EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT dated as of March 3, 2003 between Sumitomo Rubber Industries,
Ltd., a company organised under the laws of Japan, having its principal office
at 6-9, 3-Chome, Xxxxxxxxxx-xxx, Xxxx-xx, Xxxx 000-0000, Xxxxx ("SUMITOMO") and
The Goodyear Tire & Rubber Company, a company organised under the laws of the
State of Ohio, United States of America, having its principal office at 0000
Xxxx Xxxxxx Xxxxxx, Xxxxx, Xxxx 00000-0000, Xxxxxx Xxxxxx of America ("GY").
WITNESSETH
WHEREAS after discussion of the furtherance and promotion of the Alliance,
Sumitomo (for itself and its Affiliates controlled by it, collectively "SRI")
has agreed with GY (for itself and its Affiliates controlled by it, collectively
"GOODYEAR") to give certain consents and waivers; and
WHEREAS Sumitomo and GY have agreed certain other matters.
NOW THEREFORE IT IS AGREED AS FOLLOWS
1. SRI CONSENTS AND WAIVERS
Notwithstanding any other provisions of the Alliance Agreements and subject
to the terms and conditions of this Agreement, Sumitomo hereby agrees and
consents to the following actions and matters (it being understood that this
Agreement is not, and is not intended to constitute, an acknowledgment by GY
that each of the actions described below in this article 1 necessarily
requires the prior agreement or consent of Sumitomo):
(a) Notwithstanding article 4.05(b) of the Umbrella Agreement, SRI hereby
permits the disclosure by Goodyear of (i) confidential financial and other
information relating to the Europe JVC and the North America JVC and (ii)
information concerning the related Alliance Agreements (collectively
"INFORMATION") to any of Goodyear's existing or proposed lenders, their
affiliates and their respective officers, directors, employees, agents and
advisers ("PERMITTED PERSONS") provided that:
(i) Goodyear may only disclose Information to the Permitted Persons to the
extent such disclosure is necessary or advisable to enable the
restructuring of Goodyear's banking facilities;
(ii) Goodyear shall require by appropriate confidentiality agreements that
the Permitted Persons will at all times keep the disclosed Information
confidential, and will not (unless required by applicable law or
regulatory authority) disclose such Information to any other person;
(iii) Goodyear shall require by appropriate confidentiality agreements that
the disclosed Information will only be used by the Permitted Persons
in connection with the restructuring of Goodyear's banking facilities
and will not be used for any other purpose; and
(iv) the restrictions contained in this article 1(a)(i), (ii) and (iii)
shall not apply to any information, knowledge or data which (a) is or
becomes generally available to the public other than as a result of a
disclosure by a Permitted Person, (b) was rightfully available to a
Permitted Person on a confidential basis prior to its disclosure to
the Permitted Person or (c) becomes rightfully available to a
Permitted Person on a non-confidential basis.
(b) Goodyear may cause the Europe JVC and its Affiliates controlled by it to
mortgage their assets and pledge any shares they hold and provide guarantees
to support borrowings by the Europe JVC and such Affiliates of up to USD750
million by such Affiliates from banks, capital markets or as a result of
long-term financial lease obligations in connection with the restructuring
of the Europe JVC's credit facilities (including the refinancing of the
capital lease and term loan aggregating USD98 million). Therefore, the
maximum amount of new borrowing by the Europe JVC and such Affiliates as
described herein would be USD650 million.
(c) The Affiliates controlled by the Europe JVC are authorised to adjust the
payment terms on which they pay for raw materials, semi-processed materials
and finished goods from Goodyear or SRI to cash instead of payment in a
specified number of days, provided that:
(i) the price payable for such raw materials, semi-processed materials and
finished goods shall be discounted by a sum which is, in the
aggregate, at least equal to the funding cost to the Europe JVC and
its Affiliates controlled by it of financing such adjustment;
(ii) GY shall, upon request by Sumitomo from time to time, provide Sumitomo
with sufficient information to demonstrate compliance with
sub-paragraph (i) above.
(d) The Affiliates controlled by the Europe JVC are authorised to accelerate the
payment of fees for calendar year 2003 in accordance with the applicable
provisions of the Technology License Agreements between each of such
Affiliates and GY and Sumitomo, provided that:
(i) the amount of such fees shall be discounted by a sum which is, in the
aggregate, at least equal to the funding cost to the Europe JVC and
its Affiliates controlled by it of financing such acceleration;
(ii) GY shall, upon request by Sumitomo from time to time, provide Sumitomo
with sufficient information to demonstrate compliance with
sub-paragraph (i) above.
(e) The Europe JVC is authorised to pay a distribution from retained earnings of
up to the Euro equivalent of USD60.6 million to the shareholders of such
company.
(f) The Europe JVC is authorised to acquire all of the shares in Sava Joint
Venture Holding d.o.o. ("SAVA") for cash at Fair Value (as determined in
accordance with article 3(b)(i) below): and Sumitomo, whilst not
acknowledging that such acquisition is necessarily a "Strategic Investment"
(within the meaning of the Alliance Agreements), nevertheless waives any
exit right arising under article 17.01(e) of the Umbrella Agreement as a
result of such acquisition.
(g) Goodyear shall cause Goodyear Finance Holdings S.A. to place any temporary
loans or advances to or from any Affiliate controlled by the Europe JVC
through the financial accounts of the Europe JVC, causing a netting of all
such advances and loans.
(h) Sumitomo gives its consent to allow Goodyear to pledge or assign any or all
of its rights or title in the Goodyear North American Trademarks to its
lenders in connection with the restructuring of Goodyear's credit
facilities, such pledge or assignment being subject to the rights of the
Licensee (North America JVC) continuing otherwise under the terms and
conditions of the applicable Trademark License Agreement(s). For the
avoidance of doubt, Goodyear North American Trademarks do not include any
SRI North American Trademarks (e.g. Dunlop, Remington, Centennial, etc).
The consents of Sumitomo set out in this Article 1 are given conditionally upon
GY's delivering to Sumitomo no later than March 31, 2003 (1) a copy of a
commitment letter written on behalf of the agent banks engaged in Goodyear's
restructuring and (2) Goodyear's three-year business plan.
2. GY REPRESENTATIONS AND WARRANTIES
GY represents and warrants to Sumitomo that, to the best of GY's
knowledge and belief:
(a) the Fair Value of all the shares in Sava, when acquired by the Europe JVC,
will not be greater than 20 per cent of the fair value of the "total assets"
(as referred to in Article 3.6(xv) of the Shareholders Agreement for the
Europe JVC, "EUROPE SHAREHOLDERS AGREEMENT") of the Europe JVC and its
Affiliates controlled by it;
(b) borrowings by the Europe JVC and its Affiliates controlled by it will not
exceed 40 per cent of the sum of the Europe JVC's consolidated debt and
consolidated shareholders' equity (as defined in Article 6.2 of the Europe
Shareholders Agreement).
3. ACTIONS BY GY
(a) GY and Sumitomo will use all reasonable endeavours to ensure that the
distribution referred to in article 1(e) above will be paid no later
than June 30, 2003.
(b) (i) The "Fair Value" of the shares in Sava shall be the fair market value
(or the mid-point within a range of fair market values) of (A) the 80
per cent of those shares currently owned by Goodyear and (B) the
remaining 20 per cent of those shares to be acquired by Goodyear, both
as determined (at GY's cost) by Lazard Freres & Co. LLC (GY warranting
that such firm has not received any material compensation from
Goodyear in the past two years) or, if such firm does not accept
appointment, an investment bank of recognized international standing
nominated by GY and approved by Sumitomo (such approval not to be
unreasonably withheld or delayed), provided that such investment bank
shall not have received any material compensation from Goodyear or SRI
in the past two years.
(ii) GY shall use all reasonable endeavours to ensure that the said 80 per
cent of the shares in Sava are transferred to the Europe JVC (or an
Affiliate controlled by it)
no later than June 30, 2003 and that the remaining 20 per cent of
those shares are so transferred no later than June 30, 2004.
(iii) Any acquisition by the Europe JVC (or an Affiliate controlled by it)
of shares in Sava shall be on terms and conditions (including as to
warranties and indemnities) usual and reasonable in the circumstances.
4. MODIFICATIONS OF THE ALLIANCE AGREEMENTS
GY and Sumitomo agree that the relevant Alliance Agreements shall be
modified and supplemented to provide for the following:
(a) (i) target market share (passenger car and light truck) for Dunlop brand
tires sold by the Europe JVC to automotive OEMs in Europe by 2006 to
be set at a percentage figure to be agreed by GY and Sumitomo (but not
less than 2002 market shares), and in any five year period thereafter
to be maintained at or above an annual average equal to the agreed
percentage figure;
(ii) target market share (passenger car and light truck) for Dunlop brand
replacement tires sold by the Europe JVC in Europe by 2006 to be set
at a percentage figure to be agreed by GY and Sumitomo (but not less
than 2002 market shares), and in any five year period thereafter to be
maintained at or above an annual average equal to the agreed
percentage figure;
(b) (i) target market share (passenger car and light truck) for Dunlop brand
tires sold by Goodyear (including the North America JVC) to automotive
OEMs in North America by 2006 to be set at a percentage figure to be
agreed by GY and Sumitomo (but not less than 2002 market shares), and
in any five year period thereafter to be maintained at or above an
annual average equal to the agreed percentage figure;
(ii) target market share (passenger car and light truck) for Dunlop brand
replacement tires sold by the North America JVC in North America by
2006 to be set at a percentage figure to be agreed by GY and Sumitomo
(but not less than 2002 market shares), and in any five year period
thereafter to be maintained at or above an annual average equal to the
agreed percentage figure;
(c) subject to agreeing such matters (if any) as may be reasonably necessary to
address any risks under applicable law and regulations, Sumitomo non-compete
covenants in the Alliance Agreements to be modified so as to exclude from
the scope of those covenants sales of tires under the "Ohtsu" or "Falken"
brands (it being acknowledged that, in Europe, distribution of the "Ohtsu"
and "Falken" brands is covered by the existing distribution agreement with
the Europe JVC);
(d) the Europe Shareholders Agreement and North America Operating Agreement (and
the relevant constitutional documents) to be modified to provide that (in
addition and without prejudice to Sumitomo's existing rights) each of the
Europe JVC and the North America JVC shall consult Sumitomo in good time
before taking any material Court proceedings;
(e) the articles of association of the Europe JVC to be modified to include, so
far as permitted by law, all the prohibitions listed in article 3.6 of the
Europe Shareholders Agreement.
(f) the Alliance Agreements relating to all joint venture companies in Europe,
North America and Japan to be modified to provide (in relation to any shares
currently held by an Affiliate controlled by GY or Sumitomo) that, prior to
any such Affiliate ceasing to be so controlled, it shall transfer those
shares to GY (or another Affiliate controlled by it) or Sumitomo (or another
Affiliate controlled by it), as the case may require.
The modifications contemplated by this Article 4 shall be negotiated by GY
and Sumitomo in good faith with a view to having executed all necessary
documentation in relation thereto no later than June 30, 2003.
5. OTHER MATTERS REGARDING THE ALLIANCE
(a) GY and Sumitomo agree that they shall, not later than June 30, 2003, meet to
initiate discussions in good faith as to how the parties might establish
formal arrangements in Asia, in compliance with all applicable laws and
regulations, (i) to provide for joint ownership of manufacturing and /or
distribution facilities in Asia (other than Thailand and Japan), (ii) to
provide to Sumitomo responsibility with respect to the relationships with
Japan-origin OEMs in Asia (having in mind, among other things, Article XI of
the Umbrella Agreement); and (iii) in connection with such other matters
with respect to the co-operation of parties in Asia as the parties shall
deem appropriate.
(b) GY and Sumitomo agree that they shall, not later than June 30, 2003, meet to
initiate discussions in good faith with a view to agreeing the exchange
between Goodyear and SRI of Non-Commercialized Technology on the same basis
(or as near as may be) as Commercialized Technology.
6. GOODYEAR'S RESTRUCTURING, FINANCIAL INFORMATION ETC
(a) GY will, for so long as borrowings are outstanding under the credit
facilities referred to in article 1(b) above:
(i) provide to Sumitomo at monthly intervals (A) a set of relevant
indicators (including, without limitation, equivalent financial
information to that supplied to Goodyear's banks) showing Goodyear's
ongoing actual performance against its risk-adjusted financing plan
and (B) information on any material developments in Goodyear's
restructuring of its credit facilities;
(ii) meet Sumitomo at quarterly intervals for the purpose of a quarterly
review of Goodyear's financial condition, operating results and
current projections: it being agreed that all such information
provided under this Article 6(a) shall be subject to the
Confidentiality Agreement (as supplemented) referred to in article
6(c) below.
(b) GY will provide copies of agreements covering the credit facilities referred
to in Article 1(b) above.
(c) GY agrees that the following shall be considered "DESIGNATED INDIVIDUALS"
for the purpose of the Confidentiality Agreement between GY and Sumitomo
dated January 19, 2003 (as supplemented by letters dated February 17 and 22,
2003);
(i) such Sumitomo personnel who, in the opinion of Xx. Xxxxx or Xx. Xxxx,
need to know the Proprietary Information (as defined in the
Confidentiality Agreement) for the purpose of evaluating the Proposed
Transactions (as so defined);
(ii) any Xxxxxxxx Chance personnel who, in the opinion of Xxxxx Xxxxxx of
that firm, need to know the Proprietary Information for the purpose of
evaluating the Proposed Transactions;
(iii) any Shearman & Sterling personnel who, in the opinion of Xxxxxx Xxxx
of that firm, need to know the Proprietary Information for the purpose
of evaluating the Proposed Transactions; and
(iv) Xxxxx Xxxxxxxxx of UBS Warburg and any UBS Warburg personnel who, in
the opinion of Mr. Budenberg, need to know the Proprietary Information
for the purpose of evaluating the Proposed Transactions provided that
GY and UBS Warburg shall have entered into such confidentiality
agreement as may be reasonably necessary to enable GY to comply with
applicable United States securities laws.
7. GENERAL
(a) Unless otherwise defined herein, all capitalised terms shall have the same
meanings as used in the Umbrella Agreement dated as of June 14, 1999 between
GY and Sumitomo (the "UMBRELLA AGREEMENT") or the other Alliance Agreements.
(b) The provisions of Article XVIII of the Umbrella Agreement are hereby
incorporated into and made a part of this Agreement by this reference, and
this Agreement shall be governed as if it is one of the agreements governed
by such provisions of Article XVIII.
IN WITNESS WHEREOF, the undersigned hereto have caused this Agreement to be duly
executed as of March 3, 2003.
SUMITOMO RUBBER INDUSTRIES, LTD.
By: /s/ Ryochi Sawada
-------------------------------------
Name: Ryochi Sawada
Title: Representative Director and
Executive Director
Attest: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: General Manager
Overseas Business Development Department
THE GOODYEAR TIRE & RUBBER COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
Business Development and
Integration
Attest: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary
