1
EXHIBIT 10.1
Conformed Copy
As of August 20, 1999
JOINT VENTURE AGREEMENT FOR EUROPE
DATED AS OF JUNE 14, 1999
BY AND AMONG
THE GOODYEAR TIRE & RUBBER COMPANY,
GOODYEAR S.A., A FRENCH CORPORATION,
GOODYEAR S.A., A LUXEMBOURG CORPORATION,
GOODYEAR CANADA INC.,
SUMITOMO RUBBER INDUSTRIES, LTD.,
AND
SUMITOMO RUBBER EUROPE B.V.
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TABLE OF CONTENTS
PAGE NO.
--------
ARTICLE I
DEFINITIONS
-----------
Article 1.1 Definitions........................................... 1
Article 1.2 Definitions Can be Substantive........................ 8
Article 1.3 Definitions Not in Article I.......................... 8
Article 1.4 Non-Working Day Performance........................... 8
Article 1.5 Calculation of Day Periods............................ 8
Article 1.6 Tire and Non-Tire Assets.............................. 8
ARTICLE II
AGREEMENTS OF THE PARTIES HERETO
--------------------------------
WITH RESPECT TO THE ORGANIZATION OF
-----------------------------------
THE JOINT VENTURE COMPANY
-------------------------
Article 2.1 Reorganizations....................................... 9
Article 2.2 Organization of the Joint Venture Company............. 9
Article 2.3 Acquisition of SRE Stock.............................. 9
Article 2.4 Exchange for Solely Europe JVC Voting Stock........... 9
Article 2.5 Completion of Closing................................. 9
Article 2.6 Post-Closing Adjustments.............................. 10
ARTICLE III
INCLUDED ASSETS AND INCLUDED LIABILITIES
----------------------------------------
Article 3.1 Goodyear Business Assets and SRI Business Assets...... 11
Article 3.2 Liabilities of the Goodyear JV Companies and SRI JV 16
Companies............................................
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ARTICLE IV
EXCLUDED ASSETS AND EXCLUDED LIABILITIES
----------------------------------------
Article 4.1 Goodyear Excluded Assets............................. 17
Article 4.2 SRI Excluded Assets.................................. 18
Article 4.3 Goodyear Excluded Liabilities........................ 18
Article 4.4 SRI Excluded Liabilities............................. 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Article 5.1 Corporate Organization, etc.......................... 18
Article 5.2 Authority; Execution and Enforceability.............. 19
Article 5.3 Ownership of Stock; Corporate Structure.............. 19
Article 5.4 No Violation or Breach............................... 20
Article 5.5 Brokers and Finders.................................. 21
Article 5.6 Financial Statements; Liabilities.................... 22
Article 5.7 Quiet Enjoyment...................................... 23
Article 5.8 Consents; Filings.................................... 23
Article 5.9 Actions and Proceedings.............................. 24
Article 5.10 Taxes and Tax Returns................................ 24
Article 5.11 Title to Property; Condition; Sufficiency............ 25
Article 5.12 Intellectual Property................................ 28
Article 5.13 Software............................................. 34
Article 5.14 Compliance with Legal Requirements................... 35
Article 5.15 Outstanding Commitments.............................. 36
Article 5.16 Employment Matters................................... 37
Article 5.17 Environment, Health and Safety....................... 39
Article 5.18 Insurance............................................ 41
Article 5.19 Accounts Receivables................................. 41
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Article 5.20 Guarantees............................................ 41
Article 5.21 Subsidies............................................. 42
Article 5.22 Year 2000............................................. 42
Article 5.23 Undisclosed Liabilities, etc.......................... 42
Article 5.24 Absence of Certain Changes or Events.................. 43
Article 5.25 Survival Period....................................... 45
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
Article 6.1 Corporate Organization, etc........................... 45
Article 6.2 Authority; Execution and Enforceability............... 46
Article 6.3 Ownership of Stock; Corporate Structure............... 46
Article 6.4 No Violation or Breach................................ 47
Article 6.5 Brokers and Finders................................... 48
Article 6.6 Financial Statements; Liabilities..................... 48
Article 6.7 Quiet Enjoyment....................................... 50
Article 6.8 Consents; Filings..................................... 50
Article 6.9 Actions and Proceedings............................... 50
Article 6.10 Taxes and Tax Returns................................. 51
Article 6.11 Title to Property; Condition; Sufficiency............. 52
Article 6.12 Intellectual Property................................. 54
Article 6.13 Software.............................................. 61
Article 6.14 Compliance with Legal Requirements.................... 62
Article 6.15 Outstanding Commitments............................... 63
Article 6.16 Employment Matters.................................... 64
Article 6.17 Environment, Health and Safety........................ 67
Article 6.18 Insurance............................................. 68
Article 6.19 Accounts Receivables.................................. 69
Article 6.20 Guarantees............................................ 69
Article 6.21 Subsidies............................................. 69
Article 6.22 Year 2000............................................. 69
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Article 6.23 Undisclosed Liabilities, etc.......................... 70
Article 6.24 Absence of Certain Changes or Events.................. 70
Article 6.25 Survival Period....................................... 72
ARTICLE VII
MAINTENANCE OF BUSINESS AND ASSETS
----------------------------------
Article 7.1 Maintenance of Business and Assets.................... 73
ARTICLE VIII
CONDITIONS TO PARTIES' OBLIGATIONS
----------------------------------
Article 8.1 ........................................................ 73
ARTICLE IX
NAMES AND TRADEMARKS
--------------------
Article 9.1 ........................................................ 73
Article 9.2 ........................................................ 73
Article 9.3 ........................................................ 73
Article 9.4 ........................................................ 74
Article 9.5 ........................................................ 74
ARTICLE X
R&D REORGANIZATION
------------------
Article 10.1 ........................................................ 76
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ARTICLE XI
TECHNOLOGY MATTERS
------------------
Article 11.1 ........................................................ 77
ARTICLE XII
EMPLOYEE MATTERS
----------------
Article 12.1 ........................................................ 77
Article 12.2 ........................................................ 77
Article 12.3 ........................................................ 78
Article 12.4 ........................................................ 78
ARTICLE XIII
INDEMNIFICATION
---------------
Article 13.1 ........................................................ 78
ARTICLE XIV
SHARED SERVICES
---------------
Article 14.1 ........................................................ 79
Article 14.2 ........................................................ 79
Article 14.3 ........................................................ 79
ARTICLE XV
NON TIRE REAL PROPERTY LEASES
-----------------------------
Article 15.1 ........................................................ 79
Article 15.2 ........................................................ 80
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Article 15.3 ........................................................ 80
ARTICLE XVI
[Intentionally left blank]
ARTICLE XVII
WARRANTY SERVICES
-----------------
Article 17.1 Warranty Services..................................... 80
ARTICLE XVIII
INSURANCE AND PRODUCT LIABILITY
-------------------------------
Article 18.1 Insurance............................................. 81
Article 18.2 SRI Product Liability/Completed Operations........... 81
Article 18.3 Goodyear Product Liability/Completed Operations...... 82
ARTICLE XIX
TERM OF JV AGREEMENT; EFFECTIVE DATE
------------------------------------
Article 19.1 Term of Agreement.................................... 83
Article 19.2 Effective Date....................................... 83
ARTICLE XX
MISCELLANEOUS PROVISIONS
------------------------
Article 20.1 Amendments......................................... 84
Article 20.2 Waivers............................................ 84
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Article 20.3 Assignability...................................... 84
Article 20.4 Severability....................................... 84
Article 20.5 Notices............................................ 84
Article 20.6 Governing Law, Disputes and Language............... 86
Article 20.7 Termination Prior to Closing....................... 87
Article 20.8 Third Parties...................................... 87
Article 20.9 Titles to Articles and Subparts.................... 87
Article 20.10 Counterparts....................................... 87
Article 20.11 Singular and Plural; Gender........................ 87
Article 20.12 Incorporation...................................... 87
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULES
---------
SCHEDULE SUBJECT ARTICLE
-------- ------- -------
1.1(a) Goodyear JV Companies 1.1
1.1(b) SRI JV Companies 1.1
2.1(a) Goodyear Reorganization 2.1
2.1(b) SRI Reorganization 2.1
2.3 Closing Transactions - Share Purchase 2.3
2.4 Closing Transactions - Share Exchange 2.4
2.5 Example of Allocation of Voting Rights 2.5
2.6 Example of Share Reallocation 2.6
Mechanism
4.1 Goodyear Excluded Assets 4.1
4.2 SRI Excluded Assets 4.2
4.3 Goodyear Excluded Liabilities 4.3
4.4 SRI Excluded Liabilities 4.4
5.1 Companies Whose Shares Must 5.1
Be Owned by the Europe JVC and
its Affiliates
5.2 Authority; Execution and Enforceability 5.2
5.3(a) SRI JV Companies' Stock and 5.3(a)
Corporate Structure
5.3(b) No Commitment to Acquire 5.3(b)
Other Company
5.3(d) SRI JV Companies Which are Not Solvent 5.3(d)
5.4 No Violation or Breach 5.4
5.6(a) Financial Statements 5.6(a)
5.6(c) SRE Financial Statements 5.6(c)
5.6(d) SRI Major European Companies' Liabilities 5.6(d)
5.6(e) Ordinary Course of Business 5.6(e)
5.6(f) No Material Intercompany Transactions 5.6(f)
or Arrangements
5.7 Quiet Enjoyment 5.7
5.8 Consents and Filings 5.8
5.9(a) Actions and Proceedings 5.9(a)
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULE SUBJECT ARTICLE
-------- -------- -------
5.9(c) No Action Pending or Threatened 5.9(c)
5.10(b) Threatened Audits or Investigations 5.10(b)
Relating to Taxes
5.10(c) Tax Withholding Payments 5.10(c)
5.10(e) Preferential Tax Treatment 5.10(e)
5.10(f) Permanent Establishment 5.10(f)
5.10(g) Tax Liability 5.10(g)
5.11(a) Real Property Owned by SRI 3.1,5.11(a),
JV Companies 5.11(b)
5.11(b) Real Property Leased by 3.1,5.11(b)
SRI JV Companies
5.11(c) SRI Business Assets 5.11(c)
5.11(d) Leases of Tangible 5.11(d)
Personal Property Leased by
or from SRI JV Companies
5.12(a) All Patents and Patent 5.12
Applications Owned by the SRI
JV Companies or Licensed from Third
Parties
5.12(b)(ii) Infringement Proceedings 5.12
5.12(c)(i) All Patent License Agreements to 5.12
Third Parties
5.12(c)(ii) All Patents and Know-How 5.12
Licensed from Competitors
5.12(d) All Trademarks, Service Marks 5.12
and Trade Names
5.12(e) No Infringement of Trademark Rights; 5.12
No Trademark Assignments
5.12(f) Rights to Manufacture and Sell 5.12
5.12(g) Restrictions on Copyrights 5.12
5.12(h) No Infringement of Copyrights 5.12
5.13(c) Licenses for Software Granted 5.13(c)
to Third Parties
5.13(d) Assignments of Copyrights 5.13(d)
5.14 Compliance With Legal 5.14(b),(c)
Requirements
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULE SUBJECT ARTICLE
-------- ------- -------
5.15(a) Outstanding Commitments 5.15(a),(b),
(c),(d)
5.16(a) Collective Rules 5.15(a), 5.16
5.16(b) Employment, Consulting, 5.15(d), 5.16
Severance, Termination or Compensation
Contracts
5.16(d) Compliance with Labor and Social Security 5.16(d)
Laws, Collective Rules and SRI JV
Employment Agreements
5.16(f) Changes to Benefit Plans 5.16(f)
5.16(g) SRI JV Companies Labor Actions 5.16(g)
5.17(a) Environmental, Health, and 5.17(a)
Safety Compliance
5.17(b) Liabilities for Environmental, 5.17(b)
Health & Safety
5.18 Insurance 5.18
5.19 SRI JV Companies' Accounts Receivables 5.19
5.20 Guarantees 5.20
5.21 Subsidies 5.21
5.23 Undisclosed Liabilities 5.23
5.24 Absence of Certain Changes 5.24
or Events
6.1 Companies Whose Shares Must Be Owned 6.1
by Europe JVC and its Affiliates
6.2 Authorized Execution and 6.2
Enforceability
6.3(a) Goodyear JV Companies' Stock and 6.3(a)
Corporate Structure
6.3(b) No Commitment to Acquire Other Company 6.3(b)
6.3(d) Goodyear JV Companies Which are Not Solvent 6.3(d)
6.4 No Violation or Breach 6.4
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULE SUBJECT ARTICLE
-------- ------- -------
6.6(a) Financial Statement 6.6(a)
6.6(d) Ordinary Course of Business 6.6(d)
6.6(e) No Material Intercompany 6.6(e)
Transactions or Arrangements
6.7 Quiet Enjoyment 6.7
6.8 Consents and Filings 6.8
6.9(a) Actions and Proceedings 6.9(a)
6.9(c) No Action Pending or Threatened 6.9(c)
6.10(b) Threatened Audits or Investigations 6.10
Relating to Taxes
6.10(g) Tax Liability 6.10(g)
6.11(a) Real Property Owned by 3.1, 6.11(a),
Goodyear JV Companies 6.11(b)
6.11(b) Real Property Leased by 3.1, 6.11(b)
Goodyear JV Companies
6.11(c) Goodyear Business Assets 6.11(c)
6.11(d) Leases of Tangible Personal 6.11(d)
Property Leased by or from
Goodyear JV Companies
6.12(a) All Patents and Patent Applications 6.12
Owned by Goodyear JV Companies
or Licensed from Third Parties
6.12(b)(ii) Infringement Proceedings 6.12
6.12(c)(i) All Patent License Agreements to Third 6.12
Parties
6.12(c)(ii) All Patents and Know-How Licensed 6.12
from Competitors
6.12(d) All Trademarks, Service 6.12(d)
Marks and Trade Names
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULE SUBJECT ARTICLE
-------- ------- -------
6.12(d)(ii) Restrictions on Use of Goodyear 6.12
Trademarks
6.12(d)(iii) Goodyear Trademarks Licensed 6.12
to Other Parties
6.12(d)(iv) Goodyear Trademarks Licensed 6.12
from Third Parties
6.12(d)(v) Encumbrances Affecting Goodyear 6.12
Trademarks
6.12(d)(vi) Agreements Terminated by Change 6.12
of Control
6.12(d)(vii) OE Export Agreements 6.12
6.12(d)(viii) Company Names 6.12
6.12(e) No Infringement of Trademark 6.12
Rights; No Trademark Assignments
6.12(f) Rights to Manufacture and Sell 6.12
6.12(g) Restrictions on Copyrights 6.12
6.12(h) No Infringement of Copyrights 6.12
6.13(c) Licenses for Software Granted
to Third Parties 6.13(c)
6.13(d) Assignment of Copyrights 6.13(d)
6.14 Compliance With Legal 6.14(b), (c)
Requirements
6.15 Outstanding Commitments 6.15(a), (b),
(c), (d)
6.16(a) Collective Rules 6.15(a), 6.16
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SCHEDULES AND EXHIBITS TO
JOINT VENTURE AGREEMENT FOR EUROPE
SCHEDULE SUBJECT ARTICLE
-------- ------- -------
6.16(b) Employment, Consulting, Severance, 6.15(d), 6.16
Termination or Compensation
Contracts
6.16(f) Changes to Benefit Plans 6.16(f)
6.16(g) Goodyear JV Companies Labor Actions 6.16
6.17(a) Environmental, Health and Safety Compliance 6.17(a)
6.17(b) Liabilities for Environmental, Health and 6.17(b)
Safety
6.18 Insurance 6.18
6.20 Guarantees 6.20
6.21 Subsidies 6.21
6.23 Undisclosed Liabilities 6.23
6.24 Absence of Certain Changes 6.24
or Events
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JOINT VENTURE AGREEMENT FOR EUROPE
This Joint Venture Agreement for Europe dated as of June 14, 1999 (this
"JV Agreement") by and among The Goodyear Tire & Rubber Company, a company
organized and existing under the laws of the State of Ohio of The United States
of America ("Goodyear"), Goodyear S. A., a company organized and existing under
the laws of the Republic of France ("Goodyear Fra"), Goodyear S. A., a company
organized and existing under the laws of the Grand Duchy of Luxembourg
("Goodyear Lux"), Goodyear Canada Inc., a company organized and existing under
the laws of the Province of Ontario of Canada ("Goodyear Canada"), Sumitomo
Rubber Europe B. V., a company organized and existing under the laws of The
Netherlands ("SRE") and Sumitomo Rubber Industries, Ltd., a company organized
and existing under the laws of Japan ("SRI").
WITNESSETH:
WHEREAS, Goodyear and SRI have entered into an agreement of even date
herewith (the "Umbrella Agreement") which envisages that this JV Agreement would
be entered into by the above recited parties; and
WHEREAS, the Umbrella Agreement sets forth the framework for the
formation of a strategic alliance for the research and development, manufacture,
distribution and sale of tires.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
ARTICLE I
DEFINITIONS
-----------
1.1 DEFINITIONS. In this JV Agreement the terms used herein which are also
defined in the Umbrella Agreement shall have the meaning set forth in Article
1.01 of the Umbrella Agreement unless otherwise defined in this JV Agreement.
In addition, the following terms shall, unless the context otherwise requires,
have the following respective meanings:
"Affiliate" shall mean, with respect to any specified Person,
any Person that, directly or indirectly, controls, is controlled by or is under
direct or indirect common control with, such specified Person; provided that
the term "Affiliate" as used herein and in the other Alliance Agreements, shall
not include any direct or indirect shareholder of Goodyear or SRI or other
Persons controlled
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by those shareholders, unless such shareholders or other Persons are expressly
included. For this purpose, the term control (including its use in the terms
"controlled by" and "under direct or indirect common control with") shall mean
the ownership, directly or indirectly, of more than fifty percent (50%) of the
voting securities of such Person. The term "Affiliates" when used in
conjunction with Goodyear and its Affiliates shall also include South Pacific
Tyres, in which Goodyear has a fifty percent (50%) interest, provided, however,
that the arrangements contemplated in the Alliance Agreements shall not result
in an amendment of the financial and other terms of any existing license
agreements between SRI (or its Affiliates) and Pacific Dunlop Limited (or its
Subsidiaries) relating to South Pacific Tyres or its Subsidiaries with respect
to any product types or tread designs already in production in South Pacific
Tyres or its Subsidiaries. The Parties agree that Nakata Engineering Co., Ltd.
is not included within the definition of "Affiliates" in the Alliance
Agreements, notwithstanding SRI's control thereof.
"Alliance" means the strategic alliance for the research and
development, manufacture, distribution and sale of tires between Goodyear, SRI
and their Affiliates.
"Allowed Debt" means the sum of the Goodyear Allowed Debt and
the SRI Allowed Debt.
"Cash" means cash and cash equivalents as reported under US
GAAP. "Cash" excludes those amounts of cash contributed by a Party prior to
Closing in order to prefund an obligation of such Party under the Alliance
Agreements which would otherwise be owed by such Party to the Europe JVC or
Affiliates controlled by it after Closing including without limitation the cash
contributions referred to in Article 3.03(b)(iv), 3.04(b) and (d) of the
Umbrella Agreement. "Cash equivalents" means short term securities held for the
primary purpose of general liquidity which normally mature within three months
from the date of acquisition, however, it does not include trade bills of
exchange on hand.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Closing" means the closing of the Transactions pursuant to
the terms of the Alliance Agreements, subject to the satisfaction or waiver of
all the conditions thereto set forth therein.
"Closing Date" shall have the meaning specified in Article
5.01 of the Umbrella Agreement.
"Debt" means interest bearing liabilities owed to third
parties, including SRI and Goodyear (and their respective Affiliates (other
than any JVC)); other non-interest bearing liabilities (in the nature of
indebtedness) owed to
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Affiliates (other than any JVC); capital lease liabilities and other
liabilities which are otherwise in the nature of financing; preference shares,
debenture stock and other capital instruments bearing interest; interest
bearing off-balance sheet liabilities and net liability of off balance sheet
derivative contracts, but excluding trade liabilities to Affiliates and third
parties, operational lease liabilities, pension liabilities and other employee
related liabilities. Each item included in this definition of the term "Debt"
is determined in accordance with US GAAP.
"Eastern Europe" shall have the meaning specified in Article
9.5 of the Shareholders Agreement for the Europe JVC.
"Encumbrance" means any lien, mortgage, charge, security
interest, pledge, voting agreement, option or encumbrance of any similar kind.
"Environmental Claim" means any notice (written or oral) by
any Person alleging actual or potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs (past,
present or future), governmental response costs (past, present or future),
natural resources damages (past, present or future), property damages, personal
injuries, fines or penalties) arising out of, based on or resulting from
circumstances forming the basis of any violation, or alleged violation of any
Environmental Law.
"Environmental Laws" means statutes, codes, directives,
ordinances, rules, regulations, permits, consents, approvals, licenses,
judgments, orders, writs, decrees, injunctions, or other authorizations or
mandates of any Authority existing at the date hereof or that become effective
prior to the Closing Date relating to human health, the environment or to
emissions, controls, discharges or releases of pollutants, contaminants,
Hazardous Materials or wastes into the environment, including without limitation
ambient air, surface water, ground water, sewers or land, or otherwise relating
to the generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, Hazardous
Materials or wastes or the clean-up of or remediation thereof.
"Equity Capital" shall have the meaning specified in Article
1.1 of the Shareholders Agreement for the Europe JVC.
"ERISA" means the United States Retirement Income Security Act
of 1974, as amended.
"Europe JVC" means the company to be organized in accordance
with Article 2.2 of this JV Agreement.
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"European Territory" shall have the meaning specified in
Article 9.5 of the Shareholders Agreement for the Europe JVC.
"Excluded Liabilities" means both the Goodyear Excluded
Liabilities and the SRI Excluded Liabilities.
"Extended Products" shall have the meaning specified in
Article 9.3.
"Extended Services" shall have the meaning specified in
Article 9.3.
"Goodyear" shall have the meaning specified in the
introductory paragraph hereof.
"Goodyear Allowed Debt" has the meaning specified on Schedule
4.3.
"Goodyear Business Assets" means all of the assets,
properties or rights (real, personal or mixed, tangible or intangible) which
are and will be as of the Closing Date owned or held by, or leased or licensed
to the Goodyear JV Companies and which were used in the Goodyear Businesses on
December 31, 1998 including without limitation, those assets, properties and
rights described in Article 3.1 hereof, (i) excluding those assets that are
cancelled, expired, retired or sold and including those acquired, in each case,
in the Ordinary Course of Business in the period beginning on December 31, 1998
and ending on the Closing Date, inclusive, and (ii) excluding the Goodyear
Excluded Assets.
"Goodyear Businesses" means the tire manufacturing,
distribution and sales businesses and operations and related activities of the
Goodyear JV Companies and a 50% interest in Dackia Partners AB in the European
Territory, as of December 31, 1998 taking account of changes in the Ordinary
Course of Business in the period beginning on December 31, 1998 and ending on
the Closing Date, inclusive, including retail chains, if any, and retreading
operations, but excluding the Goodyear Excluded Assets.
"Goodyear Canada" shall have the meaning specified in the
introductory paragraph hereof.
"Goodyear Fra" shall have the meaning specified in the
introductory paragraph hereof.
"Goodyear JV Companies" means those companies listed in
Schedule 1.1(a). Any one of the Goodyear JV Companies is a "Goodyear JV
Company".
"Goodyear JV Employees" means the employees employed by any
of the Goodyear JV Companies in the Goodyear Businesses immediately prior to
the Closing Date and after the Goodyear Reorganization and such other employees
of
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Goodyear, Goodyear Lux and Goodyear Fra and Affiliates controlled by them whom
the Parties agree on or before the Closing Date should be offered employment by
the Europe JVC and/or Affiliates controlled by it.
"Goodyear JV Liabilities" has the meaning specified in
Article 3.2(b).
"Goodyear Lux" shall have the meaning specified in the
introductory paragraph hereof.
"Hazardous Materials" means any toxic, ignitable, reactive,
corrosive, radioactive, caustic or regulated hazardous substance, hazardous
waste or hazardous material whether solid, liquid or gaseous, including without
limitation petroleum and its derivatives and by-products; other hydrocarbons;
metals; asbestos; PCBs; and any substance having any constituent elements
displaying any of the foregoing characteristics which is regulated under
Environmental Laws, health or safety laws, regulations, orders, codes,
directives, rules and ordinances.
"Joint Venture Company" means in this JV Agreement the
company to be organized in accordance with Article 2.2 of this JV Agreement.
"JV Agreement" shall have the meaning specified in the
introductory paragraph hereof.
"Licensed Products" shall have the meaning specified in
Article 9.3.
"Material Adverse Effect" shall have the meaning specified in
Article 1.01 of the Umbrella Agreement.
"Material Goodyear JV Companies" means Deutsche Goodyear
GmbH, Gummiwerke Fulda GmbH, Goodyear Great Britain Limited, Goodyear France
S.A., the Goodyear Business portion of Goodyear Lux, Goodyear Italiana SpA,
X.X.Xxxxxxxx, N.V., Goodyear (Nederland) B.V., Goodyear Svenska AB, The
Goodyear Tire & Rubber Co A/S, Goodyear Gesellschaft M.B.H., Goodyear (Suisse)
S.A., Goodyear Espanola S.A., Goodyear Portuguesa, Limitada, Goodyear Hellas
SAIC and Deutsche Goodyear Holding GmbH, each of such companies considered
alone without its Affiliates controlled by it.
"Material SRI JV Companies" means Dunlop GmbH, Pneumant
Reifen GmbH, Holert Xxxx GmbH, Dunlop Banden B.V., Dunlop Tyres Limited, Dunlop
France S.A., SIPAR, COFIDI, CLARO PNEUS, Pneu Holding, K-DIS Distribution,
VULCO Nord, VULCO Sud, VULCO Armorique, DUNLOP TYRES NV/SA, DUNLOP PNEUMATICI
S.p.A., DUNLOP NEUMATICOS S.A., each of such companies considered alone without
its Affiliates controlled by it.
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"MOU" means the Memorandum of Understanding signed by SRI and
Goodyear on February 3, 1999.
"Ordinary Course of Business" shall have the meaning
described in Article 4.03 of the Umbrella Agreement.
"Part 6 countries" means Israel, Turkey and Morocco.
"Parties" means Goodyear, Goodyear Fra, Goodyear Lux,
Goodyear Canada, SRI and SRE and "Party" means one of the Parties, which Party
may be a specific one of the Parties as indicated by the context in which the
word Party is used.
"Permitted Encumbrances" means (i) liens for Taxes not yet
due, (ii) warehousemen's, mechanics', carriers', landlords', employees',
repairmen's or similar liens imposed by law, created in the Ordinary Course of
Business and for amounts not yet due and payable, and (iii) minor imperfections
of title or minor encumbrances, if any, which in the aggregate do not
materially detract from the value of the property subject thereto or impair in
any material respect the continued use by a SRI JV Company or a Goodyear JV
Company of the property subject thereto for the use being made thereof.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
entity, incorporated organization or government.
"Reorganizations" means both the Goodyear Reorganization and
the SRI Reorganization (each as described in Article II) including, for the
avoidance of doubt, all corporate actions reasonably required in respect
thereof.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the assets of such Person is
greater than the total amount of liabilities of such Person, (b) the present
fair saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person does not intend to incur
debts or liabilities beyond such Person's ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction for which such Person's property would constitute an unreasonably
small capital.
"SRE" shall have the meaning specified in the introductory
paragraph hereof.
"SRI" shall have the meaning specified in the introductory
paragraph hereof.
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21
"SRI Allowed Debt" has the meaning specified on Schedule 4.4.
"SRI Business Assets" means all of the assets, properties or
rights (real, personal or mixed, tangible or intangible) which are and will be
as of the Closing Date owned or held by or leased or licensed to the SRI JV
Companies and which were used in the SRI Businesses on December 31, 1998
including without limitation, those assets, properties and rights described in
Article 3.1 hereof, (i) excluding those assets that are cancelled, expired,
retired or sold and including those acquired, in each case, in the Ordinary
Course of Business in the period beginning on December 31, 1998 and ending on
the Closing Date, inclusive, and (ii) excluding the SRI Excluded Assets.
"SRI Businesses" means the tire manufacturing, distribution
and sales and air springs businesses and operations and related activities of
the SRI JV Companies in the European Territory, as of December 31, 1998, taking
account of changes in the Ordinary Course of Business in the period beginning on
December 31, 1998 and ending on the Closing Date, inclusive, including mold
facilities, interests in and rights to certain test tracks and test facilities
in Germany and the United Kingdom, the air springs division of Dunlop France
S.A., and retail chains, but excluding the SRI Excluded Assets.
"SRI JV Companies" means SRE and those companies listed in
Schedule 1.1(b). Any one of the SRI JV Companies is an "SRI JV Company".
"SRI JV Employees" means the employees employed by any of the
SRI JV Companies in the SRI Businesses immediately prior to the Closing Date and
after the SRI Reorganization and such other employees of SRI, SRE and Affiliates
controlled by them whom the Parties agree on or before the Closing Date should
be offered employment by the Europe JVC and/or Affiliates controlled by it.
"SRI JV Liabilities" shall have the meaning specified in
Article 3.2(a) hereof.
"Tax" and "Taxes" shall mean (i) all taxes, assessments,
levies, imposts, duties, fees, withholdings, or other similar mandatory charges
or collections, including, without limitation, income taxes, receipts taxes,
value added taxes, franchise taxes, net worth taxes, transfer taxes, stamp
taxes, transaction taxes, stock transfer taxes, excise taxes, custom duties,
trade taxes, capital taxes, capital contribution taxes, ad valorem taxes, sales,
use, real and personal property taxes, intangible assets taxes, waste tire
taxes, withholding taxes, minimum taxes and payroll and employee charges or
contributions, fees or other taxes which a Person is required to collect and pay
over to any Authority,
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22
and (ii) any interest, penalties, fines or additions to tax imposed on a Tax
described in clause (i) hereof, imposed by any Authority.
"Tire Goods" shall have the meaning specified in Article 9.3.
"Umbrella Agreement" shall have the meaning specified in the
first recital hereof.
"Western Europe" shall have the meaning specified in Article
9.5 of the Shareholders Agreement for the Europe JVC.
1.2 DEFINITIONS CAN BE SUBSTANTIVE. If any provision in a definition is a
substantive provision conferring rights or imposing obligations on any Party,
notwithstanding that it is only in the definition Article, effect shall be
given to it as if it were a substantive provision of this JV Agreement.
1.3 DEFINITIONS NOT IN ARTICLE I. Where any term is defined within the context
of any particular article, section or clause in this JV Agreement, the term so
defined, unless it is clear from the context in question that the term so
defined has limited application to the relevant article, section or clause,
shall bear the meaning ascribed to it for all purposes in terms of this JV
Agreement, notwithstanding that that term has not been defined in this Article.
1.4 NON-WORKING DAY PERFORMANCE. Where any payment falls due or any other
obligation is to be performed on a day which is not a working day in the
jurisdiction where such payment is to be made or such obligation is to be
performed, then such payment shall be made or such obligation performed on the
next succeeding working day.
1.5 CALCULATION OF DAY PERIODS. Except as otherwise specifically provided in
this JV Agreement, where in this JV Agreement any number of days is prescribed
in relation to the doing of a particular thing or in respect of a period of
time, those days will be calculated exclusive of the first day and inclusive of
the last day.
1.6 TIRE AND NON-TIRE ASSETS. The Parties agree that the parenthetical phrase
"(insofar as such assets are comprised in the SRI Businesses)" or "(insofar as
such assets are comprised in the Goodyear Businesses)", as the case may be,
shall not exclude any assets from the term "assets" except as a result of the
Reorganization obligations under Article 2.1 intended to separate out non-tire
assets from tire assets or except as a result of the application of the
definition of SRI Business Assets or Goodyear Business Assets, as the case may
be.
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ARTICLE II
AGREEMENTS OF THE PARTIES HERETO
--------------------------------
WITH RESPECT TO THE ORGANIZATION OF
-----------------------------------
THE JOINT VENTURE COMPANY
-------------------------
2.1 REORGANIZATIONS. Goodyear agrees to, and to cause its Affiliates to, carry
out the transactions described in Schedule 2.1(a) together with any other
transactions reasonably incidental thereto and to contribute or transfer, or
cause its Affiliates to contribute or transfer, the Goodyear Business Assets to
the Goodyear JV Companies (the "Goodyear Reorganization"). SRI agrees to, and to
cause its Affiliates to, carry out the transactions described in Schedule 2.1(b)
together with any other transactions reasonably incidental thereto and to
contribute or transfer, or cause its Affiliates to contribute or transfer, the
SRI Business Assets to the SRI JV Companies (the "SRI Reorganization"). The
Parties agree, and agree to cause their respective Affiliates, in good faith to
perform the various transactions contemplated by such reorganizations in a
sequence and by such dates as will accommodate their completion on or prior to
the Closing. The Parties agree to discuss or meet from time to time to review
the progress towards completing the Reorganizations.
2.2 ORGANIZATION OF THE JOINT VENTURE COMPANY. On or prior to the Closing, SRI
and SRE hereby agree (i) to take all necessary action to cause the articles of
association of SRE to be amended, restated or changed as contemplated in the
Shareholders Agreement for the Europe JVC, or as the Parties may otherwise
agree, and (ii) simultaneously therewith or as soon thereafter as practicable,
to change the name of SRE to Goodyear Dunlop Tires Europe B.V. (hereafter
sometimes called the "Europe JVC").
2.3 ACQUISITION OF SRE STOCK. Simultaneously with the transactions described in
Article 2.4, Goodyear Fra and Goodyear Canada shall make such respective cash
transfers to SRI, in consideration for the transfer of shares of voting stock of
SRE, free and clear of all Encumbrances and, in each case, in the respective
ownership interests and voting rights as set forth in Schedule 2.3.
2.4 EXCHANGE FOR SOLELY EUROPE JVC VOTING STOCK. The Parties hereto agree that
at the Closing, in return for the simultaneous transfer of shares of certain of
the Goodyear JV Companies by Goodyear, Goodyear Fra and Goodyear Lux, free and
clear of all Encumbrances, SRE shall exchange shares of solely voting stock of
SRE to be issued by SRE to Goodyear, Goodyear Fra and Goodyear Lux, free and
clear of all Encumbrances and, in each case, in the respective ownership
interests and voting rights as set forth in Schedule 2.4.
2.5 COMPLETION OF CLOSING. Immediately following completion of the
Reorganizations and the Closing, the issued Equity Capital of the Europe JVC
9
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will be owned, on the one hand, seventy-five percent (75%) by Goodyear, Goodyear
Fra, Goodyear Lux and Goodyear Canada, consisting of shares having seventy
percent (70%) of the voting rights of the Europe JVC as well as class specific
share premium on these shares, and, on the other hand, owned twenty-five percent
(25%) by SRI, consisting of shares owned by SRI having thirty percent (30%) of
the voting rights of the Europe JVC. Schedule 2.5 sets out an illustrative
example of how this allocation of rights may be achieved.
2.6 POST-CLOSING ADJUSTMENTS. (a) The Parties agree that where a Party shall be
obliged to make a capital contribution to SRE as provided in Article 3.02(d)(i)
and (iii) of the Umbrella Agreement, such contribution shall be made to the
Europe JVC's general reserves and simultaneously SRI on the one hand and a Party
from among Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada on the other
hand, shall subscribe to the lowest possible number of newly issued shares in
proportion to SRI's shareholding on the one hand and the aggregate shareholding
of Goodyear, Goodyear Fra, Goodyear Lux, and Goodyear Canada on the other hand,
respectively, in SRE as of that time, in order to preserve their relative voting
rights and shall pay in such amount of additional class specific share premium
as needed in order to preserve their relative economic interest in the Europe
JVC. Schedule 2.6 sets out an illustrative example of the calculations for such
an adjustment.
(b) If the sum of the adjustments to the Europe JVC Balancing Payment
as provided in Articles 3.02(d)(ii) and (iii) and 3.03 of the Umbrella Agreement
results in:
(i) AN INCREASE IN THE EUROPE JVC BALANCING PAYMENT, the
amount of the additional Europe JVC Balancing
Payment shall be paid to SRI by Goodyear Canada or
Goodyear Fra. In the event that Goodyear Canada or
Goodyear Fra fail to pay on or before the due date
specified in the Umbrella Agreement, Goodyear will
transfer funds to SRI immediately upon notice from
SRI, or
(ii) A DECREASE IN THE EUROPE JVC BALANCING PAYMENT, the
amount of the decrease in the Europe JVC Balancing
Payment shall be reimbursed by SRI to Goodyear
Canada.
(c) SHARE REALLOCATION. In order for Goodyear and its Affiliates that
are shareholders of SRE to allocate their seventy-five percent (75%) ownership
and seventy percent (70%) voting interest between each other in proportion to
the fair market value of the consideration they contributed or paid, the
following is agreed:
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25
After the closing balance sheets are prepared as provided in Article 3.01 of the
Umbrella Agreement and after adjustments made pursuant to Articles 3.02(d)(ii)
and 3.03 of the Umbrella Agreement, Goodyear, Goodyear Canada, Goodyear Fra and
Goodyear Lux shall reallocate shares among themselves in order to make their
respective voting rights and their respective shares in the Equity Capital
proportionate to the fair market value of their respective contributions and
payments. The Parties shall cause SRE to record such reallocation in its share
ledger. An illustration of such reallocation is set forth in Schedule 2.6.
ARTICLE III
INCLUDED ASSETS AND INCLUDED LIABILITIES
----------------------------------------
3.1 (a) GOODYEAR BUSINESS ASSETS AND SRI BUSINESS ASSETS. Subject to the
application of the provisions of Articles 3.1(b) and (c) and Articles 4.1 and
4.2, as the case may be, the Goodyear Business Assets and the SRI Business
Assets shall include, without limitation, all of the following types of assets
(insofar as such assets are comprised in the Goodyear Businesses or the SRI
Businesses):
(i) REAL PROPERTY AND REAL PROPERTY LEASES. All real
property, owned or leased, including, but not
limited to, factories, warehouses, office buildings,
test tracks and test facilities together with all
buildings, fixtures and improvements thereon and all
appurtenant rights, easements and privileges
belonging or relating thereto and all right, title
and interest to all leases for such property. Said
property shall include, but not be limited to, those
properties set forth on Schedules 5.11(a), 5.11(b),
6.11(a) and 6.11(b);
(ii) TANGIBLE PERSONAL PROPERTY AND TANGIBLE PERSONAL
PROPERTY LEASES. (A) All machinery, equipment
(including, without limitation, office equipment,
laboratory equipment, manufacturing totes,
furnishings, furniture, vehicles, forklifts,
trailers, tools, parts, operating supplies,
consumables and other tangible personal property
(together with all spare and maintenance parts)),
whether owned or leased, together with all right,
title and interest to all leases for such property;
(B) All merchandising equipment, including, without
limitation, dispensing equipment, controlling
equipment, displays, racks, mounting equipment,
repair equipment and other similar devices installed
or located at any customer or third party location
and which are owned on the one hand by any Goodyear
JV Companies or on the other hand, by any SRI JV
Companies, as the case may be; and
11
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26
(C) All inventory of goods, merchandise,
merchandising equipment, raw materials,
work-in-process, stock-in-trade and supplies,
including, without limitation, inventory in transit
or in storage and rights in inventory on consignment;
(iii) CONTRACT RIGHTS. All rights and incidents of interest
in and to all contracts, licenses, franchises, sales
and purchase orders, commitments, undertakings,
quotations, executory commitments, agency and
commission contracts, guarantees and indemnifications
and other arrangements and all warranties, claims and
causes of action against third parties and under
insurance policies, whether oral or written;
(iv) ACCOUNTS RECEIVABLE. All notes and accounts
receivable, deposits, advances, manufacturer and
supplier rebates, and all other receivables;
(v) RESTRICTIONS ON COMPETITION AND OBLIGATIONS REGARDING
CONFIDENTIALITY. All rights with respect to all
restrictions on competition in so far as capable of
continuing to be held following a change of control
and obligations regarding confidentiality imposed on
third parties and present and former employees;
(vi) GOVERNMENTAL LICENSES, PERMITS AND APPROVALS. All
governmental licenses, permits, concessions,
authorizations, consents, approvals and product
registrations;
(vii) INTELLECTUAL PROPERTY AND RIGHTS. All technology,
trademarks, trade secrets, inventions, patents,
patent applications, know-how, copyrights, software
and other intellectual property and rights used on
the one hand in the Goodyear JV Companies or, on the
other hand in the SRI JV Companies, including those
rights granted by Article 3.1(d), as the case may
be, except such properties and rights as are owned
or licensed by Goodyear, SRI or their Affiliates
(other than the Goodyear JV Companies or the SRI JV
Companies) or by unaffiliated third parties, unless
otherwise agreed in writing;
(viii) CASH AND INVESTMENTS. Cash on hand or on deposit
together with interest accrued thereon and
investments and shares in other companies except as
otherwise agreed;
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(ix) COMMUNICATION AND ADDRESS NUMBERS. All telephone,
telex, telecopy and electronic mail address numbers,
uniform resource locator file names (URLs), mailing
addresses, and bank account lock box numbers or
addresses, associated with the Goodyear Businesses
and the SRI Businesses wherever located to the
extent they are transferable;
(x) BOOKS AND RECORDS. All sales literature, promotional
signs and literature and other selling material,
records, files, invoices, credit and sales records,
tax records, personnel records, employee handbooks,
manufacturing and technical records or
specifications, customer lists, distributor lists,
permits or approvals, and accounting books and
records (whether stored in physical form, on
computer, on microfilm or otherwise) that pertain to
items (i) to and including (ix) above and the
Goodyear Business Assets and the SRI Business
Assets; and
(xi) GOODWILL. The value and goodwill of each of the
Goodyear Businesses and SRI Businesses as a going
concern above and beyond the separate and
identifiable assets and rights listed or described
above, if any.
Any assets of the type described in this article or otherwise which are
allocated, transferred or returned to either the Goodyear Business Assets or the
SRI Business Assets, as the case may be, under Articles 3.1(b) or (c) shall be
included within the definition of such assets for all purposes under this JV
Agreement or other Alliance Agreements referencing such term, except as
otherwise stated.
(b) TREATMENT OF ASSETS USED IN MORE THAN ONE BUSINESS. The Parties
recognize that certain assets used in or associated with the Goodyear
Businesses or the SRI Businesses, as the case may be, are also used in or
associated with other Goodyear businesses or activities or SRI businesses or
activities not included within the Goodyear Businesses or the SRI Businesses
("Dual Use Assets"). The Parties agree that Dual Use Assets will, pursuant to
the Reorganizations, be included with and belong to the businesses in which
such Dual Use Assets are predominantly used. For this purpose, the term
predominantly used will be determined by a reasonable review of the facts and
circumstances surrounding each asset's use.
In the event it is not clear in which business a Dual Use Asset is predominantly
used, the Parties agree that such Dual Use Asset will be included in the
respective Goodyear Businesses or SRI Businesses.
The Parties agree that the Dual Use Assets which are predominantly used by
Goodyear businesses or SRI businesses outside the Europe JVC and Affiliates
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controlled by it will continue to be made available to the JVC which shared the
use of such Dual Use Assets prior to Closing, at cost or upon such commercial
terms in each case, as are agreed between Goodyear and SRI. Further, Dual Use
Assets included in the Goodyear Businesses or the SRI Businesses will continue
to be made available, at cost, or upon such other commercial terms, in each
case, as are agreed between Goodyear and SRI, to Goodyear, SRI or their
Affiliates which shared the use of such Dual Use Assets prior to the Closing to
the extent it does not interfere with the best interest of the Europe JVC and
Affiliates controlled by it.
The Parties acknowledge that certain Dual Use Assets not intended to be included
within the Goodyear Business Assets or the SRI Business Assets may be disposed
of by Goodyear or SRI or their respective Affiliates to third parties instead of
to Goodyear or SRI or their respective Affiliates (other than the Goodyear JV
Companies or the SRI JV Companies) as the case may be and that, in such event,
the above arrangements shall apply after such disposal, and that such disposal
shall proceed only if such third party shall also agree to accept and abide by
the above arrangements regarding use by the Europe JVC or its Affiliates
controlled by it with respect to such assets.
(c) REALLOCATION OF ASSETS.
(i) Otherwise than as provided in Article III of the
Umbrella Agreement, in the event that, subsequent to
the Closing, any of the Parties hereto identifies
any assets, rights or contractual arrangements,
(except Excluded Assets), or at any time receives
cash proceeds in respect of accounts receivable
transferred pursuant to this JV Agreement, in either
case which should, pursuant to the Alliance
Agreements, have been but were not transferred
(through inadvertence or otherwise) to the Europe
JVC or the appropriate Goodyear JV Company or SRI JV
Company, the Parties hereto shall cause such assets,
rights or contractual arrangements or such cash
proceeds to be transferred to such company as soon
as possible at no charge and for no more than
nominal consideration, on the same terms, and
subject to the same conditions, as would have
applied had such assets, rights or contractual
arrangements or such cash proceeds been so
transferred at Closing.
(ii) In the event that subsequent to the Closing, assets,
rights or contractual arrangements or such cash
proceeds are identified which have been transferred
to the Europe JVC or a Goodyear JV Company or a SRI
JV Company as part of the
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29
consummation of the Transactions, but which should
not have been transferred to such company pursuant
to the Alliance Agreements, the Parties hereto shall
cause such company to return such assets, rights or
contractual arrangements or such cash proceeds as
soon as possible to such company as Goodyear or SRI,
as the case may be, shall designate.
(iii) The Parties agree that such reallocation will be
done in a manner or will use a mechanism so as to
leave the affected Party or Parties and each of its
Affiliates in the same tax position or with the same
net tax liability as if the relevant assets, rights,
contractual arrangements or cash proceeds had,
pursuant to the Alliance Agreements, been properly
allocated at Closing. In the event that such
reallocation would result in a tax liability or tax
position that is not the same as if the relevant
assets, rights, contractual arrangements or cash
proceeds had, pursuant to the Alliance Agreements,
been properly allocated at Closing, then the Parties
agree to make an adjustment pursuant to Article 2.6.
(d) CERTAIN RETAINED TECHNOLOGY RIGHTS. (i) Notwithstanding any
exception to the property or rights granted under Article 3.1(a)(vii), and
excepting any rights covered under any technology license contemplated by this
JV Agreement or the Umbrella Agreement, and subject to any rights held by or
the terms of any bona fide agreement with any third party, with effect from
Closing, the Goodyear JV Companies and the SRI JV Companies will retain and/or
will be granted, by the Parties or their Affiliates (the Parties to cause such
Affiliates to make this grant) as the case may be, an unrestricted, unlimited,
paid up, non-exclusive license to use in the Goodyear Businesses or the SRI
Businesses as the case may be any technology, know-how, processes, trade secret
or software of Goodyear, SRI or their Affiliates (other than the Goodyear JV
Companies or SRI JV Companies), which has applications in both the Goodyear
Businesses or SRI Businesses, on the one hand and in any businesses of
Goodyear, SRI or their Affiliates (other than the Goodyear JV Companies or SRI
JV Companies) on the other hand as the same is used at Closing.
(ii) Subject to any rights held by or the terms of any bona fide agreement with
any third party, with effect from Closing, the Parties and the Europe JVC shall
cause the Goodyear JV Companies and the SRI JV Companies to grant the Parties or
their Affiliates, as the case may be, an unrestricted, unlimited, paid up,
non-exclusive license to use in the business of the Parties or their Affiliates
any technology, know-how, processes, trade secret or software of the Goodyear JV
Companies or SRI JV Companies which has applications in both the Goodyear
Businesses or SRI Businesses, on the one hand and in any business of Goodyear,
SRI or their Affiliates (other than the Goodyear JV Companies or SRI JV
Companies) on the other hand as the same is used at Closing.
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3.2 LIABILITIES OF THE GOODYEAR JV COMPANIES AND SRI JV COMPANIES. (a) As at
the Closing, and without prejudice to any rights or obligations of
indemnification otherwise provided in the Alliance Agreements, and subject to
the provisions of Article 4.4, and except as otherwise provided in this JV
Agreement, the SRI JV Companies shall continue to be liable for any debt,
obligation, commitment, responsibility or liability arising from or in
connection with the SRI Business Assets or the SRI Businesses of any kind,
character or description, whether accrued, fixed, absolute, known or unknown,
determined or undetermined, contingent or otherwise, whether previously, now or
hereafter arising, such debts, obligations, commitments, responsibilities or
liabilities applicable to the SRI JV Companies herein called the "SRI JV
Liabilities." As at the Closing, SRE shall, directly or indirectly, have no
debts, obligations, commitments, responsibilities or liabilities other than as
follows:
(i) obligations under the Alliance Agreements; and
(ii) the SRI JV Liabilities.
(b) As at the Closing, and without prejudice to any rights or
obligations of indemnification otherwise provided in the Alliance Agreements,
and subject to the provisions of Article 4.3, and except as otherwise provided
in this JV Agreement, the Goodyear JV Companies shall continue to be liable for
any debt, obligation, commitment, responsibility or liability arising from or
in connection with the Goodyear Business Assets or the Goodyear Businesses of
any kind, character or description, whether accrued, fixed, absolute, known or
unknown, determined or undetermined, contingent or otherwise, whether
previously, now or hereafter arising, such debts, obligations, commitments,
responsibilities or liabilities applicable to Goodyear JV Companies herein
called the "Goodyear JV Liabilities".
(c) REALLOCATION OF LIABILITIES.
(i) Otherwise than as provided in Article III of the
Umbrella Agreement, in the event that, subsequent to
the Closing, any of the Parties hereto identifies
any debts, obligations, commitments,
responsibilities or liabilities, (except Excluded
Liabilities), which should, pursuant to the Alliance
Agreements, have been but were not (through
inadvertence or otherwise) assumed by the Europe JVC
or the appropriate Goodyear JV Company or SRI JV
Company, the Parties hereto shall cause such debts,
obligations, commitments, responsibilities or
liabilities to be assumed by such company as soon as
possible at no charge and for no more than a nominal
consideration, on the same terms, and subject to the
same conditions, as would have applied had such
debts,
16
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31
obligations, commitments, responsibilities or
liabilities been so assumed at Closing.
(ii) In the event that subsequent to the Closing, debts,
obligations, commitments, responsibilities or
liabilities are identified which have been assumed
by the Europe JVC or a Goodyear JV Company or a SRI
JV Company as part of the consummation of the
Transactions, but which should not have been assumed
by such company pursuant to the Alliance Agreements,
the Parties hereto shall cause such company as
Goodyear or SRI, as the case may be, shall designate
to assume such debts, obligations, commitments,
responsibilities or liabilities as soon as possible.
(iii) The Parties agree that such reallocation will be
done in a manner or will use a mechanism so as to
leave the affected Party or Parties and each of its
Affiliates in the same tax position or with the same
net tax liability as if the relevant debts,
obligations, commitments, responsibilities or
liabilities had, pursuant to the Alliance
Agreements, been properly allocated at Closing. In
the event that such reallocation would result in a
tax liability or tax position that is not the same
as if the relevant debts, obligations, commitments,
responsibilities or liabilities had, pursuant to the
Alliance Agreements, been properly allocated at
Closing, then the Parties agree to make an
adjustment pursuant to Article 2.6.
(iv) The Parties hereto shall, or shall cause the
relevant company assuming a liability under Article
3.2(c) (i) or (ii) above (the "Transferee"), to
indemnify, defend and hold harmless the company from
which such liability is assumed from and against any
failure by the Transferee to comply with its
obligations under the contractual arrangements
governing the liability so assumed.
ARTICLE IV
EXCLUDED ASSETS AND EXCLUDED LIABILITIES
----------------------------------------
4.1 GOODYEAR EXCLUDED ASSETS. Anything herein to the contrary notwithstanding,
the Parties agree that all the assets, rights or contractual arrangements or
cash proceeds listed or described in Schedule 4.1 (the "Goodyear Excluded
Assets"), except as otherwise separately agreed in writing, shall not be a part
of the Goodyear Business Assets.
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4.2 SRI EXCLUDED ASSETS. Anything herein to the contrary notwithstanding, the
Parties agree that all the assets, rights or contractual arrangements or cash
proceeds listed or described in Schedule 4.2 (the "SRI Excluded Assets") (the
Goodyear Excluded Assets and the SRI Excluded Assets collectively called the
"Excluded Assets"), except as otherwise separately agreed in writing, shall not
be a part of the SRI Business Assets.
4.3 GOODYEAR EXCLUDED LIABILITIES. The items listed on Schedule 4.3 shall be
excluded from the Goodyear JV Liabilities.
4.4 SRI EXCLUDED LIABILITIES. The items listed on Schedule 4.4 shall be
excluded from the SRI JV Liabilities.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Parties hereby agree that SRI shall be deemed to know and possess all
the knowledge and information known to or possessed by SRE and each of the
other SRI JV Companies. SRI hereby represents and warrants to Goodyear,
Goodyear Fra, Goodyear Lux and Goodyear Canada (including any successor
corporations as the case may be) as of the date hereof except as otherwise
stated herein, as follows:
5.1 CORPORATE ORGANIZATION, ETC. (a) Schedule 5.1 hereto lists all the
companies, one hundred per cent (100%) of the shares of which, except as
otherwise indicated on such schedule, must be owned by the Europe JVC and its
Affiliates controlled by it in order that the Europe JVC and its Affiliates
controlled by it will be able to conduct the SRI Businesses as contemplated in
the Alliance Agreements.
(b) Each of the SRI JV Companies, is a corporation or limited liability
company duly organized and validly existing and, in good standing under the
laws of its jurisdiction of incorporation or organization and each has all
requisite corporate power and authority to own, lease, convey and operate its
respective part of the SRI Businesses as now conducted, and is qualified to do
business in each jurisdiction where the nature of its properties, assets or
business requires such qualification, other than where the failure to be so
qualified would not have a Material Adverse Effect on the business and assets
of such corporation or company. Complete and correct copies of the Constituent
Documents, duly updated, of each of the SRI JV Companies have previously been
delivered to Goodyear or will be made available upon request. The minute books
or similar records of each of the SRI JV Companies contain a materially
accurate record of all meetings and other corporate action of its stockholders,
board of directors or
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other governing bodies (and any committees thereof). Except as described and
contemplated by this JV Agreement, there has been no proposal made or
resolution adopted by the competent corporate body or bodies of any of the SRI
JV Companies for the dissolution, liquidation, merger or split-up of any of
them and, to their best knowledge, no circumstances exist which might result in
the dissolution, liquidation, merger or split-up of any such corporation or
company.
5.2 AUTHORITY; EXECUTION AND ENFORCEABILITY. Except as set forth on Schedule
5.2, SRE and each of the other SRI JV Companies has the requisite power and
authority to execute, deliver and carry out the terms and provisions of the
Alliance Agreements to be executed, delivered and (save in respect of corporate
actions concerning the Reorganizations) carried out by each of them, if any, to
which each of them is a party and to consummate the Transactions to which each
of them is a party, and has taken all necessary corporate action to authorize
the execution, delivery and performance of such Alliance Agreements, and no
other act or proceeding, corporate or otherwise, on the part of SRE or any of
the other SRI JV Companies is necessary to authorize the execution of the
Alliance Agreements or the consummation of any of the Transactions. SRI has the
power and authority to cause the SRI JV Companies to enter into and, prior to
Closing, to carry out the obligations under the Alliance Agreements to which
such companies are a party, and, to the extent applicable, to carry out the SRI
Reorganization, in each case so as to be bound to the obligations thereunder.
This JV Agreement has been duly executed by each of SRI and SRE and constitutes
and the other Alliance Agreements when duly executed by them and the SRI JV
Companies will constitute, a legal, valid and binding obligation of each of SRI,
SRE and the other SRI JV Companies as the case may be, enforceable against each
in accordance with its terms except to the extent that (i) such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
Except as described and contemplated by this JV Agreement, all corporate actions
required from the SRI JV Companies in connection with the consummation of the
Transactions have been duly performed.
5.3 OWNERSHIP OF STOCK; CORPORATE STRUCTURE.
(a) Schedule 5.3 (a) sets forth for each of the SRI JV Companies as of
the date hereof which will be supplemented by an accurate and complete list, as
required by Article 8.03 of the Umbrella Agreement, the authorized capital, the
issued capital, the number and, where applicable, the par value of the shares
comprising such capital, the names of the shareholders thereof and the number
of shares held by each such shareholder. All of the issued and outstanding
shares of capital stock of each of the SRI JV Companies have been duly
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authorized and are validly issued, have been credited as fully paid and are
clear of any Encumbrances, and, as of the date hereof are held of record and
owned beneficially by the Persons indicated on Schedule 5.3(a). There are no
preemptive rights with respect to the capital stock indicated on Schedule
5.3(a) of any of the SRI JV Companies. Except as set forth on Schedule 5.3(a),
at the Closing, the Europe JVC will own, directly or indirectly, 100% of the
capital stock of all the other SRI JV Companies. Except in the Ordinary Course
of Business or as part of the SRI Reorganization, no repayment or reduction of
the stated capital of the SRI JV Companies has been made.
(b) Except as set forth in Schedule 5.3(b) and except for their
respective ownership interests in the SRI JV Companies or pursuant to the
Transactions, neither SRI or any SRI JV Company own, nor have they committed to
acquire, directly or indirectly, any interest in any Person which manufactures,
distributes or sells tires in the European Territory.
(c) Except as provided in Article 2 hereof, there are not authorized or
outstanding, any subscriptions, options, conversion rights, warrants or other
agreements, securities or commitments of any nature whatsoever (whether oral or
written and whether firm or conditional) obligating (i) any of SRI, or the SRI
JV Companies to issue, deliver or sell, or cause to be issued, delivered or
sold, any shares of the capital stock or any securities convertible into or
exchangeable for shares of capital stock, of any of the SRI JV Companies (ii)
any Person to repurchase or redeem the capital stock of any SRI JV Company, or
(iii) any of such Persons to grant, extend or enter into any such agreement or
commitment.
(d) Except as indicated on Schedule 5.3(d), each of the SRI JV Companies
is Solvent.
5.4 NO VIOLATION OR BREACH. Except as set forth in Schedule 5.4, neither the
execution and delivery by SRI, SRE or the other SRI JV Companies of the Alliance
Agreements to which such companies are a party nor the consummation of the
Transactions, does or will:
(a) conflict with, result in the breach of any terms or conditions of,
constitute a default under or violate, accelerate or permit the acceleration of
any other similar right of any other party or result in the creation or
imposition of any Encumbrance except for Permitted Encumbrances on any of the
SRI Business Assets, under the Constituent Documents of any of the SRI JV
Companies, any applicable law, rule or regulation or any agreement, lease,
mortgage, note, bond, indenture, license or other document or undertaking, to
which any of the SRI JV Companies is a party or by which any of the SRI JV
Companies or any of their properties may be bound, nor will such execution,
delivery and consummation violate any order, writ, injunction or decree of any
Authority to which any of the SRI JV Companies or any of their properties is
subject, the effect of any of which, either individually or in the aggregate
(i) would impair the ability of any of the SRI
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JV Companies to perform its or their material obligations under the Alliance
Agreements or have a Material Adverse Effect on any of the Material SRI JV
Companies or (ii) would materially diminish the benefits intended to be
afforded to any of the parties to the Alliance Agreements;
(b) violate, conflict with or result in the breach or termination of, or
otherwise give any other Person the right to accelerate, renegotiate or
terminate or receive any payment, or constitute a default or event of default
(or an event which with notice, lapse of time, or both, would constitute a
default or event of default), under the terms of, any contracts, agreements,
commitments or other binding undertakings ("Contracts") or any permits,
authorizations, approvals, registrations or licenses granted by or obtained
from any Authority ("Permits") to which any of SRI or the SRI JV Companies is a
party or by which any of them (or any of the securities, properties or
businesses of any of them) are bound, the effect of any of which would have a
Material Adverse Effect on any of the Material SRI JV Companies;
(c) result in the creation of any Encumbrances except Permitted
Encumbrances upon the SRI Business Assets of any of the SRI JV Companies, the
effect of which would have a Material Adverse Effect on any of the Material SRI
JV Companies; or
(d) constitute a violation by SRI or any of the SRI JV Companies of (i)
any laws, treaties, ordinances, orders, rulings or regulations of any Authority
("Laws") or any judgments, orders, rulings, awards or administrative acts of
any court, arbitrator or other judicial authority or any Authority
("Judgments") but only those violations of Laws or Judgments the violation of
which may give rise to criminal penalties or punishments or (ii) any Laws or
Judgments the violation of which may not give rise to criminal penalties or
punishments, the effect of any of which in (ii) hereof would have a Material
Adverse Effect on any of the Material SRI JV Companies.
5.5 BROKERS AND FINDERS. All negotiations relating to the Alliance Agreements
and the Transactions have been carried on without the participation of any
Person acting on behalf of SRI or any of the SRI JV Companies, in such manner as
would give rise to any broker's fee (including without limitation investment
banker's fees) or finder's fees or commissions that will be for the account of,
or impose a liability on, Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada,
any of the Goodyear JV Companies or any of the SRI JV Companies (including any
successor corporations thereof).
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5.6 FINANCIAL STATEMENTS; LIABILITIES.
(a) Schedule 5.6(a) contains complete and correct copies of the audited
statements of assets and liabilities to be contributed to the Europe JVC (as
described in the MOU, modified as stated in note 1 to the relevant Financial
Statements), including the reports of the independent accountants of the SRI JV
Companies with respect thereto, in the English language, stated in each case as
of December 31, 1998, of each of:
(i) Dunlop GmbH and its subsidiaries on a consolidated basis;
(ii) Dunlop Tyres Ltd. and its subsidiaries on a consolidated
basis; and
(iii) Dunlop France S.A. and its subsidiaries on a consolidated
basis
(each of such three companies and its respective subsidiaries being herein
called a "SRI European Operating Company") and each such statement together
referred to as is being herein called a "SRI European Operating Company Year End
Financial Statement"). The SRI European Operating Companies and SRE together
will be hereinafter referred to as the "SRI Major European Companies".
(b) Each of the SRI European Operating Company Year End Financial
Statements gives a true and accurate account in all material respects of, and
fairly presents, in conformity with accounting principles generally accepted in
the United States of America ("US GAAP"), the assets and liabilities of the
relevant SRI European Operating Company as of December 31, 1998 which are to be
contributed to the Europe JVC (as described in the MOU, modified as stated in
note 1 to the relevant Financial Statements).
Each of the SRI European Operating Company Year End Financial Statements
has been certified without qualification by the relevant independent
accountants.
(c) Schedule 5.6(c) contains a complete and correct copy of an audited
special purpose balance sheet of SRE as of December 31, 1998, including the
notes thereto (together, the "SRE balance sheet") and a report thereon by the
independent accountants. The SRE balance sheet has been prepared on the basis
set out in the notes thereto and contains the assets and liabilities of SRE as
of December 31, 1998 which are to be contributed to the Europe JVC. The SRE
balance sheet has been certified without qualification by the independent
accountants of SRE. The SRE balance sheet and each of the SRI European
Operating Company Year End Financial Statements together will be hereinafter
referred to as the "SRI Major European Companies Year End Financial
Statements."
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(d) Except as disclosed on Schedule 5.6(d), as of December 31, 1998 none
of the SRI Major European Companies had any liabilities or obligations of any
nature, whether known or unknown, accrued, absolute, contingent or otherwise,
and whether due or to become due (for the purposes of Article 5.6 or 6.6 only,
collectively, "Liabilities" and individually, a "Liability") which are to be
contributed to the Europe JVC and which (i) were required by US GAAP, as
applicable, as applied on a consistent basis, to be reflected in financial
statements and (ii) individually or in the aggregate would have had a Material
Adverse Effect on the financial condition of any of the relevant SRI Major
European Companies, and that, in either case, were not reflected or expressly
reserved against in the SRI Major European Companies Year End Financial
Statements or specifically disclosed or provided for in the notes thereto.
(e) Except as disclosed on Schedule 5.6(e) and except as otherwise
conducted as a result of the Transactions, since December 31, 1998 each SRI
Major European Company has conducted its businesses only in the Ordinary Course
of Business and the SRI Major European Company has not undergone or suffered
any change in its financial condition, income, properties (other than as
expressly required by this JV Agreement), Liabilities, operations or prospects
which has had, individually or in the aggregate, a Material Adverse Effect on
any SRI Major European Company.
(f) Except as disclosed on Schedule 5.6(f), there have been no material
intercompany transactions or arrangements relating to the SRI Businesses
between or among any of the SRI JV Companies and SRI and its Affiliates during
the periods covered by the SRI Major European Companies Year End Financial
Statements which have not been fully and accurately reflected on the SRI Major
European Companies Year End Financial Statements.
5.7 QUIET ENJOYMENT. Except as set forth on Schedule 5.7 or as a result of the
Transactions, each of the SRI JV Companies is entitled to carry on its
respective part of the SRI Businesses and enjoy the goodwill of those respective
businesses as going concerns free and clear of any and all Encumbrances, other
than Permitted Encumbrances.
5.8 CONSENTS; FILINGS. Except as set forth on Schedule 5.8 and except as
provided in Articles 8.04(a), (b) and (c) and Schedule 8.04(d) of the Umbrella
Agreement,, no consent, waiver, approval, authorization, exemption,
registration, license or declaration of or by, or filing with, any other Person
or Authority ("Consent"), is required to be made or obtained by any of SRI or
the SRI JV Companies in connection with (i) the execution, delivery or
enforceability of the Alliance Agreements to which such companies are a party or
(ii) the consummation of any of the Transactions except, in either case, where
the failure to make or obtain a Consent would not have a Material Adverse Effect
on any of the Material SRI JV Companies.
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5.9 ACTIONS AND PROCEEDINGS.
(a) Except as set forth on Schedule 5.9(a), there is no action or suit or
legal, administrative, arbitration or other alternative dispute resolution
proceeding or investigation (in each case, whether or not the defense thereof
or liability in respect thereof is covered by policies of insurance) (each, a
"Proceeding" and collectively, "Proceedings") pending nor, to the best
knowledge of SRI, is any Proceeding or claim threatened, to which any of the
SRI JV Companies is, or would be, a party, nor is any Judgment outstanding
against any of the SRI JV Companies, in each case, the effect of which would
have a Material Adverse Effect on any of the Material SRI JV Companies.
(b) No Proceeding is pending or, to the best knowledge of SRI,
threatened, before any arbitrator or Authority to restrain or prohibit, or to
obtain damages or other relief in connection with, entry into the Alliance
Agreements or the Closing of the Transactions.
(c) Except as set forth on Schedule 5.9(c), no attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or, to the best knowledge of SRI, involuntary proceedings in
bankruptcy or actions pursuant to any other debtor relief laws or actions by
any Authority having jurisdiction over any of the SRI JV Companies are pending,
or to the best knowledge of SRI, threatened, against any of the SRI JV
Companies.
5.10 TAXES AND TAX RETURNS.
(a) Each of the SRI JV Companies has filed on a timely basis (or within
any applicable extension) all returns and reports of all Taxes required to be
filed by it and has timely given and delivered all Tax notices and accounts
required to be given by it in respect of Taxes for which such company is
liable. All information provided in such returns, reports, notices and accounts
was, when filed or given, complete and accurate. All Taxes previously assessed
or that will be assessed upon any of the SRI JV Companies for any period prior
to January 1, 1999 have been paid. Adequate provisions in accordance with US
GAAP, as applicable, have been made in the SRI Major European Companies Year
End Financial Statements for the payment of all Taxes for which each of the SRI
JV Companies will be liable for the periods covered thereby that were not yet
due and payable as of the dates thereof, regardless of whether the liability
for such Taxes is disputed.
(b) Except as set forth on Schedule 5.10(b), there are no pending, or to
the best knowledge of SRI, threatened audits or investigations relating to any
Taxes for which any of the SRI JV Companies is liable. No deficiencies for any
Taxes have been proposed, asserted or assessed against any of the SRI JV
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Companies. There are no agreements in effect to extend the period of
limitations for the assessment or collection of any Taxes for which any of the
SRI JV Companies is liable and no written requests for any such agreements are
pending.
(c) Except as set forth in Schedule 5.10(c), each of the SRI JV Companies
has withheld from its employees and timely paid to the appropriate Authority
proper and accurate amounts for all periods through the date hereof in
compliance with all Tax withholding provisions of all applicable Laws.
(d) SRI and SRE have furnished or made available or will make available
upon request to Goodyear complete and accurate copies of all returns and
reports of all Taxes filed by any of the SRI JV Companies or on their behalf on
or prior to the date hereof for each of the preceding three (3) fiscal years.
(e) Except as set forth in Schedule 5.10(e), none of the SRI JV Companies
has elected, or has otherwise been granted, any preferential tax treatment or
made any sort of commitment vis-a-vis any Tax Authorities (whether in
connection with a reorganization or otherwise) which (i) are applicable in
whole or in part to any time period that includes a date on or after the date
of this JV Agreement and (ii) would have a Material Adverse Effect on any of
the SRI JV Companies.
(f) Except as set forth in Schedule 5.10(f), each of the SRI JV Companies
is resident only in the jurisdiction in which it is incorporated for tax
purposes and does not have a permanent establishment or other taxable presence
in any other jurisdiction.
(g) Except as set forth on Schedule 5.10(g), none of the SRI JV Companies
is liable for any Taxes for which SRI or any Affiliate of SRI, other than the
SRI JV Companies, is liable.
5.11 TITLE TO PROPERTY; CONDITION; SUFFICIENCY.
(a) Schedule 5.11(a) sets forth an accurate and complete list of each
parcel of real property which was owned by any of the SRI JV
Companies as part of the SRI Businesses on December 31, 1998 of the
following description:
(i) all factories, warehouses, distribution facilities, retail
stores, office buildings, test tracks, test facilities,
technical centers, dump sites and landfills and also any real
property over which environmental concerns can reasonably be
expected;
(ii) all other parcels of real property in excess of the fair
market value of US$250,000; and
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(iii) any parcels of real property owned by any of the SRI JV
Companies, leased or subleased to Persons other than
Affiliates controlled by SRE for a term exceeding three (3)
years.
Such list will be supplemented by an accurate and complete list, as required by
Article 8.03 of the Umbrella Agreement, of each parcel of such real property as
of the Closing Date. Except as indicated on Schedule 5.11(a) as so supplemented,
as of the Closing Date, the SRI JV Companies will own all of the parcels of real
property so listed and supplemented, free and clear of all Encumbrances, except
Permitted Encumbrances.
(b) Schedule 5.11(b) sets forth an accurate and complete list of all the
real property leased by any of the SRI JV Companies as part of the SRI
Businesses on December 31, 1998 of the following description:
(i) all factories, warehouses, distribution facilities, retail
stores, office buildings, test tracks, test facilities,
technical centers, dump sites and landfills and also any real
property over which environmental concerns can reasonably be
expected;
(ii) all other parcels of real property leased to any of the SRI
JV Companies with an annual rent of US$100,000 or more per
annum; and
(iii) any parcels of real property leased by any of the SRI JV
Companies, or subleased to Persons other than Affiliates
controlled by SRE for a term exceeding three (3) years.
Such list will be supplemented by an accurate and complete list, as required by
Article 8.03 of the Umbrella Agreement, of (A) all such real property leased by
any of the SRI JV Companies (the Schedule 5.11(b) leases as supplemented being
called the "SRI JV Major Real Property Leases") and (B) all real property leases
with SRI and/or any Affiliate of SRI (the "SRI Non Tire Real Property Leases"),
(A) and (B) being as of the Closing Date. SRI and SRE have made and will make
all such Schedule 5.11(b) leases above available to Goodyear upon request as
soon as practicable for review. The SRI JV Major Real Property Leases and all
other leases to which any of the SRI JV Companies is a party (except the SRI Non
Tire Real Property Leases) are collectively hereinafter called the "SRI JV Real
Property Leases". With respect to the SRI JV Real Property Leases, each SRI JV
Company which is a party to such leases has a valid and subsisting right to use
the premises, in accordance with the terms of those leases, in each instance
free and clear of all Encumbrances other than Permitted Encumbrances. There is
no default under any SRI JV Real Property Leases and no event has occurred that
with the lapse of time or giving of notice would constitute a default
thereunder, which would for the SRI JV Real Property Leases, except for the SRI
JV Major Real Property Leases, have a Material Adverse Effect on any of the
Material SRI JV Companies. There does not exist with respect to the SRI JV Real
Property
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Leases and, as of the Closing Date with respect to the SRI Non-Tire Real
Property Leases, any violation of any building, zoning, health, safety,
environmental or other license, ordinance, code, regulation or law, the effect
of which would have a Material Adverse Effect on any SRI JV Company.
The Parties agree that, notwithstanding the identification of real property on
Schedules 5.11(a) and 5.11(b) by reference to an assessment of a reasonable
expectation of environmental concern, a claim against SRI for breach by a SRI JV
Company of Environmental Laws may only be brought pursuant to Article 5.17.
(c) Except as set forth on Schedule 5.11(c), the SRI JV Companies, as the
case may be, have good title to the SRI Business Assets, free and clear of all
Encumbrances other than Permitted Encumbrances.
(d) Schedule 5.11(d) sets forth an accurate and complete list of all
leases of tangible personal property leased by or from any of the SRI JV
Companies relating to or used in the conduct of the SRI Businesses, which will
be supplemented by an accurate and complete list, as required by Article 8.03
of the Umbrella Agreement, of all such leases on the Closing Date, which in
each case require lease payments equal to or exceeding the equivalent of US$
50,000 per annum (the "SRI JV Major Personal Property Leases") and SRI and SRE
have made and will make all such Schedule 5.11(d) leases available to Goodyear
upon request as soon as practicable for review. The SRI JV Major Personal
Property Leases and all other tangible personal property leases pursuant to
which any of the SRI JV Companies leases tangible personal property are
collectively hereinafter called the "SRI JV Personal Property Leases". With
respect to each SRI JV Personal Property Lease, each SRI JV Company which is
party to any such lease has a valid and subsisting lease, in each instance free
and clear of all Encumbrances other than Permitted Encumbrances. There is no
default under any SRI JV Personal Property Lease and no event has occurred that
with the lapse of time or giving of notice would constitute a default
thereunder, which would for the SRI JV Personal Property Leases, except for the
SRI JV Major Personal Property Leases, have a Material Adverse Effect on any of
the SRI JV Companies.
(e) The SRI Business Assets and the assets, properties and rights to be
transferred and/or granted to the SRI JV Companies pursuant to the Alliance
Agreements at or prior to Closing, constitute all assets, properties and rights
necessary for the conduct of the SRI Businesses.
(f) The SRI Business Assets are in all material respects in normal
operating condition and suitable for their intended purposes, ordinary wear and
tear excepted, and adequate in all material respects for the conduct of their
respective part of the SRI Businesses and ancillary activities as currently
conducted. No material change in the nature or method of use will occur prior
to
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Closing (other than normal lease expirations) and no lease assets will be
disposed of in each case outside the Ordinary Course of Business.
5.12 INTELLECTUAL PROPERTY.
(a) Schedule 5.12(a) sets forth an accurate and complete list (as at the
date in 1999 indicated at the top of each article) in all material respects of
all patents and patent applications owned by the SRI JV Companies or (to the
extent that SRI is permitted to disclose the same) licensed by them from a
third party ("SRI Patents") indicating for each such SRI Patent whether it is
owned or licensed from a third party and whether such SRI Patent is licensed to
any third party. Except as set forth on Schedule 5.12(a), each of the SRI JV
Companies has all of the patents, patent licenses and know-how licenses
necessary for the conduct of the SRI Businesses as conducted by the SRI JV
Companies as of the Closing Date and the consummation of the transactions
contemplated hereby will not alter or impair any such rights, save as expressly
stated in or contemplated by the Alliance Agreements. Schedule 5.12(a) also
includes an update of all material and substantive changes to the information
contained in the above list which changes occurred after the date indicated on
the top of the list and before the date of this JV Agreement.
(b) To the best of SRI and SRI's Affiliates knowledge and belief (having
made all proper inquiries) save as specified in Schedule 5.12(b)(ii):
(i) the manufacture, use, or sale of the products of the SRI
Businesses, and the SRI JV Companies' respective use of
processes and equipment in the manufacture or sale of such
products, do not infringe the patent rights of any third
party; and
(ii) other than those claims identified in Schedule 5.12(b)(ii),
there is no claim of any third party or any proceeding
pending or threatened, or any investigations for which the
SRI JV Companies have procured a written legal opinion,
internally or externally, during any of the last six years,
which relate to infringement of a third party's patent rights
in the conduct of the SRI Businesses, nor are there any
written notices or challenges to the validity or
enforceability of such rights.
(c) Schedule 5.12(c) sets forth one or more lists which cumulatively
provide an accurate and complete record (as at the date in 1999 indicated at
the top of each article) in all material respects of the following (in so far
as SRI is permitted to disclose the same):
(i) All license agreements whereunder the SRI JV Companies have
licensed patents and know-how relating to the SRI
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Businesses exclusively to third parties indicating for each,
the identity of the licensee, the identity of the patents,
the identity of the licensed subject matter, as well as the
term of the license, the licensed territory, the type of
exclusivity and whether the exclusivity relates to
manufacture, use or sale; and
(ii) All patents, patent applications and know-how licensed
directly, or indirectly under a sub-license, from competitors
of SRI and SRI JV Companies, indicating the details of said
license, as described above and details of all the products,
processes and equipment used by SRI JV Companies which fall
within one or more claims of such patents.
Schedule 5.12(c) also includes an update of all material and substantive changes
to the information contained in the above lists which changes occurred after the
date indicated on those lists. Complete and accurate copies of all the license
agreements under (i) and (ii) above which SRI is permitted to disclose have been
provided to Goodyear.
(d) Schedule 5.12(d) sets forth one or more lists which cumulatively
provide an accurate and complete record (as at the date in 1999 indicated at
the top of each article) in all material respects of:
(i) all trademarks, service marks (and applications and
registrations for such trademarks and service marks), used or
held by or licensed to SRI and the SRI JV Companies, or to
which they are entitled, relating to "SRI Goods" (namely:
tires, inner tubes for tires, tire repair kits, pre-cured
treads for tires, air springs, and tire retail chains, none
of the aforesaid relating to aircraft or solid polyurethane
industrial tires) in the Greater European Territory,
including but not limited to the trademarks DUNLOP, D Device,
SP and PNEUMANT (but excluding SPAX, PERFORMA, SUMITOMO,
Sumitomo Device and trademarks owned and licensed by Sumitomo
Corporation or The Ohtsu Tire and Rubber Co. Ltd.) (together
called the "SRI European Trademarks"), indicating for each
the full name of the registered proprietor, the name of the
current proprietor (if different) or if SRI is unaware
whether a known change of proprietor has been recorded then
the names of the former proprietor and the new proprietor and
the date and nature of the transaction giving rise to the
change, the country/ies and general nature of the
goods/services for which such are registered/pending and the
general nature of the goods/services for which such are used;
and
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(ii) (A) in respect of DUNLOP, D Device, PNEUMANT, SP (whether
or not registered) and all registrations and pending
applications to register said trademarks or a similar
trademark or a variation thereof or a combination
containing any of said trademarks in the Greater
European Territory (hereinafter the "D Marks"), all and
any material restrictions on use of the D Marks in
relation to the SRI Goods in the Greater European
Territory including but not limited to all agreements,
arrangements, conflicts or threatened conflicts between
SRI or any of the SRI JV Companies and a third party
which restrict use of one or more of the D Marks in
relation to the SRI Goods or affect the scope of or
validity of the D Marks including the names of parties
and details (or copy documentation to be provided
concurrently); and
(B) in respect of all other registrations and pending
applications to register any SRI European Trademark
(hereinafter "SRI Registrations-2"), all and any
material restrictions on use and registration of the
SRI Registrations-2 in relation to the SRI Goods in all
countries where said are registered or pending,
including but not limited to all agreements,
arrangements, conflicts or threatened conflicts between
SRI or any of the SRI JV Companies and a third party
which restrict use of one or more of the SRI
Registrations-2 in relation to the SRI Goods in all
countries where said are registered or pending, or
affect the scope of or validity of the SRI
Registrations-2 in said countries including the names
of parties and details (or copy documentation to be
provided concurrently), and all restrictions on
registration of the SRI Registrations-2 in the Greater
European Territory in relation to SRI Goods of which
SRI or any of the SRI JV Companies are aware, including
but not limited to all agreements, arrangements,
conflicts or threatened conflicts between SRI or any of
the SRI JV Companies and a third party which restrict
registration of one or more of the SRI Registrations-2
in relation to the SRI Goods including the names of
parties and details (or copy documentation to be
provided concurrently); and
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45
(C) in respect of SRI European Trademarks which are
used but not registered (or the subject of a
pending application) in any country/ies for any
goods/services falling within SRI Goods in relation
to which they are used (hereinafter "SRI XX
Xxxxx"), all and any material restrictions on use
of the SRI XX Xxxxx in relation to the SRI Goods in
said countries including but not limited to all
agreements, arrangements, conflicts or threatened
conflicts between SRI or any of the SRI JV
Companies and a third party which restrict use of
one or more of the SRI XX Xxxxx in relation to the
SRI Goods or affect the scope of or validity of the
SRI XX Xxxxx including the names of parties and
details (or copy documentation to be provided
concurrently); and
(D) all other restrictions on use of the SRI European
Trademarks in relation to the SRI Goods in the
Greater European Territory of which SRI or any of
the SRI JV Companies are aware; and
(iii) all licenses under which SRI European Trademarks are
licensed to another party, with the name and address of
the licensee/s, and details of said licenses (or a copy
thereof to be provided concurrently); and
(iv) all licenses under which SRI European Trademarks are
licensed from a third party, with the name and address of
the licensor/s, the name and address of the owner (if
different), and details of said license/s (or a copy
thereof to be provided concurrently); and
(v) details of each and every Encumbrance (other than a
Permitted Encumbrance) created by SRI or any of the SRI JV
Companies on any of the SRI European Trademarks (or a copy
thereof to be provided concurrently); and
(vi) all agreements or arrangements relating to the SRI
European Trademarks which may be terminated in the event
of a change of control of the SRI JV Companies or which
require approval to grant sub-licenses in a separate list
in Schedule 5.12(d) (details shall be included); and
(vii) all OE export arrangements or agreements relating to
Licensed Products bearing SRI European Trademarks fitted
as original
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46
equipment to vehicles exported from any country within the
Greater European Territory; and
(viii) all company names of SRI or the SRI JV Companies
incorporated in the Greater European Territory.
Schedule 5.12(d) includes an update of all material and substantive changes to
the information contained in the above lists which changes occurred after the
date indicated on those lists but before the date of this Agreement.
(e) To the best of SRI's knowledge and belief (having made all proper
inquiries), save as specified in Schedule 5.12(e) the use or other exploitation
by SRI and the SRI JV Companies of the following, does not infringe the rights
of any third party:
(i) the D Marks in relation to the SRI Goods in the Greater
European Territory;
(ii) the SRI Registrations-2 in relation to the SRI Goods in
countries where they are registered or pending; and
(iii) the SRI XX Xxxxx in relation to the goods/services falling
within the SRI Goods for which they are used in the
countries in which they are used.
Other than those identified in Schedule 5.12(e), there is no claim of any third
party or any proceeding pending or to the best knowledge of SRI, threatened, or
any investigations by SRI or the SRI JV Companies, which relate to infringement
or other violation by SRI or any of the SRI JV Companies (or so far as they are
aware, any users authorized by them) of a third party's trademark rights in the
conduct of the Business in the Greater European Territory, nor are there any
written notices or challenges to the validity or enforceability of the rights of
SRI and/or the SRI JV Companies in the SRI European Trademarks. To the best of
the knowledge and belief of SRI and the SRI JV Companies, no person is
infringing the rights of any of SRI and the SRI JV Companies with respect to
such SRI European Trademarks, other than those identified in Schedule 5.12(e).
Other than as specified in Schedule 5.12(e), no Trademarks relating to the SRI
Goods in the Greater European Territory have been assigned or transferred, and
no rights which would restrict use of the SRI European Trademarks in relation to
the SRI Goods have been granted by SRI or the SRI JV Companies within the last
12 months.
(f) Except as set forth on Schedule 5.12(f), each of SRI and the SRI JV
Companies cumulatively have:
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47
(i) the right to manufacture under:
(A) the D Marks in relation to the SRI Goods,
(B) the SRI Registrations-2 in relation to the SRI
Goods in countries where they are registered or
pending, and
(C) the SRI XX Xxxxx in relation to the goods for which
they are used,
in the Greater European Territory; and
(ii) the right to sell and provide the goods and services
referred to in (f) (i) above under the respective
trademarks referred to in (f) (i) above in the Greater
European Territory; and
(iii) in relation to the SRI JV Companies, the right to use said
trademarks in connection with OE exports of said goods to
jurisdictions other than the country in which the said
goods are fitted to the vehicle;
and have all the trademark rights and licenses necessary for the conduct of the
SRI Businesses as conducted by the SRI JV Companies as of the Closing Date, and
the consummation of the transactions contemplated hereby will not alter or
impair any such rights, save as expressly stated in or contemplated by the
Alliance Agreements.
(g) Schedule 5.12(g) also sets forth:
(i) Any and all material restrictions on use by the SRI JV
Companies of all copyright rights and other rights in
drawings of tires and parts thereof and other products of
the SRI Businesses and all designs applicable to the
appearance or shape of tires and other products of the SRI
Businesses (including but not limited to tread designs)
owned by SRI, SRI's Affiliates or the SRI JV Companies or
licensed from a third party in the European Territory
(hereinafter "the Works") and the consummation of the
Transactions contemplated hereby will not alter or impair
any of the SRI JV Companies' rights in or their ability to
use the Works save as expressly stated in or contemplated
by the Alliance Agreements; and
(ii) All current conflicts or threatened conflicts (of which
SRI is aware) or validity challenges relating to the
Works.
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48
(h) To the best knowledge and belief of SRI, the use or other
exploitation by the SRI JV Companies of the Works in relation to the SRI
Businesses does not infringe the rights of any third party. Other than those
identified in Schedule 5.12(h), there is no claim of any third party or any
Proceeding pending or to the best knowledge of SRI, threatened, or any
investigations by SRI or the SRI JV Companies, which relate to infringement or
other violation of a third party's rights in the Works in the conduct of the
SRI Businesses, nor are there any written notices or challenges to the validity
or enforceability of the rights of SRI, SRI's Affiliates or the SRI JV
Companies in the Works. To the best of the knowledge and belief of SRI, no
person is infringing the rights of any of SRI, SRI's Affiliates or the SRI JV
Companies with respect to such Works, other than those identified in Schedule
5.12(h).
(i) The Parties agree that the information provided pursuant to all
parts of this Article 5.12 and in Schedules 5.12(a) through (h) shall be
supplemented by an accurate and complete list, as required by Article 8.03 of
the Umbrella Agreement as at the Closing Date.
5.13 SOFTWARE.
(a) The SRI JV Companies have entered into, have valid rights under and
have maintained all material computer programs, computer data bases or other
computer software used or owned by any of the SRI JV Companies (insofar as they
are comprised in the SRI Businesses) ("Software").
(b) The SRI JV Companies have received no claim of any third party nor
is any Proceeding or any investigation pending or, to the best of the knowledge
of SRI, threatened, which relates to infringement or other violation of the
rights of third parties arising out of the use of the Software. There are no
written notices or challenges to the validity or enforceability of the rights
of any of the SRI JV Companies to use the Software. To the best of the
knowledge of SRI, no Person is infringing the rights of any of the SRI JV
Companies with respect to the Software.
(c) The SRI JV Companies have granted to the third parties listed on
Schedule 5.13(c) the licenses or authorizations identified thereon relating to
the use of the Software owned or licensed by the SRI JV Companies.
(d) Except as set forth on Schedule 5.13(d), each of the SRI JV
Companies' consultants, contractors and subcontractors who have participated in
the creation, design or development of the Software owned or used but not
licensed by any of the SRI JV Companies has entered into a written agreement
assigning the copyright (or any other right arising under any applicable Law)
in the Software (including the related documentation) to the relevant SRI JV
Company and each employee of a SRI JV Company who has participated in the
creation, design or development of the Software owned or used by any of the SRI
JV Companies, have under the law of the relevant jurisdictions automatically
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49
assigned the copyright (or any other right arising under any applicable Law) in
the Software (including the related documentation) to the relevant SRI JV
Company.
5.14 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) The SRI JV Companies are currently conducting, and have at all times
for which the applicable statute of limitation has not expired, conducted their
respective part of the SRI Businesses and are currently maintaining and have at
all times for which the applicable statute of limitation has not expired
maintained their ownership and possession of their respective SRI Business
Assets, in compliance with all applicable Laws, Judgments and Permits, except
to the extent that the failure to so conduct their respective part of the SRI
Businesses and maintain their respective SRI Business Assets would not have a
Material Adverse Effect on any of the Material SRI JV Companies.
(b) Except as set forth on Schedule 5.14, the SRI JV Companies possess,
and upon consummation of the Transactions will continue to possess all Permits
necessary to conduct their respective part of the SRI Businesses, as they are
currently being conducted, and all such Permits are in full force and effect,
except to the extent the failure to so possess or maintain in full force and
effect would not have a Material Adverse Effect on any of the Material SRI JV
Companies or impair the SRI JV Companies ability to perform their material
obligations under the Alliance Agreements. Except as set forth in Schedule
5.14, all such Permits, to the extent such Permits need to be assigned or
transferred pursuant to the Transactions, are fully and freely assignable or
transferable (except to the extent that the failure to so assign or transfer is
due solely to the discretionary act or acts of an Authority and not based upon
the acts or omissions of SRI or any of the SRI JV Companies) to the applicable
SRI JV Company. No proceeding to modify, suspend, terminate or otherwise limit
any such Permit is pending or, to the best knowledge of SRI, threatened.
(c) Except as set forth in Schedule 5.14, none of the SRI JV Companies
has received any notice in any form (including any citations, notices of
violations, complaints, consent orders or inspection reports) which would
indicate that any such company was not at the time of such notice or is not
currently in compliance with all such applicable Laws, Judgments and Permits
except where the failure to not be in compliance would not have a Material
Adverse Effect on any of the Material SRI JV Companies.
(d) None of the SRI JV Companies has made any illegal payment to any
officer or employee of any governmental or regulatory authority, engaged in any
illegal reciprocal agreements with competitors, customers or suppliers or made
any illegal payment to any supplier or purchasing agent.
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50
5.15 OUTSTANDING COMMITMENTS.
(a) Schedule 5.15(a) contains an accurate and complete list of all
Contracts (insofar as such Contracts are comprised in the SRI Businesses other
than Contracts covered in Article 5.16(b)) to which any of the SRI JV Companies
is a party or by which any of their assets or operations are bound or affected
and which (i) involve the obligation (including contingent obligations) by or
to any of the SRI JV Companies to pay amounts in excess of the equivalent of
US$1,000,000 in any fiscal year, (ii) are Contracts whose term exceeds one (1)
year or is unlimited (with the exception of labor agreements) and which may not
be terminated by the relevant SRI JV Company on less than six (6) months'
notice without the payment of a penalty in the equivalent amount of US$100,000
or more, (iii) are Contracts under whose terms one or more of the SRI JV
Companies is bound to materially refrain from carrying out or to materially
restrict certain normal business activities as such activities are conducted in
the Ordinary Course of Business, or to refrain from competing with any third
party, (iv) are Contracts with SRI or any Affiliate thereof (except any of the
SRI JV Companies) in the equivalent amount of US$100,000 or more or any
director or employee thereof (v) are Contracts for the purchase or resale of
tires, retread materials, accessory parts and air springs in excess of the
equivalent of US$2,000,000 per annum ("Dealer Contracts"), or (vi) were not
entered into in the Ordinary Course of Business.
(b) All Contracts listed on Schedule 5.15(a) are valid, binding and
enforceable by one or more of the SRI JV Companies in accordance with their
respective terms and none of the SRI JV Companies is in default or has waived
any material right under any of such Contracts, nor does there exist any event
or condition, which upon the giving of notice or the lapse of time or both,
would (i) constitute a default or event of default thereunder or (ii) entitle
any other party thereto to terminate such Contract, and which would in any
case, have a Material Adverse Effect on any of the Material SRI JV Companies.
To the best knowledge of SRI, the obligations of each counterparty to any
Contracts listed on Schedule 5.15(a) are (i) valid and binding on such
counterparty and enforceable by one or more of the SRI JV Companies in
accordance with their respective terms, (ii) none of the counterparties is in
default or has waived any material right under any of such Contracts, nor does
there exist any event or condition, which upon the giving of notice or the
lapse of time or both, would (A) constitute a default or event of default
thereunder or (B) entitle any other party thereto to terminate such Contract,
and which would in any case have a Material Adverse Effect on any of the
Material SRI JV Companies.
(c) Specifically, pursuant to Article 5.15 (a) (i), Schedule 5.15(a)
includes without limitation a list of all Contracts in excess of the equivalent
of US$1,000,000 in any fiscal year to which any of the SRI JV Companies is a
party or by which any of their assets or operations are bound with any original
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51
equipment automotive manufacturer ("Original Equipment Contracts"). Except for
such Original Equipment Contracts, there are no other contracts with original
equipment automotive manufacturers which impose obligations on any of the
Material SRI JV Companies which would have a Material Adverse Effect on any of
the Material SRI JV Companies.
(d) None of the Contracts listed on Schedules 5.15(a) or 5.16(a) and (b)
to which any SRI JV Company is a party or a beneficiary violates any provision
of any applicable Law or Judgment. All Contracts between any of the SRI JV
Companies on the one hand, and its suppliers, customers, distributors, dealers,
agents or licensees, on the other hand, have been concluded under normal market
conditions, in accordance with normal commercial practice except where the
failure to have so concluded such Contracts would have a Material Adverse
Effect on any of the Material SRI JV Companies.
(e) SRI and SRE have made or will make upon request all Dealer Contracts
and Original Equipment Contracts available to Goodyear for review and have made
available or will make available upon request in writing all material
amendments to such Contracts in connection therewith (unless prohibited by
applicable anti-trust Laws or a confidentiality clause contained in any such
agreement). Any Contracts or material amendments not available for review by
Goodyear due to the foregoing prohibition regarding anti-trust Laws or
confidentiality clauses, impose no obligations on any of the Material SRI JV
Companies which would have a Material Adverse Effect on any of the Material SRI
JV Companies.
5.16 EMPLOYMENT MATTERS.
(a) Schedule 5.16(a) contains a list, for each of the SRI JV Companies,
and for each separate establishment thereof, of all the collective rules
applicable to SRI JV Employees (the "Collective Rules"), including without
limitation: (i) the applicable collective bargaining agreements (other than
those applicable on a nation-wide or industry-wide basis) and company
agreements; (ii) the remuneration system, including premiums, bonuses,
commissions and benefits in kind; (iii) profit-sharing, incentive and company
savings plans; (iv) any retirement or health insurance plan pursuant to which
employees are entitled to receive benefits in addition to those provided for by
law or the applicable collective bargaining agreements; (v) any other employee
benefit plans similar in type to those described in Sections 3(1) and 3(2) of
ERISA; and (vi) any regional, local or individual company or establishment
practices which provide for benefits which exceed those provided for by law or
the applicable collective bargaining agreements.
(b) Schedule 5.16(b) (save as expressly provided therein) sets forth a
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52
complete and accurate list of the thirty (30) employment, consulting,
severance, termination or compensation Contracts of greatest amount between any
individual and each of the Major SRI JV Companies and their Affiliates
controlled by them and ten (10) such contracts of greatest amount for retail
operations between an individual and any of the SRI JV Companies, pursuant to
which any such individual has received benefits within the preceding two (2)
years which exceed those provided for by law or the applicable Collective
Rules, including, but not limited to, increased severance pay, extended notice
periods, advantages in kind or pensions (the "SRI JV Employment Agreements"),
copies of which are available upon request by Goodyear. In the case of certain
of the SRI JV Employment Agreements to which the provisions of the German Data
Protection Act extend, the information provided on Schedule 5.16 (b) shall only
identify the employment contract between the applicable company and individual
by a general title, job description or functional area of responsibility, in
order not to disclose information protected by such Act (the "SRI German
Employment Contracts"). None of the individual SRI German Employment Contracts
have been amended nor do any of them contain any contractual provisions or
entitlement to benefits other than as stated in the specific representative
contract that SRI has provided to Goodyear (by letter of May 24, 1999) as
representative of that individual's SRI German Employment Contract. SRI has
provided a model representative contract (by letter of May 24, 1999) to
Goodyear for each of the SRI German Employment Contracts. No amount will become
due to any director, consultant or employee of any of the SRI JV Companies
under the Collective Rules or any SRI JV Employment Agreement solely as a
result of the Transactions.
(c) As of the date hereof, none of the directors, consultants or
employees of any of the SRI JV Companies earning in excess of the equivalent of
US$100,000 per annum has formally notified any such company that he or she does
not intend to continue his or her relationship with it following the completion
of the Transactions on the terms of the applicable Collective Rules and the SRI
JV Employment Agreements as currently in effect and SRI and SRE have no reason
to believe that each of the SRI JV Companies will not be able to continue such
relationships with such persons after the Closing.
(d) Except as set forth on Schedule 5.16(d), each of the SRI JV
Companies are now and have in the past been in all material respects in
compliance with all provisions of applicable labor and social security Laws,
the Collective Rules and the SRI JV Employment Agreements and all payments due
thereunder from each of the SRI JV Companies have been made when due.
(e) The SRI JV Companies:
(i) do not have any obligation to contribute to, nor have they
incurred any liability with respect to any benefit plan
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53
concerning the SRI JV Employees, other than the employee
benefit plans listed on Schedule 5.16(a) (the "SRI JV
Employee Benefit Plans"), nor will they have any liability
after the Closing under any employee benefit plan
concerning any employees, other than SRI JV Employees or
retirees from the SRI Businesses or the predecessors of
such businesses;
(ii) have not engaged in a transaction that could result in the
imposition upon any SRI JV Companies of a civil penalty
with respect to the regulation of the SRI JV Employee
Benefit Plans and no fact or event exists that could give
rise to any such liability which would have a Material
Adverse Effect on any of the Material SRI JV Companies;
(iii) have not entered into any agreement to indemnify any
Person (other than any Person entitled to benefits under
the SRI JV Employee Benefit Plans) with respect to any of
the SRI JV Employee Benefit Plans; and
(iv) have had the SRI JV Employee Benefit Plans, as amended to
date, determined by the appropriate regulatory authority
if required, to be plans which comply in all material
respects with the laws and regulations to which they are
subject, and no assets of the SRI JV Employee Benefit
Plans are subject to any Encumbrances.
(f) Except as set forth on Schedule 5.16(f), SRI and SRE have not
permitted the SRI JV Companies to adopt, change or commit to adopt any type of
employee benefit plan similar to the SRI JV Employee Benefit Plans covering the
SRI JV Employees, after December, 31 1998 and prior to the Closing, except in
the Ordinary Course of Business.
(g) Except as set forth in Schedule 5.16(g), since January 1, 1998 there
have not occurred any strikes, slow downs, work stoppages or other similar
labor actions by any group of employees of any of the SRI JV Companies. Nor are
any of SRI or any of the SRI JV Companies aware that any such labor action is
pending or threatened. No Proceeding arising out of any labor grievance under
any Law, the Collective Rules or any SRI JV Employment Agreement is pending or,
to the best knowledge of SRI, threatened against any SRI JV Company.
5.17 ENVIRONMENT, HEALTH AND SAFETY.
(a) Except as set forth on Schedule 5.17(a), and except where the
failure to be in compliance would not have a Material Adverse Effect on any
Material SRI
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JV Company, each of the SRI JV Companies has obtained, and has been at all
times, for which the applicable statute of limitation has not expired, in
compliance with all terms and conditions of, all Permits which are required
under, and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
which are contained in, all Laws, Permits and Judgments relating to public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation Environmental Laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or chemical, industrial, hazardous or toxic materials or wastes
into ambient air, surface water, ground water or lands or otherwise relating to
the testing, characterization, classification, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or chemical, industrial, hazardous or toxic materials
or wastes. All such Permits are valid and in full force and effect and (to the
extent such Permits need to be assigned or transferred to an SRI JV Company
pursuant to the SRI Reorganization or pursuant to the Transactions in order to
ensure the continued conduct of the SRI Businesses as such are presently
conducted) are freely transferable or assignable (except to the extent that the
failure to assign or transfer is due solely to the discretionary act of any
Authority and not based upon the acts or omissions of SRI or any of the SRI JV
Companies), and where applicable, timely renewal applications have been
submitted for all such Permits. No Proceedings have been filed or commenced
against any of the SRI JV Companies or notices of violation or Environmental
Claim received by any of the SRI JV Companies alleging any failure to comply
with any such Laws, Judgments or Permits, where such Proceeding or violation
would have a Material Adverse Effect on any of the SRI JV Companies and, to the
best knowledge of SRI, no such Proceedings, notices of violation or
Environmental Claims are pending or threatened, nor does there exist any
existing event or condition on the basis of which (i) an Authority would
reasonably be expected to deny or revoke or limit any such Permits or (ii) if
such Permits have been obtained by any of the SRI JV Companies, such Permits
would not remain in full force and effect as of the Closing Date.
(b) Except as set forth in Schedule 5.17(b), none of the SRI JV
Companies has any material liability (and there is not any past or present
fact, status, condition, activity, occurrence, action or failure to act related
to the past or present operations, properties or facilities, whether owned,
used or leased, of any of the SRI JV Companies that to their best knowledge,
forms or reasonably could form the basis for the imposition of any liability)
(i) under any law relating to protection of human health or safety or
concerning employee or worker health and safety or relating generally to the
environment, (ii) for damage to any site, location, natural resources or body
of water (surface or subsurface) or for failure to report or clean up any
discharges of any substance, or (iii) for any illness of, personal injury to,
or death of, any of its employees or any third party.
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5.18 INSURANCE. Except as disclosed on Schedule 5.18, each of the SRI JV
Companies are insured by insurance carriers not related to or affiliated with
SRI or SRE. Schedule 5.18 sets forth a complete list and brief description
(specifying the insurer, the coverage and the policy number or covering note
number with respect to binders) of all policies, binders or Contracts to which
any of the SRI JV Companies is a party or by which any of the SRI Business
Assets are covered for purposes of property, fire, liability, product liability,
workmen's compensation, vehicular, crime, builders' risk, title and other
insurance or Contracts in the nature of insurance. The policies, binders and
Contracts listed on Schedule 5.18 are in full force and effect in accordance
with their respective terms and, to the best knowledge of SRI and the SRI JV
Companies, will remain in full force and effect after the Closing, except as
otherwise agreed in writing between SRI and Goodyear and, additionally, none of
the SRI JV Companies has received written notice that any insurer thereunder
intends to cancel or terminate such policies, binders or Contracts. None of SRI
or any of the SRI JV Companies has received any notice that it is in default
with respect to any provision of any such policies, binders or Contracts. None
of SRI or any of the SRI JV Companies has provided inaccurate, incomplete or
misleading information in connection with any such policies, binders or
Contracts or failed to give any notice or present any claim thereunder in due
and timely fashion or as required by any such policies, binders or Contracts so
as to jeopardize full recovery thereunder. There are no claims in excess of
US$1,000,000 outstanding under any such policy, binder or Contract.
5.19 ACCOUNTS RECEIVABLES. Except as disclosed on Schedule 5.19, all accounts
receivables of the SRI JV Companies and other rights of payment, including,
without limitation, unbilled amounts and credits extended to third parties,
shown on the SRI Major European Companies Year End Financial Statements or
acquired by the SRI JV Companies subsequent to the date of the balance sheets
included therein but before the Closing Date, except to the extent thereafter
collected, have arisen from bona fide transactions in the Ordinary Course of
Business, are free of any Encumbrances, except for those receivables sold as
reflected on the SRI Major European Companies Year End Financial Statements
which receivables will be free and clear of Encumbrances at the Closing Date,
and the reserves or write-offs for bad debts in the SRI Major European Companies
Year End Financial Statements have been computed in a manner consistent with
past practice.
5.20 GUARANTEES. There are no guaranty agreements, commitments to issue
guarantees, comfort letters, letters of awareness, other credit support
arrangements, joint and several obligations, swap agreements or any other
derivative transactions entered into by any of the SRI JV Companies which are
not listed in Schedule 5.20, copies of which are available to Goodyear upon
request.
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5.21 SUBSIDIES. Schedule 5.21 sets forth a complete list of all governmental,
quasi-governmental and other public and private grants and subsidies that
provide any reimbursement, refund, abatement, Tax reduction or other benefit in
excess of US$1,000,000 ("Subsidies") to any of the SRI JV Companies, together
with any additional Subsidies for which any of the SRI JV Companies is in the
process of applying, and fully and correctly sets out the status of each Subsidy
and application therefor, including the obligations imposed on each SRI JV
Company that remain outstanding. The SRI JV Companies have complied in all
material respects with the terms and conditions imposed upon them in connection
with each such Subsidy, including but not limited to the utilization of funds,
the amount of investments to be made by them and the maintaining of a minimum
level of employment. Except as set forth in Schedule 5.21, none of the SRI JV
Companies are in material breach of any of the terms and conditions of any
Subsidy and no facts or circumstances exist that to the best knowledge of SRI
could cause the SRI JV Companies to be required to reimburse all or part of any
Subsidy before the due date of reimbursement, if any, or to lose all or part of
the benefit of the Subsidy.
5.22 YEAR 2000. Each of SRI and the SRI JV Companies have taken and will take
up to Closing all commercially reasonable actions in a timely manner to prevent
a Year 2000 problem in computer systems, software, or equipment owned, leased
or licensed by such company from (a) interfering with its performance under the
Alliance Agreements, (b) interfering with or frustrating the purpose and
successful operation and administration of the Europe JVC or the SRI JV
Companies, as set forth in this JV Agreement, the Umbrella Agreement or any of
the other Alliance Agreements or (c) having a Material Adverse Effect on any of
the SRI JV Companies. Each of the SRI JV Companies has requested from those of
its suppliers or other business partners whose performance may materially
affect the performance of any of the SRI JV Companies hereunder that each
supplier or business partner undertake all commercially reasonable actions in a
timely manner to prevent a Year 2000 problem from interfering with such
performance, in each case where the failure to perform would have a Material
Adverse Effect on any of the Material SRI JV Companies.
For purposes of the Alliance Agreements, Year 2000 problem means any failure,
error, or delay resulting from the inability of any software, hardware, embedded
chip, or other device to accurately and without interruption perform and
process, display, store, manipulate, and handle dates before, on, and after
January 1, 2000.
5.23 UNDISCLOSED LIABILITIES, ETC. On the date hereof, except as disclosed in
the SRI Major European Companies Year End Financial Statements or as set forth
on Schedule 5.23, the SRI JV Companies have no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
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to become due other than liabilities (i) that have been incurred in the Ordinary
Course of Business, (ii) that have not had a Material Adverse Effect on the SRI
JV Companies taken as a whole, or (iii) that would not have a Material Adverse
Effect on the SRI JV Companies taken as a whole.
5.24 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Schedule
5.24, which will be supplemented by an accurate and complete list as required
by Article 8.03 of the Umbrella Agreement, since December 31, 1998 (except for
Article 5.24(q), none of the SRI JV Companies has and/or there has not been
(with respect to either the SRI Business Assets or the SRI Businesses):
(a) declared for payment after the Closing Date, any cash dividend,
payment or other distribution in respect of their shares of capital stock or,
except as required by the SRI Reorganization or otherwise pursuant to the
Alliance Agreements, declared any dividend of property in kind;
(b) other than in the Ordinary Course of Business, or except as
contemplated by the SRI Reorganization, incurred any obligation or liability,
contingent or otherwise, exceeding US$1,000,000, except such obligations
affecting any of the SRI JV Companies beyond the Closing Date under Contracts;
(c) except (i) in the Ordinary Course of Business, (ii) as contemplated
by the Alliance Agreements, (iii) the payment of any obligations or
installments when due or (iv) the discharge or satisfaction of any Encumbrance,
paid any obligation or liability (fixed or contingent);
(d) sold, assigned, transferred, conveyed, leased or otherwise disposed
of or agreed to sell, assign, transfer, convey, lease or otherwise dispose of
any of its SRI Business Assets having a fair market value equivalent of
US$100,000 and above, except for fair consideration (plus or minus 10%
therefrom) in the Ordinary Course of Business or except as contemplated by the
SRI Reorganization;
(e) compromised any debt, Proceeding or claim, or waived or released any
right, except as made in the Ordinary Course of Business or which would not
have a Material Adverse Effect on any of the Material SRI JV Companies;
(f) suffered any extraordinary loss or extraordinary losses which would
have a Material Adverse Effect on any of the Material SRI JV Companies;
(g) except in the Ordinary Course of Business or as contemplated by the
Alliance Agreements, transferred or granted any rights under any material
concessions, leases, licenses, agreements, Patents, inventions, Trademarks,
brandmarks, brand names, copyrights, or with respect to any know-how;
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(h) suffered any accidental losses or damages with respect to the SRI
Business Assets having an aggregate replacement cost of more than US$5,000,000,
whether or not such losses or damages shall have been covered by insurance;
(i) made any material charitable contribution not in accordance with
past practice or entered into any commitment therefor;
(j) lost as customers any original equipment manufacturers, Dealer
Contracts or Contracts with suppliers or for supplies, based on facts or events
not arising out of a change in control of the SRI JV Companies, which losses,
individually or in the aggregate, have had, or which any of the SRI JV
Companies expect to have, a Material Adverse Effect on any of the Material SRI
JV Companies;
(k) other than as contemplated by the Alliance Agreements or at the
specific request of Goodyear, introduced any material change with respect to
the method or practices of accounting of the SRI JV Companies;
(l) instituted any increases or commitments for increases in excess of
3% per annum in the general average salary or compensation level of all the SRI
JV Employees of each of the SRI JV Companies;
(m) except for bids or tenders made in the Ordinary Course of Business,
made any bids or tenders on or for Contracts in excess of US$5,000,000;
(n) except as provided in (l) above, amended or otherwise modified the
terms of any SRI JV Employment Agreements to increase the amount or accelerate
the payment or vesting of any benefit thereunder or under any existing or new
benefit plan of the type described in Article 5.16(a) with respect to any
individual party to such agreements;
(o) adopted any amendments to its Constituent Documents that could
reasonably be expected to have a Material Adverse Effect on the ability of SRI
or any of the SRI JV Companies to perform their obligations under the Alliance
Agreements;
(p) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not) in the Ordinary
Course of Business) that could reasonably be expected to have a Material
Adverse Effect on the ability of SRI or any of the Material SRI JV Companies to
perform their obligations under the Alliance Agreements; and
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(q) since December 31, 1998 through and including the date hereof,
except as contemplated by the Alliance Agreements or otherwise agreed in
writing, carried on the SRI Businesses (including without limitation, entering
into any material transaction, contract or commitment) other than in the
ordinary course of business and substantially in the same manner as heretofore
conducted consistent with past practice.
5.25 SURVIVAL PERIOD. The representations and warranties of SRI or SRE
contained in the Alliance Agreements or in any document delivered pursuant to
the Alliance Agreements shall not be discharged upon the date(s) of the giving
of such representations and warranties (the date of this JV Agreement and the
Closing Date), but shall survive for so long as an indemnification claim for
the applicable representation and warranty can be made pursuant to Article XV,
Indemnification, of the Umbrella Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Parties hereby agree that Goodyear shall be deemed to know and
possess all the knowledge and information known to or possessed by each of the
Goodyear JV Companies. Each of Goodyear, Goodyear Fra, Goodyear Lux and Goodyear
Canada hereby jointly and severally represents and warrants to SRI (including
any successor corporation) as of the date hereof except as otherwise stated
herein, as follows:
6.1 CORPORATE ORGANIZATION, ETC. (a) Schedule 6.1 hereto lists all the
companies, one hundred per cent (100%) of the shares of which, except as
otherwise indicated on such schedule, must be owned by the Europe JVC and its
Affiliates controlled by it in order that the Europe JVC and its Affiliates
controlled by it will be able to conduct the Goodyear Businesses as contemplated
in the Alliance Agreements.
(b) Each of the Goodyear JV Companies, is a corporation or limited liability
company duly organized and validly existing and, in good standing under the laws
of its jurisdiction of incorporation or organization and each has all requisite
corporate power and authority to own, lease, convey and operate its respective
part of the Goodyear Businesses as now conducted, and is qualified to do
business in each jurisdiction where the nature of its properties, assets or
business requires such qualification, other than where the failure to be so
qualified would not have a Material Adverse Effect on the business and assets of
such corporation or company. Complete and correct copies of the Constituent
Documents, duly updated, of each of the Goodyear JV Companies have previously
been delivered to SRI or will be made available upon request. The
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minute books or similar records of each of the Goodyear JV Companies contain a
materially accurate record of all meetings and other corporate action of its
stockholders, board of directors or other governing bodies (and any committees
thereof). Except as described and contemplated by this JV Agreement, there has
been no proposal made or resolution adopted by the competent corporate body or
bodies of any of the Goodyear JV Companies for the dissolution, liquidation,
merger or split-up of any of them and, to their best knowledge, no
circumstances exist which might result in the dissolution, liquidation, merger
or split-up of any such corporation or company.
6.2 AUTHORITY; EXECUTION AND ENFORCEABILITY. Except as set forth on Schedule
6.2, each of the Goodyear JV Companies has the requisite power and authority to
execute, deliver and carry out the terms and provisions of the Alliance
Agreements to be executed, delivered and (save in respect of corporate actions
concerning the Reorganizations) carried out by each of them, if any, to which
each of them is a party and to consummate the Transactions to which each of them
is a party, and has taken all necessary corporate action to authorize the
execution, delivery and performance of such Alliance Agreements, and no other
act or proceeding, corporate or otherwise, on the part of any of the Goodyear JV
Companies is necessary to authorize the execution of the Alliance Agreements or
the consummation of any of the Transactions. Goodyear has the power and
authority to cause the Goodyear JV Companies to enter into and, prior to
Closing, to carry out the obligations under the Alliance Agreements to which
such companies are a party, and, to the extent applicable, to carry out the
Goodyear Reorganization, in each case so as to be bound to the obligations
thereunder. This JV Agreement has been duly executed by of each of Goodyear,
Goodyear Fra, Goodyear Lux and Goodyear Canada and constitutes and the other
Alliance Agreements when duly executed by them and the Goodyear JV Companies
will constitute, a legal, valid and binding obligation of each of Goodyear,
Goodyear Fra, Goodyear Lux, Goodyear Canada and the Goodyear JV Companies as the
case may be, enforceable against each in accordance with its terms except to the
extent that (i) such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought. Except as described and contemplated by
this JV Agreement, all corporate actions required from the Goodyear JV Companies
in connection with the consummation of the Transactions have been duly
performed.
6.3 OWNERSHIP OF STOCK; CORPORATE STRUCTURE. (a) Schedule 6.3 (a) sets forth
for each of the Goodyear JV Companies as of the date hereof which will be
supplemented by an accurate and complete list, as required by Article 9.03 of
the Umbrella Agreement, the authorized capital, the issued capital, the number
and,
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where applicable, the par value of the shares comprising such capital, the
names of the shareholders thereof and the number of shares held by each such
shareholder. All of the issued and outstanding shares of capital stock of each
of the Goodyear JV Companies have been duly authorized and are validly issued,
have been credited as fully paid and are clear of any Encumbrances, and, as of
the date hereof are held of record and owned beneficially by the Persons
indicated on Schedule 6.3(a). There are no preemptive rights with respect to
the capital stock indicated on Schedule 6.3(a) of any of the Goodyear JV
Companies. Except as set forth on Schedule 6.3(a), at the Closing, the Europe
JVC will own, directly or indirectly, 100% of the capital stock of all the
Goodyear JV Companies. Except in the Ordinary Course of Business or as part of
the Goodyear Reorganization, no repayment or reduction of the stated capital of
the Goodyear JV Companies has been made.
(b) Except as set forth in Schedule 6.3(b) and except for their
respective ownership interests in the Goodyear JV Companies and pursuant to the
Transactions, neither Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada
own, nor have they committed to acquire, directly or indirectly, any interest
in any Person which manufactures, distributes or sells tires in the European
Territory.
(c) Except as provided in Article 2 hereof, there are not authorized or
outstanding, any subscriptions, options, conversion rights, warrants or other
agreements, securities or commitments of any nature whatsoever (whether oral or
written and whether firm or conditional) obligating (i) any of Goodyear,
Goodyear Fra, Goodyear Lux, Goodyear Canada or the Goodyear JV Companies to
issue, deliver or sell, or cause to be issued, delivered or sold, any shares of
the capital stock or any securities convertible into or exchangeable for shares
of capital stock, of any of the Goodyear JV Companies (ii) any Person to
repurchase or redeem the capital stock of any Goodyear JV Company, or (iii) any
of such Persons to grant, extend or enter into any such agreement or
commitment.
(d) Except as indicated on Schedule 6.3(d), each of the Goodyear JV
Companies is Solvent.
6.4 NO VIOLATION OR BREACH. Except as set forth on Schedule 6.4, neither the
execution and delivery by Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada
or the Goodyear JV Companies of the Alliance Agreements to which such companies
are a party nor the consummation of the Transactions, does or will:
(a) conflict with, result in the breach of any terms or conditions of,
constitute a default under or violate, accelerate or permit the acceleration of
any other similar right of any other party or result in the creation or
imposition of any Encumbrance except for Permitted Encumbrances on any of the
Goodyear Assets, under the Constituent Documents of any of the Goodyear JV
Companies, any applicable law, rule or regulation or any agreement, lease,
mortgage, note,
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bond, indenture, license or other document or undertaking, to which any of the
Goodyear JV Companies is a party or by which any of the Goodyear JV Companies
or any of their properties may be bound, nor will such execution, delivery and
consummation violate any order, writ, injunction or decree of any Authority to
which any of the Goodyear JV Companies or any of their properties is subject,
the effect of any of which, either individually or in the aggregate (i) would
impair the ability of any of the Goodyear JV Companies to perform its or their
material obligations under the Alliance Agreements or have a Material Adverse
Effect on any of the Material Goodyear JV Companies or (ii) would materially
diminish the benefits intended to be afforded to any of the parties to the
Alliance Agreements;
(b) violate, conflict with or result in the breach or termination of, or
otherwise give any other Person the right to accelerate, renegotiate or
terminate or receive any payment, or constitute a default or event of default
(or an event which with notice, lapse of time, or both, would constitute a
default or event of default), under the terms of, any Contracts or any Permits
to which any of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada or the
Goodyear JV Companies is a party or by which any of them (or any of the
securities, properties or businesses of any of them) are bound, the effect of
any of which would have a Material Adverse Effect on any of the Material
Goodyear JV Companies;
(c) result in the creation of any Encumbrances except Permitted
Encumbrances upon the Goodyear Business Assets of any of the Goodyear JV
Companies, the effect of which would have a Material Adverse Effect on any of
the Material Goodyear JV Companies; or
(d) constitute a violation by Goodyear, Goodyear Fra, Goodyear Lux,
Goodyear Canada or any of the Goodyear JV Companies of (i) any Laws or any
Judgments but only those violations of Laws or Judgments the violation of which
may give rise to criminal penalties or punishments or (ii) any Laws or
Judgments the violation of which may not give rise to criminal penalties or
punishments, the effect of any of which in (ii) hereof would have a Material
Adverse Effect on any of the Material Goodyear JV Companies.
6.5 BROKERS AND FINDERS. All negotiations relating to the Alliance Agreements
and the Transactions have been carried on without the participation of any
Person acting on behalf of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada
or any of the Goodyear JV Companies, in such manner as would give rise to any
broker's fee (including without limitation investment banker's fees) or finder's
fees or commissions that will be for the account of, or impose a liability on,
SRI or any of the SRI JV Companies (including any successor corporations
thereof).
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6.6 FINANCIAL STATEMENTS; LIABILITIES.
(a) Schedule 6.6(a) contains a complete and correct copy of the audited
consolidated statement of assets and liabilities to be contributed to the
Europe JVC (as described in the MOU), modified as stated in note 1 to the
relevant Financial Statements), including the report of the independent
accountants of the Goodyear JV Companies with respect thereto, in the English
language. Such statement is made as of December 31, 1998 ("Goodyear Europe Year
End Financial Statement").
(b) The Goodyear Europe Year End Financial Statement gives a true and
accurate account in all material respects of, and fairly presents, in
conformity with accounting principles generally accepted in the United States
of America ("US GAAP"), the assets and liabilities of the relevant Goodyear JV
Companies as of December 31, 1998 which are to be contributed to the Europe JVC
(as described in the MOU, modified as stated in note 1 to the relevant
Financial Statement). The Goodyear Europe Year End Financial Statement has been
certified without qualification by the relevant independent accountants.
(c) As of December 31, 1998 the Goodyear JV Companies on a consolidated
basis did not have any liabilities or obligations of any nature, whether known
or unknown, accrued, absolute, contingent or otherwise, and whether due or to
become due (for the purposes of Article 5.6 or 6.6 only, collectively,
"Liabilities" and individually, a "Liability") which are to be contributed to
the Europe JVC and which (i) were required by US GAAP, as applicable, as
applied on a consistent basis, to be reflected in financial statements and (ii)
individually or in the aggregate would have had a Material Adverse Effect on
the financial condition of the Goodyear JV Companies on a consolidated basis,
and that, in either case, were not reflected or expressly reserved against in
the Goodyear Europe Year End Financial Statement or specifically disclosed or
provided for in the notes thereto.
(d) Except as disclosed on Schedule 6.6(d) and except as otherwise
conducted as a result of the Transactions, since December 31, 1998 the Goodyear
JV Companies on a consolidated basis have conducted their businesses only in
the Ordinary Course of Business and the Goodyear JV Companies on a consolidated
basis have not undergone or suffered any change in their financial condition,
income, properties (other than as expressly required by this JV Agreement),
Liabilities, operations or prospects which has had, individually or in the
aggregate, a Material Adverse Effect on the Goodyear JV Companies on a
consolidated basis.
(e) Except as disclosed on Schedule 6.6(e), there have been no material
intercompany transactions or arrangements relating to the Goodyear Businesses
between or among any of the Goodyear JV Companies, Goodyear, Goodyear Fra,
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Goodyear Lux and Goodyear Canada and their Affiliates during the periods
covered by the Goodyear Europe Year End Financial Statement which have not been
fully and accurately reflected on the Goodyear Europe Year End Financial
Statement.
6.7 QUIET ENJOYMENT. Except as set forth on Schedule 6.7 or as a result of the
Transactions, each of the Goodyear JV Companies is entitled to carry on its
respective part of the Goodyear Businesses and enjoy the goodwill of those
respective businesses as going concerns free and clear of any and all
Encumbrances, other than Permitted Encumbrances.
6.8 CONSENTS; FILINGS. Except as set forth on Schedule 6.8 and except as
provided in Articles 8.04(a), (b) and (c) and Schedule 8.04(d) of the Umbrella
Agreement, no consent, waiver, approval, authorization, exemption, registration,
license or declaration of or by, or filing with, any other Person or Authority
("Consent"), is required to be made or obtained by any of Goodyear, Goodyear
Fra, Goodyear Lux, Goodyear Canada or the Goodyear JV Companies in connection
with (i) the execution, delivery or enforceability of the Alliance Agreements to
which such companies are a party or (ii) the consummation of any of the
Transactions except, in each case, where the failure to make or obtain a Consent
would not have a Material Adverse Effect on any of the Material Goodyear JV
Companies.
6.9 ACTIONS AND PROCEEDINGS.
(a) Except as set forth on Schedule 6.9(a), there is no action or suit or
legal, administrative, arbitration or other alternative dispute resolution
proceeding or investigation (in each case, whether or not the defense thereof
or liability in respect thereof is covered by policies of insurance) (each, a
"Proceeding" and collectively, "Proceedings") pending nor, to the best
knowledge of Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada, is any
Proceeding or claim threatened, to which any of the Goodyear JV Companies is,
or would be, a party, nor is any Judgment outstanding against any of the
Goodyear JV Companies, in each case, the effect of which would have a Material
Adverse Effect on any of the Material Goodyear JV Companies.
(b) No Proceeding is pending or, to the best knowledge of Goodyear,
Goodyear Fra, Goodyear Lux or Goodyear Canada, threatened, before any
arbitrator or Authority to restrain or prohibit, or to obtain damages or other
relief in connection with, entry into the Alliance Agreements or the Closing of
the Transactions.
(c) Except as set forth in Schedule 6.9(c), no attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or, to the best knowledge of Goodyear, Goodyear Fra, Goodyear Lux or
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Goodyear Canada, involuntary proceedings in bankruptcy or actions pursuant to
any other debtor relief laws or actions by any Authority having jurisdiction
over any of the Goodyear JV Companies are pending, or to the best knowledge of
Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada, threatened, against
any of the Goodyear JV Companies.
6.10 TAXES AND TAX RETURNS.
(a) Each of the Goodyear JV Companies has filed on a timely basis (or
within any applicable extension) all returns and reports of all Taxes required
to be filed by it and has timely given and delivered all Tax notices and
accounts required to be given by it in respect of Taxes for which such company
is liable. All information provided in such returns, reports, notices and
accounts was, when filed or given, complete and accurate. All Taxes previously
assessed or that will be assessed upon any of the Goodyear JV Companies for any
period prior to January 1, 1999 have been paid. Adequate provisions in
accordance with US GAAP, as applicable, have been made in the Goodyear Europe
Year End Financial Statement for the payment of all Taxes for which each of the
Goodyear JV Companies will be liable for the periods covered thereby that were
not yet due and payable as of the dates thereof, regardless of whether the
liability for such Taxes is disputed.
(b) Except as set forth on Schedule 6.10(b), there are no pending, or to
the best knowledge of Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada,
threatened audits or investigations relating to any Taxes for which any of the
Goodyear JV Companies is liable. No deficiencies for any Taxes have been
proposed, asserted or assessed against any of the Goodyear JV Companies. There
are no agreements in effect to extend the period of limitations for the
assessment or collection of any Taxes for which any of the Goodyear JV
Companies is liable and no written requests for any such agreements are
pending.
(c) Each of the Goodyear JV Companies has withheld from its employees and
timely paid to the appropriate Authority proper and accurate amounts for all
periods through the date hereof in compliance with all Tax withholding
provisions of all applicable Laws.
(d) Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada have
furnished or made available or will make available upon request to SRI complete
and accurate copies of all returns and reports of all Taxes filed by any of the
Goodyear JV Companies or on their behalf on or prior to the date hereof for
each of the preceding three (3) fiscal years.
(e) None of the Goodyear JV Companies has elected, or has otherwise been
granted, any preferential tax treatment or made any sort of commitment
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vis-a-vis any Tax Authorities (whether in connection with a reorganization or
otherwise) which (i) are applicable in whole or in part to any time period that
includes a date on or after the date of this JV Agreement and (ii) would have a
Material Adverse Effect on any of the Goodyear JV Companies.
(f) Each of the Goodyear JV Companies is resident only in the
jurisdiction in which it is incorporated for tax purposes and does not have a
permanent establishment or other taxable presence in any other jurisdiction.
(g) Except as set forth on Schedule 6.10(g), none of the Goodyear JV
Companies is liable for any Taxes for which Goodyear or any Affiliate of
Goodyear, other than the Goodyear JV Companies, is liable.
6.11 TITLE TO PROPERTY; CONDITION; SUFFICIENCY.
(a) Schedule 6.11(a) sets forth an accurate and complete list of each
parcel of real property which was owned by any of the Goodyear JV
Companies as part of the Goodyear Businesses on December 31, 1998
of the following description:
(i) all factories, warehouses, distribution facilities, retail
stores, office buildings, test tracks, test facilities,
technical centers, dump sites and landfills and also any real
property over which environmental concerns can reasonably be
expected;
(ii) all other parcels of real property in excess of the fair
market value of US$250,000; and
(iii) any parcels of real property owned by any of the Goodyear JV
Companies, leased or subleased to Persons other than
Affiliates of Goodyear, Goodyear Fra, Goodyear Lux or
Goodyear Canada for a term exceeding three (3) years.
Such list which will be supplemented by an accurate and complete list, as
required by Article 9.03 of the Umbrella Agreement, of each parcel of such real
property as of the Closing Date. Except as indicated on Schedule 6.11(a) as so
supplemented, as of the Closing Date, the Goodyear JV Companies will own all of
the parcels of real property so listed and supplemented, free and clear of all
Encumbrances, except Permitted Encumbrances.
(b) Schedule 6.11(b) sets forth an accurate and complete list of all the
real property leased by any of the Goodyear JV Companies as part of the
Goodyear Businesses on December 31, 1998 of the following description:
(i) all factories, warehouses, distribution facilities, retail
stores, office buildings, test tracks, test facilities,
technical centers,
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dump sites and landfills and also any real property over
which environmental concerns can reasonably be expected;
(ii) all other parcels of real property leased to any of the
Goodyear JV Companies with an annual rent of US$100,000 or
more per annum; and
(iii) any parcels of real property leased by any of the Goodyear JV
Companies, or subleased to Persons other than Affiliates of
Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada for a
term exceeding three (3) years.
Such list which will be supplemented by an accurate and complete list, as
required by Article 9.03 of the Umbrella Agreement, of (A) all such real
property leased by any of the Goodyear JV Companies (the Schedule 6.11(b) leases
as supplemented being called the "Goodyear JV Major Real Property Leases") and
(B) all real property leases with Goodyear, Goodyear Fra, Goodyear Lux or
Goodyear Canada and/or any of their Affiliates (the "Goodyear Non Tire Real
Property Leases"), (A) and (B) being as of the Closing Date. Goodyear has made
and will make all such Schedule 6.11(b) leases above available to SRI upon
request as soon as practicable for review. The Goodyear JV Major Real Property
Leases and all other leases to which any of the Goodyear JV Companies is a party
(except the Goodyear Non Tire Real Property Leases) are collectively hereinafter
called the "Goodyear JV Real Property Leases". With respect to the Goodyear JV
Real Property Leases, each Goodyear JV Company which is a party to such leases
has a valid and subsisting right to use the premises, in accordance with the
terms of those leases, in each instance free and clear of all Encumbrances other
than Permitted Encumbrances. There is no default under any Goodyear JV Real
Property Leases and no event has occurred that with the lapse of time or giving
of notice would constitute a default thereunder, which would for the Goodyear JV
Real Property Leases, except for the Goodyear JV Major Real Property Leases,
have a Material Adverse Effect on any of the Material Goodyear JV Companies.
There does not exist with respect to the Goodyear JV Real Property Leases and,
as of the Closing Date with respect to the Goodyear Non-Tire Real Property
Leases, any violation of any building, zoning, health, safety, environmental or
other license, ordinance, code, regulation or law, the effect of which would
have a Material Adverse Effect on any Goodyear JV Company.
The Parties agree that, notwithstanding the identification of real property on
Schedules 6.11(a) and 6.11(b) by reference to an assessment of a reasonable
expectation of environmental concern, a claim against Goodyear, Goodyear Fra,
Goodyear Lux or Goodyear Canada for breach by a Goodyear JV Company of
Environmental Laws may only be brought pursuant to Article 6.17.
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(c) Except as set forth on Schedule 6.11(c), the Goodyear JV Companies,
as the case may be, have good title to the Goodyear Business Assets, free and
clear of all Encumbrances other than Permitted Encumbrances.
(d) Schedule 6.11(d) sets forth an accurate and complete list of all
leases of tangible personal property leased by or from any of the Goodyear JV
Companies relating to or used in the conduct of the Goodyear Businesses, which
will be supplemented by an accurate and complete list, as required by Article
9.03 of the Umbrella Agreement, of all such leases on the Closing Date, which
in each case require lease payments equal to or exceeding the equivalent of US$
50,000 per annum (the "Goodyear JV Major Personal Property Leases") and
Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada have made and will
make all such Schedule 6.11(d) leases available to SRI upon request as soon as
practicable for review. The Goodyear JV Major Personal Property Leases and all
other tangible personal property leases pursuant to which any of the Goodyear
JV Companies leases tangible personal property are collectively hereinafter
called the "Goodyear JV Personal Property Leases". With respect to each
Goodyear JV Personal Property Lease, each Goodyear JV Company which is party to
any such lease has a valid and subsisting lease, in each instance free and
clear of all Encumbrances other than Permitted Encumbrances. There is no
default under any Goodyear JV Personal Property Lease and no event has occurred
that with the lapse of time or giving of notice would constitute a default
thereunder, which would for the Goodyear JV Personal Property Leases, except
for the Goodyear JV Major Personal Property Leases, have a Material Adverse
Effect on any of the Goodyear JV Companies.
(e) The Goodyear Business Assets and the assets, properties and rights
to be transferred and/or granted to the Goodyear JV Companies pursuant to the
Alliance Agreements at or prior to Closing, constitute all assets, properties
and rights necessary for the conduct of the Goodyear Businesses.
(f) The Goodyear Business Assets are in all material respects in normal
operating condition and suitable for their intended purposes, ordinary wear and
tear excepted, and adequate in all material respects for the conduct of their
respective part of the Goodyear Businesses and ancillary activities as
currently conducted. No material change in the nature or method of use will
occur prior to Closing (other than normal lease expirations) and no lease
assets will be disposed of outside the Ordinary Course of Business.
6.12 INTELLECTUAL PROPERTY.
(a) Schedule 6.12(a) sets forth an accurate and complete list (as at the
date in 1999 indicated at the top of each article) in all material respects of
all patents and patent applications owned by the Goodyear JV Companies or (to
the extent that Goodyear is permitted to disclose the same) licensed by them
from a third
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party ("Goodyear Patents") indicating for each such Goodyear Patent whether it
is owned or licensed from a third party and whether such Goodyear Patent is
licensed to any third party. Except as set forth on Schedule 6.12(a), each of
the Goodyear JV Companies has all of the patents, patent licenses and know-how
licenses necessary for the conduct of the Goodyear Businesses as conducted by
the Goodyear JV Companies as of the Closing Date and the consummation of the
transactions contemplated hereby will not alter or impair any such rights, save
as expressly stated in or contemplated by the Alliance Agreements. Schedule
6.12(a) also includes an update of all material and substantive changes to the
information contained in the above list which changes occurred after the date
indicated on the top of the list and before the date of this JV Agreement.
(b) To the best of Goodyear and Goodyear's Affiliates knowledge and
belief (having made all proper inquiries) save as specified in Schedule
6.12(b)(ii):
(i) the manufacture, use, or sale of the products of the
Goodyear Businesses, and the Goodyear JV Companies'
respective use of processes and equipment in the
manufacture or sale of such products, do not infringe the
patent rights of any third party; and
(ii) other than those claims identified in Schedule
6.12(b)(ii), there is no claim of any third party or any
proceeding pending or threatened, or any investigations
for which the Goodyear JV Companies have procured a
written legal opinion, internally or externally, during
any of the last six years, which relate to infringement of
a third party's patent rights in the conduct of the
Goodyear Businesses, nor are there any written notices or
challenges to the validity or enforceability of such
rights.
(c) Schedule 6.12(c) sets forth one or more lists which cumulatively
provide an accurate and complete record (as at the date in 1999 indicated at
the top of each article) in all material respects of the following (in so far
as Goodyear is permitted to disclose the same):
(i) All license agreements whereunder the Goodyear JV
Companies have licensed patents and know-how relating to
the Goodyear Businesses exclusively to third parties
indicating for each, the identity of the licensee, the
identity of the patents, the identity of the licensed
subject matter, as well as the term of the license, the
licensed territory, the type of exclusivity and whether
the exclusivity relates to manufacture, use or sale; and
(ii) All patents, patent applications and know-how licensed
directly, or indirectly under a sub-license, from
competitors of
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Goodyear and Goodyear JV Companies, indicating the details
of said license, as described above and details of all the
products, processes and equipment used by Goodyear JV
Companies which fall within one or more claims of such
patents.
Schedule 6.12(c) also includes an update of all material and substantive changes
to the information contained in the above lists which changes occurred after the
date indicated on those lists. Complete and accurate copies of all the license
agreements under (i) and (ii) above which Goodyear is permitted to disclose have
been provided to SRI.
(d) Schedule 6.12(d) sets forth one or more lists which cumulatively
provide an accurate and complete record (as at the date in 1999 indicated at
the top of each article) in all material respects of:
(i) all trademarks, service marks (and applications and
registrations for such trademarks and service marks), used
or held by or licensed to Goodyear and the Goodyear JV
Companies, or to which they are entitled, relating to
"Goodyear Goods" (namely: tires, inner tubes for tires,
tire repair kits, pre-cured treads for tires, air springs
and tire retail chains, none of the aforesaid relating to
aircraft or solid polyurethane industrial tires) in the
Greater European Territory, including but not limited to
the trademarks GOODYEAR, GOODYEAR (and Winged Foot
Device), XXXXX and FULDA (but excluding the SAVA and
DEBICA trademarks (as defined in the Alliance Agreements)
and excluding trademarks owned by any other Eastern
European manufacturing operation which Goodyear may
subsequently acquire which is not part of the Europe JVC)
(together called the "Goodyear European Trademarks"),
indicating for each the full name of the registered
proprietor, the name of the current proprietor (if
different) or if Goodyear is unaware whether a known
change of proprietor has been recorded then the names of
the former proprietor and the new proprietor and the date
and nature of the transaction giving rise to the change,
the country/ies and general nature of the goods/services
for which such are registered/pending and the general
nature of the goods/services for which such are used; and
(ii) (A) in respect of GOODYEAR, GOODYEAR (and Winged Foot
Device), XXXXX and FULDA (whether or not
registered) and all registrations and pending
applications to register said trademarks or a
similar
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trademark or a variation thereof or a combination
containing any of said trademarks in the Greater
European Territory (hereinafter the "G Marks"), all
and any material restrictions on use of the G Marks
in relation to the Goodyear Goods in the Greater
European Territory including but not limited to all
agreements, arrangements, conflicts or threatened
conflicts between Goodyear or any of the Goodyear
JV Companies and a third party which restrict use
of one or more of the G Marks in relation to the
Goodyear Goods or affect the scope of or validity
of the G Marks including the names of parties and
details (or copy documentation to be provided
concurrently); and
(B) in respect of all other registrations and pending
applications to register any Goodyear European
Trademark (hereinafter "Goodyear Registrations-2"),
all and any material restrictions on use and
registration of the Goodyear Registrations-2 in
relation to the Goodyear Goods in all countries
where said are registered or pending, including but
not limited to all agreements, arrangements,
conflicts or threatened conflicts between Goodyear
or any of the Goodyear JV Companies and a third
party which restrict use of one or more of the
Goodyear Registrations-2 in relation to the
Goodyear Goods in all countries where said are
registered or pending, or affect the scope of or
validity of the Goodyear Registrations-2 in said
countries including the names of parties and
details (or copy documentation to be provided
concurrently), and all restrictions on registration
of the Goodyear Registrations-2 in the Greater
European Territory in relation to Goodyear Goods of
which Goodyear or any of the Goodyear JV Companies
are aware, including but not limited to all
agreements, arrangements, conflicts or threatened
conflicts between Goodyear or any of the Goodyear
JV Companies and a third party which restrict
registration of one or more of the Goodyear
Registrations-2 in relation to the Goodyear Goods
including the names of parties and details (or copy
documentation to be provided concurrently); and
(C) in respect of Goodyear European Trademarks which
are used but not registered (or the subject of a
pending application) in any country/s for any
goods/services
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falling within Goodyear Goods in relation to which
they are used (hereinafter "Goodyear XX Xxxxx"),
all and any material restrictions on use of the
Goodyear XX Xxxxx in relation to the Goodyear Goods
in said countries including but not limited to all
agreements, arrangements, conflicts or threatened
conflicts between Goodyear or any of the Goodyear
JV Companies and a third party which restrict use
of one or more of the Goodyear XX Xxxxx in relation
to the Goodyear Goods or affect the scope of or
validity of the Goodyear XX Xxxxx including the
names of parties and details (or copy documentation
to be provided concurrently); and
(D) all other restrictions on use of the Goodyear
European Trademarks in relation to the Goodyear
Goods in the Greater European Territory of which
Goodyear or any of the Goodyear JV Companies are
aware; and
(iii) all licenses under which Goodyear European Trademarks are
licensed to another party, with the name and address of
the licensee/s, and details of said licenses (or a copy
thereof to be provided concurrently); and
(iv) all licenses under which Goodyear European Trademarks are
licensed from a third party, with the name and address of
the licensor/s, the name and address of the owner (if
different), and details of said license/s (or a copy
thereof to be provided concurrently); and
(v) details of each and every Encumbrance (other than a
Permitted Encumbrance) created by Goodyear or any of the
Goodyear JV Companies on any of the Goodyear European
Trademarks (or a copy thereof to be provided
concurrently); and
(vi) all agreements or arrangements relating to the Goodyear
European Trademarks which may be terminated in the event
of a change of control of the Goodyear JV Companies or
which require approval to grant sub-licenses in a separate
list in Schedule 6.12(d)(vi) (details shall be included);
and
(vii) all OE export arrangements or agreements relating to
Licensed Products bearing Goodyear European Trademarks
fitted as original equipment to vehicles exported from any
country
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within the Greater European Territory in a separate list
in Schedule 6.12(d)(vii); and
(viii) all company names of Goodyear or the Goodyear JV Companies
incorporated in the Greater European Territory in a
separate list in Schedule 6.12(d)(viii).
Schedule 6.12(d) includes an update of all material and substantive changes to
the information contained in the above lists which changes occurred after the
date indicated on those lists but before the date of this Agreement.
(e) To the best of Goodyear's knowledge and belief (having made all
proper inquiries), save as specified in Schedule 6.12(e) the use or other
exploitation by Goodyear and the Goodyear JV Companies of the following, does
not infringe the rights of any third party:
(i) the G Marks in relation to the Goodyear Goods in the
Greater European Territory;
(ii) the Goodyear Registrations-2 in relation to the
Goodyear Goods in countries where they are registered
or pending; and
(iii) the Goodyear XX Xxxxx in relation to the goods/services
falling within the Goodyear Goods for which they are
used in the countries in which they are used.
Other than those identified in Schedule 6.12(e), there is no claim of any third
party or any proceeding pending or to the best knowledge of Goodyear,
threatened, or any investigations by Goodyear or the Goodyear JV Companies,
which relate to infringement or other violation by Goodyear or any of the
Goodyear JV Companies (or so far as they are aware, any users authorized by
them) of a third party's trademark rights in the conduct of the Business in the
Greater European Territory, nor are there any written notices or challenges to
the validity or enforceability of the rights of Goodyear and/or the Goodyear JV
Companies in the Goodyear European Trademarks. To the best of the knowledge and
belief of Goodyear and the Goodyear JV Companies, no person is infringing the
rights of any of Goodyear and the Goodyear JV Companies with respect to such
Goodyear European Trademarks, other than those identified in Schedule 6.12(e).
Other than as specified in Schedule 6.12(e), no Trademarks relating to the
Goodyear Goods in the Greater European Territory have been assigned or
transferred, and no rights which would restrict use of the Goodyear European
Trademarks in relation to the Goodyear Goods have been granted by Goodyear or
the Goodyear JV Companies within the last 12 months.
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(f) Except as set forth on Schedule 6.12(f), each of Goodyear and the
Goodyear JV Companies cumulatively have:
(i) the right to manufacture under:
(A) the G Marks in relation to the Goodyear Goods,
(B) the Goodyear Registrations-2 in relation to the
Goodyear Goods in countries where they are
registered or pending, and
(C) the Goodyear XX Xxxxx in relation to the goods
for which they are used,
in the Greater European Territory; and
(ii) the right to sell and provide the goods and services
referred to in (f) (i) above under the respective
trademarks referred to in (f) (i) above in the Greater
European Territory; and
(iii) in relation to the Goodyear JV Companies, the right to
use said trademarks in connection with OE exports of
said goods to jurisdictions other than the country in
which the said goods are fitted to the vehicle;
and have all the trademark rights and licenses necessary for the conduct of the
Goodyear Businesses as conducted by the Goodyear JV Companies as of the Closing
Date, and the consummation of the transactions contemplated hereby will not
alter or impair any such rights, save as expressly stated in or contemplated by
the Alliance Agreements.
(g) Schedule 6.12(g) also sets forth:
(i) Any and all material restrictions on use by the
Goodyear JV Companies of all copyright rights and other
rights in drawings of tires and parts thereof and other
products of the Goodyear Businesses and all designs
applicable to the appearance or shape of tires and
other products of the Goodyear Businesses (including
but not limited to tread designs) owned by Goodyear,
Goodyear's Affiliates or the Goodyear JV Companies or
licensed from a third party in the European Territory
(hereinafter "the Works") and the consummation of the
Transactions contemplated hereby will not alter or
impair any of the Goodyear JV Companies' rights in or
their ability to use
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the Works save as expressly stated in or contemplated
by the Alliance Agreements; and
(ii) All current conflicts or threatened conflicts (of which
Goodyear is aware) or validity challenges relating to
the Works.
(h) To the best knowledge and belief of Goodyear, the use or other
exploitation by the Goodyear JV Companies of the Works in relation to the
Goodyear Businesses does not infringe the rights of any third party. Other than
those identified in Schedule 6.12(h), there is no claim of any third party or
any Proceeding pending or to the best knowledge of Goodyear, threatened, or any
investigations by Goodyear or the Goodyear JV Companies, which relate to
infringement or other violation of a third party's rights in the Works in the
conduct of the Goodyear Businesses, nor are there any written notices or
challenges to the validity or enforceability of the rights of Goodyear,
Goodyear's Affiliates or the Goodyear JV Companies in the Works. To the best of
the knowledge and belief of Goodyear, no person is infringing the rights of any
of Goodyear, Goodyear's Affiliates or the Goodyear JV Companies with respect to
such Works, other than those identified in Schedule 6.12(h).
(i) The Parties agree that the information provided pursuant to all
parts of this Article 6.12 and in Schedules 6.12(a) through (h) shall be
supplemented by an accurate and complete list, as required by Article 9.03 of
the Umbrella Agreement as at the Closing Date.
6.13 SOFTWARE.
(a) The Goodyear JV Companies have entered into, have valid rights
under and have maintained all material computer programs, computer data bases
or other computer software used or owned by any of the Goodyear JV Companies
(insofar as they are comprised in the Goodyear Businesses) ("Software").
(b) The Goodyear JV Companies have received no claim of any third party
nor is any Proceeding or any investigation pending or, to the best of the
knowledge of Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada,
threatened, which relates to infringement or other violation of the rights of
third parties arising out of the use of the Software. There are no written
notices or challenges to the validity or enforceability of the rights of any of
the Goodyear JV Companies to use the Software. To the best of the knowledge of
Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada, no Person is
infringing the rights of any of the Goodyear JV Companies with respect to the
Software.
(c) The Goodyear JV Companies have granted to the third parties listed
on Schedule 6.13(c) the licenses or authorizations identified thereon relating
to the use of the Software owned or licensed by the Goodyear JV Companies.
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(d) Except as set forth on Schedule 6.13(d), each of the Goodyear JV
Companies' consultants, contractors and subcontractors who have participated in
the creation, design or development of the Software owned or used but not
licensed by any of the Goodyear JV Companies has entered into a written
agreement assigning the copyright (or any other right arising under any
applicable Law) in the Software (including the related documentation) to the
relevant Goodyear JV Company and each employee of a Goodyear JV Company who has
participated in the creation, design or development of the Software owned or
used by any of the Goodyear JV Companies, have under the law of the relevant
jurisdictions automatically assigned the copyright (or any other right arising
under any applicable Law) in the Software (including the related documentation)
to the relevant Goodyear JV Company.
6.14 COMPLIANCE WITH LEGAL REQUIREMENTS
(a) The Goodyear JV Companies are currently conducting, and have at all
times for which the applicable statute of limitation has not expired, conducted
their respective part of the Goodyear Businesses and are currently maintaining
and have at all times which the applicable statute of limitation has not
expired maintained their ownership and possession of their respective Goodyear
Business Assets, in compliance with all applicable Laws, Judgments and Permits,
except to the extent that the failure to so conduct their respective part of
the Goodyear Businesses and maintain their respective Goodyear Business Assets
would not have a Material Adverse Effect on any of the Material Goodyear JV
Companies.
(b) Except as set forth on Schedule 6.14, the Goodyear JV Companies
possess, and upon consummation of the Transactions will continue to possess all
Permits necessary to conduct their respective part of the Goodyear Businesses,
as they are currently being conducted, and all such Permits are in full force
and effect, except to the extent the failure to so possess or maintain in full
force and effect would not have a Material Adverse Effect on any of the
Material Goodyear JV Companies or impair the Goodyear JV Companies ability to
perform their material obligations under the Alliance Agreements. Except as set
forth in Schedule 6.14, all such Permits, to the extent such Permits need to be
assigned or transferred, pursuant to the Transactions, are fully and freely
assignable or transferable (except to the extent that the failure to so assign
or transfer is due solely to the discretionary act or acts of an Authority and
not based upon the acts or omissions of Goodyear, Goodyear Fra, Goodyear Lux,
Goodyear Canada or any of the Goodyear JV Companies) to the applicable Goodyear
JV Company. No proceeding to modify, suspend, terminate or otherwise limit any
such Permit is pending or, to the best knowledge of Goodyear, Goodyear Fra,
Goodyear Lux and/or Goodyear Canada, threatened.
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(c) Except as set forth in Schedule 6.14, none of the Goodyear JV
Companies has received any notice in any form (including any citations, notices
of violations, complaints, consent orders or inspection reports) which would
indicate that any such company was not at the time of such notice or is not
currently in compliance with all such applicable Laws, Judgments and Permits
except where the failure to not be in compliance would not have a Material
Adverse Effect on any of the Material Goodyear JV Companies.
(d) None of the Goodyear JV Companies has made any illegal payment to
any officer or employee of any governmental or regulatory authority, engaged in
any illegal reciprocal agreements with competitors, customers or suppliers or
made any illegal payment to any supplier or purchasing agent.
6.15 OUTSTANDING COMMITMENTS.
(a) Schedule 6.15 contains an accurate and complete list of all
Contracts (insofar as such Contracts are comprised in the Goodyear Businesses
other than Contracts covered in Article 6.16(b)) to which any of the Goodyear
JV Companies is a party or by which any of their assets or operations are bound
or affected and which (i) involve the obligation (including contingent
obligations) by or to any of the Goodyear JV Companies to pay amounts in excess
of the equivalent of US$1,000,000 in any fiscal year, (ii) are Contracts whose
term exceeds one (1) year or is unlimited (with the exception of labor
agreements) and which may not be terminated by the relevant Goodyear JV Company
on less than six (6) months' notice without the payment of a penalty in the
equivalent amount of US$100,000 or more, (iii) are Contracts under whose terms
one or more of the Goodyear JV Companies is bound to materially refrain from
carrying out or to materially restrict certain normal business activities as
such activities are conducted in the Ordinary Course of Business, or to refrain
from competing with any third party, (iv) are Contracts with Goodyear or any
Affiliate thereof (except any of the Goodyear JV Companies) in the equivalent
amount of US$100,000 or more or any director or employee thereof (v) are
Contracts for the purchase or resale of tires, retread materials, accessory
parts and air springs in excess of the equivalent of US$2,000,000 per annum
("Dealer Contracts"), or (vi) were not entered into in the Ordinary Course of
Business.
(b) All Contracts listed on Schedule 6.15 are valid, binding and
enforceable by one or more of the Goodyear JV Companies in accordance with
their respective terms and none of the Goodyear JV Companies is in default or
has waived any material right under any of such Contracts, nor does there exist
any event or condition, which upon the giving of notice or the lapse of time or
both, would (i) constitute a default or event of default thereunder or (ii)
entitle any other party thereto to terminate such Contract, and which would in
any case, have a Material Adverse Effect on any of the Material Goodyear JV
Companies. To the best knowledge of Goodyear, Goodyear Fra, Goodyear Lux
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and Goodyear Canada, the obligations of each counterparty to any Contracts
listed on Schedule 6.15 are (i) valid and binding on such counterparty and
enforceable by one or more of the Goodyear JV Companies in accordance with
their respective terms, (ii) none of the counterparties is in default or has
waived any material right under any of such Contracts, nor does there exist any
event or condition, which upon the giving of notice or the lapse of time or
both, would (A) constitute a default or event of default thereunder or (B)
entitle any other party thereto to terminate such Contract, and which would in
any case have a Material Adverse Effect on any of the Material Goodyear JV
Companies.
(c) Specifically, pursuant to Article 6.15(a)(i), Schedule 6.15
includes without limitation a list of all Contracts in excess of the equivalent
of US$1,000,000 in any fiscal year to which any of the Goodyear JV Companies is
a party or by which any of their assets or operations are bound with any
original equipment automotive manufacturer ("Original Equipment Contracts").
Except for such Original Equipment Contracts, there are no other contracts with
original equipment automotive manufacturers which impose obligations on any of
the Material Goodyear JV Companies which would have a Material Adverse Effect
on any of the Material Goodyear Companies.
(d) None of the Contracts listed on Schedules 6.15 or 6.16(a) and (b)
to which any Goodyear JV Company is a party or a beneficiary violates any
provision of any applicable Law or Judgment. All Contracts between any of the
Goodyear JV Companies on the one hand, and its suppliers, customers,
distributors, dealers, agents or licensees, on the other hand, have been
concluded under normal market conditions, in accordance with normal commercial
practice except where the failure to have so concluded such Contracts would
have a Material Adverse Effect on any of the Material Goodyear JV Companies.
(e) Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada have made
or will make upon request all Dealer Contracts and Original Equipment Contracts
available to SRI for review and have made available or will make available upon
request, in writing all material amendments to such Contracts in connection
therewith (unless prohibited by applicable anti-trust Laws or a confidentiality
clause contained in any such agreement). Any Contracts or material amendments
not available for review by SRI due to the foregoing prohibition regarding
anti-trust Laws or confidentiality clauses, impose no obligations on any of the
Material Goodyear JV Companies which would have a Material Adverse Effect on
any of the Material Goodyear JV Companies.
6.16 EMPLOYMENT MATTERS.
(a) Schedule 6.16(a) contains a list, for each of the Goodyear JV
Companies, and for each separate establishment thereof, of all the collective
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rules applicable to Goodyear JV Employees (the "Collective Rules"), including
without limitation: (i) the applicable collective bargaining agreements (other
than those applicable on a nation-wide or industry-wide basis) and company
agreements; (ii) the remuneration system, including premiums, bonuses,
commissions and benefits in kind; (iii) profit-sharing, incentive and company
savings plans; (iv) any retirement or health insurance plan pursuant to which
employees are entitled to receive benefits in addition to those provided for by
law or the applicable collective bargaining agreements; (v) any other employee
benefit plans similar in type to those described in Sections 3(1) and 3(2) of
ERISA; and (vi) any regional, local or individual company or establishment
practices which provide for benefits which exceed those provided for by law or
the applicable collective bargaining agreements.
(b) Schedule 6.16(b) (save as expressly provided therein) sets forth a
complete and accurate list of the thirty (30) employment, consulting,
severance, termination or compensation Contracts of greatest amount between any
individual and any of the Goodyear JV Companies and ten (10) such contracts of
greatest amount for retail operations between an individual and any of the
Goodyear JV Companies, pursuant to which any such individual has received
benefits within the preceding two (2) years which exceed those provided for by
law or the applicable Collective Rules, including, but not limited to,
increased severance pay, extended notice periods, advantages in kind or
pensions (the "Goodyear JV Employment Agreements"), copies of which are
available upon request by SRI. In case of certain of the Goodyear JV Employment
Agreements to which the provisions of the German Data Protection Act extend,
the information provided on Schedule 6.16(b) shall only identify the employment
contract between the applicable company and individual by a general title, job
description or functional area of responsibility, in order not to disclose
information protected by such Act (the "Goodyear German Employment Contracts").
None of the individual Goodyear German Employment Contracts have been amended
nor do any of them contain any contractual provisions or entitlement to
benefits other than as stated in the specific representative contract that
Goodyear has provided to SRI (by letter of June 10, 1999) as representative of
that individual's Goodyear German Employment Contract. Goodyear has provided a
model representative contract (by letter of June 10, 1999) to SRI for each of
the Goodyear German Employment Contracts. No amount will become due to any
director, consultant or employee of any of the Goodyear JV Companies under the
Collective Rules or any Goodyear JV Employment Agreement solely as a result of
the Transactions.
(c) As of the date hereof, none of the directors, consultants or
employees of any of the Goodyear JV Companies earning in excess of the
equivalent of US$100,000 per annum has formally notified any such company that
he or she does not intend to continue his or her relationship with it following
the completion of the Transactions on the terms of the applicable Collective
Rules and the Goodyear JV Employment Agreements as currently in effect and
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Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada have no reason to
believe that each of the Goodyear JV Companies will not be able to continue
such relationships with such persons after the Closing.
(d) Each of the Goodyear JV Companies are now and have in the past been
in all material respects in compliance with all provisions of applicable labor
and social security Laws, the Collective Rules and the Goodyear JV Employment
Agreements and all payments due thereunder from each of the Goodyear JV
Companies have been made when due.
(e) The Goodyear JV Companies:
(i) do not have any obligation to contribute to, nor have
they incurred any liability with respect to any benefit
plan concerning the Goodyear JV Employees other than
the employee benefit plans listed on Schedule 6.16(a)
(the "Goodyear JV Employee Benefit Plans"), nor will
they have any liability after the Closing under any
employee benefit plan concerning any employees, other
than Goodyear JV Employees or retirees from the
Goodyear Businesses or the predecessors of such
businesses;
(ii) have not engaged in a transaction that could result in
the imposition upon any Goodyear JV Companies of a
civil penalty with respect to the regulation of the
Goodyear JV Employee Benefit Plans and no fact or event
exists that could give rise to any such liability which
would have a Material Adverse Effect on any of the
Material Goodyear JV Companies;
(iii) have not entered into any agreement to indemnify any
Person (other than any Person entitled to benefits
under the Goodyear JV Employee Benefit Plans) with
respect to any of the Goodyear JV Employee Benefit
Plans; and
(iv) have had the Goodyear JV Employee Benefit Plans, as
amended to date, determined by the appropriate
regulatory authority if required, to be plans which
comply in all material respects with the laws and
regulations to which they are subject, and no assets of
the Goodyear JV Employee Benefit Plans are subject to
any Encumbrances.
(f) Except as set forth on Schedule 6.16(f), Goodyear, Goodyear Fra,
Goodyear Lux and Goodyear Canada have not permitted the Goodyear JV Companies
to adopt, change or commit to adopt any Goodyear JV Employee
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Benefit Plans covering the Goodyear JV Employees, after December, 31 1998 and
prior to the Closing, except in the Ordinary Course of Business.
(g) Except as set forth on Schedule 6.16(g), since January 1, 1998
there have not occurred any strikes, slow downs, work stoppages or other
similar labor actions by any group of employees of any of the Goodyear JV
Companies. Nor are any of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada
or any of the Goodyear JV Companies aware that any such labor action is pending
or threatened. No Proceeding arising out of any labor grievance under any Law,
the Collective Rules or any Goodyear JV Employment Agreement is pending or, to
the best knowledge of Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada,
threatened against any Goodyear JV Company.
6.17 ENVIRONMENT, HEALTH AND SAFETY.
(a) Except as set forth on Schedule 6.17(a), and except where the
failure to be in compliance would not have a Material Adverse Effect on any
Material Goodyear JV Company, each of the Goodyear JV Companies has obtained,
and has been at all times, for which the applicable statute of limitation has
not expired, in compliance with all terms and conditions of, all Permits which
are required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables which are contained in, all Laws, Permits and Judgments relating to
public health and safety, worker health and safety, and pollution or protection
of the environment, including without limitation Environmental Laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or chemical, industrial, hazardous or toxic materials or wastes
into ambient air, surface water, ground water or lands or otherwise relating to
the testing, characterization, classification, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or chemical, industrial, hazardous or toxic materials
or wastes. All such Permits are valid and in full force and effect and (to the
extent such Permits need to be assigned or transferred to a Goodyear JV Company
pursuant to the Goodyear Reorganization or pursuant to the Transactions in
order to ensure the continued conduct of the Goodyear Businesses as such
businesses are presently conducted) are freely transferable or assignable
(except to the extent that the failure to assign or transfer is due solely to
the discretionary act of any Authority and not based upon the acts or omissions
of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada or any of the Goodyear
JV Companies), and where applicable, timely renewal applications have been
submitted for all such Permits. No Proceedings have been filed or commenced
against any of the Goodyear JV Companies or notices of violation or
Environmental Claim received by any of the Goodyear JV Companies alleging any
failure to comply with any such Laws, Judgments or Permits, where such
Proceeding or violation would have a Material Adverse Effect on any of the
Goodyear JV Companies and, to the best knowledge
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of Goodyear, Goodyear Fra, Goodyear Lux and/or Goodyear Canada, no such
Proceedings, notices of violation or Environmental Claims are pending or
threatened, nor does there exist any existing event or condition on the basis
of which (i) an Authority would reasonably be expected to deny or revoke or
limit any such Permits or (ii) if such Permits have been obtained by any of the
Goodyear JV Companies, such Permits would not remain in full force and effect
as of the Closing Date.
(b) Except as set forth in Schedule 6.17(b), none of the Goodyear JV
Companies has any material liability (and there is not any past or present
fact, status, condition, activity, occurrence, action or failure to act related
to the past or present operations, properties or facilities, whether owned,
used or leased, of any of the Goodyear JV Companies that to their best
knowledge, forms or reasonably could form the basis for the imposition of any
liability) (i) under any law relating to protection of human health or safety
or concerning employee or worker health and safety or relating generally to the
environment, (ii) for damage to any site, location, natural resources or body
of water (surface or subsurface) or for failure to report or clean up any
discharges of any substance, or (iii) for any illness of, personal injury to,
or death of, any of its employees or any third party.
6.18 INSURANCE. Except as disclosed on Schedule 6.18, each of the Goodyear JV
Companies are insured by insurance carriers not related to or affiliated with
Goodyear, Goodyear Fra, Goodyear Lux or Goodyear Canada. Schedule 6.18 sets
forth a complete list and brief description (specifying the insurer, the
coverage and the policy number or covering note number with respect to binders)
of all policies, binders or Contracts to which any of the Goodyear JV Companies
is a party or by which any of the Goodyear Business Assets are covered for
purposes of property, fire, liability, product liability, workmen's
compensation, vehicular, crime, builders' risk, title and other insurance or
Contracts in the nature of insurance. The policies, binders and Contracts listed
on Schedule 6.18 are in full force and effect in accordance with their
respective terms and, to the best knowledge of Goodyear, Goodyear Fra, Goodyear
Lux, Goodyear Canada and the Goodyear JV Companies, will remain in full force
and effect after the Closing, except as otherwise agreed in writing between SRI
and Goodyear and, additionally, none of the Goodyear JV Companies has received
written notice that any insurer thereunder intends to cancel or terminate such
policies, binders or Contracts. None of Goodyear, Goodyear Fra, Goodyear Lux,
Goodyear Canada or any of the Goodyear JV Companies has received any notice that
it is in default with respect to any provision of any such policies, binders or
Contracts. None of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada or any
of the Goodyear JV Companies has provided inaccurate, incomplete or misleading
information in connection with any such policies, binders or Contracts or failed
to give any notice or present any claim thereunder in due and timely fashion or
as required by any such policies, binders or Contracts so as to jeopardize full
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recovery thereunder. There are no claims in excess of US$1,000,000 outstanding
under any such policy, binder or Contract.
6.19 ACCOUNTS RECEIVABLES. All accounts receivables of the Goodyear JV
Companies and other rights of payment, including, without limitation, unbilled
amounts and credits extended to third parties, shown on the Goodyear Europe
Year End Financial Statement or acquired by the Goodyear JV Companies
subsequent to the date of the balance sheets included therein but before the
Closing Date, except to the extent thereafter collected, have arisen from bona
fide transactions in the Ordinary Course of Business, are free of any
Encumbrances, except for those receivables sold as reflected on the Goodyear
Europe Year End Financial Statement which receivables will be free and clear of
Encumbrances at the Closing Date, and the reserves or write-offs for bad debts
in the Goodyear Europe Year End Financial Statement have been computed in a
manner consistent with past practice.
6.20 GUARANTEES. There are no guaranty agreements, commitments to issue
guarantees, comfort letters, letters of awareness, other credit support
arrangements, joint and several obligations, swap agreements or any other
derivative transactions entered into by any of the Goodyear JV Companies which
are not listed in Schedule 6.20, copies of which are available to SRI upon
request.
6.21 SUBSIDIES. Schedule 6.21 sets forth a complete list of all governmental,
quasi-governmental and other public and private grants and subsidies that
provide any reimbursement, refund, abatement, Tax reduction or other benefit in
excess of US$1,000,000 ("Subsidies") to any of the Goodyear JV Companies,
together with any additional Subsidies for which any of the Goodyear JV
Companies is in the process of applying, and fully and correctly sets out the
status of each Subsidy and application therefor, including the obligations
imposed on each Goodyear JV Company that remain outstanding. The Goodyear JV
Companies have complied in all material respects with the terms and conditions
imposed upon them in connection with each such Subsidy, including but not
limited to the utilization of funds, the amount of investments to be made by
them and the maintaining of a minimum level of employment. Except as set forth
in Schedule 6.21, none of the Goodyear JV Companies are in material breach of
any of the terms and conditions of any Subsidy and no facts or circumstances
exist that to the best knowledge of Goodyear, Goodyear Fra, Goodyear Lux or
Goodyear Canada could cause the Goodyear JV Companies to be required to
reimburse all or part of any Subsidy before the due date of reimbursement, if
any, or to lose all or part of the benefit of the Subsidy.
6.22 YEAR 2000. Each of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada
and the Goodyear JV Companies have taken and will take up to Closing all
commercially reasonable actions in a timely manner to prevent a Year 2000
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problem in computer systems, software, or equipment owned, leased or licensed by
such company from (a) interfering with its performance under the Alliance
Agreements, (b) interfering with or frustrating the purpose and successful
operation and administration of the Europe JVC or the Goodyear JV Companies, as
set forth in this JV Agreement, the Umbrella Agreement or any of the other
Alliance Agreements or (c) having a Material Adverse Effect on any of the
Goodyear JV Companies. Each of the Goodyear JV Companies has requested from
those of its suppliers or other business partners whose performance may
materially affect the performance of any of the Goodyear JV Companies hereunder
that each supplier or business partner undertake all commercially reasonable
actions in a timely manner to prevent a Year 2000 problem from interfering with
such performance, in each case where the failure to perform would have a
Material Adverse Effect on any of the Material Goodyear JV Companies.
For purposes of the Alliance Agreements, Year 2000 problem means any failure,
error, or delay resulting from the inability of any software, hardware, embedded
chip, or other device to accurately and without interruption perform and
process, display, store, manipulate, and handle dates before, on, and after
January 1, 2000.
6.23 UNDISCLOSED LIABILITIES, ETC. On the date hereof, except as disclosed in
the Goodyear Europe Year End Financial Statement or as set forth on Schedule
6.23, the Goodyear JV Companies have no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due other than liabilities (i) that have been incurred in the Ordinary
Course of Business, (ii) that have not had a Material Adverse Effect on the
Goodyear JV Companies taken as a whole, or (iii) that would not have a Material
Adverse Effect on the Goodyear JV Companies taken as a whole.
6.24 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Schedule
6.24, which will be supplemented by an accurate and complete list as required
by Article 9.03 of the Umbrella Agreement, since December 31, 1998 (except for
Article 6.24(q)), none of the Goodyear JV Companies has and/or there has not
been (with respect to either the Goodyear Business Assets or the Goodyear
Businesses):
(a) declared for payment after the Closing Date, any cash dividend,
payment or other distribution in respect of their shares of capital stock or,
except as required by the Goodyear Reorganization or otherwise pursuant to the
Alliance Agreements, declared any dividend of property in kind;
(b) other than in the Ordinary Course of Business or except as
contemplated by the Goodyear Reorganization, incurred any obligation or
liability, contingent or otherwise, exceeding US$1,000,000, except such
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obligations affecting any of the Goodyear JV Companies beyond the Closing Date
under Contracts;
(c) except (i) in the Ordinary Course of Business, (ii) as contemplated
by the Alliance Agreements, (iii) the payment of any obligations or
installments when due or (iv) the discharge or satisfaction of any Encumbrance,
paid any obligation or liability (fixed or contingent);
(d) sold, assigned, transferred, conveyed, leased or otherwise disposed
of or agreed to sell, assign, transfer, convey, lease or otherwise dispose of
any of its Goodyear Business Assets having a fair market value equivalent of
US$100,000 and above, except for fair consideration (plus or minus 10%
therefrom) in the Ordinary Course of Business or except as contemplated by the
Goodyear Reorganization;
(e) compromised any debt, Proceeding or claim, or waived or released
any right, except as made in the Ordinary Course of Business or which would not
have a Material Adverse Effect on any of the Material Goodyear JV Companies;
(f) suffered any extraordinary loss or extraordinary losses which would
have a Material Adverse Effect on any of the Material Goodyear JV Companies;
(g) except in the Ordinary Course of Business or as contemplated by the
Alliance Agreements, transferred or granted any rights under any material
concessions, leases, licenses, agreements, Patents, inventions, Trademarks,
brandmarks, brand names, copyrights, or with respect to any know-how;
(h) suffered any accidental losses or damages with respect to the
Goodyear Business Assets having an aggregate replacement cost of more than
US$5,000,000, whether or not such losses or damages shall have been covered by
insurance;
(i) made any material charitable contribution not in accordance with
past practice or entered into any commitment therefor;
(j) lost as customers any original equipment manufacturers, Dealer
Contracts, or lost any Contracts with suppliers or for supplies, based on facts
or events not arising out of a change in control of the Goodyear JV Companies,
which losses, individually or in the aggregate, have had, or which any of the
Goodyear JV Companies expects to have, a Material Adverse Effect on the
Material Goodyear JV Companies;
(k) other than as contemplated by the Alliance Agreements or at the
specific request of SRI, introduced any material change with respect to the
method or practices of accounting of the Goodyear JV Companies;
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(l) instituted any increases or commitments for increases in excess of
3% per annum in the general average salary or compensation level of all the
Goodyear JV Employees of each of the Goodyear JV Companies;
(m) except for bids or tenders made in the Ordinary Course of Business,
made any bids or tenders on or for Contracts in excess of US$5,000,000;
(n) except as provided in (l) above, amended or otherwise modified the
terms of any Goodyear JV Employment Agreements to increase the amount or
accelerate the payment or vesting of any benefit thereunder or under any
existing or new benefit plan of the type described in Article 6.16(a) with
respect to any individual party to such agreements;
(o) adopted any amendments to its Constituent Documents that could
reasonably be expected to have a Material Adverse Effect on the ability of
Goodyear, Goodyear Fra, Goodyear Lux, Goodyear Canada or any of the Goodyear JV
Companies to perform their obligations under the Alliance Agreements;
(p) any transaction, commitment, dispute or other event or condition
(financial or otherwise) of any character (whether or not) in the Ordinary
Course of Business) that could reasonably be expected to have a Material
Adverse Effect on the ability of Goodyear, Goodyear Fra, Goodyear Lux, Goodyear
Canada or any of the Material Goodyear JV Companies to perform their
obligations under the Alliance Agreements; and
(q) since December 31, 1998 through and including the date hereof,
except as contemplated by the Alliance Agreements or otherwise agreed in
writing, carried on the Goodyear Businesses (including without limitation,
entering into any material transaction, contract or commitment) other than in
the ordinary course of business and substantially in the same manner as
heretofore conducted consistent with past practice.
6.25 SURVIVAL PERIOD. The representations and warranties of Goodyear, Goodyear
Fra, Goodyear Lux or Goodyear Canada contained in the Alliance Agreements or in
any document delivered pursuant to the Alliance Agreements shall not be
discharged upon the date(s) of the giving of such representations and warranties
(the date of this JV Agreement and the Closing Date), but shall survive for so
long as an indemnification claim for the applicable representation and warranty
can be made pursuant to Article XV, Indemnification, of the Umbrella Agreement.
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ARTICLE VII
MAINTENANCE OF BUSINESS AND ASSETS
----------------------------------
7.1 MAINTENANCE OF BUSINESS AND ASSETS.
The Parties to this JV Agreement agree to use reasonable efforts to
preserve and to cause their Affiliates controlled by them, as the case may be,
to preserve the Goodyear Businesses and the SRI Businesses, and to maintain the
rights and franchises of such businesses, as the case may be, intact until the
Closing Date and to keep available to the Europe JVC and Affiliates controlled
by it, the present services of the Goodyear JV Employees and the SRI JV
Employees respectively and to preserve the goodwill of their respective
customers, suppliers and others with whom business relationships exist, except
as may otherwise be agreed in writing between SRI and/or SRE on the one hand
and Goodyear, Goodyear Fra, Goodyear Lux and/or Goodyear Canada on the other
hand.
ARTICLE VIII
CONDITIONS TO PARTIES' OBLIGATIONS
----------------------------------
8.1 The obligations of Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada
to consummate the Transactions shall be subject to the satisfaction of the
conditions, unless waived by Goodyear, stated in Articles V and VIII of the
Umbrella Agreement. The obligations of SRI and SRE to consummate the
Transactions shall be subject to the satisfaction of the conditions, unless
waived by SRI, stated in Articles V and IX of the Umbrella Agreement.
ARTICLE IX
NAMES AND TRADEMARKS
--------------------
9.1 Without prejudice to Article 3.6 of the Shareholders Agreement for
the Europe JVC, SRI will not object to the Europe JVC using the name "DUNLOP"
in its corporate name and trade name or in one or more domain names that do not
conflict with third party rights.
9.2 Goodyear hereby grants to the Europe JVC permission to use the name
"GOODYEAR" in its corporate name and trade name during the term of this JV
Agreement provided that Goodyear directly or indirectly maintains a greater
than fifty percent (50%) ownership of the issued voting shares of the Europe
JVC. Goodyear will not object to the Europe JVC registering one or more domain
names including "GOODYEAR" if combined with "DUNLOP".
9.3 (a) SRI agrees and shall cause its Affiliates (other than the SRI JV
Companies) jointly or severally to agree and each undertakes not to directly or
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indirectly use or assist any other Person to use any of the SRI European
Trademarks in any country in Western Europe or in Eastern Europe on or in
connection with:
(i) any "Licensed Products", (namely all types of tires,
retread tires, pre-cured treads for tires, inner tubes
for tires, flaps for tires, repair kits for tires, and
repair outfits for tires, but not including aircraft
tires or solid polyurethane industrial tires), save to
the extent that BTRI and its assigns and licensees are
licensed to use DUNLOP and D Device in connection with
industrial tires on a non-exclusive basis; or
(ii) any "Extended Products" (namely air springs, vehicle
tracks, vehicle treads, tire repair materials, vehicle
batteries, shock absorbers, accessories and parts and
fittings for vehicles (hereinafter "Tire Goods");
software relating to design, construction,
administration and sale of Licensed Products and Tire
Goods; machines and apparatus and parts thereof
relating to manufacture of Tire Goods); or
(iii) any "Extended Services" (namely retreading, retail,
repair, and fitting services relating to Licensed
Products and Extended Products; and vehicle repair
services).
(b) Products produced by the non-tire operations of SRI which
are excluded from the Alliance (said operations being identified in the
definition of SRI Businesses in this JV Agreement) are not included in the
above definitions of Extended Products and Extended Services for the purposes
of this Article 9.3.
9.4 Goodyear agrees and shall cause its Affiliates (other than the
Goodyear JV Companies) jointly or severally to agree and each undertakes not to
directly or indirectly use or assist any other Person to use any of the Goodyear
European Trademarks in any country in Western Europe or in Eastern Europe on or
in connection with:
(i) any Licensed Products; or
(ii) any Extended Products; or
(iii) any Extended Services.
9.5 SRI and Goodyear agree that:
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(a) Goodyear and SRI shall consult and co-operate with regard
to filing, maintaining and renewal of SRI European
Trademarks in the Greater European Territory;
(b) if either SRI or the Europe JVC (for itself and as
representative of the SRI JV Companies and Goodyear JV
Companies) is using or intends to use a "New D TM"
(namely: a trade xxxx similar to, incorporating, or being
a variation or foreign language equivalent of any of
DUNLOP, D Device, PNEUMANT and SP or an expansion of the
goods or services (within Licensed Products and Extended
Products and Extended Services) covered by an existing
application/registration) in any one or more countries of
French Africa, Russia/CIS, Middle East, Miscellaneous
countries or Part 6 countries, it may request the other
(whichever is the owner (the Europe JVC as owners
representative)) of DUNLOP, D Device, PNEUMANT or SP in
the country in question) to apply to register said
Trademark for the goods/services of interest and the other
company may cause said application to be filed unless the
trademark would conflict with the trademark rights of a
third party. If without due cause said other company does
not act and confirm or refuses to act to cause said
application to be filed within 21 days of said request
then the company who made the request may cause the
application to be filed in its own name or the other
company's name and the other company shall consent to said
application;
(c) in so far as SRI or any of SRI's Affiliates own Trademark
rights which may in any way interfere with the ability or
rights of the Europe JVC or any of its Subsidiaries to use
the SRI European Trademarks in relation to Extended
Products and Extended Services in the Greater European
Territory, SRI and SRI's Affiliates shall not unreasonably
object to use by the Europe JVC and its Subsidiaries of
those trademarks in relation to Extended Products and
Extended Services and shall consent to any application by
the Europe JVC or any of its Subsidiaries to register
those Trademarks for the Extended Products and Extended
Services in the Greater European Territory;
(d) in so far as Goodyear or any of Goodyear's Affiliates own
Trademark rights which may in any way interfere with the
ability or rights of the Europe JVC or any of its
Subsidiaries to use the Goodyear European Trademarks in
relation to Extended Products and Extended Services in the
Greater
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European Territory, Goodyear and Goodyear's Affiliates
shall not unreasonably object to use by the Europe JVC and
its Subsidiaries of those trademarks in relation to
Extended Products and Extended Services and consent to any
application by the Europe JVC to register those Trademarks
for the Extended Products and Extended Services in the
Greater European Territory; and
(e) in so far as DUNLOP, D Device, and SP are not registered
in any one or more countries of French Africa, Russia/CIS,
Middle East, Miscellaneous countries or Part 6 countries
or are not registered for any goods or services falling
within Licensed Products, Extended Products or Extended
Services, SRI or the Europe JVC may request the proprietor
of that trademark in that country (or in the case of the
SRI JV Companies and the Goodyear JV Companies, the Europe
JVC) to apply to register said trademark in said country
for requested goods/services and said company may cause
said application to be filed unless it would give rise to
a conflict with a third party. If without due cause said
company does not act and confirm or refuses to cause said
application to be filed within 21 days of said request
then the company making the request may cause the
application to be filed in its own name or the other
company's name and the other company shall consent to and
support said application.
ARTICLE X
R&D REORGANIZATION
------------------
10.1 After Closing, the Europe JVC will review the possibility for increasing
efficiency and cost savings in the tire research and development organizations
of the SRI JV Companies in France, Germany and the United Kingdom. If, following
appropriate consultation with relevant works councils, trade union and employee
representatives, the Europe JVC decides to proceed with any such efficiency
plan, then:
(a) the Europe JVC will consult SRI and Goodyear concerning
implementation of the plan; and
(b) all relevant costs of implementing the plan which are
reasonably and necessarily incurred and/or committed by
the Europe JVC (or its Affiliates controlled by it) within
the four months after Closing will be for the account of
SRI, provided
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however that SRI's obligation shall in no event exceed
US$7 million.
For the purpose of Article 10.1, "relevant costs" are (1) all direct employee
redundancy and relocation costs and (2) all incidental costs of reducing
variable research and development expense.
10.2 Upon request from the Europe JVC, SRI will make a capital contribution to
the general reserves of the Europe JVC in accordance with Article 5.8 of the
Shareholders Agreement for the Europe JVC to the Europe JVC of an amount equal
to the relevant costs referred to in Article 10.1(b).
ARTICLE XI
TECHNOLOGY MATTERS
------------------
11.1 The Parties agree that during the first twenty-four (24) months following
the Closing Date, the Parties will undertake to review and may reorganize and
realign the research and development and technology responsibilities of the
Parties in line with the Technology Joint Venture and Shareholders Agreement and
the technology license agreements listed in Article 5.03(d) of the Umbrella
Agreement and the overall objectives and operations of the Europe JVC. At the
end of such twenty-four (24) month period, the Parties will consider entering
into new agreements which reflect any revised responsibilities of each Party and
appropriate compensation. The Parties agree and understand that neither Party
will be financially disadvantaged as a result of such new agreements.
ARTICLE XII
EMPLOYEE MATTERS
----------------
12.1 SRI acknowledges that as of Closing, the SRI JV Companies will continue to
make employment available to the SRI JV Employees including participation in the
respective SRI JV Employee Benefit Plans in which they are entitled to
participate. The SRI JV Companies are liable for all expense charges,
contributions to, liabilities and benefits under the SRI JV Employee Benefit
Plans before the Closing Date and will be responsible for the expenses, charges,
contributions to, liabilities and benefits under these plans with effect upon
Closing. The SRI JV Companies have accounted for, consistent with past
practices, the expenses through all prior periods which end on or prior to the
Closing Date for the cost of providing the benefits for the SRI JV Employee
Benefit Plans.
12.2 Goodyear, Goodyear Fra, Goodyear Lux and Goodyear Canada acknowledge that
as of Closing, the Goodyear JV Companies will continue to
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make employment available to the Goodyear JV Employees, including participation
in the respective Goodyear JV Employee Benefit Plans in which they are entitled
to participate. The Goodyear JV Companies are liable for all expense charges,
contributions to, liabilities and benefits under the Goodyear JV Employee
Benefit Plans before the Closing Date and will be responsible for the expenses,
charges, contributions to, liabilities and benefits under these plans with
effect upon Closing. The Goodyear JV Companies have accounted for, consistent
with past practices, the expenses through all prior periods which end on or
prior to the Closing Date for the cost of providing the benefits for the
Goodyear JV Employee Benefit Plans.
12.3 As soon as practicable after the date of this JV Agreement, each of SRI
and Goodyear shall cause their applicable Affiliates to request from their
respective employees who are parties to the SRI German Employment Contracts and
the Goodyear German Employment Contracts, permission to provide copies of such
Contracts to the Parties. In lieu of the above, each of SRI or Goodyear may
make copies of the applicable agreements available to the other Parties after
approval of the Transactions by the European Commission, provided that in each
case such copies are provided at least one (1) month or more prior to the
Closing.
12.4 After the date of this JV Agreement and prior to the Closing, each of SRI
and Goodyear agree to advise the other of any directors, consultants or
employees of any of the SRI JV Companies and Goodyear JV Companies, as the case
may be, earning in excess of the equivalent of US$100,000 per annum that have
formally notified such SRI JV Company or Goodyear JV Company, as the case may
be, that he or she does not intend to continue his or her relationship with such
company following the consummation of the Transactions on the terms of the
applicable Collective Rules and the SRI JV Employment Contracts and Goodyear JV
Employment Contracts, as the case may be.
ARTICLE XIII
INDEMNIFICATION
---------------
The rights and obligations of the Parties under this JV Agreement are
governed by and subject to Article XV, Indemnification, of the Umbrella
Agreement and said Article is hereby incorporated into and made a part of this
JV Agreement by this reference. The term "Party" and/or "Parties" in said
Article XV of the Umbrella Agreement shall be deemed to include all the Parties
to this JV Agreement. SRI shall be solely liable for SRE's obligations to
indemnify under said Article XV of the Umbrella Agreement.
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ARTICLE XIV
SHARED SERVICES
---------------
14.1 The Parties acknowledge that after the Closing Date, in order to ensure
the continued operation of the Goodyear Businesses, the SRI Businesses and the
businesses to be extracted pursuant to the Goodyear Reorganization and the SRI
Reorganization, certain services will continue to be provided either by or to
the Goodyear JV Companies or the SRI JV Companies on the one hand and Goodyear
or SRI and their respective Affiliates (other than the Europe JVC and
Affiliates controlled by it) on the other hand (the "Shared Services").
14.2 The Parties agree that between the date hereof and the Closing Date, they
will, and will cause their respective Affiliates to, agree to the detailed
written commercial terms upon which the Shared Services will be provided between
them on the understanding that the provision of any such services will be made
at cost, or upon such other commercial terms, in each case, as are agreed
between Goodyear and SRI.
14.3 The Parties acknowledge that in the event that Shared Services, other than
services which in the reasonable opinion of the provider have confidentiality
aspects to providing such services (i.e. computer use, etc.), are transferred by
Goodyear or SRI or their respective Affiliates to third parties instead of to
Goodyear or SRI or their respective Affiliates (other than the Goodyear JV
Companies or the SRI JV Companies), as the case may be, the above arrangements
shall apply after such disposal, and such disposal shall proceed only if such
third party shall also agree to accept and abide by the above arrangements
regarding use by the Europe JVC or its Affiliates controlled by it with respect
to such services.
ARTICLE XV
NON TIRE REAL PROPERTY LEASES
-----------------------------
15.1 As of the Closing Date, SRI will, to the extent necessary, have caused the
SRI JV Companies to have entered into the SRI Non Tire Real Property Leases with
SRI and/or any Affiliate of SRI, other than the SRI JV Companies, for the use
and enjoyment of each of the real properties described in Article 5.11(b) at
cost, or upon such other commercial terms, in each case, as are agreed between
Goodyear and SRI. SRI will ensure that, with respect to the SRI Non Tire Real
Property Leases, as of the Closing Date, each SRI JV Company which is a party to
such leases will have a valid and subsisting right to use the premises at no
more than then current market terms, in each instance free and clear of all
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Encumbrances other than Permitted Encumbrances and that, as of the Closing Date,
there will be no default under any SRI Non Tire Real Property Lease nor any
event, that with the lapse of time or giving of notice, would constitute a
default thereunder and which would, in either case, have a Material Adverse
Effect on any of the Material SRI JV Companies.
15.2 As of the Closing Date, Goodyear will, to the extent necessary, have
caused the Goodyear JV Companies to have entered into the Goodyear Non Tire
Real Property Leases with Goodyear and/or any Affiliate of Goodyear, other than
the Goodyear JV Companies, for the use and enjoyment of each of the real
properties described in Article 6.11(b) at cost, or upon such other commercial
terms, in each case, as are agreed between Goodyear and SRI. Goodyear will
ensure that, with respect to the Goodyear Non Tire Real Property Leases, as of
the Closing Date, each Goodyear JV Company which is a party to such leases will
have a valid and subsisting right to use the premises at no more than then
current market terms, in each instance free and clear of all Encumbrances other
than Permitted Encumbrances and that, as of the Closing Date, there will be no
default under any Goodyear Non Tire Real Property Lease nor any event, that
with the lapse of time or giving of notice, would constitute a default
thereunder and which would, in either case, have a Material Adverse Effect on
any of the Material Goodyear JV Companies.
15.3 The Parties acknowledge that in the event any interest in the leases
described in Articles 15.1 or 15.2 above are disposed of by Goodyear or SRI or
their respective Affiliates to third parties instead of to Goodyear or SRI or
their respective Affiliates (other than the Goodyear JV Companies or the SRI JV
Companies), as the case may be, the above arrangements shall apply after such
disposal, and such disposal shall proceed only if such third party shall also
agree to accept and abide by the above arrangements regarding use by the Europe
JVC or its Affiliates controlled by it with respect to such leases.
ARTICLE XVI
This Article intentionally left blank.
ARTICLE XVII
WARRANTY SERVICES
-----------------
17.1 WARRANTY SERVICES. The Parties agree that the applicable Goodyear JV
Companies and the SRI JV Companies, respectively, from the Closing Date forward,
for the products contemplated to be part of the Goodyear Businesses
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and the SRI Businesses, shall perform repair and other work in connection with
product warranties and shall administratively handle all claims and pay all
costs arising in respect of warranty claims. Product recalls, including the
administration and costs therefor, shall be handled in accordance with the
applicable procedures of the Goodyear JV Companies and the SRI JV Companies, as
the case may be.
ARTICLE XVIII
INSURANCE AND PRODUCT LIABILITY
-------------------------------
18.1 INSURANCE. The Parties agree to and to cause their Affiliates, from the
date of this JV Agreement until the Closing Date, to maintain property and
liability insurance, if any, of the type and value maintained on the Goodyear
Business Assets and the SRI Business Assets, as applicable, immediately before
the signing of this JV Agreement.
18.2 SRI PRODUCT LIABILITY/COMPLETED OPERATIONS.
(a) SRI agrees to be responsible for the costs and expenses of liability for
products manufactured or services performed by the SRI JV Companies before the
Closing Date for the Transactions. Pursuant to but without limitation of the
foregoing, SRI will at SRI's expense secure a product liability/completed
operations insurance policy in the name of or for the benefit of the SRI JV
Companies to pay for losses from product liability/completed operations claims
(a "SRI Pre-Closing Product Liability Claim") arising on and after the Closing
Date for products manufactured or services performed by the SRI JV Companies
prior to the Closing Date and the Parties will cause the relevant SRI JV
Companies to claim and to use their best efforts to recover under such policy
for any insured losses. Such policy will provide coverage for a term of at least
two (2) years after the Closing Date. The insurer under such policy shall
administer such SRI Pre-Closing Product Liability Claims and shall be directed
by SRI to coordinate with the risk manager for the Europe JVC regarding such
risk manager's administration of SRI Pre-Closing Product Liability Claims with
SRI and SRI's Affiliates, as mutually agreed between Goodyear and SRI.
(b) In the event that a SRI Pre-Closing Product Liability Claim gives rise to
any claim by an SRI JV Company for recovery of insured losses which are not for
any reason met in full or in part by the relevant insurer (such loss being an
"SRI Uninsured Loss") for which SRI is responsible pursuant to this Article
18.2, the applicable SRI JV Company shall with reasonable promptness notify SRI
in writing, specifying the nature of and the specific basis for such claim
and the
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amount or the estimated amount thereof to the extent then feasible. SRI may,
and upon request of the SRI JV Company shall, retain counsel reasonably
satisfactory to the SRI JV Company to represent the SRI JV Company and any
other persons SRI may designate in connection with such claim. SRI shall pay
the fees and disbursements of such counsel with regard thereto. SRI shall not
be liable under this Article 18.2 for any settlement of any SRI Uninsured Loss
without the prior written consent of SRI, which consent shall not be
unreasonably withheld or delayed. SRI shall have the right to direct the
defense or settlement of any SRI Uninsured Loss, but shall not, without the SRI
JV Company's prior written consent, which consent shall not be unreasonably
withheld or delayed, settle or compromise any SRI Uninsured Loss or consent to
entry of any Judgment which does not include as an unconditional term thereof
the release by the claimant or the plaintiff of the SRI JV Company and its
Affiliates from all liability in respect of such claim. In the event SRI
exercises the right to undertake the defense of any SRI Pre-Closing Product
Liability Claim as provided above, the relevant SRI JV Company shall cooperate,
and shall use all reasonable efforts to cause its Affiliates to cooperate, with
SRI in such defense and make available to SRI, at SRI's expense, all witnesses,
pertinent records, materials and information in the SRI JV Company's possession
or under its control, and shall use all reasonable efforts to cause its
Affiliates to make available to SRI, at SRI's expense, all witnesses, pertinent
records, materials and information in the possession or under the control of
any of them relating thereto, in each case as is reasonably required by SRI.
18.3 GOODYEAR PRODUCT LIABILITY/COMPLETED OPERATIONS.
(a) Goodyear agrees to be responsible for the costs and expenses of liability
for products manufactured or services performed by the Goodyear JV Companies
before the Closing Date for the Transactions. Pursuant to but without limitation
of the foregoing, Goodyear will at Goodyear's expense secure a product
liability/completed operations insurance policy in the name of or for the
benefit of the Goodyear JV Companies to pay for losses from product
liability/completed operations claims (a "Goodyear Pre-Closing Product Liability
Claim") arising on and after the Closing Date for products manufactured or
services performed by the Goodyear JV Companies prior to the Closing Date and
the Parties will cause the relevant Goodyear JV Companies to claim and to use
their best efforts to recover under such policy for any insured losses. Such
policy will provide coverage for a term of at least two (2) years after the
Closing Date. The insurer under such policy shall administer such Goodyear
Pre-Closing Product Liability Claims and shall be directed by Goodyear to
coordinate with the risk manager for the Europe JVC regarding such risk
manager's administration of Goodyear Pre-Closing Product Liability Claims with
Goodyear and Goodyear's Affiliates, as mutually agreed between SRI and Goodyear.
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(b) In the event that a Goodyear Pre-Closing Product Liability Claim gives rise
to any claim by a Goodyear JV Company for recovery of insured losses which are
not for any reason met in full or in part by the relevant insurer (such loss
being a "Goodyear Uninsured Loss") for which Goodyear is responsible pursuant
to this Article 18.3, the applicable Goodyear JV Company shall with reasonable
promptness notify Goodyear in writing, specifying the nature of and the
specific basis for such claim and the amount or the estimated amount thereof to
the extent then feasible. Goodyear may, and upon request of the Goodyear JV
Company shall, retain counsel reasonably satisfactory to the Goodyear JV
Company to represent the Goodyear JV Company and any other persons Goodyear may
designate in connection with such claim. Goodyear shall pay the fees and
disbursements of such counsel with regard thereto. Goodyear shall not be liable
under this Article 18.3 for any settlement of any Goodyear Uninsured Loss
without the prior written consent of Goodyear, which consent shall not be
unreasonably withheld or delayed. Goodyear shall have the right to direct the
defense or settlement of any Goodyear Uninsured Loss, but shall not, without
the Goodyear JV Company's prior written consent, which consent shall not be
unreasonably withheld or delayed, settle or compromise any Goodyear Uninsured
Loss or consent to entry of any Judgment which does not include as an
unconditional term thereof the release by the claimant or the plaintiff of the
Goodyear JV Company and its Affiliates from all liability in respect of such
claim. In the event Goodyear exercises the right to undertake the defense of
any Goodyear Pre-Closing Product Liability Claim as provided above, the
relevant Goodyear JV Company shall cooperate, and shall use all reasonable
efforts to cause its Affiliates to cooperate, with Goodyear in such defense and
make available to Goodyear, at Goodyear's expense, all witnesses, pertinent
records, materials and information in the Goodyear JV Company's possession or
under its control, and shall use all reasonable efforts to cause its Affiliates
to make available to Goodyear, at Goodyear's expense, all witnesses, pertinent
records, materials and information in the possession or under the control of
any of them relating thereto, in each case as is reasonably required by
Goodyear.
ARTICLE XIX
TERM OF JV AGREEMENT; EFFECTIVE DATE
------------------------------------
19.1 TERM OF AGREEMENT. The covenants and agreements of the Parties hereto
contained in this JV Agreement shall survive the execution and delivery of this
JV Agreement and the Closing. This JV Agreement shall remain in effect until
terminated in accordance with the provisions of the Umbrella Agreement.
19.2 EFFECTIVE DATE. This JV Agreement shall become effective as of the date
first above written.
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ARTICLE XX
MISCELLANEOUS PROVISIONS
------------------------
20.1 AMENDMENTS. This JV Agreement may be amended, modified or superseded, and
any of the terms, covenants or conditions hereof may be waived, only by a
written instrument expressly referencing this JV Agreement as being amended,
modified, superseded or waived, executed by the Parties, or, in the case of a
waiver, by the Party or Parties waiving compliance.
20.2 WAIVERS. The failure at any time of any Party to require performance by
another Party of any responsibility or obligation provided for in this JV
Agreement shall in no way affect the full right to require such performance at
any time thereafter, nor shall the waiver by any Party of a breach of any
provision of this JV Agreement by another Party constitute a waiver of any
succeeding breach of the same or any other provision nor constitute a waiver of
the responsibility or obligation itself. No investigation conducted by or on
behalf of any Party hereto, whether prior or subsequent to the date hereof,
shall affect the representations and warranties contained in this JV Agreement,
or in the schedules or certificates delivered pursuant hereto, or the rights of
any Party hereto with respect to such representations and warranties or
otherwise under this JV Agreement.
20.3 ASSIGNABILITY. Neither this JV Agreement nor any right or obligation
hereunder may be assigned or delegated in whole or in part by any Party without
the prior written consent of the other Parties, and any such attempted
assignment or delegation without such consent shall be null, void AB INITIO and
without effect. Any permitted assignment of this JV Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns and the assignor shall, unless the Parties
agree otherwise, remain liable for the obligations of any of its permitted
assigns.
20.4 SEVERABILITY. If any one or more of the provisions contained in this JV
Agreement or any document executed in connection therewith shall be invalid,
illegal or unenforceable in any respect under any applicable Law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired; PROVIDED, HOWEVER, that in such case the
Parties agree to use their best efforts (but without the incurrence of
unreasonable cost or liability) to achieve the purpose of the invalid provision
by a new legally valid stipulation.
20.5 NOTICES. All notices, requests, demands and other communications
required or permitted under this JV Agreement shall be in writing and shall be
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deemed to have been duly given if delivered by hand, or sent by courier (and, in
either case duly receipted) or facsimile transmission (provided that, in the
case of facsimile transmission, a confirmation copy thereof shall be delivered
by hand or sent by courier (and, in either case duly receipted) within two (2)
days of transmission) as follows (until notice of a change thereof is given as
provided in this Article 20.5):
(a) if to Goodyear, to:
The Goodyear Tire & Rubber Company
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000-0000, U.S.A.
Attention: Corporate Secretary
Facsimile: (000) 000 0000
(b) if to Goodyear Fra, to:
Goodyear S.A.
000 Xxxxxx Xx Xx Chataigneraie
Xx 000
00000 Xxxxx-Xxxxxxxxx Xxxxx - Xxxxxx
Attention: Finance Director
Facsimile: 33 1 47 16 2317
(c) if to Goodyear Lux, to:
Goodyear X.X.
Xxxxxx Xxxxxx Xxxxx
X-0000 Xxxxxx-Xxxx
Grand Duchy of Luxembourg
Attention: Finance Director
Facsimile: 352 8199 2709
(d) if to Goodyear Canada, to:
Goodyear Canada Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: President
Facsimile: 0-000-000-0000
(e) if to SRI, to:
Sumitomo Rubber Industries, Ltd.
6-9, 3-Chome
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000
Xxxxxxxxxx-xxx, Xxxx-xx
Xxxx 000-0000, Xxxxx
Attention: General Manager, Legal Department
Facsimile: 81 78 265 3111
(f) if to SRE, to:
Sumitomo Rubber Europe X.X.
Xxx xx Xxxxxxxxxx 00X
X-0000 Xxxxxxxx
Xxxxxxx
Attention: Chairman
Facsimile: 32 2 500 3693
All notices given in accordance with this Article 20.5 are (subject to
the foregoing provisions) effective, if delivered by hand or mailed by courier,
at the time of delivery, and, if communicated by facsimile, at the time of
receipt of confirmation of a successful transmission.
20.6 GOVERNING LAW, DISPUTES AND LANGUAGE.
(a) THIS JV AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, WITHOUT GIVING
EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
(b) The parties hereto acknowledge that this JV Agreement and all other
agreements contemplated to be delivered in connection herewith, incorporate
certain negotiated terms and therefore, no presumption shall arise favoring any
party hereto by virtue of authorship of any provisions of this JV Agreement,
exhibits, schedules or any documents specifically referenced herein.
(c) This JV Agreement has been written in English and the English
version shall be the definitive text even if for convenience or otherwise it is
translated into another language.
(d) Except as may be otherwise specifically provided in this JV
Agreement, any dispute between the parties in regard to the interpretation of,
the effect of, the Parties' respective rights and obligations under, or a breach
of any matter arising out of this JV Agreement shall be decided by the
procedures in the Umbrella Agreement.
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20.7 TERMINATION PRIOR TO CLOSING. This JV Agreement may be terminated in
accordance with the provisions of Article 18.08 of the Umbrella Agreement.
20.8 THIRD PARTIES. Except as specifically set forth or referred to in the
Alliance Agreements, nothing expressed or implied herein is intended or shall be
construed to confer upon or give any Person or entity other than the Parties
hereto, their Affiliates and subsidiaries from time to time and their permitted
successors and assigns any rights or remedies under or by reason of this JV
Agreement.
20.9 TITLES TO ARTICLES AND SUBPARTS. The various titles of Articles or
subparts of this JV Agreement are used solely for the purpose of convenience
and shall not be used for interpreting or construing any word, clause, article
or subpart of this JV Agreement.
20.10 COUNTERPARTS. This JV Agreement may be executed simultaneously in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
20.11 SINGULAR AND PLURAL; GENDER. Whenever the context requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be deemed to include and designate the
masculine, feminine or neuter gender.
20.12 INCORPORATION. The Parties hereto hereby agree that Articles 4.01, ACCESS
TO DATA AND PROPERTIES, 4.02, CONSENTS; NONASSIGNABILITY OR APPROVALS, 4.03,
ORDINARY COURSE OF BUSINESS, 4.05, ANNOUNCEMENTS AND CONFIDENTIALITY, 4.06,
PRESERVATION OF AND ACCESS TO BOOKS AND RECORDS, 18.06 SET-OFF, 18.08,
TERMINATION PRIOR TO CLOSING, 18.09, ENTIRE AGREEMENT, 18.11, COSTS AND TAXES,
and 18.12, REMEDIES, of the Umbrella Agreement are hereby incorporated into and
made a part of this JV Agreement by this reference. The term "Party" and/or
"Parties" in the above referenced articles of the Umbrella Agreement shall be
deemed to include all the Parties to this JV Agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this JV Agreement to
be duly executed as of the day and year first above written.
THE GOODYEAR TIRE & RUBBER COMPANY
/S/ Xxxxx Xxxxxx
-----------------------------------------------
By: Xxxxx Xxxxxx
Title: Chairman of the Board, Chief Executive
Officer and President
GOODYEAR S.A. a French corporation
/S/ Xxxxx Xxxxxx
-----------------------------------------------
By : Xxxxx Xxxxxx
Title: Attorney-in-Fact
GOODYEAR S.A.
a Luxembourg corporation
/S/ Xxxxx Xxxxxx
-----------------------------------------------
By: Xxxxx Xxxxxx
Title: Attorney-in-Fact
GOODYEAR CANADA INC.
/S/ Xxxxx Xxxxxx
-----------------------------------------------
By: Xxxxx Xxxxxx
Title: Attorney-in-Fact
SUMITOMO RUBBER INDUSTRIES , LTD.
/S/ Xxxxx Xxxxx
-----------------------------------------------
By: Xxxxx Xxxxx
Title: Chairman
SUMITOMO RUBBER EUROPE B.V.
/S/ Xxxxx Xxxxx
-----------------------------------------------
By: Xxxxx Xxxxx
Title: Attorney-in-Fact
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EXHIBIT 10.1 (Continued)
AMENDMENT NO. 1 TO
JOINT VENTURE AGREEMENT FOR EUROPE
This Amendment No. 1 to the Joint Venture Agreement for Europe ("JVA") dated as
of September 1, 1999 ("Amendment No. 1") by and among The Goodyear Tire & Rubber
Company, a company organised and existing under the laws of the State of Ohio of
The United States of America ("Goodyear"), Goodyear S.A., a company organized
and existing under the laws of the Republic of France ("Goodyear Fra"), Goodyear
S.A., a company organized and existing under the laws of the Grand Duchy of
Luxembourg ("Goodyear Lux"), Goodyear Canada Inc., a company organized and
existing under the laws of the Province of Ontario of Canada ("Goodyear
Canada"), Sumitomo Rubber Europe B.V., a company organized and existing under
the laws of The Netherlands (to be renamed Goodyear Dunlop Tires Europe B.V.)
("SRE") and Sumitomo Rubber Industries, Ltd., a company organized and existing
under the laws of Japan ("SRI").
WITNESSETH:
WHEREAS,
(A) the above-stated parties desire to amend the JVA by amending Article
2.4 and Schedule 2.4 thereof (i) by having Goodyear transfer the shares
of Checkpoint Franchise B.V., where Checkpoint Franchise B.V. owns all
the shares of Goodyear Great Britain Limited, to SRE in exchange for
shares of SRE and by not having Goodyear Lux transfer any shares of
Goodyear Great Britain Limited to SRE, (ii) by not having Goodyear Lux
transfer any shares of S.A. Goodyear Coordination Center N.V. to SRE,
and (iii) by retaining as an asset of DUK the sports field site known
as "Sports Ground East, Fort Dunlop" ("sports field site") referred to
in Schedule 2.1(b) of the JVA for a period of time and to agree to
arrangements concerning its disposal by DUK following Closing; and
(B) the above-stated parties desire to agree to arrangements concerning
certain letters of comfort issued by SRI to Sumitomo Bank Limited in
favor of DU.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Goodyear Great Britain Limited and S.A. Goodyear Coordination Center
N.V.
1.1 The parties agree that Goodyear shall transfer the entire issued share
capital of Checkpoint Franchise B.V., a Netherlands company, which will
on the Closing Date be the 100% owner of all issued share capital of
Goodyear Great Britain Limited, except for certain shares held by
directors as nominees, to SRE in exchange for shares of solely voting
stock of SRE, all of the above-stated shares of Checkpoint Franchise
B.V., Goodyear Great Britain Limited and SRE to be free and clear of
all Encumbrances.
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X-10.1-103
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1.2 The parties agree that Goodyear Lux shall not transfer any shares of
Goodyear Great Britain directly to SRE and shall not transfer any
shares of S.A. Goodyear Coordination Center N.V., which corporation has
been dissolved, to SRE.
1.3 The amount of Equity Capital of SRE to be issued by SRE to Goodyear and
Goodyear Lux in exchange for the shares of the companies to be
transferred by Goodyear and Goodyear Lux pursuant to Article 2.4 and
Schedule 2.4 of the JVA, as modified and amended by this Amendment No.
1, shall be adjusted in accordance with the formula set forth in such
Schedule 2.4, where the "Share Value" for Goodyear shall increase from
$291.4 mm to $594.4 mm to reflect the additional value of Checkpoint
Franchise B.V. and Goodyear Great Britain Limited as being exchanged by
Goodyear for SRE shares and where the "Share Value" for Goodyear Lux
shall decrease from $1,071.2 mm to $768.2 mm to reflect the subtracted
value of Goodyear Great Britain Limited not being in the shares of
companies being exchanged by Goodyear Lux for SRE shares.
1.4 Goodyear hereby:
1.4.1 acknowledges and agrees with SRE that to the extent that any
stamp duty or other Tax is incurred by SRE in connection with
the matters referred to in Article 1.1 above, Goodyear agrees
to indemnify, defend and hold harmless SRE from any such stamp
duty and any other Tax in accordance with Article 3.04(c) of
the Umbrella Agreement dated as of June 14, 1999 by and
between Goodyear and SRI; and
1.4.2 agrees to indemnify, defend and hold harmless SRI (and its
Affiliates) from all costs, losses and liabilities incurred by
SRI (or any of its Affiliates) to the extent that the same
would not have been incurred had the parties given effect to
Article 2.4 and Schedule 2.4 of the JVA in their original form
prior to the amendments thereto set out in this Amendment No.
1, including, without limitation, costs, losses and
liabilities arising out of the inability of SRI (or any of its
Affiliates) to have the benefit in Japan of foreign tax
credits as a result of giving effect to such amendments.
2. Sports Ground East, Fort Dunlop
2.1 The parties agree that the sports field site shall remain as one of the
assets of DUK after Closing until such time as the sports field site is
sold to Tarmac Xxxxxxxxxx Development Limited ("Tarmac") by December
31, 1999 or thereafter to SRI (or its nominee) notwithstanding the
provisions of paragraph (xv) of Schedule 2.1(b) of the JVA on the
following basis:
2.1.1 following Closing the Parties will cooperate to agree to
arrangements for the disposal of the sports field site either
to Tarmac or to SRI (or its nominee) which, so far as is
practicable, will have the same economic effect for DUK (and
its Affiliates) and SRI (and its Affiliates) as if the
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X-10.1-104
105
sports field site had been disposed of by DUK to Tarmac or
another third party at market value immediately prior to
Closing and so that SRI (and its Affiliates) can receive the
benefit of the net proceeds of sale arising in DUK on such a
disposal, i.e. after deducting all costs associated with its
disposal; and
2.1.2 SRI shall indemnify, defend and hold harmless DUK (and its
Affiliates) from and against all costs, losses and liabilities
(other than costs already deducted in accordance with Article
2.1.1 above) incurred by DUK (or any of its Affiliates) to the
extent that the same would not have been incurred had the
sports field site been disposed of immediately prior to
Closing.
3. Letters of Comfort
3.1 SRI has issued a letter of comfort to Sumitomo Bank Limited in respect
of forward exchange contracts entered into by DU which are listed in
Schedule A hereto. The parties have agreed that it is impracticable to
terminate such letter of comfort on Closing and that it shall continue
in place for so long as the forward exchange contracts remain effective
provided that the parties will procure that DU will not enter into any
new forward exchange contracts with Sumitomo Bank Limited which are
covered by such letter of comfort. SRE shall indemnify, defend and hold
harmless SRI (and its Affiliates) from and against all costs, losses
and liabilities incurred by SRI (or any of its Affiliates) under such
letter of comfort.
4. SRI Reorganization
4.1 The Parties recognize that, for commercial reasons, it has not been
practicable to complete the non-exclusive grant back of the IMS patent
by SRI to DG envisaged by paragraph (vi) of Schedule 2.1(b) to the JVA
(the "Grant").
4.2 The Parties agree that they will each use their respective reasonable
endeavors to achieve completion of the Grant as soon as reasonably
practicable after the date hereof.
5. General
5.1 The Parties agree that the JVA shall be amended to give effect to the
provisions of this Amendment No. 1 but in all other respects the other
terms and conditions of the JVA shall continue without change.
5.2 The Parties agree that expressions used in this Amendment No. 1 will
have the same meanings as are ascribed thereto in the JVA.
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X-10.1-105
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to the
Joint Venture Agreement for Europe to be duly executed as of the day and year
first above written in this Amendment No. 1.
THE GOODYEAR TIRE & RUBBER COMPANY
/s/ X.X. Xxxxxx
------------------------------
By: Xxxxx X. Xxxxxx
Title: Senior Vice President
Business Development and
Business Integration
GOODYEAR S.A.
a French corporation
/s/ X.X. Xxxxxx
------------------------------
By: Xxxxx X. Xxxxxx
Title: Attorney-in-Fact
GOODYEAR S.A.
a Luxembourg corporation
/s/ X.X. Xxxxxx
------------------------------
By: Xxxxx X. Xxxxxx
Title: Attorney-in-Fact
GOODYEAR CANADA, INC.
/s/ X.X. Xxxxxx
------------------------------
By: Xxxxx X. Xxxxxx
Title: Attorney-in-Fact
SUMITOMO RUBBER INDUSTRIES, LTD.
/s/ T. Uchibayashi
------------------------------
By: Takashi Uchibayashi
Title: Representative Director and
Executive Vice President
SUMITOMO RUBBER EUROPE B.V.
/s/ T. Uchibayashi
------------------------------
By: Takashi Uchibayashi
Title: Attorney-in-Fact
-4-
X-10.1-106
