shall exclude the LAO Activity
for the purposes of this
definition), the German
Activity or the US Business,
as the case may be, in any
such case to the extent that
they relate thereto to or in
respect of trade creditors,
trade bills payable and any
other amounts payable to
creditors, to the extent that
they relate to the English
Activity (as aforesaid), the
German Activity or the US
Business, as the case may be,
at the opening of business on
the Closing Date (and whether
or not then due and payable)
and which are to be assumed by
the Purchasers pursuant to the
Sale Agreements, including
Intercompany Trading Accounts
(but not any other
Intercompany Accounts) but
excluding the Accruals
"Person" Any person, firm, company,
business, undertaking, entity,
concern or close corporation
"the Plant, Machinery
and Equipment" The English Plant Machinery
and Equipment, the German
Plant Machinery and Equipment
and the US Plant Machinery and
Equipment
"Preexisting
Environmental Condition" Any condition of the
Environment existing on or
prior to the Closing Date
relating to or arising from
the presence, handling, use,
treatment, storage, transport,
Release or threatened Release
of any Hazardous Material
"the Prepayments" Each of the payments made in
advance by or on behalf of a
Vendor or any other member of
the LucasVarity Group prior to
the Closing Date in the course
of carrying on the English
Activity (which expression
shall exclude the LAO Activity
for the purposes of this
definition), the German
Activity or the US Business,
as the case may be, in any
such case to the extent that
it
19
<PAGE>
relates to the period after
opening of business on the
Closing Date but excluding any
such payment made by or on
behalf of a Vendor or any
other member of the
LucasVarity Group in respect
of the English Activity (as
aforesaid), the German
Activity or the US Business,
as the case may be in any such
case relating to insurance or
any of the Excluded Assets
(Prepayments constitute Assets
transferred under the Sale
Agreements to the extent they
exist on the Closing Date)
"Prime Rate" The rate which Citibank N.A.
announces from time to time as
its prime lending rate, as in
effect from time to time
"the Property" The English Property and the
US Real Property taken
together
"the Provisional
Consideration" The sum of US$390,000,000
being the aggregate of:-
(1) the Fixed Price
Element; and
(2) US$13,000,000; and
(3) the China
Consideration
"Provisions" The provisions to be made in
the Final Closing Statement
(as defined in clause 3 below)
in respect of HVBS in respect
of only those matters listed
in Schedule 7, such provisions
to be determined on a basis
which is Consistent
"Purchaser Capacity
Warranties" The warranties on the part of
the Purchaser and the
Purchaser Guarantor contained
in paragraphs 1 and 2 of
Schedule 4
"the Purchaser Group" The Purchaser Guarantor and
any company which is a
Subsidiary, Subsidiary
Undertaking or Holding Company
of the Purchaser Guarantor
20
<PAGE>
and any Subsidiary or
Subsidiary Undertaking of any
such Holding Company for the
time being and from time to
time
"the Purchaser Guarantee" The guarantee in the form set
out in clause 20
"the Purchaser Guarantor" Meritor Automotive, Inc.
"the Purchaser Warranties" The warranties of the
Purchasers and the Purchaser
Guarantor contained in clause
9.5.1 and Schedule 4
"the Receivables" The book and other debts
(which are not Excluded
Assets) owing to a Vendor or
any other member of the
LucasVarity Group in
connection with the English
Activity (which expression
shall exclude the LAO Activity
for the purposes of this
definition), the German
Activity or the US Business,
as the case may be, by or in
respect of trade debtors,
trade bills receivable and any
other amounts owing to a
Vendor or any other member of
the LucasVarity Group by
debtors in connection with the
English Activity (as
aforesaid), the German
Activity or the US Business,
as the case may be (including,
without limitation, amounts
due (if any) from Transferring
Employees) at the opening of
business on the Closing Date
(and whether or not then due
and payable) and including the
Prepayments and Intercompany
Trading Accounts (but not any
other Intercompany Accounts),
but excluding, only for
purposes of calculating the
Net Current Assets Value,
amounts payable from insurers
in respect of assets or
liabilities not set forth in
the Final Closing Statement
(it being understood that such
payments from insurers shall
nonetheless constitute Assets
transferred under the Sale
21
<PAGE>
Agreements)
"the Records" The Records to be passed to
the Purchasers pursuant to the
Sale Agreements (and as
defined therein)
"Release" Any spilling, leaking,
pumping, pouring, emitting,
emptying, discharging,
injecting, escaping, leaching,
disposing or dumping into the
Environment
"Registered Intellectual
Property" The Registered Intellectual
Property the subject of the
English Sale Agreement and the
US Sale Agreement (and as each
such expression is defined
therein)
"Rest of the World" Every country in the world
other than Europe and NAFTA
"Retained Liabilities" The following liabilities,
howsoever or whenever arising
(which are not being assumed
by any Purchaser or the
Purchaser Guarantor hereunder
or under any Transaction
Document):
1) all liabilities (i) in
respect of the salary defined
benefit plan for Dayton
Walther employees and (ii)
save to the extent that
liabilities are expressly
assumed by the Purchasers
under the English Sale
Agreement, in respect of the
Lucas Scheme (as defined in
Schedule 7 to the English Sale
Agreement)
2) all liabilities in
respect of the following:
(i) former employees not
employed by the Vendors
immediately prior to the
Closing Date (including all
liabilities in respect of FAS
106 (retiree health) benefits
for those employees of HVBS in
North America who have retired
before Closing), other than
workers compensation claims
under FAS112
22
<PAGE>
for all past employees of the
current sites of the US
Business in North America to
the extent provided as a
liability in the Final Closing
Statement for such employees;
(ii) employees who refuse to
transfer to the Purchasers
(except to the extent (a) in
the case of employees in the
US Business, such refusal
resulted from the US Purchaser
not discharging its
obligations to offer
employment under the U.S. Sale
Agreement or (b) in the case
of employees employed in the
English Activity, or the
German Activity, that any such
employee refuses to transfer
due to a substantial change in
his working conditions to his
detriment); and
(iii) employees (other than
those employed in the English
Activity) on long-term
disability immediately prior
to the Closing Date, other
than those who return to
active employment with the
Purchasers within 6 months of
the Closing Date, except where
such failure to return results
from the US Purchaser failing
to honour its obligations to
offer employment under the US
Sale Agreement; and
(iv) employees employed in the
English Activity who are Ill
Employees as defined in clause
8.11 of the English Sale
Agreement and who are
determined to be eligible for
Early Retirement as described
in clause 8.12.1 of the
English Sale Agreement
3) all liabilities in respect
of Intercompany Accounts
(other than Intercompany
Trading Accounts to the extent
set forth as a liability in
the Final Closing Statement)
23
<PAGE>
4) all liabilities in respect
of indebtedness for borrowed
money or the equivalent
thereof of any member of the
LucasVarity Group (other than
in respect of the finance
leases set forth in Schedule 2
to the English Sale Agreement
to the extent set forth as a
liability in the Final Closing
Statement, it being understood
that obligations (other than
obligations resulting from any
failure to make any payment
due at or prior to Closing
which are not set forth in the
Final Closing Statement) which
arise after Closing (including
in respect of interest) in
respect of such finance leases
to the extent that they relate
to the period after Closing do
not constitute Retained
Liabilities);
5) all liabilities in respect
of the pending dispute with
the State of Ohio with respect
to Disabled Workers Relief
Fund;
6) all liabilities arising out
of or relating to any sites
formerly owned or occupied by
the Activity not being
transferred to the Purchasers
hereunder or under any of the
Sale Agreements (including
without limitation all closed
or divested sites);
7) all liabilities of HVBS or
any member of the LucasVarity
Group in respect of Fruehauf
matters;
8) all liabilities for Taxes
payable by any member of the
LucasVarity Group relating to
HVBS (including US transfer
Taxes on the transactions
contemplated hereby and by the
US Sale Agreement), arising,
accruing or relating to
periods (or portions thereof)
prior to the Closing, other
than (i) an amount not to
exceed US $1,500,000 in
respect of payroll Taxes and
VAT to the extent
24
<PAGE>
set forth as a liability in
the Final Closing Statement
and (ii) US property Taxes
which are to be borne by the
parties in the proportion to
their days of ownership in the
pertinent tax periods to which
the property Taxes relate. For
the avoidance of doubt this
paragraph 8 does not apply to
any VAT or stamp duty which
arises in the UK, Germany or
France directly or indirectly
as a consequence of the sale
of HVBS or any part of it and
the assets comprised within it
as contemplated by this
Agreement and the Sale
Agreements other than VAT or
stamp duty payable in
connection with licences of
intellectual property to
Vendors or the Vendor
Guarantor pursuant to this
Agreement or the Sale
Agreements or in connection
with the Training School Lease
(as defined in the English
Sale Agreement) or the
Agreement relating thereto;
9) all liabilities for and
relating to Excluded Assets,
including without limitation
the Hose Activity as defined
in the English Sale Agreement,
except for those liabilities
which the Purchasers agree to
assume under the terms of the
Hoses Subcontract Agreement;
10) all liabilities described
in clause 9.1 of the English
Sale Agreement, section 1.3 of
the US Sale Agreement and
clause 7.1 of the German Sale
Agreement;
11) all liabilities in respect
of the funding of all cheques
outstanding (issued from
members of the LucasVarity
Group's accounts and not yet
paid) on or after the Closing
Date relating to the Activity;
12) all liabilities in respect
of
25
<PAGE>
divestment, sale or similar
bonuses payable to employees
of the LucasVarity Group,
including the Activity, in
connection with the
transactions contemplated
hereby or by any Sale
Agreement or the China Sale
Agreement; and
13) all liabilities of a
Vendor or a member of the
LucasVarity Group relating to
the LAO Activity to the extent
that it relates thereto which
falls to be settled after the
Closing Date in the course of
carrying on the LAO Activity,
to the extent that they relate
to the period before opening
of business on the Closing
Date, except to the extent the
parties agree to provide for
the same on the Final Closing
Statement
"the Sale Agreements" The English Sale Agreement,
the German Sale Agreement and
the US Sale Agreement taken
together
"Subsidiary" A subsidiary company as
defined in Section 736
Companies Act 1985
"Subsidiary Undertaking" A subsidiary undertaking as
defined in Section 258
Companies Act 1985
"Taxes" All taxes, charges, duties,
fees, levies or other
assessments in the nature of
taxation, including, without
limitation, income, excise,
property, sales, use, gross
receipts, recording,
insurance, value added,
profits, license, withholding,
payroll, employment, net
worth, capital gains,
transfer, stamp, social
security, environmental,
occupation and franchise
taxes, imposed by any
governmental entity, and
including any interest,
penalties and additions
attributable thereto
"Title Breach" A breach of any of those
Warranties contained in either
of paragraphs 4.1 or 9.3.1 of
Part A of Schedule 3 or
26
<PAGE>
paragraph 2.2 of Part D of
Schedule 3
"the Transaction
Documents" Those documents listed in
Schedule 5
"the Transferring
Employees" The English Transferring
Employees, the German
Transferring Employees, the
French Transferring Employees
and the US Transferring
Employees
"UK GAAP" Generally accepted United
Kingdom accounting principles
as of the date hereof
"the US Assets" The US Assets the subject of
the US Sale Agreement (and as
defined therein)
"the US Business" The US Business (as defined in
the US Sale Agreement)
"the US Intellectual
Property" The US Intellectual Property
the subject of the US Sale
Agreement (and as defined
therein)
"the US Plant Machinery
and Equipment" The US Plant, Machinery and
Equipment the subject of the
US Sale Agreement (and as
defined therein)
"the US Purchaser" Meritor Heavy Vehicle Braking
Systems (U.S.A.), Inc., c/o
Meritor Automotive, Inc., 2135
West Maple Road, Troy, MI, USA
48084-7186
"the US Real Property" The US Real Property the
subject of the US Sale
Agreement (and as defined
therein)
"the US Sale Agreement" An agreement of even date
herewith made between (1) the
US Vendor and (2) the US
Purchaser relating to the sale
and purchase of the US
Business
"the US Transferring
Employees" The US Transferring Employees
the subject of the US Sale
Agreement (and as defined
therein)
"the US Vendor" Kelsey-Hayes Company, a
Delaware USA corporation with
its principal place of
business at 12025 Tech
27
<PAGE>
Center Drive, Livonia, MI, USA
"the US Warranties" The warranties of the US
Vendor relating only to the US
Business contained in clause
6.1 and Part D of Schedule 3
"Varga" Freios Varga SA, a Brazilian
company whose principal place
of business is at KM 147, Via
Anhangueri, KM 147, Sao Paulo,
Brazil
"Varga Licence" The licence in the form set
out in Schedule 11
"VAT" Value Added Tax
"Vendor Capacity
Warranties" Those warranties on the part
of the Vendors and/or
LucasVarity contained in
paragraph 1 of Part A of
Schedule 3
"the Vendor Guarantee" The guarantee in the form set
out in clause 21
"the Vendor Guarantor" LucasVarity
"the Warranties" The General Warranties, the
English Warranties, the German
Warranties, the US Warranties,
the LucasVarity Warranties and
the China Warranties taken
together, which shall be made
both at the date of this
Agreement and on Closing
"Warranty Claimant" Any member of the Purchaser
Group or the Vendor Group who
or which are or is entitled to
make a claim under the
Warranties or the Purchaser
Warranties, as the case may be
"Wheel End Products" Drum foundation brakes, disc
foundation brakes, brake
drums, rotors, discs, hubs,
cast spoke wheels together
with actuators, ABS tone
rings, sensors and bearings
but specifically excluding
Anti-Lock Brake Systems
28
<PAGE>
"Wilful Breach" The deliberate or intentional
failure on the part of any
Vendor or the Vendor Guarantor
or any Purchaser or the
Purchaser Guarantor, as the
case may be, to comply with
any of the obligations imposed
on that Vendor or the Vendor
Guarantor or that Purchaser or
the Purchaser Guarantor, as
the case may be, by this
Agreement or any Transaction
Document required to be
performed prior to Closing
where that Vendor or the
Vendor Guarantor or that
Purchaser or the Purchaser
Guarantor, as the case may be,
knew that the act or omission
giving rise to such breach
constituted a breach and
nonetheless acted or omitted
to act accordingly
"Wilful Non Disclosure" The deliberate or intentional
failure on the part of any
Vendor or Purchaser to
disclose any fact matter or
circumstance which that Vendor
or that Purchaser, as the case
may be, knew constituted a
material breach of the
Warranties or the Purchaser
Warranties, as the case may be
1.2 References in this Agreement to laws, statutes or any
statutory provision shall include any statutory
modification, re-enactment or extension thereof and any
orders, regulations, instruments or other subordinate
legislation made thereunder in each case in force at the
date of this Agreement.
1.3 In this Agreement:-
1.3.1 the masculine gender shall include the feminine
and neuter and the singular number shall
include the plural and vice versa;
1.3.2 the expression "the Vendors" shall be construed
as any one of the Vendors or all of them as the
context shall permit;
1.3.3 the expression "the Purchasers" shall be
construed as any one of the Purchasers or all
of them as the context shall permit; and
1.3.4 the headings contained in this document are
inserted for convenience only and shall not
affect its construction.
29
<PAGE>
1.4 Whenever a document is referred to as being "in the Agreed
Terms" it shall be in the form agreed and initialled by or
on behalf of the Vendors and the Purchasers.
1.5 Except where the contrary is stated, any reference herein to
a clause or Schedule or party is to a clause of or Schedule
or party to this Agreement and any reference within a clause
or Schedule to a sub-clause, paragraph or other sub-division
is a reference to such sub-clause, paragraph or other
sub-division so numbered or lettered in that clause or
Schedule. The Schedules form part of this Agreement and
shall have the same force and effect as if expressly set out
in the body of this Agreement.
1.6 Except where the context shall provide to the contrary words
and expressions defined in the Sale Agreements shall have the
same meaning in this Agreement.
1.7 It is understood and agreed that the existence and levels of
any financial thresholds or ceilings in respect of
satisfaction of conditions precedent or for purposes of
determining entitlement to recovery for breach in this
Agreement shall not be considered relevant in determining the
meaning of the phrase "Material Adverse Effect" or any other
materiality standard as used in this Agreement.
1.8 When used in this Agreement (except in the definitions of
Wilful Breach or Wilful Non Disclosure or except where
expressly provided to the contrary), the Vendors' awareness
or knowledge means the actual awareness or belief or
knowledge of the persons whose names are listed in the left
hand column below and whose position is stated opposite his
name in the right hand column below (or the knowledge that
each such person would reasonably be expected to have noting
their position with the LucasVarity Group).
Name of Person Position Held
-------------- -------------
Iain Duffin Senior Vice President - Corporate Development
Chris Long-Leather Programme Director - Business Development
David Brown Project Director - Corporate Development
Andy Lord Project Manager - Corporate Development
Mike McKiernan Director, Health Safety and Environmental
Leighton Quinn Managing Director, HVBS
Gary Stewart Vice President, Finance - HVBS
Richard Wolfe Assistant Financial Controller
Nick Exton Vice President, Business Development - HVBS
Jerry Hoffman Vice President, Manufacturing Operations - HVBS
Ron Butschle Vice President, Human Resources - HVBS
Larry Dowers Vice President, Sales and Marketing - HVBS
Richard Thompson Vice President, Engineering - HVBS
2. CONDITIONS PRECEDENT, SALE AND PURCHASE
OF HVBS AND EXCHANGE OF DOCUMENTS
2.1 The sale and purchase contemplated by this Agreement and each
of the Sale Agreements and the China Sale Agreement and the
respective obligations of Purchasers and Vendors to effect the
Closing are conditional on:-
30
<PAGE>
2.1.1 either (i) the parties having obtained the
authorisation or approval of the US antitrust
authorities on terms reasonably acceptable to
the parties, or (ii) the applicable waiting
period under Hart-Scott-Rodino having expired
or having been earlier terminated;
2.1.2 either:
(a) the Office of Fair Trading indicating
in terms satisfactory to the
Purchasers that it is not the
intention of the Secretary of State
for Trade and Industry to refer the
proposed acquisition of the English
Activity, or any matters arising
therefrom or from this Agreement or
any other Transaction Document, to
the Monopolies and Mergers
Commission; or
(b) where a merger notice has been
submitted pursuant to the Merger
(Prenotification) Regulations 1990,
the period for consideration of the
notice and any extension thereof
expiring without the Director General
rejecting the said merger notice or
issuing a notice pursuant to Section
75(B)(5) of the Fair Trading Act of
1973 and without any reference being
made to the Monopolies and Mergers
Commission in respect of the relevant
matter;
2.1.3 either:
(a) the German Federal Cartel Office
("FCO") advising in writing that the
prerequisites of an enjoining order
pursuant to Section 24 Subsection 1
of the Act against Restraint of Trade
are not fulfilled; or
(b) the time periods for an enjoining
order by the FCO pursuant to Section
24a Subsection 2 of the Act against
Restraint of Trade having expired
without requisite action having been
taken by the FCO so that the
transactions contemplated by this
Agreement and the Sale Agreements are
conclusively deemed approved;
2.1.4 the French Ministere de l'Economie having
confirmed that it will not refer the
transactions contemplated in this Agreement and
the other Transaction Documents to the French
Conseil de la Concurrence pursuant to Article
38 et seq. of the Regulation of 1 December
1986, or the requisite period having elapsed
from the date on which the transactions
contemplated in this Agreement and the other
Transaction Documents is notified to the French
Ministere de l'Economie without any such
referral having been made; and
2.1.5 no temporary restraining order, preliminary or
permanent injunction or other order issued by
any court of competent jurisdiction or other
legal restraint or prohibition (but not
including the corporate incapacity of any party
to this Agreement or any Sale Agreement)
preventing or otherwise restraining the
consummation of all or any part of the
transactions contemplated by this Agreement
(other than the sale of the China Share) and
the Sale Agreements
31
<PAGE>
being in effect and there shall not be pending
any Action that is reasonably likely to result
in any of the foregoing.
2.2 The obligations of the Purchasers to effect the Closing are
also conditional on:
2.2.1 the Warranties being true and correct (but
subject always to the qualifications,
limitations or other restrictions or conditions
to which the same are subject as contained in
this Agreement and each Transaction Document,
save for any qualification thereto in respect
of disclosures made to or information which
becomes known by the Purchasers after the date
hereof, in each case in relation to the
Warranties when repeated or deemed to be
repeated on the Closing Date) at the date of
this Agreement and at the time of Closing as if
such Warranties were repeated at that time
except that a breach or breaches of any of the
Warranties at the date of this Agreement or the
existence of facts or circumstances which would
constitute a breach or breaches of the
Warranties had the same been repeated at
Closing (a "deemed breach or deemed breaches")
shall only constitute a failure to satisfy this
Closing Condition where the consequence of such
breach or breaches or deemed breach or deemed
breaches is that the value of HVBS and the
China Share taken as a whole was or would
reasonably be expected to be reduced by an
amount equal to or exceeding US$40 million;
2.2.2 the Vendors having complied in all respects
with the obligations (other than pursuant to
clause 5.6) imposed on them pursuant to this
Agreement, any of the Sale Agreements or the
China Sale Agreement to be performed by them on
or prior to the Closing except that (i) a
breach or breaches of any such obligations
shall only constitute a failure to satisfy this
Closing Condition (a) in the event of a Wilful
Breach or (b) in the event of a breach or
breaches which is/are not a Wilful Breach where
the consequence of such breach or breaches is
that the value of HVBS and the China Share
taken as a whole was or would reasonably be
expected to be reduced by an amount equal to or
exceeding US$10 million; and (ii) a breach or
breaches of any of the Warranties (whether at
the date of this Agreement or at Closing) shall
not be regarded as a failure by the Vendors to
comply with any such obligations;
2.2.3 there not having occurred since the date of
this Agreement any events changes or
developments which have had or would reasonably
be expected to have a Material Adverse Effect
which Material Adverse Effect has resulted or
would reasonably be expected to result in the
value of HVBS taken as a whole being reduced by
an amount equal to or exceeding US$40 million.
2.3 The obligations of the Vendors to effect Closing are also
conditional on:
2.3.1 the Purchaser Warranties being true and correct
(but subject always to the qualifications,
limitations or other restrictions or conditions
to which the same are subject as contained in
this Agreement and each Transaction Document,
save for any qualification thereto in respect
of disclosures made to or information which
becomes known by the Vendors after the date
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hereof, in each case in relation to the
Purchaser Warranties when repeated or deemed to
be repeated on the Closing Date) at the date of
this Agreement and at the time of Closing as if
such Purchaser Warranties were repeated at that
time except that a breach or breaches of any of
the Purchaser Warranties at the date of this
Agreement or the existence of facts or
circumstances which would constitute a breach
or breaches of the Purchaser Warranties had the
same been repeated at Closing (a "deemed breach
or deemed breaches") shall only constitute a
failure to satisfy this Closing Condition where
the consequence of such breach or breaches or
deemed breach or deemed breaches is that if
Closing were to take place and the Vendors were
to pursue a claim against the Purchasers in
respect of such breach or breaches or deemed
breach or deemed breaches the Purchasers would
be liable in damages to the Vendors in a sum
equal to or exceeding US$40 million;
2.3.2 the Purchasers or, as the case may be, the
Purchaser Guarantor having complied with its
obligation under clause 4.4; and
2.3.3 the Purchasers having complied in all respects
with each of the other obligations imposed on
them pursuant to this Agreement and any of the
Transaction Documents to be performed by them
on or prior to Closing except that (i) a breach
or breaches of any such obligations shall only
constitute a failure to satisfy this Closing
Condition (a) in the event of a Wilful Breach
or (b) in the event of a breach or breaches
which is/are not a Wilful Breach where the
consequence of such breach or breaches is that
if the Vendors were successfully to make a
claim against the Purchasers in respect of such
breach the Purchasers would be liable to the
Vendors in respect of such breach in a sum
exceeding US$10 million; and (ii) a breach or
breaches of any of the Purchaser Warranties
(whether at the date of this Agreement or at
Closing) shall not be regarded as a failure by
the Purchasers to comply with any such
obligations.
2.4 Each party hereto agrees to make an appropriate filing of a
notification and report form pursuant to Hart-Scott-Rodino
with respect to those transactions contemplated by this
Agreement and the Transaction Documents within ten Business
Days after the date hereof and to supply promptly any
additional information and documentary material that may be
requested pursuant to Hart-Scott-Rodino. In addition, each
party agrees to make those other filings contemplated by
clauses 2.1.2, 2.1.3 and 2.1.4 in a timely manner in
accordance with applicable laws or regulations. The Vendor
Guarantor (on behalf of the Vendors) and the Purchaser
Guarantor (on behalf of the Purchasers) agree to co-operate
and to use their respective reasonable efforts to obtain
those government consents required for Closing as
contemplated by clauses 2.1.1 to 2.1.4 inclusive. Anything
contained in this Agreement to the contrary notwithstanding
none of the parties to this Agreement or any of the
Transaction Documents or any Affiliate thereof shall be
required to commence litigation, divest or hold separate any
business or assets or restrict any of its rights or ability
to engage in any business in connection with the
consummation of the transactions contemplated by this
Agreement or the Transaction Documents. Each party shall
bear its respective filing fees associated with
Hart-Scott-Rodino filings and those other filings
contemplated by clauses 2.1.2, 2.1.3 and 2.1.4.
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2.5 If the Closing Conditions shall not have been fulfilled or
in the case of the Closing Condition contained in clause
2.1.5 waived by the Vendors and the Purchasers or in the
case of the Closing Conditions contained in clauses 2.2.1,
2.2.2 and 2.2.3 waived by the Purchasers or in the case of
the Closing Conditions contained in clauses 2.3.1 to 2.3.3
inclusive waived by the Vendors on or before the date which
is 6 months after the date of this Agreement or such later
date as the Vendor Guarantor (on behalf of the Vendors) and
the Purchaser Guarantor (on behalf of the Purchasers) shall
agree then either the Vendor Guarantor (in the case of a
failure to satisfy the Closing Conditions set forth in
clauses 2.1 and/or 2.3) or the Purchaser Guarantor (in the
case of failure to satisfy the Closing Conditions set forth
in clauses 2.1 and 2.2) may rescind this Agreement, each of
the Sale Agreements, the China Sale Agreement and the Hoses
Subcontract Agreement, whereupon the same shall (except for
the provisions of clauses 9.4, 13 and 17) lapse and be of no
further force or effect and no party shall have any claim
against any other party in respect thereof save in respect
of any antecedent breach of this Agreement or any Sale
Agreement or the China Sale Agreement (other than a breach
of the Warranties or the Purchaser Warranties, save in
respect of a breach of the Vendor Capacity Warranties or the
Purchaser Capacity Warranties for a breach resulting from
fraud or Wilful Non Disclosure).
2.6 The provisions of this Agreement and of each of the Sale
Agreements shall apply relating to the sale of HVBS and the
provisions of this Agreement and the China Sale Agreement
shall apply relating to the sale of the China Share.
2.7 On the date of this Agreement the Vendors, the Purchasers,
the Purchaser Guarantor and the Vendor Guarantor shall
procure that each of the Sale Agreements, the China Sale
Agreement and the Hoses Subcontract Agreement is entered
into and exchanged by the parties thereto.
3. THE CONSIDERATION
3.1 The purchase price for HVBS shall be the Consideration
allocated in accordance with the provisions of Schedule 2
Part 2. The purchase price for the China Share shall be that
set out in Schedule 2 Part 3 notwithstanding anything to the
contrary contained in the China Sale Agreement. Subject
always to the allocation of the Consideration which appears
in Schedule 2 Part 2, the Purchaser Guarantor shall not
later than 180 days after the Closing Date, prepare and
deliver to the Vendor Guarantor an allocation schedule
allocating the Consideration and the assumed liabilities
among the Assets in accordance with Treas. Reg. 1.1060-IT
(or any comparable provision of state, local or non-U.S. tax
law) or any successor provision. Within 30 days after the
receipt of such allocation schedule, the Vendor Guarantor
shall propose any changes to such allocation schedule or
shall indicate its concurrence therewith, which concurrence
shall not be unreasonably withheld. Except to the extent
otherwise required by applicable laws, each of the parties
to this Agreement agrees to report this transaction for tax
purposes in accordance with the provisions of Schedule 2
Part 2 and such allocation schedule.
The Consideration payable hereunder excludes any VAT which
any Purchaser is required to pay pursuant to this Agreement
or any of the Sale Agreements.
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3.2 On Closing the Purchasers shall pay to the Vendors in cash
the Provisional Consideration. The Purchasers agree and
acknowledge that such Provisional Consideration (including
the China Consideration) shall be so paid notwithstanding
that the China Sale Agreement will not be completed
contemporaneously with the Sale Agreements.
3.3 The following provisions shall apply regarding the
calculation of the Net Current Assets Value, namely:-
3.3.1 each of the Vendors shall in relation to their
respective part of HVBS and in conjunction with
the local management of that part of HVBS
procure that if not done immediately before
then on the day of, or no later than during the
3 days immediately following, Closing there is
carried out a stock-take of the Inventory;
3.3.2 the Purchasers will after Closing allow each of
the Vendors and KPMG International ("KPMG")
reasonable access to the Property and any
leasehold or non-owned property or other
property occupied for the purposes of HVBS's
business, all relevant employees and all
relevant records, information and other
documentation to enable the Vendors and KPMG to
undertake whatever investigations, reviews and
work they reasonably require to undertake to
prepare and report on the draft Closing
Statements and draft Aggregation Statement
defined and referred to in clause 3.4. In
particular but without limitation to the
foregoing the Purchasers will grant and procure
that there is granted to the Vendors and KPMG
and each of them reasonable access to and the
reasonable services of each of Gary Stewart
(Vice President of Finance), Tom Anacker
(Controller, North America) Alan Williams
(Controller, Europe) Ken Maddox (Consultant and
former finance director of Lucas Heavy Duty
Braking Systems) Bill Jung (Financial
Accounting Manager (North America) and Andrew
Watkins (Financial Accounting Manager, Europe)
or their successors, if any, for all purposes
of this clause 3, including without limitation,
the ascertainment of the Net Current Assets
Value in accordance with this Agreement;
3.3.3 the Net Current Assets Value shall be
determined on a basis which is Consistent to
the intent and effect that for the purposes of
the preparation of the draft Closing Statements
(as defined in clause 3.4) the values of the
items comprised therein shall each be
determined on a basis which is Consistent; and
3.3.4 without prejudice to clause 3.3.3, the draft
Closing Statements, the draft Aggregation
Statement and the Final Closing Statement (as
each such expression is defined and referred to
in clauses 3.4 and 3.7) (i) shall contain only
provisions in respect of Receivables,
Inventory, Payables, Accruals and the
Provisions, in each case as of the opening of
business on the Closing Date and (ii) shall not
contain any amount in respect of any asset or
liability of HVBS unless that asset or
liability is to be acquired or assumed by the
Purchasers under this Agreement or any of the
Sale Agreements.
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Notwithstanding anything to the contrary
contained in this Agreement no provision shall
be contained in any such Statement in respect
of any Excluded Assets or any Retained
Liabilities;
3.4 Within 45 days following Closing, the Net Current Assets
Value shall be ascertained by the Vendors and the Vendors
shall serve written statements relating respectively to the
English Activity and German Activity (taken together) and
separately therefrom the US Business ("the draft Closing
Statements") on the Purchaser Guarantor within such period
showing in respect of each of the English Activity and the
German Activity (taken together) and, separately therefrom,
the US Business the sums attributable to the Payables, the
Accruals, the Provisions, the Receivables and the Inventory
in the case of the draft Closing Statement relating to the
English Activity and the German Activity (taken together)
insofar as they relate to the English and/or the German
Activity and in the case of the draft Closing Statement
relating to the US Business insofar as they relate to the US
Business. The Vendors shall also serve on the Purchaser
Guarantor within such period a further statement ("the draft
Aggregation Statement") containing an aggregation of each
draft Closing Statement (and accordingly the proposed Net
Current Assets Value), showing also the proposed
Consideration (excluding VAT or other like tax as
contemplated by any of the Sale Agreements) and the sum due
to or from the Purchasers having regard to the amount of the
Provisional Consideration paid by the Purchasers on Closing.
All sums in the draft Closing Statements and the draft
Aggregation Statement shall be expressed in US$ calculated
at the Exchange Rates. The draft Closing Statements shall
adopt the format set out in the pro forma statement which is
set out in Part 1 of Schedule 2 and the draft Aggregation
Statement shall adopt the format set out in the pro forma
statement which is also set out in Part 1 of Schedule 2. The
Vendors will retain KPMG to report on the draft Closing
Statements and the draft Aggregation Statement and to render
their report thereon to the effect that in the opinion of
KPMG the draft Closing Statements and the draft Aggregation
Statement have been prepared on a basis which is Consistent
and otherwise in accordance with clauses 3.3.4 and 3.10 of
this Agreement. A copy of such report (which shall be
addressed to the Vendors and not to the Purchasers) will be
delivered to the Purchasers with the draft Closing
Statements and the draft Aggregation Statement. For the
avoidance of any doubt the Purchasers expressly agree and
acknowledge that in preparing such report KPMG have been
engaged solely by the Vendors and their report will be
issued to the Vendors. Unless the Purchaser Guarantor shall
notify the Vendors within 45 days after its receipt of
whichever is the latest to be served of the draft Closing
Statements and the draft Aggregation Statement that it does
not accept and agree with their respective contents then the
Purchaser Guarantor and the Purchasers shall be deemed to
have accepted and agreed the contents of each of the draft
Closing Statements and the draft Aggregation Statement for
the purposes of this Agreement. The Purchaser Guarantor
shall not be entitled to dispute or otherwise disagree with
the treatment of any matter or issue in any of the draft
Closing Statements and/or the draft Aggregation Statement
unless the amount in dispute on an item by item basis
(individually) or, in the event of a series of items arising
out of and relating to the same subject matter, in the
aggregate, exceeds US$75,000. Notwithstanding the obligation
to prepare draft Closing Statements on a basis which is
Consistent, in ascertaining the Net Current Assets Value no
account shall be taken of events which occur or information
which emerges after the expiry of 45 days from the Closing.
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3.5 If within the period of 45 days after its receipt of
whichever is the latest to be served of the draft Closing
Statements and the draft Aggregation Statement the Purchaser
Guarantor shall notify the Vendors in writing that it does
not accept and agree with the contents of the draft Closing
Statements and the draft Aggregation Statement specifying in
the case of each draft Closing Statement each individual
objection with respect thereto, showing in each case the
amount in dispute, the reason why the same is in dispute and
identifying why the treatment of the issue giving rise to
the dispute in question is not Consistent or is not
otherwise in accordance with clauses 3.3.4 and 3.10 of this
Agreement, then the Purchaser Guarantor and the Vendors
shall endeavour to reach agreement upon adjustments to the
draft Closing Statements and the draft Aggregation Statement
to meet the Purchaser Guarantor's objections. For the
avoidance of any doubt:-
3.5.1 any matters not objected to in any notice
served pursuant to clause 3.4 or 3.5;
3.5.2 any matters not notified in accordance with the
foregoing provisions of this clause 3.5; and
3.5.3 any matters which pursuant to the provisions of
clause 3.4 the Purchasers are not entitled to
dispute
may not be disputed by the Purchaser Guarantor. During the
aforesaid 45-day period and subject to the Purchasers and the
Purchaser Guarantor providing KPMG with their standard
indemnities, the Vendors will, and will cause KPMG to,
furnish to the Purchasers, the Purchaser Guarantor and their
authorized agents or representatives, including their
accountants, access to the work papers of KPMG produced in
arriving at their report for the purpose of preparing any
notification of disagreement under this clause 3.
3.6 If the Vendors and the Purchaser Guarantor are unable to
reach agreement as aforesaid within 30 days of the Purchaser
Guarantor giving to the Vendors the written notification
contemplated by clause 3.5 or within such later time as the
Vendors and the Purchaser Guarantor may agree then any
unresolved disputes shall be forthwith submitted to the
Independent Accountant for resolution in accordance with the
terms of this Agreement (to the intent and effect that the
Independent Accountant shall be asked to resolve the
outstanding disputes so that the treatment of the issue in
question is Consistent and otherwise in accordance with
clauses 3.3.4 and 3.10 of this Agreement). The parties shall
co-operate and use all reasonable endeavours to procure that
the Independent Accountant shall as expeditiously as
practicable either confirm in writing to each of the Vendors
and the Purchaser Guarantor their agreement with the draft
Closing Statements or draft Aggregation Statement or (having
regard to the provisions of this Agreement with respect to
the preparation thereof as if it were the relevant draft
Closing Statement or draft Aggregation Statement) produce
and submit in writing to each of the Vendors and Purchaser
Guarantor revised Closing Statement(s) or, as the case may
be, Aggregation Statement. The Independent Accountant shall
resolve any disputes solely on presentation by the Vendors
and the Purchasers and not by independent review. In
resolving any dispute the Independent Accountant may not
assign a value to an item greater than the greatest value
claimed by any party or less
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<PAGE>
than the smallest value for such item claimed by any party.
The Independent Accountant shall, where the dispute relates
to the English Activity and/or the German Activity, act as
expert and not arbitrator and their decision shall be final
and binding on the parties. The Independent Accountant shall
where the dispute relates to the US Business act as
arbitrator and their decision shall be final and binding on
the parties. The parties intend that resort to the
Independent Accountant shall be the sole recourse and remedy
of the parties against each other with respect to any
dispute arising out of determination of the Net Current
Assets Value or the preparation of the draft Closing
Statements or draft Aggregation Statement and the
Independent Accountant's determination shall be enforceable
in a court of law. Their respective fees shall be borne by
the parties so that the Purchaser Guarantor and Purchasers
share of such costs shall be in the same proportion that the
aggregate value of the disputed items submitted to the
Independent Accountant that are unsuccessfully disputed by
them (as determined by the Independent Accountant) bears to
the aggregate value of the disputed items submitted to the
Independent Accountant by them. For the purpose of the work
of the Independent Accountant, they shall be allowed
reasonable access by the Vendors, the Purchasers and the
Purchaser Guarantor to all relevant accounting and other
relevant records of HVBS, the Property, all other properties
occupied for the purposes of HVBS and all relevant
employees. The Purchasers and the Purchaser Guarantor agree
and acknowledge that notwithstanding any provisions of the
German Civil Code to the contrary (including in particular
but without any limitation section 315 thereof), any
decision made by an expert under this clause shall be final
and binding and neither the Purchaser Guarantor nor the
Purchasers will make any application to the Court as
contemplated by section 315 as aforesaid, in respect
thereof.
3.7 For the purposes of this Agreement the expression "the Final
Closing Statement" shall mean:-
3.7.1 the draft Closing Statements and draft
Aggregation Statement which the Purchaser
Guarantor is deemed to have accepted and agreed
pursuant to clause 3.4 or with which the
Purchaser Guarantor indicates its acceptance
and agreement within the 45 day period referred
to in clause 3.4 whereupon (in either event)
the contents of the same shall become and be
final and binding on the Vendors, the Vendor
Guarantor, the Purchasers and the Purchaser
Guarantor for the purposes of this Agreement;
or
3.7.2 the draft Closing Statements and draft
Aggregation Statement bearing any adjustment
made pursuant to clause 3.5, if clause 3.5
applies and agreement is reached between the
Vendors and the Purchaser Guarantor as
contemplated therein whereupon the contents of
the same shall become and be final and binding
on the Vendors, the Vendor Guarantor, the
Purchasers and the Purchaser Guarantor for the
purposes of this Agreement; or
3.7.3 the draft Closing Statements and draft
Aggregation Statement as agreed by the
Independent Accountant or, as the case may be,
any revised Closing Statement or Aggregation
Statement produced by the Independent
Accountant whereupon (in either event) the
contents thereof shall become and be final and
binding upon the Vendors, the Vendor Guarantor,
the Purchasers and the Purchaser Guarantor for
the purposes of this Agreement.
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3.8 For the purposes of determining the Net Current Assets Value
and all other matters contemplated as being determined in
this Agreement by reference to the Final Closing Statement,
the Final Closing Statement and the contents thereof shall
(save in the case of manifest error) be final and binding on
the Vendors, the Vendor Guarantor, the Purchasers and the
Purchaser Guarantor. For the purposes of dealing with all
matters which arise in respect of or which otherwise relate
to all or any of the draft Closing Statements, the draft
Aggregation Statement and/or the Final Closing Statement the
Purchasers and each of them hereby irrevocably instruct and
authorise the Purchaser Guarantor to deal with the same on
their behalf and agree that:-
3.8.1 any agreement reached with the Vendors or any
of them by the Purchaser Guarantor shall bind
each Purchaser;
3.8.2 the Vendors shall conduct all discussions
relating to the preparation of all or any of
the draft Closing Statements, the draft
Aggregation Statement and/or Final Closing
Statement with the Purchaser Guarantor; and
3.8.3 where any provision of this clause 3 affects or
binds the Purchaser Guarantor then each of the
Purchasers shall be affected or bound to the
same extent as if any reference to the
Purchaser Guarantor included a reference to
each of the Purchasers.
3.9 The provisions of clause 3.8 shall apply mutatis
mutandis to the Vendors and the Vendor Guarantor.
3.10 Any costs incurred by the Purchaser Guarantor, the
Purchasers or the Vendors in acting in the manner
contemplated by this clause 3 including, without limitation,
any professional costs and expenses, shall be borne by the
party which incurs them save as contemplated by clause 3.6
if that clause applies. It is agreed and declared that in
any event no provision for such or any costs shall be
contained in the Final Closing Statement.
3.11 If the aggregate of (a) the Fixed Price Element, (b) the
China Consideration and (c) the Net Current Assets Value as
shown by the Final Closing Statement:
3.11.1 is less than the Provisional Consideration paid
by the Purchasers on Closing the Vendors shall
pay to the Purchaser Guarantor on behalf of the
Purchasers the deficiency in cash within 5 days
of such agreement or ascertainment together
with interest under clause 3.12; or
3.11.2 is more than the Provisional Consideration paid
by the Purchasers, the Purchaser Guarantor (on
behalf of the Purchasers) shall pay to the
Vendors or in accordance with the Vendors
instructions the excess in cash within 5 days
of such agreement or ascertainment together
with interest under clause 3.12 save that in no
event shall any Purchaser or the Purchaser
Guarantor be obliged to make any payment to the
Vendors pursuant to the provisions of this
clause which exceeds (excluding interest) US$20
million.
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3.12 The Vendors shall pay to the Purchasers or the Purchasers
shall pay to the Vendors (as the case may be) interest on
any sum due under clause 3.11 at the rate per annum which is
equal to the Prime Rate, such interest to accrue from day to
day from the Closing Date until the due date for payment in
accordance with the foregoing provisions of this clause 3.
3.13
3.13.1 All sums due from the Purchasers and/or the
Purchaser Guarantor to the Vendors under this
Agreement shall be paid in US dollars to such
account as the Vendor Guarantor may hereafter
nominate in writing to the Purchaser Guarantor.
3.13.2 All sums due from the Vendors to the Purchasers
and/or the Purchaser Guarantor on behalf of the
Purchasers under this Agreement shall be paid
in US dollars to such account as the Purchaser
Guarantor may hereafter nominate in writing to
the Vendor Guarantor.
3.14 For the purposes of this clause 3:
3.14.1 where there is a reference to the Vendors, the
Vendors hereby irrevocably authorise and
appoint the Vendor Guarantor to act on their
behalf for the purposes hereof and the
Purchasers and the Purchaser Guarantor may, for
the purposes of this clause 3 assume that any
act of or on behalf of the Vendor Guarantor is
an act of and duly authorised by the Vendors;
and
3.14.2 where there is a reference to the Purchasers,
the Purchasers hereby irrevocably authorise and
appoint the Purchaser Guarantor to act on their
behalf and the Vendors may for the purposes of
this clause 3 assume that any act of or on
behalf of the Purchaser Guarantor is an act of
and duly authorised by the Purchasers.
4. CLOSING
4.1 Subject as hereinafter provided closing:-
4.1.1 of the English Sale Agreement, the US Sale
Agreement and the German Sale Agreement shall
occur in accordance with the provisions of
clause 4.2; and
4.1.2 of the China Sale Agreement shall occur after
Closing shall have taken place and at the time
contemplated by the China Sale Agreement.
4.2 Subject to the terms and conditions of this Agreement
Closing shall be held at the offices of Chadbourne & Parke
LLP, 30 Rockefeller Plaza, New York, New York 10112 within 5
Business Days after the satisfaction of the Closing
Conditions contained in clauses 2.1.1 to 2.1.4 (inclusive)
but subject to the satisfaction (or waiver by the applicable
party as contemplated by clause 2.5) of the Closing
Conditions contained in clauses 2.1.5, 2.2 and 2.3 or at
such other later time as the Vendor Guarantor (on behalf of
the Vendors) and the Purchaser Guarantor (on behalf of the
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Purchasers) shall agree. All the transactions at the Closing
shall be deemed to occur simultaneously.
4.3 Subject to clauses 4.1 and 4.2 and as hereinafter provided
Closing shall not occur unless the English Sale Agreement,
the US Sale Agreement and the German Sale Agreement are
closed at the same time. For the avoidance of any doubt if
the China Sale Agreement shall have become incapable of
closing at the time when Closing is due to occur pursuant to
Clause 4.2 then the Closing shall nonetheless occur and the
China Sale Agreement shall lapse in accordance with the
terms of this Agreement and its terms provided however that
in that event and only in that event the Purchaser shall not
be obliged to pay the China Consideration on Closing.
4.4 On Closing, in consideration of and simultaneously with
compliance by the Vendors with their obligations to be
performed on Closing contained in this Agreement and each of
the Sale Agreements subject only to payment by the
Purchasers of the Provisional Consideration, the Purchasers
or the Purchaser Guarantor on behalf of the Purchasers shall
pay the Provisional Consideration (including the China
Consideration) in accordance with the provisions of clause
3.13.
4.5 Subject to satisfaction (or waiver by the applicable party
as contemplated by clause 2.5) of the Closing Conditions and
the provisions of clause 4.4, the Closing will take place
whether or not the Vendors or the Purchasers are in breach
of any of the Warranties or the Purchaser Warranties, as the
case may be, as given at the date of this Agreement or are
able to repeat those Warranties or the Purchaser Warranties,
as the case may be, which they are required by this
Agreement to repeat on Closing (subject always in each case
to the qualifications, limitations and conditions to which
they are subject to the extent that any of them apply at
Closing) and whether or not the Vendors or the Purchasers
are in breach of any of their respective obligations under
this Agreement or any of the Transaction Documents; provided
that completion of Closing shall not affect any party's
rights or liabilities in respect of any such breaches under
this Agreement or the Transaction Documents.
4.6 Save as contemplated by clause 2.5 or clause 4.7 and except
in the case of fraud or Wilful Non Disclosure, the
Purchasers agree and acknowledge that the Purchasers shall
not have any right to rescind or otherwise terminate this
Agreement or any of the Transaction Documents in any
circumstances whatsoever and their sole and exclusive remedy
for breach of any of its terms or the terms of any of the
Transaction Documents shall lie in damages.
4.7 If any party fails or refuses to close the transactions
contemplated by this Agreement and the Sale Agreements in
accordance with the provisions hereof or thereof upon
satisfaction of the Closing Conditions or any party does not
discharge its obligations as required by this Agreement or
any of the Sale Agreements or the China Sale Agreement and
as a result the Closing Conditions are not satisfied or not
satisfied within the time contemplated by clause 2.5 the non
breaching party shall have all rights and remedies provided
under applicable law and equitable principles and under the
terms of this Agreement and the Sale Agreements, including
without limitation, rescission, termination, specific
performance, benefit of the bargain damages and other
damages (excluding consequential damages, loss of profit,
loss of business and any other similar
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damage or loss), save that , neither the Purchasers nor the
Vendors, as the case may be, shall have any claims against
the other party in respect of breaches of Warranties or
Purchaser Warranties (other than the Vendor Capacity
Warranties or the Purchaser Capacity Warranties as the case
may be or for breaches resulting from fraud or Wilful Non
Disclosure). These remedies (which are all subject to the
qualifications, limitations or other restrictions or
conditions as contained in this Agreement and/or each Sale
Agreement) are cumulative and not exclusive of each other
and the non breaching party may seek any and all of these
remedies but subject as aforesaid simultaneously.
4.8 For a period of 6 months from Closing the Vendors and the
Purchasers will co-operate, work together and use their
respective reasonable efforts to obtain approval from the
Approval Authority (as defined in the China Sale Agreement).
If at the end of that 6 month period closing of the China
Sale Agreement shall not have occurred then the Vendors
shall refund to the Purchasers the China Consideration
together with interest thereon at the Prime Rate from the
date of Closing to the date of refund, whereupon the China
Sale Agreement shall lapse and be of no further force or
effect, save in respect of any claim any party may have in
respect of any antecedent breach thereof.
5. FURTHER OBLIGATIONS
5.1 Between the date of this Agreement and the Closing Date the
Vendors will conduct HVBS's business in its ordinary and
normal course. Without prejudice to the generality of that
statement the Vendors agree that in respect of HVBS the
following matters shall be deemed to be outside the ordinary
and normal course of business if they occur or are permitted
to occur without first obtaining the consent of the
Purchaser Guarantor (such consent not to be unreasonably
withheld or delayed):-
5.1.1 any change in accounting principles or policies
in respect of any part of HVBS;
5.1.2 the granting of any license with respect to any
Intellectual Property (excluding granting the
Brakes India Licence);
5.1.3 the changing in any material respect of the
rates of compensation or other terms of
employment of employees except where such
change is in the ordinary and normal course of
business and consistent with the past practices
of HVBS;
5.1.4 the entering into of any employment agreement
with any person where the salary payable
thereunder exceeds $100,000 per annum or which
cannot be terminated by less than twelve months
notice;
5.1.5 the changing in any material respect or putting
in place of any employee benefit plans ;
5.1.6 the entering into, amendment or termination or
waiver of any right by the Vendors of any
material contract except in the ordinary and
normal course of business and consistent with
the past practices of HVBS;
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5.1.7 the entering into, amendment or termination of,
or waiver of any right under, any contract with
any Affiliates (it being understood that no
consent of the Purchaser Guarantor will be
required in respect of the supply of goods or
services between the date of this Agreement and
Closing on the basis contemplated by the intra
group arrangements disclosed in the Disclosure
Letter);
5.1.8 the changing in any material respect of the
credit, collection or payment policies of HVBS;
5.1.9 the acquisition or sale of any business by
merger, consolidation or purchase of assets;
5.1.10 the settlement of any material litigation;
5.1.11 the selling or transferring of any material
assets other than inventories and other assets
in the ordinary and normal course of business
and consistent with the past practices of HVBS;
5.1.12 the amending in any material respect of any of
the finance leases set out in Schedule 2 to the
English Sale Agreement; or
5.1.13 the entering into of any agreement to take any
of foregoing actions
(it being understood that if and to the extent that the
Purchaser Guarantor consents to any of the foregoing the
Vendors shall not be in breach of any of the Warranties
merely by reason of the entering into or existence of the
matter consented to).
5.2 For the purposes of clause 5.1 the Vendors shall be entitled
to assume that consent to any of the matters set out in
clause 5.1 above constitutes the consent of the Purchaser
Guarantor if that consent is given in writing by the Chief
Executive Officer of the Purchaser Guarantor, any Senior
Vice President of Purchaser Guarantor or any of the
following employees of the Purchaser Guarantor: Juan L. De
La Riva or Walter Frankiewicz.
5.3 Between the date of this Agreement and the date on which the
China Sale Agreement is completed the Vendor Guarantor will
continue to exercise its rights in respect of Huayang in the
same way and to the same extent as it has prior to the date
of this Agreement.
5.4 Prior to the Closing Date, the Vendors will give to the
employees of the Purchasers and such agents and
representatives of the Purchasers as the Vendors shall
reasonably agree, upon reasonable notice, reasonable access
during normal business hours to such employees of HVBS as
the Vendors and the Purchasers shall reasonably agree so
that discussions may take place and arrangements made for
the orderly transfer of HVBS to the Purchasers on Closing
and not for the purpose of further due diligence ("the
Purpose") save that such access:-
5.4.1 shall not interfere unreasonably with the
normal operations of HVBS;
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5.4.2 shall be granted for the Purpose only; and
5.4.3 may be under the supervision of the Vendors if
the Vendors shall so require; provided the same
shall not interfere unreasonably with the
access provided.
The Vendors will furnish to the Purchasers such financial
and operating data as the Purchasers shall from time to time
reasonably request in connection with the Purpose.
The Confidentiality Agreement executed by the parties on
August 20, 1998 ("the Confidentiality Agreement") will apply
with respect to any information furnished pursuant to this
clause 5.4.
5.5 All assets, amounts and proceeds which are received (whether
received in lock boxes, via wire transfer, by check or
otherwise) or possessed by any Vendor or any Affiliate
thereof on or after the Closing Date in respect of the
Assets or the liabilities assumed by the Purchasers
hereunder or under any of the Transaction Documents will be
received or possessed and held in trust for the benefit of
the Purchasers and will be forthwith paid over or delivered
to the Purchasers in the form so received or possessed.
Without limiting the generality of the foregoing, the
Vendors will, and will cause each of their respective
Affiliates to, wire transfer to an account designated by the
Purchasers all payments in respect of the Receivables
received by the Vendors or any Affiliate of any thereof
within three Business Days after receipt thereof. The
Vendors agree that on and after the Closing Date, the
Vendors, to the extent they are able, will endorse in favour
of the Purchasers any check, any other evidences of
indebtedness or negotiable instruments in the names of
Vendors received by the Purchasers or the Vendors on account
of any Receivables or other Assets transferred to the
Purchasers hereunder or under the Sale Agreements (and, if
they are not so able to endorse the same, the Vendors will
promptly turn the same into cash and immediately remit to
the Purchasers such cash). Upon and after the closing of the
China Sale Agreement, the Vendors and the Vendor Guarantor
will promptly account to the Purchasers for all monies
received by any member of the LucasVarity Group in respect
of its ownership of the China Share for all periods after
the date of this Agreement.
5.6 In the period between the date of this Agreement and Closing
the Vendor Guarantor (on behalf of the Vendors) and the
Purchaser Guarantor (on behalf of the Purchasers) will each
give prompt notice to the other upon becoming actually aware
of (i) any breach of the Warranties in any material respect
or, as the case may be, the Purchaser Warranties in any
material respect and (ii) any failure on the part of the
Vendors or the Purchasers, as the case may be, to comply
with or satisfy in any material respect any covenant,
condition or agreement (other than the Warranties or the
Purchaser Warranties, respectively) to be complied with or
satisfied by the Vendors or the Purchasers, as the case may
be, under this Agreement or any of the Transaction Documents
on or prior to the Closing Date. The notifying party will
use its reasonable efforts to prevent or promptly remedy any
matter which is or would be the subject of any such notice.
No notice pursuant to this clause 5.6 will affect any
warranties, covenants, agreements, obligations or conditions
set forth herein or the limitations, restrictions,
qualifications or conditions to which the same are subject
and any failure on the part of any party to serve a notice
under this clause 5.6 shall not increase that party's
liability beyond that
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which would otherwise have arisen in respect of the
respective breach of warranty or breach of other covenant,
condition and agreement, other than a failure to serve a
notice of a breach of a Warranty which would have caused the
Closing Condition set forth in Section 2.2.1 not to have
been satisfied.
5.7
5.7.1 Subject to the provisions of clause 5.7.3 the
Vendors and the Vendor Guarantor will if so
requested by the Purchasers after Closing (i)
assert claims (and the Purchasers will use
reasonable best efforts to assist the Vendors
in asserting claims) with respect to assets
acquired or liabilities assumed by the
Purchasers and the Purchaser Guarantor under
the Sale Agreements and the China Sale
Agreement, under insurance policies of the
Vendors and the Vendor Guarantor which are
"occurrence basis" policies ("Occurrence Basis
Policies") arising out of insured incidents
occurring from the date coverage thereunder
first commenced until the Closing Date to the
extent that the terms and conditions of any
such Occurrence Basis Policies so allow and
(ii) continue to prosecute claims with respect
to assets acquired or liabilities assumed by
the Purchasers and the Purchaser Guarantor
under the Sale Agreements and the China Sale
Agreement properly asserted with the insurance
carrier prior to the Closing (and the
Purchasers will use reasonable best efforts to
assist the Vendors in connection therewith)
under insurance policies of the Vendors and the
Vendor Guarantor which are on a "claims made"
basis ("Claims Made Policies") arising out of
insured incidents occurring from the date
coverage thereunder first commenced until the
Closing Date to the extent that the terms and
conditions of any such Claims Made Policies so
allow;
provided that the Vendors' reasonable costs and
expenses incurred in connection with the
foregoing are promptly paid by the Purchasers
and Purchasers shall provide to Vendors all
reasonable information and assistance as
necessary to facilitate the making and
prosecution of claims. All recoveries in
respect of such claims shall be for the account
of the Purchasers.
In addition, the Purchasers may purchase (at
the Purchasers' expense), prior to, on or after
the Closing Date, discovery coverage with
respect to Claims Made Policies to provide
coverage with respect to such Claims Made
Policies for claims submitted by the Purchasers
after the Closing Date with respect to
incidents occurring prior to the Closing Date,
and all recoveries under such discovery
coverage will be for the account of the
Purchasers.
5.7.2 The Vendors will not amend, commute, terminate,
buy-out, extinguish liability under or
otherwise modify any Occurrence Basis Policies
or Claims Made Policies under which the Vendors
are obliged to assert and prosecute claims
under clause 5.7.1 in a manner that would
adversely affect any such rights of the
Purchasers in respect thereof.
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5.7.3 It is understood between the parties that the
provisions of clause 5.7.1 shall not apply to
the extent that the Purchasers have received a
reduction in the Consideration (by operation of
the Final Closing Statement) as a result of the
matter giving rise to the claim in question.
5.7.4 The provisions of clauses 5.7.1 and 5.7.2 shall
lapse on the fifth anniversary of Closing,
other than in respect of claims made prior to
such date.
5.8
5.8.1 Subject to the provisions of clause 5.8.2, at
the Closing, the Purchasers and the Vendors
will enter into an agreement or agreements
(subject to their mutual agreement) with
respect to the transitional and separation
arrangements relating to the Activity set forth
on Schedule 9 and relating to such other
transitional and separation matters as shall be
mutually agreed.
5.8.2 In the period between the date of this
Agreement and the Closing the Purchasers and
the Vendors will negotiate in good faith to
agree agreements which shall incorporate the
terms set out in Schedule 9 and such other
terms and conditions as the Vendors and
Purchasers may agree.
5.8.3 For the avoidance of any doubt the parties to
this Agreement agree that should they fail to
reach agreement as contemplated in clauses
5.8.1 and 5.8.2 such failure and the failure to
enter into any such agreements on Closing shall
not constitute a failure of condition for the
purposes of either of clauses 2.2.2 or 2.3.2.
5.8.4 Notwithstanding anything to the contrary
contained herein, in the event the Purchasers
and the Vendors fail to enter into an agreement
with respect to one or more of the matters set
forth in Schedule 9, the parties agree that the
party contemplated to provide such services or
products will provide such services or products
to the party contemplated to receive them for a
period of one year after the Closing Date (in
the case of services involving manufacturing,
supply of products or occupancy of premises) or
for a period of 6 months after the Closing Date
(in the case of other services), in each case
on reasonable terms that are comparable to the
terms on which unaffiliated parties in the
Industry provide and have provided to them such
services or products (provided that the party
contemplated to receive such services or
products may terminate the same on at least 60
days written notice to the providing party).
5.9 The parties understand and agree that, except for the
Excluded Assets, it is the intent of the parties that, on the
terms of, and as set out in the Transaction Documents:
5.9.1 the Vendors will transfer to the Purchasers and
the Purchasers will acquire all of (i) each
member of the LucasVarity Group's right, title
and interest in and to the Registered
Intellectual Property; and (ii) each member of
the LucasVarity Group's right, title and
interest in and to all unregistered
intellectual property owned by or (to the
extent permitted under the terms of
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the applicable licence) licensed to such member
that is related primarily to or used primarily
in the Activity (which expression shall exclude
the LAO Activity for the purposes of this
clause 5.9.1) and (iii) the LAO Intellectual
Property (as defined in the English Sale
Agreement);
5.9.2 the Vendors and each other member of the
LucasVarity Group will grant to the Purchasers
irrevocable, non-exclusive, royalty-free,
freely sublicencable, freely assignable
licenses in the field of the Activity under all
intellectual property owned by or (to the
extent permitted under the terms of the
applicable license) licensed to such member and
used in the Activity on or prior to the
Closing, but not acquired by the Purchasers. In
addition certain members of the LucasVarity
Group will grant to the Purchasers further
licences of specified intellectual property
rights agreed by the parties;
5.9.3 the Purchasers will grant to the Vendors
irrevocable, non-exclusive, royalty-free,
freely sublicencable, freely assignable
licenses in the field of LucasVarity Group's
businesses as they exist at Closing (other than
the Activity) under all intellectual property
acquired by the Purchasers (as contemplated by
clause 5.9.1) that is used in the businesses of
the Vendors existing at Closing (other than the
Activity) on or prior to the Closing. In
addition, certain Purchasers will grant to the
Vendors further licences of specified
intellectual property rights agreed by the
parties.
5.10
5.10.1 At the option of the Purchaser Guarantor (which
option shall be exercised by the Purchaser
Guarantor by written notice to the Vendor
Guarantor, such notice to be served by
whichever first occurs of 45 days from the date
of this Agreement and five Business Days prior
to the Closing), the parties shall effect
either the transaction contemplated in clause
5.10.1.1 or the transaction contemplated in
clause 5.10.1.2:-
5.10.1.1 At the Closing, in consideration of
an amount equal to R1,377,000
payable to the Vendor Guarantor
(which amount shall be in addition
to the Provisional Consideration),
the Vendor Guarantor will cause
Varga to sell, assign, convey,
transfer and deliver to Meritor do
Brasil Limitada (the "Brazil
Purchaser"), and the Brazil
Purchaser will purchase and acquire
from Varga, all right, title and
interest of Varga in and to (i) the
machinery, equipment and other
property listed on Schedule 12,
under the heading "Committed"
(together with any rights or claims
of Varga arising out of the breach
of any express or implied warranty
by the manufacturers or sellers of
any such assets or any component
part thereof) and (ii) the contracts
listed on Schedule 12 (and all
rights to receive payment for
products sold or services rendered,
and to receive goods and services,
pursuant thereto and to assert
claims and to take other actions in
respect of breaches, defaults and
violations
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thereunder) (collectively, the
"Brazil Assets"), free and clear of
all liens and encumbrances. In
addition the Brazil Purchaser will
have a separate option (exercisable
as aforesaid in clause 5.10.1) to
assume all of Varga's obligations to
purchase the machines on order
identified in Schedule 12, under the
heading "To Be Committed" for
approximately R283,557. The Vendors
and the Vendor Guarantor agree that
the Brazil Purchaser will have the
right to pursue with Volvo (and the
Vendors and the Vendor Guarantor
will provide to the Brazil Purchaser
all reasonable assistance in this
regard) and retain any reimbursement
of engineering or tooling charges
granted by Volvo in relation to the
Brazil assets purchased by the
Brazil Purchaser as identified in
Schedule 12 under the heading "To Be
Committed" or;
5.10.1.2 If within the period set out above
for the exercise by the Purchaser
Guarantor of its option to elect
between clause 5.10.1.1. and clause
5.10.1.2, the Purchaser Guarantor
has not exercised its option to
effect the transaction contemplated
by clause 5.10.1.1 or if such
transaction has not been effected by
the Brazil Purchaser at the Closing
then at Closing the appropriate
member of the LucasVarity Group will
grant to Varga the Varga Licence and
the Varga Licence will be assigned
to the Purchaser Guarantor.
5.10.2 If the Purchaser Guarantor elects the option
set out in clause 5.10.1.1 and within a period
of 5 years after Closing the Vendor Guarantor
segregates Varga's heavy duty braking business
(other than the Brazil Assets which are being
acquired by the Brazil Purchaser pursuant to
this Agreement) (the "Varga Remaining HDB
Business") from Varga's other businesses then,
upon completion of such segregation, the Vendor
Guarantor will cause Varga to grant to the
Brazil Purchaser a right of first refusal in
respect of all or any part of the Varga
Remaining HDB Business on the terms set forth
in clause 5.10.3 and on such other terms and
conditions as the parties shall reasonably
agree, provided always that nothing contained
in this Clause 5.10.2 shall impose any
obligation on LucasVarity or Varga to segregate
such Varga Remaining HDB Business or imply any
obligation or commitment to undertake the same.
5.10.3 If Varga wishes to sell all or any part of the
Varga Remaining HDB Business then Varga shall
first offer such part to the Purchaser
Guarantor at a price which Varga considers to
be fair and reasonable. The offer shall be
effected by notice in writing to the Purchaser
Guarantor and shall specify the proposed
purchase price and all other terms and
conditions of the proposed sale. The Purchaser
Guarantor shall then have the right,
exercisable for a period of 30 days thereafter,
to accept such offer. If the Purchaser
Guarantor shall accept an offer to acquire such
part of the Varga Remaining HDB Business, the
Purchaser Guarantor shall complete the
acquisition within
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whichever is the later to occur of 60 days
after such acceptance and five days after
receipt of any governmental approvals which are
required in order to permit the Purchaser
Guarantor to acquire such interest. If the
Purchaser Guarantor shall fail to accept such
an offer within the 30-day period referred to
in this clause 5.10.3, or shall accept such an
offer but fail to complete such acquisition
within the time period referred to above, Varga
may during a period of 180 days following the
expiration of such period, dispose of such part
of the Varga Remaining HDB Business to any
other purchaser; notwithstanding the foregoing,
Varga agrees not to sell such part of the Varga
Remaining HDB Business during such 180 day term
at a lower price or on more favourable terms
than offered to Purchaser Guarantor without
first offering Purchaser Guarantor a right of
first refusal exercisable within 30 days of
written notice. If the sale is not effected
within such 180-day period, the provisions of
this clause 5.10.3 shall again be applicable to
any subsequent proposed sale.
5.11
5.11.1 The parties understand and agree that the
appropriate member of the LucasVarity Group may
prior to the Closing grant to Brakes India the
Brakes India Licence.
5.11.2 It is the intent of the appropriate members of
the LucasVarity Group to work after Closing
with its partner in Brakes India to cause
Brakes India as soon as reasonably practicable
to restructure its current businesses such that
the business of braking products for heavy duty
vehicular applications will be carried on in a
new company ("New Brakes India") which shall be
a separate company from Brakes India. The
Vendor Guarantor will use its reasonable
efforts to obtain formal approval of the
majority shareholders of Brakes India to effect
the actions described in this clause 5.11.2.
The Vendor Guarantor will consult with the
Purchaser Guarantor in good faith from time to
time regarding the progress of formation of New
Brakes India. The parties acknowledge that it
may take some time to implement such actions
fully, which actions may involve without
limitation the setting up of new manufacturing
and administration facilities. Upon completion
of such actions, the Vendor Guarantor will
grant to the Purchaser Guarantor a right of
first refusal in respect of all or any part of
the Vendor Guarantor's interest in New Brakes
India on the terms and conditions set forth in
clause 5.11.3 and on such other terms and
conditions as the parties hereto shall
reasonably agree.
5.11.3 If the Vendor Guarantor wishes to sell all or
any of its interest in New Brakes India, then
the Vendor Guarantor shall first offer such
interest to the Purchaser Guarantor at a price
which the Vendor Guarantor considers to be fair
and reasonable. The offer shall be effected by
notice in writing to the Purchaser Guarantor
and shall specify the proposed purchase price
and all other terms and conditions of the
proposed sale. The Purchaser Guarantor shall
then have the right, exercisable for a period
of 30 days thereafter, to accept such offer. If
the Purchaser Guarantor shall accept an offer
to acquire
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such interest in Brakes India, the Purchaser
Guarantor shall complete the acquisition within
whichever is the later to occur of 60 days
after such acceptance and five days after
receipt of any governmental approvals which are
required in order to permit the Purchaser
Guarantor to acquire such interest. If the
Purchaser Guarantor shall fail to accept such
an offer within the time period referred to
above , the Vendor Guarantor may, during a
period of 180 days following the expiration of
such period, dispose of such interest in Brakes
India to any other purchaser; notwithstanding
the foregoing, the Vendor Guarantor agrees not
to sell such interest in New Brakes India
during such 180 day term at a lower price or on
more favourable terms than offered to Purchaser
Guarantor without first offering Purchaser
Guarantor a right of first refusal exercisable
within 30 days of written notice. If the sale
is not effected within such 180-day period, the
provisions of this clause 5.11.3 shall again be
applicable to any subsequent proposed sale.
5.12 The Vendor Guarantor will prior to the Closing
Date complete its capital contributions to the
registered capital of Huayang in full.
5.13 The Vendors and the Vendor Guarantor covenant
to the Purchasers in the terms of Schedule 10.
The provisions of paragraphs 2.2 and 2.4 of
Schedule 10 shall apply to limit the Vendors
liability in respect of Environmental Claims.
It is understood between the parties that the
covenant contained in this clause 5.13 shall be
incapable of constituting a failure of
condition for the purposes of clause 2.2.2
except with respect to those obligations in
paragraph 1 of Schedule 10.
6. WARRANTIES AND INDEMNITIES
6.1 The English Vendor hereby warrants to the English Purchaser
with regard to the English Activity in the terms of the
General Warranties and the English Warranties at the date of
this Agreement and at the Closing by reference to the facts
and circumstances then existing. The German Vendor hereby
warrants to the German Purchaser with regard to the German
Activity in the terms of the General Warranties and the German
Warranties at the date of this Agreement and at the Closing by
reference to the facts and circumstances then existing. The US
Vendor hereby warrants to the Purchasers with regard to the US
Business in the terms of the General Warranties and the US
Warranties at the date of this Agreement and at the Closing by
reference to the facts and circumstances then existing.
LucasVarity hereby warrants to the Purchasers in the terms of
the LucasVarity Warranties at the date of this Agreement and
at the Closing by reference to the facts and circumstances
then existing.
6.2
6.2.1 Subject as provided in clause 6.3, the
Warranties shall be qualified to the extent of
the disclosures fairly made on the date hereof
in the Disclosure Schedules or Disclosure
Letters and to the extent of any matters,
events or circumstances actually known by any
of the following persons: Glenn J. Eggert, Juan
L. De La Riva, Walter Frankiewicz, Diane
Stelfox, Mark W.
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Purtilar and Ronald Quigley (and the knowledge
of any Purchaser or the Purchaser Guarantor for
purposes of this Agreement and the Transaction
Documents shall be deemed to be only the actual
knowledge of such persons).
6.2.2 On the Closing Date the Vendors shall amend,
add to or supplement the Disclosure Letters and
or Disclosure Schedules for the purposes of
qualifying the Warranties when the same are
repeated as at Closing in relation to any
matter of which any Vendor becomes actually
aware after the date hereof but prior to
Closing provided always that disclosure after
the date of this Agreement of any fact matter
or circumstance shall not be effective to:-
6.2.2.1 cure any breach of such Warranties
as given at the date of this
Agreement or at the Closing Date
(for which the Vendors shall remain
liable subject to the terms and
provisions of this Agreement
notwithstanding such disclosure); or
6.2.2.2 satisfy the Closing Condition
contained in clause 2.2.1 where that
Closing Condition would not but for
the disclosure of such fact matter
or circumstance have been satisfied
6.3
6.3.1 The Vendors and the Vendor Guarantor agree and
confirm that the Purchasers are entering into
this Agreement on the basis of the Warranties
as given on the date of this Agreement and on
the basis that they will be repeated on Closing
in the manner specified herein and on the basis
that the Purchasers and/or the Purchaser
Guarantor (as the case may be) will be entitled
to recover under a Warranty (subject to the
terms and provisions of this Agreement) when
repeated on Closing without reference to any
disclosure made or information provided by or
on behalf of the Vendors, the Vendor Guarantor
or any of them after the execution and delivery
of this Agreement or any information, matter,
fact or circumstance which becomes known by the
Purchasers, the Purchaser Guarantor or any
adviser acting on behalf of any of them after
the execution and delivery of this Agreement.
No knowledge, howsoever obtained after the
execution and delivery of this Agreement, or
disclosure made by the Vendors or the Vendor
Guarantor after such execution and delivery
shall in any way diminish or otherwise affect
any Purchaser's ability to recover in respect
of the Warranties either as a result of their
having been given on the date of this Agreement
or being repeated on Closing.
6.3.2 Liability under any Warranty (whether given on
the date of this Agreement or repeated on
Closing) or for any breach of any obligation
under this Agreement any Sale Agreement or
China Sale Agreement shall not be confined to
breaches discovered before Closing nor in any
way be modified or discharged by Closing.
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6.4 Subject to the other provisions of this clause 6, the
Vendors shall indemnify, defend and hold harmless the
Purchasers for themselves and as trustee for each member of
the Purchasers Group from and against any and all Losses,
incurred or suffered by the Purchasers or any other member
of the Purchaser Group based upon or arising out of:
6.4.1 any breach of any obligation (other than a
breach of the Warranties) on the part of any
Vendor or the Vendor Guarantor contained herein
or in any Sale Agreement or the China Sale
Agreement;
6.4.2 the Excluded Assets; or
6.4.3 the Retained Liabilities.
6.5 Subject to the other provisions of this clause 6, the
Purchasers shall indemnify, defend and hold harmless the
Vendors for themselves and as trustee for each member of the
Vendor Group from and against, any and all Losses incurred
or suffered by the Vendors or any other member of the Vendor
Group based upon or arising out of:
6.5.1 any breach of any obligation (other than a
breach of the Purchaser Warranties) of any
Purchaser or the Purchaser Guarantor contained
herein or in any Sale Agreement or the China
Sale Agreement; or
6.5.2 the liabilities relating to the Activity
assumed by the Purchasers under this Agreement
or any of the Sale Agreements.
6.6 Notwithstanding anything to the contrary contained in this
Agreement the Warranties and the Purchaser Warranties are
subject to the following:-
6.6.1 no claim in respect of the Warranties or the
Purchaser Warranties shall be capable of being
made unless it shall be notified in writing to
the Vendor Guarantor or the Purchaser
Guarantor, as the case may be;
6.6.1.1 within 18 months from the Closing
(other than as provided in clauses
6.6.1.2 to 6.6.1.4); or
6.6.1.2 in the case only of the Warranties
contained in paragraph 18 of
Schedule 3, Part A, paragraph 4 of
Schedule 3, Part B and paragraph 3
of Schedule 3, Part D (taxes),
within seven years from the date
hereof; or
6.6.1.3 in the case of the Warranty
contained in paragraph 15 of
Schedule 3, Part A (environment),
within three years from the date
hereof; or
6.6.1.4 in the case only of a Title Breach
or a breach of the Purchaser
Capacity Warranties or the Vendor
Capacity Warranties, at any time
(subject to the provisions of any
applicable law regarding
limitation);
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6.6.2 any such claim in respect of the Warranties or
the Purchaser Warranties which may be made
shall (if it has not been previously satisfied,
settled or withdrawn) be deemed to be withdrawn
at the expiration of 6 months from the last
date upon which a claim in respect of the
relevant warranty could have been made under
this Agreement unless prior to such expiration
legal proceedings in respect thereof shall have
been issued and served on the relevant Vendor
or Purchaser, as the case may be;
6.6.3
6.6.3.1 Without limiting the obligations of
the Vendors in respect of an
Environmental Claim, the aggregate
liability of the Vendors in respect
of all breaches of the Warranties
(except for breach or breaches of
the Environmental Warranties, the
Vendor Capacity Warranties, Title
Breaches and breaches resulting from
fraud or Wilful Non Disclosure)
shall not exceed a sum equal to
US$40,000,000. The dollar limitation
provided for in this clause 6.6.3.1
is independent of and shall in no
way affect or be affected by the
dollar limitation provided for in
paragraph 2.4 of Schedule 10, nor
shall such dollar limitation apply
to any matters for which
indemnification is provided in
clause 6.4 of this Agreement
(whether or not indemnification (as
distinct from any action for
damages) is sought in respect of
such matters) or to any breach of
the Environmental Warranties, the
Vendor Capacity Warranties, Title
Breaches or to any breaches of
Warranties resulting from fraud or
Wilful Non-Disclosure.
6.6.3.2 The aggregate liability of the
Purchasers in respect of all
breaches of the Purchaser Warranties
(except for breaches resulting from
fraud or Wilful Non-Disclosure or
any breach of the Purchaser Capacity
Warranties) shall not exceed a sum
equal to US$40,000,000. The dollar
limitation provided for in this
clause 6.6.3.2 shall not apply to
any matters for which
indemnification is provided in
clause 6.5 (whether or not
indemnification (as distinct from
any action for damages) is sought in
respect of such matters) or to any
breach of the Purchaser Warranties
resulting from fraud or Wilful
Non-Disclosure or to any breach of
the Purchaser Capacity Warranties.
6.6.4 The Vendors or the Purchasers shall not be
liable in respect of any single claim brought
by the Purchasers or the Vendors, respectively,
for a breach of the Warranties (other than in
respect of the Environmental Warranties, the
Vendor Capacity Warranties or a Title Breach)
or the Purchaser Warranties (other than in
respect of the Purchaser Capacity Warranties)
arising in any such case out of a single event
if the liability in respect of such claim would
not exceed US$75,000 (seventy five thousand
dollars). The Vendors or the relevant Vendor or
the Purchasers or the relevant Purchaser shall
be liable in respect of any claim for a breach
of the
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Warranties (other than in respect of the
Environmental Warranties, the Vendor Capacity
Warranties or a Title Breach) or the Purchaser
Warranties (other than in respect of the
Purchaser Capacity Warranties) in respect of
which the liability of the Vendors or a Vendor
or the Purchasers or a Purchaser exceeds
US$75,000 (seventy five thousand dollars) only
if the liability of the Vendors or any Vendor
or of the Purchasers or Purchaser for that
claim and all other such claims exceeding
US$75,000 (seventy five thousand dollars) would
in aggregate exceed US$4,000,000 (four million
dollars) and in that event the Vendors or the
Purchasers, as the case may be, shall be liable
for the full amount and not just for excess.
The dollar thresholds and limitations provided
for in this clause 6.6.4 do not apply to any
matters for which indemnification is provided
in clause 6.4 or clause 6.5 (whether or not
indemnification (as distinct from any action
for damages) is sought in respect of such
matters) of this Agreement or to any breach of
the Environmental Warranties, the Vendor
Capacity Warranties, the Purchaser Capacity
Warranties, Title Breaches or breaches of
Warranties or Purchaser Warranties resulting
from fraud or Wilful Non-Disclosure.
6.7
6.7.1 If a claim or demand is made against an
Indemnitee or, as the case may be, a Warranty
Claimant an Indemnitee or, as the case may be,
a Warranty Claimant shall otherwise learn of an
assertion, by any Person who is not a party to
this Agreement (and who is not an Affiliate of
a party to this Agreement) (a "Third Party
Claim") as to which a party (the "Indemnifying
Party" in the case of an Indemnitee or a
"Warrantor" in the case of a Warranty Claimant)
may be obligated to provide indemnification to
an Indemnitee under this Agreement or any Sale
Agreement or may otherwise be obligated to a
Warranty Claimant for breach of Warranty or
Purchaser Warranty, as the case may be,
pursuant to this Agreement, such Indemnitee or,
as the case may be, Warranty Claimant will
notify the Indemnifying Party or , as the case
may be, Warrantor in writing, and in reasonable
detail, of the Third Party Claim reasonably
promptly after becoming aware of such Third
Party Claim; provided, however, that failure to
give any such notification will not (i) affect
the indemnification provided hereunder except
to the extent the Indemnifying Party has been
actually prejudiced as a result of such failure
or (ii) prejudice the ability of a Purchaser or
a Vendor to make and pursue a claim under this
Agreement for breach of the Warranties or
Purchaser Warranties as the case may be
(provided that such claim is made within any
time limits prescribed by this Agreement)
except to the extent that the Warrantor has
been actually prejudiced as a result of such
failure.
6.7.2 If a Third Party Claim is made against any
Indemnitee or, as the case may be, Warranty
Claimant the relevant Indemnitee or Warranty
Claimant shall not seek to settle or compromise
the same without the written consent of the
relevant Indemnifying Party or, as the case may
be, Warrantor such consent not to be
unreasonably withheld or delayed and shall take
such action as the relevant Indemnifying Party
or, as the case may be, Warrantor may
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reasonably require to avoid, resist, contest or
compromise any such Third Party Claim, provided
that the relevant Indemnifying Party or, as the
case may be, Warrantor agrees in writing to
indemnify the relevant Indemnitee or Warranty
Claimant against all reasonable legal costs
incurred by or awarded against the relevant
Indemnitee or Warranty Claimant as a direct
result thereof, such action to include (without
limitation) allowing the Indemnifying Party or,
as the case may be, Warrantor to assume the
defence thereof (at the expense of the
Indemnifying Party or, as the case may be,
Warrantor) with legal advisers selected by the
Indemnifying Party or, as the case may be,
Warrantor and reasonably satisfactory to the
Indemnitee or, as the case may be, Warranty
Claimant. Should the Indemnifying Party or, as
the case may be, Warrantor so elect to assume
the defence of a Third Party Claim, the
Indemnifying Party or, as the case may be,
Warrantor will not be liable to the Indemnitee
or, as the case may be, Warranty Claimant for
any legal or other expenses subsequently
incurred by the Indemnitee or, as the case may
be, Warranty Claimant in connection with the
defence thereof as long as the Indemnifying
Party or, as the case may be, Warrantor
conducts such defence with reasonable care;
provided that, if a conflict of interest arises
in respect of the use of the legal advisers
selected by the Indemnifying Party or, as the
case may be, Warrantor, the Indemnitee or, as
the case may be, Warranty Claimant will have
the right to employ separate legal advisers to
represent the Indemnitee or, as the case may
be, Warranty Claimant in connection with the
Third Party Claim in question and in that event
the reasonable fees and expenses of such
separate advisors will be paid by the
Indemnifying Party or, as the case may be,
Warrantor. If the Indemnifying Party or, as the
case may be, Warrantor assumes the defence of
any such Third Party Claim, each Indemnitee or,
as the case may be, Warranty Claimant will have
the right to participate in the defence thereof
and to employ legal advisors , at its own
expense, separate from the legal advisers
employed by the Indemnifying Party or, as the
case may be, Warrantor. The Indemnifying Party
or, as the case may be, Warrantor will be
liable for the fees and expenses of counsel
employed by the Indemnitee or, as the case may
be, Warranty Claimant for any period during
which the Indemnifying Party or, as the case
may be, Warrantor has failed to assume the
defense thereof or if it does not expressly
elect to assume the defense thereof. If the
Indemnifying Party or, as the case may be,
Warrantor assumes the defence of any such Third
Party Claim, the Indemnitee or, as the case may
be, Warranty Claimant will promptly supply to
the Indemnifying Party or, as the case may be,
Warrantor copies of all correspondence and
documents relating to or in connection with
such Third Party Claim and the Indemnifying
Party or, as the case may be, the Warrantor
will keep the Indemnitee or, as the case may
be, Warranty Claimant fully informed of all
developments relating to or in connection with
such Third Party Claim (including, without
limitation, providing to the Indemnitee or, as
the case may be, Warranty Claimant on
reasonable request updates and summaries as to
the status thereof and copies of all material
correspondence and documents relating thereto).
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6.7.3 No Indemnifying Party or, as the case may be,
Warrantor will consent to any settlement,
compromise or discharge (including the consent
to entry of any judgment) of any Third Party
Claim without the Indemnitee's or as, the case
may be, Warranty Claimant's prior written
consent (such consent is not to be unreasonably
withheld or delayed).
6.8 No claim under this Agreement or any of the Sale Agreements
or the China Sale Agreement in respect of any breach or
breaches of any of the Warranties shall be made by the
Purchasers to the extent that specific and identifiable
provision or reserve therefor has been made in respect of
the subject matter thereof in the course of the preparation
of and is reflected in the Final Closing Statement or the
subject matter thereof is otherwise taken account of in a
specific or identifiable manner in the Final Closing
Statement.
6.9 The Vendors and the Purchasers shall have no liability in
respect of any claim under this Agreement or any Transaction
Document to the extent of any insurance proceeds (net of
reasonable costs and expenses of recovery) actually
recovered by the Purchasers or the Vendors, respectively,
with respect to the loss relating to such claim.
6.10 Where any Purchaser or any Vendor is at any time entitled to
recover from some other person any sum in respect of any
matter or event which could give rise to a claim under the
Warranties or the Purchaser Warranties, an Environmental
Claim, a claim under any provision of this Agreement or any
of the Sale Agreements or the China Sale Agreement, or the
indemnification provisions of clause 6.4 or clause 6.5, as
the case may be, the Purchasers or the Vendors, as the case
may be, undertake to take all reasonable steps (including
filing of insurance claims) to enforce any rights of
recovery that any of the Purchasers or the Vendors, as the
case may be, may have against any third party in respect of
the subject matter of the claim and, in the event that any
Purchaser or any Vendor, as the case may be, shall recover
any amount from such third party, the amount of the claim
against the Vendors or the Purchasers, as the case may be,
shall be reduced by the amount recovered (after deduction of
all reasonable costs and expenses of recovery) (and in the
event of the recovery being delayed until after such claim
has been satisfied by the Vendors or the Purchasers, as the
case may be, the sum recovered will be paid to the Vendors
or the Purchasers, as the case may be (up to the amount
actually paid by the Vendors or the Purchasers, as the case
may be, to the Purchasers or the Vendors, as the case may
be) after deduction of all reasonable costs and expenses of
the recovery and any taxation payable on any sum so
recovered).
6.11 Payment of any claim under the Warranties or the Purchaser
Warranties shall, to the extent of such payment, satisfy and
preclude any other claim which is capable of being made in
respect of the same matter.
6.12 If the Vendors or any of them or the Purchasers or any of
them pay at any time to any Purchaser or any Vendor,
respectively, an amount pursuant to a claim in respect of
the Warranties or the Purchaser Warranties or under any of
the other provisions of this Agreement, the Sale Agreements
or the China Sale Agreement and the relevant Purchaser or
any Purchaser or the relevant Vendor or any Vendor, as the
case may be, subsequently becomes entitled to recover from
some other person any sum in respect of any matter which
gave rise to such claim and payment then such Purchaser or
Vendor,
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as the case may be, shall take all reasonable steps to
enforce such recovery and shall forthwith repay to the
Vendors or the Purchasers, as the case may be, so much of
the amount paid by it to the relevant Purchaser or the
relevant Vendor, as the case may be, as does not exceed the
sum recovered from such other person (after deduction of all
reasonable costs and expenses of the recovery and any
taxation payable on any sum so recovered).
6.13 Nothing in this Agreement shall operate to diminish the
Purchasers' and the Vendors' common law duty to mitigate
loss in respect of the matters dealt with in this Agreement.
6.14 If any potential claim shall arise under the Warranties or
the Purchaser Warranties by reason of a liability which is
contingent only then the Vendors or the Purchasers, as the
case may be, shall not be under any obligation to make any
payment in respect of such claim until such time as the
contingent liability ceases to be contingent and becomes
actual and the time periods contained in clauses 6.6.1 and
6.6.2 shall be extended until 3 months after such liability
becomes actual.
6.15 In calculating the liability of the Vendors or any of them
or the Purchasers or any of them in respect of any claim
under the Warranties or the Purchaser Warranties credit will
be given to the relevant Vendor or the relevant Purchaser,
as the case may be, to the extent of the amount of any
saving of taxation ("a saving") for any Purchaser or any
Vendor, as the case may be, which the subject matter of any
such claim gives rise to and for these purposes a saving is
obtained if by virtue of the subject matter of a claim any
Purchaser or any Vendor, as the case may be, is relieved in
whole or in part of a liability to make a payment of
taxation which it would otherwise have been liable to make.
6.16 Any payment made under this Agreement by the Vendors to the
Purchasers in respect of any breach of any of the Warranties
or under the Environmental Indemnity shall be and be deemed
to be a reduction in the Consideration paid for the Assets.
7. POST COMPLETION COVENANTS
7.1 For the purposes of assuring to the Purchasers the full
benefit of HVBS and following completion of the China Sale
Agreement (if it occurs), the China Share and the goodwill
in each of HVBS and the China Share and in consideration of
the agreement of the Purchaser to buy HVBS and the China
Share the Vendors and each of them covenant and undertake in
favour of the Purchasers that they shall not and shall
procure that no other member of the LucasVarity Group will,
either alone or in conjunction with or on behalf of any
other Person, but subject in any event to clause 7.2
7.1.1 for a period of three years from Closing either
on its own account or in conjunction with or on
behalf of any Person be (either directly or
indirectly) engaged or (save as the holder of
shares or other securities in any company which
are quoted, listed or otherwise dealt in on a
recognised stock exchange or other securities
market which confer not more than 5% of the
votes which could be cast at a general meeting
of the company concerned) concerned with or
interested in any Heavy Vehicle Competing
Business;
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7.1.2 for a period of twelve months from Closing
either on its own account or in conjunction
with or on behalf of any Person without the
prior written consent of the Purchaser
Guarantor which consent shall not be
unreasonably withheld or delayed, solicit or
endeavour to entice away an employee of HVBS
who is, at Closing, employed in a senior
technical or senior managerial position other
than Gary Stewart and Colin Smart;
7.1.3 save as may be required by law or the
regulations of the New York Stock Exchange or
the London Stock Exchange Limited for a period
of three years from Closing reveal to any
Person or use or exploit for its own benefit or
for the benefit of any other Person any of the
trade secrets, secret or confidential
operations, processes (together "Trade
Secrets") or dealings or any other confidential
information concerning HVBS and Huayang (other
than in connection with its ownership of equity
in Huayang until completion of transfer of the
China Share) including (without limitation)
customer lists and names, sales targets and
statistics, market share statistics, surveys
and reports so far as the same have come to the
Vendors' knowledge or to the knowledge of any
other member of LucasVarity Group before
Closing but so that this restriction shall:-
7.1.3.1 cease to apply to information which
otherwise than through default of
any member of the LucasVarity Group
falls into the public domain;
7.1.3.2 subject to clauses 7.1.1 and 7.1.2
not prevent or restrain any member
of the LucasVarity Group from using,
exploiting or disclosing such
confidential information when the
information to be used, exploited or
revealed relates not only to HVBS
and/or Huayang but also to any
business engaged in by any member of
the LucasVarity Group, now or in the
future provided always this
sub-clause 7.1.3.2 shall not permit
the use of any Trade Secrets in any
Heavy Vehicle Competing Business for
a period of three years from
Closing.
7.2 Nothing in clause 7.1 shall prevent or restrict the
LucasVarity Group or any member of it, either alone or in
conjunction with or on behalf of any other Person:-
7.2.1 from continuing to hold shares in or to acquire
shares in Brakes India and nothing in this
Agreement shall prevent or restrict Brakes
India from continuing to carry on any of its
businesses including, without limitation, a
Heavy Vehicle Competing Business, nor from
developing any such business(es) or any
business of a similar type;
7.2.2 from continuing to hold shares in, to control
or to acquire further shares in Varga and
nothing in this Agreement shall prevent or
restrict Varga from continuing to carry on any
of its businesses including without limitation
a Heavy Vehicle Competing Business nor from
developing any such businesses or any business
of a similar type provided, however, that if
the Purchaser Guarantor exercises its option to
acquire and actually acquires the
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Brazil Assets, provided for in clause 5.10.1.1
of this Agreement, Varga shall not carry on a
Heavy Vehicle Competing Business that includes
designing and/or manufacturing and/or selling
Wheel End Products for applications in full air
brake systems;
7.2.3 in whatever form it takes from continuing to
own, carry on and develop any of its businesses
anywhere in the world, which are howsoever, and
whether directly or indirectly, engaged,
concerned with or interested in designing
and/or manufacturing and/or selling Wheel End
Products and/or Friction:-
7.2.3.1 in the Independent Aftermarket where
such Wheel End Products and/or
Friction is/or are Alternative
Specification; or
7.2.3.2 in the Independent Aftermarket where
the sale of such Wheel End Products
and/or Friction complements in the
reasonable opinion of LAO the range
of products sold from time to time
by LAO;
provided, however, that in no event shall LAO
or any other member of the LucasVarity Group
(save where otherwise permitted pursuant to
this clause 7.2) reverse engineer products or
sell Alternative Specification products to
those products which are manufactured by and/or
for the Activity for inclusion in products for
sale to the OE Market from time to time, save
where: such products manufactured by and/or for
the Activity are Friction or brake rotors of 15
3/8th inches or less in diameter;
7.2.3.3 in NAFTA in the Aftermarket and
Independent Aftermarket for
applications in Classes 5 and 6;
7.2.4 from acquiring, holding or operating any
business or the shares or other securities of
any company (including, without limitation,
shares which are quoted, listed or otherwise
dealt in on a recognised stock exchange or
other securities market) or group of companies
or participating in any joint venture (and from
any business, company, group of companies or
joint venture so acquired, held or operated or
participated in from carrying on and/or
developing any of its or their businesses):-
7.2.4.1 where the portion of the activities
of such business, company, group of
companies or joint venture which
comprises a Heavy Vehicle Competing
Business is less than 20% of its
business; and
7.2.4.2 where the principal purpose of such
acquisition or participation is not
to acquire or participate in a Heavy
Vehicle Competing Business;
7.2.5 from carrying on any of the activities in the
capacity and to the extent as contemplated by
the Transaction Documents or any of them or
from enjoying or exercising any benefits or
rights granted to any member of the LucasVarity
Group pursuant to such Transaction Documents;
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7.2.6 from licensing or entering into any agreement
or other arrangement whatsoever relating to its
trademarks or other intellectual property
provided that subject to the other provisions
of clause 7.2 neither the Vendors nor any
member of the LucasVarity Group shall for a
period of three years from the Closing grant
any licence under any of its trade marks or
other intellectual property to use or exploit
the same in a Heavy Vehicle Competing Business
application;
7.2.7 from designing and/or manufacturing and/or
distributing and/or selling ABS;
7.2.8 subject to the Vendors' obligations hereunder
with respect to sale of the China Share from
continuing to own and/or hold the China Share
and nothing in this Agreement shall prevent or
restrict any Vendor from holding shares in or
acquiring further shares in Huayang or from
Huayang from continuing to carry on any of its
businesses including without limitation a Heavy
Vehicle Competing Business nor from developing
any such businesses or any business of a
similar type;
7.2.9 remanufacturing Wheel End Products, and selling
and/or distributing such remanufactured Wheel
End Products, provided that where products to
be remanufactured are products forming part of
the range of products manufactured by the
Activity, the LucasVarity Group shall use only
original spares sourced from the Activity
pursuant to the terms and conditions of the LAO
Agreement (as defined in the English Sale
Agreement) in carrying out such remanufacture;
7.2.10 from performing and continuing to perform its
obligations under its contract to supply
Alternative Specification discs to Optare for
Original Equipment Service;
7.2.11 in NAFTA in Classes 5 and 6 from supplying and
continuing to supply Wheel End Products (other
than Wheel End Products for applications in
full air brake systems) to the current or
similar to current customer base of LVBS which
are primarily automotive manufacturers (ie,
manufacturers of primarily light vehicles that
also manufacture medium-duty vehicles) and not
heavy truck manufacturers; or
7.2.12 from continuing to hold shares in or to acquire
shares in Roulunds Lucas Huangshi Friction
Company and nothing in this Agreement shall
prevent or restrict that Company from
continuing to carry on any of its business as a
manufacturer of Friction
and accordingly, none of the Vendors shall be in breach of
any of the provisions of clause 7.1 if they undertake any of
the activities contemplated by this clause 7.2.
7.3 The Purchaser covenants and undertakes in favour of the
Vendors for themselves and as trustee for each member of the
LucasVarity Group that it shall not and shall procure that
no other member of the Purchaser Group will, either alone or
in conjunction with
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or on behalf of any other Person for a period which
commences on the date of this Agreement and ends twelve
months from the date of Closing either on its own account or
in connection with or on behalf of any Person without the
prior written consent of LucasVarity, which consent shall
not be unreasonably withheld or delayed solicit or endeavour
to entice away any employee of LVBS who is, at the date of
this Agreement, employed by LVBS as it exists on the date
hereof in a senior technical or senior managerial position
7.4 Where HVBS or LVBS have acted as joint bidders or as a
supplier to the other on business quoted by the other to a
customer, upon the expiration of the platform or when new
quotes for continuance of the business or other business are
due the Purchasers and the Vendors (as trustee for and on
behalf of LVBS) agree to negotiate in good faith the renewal
of such arrangement on commercially acceptable terms
7.5
7.5.1 Each of the Vendors and the Purchasers hereby
agrees that each of the restrictions imposed on
them contained in this clause 7 is reasonable
and necessary for the protection of in case of
the restrictions imposed on the Vendors the
Purchaser's proprietary interests in HVBS and
(after completion of the China Sale Agreement,
if it takes place) Huayang and the goodwill in
relation to them and in case of the restriction
imposed on the Purchasers, the LucasVarity
Group's interest in LVBS and each of the other
businesses comprised within the LucasVarity
Group but if any such restriction shall be
found by a competent court to be void or
voidable at the option of the Vendors, or any
of them, or as the case may be, the Purchasers,
or any of them but would be valid and
enforceable if some part thereof were deleted
or the period or the area of application of the
restraint reduced such restriction shall apply
with such modification as may be necessary to
make it valid and enforceable and not void or
voidable.
7.5.2 Without prejudice to clause 7.6 if any
restriction or undertaking is found by any
court or other competent authority to be void,
voidable or unenforceable the parties shall
negotiate in good faith to replace such void,
voidable or unenforceable restriction or
undertaking with a valid provision which has
materially the same or similar legal and
commercial effect as such void, voidable or
unenforceable undertaking or restriction as the
case may be which it replaces.
7.6 For the purposes of clause 7.1 the time which shall be
relevant for the purposes of determining whether a Person is
at that time a member of the LucasVarity Group shall be the
time at which the Person is in breach of the undertaking
given by the Vendors in clause 7.1. For the avoidance of
doubt, but except in respect of any pre-existing breach, the
Vendors and each of them, shall cease to be liable for any
actions of any Person in breach of clause 7.1 immediately on
such Person ceasing to be a member of the LucasVarity Group.
7.7 The provisions of clause 7.6 apply mutatis mutandis for the
purposes of clause 7.3 and the Purchaser Group.
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8. RESTRICTIVE TRADE PRACTICES ACT
If this Agreement or any wider arrangement of which it forms part
constitutes an agreement particulars of which are required to be
furnished to the Director General of Fair Trading pursuant to Section
24 of the Restrictive Trade Practices Act 1976 then none of the
relevant provisions shall come into effect nor shall any of the parties
give effect to or enforce or purport to enforce any restriction by
virtue of which the Agreement (or wider arrangement) is subject to
registration until the day after relevant particulars have been duly
furnished in accordance with section 24 of that Act.
9. PURCHASER ASSURANCES
9.1 The Purchaser Guarantor and the Purchasers acknowledge to
and agree with each of the Vendors (both for themselves and
in each case as trustees for each other member of the
LucasVarity Group and for the benefit of each of their
respective officers employees and advisers and as trustee
for such officers, employees and advisers) that:-
9.1.1 the invitation to them by or on behalf of the
Vendors to consider the purchase of HVBS and
the China Share and the provision of
information relating to HVBS and the China
Share, their respective financial positions or
prospects was made by or on behalf of the
Vendors and the LucasVarity Group and accepted
by the Purchaser Guarantor and the Purchasers
and this Agreement and the Transaction
Documents were entered into on the basis that
none of the Vendors nor any member of the
LucasVarity Group nor any of the Vendors' or
any member of the LucasVarity Group's officers
employees or advisers have made or makes any
representation or warranty (other than as set
out in the Warranties) as to the accuracy or
completeness of such information or accepts any
duty of care in relation to the Purchaser
Guarantor and/or the Purchasers in respect of
the provision of such information and, save as
contemplated by the Warranties or in the case
of representations made fraudulently by the
Vendors and/or any member of the LucasVarity
Group, none of such persons shall be under any
liability to the Purchaser Guarantor and/or the
Purchasers in the event that, for whatever
reason, such information is or becomes
inaccurate incomplete or misleading in any
particular; and
9.1.2 the Purchaser Guarantor and the Purchasers have
had independent legal and financial advice
relating to the purchase of HVBS, the Assets,
the China Share and to the terms of this
Agreement and each Transaction Document and the
documents to be executed pursuant to them
including the terms of this clause.
9.2 Subject to such rights as the Purchasers may have under this
Agreement or any of the Transaction Documents each of the
Purchasers and the Purchaser Guarantor undertakes to the
Vendors and each of them, for themselves and as trustee for
and on behalf of each member of the LucasVarity Group to
procure that none of the Purchasers, HVBS and/or Huayang
will at any time after Closing hold itself out as a
Subsidiary of or otherwise connected with the LucasVarity
Group or use in connection with any business the name or
mark "Lucas" and/or "LucasVarity" and/or "Girling"
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and/or "Kelsey-Hayes" and/or the LucasVarity Group diagonal
flash and/or the Varity logo and/or any LucasVarity Group or
Girling or Lucas or Kelsey-Hayes get up or trade dress or
any colourable imitations of any of them (the "Names") and
(without limiting the foregoing) to procure that all of the
same are deleted from all printed material including
(without limitation) stationery, compliments slips,
invoices, business cards, catalogues, brochures, sales
material and (if relevant) from electronic media such as
Internet sites and telephone listings and (if relevant) from
signage at the Property and any other premises from which
any of HVBS or Huayang carries on business or otherwise
operates and from motor vehicles and other tangible assets
used by HVBS or Huayang as soon as reasonably practicable.
Notwithstanding anything contained herein to the contrary,
the Purchasers shall be permitted to continue to use the
Names for certain limited purposes for a limited period of
time from the Closing Date as follows:
9.2.1 on catalogues and forms for internal use only,
for 180 days;
9.2.2 to package products in packaging bearing any of
the Names and on any other written materials
(other than as provided in clause 9.2.1) or
signs at facilities, for 90 days;
9.2.3 to deliver to customers products packaged in
packaging bearing any of the Names, for 270
days; and
9.2.4 to use Plant, Machinery and Equipment,
including for the avoidance of doubt any
tooling, which involves the printing,
impressing or otherwise marking of products
with any of the Names for 3 years.
9.3 The Purchasers acknowledge to each Vendor for themselves and
as trustee for each other member of the LucasVarity Group
the ownership by the LucasVarity Group of the names and/or
mark "Lucas" or "LucasVarity" and/or "Girling" and/or
"Kelsey-Hayes" and/or the LucasVarity Group diagonal flash
and/or the Varity logo in relation to the goods or services
in respect of which such names, marks or logo are registered
and/or are used by any member of the LucasVarity Group and
hereby acknowledge that notwithstanding any arrangements
which may be contained in any of the Transaction Documents
and which operate between the Vendors and the Purchasers in
respect of the period following Closing all and any goodwill
in the names and/or marks Lucas and/or LucasVarity and/or
Girling and/or Kelsey-Hayes and/or the LucasVarity Group
diagonal flash and/or the Varity logo and/or any LucasVarity
Group or Girling get up or trade dress belongs to and
remains vested in the LucasVarity Group in relation to such
goods and services.
9.4 The Purchaser Guarantor and the Purchasers hereby covenant
with the Vendors and each of them for themselves and as
trustee for each other member of the LucasVarity Group that
except to the extent (if any) required by law the Purchaser
Guarantor and the Purchasers will not and will procure that
no member of the Purchaser Group will at any time within the
period of three years from Closing disclose or make public
any secret or confidential or professional or financial or
commercial information concerning the LucasVarity Group and
not relating to HVBS or Huayang which it or they has or have
learned by reason of HVBS or Huayang or either of them being
owned by the Vendors and will not and will procure that no
member of the Purchaser Group
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will use to the detriment of any member of the LucasVarity
Group any information concerning LucasVarity and not
relating to HVBS which HVBS has obtained in confidence in
the course of or as a result of such ownership provided
always that the provisions of this clause 9.4 shall cease to
apply to any information which is already or which falls
into the public domain otherwise than by reason of a breach
of this provision.
9.5
9.5.1 The Purchaser Guarantor and the Purchasers
hereby warrant and represent to the Vendors in
the terms of Schedule 4 at the date of this
Agreement and at the Closing by reference to
the facts and circumstances then existing.
Subject as provided in clause 9.5.2, the
Purchaser Warranties shall be qualified to the
extent of any matters, events or circumstances
known prior to execution and delivery of this
Agreement by the Vendors.
9.5.2 The Purchasers and the Purchaser Guarantor
agree and confirm that the Vendors are entering
into this Agreement on the basis of the
Purchaser Warranties as given on the date of
this Agreement and on the basis that they will
be repeated on Closing in the manner specified
herein and on the basis that the Vendors will
be entitled to recover under a Purchaser
Warranty (subject to the terms and conditions
of this Agreement) when repeated on Closing
without reference to any disclosure made or
information provided by or on behalf of the
Purchasers the Purchaser Guarantor or any of
them after the execution and delivery of this
Agreement. No knowledge howsoever obtained
after the execution and delivery of this
Agreement or disclosure made by the Purchasers
or the Purchaser Guarantor after the execution
and delivery of this Agreement shall in any way
diminish or otherwise affect any Vendor's
ability to recover in respect of the Purchaser
Warranties either as a result of them having
been given on the date of this Agreement or
being repeated on Closing.
9.5.3 Liability under any Purchaser Warranty (whether
given on the date of this Agreement or repeated
on Closing) or for any breach of any
obligations of the Purchasers under this
Agreement or any Transaction Document shall not
be confined to breaches discovered before
Closing nor in any way be modified or
discharged by Closing
9.6 All undertakings, covenants, indemnities and
acknowledgements given to or made with any member of the
LucasVarity Group under this Agreement or any of the
Transaction Documents are given to or made with the Vendors
and each of them for themselves and (as a separate
undertaking, covenant, indemnity or acknowledgement) to or
with each Vendor as trustee for each other member of the
LucasVarity Group.
9.7 All undertakings covenants, indemnities and acknowledgements
given or made with any member of the Purchaser Group under
this Agreement or any of the Transaction Documents are given
to or made with the Purchasers and each of them for
themselves and (as a separate undertaking covenant indemnity
or acknowledgement) to or with each Purchaser as trustee for
each other member of the Purchaser Group.
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10. INTEREST
Save where otherwise provided by any other provision of this Agreement
or any Transaction Document, if any sum shall at any time be due and
outstanding from any Purchaser to the Vendors or any of them or from
any Vendor to the Purchasers or any of them (as the case may be)
pursuant to the terms of this Agreement or any Transaction Document
interest shall be payable thereon at the rate per annum of 3% above
Prime Rate from time to time such interest to accrue from day to day
and to be payable from the due date until payment whether before or
after judgment.
11. WAIVER
No waiver by any party to this Agreement or any Transaction Document of
any of the requirements of this Agreement or any Transaction Document
or any of its rights hereunder or thereunder shall have effect unless
given in writing and signed by or on behalf of the party giving the
waiver and no delay by any party in exercising any of its rights
hereunder or thereunder shall impair the same. No single or partial
exercise of any right or remedy shall preclude any further exercise
thereof or the exercise of any other right.
12. NOTICES
12.1 The addresses for service of the parties to this Agreement
and each Sale Agreement and the China Sale Agreement shall
be:-
12.1.1 in the case of each of LucasVarity and the
Vendors and each of them:-
The Company Secretary and General Counsel,
LucasVarity plc, 48 Park Street, London W1Y 4DJ
with a copy to each of Chris Long-Leather and
Hilary Kindelan both at LucasVarity plc,
Stratford Road, Shirley, Solihull, West
Midlands; and
12.1.2 in the case of each of the Purchaser Guarantor
and the Purchasers:-
David W. Greenfield, Senior Vice President,
General Counsel and Secretary, Meritor
Automotive, Inc., 2135 West Maple Road, Troy,
Michigan 48084-7186 with a copy to Thomas A.
Madden, Senior Vice President and Chief
Financial Officer, Meritor Automotive, Inc. at
the same address.
12.2 Any notice will be deemed well served on the party to whom
it is addressed if it be served personally or by courier
delivery addressed to such party at its address for service
and such service shall be deemed to be effective upon such
personal or courier delivery taking place.
12.3 Any notices or statements to be served pursuant to clause 3
of this Agreement may be sent by facsimile process to each
of the persons identified in clause 12.1.1:-
12.3.1 in the case of notices to the Vendors, to Chris
Long-Leather at Fax Number 0121 627 4003,
Russell Kelley at Fax Number 0171 647 0671 and
Hilary Kindelan at Fax Number 0121 627 4417;
and
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12.3.2 in the case of notices to the Purchaser
Guarantor and the Purchasers or any of them, to
David W. Greenfield at Fax Number 248-435-2184
and Thomas A. Madden at Fax Number
248-435-8397.
12.4 Any notice or statement so sent by facsimile process shall
be deemed to have been served at the expiration of 2 hours
after the time of despatch, if despatched before 3.00 pm
(local time at the place of destination) on any Business
Day, and in any other case at 10.00 am (local time at the
place of destination) on the Business Day following the date
of despatch, provided that despatch is evidenced by a
transmission slip and it is followed by a hard copy of the
notice or statement served on the recipient in accordance
with clause 12.2.
13. COSTS
Save as otherwise provided in this Agreement and the Transaction
Documents each party hereto shall bear its own costs and expenses in
connection with this Agreement and each of the Transaction Documents
and the negotiations leading thereto.
14. ENTIRE AGREEMENT
14.1 This Agreement, the Transaction Documents and the documents
referred to in them or executed pursuant thereto contain the
whole agreement between the parties to this Agreement relating
to the transactions contemplated by them and supersede all
previous agreements between the parties relating to these
transactions. Each of the parties to this Agreement
acknowledges that in agreeing to enter into this Agreement,
the Transaction Documents and the documents referred to in
them or executed pursuant to them it has not relied on any
pre-contractual representations or warranties or other
assurances save as set out in this Agreement, the Transaction
Documents and the documents referred to in or executed
pursuant to them. Nothing in this clause 14 shall relieve any
member of the LucasVarity Group from any liability for
representations made fraudulently.
14.2 Except in the case of any provisions relating to applicable
law and jurisdiction, in the case of any conflict between (i)
this Agreement and (ii) any Sale Agreement or the China Sale
Agreement, the provisions of this Agreement shall prevail.
14.3 Without prejudice to the generality of clause 14.1, the
"parties" to this Agreement shall include the Other Lucas
Companies for the purpose of that clause.
15. SURVIVAL OF CERTAIN PROVISIONS
This Agreement and each Transaction Document and each document referred
to in each of them or executed pursuant to any of them shall remain in
force and effect after Closing (but subject to the qualifications,
limitations or other restrictions or conditions to which the same are
subject as contained in this Agreement and each Transaction Document)
in respect of any matters covenants or conditions which shall not have
been done observed or performed prior thereto and all warranties
obligations of and indemnities given by the parties shall (except for
any obligations fully performed) continue in full force and effect
notwithstanding Closing.
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16. GOVERNING LAW
The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or any term of this Agreement
shall be governed by English law. The English Courts shall have
non-exclusive jurisdiction to settle any disputes which may arise out
of or in connection with this Agreement and the parties hereby submit
to the non-exclusive jurisdiction of the English courts.
17. ANNOUNCEMENTS
No announcement concerning the transactions contemplated by this
Agreement or any Transaction Documents or any matter ancillary to them
and no disclosure of the terms or contents of this Agreement or any
Transaction Document or any matter ancillary to them shall (save as
required by law or the regulations of the London Stock Exchange or the
New York Stock Exchange) be made by any party except with the prior
written approval of LucasVarity and the Purchaser Guarantor (such
approval not to be unreasonably withheld or delayed). Each of the
Vendors and the Purchasers agree to procure that each of their
respective advisers and representatives complies with the provisions of
this clause as if such persons were parties to this Agreement.
18. COUNTERPARTS
This Agreement and any other documents to be delivered pursuant to any
provision hereof or of any Transaction Document may be executed in any
number of counterparts and by the several parties hereto on separate
counterparts each of which when so executed and delivered shall be an
original but all the counterparts shall together constitute one
document.
19. ASSIGNMENT; CONFIDENTIALITY AGREEMENTS
19.1 The obligations and benefits of this Agreement or any Sale
Agreement or the China Sale Agreement may not be assigned by
the Vendor Guarantor or any of the Vendors without the prior
written consent of the Purchaser Guarantor or by the
Purchaser Guarantor or the Purchasers without the prior
written consent of LucasVarity save that any party may
assign the benefit of this Agreement or any Sale Agreement
or the China Sale Agreement to any of its Subsidiaries or
its Holding Company or any other Subsidiary of its Holding
Company or to the successor of all or any part of its
business without any relief from liability of the assignor
if such assignment does not increase the liability of any
party under this Agreement. If at any time thereafter such
assignee shall cease to be such a Subsidiary or Holding
Company it shall prior to so ceasing re-assign the benefit
of this Agreement to a member of the LucasVarity Group or as
the case may be the Purchaser's Group.
19.2 With effect from Closing, to the extent assignable, the
Vendors and the Vendor Guarantor hereby assign to the
Purchasers all their rights under all confidentiality
agreements relating to the sale of or other transactions
involving the Activity (or any portion thereof) or any of
the Assets. Effective upon Closing, the Confidentiality
Agreement will automatically be terminated.
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20. GUARANTEE BY PURCHASER GUARANTOR
20.1 In consideration of the Vendors entering into this
Agreement, each Sale Agreement and the other Transaction
Documents at the request of the Purchaser Guarantor, the
Purchaser Guarantor irrevocably and unconditionally:-
20.1.1 guarantees to the Vendors and each of them the
payment, observance and performance when due by
the Purchasers of all their liabilities and
obligations whether present or future, actual
or contingent under or arising out of each of
this Agreement and the Transaction Documents
(including any liability or obligation to pay
damages);
20.1.2 undertakes with the Vendors and each of them
that whenever any of the Purchasers fails to
pay or perform when due any of the liabilities
or obligations referred to in clause 20.1.1 it
will on demand by any Vendor from time to time
pay, perform or procure the performance of any
and all of the same; and
20.1.3 in addition to the obligations contained in
clauses 20.1.1 and 20.1.2 and separate from
them agrees to indemnify the Vendors and each
of them in full on demand against any loss or
damage or any liability (which liability will
include all losses or costs claims expenses or
damages including legal and other professional
fees and expenses) which the Vendors or any of
them may suffer or incur directly or indirectly
arising out of or as a result of or in
connection with any failure for any reason of
the Purchasers to pay, observe or perform any
of the obligations referred to in clause 20.1.1
when due and in enforcing protecting or
preserving or seeking to enforce protect or
preserve any of the Vendors' rights under this
Agreement or any Transaction Document.
20.2. None of the Vendors will be obliged before exercising any of
the rights powers or remedies conferred upon it and them in
respect of the Purchaser Guarantor under the Purchaser
Guarantee or by law:-
20.2.1 to make demand of the Purchasers or any of
them; or
20.2.2 to enforce or seek to enforce any claim right
or remedy against any Purchaser or any other
person; or
20.2.3 to make or file any claim in connection with
the insolvency of any Purchaser or any other
person; or
20.2.4 to take any action or obtain judgment in any
court against any Purchaser or any other
person; or
20.2.5 to enforce or seek to enforce any other
security, indemnity, guarantee or lien taken in
respect of any of the obligations of the
Guarantor under the Guarantee.
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20.3 Neither the liability of the Purchaser Guarantor under the
Purchaser Guarantee nor the rights powers and remedies
conferred on the Vendors under the Purchaser Guarantee or by
law will in any way be released prejudiced diminished or
affected by any of the following:-
20.3.1 the granting of time or indulgence to or any
compromise with or agreement not to sue the
Purchasers, the Purchaser Guarantor or any
other person or the Vendors abstaining from
proving or enforcing payment of any dividend or
composition;
20.3.2 the Vendors not giving the Purchaser Guarantor
notice of any default by any Purchaser or of
any action taken by the Vendors;
20.3.3 any variation made in any of the terms of this
Agreement or any Transaction Document whether
the same is made with or without the assent or
knowledge of the Purchaser Guarantor;
20.3.4 the Vendors obtaining or failing to obtain or
perfect any other guarantee or security
(whether contemporaneously with this Agreement
or any Transaction Document or not) or the
modification, variation, renewal, release,
termination or discharge by the Vendors of any
security or guarantee now or hereafter held
from any Purchaser or any other person
(including any signatory to this Agreement or
any Transaction Document) in respect of the
liabilities and obligations referred to in
clause 20.1.1;
20.3.5 any defect in or the unenforceability of any
security or guarantee given by or on behalf of
any Purchaser or any other person in respect of
any of the liabilities and obligations referred
to in clause 20.1.1; or
20.3.6 any act omission or circumstances which but for
this clause 20.3 might operate to prejudice,
affect or otherwise diminish the liability of
the Purchaser Guarantor under clause 20 or any
of the rights powers or remedies conferred upon
the Vendors or any of them under clause 20 or by
law.
20.4. The Purchaser Guarantee is a continuing guarantee and will
remain in full force and effect until all the liabilities
and obligations referred to in clause 20 have been
irrevocably paid and satisfied in full.
20.5. Without prejudice to the Vendors' rights against the
Purchasers as principal debtor the Purchaser Guarantor
agrees as a separate and independent stipulation that any
liabilities or obligations referred to in clause 20.1.1
which may not be recoverable on the footing of a guarantee
(whether by reason of any legal limitation, disability or
incapacity on or of any Purchaser or any other fact or
circumstance) or which are or become discharged by any
insolvency (and whether or not known to the Purchasers or
the Vendor Guarantor or any other person) will nevertheless
be recoverable from and enforceable against the Purchaser
Guarantor as sole or principal debtor in respect thereof and
will be paid or performed by the Purchaser Guarantor on
demand.
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20.6 Notwithstanding any provision to the contrary contained in
this clause 20 but subject to the provisions of clause 20.5
the Purchaser Guarantor shall be entitled to raise as a
defence to any claim made in respect of the Purchaser
Guarantee any defence which the Purchasers would have had
arising out of or in respect of the subject matter which
gave rise to the claim under the Purchaser Guarantee
21. GUARANTEE BY VENDOR GUARANTOR
21.1 In consideration of the Purchasers entering into this
Agreement, each Sale Agreement and the other Transaction
Documents at the request of the Vendor Guarantor, the Vendor
Guarantor irrevocably and unconditionally:-
21.1.1 guarantees to the Purchasers and each of them
the payment, observance and performance when
due by the Vendors of all their liabilities and
obligations whether present or future, actual
or contingent under or arising out of each of
this Agreement and the Transaction Documents
(including any liability or obligation to pay
damages);
21.1.2. guarantees to the Purchasers and each of them
the payment, observance and performance when
due by Lucas Automotive Limited of all its
liabilities and obligations whether present or
future, actual or contingent under or arising
out of the Lease relating to the Training
Centre in Cwmbran to be entered into on the
Closing Date;
21.1.3 undertakes with the Purchasers and each of them
that whenever any of the Vendors or Lucas
Automotive Limited fails to pay or perform when
due any of the liabilities or obligations
referred to in clauses 21.1.1 or 21.1.2, as the
case may be, it will on demand by any Purchaser
from time to time pay, perform or procure the
performance of any and all of the same; and
21.1.4 in addition to the obligations contained in
clauses 21.1.1, 21.1.2 and 21.1.3 and separate
from them agrees to indemnify the Purchasers
and each of them in full on demand against any
loss or damage or any liability (which
liability will include all losses or costs
claims expenses or damages including legal and
other professional fees and expenses) which the
Purchasers or any of them may suffer or incur
directly or indirectly arising out of or as a
result of or in connection with any failure for
any reason of the Vendors or Lucas Automotive
Limited to pay, observe or perform any of the
obligations referred to in clause 21.1.1 or
21.1.2, as the case may be, when due and in
enforcing protecting or preserving or seeking
to enforce protect or preserve any of the
Purchasers' rights under this Agreement or any
Transaction Document.
21.2. None of the Purchasers will be obliged before exercising any
of the rights powers or remedies conferred upon it and them
in respect of the Vendor Guarantor under the Vendor
Guarantee or by law:-
21.2.1 to make demand of the Vendors or Lucas
Automotive Limited or any of them; or
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21.2.2 to enforce or seek to enforce any claim right
or remedy against any Vendor or Lucas
Automotive Limited or any other person; or
21.2.3 to make or file any claim in connection with
the insolvency of any Vendor or Lucas
Automotive Limited or any other person; or
21.2.4 to take any action or obtain judgment in any
court against any Vendor or Lucas Automotive
Limited or any other person; or
21.2.5 to enforce or seek to enforce any other
security, indemnity, guarantee or lien taken in
respect of any of the obligations of the Vendor
Guarantor under the Guarantee.
21.3 Neither the liability of the Vendor Guarantor under the
Vendor Guarantee nor the rights powers and remedies
conferred on the Purchasers under the Vendor Guarantee or by
law will in any way be released prejudiced diminished or
affected by any of the following:-
21.3.1 the granting of time or indulgence to or any
compromise with or agreement not to sue the
Vendors, the Vendor Guarantor, Lucas Automotive
Limited or any other person or the Purchasers
abstaining from proving or enforcing payment of
any dividend or composition;
21.3.2 the Purchasers not giving the Vendor Guarantor
notice of any default by any Vendor or Lucas
Automotive Limited or of any action taken by
the Purchaser;
21.3.3 any variation made in any of the terms of this
Agreement or any Transaction Document whether
the same is made with or without the assent or
knowledge of the Vendor Guarantor;
21.3.4 the Purchasers obtaining or failing to obtain
or perfect any other guarantee or security
(whether contemporaneously with this Agreement
or any Transaction Document or not) or the
modification, variation, renewal, release,
termination or discharge by the Purchasers of
any security or guarantee now or hereafter held
from any Vendor or Lucas Automotive Limited or
any other person (including any signatory to
this Agreement or any Transaction Document) in
respect of the liabilities and obligations
referred to in clause 21.1.1 or 21.1.2;
21.3.5 any defect in or the unenforceability of any
security or guarantee given by or on behalf of
any Vendor, Lucas Automotive Limited or any
other person in respect of any of the
liabilities and obligations referred to in
clause 21.1.1 or 21.1.2; or
21.3.6 any act omission or circumstances which but for
this clause 21.3 might operate to prejudice,
affect or otherwise diminish the liability of
the Vendor Guarantor under clause 21 or any of
the rights powers or remedies conferred upon
the Purchasers or any of them under clause 21
or by law.
21.4. The Vendor Guarantee is a continuing guarantee and will
remain in full force and effect until all the liabilities
and obligations referred to in clause 21 have been
irrevocably paid and satisfied in full.
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21.5. Without prejudice to the Purchasers' rights against the
Vendors or Lucas Automotive Limited as principal debtor the
Vendor Guarantor agrees as a separate and independent
stipulation that any liabilities or obligations referred to
in clause 21.1.1 and 21.1.2 which may not be recoverable on
the footing of a guarantee (whether by reason of any legal
limitation, disability or incapacity on or of any Vendor or
Lucas Automotive Limited or any other fact or circumstance)
or which are or become discharged by any insolvency (and
whether or not known to the Purchasers or the Vendor
Guarantor or any other person) will nevertheless be
recoverable from and enforceable against the Vendor
Guarantor as sole or principal debtor in respect thereof and
will be paid or performed by the Vendor Guarantor on demand.
21.6 Notwithstanding any provision to the contrary contained in
this clause 21 but subject to the provisions of clause 21.5
the Vendor Guarantor shall be entitled to raise as a defence
to any claim made in respect of the Vendor Guarantee any
defence which the Vendors or Lucas Automotive Limited would
have had arising out of or in respect of the subject matter
which gave rise to the claim under the Vendor Guarantee.
22. NO THIRD PARTY BENEFICIARY
Except as otherwise provided in this Agreement, this Agreement and the
Transaction Documents are intended and agreed to be solely for the
benefit of the parties hereto and their permitted assigns and no third
party shall accrue any benefit, claim or right of any kind whatsoever
pursuant to, under, by or through this Agreement or any of the
Transaction Documents.
23. EXTENSION AND WAIVER
At any time prior to the Closing Date the parties by agreement between
all of them may extend the time for the performance of any of the
obligations or other act of the other parties or waive compliance with
any of the terms of this Agreement or any of the Transaction Documents.
Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
24. MUTUAL CO-OPERATION
Each of the parties to this Agreement shall co-operate with the others
in a timely manner in the preparation and filing of any tax returns.
Each party shall promptly deliver to the others such information and
data and shall make available such knowledgeable employees as such
other party may reasonably request in order to cause the completion and
filing of all tax returns or to respond to audits by any taxing
authorities with respect to any taxes for which the requesting party is
responsible under this Agreement or any of the Sale Agreements.
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SCHEDULE 3
WARRANTIES OF VENDORS
DEFINITIONS AND INTERPRETATION
1. Words and expressions used in this Schedule shall unless the context
otherwise requires have the same meanings (if any) as are given to them
in this Agreement.
2. With regard to the different Parts of this Schedule:-
2.1 the Warranties contained in Part A of this Schedule are made
by the English Vendor in relation to the English Activity, the
German Vendor in relation to the German Activity and the US
Vendor in relation to the US Business. Where in such Schedule
reference is made to the Vendor the same shall be deemed to be
a reference to the English Vendor, the German Vendor or the US
Vendor as appropriate. Where in such Schedule reference is
made to the Activity the same shall be deemed to be a
reference to the English Activity, the German Activity or the
US Business as appropriate;
2.2 the Warranties contained in Part B of this Schedule are made
by the English Vendor in relation to the English Activity only
and nothing contained in Part B shall affect the application
or interpretation of the Warranties contained in the remainder
of this Schedule. References in such Part B to the Vendor or
the Purchaser shall be deemed to be to the English Vendor or
the English Purchaser (as the case may be) and references to
the Activity shall be deemed to be to the English Activity;
2.3 the Warranties contained in Part C of this Schedule are made
by the German Vendor in relation to the German Activity only
and nothing contained in Part C shall affect the application
or interpretation of the Warranties contained in the remainder
of this Schedule. References in such Part C to the Vendor or
the Purchaser shall be deemed to be to the German Vendor or
the German Purchaser (as the case may be) and references to
the Activity shall be deemed to be to the German Activity; and
2.4 the Warranties contained in Part D of this Schedule are made
by the US Vendor in relation to the US Business only and
nothing contained in Part D shall affect the application or
interpretation of the Warranties contained in the remainder of
this Schedule. References in such Part D to the Vendor shall
be deemed to be to the US Vendor and references to the
Activity shall be deemed to be to the US Business.
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PART A. GENERAL
1. ORGANISATION
Each of LucasVarity and the Vendors is a corporation duly organised and
validly existing under the laws of its jurisdiction of organisation.
Each of the Vendors is entitled, and has all requisite corporate power
and authority, to own or lease and operate the Assets owned or leased
and operated by it and to carry on the Activity as presently conducted.
Each of the Vendors is duly qualified to transact business and in good
standing as a foreign corporation in each jurisdiction in which the
conduct or nature of its business as it relates to the Activity or the
ownership, leasing or holding of Assets by it makes such qualification
necessary, except where the failure to be so qualified would not have,
individually or in the aggregate, a Material Adverse Effect or could
not preclude LucasVarity and the Vendors from consummating the
transactions contemplated by this Agreement and the Sale Agreements.
Each of LucasVarity and the Vendors is entitled, and has all requisite
corporate power and authority, to enter into and perform this Agreement
and those of the Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and the
Transaction Documents by LucasVarity and the Vendors has been duly
authorised by all necessary acts of LucasVarity and the Vendors. Each
of this Agreement and those of the Transaction Documents to which
LucasVarity or any Vendor is a party has been duly executed and where
appropriate delivered by LucasVarity or the applicable Vendor and
constitutes the legal, valid and binding obligation of LucasVarity or
the applicable Vendor, enforceable against LucasVarity or the
applicable Vendor in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganisation, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights in general and by general principles
of equity.
2. NO CONFLICT
None of the execution, delivery or performance by LucasVarity or any
Vendor of this Agreement or any of the Transaction Documents will, with
or without the giving of notice or the lapse of time or both, result in
the creation of any lien upon any of the Assets, or conflict with, or
result in a breach or violation of or a default under, or give rise to
a right of amendment, termination, cancellation or acceleration of any
obligation or to a loss of a benefit under (i) the articles of
incorporation or by-laws or similar organisational documents of
LucasVarity or any Vendor, or (ii) any contract or agreement or lease
related to real property to which LucasVarity or any Vendor is a party
or by which any of its assets are bound (other than with respect to
consents required as a result of the transactions contemplated hereby
under those contracts or agreements or leases related to real property
to which LucasVarity or any Vendor is a party or by which any of its
assets are bound) or (iii) any law or permit (subject to compliance
with Hart-Scott-Rodino and any other filing provided for in clause 2.1
of this Agreement) or other requirement to which LucasVarity or any
Vendor or their respective properties or assets is subject, except, in
the case of items (ii) and (iii) above only, for those which would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or would not preclude LucasVarity and the
Vendors from consummating the transactions contemplated by this
Agreement and the Sale Agreements.
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3. THE ACTIVITY
Since the Accounting Date, the Activity has been carried on in the
ordinary and usual course in a similar manner as in the financial year
of the Vendors ending on the Accounting Date and, in the period
commencing on 30 August 1998 and ending on the date of this Agreement,
there have not been any events, occurrences, changes or developments
which, individually or in the aggregate, have had or would have, a
Material Adverse Effect. Without limiting the generality of the
foregoing, in the period commencing on 30 August 1998 and ending on the
date of this Agreement none of LucasVarity or any Vendor (with respect
to the Activity) has engaged in any transaction which, if engaged in
between the date hereof and the Closing Date, would constitute a breach
of the covenant of the Vendors contained in clause 5.1 of this
Agreement
4. THE ASSETS
4.1 All the Assets (other than the owned real property and the
leased real property and other than intellectual property
which shall be governed by clause 9.3 of this Schedule 3,
Part A) and the China Share are the absolute and
unencumbered property of the Vendors and are not subject to
any outstanding mortgage, charge (including floating
charge), lien, conditional sale, credit sale, hire-purchase
or lease agreements or any encumbrances of any nature
whatsoever (excluding retention of title claims by unpaid
suppliers) or to any option or agreement for purchase in
favour of any person provided always that nothing contained
in the provisions of this paragraph 4.1 shall be construed
as a guarantee of collectibility of accounts receivable or
the enforceability of rights or claims constituting Assets.
4.2 The Assets (together with any right to use intellectual
property rights granted pursuant to the Transaction
Documents) comprise and will comprise on the Closing Date
(a) all the material assets and rights that are used in the
operation of the Activity as it is being conducted as of the
date hereof and as it will be conducted by the Vendors on
the Closing Date and (b) all of the property, real and
personal, tangible and intangible, necessary for the conduct
by the Purchasers of the Activity as it is being conducted
as of the date hereof and as it will be conducted by the
Vendors on the Closing Date.
5. NO DEFAULT
5.1 (a) The Vendors are not in respect of HVBS in default or
violation of any (i) order, writ, injunction or decree of
which they have been notified (or which the Vendors are
otherwise aware of), or (ii) statute, rule or regulation
which is applicable to the Vendors except in each case for
defaults or violations which in the aggregate have not had
and would not have a Material Adverse Effect or would not
preclude LucasVarity and the Vendors from consummating the
transactions contemplated by this Agreement and the
Transaction Documents, (b) no claims or complaints in
writing or, so far as the Vendors are aware, any other
claims or complaints from any governmental entities or other
regulatory authority have been received by any of the
Vendors which claims or complaints remain outstanding and
which affect the Activity or the Assets where such claims or
complaints allege that any of the Vendors is in violation of
any laws or permits applicable to the Activity or the
Assets, except for such claims or complaints that,
individually or in the aggregate, have not had and would not
have a Material Adverse Effect or would not preclude
LucasVarity and the Vendors from
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consummating the transactions contemplated by this Agreement
and the Sale Agreements, and, so far as the Vendors are
aware no such claims or complaints are threatened, and (c)
so far as the Vendors are aware no investigation, inquiry,
or review by any governmental authority with respect to any
of the Vendors related to or affecting the Activity is
pending or threatened, nor has any governmental authority
indicated an intention in terms such that the conclusion
would reasonably be drawn that it intends to conduct any
such investigation, inquiry or review, except for such
investigations, inquiries or reviews that, individually or
in the aggregate, have not had and would not have a Material
Adverse Effect or would not preclude LucasVarity and the
Vendors from consummating the transactions contemplated by
this Agreement and the Sale Agreements. For the purposes of
the warranty contained in this paragraph 5.1(b) and (c)
there shall be added to the list of persons in clause 1.8 of
this Agreement whose knowledge is relevant for the purposes
of interpreting the expression "so far as the Vendors are
aware" the names of the following individuals:-
Plant Plant Manager
----- -------------
Cwmbran, UK Arthur Richardson
Franklin, USA Gary Broda
Carrollton Machining, USA Ray Morrison
Carrollton Casting, USA Gary Traylor
Moraine, USA Jack Taylor
6. CONTRACTS
6.1 For the purposes of this paragraph 6, a "Material Contract"
means (a) a contract relating to or affecting the Activity
which has been entered into by any Vendor, is still
subsisting and which during the life of the contract or
series of contracts with one customer will require, or is
anticipated to require any party to it to pay in aggregate a
sum of at least US$500,000 per annum to the other party or
parties or (b) any finance lease to be assumed by any
Purchaser.
6.2 The Material Contracts are listed in and annexed to the
Disclosure Schedules.
6.3 The Disclosure Schedules also list and have annexed thereto
the following contracts which are not Material Contracts
(other than those constituting Excluded Assets):
6.3.1 any contract concerning a partnership, joint
venture, consortium, joint development or
similar arrangement or contract relating to
the Activity;
6.3.2 any contract requiring any Vendor to pay any
royalty, commission or like payment in
relation to the Activity;
6.3.3 any contract for the supply of goods and/or
services by or to any Vendor in relation to
the Activity on terms under which
retrospective or future
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discounts, price reductions or other financial
incentives are given by or to any Vendor
dependent on the level of purchases or any
other criteria;
6.3.4 any agency or distributorship agreement;
6.3.5 any contract under which any Vendor (with
respect to the Activity) has directly or
indirectly guaranteed any indebtedness or
other liabilities of any person (in each case
other than endorsements for the purpose of
collection in the ordinary course of
business);
6.3.6 any contract under which any Vendor (with
respect to the Activity) has directly or
indirectly made any advance (excluding
advances to employees in the ordinary course),
loan or capital contribution to, or other
investment in, any person, or which involve a
sharing of profits, losses, costs or
liabilities by any Vendor (with respect to the
Activity);
6.3.7 any contract for the purchase or sale of any
business, corporation, partnership, joint
venture, association or other business
organisation or any division, material assets,
operating unit or product line thereof under
the terms of which there are outstanding
obligations;
6.3.8 any contract which limits or purports to limit
the ability of any Vendor (with respect to the
Activity), to compete in any line of business
or with any person or in any geographic area
or which limits or purports to limit or
restrict the ability of any Vendor (with
respect to the Activity) with respect to the
development, manufacture, marketing, sale or
distribution of, or other rights with respect
to, any products or services;
6.3.9 any foreign currency forward exchange
contract;
6.3.10 any written contract between or among a Vendor
or any member of the LucasVarity Group and any
Affiliate thereof with respect to the
Activity;
6.3.11 any contract outside the ordinary course of
the business; and
6.3.12 any contract pursuant to which the Activity
leases any material real property.
6.4 The applicable Vendor and, so far as the Vendors are aware
the other party or parties thereto have complied in all
material respects with the provisions of each Material
Contract and contract referred to in paragraph 6.3 and the
applicable Vendor (subject to any consents required as a
result of the transactions contemplated hereby) is not and
so far as the Vendors are aware the other party or parties
thereto are not in material default thereunder (and there
does not exist any condition which, after notice or lapse of
time or both would constitute a material default thereunder
by the applicable Vendor or, to the knowledge of the
Vendors, the other party or parties thereto). So far as the
Vendors are aware each Material Contract and contract
referred to in paragraph 6.3 is legal, valid, binding,
enforceable and in full force and effect except to the
extent that enforceability may be limited by applicable
bankruptcy, insolvency reorganisation, moratorium or similar
laws affecting the enforcement of creditors
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rights generally and subject to general principles of
equity. So far as the Vendors are aware no party to any
Material Contract or contract referred to in paragraph 6.3
has repudiated any provision thereof and so far as the
Vendors are aware no other party or parties to any such
Material Contract, Business Lease or contract referred to in
paragraph 6.3 intends to exercise any right of cancellation
or termination thereof.
6.5 The Disclosure Letter lists:
6.5.1 the top twenty suppliers (a "Major Supplier")
by value (net invoice value) to each Vendor in
respect of the Activity in the twelve months
immediately preceding the Accounting Date; and
6.5.2 Those customers (a "Major Customer") who have
purchased from any Vendor in respect of the
Activity in any of the two years which
immediately preceded the Accounting Date goods
and services having in the aggregate a net
invoice sales value of not less than
US$500,000 per annum.
7. EMPLOYEES
7.1 The Vendors have provided to the Purchaser Guarantor a true,
complete and accurate list of the names, positions and dates
of hire of the Transferring Employees and the Hose
Employees.
7.2 The Vendors are not under any contractual obligation:
7.2.1 to make any increase in the rates of
remuneration of or other similar payment to
any of the Transferring Employees or the Hose
Employees; or
7.2.2 to make any change in the terms and conditions
of employment of the Transferring Employees or
the Hose Employees, where any such contractual
obligation is material.
7.3 The Employee Pack referred to in and annexed to the
Disclosure Letter discloses all material agreements or
arrangements with trades unions, staff associations or other
associations of employees relating to the Transferring
Employees and the Hose Employees.
7.4 The Employee Pack referred to in and annexed to the
Disclosure Letter discloses all material contracts providing
for severance or other termination payment to any employee
whose employment is terminated after Closing.
7.5 The written contracts of employment of those Transferring
Employees and the Hose Employees whose basic salary exceeds
US$75,000 per annum or to whom any Vendor is required to
give more than three months' notice to terminate the
employment without cause are annexed to the Disclosure
Letter, together with the full details of their remuneration
and benefits of any nature whatsoever. In relation to all
other Transferring Employees and the Hose Employees, a pro
forma pack incorporating standard form statements of
particulars of employment and other written statements of
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employment benefits is annexed to the Disclosure Letter,
together with the salary or wages of such other Transferring
Employees and the Hose Employees being shown in the list
referred to in paragraph 7.1 above.
7.6 No Transferring Employee or Hose Employee employed in a
senior technical or senior managerial position has given or
has been given notice to terminate his employment.
7.7 There are no loans outstanding from any Vendor or the
LucasVarity Group to any of the Transferring Employees or
the Hose Employees or from any of the Transferring Employees
or the Hose Employees to any Vendor or the LucasVarity
Group.
7.8 Relevant employment laws have been complied with in relation
to all Transferring Employees and the Hose Employees except
for violations which in the aggregate have not had and would
not have a Material Adverse Effect.
8. LITIGATION
8.1 (a) Except for any of the same in connection with which the
Vendors have not been notified (and which the Vendors are
not otherwise aware of), no judgment, ruling, order, writ,
decree, stipulation, injunction or determination by or with
any arbitrator, court or other governmental entity to which
any Vendor or any affiliate thereof is party or by which any
Vendor or any assets of any thereof is bound, and which
relates to or affects the Activity (or the operation
thereof), the Assets, this Agreement or any of the
Transaction Documents or the transactions contemplated
hereby and thereby is in effect, and (b) except any Action
which has been filed but not served (and which the Vendors
are not otherwise aware of) none of the Vendors or any
Affiliate thereof is party to or engaged in or so far as the
Vendors are aware threatened with any Action with respect to
the Activity and which (i) seeks damages of more than
$250,000, (ii) seeks any injunctive relief, (iii) which
relates to this Agreement or any of the Transaction
Documents or (iv) with respect to which there is a
reasonable likelihood of an adverse determination which
would have a Material Adverse Effect, and, so far as the
Vendors are aware, no event has occurred and no condition
exists which could reasonably be expected to result in any
Action under sub-paragraph (iv) above.
8.2 None of the Vendors is in default under or with respect to
any judgment, ruling, order, writ, decree, stipulation,
injunction or determination as described in paragraph 8.1.
8.3 There are no outstanding disputes between any Vendor and any
of its Major Customers or Major Suppliers that individually
or in the aggregate would have a Material Adverse Effect.
9. INTELLECTUAL PROPERTY
9.1 Set forth on or in the Disclosure Schedules or Disclosure
Letters are all patents, patent applications, patent or
invention disclosures awaiting filing, and trademarks and
trademark applications and registrations which constitute
Registered Intellectual Property.
9.2 Set forth on or in the Disclosure Schedules or Disclosure
Letters are all material license agreements or agreements
relating to royalty payments, with respect to,
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Intellectual Property, whether as licensor or licensee and
whether on an exclusive or non-exclusive basis.
9.3 Except as set forth on or in the Disclosure Schedules or
Disclosure Letters and so far as Vendors are aware:
9.3.1 the Vendors own or, in the case of
Intellectual Property subject to license
agreements set forth on or in the Disclosure
Schedules or Disclosure Letters, have a right
to use all of the Intellectual Property, free
from any liens and free from any requirement
of any past, present or future royalty
payments, charges or fees (other than renewal
fees) and all such Intellectual Property is in
full force and effect; all required annuities
and taxes with respect thereto have been paid
through the date hereof and will prior to the
Closing be paid through the Closing. The
Vendors are the registered owners of the
Intellectual Property in each jurisdiction in
which the Activity conducts business (to the
extent such Intellectual Property has been
registered in such jurisdiction);
9.3.2 the Vendors have not received any notice of
any pending or threatened claims or litigation
or proceeding against any Vendor contesting
the rights of any Vendor to any Intellectual
Property or the ownership, enforceability or
validity of the Intellectual Property or use
by any Vendor of the Intellectual Property or
alleging that HVBS or any of its intellectual
property, processes or products infringes any
intellectual property rights of any third
party;
9.3.3 the Vendors have not received any notice that
the Intellectual Property is subject to any
outstanding judgment, ruling, order, writ,
decree, stipulation, injunction or
determination by or with any governmental
entity, nor is there any pending, or so far as
the Vendors are aware threatened proceeding
relating thereto;
9.3.4 no Vendor has covenanted or agreed with any
person not to sue or otherwise enforce any
legal rights with respect to the Intellectual
Property;
9.3.5 except as permitted in clause 7 of this
Agreement no Vendor has licensed any of the
Names to any Person for use in connection with
a Heavy Vehicle Competing Business.
9.4 the Vendors have taken all reasonable steps to protect the
secrecy and confidentiality of any know-how or confidential
information in relation to the Intellectual Property.
9.5 The Intellectual Property, together with the intellectual
property rights licensed to the Purchaser under the English
Sale Agreement, the German Sale Agreement and the US Sale
Agreement and arising from the contracts that constitute
Assets, constitute all intellectual property rights owned or
licensed to the Vendor necessary to conduct the Activity as
currently conducted and as it will be conducted on the
Closing Date.
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9.6 Notwithstanding the above, with respect to information or
activity not known to Vendors prior to Closing, Vendors make
no warranty or representation as to the validity or
enforceability of the Intellectual Property, or that any
products or processes incorporating the Intellectual
Property are free of infringement of intellectual property
rights of any third party.
10. TRADING MATTERS
10.1 There is attached to the Disclosure Letter an up-to-date
copy of the Vendors' various current standard terms and
conditions of trading as used by the Activity.
10.2 There is attached to the Disclosure Letter a list of all
Major Customers and Major Suppliers.
10.3 All trade names under which the Vendors currently carry on
the Activity are listed in the Disclosure Letter.
11. GRANTS
No governmental grants have been made to any Vendor or any other member
of the LucasVarity Group in relation to the Activity.
12. INSOLVENCY
No Vendor has taken any steps and so far as the Vendors are aware no
steps have been taken by any other person, so far as the Vendors are
aware no petition has been presented, no order has been made and no
resolution has been passed for the winding-up of any Vendor, no
administrative receiver, trustee, debtor-in-possession receiver and/or
manager has been appointed of the whole or any part of the property of
any Vendor, no administration order has been made appointing an
administrator in respect of any Vendor and so far as the Vendors are
aware no petition has been presented for an administration order in
respect of any Vendor and nothing analogous to any of the foregoing has
occurred in any jurisdiction outside England and Wales.
13. INSURANCE
13.1 The Disclosure Schedule sets forth a list of the material
insurance policies and surety bonds which LucasVarity or any
Vendor maintains with respect to the Activity (including
those maintained with respect to the employees engaged in
the Activity and the Assets). So far as the Vendors are
aware all such policies are in full force and effect and
shall remain in full force and effect through the Closing
Date; and no written notice of cancellation or termination
has been received with respect to any such policy.
13.2 There is no material insurance claim made by any Vendor
pending or outstanding relating to the Assets or the
Transferring Employees.
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14. ACCOUNTS AND MANAGEMENT ACCOUNTS
14.1 The Accounts and the management accounts of the Vendors
relating to the Activity in respect of the Accounts for the
year which ended on the Accounting Date and in respect of
the management accounts in respect of the period which
commenced on 1st February 1998 and ended on 30th August 1998
which are annexed to the Disclosure Schedule (the "HVBS
Financial Statements") have been prepared from and in
accordance with the books, accounts and financial records of
LucasVarity and the Vendors (which are maintained in
accordance with UK GAAP) and except for those deviations
from UK GAAP contained in Schedule 9 in accordance with UK
GAAP consistently applied (except as expressly set forth in
the HVBS Financial Statements). The HVBS Financial
Statements present fairly, in conformity with UK GAAP except
for those deviations from UK GAAP contained in Schedule 8
applied on a consistent basis (except for those deviations
from UK GAAP contained in Schedule 8), the consolidated
financial position of the Activity as of the dates set forth
therein and its consolidated results of operations for the
periods set forth therein.
14.2 So far as the Vendors are aware , none of the Vendors has
any material liabilities of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due,
arising out of or relating to the Activity, except (a) as
set forth in the Disclosure Schedule, (b) as and to the
extent disclosed or reserved against in the 30th August,
1998 HVBS Financial Statements or (c) those liabilities (i)
incurred in the ordinary course of business after 30th
August, 1998 and (ii) which could not reasonably be expected
to have a Material Adverse Effect.
15. ENVIRONMENT
15.1 So far as the Vendors are aware:
15.1.1 the Activity and Assets are, and have been, in
material compliance with all applicable
Environmental Laws, and there is no pending,
and none of the Vendors has received any
written notice of a threatened action, demand,
investigation or claim by any governmental
entity or other person regarding any actual or
alleged violations of Environmental Law by any
Vendor or any actual or potential liability of
any Vendor under any Environmental Law with
respect to the Activity or Assets;
15.1.2 none of the Vendors has assumed, by contract,
any liabilities or obligations arising under
Environmental Laws regarding any properties or
facilities, including any facilities formerly
owned, leased, operated or used by any Vendor
in respect of the Activity or Assets ;
15.1.3 there are and have been no events, conditions,
or actions which would reasonably be expected
to prevent material compliance by any Vendor
or Purchaser with respect to the Activity or
Assets with any Environmental Law, or which
would reasonably be expected to result in any
liability of any Vendor with respect to the
Activity or Assets under any Environmental
Law;
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15.1.4 there are no underground storage tanks or
related piping located at any properties
currently owned or leased by any Vendor with
respect to the Activity or Assets;
15.1.5 all Hazardous Materials generated or used by
any Vendor in the operation of the Activity
have been transported, stored, treated,
disposed of, and handled in material
compliance with all Environmental Laws;
15.1.6 there has been no Release or threatened
Release of any Hazardous Materials at any
location in any form, quantity or circumstance
which could reasonably be expected to result
in any material liability to any Vendor with
respect to the Activity or Assets under any
Environmental Law;
15.1.7 the Vendors have delivered or otherwise made
available for inspection to the Purchasers
copies of any material reports, assessments,
evaluations and audits in their possession
discussing, describing or relating to the
current or former presence of, or the Release
of Hazardous Materials at, in, beneath or
adjacent to any properties or facilities now
or formerly owned, leased, operated or used by
any Vendor in respect of the Activity or
Assets, or of compliance by any of such
facilities with, or liability of any of them
under, applicable Environmental Laws.
15.2 Notwithstanding the generality of any other warranties
contained in this Schedule 3, Part A, this paragraph 15 will
be deemed to contain the only warranties in this Schedule 3,
Part A with respect to environmental matters or
Environmental Laws.
16. YEAR 2000
The Vendors in respect of the Activity have developed plans which have
as their objective addressing and remedying issues related to the
impact of the year 2000 on its computer systems. These plans are
contained in the Disclosure Schedules.
17. EUROPEAN MONETARY UNION
The European software and computer systems used in the Activity will in
all material respects correctly process and recognize the currency
exchange changes of European Monetary Union ("EMU") and are capable of
processing accounting information in respect of Receivables and
Payables in more than one currency. Such software will not produce
Management Accounts in ECUs.
18. TAXES
All material federal, state, local and foreign tax returns, reports,
declarations, statements and other documents ("Tax Returns") required
to be filed by or on behalf of any Vendor or any predecessor thereof
with respect to (or which include) the Activity or the Assets have been
timely filed or requests for extensions have been timely filed; each
such Tax Return was complete and correct in all material respects; and
all Taxes shown as due by such Tax Returns and all other material Taxes
for which any Vendor is otherwise liable with respect to (or which
relate to) the Activity or the Assets that are due have been or will be
paid in full save that this
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shall not derogate from the obligations of the Purchasers to discharge
the Payables and the Accruals on a basis which includes the VAT element
thereon.
19. NO BROKERS
There is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of
LucasVarity or any Vendor who is or might be entitled to any fee,
commission or payment in connection with the negotiation, preparation,
execution or delivery of this Agreement or any Transaction Document or
the consummation of the transactions contemplated hereby or thereby,
nor is there any basis for any such fee, commission or payment to be
claimed by any person against any Purchaser.
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PART B. THE ENGLISH ACTIVITY
1. PENSIONS
1.1 The Vendor is under no legal liability or voluntary
commitment to pay or make provision for payment of any
pension, superannuation, death benefit or other similar
benefit in respect of any Transferring Employee (excluding
the French Transferring Employees) or to contribute to a
pension, superannuation or life assurance scheme other than
the Lucas Pension Scheme in respect of any Transferring
Employee.
1.2 Complete and accurate particulars of the Lucas Pension
Scheme relevant to the Transferring Employees are set out or
referred to in the Disclosure Letter, including (without
limitation) true and complete copies or particulars of each
deed, document, resolution, action, practice or other matter
which in relation to the Lucas Pension Scheme confers or
describes any actual, prospective or contingent right to
benefits thereunder for or in respect of any Transferring
Employee.
1.3 The Disclosure Letter contains a list of all of the
Transferring Employees who are members of or have any rights
to benefits under the Lucas Pension Scheme and includes data
which is complete and accurate as at the date stated therein
pertaining to the benefits payable or prospectively or
contingently payable under the Lucas Pension Scheme to and
in respect of them.
1.4 No discretion or power under the Lucas Pension Scheme has
been exercised by the trustees or administrators or the
Vendor, or any other party, and there is no obligation to do
so, in respect of any of the Transferring Employees.
1.5 All amounts due to the trustees of the Lucas Pension Scheme
from the Vendor in respect of any of the Transferring
Employees have been paid.
1.6 The Lucas Pension Scheme is approved as an exempt approved
scheme (within the meaning of chapter I of Part XIV ICTA
1988) and there is in force a contracting-out certificate in
relation to the Vendor and the Transferring Employees for
the purposes of the Pension Schemes Act 1993 and nothing has
been done or omitted to be done which will or may result in
the Lucas Pension Scheme ceasing to be an exempt approved
scheme or in any contracting-out certificate being
cancelled, surrendered or varied.
1.7 In relation to the Transferring Employees The Lucas Pension
Scheme has been operated in compliance with all applicable
requirements and there are no material actions, claims or
suits (other than routine claims for benefits) outstanding,
pending or threatened against the trustees or administrators
of the Lucas Pension Scheme or against the Vendor in respect
of any act, event or omission or other matter relating to
the Transferring Employees and their entitlement under the
Lucas Pension Scheme and the Vendor is not aware of any
circumstance which may give rise to such a claim.
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1.8 No event has happened which under the rules of the Lucas
Pension Scheme either has started or will automatically
start the winding up of the Lucas Pension Scheme
2. PROPERTY
2.1 So far as the Vendors are aware the replies given on the
Vendors' behalf which are contained in document 51 of
Appendix 2 to the Disclosure Letter to the pre-contract
enquiries in respect of the English Property are not
misleading in any material respect.
2.2 The English Property comprises all of the land and premises
owned by Lucas Industries plc or occupied by the English
Vendor for the purpose of the English Activity. The
particulars of all of the English Property contained in the
English Sale Agreement are true and correct in all material
respects.
2.3 So far as the Vendors are aware the Vendors have received no
notice (with which they have not complied) alleging material
non-compliance with all agreements, covenants, restrictions
or other matters to which the English Properties are subject
and no notice of outstanding claims or disputes or orders or
notices affecting the English Property in a material
respect.
3. FAIR TRADING
3.1 No agreement, transaction, practice or arrangement entered
into or carried on, or proposed to be entered into or
carried on, by the Vendor in respect of the Activity:
3.1.1 is being or has been registered by the Vendor,
nor as far as the Vendor is aware by any third
party, in accordance with the provisions of
the Restrictive Trade Practices Acts 1976 and
1977;
3.1.2 is being or has been notified by the Vendor,
nor as far as the Vendor is aware by any third
party, to the EC Commission ("the Commission")
by reason of Article 85 of the Treaty
establishing the European Economic Community;
3.1.3 so far as the Vendor is aware, is or has been
the subject of an enquiry, investigation,
reference or report under the Fair Trading Act
1973, the Competition Act 1980 or by the
Commission or any other regulatory authority.
3.2 The Vendor has not in relation to the Activity given any
assurances or undertaking to the Restrictive Practices
Court, the Director General of Fair Trading, the Secretary
of State for Trade and Industry, the Commission or Court of
First Instance or Court of Justice of the European
Communities, or any other Court or similar person or body.
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4. TAX MATTERS
4.1 The Vendor has complied in all material respects with all
statutory requirements, regulations, orders, provisions,
directions or conditions relating to national insurance and
PAYE and has maintained full, complete, correct and
up-to-date records and other documents appropriate and
requisite for the purposes thereof, in such form and for
such periods as are required by the relevant legislation and
regulations and none of its pay practices in relation to any
of the English Transferring Employees have been the subject
of any dispute with the Inland Revenue or the Department of
Social Security which is material to HVBS.
4.2 In respect of the English Activity the Vendor has complied
in all material respects with the provisions of the Value
Added Tax Act 1994 and with all statutory requirements,
regulations, orders, provisions, directions or conditions
relating to value added tax, including the terms of any
agreement reached with the Commissioners of Customs & Excise
in respect of the English Activity and has maintained full,
complete, correct and up-to-date records, invoices and other
documents (as the case may be) appropriate or requisite for
the purposes thereof and has preserved such records,
invoices and other documents in such form and for such
periods as are required by the relevant legislation.
4.3 The Vendor has identified to the Purchaser in respect of the
English property works which have been carried out in
respect of which industrial buildings allowances have been
claimed by the Vendor and in respect of each such works
contains details of:
(a) the amount of capital expenditure concerned;
(b) the aggregate of initial and writing down allowances
claimed;
(c) the residue of expenditure available;
(d) the period of years over which writing down
allowances may be available to the Purchaser.
4.4 The English Vendor has provided to the English Purchaser
details in respect of all fixtures, as aforesaid that are,
so far as the Vendors are aware treated pursuant to the said
Section 51 as belonging to a person other than the Vendor.
5. EMPLOYEES
There is no material dispute relating to the English Activity relating
to the provisions of any employment legislation, and so far as the
Vendors are aware, there are no circumstances which could reasonably be
expected to give rise to any such dispute.
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PART C. THE GERMAN ACTIVITY
1. EMPLOYEE MATTERS
1.1 The Disclosure Letter contains a complete description of all
employee benefits other than standard salaries and benefits
available by operation of law and under compulsory social
security schemes. Such description includes, without
limitation, all bonus profit or revenue sharing arrangements,
pension plans or individual old age benefit agreements,
benefits resulting from shop agreements (Betriebsvereinbarung)
or social plans as well as any other benefits based on any
individual or collective contract. Said Disclosure Letter
specifies which employees are entitled to any such benefits as
well as the particulars of such entitlements. The Disclosure
Letter further contains the calculation of the pension
entitlement of each German Transferring Employee for tax
purposes. All of the benefits to which German Transferring
Employees are entitled have been settled as and when due and
there exists no dispute as to the existence or extent of any
benefit entitlement.
1.2 There is no material dispute relating to the German Activity
relating to the provision of any employment legislation, and
so far as the Vendor is aware, there are no circumstances
which could reasonably be expected to give rise to any such
dispute.
2. TAX MATTERS
2.1 The Vendor has complied in all material respects with all
statutory requirements, regulations, orders, provisions,
directions or conditions relating to the German social
security and has maintained full, complete, correct and
up-to-date records and other documents appropriate and a
requisite for the purposes thereof, in such form and for such
periods as are required by the relevant legislation and
regulations and none of its pay-practices in relation to any
of the German Transferring Employees have been the subject of
any dispute with the German tax authorities or any of the
social security branches which is material to HVBS.
2.2 In respect of the German Activity the Vendor has complied in
all material respects with the provisions of the German Value
Added Tax Act and with all statutory requirements,
regulations, orders, provisions, directions or conditions in
respect thereof and has maintained full, complete, correct and
up-to-date records, invoices and other documents (as the case
may be) appropriate or requisite for the purposes thereof and
has preserved such records, invoices and other documents in
such form and for such periods as are required by the relevant
legislation.
3. LICENCES AND PERMITS
All material governmental franchises, licenses, permits, authorizations
and approvals necessary to enable the Vendor or any other member of the
LucasVarity Group to own, lease or otherwise hold the German Assets and
to carry on the German Activity, as it is
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presently conducted have been obtained and are presently valid and in
full force and effect, and neither the Vendor nor any other member of
the LucasVarity Group is in default or violation of any of the terms or
conditions of such governmental franchises, licenses, permits,
authorizations and approvals.
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PART D. THE US BUSINESS
1. PENSION AND BENEFIT PLANS
1.1 The Disclosure Schedule sets forth a true and complete list
of all material benefit plans, programs and arrangements
maintained by the Vendor, any other member of the
LucasVarity Group or HVBS for the benefit of the US
Transferring Employees, including a true and complete
description of all benefits provided under the Dayton
Walther Corporation Group Employee Benefit Plan (ERISA Plan
No. 504). Those employee benefit and pension plans (each a
"Plan") which Purchaser is assuming are separately
identified as such on the Disclosure Schedule.
1.2 (a) The Plans and any related trust agreements have been
administered and enforced in accordance with their terms and
all applicable laws, rules and regulations, including,
without limitation, all applicable provisions of ERISA and
the Internal Revenue Code of 1986, as amended (the "Code");
(b) each Plan, if intended or designed to qualify under
Section 401(a) or 403(a) of the Code, has received a
favorable determination letter from the Internal Revenue
Service to the effect that it is qualified under the Code,
and none of the Vendor, any other member of the LucasVarity
Group or HVBS is aware of any event that has occurred since
the date of such determination that would materially
adversely affect such qualification; (c) except for routine
claims for benefits, no disputes are pending or, to the
knowledge of the Vendor, threatened against the Vendor or
any other member of the LucasVarity Group or HVBS with
respect to any Plan; and (d) all reporting, filing and
disclosure requirements with respect to each Plan have been
satisfied.
1.3 With respect to each Plan: (a) the fair market value of the
assets of such Plan equals or exceeds the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) of
such Plan, based on actuarial assumptions which are
reasonable, both individually and in the aggregate, as of
the date hereof, (b) no "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA)
has been incurred, (c) no provision under this Agreement or
the US Sale Agreement prevents the sponsoring employer
(including the Purchaser after the Closing Date) from
amending, modifying or terminating any Plan or any benefit
thereunder in accordance with applicable law or any
applicable collective bargaining agreement, (d) all
contributions required to be made to such Plan have been
made on a timely basis, (e) any contribution required to be
made under the Plan and attributable to any participant's
service prior to the Closing Date has been or will be made
prior to the Closing Date, (f) any amendment to the Plan
adopted by the sponsoring employer prior to the Closing Date
is or will become effective prior to the Closing Date (other
than any amendment to transfer sponsorship of the Plan to
the Purchaser in accordance with Section 3.1.4 of the US
Sale Agreement, which amendment shall be effective as of the
Closing Date), (g) the Plan expressly provides the
sponsoring employer the right to amend, terminate or modify
any benefit under the Plan in accordance with applicable law
and any applicable collective bargaining agreement(s) and
(h) none of the Vendor, any other member of the LucasVarity
Group, HVBS or any entity which would be aggregated with the
Vendor, any
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other member of the LucasVarity Group or HVBS under Sections
414(b),(c),(m) or (n) of the Code or Section 4001(h) of
ERISA (an "ERISA Affiliate") has taken any action or failed
to take any action with respect to any "employee benefit
plan" within the meaning of section 3(3) of ERISA which
could result in the imposition of any lien or other
encumbrance on the Assets.
1.4 The Vendor, each other member of the LucasVarity Group, HVBS
and each of their respective ERISA Affiliates have complied
in all material respects with the health care continuation
requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
2. REAL PROPERTY
2.1 The Disclosure Schedule sets forth a true and complete list
of all real property owned by any member of the LucasVarity
Group that is used primarily in or relates primarily to the
US Business ("Owned US Real Properties"). The Disclosure
Schedule sets forth a true and complete list of all real
property leased by any member of the LucasVarity Group that
is used primarily in or relates primarily to the US Business
("Leased US Real Properties").
2.2 Except as set forth on the Disclosure Schedule, each of the
Vendor and any other member of the LucasVarity Group has (A)
good and insurable title to its Owned US Real Properties and
(B) valid and subsisting leasehold interests in its Leased
US Real Properties, in each case free and clear of any
mortgage, lien, charge, security interest, pledge,
imperfection of title or encumbrance, except for easements,
covenants, rights-of-way, other matters of record and other
matters subject to which the leases of Leased US Real
Properties are granted.
3. TAXES
3.1 None of the US Assets (i) is tax-exempt use property within
the meaning of section 168(h) of the Code, (ii) directly or
indirectly secures any debt the interest on which is exempt
under section 103(a) of the Code or (iii) is property that
is required to be treated as being owned by any Person
(other than the Vendors or any other member of the
LucasVarity Group) pursuant to the provisions of section
168(f)(8) of the Internal Revenue Code of 1954, as amended,
and in effect immediately before the enactment of the Tax
Reform Act of 1986.
3.2 No lien, security interest, pledge, mortgage, charge,
retention of title agreement or other encumbrance of
whatever nature for Taxes exist with respect to any of the
US Assets.
4. LICENSES AND PERMITS
4.1 All material governmental franchises, licenses, permits,
authorizations and approvals necessary to enable the Vendor
or any other member of the LucasVarity Group to own, lease
or otherwise hold the US Assets and to carry on the US
Business as it is presently conducted have been obtained and
are presently valid and in full force and effect, and
neither the Vendor nor any other member of
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the LucasVarity Group is in default or violation of any of
the terms or conditions of such governmental franchises,
licenses, permits, authorizations and approvals.
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SCHEDULE 4
PURCHASERS' AND PURCHASER GUARANTOR'S WARRANTIES
1. ORGANISATION
Each of the Purchasers and the Purchaser Guarantor is a corporate
entity organised and validly existing and has all requisite corporate
power and authority to enter into and perform its obligations under
this Agreement and the Transaction Documents.
2. CORPORATE AUTHORITY
The execution, delivery and performance of this Agreement and the
Transaction Documents by the Purchaser Guarantor and the Purchasers
have been duly authorised by all requisite corporate action on the part
of the Purchasers and the Purchaser Guarantor. This Agreement and the
Transaction Documents have been or will be duly executed and delivered
by the Purchaser Guarantor and the Purchasers where they are party to
the same and constitute or will constitute the legal, valid and binding
obligation of the Purchaser Guarantor or the applicable Purchasers
party thereto, enforceable against such Purchaser Guarantor and the
Purchasers in accordance with their terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally and subject to general
principles of equity.
3. NO CONFLICT
Neither the execution nor the delivery of any of this Agreement and/or
the Transaction Documents by the Purchaser Guarantor and/or the
Purchasers will conflict with or result in a breach of any of the
provisions of, or constitute a default under, the charter, by-laws or
Memorandum or Articles of Association of the Purchaser Guarantor and/or
Purchasers, as amended to date, or any agreement, mortgage, indenture,
lease or other instrument to which any of the Purchaser Guarantor
and/or the Purchasers is a party or by which any of the Purchaser
Guarantor or the Purchasers or its property is bound, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which any of the Purchaser Guarantor or the Purchasers or its property
is subject, except for those which would not have a material adverse
effect on the ability of the Purchasers to consummate the transactions
contemplated by this Agreement.
4. CONSENTS
No material consent, approval or authorisation of, or declaration or
filing with, any governmental authority is required on the part of the
Purchaser Guarantor or the Purchasers in connection with the execution,
delivery or performance of this Agreement and/or the Transaction
Documents by them, except for filings with the Federal Trade Commission
and the Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and those contemplated by clauses 2.1.1 to
2.1.4 inclusive of this Agreement. No approval, consent or
authorisation of any lender, lessor or other person (other than is
contemplated by the previous sentence) is required in order for the
Purchaser Guarantor or the Purchasers to consummate the transactions
contemplated by the Transaction Documents of which failure to obtain
would have a material adverse effect on the ability of the Purchasers
to consummate the transactions contemplated by this Agreement.
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5. AVAILABILITY OF FUNDS
The Purchasers and the Purchaser Guarantor have cash available or
irrevocable commitments from financial institutions to enable them to
consummate the transactions contemplated by this Agreement and the
Transaction Documents.
6. BROKER
Other than Warburg Dillon Read LLC, no broker, investment banker,
financial adviser or other person is entitled to any broker's, finders,
financial advisers or other similar fee or commission in connection
with the transaction contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchasers and/or the
Purchaser Guarantor.
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SCHEDULE 10
Storm Water Actions and Environmental Indemnity
1. Storm Water Contamination
1.1 The Purchasers agree to engage Arcadis Geraghty & Miller (or
such other consultants as the parties may agree) (the
"Consultant") to conduct periodic monitoring with respect to
the condition and nature of the two storm water discharges
from the Cwmbran facility storm water discharge system (the
"Storm Water System"). Such monitoring is to be commenced
within 15 days of the date hereof and shall continue until the
Closing Date and the frequency and location of such monitoring
will be determined by the Consultant, based upon the
Consultant's best professional judgment, and will be described
by the Consultant in a scope of work together with costs which
shall be provided to the Vendors for comment and consultation
which shall be taken into due account in deciding the final
scope of works and costs at least 48 hours prior to the
commencement of such work.
1.2 Within 15 days of the date hereof, the Consultant shall also
commence a program of investigating the condition and nature
of the Storm Water System, using methods that are reasonably
necessary to determine its integrity and to identify likely
areas of egress and ingress of Hazardous Materials (which
circumstances for the purpose of this clause 1 shall exclude
those materials in the concentrations and quantities currently
consented to be discharged by the applicable authority) and to
identify remedial measures that are reasonably necessary to
ensure the continued operation of the Storm Water System
without further Release of such compounds. At least 48 hours
prior to the commencement of such investigation work, or any
phase thereof, a scope of work and costings describing the
actions to be taken shall be provided to the Vendors for
comment and consultation which shall be taken into due account
in deciding the final scope of works and costs.
1.3 The Vendors shall co-operate fully in the performance of the
monitoring and the investigation work described in paragraphs
1.1 and 1.2 subject to the works being carried out in such a
way as to cause as little disturbance to the Vendors and their
business as is reasonably possible and in compliance with
reasonable health and safety and security requirements. Based
on the results of such work, the Consultant shall, prior to
the Closing Date or as soon as reasonably possible, prepare a
corrective action plan (the "Storm Water Plan"):
(a) to put into compliance discharges from the north
drain and south drain outfalls by the Closing Date
where it is reasonably practicable so to do or
otherwise as soon as possible thereafter by either
interim or permanent measures as may be necessary;
(b) in circumstances where a final solution to ensure
compliance with respect to site drainage
discharges is not reasonably practicable by the
Closing Date, to provide full assistance and
co-operation in connection with the identification
and the implementation of any interim solutions;
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(c) to investigate drainage integrity (including but
not limited to the ingress of Hazardous Materials
to or egress of Hazardous Materials from the
drainage system) and the implementation of any
necessary remedial works identified by drainage
investigations.
The Storm Water Plan shall be based upon actions which a
reasonable and prudent operator would take, acting in a
commercially reasonable manner, so as to correct any breach of
any Environmental Law and to minimise any reasonable prospect
of liability pursuant to any Environmental Law. Once
completed, the Storm Water Plan will be reviewed by the
parties pursuant to the procedures set forth in paragraph 2.8.
1.4 The parties agree subject to the provisions of this clause 1
that they will implement, prior to the Closing Date, all of
the remedial measures described in paragraph 1.3 herein that
may reasonably be implemented prior to that time. To the
extent that this is not possible, the Purchasers will
implement the Storm Water Plan after the Closing Date, and,
once the Storm Water Plan has been implemented, may take any
further measures that continue to be necessary to temporarily
or permanently abate the Release of Hazardous Materials from
the Storm Water System.
1.5 If after implementing the Storm Water Plan and taking such
other remedial measures as are commercially reasonable under
the circumstances, Hazardous Materials continue to be
discharged from the Storm Water System, the Vendors and
Purchasers may jointly agree to request that the governmental
entity with jurisdiction over such discharges modify the
Cwmbran facility storm water discharge permit to authorise
such discharges of Hazardous Materials in such quantities and
concentrations as will enable the facility to continue such
discharges without causing Purchasers to incur further Losses
in respect thereof.
1.6 The Purchasers will use reasonable endeavours to procure a
collateral warranty to Vendors from the Consultant for all of
the Consultant's work in connection with the monitoring,
investigations and remedial works described in paragraphs 1.1
to 1.4
2. General Indemnification Provisions
2.1 The Vendors shall indemnify, keep indemnified, defend and hold
harmless the Purchasers for themselves and as trustee for each
member of the Purchaser Group from and against, and pay or
reimburse the Purchasers for, any and all Losses (as used in
this Schedule 10, the term Losses shall include, but not be
limited to, any fines, penalties, reasonable attorneys' and
consultants' fees and costs of investigation, containment,
removal, remedying, monitoring, risk evaluation, clean-up or
abatement, or of reporting to and dealing with government
entities and third parties) incurred or suffered by any
Purchasers or any other member of the Purchaser Group relating
to the Activity, the Assets, or the Property based upon or
arising out of any of the following (whether known or
unknown):
2.1.1 any non-compliance with any applicable Environmental
Law at any time on or prior to the Closing Date, and
any ongoing non-compliance with an Environmental Law
after the Closing Date to the extent that, and for
so long as, such non-compliance, which commenced
prior to the Closing Date could not
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reasonably be detected or abated by the Purchasers
in the normal course of the Purchasers ownership or
use of such non-compliant property or operation;
2.1.2 any Pre-existing Environmental Condition relating to
the Activity, the Property, or the Assets, or any
properties which are or at any time in the past have
been owned, operated, leased, or used in any way by
any Vendor relating to the Activity or any property
upon which any Hazardous Materials generated or used
in connection with the Activity, the Property, or
the Assets are or have at any time been present;
2.1.3 any claims by persons or entities for injury to
their health or property as a result of the Release
or threatened Release of any Hazardous Materials
generated or used in connection with the Activity or
otherwise emanating from the Property; and
2.1.4 the matters referred to in clause 1 above.
2.2 Save in respect of sub-paragraph 2.1.4 indemnification claims
(which shall be dealt with in accordance with paragraph 2.3
below), the Purchasers may not assert any claim for
indemnification under paragraph 2.1 or make any claim under
the Environmental Warranties unless and until the aggregate
amount of actual expenditure made or incurred by the
Purchasers with respect to such claims assertible under
paragraph 2.1 and in respect of the Environmental Warranties
shall exceed $2,000,000 (for the avoidance of doubt any costs
paid under Clause 2.1.4 shall not contribute to this amount)
and thereafter, subject to paragraph 2.4 the Vendors shall
indemnify the Purchasers for actual expenditure made or
incurred by the Purchasers with respect to all Losses in
excess of $2,000,000; provided, that if the claim is made in
respect of any matter of which the Vendors are not aware
and/or could not reasonably have foreseen at the time of
Closing, the Vendors shall only be required to indemnify the
Purchasers for 50% of actual expenditure made or incurred by
the Purchasers with respect to the Losses otherwise subject to
the indemnification provision hereunder which are incurred
with respect to such matter. For the avoidance of doubt it is
agreed that there is no matter, fact or circumstances likely
to impart such awareness, knowledge or foresight in relation
to the on-site landfill at the Carrolton facility contained in
the reports prepared by Trans-Enviro Services, Inc and Arcadis
Geraghty and Miller dated May 20th 1998 and November 16th 1998
respectively.
2.3 The Purchasers shall be entitled to recover in full for all
sub-paragraph 2.1.4 Losses actually paid or incurred
(including but not limited to the operational and maintenance
costs associated with any interim measures to remedy site
drainage problems) and all or any Losses actually paid or
incurred arising from contamination of or damage to off-site
Environment and property, provided however that Losses for
remediating groundwater contamination whether off-site or on
site (except off-site contamination resulting from the storm
water discharge) shall be dealt with in accordance with the
principles in paragraph 2.2.
2.4 The aggregate liability of the Vendors under paragraph 2.1
and, except in the case of fraud or Wilful Non-Disclosure, for
breaches of the Environmental Warranties shall not exceed a
sum equal to US$30 million, provided, however, that no more
than US$1.5
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million of Losses indemnified pursuant to paragraph 2.1.4
shall count against such US$30 million total.
2.5 No indemnification shall be provided or other claim may be
made in respect of any claim to the extent that such claim
results directly from (a) any Pre-existing Environmental
Condition caused or resulting from any activities,
circumstances, or conditions at, on or under land which is
adjacent to the Activity (except with respect to any adjacent
properties retained by the Vendors Group); (b) any failure by
Purchasers to use commercially reasonable efforts to reduce or
mitigate any condition for which a claim has been made; (c)
any incremental remedial costs, above those that would have
been incurred in any event, arising from any change in the use
of any Property to a more environmentally sensitive use than
the use of such Property on the Closing Date; (d) the
negligent performance of any responsive or remedial work with
respect to a Pre-existing Environmental Condition by
Purchasers or Purchasers' representatives, contractors, or
agents, including any negligent performance by Purchasers or
any actions necessary to cure any non-compliance referenced
under paragraph 2.1.1, or (e) any Release of any Hazardous
Material caused by the Purchasers which occurs after Closing
except with respect to the continuation of any Pre-existing
Environmental Condition.
2.6 Save where provided in clause 6 to the contrary the provisions
of clause 6 of this Agreement shall not apply to this clause
2. Without limiting the generality of the foregoing, the
dollar limitations provided for in paragraphs 2.2 and 2.4 are
independent of and shall in no way affect or be affected by
the dollar limitations provided for in sub-paragraphs 6.6.3.1
and 6.6.4 of this Agreement. The indemnification obligations
of the Vendors under this Schedule 10 shall terminate on the
third anniversary of the Closing Date, except for such
indemnifiable matters for which notice was provided to Vendors
prior to that time regardless of whether Purchasers' Losses
are incurred before or after that time.
2.7 The provisions of this clause 2 shall not restrict or limit in
any way the Purchasers' rights and remedies with respect to
the Retained Liabilities or any rights or remedies of
Purchasers that may be available under applicable
Environmental Laws with respect to parties other than Vendors.
2.8 With respect to any matter for which a claim for
indemnification has been made under this clause 2, Purchasers
shall, upon the reasonable request of Vendors, provide copies
of all relevant environmental reports and data. The Purchasers
shall consult with the Vendors concerning the Storm Water Plan
and any further measures prior to implementing any
indemnifiable remedial works. The parties shall act in good
faith to agree concerning the Storm Water Plan and any further
measures and/or other indemnifiable remedial works (the
Vendors' agreement to the same not to be unreasonably withheld
or delayed) provided that if agreement cannot be reached
within 14 days of the Purchasers notifying the Vendors of its
proposals (or such longer time as the parties may agree) the
Purchasers shall have the right to define the Plan and/or the
indemnifiable remedial works and implement the Plan and any
further measures and/or the works without the Vendors'
agreement, but without prejudice to any rights or remedies the
Vendors may have under this clause 2.
98
<PAGE>
SIGNED by Juan L. De La Riva
for and on behalf of
MERITOR HEAVY VEHICLE
BRAKING SYSTEMS (USA), INC.
/s/ Juan L. De La Riva
SIGNED by Juan L. De La Riva
for and on behalf of
MERITOR AUTOMOTIVE GMBH
/s/ Juan L. De La Riva
SIGNED by David Brown
for and on behalf of
LUCASVARITY PLC
/s/ David Brown
SIGNED by David Brown
for and on behalf of
LUCAS GIRLING LIMITED
/s/ David Brown
SIGNED by David Brown
for and on behalf of
LUCAS AUTOMOTIVE LIMITED
/s/ David Brown
SIGNED by David Brown
for and on behalf of
DAYTON-WALTHER LIMITED
/s/ David Brown
99
<PAGE>
SIGNED by Juan L. De La Riva
for and on behalf of
MERITOR AUTOMOTIVE, INC.
/s/ Juan L. De La Riva
SIGNED by Juan L. De La Riva
for and on behalf of
MERITOR HEAVY VEHICLE
BRAKING SYSTEMS (UK) LIMITED
/s/ Juan L. De La Riva
SIGNED by David Brown
for and on behalf of
LUCAS INDUSTRIES PLC
/s/ David Brown
SIGNED by David Brown
for and on behalf of
LUCAS LIMITED
/s/ David Brown
SIGNED by David Brown
for and on behalf of
KELSEY-HAYES COMPANY
/s/ David Brown
SIGNED by David Brown
for and on behalf of
LUCAS FRANCE SAS
/s/ David Brown
100
<PAGE>
SIGNED by David Brown
for and on behalf of
LUCAS AUTOMOTIVE GMBH
/s/ David Brown
101
EXHIBIT 99.1
MERITOR AUTOMOTIVE, INC.
-------------------------------------
CREDIT AGREEMENT
dated as of January 15, 1999
----------------------------
THE LENDERS PARTY HERETO,
UBS AG, STAMFORD BRANCH,
as Administrative Agent
-------------------------------------
WARBURG DILLON READ LLC,
as Arranger
-------------------------------------
NBD BANK,
as Documentation Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..............................................1
ARTICLE II THE CREDITS.............................................15
2.1 Commitments.............................................15
2.2 Repayment of Loans; Evidence of Debt....................15
2.3 Procedures for Borrowing................................16
2.4 Fees....................................................17
2.5 Optional and Mandatory Principal Payments on All
Loans...................................................17
2.6 Conversion and Continuation of Outstanding Loans........18
2.7 Interest Rates, Interest Payment Dates; Interest
and Fee Basis...........................................19
2.8 Changes in Interest Rate, etc...........................19
2.9 Rates Applicable After Default..........................20
2.10 Pro Rata Payment, Method of Payment.....................20
2.11 Telephonic Notices......................................21
2.12 Notification of Loans, Interest Rates,
Prepayments and Commitment Reductions...................21
2.13 Lending Offices.........................................21
2.14 Non-Receipt of Funds by the Administrative Agent........21
2.15 Application of Payments with Respect to Defaulting
Lenders.................................................22
ARTICLE III CHANGE IN CIRCUMSTANCES, TAXES..........................22
3.1 Yield Protection........................................22
3.2 Changes in Capital Adequacy Regulations.................23
3.3 Availability of Types of Loans..........................23
3.4 Funding Indemnification.................................23
3.5 Lender Statements; Survival of Indemnity................24
3.6 Taxes...................................................24
3.7 Substitution of Lender..................................26
ARTICLE IV CONDITIONS PRECEDENT....................................26
4.1 Closing Date Conditions.................................27
4.2 Conditions to Borrowing Date............................29
-i-
<PAGE>
Page
ARTICLE V REPRESENTATIONS AND WARRANTIES..........................31
5.1 Corporate Existence and Standing........................31
5.2 Authorization and Validity..............................31
5.3 No Conflict; Government Consent.........................31
5.4 Financial Statements....................................32
5.5 Material Adverse Change.................................32
5.6 Taxes...................................................32
5.7 Litigation and Contingent Obligations...................33
5.8 Subsidiaries............................................33
5.9 ERISA...................................................33
5.10 Accuracy of Information.................................33
5.11 Regulation U............................................34
5.12 Material Agreements.....................................34
5.13 Compliance With Laws....................................34
5.14 Plan Assets; Prohibited Transactions....................34
5.15 Environmental Matters...................................34
5.16 Investment Company Act..................................34
5.17 Public Utility Holding Company Act......................35
5.18 Related Agreements......................................35
5.19 Year 2000 Compliance....................................35
ARTICLE VI COVENANTS...............................................36
6.1 Financial Reporting.....................................36
6.2 Use of Proceeds.........................................37
6.3 Notice of Default.......................................37
6.4 Conduct of Business.....................................37
6.5 Taxes...................................................38
6.6 Insurance...............................................38
6.7 Compliance with Laws....................................38
-ii-
<PAGE>
Page
6.8 Maintenance of Properties...............................38
6.9 Inspection..............................................38
6.10 Subsidiary Indebtedness.................................38
6.11 Merger..................................................39
6.12 Sale of Assets..........................................39
6.13 Investments and Acquisitions............................40
6.14 Liens...................................................41
6.15 Affiliates..............................................43
6.16 Contingent Obligations..................................43
6.17 Debt Ratio..............................................43
6.18 Net Worth...............................................44
6.19 Year 2000 Compliance....................................44
ARTICLE VII DEFAULTS................................................44
ARTICLE VIII ACCELERATION WAIVERS, AMENDMENTS AND REMEDIES...........47
8.1 Acceleration............................................47
8.2 Amendments..............................................47
8.3 Preservation of Rights..................................48
ARTICLE IX GENERAL PROVISIONS......................................48
9.1 Survival of Representations.............................48
9.2 Governmental Regulation.................................48
9.3 Taxes...................................................48
9.4 Headings................................................48
9.5 Entire Agreement........................................48
9.6 Several Obligations; Benefits of this Agreement.........49
9.7 Expenses; Indemnification...............................49
9.8 Numbers of Documents....................................50
9.9 Accounting..............................................50
9.10 Severability of Provisions..............................50
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<PAGE>
Page
9.11 Non-liability of Lenders................................50
9.12 Confidentiality.........................................50
9.13 Nonreliance.............................................51
9.14 Setoff..................................................51
9.15 Ratable Sharing.........................................51
ARTICLE X AGENTS..................................................51
10.1 Appointment.............................................51
10.2 Powers and Duties; General Immunity.....................52
10.3 Representations and Warranties; No Responsibility
For Appraisal of Creditworthiness.......................54
10.4 Right to Indemnity......................................54
10.5 Successor Administrative Agent..........................54
ARTICLE XI BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.......55
11.1 Successors and Assigns..................................55
11.2 Participations..........................................55
11.3 Assignments.............................................56
11.4 Dissemination of Information............................57
11.5 Tax Treatment...........................................57
ARTICLE XII NOTICES.................................................57
12.1 Giving Notices..........................................57
12.2 Change of Address.......................................58
ARTICLE XIII COUNTERPARTS............................................58
ARTICLE XIV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER
OF JURY TRIAL...........................................58
14.1 Choice of Law...........................................58
14.2 Waiver of Jury Trial....................................58
14.3 Submission to Jurisdiction; Waivers.....................58
14.4 Acknowledgments.........................................59
-iv-
<PAGE>
EXHIBITS:
- --------
A Pricing
B Form of Borrowing Notice
C Form of Conversion/Continuation Notice
D Form of Note
E Form of Compliance Certificate
F Form of Opinion of Counsel to Company
G Form of Opinion of O'Melveny & Myers LLP
H Form of Assignment Agreement
I Form of Certificate Re Non-Bank Status
-v-
<PAGE>
SCHEDULES:
- ---------
1 Commitments
5.7 Certain Litigation
5.8 Subsidiaries of Company
-vi-
<PAGE>
THIS CREDIT AGREEMENT (this "Agreement") is dated as of
January 15, 1999, among MERITOR AUTOMOTIVE, INC., a Delaware corporation (the
"Company"), the Lenders from time to time parties hereto, WARBURG DILLON READ
LLC ("WDR"), as arranger, UBS AG, STAMFORD BRANCH ("UBS"), as administrative
agent for the Lenders, and NBD BANK, as documentation agent. Capitalized terms
used in this preamble and in the recitals without definition are defined in
Article I hereof.
WHEREAS, on the Borrowing Date, the Company will purchase
substantially all of the assets of the Heavy Vehicle Braking Systems Division of
the Seller pursuant to the LucasVarity Acquisition Agreement for an aggregate
consideration not to exceed $400,000,000 (excluding post-closing working capital
adjustments not to exceed $20,000,000);
WHEREAS, Lenders have agreed to extend certain credit
facilities to the Company in the aggregate amount of $300,000,000, the proceeds
of which will be used, together with cash on hand of the Company and borrowings
under the Existing Credit Agreement, to fund the LucasVarity Acquisition
Financing Requirements;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acquired Division" means the assets of the Heavy Vehicle
Braking Systems Division of the Seller to be acquired on the Borrowing Date
pursuant to the LucasVarity Acquisition Agreement.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Administrative Agent" means UBS in its capacity as
administrative agent for the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.
1
<PAGE>
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agreement" means this Credit Agreement, as it may be amended
or modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time in the United States,
applied in a manner consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries and delivered to the
Lenders; provided that, if the Company notifies the Administrative Agent that
the Company wishes to amend any covenant contained in Article VI to eliminate
the effect of any change in generally accepted accounting principles on the
calculation of such covenant (or if the Administrative Agent notifies the
Company that the Required Lenders wish to amend Article VI for such purpose),
then the Company's compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect immediately before
the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Company and the Required Lenders.
"Aggregate Outstandings" means, at any date of determination
with respect to any Lender, an amount equal to the aggregate unpaid principal
amount of such Lender's Loan on such date.
"Alternate Base Rate" means, for any day, a rate of interest
per annum equal to the higher of (a) the Corporate Base Rate for such day and
(b) the sum of the Federal Funds Effective Rate for such day plus 1/2% per
annum.
"Applicable Margin" means the per annum rate determined from
time to time in accordance with the Pricing Schedule on Exhibit A annexed
hereto.
"Arranger" means WDR in its capacity as arranger pursuant to
Article X.
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Assignment" is defined in Section 11.3.1.
"Authorized Officer" means any of the Chairman of the Board of
the Company, the Senior Vice President and Chief Financial Officer of the
Company or any person designated by the Senior Vice President and Chief
Financial Officer or the Chairman of the Board of the Company in writing to the
Administrative Agent from time to time, acting singly.
2
<PAGE>
"Borrowing Date" means the Business Day on or after the
Closing Date (but no later than January 31, 1999) (a) specified in the Borrowing
Notice as the date on which the Company requests the Lenders to make the Loans
hereunder and (b) on which the conditions precedent set forth in Section 4.2 are
satisfied or waived in accordance with the terms of this Agreement.
"Borrowing Notice" means a notice substantially in the form of
Exhibit B annexed hereto delivered by the Company to the Administrative Agent
pursuant to Section 2.3 with respect to the Borrowing Date.
"Business Day" means (a) when such term is used to describe a
day on which a borrowing, payment or interest rate determination is to be made
in respect of a Eurodollar Loan, a London Banking Day; and (b) when such term is
used in any context in this Agreement (including as described in the foregoing
clause (a)), a day which, in addition to complying with any applicable
requirements set forth in the foregoing clause (a), is a day other than a
Saturday, Sunday or other day on which commercial banks in New York City or
Stamford, Connecticut are authorized or required by law to close.
"Capitalized Lease" of a Person means any lease of Property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which would be shown
as a liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Change in Control" means any of the following events or
circumstances: (a) any Person or group of Persons (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) shall either
(i) acquire beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
40% or more of the outstanding shares of voting stock of the Company or (ii)
obtain the power (whether or not exercised) to elect a majority of the Company's
directors or (b) Continuing Directors shall cease to constitute a majority of
the board of directors of the Company.
"Closing Date" means the date on which the conditions
precedent to the effectiveness of this Agreement set forth in Section 4.1 are
satisfied or waived in accordance with the terms of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, as to any Lender at any time, its
obligation to make a Loan to the Company pursuant to Section 2.1 in an amount
not to exceed the U.S. Dollar amount set forth opposite such Lender's name in
Schedule I under the heading "Commitment" or as otherwise established pursuant
to Section 11.3, as such amount may be reduced from time to time pursuant to
Section 2.5, Section 11.3 and the other applicable provisions hereof.
3
<PAGE>
"Commitment Termination Date" is defined in Section 2.1.
"Committed Percentage" means, as to any Lender at any time,
the percentage which such Lender's Commitment then constitutes of the aggregate
Commitments of all Lenders (or, if the Commitments have terminated or expired,
the percentage which (a) the Aggregate Outstandings of such Lender at such time
then constitutes of (b) the Aggregate Outstandings of all Lenders at such time).
"Company" is defined in the preamble hereto.
"Condemnation" is defined in Section 7.8.
"Confidential Information Memorandum" means the Confidential
Information Memorandum dated December 1998 relating to the Loans.
"Consultant" is defined in Section 6.19.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or liability of
any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person, or otherwise assures any creditor
of such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract. The amount of any
Contingent Obligation shall be equal to the amount of the obligation that is so
guarantied or supported that is actually outstanding or otherwise due and
payable from time to time, if a fixed and determinable amount, or, if there is
no fixed or determinable amount, either (x) if a maximum amount is guaranteed,
the maximum amount or (y) if there is no maximum amount, the amount of the
obligation that is so guarantied or supported.
"Continuing Director" means any member of the Company's board
of directors who either (a) is a member of such board as of the Closing Date or
(b) is thereafter elected to such board, or nominated for election by
stockholders, by a vote of at least two-thirds of the directors who are
Continuing Directors at the time of such vote; provided that an individual who
is so elected or nominated in connection with a merger, consolidation,
acquisition or similar transaction shall not be a Continuing Director unless
such individual was a Continuing Director prior thereto.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.6.
4
<PAGE>
"Conversion Date" means any date on which either (a) a Default
under Section 7.6 or 7.7 has occurred or (b) the Commitments shall have been
terminated and/or the Loans shall have been declared immediately due and payable
pursuant to Section 8.1(b).
"Corporate Base Rate" means a rate per annum equal to the UBS
prime rate of interest announced by UBS from time to time, changing when and as
said prime rate changes.
"Debt Ratio" means, as of the last day of any fiscal quarter
commencing with the fiscal quarter ending March 31, 1999, the ratio of (a) Total
Debt to (b) EBITDA for the four consecutive fiscal quarters ended on such date.
"Default" means an event described in Article VII.
"Defaulting Lender" means any Lender that on the Borrowing
Date fails to make available to the Administrative Agent such Lender's Loan
required to be made to the Company on the Borrowing Date. Once a Lender becomes
a Defaulting Lender, such Lender shall continue as a Defaulting Lender until
such time as such Defaulting Lender makes available to the Administrative Agent
the amount of such Defaulting Lender's Loan together with all other amounts
required to be paid to the Administrative Agent pursuant to this Agreement.
"Designated Financial Officer" means, with respect to the
Company, its chief financial officer, treasurer or controller.
"Documentation Agent" means NBD Bank in its capacity as
documentation agent pursuant to Article X, and not in its individual capacity as
a Lender.
"Dollars," "U.S. Dollars" and "$" means dollars in lawful
currency of the United States of America.
"EBITDA" means for any period, the sum of (a) the consolidated
net income (or loss) of the Company and its Subsidiaries for such period
determined in conformity with Agreement Accounting Principles, plus (b) to the
extent deducted in determining net income, income taxes, depreciation and
amortization expense and Interest Expenses.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(a) the protection of the environment, (b) the effect of the environment on
human health, (c) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (d)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof, in each case applicable to
the Company or its Property.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation issued
thereunder.
5
<PAGE>
"Euclid Acquisition" means the acquisition of Euclid
Industries on substantially the terms described in the Confidential Information
Memorandum.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Loan for the relevant Eurodollar Interest Period, the per annum rate determined
by the Administrative Agent to be the rate for deposits in U.S. Dollars for a
period equal to such Eurodollar Interest Period commencing on the first day of
such Eurodollar Interest Period appearing on Page 3750 of the Telerate screen as
of 11:00 a.m. (London time) two Business Days prior to the first day of such
Eurodollar Interest Period; provided, however, that in the event that such rate
does not appear on Page 3750 of the Telerate Service (or otherwise on such
service), the Eurodollar Base Rate shall be (i) determined by reference to such
other publicly available service for displaying Eurodollar rates as may be
agreed upon by the Administrative Agent and the Company or (ii) in the absence
of such agreement, the arithmetic average of the rates reported to the
Administrative Agent by each Reference Lender as the rate at which such
Reference Lender offers to place deposits in U.S. Dollars with first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Eurodollar Interest Period, in the
approximate amount of such Reference Lender's relevant Eurodollar Loan and
having a maturity approximately equal to such Eurodollar Interest Period. If any
Reference Lender fails to provide such quotation to the Administrative Agent,
then the Administrative Agent shall determine the Eurodollar Base Rate on the
basis of the quotations of the remaining Reference Lender(s).
"Eurodollar Interest Period" means with respect to any
Eurodollar Loan:
(a) initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Eurodollar Loan and ending one, two or three
months thereafter, as selected by the Company in its Borrowing Notice or
Conversion/Continuation Notice, as the case may be, given with respect thereto;
and
(b) thereafter, each period commencing on the last day of the next preceding
Eurodollar Interest Period applicable to such Eurodollar Loan and ending one,
two or three months thereafter, as selected by the Company by
Conversion/Continuation Notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Eurodollar Interest
Period with respect thereto; provided that, all of the foregoing provisions
relating to Eurodollar Interest Periods are subject to the following:
(i) if any Eurodollar Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business Day,
such Eurodollar Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension
would be to carry such Eurodollar Interest Period into another
calendar month in which event such Eurodollar Interest Period
shall end on the immediately preceding Business Day;
(ii) any Eurodollar Interest Period applicable to a Eurodollar Loan
that would otherwise extend beyond the Maturity Date shall end
on such date;
6
<PAGE>
(iii) the number of Eurodollar Interest Periods outstanding at any
time shall not exceed five; and
(iv) any Eurodollar Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day
in the calendar month at the end of such Eurodollar Interest
Period) shall end on the last Business Day of a calendar
month.
"Eurodollar Loan" means a Loan which bears interest at a rate
determined with reference to a Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for
the relevant Eurodollar Interest Period, the sum of (a) the quotient of (i) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(ii) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (b) the Applicable Margin in effect from
time to time. The Eurodollar Rate shall be rounded to the next higher multiple
of 1/100 of 1% if the rate is not such a multiple.
"Excluded Equity Issuance" means any issuance of equity
securities of the Company to officers, employees or directors of the Company or
any of its Subsidiaries pursuant to any employee stock option, savings or stock
purchase plan or other employee benefit plan.
"Excluded Indebtedness" means (i) Indebtedness incurred by the
Company pursuant to the Existing Credit Agreement in an aggregate amount,
together with any Excluded Subsidiary Debt referred to in clause (i) of the
definition of that term, not to exceed $1,000,000,000; (ii) Excluded Subsidiary
Debt; (iii) Indebtedness of the type described in clauses (b), (e), (f) and (g)
of the definition thereof and (iv) intercompany Indebtedness, in each case so
long as such Indebtedness is not otherwise prohibited under this Agreement.
"Excluded Subsidiary Debt" means (i) Indebtedness incurred by
a Foreign Subsidiary Borrower (as defined in the Existing Credit Agreement as in
effect on the Closing Date) pursuant to the Existing Credit Agreement in an
aggregate amount not to exceed the amount available for borrowing by such
Foreign Subsidiary Borrower under such agreement as in effect on the Closing
Date and (ii) Indebtedness incurred by a Foreign Subsidiary Borrower pursuant to
any other credit facility so long as such Indebtedness is not otherwise
prohibited under this Agreement (including Section 6.10).
"Existing Credit Agreement" means the Credit Agreement dated
as of August 21, 1997 between the Company, certain foreign subsidiary borrowers,
First Chicago Capital Markets, Inc., as syndication agent and arranger, Morgan
Guaranty Trust Company of New York, as administrative agent, NBD Bank, as
documentation agent, and the lenders party thereto, as such Credit Agreement has
heretofore been and as it may hereafter be amended, supplemented or otherwise
modified from time to time.
7
<PAGE>
"Federal Funds Effective Rate" means, for any day, an interest
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 for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately 10:00 a.m.
(New York City time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.
"Financial Contract" of a Person means (a) any exchange-traded
or over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics or (b) any Rate Hedging Agreement.
"Floating Rate" means, for any day, a rate per annum (based on
a year of 365 or 366 days, as appropriate) equal to the Alternate Base Rate for
such day, in each case changing when and as the Alternate Base Rate changes.
"Floating Rate Loan" means a Loan which bears interest at a
rate determined with reference to the Floating Rate.
"Governmental Authority" means any nation or government, any
state, or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness" of a Person means, without duplication, such
Person's (a) obligations for borrowed money, (b) obligations representing the
deferred purchase price of Property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on terms
customary in the trade), (c) obligations, whether or not assumed, secured by
Liens on property now or hereafter owned or acquired by such Person, (d)
obligations which are evidenced by notes, acceptances, or other instruments
(other than Financial Contracts), to the extent of the amounts actually
borrowed, due, payable or drawn, as the case may be, (e) Capitalized Lease
Obligations, (f) all obligations in respect of letters of credit, whether drawn
or undrawn, contingent or otherwise, and (g) Contingent Obligations with respect
to any of the foregoing to the extent (and only to the extent) that (i) such
Contingent Obligation relates to other Indebtedness that is not consolidated
Indebtedness of the Company and its Subsidiaries and (ii) the other Indebtedness
to which such Contingent Obligation relates is outstanding and then only as to
principal or like amounts actually borrowed, due, payable or drawn, as the case
may be.
"Interest Expenses" means, with respect to any period, the
aggregate of all interest expense reported by the Company and its Subsidiaries
in accordance with Agreement Accounting Principles during such period, net of
any interest income received by the Company and its Subsidiaries during such
period from Investments. As used in this definition, the term "interest" shall
include, without limitation, all interest, fees and costs payable with respect
to the obligations under this Agreement (other than fees and costs which may be
capitalized as
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transaction costs in accordance with Agreement Accounting Principles), any
discount in respect of sales of accounts receivable and/or related contract
rights and the interest portion of Capitalized Lease payments during such
period, all as determined in accordance with Agreement Accounting Principles.
"Investment" of a Person means (i) any loan, advance (other
than commission, travel and similar advances to officers and employees made in
the ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade and loans to employees in the ordinary course of business) or contribution
of capital by such Person; (ii) stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; (iii) any
deposit accounts and certificates of deposit owned by such Person; and (iv)
structured notes, derivative financial instruments and other similar instruments
or contracts owned by such Person (other than Financial Contracts).
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors and, to the
extent permitted by Section 11.3, assigns.
"Lending Office" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan" means, with respect to a Lender, such Lender's loan
made pursuant to Section 2.1 and "Loans" means each such Loan, collectively.
"Loan Documents" means this Agreement, the Notes and the other
documents and agreements contemplated hereby and executed by the Company in
favor of the Administrative Agent or any Lender.
"London Banking Day" means any day on which banks in London
are open for general banking business, including dealings in foreign currency
and exchange.
"LucasVarity Acquisition" means the transactions contemplated
by the LucasVarity Acquisition Agreement.
"LucasVarity Acquisition Agreement" means, collectively (i)
that certain Umbrella Agreement dated November 22, 1998 by and among LucasVarity
plc, the Company, Lucas Industries plc, Meritor Heavy Vehicle Braking Systems
(UK) Limited and certain other Persons named therein; (ii) that certain
Agreement dated November 22, 1998 by and among Lucas Limited, Meritor Heavy
Vehicle Braking Systems (UK) Limited, Lucas Industries plc, Lucas France SAS and
the Company, relating to the sale and purchase of assets of the Acquired
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Division in the United Kingdom and France; (iii) that certain United States Sale
Agreement dated as of November 22, 1998 by and between Kelsey-Hayes Company and
Meritor Heavy Vehicle Braking Systems (U.S.A.), Inc., relating to the sale and
purchase of assets of the Acquired Division in the United States; (iv) that
certain Agreement dated November 22, 1998 by and among Lucas Automotive GmbH,
Lucas Limited, Meritor Automotive GmbH and the Company, relating to the sale and
purchase of assets of the Acquired Division in Germany; and (v) that certain
Transfer and Amendment Agreement dated November 22, 1998 by and among Lucas
Industries plc, Huayang Group and the Company, relating to the transfer of Lucas
Industries plc's joint venture interest in Lucas Huyang Vehicle Braking Company
Limited in the People's Republic of China; in each case, in the form delivered
to the Administrative Agent prior to its execution of this Agreement and as such
agreement may be amended, supplemented or otherwise modified from time to time
thereafter to the extent permitted hereunder.
"LucasVarity Acquisition Financing Requirements" means the
aggregate of all amounts necessary (a) to finance the purchase price payable in
connection with the LucasVarity Acquisition, (b) to refinance all Indebtedness
outstanding relating to the Acquired Division other than Indebtedness permitted
hereunder and (c) to pay fees, costs and expenses payable by the Company on the
Borrowing Date in connection with the transactions contemplated by the
LucasVarity Acquisition Agreement.
"Margin Stock" means margin stock as defined in Regulation T,
Regulation U or Regulation X.
"Material Adverse Effect" means a material adverse effect on
(a) the business, Property, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, (b) the ability
of the Company to pay the Obligations under the Loan Documents, or (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders thereunder.
"Material Indebtedness" is defined in Section 7.5.
"Material Plan" is defined in Section 7.10.
"Maturity Date" means January 14, 2000.
"Moody's Bond Rating" means for any day, the rating of the
Company's senior long-term unsecured debt by Moody's Investors Service, Inc.
("Moody's") in effect at 11:00 a.m., New York City time, on such day.
"Multiemplover Plan" means a plan defined in Section 4001
(a)(3) of ERISA to which the Company or any member of the Controlled Group has
an obligation to contribute.
"Net Securities Proceeds" is defined in Section 2.5.3.
"Net Worth" means the consolidated shareholder's equity of the
Company and its Subsidiaries, including minority interests, calculated in
accordance with Agreement Accounting
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Principles, provided that the amount of adjustment for foreign currency
translation shall be deemed equal at all times to the amount described in the
audited financial statements of the Company and its Subsidiaries for the fiscal
year ending September 30, 1998 delivered to the Lenders pursuant to Section
4.1.2 for purposes of determining Net Worth under this Agreement.
"Non-Excluded Taxes" is defined in Section 3.6.1.
"Note" is defined in Section 2.2.5.
"Notice of Assignment" is defined in Section 11.3.2.
"Obligations" means collectively, the unpaid principal of and
interest on the Loans and all other obligations and liabilities of the Company
under this Agreement and the other Loan Documents (including, without
limitation, interest accruing at the then applicable rate provided in this
Agreement or any other applicable Loan Document after the maturity of the Loans
and interest accruing at the then applicable rate provided in this Agreement or
any other applicable Loan Document after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the other Loan Documents or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
the Company pursuant to the terms of this Agreement or any other Loan Document).
"Officer's Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer) or its president or one of its vice presidents or by a
Designated Financial Officer; provided that every Officer's Certificate with
respect to the compliance with a condition precedent to the making of the Loans
hereunder shall include (a) a statement that the officer making or giving such
Officer's Certificate has read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (b) a statement that,
in the opinion of the signer, he or she has made or has caused to be made such
examination or investigation as is necessary to enable him or her to certify as
to whether or not such condition has been complied with, and (c) a statement
certifying that such condition has been complied with.
"Participants" is defined in Section 11.2.1.
"Payment Date" means the last Business Day of each March,
June, September and December occurring after the date hereof, commencing March
31, 1999.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
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"Person" means any natural person, corporation, firm, joint
venture, limited liability company, partnership, association, enterprise, trust
or other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Company or any member of the Controlled Group
has any obligation to contribute to on or after the Closing Date.
"Plan of Correction" is defined in Section 5.19.
"Pro Forma Balance Sheet" is defined in Section 4.1.2.
"Projections" is defined in Section 4.1.2.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 11.3.1.
"Rate Hedging Agreement" means an agreement, device or
arrangement providing for payments which are related to fluctuations of interest
rates, exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (a) any
and all Rate Hedging Agreements, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Hedging Agreement.
"Reference Lenders" means UBS, Bank of America NT & SA First
National Bank of Chicago, in their capacities as Lenders.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors.
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"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors.
"Replaced Lender" is defined in Section 3.7.
"Replacement Lender" is defined in Section 3.7.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section occurring
after the Closing Date, with respect to a Plan, excluding, however, such events
as to which the PBGC by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event;
provided, however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means (a) at any time prior to the
termination of the Commitments, Lenders the Committed Percentages of which
aggregate at least 51%; and (b) at any time after the termination of the
Commitments, Lenders whose Aggregate Outstandings aggregate at least 51% of the
Aggregate Outstandings of all Lenders.
"Requirement of Law" means as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Reserve Requirement" means, with respect to a Eurodollar
Interest Period for Eurodollar Loans the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D) maintained by a member bank of
such System.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Seller" means, collectively, LucasVarity plc, Lucas
Industries plc, Lucas France SAS, Kelsey-Hayes Company, Lucas Automotive GmbH
and Lucas Limited.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" within the meaning of Rule 1-02 of the Securities and
Exchange Commission's Regulation S-X.
"Single Employer Plan" means a Plan which is maintained on or
after the Closing Date by the Company or any member of the Controlled Group for
employees of the Company or any member of the Controlled Group.
"S&P Bond Rating" means for any day, the rating of the
Company's senior long-term unsecured debt by Standard & Poor's Rating Group
("S&P") in effect at 11:00 a.m., New York City time, on such day.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Company.
"Substantial Portion" means, with respect to the Property of
the Company and its Subsidiaries, Property which (a) represents more than 15% of
the consolidated assets of the Company and its Subsidiaries as would be shown in
the consolidated financial statement of the Company and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (b) is responsible for more than 15% of the
consolidated net sales or of the consolidated net income of the Company and its
Subsidiaries as reflected in the financial statements referred to in clause (a)
above.
"Total Debt" means, as of the end of any fiscal quarter of the
Company, all Indebtedness of the Company and its Subsidiaries as at such date,
determined on a consolidated basis.
"Transferee" is defined in Section 11.4.
"Type" means, with respect to any Loan, its nature as a
Floating Rate Loan or a Eurodollar Loan.
"UBS" is defined in the preamble hereto.
"Unfunded Liabilities" means the amount (if any) by which the
actuarial present value of all benefit liabilities under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefit liabilities, all determined as of the then most recent valuation date
for such Plans using FASB actuarial assumptions for single employer plan
terminations.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
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"Volvo Acquisition" means the acquisition of Volvo Truck
Corporation's heavy truck axle manufacturing operations in Lindesberg, Sweden on
substantially the terms described in the Confidential Information Memorandum.
"WDR" is defined in the preamble hereto.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary
all of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.
"Year 2000 Problems" means limitations in the capacity or
readiness to handle date information for the Year 1999 or years beginning
January 1, 2000 of any of the hardware, firmware or software systems ("Systems")
associated with information processing and delivery, operations or services
(e.g., security and alarms, elevators, communications and HVAC) operated by,
provided to or otherwise reasonably necessary to the business or operations of
the Company and its Subsidiaries.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
ARTICLE II
----------
THE CREDITS
-----------
2.1 Commitments. Each Lender severally agrees, on the terms and conditions
set forth in this Agreement, to make a loan to the Company on the Borrowing Date
in an amount not exceeding its Commitment. The Loans may be Floating Rate Loans
or Eurodollar Loans, or a combination thereof selected in accordance with
Sections 2.3 and 2.6; provided, however, that if the Borrowing Date is on or
within 3 days after the Closing Date, the Loans shall initially be Floating Rate
Loans. Each Lender's Commitment shall expire immediately and without further
action on January 31, 1999, if the Loans are not made on or before such date
(it being understood that delivery of an appropriate Borrowing Notice in
accordance with the terms of this Agreement is a condition to the making of the
Loans). The Company may make only one borrowing under the Commitments. Amounts
borrowed under this Section 2.1 and subsequently repaid or prepaid may not be
reborrowed.
2.2 Repayment of Loans; Evidence of Debt.
2.2.1 The Company hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender (x) the then unpaid
principal amount of the Loan of such Lender on the Maturity Date, and (y) such
other amounts on such other dates as may be required to be paid from time to
time pursuant to this Agreement. The Company hereby further agrees to pay to the
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Administrative Agent for the account of each Lender interest on the unpaid
principal amount of the Loans from time to time outstanding until payment
thereof in full at the rates per annum, and on the dates, set forth in Section
2.7.
2.2.2 Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Company to such Lender
resulting from the Loan of such Lender from time to time, including the amounts
of principal and interest payable thereon and paid to such Lender from time to
time under this Agreement.
2.2.3 The Administrative Agent shall maintain an account in its books and
records with a subaccount for each Lender, in which shall be recorded (a) the
amount of such Lender's Loan made hereunder, the Type thereof and each
Eurodollar Interest Period, if any, applicable thereto, (b) the amount of any
principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder in respect of its Loan and (c) both the amount
of any sum received by the Administrative Agent hereunder from the Company in
respect of the Loans and each Lender's share thereof.
2.2.4 The books and records of the Administrative Agent and of each Lender
maintained pursuant to Section 2.2.2 and 2.2.3 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the failure
of any Lender or the Administrative Agent to maintain any such books and records
or any error therein, shall not in any manner affect the obligation of the
Company to repay (with applicable interest) the Loan made to the Company by such
Lender in accordance with the terms of this Agreement.
2.2.5 The Company agrees that, upon the request to the Administrative Agent
by any Lender, the Company will execute and deliver to such Lender a promissory
note of the Company evidencing the Loan of such Lender, substantially in the
form of Exhibit D annexed hereto with appropriate insertions as to date and
principal amount (each, a "Note"); provided, that the delivery of such Notes
shall not be a condition precedent to the Closing Date.
2.3 Procedures for Borrowing. The Company may borrow once under the
Commitments on any Business Day on or before January 31, 1999; provided, that
the Company shall give the Administrative Agent an irrevocable Borrowing Notice
(which Borrowing Notice must be received by the Administrative Agent prior to
10:00 a.m., New York City time) (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Loans are to be initially
Eurodollar Loans, or (b) on the requested Borrowing Date, otherwise, specifying
in each case (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, Floating Rate Loans or
a combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Type of Loan and the length of the initial
Eurodollar Interest Periods therefor. Each borrowing shall be in an amount equal
to (A) in the case of Floating Rate Loans, $5,000,000 or a whole multiple of
$5,000,000 in excess thereof, and (B) in the case of Eurodollar Loans,
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$10,000,000 or a whole multiple of $5,000,000 in excess thereof. Upon receipt of
such notice from the Company, the Administrative Agent shall promptly notify
each Lender thereof. Not later than 11:00 a.m., New York City time, on the
requested Borrowing Date each Lender shall make an amount equal to its Committed
Percentage of the principal amount of the Loans requested to be made on such
Borrowing Date available to the Administrative Agent at its New York office
specified in Section 12.1 in immediately available funds. The Administrative
Agent shall on such date credit the account of the Company on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.
The Borrowing Notice shall be irrevocable, and the Company shall be bound to
make a borrowing in accordance therewith.
2.4 Fees.
(a) The Company agrees to pay on the Closing Date to the
Administrative Agent, for distribution to each Lender in
proportion to that Lender's Committed Percentage on such date,
a participation fee equal to 0.125% multiplied by the
aggregate Commitments of all Lenders.
(b) The Company agrees to pay to the Arranger and the
Administrative Agent, in each case for their own account, such
other fees as agreed to between the Company and the Arranger
and the Administrative Agent.
2.5 Optional and Mandatory Principal Payments on All Loans.
2.5.1 The Company may at any time and from time to time prepay Floating Rate
Loans, in whole or in part, without penalty or premium, upon at least one
Business Day's irrevocable notice to the Administrative Agent, specifying the
date and amount of prepayment. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein. Partial
prepayment of Floating Rate Loans shall be in a minimum aggregate amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof.
2.5.2 The Company may at any time and from time to time prepay, without
premium or penalty but upon payment of any amount payable pursuant to Section
3.4, its Eurodollar Loans in whole or in part, upon at least three Business
Days' irrevocable notice to the Administrative Agent specifying the date (which
shall be at the end of the applicable Eurodollar Interest Period) and amount of
prepayment. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein. Partial prepayment of
Eurodollar Loans shall be in a minimum aggregate amount of $10,000,000 or any
integral multiple of $1,000,000 in excess thereof.
2.5.3 On the date of receipt by the Company of the cash proceeds (any such
proceeds, net of underwriting discounts and commissions and other reasonable
costs and expenses associated
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therewith, including reasonable legal fees and expenses, being "Net Securities
Proceeds") from the incurrence of any Indebtedness by the Company or any of its
Subsidiaries or the issuance of any debt or equity securities of the Company
after the Closing Date (other than proceeds from the incurrence of Excluded
Indebtedness or from Excluded Equity Issuances), the Company shall prepay the
Loans and/or the Commitments shall be permanently reduced in an aggregate amount
equal to such Net Securities Proceeds, until all Obligations have been paid in
full. Concurrently with any prepayment of the Loans and/or reduction of the
Commitments pursuant to this Section 2.5.3, the Company shall deliver to the
Administrative Agent an Officer's Certificate demonstrating the calculation of
the amount of the applicable Net Securities Proceeds that gave rise to such
prepayment and/or reduction. In the event that the Company shall subsequently
determine that the actual Net Securities Proceeds amount was greater than the
amount set forth in such Officer's Certificate, the Company shall promptly make
an additional prepayment of the Loans in an amount equal to the amount of such
excess, and the Company shall concurrently therewith deliver to the
Administrative Agent an Officer's Certificate demonstrating the derivation of
the additional Net Securities Proceeds amount resulting in such excess.
2.5.4 Each prepayment and conversion pursuant to this Section 2.5 shall be
accompanied by accrued and unpaid interest on the amount prepaid to the date of
prepayment and any amounts payable under Section 3.4 in connection with such
payment.
2.5.5 Mandatory prepayments pursuant to this Section 2.5 shall be applied
first to prepay Floating Rate Loans and second to prepay Eurodollar Loans then
outstanding in such order as the Company may direct.
2.6 Conversion and Continuation of Outstanding Loans. Floating Rate Loans
shall continue as Floating Rate Loans unless and until such Floating Rate Loans
are converted into Eurodollar Loans. Each Eurodollar Loan shall continue as a
Eurodollar Loan until the end of the then applicable Eurodollar Interest Period
therefor, at which time such Eurodollar Loan shall be automatically converted
into a Floating Rate Loan unless the Company shall have given the Administrative
Agent a Conversion/Continuation Notice requesting that, at the end of such
Eurodollar Interest Period, such Eurodollar Loan either continue as a Eurodollar
Loan for the same or another Eurodollar Interest Period or be converted into a
Floating Rate Loan. Subject to the terms hereof, the Company may elect from time
to time to convert all or any part of a Loan of any Type into any other Type or
Types of Loans; provided that any conversion of a Eurodollar Loan shall be made
on, and only on, the last day of the Eurodollar Interest Period applicable
thereto. Notwithstanding anything herein to the contrary, no Loan may be
converted to a Eurodollar Loan, and no Eurodollar Loan may be continued as such,
if any Default or Unmatured Default has occurred and is continuing. The Company
shall give the Administrative Agent irrevocable notice substantially in the form
of Exhibit C annexed hereto (a "Conversion/Continuation Notice") of each
conversion of a Loan or continuation of a Eurodollar Loan not later than 10:00
a.m. (New York City time) at least one Business Day, in the case of a conversion
into a Floating Rate Loan or three Business Days, in the case of a conversion
into or
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continuation of a Eurodollar Loan, prior to the date of the requested conversion
or continuation, specifying:
(i) the requested date, which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Loan which is to be
converted or continued, and
(iii) the amounts and Type(s) of Loan(s) into which such Loan is to
be converted or continued and, in the case of a conversion
into or continuation of a Eurodollar Loan, the duration of the
Eurodollar Interest Period applicable thereto.
2.7 Interest Rates, Interest Payment Dates; Interest and Fee Basis. (a)
Each Floating Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day from and including the date such Loan is made or is
converted from a Eurodollar Loan into a Floating Rate Loan pursuant to Section
2.6 to but excluding the date it becomes due or is converted into a Eurodollar
Loan pursuant to Section 2.6 hereof, at a rate per annum equal to the Floating
Rate for such day. Each Eurodollar Loan shall bear interest for each day during
each Eurodollar Interest Period with respect thereto at a rate per annum equal
to the Eurodollar Rate determined for such Eurodollar Interest Period.
(b) Interest accrued on each Floating Rate Loan shall be
payable on each Payment Date, commencing with the first such date to
occur after the date hereof and at maturity. Interest accrued on each
Eurodollar Loan shall be payable on the last day of its applicable
Eurodollar Interest Period, on any date on which the Eurodollar Loan is
prepaid, whether by acceleration or otherwise, and at maturity.
(c) Interest shall be payable for the day a Loan is made but
not for the day of any payment on the amount paid if payment is
received prior to noon (local time) at the place of payment. If any
payment of principal of or interest on a Loan shall become due on a day
which is not a Business Day, except as otherwise provided in the
definition of Eurodollar Interest Period, such payment shall be made on
the next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing interest
in connection with such payment.
(d) All interest and fees shall be computed on the basis of
the actual number of days (including the first day but excluding the
last day) occurring during the period such interest or fee is payable
over a year comprised of 360 days (or in the case of interest on
Floating Rate Loans, 365 days or, if appropriate, 366 days).
2.8 Changes in Interest Rate, etc. Changes in the rate of interest on that
portion of any Loan maintained as a Floating Rate Loan will take effect
simultaneously with each change in the
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Alternate Base Rate. Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof from and including the first day of the Eurodollar
Interest Period applicable thereto to (but not including) the last day of such
Eurodollar Interest Period at the interest rate determined as applicable to such
Eurodollar Loan. No Eurodollar Interest Period may end after the Maturity Date.
2.9 Rates Applicable After Default. Notwithstanding anything to the
contrary contained in this Article II, during the continuance of a Default the
Required Lenders may, at their option, by notice to the Company (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that no Loan may be made as, converted into or
continued (after the expiration of the current Eurodollar Interest Period) as a
Eurodollar Loan. If any Loan is not paid at maturity, whether by acceleration or
otherwise, the Required Lenders may, at their option, by notice to the Company
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent of the
Lenders as to changes in interest rates) declare that (i) each Eurodollar Loan
shall bear interest (including interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) for the remainder of
the applicable Eurodollar Interest Period at the rate per annum otherwise
applicable to such Eurodollar Interest Period plus 2% per annum and (ii) each
Floating Rate Loan shall bear interest (including interest accruing after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Company, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
at a rate per annum equal to the Floating Rate otherwise applicable to Floating
Rate Loans plus 2% per annum.
2.10 Pro Rata Payment, Method of Payment.
2.10.1 The borrowing of Loans by the Company from the Lenders shall be made
pro rata according to the Committed Percentages of the Lenders in effect on the
Borrowing Date. Each payment (other than any optional prepayment) by the Company
on account of principal of or interest on the Loans shall be allocated by the
Administrative Agent pro rata amongst the Lenders according to the respective
outstanding principal amounts thereof then due and owing to each Lender. Each
optional prepayment by the Company on account of principal or interest on the
Loans shall be allocated by the Administrative Agent pro rata according to the
respective outstanding principal amounts thereof. All payments (including
prepayments) to be made by the Company hereunder, whether on account of
principal, interest, fees or otherwise, shall be made, without setoff,
deduction, or counterclaim, in immediately available funds to the Administrative
Agent at the Administrative Agent's address specified pursuant to Article XII,
or at any other Lending Office of the Administrative Agent specified in writing
by the Administrative Agent to the Company, by 12:00 p.m. (New York City time)
on the date of payment. All payments hereunder shall be made in U.S. Dollars.
Each payment delivered to the Administrative Agent for the account of any Lender
shall be delivered promptly by the Administrative Agent to such
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Lender in the same type of funds that the Administrative Agent received at its
address specified pursuant to Article XII or at any Lending Office specified in
a notice received by the Administrative Agent from such Lender. The
Administrative Agent is hereby authorized to charge the account of the Company
maintained with UBS for each payment of principal, interest and fees as it
becomes due hereunder.
2.11 Telephonic Notices. The Company hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Loans, effect selections of
Types of Loans and to transfer funds based on telephonic notices made by any
person or persons the Administrative Agent or any Lender reasonably and in good
faith believes to be an Authorized Officer. The Company agrees to deliver
promptly to the Administrative Agent a written confirmation, if such
confirmation is requested by the Administrative Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the Lenders
shall govern absent manifest error.
2.12 Notification of Loans, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Administrative Agent will notify
each Lender of the contents of each Borrowing Notice, Conversion/Continuation
Notice, and repayment notice received by it hereunder. The Administrative Agent
will notify each Lender of the interest rate applicable to each Eurodollar Loan
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate. Each Reference Lender
agrees to furnish timely information for the purpose of determining the
applicable interest rates.
2.13 Lending Offices. Each Lender may book its Loans at any Lending Office
selected by such Lender and may change its Lending Office from time to time. All
terms of this Agreement shall apply to any such Lending Office and the Notes, if
any, shall be deemed held by each Lender for the benefit of such Lending Office.
Each Lender may, by written or telex notice to the Administrative Agent and the
Company, designate a Lending Office through which Loans will be made by it and
for whose account Loan payments are to be made.
2.14 Non-Receipt of Funds by the Administrative Agent. Unless the Company or
a Lender, as the case may be, notifies the Administrative Agent prior to the
date on which it is scheduled to make payment to the Administrative Agent of (a)
in the case of a Lender, the proceeds of a Loan or (b) in the case of the
Company, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Company, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall, on
demand by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by the
Administrative Agent until
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the date the Administrative Agent recovers such amount at a rate per annum equal
to (i) in the case of payment by a Lender, the Federal Funds Effective Rate for
such day or (ii) in the case of payment by the Company, the interest rate
applicable to the relevant Loan.
2.15 Application of Payments with Respect to Defaulting Lenders. No
payments of principal, interest or fees delivered to the Administrative Agent
for the account of any Defaulting Lender shall be delivered by the
Administrative Agent to such Defaulting Lender. Instead, such payments shall,
for so long as such Defaulting Lender shall be a Defaulting Lender, be held by
the Administrative Agent, and the Administrative Agent is hereby authorized and
directed by all parties hereto to hold such funds in escrow and apply such funds
to the Loan required to be made by such Defaulting Lender on the Borrowing Date
to the extent such Lender fails to make such Loan. Notwithstanding the
foregoing, upon the termination of the Commitments and the payment and
performance of all of the Obligations (other than those owing to a Defaulting
Lender), any funds then held in escrow by the Administrative Agent pursuant to
the preceding sentence shall be distributed to each Defaulting Lender, pro rata
in proportion to amounts that would be due to each Defaulting Lender but for the
fact that it is a Defaulting Lender.
ARTICLE III
-----------
CHANGE IN CIRCUMSTANCES, TAXES
------------------------------
3.1 Yield Protection. If after the date hereof any law or any governmental
or quasi-governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law), or any change or modification thereof, or any
interpretation thereof, or the compliance of any Lender therewith,
(a) subjects any Lender or any applicable Lending Office to any
tax, duty, charge or withholding on or from payments due from
the Company or changes the basis of taxation of payments to
any Lender in respect of its Loans or other amounts due it
hereunder (excluding income taxes and franchise taxes (imposed
in lieu of income taxes)) imposed on the Administrative Agent
or any Lender as a result of a present or former connection
between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or
therein, other than any such connection arising solely from
the Administrative Agent or such Lender having executed,
delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan
Document), or
(b) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Office (other than reserves and assessments
taken into account in determining the interest rate applicable
to Eurodollar Loans), or
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(c) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Office of
making, funding or maintaining loans or reduces any amount
receivable by any Lender or any applicable Lending Office in
connection with loans, or requires any Lender or any
applicable Lending Office to make any payment calculated by
reference to the amount of loans held or interest received by
it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Company shall pay such Lender
that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loan or its Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Office of such Lender or any corporation controlling such Lender is
increased as a result of a Change (as defined below), then, within 15 days of
demand by such Lender, the Company shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loan or its obligation to make its Loan hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means (a)
any change after the date of this Agreement in the Risk-Based Capital Guidelines
or (b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Office or any corporation controlling
any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Loans. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Office would violate
any applicable law, rule, regulation, or directive, whether or not having the
force of law, or if the Required Lenders with respect to Eurodollar Loans
determine that (i) deposits of a type and maturity appropriate to match fund
Eurodollar Loans are not available or (ii) the interest rate applicable to a
Eurodollar Loan does not accurately reflect the cost of making or maintaining
such Loans, then the Administrative Agent shall suspend the availability of the
affected Eurodollar Loans and require any affected Eurodollar Loans to be repaid
at the end of the Eurodollar Interest Period for the affected Loans.
3.4 Funding Indemnification. If any payment of a Eurodollar Loan occurs on
a date which is not the last day of the applicable Eurodollar Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar Loan
is not made on the date specified by the Company
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for any reason other than default by the Lenders, the Company will indemnify
each Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
acquired to fund or maintain the Eurodollar Loan.
3.5 Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Office with respect
to its Eurodollar Loans to reduce any liability of the Company to such Lender
under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Loan
under Section 3.3, so long as such designation is not disadvantageous to such
Lender in any material respect. Each Lender shall deliver a written statement of
such Lender to the Company (with a copy to the Administrative Agent) as to the
amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement shall
set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall state that amounts determined in accordance
with such procedures are being charged by such Lender to other borrowers with
credit facilities similar to this Agreement and credit characteristics
comparable to the Company as determined by such Lender and shall be final,
conclusive and binding on the Company in the absence of manifest error.
Determination of amounts payable under such sections in connection with
Eurodollar Loans shall be calculated as though each Lender funded such Loans
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the interest rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided herein,
the amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Company of such written statement. The obligations
of the Company under Sections 3.1, 3.2, 3.4 and 3.6 shall survive payment of the
Obligations and termination of this Agreement. The Company shall have no
obligation to compensate any Lender with respect to amounts provided in Section
3.1, 3.2, 3.4 or 3.6 with respect to any period prior to the date which is 120
days prior to the date such Lender delivers its written statement hereunder
requesting compensation.
3.6 Taxes.
3.6.1 All payments of principal and interest made by the Company under this
Agreement and any Note, if any, shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding income taxes and franchise taxes
(imposed in lieu of income taxes) imposed on the Administrative Agent or any
Lender as a result of a present or former connection between the Administrative
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative Agent or
such Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the
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Administrative Agent, or any Lender hereunder or under any Note, the amounts so
payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates and in the amounts specified in this Agreement; provided,
however, that the Company shall not be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of Section 3.6.2. Whenever any Non-Excluded Taxes are payable by
the Company, as promptly as possible thereafter the Company shall send to the
Administrative Agent for its own account or for the account of such Lender, as
the case may be, a certified copy of an original official receipt received by
the Company showing payment thereof. If the Company fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Company shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
3.6.2 Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(a) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such
Lender, deliver to the Company and the Administrative Agent
(A) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, certifying that it is entitled to
receive payments under this Agreement without deduction or
withholding of any United States federal income taxes or (B)
in the event such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Code and cannot deliver
the documents described in clause (A), a duly completed copy
of Internal Revenue Service Form W-8, or successor applicable
form, certifying that it is entitled to an exemption from
United States backup withholding tax and a certificate
substantially in the form of Exhibit I annexed hereto;
(b) deliver to the Company and the Administrative Agent two
further copies of any such form or certification at least five
Business Days before the date that any such form or
certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent
form previously delivered by it to the Administrative Agent
and the Company;
(c) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the
Company or the Administrative Agent; and
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(d) file amendments to such forms as and when required; and each
Lender (or Transferee) that is incorporated or organized under
the laws of the United States of America or a State thereof
shall provide two properly completed and duly executed copies
of Form W-9, or successor applicable form, at the times
specified for delivery of forms under this Section 3.6.2
unless an event (including, without limitation, any change in
treaty, law or regulation) has occurred after the date such
Person becomes a Lender hereunder which renders all such forms
inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and
such Lender so advises the Company and the Administrative
Agent; provided, however, that the Company may rely upon such
forms provided to the Company for all periods prior to the
occurrence of such event. Each Person that shall become a
Lender or a Participant pursuant to Section 11.2 shall, upon
the effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements
required pursuant to this Section, provided that in the case
of such Participant, the obligations of such Participant
pursuant to this Section 3.6.2 shall be determined as if such
Participant were a Lender, except that such Participant shall
furnish all such required forms, certifications and statements
to the Lender from which the related participation shall have
been purchased.
3.6.3 Each Lender agrees to use reasonable efforts to avoid or to minimize
any amounts which might otherwise be payable pursuant to this Section 3.6,
provided that such effort shall not impose on any such Lender any additional
costs or legal or regulatory burdens deemed by such Lender in its reasonable
judgment to be material. In the event that any Lender determines that any event
or circumstance that will lead to a claim by it under this Section 3.6 has
occurred or will occur; such Lender will use its best efforts to so notify the
Company in writing, provided that any failure to provide such notice shall in no
way impair the rights of any Lender to demand and receive compensation under
this Section 3.6.
3.7 Substitution of Lender. If (a) the obligation of any Lender to make or
maintain Eurodollar Loans has been suspended pursuant to Section 3.3 when not
all Lenders' obligations have been suspended, (b) any Lender has demanded
compensation under Section 3.1 or 3.2 when all Lenders have not done so or (c)
any Lender is a Defaulting Lender, the Company shall have the right, if no
Default then exists, to replace such Lender (a "Replaced Lender") with one or
more other lenders (collectively, the "Replacement Lender") acceptable to the
Administrative Agent, provided that (i) at the time of any replacement pursuant
to this Section 3.7, the Replacement Lender shall enter into one or more
Assignments pursuant to which the Replacement Lender shall acquire the
Commitments and outstanding Loans and other obligations of the Replaced Lender
and, in connection therewith, shall pay to the Replaced Lender in respect
thereof an amount equal to the sum of (A) the amount of principal of, and all
accrued interest on, all outstanding Loans of the Replaced Lender, (B) the
amount of all accrued, but theretofore unpaid, fees owing to the Replaced Lender
hereunder and (C) the amount which would be payable by the Company to the
Replaced Lender pursuant to Section 3.4, if any, if the Company
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prepaid at the time of such replacement all of the Loans of such Replaced Lender
outstanding at such time and (ii) all obligations of the Company then owing to
the Replaced Lender (other than those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignments, the payment
of amounts referred to in clauses (i) and (ii) above and, if so requested by the
Replacement Lender, delivery to the Replacement Lender of the appropriate Note
or Notes executed by the Company, the Replacement Lender shall become a Lender
hereunder and the Replaced Lender shall cease to constitute a Lender hereunder.
The provisions of this Agreement (including without limitation Sections 3.4 and
9.7) shall continue to govern the rights and obligations of a Replaced Lender
with respect to any Loans made or any other actions taken by such lender while
it was a Lender. Nothing herein shall release any Defaulting Lender from any
obligation it may have to the Company, the Arranger, the Administrative Agent or
any other Lender.
ARTICLE IV
----------
CONDITIONS PRECEDENT
--------------------
4.1 Closing Date Conditions. The effectiveness of this Agreement is subject
to the satisfaction of the following conditions:
4.1.1 Corporate Documents. On the Closing Date, the Company shall furnish
to the Administrative Agent, with sufficient copies for the Lenders, each of the
following:
(a) Copies of the certificate of incorporation of the Company,
together with all amendments thereto, and a certificate of
good standing or similar governmental evidence of corporate
existence, all certified by the Secretary or an Assistant
Secretary of the Company.
(b) Copies, certified by the Secretary or an Assistant Secretary
or other duly authorized representative of the Company, of its
by-laws and of its Board of Directors' resolutions (and
resolutions of other bodies, if any are deemed necessary by
counsel for the Administrative Agent) authorizing the
execution of the Loan Documents.
(c) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of the Company, which shall identify by
name and title and bear the signature of the officers of the
Company authorized to sign the applicable Loan Documents and
to make borrowings hereunder, upon which certificate the
Administrative Agent and the Lenders shall be entitled to rely
until informed of any change in writing by the Company.
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(d) Such other documents as the Administrative Agent or its
counsel may have reasonably requested.
4.1.2 Financial Statements; Pro Forma Balance Sheet; Projections. On or
before the Closing Date, the Agent and the Lenders shall have received from the
Company (i) audited financial statements of the Company and its Subsidiaries for
its fiscal year ending September 30, 1998, consisting of a balance sheet and the
related consolidated statements of income, stockholders' equity and cash flows
for such fiscal year, (ii) a pro forma consolidated balance sheet of the Company
and its Subsidiaries as at December 31, 1998 as contained in the Confidential
Information Memorandum and as modified by the letter from the Company to S&P and
Moody's dated December 4, 1998 (the "Pro Forma Balance Sheet"), prepared in
accordance with Agreement Accounting Principles and reflecting the consummation
of the LucasVarity Acquisition, the Volvo Acquisition and the Euclid
Acquisition, the related financing and the other transactions contemplated by
the Loan Documents, which Pro Forma Balance Sheet shall be in form and substance
satisfactory to Lenders, and (iii) projections of the Company and its
Subsidiaries for the period from September 30, 1999 through September 30, 2001
as presented on November 30 and December 1, 1998 to S&P and Moody's and as
modified by the letter from the Company to such rating agencies dated December
4, 1998 (the "Projections"), prepared in accordance with Agreement Accounting
Principles and reflecting the consummation of the LucasVarity Acquisition, the
Volvo Acquisition and the Euclid Acquisition, the related financings and the
other transactions contemplated by the Loan Documents, which Projections shall
be in form and substance satisfactory to Lenders.
4.1.3 Fees. On the Closing Date, the Company shall have paid to the
Administrative Agent, for distribution (as appropriate) to the Arranger, the
Administrative Agent and the Lenders, the fees payable on the Closing Date
referred to in Section 2.4.
4.1.4 Opinion of Counsel to Company. On the Closing Date, Lenders shall have
received (a) written opinions of the general counsel of the Company and of
Chadbourne & Parke LLP, counsel to the Company, addressed to the Lenders and
dated the Closing Date, in substantially the forms of Exhibit F-1 and Exhibit
F-2 annexed hereto respectively, and (b) evidence satisfactory to the
Administrative Agent that the Company has requested such counsel to deliver such
opinions to Lenders.
4.1.5 Opinion of Counsel to Arranger and Administrative Agent. On the Closing
Date, Lenders shall have received a written opinion of O'Melveny & Myers LLP,
counsel to the Arranger and the Administrative Agent, addressed to the Lenders
and dated the Closing Date, in substantially the form of Exhibit G annexed
hereto.
4.1.6 Acquisition Documents. The Administrative Agent and, if requested by
any Lender, each such Lender shall have received a fully executed or conformed
copy of the LucasVarity Acquisition Agreement and all documentation relating
thereto in effect on the Closing Date. Each such agreement shall be in full
force and effect.
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4.1.7 Officer's Certificate. (a) The representations and warranties contained
in Article V shall be true and correct as of the Closing Date except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true and
correct on and as of such earlier date, (b) the Company shall have performed in
all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by the
Administrative Agent and Required Lenders, (c) no Default or Unmatured Default
shall have occurred and be continuing, and (d) the Company shall have delivered
to the Administrative Agent an Officer's Certificate, in form and substance
satisfactory to the Administrative Agent, to the effect set forth in clauses (a)
through (c) above.
4.1.8 Completion of Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by the
Administrative Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to the Administrative Agent and such counsel.
4.2 Conditions to Borrowing Date. The obligations of the Lenders to make
the Loans on the Borrowing Date are, in addition to the conditions precedent
specified in Section 4.1, subject to satisfaction of the following conditions:
(a) Use of Proceeds. On or before the Borrowing Date, the
Administrative Agent shall have received evidence satisfactory
to the Administrative Agent that the proceeds of the Loans
have been irrevocably committed to the payment of a portion of
the LucasVarity Acquisition Financing Requirements.
(b) No Amendment to Acquisition Documents. No provision of the
LucasVarity Acquisition Agreement or any of the documents
executed in connection therewith shall have been modified or
waived in any manner that is materially adverse to the Lenders
without the consent of the Administrative Agent and Required
Lenders.
(c) Existing Indebtedness. The Administrative Agent shall have
received an Officer's Certificate of the Company stating that,
after giving effect to the funding and application of the
Loans and the consummation of the LucasVarity Acquisition, all
Indebtedness of the Company and its Subsidiaries that is not
permitted under this Agreement shall have been paid in full,
redeemed or defeased, any commitments to lend thereunder shall
have terminated, all letters of credit shall have expired or
been canceled and all Liens other than Liens permitted to
remain outstanding pursuant to Section 6.14 shall have been
released or terminated.
(d) Necessary Governmental Authorizations and Consents; Expiration
of Waiting Periods, Etc. Company shall have obtained all
Governmental Authorizations and
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all consents of other Persons, in each case that are necessary
or advisable in connection with the LucasVarity Acquisition,
the other transactions contemplated by the Loan Documents, and
the continued operation of the business conducted by the
Acquired Division in substantially the same manner as
conducted prior to the consummation of the LucasVarity
Acquisition, and each of the foregoing shall be in full force
and effect, in each case other than those the failure to
obtain or maintain which, either individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. All applicable waiting periods shall have
expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise
impose adverse conditions on the LucasVarity Acquisition or
the financing thereof No action, request for stay, petition
for review or rehearing, reconsideration, or appeal with
respect to any of the foregoing shall be pending, and the time
for any applicable agency to take action to set aside its
consent on its own motion shall have expired.
(e) Consummation of Acquisition.
(i) All conditions to the LucasVarity Acquisition set
forth in the LucasVarity Acquisition Agreement shall
have been satisfied or the fulfillment of any such
conditions shall have been waived with the consent of
Administrative Agent and Required Lenders, except for
such conditions the waiver of or failure to satisfy
which are not materially adverse to the Lenders;
(ii) The aggregate cash consideration paid to Seller in
connection with the LucasVarity Acquisition shall not
exceed $400,000,000 (excluding post-closing working
capital adjustments not to exceed $20,000,000); and
(iii) The Administrative Agent shall have received an
Officer's Certificate of the Company to the effect
set forth in clauses (i) and (ii) above and stating
that (x) the LucasVarity Acquisition Agreement has
not been amended, modified or otherwise supplemented
since the Closing Date in any manner which is
materially adverse to the Lenders (other than with
the consent of the Administrative Agent and the
Required Lenders) and (y) the Company will consummate
the LucasVarity Acquisition on the Borrowing Date
immediately upon the making of the Loans.
(f) Officer's Certificate. (i) The representations and warranties
contained in Article V shall be true and correct as of the
Borrowing Date except to the extent any such representation or
warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and
correct on and as of such earlier date, (ii) the Company shall
have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before the Borrowing
Date except as otherwise
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disclosed to and agreed to in writing by the Administrative
Agent and Required Lenders, (iii) no Default or Unmatured
Default shall have occurred and be continuing, and (iv) the
Company shall have delivered to the Administrative Agent an
Officer's Certificate, in form and substance satisfactory to
the Administrative Agent, to the effect set forth in clauses
(i) through (iii) above.
(g) Legal Matters. All legal matters incident to the making of
such Loans shall be satisfactory to the Administrative Agent
and its counsel, and no injunction or other restraining order
shall have been issued.
The Borrowing Notice with respect to the borrowing by the
Company hereunder shall constitute a representation and warranty by the Company
that the conditions contained in Sections 4.1 and 4.2 have been satisfied.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Lenders on the
Closing Date and on the Borrowing Date that:
5.1 Corporate Existence and Standing. Each of the Company and its
Subsidiaries is a corporation, partnership, limited liability company or other
organization, duly organized and validly existing under the laws of its
jurisdiction of organization and has all requisite corporate, partnership,
company or similar authority to conduct its business as presently conducted.
5.2 Authorization and Validity. The Company has the corporate power and
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Company of
the Loan Documents and the performance of its obligations thereunder have been
duly authorized by proper corporate proceedings, and the Loan Documents to which
it is a party constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by equitable
principles affecting the availability of specific performance and other
remedies.
5.3 No Conflict; Government Consent. Neither the execution and delivery by
the Company of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Company or any of its Subsidiaries or the Company's or any
Subsidiary's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Company or any of its
Subsidiaries is a party or is subject, or by which it, or its Property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than any Lien permitted by
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Section 6.14) in, of or on the Property of the Company or a Subsidiary pursuant
to the terms of any such indenture, instrument or agreement, except for any such
violation, conflict or default as would not reasonably be expected to have a
Material Adverse Effect. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents.
5.4 Financial Statements. The September 30, 1998 consolidated financial
statements of the Company and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Company and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended. The Pro Forma Balance Sheet fairly presents the pro
forma consolidated financial condition of the Company and its Subsidiaries after
giving effect to the LucasVarity Acquisition, the Volvo Acquisition and the
Euclid Acquisition and the financings contemplated by this Agreement in
accordance with generally accepted accounting principles and was prepared in
accordance with the applicable requirements of Rule 11-2 of the Securities and
Exchange Commission's Regulation S-X, including without limitation containing
reasonable assumptions and giving appropriate effect to those assumptions. The
Projections are based on estimates and assumptions considered reasonable by the
Company's management and the best information available to the Company's
management at the time made, and use information consistent with the plans of
the Company. However, the Projections are inherently subject to significant
business, economic and competitive uncertainties and contingencies, all of which
are difficult to predict and many of which are beyond the control of the
Company. Accordingly, there can be no assurance that the projected results will
be realized or that actual results will not be significantly lower or higher
than those projected.
5.5 Material Adverse Change. As of the Closing Date and the Borrowing Date,
since September 30, 1998, there has been no change in the business, Property,
prospects, condition (financial or otherwise) or results of operations of the
Acquired Division or of the Company and its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect.
5.6 Taxes. The Company and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes shown as due pursuant to said returns or pursuant to any
assessment received by the Company or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided in accordance with Agreement Accounting Principles
and as to which no Lien (other than as permitted by Section 6.14) exists and
such failures to file or pay, if any, as would not reasonably be expected to
have a Material Adverse Effect. No tax liens have been filed and no claims are
being asserted with respect to any such taxes, other than as
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permitted by Section 6.14. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of any taxes or other governmental
charges are adequate.
5.7 Litigation and Contingent Obligations. Except as set forth on Schedule
5.7 annexed hereto, there is no litigation, arbitration or proceeding pending
or, to the knowledge of any of their executive officers, any governmental
investigation or inquiry pending or any litigation, arbitration, governmental
investigation, proceeding or inquiry threatened against or affecting the Company
or any of its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect or which seeks to prevent, enjoin or delay the making of the
Loans. Other than any liability incident to such litigation, arbitration or
proceedings, the Company and its Subsidiaries have no material contingent
obligations not provided for or disclosed in the financial statements referred
to in Section 5.4.
5.8 Subsidiaries. Schedule 5.8 annexed hereto contains an accurate list of
all Subsidiaries of the Company as of the date of this Agreement (giving effect
to the LucasVarity Acquisition as if it occurred on the date hereof), setting
forth their respective jurisdictions of incorporation and the percentage of
their respective capital stock owned by the Company or other Subsidiaries. All
of the issued and outstanding shares of capital stock of such Subsidiaries held
by the Company have been duly authorized and issued and are fully paid and
non-assessable.
5.9 ERISA. Each member of the Controlled Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan. Each member of the Controlled Group is in compliance with
the applicable provisions of ERISA and the Code with respect to each Plan except
where such non compliance would not have a Material Adverse Effect. Each Plan
complies in all material respects with all applicable requirements of law and
regulations, no Reportable Event which has or may result in any material
liability has occurred with respect to any Plan, and no steps have been taken to
reorganize or terminate any Single Employer Plan. No member of the Controlled
Group has (i) sought a waiver of the minimum funding standard under Section 412
of the Code in respect of any Plan, (ii) failed to make any contribution or
payment to any Single Employer Plan or Multiemployer Plan, or made any amendment
to any Plan, which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security under ERISA or the Code or (iii)
incurred any material, actual liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
5.10 Accuracy of Information. No information, exhibit or report furnished by
the Company or any of its Subsidiaries in writing to the Administrative Agent or
to any Lender in connection with the negotiation of the Loan Documents contained
any material misstatement of fact or omitted to state a material fact or any
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which made, as of the date thereof.
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5.11 Regulation U. Margin Stock constitutes less than 25% of those assets of
the Company and its Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder.
5.12 Material Agreements. Neither the Company nor any Subsidiary is a party
to any agreement or instrument or subject to any charter or other corporate
restriction which could reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement to which it is a party (including any agreement or
instrument evidencing or governing Indebtedness), which default could reasonably
be expected to have a Material Adverse Effect.
5.13 Compliance With Laws. The Company and its Subsidiaries have complied
with all applicable statutes, rules, regulations, orders and restrictions of any
domestic or foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective Property if failure to comply could reasonably be expected to
have a Material Adverse Effect.
5.14 Plan Assets; Prohibited Transactions. The Company and its Subsidiaries
have not engaged in any prohibited transaction within the meaning of Section
4.06 of ERISA or Section 4975 of the Code which could result in any material
liability; and neither the execution of this Agreement nor the making of Loans
(assuming that the Lenders do not fund any of the Loans with any "plan assets"
as defined above) hereunder give rise to a non-exempt prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code.
5.15 Environmental Matters. In the ordinary course of its business, the
officers of the Company consider the effect of Environmental Laws on the
business of the Company and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Company
and its Subsidiaries due to Environmental Laws. On the basis of this
consideration, the Company has reasonably concluded that Environmental Laws
cannot reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable Environmental Laws or are the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.16 Investment Company Act. The Company is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
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5.17 Public Utility Holding Company Act. The Company is not a "holding
company" or a "subsidiary company" of a "holding company, or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
5.18 Related Agreements.
(a) The Company has delivered to the Administrative Agent and
complete and correct copies of the LucasVarity Acquisition
Agreement and of all exhibits and schedules thereto other than
copies of any amendments or supplements thereto since the
Closing Date that are not material, in which case the Company
agrees to deliver a correct and complete copy thereof to the
Administrative Agent within 10 days of the Borrowing Date.
(b) Except to the extent otherwise set forth herein or in the
schedules hereto, to the best of the Company's knowledge, each
of the material representations and warranties given by Seller
to the Company in the LucasVarity Acquisition Agreement is
true and correct in all material respects as of the date
hereof (or as of any earlier date to which such representation
and warranty specifically relates) and will be true and
correct in all material respects as of the Closing Date and
the Borrowing Date (or as of such earlier date, as the case
may be), in each case subject to the qualifications set forth
in the schedules to the LucasVarity Acquisition Agreement.
(c) Subject to the qualifications set forth therein, each of the
representations and warranties given by the Company to Seller
in the LucasVarity Acquisition Agreement is true and correct
in all material respects as of the date hereof and will be
true and correct in all material respects as of the Closing
Date and the Borrowing Date.
5.19 Year 2000 Compliance. The Company and its Subsidiaries have (i) engaged
in a process of assessment of the existence of the Year 2000 Problems reasonably
appropriate to the scope and complexity of their respective Systems; (ii)
adopted and are successfully implementing a plan of correction ("Plan of
Correction") which the Company reasonably believes will result in a substantial
elimination of Year 2000 Problems before any processing failure of a System or
of Systems due to Year 2000 Problems which might have a material affect on the
business, operations or financial performance of the Company and, in the case of
all Systems critical to the business or operations of the Company and its
Subsidiaries (whether now owned or hereafter acquired), elimination in all
material respects of Year 2000 Problems before any processing failure of a
System or of Systems due to Year 2000 Problems which might have a material
affect on the business, operations or financial performance of the Company;
(iii) adopted and are successfully implementing validation procedures reasonably
calculated to test on an ongoing basis the sufficiency of the Plan of
Correction, its implementation, and the correction of Year
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2000 Problems in any System; (iv) adopted and are successfully implementing
policies and procedures requiring regular reports to, and monitoring by, senior
management of the Company concerning the foregoing matters; and (v) provided the
Administrative Agent true and correct copies of the written Plan of Correction
and related implementation budgets, reviewed by the Company's Board of
Directors.
ARTICLE VI
----------
COVENANTS
---------
During the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:
6.1 Financial Reporting. The Company will maintain, for itself and each
Subsidiary, a system of accounting enabling it to provide financial statements
for the Company and each Subsidiary in accordance with Agreement Accounting
Principles and furnish to the Lenders:
(i) Within 120 days after the close of each of its fiscal years,
an unqualified (except for qualifications relating to changes
in accounting principles or practices reflecting changes in
generally accepted accounting principles and required or
approved by the Company's independent certified public
accountants) audit report certified by nationally recognized
independent certified public accountants certifying that the
Company's consolidated financial statements are fairly stated
in all material respects, in accordance with Agreement
Accounting Principles for itself and the Subsidiaries,
including balance sheets as of the end of such period, related
income statements, and statements of cash flows, accompanied
by a certificate of said accountants that, in the course of
their examination necessary for their certification of the
foregoing, they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such accountants,
any Default or Unmatured Default shall exist, stating the
nature and status thereof.
(ii) Within 60 days after the close of each of the first three
quarterly periods of each of its fiscal years, for itself and
its Subsidiaries, a consolidated unaudited balance sheet as at
the close of each such period and a related income statement
and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter, all
certified by a Designated Financial Officer of the Company.
(iii) Together with the financial statements required under Sections
6.1(i) and (ii), a compliance certificate in substantially the
form of Exhibit E annexed hereto signed by a Designated
Financial Officer of the Company showing the calculations
necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and
status thereof. The Company may, at its
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option, satisfy its obligations to deliver financial
statements under Sections 6.1(i) and (ii) hereof by delivery
of its Form 10-K and 10-Q, respectively, for any relevant
fiscal year or quarterly period, as filed by the Company with
the Securities and Exchange Commission.
(iv) As soon as possible and in any event within 10 days after (x)
receipt by the Company, and (y) a determination is made by the
Company concerning a Material Adverse Effect with respect
thereto, a copy of (a) any notice or claim to the effect that
the Company or any of its Subsidiaries is or may be liable to
any Person as a result of the release by the Company, any of
its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, (b) any
notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by the
Company or any of its Subsidiaries, and (c) any notice of
occurrence of any Reportable Event, which, in each case, could
reasonably be expected to have a Material Adverse Effect.
(v) Promptly upon the furnishing thereof to the shareholders of
the Company, copies of all financial statements, reports and
proxy statements so furnished.
(vi) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other reports
which the Company or any of its Subsidiaries files with the
Securities and Exchange Commission, including without
limitation all reports on Form 10-K, l0-Q and 8-K, and which
are not otherwise delivered to the Lenders hereunder.
(vii) Such other information (including non-financial information)
concerning the Company and its Subsidiaries as the
Administrative Agent or any Lender may from time to time
reasonably request.
6.2 Use of Proceeds. The Company will use the proceeds of the Loans to fund
a portion of the LucasVarity Acquisition Financing Requirements. None of the
proceeds of any of the Loans made under this Agreement will be used, whether
directly or indirectly, in violation of any applicable law or regulation,
including without limitation Regulation T, Regulation U or Regulation X.
6.3 Notice of Default. The Company will give prompt notice in writing to
the Administrative Agent of the occurrence of any Default or Unmatured Default.
6.4 Conduct of Business. The Company will, and will cause each Subsidiary
to, carry on and conduct its business in substantially the same fields of
enterprise as it is presently conducted and to do all things necessary to remain
duly incorporated, validly existing and in good standing in its jurisdiction of
organization (subject to Sections 6.11, 6.12 and 6.13) and maintain all
requisite
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authority to conduct its business in each jurisdiction in which its business is
conducted, except in any such case where such failure would not reasonably be
expected to have a Material Adverse Effect.
6.5 Taxes. The Company will, and will cause each Subsidiary to, timely file
complete and correct United States federal and applicable foreign, state and
local tax returns required by law and pay when due all taxes, assessments and
governmental charges and levies upon it or its income, profits or Property,
except those which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside in accordance
with Agreement Accounting Principles and those which the failure to file or pay
would not reasonably be expected to have a Material Adverse Effect.
6.6 Insurance. The Company will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
their Property in such amounts (with such customary deductibles, exclusions and
self insurance) and covering such risks as management of the Company reasonably
considers consistent with sound business practice, and the Company will furnish
to any Lender upon request such information as to the insurance carried as may
be reasonably requested by the Administrative Agent on behalf of such Lender.
6.7 Compliance with Laws. The Company will, and will cause each Subsidiary
to, comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject except for such
noncompliance as would not reasonably be expected to have a Material Adverse
Effect.
6.8 Maintenance of Properties. The Company will, and will cause each
Subsidiary to, do all things reasonably necessary to maintain, preserve, protect
and keep its material Property in good repair, working order and condition
(ordinary wear and tear excepted), and make all reasonably necessary and proper
repairs, renewals and replacements.
6.9 Inspection. The Company will, and will cause each Subsidiary to, permit
the Administrative Agent, by its representatives and agents, and any reasonable
number of representatives of the Lenders, to inspect (at no cost to the Company)
any of the Property, corporate books and financial records of the Company and
each Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Company and each Subsidiary, and to discuss the
affairs, finances and accounts of the Company and each Subsidiary with, and to
be advised as to the same by, their respective officers at such reasonable times
and intervals as the Administrative Agent may designate.
6.10 Subsidiary Indebtedness. The Company will not permit any Subsidiary
to create, incur or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to the Existing Credit
Agreement.
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(ii) Indebtedness existing as of the Closing Date in an outstanding
aggregate principal amount not to exceed $50,000,000.
(iii) Indebtedness of any Subsidiary to the Company or any other
Subsidiary.
(iv) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that such Indebtedness existed at the
time such Person becomes a Subsidiary and is not created in
contemplation of or in connection with such Person becoming a
Subsidiary.
(v) Any refunding or refinancing of any Indebtedness referred to
in clauses (i) through (iv) above, provided that any such
refunding or refinancing of Indebtedness referred to in clause
(ii) or (iv) does not increase the principal amount thereof.
(vi) Other Indebtedness; provided that, at the time of the
creation, incurrence or assumption of such other Indebtedness
and after giving effect thereto, the aggregate amount of all
such other Indebtedness of the Subsidiaries does not exceed an
amount equal to 50% of Net Worth at such time.
6.11 Merger. The Company will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that, provided that
no Default or Unmatured Default shall have occurred and be continuing or would
result therefrom on a pro forma basis reasonably acceptable to the
Administrative Agent, the Company may merge or consolidate with any other U.S.
corporation and each Subsidiary may merge or consolidate with any other Person,
provided, further, that in the case of any such merger or consolidation
involving the Company, the Company is the surviving corporation.
6.12 Sale of Assets. The Company will not, nor will it permit any Subsidiary
to, lease, sell or otherwise dispose of its Property, to any other Person (other
than the Company or a Wholly-Owned Subsidiary), except:
(i) Sales of inventory, marketable securities and cash equivalents
in the ordinary course of business and sales or other
dispositions of Margin Stock at any time.
(ii) Sales or other dispositions of accounts receivable payable
within 90 days of the date of sale.
(iii) Sales, leases or other dispositions of obsolete Property or
Property no longer used or useful in the business of the
Company or its Subsidiaries.
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(iv) Sales or other dispositions of Property that is replaced
within eighteen months of such sale or other disposition with
other Property which has a fair market value not materially
less than the Property sold or otherwise disposed of.
(v) Sales or other dispositions of motor vehicles, office or other
equipment in the ordinary course of business and not material
in aggregate amount.
(vi) Sales of financial instruments of the Company and its
Subsidiaries existing as of the Closing Date that do not in
the aggregate have a value in excess of $30,000,000.
(vii) Other leases, sales or other dispositions of its Property
that, together with all other Property of the Company and its
Subsidiaries previously leased, sold or disposed of (other
than as provided in clauses (i) through (vi) above) as
permitted by this Section during the twelve-month period
ending with the month prior to the month in which any such
lease, sale or other disposition occurs, do not constitute a
Substantial Portion of the Property of the Company and its
Subsidiaries.
6.13 Investments and Acquisitions. The Company will not, nor will it permit
any Subsidiary to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries which
are not Wholly-Owned Subsidiaries), or commitments therefor, or make any
Acquisition of any Person, if (i) after giving effect to such Investment or
Acquisition, on a pro forma basis (after giving effect to the LucasVarity
Acquisition, the Volvo Acquisition and the Euclid Acquisition) (a) any Default
or Unmatured Default shall have occurred and be continuing or (b) more than 30%
of the projected consolidated net income of the Company and its Subsidiaries
(determined in accordance with Agreement Accounting Principles) for the
twelve-month period following such Investment or Acquisition will be derived
from fields of enterprise which are not substantially the same as those
conducted by the Company and its Subsidiaries as of the Closing Date, or (ii)
the value of any consideration (other than equity securities of the Company) to
be paid by the Company and its Subsidiaries in connection with any such
Investment (other than Investments of the types described in clauses (ii)
through (iv) of the definition thereof) or Acquisition (other than the
LucasVarity Acquisition, the Volvo Acquisition and the Euclid Acquisition),
together with the aggregate value of the consideration (other than equity
securities of the Company) paid or to be paid by the Company and its
Subsidiaries in connection with all Acquisitions and all such Investments after
the Closing Date (other than the LucasVarity Acquisition, the Volvo Acquisition
and the Euclid Acquisition), would exceed $200,000,000, or (iii) after giving
effect to such Investment or Acquisition, on a pro forma basis the Company and
its Subsidiaries would not be in compliance with the covenants contained in
Sections 6.17 and 6.18; provided, however, that nothing in this Section 6.13
shall be construed to prohibit the LucasVarity Acquisition, the Volvo
Acquisition or the Euclid Acquisition.
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6.14 Liens. The Company will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Company or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with Agreement
Accounting Principles shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 90 days past due or which are being
contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its
books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the marketability of the same or interfere with the use
thereof in the business of the Company or the Subsidiaries.
(v) Liens existing on the Closing Date on assets of Subsidiaries
of the Company, provided that no increase in the principal
amount secured thereby shall be permitted.
(vi) Liens in favor of the Company or any Lien granted by any
Subsidiary of the Company in favor of a Wholly-Owned
Subsidiary of the Company.
(vii) Liens existing on such Property at the time of its acquisition
(directly or indirectly) (other than any such Lien created in
contemplation of such acquisition).
(viii) Liens on the Property of a Person that is merged with or into
the Company or a Subsidiary or of a Person that becomes a
Subsidiary after the Closing Date (in each case to the extent
such merger, Acquisition or Investment is otherwise permitted
by this Agreement), provided that (A) such Liens existed at
the time such Person was so merged or became a Subsidiary and
were not created in anticipation of any such transaction, (B)
any such Lien does not by its terms cover
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any additional property or assets acquired after the time such
Person was so merged or became a Subsidiary, and (C) any such
Lien does not by its terms secure any Indebtedness other than
Indebtedness existing immediately prior to the time such
Person was so merged or became a Subsidiary.
(ix) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of defeasing
Indebtedness of the Company or any Subsidiary.
(x) Bank setoff rights arising in the ordinary course of business.
(xi) Deposits or Liens to secure the performance (and not securing
any Indebtedness) of statutory obligations, surety and appeal
bonds, performance bonds and other obligations of like nature
incurred in the ordinary course of business.
(xii) Judgment or other similar Liens arising in connection with
legal proceedings so long as the execution or other
enforcement thereof is effectively stayed and the claims
secured thereby are being contested in good faith by
appropriate proceedings and the Company or such Subsidiary, as
the case may be, has established appropriate reserves against
such claims in accordance with Agreement Accounting
Principles.
(xiii) Any interest or title of a lessor in the property subject to
any Capitalized Lease Obligation (to the extent such
Capitalized Lease Obligation is otherwise permitted by this
Agreement) or operating lease.
(xiv) Liens arising under the Existing Credit Agreement as in effect
on the Closing Date.
(xv) Liens arising in connection with sales or other dispositions
of accounts receivable permitted by Section 6.12(ii).
(xvi) Any extension, renewal or replacement (or successive
extension, renewal, or replacement) in whole or in part, of
any Lien referred to in the foregoing clauses (i) through (xv)
inclusive; provided, however, that the principal amount of
Indebtedness secured thereby shall not exceed the principal
amount of Indebtedness so secured at the time of such
extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or a part of
the property which secured the Lien so extended, renewed or
replaced (plus improvements on such property).
(xvii) Liens securing Indebtedness which are not otherwise permitted
by the foregoing clauses of this Section 6.14, provided that
the aggregate outstanding principal
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amount of the Indebtedness secured by all such Liens shall not
exceed 50% of Net Worth.
Notwithstanding the foregoing, the restrictions set forth in this Section 6.14
shall not apply to Margin Stock if and to the extent that the value of the
Margin Stock with respect to which the rights of the Company and its
Subsidiaries are restricted by this Section 6.14 would otherwise exceed 25% of
the value of all assets with respect to which the rights of the Company and its
Subsidiaries are restricted by this Section 6.14.
6.15 Affiliates. The Company will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate except in the ordinary course of business and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms (taken as a whole) no less favorable to the Company or
such Subsidiary than the Company or such Subsidiary would obtain in a comparable
arm's-length transaction.
6.16 Contingent Obligations. The Company will not, nor will it permit any
Subsidiary to, make or suffer to exist any Contingent Obligation (including,
without limitation, any Contingent Obligation with respect to the obligations of
a Subsidiary) in respect of any Indebtedness, except (i) by endorsement of
instruments for deposit or collection in the ordinary course of business; (ii)
Contingent Obligations of any Subsidiary with respect to Indebtedness of another
Subsidiary or the Company and Contingent Obligations of the Company with respect
to Indebtedness of a Subsidiary; (iii) Contingent Obligations of the Company
under Article IX of the Existing Credit Agreement; (iv) Contingent Obligations
existing on the Closing Date; (v) Contingent Obligations with respect to
Facility Letters of Credit (as defined in the Existing Credit Agreement); (vi)
Contingent Obligations under Rate Hedging Agreements; (vii) Contingent
Obligations with respect to customary indemnifications and purchase price
adjustment obligations incurred in connection with mergers, Acquisitions,
Investments and sales of assets (in each case to the extent such merger,
Acquisition, Investment or sale of assets is otherwise permitted by this
Agreement); (viii) Contingent Obligations with respect to Indebtedness permitted
by Section 6.10; (ix) Contingent Obligations with respect to customary product
and service warranties; (x) Contingent Obligations with respect to director's,
officer's and other indemnities set forth in the Company's or any of its
Subsidiary's organizational documents as in effect from time to time; and (xi)
other Contingent Obligations, provided that the Indebtedness and other
liabilities guaranteed or supported thereby does not exceed in the aggregate for
the Company and all of its Subsidiaries an amount equal to 50% of Net Worth.
6.17 Debt Ratio. The Company shall not permit its Debt Ratio, calculated on
a consolidated basis for the Company and its Subsidiaries, to exceed 3.0 to 1.0
on the last day of any fiscal quarter.
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6.18 Net Worth. The Company shall maintain, on the last day of each month
after the Closing Date, a Net Worth at least equal to $150,000,000.
6.19 Year 2000 Compliance. The Company shall (i) promptly advise the
Administrative Agent of any material (A) disruption or delay in the
implementation of the Plan of Correction, as the same may be updated from time
to time, including any determination by the Company, any senior manager of the
Company or any Subsidiary of the Company, or any consultant to the Company or
any such Subsidiary with respect to Year 2000 Problems ("Consultant") that there
may be a failure to achieve any of the objectives specifically identified in
subdivision (ii) of Section 5.19, or (B) change in the written Plan of
Correction or related implementation budget referred to in subdivision (v) of
Section 5.19, or any later version thereof furnished to the Administrative
Agent; (ii) afford to the Administrative Agent and its representatives
reasonable access to the Company's and its Subsidiaries' properties, personnel,
service providers, vendors and records for the purpose of enabling the
Administrative Agent to assess the adequacy of, and the record of performance of
the Company and its Subsidiaries with respect to, the Plan of Correction,
related financial performance and conformity of actual performance with related
implementation budgets; (iii) periodically report to the Administrative Agent,
in such form as the Administrative Agent may reasonably request, on the progress
of the Company and its Subsidiaries in implementing the Plan of Correction; the
budget for, and actual financial performance with respect to, implementation of
the Plan of Correction; the assessment of the Company, any senior manager of the
Company or any Subsidiary, or any Consultant of the adequacy of the Plan of
Correction or the related implementation budget.
ARTICLE VII
-----------
DEFAULTS
--------
The occurrence of any one or more of the following events
shall constitute a Default:
7.1 Any representation or warranty made or deemed made by or on behalf of
the Company or its Subsidiaries to the Lenders or the Administrative Agent in
any Loan Document, in connection with any Loan, or in any certificate or
information delivered in writing in connection with any Loan Document shall be
false in any material respect on the date as of which made.
7.2 Nonpayment of principal of any Loan when due, or nonpayment of interest
on any Loan within three Business Days after the same becomes due, or nonpayment
of any other obligations under any of the Loan Documents within ten days after
the same becomes due.
7.3 The breach by the Company of any of the terms or provisions of Section
6.3, 6.10, 6.11, 6.12, 6.13, 6.15, 6.16, 6.17 or 6.18.
7.4 The breach by the Company (other than a breach which constitutes a
Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement or any other Loan
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Document which is not remedied within 30 days after written notice from the
Administrative Agent.
7.5 Failure of the Company or any of its Subsidiaries to pay when due any
Indebtedness or Rate Hedging Obligations aggregating in excess of $20,000,000
("Material Indebtedness") or the default by the Company or any of its
Subsidiaries in the performance of any term, provision or condition (other than
such a term, provision or condition to or for the benefit of a Lender or
Affiliate thereof restricting the sale, pledge or other disposition by the
Company or any Subsidiary of Margin Stock having a value in excess of 25% of the
value of the assets referred to in clause(2)(i) of the definition of "Indirectly
Secured" in Section 221.2 of Regulation U unless the Board of Governors of the
Federal Reserve System or its staff advises the Administrative Agent in writing
that the existence of this Section 7.5 without this parenthetical exception
would not in such circumstances render this Agreement "secured directly or
indirectly by margin stock" within the meaning of its Regulation U) contained in
any agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect of which
is to cause, or to permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its stated maturity; or
any Material Indebtedness of the Company or any of its Subsidiaries shall be
declared to be due and payable or required to be prepaid or repurchased (other
than by a regularly scheduled payment) prior to the stated maturity thereof; or
the Company or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.
7.6 The Company or any of its Significant Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in
good faith any appointment or proceeding described in Section 7.7.
7.7 Without its application, approval or consent, a receiver, trustee,
examiner, liquidator or similar official shall be appointed for the Company or
any of its Significant Subsidiaries, or any Substantial Portion of their
respective Property, or a proceeding described in Section 7.6(iv) shall be
instituted against the Company or any of its Significant Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.
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7.8 Any court, government or governmental agency shall without appropriate
compensation condemn, seize or otherwise appropriate, or take custody or control
of (each a "Condemnation"), all or any portion of the Property of the Company
and its Subsidiaries which, when taken together with all other Property of the
Company and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month in
which any such Condemnation occurs, constitutes a Substantial Portion and is
reasonably likely to have a Material Adverse Effect.
7.9 The Company or any of its Subsidiaries shall fail within 90 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $20,000,000, which is not stayed on appeal.
7.10 Any member of the Controlled Group shall fail to pay when due an amount
or amounts aggregating in excess of $20,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a Single
Employer Plan with Unfunded Liabilities in excess of $20,000,000 (a "Material
Plan") shall be filed under Section 4041(c) of ERISA by any member of the
Controlled Group, any plan administrator or any combination of the foregoing; or
PBGC shall institute proceedings under which it is likely to prevail under Title
IV of ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial withdrawal from,
or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
to, one or more Multiemployer Plans which causes one or more members of the
Controlled Group to incur a current payment obligation in excess of $20,000,000.
7.11 The Company or any of its Subsidiaries shall be the subject of any
proceeding or investigation pertaining to the release by the Company or any of
its Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any federal, state or local
environmental, health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
7.12 The occurrence of any Change in Control.
7.13 The Company shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability under
any Loan Document to which it is a party.
7.14 The LucasVarity Acquisition shall not be consummated in accordance with
this Agreement and the LucasVarity Acquisition Agreement as in effect on the
Borrowing Date (with such amendments, supplements or other modifications thereto
as are permitted hereunder) concurrently with the making of the Loans.
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ARTICLE VIII
------------
ACCELERATION WAIVERS, AMENDMENTS AND REMEDIES
---------------------------------------------
8.1 Acceleration.
(a) If any Default described in Section 7.6 or 7.7 occurs, the
obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately
become due and payable without presentment, demand, protest or
notice of any kind, all of which the Company hereby expressly
waives and without any election or action on the part of the
Administrative or any Lender.
(b) If any Default occurs and is continuing (other than a Default
described in Section 7.6 or 7.7), the Required Lenders may
terminate or suspend the obligations of the Lenders to make
Loans, or declare the Obligations to be due and payable, or
both, whereupon (if so declared) the Obligations shall become
immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which the Company hereby
expressly waives.
8.2 Amendments.
8.2.1 Subject to the provisions of this Article VIII, the Required Lenders
(or the Administrative Agent with the consent in writing of the Required
Lenders) and the Company may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Company hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
(a) Extend the final maturity of any Loan or Note or forgive all
or any portion of the principal amount thereof, or reduce the
rate or extend the time of payment of interest or fees
thereon.
(b) Reduce the percentage specified in the definition of Required
Lenders.
(c) Extend the Maturity Date, or reduce the amount or extend the
payment date for, the mandatory payments required under
Section 2.5, or increase the amount of the Commitment of any
Lender hereunder, or permit the Company to assign its rights
under this Agreement.
(d) Amend this Section 8.2.1.
8.2.2 No amendment of any provision of this Agreement relating to the
Arranger or the Administrative Agent shall be effective without the written
consent of the Arranger or the
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Administrative Agent, respectively. The Administrative Agent may waive payment
of the fee required under Section 11.3.2 without obtaining the consent of any
other party to this Agreement.
8.3 Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Company to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
----------
GENERAL PROVISIONS
------------------
9.1 Survival of Representations. All representations and warranties of the
Company contained in this Agreement shall survive delivery of the Loan Documents
and the making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Company in violation of any limitation or prohibition provided by any applicable
statute or regulation.
9.3 Taxes. Any taxes (excluding income taxes and franchise taxes (imposed
in lieu of income taxes) imposed on the Administrative Agent or any Lender as a
result of a present or former connection between the Administrative Agent or
such Lender and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document)) or other similar
assessments or charges made by any governmental or revenue authority in respect
of the Loan Documents shall be paid by the Company, together with interest and
penalties, if any.
9.4 Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Company, the Administrative Agent and the Lenders and
supersede all prior
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agreements and understandings among the Company, the Administrative Agent and
the Lenders relating to the subject matter thereof other than any fee letters
among the Company and the Arranger and the Administrative Agent and any other
agreements of any of the Company with the Arranger or the Administrative Agent
which survive the execution of the Loan Documents.
9.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Arranger or the Administrative Agent is authorized to act as such). The failure
of any Lender to perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification. The Company shall reimburse each Agent for
any reasonable costs and out-of-pocket expenses (including reasonable fees and
time charges of attorneys for such Agent, which attorneys may be employees of
such Agent) paid or incurred by such Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification and
administration of the Loan Documents, except as otherwise agreed in writing from
time to time. The Company also agrees to reimburse the Administrative Agent and
the Lenders for any reasonable costs, and out-of-pocket expenses (including
reasonable fees and time charges of attorneys for the Administrative Agent and
the Lenders, which attorneys may be employees of the Administrative Agent or the
Lenders) paid or incurred by the Arranger, the Administrative Agent or any
Lender in connection with the collection and enforcement of the Loan Documents
subject to the limitations set forth below. The Company further agrees to
indemnify each of the Arranger and the Administrative Agent and each Lender, and
their respective directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Arranger, the Administrative Agent or any Lender is a party thereto) which
any of them may pay or incur arising out of or relating to this Agreement, the
other Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Loan subject
to the limitations set forth below, provided that the Company shall have no
obligation to indemnify any person in respect of any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings except as (and to the extent) provided in Section 3.6 and Section
9.3 hereof. The Company shall have no obligation to indemnify any Agent or
Lender (or their respective directors, officers and employees) to the extent
that any losses, claims, damages, penalties, judgments, liabilities and expenses
are determined by a court of competent jurisdiction in a final, non-appealable
order to have resulted from the gross negligence or willful misconduct of, or
violation of applicable laws or any of the Loan Documents by, any such Person.
The obligations of the Company under this Section shall survive the termination
of this Agreement.
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9.8 Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the appropriate Agent with sufficient
counterparts so that each Agent may furnish one to each of the Lenders.
9.9 Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles.
9.10 Severability of Provisions. Any provision in any Loan Document that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
9.11 Non-liability of Lenders. The relationship between the Company and the
Lenders and the Administrative Agent shall be solely that of borrower and
lender. None of the Arranger, the Administrative Agent nor any Lender shall have
any fiduciary responsibilities to the Company. None of the Arranger, the
Administrative Agent nor any Lender undertakes any responsibility to the Company
to review or inform the Company of any matter in connection with any phase of
the Company's business or operations. The Company agrees that none of the
Arranger, the Administrative Agent nor any Lender shall have liability to the
Company (whether sounding in tort, contract or otherwise) for losses suffered by
the Company in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined by a court of competent jurisdiction in a final and
non-appealable order that such losses resulted from the gross negligence or
willful misconduct of, or violation of applicable laws or any of the Loan
Documents by, the party from which recovery is sought. None of the Arranger, the
Administrative Agent nor any Lender shall have any liability with respect to,
and the Company hereby waives, releases and agrees not to sue for, any special,
indirect or consequential damages suffered by the Company in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby.
9.12 Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Company pursuant to this Agreement in
confidence, and will not disclose or use for any purpose other than its credit
evaluation under this Agreement such confidential information, except for
disclosure; (i) to any Transferee or prospective Transferee to the extent
provided in Section 11.4; (ii) to legal counsel, accountants and other
professional advisors to that Lender to the extent necessary to advise that
Lender concerning its rights or obligations in respect of this Agreement;
provided that such professional advisor agrees to hold any confidential
information which it may receive in confidence and not to disclose or use such
confidential information for any purpose other than advising that Lender with
respect to its rights and obligations under this Agreement; (iii) to regulatory
officials to the extent required by applicable law, rule, regulations, order,
policy or directive (whether or not any such policy or
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directive has the force of law); and (iv) pursuant to any order of any court,
arbitrator or Governmental Authority of competent jurisdiction (or as otherwise
required by law); provided, however, that the Lender (or other Person given
confidential information by such Lender) shall provide the Company with prompt
notice of any such required disclosure so that the Company may seek a protective
order or other appropriate remedy, and in the event that such protective order
or other remedy is not obtained, such Lender (or such other Person) will furnish
only that portion of the confidential information which is legally required.
9.13 Nonreliance. Each Lender hereby represents that it is not relying on or
looking to any margin stock (as defined in Regulation U) for the repayment of
the Loans provided for herein.
9.14 Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if any Default described in Section 7.2, 7.6 or
7.7 occurs or the Loans are accelerated pursuant to Section 8.1, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Lender to or for the credit or account of the Company may
be offset and applied toward the payment of the Obligations owing to such Lender
by the Company.
9.15 Ratable Sharing. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans to the Company (other than payments received
pursuant to Section 3.1, 3.2, 3.4, 3.6 or 9.7) in a greater proportion than that
received by any other Lender from the Company or its Loans, such Lender agrees,
promptly upon demand, to purchase a portion of the Loans to the Company held by
the other Lenders so that after such purchase each Lender will hold its ratable
proportion of Loans to the Company. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.
ARTICLE X
---------
AGENTS
------
10.1 Appointment. WDR is hereby appointed the Arranger hereunder, and each
Lender hereby authorizes the Arranger to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. UBS is hereby appointed
the Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes the Administrative Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. NBD
Bank is hereby appointed the Documentation Agent hereunder, and each Lender
hereby authorizes the Documentation Agent to act as its agent in accordance with
the terms of this Agreement and the other Loan Documents. Each of the Arranger,
the Documentation Agent and the Administrative Agent hereby agrees to act upon
the express conditions contained in this Agreement and the other Loan Documents,
as applicable. The
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provisions of this Article X are solely for the benefit of the Arranger, the
Documentation Agent and the Administrative Agent and Lenders and the Company
shall have no rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties under this Agreement, each of
the Arranger, the Documentation Agent and the Administrative Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Company or any of its Subsidiaries. The Arranger, without consent of or
notice to any party hereto, may assign any and all of its rights or obligations
hereunder to any of its Affiliates. As of the Closing Date, all obligations of
WDR, in its capacity as the Arranger hereunder, and all obligations of NBD Bank,
in its capacity as the Documentation Agent hereunder, shall terminate.
10.2 Powers and Duties; General Immunity.
10.2.1 Powers; Duties Specified. Each Lender irrevocably authorizes the
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to such agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each of the Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and
the other Loan Documents. Each of the Arranger, the Documentation Agent and the
Administrative Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. Neither the Arranger, the
Documentation Agent nor the Administrative Agent shall have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Arranger, the Documentation Agent or the Administrative Agent
any obligations in respect of this Agreement or any of the other Loan Documents
except as expressly set forth herein or therein.
10.2.2 No Responsibility for Certain Matters. Neither the Arranger, the
Documentation Agent nor the Administrative Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan Document or
for any representations, warranties, recitals or statements made herein or
therein or made in any written or oral statements or in any financial or other
statements, instruments, reports or certificates or any other documents
furnished or made by the Arranger, the Documentation Agent or the Administrative
Agent to Lenders or by or on behalf of the Company to the Arranger, the
Documentation Agent or the Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of the Company or any other Person
liable for the payment of any Obligations, nor shall the Arranger, the
Documentation Agent or the Administrative Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Default or Unmatured Default. Anything contained in this
Agreement to the contrary notwithstanding, the
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Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the component amounts thereof.
10.2.3 Exculpatory Provisions. Neither the Arranger, the Documentation Agent
nor the Administrative Agent nor any of their respective officers, partners,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by the Arranger, the Documentation Agent or the Administrative Agent
under or in connection with any of the Loan Documents except to the extent
caused by such agent's gross negligence or willful misconduct. Each of the
Arranger, the Documentation Agent and the Administrative Agent shall be entitled
to refrain from any act or the taking of any action (including the failure to
take an action) in connection with this Agreement or any of the other Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until such agent shall have received
instructions in respect thereof from Required Lenders (or such other Lenders as
may be required to give such instructions under Section 8.2) and, upon receipt
of such instructions from Required Lenders (or such other Lenders, as the case
may be), such agent shall be entitled to act or (where so instructed) refrain
from acting, or to exercise such power, discretion or authority, in accordance
with such instructions. Without prejudice to the generality of the foregoing,
(i) each of the Arranger, the Documentation Agent and the Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against the Arranger, the
Documentation Agent or the Administrative Agent as a result of such agent acting
or (where so instructed) refraining from acting under this Agreement or any of
the other Loan Documents in accordance with the instructions of Required Lenders
(or such other Lenders as may be required to give such instructions under
Section 8.2).
10.2.4 Agent Entitled to Act as Lender. The agency hereby created shall in no
way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Arranger, the Documentation Agent or the Administrative
Agent in its individual capacity as a Lender hereunder. With respect to its
participation in the Loans, the Administrative Agent shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not performing the duties and functions delegated to it hereunder, and the
term "Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacity. Each of the Arranger, the Documentation Agent and the Administrative
Agent and their respective Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with the Company or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
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10.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness. Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Company
and its Subsidiaries in connection with the making of the Loans hereunder and
that it has made and shall continue to make its own appraisal of the
creditworthiness of the Company and its Subsidiaries. Neither the Arranger, the
Documentation Agent nor the Administrative Agent shall have any duty or
responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and neither the Arranger, the Documentation Agent nor the
Administrative Agent shall have any responsibility with respect to the accuracy
of or the completeness of any information provided to Lenders.
10.4 Right to Indemnity. Each Lender, in proportion to its Committed
Percentage, severally agrees to indemnify each of the Arranger, the
Documentation Agent and the Administrative Agent, to the extent that such agent
shall not have been reimbursed by Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against such agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Loan Documents or otherwise in its
capacity as such agent in any way relating to or arising out of this Agreement
or the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such agent's
gross negligence or willful misconduct. If any indemnity furnished to the
Arranger, the Documentation Agent and the Administrative Agent for any purpose
shall, in the opinion of such agent, be insufficient or become impaired, such
agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished; provided
that in no event shall this sentence require any Lender to indemnify the
Arranger, the Documentation Agent or the Administrative Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement in excess of such Lender's Committed Percentage thereof;
and provided, further, that this sentence shall not be deemed to require any
Lender to indemnify the Arranger, the Documentation Agent or the Administrative
Agent against any liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement described in the proviso in the
immediately preceding sentence.
10.5 Successor Administrative Agent. The Administrative Agent may resign at
any time by giving 30 days' prior written notice thereof to Lenders and the
Company. Upon any such notice of resignation, Required Lenders shall have the
right, upon five Business Days' notice to the Company, to appoint a successor
Administrative Agent. Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent and the retiring Administrative
54
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Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as the
Administrative Agent, the provisions of this Article X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
ARTICLE XI
----------
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
11.1 Successors and Assigns. The terms and provisions of the Loan Documents
shall be binding upon and inure to the benefit of the Company and the Lenders
and their respective successors and assigns, except that (i) the Company shall
not have the right to assign its rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with Section
11.3. Notwithstanding clause (ii) of this Section, any Lender may at any time,
without the consent of the Company or the Administrative Agent, assign all or
any portion of its rights under this Agreement or the Loan Documents to a
Federal Reserve Bank; provided, however, that no such assignment to a Federal
Reserve Bank shall release the transferor Lender from its obligations hereunder.
The Administrative Agent may treat the payee of any Loan Document as the owner
thereof for all purposes hereof unless and until such payee complies with
Section 11.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent. Any assignee or transferee of any of the Loans or a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the owner of any of
the Loans or a holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
11.2 Participations.
11.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participants") participating interests in any
Loan owing to such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender's obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the holder of any such
Loan or Note for all purposes under the Loan Documents, all amounts payable by
the Company under this Agreement shall be determined as if such Lender had not
sold such participating interests (including without limitation payments with
respect to Non-Excluded Taxes), and the Company and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.
55
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11.2.2 Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment in which such Participant has an
interest which would require the consent of all Lenders under Section 8.2.1.
11.2.3 Benefit of Setoff. The Company agrees that each Participant shall be
deemed to have the right of setoff provided in Section 9.14 in respect of its
participating interest in amounts owing under the Loan Documents to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under the Loan Documents, provided that each Lender shall retain the
right of setoff provided in Section 9.14 with respect to the amount of
participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 9.14, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 9.14 as if each Participant were a Lender.
11.3 Assignments.
11.3.1 Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks, finance companies, insurance companies or other financial
institutions or funds that are engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business or, after
the occurrence of any Default, any other entity ("Purchasers") all or any part
of its rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit H annexed hereto (an "Assignment") or in
such other form as may be agreed to by the parties thereto. The consent of the
Company and the Administrative Agent shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender or an
Affiliate thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Company shall not be required. Such consent by
the Company shall not be unreasonably withheld or delayed. Each such assignment
shall be in an amount not less than the lesser of (i) $5,000,000 and in integral
multiples of $1,000,000 thereafter, or (ii) the remaining amount of the
assigning Lender's Commitment (calculated as at the date of such assignment).
11.3.2 Effect; Effective Date. Upon (i) delivery to the Administrative Agent
of a notice of assignment, substantially in the form attached as Exhibit I to
Exhibit H annexed hereto (a "Notice of Assignment"), together with any consents
required by Section 11.3.1, and (ii) payment of a $2,500 fee to the
Administrative Agent for processing such assignment (provided that such fee
shall not be required if such assignment is to an existing Lender or an
Affiliate thereof), such assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that the
fights and interests of the Purchaser in and under the Loan Documents will not
be "plan
56
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assets" under ERISA. On and after the effective date of such assignment, such
Purchaser shall for all purposes be a Lender party to this Agreement and any
other Loan Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if it
were an original party hereto, and no further consent or action by the Company,
the Lenders or the Administrative Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Commitments
and Loans assigned to such Purchaser. Upon the consummation of any assignment to
a Purchaser pursuant to this Section 11.3.2, the transferor Lender, the
Administrative Agent and the Company shall make appropriate arrangements so that
replacement Notes, if applicable, are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their Commitments, as adjusted
pursuant to such assignment.
11.4 Dissemination of Information. The Company authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Company and its Subsidiaries provided
that each Transferee and prospective Transferee agrees to be bound by Section
9.12.
11.5 Tax Treatment. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, to comply with
the provisions of Section 3.6.
ARTICLE XII
-----------
NOTICES
-------
12.1 Giving Notices. Except as otherwise permitted by Article II with
respect to borrowing notices, all notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Company, the Arranger or the Administrative Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Lender, at its address or facsimile number set forth in Schedule 1 hereto or
otherwise established pursuant to an Assignment or (z) in the case of any party,
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Administrative Agent and the Company. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Administrative Agent under Article II shall not be effective until
received.
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12.2 Change of Address. The Company, the Arranger, the Administrative Agent
and any Lender may each change the address for service of notice upon it by a
notice in writing to the other parties hereto.
ARTICLE XIII
------------
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Company, the
Arranger, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent by telex or telephone, that it has taken such action.
ARTICLE XIV
-----------
CHOICE OF LAW, CONSENT TO JURISDICTION,
---------------------------------------
WAIVER OF JURY TRIAL
--------------------
14.1 Choice of Law. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
14.2 Waiver of Jury Trial. THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
14.3 Submission to Jurisdiction; Waivers. The Company hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof to the
non-exclusive general jurisdiction of the courts of the State
of New York in New York County, the courts of the United
States of America for the Southern District of New York, and
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or
hereafter have to the venue of any such
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action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Company at the address
specified in Section 12.1, or at such other address of which
the Administrative Agent shall have been notified pursuant
thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
14.4 Acknowledgments. The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Loan Documents;
(b) none of the Arranger, the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Company arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent and the Lenders, on the one hand,
and the Company, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Company and the Lenders.
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IN WITNESS WHEREOF, the Company, the Lenders, the Arranger,
the Administrative Agent and the Documentation Agent have executed this
Agreement as of the date first above written.
MERITOR AUTOMOTIVE, INC.
By: /s/ Thomas J. Joyce
-----------------------
Name: Thomas J. Joyce
Title: Vice President & Treasurer
Notice Address:
2135 West Maple Road
Troy, Michigan 48084-7186
Attention: Glenn Dong
Telephone: (248) 438-8891
Facsimile: (248) 435-0663
S-1
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WARBURG DILLON READ LLC,
as Arranger
By: /s/ P.W. Knight, Jr.
----------------------------
Name: P.W. Knight, Jr.
Title: Managing Director
By: /s/ C.M. Levy
----------------------------
Name: C.M. Levy
Title: Executive Director
Notice Address:
6th Floor, Trading
677 Washington Boulevard
Stamford, Connecticut 06901
Attention: Christopher Levy, Esq.
Telephone: (203) 719-7294
Facsimile: (203) 719-8620
S-2
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UBS AG, STAMFORD BRANCH,
individually and as
Administrative Agent
By: /s/ Philippe R. Sandmeier
----------------------------
Name: Philippe R. Sandmeier
Title: Director
By: /s/ Richard W. Fortney
----------------------------
Name: Richard W. Fortney
Title: Executive Director
Notice Address:
UBS AG, New York Branch
299 Park Avenue, 35th Floor
New York, New York 10171
Attention: Philippe Sandmeier
Telephone: (212) 821-3661
Facsimile: (212) 821-3878
S-3
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BANK OF AMERICA NT & SA
By: /s/ Kris A. Gagnon
----------------------------
Name: Kris A. Gagnon
Title: Managing Director
Credit Contact
--------------
231 South LaSalle Street
Chicago, IL 60697
Attention: Lynn Stetson
Telephone: (312) 828-6757
Facsimile: (312) 987-0303
Operating Contact
-----------------
231 South LaSalle Street
Chicago, IL 60697
Attention: Pat Lopez
Telephone: (312) 828-3865
Facsimile: (312) 974-9626
S-4
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THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
----------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan
Operations
Notice Address:
Credit Contact:
181 W. Madison Street, Suite 3700
Chicago, Illinois 60602
Attention: David Scott
Telephone: (312) 201-4116
Facsimile: (312) 201-4108
Operations Contact:
600 Peachtree Street NE, Suite 2700
Atlanta, Georgia 30308
Attention: Shannon Dancila
Telephone: (404) 877-1561
Facsimile: (404) 888-8998
S-5
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COMERICA BANK
By: /s/ Lana L. Anderson
----------------------------
Name: Lana L. Anderson
Title: Vice President
Notice Address:
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Lana L. Anderson
Telephone: (313) 222-5075
Facsimile: (313) 222-3776
S-6
<PAGE>
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN ISLANDS
BRANCH
By: /s/ Stephan A. Wiedemann
----------------------------
Name: Stephan A. Wiedemann
Title: Director
By: /s/ Susan L. Pearson
----------------------------
Name: Susan L. Pearson
Title: Director
Notice Address:
31 West 52nd Street
New York, New York 10019
Attention: Hajo Thiele
Telephone: (212) 469-8649
Facsimile: (212) 469-8212
with a copy to:
Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019
Attention: Richard Agnolet,
Corporate Finance
Services
Telephone: (212) 469-4113
Facsimile: (212) 469-4138
S-7
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FIRST NATIONAL BANK OF CHICAGO
By: /s/ Richard H. Huttenlocher
------------------------------
Name: Richard H. Huttenlocher
Title: First Vice President
Notice Address:
Corporate Banking, STE 8074
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard H. Huttenlocher
Telephone: (313) 225-2259
Facsimile: (313) 225-2290
NBD BANK, as Documentation Agent
By: /s/ Richard H. Huttenlocher
------------------------------
Name: Richard H. Huttenlocher
Title: First Vice President
Notice Address:
Corporate Banking, STE 8074
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Richard H. Huttenlocher
Telephone: (313) 225-2259
Facsimile: (313) 225-2290
S-8
