Dana Corporation 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended: June 30, 2007
Commission File Number: 1-1063
Dana Corporation
(Exact name of registrant as specified in its charter)
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Virginia
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34-4361040 |
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(State or other jurisdiction of incorporation or
organization)
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(IRS Employer Identification Number) |
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4500 Dorr Street, Toledo, Ohio
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43615 |
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(Address of principal executive offices)
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(Zip Code) |
(419) 535-4500
(Registrants
telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer o Accelerated filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
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Class
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Outstanding at July 31, 2007 |
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Common stock, $1 par value
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150,202,981 |
DANA CORPORATION FORM 10-Q
FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2007
Table of Contents
2
FORWARD-LOOKING INFORMATION
Statements in this report that are not entirely historical constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forwarding-looking statements are indicated by words such as anticipates, expects, believes,
intends, plans, estimates, projects and similar expressions. These statements represent
the present expectations of Dana Corporation (Dana, we or us) and its consolidated subsidiaries
based on our current information and assumptions. Forward-looking statements are inherently
subject to risks and uncertainties. Our plans, actions and actual results could differ materially
from our present expectations due to a number of factors, including those discussed below and
elsewhere in this report, in our Annual Report on Form 10-K for the fiscal year ended December 31,
2006 (our 2006 Form 10-K) and in our other filings with the Securities and Exchange Commission
(SEC):
Bankruptcy-Related Risk Factors
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Our ability to continue as a going concern, operate pursuant to the terms of our
debtor-in-possession credit facility, and obtain court approval with respect to motions in
our bankruptcy proceedings from time to time; |
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Our ability to fund and execute our business plan; |
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Our ability to maintain satisfactory terms with our customers, vendors and service
providers; |
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Our ability to attract, motivate and/or retain key employees; |
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Our ability to successfully complete the implementation of the reorganization
initiatives discussed in Managements Discussion and Analysis of Financial Condition
and Results of Operations (MD&A) in Item 2 of Part I of this report; and |
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Our ability to (i) file a plan of reorganization with the United States Bankruptcy Court
for the Southern District of New York (the Bankruptcy Court) by September 3, 2007, that
comports with the requirements of Chapter 11 of Title II of the United
States Code (the Bankruptcy Code) and incorporates the union settlement
agreements and equity investment commitments discussed in Note 2 to our financial
statements in Item 1 of Part I of this report and in MD&A in Item 2 of Part I of this
report, or an alternative proposal acceptable to the United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union
(the USW) and the International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (the UAW), (ii) obtain Bankruptcy Court approval of the
disclosure statement filed with our plan of reorganization, (iii) obtain confirmation of
our plan of reorganization implementing such union settlement
agreements and equity investment commitments (or such alternative
proposal) by February 28, 2008, and (iv) emerge from
bankruptcy by May 1, 2008. |
3
Risk Factors in the Vehicle Markets We Serve
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High fuel prices and interest rates; |
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The cyclical nature of the heavy-duty commercial vehicle market; |
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Shifting consumer preferences in the United States (U.S.) from pickup trucks and sport
utility vehicles (SUVs) to cross-over vehicles (CUVs) and passenger cars; |
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Market share declines, production cutbacks, and potential vertical integration by our
larger customers, including Ford Motor Company (Ford), General Motors Corporation (GM) and
DaimlerChrysler AG (Chrysler); |
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The ability of Ford, GM and Chrysler to renegotiate collective bargaining agreements
with their unionized employees and avert potential production interruptions; |
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High costs of commodities used in our manufacturing processes, such as steel, other raw
materials and energy, particularly costs that cannot be recovered from our customers; |
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Competitive pressures on our sales from other vehicle component suppliers; and |
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Adverse effects that could result from any divestitures, consolidations or
bankruptcies of our customers, vendors and competitors. |
Company-Specific Risk Factors
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Changes in business relationships with our major customers and/or in the timing, size
and duration of their programs for vehicles with Dana content; |
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Price reduction pressures from our customers; |
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Our vendors ability to maintain projected production levels and furnish us with
critical components for our products and other necessary goods and services; |
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Adverse effects that could result if U.S. federal legislation relating to asbestos
personal injury claims were enacted; and |
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Adverse effects that could result from increased costs of environmental
remediation and compliance. |
4
PART I FINANCIAL INFORMATION
(In millions, except per share amounts)
ITEM 1. FINANCIAL STATEMENTS
DANA CORPORATION
(DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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Net sales |
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$ |
2,289 |
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$ |
2,300 |
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$ |
4,434 |
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$ |
4,497 |
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Costs and expenses |
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Cost of sales |
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2,141 |
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2,161 |
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4,184 |
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4,257 |
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Selling, general and administrative expenses |
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88 |
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115 |
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184 |
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230 |
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Realignment charges, net |
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134 |
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1 |
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153 |
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2 |
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Impairment of assets |
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1 |
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15 |
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Other income, net |
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32 |
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39 |
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78 |
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70 |
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Income (loss) from continuing operations before
interest,
reorganization items and income taxes |
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(42 |
) |
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61 |
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(9 |
) |
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63 |
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Interest
expense (contractual interest of $55 and $53 for the
three months ended June 30, 2007 and 2006
and $105 and
$100 for the six months ended June 30, 2007
and 2006) |
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28 |
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26 |
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51 |
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65 |
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Reorganization items, net |
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38 |
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34 |
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75 |
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89 |
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Income (loss) from continuing operations before
income taxes |
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(108 |
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1 |
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(135 |
) |
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(91 |
) |
Income tax
expense |
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(3 |
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(36 |
) |
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(18 |
) |
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(58 |
) |
Minority interest expense |
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(4 |
) |
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(2 |
) |
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(6 |
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(3 |
) |
Equity in earnings of affiliates |
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10 |
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6 |
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18 |
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16 |
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Loss from continuing operations |
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(105 |
) |
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(31 |
) |
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(141 |
) |
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(136 |
) |
Income (loss) from discontinued operations |
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(28 |
) |
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3 |
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(84 |
) |
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(18 |
) |
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Net loss |
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$ |
(133 |
) |
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$ |
(28 |
) |
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$ |
(225 |
) |
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$ |
(154 |
) |
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Basic loss per common share |
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Loss from continuing operations |
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$ |
(0.70 |
) |
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$ |
(0.21 |
) |
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$ |
(0.94 |
) |
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$ |
(0.91 |
) |
Income (loss) from discontinued operations |
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(0.19 |
) |
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0.02 |
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(0.56 |
) |
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(0.12 |
) |
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Net loss |
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$ |
(0.89 |
) |
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$ |
(0.19 |
) |
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$ |
(1.50 |
) |
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$ |
(1.03 |
) |
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Diluted loss per common share |
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Loss from continuing operations |
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$ |
(0.70 |
) |
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$ |
(0.21 |
) |
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$ |
(0.94 |
) |
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$ |
(0.91 |
) |
Income (loss) from discontinued operations |
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(0.19 |
) |
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0.02 |
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(0.56 |
) |
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(0.12 |
) |
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Net loss |
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$ |
(0.89 |
) |
|
$ |
(0.19 |
) |
|
$ |
(1.50 |
) |
|
$ |
(1.03 |
) |
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Average shares outstanding Basic |
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150 |
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150 |
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150 |
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150 |
|
Average shares outstanding Diluted |
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150 |
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150 |
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|
150 |
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|
150 |
|
The accompanying notes are an integral part of the financial statements.
5
DANA CORPORATION
(DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
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June 30, |
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December 31, |
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2007 |
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2006 |
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Assets |
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Current assets |
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Cash and cash equivalents |
|
$ |
1,001 |
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$ |
704 |
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Restricted cash |
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103 |
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15 |
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Accounts receivable |
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Trade, less allowance for doubtful accounts
of $23 in 2007 and 2006 |
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1,411 |
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1,131 |
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Other |
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297 |
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235 |
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Inventories |
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Raw materials |
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322 |
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290 |
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Work in process and finished goods |
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451 |
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435 |
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Assets of discontinued operations |
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194 |
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392 |
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Other current assets |
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143 |
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122 |
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Total current assets |
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3,922 |
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3,324 |
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Investments and other assets |
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1,042 |
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1,079 |
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Investments in equity affiliates |
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211 |
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555 |
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Property, plant and equipment, net |
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1,732 |
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1,776 |
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Total assets |
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$ |
6,907 |
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$ |
6,734 |
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Liabilities and shareholders deficit |
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Current liabilities |
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Notes payable, including current portion
of long-term debt |
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$ |
265 |
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$ |
293 |
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Debtor-in-possession financing |
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|
900 |
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Accounts payable |
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1,146 |
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|
886 |
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Liabilities of discontinued operations |
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96 |
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195 |
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Other accrued liabilities |
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837 |
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712 |
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Total current liabilities |
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3,244 |
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2,086 |
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Liabilities subject to compromise |
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3,653 |
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4,175 |
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Deferred employee benefits and other non-current liabilities |
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473 |
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504 |
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Long-term debt |
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20 |
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22 |
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Debtor-in-possession financing |
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700 |
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Commitments and contingencies (Note 14) |
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Minority interest in consolidated subsidiaries |
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92 |
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81 |
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Total liabilities |
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7,482 |
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7,568 |
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Shareholders deficit |
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(575 |
) |
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(834 |
) |
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Total liabilities and shareholders deficit |
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$ |
6,907 |
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$ |
6,734 |
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The accompanying notes are an integral part of the financial statements.
6
DANA CORPORATION
(DEBTOR IN POSSESSION)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
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Six Months Ended |
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June 30, |
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2007 |
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2006 |
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Operating activities |
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Net loss |
|
$ |
(225 |
) |
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$ |
(154 |
) |
Depreciation and amortization |
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|
139 |
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135 |
|
Impairment and divestiture-related charges |
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1 |
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46 |
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Gain on sale of assets |
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(8 |
) |
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Non-cash portion of U.K. pension charge |
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60 |
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Reorganization items, net of payments |
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7 |
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|
45 |
|
Payments to VEBAs for postretirement benefits |
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(27 |
) |
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Changes in working capital |
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(64 |
) |
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|
49 |
|
Other |
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(35 |
) |
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(39 |
) |
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Net cash flows provided by (used for) operating activities |
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(152 |
) |
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|
82 |
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Investing activities |
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Purchases of property, plant and equipment |
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(94 |
) |
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(182 |
) |
Proceeds from sale of businesses |
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305 |
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Proceeds from sale of DCC assets and partnership interests |
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|
109 |
|
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|
11 |
|
Proceeds from sale of other assets |
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7 |
|
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|
28 |
|
Payments received on leases and loans |
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7 |
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|
6 |
|
Increase in restricted cash |
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(88 |
) |
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Other |
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|
18 |
|
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|
19 |
|
|
|
|
|
|
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|
Net cash flows provided by (used for) investing activities |
|
|
264 |
|
|
|
(118 |
) |
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|
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Financing activities |
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|
|
|
|
|
|
|
Net change in short-term debt |
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|
(28 |
) |
|
|
(555 |
) |
Proceeds from debtor-in-possession facility |
|
|
200 |
|
|
|
700 |
|
Issuance of long-term debt |
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|
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|
7 |
|
Other |
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|
(2 |
) |
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|
(7 |
) |
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|
|
|
|
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|
Net cash flows provided by financing activities |
|
|
170 |
|
|
|
145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net increase in cash and cash equivalents |
|
|
282 |
|
|
|
109 |
|
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Cash and cash equivalents beginning of period |
|
|
704 |
|
|
|
762 |
|
Effect of exchange rate changes on cash balances held in foreign currencies |
|
|
28 |
|
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|
(5 |
) |
Net change in cash of discontinued operations |
|
|
(13 |
) |
|
|
5 |
|
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Cash and cash equivalents end of period |
|
$ |
1,001 |
|
|
$ |
871 |
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|
|
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|
The accompanying notes are an integral part of the financial statements.
7
DANA CORPORATION
(DEBTOR IN POSSESSION)
INDEX TO NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. |
|
Basis of Presentation |
|
2. |
|
Reorganization Under Chapter 11 of the Bankruptcy Code |
|
3. |
|
Debtor Financial Statements |
|
4. |
|
Asset Disposals and Impairments, Divestitures and Acquisitions |
|
5. |
|
Discontinued Operations |
|
6. |
|
Realignment of Operations |
|
7. |
|
Common Shares |
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8. |
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Goodwill |
|
9. |
|
Equity-Based Compensation |
|
10. |
|
Pension and Postretirement Benefit Plans |
|
11. |
|
Comprehensive Income (Loss) |
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12. |
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Cash Deposits |
|
13. |
|
Financing Agreements |
|
14. |
|
Commitments and Contingencies |
|
15. |
|
Warranty Obligations |
|
16. |
|
Income Taxes |
|
17. |
|
Other Income, Net |
|
18. |
|
Segments |
|
19. |
|
Union Settlement, Plan Support and Investment Agreements |
8
Notes to Condensed Consolidated Financial Statements
(In millions, except per share amounts)
Note 1. Basis of Presentation
In managements opinion, the accompanying financial statements include all normal recurring
adjustments necessary for a fair presentation of Danas financial condition, results of operations
and cash flows for the interim periods presented. Interim results are not necessarily indicative
of full-year results.
The financial statements in this report should be read in conjunction with the audited
consolidated financial statements and accompanying notes in our 2006 Form 10-K.
Accounting Requirements
As discussed in Note 2, Dana Corporation and forty of its wholly-owned subsidiaries
(collectively, the Debtors) are reorganizing under the Bankruptcy Code. American Institute of Certified Public Accountants Statement of Position
90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code (SOP 90-7),
which is applicable to companies operating under Chapter 11, generally does not change the manner
in which financial statements are prepared. However, SOP 90-7 does require that the financial
statements for periods subsequent to the filing of a Chapter 11 petition distinguish transactions
and events that are directly associated with the reorganization from the ongoing operations of the
business.
We adopted SOP 90-7 effective March 3, 2006 (the Filing Date) and prepare our financial
statements in accordance with its requirements. Revenues, expenses, realized gains and losses and
provisions for losses that can be directly associated with the reorganization and restructuring of
our business are reported separately as reorganization items in our statement of operations. Our
balance sheet distinguishes pre-petition liabilities subject to compromise both from those
pre-petition liabilities that are not subject to compromise and from post-petition liabilities.
Liabilities that may be affected by the Debtors plan of reorganization are reported at the amounts
expected to be allowed by the Bankruptcy Court, although they may ultimately be settled for different amounts. In
addition, cash provided by or used for reorganization items is disclosed separately in our
statement of cash flows. See Note 3 for further information about our financial statement
presentation under SOP 90-7.
Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities including an amendment of FASB Statement No. 115. SFAS No. 159 permits an
entity to choose to measure many financial instruments and certain other items at fair value. Most
of the provisions in SFAS No. 159 are elective; however, the amendment to SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities, applies to all entities with
available-for-sale and trading securities. The fair value option established by SFAS No. 159
permits companies to choose to measure eligible items at fair value at specified election dates.
Companies must report unrealized gains and losses on items for which the fair value option has been
elected in earnings at each subsequent reporting date. SFAS No. 159
9
must be adopted effective January 1, 2008, and we are evaluating the effect, if any, that adoption
will have on our consolidated financial statements in 2008.
In September 2006, the FASB Emerging Issues Task Force (EITF) promulgated Issue No. 06-4,
Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement
Split-Dollar Life Insurance Arrangements (EITF No. 06-4). In March 2007, the EITF promulgated
Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements
(EITF No. 06-10). EITF Nos. 06-4 and 06-10 require a company that provides a benefit to an
employee under an endorsement or collateral assignment split-dollar life insurance arrangement that
extends to postretirement periods to recognize a liability and related compensation costs. We will
adopt EITF Nos. 06-4 and 06-10 effective in the first quarter of 2008 and are evaluating the
effect, if any, that adoption will have on our consolidated financial statements in 2008.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (SFAS No. 157). SFAS
No. 157 defines fair value, establishes a framework for measuring fair value under accounting
principles generally accepted in the United States (GAAP or U.S. GAAP) and expands disclosures
about fair value measurements. We will adopt SFAS No. 157 as of January 1, 2008 and are evaluating
the effect, if any, that adoption will have on our consolidated financial statements for 2008 and
subsequent periods.
We expect to emerge from bankruptcy following the confirmation of our plan of
reorganization and to adopt fresh-start reporting as defined in SOP 90-7. SOP 90-7
requires that changes in accounting principles that will be required in the financial statements of
the emerging entity within the twelve months following the date of emergence must be adopted at the
time fresh-start reporting is adopted.
Note 2. Reorganization Under Chapter 11 of the Bankruptcy Code
The Bankruptcy Cases
The Debtors are operating under Chapter 11 of the Bankruptcy Code. The Debtors Chapter 11
cases (collectively, the Bankruptcy Cases) have been consolidated in the Bankruptcy Court under the
caption In re Dana Corporation, et al., Case No. 06-10354 (BRL). Neither Dana Credit Corporation
(DCC) and its subsidiaries nor any of Danas non-U.S. affiliates are Debtors.
During the bankruptcy proceedings, investments in Dana securities are highly speculative.
Although shares of our common stock are trading on the OTC Bulletin Board under the symbol DCNAQ,
the opportunity for any recovery by shareholders under a confirmed plan of reorganization is
uncertain and the shares may be cancelled without any compensation pursuant to such plan.
The Bankruptcy Cases are being jointly administered, with the Debtors managing their
businesses as debtors in possession subject to the supervision of the Bankruptcy Court. We are
continuing normal business operations while we evaluate our business financially and operationally.
We are proceeding with previously announced divestiture and realignment plans and taking steps to
reduce costs, increase efficiency and enhance productivity so that we can emerge from bankruptcy as
a stronger, more viable company.
Official committees of the Debtors unsecured creditors (the Creditors Committee) and retirees
not represented by unions (the Retiree Committee) have been appointed in the
10
Bankruptcy Cases. The
Debtors bear certain of the committees costs and expenses, including those of their counsel and
other professional advisors. An official committee of Danas equity security holders was also
appointed, but it was later disbanded.
The Debtors have filed schedules of their assets and liabilities existing on the Filing Date,
including certain amendments to the initial schedules, with the Bankruptcy Court.
Under the Bankruptcy Code, the Debtors have the right to assume or reject executory contracts
(i.e., contracts that are to be performed by the parties after the Filing Date) and unexpired
leases, subject to Bankruptcy Court approval and other limitations. The Bankruptcy Court has
approved the Debtors assumption and rejection of certain executory contracts and unexpired leases,
but a significant number of contracts and leases have not yet been assumed or rejected.
The Bankruptcy Court has entered an order establishing procedures for trading in claims
and equity securities that is designed to protect the Debtors potentially valuable tax attributes
(such as net operating loss carryforwards). Under the order, holders or acquirers of 4.75% or more
of Danas common stock are subject to certain notice and consent procedures before acquiring or
disposing of the shares. Holders of claims against the Debtors that would entitle them to more
than 4.75% of the common shares of reorganized Dana under a confirmed plan of reorganization
utilizing the tax benefits provided under Section 382(l)(5) of the Internal Revenue Code may be
required to sell down the excess claims if necessary to implement such a plan of reorganization.
The Plan Support Agreement discussed below contemplates a plan of reorganization utilizing tax
benefits under Section 382(l)(6) of the Internal Revenue Code.
The
Bankruptcy Court has also authorized the Debtors to enter into the
agreements discussed in Note 19.
Pre-petition Claims
Most persons and entities asserting pre-petition claims (with the exception of, among others,
asbestos-related personal injury claims and claims resulting from the future rejection of executory
contracts and unexpired leases) against the Debtors were required to file proofs of claim in the
Bankruptcy Cases by September 21, 2006. Proofs of claim alleging rights to payment for financing,
trade debt, employee obligations, environmental matters, commercial damages and other
litigation-based liabilities, tax liabilities and other matters in a total amount of approximately
$26,600 (as well as certain unliquidated amounts) were filed by that date. In addition, another $51 in
liabilities is listed in our schedules of assets and liabilities as undisputed, non-contingent and
liquidated. Of the claims filed, the Debtors have so far identified claims totaling approximately
$21,800 that they believe should be disallowed, primarily because they appear to be amended,
duplicative, withdrawn by the creditor, without basis for claim, or solely equity-based. Of these
claims, approximately $20,400 had been disallowed by the Bankruptcy Court, withdrawn by the
creditors or eliminated by settlement through July 2007. The Debtors are continuing to evaluate
the remaining filed claims and, as appropriate, to file and prosecute additional claim objections
with the Bankruptcy Court or to address claims through settlement or alternate dispute resolution
procedures. Asbestos-related personal injury claims will be addressed separately in the future in
connection with our plan of reorganization.
Filed
proofs of claim are being reviewed and evaluated by the Debtors through reconciliation and other
procedures. In connection therewith, claim adjustments of $9 were
recorded as liabilities subject to compromise $5 being charged to
reorganization items, net, and $4 to cost of sales and selling,
general and administrative expense (SG&A). These claims existed prior to
the second quarter of 2007 but were recorded in the second quarter. This out-of-period
adjustment was not considered material to the second quarter of 2007 or the earlier periods to which they related.
Claims have been filed for matters such as contract disputes, litigation,
and environmental remediation and related costs. The amounts recorded as liabilities subject to compromise for
11
these
claims are, in most cases, significantly lower based on the Debtors assessment of the probable and
estimable liabilities.
Since receipt of the filed claims, the Debtors have been actively evaluating the merits of the
claims and obtaining additional information to ascertain their validity. Upon completion of this
evaluation, the Debtors in many cases have commenced settlement discussions with the claimants to
reach a consensual resolution of the allowed claim amount. Based on
such settlement activity, $21 was added to liabilities subject to
compromise in the second quarter with
corresponding charges of $11 to other income
(expense), net, $9 to pre-tax loss from discontinued operations and $1
to cost of sales.
Although certain of these settlements may be subject to Bankruptcy Court approval, the Debtors determined these settlements to be
probable. As the Debtors continue to pursue settlement discussions to resolve these claims,
additional agreements to allow claims subject to compromise are likely to be achieved at amounts
in excess of that currently recorded for these claims. As of the present date, however, these
additional amounts do not meet probable and estimable standards for recognition in the financial
statements.
In July 2007, we entered into a Settlement Agreement with Sypris Solutions, Inc. (Sypris)
under which Sypris will obtain a general unsecured claim of $90 in the Bankruptcy Cases, subject to
Bankruptcy Court approval. The settlement amount primarily covers damages alleged by Sypris in
connection with the termination of existing supply agreements. As part of the settlement, Sypris
and Dana will execute a new long-term supply agreement at prices more favorable to Dana than those
in the existing agreements, and Sypris will release Dana from all filed and asserted claims. Of
the total settlement amount, $3 has been attributed to events which occurred prior to June 30,
2007. Net of amounts previously recorded for these events, the impact of this settlement on the
second quarter of 2007 was not material. The remaining $87 of the settlement, which is
attributable to damages for lost future profits from termination of the existing agreements, will
be recognized upon Bankruptcy Court approval (expected in the third quarter of 2007) in liabilities
subject to compromise. The Bankruptcy Court approved this settlement
on August 7, 2007.
Pre-petition Debt
Our bankruptcy filing triggered the immediate acceleration of certain of the direct financial
obligations of the Debtors, including, among others, an aggregate of $1,623 in principal and
accrued interest on currently outstanding unsecured notes issued under our 1997, 2001, 2002 and
2004 indentures. Such amounts are characterized as unsecured debt for purposes of the
reorganization proceedings and the related obligations are classified as liabilities subject to
compromise in our consolidated balance sheet as of June 30, 2007. In accordance with SOP 90-7,
following the Filing Date, we discontinued recording interest expense on debt classified as
liabilities subject to compromise.
Reorganization Initiatives
It is critical to the Debtors successful emergence from bankruptcy that they (i) achieve
positive margins for their products by obtaining substantial price increases from their customers,
(ii) recover or otherwise provide for increased material costs through renegotiation or rejection
of various customer programs, (iii) restructure their wage and benefit programs to create an
appropriate labor and benefit cost structure, (iv) address the excessive cash requirements of the
legacy pension and other postretirement benefit liabilities that they have accumulated over the
years, (v) optimize their manufacturing footprint by eliminating excess capacity, closing and
consolidating facilities and repositioning operations in lower cost countries and (vi) achieve a
12
permanent reduction and realignment of their overhead costs. The steps that the Debtors are taking
to accomplish these goals are discussed in Item 2 of Part I.
Plan of Reorganization
Until September 3, 2007, the Debtors have the exclusive right to file a plan of reorganization
in the Bankruptcy Cases. We anticipate that substantially all of the Debtors liabilities as of
the Filing Date will be addressed and treated in accordance with such plan, which will be voted on
by the creditors and equity holders in accordance with the provisions of the Bankruptcy Code.
Although the Debtors intend to file such a plan by that date, there can be no assurance that they
will be able to do so or that any plan that is filed will be confirmed by the Bankruptcy Court and
consummated. The Debtors plan of reorganization could materially change the amounts and
classification of items reported in our historical financial statements.
On August 1, 2007, the Bankruptcy Court entered an order authorizing the Debtors to enter into
a series of related agreements consisting of (i) settlement agreements with the UAW and USW
providing terms for settling all outstanding issues between the Debtors and these unions related to
the Bankruptcy Cases; (ii) a Plan Support Agreement with these unions, Centerbridge Capital Partners, L.P. (Centerbridge) and certain of
Danas unsecured creditors setting out the terms under which these parties will support the
Debtors plan of reorganization; and (iii) an Investment Agreement between Dana, Centerbridge, and
a Centerbridge affiliate providing for Centerbridge to purchase $250 in Series A convertible
preferred shares of reorganized Dana and qualified creditors of the Debtors (i.e., creditors who
meet specified criteria) to have an opportunity to purchase $500 in Series B convertible preferred
shares on a pro rata basis, with Centerbridge purchasing up to $250 in Series B preferred shares
that are not purchased by the qualified creditors. The proceeds from the sale of the preferred
shares will be used in part to fund the Voluntary Employee
Benefit Association (VEBA) trusts that will be established under the union
settlement agreements. We have agreed to file a plan of reorganization with the Bankruptcy
Court incorporating the union settlement agreements and the foregoing
equity investment commitments
(or an alternative proposal acceptable to the UAW and USW) by September 3, 2007. If we fail to do
so, Centerbridge may terminate the Investment Agreement and the unions may, under some
circumstances, terminate the union settlement agreements or their collective bargaining agreements.
In addition, if our plan of reorganization does not become effective by February 28, 2008,
individual supporting creditors may withdraw their support and if it does not become effective by
May 1, 2008, the Plan Support Agreement will expire. See Note 19 for additional details.
In addition, the Bankruptcy Court order authorizing our entry into these agreements
established a schedule and procedures under which we will consider potential alternatives to the
investments contemplated with Centerbridge under the Investment Agreement. The schedule
contemplates that any alternate investment proposals will be received and considered by specific
dates during August through October 2007.
Continuation as a Going Concern
Our financial statements have been prepared on a going-concern basis, which contemplates
continuity of operations, realization of assets and liquidation of liabilities in the ordinary
course of business. As a result of our bankruptcy filing, such realization of assets and
liquidation of liabilities is subject to uncertainty. While operating as debtors in possession
under the protection of Chapter 11, the Debtors may sell or otherwise dispose of assets and
liquidate
or settle liabilities for amounts other than those recorded in our financial statements, subject to
Bankruptcy Court approval or as otherwise permitted in the ordinary course of business. Our
13
financial statements as of June 30, 2007 do not give effect to all the adjustments to the carrying
value of assets and liabilities that may become necessary as a consequence of our reorganization.
Our continuation as a going concern is contingent upon our ability to (i) comply with the
terms and conditions of the Senior Secured Superpriority Debtor-In-Possession Credit Agreement to
which Dana, as borrower, and our Debtor U.S. subsidiaries, as guarantors, are parties (the DIP
Credit Agreement) (see Note 13), (ii) obtain confirmation of a plan of reorganization under the
Bankruptcy Code, (iii) generate sufficient cash flow from operations, and (iv) obtain financing
sources to meet our future obligations. Although we are taking steps to achieve these objectives,
there is no assurance that we will be successful in doing so or that any measures that are
achievable will result in sufficient improvement to our financial position. Accordingly, until
such time as we emerge from bankruptcy, there is no certainty about our ability to continue as a
going concern. If our reorganization is not completed successfully, we could be forced to sell a
significant portion of our assets to retire debt outstanding or, under certain circumstances, to
cease operations.
DCC Notes
At the time of our bankruptcy filing, DCC had outstanding notes totaling approximately $399.
In December 2006, DCC and most of its noteholders executed a Forbearance Agreement under which (i)
the forbearing noteholders agreed not to exercise their rights or remedies with respect to the DCC
notes for a period of 24 months (or until the effective date of Danas plan of reorganization),
during which time DCC is endeavoring to sell its remaining asset portfolio in an orderly manner and
use the proceeds to pay down the notes and (ii) DCC agreed to pay the forbearing noteholders their
pro rata share of any cash it maintains in the U.S. greater than $7.5 on a quarterly basis. At
June 30, 2007, the amount of principal outstanding under the DCC notes was $228. In July 2007, DCC
made a $95 payment to the forbearing noteholders, consisting of $91 of principal and $4 of
interest.
Contemporaneously with the execution of the Forbearance Agreement, Dana and DCC executed a
Settlement Agreement whereby they agreed to the discontinuance of a tax sharing agreement between
them and to a stipulated amount of a general unsecured claim owed by Dana to DCC of $325. Payments
to DCC relative to this obligation are expected to be addressed in our plan of reorganization,
which may propose that distributions to DCC be limited to the amount required to satisfy DCCs
obligations.
14
Liabilities Subject to Compromise
Liabilities subject to compromise in the consolidated balance sheet include those of our
discontinued operations and consisted of the following at June 30, 2007 and December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Accounts payable |
|
$ |
291 |
|
|
$ |
290 |
|
Pension and other postretirement obligations |
|
|
1,140 |
|
|
|
1,687 |
|
Debt (including accrued interest of $39) |
|
|
1,623 |
|
|
|
1,623 |
|
Other |
|
|
599 |
|
|
|
575 |
|
|
|
|
|
|
|
|
Consolidated liabilities subject to compromise |
|
|
3,653 |
|
|
|
4,175 |
|
Payables to non-Debtor subsidiaries |
|
|
401 |
|
|
|
402 |
|
|
|
|
|
|
|
|
Debtor liabilities subject to compromise |
|
$ |
4,054 |
|
|
$ |
4,577 |
|
|
|
|
|
|
|
|
Other includes accrued liabilities for environmental, asbestos-related and other product
liabilities, income tax, deferred compensation, other postemployment benefits and lease rejection
claims. Payables to non-Debtor subsidiaries include the $325 payable to DCC under the Settlement
Agreement referred to above. As a result of the claims and settlement activity
described elsewhere in Note 2, liabilities subject to compromise
increased by $21 during the second quarter
of 2007.
As discussed in Note 10, the reduction in pension and postretirement obligations is attributed
to the elimination of postretirement healthcare benefits for non-union employees and retirees and
the freeze of service and benefit accruals for non-union employees.
Debtors pre-petition debt of $1,623 is included in liabilities subject to compromise. As of
the Filing Date, we discontinued recording interest expense on debt classified as liabilities
subject to compromise. On a consolidated basis, contractual interest on all debt, including the
portion classified as liabilities subject to compromise, amounted to $55 and $53 for the three
months and $105 and $100 for the six months ended June 30, 2007 and 2006.
As required by SOP 90-7, the amount of liabilities subject to compromise represents our
estimate of known or potential pre-petition claims to be addressed in connection with the
Bankruptcy Cases. Such claims are subject to future adjustments that may result from, among other
things, negotiations with creditors, rejection of executory contracts and unexpired leases, and
orders of the Bankruptcy Court. Liabilities subject to compromise may change due to
reclassifications, settlements or reorganization activities that give rise to new claims or
increases in existing claims.
Reorganization Items
Professional advisory fees and other costs directly associated with our reorganization are
reported separately as reorganization items pursuant to SOP 90-7. Reorganization items also
include provisions and adjustments to record the carrying value of certain pre-petition liabilities
at their estimated allowable claim amounts, as well as the costs of certain actions within the
non-Debtor companies that have occurred as a result of the Debtors bankruptcy proceedings.
15
The reorganization items in the consolidated statement of operations for the three and
six months ended June 30, 2007 and 2006 consisted of the following items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Debtor reorganization items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
$ |
29 |
|
|
$ |
27 |
|
|
$ |
63 |
|
|
$ |
64 |
|
Debt valuation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17 |
|
Loss on settlements |
|
|
8 |
|
|
|
7 |
|
|
|
9 |
|
|
|
8 |
|
Interest income |
|
|
(4 |
) |
|
|
(3 |
) |
|
|
(7 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtor reorganization items |
|
|
33 |
|
|
|
31 |
|
|
|
65 |
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Debtor reorganization items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
5 |
|
|
|
3 |
|
|
|
10 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reorganization items |
|
$ |
38 |
|
|
$ |
34 |
|
|
$ |
75 |
|
|
$ |
89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims resulting from contract rejections under the bankruptcy process are recorded
as reorganization loss on settlements.
Non-Debtor costs during the second quarter of 2007 related principally to services rendered in
connection with the settlement of our pension obligations in the United Kingdom (U.K.) (see Note 6)
and other organizational restructuring to facilitate future repatriations, financings and other
actions.
Note 3. Debtor Financial Statements
Debtor In Possession Financial Information
In accordance with SOP 90-7, the statement of operations and statement of cash flows of the
Debtors are presented below for the three and six months ended June 30, 2007 and 2006, along with
the balance sheet at June 30, 2007 and December 31, 2006. Intercompany balances between Debtors
and non-Debtors are not eliminated. The investment in non-Debtor subsidiaries is accounted for on
an equity basis and, accordingly, the net loss reported in the debtor in possession statement of
operations is equal to the consolidated net loss.
16
DANA CORPORATION
DEBTOR IN POSSESSION
STATEMENT OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customers |
|
$ |
1,087 |
|
|
$ |
1,126 |
|
|
$ |
2,110 |
|
|
$ |
2,234 |
|
Non-Debtor subsidiaries |
|
|
63 |
|
|
|
65 |
|
|
|
122 |
|
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,150 |
|
|
|
1,191 |
|
|
|
2,232 |
|
|
|
2,360 |
|
Costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
1,140 |
|
|
|
1,196 |
|
|
|
2,233 |
|
|
|
2,390 |
|
Selling, general and administrative expenses |
|
|
54 |
|
|
|
75 |
|
|
|
115 |
|
|
|
152 |
|
Realignment and impairment |
|
|
(9 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
|
|
Other income, net |
|
|
56 |
|
|
|
45 |
|
|
|
120 |
|
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before interest,
reorganization items and income taxes |
|
|
21 |
|
|
|
(35 |
) |
|
|
9 |
|
|
|
(97 |
) |
Interest expense (contractual interest of $45 and $39 for the three
months ended June 30, 2007 and 2006 and $89 and $78 for
the six months ended June 30, 2007 and 2006) |
|
|
18 |
|
|
|
12 |
|
|
|
35 |
|
|
|
43 |
|
Reorganization items, net |
|
|
33 |
|
|
|
31 |
|
|
|
65 |
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes |
|
|
(30 |
) |
|
|
(78 |
) |
|
|
(91 |
) |
|
|
(226 |
) |
Income tax benefit (expense) |
|
|
30 |
|
|
|
(9 |
) |
|
|
26 |
|
|
|
(10 |
) |
Minority interest income |
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
Equity in earnings (losses) of affiliates |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
3 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(1 |
) |
|
|
(91 |
) |
|
|
(60 |
) |
|
|
(243 |
) |
Loss from discontinued operations |
|
|
(66 |
) |
|
|
(14 |
) |
|
|
(118 |
) |
|
|
(43 |
) |
Equity in earnings (losses) of non-Debtor subsidiaries |
|
|
(66 |
) |
|
|
77 |
|
|
|
(47 |
) |
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(133 |
) |
|
$ |
(28 |
) |
|
$ |
(225 |
) |
|
$ |
(154 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
17
DANA CORPORATION
DEBTOR IN POSSESSION
BALANCE SHEET (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
378 |
|
|
$ |
216 |
|
Accounts receivable |
|
|
|
|
|
|
|
|
Trade, less allowance for doubtful accounts of
$23 in 2007 and 2006 |
|
|
580 |
|
|
|
460 |
|
Other |
|
|
103 |
|
|
|
71 |
|
Inventories |
|
|
227 |
|
|
|
243 |
|
Assets of discontinued operations |
|
|
65 |
|
|
|
237 |
|
Other current assets |
|
|
31 |
|
|
|
15 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,384 |
|
|
|
1,242 |
|
Investments and other assets |
|
|
960 |
|
|
|
875 |
|
Investments in equity affiliates |
|
|
119 |
|
|
|
110 |
|
Investments in non-debtor subsidiaries |
|
|
2,124 |
|
|
|
2,193 |
|
Property, plant and equipment, net |
|
|
744 |
|
|
|
788 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,331 |
|
|
$ |
5,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders deficit |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Debtor-in-possession financing |
|
$ |
900 |
|
|
$ |
|
|
Accounts payable |
|
|
383 |
|
|
|
294 |
|
Liabilities of discontinued operations |
|
|
22 |
|
|
|
50 |
|
Other accrued liabilities |
|
|
412 |
|
|
|
343 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,717 |
|
|
|
687 |
|
|
|
|
|
|
|
|
|
|
Liabilities subject to compromise |
|
|
4,054 |
|
|
|
4,577 |
|
Deferred employee benefits and other non-current liabilities |
|
|
135 |
|
|
|
76 |
|
Debtor-in-possession financing |
|
|
|
|
|
|
700 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
|
|
Minority interest in consolidated subsidiaries |
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
5,906 |
|
|
|
6,042 |
|
Shareholders deficit |
|
|
(575 |
) |
|
|
(834 |
) |
|
|
|
|
|
|
|
Total liabilities and shareholders deficit |
|
$ |
5,331 |
|
|
$ |
5,208 |
|
|
|
|
|
|
|
|
18
DANA CORPORATION
DEBTOR IN POSSESSION
STATEMENT OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
Operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(225 |
) |
|
$ |
(154 |
) |
Depreciation and amortization |
|
|
68 |
|
|
|
60 |
|
Loss on sale of businesses |
|
|
23 |
|
|
|
|
|
Impairment and divestiture-related charges |
|
|
1 |
|
|
|
31 |
|
Reorganization charges, net |
|
|
2 |
|
|
|
44 |
|
Equity in losses (earnings) of non-Debtor subsidiaries, net of dividends |
|
|
67 |
|
|
|
(132 |
) |
Payments to VEBAs for postretirement benefits |
|
|
(27 |
) |
|
|
|
|
Working capital |
|
|
69 |
|
|
|
85 |
|
Other |
|
|
(44 |
) |
|
|
(37 |
) |
|
|
|
|
|
|
|
Net cash flows used for operating activities |
|
|
(66 |
) |
|
|
(103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(38 |
) |
|
|
(45 |
) |
Proceeds from sale of businesses |
|
|
43 |
|
|
|
|
|
Other |
|
|
23 |
|
|
|
(10 |
) |
|
|
|
|
|
|
|
Net cash flows provided by (used for) investing activities |
|
|
28 |
|
|
|
(55 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from debtor-in-possession facility |
|
|
200 |
|
|
|
700 |
|
Net change in short-term debt |
|
|
|
|
|
|
(546 |
) |
|
|
|
|
|
|
|
Net cash flows provided by financing activities |
|
|
200 |
|
|
|
154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
162 |
|
|
|
(4 |
) |
Cash and cash equivalents beginning of period |
|
|
216 |
|
|
|
286 |
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period |
|
$ |
378 |
|
|
$ |
282 |
|
|
|
|
|
|
|
|
Note 4. Asset Disposals and Impairments, Divestitures and Acquisitions
DCC Asset Disposals and Impairments
The carrying value of the remaining DCC portfolio assets was $83 at June 30, 2007, down from
$178 at December 31, 2006. Where applicable, these assets are adjusted quarterly to estimated fair
value less cost to sell. At June 30, 2007, we determined that no
additional adjustments to carrying value
were required.
During the first six months of 2007 DCC continued to dispose of assets under the terms of the
Forbearance Agreement discussed in Note 2. Cash proceeds from these asset sales totaled $120.
Certain DCC assets with a net book value of $49 are equity investments. The assets underlying
these equity investments have not been impaired by the investees and there is not a
readily determinable market value for these investments. Based on internally estimated current
19
market value, DCC expects that the future sale of these assets will result in total losses of $20
to $30. We will recognize an impairment charge if DCC enters into agreements to sell these
investments at values below the carrying values or if we obtain other evidence that there has been
an other-than-temporary decline in the fair values of the assets.
Divestitures
In January 2007, we sold our trailer axle business manufacturing assets for $28 in cash and
recorded an after-tax gain of $14.
In March 2007, the following events occurred:
|
|
|
-
|
|
We sold our engine hard parts
business and received cash proceeds of $98. Of
these proceeds, $5 was escrowed pending completion of closing conditions in certain
countries and $20 was escrowed pending finalization of purchase price adjustments and
satisfaction of certain of our indemnification obligations. We recorded a first quarter
pre-tax loss of $26 in connection with this sale. In the second
quarter, we received $5 of escrowed funds following completion of
closing conditions in certain countries. $10 of the remaining escrow amounts is
expected to be settled in the third quarter, with the remaining $10
settled in 2008. |
|
|
|
-
|
|
We sold our 30% equity interest in GETRAG Getriebe-und Zahnradfabrik Hermann
Hagenmeyer GmbH & Cie KG (GETRAG) to our joint venture partner for $207 in cash. We had
recorded an impairment charge of $58 in the fourth quarter of 2006 to adjust this equity
investment to fair value and we recorded an additional charge of $2 in the first quarter of
2007 based on value of the investment at the time of closing. |
|
|
|
-
|
|
We signed an agreement with Orhan Holding A.S. and certain of its affiliates
for the sale of our fluid products hose and tubing business. We subsequently completed
the sale in two transactions in July and August and received aggregate cash proceeds of
$85. We expect to record a third-quarter after-tax gain of $34 in connection with this
sale. |
In May 2007, we signed an agreement with Coupled Products Acquisition LLC for the sale of our
coupled fluid products business for the nominal price of one dollar, with the buyer to assume
certain liabilities of the business at closing. We expect to complete this sale in the third
quarter of 2007 and to record an after-tax loss of $25 at closing.
Acquisitions
In June 2007, our subsidiary Dana Mauritius Limited (Dana Mauritius) purchased 4% of the
registered capital of Dongfeng Dana Axle Co., Ltd. (a commercial vehicle axle manufacturer in China
formerly known as Dongfeng Axle Co., Ltd.) from Dongfeng Motor Co., Ltd. and certain of its
affiliates for $5. Dana Mauritius has agreed, subject to certain conditions, to purchase an
additional 46% equity interest in Dongfeng Dana Axle Co., Ltd. within the next three years for
approximately $55.
Note 5. Discontinued Operations
The results of operations of the engine hard parts business that we sold in March 2007 and the
fluid products and pump products businesses that we have divested or are divesting are aggregated
and presented as discontinued operations.
20
The results of the discontinued operations for the three and six months ended June 30, 2007
and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Sales |
|
$ |
167 |
|
|
$ |
328 |
|
|
$ |
416 |
|
|
$ |
653 |
|
Cost of sales |
|
|
136 |
|
|
|
307 |
|
|
|
406 |
|
|
|
607 |
|
Selling, general and administrative expenses |
|
|
7 |
|
|
|
15 |
|
|
|
22 |
|
|
|
33 |
|
Impairment charges |
|
|
3 |
|
|
|
|
|
|
|
4 |
|
|
|
28 |
|
Restructuring
and other expense, net |
|
|
52 |
|
|
|
3 |
|
|
|
50 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(32 |
) |
|
|
3 |
|
|
|
(66 |
) |
|
|
(19 |
) |
Income tax benefit (expense) |
|
|
4 |
|
|
|
|
|
|
|
(18 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations |
|
$ |
(28 |
) |
|
$ |
3 |
|
|
$ |
(84 |
) |
|
$ |
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Since the fourth quarter of 2005, we have adjusted the underlying assets of the
discontinued operations to their net fair value less cost to sell based on the profit outlook for
these businesses, discussions with potential buyers and other factors impacting expected sale
proceeds. These valuation adjustments are reflected in the discontinued operations results as
impairment charges. Restructuring & other expense, net for the three months ended June 30, 2007 included a charge of
$17 for settlement of pension obligations in the U.K. (see Note 6) relating to discontinued
operations and $9 for estimated bankruptcy claim settlements. Other expense for the six months ended June 30, 2007 included pre-tax losses of $26
recognized during the first quarter in connection with the sale of the engine hard parts business.
At June 30, 2007, we had reduced the assets of the fluid products and pump products businesses to
the extent permitted by GAAP. At the current expected selling prices, additional charges of $27
will be recorded as the sales are finalized.
The assets and liabilities of discontinued operations reported in the consolidated balance
sheet at June 30, 2007 and December 31, 2006 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
Assets of discontinued operations |
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
128 |
|
|
$ |
223 |
|
Inventories |
|
|
38 |
|
|
|
123 |
|
Cash and other current assets |
|
|
23 |
|
|
|
11 |
|
Investments and other assets |
|
|
5 |
|
|
|
29 |
|
Investments in leases |
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
194 |
|
|
$ |
392 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of discontinued operations |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
62 |
|
|
$ |
95 |
|
Accrued payroll and employee benefits |
|
|
14 |
|
|
|
41 |
|
Other current liabilities |
|
|
20 |
|
|
|
51 |
|
Other noncurrent liabilities |
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
96 |
|
|
$ |
195 |
|
|
|
|
|
|
|
|
In the consolidated statement of cash flows, the cash flows of discontinued operations
are reported in the respective categories of cash flows, along with those of our continuing
operations.
21
Liabilities subject to compromise of discontinued operations and certain other
accounts are not included in the liabilities of discontinued operations. The assets and
liabilities of discontinued operations declined due to the sale of the engine hard parts business
during the first quarter of 2007.
Note 6. Realignment of Operations
The
following table shows the realignment charges and related payments, exclusive of the U.K.
pension charges discussed below, recorded in our continuing operations during the six months ended June 30, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee |
|
|
Long-Lived |
|
|
|
|
|
|
|
|
|
Termination |
|
|
Asset |
|
|
Exit |
|
|
|
|
|
|
Benefits |
|
|
Impairment |
|
|
Costs |
|
|
Total |
|
Balance at December 31, 2006 |
|
$ |
64 |
|
|
$ |
|
|
|
$ |
10 |
|
|
$ |
74 |
|
Activity during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges to expense |
|
|
11 |
|
|
|
6 |
|
|
|
24 |
|
|
|
41 |
|
Adjustments of accruals |
|
|
(24 |
) |
|
|
|
|
|
|
|
|
|
|
(24 |
) |
Non-cash write-off |
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
(6 |
) |
Cash payments |
|
|
(23 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
(46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2007 |
|
$ |
28 |
|
|
$ |
|
|
|
$ |
11 |
|
|
$ |
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In February 2007, we announced the restructuring of pension liabilities in the U.K. As a
result of the underlying agreement, we recorded $8 of pension curtailment cost as a realignment
charge in the first quarter of 2007. In April 2007 our U.K. subsidiaries settled their pension
plan obligations to the plan participants through a cash payment of $93 and the transfer of a 33% equity interest in our
remaining U.K. axle and driveshaft operating businesses to the plans. Concurrent with the cash
payment and equity transfer, we recorded a pension settlement charge
of $128 as a realignment
charge in continuing operations and $17 in discontinued operations.
As a consequence of the negotiations that resulted in the agreements reached with the UAW and
the USW in July 2007 (see Notes 10 and 19), we modified certain of our manufacturing footprint
optimization plans. A facility that we previously planned to close will remain operative, but we
will implement work force reductions at that facility and other facilities in the affected business
segment. As a result of these modifications, realignment charges for the second quarter of 2007
included a credit adjustment of $17 to record reduced contractual employee separation cost.
The remainder of the realignment charges expensed during the three months and six months ended
June 30, 2007 related primarily to the ongoing facility closure activities associated with
previously announced manufacturing footprint actions.
At
June 30, 2007, $39 of restructuring charges remained in accrued
liabilities, including $28
for the reduction of approximately 1,600 employees to be completed over the next two years and $11
for lease terminations and other exit costs. The estimated cash expenditures related to these
liabilities are projected to approximate $26 in the remainder of 2007 and $13 thereafter. In
addition to the $39 accrued at June 30, 2007, we estimate that another $101 will be expensed in
relation to pending initiatives. Our liquidity and cash flows will be impacted by these
expenditures.
22
Realignment initiatives generally occur over multiple reporting periods. The following table
provides project-to-date and estimated future expenses for completion of our pending realignment
initiatives for the Automotive Systems Group (ASG) and the Heavy Vehicle Technology Systems Group
(HVTSG) business units and the underlying segments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense Recognized |
|
|
|
|
|
|
|
|
|
|
Year-to- |
|
|
|
|
|
|
Estimated |
|
|
|
Prior to |
|
|
Date |
|
|
|
|
|
|
Cost to |
|
|
|
2007 |
|
|
2007 |
|
|
Total |
|
|
Complete |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
42 |
|
|
$ |
4 |
|
|
$ |
46 |
|
|
$ |
(2 |
) |
Driveshaft |
|
|
31 |
|
|
|
(9 |
) |
|
|
22 |
|
|
|
38 |
|
Sealing |
|
|
3 |
|
|
|
1 |
|
|
|
4 |
|
|
|
1 |
|
Thermal |
|
|
4 |
|
|
|
1 |
|
|
|
5 |
|
|
|
|
|
Structures |
|
|
45 |
|
|
|
10 |
|
|
|
55 |
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
125 |
|
|
|
7 |
|
|
|
132 |
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicles |
|
|
5 |
|
|
|
6 |
|
|
|
11 |
|
|
|
|
|
Off-Highway |
|
|
31 |
|
|
|
2 |
|
|
|
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
36 |
|
|
|
8 |
|
|
|
44 |
|
|
|
|
|
Other |
|
|
17 |
|
|
|
2 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total continuing operations |
|
$ |
178 |
|
|
$ |
17 |
|
|
$ |
194 |
|
|
$ |
101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7. Common Shares
In addition to average shares outstanding of 149.8 for the three and six months ended June 30,
2007 and 2006, there were 0.6 shares that satisfy the definition of potentially dilutive shares for
these periods. These potentially dilutive shares have been excluded from the computation of
earnings per share for the three and six months ended June 30, 2007 and 2006 as the loss from continuing operations for these periods caused the shares to
have an anti-dilutive effect.
In addition, we have excluded 11.5 common shares for each of these periods from the
computation of earnings per share as these shares represent stock options with exercise prices
higher than the average per share trading price of our stock during the respective periods and the
effect of including them would also be anti-dilutive.
23
Note 8. Goodwill
Changes in goodwill during the six months ended June 30, 2007 for the affected segments were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of |
|
|
|
|
|
|
December 31, |
|
|
Currency |
|
|
June 30, |
|
|
|
2006 |
|
|
and Other |
|
|
2007 |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
Driveshaft |
|
$ |
158 |
|
|
$ |
5 |
|
|
$ |
163 |
|
Sealing |
|
|
24 |
|
|
|
|
|
|
|
24 |
|
Thermal |
|
|
119 |
|
|
|
1 |
|
|
|
120 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
301 |
|
|
|
6 |
|
|
|
307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
Off-Highway |
|
|
115 |
|
|
|
1 |
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
416 |
|
|
$ |
7 |
|
|
$ |
423 |
|
|
|
|
|
|
|
|
|
|
|
Note 9. Equity-Based Compensation
During the second quarter of 2007, there were no stock options, restricted shares or units or
other stock-based awards granted under our equity compensation plans. Also, no options were
exercised.
The following chart shows the number of options that vested or were forfeited during the first
six months of 2007:
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Weighted Average |
|
|
of |
|
Grant Date Fair |
|
|
Options |
|
Values (in $ per share) |
Non-vested at December 31, 2006 |
|
|
617,026 |
|
|
$ |
3.39 |
|
Vested |
|
|
(353,260 |
) |
|
|
3.42 |
|
Forfeited |
|
|
(52,757 |
) |
|
|
3.47 |
|
|
|
|
|
|
|
|
|
|
Non-vested at June 30, 2007 |
|
|
211,009 |
|
|
|
3.33 |
|
|
|
|
|
|
|
|
|
|
As of June 30, 2007, the total unrecognized compensation expense for non-vested options
was $1, which will be amortized over a period of approximately one year. The total fair value of
options that vested during the three and six months ended June 30, 2007 was $1 and $1. During the
three and six months ended June 30, 2007 we recognized nominal equity-based compensation expense. For
the three and six months ended June 30, 2006, we recognized $1 of expense.
24
Note 10. Pension and Postretirement Benefit Plans
We provide defined contribution and defined benefit, qualified and nonqualified, pension plans
for certain employees. We also provide other postretirement benefits, including medical and life
insurance, for certain employees following retirement.
Components of net periodic benefit costs for the three and six months ended June 30, 2007 and
2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
|
|
Pension Benefits |
|
|
Other Benefits |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Service cost |
|
$ |
12 |
|
|
$ |
11 |
|
|
$ |
1 |
|
|
$ |
3 |
|
Interest cost |
|
|
41 |
|
|
|
41 |
|
|
|
20 |
|
|
|
23 |
|
Expected return on plan assets |
|
|
(48 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
|
|
|
|
1 |
|
|
|
(3 |
) |
|
|
(3 |
) |
Recognized net actuarial loss
(gain) |
|
|
8 |
|
|
|
8 |
|
|
|
5 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
13 |
|
|
$ |
11 |
|
|
$ |
23 |
|
|
$ |
33 |
|
Curtailment loss |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement loss |
|
|
128 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost after
curtailment and settlements |
|
$ |
144 |
|
|
$ |
18 |
|
|
$ |
23 |
|
|
$ |
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
|
|
Pension Benefits |
|
|
Other Benefits |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Service cost |
|
$ |
25 |
|
|
$ |
23 |
|
|
$ |
3 |
|
|
$ |
6 |
|
Interest cost |
|
|
82 |
|
|
|
82 |
|
|
|
42 |
|
|
|
45 |
|
Expected return on plan assets |
|
|
(98 |
) |
|
|
(101 |
) |
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
|
|
|
|
2 |
|
|
|
(6 |
) |
|
|
(7 |
) |
Recognized net actuarial loss
(gain) |
|
|
14 |
|
|
|
16 |
|
|
|
14 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost |
|
$ |
23 |
|
|
$ |
22 |
|
|
$ |
53 |
|
|
$ |
64 |
|
Curtailment loss |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement loss (gain) |
|
|
128 |
|
|
|
11 |
|
|
|
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost after
curtailment and settlements |
|
$ |
162 |
|
|
$ |
33 |
|
|
$ |
41 |
|
|
$ |
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In March 2007, the Bankruptcy Court approved the elimination of postretirement healthcare
benefits for active non-union employees in the U.S. This action reduced our accumulated
postretirement benefit obligation (APBO) for postretirement healthcare by $115 in the first
quarter. Because the elimination of these benefits reduced benefits previously earned, it was
considered a negative plan amendment. Accordingly, the reduction in the APBO was offset by a
credit to accumulated other comprehensive income (AOCI) which is being amortized to income.
In May 2007, we reached an agreement with the Retiree Committee to make cash contributions of
$78 to a VEBA trust for non-pension retiree benefits
in exchange for release of the Debtors from obligations for postretirement health and welfare
benefits for non-union retirees in the U.S. A payment of $25 was made in June
2007. In May 2007 we also made a $2.25 payment to the International Association of Machinists
(IAM) to resolve all claims for non-pension retiree benefits after June 30, 2007 for retirees and
active employees represented by the IAM. As a result of these actions, we reduced our APBO by
$303, with $80 being offset by the payment obligation to the VEBAs and $223 being credited to AOCI.
The elimination of retiree medical benefits for non-union employees in March 2007 and the
agreement with the Retiree Committee on behalf of such employees in May 2007 necessitated the remeasurement of U.S. pension
benefits as of June 30, 2007. The discount rate used for remeasurement was 6.29% versus 5.88% used
at December 31, 2006.
In June 2007, we amended our U.S. pension plans for non-union employees to freeze service
credits and benefit accruals effective July 1, 2007. In connection with this action, we recorded a
curtailment charge of $3 during the second quarter of 2007 and certain plan assets
25
and liabilities
were remeasured. The resulting funded status of all our U.S. pension plans (non-union and union)
at June 30, 2007 was a net liability of $19, as compared to a net liability of $103 at December 31,
2006. Unamortized pension loss in AOCI was reduced to $335 at June 30, 2007 from $433 at December
31, 2006 and continues to be amortized to income over an actuarially determined period.
In July 2007, we entered into the settlement agreements with the UAW and USW that are
discussed in Note 19. Some provisions of the agreements, such as wage structure modifications and
buyouts for certain eligible employees represented by the UAW and the USW (union-represented
employees), were effective upon Bankruptcy Court approval of the settlement agreements.
Other provisions will be implemented on January 1, 2008 or upon our emergence from bankruptcy.
Under these provisions, we will:
|
-- |
|
modify healthcare, long-term and short-term disability and life insurance benefits for
covered union-represented employees; |
|
|
-- |
|
freeze credited service and benefit accruals under our defined benefit pension plans
for union-represented employees; |
|
|
-- |
|
make contributions, based on an allowed hours formula, to a USW pension trust,
which will provide future pension benefits for covered union-represented employees; |
|
|
-- |
|
eliminate non-pension retiree benefits (postretirement healthcare and life insurance
benefits) for union-represented employees and retirees; |
|
|
-- |
|
contribute an aggregate of $722 in cash (less certain offsets, including amounts paid
for non-pension retiree benefit claims of union-represented retirees after June 30,
2007) to separate UAW- and USW-administered VEBAs to provide non-pension retiree
benefits, as determined by the VEBA trustees, to eligible union-represented retirees
after our emergence from bankruptcy; |
|
|
-- |
|
eliminate long-term disability and related healthcare benefits for union-represented
employees receiving, or entitled to receive, disability benefits; and |
|
|
-- |
|
contribute an aggregate of $42 in cash (less certain offsets, including amounts paid for
long-term disability and related healthcare benefit claims of eligible
union-represented
employees after June 30, 2007) to the VEBAs to provide disability benefits, as
determined by the VEBA trustees, to such employees after our emergence from
bankruptcy. |
These actions, when implemented, are expected to eliminate our remaining APBO for non-pension
retiree benefits in the U.S. ($1,033 as of June 30, 2007). Although we expect to implement these
actions, under certain circumstances involving termination of the Centerbridge investment
commitments, they may not be implemented as currently contemplated or at all.
Note 11. Comprehensive Income (Loss)
Comprehensive income (loss) includes our net loss and components of other comprehensive income
(loss) (OCI) such as deferred currency translation gains and losses that are charged or credited
directly to shareholders deficit.
The components of our total comprehensive income (loss) for the three and six months ended
June 30, 2007 and 2006 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Six Months |
|
|
|
Ended June 30, |
|
|
Ended June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Net loss |
|
$ |
(133 |
) |
|
$ |
(28 |
) |
|
$ |
(225 |
) |
|
$ |
(154 |
) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred translation gain |
|
|
51 |
|
|
|
57 |
|
|
|
67 |
|
|
|
90 |
|
Postretirement healthcare plan revisions |
|
|
223 |
|
|
|
|
|
|
|
338 |
|
|
|
|
|
Pension plan revisions |
|
|
63 |
|
|
|
|
|
|
|
63 |
|
|
|
|
|
Reclassification to net loss of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit plan amortization |
|
|
7 |
|
|
|
|
|
|
|
18 |
|
|
|
|
|
UK pension settlement |
|
|
144 |
|
|
|
|
|
|
|
144 |
|
|
|
|
|
GETRAG deferred translation and pension |
|
|
|
|
|
|
|
|
|
|
(93 |
) |
|
|
|
|
Income tax
provision |
|
|
(73 |
) |
|
|
|
|
|
|
(73 |
) |
|
|
|
|
Other |
|
|
4 |
|
|
|
(2 |
) |
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) |
|
$ |
286 |
|
|
$ |
27 |
|
|
$ |
256 |
|
|
$ |
(64 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The $51 deferred translation gain reported for the three months ended June 30, 2007 was
due largely to the continued weakening of the U.S. dollar relative to a number of currencies
including the Brazilian real ($21), Canadian dollar ($8), euro ($6), and Australian dollar ($5).
26
The Brazilian real ($34), euro ($13), Canadian dollar ($9) and Australian dollar ($8) all gained
value against the U.S. dollar over the six months ended June 30, 2007, contributing to a deferred
translation gain of $67.
For the three months ended June 30, 2007, OCI included credits of
$63 related to the modification of pension plans and $223 resulting from the settlements reached
with the Retiree Committee and the IAM (see Note 10). OCI also reflects the reclassification to
net loss of the amortization of unamortized benefit plan losses of $7
and a loss of $144 related to
the April settlement of U.K. pension liabilities. The settlement was effected through a cash
payment and transfer of an equity interest in our U.K. axle and driveshaft operating businesses
(see Note 6).
In addition to the second quarter activity, OCI for the six months ended June 30, 2007
included a $115 credit that resulted from the termination of postretirement healthcare coverage for
active non-union employees (see Note 10) and a charge of $93 to reclassify to net loss for the
period the deferred translation gain and unamortized pension expense related to our equity
investment in GETRAG, which we sold in March 2007.
See
Note 16 for a discussion of the tax provision.
The $57 deferred translation gain reported for the three months ended June 30, 2006 was
primarily the result of the strengthening of the euro ($44), Canadian dollar ($16) and British
pound ($14) relative to the U.S. dollar. These gains were partially offset by the effects of a
weaker South African rand ($7) and Mexican peso ($4). The $90 deferred gain for the six months
ended June 30, 2006 was due largely to a stronger euro ($60), Brazilian real ($23), British pound
($15) and Canadian dollar ($14). The South African rand ($6) and Mexican peso ($4) both lost value
relative to the U.S. dollar, partially offsetting the gains.
Note 12. Cash Deposits
At June 30, 2007, cash and cash equivalents held in the U.S. amounted to $378. Included in
this amount was $72 of cash deposits that provide credit enhancement
for certain lease agreements and support surety bonds that enable us to self-insure our workers compensation obligations in certain
states and fund an escrow account required to appeal a judgment rendered in Texas. Cash held by
DCC of $103 is restricted under the terms of the Forbearance Agreement discussed in Note 2 and is
reported separately as restricted cash.
At June 30, 2007, cash and cash equivalents held outside the U.S. amounted to $623. Included
in this amount was $22 of cash deposits that provide credit enhancement for certain lease
agreements and support surety bonds that enable us to self-insure certain employee benefit
obligations.
The cash deposits other than DCCs cash are not considered restricted as they could be replaced by
letters of credit under our DIP Credit Agreement (discussed in Note 13). Availability at June 30,
2007 was adequate to cover the deposits for which replacement by letters of credit is permitted.
A substantial portion of our non- U.S. cash and cash equivalents is needed for working
capital and other operating purposes. Several countries have local regulatory requirements that
significantly restrict the ability of the Debtors to access this cash. In addition, at June 30,
2007, $78 was held by consolidated entities that have minority interests with varying levels of
participation rights involving cash withdrawals. Beyond these restrictions, there are practical
limitations on repatriation of cash from certain countries because of the resulting tax cost.
27
Note 13. Financing Agreements
DIP Credit Agreement
Dana Corporation, as borrower, and its Debtor subsidiaries, as guarantors, are parties to the
DIP Credit Agreement that was approved by the Bankruptcy Court in March 2006. Under the DIP Credit
Agreement, we currently have a $650 revolving credit facility and a $900 term loan facility. In
the first quarter of 2007, the original term loan facility was increased by $200 and we reduced the
original revolving credit facility by $100 to correspond with the lower availability in our
collateral base. For a discussion of the terms of the DIP Credit Agreement, see Note 10 to our
consolidated financial statements in Item 8 of our 2006 Form 10-K.
At June 30, 2007, we had borrowed $900 under the DIP Credit Agreement. Based on our borrowing
base collateral, we had availability at that date under the DIP Credit Agreement of $236 after
deducting the $100 minimum availability requirement and $237 for outstanding letters of credit.
All obligations under the DIP Credit Agreement will become due and payable no later than March
2008. We expect to refinance these obligations as part of our plan of reorganization. However,
since refinancing these obligations on a long-term basis is not presently assured, we have
classified the borrowings under the DIP Credit Agreement as a current liability at June 30, 2007.
Canadian Credit Agreement
Dana Canada Corporation (Dana Canada) as borrower, and certain of its Canadian affiliates,
as guarantors, are parties to a credit agreement (the Canadian Credit Agreement) that provides
Dana Canada with a $100 revolving credit facility, of which $5 is available for the issuance of
letters of credit. For a discussion of the terms of the Canadian Credit Agreement, see Note 10
to our consolidated financial statements in Item 8 of our 2006 Form 10-K. Based on Dana
Canadas borrowing base collateral at June 30, 2007, it had availability under the Canadian
Credit Agreement of $58 after deducting the $20 minimum availability requirement and $2 for
currently outstanding letters of credit. Dana Canada had no borrowing under this agreement at
June 30, 2007.
European Receivables Loan Facility
In July 2007, certain European subsidiaries of Dana entered into definitive agreements to
establish a receivable securitization program. The agreements include a Receivables Loan Agreement
(the Loan Agreement) with GE Leveraged Loans Limited (GE) that provides for a five-year accounts
receivable securitization facility under which up to the euro equivalent of approximately $225 in
financing will be available to those European subsidiaries (collectively, the Sellers).
Ancillary to the Loan Agreement, the Sellers will enter into receivables purchase agreements
and related agreements, as applicable, under which they will, directly or indirectly, sell certain
receivables to Dana Europe Financing (Ireland) Limited (the Purchaser). The
Purchaser is a limited liability company incorporated under the laws of Ireland as a special
purpose entity to purchase the transferred receivables. The Purchaser will pay the purchase price
of the transferred receivables in part from the proceeds of loans from GE and other lenders under
the Loan Agreement and in part from the proceeds of certain subordinated loans from Dana Europe
S.A., a Dana subsidiary. The Purchasers obligations under the Loan Agreement will be secured by a
lien on and security interest in all of its rights to the transferred
28
receivables, as well as
collection accounts and items related to the receivables. The accounts receivable purchased will
be included in our consolidated financial statements because the Purchaser does not meet certain
accounting requirements for treatment as a qualifying special purpose entity under GAAP and the
Sellers will retain control of the assets. Accordingly, the sale of the accounts receivable and
the subordinated loans from Dana Europe S.A. will be eliminated in consolidation and any loans to
the Purchaser from GE and the participating lenders will be reflected in our consolidated financial
statements.
Advances to the Purchaser under the Loan Agreement will be determined based on advance rates
relating to the value of the transferred receivables. Advances will bear interest based on the
London Interbank Offered Rate (LIBOR) applicable to the currency in which each advance is
denominated, plus a margin as specified in the Loan Agreement. Advances are to be repaid in full
by July 2012. The Purchaser will also pay a fee to the lenders based on any unused amount of the
receivables facility. The Loan Agreement contains representations and warranties, affirmative and
negative covenants and events of default that are customary for financings of this type.
The Sellers and Dana International Luxembourg SARL, a subsidiary of Dana (Dana Luxembourg) and
certain of its subsidiaries (collectively, the Dana European Group) also entered into a Performance
and Indemnity Deed (the Performance Guaranty) with GE under which Dana Luxembourg has, among other
things, guaranteed the Sellers obligations to perform under their respective purchase agreements.
The Performance Guaranty contains representations and warranties, affirmative and negative
covenants, and events of default that are customary for financings of this type, including certain
restrictions on the ability of members of the Dana European Group to incur additional indebtedness,
grant liens on their assets, make acquisitions and investments, and pay dividends and make other
distributions. Dana Luxembourg has agreed to act as the master servicer for the transferred
receivables under the terms of a servicing agreement with GE and each Seller has agreed to act as a
sub-servicer under the servicing agreement for the transferred receivables it sells.
The proceeds from the sales of the transferred receivables will principally be reinvested in
our European businesses, including the repayment of intercompany debt.
DCC Notes
See Note 2 for information about DCCs outstanding notes and the Forbearance Agreement among
DCC and most of its noteholders.
United Kingdom Financing
During the first quarter of 2007, in connection with the restructuring and settlement of our
U.K. pension obligations (see Note 6), we borrowed GBP 35 ($67) under an interim bank loan which
has an October 31, 2007 maturity date. As of June 30, 2007, a balance of GBP 5 ($10) remained
outstanding under this loan.
29
Note 14. Commitments and Contingencies
Impact of Our Bankruptcy Filing
During our Chapter 11 reorganization proceedings, most actions against us relating to
pre-petition liabilities are automatically stayed. Substantially all of our pre-petition
liabilities will be addressed under our plan of reorganization or pursuant to orders of the
Bankruptcy Court.
Class Action Lawsuit and Derivative Actions
By order dated June 14, 2007 (as amended on June 18, 2007), the U.S. District Court for the
Northern District of Ohio denied lead plaintiffs motion in the consolidated securities class
action Howard Frank v. Michael J. Burns and Robert C. Richter for an order partially lifting the
statutory discovery stay which would have enabled the plaintiff to obtain copies of certain
documents produced to the SEC. The Court still has under consideration the defendants motion to
dismiss the Frank action. By order dated July 13, 2007, the Court dismissed the class action
claims asserted by the plaintiff in the shareholder derivative action Roberta Casden v. Michael J.
Burns, et al. and entered a judgment closing the case.
SEC Investigation
We are continuing to cooperate with the SEC in its investigation with respect to matters
related to the restatement of our financial statements for the first two quarters of 2005 and
fiscal years 2002 through 2004.
Legal Proceedings Arising in the Ordinary Course of Business
We are a party to various pending judicial and administrative proceedings arising in the
ordinary course of business. These include, among others, proceedings based on product liability
claims and alleged violations of environmental laws. We have reviewed these pending legal
proceedings, including the probable outcomes, our reasonably anticipated costs and expenses, the
availability and limits of our insurance coverage and surety bonds and our established reserves for
uninsured liabilities.
Further information about these legal proceedings follows, including information
about our accruals for the liabilities that may arise from such proceedings. We
accrue for contingent liabilities at the time when we believe they are both
probable and estimable. We review our assessments of probability and
estimability as new information becomes available and adjust our accruals
quarterly, if appropriate. With respect to liabilities subject to compromise in the
bankruptcy proceedings, we consider the potential settlement outcomes in
determining whether the liabilities are probable and estimable. Since we do not
accrue for contingent liabilities that we believe are probable unless we can
reasonably estimate the amounts of such liabilities, our actual liabilities may exceed the amounts we have recorded.
We do not believe that any liabilities that may result from these
proceedings are reasonably likely to have a material adverse effect
on our liquidity, or financial
condition; however, bankruptcy claim settlements could result in
charges materially impacting results of operations.
Asbestos-Related Product Liabilities
We had approximately 72,000 active pending asbestos-related product liability claims at June
30, 2007, including approximately 6,000 claims that were settled but awaiting final documentation
and payment. We project costs for asbestos-related product liability claims using the methodology
that is discussed in Note 17 to our consolidated financial statements in Item 8 of our 2006 Form
10-K. We had accrued $138 for indemnity and defense costs for pending and future claims at June
30, 2007.
Prior to 2006, we reached agreements with some of our insurers to commute policies covering
asbestos-related product liability claims. There were no commutations of insurance in the first
half of 2007. At June 30, 2007, our liability for future demands under prior commutations was $11,
bringing our total recorded liability for asbestos-related product liability claims to $149.
30
At June 30, 2007, we had recorded $71 as an asset for probable recovery from our insurers for
pending and projected asbestos-related product liability claims. The recorded asset does not
represent the limits of our insurance coverage, but rather the amount we would expect to recover if
we paid the accrued indemnity and defense costs.
In addition, we had a net amount recoverable from our insurers and others of $17 at June 30,
2007. The recoverable represents reimbursements for settled asbestos-related product liability
claims, including billings in progress and amounts subject to alternate dispute resolution
proceedings with some of our insurers.
Other Product Liabilities
We had accrued $10 for non-asbestos product liabilities at June 30, 2007, with no recovery
expected from third parties. We estimate these liabilities based on assumptions about the value of
the claims and about the likelihood of recoveries against us derived from our historical experience
and current information.
Environmental Liabilities
We had accrued $59 for environmental liabilities at June 30, 2007. We estimate these
liabilities based on the most probable method of remediation, current laws and regulations and
existing technology. Our estimates are made on an undiscounted basis and exclude the effects of
inflation. If there is a range of equally probable remediation methods or outcomes, we accrue the
lower end of the range. The difference between our minimum and maximum estimates for these
liabilities was $1 at June 30, 2007. Included in this accrual are amounts relating to the Hamilton
Avenue Industrial Park site in New Jersey, where we are one of four potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund).
Other Liabilities Related to Asbestos Claims
After the Center for Claims Resolution (CCR) discontinued negotiating shared settlements for
asbestos claims for its member companies in 2001, some former CCR members defaulted on the payment
of their shares of some settlements and some settling claimants sought payment of the unpaid shares
from other members of the CCR at the time of the settlements, including Dana. Through June 30,
2007, we had paid $47 to such claimants and collected $29 from our insurance carriers with respect
to these claims. At June 30, 2007, we had a net receivable of $13 for the amount that we expect to
recover from available insurance and surety bonds relating to these claims. We are continuing to
pursue insurance collections with respect to such claims paid prior to the Filing Date.
Assumptions Regarding Asbestos-Related Liabilities
The amounts we have recorded for asbestos-related liabilities and recoveries are based on
assumptions and estimates reasonably derived from our historical experience and current
information. The actual amount of our liability for asbestos-related claims and the effect on us
could differ materially from our current expectations if our assumptions about the outcome of the
pending unresolved asbestos-related product liability claims, the volume and outcome of projected
future asbestos-related product liability claims, the outcome of claims relating to the
CCR-negotiated settlements, the costs to resolve these claims, or the amount of available
insurance and surety bonds prove to be incorrect, or if U.S. federal legislation impacting
31
asbestos personal injury claims is enacted. Although we have projected our liability for
future asbestos-related product liability claims based upon historical trend data that we consider
to be reliable, there is no assurance that our actual liability will not differ from what we
currently project.
Note 15. Warranty Obligations
We record a liability for estimated warranty obligations at the dates our products are sold.
Adjustments are made as new information becomes available. Our warranty activity for the three
months and six months ended June 30, 2007 and 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Balance, beginning of period |
|
$ |
84 |
|
|
$ |
95 |
|
|
$ |
90 |
|
|
$ |
91 |
|
Amounts accrued for current period sales |
|
|
20 |
|
|
|
10 |
|
|
|
31 |
|
|
|
25 |
|
Adjustments of prior accrual estimates |
|
|
(1 |
) |
|
|
1 |
|
|
|
2 |
|
|
|
1 |
|
Settlements of warranty claims |
|
|
(15 |
) |
|
|
(12 |
) |
|
|
(35 |
) |
|
|
(24 |
) |
Foreign currency translation and other |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
89 |
|
|
$ |
95 |
|
|
$ |
89 |
|
|
$ |
95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 16. Income Taxes
Income taxes are accounted for in accordance with SFAS No. 109, Accounting for Income Taxes.
Current and deferred income tax assets and liabilities are recognized based on events which have
occurred and are measured under enacted tax laws. Based on our history of losses and our near-term
profit outlook, we have established 100% valuation allowances against our U.S. deferred tax assets.
Similar valuation allowances are recorded in other countries such as the U.K. where, based on the
profit outlook, realization of the deferred taxes does not satisfy the more likely than not
recognition criterion.
The tax expense or benefit recorded in continuing operations is generally determined without
regard to other categories of earnings, such as a loss from
discontinued operations or OCI. An exception is provided if there is aggregate pre-tax income from other
categories and a pre-tax loss from continuing operations, even if a valuation allowance has
been established against deferred tax assets as of the beginning of the year. The tax benefit
allocated to continuing operations is the amount by which the loss from continuing operations
reduces the tax expense recorded with respect to the other categories of earnings.
Prior
to considering the effect of income taxes, Dana reported U.S. OCI of
$401 for the six months ended June 30, 2007, primarily as a result of amending its pension and
other postretirement benefit plans. The exception described in the preceding
paragraph resulted in reducing OCI for the quarter ended June 30, 2007 by
$73. An offsetting tax benefit was attributed to continuing operations; however, the benefit
recorded in continuing operations for the quarter was limited to $26 due to interperiod tax
allocation rules, resulting in a deferred credit of $47 being recorded in other accrued liabilities
as of June 30, 2007. The amount to be recognized in the second half of 2007 will be affected by
the OCI and pre-tax loss from continuing operations reported for the period.
Our
tax provision for the three months ended June 30, 2007 included
incremental net tax expense of $3 for items that should have been
recorded in prior periods, including an $8 reduction for the March
2007 divestiture of our engine hard parts business and $11 of
additional tax expense relating to the fourth quarter of 2006
modification of our plans to repatriate 2007 divestiture proceeds to
the U.S. These items did not have a material effect on net loss for
any of the affected periods.
With the exception of this $26 of income tax benefits recorded in continuing operations for
the three and six months ended June 30, 2007, we have not recognized tax benefits on losses
generated since 2005 in several countries, including the U.S. and the U.K., where the recent
history of operating losses does not allow us to satisfy the more likely than not criterion for
realization of deferred tax assets. This is the
primary factor which causes the tax expense
of $3 and $18 for the three and six
months ended June 30, 2007 to differ from expected tax benefits of $37 and $47 at the U.S. federal
statutory rate of 35%. This is also the primary factor which causes the tax expense of $36 and $58
for the three and six months ended June 30, 2006 to differ from the expected tax benefits of $0 and
$32 using the 35% rate.
We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 (FIN 48), on January 1, 2007, and credited
retained earnings for the initial impact of approximately $3. As of the
adoption date, we had gross unrecognized tax benefits of $137, of which $112 can be reduced by net
operating loss carryforwards, and other timing adjustments. The net amount of $25, if recognized,
would affect our effective tax rate. Unrecognized tax benefits are the difference between a tax
position taken, or expected to be taken, in a tax return and the benefit recognized for accounting
purposes pursuant to FIN 48. We recognize interest and penalties related to unrecognized tax
benefits in income tax expense.
We conduct business globally and, as a result, file income tax returns in the U.S. and various non-U.S. jurisdictions. In the normal course of business we are subject to examination
32
by taxing authorities throughout the world. With few exceptions, we are no longer subject to U.S.
federal, state and local or non-U.S. income tax examinations for years before 1999. We are
currently under audit by the U.S. Internal Revenue Service for the 2003 to 2005 tax years. It is likely
that the examination phase of this audit will conclude in 2007.
As
of June 30, 2007, the total amount of gross unrecognized tax
benefits was $49, of which $31, if recognized, would impact the effective tax rate. The gross unrecognized tax benefits decrease
of $88 from January 1, 2007 was caused by our assessment that an uncertain tax position had become
a certain tax position. The certain position was related to years in which we had incurred net
operating losses. As a result of this change we reduced the deferred benefit of our net operating
loss carryforwards and our valuation allowance. This adjustment did not impact the effective tax
rate or result in cash taxes. If matters for 1999 through 2002 that are currently under discussion
with the U.S. Internal Revenue Service ultimately settle within the next 12 months, the total
amounts of unrecognized tax benefits may increase or decrease for all open tax years. Audit
outcomes and the timing of the audit settlements are subject to significant uncertainty; therefore,
we cannot make an estimate of the impact on earnings at this time.
Note 17. Other Income, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Six Months |
|
|
|
Ended June 30, |
|
|
Ended June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Interest income |
|
$ |
9 |
|
|
$ |
11 |
|
|
$ |
17 |
|
|
$ |
20 |
|
DCC income |
|
|
19 |
|
|
|
14 |
|
|
|
25 |
|
|
|
23 |
|
Divestiture gains |
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
|
|
Foreign exchange gain, net |
|
|
14 |
|
|
|
|
|
|
|
19 |
|
|
|
3 |
|
Claim settlement |
|
|
(11 |
) |
|
|
|
|
|
|
(11 |
) |
|
|
|
|
Government grants |
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
4 |
|
Rental income |
|
|
|
|
|
|
1 |
|
|
|
3 |
|
|
|
1 |
|
Other, net |
|
|
(2 |
) |
|
|
10 |
|
|
|
7 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
|
$ |
32 |
|
|
$ |
39 |
|
|
$ |
78 |
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency denominated intercompany loans valued at $197 at June 30, 2007 by the
Debtors to certain non-U.S. operations have been determined to no longer be permanently invested.
As such, the foreign exchange gains or losses on these loans are now recorded in other income
rather than as translation gain or loss in other comprehensive income. The bankruptcy claim settlement charge of $11 represents the estimated costs to settle a contractual matter with an investor in one of our equity investments.
Note 18. Segments
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS No.
131), establishes standards for reporting information about operating segments and related
disclosures about products and services and geographic locations. SFAS No. 131 requires reporting
on a single basis of segmentation. The components that management establishes for purposes of
making decisions about an enterprises operating matters are referred to as operating segments.
We currently have seven operating segments within two manufacturing business units (ASG and HVTSG).
ASG consists of five operating segments: Axle, Driveshaft, Sealing, Thermal and Structures. HVTSG
consists of two operating segments: Commercial Vehicle and Off-Highway.
Management also monitors shared services, operations that are not part of the operating
segments, trailing liabilities of closed operations and other administrative costs.
33
Management evaluates DCC as if it were accounted for under the equity method of accounting
rather than on the fully consolidated basis used for external reporting. DCC is included as a
reconciling item between the segment results and our income (loss) from continuing operations
before income taxes.
At the start of 2007, we modified the methodology underlying the transfer pricing on certain
sales from the Axle and Driveshaft segments to the Commercial Vehicle segment. For comparability
purposes, segment profits in 2006 have been adjusted to be consistent with the new profit
allocation used by management to evaluate segment performance.
Earnings before interest and taxes (EBIT) is the key internal measure of performance used by
management as a measure of profitability for our segments. EBIT, a non-GAAP financial measure,
excludes equity in earnings of affiliates. It includes sales, cost of
sales, SG&A and certain reorganization items and other income (expense) items,
net. Certain nonrecurring and unusual items like goodwill impairment, certain realignment charges
and divestiture gains and losses are excluded from segment EBIT. EBIT is a critical component of
earnings before interest, taxes, depreciation, amortization, restructuring and reorganization
charges (EBITDAR), which is a measure used to determine compliance with our DIP Credit Agreement
financial covenants.
34
We used the following information to evaluate our operating segments for the three months
ended June 30, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter- |
|
|
|
|
|
|
External |
|
|
Segment |
|
|
Segment |
|
2007 |
|
Sales |
|
|
Sales |
|
|
EBIT |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
716 |
|
|
$ |
26 |
|
|
$ |
13 |
|
Driveshaft |
|
|
307 |
|
|
|
59 |
|
|
|
22 |
|
Sealing |
|
|
190 |
|
|
|
6 |
|
|
|
16 |
|
Thermal |
|
|
79 |
|
|
|
2 |
|
|
|
5 |
|
Structures |
|
|
279 |
|
|
|
5 |
|
|
|
21 |
|
Eliminations and other |
|
|
7 |
|
|
|
(69 |
) |
|
|
(10) |
|
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
1,578 |
|
|
|
29 |
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
307 |
|
|
|
2 |
|
|
|
4 |
|
Off-Highway |
|
|
403 |
|
|
|
12 |
|
|
|
41 |
|
Eliminations and other |
|
|
|
|
|
|
(11 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
710 |
|
|
|
3 |
|
|
|
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operations |
|
|
1 |
|
|
|
8 |
|
|
|
|
|
Eliminations |
|
|
|
|
|
|
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segments |
|
$ |
2,289 |
|
|
$ |
|
|
|
$ |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter- |
|
|
|
|
|
|
External |
|
|
Segment |
|
|
Segment |
|
2006 |
|
Sales |
|
|
Sales |
|
|
EBIT |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
615 |
|
|
$ |
14 |
|
|
$ |
1 |
|
Driveshaft |
|
|
293 |
|
|
|
28 |
|
|
|
30 |
|
Sealing |
|
|
178 |
|
|
|
9 |
|
|
|
18 |
|
Thermal |
|
|
79 |
|
|
|
1 |
|
|
|
10 |
|
Structures |
|
|
333 |
|
|
|
10 |
|
|
|
11 |
|
Eliminations and other |
|
|
28 |
|
|
|
(34 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
1,526 |
|
|
|
28 |
|
|
|
61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
439 |
|
|
|
1 |
|
|
|
4 |
|
Off-Highway |
|
|
329 |
|
|
|
10 |
|
|
|
33 |
|
Eliminations and other |
|
|
|
|
|
|
(9 |
) |
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
768 |
|
|
|
2 |
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operations |
|
|
6 |
|
|
|
12 |
|
|
|
|
|
Eliminations |
|
|
|
|
|
|
(42 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segments |
|
$ |
2,300 |
|
|
$ |
|
|
|
$ |
96 |
|
|
|
|
|
|
|
|
|
|
|
35
We used the following information to evaluate our operating segments for the six months
ended June 30, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter- |
|
|
|
|
|
|
External |
|
|
Segment |
|
|
Segment |
|
2007 |
|
Sales |
|
|
Sales |
|
|
EBIT |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
1,327 |
|
|
$ |
50 |
|
|
$ |
3 |
|
Driveshaft |
|
|
593 |
|
|
|
110 |
|
|
|
31 |
|
Sealing |
|
|
366 |
|
|
|
13 |
|
|
|
27 |
|
Thermal |
|
|
151 |
|
|
|
4 |
|
|
|
9 |
|
Structures |
|
|
549 |
|
|
|
9 |
|
|
|
29 |
|
Eliminations and other |
|
|
12 |
|
|
|
(130 |
) |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
2,998 |
|
|
|
56 |
|
|
|
82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
647 |
|
|
|
2 |
|
|
|
12 |
|
Off-Highway |
|
|
787 |
|
|
|
21 |
|
|
|
77 |
|
Eliminations and other |
|
|
|
|
|
|
(19 |
) |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
1,434 |
|
|
|
4 |
|
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operations |
|
|
2 |
|
|
|
17 |
|
|
|
|
|
Eliminations |
|
|
|
|
|
|
(77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segments |
|
$ |
4,434 |
|
|
$ |
|
|
|
$ |
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inter- |
|
|
|
|
|
|
External |
|
|
Segment |
|
|
Segment |
|
2006 |
|
Sales |
|
|
Sales |
|
|
EBIT |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
1,203 |
|
|
$ |
27 |
|
|
$ |
(5 |
) |
Driveshaft |
|
|
570 |
|
|
|
60 |
|
|
|
56 |
|
Sealing |
|
|
355 |
|
|
|
16 |
|
|
|
33 |
|
Thermal |
|
|
155 |
|
|
|
2 |
|
|
|
21 |
|
Structures |
|
|
657 |
|
|
|
18 |
|
|
|
13 |
|
Eliminations and other |
|
|
60 |
|
|
|
(67 |
) |
|
|
(24 |
) |
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
3,000 |
|
|
|
56 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
856 |
|
|
|
4 |
|
|
|
8 |
|
Off-Highway |
|
|
630 |
|
|
|
18 |
|
|
|
60 |
|
Eliminations and other |
|
|
|
|
|
|
(18 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
1,486 |
|
|
|
4 |
|
|
|
63 |
|
|
Other Operations |
|
|
11 |
|
|
|
24 |
|
|
|
|
|
Eliminations |
|
|
|
|
|
|
(84 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segments |
|
$ |
4,497 |
|
|
$ |
|
|
|
$ |
157 |
|
|
|
|
|
|
|
|
|
|
|
36
The following table reconciles segment EBIT to the consolidated income (loss) from
continuing operations before income tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Segment EBIT |
|
$ |
110 |
|
|
$ |
96 |
|
|
$ |
167 |
|
|
$ |
157 |
|
Shared services and administrative |
|
|
(41 |
) |
|
|
(51 |
) |
|
|
(78 |
) |
|
|
(102 |
) |
Closed operations not in segments |
|
|
(3 |
) |
|
|
(11 |
) |
|
|
(5 |
) |
|
|
(24 |
) |
DCC EBIT |
|
|
12 |
|
|
|
6 |
|
|
|
19 |
|
|
|
15 |
|
Impairment of other assets |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
(15 |
) |
Reorganization items, net |
|
|
(38 |
) |
|
|
(34 |
) |
|
|
(75 |
) |
|
|
(89 |
) |
Interest expense |
|
|
(28 |
) |
|
|
(26 |
) |
|
|
(51 |
) |
|
|
(65 |
) |
Realignment not in segments |
|
|
(134 |
) |
|
|
(13 |
) |
|
|
(150 |
) |
|
|
(13 |
) |
Other income
(loss) |
|
|
14 |
|
|
|
35 |
|
|
|
38 |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
before income taxes |
|
$ |
(108 |
) |
|
$ |
1 |
|
|
$ |
(135 |
) |
|
$ |
(91 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 19. Union Settlement, Plan Support and Investment Agreements
On August 1, 2007, the Bankruptcy Court entered an order authorizing the Debtors to enter into
a series of related agreements consisting of (i) settlement agreements (referred to collectively in
this Note 19 as the Union Settlement Agreements) with the UAW and the USW (referred to collectively
in this Note 19 as the Unions); (ii) a Plan Support Agreement with the Unions, Centerbridge, and
certain of Danas unsecured creditors; and (iii) an Investment Agreement between Dana,
Centerbridge, and a Centerbridge affiliate. More information about these agreements follows. The
following summary is not intended to be exhaustive and is qualified in its entirety by reference to
the agreements themselves, copies of which have been filed with the SEC.
THIS DOCUMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES
OF A CHAPTER 11 PLAN. SUCH AN OFFER OR SOLICITATION WILL ONLY BE MADE IN COMPLIANCE WITH ALL
APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.
Union Settlement Agreements
The Union Settlement Agreements, which have been ratified by the Debtors Union-represented
employees, provide terms for settling all outstanding issues between the Debtors and the Unions
related to the Bankruptcy Cases.
As amended, the Union Settlement Agreements provide for the following, among other things:
(i) Union collective bargaining agreements (including the UAW Master Agreement), effective
until June 1, 2011, for the Debtors Union-represented facilities in the United States;
(ii) modifications to healthcare, short-term and long-term disability and life insurance
benefits for Union-represented employees, effective January 1, 2008;
37
(iii) wage structure modifications effective upon Bankruptcy Court approval of the Union
Settlement Agreements;
(iv) the elimination of non-pension healthcare and life insurance retiree benefits for
Union-represented retirees, and of non-pension healthcare and certain long-term disability benefits
for certain Union-represented employees, effective on the later of January 1, 2008 or the effective
date of the Debtors plan of reorganization; the establishment by the Unions of separate,
Union-specific VEBAs to provide such benefits to eligible Union-represented employees and retirees
after that date; and the Debtors contribution of an aggregate cash amount of $764 (less amounts
incurred on behalf of Union-represented employees and retirees between July 1, 2007 and January 1, 2008
for long-term disability, healthcare and life insurance claims) to fund the VEBAs;
(v) a freeze of credited service and benefit accruals under the Debtors defined benefit
pension plans for Union-represented employees, effective on the later of January 1, 2008 or the
effective date of the Debtors plan of reorganization, with future benefits to be provided through
company participation in and contributions to a USW pension trust for some such employees;
(vi) buyouts valued at twenty-two thousand five hundred dollars and forty-five thousand
dollars for certain retirement-eligible and recently retired Union-represented employees, available
on the date when the pension benefits are frozen; and
(vii) separation payments for eligible Union-represented employees at one Union-represented
facility in Indiana under a special voluntary separation program.
The Union Settlement Agreements memorialize certain other agreements between the Debtors and
the Unions, including, among others, agreements with respect to neutrality at certain of the
Debtors non-union facilities, the continuation of the Debtors manufacturing footprint
optimization program, and the reserve of common shares of reorganized Dana valued at up to
approximately $22.5 to provide post-emergence bonuses for certain Union-represented employees
following the Debtors emergence from bankruptcy.
The Union Settlement Agreements also provide that the Unions will have certain rights if the
Debtors choose to pursue a transaction or means of reorganization different from that contemplated
under the Plan Support Agreement. Under certain circumstances, the Unions will have the right to
(i) consent to the alternative plan; (ii) designate a replacement investor to Centerbridge; (iii)
either terminate their collective bargaining agreements or elect between an allowed administrative
claim of $764 or an allowed general unsecured claim of $908; or (iv) in some circumstances,
terminate the Union Settlement Agreements and have a general unsecured claim of $908.
Plan Support Agreement
The Plan Support Agreement sets out the terms under which the Unions, Centerbridge and certain
holders of unsecured claims against the Debtors who may become parties thereto, including holders
of unsecured notes of Dana, will support the Debtors plan of reorganization.
The Plan Support Agreement provides as follows, among other things:
(i) Centerbridge, the Unions and the other creditor parties to the Plan Support Agreement each
will support the prosecution, confirmation and consummation of a plan of reorganization
38
that is
consistent with the Plan Support Agreement and the Plan Term Sheet attached as an exhibit thereto,
including confirmation under 11 U.S.C. Section 1129(b), and will not encourage other persons to
take actions that would interfere with an orderly plan and disclosure statement process;
(ii) Centerbridge will make an investment in reorganized Dana and other parties will purchase
certain preferred stock on the terms set out in the Investment Agreement upon the effective date of
the Debtors plan of reorganization;
(iii) the Debtors and the Unions will enter into the Union Settlement Agreements;
(iv) the Unions, Centerbridge, and the other creditor parties to the Plan Support Agreement
will engage in good faith negotiations with other parties in interest regarding the form of plan of
reorganization, related disclosure statement and other definitive documents that are consistent
with the Plan Support Agreement;
(v) the Debtors will not propose, and Centerbridge and the Unions will not support, any plan
of reorganization premised upon the use of Section 382(l)(5) of the Internal Revenue Code and will
propose only a plan of reorganization premised upon the use of Section 382(l)(6) of the Internal
Revenue Code;
(vi) certain holders of unsecured claims agree not to sell, transfer, assign, pledge, or
otherwise dispose of, directly or indirectly (including by creating any subsidiary or affiliate for
the sole purpose of acquiring any claims against any Debtor), their right, title or interest in
respect of any claim against any Debtor unless the recipient of such claim agrees in writing, prior
to such transfer, to be bound by the Plan Support Agreement;
(vii) the plan of reorganization may not become effective if the total amount of allowed
unsecured non-priority claims (but not including asbestos claims, claims of the Unions, small claims
to be paid in cash under a plan of reorganization, intercompany claims, including claims of Dana
Credit Corporation, and claims of the non-union retirees) (with such exceptions, the Unsecured
Claims) against the Debtors exceeds $3,250, unless the Creditors Committee waives such condition
consistent with its fiduciary duties to all unsecured creditors;
(viii) the Debtors post-emergence funded debt will not exceed $1,500;
(ix) the Debtors will obtain exit financing on terms and with parties reasonably acceptable to
Centerbridge and sufficient to refinance their existing debtor-in-possession credit facility and
provide sufficient liquidity for working capital and general corporate purposes;
(x) the Debtors plan of reorganization will provide with reasonable certainty the sources and
amounts of cash required to meet the Debtors cash payment obligations to the Unions under the
Union Settlement Agreements and will otherwise conform to the terms of the Union Settlement
Agreements;
(xi) holders of allowed Unsecured Claims will receive, on account of their allowed unsecured
nonpriority claims, their pro rata portion of shares of common stock of reorganized Dana and/or
cash in excess of the minimum cash required to operate the Debtors business on the effective date
of the plan of reorganization and thereafter;
39
(xii) holders of allowed Unsecured Claims who do not qualify to purchase Series B preferred
shares pursuant to and consistent with the terms of the Investment Agreement will receive an amount
of cash or shares of common stock of reorganized Dana that is (a) determined to be reasonably
acceptable to the Debtors, Centerbridge and certain unsecured creditors and (b) approved by the
Bankruptcy Court;
(xiii) the individuals that are anticipated to serve on the board of directors of reorganized
Dana will negotiate employment agreements with initial senior management in form and substance
reasonably acceptable to Centerbridge, who will consult with certain other parties regarding such
agreements; and
(xiv) except for certain agreed-upon exceptions, prior to the effective date of the plan of
reorganization, the Debtors will not be permitted to sell any of their businesses without
appropriate Union consent or the consent of Centerbridge.
The Plan Support Agreement and Plan Term Sheet will expire and be of no further effect (i) for
the Unions, the Debtors and Centerbridge if the Debtors plan of reorganization fails to become
effective on or before May 1, 2008 and (ii) for any supporting creditor who exercises its right to
terminate the Plan Support Agreement, if the Debtors plan of reorganization fails to become
effective on or before February 28, 2008.
Investment Agreement
The Investment Agreement, dated as of July 26, 2007, provides that Centerbridge will purchase
$250 in Series A convertible preferred shares of reorganized Dana and qualified creditors of the
Debtors (i.e., creditors who meet specified criteria) will have an opportunity to purchase $500 in
Series B convertible preferred shares on a pro rata basis. Centerbridge will purchase up to $250 in
Series B preferred shares that are not purchased by the qualified creditors.
The Investment Agreement provides as follows, among other things:
(i) The price at which the Series A and Series B preferred shares will be convertible into the
common stock of reorganized Dana will be 83% of the value that is determined by calculating the
20-day volume weighted average trading price of such common stock (determined using the closing
trading price of the stock between the first and the twenty-third business days after Danas
emergence from bankruptcy after disregarding the highest and lowest closing trading price during
such period), subject to a collar based on total enterprise value of Dana of between $3,150 and
$3,500.
(ii) Under certain circumstances, reorganized Dana will be able to force conversion of the
preferred shares on or after the fifth anniversary of the effective date of the Debtors plan of
reorganization.
(iii) The Series A and Series B preferred shares will be entitled to dividends at an annual
rate of 4%, payable quarterly in cash. The shares will have equal voting rights and will vote
together as a single class with the common stock of reorganized Dana on an as-converted basis.
(iv) The Series A and Series B preferred shares will have customary registration rights. For
purposes of liquidation, dissolution or winding up of reorganized Dana, the Series A and
40
Series B
preferred shares will rank pari passu and senior to any other class or series of capital stock of
reorganized Dana.
(v) The Series A and Series B preferred shares will be subject to lockup provisions
prohibiting their sale for six months after the effective date of the Debtors plan of
reorganization and prohibiting the sale or conversion of the Series A preferred shares to common
shares valued at more than $150 for an additional 30 months.
(vi) Centerbridge will be limited for ten years in its ability to acquire additional stock of
reorganized Dana if it would own more than 30% of the voting power of the stock after such
acquisition or to take other actions to control reorganized Dana after the effective date of the
Debtors plan of reorganization without the consent of reorganized Danas board of directors.
(vii) The initial board of directors of reorganized Dana will be composed of seven members, as
follows: three directors (one of whom must be independent) chosen by Centerbridge, two independent
directors chosen by the Creditors Committee, one director chosen by Centerbridge and the Creditors
Committee through a process specified in the Investment Agreement, and the chief executive officer
of reorganized Dana. Beginning at the first annual meeting of shareholders of reorganized Dana
following emergence, and as long as Centerbridge owns at least $150 of Series A preferred shares,
Danas board of directors will be composed of seven members, as follows: three directors (one of
whom must be independent) designated by Centerbridge and elected by holders of the Series A
preferred shares, one independent director nominated by a special purpose nominating committee
composed of two Centerbridge designees and one other board member and elected by all shareholders,
and three directors (including the chief executive officer of reorganized Dana) nominated by
reorganized Danas board.
(viii) For a period of three years, so long as Centerbridge owns at least $150 of Series A
preferred shares (a) Centerbridges approval will be required for any sale of all or substantially
all of Danas assets, a merger of Dana involving a change of control, a liquidation of Dana, the
issuance by Dana of equity at a value below fair market value, the payment of cash dividends on
account of common stock of reorganized Dana, or an amendment of the charter of reorganized
Dana, and (b) Centerbridges consent will be required for material transactions with directors,
officers or 10% shareholders (other than officer and director compensation arrangements), the
issuance of debt or equity securities senior to or pari passu with the Series A preferred shares
other than for refinancings, by-law amendments adverse to shareholders generally or adverse to
Centerbridge, and share repurchases exceeding $10 in any 12-month period. Centerbridges approval
and consent rights will be subject to override by a vote of two-thirds of reorganized Danas
shareholders and its approval rights for dividends and the issuance of senior or pari passu
securities will end after 12 months if certain financial ratios are met.
(ix) The investment by Centerbridge will be subject to certain conditions, including (a) no
material adverse change in Dana; (b) the Debtors obtaining of exit financing on market terms and
with parties reasonably acceptable to Centerbridge; (c) the filing of the Debtors plan of
reorganization and disclosure statement by September 3, 2007; (d) confirmation of the Debtors plan
of reorganization no later than February 28, 2008; and (e) an effective date of the Debtors plan
of reorganization no later than May 1, 2008.
41
(x) Dana will have the right to terminate the Investment Agreement subject to (a) a $15
break-up fee and an expense reimbursement of up to $4, if the Debtors accept a proposal for an
alternative minority investment determined by Danas board of directors to be superior to the
Centerbridge investment commitments and (b) a $22.5 break-up fee and an expense reimbursement of up to $4, if
the Debtors accept a proposal for an alternative majority investment, the sale of all or
substantially all of the assets of Dana and its subsidiaries, or a standalone plan of
reorganization that Danas board of directors determines would be more favorable to the Debtors
bankruptcy estates than the Centerbridge investment commitments and plan.
(xi) Centerbridge will be entitled to a $2.5 commitment fee if the Investment Agreement is
terminated because the Debtors have not emerged from bankruptcy by May 1, 2008 and a $3.5
commitment fee if the Investment Agreement is terminated because the Debtors cases are dismissed
or converted to Chapter 7 cases under the Bankruptcy Code or if Centerbridge terminates the
Investment Agreement because of a breach by Dana.
Under the Investment Agreement, the holders of Danas unsecured notes (the Dana bonds)
may qualify to participate in the purchase of the Series B preferred shares. The record date for
determining which Dana bonds will qualify to participate is August 13, 2007 (the Bond Record
Date). To qualify, the Dana bondholder must meet the following criteria: (i) the holder must
beneficially own the Dana bonds on the Bond Record Date; (ii) the holder and its affiliates must
own $25 or more in Dana bonds and other allowed liquidated, non-contingent unsecured claims
that are not Dana bond claims (Trade Claims); (iii) the holder must be a Qualified
Institutional Buyer as defined in Rule 144A under the Securities Act of 1933, as amended
(a QIB); and (iv) the holder must execute and deliver to Dana a signature page to the Plan
Support Agreement by the Bond Record Date. In determining the amount of Dana bonds owned
on the Bond Record Date for eligibility and participation in the Series B preferred shares, the
calculation will be done net of short positions and/or other hedging positions. Bondholders who
(i) qualify under these requirements; (ii) do not engage in hedging activities (as described the
definition of Qualified Investor in the Investment Agreement) after the Bond
Record Date and before the effective date of the Debtors plan
of reorganization; and (iii) sign a subscription agreement in the timeframe specified in the Investment Agreement, will be
considered Qualified Investors and their bonds will be considered Participating Bonds.
A transferee of a Participating Bond will continue to hold Participating Bonds if it (i)
executes and delivers to Dana a signature page to the Plan Support Agreement within five business days after the closing of an acquisition of a Participating Bond (but in no event later than
the confirmation date for the Debtors plan of reorganization); (ii) assumes the obligations of the transferor of Qualified Bond Claims under the Plan Support Agreement;
(iii) is a QIB; (iv) does not engage in the hedging activities referred to above; and (v) owns $25 or more in Participating Bonds and Trade Claims (aggregated).
If a bondholder meets the requirements for being a Qualified Investor, the holders
Participating Bonds purchased after the Bond Record Date and Trade Claims purchased up until the confirmation date of the Debtors plan of reorganization will count as claims eligible to
purchase a pro rata share of the Series B preferred shares, subject to a cap of $200 of Series B preferred shares per investor and its affiliates.
The record date for Trade Claims to be considered for participation in the purchase of Series B preferred shares will be the date that the Bankruptcy Court enters an order confirming
the Debtors plan of reorganization. Trade Claims may be aggregated with Participating
Bonds for purposes of determining whether the $25 threshold is met. To be eligible, holders of
Trade Claims must meet the same criteria as apply to the holders of Participating Bonds, except that the holder of Trade Claims may execute a signature page to the Plan Support Agreement at
any time prior to the confirmation of the Debtors plan of reorganization.
Signature pages to the Plan Support Agreement must be provided to: (i) the Debtors,
Dana Corporation, P.O. Box 1000, Toledo, Ohio 43697, Attn: Linda Grant, Fax: (419) 535-4790;
(ii) counsel to the Debtors, Jones Day, 222 East 41st Street, New York, New York 10017, Attn: Denise Sciabarassi, Fax: (212) 755-7306; and (iii) Centerbridge Capital Partners, L.P., 31 West
52nd Street, 16th Floor, New York, New York 10019, Attn: David Trucano, Fax: (212) 301-6501.
Amendment to Rights Agreement
Dana has a preferred share purchase rights plan which is administered under the Rights
Agreement, dated as of April 25, 1996, as amended (the Rights Agreement), between Dana and The Bank
of New York, as Rights Agent. Pursuant to the Rights Agreement, one right to purchase 1/1000th of a
share of Series A Junior Participating Preferred Stock, no par value, has been issued in respect of
each share of Dana common stock outstanding on and after July 25, 1996. Dana registered the rights
on Form 8-A registration statements filed with the SEC on May 1,
1996; July 21, 2006; and August 1, 2007. A full
description of the rights is contained therein and incorporated herein by reference.
On July 25, 2007, Danas Board of Directors adopted an amendment to the Rights Agreement that
provides that the provisions of the Rights Agreement are inapplicable to the transactions
contemplated by the Investment Agreement, dated as of July 25, 2007, as amended and restated on
July 26, 2007, and makes certain other modifications to the Rights Agreement.
42
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions)
Managements discussion and analysis of financial condition and results of operations should
be read in conjunction with the financial statements and accompanying notes in this report.
Management Overview
We are a leading supplier of axle, driveshaft, structures, sealing and thermal products and we
design and manufacture products for every major vehicle producer in the world. We are focused on
being an essential partner to automotive, commercial truck and off-highway vehicle customers. We
employ approximately 40,000 people in 28 countries. Our world headquarters is in Toledo, Ohio. Our Internet
address is www.dana.com.
We are currently operating under Chapter 11 of the Bankruptcy Code. The Bankruptcy Cases are
discussed in detail in Note 2 to our financial statements in Item 1 of Part I. Our reorganization
goals are to maximize enterprise value during the reorganization process and to emerge from Chapter
11 as soon as practicable as a sustainable, viable company.
Business Strategy
We are utilizing the reorganization process to effect fundamental changes that will improve
our distressed U.S. operations. This is critical to us, as our worldwide operations are highly
integrated for the manufacture and assembly of our products. Therefore, while we are continuing to
grow overseas, our long-term viability depends on our ability to return our U.S. operations to
sustainable profitability.
During the first half of 2007, we have been successfully implementing our restructuring
initiatives. While our U.S. operations continue to generate losses and consume substantial amounts
of cash, our efforts to improve our margins and reduce costs are favorably impacting our
performance and helping to mitigate the underlying industry challenges and difficult business
conditions. We are depending upon divestiture proceeds, repatriating available cash from our
overseas operations, and loans under our DIP Credit Agreement to meet our liquidity needs for 2007.
However, we cannot depend on those sources of funding indefinitely. We expect our restructuring
initiatives to enable our U.S. operations to become substantially less dependent on returns from
our foreign operations in the future.
As we successfully implement the initiatives that we have reported previously, we expect to
emerge from bankruptcy as a sustainable, viable business. These initiatives, which require the
cooperation of all of our key business constituencies customers, vendors, employees and retirees
are:
|
|
|
Achieve improved margins for our products by obtaining substantial price increases from
our customers; |
|
|
|
|
Restructure our wage and benefit programs to create an appropriate labor and benefit
cost structure; |
43
|
|
|
Address the excessive costs and funding requirements of the legacy postretirement
benefit liabilities that we have accumulated over the years, in part from prior
divestitures and closed operations; |
|
|
|
|
Achieve a permanent reduction and realignment of our overhead costs; and |
|
|
|
|
Optimize our manufacturing footprint by substantially repositioning our production to
lower cost countries. |
Achievement of many of our objectives has enabled us to mitigate the effects of the
significantly curtailed production forecasts since the second half of 2006 by some of our largest
domestic customers, particularly in the production of SUVs and pickup trucks, which represent the
primary market for our products in the U.S. These production cuts are adversely impacting our
sales in 2007 in the light vehicle market. Weaker demand in the U.S. heavy-duty and medium-duty
truck markets in 2007 as a result of pre-buying in 2006 ahead of new emissions rules is also
negatively impacting our 2007 performance. However, we expect that our restructuring initiatives,
when fully implemented, will achieve viable long-term U.S. operations despite a challenged U.S.
automotive industry and a cyclical commercial vehicle market.
We have made the following progress on our reorganization initiatives:
|
|
|
Product Profitability |
|
|
|
|
Following a detailed review of our product programs to identify unprofitable contracts
and meetings with our customers and their advisors to address under-performing programs,
we have or are finalizing documentation for agreements with customers resulting in
aggregate pricing improvements of approximately $180 on an annualized basis. |
|
|
|
|
Labor and Benefit Costs |
|
|
|
|
In June 2007, we amended our U.S. pension plans for non-union employees to freeze
service credits and benefit accruals effective July 1, 2007. Actions to reduce other
non-union employee benefits, such as disability and healthcare, were previously
implemented. |
|
|
|
|
In July 2007, we entered into settlement agreements (subsequently approved by the
Bankruptcy Court) with two primary unions representing our active
U.S. employees the
UAW and the USW which resolve our collective bargaining issues with these unions and,
when fully implemented, will help us achieve our labor cost reduction
goal. These agreements provide for (i) union master agreements and
collective bargaining agreements for UAW- and USW-represented employees at our U.S.
facilities until June 2011, and (ii) wage structure modifications and modifications to
healthcare, short-term disability, and life insurance benefits for the covered union
employees. The UAW and USW settlement agreements also provide for a
freeze of credited service and benefit accruals under our defined benefit pension plans
for UAW- and USW-represented employees, effective on the later of January 1, 2008 or the
effective date of our plan of reorganization, and for the replacement of future benefits
with matching company contributions to a USW pension trust for some such employees.
Although we expect |
44
|
|
|
to obtain the above benefits from the union settlement agreements, under certain
circumstances involving termination of the Centerbridge investment
commitments, these agreements may
not be implemented. |
|
|
|
|
Our labor and benefits cost reduction goal was $60-$90 of annual cost savings. With the
actions referred to above and other previously implemented actions, the annualized cost
savings are expected to approximate $70. |
|
|
|
|
Other Postretirement Employee Benefits |
|
|
|
|
In March 2007, we reached an agreement with the Retiree Committee (subsequently executed
in May after approval by the Bankruptcy Court) to make a $78 cash contribution to a
VEBA trust for non-pension retiree benefits for
our non-union retirees, in exchange for release of our obligations for postretirement
health and welfare benefits for such retirees after June 30, 2007. We also reached an
agreement with the IAM (subsequently approved by the Bankruptcy Court) to pay $2.25 to
resolve all IAM claims after June 30, 2007 for non-pension retiree benefits for retirees
and active employees represented by the IAM. |
|
|
|
|
In April 2007, we eliminated retiree healthcare benefits coverage for our active
non-union U.S. employees. |
|
|
|
|
Under the UAW and USW settlement agreements, we will eliminate long-term disability,
healthcare, and life insurance benefits for UAW- and USW-represented employees and
retirees, effective on the later of January 1, 2008 or the effective date of our plan of
reorganization, and the UAW and the USW will establish separate, union-specific VEBAs to
provide such benefits to eligible union-represented employees and retirees after that
date. We have agreed to contribute to the VEBAs an aggregate cash amount of up to $764
(less amounts incurred by UAW- and USW-represented employees between July 1, 2007 and
January 1, 2008 for long-term disability, healthcare and life insurance claims). |
|
|
|
|
As a result of these actions, we will eliminate our U.S. postretirement
healthcare obligations, resulting in annualized cost savings of
approximately $90. |
|
|
|
|
Overhead Costs |
|
|
|
|
We are continuing to analyze and implement initiatives to reduce overhead costs.
Additional reductions in overhead will occur as a result of a
remaining divestiture and
reorganization activities. We expect our reductions in overhead spending to contribute
annual expense savings of $40 to $50. |
|
|
|
|
Manufacturing Footprint |
|
|
|
|
We have identified a number of manufacturing and assembly plants that carry an excessive
cost structure or have excess capacity and closed certain locations and consolidated
their operations into lower costs facilities in other countries or into U.S. facilities
that currently have excess capacity. During 2007, we completed the closure of eight
facilities. Closures of five facilities previously announced are in various stages of
progress. As a consequence of the aforementioned settlement with the |
45
|
|
|
unions, a facility previously identified for closure but not announced, is now expected
to remain open. This facility and others within the affected business segment will
implement work force reductions. In addition to the five facility closures, there are
several locations and work force reduction initiatives that are in various stages of
development. As of the present date, there remain two facilities that we plan to close
that have not been announced. As modified in response to the union settlements, over
the long term, we continue to expect our manufacturing footprint actions to reduce our
annual operating costs by $60 to $85. |
Our customer pricing initiatives and labor and benefit actions, certain of which are subject
to future events, are substantially completed. The manufacturing footprint and overhead reduction
actions are in process and progressing largely as planned. We are solidly on course to achieve our
goal of aggregate annual pre-tax profit improvement of $405 to $540 from our reorganization
initiatives, when fully implemented, and we expect these actions to contribute between $175 and
$200 to our base plan forecast for 2007 (i.e., our initial base forecast based on 2006 ending
production levels, before inclusion of the benefits of any of the initiatives) as we continue to
phase them in during the year.
As reported elsewhere in this report, we are also completing previously announced divestures.
In January 2007, we sold our trailer axle business manufacturing assets for $28 in cash and
recorded an after-tax gain of $13.
In March 2007, the following events occurred:
|
- |
|
We sold our engine hard parts business and received cash
proceeds of $98. Of
these proceeds, $5 was escrowed pending completion of closing conditions in certain
countries and $20 was escrowed pending finalization of purchase price adjustments and
satisfaction of certain of our indemnification obligations. We recorded a first quarter
after-tax loss of $26 in connection with this sale. In the second quarter, $3 of the $5
escrow was returned to the buyers and $2 was paid to Dana. The remaining escrow amounts
are expected to be settled in the third quarter. |
|
|
- |
|
We sold our 30% equity interest in GETRAG Getriebe-und Zahnradfabrik Hermann
Hagenmeyer GmbH & Cie KG (GETRAG) to our joint venture partner for $207 in cash. We had
recorded an impairment charge of $58 in the fourth quarter of 2006 to adjust this equity
investment to fair value and we recorded an additional charge of $2 in the first quarter of
2007 based on value of the investment at the time of closing. |
|
|
- |
|
We signed an agreement with Orhan Holding A.S. and certain of its affiliates
for the sale of our fluid products hose and tubing business. We subsequently completed
the sale in two transactions in July and August and received aggregate cash proceeds of
$85. We expect to record a third-quarter after-tax gain of $34 in connection with this
sale. |
In May 2007, we signed an agreement with Coupled Products Acquisition LLC for the sale of our
coupled fluid products business for the nominal price of one dollar, with the buyer to assume
certain liabilities of the business at closing. We expect to complete this sale in the third
quarter of 2007 and to record an after-tax loss of $25.
46
Reorganization Proceedings under Chapter 11 of the Bankruptcy Code
The Bankruptcy Cases
Dana Corporation and forty of its wholly-owned domestic subsidiaries (collectively, the
Debtors) are operating under Chapter 11 of the Bankruptcy Code. The Debtors Chapter 11 cases have
been consolidated in the Bankruptcy Court for the Southern District of New York under the caption
In re Dana Corporation, et al., Case No. 06-10354 (BRL). Neither DCC and its subsidiaries nor any
of Danas non-U.S. affiliates are Debtors.
During the bankruptcy proceedings, investments in Dana securities are highly speculative.
Although shares of our common stock are trading on the OTC Bulletin Board under the symbol DCNAQ,
the opportunity for any recovery by shareholders under our confirmed plan of reorganization is
uncertain and the shares may be cancelled without any compensation pursuant to such plan.
The Bankruptcy Cases are being jointly administered, with the Debtors managing their
businesses as debtors in possession subject to the supervision of the Bankruptcy Court. We are
continuing normal business operations while we evaluate our business financially and operationally.
We are proceeding with previously announced divestiture and reorganization plans and taking steps
to reduce costs, increase efficiency and enhance productivity so that we can emerge from bankruptcy
as a stronger, more viable company.
Official committees of the Debtors unsecured creditors (the Creditors Committee) and retirees
not represented by unions (the Retiree Committee) have been appointed in the Bankruptcy Cases. The
Debtors bear certain of the committees costs and expenses, including those of their counsel and
other professional advisors. An official committee of Danas equity security holders was also
appointed, but it was later disbanded.
The Debtors have filed schedules of their assets and liabilities existing on the Filing Date,
including certain amendments to the initial schedules, with the Bankruptcy Court.
Under the Bankruptcy Code, the Debtors have the right to assume or reject executory contracts
(i.e., contracts that are to be performed by the parties after the Filing Date) and unexpired
leases, subject to Bankruptcy Court approval and other limitations. The Bankruptcy Court has
approved the Debtors assumption and rejection of certain executory contracts and unexpired leases.
The Bankruptcy Court has entered an order establishing procedures for trading in claims
and equity securities that is designed to protect the Debtors potentially valuable tax attributes
(such as net operating loss carryforwards). Under the order, holders or acquirers of 4.75% or more
of Danas common stock are subject to certain notice and consent procedures before acquiring or
disposing of the shares. Holders of claims against the Debtors that would entitle them to more
than 4.75% of the common shares of reorganized Dana under a confirmed plan of reorganization
utilizing the tax benefits provided under Section 382(l)(5) of the Internal Revenue Code may be
required to sell down the excess claims if necessary to implement such a plan of reorganization.
Currently, the Plan Support Agreement contemplates a plan of reorganization utilizing tax benefits
under Section 382(l)(6) of the Internal Revenue Code.
The
Bankruptcy Court has also authorized us to enter into the agreements
discussed in Note 19 to the financial statements in Item 1
of Part I of this report.
47
Pre-petition Claims
Most persons and entities asserting pre-petition claims (with the exception of, among others,
asbestos-related personal injury claims and claims resulting from the future rejections of
executory contracts and unexpired leases) against the Debtors were required to file proofs of claim
in the Bankruptcy Cases by September 21, 2006. Proofs of claim alleging rights to payment for
financing, trade debt, employee obligations, environmental matters, commercial damages and other
litigation-based liabilities, tax liabilities and other matters in a total amount of approximately
$26,600 (as well as certain unliquidated amounts) were filed by that date. In
addition, another $51 in
liabilities is listed in our schedules of assets and liabilities as undisputed, non-contingent and
liquidated.
Pre-petition Debt
Our bankruptcy filing triggered the immediate acceleration of certain of our direct financial
obligations, including, among others, an aggregate of $1,623 in principal and accrued interest on
currently outstanding non-secured notes issued under our 1997, 2001, 2002 and 2004 indentures.
Such amounts are characterized as unsecured debt for purposes of the reorganization proceedings and
the related obligations are classified as liabilities subject to compromise in our consolidated
balance sheet as of June 30, 2007. In accordance with SOP 90-7, following the Filing Date, we
discontinued recording interest expense on debt classified as liabilities subject to compromise.
Reorganization Initiatives
It is critical to the Debtors successful emergence from bankruptcy that they (i) achieve
positive margins for their products by obtaining substantial price increases from their customers,
(ii) recover or otherwise provide for increased material costs through renegotiation or rejection
of various customer programs, (iii) restructure their wage and benefit programs to create an
appropriate labor and benefit cost structure, (iv) address the excessive cash requirements of the
legacy pension and other postretirement benefit liabilities that they have accumulated over the
years, (v) optimize their manufacturing footprint by eliminating excess capacity, closing and
consolidating facilities and repositioning operations in lower cost countries, and (vi) achieve a
permanent reduction and realignment of their overhead costs. The steps that the Debtors have taken
or are taking to accomplish these goals are discussed in Business Strategy above.
Plan of Reorganization
Until September 3, 2007, the Debtors have the exclusive right to file a plan of reorganization
in the Bankruptcy Cases. We anticipate that substantially all of the Debtors liabilities as of
the Filing Date will be addressed and treated in accordance with such plan, which will be voted on
by the creditors and equity holders in accordance with the provisions of the Bankruptcy Code. Although the Debtors
intend to file such a plan by that date, there can be no assurance that they will be able to do so
or that any plan that is filed will be confirmed by the Bankruptcy Court and consummated. The
Debtors plan of reorganization could materially change the amounts and classification of items
reported in our historical financial statements.
On
August 1, 2007, the Bankruptcy Court entered an order
authorizing the Debtors to enter into a
series of related agreements consisting of (i) settlement agreements with the UAW and USW providing
terms for settling all outstanding issues between the Debtors and these unions related to the
Bankruptcy Cases; (ii) a Plan Support Agreement with these unions, Centerbridge, and
48
certain of Danas unsecured creditors setting out the terms under which these parties will support
the Debtors plan of reorganization; and (iii) an Investment Agreement between Dana, Centerbridge,
and a Centerbridge affiliate providing for Centerbridge to purchase $250 in Series A convertible
preferred shares of reorganized Dana and qualified creditors of the Debtors (i.e., creditors who
meet specified criteria) to have an opportunity to purchase $500 in Series B convertible preferred
shares on a pro rata basis, with Centerbridge purchasing up to $250 in Series B preferred shares
that are not purchased by the qualified creditors. The proceeds from the sale of the preferred
shares will be used in part to fund the VEBA trusts that will be established under the union
settlement agreements. We have agreed to file a plan of reorganization with the Bankruptcy
Court incorporating the union settlement agreements and the foregoing
equity investment commitments
(or an alternative proposal acceptable to the UAW and USW) by September 3, 2007. If we fail to do
so, Centerbridge may terminate the Investment Agreement and the unions may, under some
circumstances, terminate the union settlement agreements or their collective bargaining agreements.
In addition, if our plan of reorganization does not become effective by February 28, 2008,
individual supporting creditors may withdraw their support and if it does not become effective by
May 1, 2008, the Plan Support Agreement will expire. See Note 19 to the financial statements in
Item 1 of Part I for additional details.
In addition, the Bankruptcy Court order authorizing our entry into these agreements
established a schedule and procedures under which we will consider potential alternatives to the
investments contemplated with Centerbridge under the Investment Agreement. The schedule
contemplates that any alternate investment proposals will be received and considered by specific
dates during August through October 2007.
Continuation as a Going Concern
Our financial statements have been prepared on a going-concern basis, which contemplates
continuity of operations, realization of assets and liquidation of liabilities in the ordinary
course of business. As a result of our bankruptcy filing, such realization of assets and
liquidation of liabilities is subject to uncertainty. While operating as debtors in possession
under the protection of Chapter 11 of the Bankruptcy Code, the Debtors may sell or otherwise
dispose of assets and liquidate or settle liabilities for amounts other than those recorded in our
financial statements, subject to Bankruptcy Court approval or as otherwise permitted in the
ordinary course of business. Our financial statements as of June 30, 2007 do not give effect to
all the adjustments to the carrying value of assets and liabilities that may become necessary as a
consequence of our reorganization.
Our continuation as a going concern is contingent upon our ability to (i) comply with the
terms and conditions of the DIP Credit Agreement, (ii) obtain confirmation of a plan of
reorganization under the Bankruptcy Code, (iii) generate sufficient cash flow from operations, and
(iv) obtain financing sources to meet our future obligations. Although we are taking steps to
achieve these objectives, there is no assurance that we will be successful in doing so or that any
measures that are achievable will result in sufficient improvement to our financial position.
Accordingly, until such time as we emerge from bankruptcy, there is no certainty about our ability
to continue as a going concern. If our reorganization is not completed successfully, we could be
forced to sell a significant portion of our assets to retire debt outstanding or, under certain
circumstances, to cease operations.
49
DCC Notes
At the time of our bankruptcy filing, DCC had outstanding notes totaling approximately $399.
In December 2006, DCC and most of its noteholders executed a Forbearance Agreement under which (i)
the forbearing noteholders agreed not to exercise their rights or remedies with respect to the DCC
notes for a period of 24 months (or until the effective date of Danas plan of reorganization),
during which time DCC is endeavoring to sell its remaining asset portfolio in an orderly manner and
use the proceeds to pay down the notes and (ii) DCC agreed to pay the forbearing noteholders their
pro rata share of any excess cash it maintains in the U.S. greater than $7.5 on a quarterly basis.
At June 30, 2007, the amount of principal outstanding under the DCC notes was $228. In July 2007,
DCC made a $95 payment to the forbearing noteholders, consisting of $91 of principal and $4 of
interest.
Contemporaneously with the execution of the Forbearance Agreement, Dana and DCC executed a
Settlement Agreement whereby they agreed to the discontinuance of a tax sharing agreement between
them and to a stipulated amount of a general unsecured claim owed by Dana to DCC of $325. Payments
to DCC relative to this obligation are expected to be addressed in our plan of reorganization,
which may propose that distributions to DCC be limited to the amount required to satisfy DCCs
obligations.
Business Units
We manage our operations globally through two business units ASG and HVTSG. ASG focuses on
the automotive market and primarily supports light vehicle original equipment manufacturers (OEMs)
with products for light trucks, SUVs, CUVs, vans and passenger cars. ASG has five operating
segments focused on specific products for the automotive market: Axle, Driveshaft, Structures,
Sealing and Thermal.
HVTSG supports the OEMs of medium-duty (Classes 5-7) and heavy-duty (Class 8) commercial
vehicles (primarily trucks and buses) and off-highway vehicles (primarily wheeled vehicles used in
construction and agricultural applications). HVTSG has two operating segments focused on specific
markets: Commercial Vehicle and Off-Highway.
Trends in Our Markets
North American Light Vehicle Market
Production Levels
North American light vehicle production levels were 2.2% lower in the second quarter of 2007
than in the second quarter of 2006, and 4.9% lower for the first half of 2007 compared to 2006. In
the light truck segment, second quarter production levels were up 0.4% over 2006, while first half
production was down 2.2%. Within this segment, the declines over the past year have been more
heavily weighted toward medium and full size pick-up trucks and SUVs where consumer concerns about
high fuel prices have led to increased preferences for more fuel efficient CUVs. The light truck
platforms which generate the highest sales for us are primarily medium and full size pick-up trucks
and SUVs; however, a number of our newer programs involve CUVs. Production levels on vehicles with
higher Dana content in the second quarter and first half of 2007 were up about 3.7% and down 2.7%
from the same periods in the previous year (source: Global Insight).
50
Lower light truck production levels during the second half of 2006 and first six months
of 2007 have helped bring inventory levels down. Days supply of light truck inventories in the
U.S. was 76 at June 30, 2007 as compared to 83 at the same time a year ago. While improved over
last year, the days supply of light trucks in the U.S. increased during this years second quarter
rising to the current level of 76 days from 69 days at the end of March. Sales of light trucks
in U.S. during the second quarter of 2007 were down about 2% from the prior year, with June sales
being especially soft down 6% from the previous year. Light
truck sales in the U.S. in July continued to be relatively weak off
about 7% from last year. While a number of vehicle manufacturers
have increased incentives recently in an effort to stimulate sales, the recent inventory and sales
data lead to a cautious near term outlook for light truck production
levels. (source: Wards
Automotive).
Overall North American light vehicle production in 2007 is forecasted to be about the same as
in 2006 15.3 million units or slightly lower (source: Global Insight & Wards Automotive). While
second half light truck production is currently forecasted to be somewhat higher than comparable 2006
levels, high fuel prices and a weaker housing market could put potential pressure on production
levels of our key platforms later in the year.
OEM Mix
The declining sales of light vehicles (especially light trucks, which generally have a higher
profit margin than passenger cars) in North America, as well as losses of market share to
competitors such as Toyota and Nissan, continue to put pressure on three of our largest light
vehicle customers: Ford, GM and Chrysler. These three customers accounted for 78% of light truck
production in North America in the second quarter of 2006. Their share of second quarter 2007
production was 76% (source: Global Insight). While our current bankruptcy reorganization has
provided us with some relief from the price reduction pressures applied by these major customers, we
expect any continuing loss of their market shares could result in renewed pricing pressure in order for us
to retain existing business and be awarded new business. Our product profitability initiative
discussed in Business Strategy above specifically addresses our efforts to improve our pricing.
Commodity Costs
Another challenge we face is the high cost of steel and other raw materials, which has had a
significant adverse impact on our results, and those of other North American automotive suppliers,
for more than two and a half years. Steel suppliers began assessing price surcharges and
increasing base prices during the first half of 2004, and prices since then have remained at
considerably higher levels.
Two commonly-used market-based indicators the Tri Cities Scrap Index for #1 bundled scrap
steel (which represents the monthly average costs in the Chicago, Cleveland and Pittsburgh ferrous
scrap markets, as posted by American Metal Market, and is used by our domestic steel suppliers to
determine our monthly surcharge) and the spot market price for hot-rolled sheet steel illustrate
the impact. As compared to 2003, average scrap steel prices on the Tri Cities index during 2006
were more than 70% higher, and spot market hot-rolled sheet steel prices during 2006 were up more
than 100%. After subsiding some during the second half of 2006, scrap prices on the Tri Cities
index rose significantly during the first six months of 2007 with the average
second quarter 2007 price being slightly lower than the second quarter 2006 average by
approximately 2% and year-to-date 2007 average prices being up about 6%. In the case of hot-rolled
steel, spot prices during the first six months of 2007 have dropped, with average second quarter
and year-to-date 2007 spot prices about 7% lower than the comparable
51
2006 period. However, even
after taking account of the recent decline in hot-rolled steel prices, at current consumption
levels, we estimate that our annualized cost of raw steel is approximately $140 higher than it
would have been using prices at the end of 2003. We have taken actions to mitigate the impact of
these increases, including consolidating purchases, taking advantage of our customers resale
programs where possible, finding new global steel sources, identifying alternative materials and
re-designing our products to be less dependent on higher cost steel grades.
During the latter part of 2005 and throughout 2006, cost increases for raw materials other
than steel were also significant. Average prices for nickel (which is used to manufacture
stainless steel) and aluminum increased significantly, up about 60% and 37% over 2005 prices.
During the first six months of this year, aluminum prices have been relatively stable while nickel
prices continued to increase through May with a drop in June. Aluminum prices were up 4% compared
to second quarter 2006 prices, while average nickel prices were up 42%. On a six month
year-to-date basis, aluminum prices were about 6% higher than 2006, while nickel prices were up
around 57%.
As discussed above, our reorganization initiatives include working with our customers to
recover a greater portion of our commodity materials costs.
Automotive Supplier Bankruptcies
Several major U.S. automotive suppliers, in addition to Dana, have filed for protection under
Chapter 11 of the Bankruptcy Code since early 2005, including Tower Automotive, Inc., Collins &
Aikman Corporation, Delphi Corporation and Dura Automotive Systems, Inc. These bankruptcy filings
indicate stress in the North American light vehicle market that could lead to further filings or to
competitor or customer reorganizations or consolidations that could impact the marketplace and our
business.
North American Commercial Vehicle Market
Production Cyclicality
The North American commercial vehicle market was strong during 2006, primarily due to
pre-buying of heavy-duty (Class 8) and medium-duty (Class 5-7) trucks in advance of the more
stringent U.S. emission regulations that took effect at the beginning of 2007 and increased the
prices of these trucks. As a result of the pre-buying, North American commercial vehicle truck
build is expected to be down considerably in 2007.
Second quarter 2007 production of Class 8 vehicles in North America was down about 53% from
the second quarter of 2006, and Class 5-7 medium-duty production was down 21% for the same period.
We expect that the second quarter will be the lowest quarterly Class 8 production level for the
year. While Class 8 vehicle build during the remainder of 2007 is expected to be down
significantly from levels of a year ago, production levels are expected to increase from second
quarter 2007 levels. Class 8 and medium-duty order backlogs at
June 30, 2007 were off 52% and 65%
from the same time last year. Full year 2007 production of Class 8 vehicles is expected to be
around 200,000 units, compared to 369,000 units in 2006, and medium-duty truck build is forecast at about
200,000 units in 2007 compared to 265,000 units in 2006 (source: ACT).
52
Commodity Costs
The high commodity costs, in particular steel, affecting the North American light vehicle
market have also impacted the commercial vehicle market, but this impact has been partially
mitigated by our ability to recover material cost increases from our Commercial Vehicle customers.
New Business
A continuing major focus for us is growing our revenue through new business. Based on awards
to date, we expect net new business to contribute approximately $270 and $150 to our sales in 2007
and 2008.
Our level of net new business is lower in 2007 than in recent years. This is due, in part, to the
end of some of our larger customer programs in 2006, including programs to supply certain
structural products to Ford and certain axle products to a GM affiliate in Australia. Our 2008 net
new business projection takes into consideration sales reductions that we anticipate next year due to the co-sourcing of a structural products program with Ford.
While continuing to support Ford, GM and Chrysler, we are striving to diversify our sales
across a broader customer base. Approximately 80% of our current book of net new business involves
customers other than Ford, GM and Chrysler, and approximately 90% of this business is with other
automotive manufacturers based outside North America.
United States Profitability
Our U.S. operations have generated losses before income taxes during the past five years
aggregating more than $2,000. While numerous factors have contributed to our lack of profitability
in the U.S., paramount among them are those discussed earlier in this report: high raw material
costs that we have been absorbing, customer price reductions that have reduced our margins,
competition from suppliers in countries with lower labor costs, and accumulated retiree healthcare
costs disproportionate to the scale of our current business.
As indicated in Note 3 to the financial statements in Item 1 of Part I, during the first six
months of 2007, the Debtor companies (comprised of our U.S. operations other than DCC), incurred
pre-tax losses from continuing operations of $91, including $65 of net reorganization costs. After
adjusting for the reorganization items, the pre-tax loss was $26 for the first six months of the
year, with the second quarter of 2007 showing pre-tax income before reorganization items of $3.
While the second quarter results benefited from some nonrecurring currency transaction gains and
reductions to restructuring expense, part of the improvement was due to the customer pricing,
benefits and SG&A reorganization actions discussed earlier in this section. The second quarter has
traditionally been our strongest in terms of sales given the typical North American light vehicle
production cycle. While we do not necessarily expect this level of profit during the second half
of the year, we do expect continued improvement from the reorganization actions.
53
Results of Operations Summary (Second Quarter 2007 versus Second Quarter 2006)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
Change |
|
Net sales |
|
$ |
2,289 |
|
|
$ |
2,300 |
|
|
$ |
(11 |
) |
Cost of sales |
|
|
2,141 |
|
|
|
2,161 |
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
148 |
|
|
|
139 |
|
|
|
9 |
|
Selling, general and administrative expenses |
|
|
88 |
|
|
|
115 |
|
|
|
(27 |
) |
|
|
|
|
|
|
|
|
|
|
Gross margin less SG&A* |
|
|
60 |
|
|
|
24 |
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Realignment charges |
|
$ |
134 |
|
|
$ |
1 |
|
|
$ |
133 |
|
Impairment of other assets |
|
|
|
|
|
|
1 |
|
|
|
(1 |
) |
Other income, net |
|
|
32 |
|
|
|
39 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
Total expense (income) |
|
|
102 |
|
|
|
(37 |
) |
|
|
139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before
interest, reorganization items and income taxes |
|
$ |
(42 |
) |
|
$ |
61 |
|
|
$ |
(103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(105 |
) |
|
$ |
(31 |
) |
|
$ |
(74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations |
|
$ |
(28 |
) |
|
$ |
3 |
|
|
$ |
(31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(133 |
) |
|
$ |
(28 |
) |
|
$ |
(105 |
) |
|
|
|
* |
|
Gross margin less SG&A is a non-GAAP financial measure derived by excluding realignment
charges, impairments and other income, net from the most closely related GAAP measure, which is
income from continuing operations before interest, reorganization items and income taxes. We
believe this non-GAAP measure is useful for an understanding of our ongoing operations because it
excludes other income and expense items which are generally not expected to be part of our ongoing
business. Certain reclassifications were made to conform 2006 to the 2007 reporting schedules. |
54
Results of Operations (Second Quarter 2007 versus Second Quarter 2006)
The tables below show changes in our sales by geographic region, business unit and segment for
the three months ended June 30, 2007 and 2006.
Geographical Sales Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Change Due To |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
|
Effects |
|
|
Divestitures |
|
|
Change |
|
North America |
|
$ |
1,301 |
|
|
$ |
1,398 |
|
|
$ |
(97 |
) |
|
$ |
4 |
|
|
$ |
(25 |
) |
|
$ |
(76 |
) |
Europe |
|
|
575 |
|
|
|
493 |
|
|
|
82 |
|
|
|
39 |
|
|
|
(1 |
) |
|
|
44 |
|
South America |
|
|
253 |
|
|
|
221 |
|
|
|
32 |
|
|
|
15 |
|
|
|
|
|
|
|
17 |
|
Asia Pacific |
|
|
160 |
|
|
|
188 |
|
|
|
(28 |
) |
|
|
14 |
|
|
|
(8 |
) |
|
|
(34 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,289 |
|
|
$ |
2,300 |
|
|
$ |
(11 |
) |
|
$ |
72 |
|
|
$ |
(34 |
) |
|
$ |
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Sales Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Change Due To |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
|
Effects |
|
|
Divestitures |
|
|
Change |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
716 |
|
|
$ |
615 |
|
|
$ |
101 |
|
|
$ |
20 |
|
|
$ |
5 |
|
|
$ |
76 |
|
Driveshaft |
|
|
307 |
|
|
|
293 |
|
|
|
14 |
|
|
|
13 |
|
|
|
12 |
|
|
|
(11 |
) |
Sealing |
|
|
190 |
|
|
|
178 |
|
|
|
12 |
|
|
|
5 |
|
|
|
|
|
|
|
7 |
|
Thermal |
|
|
79 |
|
|
|
79 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
(2 |
) |
Structures |
|
|
279 |
|
|
|
333 |
|
|
|
(54 |
) |
|
|
6 |
|
|
|
|
|
|
|
(60 |
) |
Other |
|
|
7 |
|
|
|
28 |
|
|
|
(21 |
) |
|
|
|
|
|
|
(2 |
) |
|
|
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
1,578 |
|
|
|
1,526 |
|
|
|
52 |
|
|
|
46 |
|
|
|
15 |
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
307 |
|
|
|
439 |
|
|
|
(132 |
) |
|
|
5 |
|
|
|
(49 |
) |
|
|
(88 |
) |
Off-Highway |
|
|
403 |
|
|
|
329 |
|
|
|
74 |
|
|
|
21 |
|
|
|
|
|
|
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
710 |
|
|
|
768 |
|
|
|
(58 |
) |
|
|
26 |
|
|
|
(49 |
) |
|
|
(35 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operations |
|
|
1 |
|
|
|
6 |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,289 |
|
|
$ |
2,300 |
|
|
$ |
(11 |
) |
|
$ |
72 |
|
|
$ |
(34 |
) |
|
$ |
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Review
Total sales of $2,289 in the second quarter of 2007 were $11 lower than in the second quarter
of 2006. Currency translation effects, primarily from a stronger
euro, increased sales by $72,
partially offsetting the overall organic sales decline associated with reduced production levels in
certain of our key markets and the effects of divestitures. The 2006 acquisition of the axle and
driveshaft operations of our former Mexican joint venture provided additional sales in 2007.
However, these higher sales were more than offset by the divestiture of our trailer axle business
in January 2007, which reduced second quarter sales by $49.
The second quarter of 2007 organic sales decline of 5.5% in North America was driven primarily
by lower production in the commercial vehicle markets. Production levels of Class 8 trucks were
down 53% and medium-duty production was 21% lower compared to the second quarter of 2006. North
American light vehicle production in the second quarter of 2007 was comparable to the same period
in 2006. Partially offsetting the commercial vehicle production
55
decreases was the impact of higher
pricing from our reorganization initiatives which contributed about $47 as discussed in the
Business Strategy section.
In
Europe, the sales increase of $82 included a positive translation impact of $39 mostly
from a stronger euro. The organic increase of $44 was in large part due to strong production
levels in the off-highway market where we have a significant European presence and to new business
with European customers. The organic sales reduction in Asia Pacific was due primarily to the
expiration of an axle program in mid-2006 with a subsidiary of General Motors.
Business Segment Review
Reorganization-related pricing improvements contributed approximately $44 to organic sales in our ASG segments in second quarter of 2007. However, the increase from
pricing was more than offset by lower production levels. In our Axle segment, pricing improvements
and new business programs generated the higher sales. Our Driveshaft segment sells to the
commercial vehicle market as well as the light vehicle market. The significant decline in
commercial vehicle production levels led to this units overall organic sales decline. Neither the
Thermal nor Sealing segment benefited significantly from pricing improvement or new business;
consequently, the organic sales change in these operations was primarily due to production level
changes. In Structures, the sales decline was due to lower production levels and to the expiration of a frame program with Ford in 2006. The
reduction from these two factors was partially offset by higher sales from pricing initiatives.
In HVTSG, our Commercial Vehicle segment is heavily concentrated in the North American
market and the organic sales decline of 20% in this segment was primarily due to the drop in North
American production levels. Organic sales in the Off-Highway segment have benefited from stronger
production levels and sales from new programs. With its significant European presence, this
segments sales also benefited from the stronger euro.
56
The chart below shows our business unit and segment margin analysis for the three months ended
June 30, 2007 and 2006:
Margin Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a Percentage of Sales |
|
|
Increase / |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
Gross margin: |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
6.1 |
% |
|
|
7.5 |
% |
|
|
(1.4 |
)% |
Axle |
|
|
3.0 |
|
|
|
2.6 |
|
|
|
0.4 |
|
Driveshaft |
|
|
6.8 |
|
|
|
10.2 |
|
|
|
(3.4 |
) |
Sealing |
|
|
14.0 |
|
|
|
15.5 |
|
|
|
(1.5 |
) |
Thermal |
|
|
10.2 |
|
|
|
16.5 |
|
|
|
(6.3 |
) |
Structures |
|
|
8.6 |
|
|
|
4.9 |
|
|
|
3.7 |
|
|
HVTSG |
|
|
9.1 |
|
|
|
7.3 |
|
|
|
1.8 |
|
Commercial Vehicle |
|
|
5.1 |
|
|
|
3.5 |
|
|
|
1.6 |
|
Off-Highway |
|
|
11.9 |
|
|
|
12.1 |
|
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
2.6 |
% |
|
|
3.8 |
% |
|
|
(1.2 |
)% |
Axle |
|
|
1.9 |
|
|
|
2.7 |
|
|
|
(0.8 |
) |
Driveshaft |
|
|
0.8 |
|
|
|
1.0 |
|
|
|
(0.2 |
) |
Sealing |
|
|
6.3 |
|
|
|
6.6 |
|
|
|
(0.3 |
) |
Thermal |
|
|
4.7 |
|
|
|
3.9 |
|
|
|
0.8 |
|
Structures |
|
|
1.8 |
|
|
|
1.7 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
3.1 |
|
|
|
2.9 |
|
|
|
0.2 |
|
Commercial Vehicle |
|
|
3.5 |
|
|
|
2.6 |
|
|
|
0.9 |
|
Off-Highway |
|
|
2.2 |
|
|
|
2.6 |
|
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin less SG&A:* |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
3.5 |
% |
|
|
3.7 |
% |
|
|
(0.2 |
)% |
Axle |
|
|
1.1 |
|
|
|
(0.1 |
) |
|
|
1.2 |
|
Driveshaft |
|
|
6.0 |
|
|
|
9.2 |
|
|
|
(3.2 |
) |
Sealing |
|
|
7.7 |
|
|
|
8.9 |
|
|
|
(1.2 |
) |
Thermal |
|
|
5.5 |
|
|
|
12.6 |
|
|
|
(7.1 |
) |
Structures |
|
|
6.8 |
|
|
|
3.2 |
|
|
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
6.0 |
|
|
|
4.4 |
|
|
|
1.6 |
|
Commercial Vehicle |
|
|
1.6 |
|
|
|
0.9 |
|
|
|
0.7 |
|
Off-Highway |
|
|
9.7 |
|
|
|
9.5 |
|
|
|
0.2 |
|
|
Consolidated |
|
|
2.6 |
|
|
|
1.0 |
|
|
|
1.6 |
|
|
|
|
* |
|
Gross margin less SG&A is a non-GAAP financial measure derived by excluding realignment
charges, impairments and other income, net from the most closely related GAAP measure, which is
income from continuing operations before interest, reorganization items and income taxes. We
believe this non-GAAP measure is useful for an understanding of our ongoing operations because it
excludes other income and expense items which are generally not expected to be part of our ongoing
business. Certain reclassifications were made to conform 2006 to the 2007 reporting structures. |
In ASG, gross margin less SG&A was 3.5% as compared to the 3.7% in the second quarter of
2006. In the Axle segment, gross margin less SG&A as a percent of sales was up 1.2% from 2006.
The reorganization related pricing improvement contributed approximately $18 to 2007 margin. This
benefit was partially offset by an adverse sales mix higher sales on programs with lower margins
and increased warranty cost of about $3. Gross margin less SG&A in the Driveshaft segment was
down significantly 3.2%. In addition to the light vehicle market, this
57
segment supplies product
to the commercial vehicle market where production levels in 2007 were down substantially.
Driveshaft sales to the North American commercial vehicle market were approximately $60 lower than
last year. While this decline was partially offset by higher sales to the light vehicle market,
the margins on sales to the light vehicle market are lower. Also reducing year-over-year
Driveshaft margins were higher new program launch costs, premium freight and other manufacturing
inefficiencies. Benefiting margins was customer pricing improvement of about $7. In the Sealing
segment, the margin reduction of 1.2% of sales was due principally to higher material costs for
stainless steel and nickel. Higher raw material costs, most notably aluminum, also reduced margins
in our Thermal segment. Margins in Thermal were also negatively impacted by start-up costs
associated with a new operation in Hungary and some new program launch costs. The Structures
segment, while experiencing the largest percentage decline in organic sales, had
quarter-over-quarter gross margin less SG&A improvement of 3.6%. More than offsetting the impact
from lower sales was $19 of increased margin from pricing improvement and $3 from a one-time
program cost recovery.
Gross margin less SG&A in HVTSG improved from 4.4% in the second quarter of 2006 to 6.0% in
the second quarter of 2007. Commercial Vehicle gross margin less SG&A as a percent of sales
improved 0.7% as the margin reduction associated with the lower production levels and loss of the
trailer axle business was more than offset by pricing improvement, lower material costs and reduced
SG&A. Price increases with certain major customers in this segment were implemented in the second
half of 2006, with additional pricing improvement coming from the reorganization actions discussed
in the Business Strategy section. The quarter-over-quarter margin improvement from pricing
amounted to $7, while higher warranty costs reduced margins by $2. In the Off-Highway segment, the margin
improvement of 0.2% of sales was due primarily to higher sales volume.
Corporate expenses and other costs not allocated to the business units reduced gross margins
less SG&A by 2.1% for the second quarter of 2007 as compared to 3.4% in the same period in 2006,
thereby contributing to the 1.7% improvement in consolidated gross margin less SG&A. Second
quarter 2006 expenses included $7 of pension settlement cost triggered by high levels of lump sum
pension fund distributions. Adjustments to accruals for long-term disability and active employee
medical benefits were lower in 2007 by $14. The remaining margin improvement was due primarily
to lower employee benefit costs resulting from the actions discussed in the Business Strategy
section and to manpower and other cost reductions.
Realignment charges
Realignment charges during the second quarter of 2007 were primarily costs incurred in
connection with the continuing manufacturing footprint optimization
actions and $128 of costs
relating to settlement of pension obligations in the U.K., both of which are described in the
Business Strategy section.
58
Other income (expense)
During 2007, certain intercompany loans receivable held by the Debtors that were previously
designated as invested indefinitely were identified for repayment through near-term repatriation
actions. As a consequence, exchange rate movements on these loans generated currency gains of $17 during the
second quarter. Other expense of $11 is included in 2007 for the estimated cost to settle a
contractual matter with an investor in one of our equity investments. See Note 17 to the financial
statements in Item 1 of Part I for additional components of other income.
Interest expense
As a result of our Chapter 11 reorganization process, a substantial portion of our debt
obligations are now subject to compromise. Effective with our filing for reorganization under
Chapter 11, interest expense is no longer accrued on these obligations. The post-filing interest
expense not recognized in the three month periods ended June 30, 2007 and 2006 on these obligations
amounted to $27 in each period.
Reorganization items
Reorganization items are primarily expenses directly attributed to our Chapter 11
reorganization process. See Note 3 to our financial statements in Item 1 of Part I of this report
for a summary of these costs. Higher professional advisory fees in 2007 were due in part to costs
associated with completing the restructuring and settlement of our pension obligations in the U.K.
and implementing European repatriation initiatives.
Income tax benefit (expense)
As
a result of the significant amount of OCI reported for the three
months ended June 30, 2007, we recognized a U.S. tax benefit of $26 in continuing operations for
the same period. (See Note 16 for additional information regarding the determination of this
benefit.) The continuing inability to recognize tax benefits in the U.K. overshadowed this item as
the substantial loss recognized on the settlement of pension plans in the U.K. generated no tax
effects. Accordingly, the tax expense of $3 is significantly less
than the $37 of expected benefit
derived by applying a marginal tax rate of 35%. The inability to recognize benefits in both the
U.S. and the U.K. in 2006 was the primary reason that we recorded tax expense of $36 on only $1 of
pre-tax income from continuing operations in the second quarter of 2006.
59
Results of Operations Summary (Year-to-Date 2007 versus Year-to-Date 2006)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
Change |
|
Net sales |
|
$ |
4,434 |
|
|
$ |
4,497 |
|
|
$ |
(63 |
) |
Cost of sales |
|
|
4,184 |
|
|
|
4,257 |
|
|
|
(73 |
) |
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
250 |
|
|
|
240 |
|
|
|
10 |
|
Selling, general and administrative expenses |
|
|
184 |
|
|
|
230 |
|
|
|
(46 |
) |
|
|
|
|
|
|
|
|
|
|
Gross margin less SG&A* |
|
|
66 |
|
|
|
10 |
|
|
|
56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Realignment charges |
|
$ |
153 |
|
|
$ |
2 |
|
|
$ |
151 |
|
Impairment of other assets |
|
|
|
|
|
|
15 |
|
|
|
(15 |
) |
Other income, net |
|
|
78 |
|
|
|
70 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
Total expense (income) |
|
|
75 |
|
|
|
(53 |
) |
|
|
128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before
interest, reorganization items and income taxes |
|
$ |
(9 |
) |
|
$ |
63 |
|
|
$ |
(72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(141 |
) |
|
$ |
(136 |
) |
|
$ |
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
|
$ |
(84 |
) |
|
$ |
(18 |
) |
|
$ |
(66 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(225 |
) |
|
$ |
(154 |
) |
|
$ |
(71 |
) |
|
|
|
* |
|
Gross margin less SG&A is a non-GAAP financial measure derived by excluding realignment
charges, impairments and other income, net from the most closely related GAAP measure, which is
income from continuing operations before interest, reorganization items and income taxes. We
believe this non-GAAP measure is useful for an understanding of our ongoing operations because it
excludes other income and expense items which are generally not expected to be part of our ongoing
business. Certain reclassifications were made to conform 2006 to the
2007 reporting schedules. |
60
Results of Operations (Year-to-Date 2007 versus Year-to-Date 2006)
The tables below show changes in our sales by geographic region, business unit and segment for
the six months ended June 30, 2007 and 2006.
Geographical Sales Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Change Due To |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
|
Effects |
|
|
Divestitures |
|
|
Change |
|
North America |
|
$ |
2,525 |
|
|
$ |
2,770 |
|
|
$ |
(245 |
) |
|
$ |
|
|
|
$ |
(32 |
) |
|
$ |
(213 |
) |
Europe |
|
|
1,137 |
|
|
|
958 |
|
|
|
179 |
|
|
|
90 |
|
|
|
(23 |
) |
|
|
112 |
|
South America |
|
|
459 |
|
|
|
420 |
|
|
|
39 |
|
|
|
16 |
|
|
|
|
|
|
|
23 |
|
Asia Pacific |
|
|
313 |
|
|
|
349 |
|
|
|
(36 |
) |
|
|
23 |
|
|
|
(13 |
) |
|
|
(46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,434 |
|
|
$ |
4,497 |
|
|
$ |
(63 |
) |
|
$ |
129 |
|
|
$ |
(68 |
) |
|
$ |
(124 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Sales Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Change Due To |
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
Currency |
|
|
Acquisitions/ |
|
|
Organic |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
|
Effects |
|
|
Divestitures |
|
|
Change |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axle |
|
$ |
1,327 |
|
|
$ |
1,203 |
|
|
$ |
124 |
|
|
$ |
32 |
|
|
$ |
20 |
|
|
$ |
72 |
|
Driveshaft |
|
|
593 |
|
|
|
570 |
|
|
|
23 |
|
|
|
22 |
|
|
|
23 |
|
|
|
(22 |
) |
Sealing |
|
|
366 |
|
|
|
355 |
|
|
|
11 |
|
|
|
12 |
|
|
|
|
|
|
|
(1 |
) |
Thermal |
|
|
151 |
|
|
|
155 |
|
|
|
(4 |
) |
|
|
3 |
|
|
|
|
|
|
|
(7 |
) |
Structures |
|
|
549 |
|
|
|
657 |
|
|
|
(108 |
) |
|
|
6 |
|
|
|
|
|
|
|
(114 |
) |
Other |
|
|
12 |
|
|
|
60 |
|
|
|
(48 |
) |
|
|
|
|
|
|
(24 |
) |
|
|
(24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
2,998 |
|
|
|
3,000 |
|
|
|
(2 |
) |
|
|
75 |
|
|
|
19 |
|
|
|
(96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Vehicle |
|
|
647 |
|
|
|
856 |
|
|
|
(209 |
) |
|
|
7 |
|
|
|
(87 |
) |
|
|
(129 |
) |
Off-Highway |
|
|
787 |
|
|
|
630 |
|
|
|
157 |
|
|
|
47 |
|
|
|
|
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total HVTSG |
|
|
1,434 |
|
|
|
1,486 |
|
|
|
(52 |
) |
|
|
54 |
|
|
|
(87 |
) |
|
|
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operations |
|
|
2 |
|
|
|
11 |
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,434 |
|
|
$ |
4,497 |
|
|
$ |
(63 |
) |
|
$ |
129 |
|
|
$ |
(68 |
) |
|
$ |
(124 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Review
Total sales of $4,434 in the first six months of 2007 were $63 lower than in the comparable
period of 2006. Currency translation effects, primarily from a stronger euro, increased sales,
partially offsetting the lower sales due to divestitures and the overall organic sales decline
associated with reduced production levels in certain of our key markets. The 2006 acquisition of
the axle and driveshaft operations of our former Mexican joint venture provided additional sales in
2007. However, these higher sales were more than offset by the divestiture of our trailer axle
business in January 2007, which reduced sales for the first six months of 2007 by $87.
The first half of 2007 organic sales decline of 7.7% in North America reflects lower
production levels in both the light vehicle and commercial vehicle markets. North American light
truck production in the first six months of 2007 was down 2.2%, with the production levels of our
key platforms down about 2.7%. In the commercial vehicle market, production levels of Class 8
trucks were down 36% and medium-duty production was 17% lower. Partially offsetting the
production-
61
driven decreases was the impact of higher pricing from our reorganization initiatives of
about $73 as discussed in the Business Strategy section.
In Europe, the sales increase of $179 included a positive translation impact of $90 mostly
from a stronger euro. The organic increase of $112 was in large part due to strong production
levels in the off-highway market where we have a significant European presence and to contributions
from new business. The organic sales reduction in Asia Pacific was due primarily to the expiration
of an axle program in mid-2006 with a subsidiary of General Motors.
Business Segment Review
Most of our ASG segments were impacted negatively in the first six months of 2007 by the lower
production levels in the North American light vehicle market. The exception was our Axle segment
where higher sales from new business more than offset the impact from lower production levels.
Lower organic sales in the Driveshaft, Sealing and Thermal segments were due principally to lower
production levels. In Structures, the sales decline was due to lower production levels and to the
expiration of a frame program with Ford in 2006. ASG sales benefited by about $68 from the pricing
initiatives discussed in the Business Strategy section.
In the HVTSG, our Commercial Vehicle segment is heavily concentrated in the North American
market and the organic sales decline of 15% in this segment was primarily due to lower North
American production levels. Organic sales in the Off-Highway segment have benefited from stronger
production levels and sales from new programs. With its significant European presence, this
segments sales particularly benefited from the stronger euro.
62
The chart below shows our business unit and segment margin analysis for the six months ended
June 30, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a Percentage of Sales |
|
|
Increase / |
|
|
|
2007 |
|
|
2006 |
|
|
(Decrease) |
|
Gross margin: |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
5.1 |
% |
|
|
6.5 |
% |
|
|
(1.4 |
)% |
Axle |
|
|
1.6 |
|
|
|
1.8 |
|
|
|
(0.2 |
) |
Driveshaft |
|
|
6.3 |
|
|
|
11.2 |
|
|
|
(4.9 |
) |
Sealing |
|
|
13.6 |
|
|
|
15.1 |
|
|
|
(1.5 |
) |
Thermal |
|
|
10.4 |
|
|
|
17.0 |
|
|
|
(6.6 |
) |
Structures |
|
|
6.2 |
|
|
|
3.5 |
|
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
9.1 |
|
|
|
7.4 |
|
|
|
1.7 |
|
Commercial Vehicle |
|
|
5.3 |
|
|
|
3.9 |
|
|
|
1.4 |
|
Off-Highway |
|
|
11.9 |
|
|
|
11.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
3.0 |
% |
|
|
3.6 |
% |
|
|
(0.6 |
)% |
Axle |
|
|
2.1 |
|
|
|
2.4 |
|
|
|
(0.3 |
) |
Driveshaft |
|
|
2.0 |
|
|
|
2.3 |
|
|
|
(0.3 |
) |
Sealing |
|
|
6.5 |
|
|
|
6.5 |
|
|
|
|
|
Thermal |
|
|
4.9 |
|
|
|
3.7 |
|
|
|
1.2 |
|
Structures |
|
|
1.8 |
|
|
|
1.7 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
3.2 |
|
|
|
3.4 |
|
|
|
(0.2 |
) |
Commercial Vehicle |
|
|
3.6 |
|
|
|
3.3 |
|
|
|
0.3 |
|
Off-Highway |
|
|
2.3 |
|
|
|
2.7 |
|
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin less SG&A:* |
|
|
|
|
|
|
|
|
|
|
|
|
ASG |
|
|
2.1 |
% |
|
|
2.9 |
% |
|
|
(0.8 |
)% |
Axle |
|
|
(0.5 |
) |
|
|
(0.6 |
) |
|
|
0.1 |
|
Driveshaft |
|
|
4.3 |
|
|
|
8.9 |
|
|
|
(4.6 |
) |
Sealing |
|
|
7.1 |
|
|
|
8.6 |
|
|
|
(1.5 |
) |
Thermal |
|
|
5.5 |
|
|
|
13.3 |
|
|
|
(7.8 |
) |
Structures |
|
|
4.4 |
|
|
|
1.8 |
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVTSG |
|
|
5.9 |
|
|
|
4.0 |
|
|
|
1.9 |
|
Commercial Vehicle |
|
|
1.7 |
|
|
|
0.6 |
|
|
|
1.1 |
|
Off-Highway |
|
|
9.6 |
|
|
|
9.2 |
|
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
1.5 |
|
|
|
0.2 |
|
|
|
1.3 |
|
|
|
|
* |
|
Gross margin less SG&A is a non-GAAP financial measure derived by excluding realignment
charges, impairments and other income, net from the most closely related GAAP measure, which is
income from continuing operations before interest, reorganization items and income taxes. We
believe this non-GAAP measure is useful for an understanding of our ongoing operations because it
excludes other income and expense items which are generally not expected to be part of our ongoing
business. Certain reclassifications were made to conform 2006 to the 2007 reporting structures. |
In ASG, gross margin less SG&A declined from 2.9% in the first six months of 2006 to 2.1%
in the first six months of 2007. Each of the ASG segments except Axle experienced lower organic
sales as compared to 2006 mostly due to lower production levels. This lower volume of unit sales
without proportionate reduction in fixed costs reduced overall margins. In the Axle segment, net
margins as a percent of sales improved by 0.1% from the first half of 2006. Pricing actions
benefited margins by about $26. However, this benefit was largely offset by the adverse sales mix.
The higher sales were mostly on newer programs with lower overall margins. As such,
63
these sales
masked the sales reduction resulting from lower production levels on existing higher margin
programs. Gross margin less SG&A in the Driveshaft segment was
down significantly 4.6%. The
Mexican driveshaft operation that was acquired in mid-2006 generated losses of $6, in part due to
start up costs associated with the transition of business from the U.S. Additionally, costs in the
U.S. of closing Driveshafts Bristol, VA operation and transferring the business to Mexico added
another $2 of cost. This segment also sells to the commercial vehicle market, where production
levels were down more significantly than in the light vehicle market. Further adding to the mix
factor, margins on Driveshaft commercial vehicle sales are higher than on light vehicle sales.
Margins in the Driveshaft operations have also been negatively impacted by new program launch
costs, premium freight and other manufacturing inefficiencies. Partially offsetting the above margin reductions
in Driveshaft was pricing action improvement of $8. In the Sealing segment, the margin reduction
of 1.5% of sales was due principally to higher material costs for stainless steel and nickel.
Higher raw material costs, most notably aluminum, also reduced margins in our Thermal segment.
Margins in Thermal were also negatively impacted by the lower production levels, start-up costs
associated with a new operation in Hungary and some new program launch costs. The Structures
segment achieved year-over-year net margin improvement of 2.6%. More than offsetting the impact
from lower sales was $34 of increased margin from pricing improvement and $9 from one-time program
cost recoveries.
Gross margin less SG&A in HVTSG improved from 4.0% in the first six months of 2006 to 5.9% in
the first six months of 2007. Commercial Vehicle net margins as a percent of sales improved 1.1%
as the margin reduction associated with the lower production levels and loss of the trailer axle
business was more than offset by pricing improvement, lower material costs and reduced SG&A. Price
increases with certain major customers in this segment were implemented in the second half of 2006,
with additional pricing improvement from the reorganization actions discussed in the Business
Strategy section effectuated during this years first six months. The year-over-year margin
improvement from pricing amounted to $15. In the Off-Highway segment, the margin improvement of
0.4% of sales was due primarily to higher sales volume. Lower material costs improved margins, but
this was largely offset by higher warranty cost.
Corporate expenses and other costs not allocated to the business units reduced gross margins
less SG&A by 2.2% for the first six months of 2007 as compared to 3.7% in the same period in 2006,
thereby contributing to the 1.3% improvement in consolidated gross margin less SG&A. Year-to-date
2006 expenses included $11 of pension settlement cost triggered by high levels of lump sum pension
fund distributions and approximately $6 of higher costs associated with advisory and other fees
incurred in connection with the arrangement of replacement financing and other projects which were
discontinued with our bankruptcy filing in March 2006. The lower corporate and other expenses as a
percent of sales in 2007 also resulted from manpower, employee benefits, and other cost reductions
and net reductions to medical and long-term disability accruals in 2007.
Realignment charges
Realignment charges during the first six months of 2007 were primarily costs incurred in
connection with the continuing manufacturing footprint optimization
actions and $136 of costs
relating to settlement of pension obligations in the U.K., both of which are described in the
Business Strategy section.
64
Other income (expense)
The increase in other income is due primarily to currency transaction gains of $22 on foreign
currency denominated intercompany loans designated in 2007 for repayment in the near-term through
repatriation actions. Additionally, included in 2007 is $14 of gain from the sale of the trailer
axle business and an expense of $11 associated with settling a contractual matter with an investor
in one of our equity investments. See Note 17 to the financial
statements in Item 1 of Part I for additional components of other income.
Interest expense
As a result of our Chapter 11 reorganization process, a substantial portion of our debt
obligations are now subject to compromise. Effective with our filing for reorganization under
Chapter 11, interest expense is no longer accrued on these obligations. The post-filing interest
expense not recognized in the first six months of 2007 on these obligations amounted to $54,
compared to $35 not recognized for this period in 2006.
Reorganization items
Reorganization items are primarily expenses directly attributed to our Chapter 11
reorganization process. See Note 3 to our financial statements in Item 1 of Part I of this report
for a summary of these costs. Reorganization items recorded in the six months ended June 30, 2006
included debt valuation adjustments on pre-petition liabilities and underwriting fees related to
the DIP Credit Agreement that were one-time charges associated with the initial phase of the
reorganization. In the first half of 2007, in lieu of these one-time charges, the reorganization
items consisted primarily of higher ongoing professional advisory fees due to an increased level of
reorganization initiatives and the activities of the official committees appointed by the
Bankruptcy Court.
Income tax benefit (expense)
As a result of the significant amount of OCI reported for the six
months ended June 30, 2007, we recognized a U.S. tax benefit of $26 in continuing operations for
the same period. (See Note 16 for additional information regarding the determination of this
benefit.) The continuing inability to recognize tax benefits in the U.K. overshadowed this item as
the substantial operating loss in the U.K., which included the $136 of charges related to the
curtailment and subsequent settlement of pension plans, generated no tax effects. Accordingly, the
tax expense of $18 is significantly less than the $47 of expected benefit derived by applying a marginal
tax rate of 35%. The inability to recognize benefits in both the U.S.
and the U.K. in 2006 was the
primary reason that we recorded tax expense of $58 versus an expected benefit of $32 derived by
applying a marginal tax rate of 35% to a pre-tax loss from continuing
operations of $91 in the first half of 2006.
Discontinued Operations
In October 2005, our Board of Directors approved the divestiture of our engine hard parts,
fluid products and pump products operations and we started to report these businesses as
discontinued operations. The engine hard parts business was sold in March 2007, and the
fluid products hose and tubing business was sold in July and August 2007. We expect the
coupled fluid products business to be sold in the third quarter of 2007. We are continuing to
pursue the sale of our pump products business.
65
The net sales and the income (loss) from discontinued operations of these businesses for
the three and six months ended June 30, 2007 and 2006, aggregated by operating segment, are shown
in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
Sales |
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
ASG |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine |
|
$ |
6 |
|
|
$ |
175 |
|
|
$ |
130 |
|
|
$ |
354 |
|
Fluid |
|
|
134 |
|
|
|
127 |
|
|
|
238 |
|
|
|
248 |
|
Pump |
|
|
27 |
|
|
|
26 |
|
|
|
48 |
|
|
|
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Discontinued Operations |
|
$ |
167 |
|
|
$ |
328 |
|
|
$ |
416 |
|
|
$ |
653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
Net
income (loss) |
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
ASG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine |
|
$ |
(7 |
) |
|
$ |
(16 |
) |
|
$ |
(63 |
) |
|
$ |
(19 |
) |
Fluid |
|
|
1 |
|
|
|
8 |
|
|
|
(2 |
) |
|
|
(13 |
) |
Pump |
|
|
(18 |
) |
|
|
2 |
|
|
|
(15 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ASG |
|
|
(24 |
) |
|
|
(6 |
) |
|
|
(80 |
) |
|
|
(31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
(4 |
) |
|
|
9 |
|
|
|
(4 |
) |
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Discontinued Operations |
|
$ |
(28 |
) |
|
$ |
3 |
|
|
$ |
(84 |
) |
|
$ |
(18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Since October 2005, we have adjusted the underlying net assets of the discontinued
operations to their net fair value less cost to sell from time to time based on the profit outlook
for these businesses, discussions with potential buyers and other factors impacting expected sale
proceeds. Valuation adjustment charges for the six months ended June 30, 2007 of less than $1
relating to the fluid routing and pump businesses are reported as impairment. Valuation adjustment
charges of $28 were recorded in the first quarter of 2006. The 2007 net loss in Engine includes a
loss of $26 on the sale of the engine hard parts business. The second
quarter 2007 net loss in Pump includes a charge of $17 for settlement
of pension obligations in the U.K. (see Note 6).
Liquidity
During 2007, we have taken the following steps to ensure adequate liquidity for all of our
operations for the expected duration of the Chapter 11 proceedings, including the funding of our
restructuring initiatives.
|
|
|
Increased the size of our DIP Credit Agreement; |
|
|
|
|
Negotiated settlements with the Retiree Committee and the IAM related to postretirement, non-union benefits; |
|
|
|
|
Sold our interest in GETRAG; |
|
|
|
|
Sold our engine hard parts and a portion of our fluid products businesses; |
|
|
|
|
Sold our trailer axle business; and |
|
|
|
|
Established a $225 five-year accounts receivable securitization program with respect to
our European operations. |
66
As a result of these actions, we believe that our liquidity will be adequate to finance our
business through our emergence from bankruptcy.
The following table summarizes our global liquidity at June 30, 2007 (excluding the European
accounts receivable securitization program established in July 2007):
|
|
|
|
|
Cash |
|
$ |
1,001 |
|
Less: |
|
|
|
|
Deposits
supporting obligations |
|
|
(94 |
) |
Cash in less than wholly-owned subsidiaries |
|
|
(78 |
) |
|
|
|
|
Available cash |
|
|
829 |
|
Additional cash availability from: |
|
|
|
|
Lines of credit in the U.S. and Canada |
|
|
294 |
|
Letters of credit from these lines allowing
additional international borrowing |
|
|
43 |
|
|
|
|
|
Total global liquidity |
|
$ |
1,166 |
|
|
|
|
|
A summary of the changes in cash and cash equivalents for the six months ended June 30,
2007 and 2006 is shown in the following tables:
|
|
|
|
|
|
|
|
|
Cash flow summary: |
|
2007 |
|
|
2006 |
|
Cash and cash equivalents at beginning of period |
|
$ |
704 |
|
|
$ |
762 |
|
|
|
|
|
|
|
|
Cash provided by (used in) operating activities |
|
|
(152 |
) |
|
|
82 |
|
Cash provided by (used in) investing activities |
|
|
264 |
|
|
|
(118 |
) |
Cash provided by financing activities |
|
|
170 |
|
|
|
145 |
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
282 |
|
|
|
109 |
|
Impact of foreign exchange and discontinued operations |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
1,001 |
|
|
$ |
871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities: |
|
2007 |
|
|
2006 |
|
Net loss |
|
$ |
(225 |
) |
|
$ |
(154 |
) |
Depreciation and amortization |
|
|
139 |
|
|
|
135 |
|
Charges related to divestitures and asset sales |
|
|
(7 |
) |
|
|
46 |
|
Non-cash portion of U.K. pension charge |
|
|
60 |
|
|
|
|
|
Reorganization items, net |
|
|
7 |
|
|
|
45 |
|
Payments to VEBAs for postretirement benefits |
|
|
(27 |
) |
|
|
|
|
Other |
|
|
(35 |
) |
|
|
(39 |
) |
|
|
|
|
|
|
|
|
|
|
(88 |
) |
|
|
33 |
|
Decrease (increase) in working capital |
|
|
(64 |
) |
|
|
49 |
|
|
|
|
|
|
|
|
Cash flows provided by (used for) operating activities |
|
$ |
(152 |
) |
|
$ |
82 |
|
|
|
|
|
|
|
|
Cash of $152 was used by operating activities in the first six months of 2007 as compared
to cash of $82 provided in the same period of 2006. We typically experience an increase in working
capital during the first six months of the year due primarily to trade receivables being
customarily lower at the end of the calendar year as our OEM customers production levels are
lighter during the holiday season. During the first half of 2007, receivables, as expected,
increased by $223, which was one third of the increase in the first half of last year. The
increases in the first half of this year and last year were offset primarily by increases in
accounts payable, in part due to normal seasonality. The increase in payables during the first
half of 2006 was larger by about $133 as the bankruptcy filing in March 2006 precluded the payment
of a large portion of the pre-petition accounts payable.
Inventory used cash of $21 in 2007 versus providing cash of $1 in 2006.
Operating cash flow, exclusive of working capital, was lower in 2007 by $121, in large
part due to a payment of $93 to settle pension obligations in the U.K and $27 of payments to VEBAs
in connection with reorganization-related benefit reduction actions in
the U.S.
67
|
|
|
|
|
|
|
|
|
Investing activities: |
|
2007 |
|
|
2006 |
|
Purchases of property, plant and equipment |
|
$ |
(94 |
) |
|
$ |
(182 |
) |
Proceeds from sale of businesses |
|
|
305 |
|
|
|
|
|
Proceeds from sale of DCC assets and partnership interests |
|
|
109 |
|
|
|
11 |
|
Proceeds from sale of other assets |
|
|
7 |
|
|
|
28 |
|
Payments received on leases and loans |
|
|
7 |
|
|
|
6 |
|
Increase in restricted cash |
|
|
(88 |
) |
|
|
|
|
Other |
|
|
18 |
|
|
|
19 |
|
|
|
|
|
|
|
|
Cash flows provided by (used for) investing activities |
|
$ |
264 |
|
|
$ |
(118 |
) |
|
|
|
|
|
|
|
Divestitures of the engine hard parts business and the trailer axle business and the sale
of our investment in GETRAG provided cash of $305 in the first six months of 2007. Proceeds from
DCC investment-related actions generated $109. Expenditures for property, plant and equipment were
lower than last year in part due to timing. Capital investment in last years first six months was
higher because we had delayed some expenditures from the second half of 2005. Although we expect
the full year capital expenditures to be lower in 2007 than 2006, expenditures during the remainder
of the year are expected to be at higher levels than in the first half in line with new program and
manufacturing footprint optimization requirements. DCC cash is restricted by the Forbearance
Agreement discussed in Note 2 to our financial statements in Item 1, Part I, and increased by $88
from year-end. DCC pays the forbearing noteholders following the end of each quarter.
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
2007 |
|
|
2006 |
|
Net change in short-term debt |
|
$ |
(28 |
) |
|
$ |
(555 |
) |
Proceeds from debtor-in-possession facility |
|
|
200 |
|
|
|
700 |
|
Issuance (payment) of long-term debt |
|
|
|
|
|
|
7 |
|
Other |
|
|
(2 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
Cash flows provided by financing activities |
|
$ |
170 |
|
|
$ |
145 |
|
|
|
|
|
|
|
|
During the first six months of 2007, we borrowed an additional $200 under the DIP Credit
Agreement. We also borrowed GBP 35 ($67) under a short-term financing arrangement in the U.K. to
facilitate the restructuring of our pension obligations. The proceeds from this U.K. borrowing
were placed in escrow and were used to satisfy the settlement payment in April 2007.
During the second quarter of 2007, GBP 30 ($57) was repaid. In the first
six months of 2006, we borrowed $700 under the DIP Credit Agreement in connection with our
bankruptcy filing. These proceeds were used in part to repay obligations under our previous bank
facility and an accounts receivable securitization program.
Financing Activities
Cash and Cash Equivalents
At June 30, 2007, cash and cash equivalents held in the U.S. amounted to $378. Included in this
amount was $72 of cash deposits that provide credit enhancement for
certain lease agreements and support surety bonds that enable us to self-insure our workers compensation obligations in certain
states and fund an escrow account required to appeal a judgment rendered in Texas. Cash held by
DCC of $103 is restricted under the terms of the Forbearance Agreement discussed in Note 2 to our
financial statements in Item 1, Part I and is reported separately as restricted cash.
68
At June 30, 2007, cash and cash equivalents held outside the U.S. amounted to $623. Included
in this amount was $22 of cash deposits that provide credit enhancement for certain lease
agreements and support surety bonds that enable us to self-insure certain employee benefit
obligations. These deposits are not considered restricted cash as they could be replaced by
letters of credit under our DIP Credit Agreement (discussed in Note 13 to our financial statements
in Item 1, Part I). Availability at June 30, 2007 was adequate to cover the deposits for which
replacement by letters of credit is permitted.
A substantial portion of our non-U.S. cash and cash equivalents is needed for working capital
and other operating purposes. Several countries have local regulatory requirements that
significantly restrict the ability of the Debtors to access this cash. In addition, at June 30,
2007, $78 was held by consolidated entities that have minority interests with varying levels of
participation rights involving cash withdrawals. Beyond these restrictions, there are practical
limitations on repatriation of cash from certain countries because of the resulting tax cost.
Intercompany Loans
Certain of our international operations had intercompany loan obligations to the U.S. totaling
$615 at June 30, 2007. These intercompany loans resulted (i) from certain international operations
having received cash or other forms of financial support from the U.S. to finance their activities,
(ii) from U.S. entities transferring their ownership in certain entities in exchange for
intercompany notes, and (iii) from certain entities having declared a dividend in kind in the form
of a note payable. Debtor loans of $197 to our international operations denominated in foreign
currency are no longer considered permanently invested. Accordingly, foreign exchange gains on
losses on these loans are reported in other income (expense) rather than being recorded in
other comprehensive income as translation gain or loss.
European Accounts Receivable Securitization
In July 2007, certain European subsidiaries of Dana entered into definitive agreements to
establish a receivable securitization program. The agreements include a Receivables Loan Agreement
with GE Leveraged Loans Limited (GE) that provides for a five-year accounts receivable
securitization facility under which the euro equivalent of approximately $225 in financing will be
available to those European subsidiaries. The proceeds from the sales of the transferred
receivables will principally be reinvested in our European businesses, including the repayment of
intercompany debt.
DIP Credit Agreement
Dana Corporation, as borrower, and its Debtor subsidiaries, as guarantors, are parties to the
DIP Credit Agreement that was approved by the Bankruptcy Court in March 2006. Under the DIP Credit
Agreement, we currently have a $650 revolving credit facility and a $900 term loan facility. In
the first quarter of 2007, the original term loan facility was increased by $200 and we reduced the
original revolving credit facility by $100 to correspond with the lower availability in our
collateral base. For a discussion of the terms of the DIP Credit Agreement, see Note 10 to our
consolidated financial statements in Item 8 of our 2006 Form 10-K.
At June 30, 2007, we had borrowed $900 under the DIP Credit Agreement and, based on our
borrowing base collateral, had availability of $236 after deducting the $100 minimum availability
requirement and $237 for outstanding letters of credit. All obligations under the DIP Credit
Agreement will become due and payable no later than March 2008. We expect to
69
refinance these obligations as part of our plan of reorganization. However, since refinancing
these obligations on a long-term basis is not presently assured, we have classified the borrowings
under the DIP Credit Agreement as a current liability at June 30, 2007.
Canadian Credit Agreement
Dana Canada and certain of its Canadian affiliates are parties to the Canadian Credit
Agreement. The Canadian Credit Agreement provides for a $100 revolving credit facility, of which
$5 is available for the issuance of letters of credit. At June 30, 2007, $2 was utilized under the
facility for the issuance of letters of credit and there were no borrowings. Dana Canada must
maintain a minimum availability of $20 under the Canadian Credit Agreement. Based on Dana Canadas
borrowing base collateral, at June 30, 2007, it had availability of $58 after deducting the $20
minimum availability requirement and $2 for currently outstanding letters of credit.
United Kingdom Financing
In February 2007, we announced the restructuring of pension liabilities in the U.K. As a
result of the underlying agreement, we recorded $8 of pension curtailment cost as a realignment
charge in the first quarter of 2007. In April 2007, our U.K. subsidiaries settled their continuing
pension plan obligations through a cash payment of $93 and the transfer of a 33% equity interest in
our remaining U.K. axle and driveshaft operating businesses to the plan. Concurrent with the cash
payment and equity transfer, we recorded a pension settlement charge of $128 as a realignment
charge in continuing operations and $17 in discontinued operations for the portion of the charge
attributed to these businesses.
In connection with the restructuring of our U.K. pension obligations (see Note 6 to our
financial statements in Item 1 of Part I), we borrowed GBP 35 ($67) under a short-term interim bank
loan. As of June 30, 2007, a balance of GBP 5 ($10) remains outstanding.
Post-emergence Financing
On
August 1, 2007, the Bankruptcy Court entered an order
authorizing the Debtors to enter into a
series of related agreements consisting of (i) settlement agreements with the UAW and USW providing
terms for settling all outstanding issues between the Debtors and these unions related to the
Bankruptcy Cases; (ii) a Plan Support Agreement with these unions, Centerbridge, and certain of Danas unsecured creditors setting out the terms under which
these parties will support the Debtors plan of reorganization; and (iii) an Investment Agreement
between Dana, Centerbridge, and a Centerbridge affiliate providing for Centerbridge to purchase
$250 in Series A convertible preferred shares of reorganized Dana and qualified creditors of the
Debtors (i.e., creditors who meet specified criteria) to have an opportunity to purchase $500 in
Series B convertible preferred shares on a pro rata basis, with Centerbridge purchasing up to $250
in Series B preferred shares that are not purchased by the
qualified creditors. (See Note 19 to our financial statements in Item
1 of Part I for more information.) The proceeds from
the sale of the preferred shares will be used in part to fund the VEBA trusts that will be
established under the union settlement agreements. We have also agreed to file a plan of
reorganization with the Bankruptcy Court incorporating the union settlement agreements and the
foregoing equity investment commitments (or an alternative proposal acceptable to the UAW and USW)
by September 3, 2007. If we fail to do so, Centerbridge may terminate the Investment Agreement and
the unions may, under some circumstances, terminate the union settlement agreements or their
collective bargaining agreements. In addition, if our plan of reorganization does not become
effective by February
70
28, 2008, individual supporting creditors may withdraw their support and if it does not become
effective by May 1, 2008, the Plan Support Agreement will expire.
In addition, the Bankruptcy Court order authorizing our entry into these agreements
established a schedule and procedures under which we will consider potential alternatives to the
investments contemplated with Centerbridge under the Investment Agreement. The schedule
contemplates that any alternate investment proposals will be received and considered by specific
dates during August through October 2007.
Cash Obligations
We are obligated to make future cash payments in fixed amounts under various agreements.
These include payments under our long-term debt agreements, rent payments under operating lease
agreements and payments for equipment, other fixed assets and certain raw materials under purchase
agreements. In the second quarter of 2007, there were no significant changes in the cash
obligations reported in Item 7 of our 2006 Form 10-K.
Impact of Our Bankruptcy Filing
During our Chapter 11 reorganization proceedings, most actions against us relating to
pre-petition liabilities are automatically stayed. Substantially all of our pre-petition
liabilities will be addressed under our plan of reorganization or pursuant to orders of the
Bankruptcy Court.
Class Action Lawsuit and Derivative Actions
By order dated June 14, 2007 (as amended on June 18, 2007), the U.S. District Court for the
Northern District of Ohio denied lead plaintiffs motion in the consolidated securities class
action Howard Frank v. Michael J. Burns and Robert C. Richter for an order partially lifting the
statutory discovery stay which would have enabled the plaintiff to obtain copies of certain
documents produced to the SEC. The Court still has under consideration the defendants motion to
dismiss the Frank action. By order dated July 13, 2007, the Court dismissed the class action
claims asserted by the plaintiff in the shareholder derivative action Roberta Casden v. Michael J.
Burns, et al., and entered a judgment closing the case.
SEC Investigation
We are continuing to cooperate with the SEC in its investigation with respect to matters
related to the restatement of our financial statements for the first two quarters of 2005 and
fiscal years 2002 through 2004.
Legal Proceedings Arising in the Ordinary Course of Business
We are a party to various pending judicial and administrative proceedings arising in the
ordinary course of business. These include, among others, proceedings based on product liability
claims and alleged violations of environmental laws. We have reviewed these pending legal
proceedings, including the probable outcomes, our reasonably anticipated costs and expenses, the
availability and limits of our insurance coverage and surety bonds and our established reserves for
uninsured liabilities. We do not believe that any liabilities that may result from these
proceedings are reasonably likely to have a material adverse effect on our liquidity, financial
condition or results of operations.
71
Asbestos-Related Product Liabilities
We had approximately 72,000 active pending asbestos-related product liability claims at June
30, 2007, including approximately 6,000 claims that were settled but awaiting final documentation
and payment. We project costs for asbestos-related product liability claims using the methodology
that is discussed in Note 17 to our consolidated financial statements in Item 8 of our 2006 Form
10-K. We had accrued $138 for indemnity and defense costs for pending and future claims at June
30, 2007.
Prior to 2006, we reached agreements with some of our insurers to commute policies covering
asbestos-related product liability claims. There were no commutations of insurance in the second
quarter of 2007. At June 30, 2007, our liability for future demands under prior commutations was
$11, bringing our total recorded liability for asbestos-related product liability claims to $149.
At June 30, 2007, we had recorded $71 as an asset for probable recovery from our insurers for
pending and projected asbestos-related product liability claims. The recorded asset does not
represent the limits of our insurance coverage, but rather the amount we would expect to recover if
we paid the accrued indemnity and defense costs.
In addition, we had a net amount recoverable from our insurers and others of $17 at June 30,
2007. The recoverable represents reimbursements for settled asbestos-related product liability
claims, including billings in progress and amounts subject to alternate dispute resolution
proceedings with some of our insurers.
Other Product Liabilities
We had accrued $10 for non-asbestos product liabilities at June 30, 2007, with no recovery
expected from third parties. We estimate these liabilities based on assumptions about the value of
the claims and about the likelihood of recoveries against us derived from our historical experience
and current information.
Environmental Liabilities
We had accrued $59 for environmental liabilities at June 30, 2007. We estimate these
liabilities based on the most probable method of remediation, current laws and regulations and
existing technology. Our estimates are made on an undiscounted basis and exclude the effects of
inflation. If there is a range of equally probable remediation methods or outcomes, we accrue the
lower end of the range. The difference between our minimum and maximum estimates for these
liabilities was $1 at June 30, 2007. Included in this accrual are amounts relating to the Hamilton
Avenue Industrial Park site in New Jersey, where we are one of four potentially responsible parties
under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund).
72
Other Liabilities Related to Asbestos Claims
After the Center for Claims Resolution (CCR) discontinued negotiating shared settlements for
asbestos claims for its member companies in 2001, some former CCR members defaulted on the payment
of their shares of some settlements and some settling claimants sought payment of the unpaid shares
from other members of the CCR at the time of the settlements, including Dana. Through June 30,
2007, we had paid $47 to such claimants and collected $29 from our insurance carriers with respect
to these claims. At June 30, 2007, we had a net receivable of $13 for the amount that we expect to
recover from available insurance and surety bonds relating to these claims. We are continuing to
pursue insurance collections with respect to such claims paid prior to the Filing Date.
Assumptions Regarding Asbestos-Related Liabilities
The amounts we have recorded for asbestos-related liabilities and recoveries are based on
assumptions and estimates reasonably derived from our historical experience and current
information. The actual amount of our liability for asbestos-related claims and the effect on us
could differ materially from our current expectations if our assumptions about the outcome of the
pending unresolved asbestos-related product liability claims, the volume and outcome of projected
future asbestos-related product liability claims, the outcome of claims relating to the
CCR-negotiated settlements, the costs to resolve these claims, or the amount of available
insurance and surety bonds prove to be incorrect, or if U.S. federal legislation impacting asbestos
personal injury claims is enacted. Although we have projected our liability for future
asbestos-related product liability claims based upon historical trend data that we consider to be
reliable, there is no assurance that our actual liability will not differ from what we currently
project.
Critical Accounting Estimates
Except as discussed below, our critical accounting estimates for purposes of the financial
statements in this report are the same as those discussed in Item 7 of our 2006 Form 10-K.
Tax Rates
For purposes of preparing our interim financial statements, we utilize an estimated annual
effective tax rate for ordinary items that is re-evaluated each period based on changes in the
components used to determine the annual effective rate.
Retiree Benefits
Under SFAS No. 158, we record on the balance sheet any unfunded liabilities associated with
defined benefit pension and other postretirement obligations, as well as any assets exceeding plan
obligations.
We use several key assumptions to determine our obligations, funding requirements and expense
for our defined benefit retirement plans. These key assumptions include the long-term estimated
rate of return on plan assets and the interest rate used to discount the pension obligations. In
connection with amending our pension plans for U.S. non-union employees during the second quarter
of 2007, we remeasured the assets and liabilities of these plans using updated assumptions. Our
assumptions for other plans were last revised in December 2006.
73
Expense of medical and life insurance benefits provided to U.S. retired employees under
postretirement benefit plans will also be impacted by changes in our assumptions. The discount
rate used to value these liabilities at the end of 2006 was 5.86%.
Two actions necessitated the remeasurement of U.S. postretirement medical benefits the
elimination of retiree medical benefits for non-union employees on March 31, 2007 and the agreement
with the Retirement Committee on behalf of U.S. non-union retirees in
May 2007, which eliminated
postretirement medical benefits in exchange for funding a retiree-sponsored VEBA. The discount
rate used for remeasurement was 5.9%.
As discussed in the Business Strategy section, we have reached agreements with our U.S.
union employees on similar actions to utilize union-sponsored VEBAs to eliminate postretirement
medical benefits and to freeze future benefit accruals under defined benefit pension plans. While
approved by the Bankruptcy Court by an order entered on August 1, 2007, these actions will generally not be effective
until our emergence from bankruptcy. As such, we do not expect to remeasure the assets and
liabilities associated with these plans until emergence from bankruptcy.
Our international defined benefit pension plans and postretirement benefit programs cover
substantially fewer employees and the impact of changes in key assumptions would not be of the same
magnitude as that on the domestic plans. The ultimate impact on our financial condition and
results of operations of estimates used in valuing the U.S. and international pension and
postretirement programs will depend on the actual assumptions used for interest rates, discount
rates, health care trend rates, and other factors.
Long-lived Asset and Goodwill Impairment
We perform periodic impairment analyses on our long-lived assets (such as property, plant and
equipment, carrying amount of investments, and goodwill) whenever events and circumstances indicate
that the carrying amount of such assets may not be recoverable. The recoverability of long-lived
assets is determined by comparing the forecasted undiscounted net cash flows of the operations to
which the assets relate to their carrying amount. If the operation is determined to be unable to
recover the carrying amount of its assets, the long-lived assets (excluding goodwill) are written
down to fair value, as determined based on discounted cash flows or other methods providing best
estimates of value. In assessing the recoverability of goodwill recorded by a reporting unit, we
make projections regarding estimated future cash flows and other factors affecting the fair value
of the reporting unit. By their nature, these assessments require significant estimates. Since
the assessment completed in connection with the filing of our financial statements on 2006 Form
10-K, there have not been any significant events or developments requiring additional assessment.
Asset impairments often result from significant actions like the discontinuance of customer
programs and facility closures. In the Business Strategy section, we discuss a number of
reorganization initiatives that are in process or planned, which include customer program
evaluations and manufacturing footprint assessments. While at present no final decisions have been
made which require further asset impairment recognition, future decisions in connection with the
reorganization initiatives could result in future asset impairment losses.
Impairments are possible if there is significant deterioration in our projected cash flows.
Our cash flows could be reduced due to customer production cutbacks, our inability to increase
prices to customers or reduce prices from suppliers or delays in implementing cost reduction and
operating efficiencies. Our Axle and Structures segments in ASG have significant business with
74
domestic
automobile manufacturers and are presently at the greatest risk of future impairment of
their long-lived assets should they be unable to meet their forecasted cash flow targets.
Liabilities Subject to Compromise
Pre-petition
obligations relating to matters such as contract disputes, litigation and environmental
remediation are evaluated to determine whether a potential liability is probable. If probable, an
assessment, based on all information then available, is made of whether the potential liability is
estimable. A liability is recorded when it is both probable and
estimable. In a case where there is a range of
estimates which are equally probable, a liability is generally recorded using the low end of the
range of estimates. In connection with the bankruptcy reorganization process, there are attempts
to settle claims relating to these pre-petition matters. As such, the likelihood of settlement and
potential settlement outcomes are considered in evaluating whether potential obligations are
probable and estimable.
75
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various types of market risks, including fluctuations in foreign currency
exchange rates, adverse movements in commodity prices for products we use in our manufacturing and
adverse changes in interest rates. To reduce our exposure to these risks, we maintain risk
management controls to monitor these risks and take appropriate actions to attempt to mitigate such
risks. There have been no material changes to the market risk exposures discussed in Item 7A of
our 2006 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the
information disclosed in the reports we file with the SEC under the Securities Exchange Act of
1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.
Based on the continued existence of the material weaknesses discussed in Item 9A of our 2006
Form 10-K, management, including our CEO and CFO, has concluded that our disclosure controls and
procedures were not effective as of June 30, 2007.
For more information about the material weaknesses, their impact on our disclosure controls
and procedures and our internal control over financial reporting, and the actions we have taken or
are planning to take to remediate them, see Item 9A of our 2006 Form 10-K and Item 4 of our first
quarter 2007 Form 10-Q. In addition, as described in Note 16 to the financial
statements in Item 1 of Part I, we reported two out-of-period
adjustments related to income taxes. Management has concluded that
the material weakness described in our Annual Report on Form 10-K for
the year ended December 31, 2006 related to effective controls around
the completeness and accuracy of certain accruals also extends to
income tax accruals.
Changes in Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance
with GAAP.
With the participation of our CEO and CFO, our management evaluates any changes in our
internal control over financial reporting that occurred during each fiscal quarter that materially
affected, or are reasonably likely to affect, such internal control.
During the second quarter of 2007, we took the following actions. Management believes that
these changes have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
|
|
|
In continuing to strengthen our financial and accounting organizations ability
to support our financial accounting and reporting needs, we: |
|
|
|
Conducted separate multi-day controllers meetings in North and South America
focusing on US GAAP accounting (including specific topics such as revenue recognition,
fixed assets and contingencies), internal controls and accounting for |
76
|
|
|
certain key financial transactions (such as asset impairment, inventory valuation and
account reconciliation). |
|
|
|
|
Updated and communicated enhanced corporate policies and procedures
regarding account reconciliations and inventory accounting. |
|
|
|
|
Reduced the number of open financial positions, and maintained vigorous
recruiting and hiring efforts in spite of an extremely challenging environment. |
|
|
|
|
Made significant progress toward consolidating numerous business processes,
such as billing, accounts payable, inventory costing and general accounting, in HVTSG in North America. |
|
|
|
|
Made progress towards the consolidation of the accounts
payable process within ASG in North America. |
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Continued to use qualified supplemental resources in specific corporate accounting areas. |
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To increase our monitoring of our overall financial and information technology control environment, we: |
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Shortened the criteria for the timeliness of control deficiency remediation to 30 days. |
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Implemented criteria to evaluate the quality of key financial controls and
personnel (including account reconciliations, control ownership compliance and
financial account analysis). |
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Improved the manner by which we monitor control deficiencies and remediation
efforts, including timeliness. |
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In addressing our ability to improve our segregation of duties over
financial transaction processes, we developed, and are utilizing as part of the
internal audit process, programs to evaluate potential segregation of duties conflicts
for the major North American critical business application systems. |
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|
Additionally, we fully implemented the enhanced Standards of Business Conduct,
which was revised during the first quarter 2007. |
Turnover in our Finance and Information Technology functions, which we attribute to the
uncertainty surrounding the reorganization process, continued in the second quarter of 2007. We
are addressing the situation through reassignment of internal resources, recruitment of additional
qualified personnel and the utilization of temporary resources.
CEO and CFO Certifications
The Certifications of our CEO and CFO that are attached to this report as Exhibits 31-A and
31-B include information about our disclosure controls and procedures and internal control over
financial reporting. These Certifications should be read in conjunction with the information
contained in this Item 4 and in Item 9A of our 2006 Form 10-K and Item 4 of our first quarter 2007
Form 10-Q for a more complete understanding of the matters covered by the Certifications.
77
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Dana Corporation and forty of its wholly owned subsidiaries are operating under Chapter 11 of
the Bankruptcy Code. Under the Bankruptcy Code, the filing of the petitions for reorganization
automatically stayed most actions against the Debtors, including most actions to collect on
pre-petition indebtedness or to exercise control over the property of the bankruptcy estates.
Substantially all of our pre-petition liabilities will be addressed under our plan of
reorganization, if not otherwise addressed pursuant to orders of the Bankruptcy Court.
As discussed in Note 14 to our financial statements in Item 1 of Part I, our CEO and former
CFO are parties to a pending pre-petition securities class action and we are a party to various
pending judicial and administrative proceedings that arose in the ordinary course of business
(including both pre-petition and subsequent proceedings). We are also cooperating with a formal
investigation by the SEC with respect to matters related to the restatement of our financial
statements for the first two quarters of 2005 and fiscal years 2002 through 2004.
After reviewing the currently pending lawsuits and proceedings (including the probable
outcomes, reasonably anticipated costs and expenses, availability and limits of our insurance
coverage and surety bonds and our established reserves for uninsured liabilities), we do not
believe that any liabilities that may result are reasonably likely to have a material adverse
effect on our liquidity, financial condition or results of operations.
ITEM 1A. RISK FACTORS
We discussed a number of risk factors that could adversely affect our business, financial
condition and results of operations in Item 1A of our 2006 Form 10-K. There have been no material
changes in most of the risk factors previously disclosed.
However, two previously reported risks have diminished or been eliminated:
|
|
|
We have substantially completed the divestiture of our non-core fluid products
business and there is little risk that we will not complete the remainder of this
divestiture. We are continuing to pursue the sale of our non-core pump products business
and, while there is no assurance that we will be successful in this endeavor, we would
not expect our profitability and cash flow to be materially impacted if we do not
complete the sale of this business. |
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|
The settlement agreements with the IAM, the UAW and the USW that are discussed
elsewhere in this report (the latter two of which are conditioned upon the timely
filing and confirmation of our plan of reorganization and our timely emergence from
bankruptcy) will, if implemented, resolve our collective bargaining and cost savings
issues with our U.S. unionized employees. Although we expect to obtain the above
benefits from the union settlement agreements, under certain circumstances involving
termination of the Centerbridge investment commitments, these agreements may not be implemented.
While we have not yet commenced negotiations with our Canadian unionized employees, we
expect to be able to renegotiate our Canadian collective bargaining agreements on
satisfactory terms. |
78
In addition, in the second quarter of 2007, we identified a new bankruptcy-related risk
factor:
|
|
|
Our emergence from bankruptcy may be jeopardized if we are unable to file and obtain
confirmation of our plan of reorganization on the timetable that we currently anticipate |
|
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|
We have agreed to file a plan of reorganization with the Bankruptcy Court that comports with
the requirements of the Bankruptcy Code and incorporates the union settlement agreements and
the equity investment commitments (or an alternative proposal acceptable to the UAW and USW) discussed
in Notes 2 and 19 to our financial statements in Item 1 of Part I and in the MD&A in Item 2
of Part I by September 3, 2007, the deadline for our period of exclusivity to file a plan of
reorganization. If we fail to do so, Centerbridge may terminate the Investment Agreement
and the unions may, under some circumstances, terminate the union settlement agreements or
their collective bargaining agreements. In addition, after the exclusivity period, other
parties may file plans of reorganization for the Debtors. If our plan of reorganization
does not become effective by February 28, 2008, individual supporting creditors may withdraw
their support and if it does not become effective by May 1, 2008, the Plan Support Agreement
will expire. |
ITEM 6. EXHIBITS
The Exhibits listed in the Exhibit Index are filed or furnished with this report.
79
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Dana Corporation |
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(Registrant) |
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Date: August 9, 2007
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/s/ Kenneth A. Hiltz
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Kenneth A. Hiltz |
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Chief Financial Officer |
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80
EXHIBIT INDEX
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Exhibit No. |
|
Description |
|
Method of Filing or Furnishing |
|
|
|
|
|
10-W
|
|
Agreement to Purchase
Assets and Stock by and
between Orhan Holding,
A.S. and Dana Corporation,
dated as of March 28, 2007
|
|
Filed with this report |
|
|
|
|
|
10-W(1)
|
|
First Amendment to
Agreement to Purchase
Assets and Stock by and
between Orhan Holding,
A.S. and Dana Corporation,
dated as of June 5, 2007
|
|
Filed with this report |
|
|
|
|
|
10-X
|
|
Asset Purchase Agreement
by and between Coupled
Products Acquisition LLC
and Dana Corporation,
dated as of May 28, 2007
|
|
Filed with this report |
|
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|
10-Y
|
|
Executive Bonus Agreement
between Dana Corporation
and Ralf Gõttel, entered
into on June 14, 2007
|
|
Filed with this report |
|
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|
|
|
10-Z(1)
|
|
Receivables Loan Agreement
dated 18 July 2007,
between Dana Europe
Financing (Ireland)
Limited, as Borrower; Dana
International Luxembourg
SARL, as Servicer and as
Performance Undertaking
Provider; the persons from
time to time party thereto
as Lenders; and GE
Leveraged Loans Limited,
as Administrative Agent
|
|
Filed with this report |
|
|
|
|
|
10-Z(2)
|
|
Master Schedule of
Definitions,
Interpretation and
Construction dated 18 July
2007, between Dana Europe
Financing (Ireland)
Limited; Dana
International Luxembourg
SARL; the Originators; GE
Leveraged Loans Limited;
GE FactorFrance SNC; Dana
Europe S.A., the Lenders;
and certain other parties
|
|
Filed with this report |
|
|
|
|
|
10-Z(3)
|
|
Performance and Indemnity
Deed dated 18 July 2007,
between Dana International
Luxembourg SARL, as
Performance Undertaking
Provider; the Intermediate
Transferor; Dana Europe
Financing (Ireland)
Limited, as Borrower; GE
Leveraged Loans Limited,
as Administrative Agent;
and other secured parties
|
|
Filed with this report |
|
|
|
|
|
31-A
|
|
Rule 13a-14(a)/15d-14(a)
Certification by Chief
Executive Officer
|
|
Filed with this report |
|
|
|
|
|
31-B
|
|
Rule 13a-14(a)/15d-14(a)
Certification by Chief
Financial Officer
|
|
Filed with this report |
81
|
|
|
|
|
Exhibit No. |
|
Description |
|
Method of Filing or Furnishing |
|
|
|
|
|
32
|
|
Section 1350 Certifications
|
|
Furnished with this report |
82
EX-10(W)
Exhibit 10-W
AGREEMENT TO PURCHASE ASSETS AND STOCK
by and between
ORHAN HOLDING, A.S.,
and
DANA CORPORATION
Dated as of March 28, 2007
TABLE OF CONTENTS
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Page |
ARTICLE I THE PURCHASE AND SALE |
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3 |
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Section 1.1. Purchasers and Sellers |
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3 |
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Section 1.2. Purchase and Sale of Shares |
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4 |
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Section 1.3. Purchase and Sale of the Purchased Assets |
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4 |
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Section 1.4. Excluded Assets |
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5 |
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Section 1.5. Assumed Liabilities in respect of Purchased Assets |
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7 |
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Section 1.6. Excluded Liabilities in respect of Purchased Assets |
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9 |
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Section 1.7. Product Liability, Recall and Warranty Claims, Legal Proceedings |
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10 |
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ARTICLE II CONSIDERATION |
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11 |
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Section 2.1. Amount and Form of Consideration |
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11 |
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Section 2.2. Payment of Cash Consideration |
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12 |
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Section 2.3. Post-Closing Adjustment |
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12 |
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Section 2.4. Allocation of Consideration |
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15 |
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ARTICLE III THE CLOSING |
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15 |
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Section 3.1. Closing Date |
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15 |
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Section 3.2. Deliveries by Sellers to Purchasers |
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16 |
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Section 3.3. Deliveries by Purchasers to Sellers |
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16 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS |
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16 |
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Section 4.1. Organization and Qualification |
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16 |
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Section 4.2. Capital Structure of Non-JV Acquired Companies; Transferred JV Interests |
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17 |
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Section 4.3. [Intentionally Omitted] |
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18 |
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Section 4.4. Corporate Authorization |
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18 |
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Section 4.5. Consents and Approvals |
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18 |
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Section 4.6. Non-Contravention |
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19 |
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Section 4.7. Binding Effect |
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19 |
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Section 4.8. Financial Statements |
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19 |
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Section 4.9. Taxes |
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20 |
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Section 4.10. Real Property |
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21 |
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Section 4.11. Tangible Personal Property |
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22 |
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Section 4.12. Intellectual Property |
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22 |
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Section 4.13. Contracts |
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23 |
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Section 4.14. Employee Benefits |
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25 |
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Section 4.15. Labor |
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27 |
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Section 4.16. Litigation |
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28 |
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Section 4.17. Compliance with Laws |
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28 |
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Section 4.18. Environmental Matters |
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28 |
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i
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Page |
Section 4.19. Ownership of Necessary Assets and Rights |
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29 |
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Section 4.20. Brokers |
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29 |
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Section 4.21. Disclaimers of Sellers |
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30 |
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Section 4.22. Information Systems |
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30 |
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Section 4.23. Insurance Coverage |
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31 |
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Section 4.24. Conveyance; Free and Clear |
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31 |
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Section 4.25. No Material Misstatements |
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31 |
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Section 4.26. No Other Representations or Warranties |
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32 |
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASERS |
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32 |
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Section 5.1. Organization and Qualification |
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32 |
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Section 5.2. Corporate Authorization |
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32 |
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Section 5.3. Consents and Approvals |
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33 |
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Section 5.4. Non-Contravention |
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33 |
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Section 5.5. Binding Effect |
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33 |
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Section 5.6. Litigation |
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33 |
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Section 5.7. Financing |
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34 |
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Section 5.8. Brokers |
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34 |
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Section 5.9. No Inducement or Reliance; Independent Assessment |
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34 |
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ARTICLE VI COVENANTS OF SELLERS |
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35 |
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Section 6.1. Access, Further Actions |
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35 |
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Section 6.2. Conduct of FPG Business |
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36 |
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Section 6.3. Bankruptcy Actions |
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37 |
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Section 6.4. Regulatory Approvals |
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37 |
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Section 6.5. Assignment of Contracts |
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38 |
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Section 6.6. Updating of Information |
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38 |
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Section 6.7. Intercompany Accounts |
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39 |
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Section 6.8. Nobel Iberica and Nobel Receivables |
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39 |
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Section 6.9. NMD Joint Venture Interest |
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39 |
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Section 6.10. China FPG Initiative |
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39 |
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ARTICLE VII COVENANTS OF PURCHASERS |
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40 |
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Section 7.1. Contact with Customers, Suppliers and Employees |
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40 |
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Section 7.2. Cure of Defaults |
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40 |
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Section 7.3. Bankruptcy Actions |
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40 |
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Section 7.4. Consents, Conditions, Antitrust and Competition |
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40 |
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Section 7.5. Further Actions |
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42 |
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Section 7.6. Guarantees; Letters of Credit |
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42 |
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Section 7.7. Use of Sellers Name |
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42 |
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ARTICLE VIII CONDITIONS PRECEDENT TO PURCHASERS OBLIGATIONS |
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43 |
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Section 8.1. Accuracy of Representations and Warranties |
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43 |
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ii
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Page |
Section 8.2. Performance of Covenants |
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44 |
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Section 8.3. Antitrust and Competition Laws |
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44 |
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Section 8.4. No Injunctions |
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44 |
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Section 8.5. Entry of Orders By Bankruptcy Court; Consents Obtained |
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44 |
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Section 8.6. Consents |
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44 |
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Section 8.7. Officers Certificate |
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44 |
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Section 8.8. Material Adverse Effect |
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45 |
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Section 8.9. Selling Affiliates |
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45 |
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Section 8.10. Other Deliveries |
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45 |
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Section 8.11. Other Conditions |
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45 |
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ARTICLE IX CONDITIONS PRECEDENT TO SELLERS OBLIGATIONS |
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45 |
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Section 9.1. Accuracy of Representations and Warranties |
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45 |
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Section 9.2. Performance of Covenants |
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45 |
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Section 9.3. Antitrust and Competition Laws |
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45 |
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Section 9.4. No Injunctions |
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46 |
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Section 9.5. Entry of Orders By Bankruptcy Court |
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46 |
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Section 9.6. Officers Certificate |
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46 |
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Section 9.7. Other Deliveries |
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46 |
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ARTICLE X EMPLOYEES |
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46 |
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Section 10.1. Transferred Employees |
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46 |
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Section 10.2. Seller Benefits Plans |
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50 |
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Section 10.3. Acquired Company Benefit Plans |
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51 |
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Section 10.4. Non-U.S. Employee Matters |
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51 |
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ARTICLE XI POST CLOSING COVENANTS |
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51 |
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Section 11.1. Further Assurances; Further Conveyances and Assumptions; Consent of Third Parties |
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51 |
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Section 11.2. Record Retention, Access to Documents and Cooperation |
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53 |
|
Section 11.3. Noncompetition |
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53 |
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Section 11.4. Transition Services |
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53 |
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ARTICLE XII SURVIVAL, INDEMNIFICATION AND RELATED MATTERS |
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54 |
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Section 12.1. Survival |
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54 |
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Section 12.2. Indemnification |
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55 |
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Section 12.3. Limitations on Amount Seller |
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56 |
|
Section 12.4. Procedures for Indemnification |
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56 |
|
Section 12.5. Certain North American Real Property Environmental Matters |
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57 |
|
Section 12.6. Exclusive Remedy |
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59 |
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ARTICLE XIII NONSOLICITATION; STANDSTILL |
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|
59 |
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Section 13.1. Nonsolicitation of Purchaser Employees |
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59 |
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iii
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Page |
Section 13.2. Nonsolicitation of Seller Employees |
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59 |
|
Section 13.3. Standstill |
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60 |
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Section 13.4. Remedies |
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60 |
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ARTICLE XIV TERMINATION |
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60 |
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Section 14.1. Termination |
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60 |
|
Section 14.2. Effect of Termination |
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61 |
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ARTICLE XV TAX MATTERS |
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63 |
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Section 15.1. Tax Indemnification |
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63 |
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Section 15.2. Preparation and Filing of Tax Returns |
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64 |
|
Section 15.3. Refunds, Credits and Carrybacks |
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65 |
|
Section 15.4. Tax Contests |
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65 |
|
Section 15.5. Cooperation |
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66 |
|
Section 15.6. Timing Differences |
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67 |
|
Section 15.7. Tax Treatment of Indemnification Payments |
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67 |
|
Section 15.8. Additional Tax Covenants |
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68 |
|
Section 15.9. Transfer Taxes |
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68 |
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Section 15.10. Other Agreements |
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69 |
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ARTICLE XVI DEFINITIONS AND TERMS |
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|
69 |
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Section 16.1. Acquired Companies |
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69 |
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Section 16.2. Acquired Company Benefit Plans |
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69 |
|
Section 16.3. Acquired Company Employee |
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69 |
|
Section 16.4. Acquired Company Intellectual Property |
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70 |
|
Section 16.5. Acquired Intellectual Property |
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70 |
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Section 16.6. Affiliate |
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70 |
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Section 16.7. Agreement |
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70 |
|
Section 16.8. Alternative Transaction |
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70 |
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Section 16.9. Approval Order |
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70 |
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Section 16.10. Asset Selling Entity |
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70 |
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Section 16.11. Assignment and Assumption Agreement |
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70 |
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Section 16.12. Assumed Liabilities |
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70 |
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Section 16.13. Assumed Retention Agreements |
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71 |
|
Section 16.14. Bankruptcy Code |
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71 |
|
Section 16.15. Bankruptcy Court |
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71 |
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Section 16.16. Bankruptcy Court Orders |
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71 |
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Section 16.17. Bidding Procedures Order |
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71 |
|
Section 16.18. Bill of Sale |
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71 |
|
Section 16.19. Breakup Fee |
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71 |
|
Section 16.20. Business Day |
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71 |
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Section 16.21. Business Employee |
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71 |
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Section 16.22. Carveout |
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72 |
|
Section 16.23. Case |
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72 |
|
iv
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Page |
Section 16.24. CERCLA |
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72 |
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Section 16.25. Chapter 11 Expenses |
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72 |
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Section 16.26. China Subsidiary |
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72 |
|
Section 16.27. Chosen Court |
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72 |
|
Section 16.28. Closing |
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72 |
|
Section 16.29. Closing Claims Schedule |
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72 |
|
Section 16.30. Closing Date |
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73 |
|
Section 16.31. Closing Date Employees |
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73 |
|
Section 16.32. Closing European Net Working Assets |
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73 |
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Section 16.33. Closing NA Net Working Assets |
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73 |
|
Section 16.34. Closing Statement of European Net Assets |
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73 |
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Section 16.35. Closing Statement of NA Net Assets |
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73 |
|
Section 16.36. Closing Statement of Net Assets |
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73 |
|
Section 16.37. COBRA |
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73 |
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Section 16.38. Code |
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73 |
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Section 16.39. Contract |
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73 |
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Section 16.40. Cure Costs |
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73 |
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Section 16.41. Current Employees |
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74 |
|
Section 16.42. Dana |
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74 |
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Section 16.43. Dana Defined Contribution Plan |
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|
74 |
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Section 16.44. Dana Retirement Plan |
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74 |
|
Section 16.45. Debtor Asset Selling Entities |
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|
74 |
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Section 16.46. Debtor Contracts |
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74 |
|
Section 16.47. Debtors |
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74 |
|
Section 16.48. Deposit Agent |
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|
74 |
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Section 16.49. Deposit Agreement |
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|
74 |
|
Section 16.50. Deposit Amount |
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|
74 |
|
Section 16.51. DSE |
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|
74 |
|
Section 16.52. EC Regulation |
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|
75 |
|
Section 16.53. EFMG |
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|
75 |
|
Section 16.54. Employee Benefit Plans |
|
|
75 |
|
Section 16.55. Environment |
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|
75 |
|
Section 16.56. Environmental Assessments |
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|
75 |
|
Section 16.57. Environmental Law |
|
|
75 |
|
Section 16.58. ERISA |
|
|
76 |
|
Section 16.59. European Lower Range |
|
|
76 |
|
Section 16.60. European Upper Range |
|
|
76 |
|
Section 16.61. Excluded Assets |
|
|
76 |
|
Section 16.62. Excluded Intellectual Property |
|
|
76 |
|
Section 16.63. Excluded Liabilities |
|
|
76 |
|
Section 16.64. Excluded Taxes |
|
|
76 |
|
Section 16.65. Existing Inventory |
|
|
77 |
|
Section 16.66. Final Cash Consideration |
|
|
77 |
|
Section 16.67. Final Consideration |
|
|
77 |
|
Section 16.68. Final Order |
|
|
77 |
|
Section 16.69. Financial Statements |
|
|
77 |
|
v
|
|
|
|
|
|
|
Page |
Section 16.70. FPG Business |
|
|
77 |
|
Section 16.71. French Consolidated Tax Group Exit Agreement |
|
|
77 |
|
Section 16.72. GAAP |
|
|
77 |
|
Section 16.73. Governmental Body |
|
|
78 |
|
Section 16.74. Guarantees |
|
|
78 |
|
Section 16.75. Hazardous Material |
|
|
78 |
|
Section 16.76. HSR Act |
|
|
78 |
|
Section 16.77. H&T |
|
|
78 |
|
Section 16.78. Income Tax |
|
|
78 |
|
Section 16.79. Indebtedness |
|
|
78 |
|
Section 16.80. Indemnified Party |
|
|
79 |
|
Section 16.81. Indemnifying Party |
|
|
79 |
|
Section 16.82. Independent Auditors |
|
|
79 |
|
Section 16.83. Initial Cash Consideration |
|
|
79 |
|
Section 16.84. Initial Consideration |
|
|
79 |
|
Section 16.85. Intellectual Property |
|
|
79 |
|
Section 16.86. Intellectual Property Assignment |
|
|
80 |
|
Section 16.87. IP License |
|
|
80 |
|
Section 16.88. Joint Venture Agreements |
|
|
80 |
|
Section 16.89. Joint Venture Interest Transfer Agreement |
|
|
80 |
|
Section 16.90. JV Acquired Companies |
|
|
80 |
|
Section 16.91. Knowledge |
|
|
80 |
|
Section 16.92. Known Claims |
|
|
80 |
|
Section 16.93. Law |
|
|
80 |
|
Section 16.94. Lease Agreement/Paris |
|
|
81 |
|
Section 16.95. Leased Real Properties |
|
|
81 |
|
Section 16.96. Leave Employees |
|
|
81 |
|
Section 16.97. Legal Proceeding |
|
|
81 |
|
Section 16.98. Liabilities |
|
|
81 |
|
Section 16.99. Lien |
|
|
81 |
|
Section 16.100. Local Asset Transfer Agreements |
|
|
81 |
|
Section 16.101. Local Stock Transfer Documents |
|
|
81 |
|
Section 16.102. Losses |
|
|
81 |
|
Section 16.103. Material Adverse Effect |
|
|
82 |
|
Section 16.104. Material Business Contracts |
|
|
82 |
|
Section 16.105. Modified GAAP |
|
|
82 |
|
Section 16.106. NA Lower Range |
|
|
82 |
|
Section 16.107. NA Upper Range |
|
|
82 |
|
Section 16.108. Net Working Assets Adjustment |
|
|
82 |
|
Section 16.109. Net Working Assets European Adjustment |
|
|
82 |
|
Section 16.110. Net Working Assets NA Adjustment |
|
|
82 |
|
Section 16.111. Net Working Assets of the European Business |
|
|
82 |
|
Section 16.112. Net Working Assets of the NA Business |
|
|
83 |
|
Section 16.113. NMD |
|
|
83 |
|
Section 16.114. Nobel |
|
|
83 |
|
Section 16.115. Nobel Iberica |
|
|
83 |
|
vi
|
|
|
|
|
|
|
Page |
Section 16.116. Nonassignable Assets |
|
|
83 |
|
Section 16.117. Non-Debtor Asset Selling Entities |
|
|
83 |
|
Section 16.118. Non-Debtor Contracts |
|
|
83 |
|
Section 16.119. Non-JV Acquired Companies |
|
|
83 |
|
Section 16.120. Non-JV Acquired Company Contract |
|
|
83 |
|
Section 16.121. Non-Union Transferred Employees |
|
|
83 |
|
Section 16.122. North American Real Property |
|
|
84 |
|
Section 16.123. Operative Documents |
|
|
84 |
|
Section 16.124. Order |
|
|
84 |
|
Section 16.125. Other Marked Assets |
|
|
84 |
|
Section 16.126. Owned Real Property |
|
|
84 |
|
Section 16.127. Orhan |
|
|
84 |
|
Section 16.128. Patents |
|
|
84 |
|
Section 16.129. Permit |
|
|
84 |
|
Section 16.130. Permitted Exceptions |
|
|
85 |
|
Section 16.131. Person |
|
|
85 |
|
Section 16.132. Personal Property Leases |
|
|
85 |
|
Section 16.133. Petition Date |
|
|
85 |
|
Section 16.134. Post-Closing Tax Period |
|
|
85 |
|
Section 16.135. Pre-Closing Tax Period |
|
|
85 |
|
Section 16.136. Property Taxes |
|
|
85 |
|
Section 16.137. PTG Mexico |
|
|
85 |
|
Section 16.138. PTG Servicios |
|
|
86 |
|
Section 16.139. Purchased Assets |
|
|
86 |
|
Section 16.140. Purchased Equipment |
|
|
86 |
|
Section 16.141. Purchased Intellectual Property |
|
|
86 |
|
Section 16.142. Purchased Shares |
|
|
86 |
|
Section 16.143. Purchasers |
|
|
86 |
|
Section 16.144. Purchaser Indemnified Group |
|
|
86 |
|
Section 16.145. Purchaser Welfare Plans |
|
|
86 |
|
Section 16.146. Purchasing Affiliate |
|
|
86 |
|
Section 16.147. RCRA |
|
|
86 |
|
Section 16.148. Real Property Leases |
|
|
87 |
|
Section 16.149. Release |
|
|
87 |
|
Section 16.150. Relevant ASE Business |
|
|
87 |
|
Section 16.151. Remedial Action |
|
|
87 |
|
Section 16.152. Remediations |
|
|
87 |
|
Section 16.153. Retention Agreements |
|
|
87 |
|
Section 16.154. Review Period |
|
|
87 |
|
Section 16.155. Sale Motion |
|
|
87 |
|
Section 16.156. Satisfaction and Releases |
|
|
87 |
|
Section 16.157. Second Phase |
|
|
88 |
|
Section 16.158. Second Request |
|
|
88 |
|
Section 16.159. Seller |
|
|
88 |
|
Section 16.160. Seller Authorization |
|
|
88 |
|
Section 16.161. Seller Employee Benefit Plan |
|
|
88 |
|
vii
|
|
|
|
|
|
|
Page |
Section 16.162. Seller Financing |
|
|
88 |
|
Section 16.163. Seller Indemnified Group |
|
|
88 |
|
Section 16.164. Seller Name |
|
|
88 |
|
Section 16.165. Seller Welfare Plans |
|
|
88 |
|
Section 16.166. Statement of Net Assets |
|
|
88 |
|
Section 16.167. Stock Selling Entities |
|
|
88 |
|
Section 16.168. Straddle Period |
|
|
89 |
|
Section 16.169. Subsidiary |
|
|
89 |
|
Section 16.170. Tax or Taxes |
|
|
89 |
|
Section 16.171. Tax Claim |
|
|
89 |
|
Section 16.172. Tax Item |
|
|
89 |
|
Section 16.173. Tax Proceeding |
|
|
89 |
|
Section 16.174. Tax Return |
|
|
89 |
|
Section 16.175. TPF |
|
|
89 |
|
Section 16.176. Trade Secrets |
|
|
90 |
|
Section 16.177. Trademarks |
|
|
90 |
|
Section 16.178. Transfer Taxes |
|
|
90 |
|
Section 16.179. Transferred Employee |
|
|
90 |
|
Section 16.180. Transferred Intercompany Receivables |
|
|
90 |
|
Section 16.181. Transferred JV Interests |
|
|
90 |
|
Section 16.182. Transition Agreement |
|
|
91 |
|
Section 16.183. Trigger Levels |
|
|
91 |
|
Section 16.184. Union Transferred Employees |
|
|
91 |
|
Section 16.185. VAT |
|
|
91 |
|
Section 16.186. WARN ACT |
|
|
91 |
|
Section 16.187. Other Definitional and Interpretive Provisions |
|
|
91 |
|
|
|
|
|
|
ARTICLE XVII MISCELLANEOUS |
|
|
92 |
|
|
|
|
|
|
Section 17.1. Notices |
|
|
92 |
|
Section 17.2. Amendment; Waiver |
|
|
93 |
|
Section 17.3. Assignment |
|
|
93 |
|
Section 17.4. Entire Agreement |
|
|
93 |
|
Section 17.5. Fulfillment of Obligations |
|
|
94 |
|
Section 17.6. Parties in Interest |
|
|
94 |
|
Section 17.7. No Third-Party Rights |
|
|
94 |
|
Section 17.8. Public Disclosure |
|
|
94 |
|
Section 17.9. Confidentiality |
|
|
94 |
|
Section 17.10. Return of Information |
|
|
95 |
|
Section 17.11. Expenses |
|
|
95 |
|
Section 17.12. Bulk Sales Laws |
|
|
95 |
|
Section 17.13. Governing Law |
|
|
96 |
|
Section 17.14. Submission to Jurisdiction; Selection of Forum |
|
|
96 |
|
Section 17.15. Counterparts |
|
|
96 |
|
Section 17.16. Headings |
|
|
96 |
|
Section 17.17. Severability |
|
|
96 |
|
viii
EXHIBITS
|
|
|
|
|
Exhibit A |
|
|
|
Debtors |
Exhibit B |
|
|
|
Form of Deposit Agreement |
Exhibit C |
|
|
|
Form of Bill of Sale |
Exhibit D |
|
|
|
Form of Intellectual Property Assignment |
|
|
|
|
Form of Copyright Assignment |
|
|
|
|
Form of Domain Name Assignment |
|
|
|
|
Form of Patent Assignment |
|
|
|
|
Form of Trademark Assignment |
Exhibit E |
|
|
|
Form of Assignment and Assumption Agreement |
Exhibit F |
|
|
|
Form of Sale Motion |
Exhibit G |
|
|
|
Form of Bidding Procedures Order |
Exhibit H |
|
|
|
Form of Approval Order |
Exhibit I |
|
|
|
[Intentionally Omitted] |
Exhibit J |
|
|
|
Forms of Local Stock Transfer Documents |
|
|
|
|
France |
|
|
|
|
Slovakia |
Exhibit K |
|
|
|
Forms of Local Asset Transfer Agreements |
|
|
|
|
Mexico |
|
|
|
|
United Kingdom |
Exhibit L |
|
|
|
Form of French Consolidated Tax Group Exit Agreement |
Exhibit M |
|
|
|
Form of IP License |
|
|
|
|
NYCAT |
|
|
|
|
General |
Exhibit N |
|
|
|
Form of Joint Venture Interest Transfer Agreement |
Exhibit O |
|
|
|
Satisfaction and Releases |
|
|
|
|
Nobel Teknik |
|
|
|
|
Nobel Teknik France |
Exhibit P |
|
|
|
Form of Lease Agreement -- Paris, Tennessee |
ix
SCHEDULES
|
|
|
Schedule 1.3(b) |
|
Purchased Equipment |
Schedule 1.3(e) |
|
Debtor Contracts |
Schedule 1.3(f) |
|
Assumed Retention Agreements |
Schedule 1.3(h) |
|
Purchased Intellectual Property |
Schedule 1.3(m) |
|
Purchased Claims and Causes of Action |
Schedule 1.3(n) |
|
Software |
Schedule 1.4(f) |
|
Excluded Assets, Real Property Leases and Contracts of Asset Selling Entities |
Schedule 1.4(n) |
|
Excluded Notes Receivable |
Schedule 1.6(a) |
|
Excluded Debt and Other Liabilities |
Schedule 1.7 |
|
Closing Claims Schedule |
Schedule 2.3(a) |
|
Net Working Asset Calculations |
Schedule 2.4(a) |
|
Initial Consideration Allocation and Parameters |
Schedule 2.4(b) |
|
Allocation of Consideration |
Schedule 3.2 |
|
Sellers Closing Deliveries |
Schedule 3.3 |
|
Purchasers Closing Deliveries |
Schedule 4.2(a) |
|
Capital Structure of Purchased Companies |
Schedule 4.2(b) |
|
Equity Holders of Transferred JVs |
Schedule 4.5 |
|
Consents and Approvals |
Schedule 4.8 |
|
Financial Statements |
Schedule 4.9 |
|
Tax Matters |
Schedule 4.10(a) |
|
Owned Real Property |
Schedule 4.10(b) |
|
Leased Real Property |
Schedule 4.10(c) |
|
Owned Real Property and Leased Real Property Encumbrances |
Schedule 4.12(e) |
|
Intellectual Property Contracts and Rights |
Schedule 4.12(f) |
|
Intellectual Property Matters |
Schedule 4.13 |
|
Material Business Contracts |
Schedule 4.14(a) |
|
Seller Employee Benefit Plans |
Schedule 4.14(c) |
|
Certain Acquired Company Benefit Plan Matters |
Schedule 4.14(f) |
|
Multiemployer Pension Plans |
Schedule 4.14(g) |
|
Certain Employment Agreements |
Schedule 4.14(i) |
|
Non-Qualified Retirement Plans |
Schedule 4.14(j) |
|
Employment Classification |
Schedule 4.15(a) |
|
Collective Bargaining Agreements |
Schedule 4.15(b) |
|
Certain Labor Matters |
Schedule 4.15(c) |
|
Labor Disputes |
Schedule 4.16 |
|
Legal Proceedings |
Schedule 4.18(a) |
|
Material Environmental Reports |
Schedule 4.18(b) |
|
Environmental Matters |
Schedule 4.19 |
|
Ownership of Assets |
Schedule 4.22 |
|
Information Systems Matters |
Schedule 4.23 |
|
Insurance Policies |
Schedule 5.7 |
|
Financing Commitments |
Schedule 6.8 |
|
Nobel Iberica and Nobel Receivables |
x
|
|
|
Schedule 6.9 |
|
NMD Joint Venture Interest |
Schedule 7.6 |
|
Guarantees |
Schedule 8.3 |
|
Antitrust and Competition Approvals |
Schedule 8.6 |
|
Seller Consents |
Schedule 8.11 |
|
Purchaser Conditions Precedent |
Schedule 9.3 |
|
Antitrust and Competition Approvals |
Schedule 10.1 |
|
Closing Date Employees at Rochester Hills and San Luis Potosi, Mexico |
Schedule 10.3 |
|
Acquired Company Benefit Plans |
Schedule 10.4 |
|
Non-U.S. Employee Matters |
Schedule 11.3 |
|
Noncompetition |
Schedule 16.70 |
|
FPG Business |
Schedule 16.91 |
|
Knowledge |
Schedule 16.105 |
|
Modified GAAP |
Schedule 16.118 |
|
Non-Debtor Contracts |
Schedule 16.130 |
|
Permitted Exceptions |
Schedule 16.153 |
|
Retention Agreements |
xi
AGREEMENT TO PURCHASE ASSETS AND STOCK
AGREEMENT TO PURCHASE ASSETS AND STOCK, dated as of March 28, 2007 (this Agreement), by and
between Orhan Holding, A.S., an anonim sirket organized under the laws of the Republic of Turkey
(Orhan), and Dana Corporation, a corporation organized under the laws of the Commonwealth of
Virginia (Dana).
As of the Closing Date in accordance with Section 1.1(a), the following Persons will
become additional parties to this Agreement: Dana Spicer Europe Ltd., a limited company organized
under the laws of England and Wales (DSE); Thermal Products France, a société par
actions simplifiée with its registered office located at ZI de Guiscard, rue du Lieutenant Gabriel
Lalanne, 60640 Guiscard, registered with the Registry of Commerce and Companies of Compiègne under
the number 341 206 183 (TPF); EFMG, LLC, a limited liability company organized under the laws of
the Commonwealth of Virginia (EFMG); PTG Mexico S. de R.L. de C.V., a corporation organized under
the laws of Mexico (PTG Mexico); PTG Servicios S. de R.L. de C.V., a corporation organized under
the laws of Mexico (PTG Servicios); and Hose & Tubing Products, Inc., a corporation organized
under the laws of the Commonwealth of Virginia (H&T, together with DSE, TPF, EFMG and PTG Mexico,
the Selling Affiliates; the Selling Affiliates together with Dana, the Sellers and, each
individually a Seller).
As of the Closing Date in accordance with Section 1.1(b), one or more Subsidiaries of
Orhan designated by Orhan as purchasers hereunder (the Purchasing Affiliates), if any, will
become additional parties to the Agreement (the Purchasing Affiliates, together with Orhan, the
Purchasers).
RECITALS
WHEREAS, each of the Selling Affiliates is a Subsidiary of Dana, and the Sellers are, among
other things, engaged in the business known within Dana as the Fluid Products Group business;
WHEREAS, each of the Sellers wishes to transfer all of its interest in the FPG Business to the
relevant Purchaser and to provide the representations, warranties, and indemnities set forth herein
with respect to such Sellers interest in the relevant part of the FPG Business on a several (but
not a joint) basis, and Orhan wishes, directly or through Purchasing Affiliates, to acquire all
such interests;
WHEREAS, Dana conducts the FPG Business through:
|
(i) |
|
Danas wholly-owned Subsidiary Nobel Plastiques, SAS, a société par actions
simplifiée with its registered office located at Le Technoparc, 1 rue Gustave Eiffel,
7300 Poissy, registered with the Registry of Commerce and Companies of Versailles under
the number 453 570 806 (Nobel), which further conducts the FPG Business through its
wholly-owned Subsidiary Nobel Plastiques Iberica S.A., a sociedad anónima with its
registered office located at Avenida Barcelona, numero 18, Sant Joan Despi, 08970
Barcelona, Spain, registered with the Registry of Commerce (Registro de Mercantil)
of Barcelona under the number NIF A 58835083 on June 14th, 1989 (Nobel Iberica),
and its 50%- |
1
|
|
|
owned joint ventures Nobel Teknik France SAS and Nobel Teknik A.S., and which is in
the process of forming a new wholly-owned Subsidiary (the China Subsidiary) for
purposes of conducting the FPG Business in China; |
|
(ii) |
|
Danas 50%-owned joint venture Orda Automotive, A.S.; |
|
|
(iii) |
|
Danas wholly-owned Subsidiary Dana Fluid Products Slovakia, S.R.O.; |
|
|
(iv) |
|
those certain Purchased Assets located in Birmingham, United Kingdom, owned by
Danas wholly-owned Subsidiary DSE; |
|
|
(v) |
|
those certain Purchased Assets located in Archbold, Ohio owned by Danas
wholly-owned Subsidiary H&T; |
|
|
(vi) |
|
those certain Purchased Assets located in Paris, Tennessee owned by Dana; |
|
|
(vii) |
|
those certain Purchased Assets located in Rochester Hills, Michigan owned by
EFMG; |
|
|
(viii) |
|
those certain Purchased Assets located in San Luis Potosi, Mexico owned by H&T and
PTG Mexico (DSE, EFMG, PTG Mexico and H&T, together with Dana, the Asset Selling
Entities and individually, an Asset Selling Entity); and |
|
|
(ix) |
|
Current Employees of PTG Servicios; |
WHEREAS, Orhan directly owns a 50% interest in (i) Nobel Teknik France SAS; (ii) Nobel Teknik
A.S.; and (iii) Orda Automotive, S. (Orda Automotive, A.S., Nobel Teknik France SAS and Nobel
Teknik A.S. collectively, the JV Acquired Companies);
WHEREAS, Nobel, Nobel Iberica and Dana Fluid Products Slovakia, S.R.O. are referred to
collectively as the Non-JV Acquired Companies and the JV Acquired Companies together with the
Non-JV Acquired Companies are each referred to as an Acquired Company and collectively as the
Acquired Companies;
WHEREAS, upon the terms and subject to the conditions herein and in order to transfer the FPG
Business, each of the Asset Selling Entities shall assign and transfer to the applicable Purchaser,
and Orhan shall, or shall cause the applicable Purchasing Affiliate to, purchase and acquire from
the applicable Asset Selling Entity, all right, title and interest of such Asset Selling Entity in
and to the relevant Purchased Assets and Orhan shall, and shall cause the applicable Purchasing
Affiliate to, assume the relevant Assumed Liabilities;
WHEREAS, upon the terms and subject to the conditions herein and in order to transfer the FPG
Business, Dana and TPF (collectively, the Stock Selling Entities) each shall sell and transfer to
the applicable Purchasing Affiliate, and Orhan shall, or shall cause the applicable Purchaser to,
purchase and acquire from the applicable Stock Selling Entity, all of the right, title and interest
of such Stock Selling Entity in and to the relevant Purchased Shares;
2
WHEREAS, Dana and its NMD joint venture partner have agreed to carry out the dissolution and
liquidation of NMD in accordance with Mexican Law, and Dana and Orhan intend to deal with the
disposition of the NMD joint venture interest and NMD-related assets located in San Luis Potosi,
Mexico as provided herein; and
WHEREAS, Dana and certain of its Subsidiaries that are Sellers and are identified on
Exhibit A hereto (collectively, the Debtors), together with certain other Subsidiaries of
Dana, have filed voluntary petitions initiating cases under chapter 11 of the Bankruptcy Code in
the Bankruptcy Court (each, a Case and together, the Cases) and intend that the transactions
contemplated by this Agreement shall be implemented through the filing of the Sale Motion, subject
to better and higher bids, pursuant to Section 363 of the Bankruptcy Code seeking approval of the
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
THE PURCHASE AND SALE
Section 1.1. Purchasers and Sellers.
(a) Dana shall, and shall cause each of the other Sellers to, make all notifications,
applications, and requests necessary to obtain the corporate or other authority, and to comply with
all requirements of applicable Law, required to enable such Seller to lawfully enter into and
become obligated as a Seller under and subject to the terms and conditions of this Agreement (as to
each Seller, the Seller Authorization). Dana shall cause such Seller to execute and deliver a
counterpart of this Agreement after obtaining the Seller Authorization applicable to such Seller,
whereupon such Seller shall become a party hereto effective as of the Closing Date. As provided in
Articles VIII and IX, the obligations of Orhan and the other Purchasers, on the one
hand, and of Dana and the other Sellers, on the other hand, to consummate the transactions
contemplated by this Agreement, are subject to, among other things, all of the Sellers entering
into and becoming parties to this Agreement in accordance with this Section 1.1(a).
(b) The parties acknowledge and agree that Orhan contemplates identifying and designating one
or more Subsidiaries as Purchasing Affiliates to acquire the Purchased Shares and the Purchased
Assets and to assume the Assumed Liabilities and otherwise perform the obligations of Purchasers
under and subject to the terms and conditions of this Agreement. To the extent that Orhan chooses
to do so, Orhan will, before the Closing Date, identify and designate one or more of its
Subsidiaries as Purchasing Affiliates hereunder by giving to Dana written notice to such effect,
which notice will identify each such Purchasing Affiliate and the Purchased Shares or Purchased
Assets that such Purchasing Affiliate is to acquire hereunder. Orhan shall cause each such
Purchasing Affiliate to execute and deliver a counterpart of this
3
Agreement on the Closing Date, whereupon such Purchasing Affiliate shall become a party hereto
effective as of the Closing Date.
Section 1.2. Purchase and Sale of Shares.
On the terms and subject to the conditions set forth herein, at the Closing:
(a) Dana shall sell and deliver, and Orhan shall, or shall cause the applicable Purchaser to,
purchase, acquire and accept from Dana all of the issued and outstanding capital stock or other
equity interests owned by Dana of: (i) Orda Automotive, A.S.; and (ii) Dana Fluid Products
Slovakia, S.R.O.; and
(b) TPF shall, and Dana shall cause TPF to, sell and deliver, and Orhan shall, or shall cause
the applicable Purchaser to, purchase, acquire and accept from TPF all of the issued and
outstanding capital stock owned by TPF of Nobel, with all rights attached to such capital stock,
including, but not limited to all rights to dividends distributed after the Closing Date.
The issued and outstanding capital stock and other equity interests described in this
Section 1.2 are referred to as the Purchased Shares.
Section 1.3. Purchase and Sale of the Purchased Assets.
On the terms and subject to the conditions set forth herein, at the Closing, each Asset
Selling Entity shall, and Dana shall cause each such Asset Selling Entity to, sell, assign,
transfer, convey and deliver to the applicable Purchaser, and Orhan shall, or shall cause the
applicable Purchaser to, purchase, acquire and accept from such Asset Selling Entity, all of such
entitys right, title and interest in, to and under the following assets, properties, rights,
Contracts and claims of such entity, in each case, primarily related to such Asset Selling Entitys
part of the FPG Business (each such part of the FPG Business a Relevant ASE Business and
collectively, the ASE Business) whether tangible or intangible, real, personal or mixed (such
assets of the ASE Business, excluding the Excluded Assets, the Purchased Assets):
(a) (i) the Owned Real Property and (ii) the Real Property Leases;
(b) all machinery, equipment, furniture, vehicles, tools, tooling and other tangible personal
property primarily related to the FPG Business, including, without limitation, the items set forth
on Schedule 1.3(b) (the Purchased Equipment);
(c) all inventories and supplies of raw materials, works-in-process, finished goods, spare
parts, supplies, storeroom contents and other inventoried items wherever located;
(d) all trade accounts and other receivables arising out of the sale or other disposition of
goods or services, including, without limitation, those trade accounts and other receivables
reflected on the Financial Statements;
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(e) all rights in, to and under all Contracts of the Debtor Asset Selling Entities, including,
without limitation, the Contracts listed on Schedule 1.3(e) (collectively, the Debtor
Contracts and each, individually, a Debtor Contract);
(f) all rights in, to and under the Retention Agreements listed on Schedule 1.3(f)
(collectively, the Assumed Retention Agreements and each, individually, an Assumed Retention
Agreement);
(g) all rights in, to and under the Non-Debtor Contracts;
(h) the Intellectual Property identified on Schedule 1.3(h), all associated know-how,
all rights to enforce and to past and future damages for the infringement of any such Intellectual
Property, and all goodwill of the FPG Business associated with any Trademarks included in such
Intellectual Property (the Purchased Intellectual Property);
(i) subject to Section 11.2, and other than Tax Returns and related work papers and
items set forth in 1.4(h), all books, records, files, papers, disks, manuals, keys,
reports, plans, catalogs, sales and promotional materials, and all other printed and written
materials, to the extent available;
(j) the Permits (to the extent permitted by applicable Law to be transferred and subject to
any required consents);
(k) all deferred and prepaid charges for utilities and similar operational services and
requirements, other than those that relate to any Excluded Asset;
(l) all rights under or pursuant to all warranties, representations and guarantees, whether
express or implied, made by suppliers, manufacturers, contractors and other third parties with
respect to any of the Purchased Assets, other than any of the foregoing that primarily relate to
any Excluded Asset or Excluded Liability;
(m) all claims, defenses causes of action, causes of action, rights of recovery, rights of set
off, and rights of recoupment listed on Schedule 1.3(m);
(n) the software listed on Schedule 1.3(n), in accordance with the terms of
Section 4.22; and
(o) those receivables, loans and investments constituting Transferred Intercompany
Receivables.
Section 1.4. Excluded Assets.
The parties expressly understand and agree that the Purchased Assets shall not include, and no
Asset Selling Entity is selling, assigning, transferring or conveying to any Purchaser, any right
or title to or interest in, any of the following assets, properties, rights, Contracts and claims,
whether tangible or intangible, real, personal or mixed (collectively, the Excluded
Assets):
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(a) all cash, cash equivalents, bank deposits, investment accounts, lockboxes, certificates of
deposit, marketable securities or similar cash items, of such Asset Selling Entity;
(b) subject to Section 10.1 through 10.4, any assets of an Employee Benefit
Plan other than an Acquired Company Benefit Plan, including, any trusts, insurance arrangements or
other assets held pursuant to, or set aside to fund the obligations of each Asset Selling Entity or
its Affiliates under, any such Employee Benefit Plan, and any data and records (or copies thereof)
required to administer the benefits of Business Employees under any such Employee Benefit Plan;
(c) any and all insurance policies, binders and claims and rights thereunder and the proceeds
thereof and all prepaid insurance premiums;
(d) subject to Section 7.7, all right, title and interest of each Asset Selling Entity
and its Affiliates in all Intellectual Property other than Purchased Intellectual Property (the
Excluded Intellectual Property);
(e) all tangible personal property disposed of or consumed in the ordinary course of business
between the date hereof and the Closing Date as permitted by this Agreement;
(f) the assets, Real Property Leases and Contracts of the Asset Selling Entities listed on
Schedule 1.4(f);
(g) all rights and incidents in, to and under any Retention Agreements other than Assumed
Retention Agreements;
(h) any books, records and other materials that any Asset Selling Entity or any of its
Affiliates is required by Law to retain all Tax Returns (subject to Section 15.5) and
related work papers and all Dana marked sales and promotional materials and brochures (subject to
Section 7.7);
(i) all claims, counterclaims, defenses, causes of action, choses in action or claims of any
kind relating primarily to either Excluded Assets or Excluded Liabilities;
(j) all assets, business lines, properties, rights, Contracts and claims of any Asset Selling
Entity not primarily related to the FPG Business, wherever located, whether tangible or intangible,
real, personal or mixed;
(k) except as set forth in Section 1.3(a), all assets associated with facilities
related to the FPG Business which have ceased operations prior to the date hereof;
(l) all refunds, credits, prepayments or deferrals of or against any Excluded Taxes;
(m) except for Transferred Intercompany Receivables, all intercompany receivables, loans and
investments (i) between any Asset Selling Entity, on the one hand, and any other Seller or any of
its Affiliates, on the other hand, or (ii) required to be settled in accordance with Section
6.7;
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(n) any and all notes receivable listed on Schedule 1.4(n);
(o) any and all causes of action arising under Sections 510, 544 through 550 and 553 of the
Bankruptcy Code or under similar state laws; and
(p) except as set forth in Section 1.3(m), or otherwise arising from the Purchased
Intellectual Property, all claims, defenses, causes of actions, choses in action, rights of
recovery, rights of set off and rights of recoupment.
Section 1.5. Assumed Liabilities in respect of Purchased Assets.
Subject to the effect of the Approval Order, at the Closing, Orhan shall, and shall cause the
applicable Purchaser acquiring Purchased Assets from an Asset Selling Entity to, assume and be
liable for, and Orhan shall, and shall cause such applicable Purchaser to, become responsible to
pay, perform and discharge, only the following obligations and Liabilities of such Asset Selling
Entity related to the Relevant ASE Business, whether known or unknown, fixed or contingent,
asserted or unasserted (collectively, and excluding the Excluded Liabilities, the Assumed
Liabilities):
(a) all Liabilities of such Asset Selling Entity relating primarily to the FPG Business and
arising exclusively on or after the Closing Date, except for Excluded Liabilities and Liabilities
arising from the claims listed on the Closing Claims Schedule;
(b) all Liabilities under the Contracts arising exclusively on or after the Closing Date, plus
payment of the Cure Costs;
(c) except as set forth in Sections 10.1 through 10.4, (i) all Liabilities
arising out of the employment of the Transferred Employees owed to the Transferred Employees and
their dependents and their beneficiaries, including, but not limited to, obligations for salaries,
wages, profit-sharing plans, annual bonuses, any other form of compensation accrued prior to, but
payable after, the Closing Date, and accrued but not taken vacation, personal days and floating
holidays, sick pay and any other leave of the Transferred Employees, and (ii) Liabilities relating
to, arising out of or resulting from any collective bargaining agreement covering the Transferred
Employees; and (iii) the Liabilities of Asset Selling Entities relating to the Transferred
Employees for severance, separation or notice payments under any Debtor Contract, any policy or
practice or under the Assumed Retention Agreements, in the case of this clause (iii), arising after
the Closing Date.
(d) any and all Liabilities, claims, demands, expenses or commitments of the Debtor Asset
Selling Entities primarily related to the ASE Business arising after the filing by the Debtors of
the Cases, including without limitation:
(i) accounts and trade payables of the Debtor Asset Selling Entities related to
the Relevant ASE Business; and
(ii) Liabilities of the Debtor Asset Selling Entities related to the Relevant
ASE Business for utility, telephone and other utility services and goods;
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(e) all other Liabilities of the FPG Business reflected on the Closing Statement of Net
Assets;
(f) all Liabilities that Orhan or any other Purchaser has assumed or agreed to pay for or be
responsible for pursuant to this Agreement and the other Operative Documents;
(g) all Liabilities for claims made on or after the Closing Date for any return, rebate,
recall, warranty or similar claims with respect to products (or any part or component thereof)
designed, manufactured, serviced or sold by the FPG Business, other than those described on the
Closing Claims Schedule;
(h) all Liabilities for claims made on or after the Closing Date for death, personal injury,
other injury to persons or property damage relating to, resulting from, caused by or arising out
of, directly or indirectly, use of or exposure to any of the products (or any part or component
thereof) designed, manufactured, serviced or sold by the FPG Business (including asbestos and any
such Liabilities for negligence, strict liability, design or manufacturing defect, failure to warn,
or breach of express or implied warranties of merchantability or fitness for a particular purpose
or use), other than those described on the Closing Claims Schedule;
(i) all Liabilities relating to, resulting from, caused by or arising out of, workers
compensation, occupational health and safety, occupational disease, occupational injury, or similar
workplace issues to the extent involving or relating to Transferred Employees;
(j) all Liabilities relating to, resulting from, caused by or arising out of toxic tort or
Environmental Law (including the presence, removal or remediation of mold, formaldehyde insulation
or asbestos in buildings or building interiors or elsewhere, and exposure to asbestos containing
materials or friable asbestos, and release of Hazardous Material, including Liabilities arising
under CERCLA and RCRA) and that are directly or indirectly related to the FPG Business or any
assets or property (including the Purchased Assets, the Owned Real Property) used, manufactured,
sold, leased, owned or operated, or services performed, in connection with the ASE Business
including those that constitute, may constitute or are alleged to constitute a tort, breach of
contract or violation of, or non-compliance with, any Law or Permit; provided, however, that
Purchasers shall not assume such Liabilities for property leased to any Purchaser by any Seller or
any of such Sellers Affiliates to the extent such Liabilities are attributable to acts or
omissions that occurred prior to the Closing;
(k) all Liabilities arising out of Legal Proceedings relating to, or arising out of, or
resulting from, the FPG Business or the use, manufacture, sale, ownership, lease and operation or
disposition of any of the Purchased Assets, other than and excluding those Legal Proceedings
described in Schedule 4.16; and
(l) those payables and Liabilities constituting Transferred Intercompany Receivables.
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Section 1.6. Excluded Liabilities in respect of Purchased Assets.
It is expressly understood and agreed that there shall be excluded from the Liabilities being
assumed by the Purchasing Affiliates hereunder the following Liabilities of the Asset Selling
Entities (collectively, the Excluded Liabilities):
(a) the debt and other Liabilities, including any interest or other amounts in connection
therewith, listed on Schedule 1.6(a);
(b) all Liabilities for which any Asset Selling Entity is expressly made responsible pursuant
hereto or under any Transition Agreement;
(c) all Liabilities of the Asset Selling Entities not expressly assumed;
(d) all Excluded Taxes;
(e) fees, expenses, indemnification obligations and other Liabilities owed by Sellers to their
respective advisors, including Miller Buckfire & Co., LLC, on account of the acquisition advisory
services provided to Sellers by such advisors in connection with the transactions contemplated
hereby;
(f) except for Transferred Intercompany Receivables, all intercompany payables, loans and
investments (i) between any Asset Selling Entity, on the one hand, and any Seller or any of its
Affiliates, on the other hand, or (ii) required to be settled in accordance with Section
6.7;
(g) all Chapter 11 Expenses and other expense associated with the Cases, unless expressly
assumed by any Purchaser under this Agreement or any of the other Operative Documents;
(h) all Liabilities for claims made prior to the Closing Date for any return, rebate, recall,
warranty or similar claims with respect to products (or any part or component thereof) designed,
manufactured, serviced or sold by the FPG Business, and all such Liabilities with respect to claims
made on or after the Closing Date described on the Closing Claims Schedule;
(i) all Liabilities for claims made prior to the Closing Date for death, personal injury,
other injury to persons or property damage relating to, resulting from, caused by or arising out
of, directly or indirectly, use of or exposure to any of the products (or any part or component
thereof) designed, manufactured, serviced or sold by the FPG Business (including asbestos and any
such Liabilities for negligence, strict liability, design or manufacturing defect, failure to warn,
or breach of express or implied warranties of merchantability or fitness for a particular purpose
or use), and all such Liabilities with respect to claims made on or after the Closing Date
described on the Closing Claims Schedule;
(j) all Liabilities of any Asset Selling Entity arising out of those Legal Proceedings
described in Schedule 4.16;
9
(k) all Liabilities arising under any Employee Benefit Plan, except as expressly otherwise
provided in Section 1.5 and Article X; and
(l) all Liabilities with respect to which the Purchased Assets are being sold free and clear
under the Approval Order.
Section 1.7. Product Liability, Recall and Warranty Claims, Legal Proceedings.
(a) Schedule 1.7 (the Closing Claims Schedule) sets forth a true and complete
description of the following: (i) events, acts and omissions of which Sellers have Knowledge that
are reasonably expected to result in Liabilities for return, rebate, recall, warranty or similar
claim with respect to products (or any part or component thereof ) designed, manufactured, serviced
or sold by the FPG Business with respect to which no claim has been made (or as to which one or
more claims have been made but further claims are reasonably expected to be made); (ii) events,
acts and omissions of which Sellers have Knowledge that are reasonably expected to result in
Liabilities for death, personal injury, other injury to persons or property damage relating to,
resulting from, caused by or arising out of, directly or indirectly, use of or exposure to any of
the products (or any part or component thereof) designed, manufactured, serviced or sold by the FPG
Business (including asbestos and any such Liabilities for negligence, strict liability, design or
manufacturing defect, failure to warn, or breach of express or implied warranties of
merchantability or fitness for a particular purpose or use) with respect to which no claim has been
made; and (iii) events, acts and omissions of which Sellers have Knowledge that are reasonably
expected to result in Legal Proceedings to be instituted, brought or commenced relating to, or
arising out of, or resulting from, the FPG Business or the use, manufacture, sale, ownership, lease
and operation or disposition of any of the Purchased Assets.
(b) At the Closing, the Sellers shall deliver, or shall cause to be delivered, to Orhan and
the Applicable Purchaser an updated Closing Claims Schedule including a description of the
following: (i) any additional events, acts or omissions that would reasonably be expected to
result in Liabilities for return, rebate, recall, warranty or similar claim with respect to
products (or any part or component thereof) designed, manufactured, serviced or sold by the FPG
Business with respect to which no claim has been made prior to the Closing Date (or as to which one
or more claims have been made but further claims are reasonably expected to be made on or after the
Closing Date) but as to which Seller has Knowledge on the Closing Date; (ii) any additional events,
acts or omissions that would reasonably be expected to result in Liabilities for death, personal
injury, other injury to persons or property damage relating to, resulting from, caused by or
arising out of, directly or indirectly, use of or exposure to any of the products (or any part or
component thereof) designed, manufactured, serviced or sold by the FPG Business (including asbestos
and any such Liabilities for negligence, strict liability, design or manufacturing defect, failure
to warn, or breach of express or implied warranties of merchantability or fitness for a particular
purpose or use) with respect to which no claim has been made prior to the Closing Date but as to
which Seller has Knowledge on the Closing Date; and (iii) any additional events, acts or omissions
occurring prior to the Closing that would reasonably be expected to result in Legal Proceedings to
be instituted, brought or commenced relating to, or arising out of, or resulting from, the FPG
Business or the use, manufacture, sale, ownership, lease and operation or disposition of any of the
Purchased Assets as to which Seller has Knowledge on the Closing Date.
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(c) Each Seller of a Non-JV Acquired Company shall, and Dana shall cause each such Seller to,
assume and retain responsibility for all Liabilities of such Non-JV Acquired Company for (i) any
return, rebate, recall, warranty or similar claim with respect to products (or any part or
component thereof) designed, manufactured, serviced or sold by the FPG Business for which any
claims have been made prior to the Closing Date (or for which one or more claims have been made but
further claims are reasonably expected to be made on or after the Closing Date); (ii) for death,
personal injury, other injury to persons or property damage relating to, resulting from, caused by
or arising out of, directly or indirectly, use of or exposure to any of the products (or any part
or component thereof) designed, manufactured, serviced or sold, or services performed, by the FPG
Business (including asbestos and any such Liabilities for negligence, strict liability, design or
manufacturing defect, failure to warn, or breach of express or implied warranties of
merchantability or fitness for a particular purpose or use) for which claims have been made prior
to the Closing Date; (iii) those Legal Proceedings described in Schedule 4.16; and (iv)
matters described in clauses (i), (ii) and (iii) hereof with respect to claims made on or after the
Closing Date, or, in the case of Legal Proceedings, instituted, brought or commenced on or after
the Closing Date, to the extent described on the Closing Claims Schedule.
(d) As between the applicable Seller and the applicable Purchaser, responsibility for the
management after Closing of proceedings relating to matters for which the Seller is responsible
pursuant to Section 1.6(h) and Section 1.7(c)(i) shall be as designated and
described in the Closing Claims Schedule. All proceedings relating to matters for which a Seller
is responsible pursuant to Section 1.6(i), Section 1.7(c)(ii) or Section
1.7(c)(iii) shall be managed in accordance with Section 12.4.
(e) All Liabilities of the JV Acquired Companies, including those arising from or in
connection with (i) any return, rebate, recall, warranty or similar claim with respect to products
(or any part or component thereof) designed, manufactured, serviced or sold by the FPG Business;
(ii) any death, personal injury, other injury to persons or property damage relating to, resulting
from, caused by or arising out of, directly or indirectly, use of or exposure to any of the
products (or any part or component thereof) designed, manufactured, serviced or sold by the FPG
Business (including asbestos and any such Liabilities for negligence, strict liability, design or
manufacturing defect, failure to warn, or breach of express or implied warranties of
merchantability or fitness for a particular purpose or use); and (iii) Legal Proceedings, shall
remain the responsibility of the JV Acquired Companies.
ARTICLE II
CONSIDERATION
Section 2.1. Amount and Form of Consideration.
The consideration to be paid by Purchasers to Sellers, in full consideration of the Purchased
Shares and the Purchased Assets shall consist of:
(a) U.S.$70 million (the Initial Cash Consideration) in immediately available funds, subject to
adjustment as set forth in Section 2.3 (the Initial Cash Consideration,
11
as adjusted, the Final Cash Consideration), to be paid in the manner and at the time set forth in
Section 2.2; and
(b) the assumption by Orhan or the applicable Purchasers of the Assumed Liabilities.
Section 2.2. Payment of Cash Consideration.
The Initial Cash Consideration shall be paid as follows:
(a) within three (3) Business Days after the date hereof, in accordance with the Deposit
Agreement (the form of which is attached as Exhibit B hereto, the Deposit Agreement),
Orhan will wire transfer in immediately available funds to The Bank of New York, as deposit agent
(the Deposit Agent), an amount equal to 10 percent (10%) of the Initial Cash Consideration in
U.S. Dollars (such amount, together with the interest accrued thereon, the Deposit Amount), to be
held in an interest-bearing account by the Deposit Agent and to be distributed in accordance with
the terms of the Deposit Agreement.
(b) at the Closing, Orhan shall, or shall cause the applicable Purchasers to, pay, by wire
transfer of immediately available funds in U.S. Dollars, an amount equal to (i) the Initial Cash
Consideration, less (ii) the Deposit Amount, plus (iii) any applicable VAT or other
Transfer Taxes that are the responsibility of Orhan or the applicable Purchasers in accordance with
Section 15.9 (but, only to the extent that any Seller will be required by applicable Law to
make a payment of such VAT or Transfer Taxes), to an account or accounts designated by Sellers,
such designation to be made in writing at least three (3) Business Days prior to the Closing Date.
If any requirements of Law require that any portion of the Initial Cash Consideration payable to
Sellers must be paid in a currency other than United States Dollars, Purchasers shall pay such
portion at the Closing, by wire transfer of immediately available funds in such other currency,
based on the exchange rate as published in The Wall Street Journal two (2) Business Days prior to
the Closing Date.
Section 2.3. Post-Closing Adjustment.
(a) Net Working Assets of the European Business as of any date shall mean the amount
calculated by subtracting the Liabilities described in Schedule 2.3(a) from the assets
described in Schedule 2.3(a), in each case for the Non- JV Acquired Companies and the ASE
Business associated with the Birmingham, England facility. Net Working Assets of the NA Business
as of any date shall mean the amount calculated by subtracting the Liabilities described in
Schedule 2.3(a) from the assets described in Schedule 2.3(a), in each case for the
ASE Business associated with the Archbold, Ohio, Paris, Tennessee, and San Luis Potosi II, Mexico
facilities.
(b) As promptly as practicable, but in any event within 90 days following the Closing, Dana, at its
sole cost and expense, will prepare and deliver to Orhan (i) a statement of Net Working Assets of
the European Business as of the Closing Date (as such may be adjusted following resolution of
disputes in accordance with Section 2.3(c), the Closing Statement of European Net Assets)
and a calculation of the Net Working Assets European Adjustment derived from the Closing Statement
of European Net Assets, and (ii) a statement of Net Working
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Assets of the NA Business as of the Closing Date (as such may be adjusted following resolution of
disputes in accordance with Section 2.3(c), the Closing Statement of NA Net Assets) and a
calculation of the Net Working Assets NA Adjustment derived from the Closing Statement of NA Net
Assets (the Closing Statement of European Net Assets and the Closing Statement of NA Net Assets,
collectively, the Closing Statements of Net Assets). The Closing Statements of Net Assets and
the calculation of the Net Working Assets Adjustments derived from the Closing Statements of Net
Assets shall (i) be prepared on a basis consistent with the preparation of the Statement of Net
Assets, and (ii) be prepared in accordance with Modified GAAP. During the preparation of the
Closing Statements of Net Assets, and the 90 day period for dispute resolution under this
Section 2.3(b), Orhan shall, and shall cause the Purchasing Affiliates and Acquired
Companies to: (i) provide Dana and its authorized representatives with full access to all relevant
books, records, facilities and employees of the FPG Business to the extent reasonably necessary to
prepare the Closing Statements of Net Assets, and (ii) cooperate fully with Dana and its authorized
representatives, including by providing on a timely basis all information to the extent necessary
or useful in preparing the Closing Statements of Net Assets and calculating the Net Working Assets
Adjustments.
(c) Following receipt by Orhan of the Closings Statement of Net Assets and the Net Working
Assets Adjustments, Orhan will be afforded a period of 30 days (the Review Period) to review the
Closing Statements of Net Assets and the Net Working Assets Adjustments. Orhan shall be deemed to
have accepted the Net Working Assets Adjustments unless, prior to the expiration of the Review
Period, Orhan shall deliver to Dana a detailed written explanation of those items in the Net
Working Assets Adjustments that Orhan disputes. The Net Working Assets Adjustments, to the extent
not affected by such disputed items, will be deemed to be accepted, and the items identified by
Orhan shall be deemed to be in dispute. Within a further period of 30 days from the end of the
Review Period, Dana and Orhan will attempt to resolve in good faith any disputed items. Failing
such resolution, the unresolved disputed items will be referred for final binding resolution to a
nationally recognized certified public accounting firm mutually acceptable to Dana and Orhan (the
Independent Auditors). Such unresolved disputed items shall be as determined by the Independent
Auditors within 30 days in accordance with Modified GAAP applied on a basis consistent with the
preparation of the Statement of Net Assets. One-half of the cost of the Independent Auditors shall
be paid by Orhan and one-half by Dana. The decision of the Independent Auditors shall not be
subject to appeal or challenge for any reason (other than gross negligence, fraud or willful
misconduct). The definitive Closing Net Working Assets and Net Working Assets Adjustment shall be
the Closing Net Working Assets and Net Working Assets Adjustment, as applicable, agreed to (or
deemed to be agreed to) by Orhan and Dana or as determined by the Independent Auditors, as the case
may be, in accordance with the terms of this Section 2.3(c). Other than those provisions
set forth in this Section 2.3(c) relating to the resolution of certain matters by the
Independent Auditors, nothing herein shall constitute an agreement among the parties to submit
disputes under this Agreement to arbitration.
(d) For purposes hereof, the upper range for Net Working Assets of the European Business is
U.S.$26,775,000 (the European Upper Range) and the lower range for Net Working Assets of the
European Business is U.S.$24,225,000 (the European Lower Range). The upper range for Net
Working Assets of the NA Business is U.S.$14,010,000 (the
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NA Upper Range) and the lower range for Net Working Assets of the NA Business is
U.S.$11,590,000 (the NA Lower Range).
(e) Closing European Net Working Assets is an amount equal to the Net Working Assets of the
European Business as calculated and finalized in accordance with this Section 2.3 from the
Closing Statement of European Net Assets. Closing NA Net Working Assets is an amount equal to
the Net Working Assets of the NA Business as calculated and finalized in accordance with this
Section 2.3 from the Closing Statement of NA Net Assets.
(f) Net Working Assets European Adjustment shall be determined as follows: (i) if the
Closing European Net Working Assets is equal to or greater than the European Lower Range but not
greater than the European Upper Range, then the Net Working Assets European Adjustment will equal
zero; (ii) if the Closing European Net Working Assets is more than the European Upper Range, then
the Net Working Assets European Adjustment will be a positive amount equal to the amount of such
excess; and (iii) if the Closing European Net Working Assets is less than the European Lower Range,
then the Net Working Assets European Adjustment will be a negative amount equal to the absolute
value of such difference. Net Working Assets NA Adjustment shall be determined as follows: (i)
if the Closing NA Net Working Assets is equal to or greater than the NA Lower Range but not greater
than the NA Upper Range, then the Net Working Assets NA Adjustment will equal zero; (ii) if the
Closing NA Net Working Assets is more than the NA Upper Range, then the Net Working Assets NA
Adjustment will be a positive amount equal to the amount of such excess; and (iii) if the Closing
NA Net Working Assets is less than the NA Lower Range, then the Net Working Assets NA Adjustment
will be a negative amount equal to the absolute value of such difference. The amount of the Net
Working Assets European Adjustment and amount of the Net Working Assets NA Adjustment shall be
aggregated, or netted, as the case may be, and such aggregate or net amount shall be the Net
Working Assets Adjustment.
(g) If the Net Working Assets Adjustment is a positive amount, (i) Orhan will pay the
applicable Seller (as directed by Dana) the amount of the Net Working Assets Adjustment, together
with interest thereon at the rate of 8.0% per annum from the Closing Date through the date of
payment, such payment to be made within ten days after the final determination of the Net Working
Assets Adjustment; provided, however, that, if payment is not made within such ten-day period, the
applicable rate of interest shall be increased by 2% per month for the period from the day
following such date through the date such payment is made.
(h) If the Net Working Assets Adjustment is a negative amount (i) Dana will pay Orhan the
amount equal to the Net Working Assets Adjustment, together with interest thereon at the rate of
8.0% per annum from the Closing Date through the date of payment, such payment to be made within
ten days after the final determination of the Net Working Assets Adjustment; provided, however,
that, if any such payment is not made within such ten-day period, the applicable rate of interest
shall be increased by 2% per month for the period from the day following such date through the date
such payment is made.
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Section 2.4. Allocation of Consideration.
Dana and Orhan have agreed to allocate the Initial Consideration (taking into account Assumed
Liabilities to the extent they are included in the amount realized for income tax purposes) among
the Sellers as set forth on Schedule 2.4(a) and in accordance with Code Section 1060.
Prior to the Closing and consistent with Schedule 2.4(a) (including the allocation
parameters set forth therein), Sellers and Orhan shall in good faith agree how to allocate the
Initial Consideration (taking into account Assumed Liabilities to the extent they are included in
the amount realized for income tax purposes) among the Purchased Shares and the Purchased Assets,
and such agreement shall be set forth on a schedule to be attached to, and to become part of, this
Agreement as Schedule 2.4(b). Orhan may initially propose the content of Schedule
2.4(b) and if Orhan does so, such proposal shall be subject to Sellers review and reasonable
objection, to be resolved by good-faith negotiations between Orhan and Sellers. Within 60 calendar
days following the determination of the Final Consideration, Orhan and Sellers shall attempt in
good faith to agree upon the allocation of the difference between the Initial Consideration and the
Final Consideration among the Purchased Shares and the Purchased Assets (and among Dana and its
Selling Affiliates that are selling Purchased Shares or Purchased Assets). The allocation of such
difference shall take into account the item or items to which it is attributable and shall, to the
extent such allocation is agreed by Orhan and Sellers, be reflected on a revised Schedule
2.4(b). In the event that Orhan and Sellers are unable to reach an agreement within such 60
calendar day period, the allocation of any disputed item or items shall be resolved within the next
30 calendar days by the Independent Auditors whose fees shall be borne equally by Orhan and Dana.
Such determination by the Independent Auditors shall be binding on the parties and reflected on a
revised Schedule 2.4(b). Except as otherwise required pursuant to a determination under
Section 1313(a) of the Code (or any comparable provision of state, local or foreign Law), Orhan and
Dana agree to act in accordance with the allocations contained in Schedule 2.4(b) for all
Tax purposes and that neither of them will (or will permit its Affiliates to) take any position
inconsistent therewith in any Tax Returns or similar filings (including IRS Form 8594 or any
similar form required to be filed under state, local or foreign Law), any refund claim, litigation,
or otherwise. Orhan and Dana agree to provide the others with any additional information
reasonably required to complete IRS Form 8594 (or any similar form required to be filed under
state, local or foreign Law) and with completed copies of such forms.
ARTICLE III
THE CLOSING
Section 3.1. Closing Date.
The closing of the transactions contemplated hereunder shall be considered part of a single closing
(the Closing) and shall take place at such places and times and on such date as may be mutually
agreed upon by Orhan and Dana, but in no event later than the expiration of 30 days after all of
the conditions precedent set forth in Article VIII and Article IX have been either
satisfied or waived (such date, the Closing Date). No part of the Closing shall occur unless all
other parts of the Closing occur concurrently. The Closing shall be deemed to have occurred
a
15
of 12:01 a.m. (in each applicable time zone and jurisdiction) on the day immediately following the
Closing Date.
Section 3.2. Deliveries by Sellers to Purchasers.
At the Closing, each Seller shall deliver, or cause to be delivered, to the Purchasers the
following:
(a) duly executed counterparts of the Operative Documents to which it is or is to be a party;
(b) the documents and instruments set forth in Schedule 3.2 with respect to such
Seller;
(c) a copy of the Approval Order;
(d) the updated Closing Claims Schedule in accordance with Section 1.7; and
(e) updated Schedules to this Agreement as applicable.
Section 3.3. Deliveries by Purchasers to Sellers.
At the Closing, Orhan shall, or shall cause each applicable Purchaser to, deliver, or cause to
be delivered, to the applicable Sellers the following:
(a) the cash payment in the amount and manner provided in Section 2.2(b);
(b) duly executed counterparts of the Operative Documents to which it is or is to be a party;
and
(c) the documents and instruments set forth in Schedule 3.3 with respect to such
Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
As an inducement to Orhan and any other Purchasers to enter into this Agreement and to
consummate the transactions contemplated hereby, Dana hereby represents and warrants to Orhan on
the date hereof, and each Seller, severally and not jointly, hereby represents and warrants (with
respect only to itself and to its Relevant ASE Business, Purchased Assets, Non-JV Acquired Company
or Purchased Shares, as the case may be) to Orhan and any other Purchasers on the Closing Date,
that:
Section 4.1. Organization and Qualification.
(a) Such Seller is an entity duly organized, validly existing and, if applicable, in good standing
under the laws of the jurisdiction of its organization and has the requisite entity power and
authority to own or lease and operate its properties and to carry on, in all material
16
respects, its business as currently conducted. Such Seller is duly licensed or qualified to
conduct its business and, if applicable, is in good standing under the laws of each jurisdiction in
which the conduct of its business or the ownership of its properties requires such license or
qualification, except where the failure to be so licensed or qualified or in good standing would
not reasonably be expected to be material.
(b) The Non-JV Acquired Company being sold by such Seller is an entity duly organized, validly
existing and, if applicable, in good standing under the laws of the jurisdiction of its
organization and has the requisite entity power and authority to own or lease and operate its
properties and to carry on, in all material respects, its business as currently conducted. Such
Non-JV Acquired Company is duly licensed or qualified to conduct its business and, if applicable,
is in good standing under the laws of each jurisdiction in which the conduct of its business or the
ownership of its properties requires such license or qualification, except where the failure to be
so licensed or qualified or in good standing would not reasonably be expected to be material.
(c) No Non-JV Acquired Company has an interest in any corporation, partnership, limited
liability company or other entity in which the liability of the members or partners is not limited
to their ownership equity interest such as a groupement dintérêt économique, a société civile or a
société en nom collectif.
(d) With respect to Nobel and TPF:
(i) no order has been made and no resolution has been passed for the winding up
of Nobel and TPF and no petition has been presented for the purposes of winding up
of Nobel or TPF;
(ii) no administration order has been made and no petition or application for
such an order has been made or presented and no administrator has been appointed and
no procedure has been commenced with a view to the appointment of an administrator
in respect of Nobel or TPF;
(iii) no receiver has been appointed in respect of TPF;
(iv) no request or declaration has been made with a view to the judicial
reorganization (redressement judiciaire) or judicial liquidation (liquidation
judiciaire) of Nobel or TPF, neither Nobel nor TPF is subject to any judicial or
amicable procedure of bankruptcy, insolvency, receivership, winding-up or
liquidation (whether voluntary or involuntary) or insolvent, or unable to pay its
due debts with its available assets (état de cessation des paiements) nor has it
stopped paying its debts as they fall due.
Section 4.2. Capital Structure of Non-JV Acquired Companies; Transferred JV Interests.
(a) The authorized capital stock or other equity interests of each of the Non-JV Acquired
Companies and the number of shares of such capital stock or other equity interests that are issued
and outstanding and any options or rights to acquire any such capital
17
stock as of the date hereof are as set forth on Schedule 4.2(a), and will be as set
forth on Schedule 4.2(a) as updated as of the Closing Date, together with a statement of
the corresponding Seller owning such shares or interests. Each such Seller directly owns and has
good and valid title to all such Purchased Shares, free and clear of all Liens, other than
Permitted Exceptions described in clause (a) of the definition thereof or set forth on Schedule
16.130 or Liens under the Seller Financing, and all such Purchased Shares have been duly and
validly issued and are fully paid and non-assessable. Except as contemplated in connection with
the assignment of intercompany receivables by Nobel to TPF as provided in Section 6.8,
there are no contemplated operations on, or other planned changes to, the capital stock of the
Non-Acquired Companies as of the date hereof.
(b) Schedule 4.2(b) sets forth the outstanding shares of capital stock or equity
interests of each of the JV Acquired Companies held of record Dana and Nobel. Each of Dana and
Nobel directly owns and has good and valid title to all the corresponding Transferred JV Interests,
free and clear of all Liens, other than Permitted Exceptions described in clause (a) of the
definition thereof or set forth on Schedule 16.130 or Liens under the Seller Financing.
Section 4.3. [Intentionally Omitted]
Section 4.4. Corporate Authorization.
(a) Each Seller that is not a Debtor has full entity power and authority to enter into,
execute and deliver (or cause to be entered into, executed and delivered) this Agreement and each
Operative Document and other document or instrument listed in Schedule 3.2 to which it is a
party, and to perform (or cause to be performed) its obligations hereunder and thereunder.
(b) Each Seller that is a Debtor, upon entry of the Approval Order and subject to such
Approval Order becoming a Final Order, will have full entity power and authority to enter into,
execute and deliver (or cause to be entered into, executed and delivered) this Agreement and each
Operative Document and other document or instrument listed in Schedule 3.2 to which it is a
party, and to perform (or cause to be performed) its obligations hereunder and thereunder.
Section 4.5. Consents and Approvals.
Except as set forth in Schedule 4.5, and after giving effect to the entry of the
Approval Order and subject to such Approval Order becoming a Final Order, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of any Seller or any Non-JV Acquired Company in
connection with the execution and delivery of this Agreement and the other Operative Documents to
which it is a party, the consummation of the transactions contemplated hereby and thereby or the
compliance by each Seller with any of the provisions hereof or thereof applicable to it, except for
(i) compliance with the applicable requirements of any competition or antitrust laws, including (x)
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the HSR Act) and/or (y) Council Regulation (EC) No. 139/2004 of the European Union
(the EC Regulation), and/or (z) such other antitrust authorities that may require notification
and approval of the transaction, and (ii) other than those
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described in clause (i) of this Section 4.5, such consents, waivers, approvals,
Orders, Permits or authorizations of, or declarations or filings with, or notifications to, any
Person or Governmental Body the failure of which to be received or made would not reasonably be
expected to be material.
Section 4.6. Non-Contravention.
Upon entry of the Approval Order and subject to it becoming a Final Order, none of the
execution and delivery by each Seller of this Agreement and the other Operative Documents to which
it is a party, the consummation of the transactions contemplated hereby or thereby or compliance by
such Seller with any of the provisions hereof or thereof will, subject to the receipt of the
consents identified on Schedule 4.5: (i) result in the breach of any provision of the
certificate or articles of incorporation, bylaws or similar organizational documents of such Seller
or the applicable Non-JV Acquired Company; (ii) violate, result in the breach or termination of, or
constitute (with or without notice or lapse of time or both) a default or give rise to any right of
consent, cancellation, termination or acceleration or right to increase the obligations or
otherwise modify the terms under any Contract the effect of which would materially adversely affect
the Relevant ASE Business of such Seller or that portion of the FPG Business conducted by the
applicable Non-JV Acquired Company; or (iii) constitute a violation of any Law applicable to such
Seller or applicable Non-JV Acquired Company, except (A) for minor violations none of which are
material individually or in the aggregate and (B) in the case of clause (ii), any violation,
breach, termination, default, consent, cancellation or acceleration in any Contract disclosed in
the Schedules hereto.
Section 4.7. Binding Effect.
Upon entry of the Approval Order and subject to it becoming a Final Order, this Agreement
constitutes, and, when executed and delivered on the Closing Date, each of the and the other
Operative Documents to which it is a party will constitute, a valid and legally binding obligation
of each Seller, enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors rights and to general equity principles (whether in equity or at law).
Section 4.8. Financial Statements.
Dana represents and warrants that Schedule 4.8 contains true and correct copies of the
unaudited statement of net assets (the Statement of Net Assets) of the FPG Business, as of
December 31, 2006, and the unaudited statement of operating results of the FPG Business for the
year ended December 31, 2006 (all such statements, collectively, the Financial Statements), that
each of the Financial Statements has been prepared in accordance with Modified GAAP and that the
Financial Statements were prepared on the basis of the books and records of the Asset Selling
Entities and Stock Selling Entities, in each case, as the same relate to the FPG Business (in each
case, as of the date of such Financial Statements) and present fairly, in all material respects,
the financial condition of the FPG Business as of the dates thereof and the results of its
operations for each of the periods then ended in conformity with Modified GAAP.
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Section 4.9. Taxes.
Except as disclosed on Schedule 4.9:
(a) all Tax Returns required to be filed by or with respect to the Non-JV Acquired Companies
and the Purchased Assets have been timely filed (taking into account extensions) and all such Tax
Returns are complete and accurate, and more generally each Non-JV Acquired Company has complied
with all Tax rules and regulations applicable to it;
(b) all Taxes shown to be due on such Tax Returns (or payable pursuant to any assessments with
respect to such Tax Returns) have been or will be timely paid, except for any payments by the
Debtors which have been stayed by the filing of the Cases under Section 362 of the Bankruptcy Code;
(c) there is no action, suit, investigation, audit, inquiry, claim or assessment current or
pending with respect to Taxes of the Non-JV Acquired Companies, except for claims being pursued
against the Debtors in the Cases. This representation refers only to actions, suits,
investigations, audits, inquiries, claims or assessments of which the relevant Non-JV Acquired
Company has been informed by the Tax authorities. To Sellers Knowledge, no such audits or
inquiries are threatened. No Tax Liens (other than Permitted Exceptions) encumber the Non-JV
Acquired Companies or the Purchased Assets;
(d) all amounts required to be withheld or collected for payment of Taxes by the Non-JV
Acquired Companies, including from employee salaries, wages and other compensation, have been
collected or withheld and, if due, paid to the appropriate taxing authorities;
(e) the Non-JV Acquired Companies are not bound by any Tax sharing or Tax allocation agreement
or arrangement or Tax consolidation regime that will be effective after the Closing or that will
have further effect after the Closing for any taxable year (other than any agreement exclusively
between or among the Acquired Companies and other than the French Consolidated Tax Group Exit
Agreement set forth in Exhibit L hereto);
(f) the profit-sharing (contrats de participation et dintéressement), corporate savings (plan
dépargne entreprise), stock-options and other similar plans enjoyed by the employees of any Non-JV
Acquired Company duly qualify for the purpose of the Tax and social exemptions normally applicable
to them;
(g) no Non-JV Acquired Company shall incur any Tax burden as a result of the termination,
subsequent to the Purchase and Sale of Shares, of any existing Tax sharing or Tax allocation
agreement or arrangement or existing Tax consolidation regime applicable to it;
(h) no Non-JV Acquired Company has been made aware by its tax counsel (external or in-house)
or auditors that a position it has taken on certain Tax matters is based on an interpretation of
the Tax rules and regulations likely to be challenged by the Tax authorities; and
20
(i) no Non-JV Acquired Company has any obligation to hold any person harmless from or to
indemnify any person against such persons Tax liabilities.
Section 4.10. Real Property.
(a) Each Asset Selling Entity and each Non-JV Acquired Company has good and marketable title
to its respective Owned Real Properties as reflected on Schedule 4.10(a), free and clear of
all Liens except Permitted Exceptions and Liens under the Seller Financing. Nobel has validly
exercised its option to purchase the real property located in Vitry-le-François in accordance with
the terms of the applicable finance lease (credit-bail), a deed of sale has been validly executed
and all related costs and Taxes have been duly paid by Nobel;
(b) Each Asset Selling Entity and each Non-JV Acquired Company, has valid leasehold estates in
each of the Leased Real Properties as reflected on Schedule 4.10(b) and, except as to the
Leased Real Property located in Birmingham, U.K., has a valid and enforceable leasehold interest in
such Leased Real Property, free and clear of all Liens encumbering such lessees leasehold interest
except Permitted Exceptions and Liens under the Seller Financing, but subject to all terms and
conditions of the Real Property Leases and subject to any Liens encumbering the applicable lessors
title to the Leased Real Properties. As to the Leased Real Property located in Birmingham, U.K.,
Dana Automotive Limited has a valid leasehold estate in such Leased Real Property and has a valid
and enforceable leasehold interest in such Leased Real Property and sole legal and beneficial title
to such leasehold estate, free and clear of all Liens except Permitted Exceptions and Liens under
the Seller Financing;
(c) Except for Permitted Exceptions and as otherwise set forth on Schedule 4.10(c),
none of the Owned Real Properties, nor to Sellers Knowledge, the Leased Real Properties, is
subject to any lease, sublease, license or other agreement granting to any other Person any right
to the use or occupancy of such Owned Real Property or Leased Real Property or any part thereof;
(d) To Sellers Knowledge, each Real Property Lease is in full force and effect and is valid
and enforceable against the applicable Asset Selling Entity or Non-JV Acquired Company and the
lessor in accordance with its terms (subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors rights and to general
equity principles, whether in equity or at law), and there is no current default which cannot be
cured under Section 365 of the Bankruptcy Code. No Non-JV Acquired Company that is party to a Real
Property Lease has given notice in order to terminate any Real Property Lease. Article L.145-1 et
seq. of the French Commercial Code applies to all Real Property Leases governed by French law
entered into by Non-JV Acquired Companies and the Non-JV Acquired Companies have the right to renew
such leases in accordance with article L.145-8 of the French Commercial Code. Each Non-JV Acquired
Company that is a party to a Real Property Lease governed by French law has complied with all its
obligations under the applicable Real Property Lease and holds a valid and enforceable right to the
renewal of the Real Property Lease;
(e) To Sellers Knowledge, (i) each Non-JV Acquired Company and the Asset Selling Entities to
the extent of the Relevant ASE Business, has all material Permits necessary
21
for the current use by it of each applicable Owned Real Property and Leased Real Property, and
(ii) no material default or violation by the applicable Seller has occurred in the due observance
of any such Permit;
(f) The real properties listed on Schedule 4.10(a) and Schedule 4.10(b), the
real property owned by Sellers and leased to Purchasers following the Closing, and the real
property located in Rochester Hills, Michigan, include all real properties owned or leased and
currently used by each of the Non-JV Acquired Companies to carry out its business;
(g) To Sellers Knowledge, (i) there does not exist any actual or threatened condemnation or
eminent domain proceedings or disputes, claims, actions or notices, that affect any Owned Real
Property or Leased Real Property that is material to the FPG Business, and (ii) no Seller has
received any written notice of breach of current or previous legislation or regulations that is
material to the FPG Business or of the intention of any Governmental Body or other Person to take
or use any Owned Real Property or Leased Real Property that is material to the FPG Business;
(h) The Sellers of the Owned Real Property located in the United States are not foreign
persons within the meaning of Treasury regulation 1.1445-2(b)(2); and
(i) Each Asset Selling Entity has paid all sums due and has observed and performed the
covenants and obligations on the part of the tenant and the conditions contained in the Real
Property Leases.
Section 4.11. Tangible Personal Property.
(a) Each lease of personal property to which a Non-JV Acquired Company is a party or that is
included in the Purchased Assets (i) requiring lease payments equal to or exceeding U.S.$100,000
per annum, or (ii) the loss of which would be material (all such leases collectively, the Personal
Property Leases) is in full force and effect and is valid and enforceable in accordance with its
terms (subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors rights and to general equity principles, whether
in equity or at law). There is no default under any Personal Property Lease either by a Seller or,
to Sellers Knowledge, by any other party thereto, and no event has occurred that, with the lapse
of time or the giving of notice or both, would constitute a default by a Seller thereunder which
cannot be cured under Section 365 of the Bankruptcy Code.
(b) The applicable Asset Selling Entity or Non-JV Acquired Company has good and valid title to
each item of owned Purchased Equipment, free and clear of any and all Liens other than Permitted
Exceptions or Liens under the Seller Financing.
Section 4.12. Intellectual Property.
(a) To Sellers Knowledge, there are no material Legal Proceedings instituted, commenced,
pending or threatened in writing, that (i) challenge the rights of any Seller regarding the
ownership of any of the Acquired Intellectual Property or are otherwise adverse to the use,
registration, right to use, validity or enforceability of the Acquired Intellectual Property; or
(ii)
22
assert that the operation of the FPG Business as conducted by any Seller is or was infringing
or otherwise in violation of any Intellectual Property of any other Person;
(b) To Sellers Knowledge, the operation of the FPG Business does not infringe or
misappropriate the Intellectual Property of any third party;
(c) After Closing, no Seller will own or control any Intellectual Property that is infringed
by the operation of the FPG Business when operated by Purchasers in substantially the same manner
as currently operated;
(d) To Sellers Knowledge, no Person is infringing or has misappropriated any of the Acquired
Intellectual Property;
(e) Schedule 4.12(e) lists all licenses, Contracts, and other agreements pursuant to
which any third party has licensed or granted to any Seller any rights or licenses to any
Intellectual Property that is material to the operation of the FPG Business; except as identified
on Schedule 4.12(e), no third party has any rights to any Acquired Intellectual Property,
and all such licenses will survive the Closing and remain in full force and effect (in accordance
with and subject to their terms) immediately following the Closing;
(f) Except as set forth in Schedule 4.12(f), no material breach or default by any
Seller exists under any of the agreements listed on Schedule 4.12(e) and to Sellers
Knowledge, no material breach or default by any other Party exists under any of the agreements
listed on Schedule 4.12(e);
(g) At Closing, the Non-JV Acquired Companies will own free and clear of all Liens all the
Acquired Company Intellectual Property. To Sellers Knowledge, none of the Persons who have worked
internally or externally on the development of any Intellectual Property has infringed any third
party rights on any Intellectual Property;
(h) All registration and/or renewal fees and taxes in respect of the registered Acquired
Company Intellectual Property which are payable have been paid in the ordinary course of business
in all jurisdictions where such Intellectual Property rights are registered;
(i) At Closing, the Non-JV Acquired Companies hold all necessary information to register the
Patents and Trademarks of the Acquired Company Intellectual Property; and
(j) To Sellers Knowledge, (i) the Acquired Company Intellectual Property is valid and
enforceable in each applicable jurisdiction; and (ii) no event has occurred which may result in its
cancellation or avoidance.
Section 4.13. Contracts.
Schedule 4.13 sets forth a true, complete and correct list, as of the date hereof, of
each of the following Contracts:
23
(a) any Non-JV Acquired Company Contract and any Asset Selling Entity Contract primarily
related to the FPG Business not made in the ordinary course of business;
(b) any Non-JV Acquired Company Contract, and Asset Selling Entity Contract primarily related
to the FPG Business or constitutes a binding commitment for, or sets forth any of the terms or
conditions relating to, the employment or termination of employment of any officer or employee of
any Non-JV Acquired Company or Asset Selling Entity employee with respect to the FPG Business whose
basic annual compensation (excluding bonus on commission) is in excess of U.S.$50,000;
(c) any franchise, distributorship or sales agency agreement of any Non-JV Acquired Company or
Asset Selling Entity with respect to the FPG Business involving annual payments in excess of
U.S.$50,000;
(d) any Non-JV Acquired Company Contract and Asset Selling Entity Contract that is primarily
related to the FPG Business for the purchase, or the sale, supply or provision, of materials,
supplies, services, merchandise or equipment not capable of being fully performed or not terminable
without penalty within a period of 60 calendar days and involving annual payments in excess of
U.S.$50,000;
(e) any agreement for the purchase or sale of any shares of or interests in any Non-JV
Acquired Company;
(f) any non-competition agreement of any Non-JV Acquired Company or Asset Selling Entity with
respect to the FPG Business;
(g) any commitment of any Non-JV Acquired Company or Asset Selling Entity with respect to the
FPG Business to make any capital expenditure or to purchase a capital asset in excess of
U.S.$50,000;
(h) any Non-JV Acquired Company Contract for the creation or formation of a joint venture,
partnership or limited liability company;
(i) any Non-JV Acquired Company Contract or any Asset Selling Entity Contract primarily
related to the FPG Business relating to any indebtedness for borrowed money, guaranty, surety, line
of credit or other loan or financing arrangement;
(j) any Non-JV Acquired Company Contract or any Asset Selling Entity Contract primarily
related to the FPG Business setting forth terms and conditions of employment in a collective
bargaining agreement;
(k) any Non-JV Acquired Company Contract or any Asset Selling Entity Contract primarily
related to the FPG Business setting forth terms and conditions of employment in an agreement other
than a collective bargaining agreement and providing for termination indemnities beyond mandatory
provisions of applicable laws or of applicable collective bargaining agreements or similar
instruments in the relevant jurisdictions; or
24
(l) any Non-JV Acquired Company Contract or any Asset Selling Entity Contract not otherwise
described in clauses (a) through (k) above to which any Non-JV Acquired Company or any Asset
Selling Entity is a party or is otherwise bound, which is material to such entity or the FPG
Business;
in each case (a) through (l), material to the FPG Business (collectively, the Material Business
Contracts). To Sellers Knowledge, (x) each Material Business Contract is in full force and
effect and constitutes as of the date hereof the valid and legally binding obligation of each party
thereto, enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors rights and to general equity principles (whether in equity or
at law), and (y) there are no defaults under the Material Business Contracts on the part of any
Non-JV Acquired Company or any Asset Selling Entity (and, with respect to TPF, there are no
defaults that could constitute an invalid transfer from TPF to Nobel of the Material Business
Contracts pertaining to the FPG Business pursuant to the contribution agreement dated in 2004
(Apport Partiel dActifs)) or any other party to the Material Business Contracts which cannot be
cured under Section 365 of the Bankruptcy Code.
Section 4.14. Employee Benefits.
(a) Schedule 4.14(a) contains a complete and accurate list of each Seller Employee
Benefit Plan maintained by any Asset Selling Entity with respect to the Transferred Employees or
any Non-JV Acquired Company. Dana has made available to Orhan, to the extent applicable to any
such Seller Employee Benefit Plan and within the responsibility of Dana, (i) a true and complete
copy of the plan document (including all amendments and modifications thereto) and all related
trust agreements, insurance contacts and other funding arrangements, (ii) the most recently filed
United States Department of Labor Form 5500 series and all schedules thereto, (iii) the current
summary plan description and all summary material modifications thereto as applicable, (iv) with
respect to the Acquired Company Benefit Plans, to the extent applicable, the most recent actuarial
reports, and (v) to the extent applicable, the most recent U.S. Internal Revenue Service
determination letter with respect to each Seller Employee Benefit Plan.
(b) Each Acquired Company Benefit Plan has been maintained, operated and administered in
compliance with its terms of applicable Law, except for any failure to comply that would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(c) Except as set forth in Schedule 4.14(c), there is no audit or investigation
pending or, to Sellers Knowledge, threatened (other than routine qualification or registration
determination filings) with respect to any Acquired Company Benefit Plan before any Governmental
Body and no such audit or investigation has been threatened in writing.
(d) Other than claims by common law employees for benefits received in the ordinary course
under an Acquired Company Benefit Plan, Sellers have no knowledge of any pending or threatened
claim under an Acquired Company Benefit Plan made by any participating employee.
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(e) With respect to any Acquired Company Benefit Plan, all contributions, premiums, expenses
and other payments required to be made by any Asset Selling Entity with respect to the Transferred
Employees or any Non-JV Acquired Company by the Closing Date have been made or will be made by the
Closing Date.
(f) No Seller Employee Benefit Plan is a multiemployer pension plan as defined in Section
3(37) of ERISA, and no Asset Selling Entity or any of the Non-JV Acquired Companies is obligated to
make contributions to a multiemployer pension plan on behalf of any Business Employee or Acquired
Company Employee, except as described in Schedule 4.14(f). Neither any Asset Selling
Entity nor any of the Non-JV Acquired Companies has incurred a complete withdrawal as this term is
defined in Section 4203 of ERISA or a partial withdrawal as defined in ERISA Section 4205 from such
multiemployer pension plan. To the Knowledge of Sellers, such multiemployer pension plan is not in
reorganization status under ERISA Section 4241.
(g) No Asset Selling Entity or any of the Non-JV Acquired Companies is a party to any
employment agreement, contract or other compensation or severance agreement with any FPG Business
Employee providing for termination indemnities beyond mandatory provisions of applicable laws or of
applicable collective bargaining agreements or similar instruments in the relevant jurisdictions,
with the exception of the Retention Agreements or as described in Schedule 4.14(g).
(h) No payment of or benefit which will or may be made by any Asset Selling Entity or any of
the Non-JV Acquired Companies with respect to any Business Employee who is a disqualified
individual (as defined in Code Section 280G and the regulations thereunder) will be characterized
as a excess parachute payment, within the meaning of Section 280G(b) of the Code, there is no
contract, agreement, plan or arrangement to which any Asset Selling Entity or any of the Non-JV
Acquired Companies is a party or by which it is bound to compensate any Business Employee who is a
disqualified individual for excise taxes paid pursuant to Section 4999 of the Code.
(i) Except as set forth on Schedule 4.14(i), no Asset Selling Entity or any of the
Non-JV Acquired Companies are parties to any Contract, agreement or arrangement relating to or
covering Business Employees that is a nonqualified deferred compensation plan subject to Section
409A of the Code. Each such nonqualified deferred compensation plan has been operated since
January 1, 2005 in good faith compliance with Section 409A of the Code and IRS Notice 2005-1. No
stock option or other right to acquire an Asset Selling Entity or any of the Non-JV Acquired
Companies common stock or other equity of an Asset Selling Entity or any of the Non-JV Acquired
Companies granted to any Business Employee (i) has an exercise price that has been or may be less
than the fair market value of the underlying equity as of the date such option or right was
granted, as determined by the boards of directors of the respective Asset Selling Entity or any of
the Non-JV Acquired Companies in good faith (ii) has any feature for the deferral of compensation
other than the deferral of recognition of income until the later of exercise or disposition of such
option or rights, or (iii) has been granted after December 31, 2004, with respect to any class of
stock of an Asset Selling Entity or any of the Non -JV Acquired Companies that is not service
recipient stock (within the meaning of applicable regulations under Section 409A).
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(j) To Sellers Knowledge, no Asset Selling Entity has direct or indirect liability with
respect to any misclassification of any Person, who is primarily related to the FPG Business, as an
independent contractor rather than as an employee, or with respect to any employee leased from
another employer primarily in connection with the FPG Business, except as would not result in
material harm to such Asset Selling Entity. Except as set forth on Schedule 4.14(j), to
Sellers Knowledge, none of the Non-JV Acquired Companies have direct or indirect liability with
respect to any misclassification of any Person as an independent contractor rather than as an
employee, or with respect to any employee leased from another employer, except as would not result
in material harm to such Non-JV Acquired Companies.
Section 4.15. Labor.
(a) Set forth on Schedule 4.15(a) is a true and complete list, as of the date hereof,
of each labor or collective bargaining agreement to which any Asset Selling Entity or any Non-JV
Acquired Company is a party that applies to Acquired Company Employees or Business Employees.
(b) Except as set forth in Schedule 4.15(b), no labor organization has made a written
demand against any Asset Selling Entity or any Non-JV Acquired Company for recognition with respect
to representation of any Business Employees or group of Business Employees; and there are no
representation proceedings or written petitions seeking a representation proceeding presently
pending against any Asset Selling Entity or Non-JV Acquired Companies involving any Business
Employees or, to Sellers Knowledge, threatened in writing to be brought or filed against any
Seller related to the Relevant ASE Business with the United States National Labor Relations Board
or other Governmental Body. Except as set forth in Schedule 4.15(b), to Sellers
Knowledge, there is no ongoing organizing activity involving Business Employees pending or
threatened in writing by any labor organization or group of Business Employees.
(c) Except as set forth in Schedule 4.15(c), to Sellers Knowledge, there are no
current or threatened material (i) strikes, work stoppages, slowdowns or lockouts involving any
Business Employees, (ii) grievances, arbitrations or other material labor disputes or proceedings
pending or threatened in writing against or involving any Business Employees, or (iii) unfair labor
practice charges, grievances or complaints pending or threatened in writing by or on behalf of any
Business Employees.
(d) To Sellers Knowledge, each Non JV Acquired Company and each Asset Selling Entity is in
material compliance with all Laws applicable to the FPG Business relating to the employment of
their respective employees, including all such Laws applicable to fixed-term employees, temporary
employees and trainees, wages, hours, collective bargaining, employment discrimination (notably
gender discrimination), immigration, disability, civil rights, occupational safety and health,
workers compensation, pay equity and the collection and payment of withholding and/or social
contribution taxes and similar Taxes, and, as to those employed by Nobel or Nobel Iberica, no
temporary employee is classified as a permanent employee due to continued employment by such
company.
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(e) To Sellers Knowledge (other than DSE), no Asset Selling Entity has incurred any material
obligation or liability with respect to Business Employees under the WARN Act or any comparable
United States state or local law or ordinance which remains unsatisfied.
Section 4.16. Litigation.
Except for the filing of the Cases, there is no material Legal Proceeding pending or, to
Sellers Knowledge, threatened in writing against any Asset Selling Entity or any Non-JV Acquired
Company that challenges, or questions the validity of, this Agreement, any other Operative Document
or any action taken or to be taken by any of the Sellers in connection herewith or therewith, or
which seeks to enjoin or obtain monetary damages in respect of, the consummation of the
transactions contemplated hereby or thereby. Except for the filing of the Cases, Schedule
4.16 sets forth a true, complete and correct list, as of the date thereof, of all material
pending or, to Sellers Knowledge, threatened Legal Proceedings primarily related to the FPG
Business in which any Non-JV Acquired Company or Asset Selling Entity is or would be a party.
Section 4.17. Compliance with Laws.
Except with respect to Environmental Law matters which are addressed in Section 4.18,
Laws relating to employee benefits matters, which are addressed in Section 4.14, and Laws
relating to labor and employment matters, which are addressed in Section 4.15, each Asset
Selling Entity, with respect to the Relevant ASE Business conducted by it, and each Non-JV Acquired
Companys part of the FPG Business, is in compliance with all applicable Laws and all decrees
(including but not limited to the EU Directive 95/46/EC on the protection of individuals with
regard to the processing of personal data and on the free movement of such data, by certifying to
the Safe Harbor Principles of the US Department of Commerce), orders, judgments and Permits of or
from Governmental Bodies, except for minor instances of noncompliance or possible noncompliance
that would not reasonably be expected to be material, it being further acknowledged that any
violation of Law that would reasonably be expected to force any of the manufacturing facilities
listed on Schedule 16.70 (other than JV Acquired Entity facilities) to substantially cease
operations by order of a Governmental Body and where such ordered cessation of operations is
reasonably expected to last for 30 or more consecutive days, such cessation of operations will be
deemed to be a Material Adverse Effect.
Section 4.18. Environmental Matters.
(a) Dana represents and warrants that it has provided Orhan copies of all:
(i) written notices of a currently pending charge, action, hearing,
investigation, claim, demand or notice having been filed or commenced against any
Asset Selling Entity or the Non-JV Acquired Companies alleging any failure of the
FPG Business to comply with any Environmental Law concerning (A) the release or
threatened release of hazardous material (B) pollution or (C) protection of the
Environment;
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(ii) all Permits held by any Asset Selling Entity and the Non-JV Acquired
Companies in connection with the FPG Business and related to any Environmental Law;
and
(iii) all material environmental reports with respect to the Owned Real
Property and the Leased Real Property and the FPG Business set forth on Schedule
4.18(a).
(b) With respect to the Owned Real Property and any real property owned by Sellers and leased
to Purchasers following the Closing except as set forth in Schedule 4.18(b):
(i) to Sellers Knowledge, the FPG Business and the Owned Real Property and any
real property owned by Sellers and leased to Purchasers following the Closing are
not in material violation of any Environmental Law.
(ii) (A) no Asset Selling Entity has transported or disposed, or to Sellers
Knowledge allowed or arranged for any third parties to transport or dispose, of any
Hazardous Substance or other waste to or at a site which, pursuant to CERCLA or any
applicable state law, has been placed on the National Priorities List or its state,
national or international equivalent, (B) each Asset Selling Entity has all material
environmental permits necessary for the continued operation by it of the Relevant
ASE Business, (C) no Asset Selling Entity has submitted or was required to submit
any notice pursuant to Section 103(c) of CERCLA or received a request for
information under Section 104(e) of CERCLA, and (D) no Asset Selling Entity has
undertaken or has been ordered, directed or enjoined to undertake any response or
remedial actions or clean-up actions of any kind by any Governmental Body at any
Owned Real Property or any real property owned by Sellers and leased to Purchasers
following the Closing.
Section 4.19. Ownership of Necessary Assets and Rights.
The Purchased Assets and the assets owned, leased or used, as the case may be, by the Non-JV
Acquired Companies on the Closing Date, together with (i) those assets and services to be provided
pursuant to the Transition Agreement, (ii) the Intellectual Property covered by Section 7.7
and the IP Licenses, and (iii) those assets and services listed on Schedule 4.19 provided
in a similar manner as those provided to the FPG Business by Dana or its Affiliates prior to the
Closing, are in all material respects sufficient for the conduct of the FPG Business immediately
following the Closing in substantially the same manner as currently conducted.
Section 4.20. Brokers.
Except for Miller Buckfire & Co., LLC, (a) no Person has acted directly or indirectly as a
broker, finder or financial advisor for Sellers in connection with the negotiations relating to the
transactions contemplated hereby and (b) no Person is entitled to any fee or commission or like
payment in respect thereof from Purchasers based in any way on any agreement, arrangement or
understanding made by or on behalf of Sellers, and, further, Sellers are solely responsible for the
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fees and expenses of Miller Buckfire & Co., LLC, payable in connection with the transactions
contemplated hereby.
Section 4.21. Disclaimers of Sellers.
EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT, (A) SELLERS EXCLUDE
AND DISCLAIM ALL WARRANTIES, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE FPG BUSINESS OR THE PURCHASED ASSETS, (B) SELLERS MAKE NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE CONFIDENTIAL INFORMATION MEMORANDUM, FINANCIAL
SUPPLEMENT, PRESENTATIONS, REPORTS, OR ANY FINANCIAL FORECASTS OR PROJECTIONS OR OTHER INFORMATION
FURNISHED BY SELLERS OR THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, (C)
SELLERS UNDERTAKE NO LIABILITY FOR ANY DAMAGE, LOSS, EXPENSE OR CLAIM OR OTHER MATTER RELATING TO
ANY CAUSE WHATSOEVER ARISING UNDER OR PURSUANT HERETO (WHETHER SUCH CAUSE BE BASED IN CONTRACT,
NEGLIGENCE, STRICT LIABILITY, TORT OR OTHERWISE) AND IN NO EVENT SHALL SELLERS BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, INDIRECT OR PUNITIVE DAMAGES RESULTING FROM ANY SUCH
CAUSE, (D) SELLERS SHALL NOT BE LIABLE FOR, AND PURCHASERS ASSUME LIABILITY FOR, ALL PERSONAL
INJURY AND PROPERTY DAMAGE CONNECTED WITH PURCHASERS INVESTIGATION AND EXAMINATION OF THE
PURCHASED ASSETS, AND THE ACQUIRED COMPANIES, THE HANDLING, TRANSPORTATION, POSSESSION, PROCESSING,
FURTHER MANUFACTURE OR OTHER USE OR RESALE OF ANY OF THE PURCHASED ASSETS OR THE ASSETS OF THE
ACQUIRED COMPANIES AFTER THE CLOSING DATE, WHETHER SUCH PURCHASED ASSETS OR THE ASSETS OF THE
ACQUIRED COMPANIES ARE USED OR RESOLD ALONE OR IN COMBINATION WITH OTHER ASSETS OR MATERIALS, AND
(E) PURCHASERS ACKNOWLEDGE THAT THE PURCHASED ASSETS AND THE ACQUIRED COMPANIES ARE BEING SOLD IN
THEIR PRESENT STATE AND CONDITION, AS IS, WHERE IS, WITH ALL FAULTS, AND PURCHASER IS PURCHASING
AND ACQUIRING SUCH PURCHASED ASSETS AND THE ACQUIRED COMPANIES ON THAT BASIS PURSUANT TO
PURCHASERS OWN INVESTIGATION AND EXAMINATION AFTER HAVING BEEN PROVIDED WITH AN ADEQUATE
OPPORTUNITY AND ACCESS TO SUCH PURCHASED ASSETS AND THE ACQUIRED COMPANIES TO COMPLETE SUCH
INVESTIGATION OR EXAMINATION.
Section 4.22. Information Systems.
All information technology hardware and software owned by a Non-JV Acquired Company will
remain owned by the Non-JV Acquired Company immediately following the Closing, and all licenses to
information technology hardware and software licensed to a Non-JV Acquired Company will survive the
Closing and remain in full force and effect (in accordance with and subject to their terms)
immediately following the Closing. All information technology hardware and software owned by an
Asset Selling Entity and all licenses to information technology hardware and software licensed to
an Asset Selling Entity, to the extent used
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primarily in connection with the Relevant ASE Business, are included within the Purchased
Assets, and all such licenses will survive the Closing and remain in full force and effect (in
accordance with and subject to their terms) immediately following the Closing. To the extent such
assets are used under license, the applicable Seller will cooperate with and assist the applicable
Purchaser to obtain any necessary consents to the assignment and assumption of such license, or
alternatively, to obtain a new or replacement license, provided that any associated license or
transfer fees will be the obligation of the applicable Purchaser. Any information technology
services currently supplied by Sellers to the FPG Business but not described above, will be the
subject of and supplied under the terms of the Transition Agreement (i) in the case of services
provided directly by Dana or its Affiliates, at the cost to Dana (or such Affiliate) of providing
such services, and (ii) in the case of services provided by third parties, at the cost charged by
such third party (or an allocable share of such cost, as appropriate), without increase by Dana,
plus an allocable share of the costs to Dana (or its Affiliates) of administering such third-party
provider and the provision of such services. The parties will work together prior to Closing to
identify the specifics and scope of such information technology services to be provided under the
terms of the Transition Agreement. Subject to the foregoing, immediately following the Closing,
the applicable Purchaser will have ownership of and license rights to use all information
technology hardware and software which is owned, held or used by the Non-JV Acquired Entities or
used by any Asset Selling Entity primarily in connection with the Relevant ASE Business conducted
in Europe.
Section 4.23. Insurance Coverage.
Schedule 4.23 sets forth a true and complete list of insurance policies maintained by
the Non-JV Acquired Companies relating to the assets, business, operations, employees, officers or
directors of the Non-JV Acquired Companies. To Sellers Knowledge, none of the Non-JV Acquired
Companies has omitted or committed any act which would render null or inoperative such insurance
policies or which might bring about their cancellation.
Section 4.24. Conveyance; Free and Clear.
The Purchased Shares will be conveyed to the applicable Purchaser hereunder free and clear of
all Liens and other interests of all kinds, other than the Permitted Exceptions described in clause
(a) of the definition thereof and set forth on Schedule 16.130. Except as otherwise
contemplated by this Agreement, the Purchased Assets which are being sold by Debtor Asset Selling
Entities will be conveyed to the applicable Purchaser hereunder free and clear of all Liens and
other interests of all kinds, other than the Permitted Exceptions. To Sellers Knowledge, neither
Nobel nor Nobel Iberica is a real estate company for tax purposes.
Section 4.25. No Material Misstatements.
To Sellers Knowledge, this Agreement does not, and, when executed and delivered at the
Closing, the other Operative Documents to which such Seller is a party and the documents or
instruments listed in Schedule 3.2 relating to such Seller will not, contain any material
misstatement of fact, or omit to state any material fact necessary to make statements therein, in
the light of the circumstances under which they were made, not misleading.
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Section 4.26. No Other Representations or Warranties.
Except for the representations and warranties contained in this Article IV, no Seller,
any Affiliate of such Seller or any other Person makes any representations or warranties, and each
Seller hereby disclaims any other representations or warranties, whether made by such Seller or any
Affiliate of such Seller, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or any other
Operative Document, the transactions contemplated hereby or thereby or the FPG Business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As an inducement to Dana and the other Sellers to enter into this Agreement and to consummate
the transactions contemplated hereby, Orhan hereby represents and warrants to Dana on the date
hereof, and, jointly and severally with the Purchasing Affiliates, hereby represents and warrants
to Dana and the other Sellers on the Closing Date, and each Purchasing Affiliate, severally and not
jointly, hereby represents and warrants (with respect only to itself) to Dana and the other Sellers
on the Closing Date, that:
Section 5.1. Organization and Qualification.
(a) Orhan is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has the requisite corporate or other power and authority
to own or lease and operate its properties and to carry on, in all material respects, its business
as currently conducted.
(b) At the Closing Date, each Purchaser will be a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation and will have the requisite
corporate or other power and authority to own or lease and operate its properties.
Section 5.2. Corporate Authorization.
(a) Orhan has full corporate power and authority to enter into, execute and deliver (or cause
to be entered into, executed and delivered) this Agreement and each Operative Document to which it
is a party and the documents or instrument listed in Schedule 3.3, and to perform or cause
to be performed its obligations hereunder and thereunder. The execution, delivery and performance
by Orhan of this Agreement and each Operative Document and other document or instrument listed in
Schedule 3.3 to which it is a party has been or as of the Closing Date will be duly
authorized by all requisite corporate action on the part of Orhan.
(b) At the Closing Date, each Purchaser will have full corporate power and authority to enter
into, execute and deliver (or cause to be entered into, executed and delivered) this Agreement and
each other Operative Document to which it is a party and the other documents or instruments listed
in Schedule 3.3, and to perform or cause to be performed its obligations hereunder and
thereunder. The execution, delivery and performance by each Purchaser of this Agreement and each
Operative Document to which it is a party and other
32
document or instrument listed in Schedule 3.3 to which it is a party as of the Closing
Date will be duly authorized by all requisite corporate action on the part of such Purchaser.
Section 5.3. Consents and Approvals.
Upon entry of the Approval Order and subject to it becoming a Final Order, no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of any Purchaser in connection with the
execution and delivery of this Agreement or any other Operative Document to which it is a party,
the consummation of the transactions contemplated hereby and thereby or the compliance by such
Purchaser with any of the provisions hereof or thereof, except for compliance with any applicable
requirements of the HSR Act and/or the EC Regulation and other applicable merger control or similar
Laws and the receipt of appropriate Permits by Orhan or the applicable Purchaser to conduct the
applicable part of the FPG Business and operate the relevant portion of the Purchased Assets.
Section 5.4. Non-Contravention.
None of the execution and delivery by each of the Purchasers of this Agreement and the other
applicable Operative Documents to which it is a party, the consummation of the transactions
contemplated hereby or thereby or the compliance by the Purchasers with any of the provisions
hereof or thereof will (a) result in the breach of, any provision of the certificate or articles of
incorporation, bylaws or similar organizational documents of any of such Purchaser or (b) violate,
result in the breach of, or constitute a material default under any Law or Order by which such
Purchaser or any of its respective properties or assets is bound or subject.
Section 5.5. Binding Effect.
As of the date hereof, this Agreement, and the Deposit Agreement constitute and, when executed
and delivered on the Closing Date, each of the other Operative Documents to which any of the
Purchasers is a party executed on the Closing Date will constitute, a valid and legally binding
obligation of Orhan and the applicable Purchaser parties thereto, as applicable, enforceable
against Orhan and such applicable Purchasers in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors rights and to general equity principles (whether in equity or at law).
Section 5.6. Litigation.
There is no Legal Proceeding pending or, to Orhans Knowledge, threatened in writing, against
Orhan that challenges, or questions the validity of, this Agreement, the other Operative Documents
to which Orhan or any other Purchaser is or is to be a party or any action taken or to be taken by
Orhan or any other Purchaser in connection with, or that seeks to enjoin or obtain monetary damages
in respect of, the consummation of the transactions contemplated hereby or thereby.
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Section 5.7. Financing.
Orhan has, and has no Knowledge of any circumstance or condition that would reasonably be
expected to prevent the availability at the Closing of, sufficient funds to consummate the
transactions contemplated by this Agreement (including payment by Orhan of the Initial Cash
Consideration). Orhan has incurred no commitment, restriction or Liability of any kind, absolute
or contingent, present or future, which would impair or adversely affect its available resources
and capabilities (financial or otherwise), or those of any of its Affiliates, to perform its or
their obligations hereunder and under the Operative Documents to which it or any of them is a
party. Schedule 5.7 sets forth evidence of the availability of funds or financing
commitments to be used in connection with the transaction contemplated hereby.
Section 5.8. Brokers.
No Person has acted directly or indirectly as a broker, finder or financial advisor for Orhan
or any of its Affiliates in connection with the negotiations relating to or the transactions
contemplated hereby and no Person is entitled to any fee or commission or like payment in respect
thereof from Sellers or any of their Subsidiaries or Affiliates based in any way on agreements,
arrangements or understandings made by or on behalf of Orhan or any of its Affiliates.
Section 5.9. No Inducement or Reliance; Independent Assessment.
(a) With respect to the Purchased Shares, the Purchased Assets, the FPG Business or any other
rights or obligations to be transferred hereunder or under the Operative Documents or pursuant
hereto or thereto, no Purchaser has been induced by or has relied upon any representations,
warranties or statements, whether express or implied, made by any Seller, any Affiliate of any
Seller, or any agent, employee, attorney or other representative of any Seller representing or
purporting to represent any Seller that are not expressly set forth herein or in the other
Operative Documents, whether or not any such representations, warranties or statements were made in
writing or orally, and no Seller, no Affiliate of Seller, nor any agent, employee, attorney, other
representative of any Seller or other Person shall have or be subject to any liability to any
Purchaser or any other Person resulting from the distribution to any Purchaser, or any Purchasers
use of, any such information, including the Confidential Information Memorandum prepared by Miller
Buckfire & Co., LLC relating to the FPG Business and any information, documents or material made
available in any data rooms or management presentations or in any other form in expectation of
the transactions contemplated hereby.
(b) No Seller, no Affiliate of Seller, nor any agent, employee, attorney, other representative
of any Seller shall have or be subject to any liability to Orhan or any Purchaser resulting from
the distribution to or any Purchaser, or any Purchasers use, of the Confidential Information
Memorandum prepared by Miller Buckfire & Co., LLC.
(c) Each Purchaser acknowledges that it has made its own assessment of the present condition
and the future prospects of the FPG Business and is sufficiently experienced to make an informed
judgment with respect thereto. Each Purchaser acknowledges that, except as explicitly set forth
herein, no Seller nor any of its Affiliates has made any warranty, express or
34
implied, as to the prospects of the FPG Business or its profitability for Orhan or applicable
Purchasers, or with respect to any forecasts, projections or business plans prepared by or on
behalf of Sellers and delivered to any Purchaser in connection with its review of the FPG Business
and the negotiation and the execution of this Agreement and the other Operative Documents.
(d) The Purchasers are purchasing the Purchased Shares or the Purchased Assets, as the case
may be, for investment and not with a view to any resale or distribution thereof, but subject,
nevertheless, to any requirement of Law that the disposition of its property remain within its
control at all times, and neither it nor anyone authorized by it to act on its behalf has directly
or indirectly offered any interest in such Purchased Shares or Purchased Assets, as the case may
be, or any similar security for sale to, or solicited any offer to acquire any of the same from,
any Person.
ARTICLE VI
COVENANTS OF SELLERS
From and after the date hereof and until the Closing (except with respect to Section
6.9, which shall survive the Closing in accordance with its terms), Dana hereby covenants and
agrees, and, effective as of the Closing (with respect to Section 6.9), each Seller,
severally and not jointly, hereby covenants and agrees (with respect only to itself and to its
Relevant ASE Business, Purchased Assets, Non-JV Acquired Company or Purchased Shares, as the case
may be), that:
Section 6.1. Access, Further Actions.
(a) Dana shall, and shall cause (A) its Subsidiaries to, afford to representatives of the
Purchasers reasonable access to senior management of the FPG Business to answer such Purchasers
questions concerning the business operations and affairs of the FPG Business, corporate records,
books of accounts, Contracts, financial statements and all other documents (excluding confidential
portions of personnel and medical records) related to the FPG Business reasonably requested by
Purchasers and shall permit Purchasers and their representatives reasonable access to the Owned
Real Property and the Leased Real Property (but excluding the Excluded Assets and subject to any
limitations that are reasonably required to preserve any applicable attorney-client privilege or
third-party confidentiality obligation); provided, however, that in each case, such access shall be
given at reasonable times and upon reasonable prior notice and without undue interruption to any
Sellers business or personnel as approved by Dana. All requests for access shall be made to such
representatives of such Seller as Dana shall designate, who shall be solely responsible for
coordinating all such requests and access thereunder.
(b) Before the Closing, Dana shall, and shall cause any applicable Selling Affiliate to,
execute and deliver such instruments and take such other actions as may reasonably be required to
(i) carry out the intent of this Agreement and the other Operative Documents and (ii) consummate
the transactions contemplated hereby and thereby.
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Section 6.2. Conduct of FPG Business.
Unless (1) ordered by the Bankruptcy Court, (2) required by this Section 6.2, to make
any payment of any amount owed to creditors on the Petition Date, (3) such action would violate the
Bankruptcy Code, (4) otherwise consented to by Orhan, which consent shall not be unreasonably
withheld, conditioned or delayed, or (5) such action is otherwise expressly provided for or
contemplated by or in this Agreement, until the Closing Date, Dana shall cause each Seller to use
commercially reasonable efforts to, and to cause each Non-JV Acquired Company to:
(a) (i) operate the FPG Business, including managing levels of inventories, supplies, accounts
receivable and accounts payable, in the ordinary course in all material respects consistent with
past practice, (ii) to honor binding commitments for capital expenditures as to capital projects
currently authorized, in the ordinary course in all material respects consistent with past
practice, and (ii) preserve its present material business operations, organization and goodwill;
(b) not incur any Indebtedness in connection with the FPG Business, other than (i)
Indebtedness incurred in the ordinary course of business, (ii) Indebtedness in an amount not in
excess of $100,000 in the aggregate (excluding Indebtedness permitted by Section
6.2(b)(i)), and (iii) intercompany indebtedness between Affiliates;
(c) not acquire or dispose of any material property or assets used in the FPG Business or
create or permit to exist any Lien (other than Permitted Exceptions or Liens securing obligations
under Seller Financing) on any such property or assets except in the ordinary course of business or
with respect to property or assets not in excess of U.S.$100,000 in the aggregate;
(d) not make, or enter into commitments for, capital expenditures connection with the FPG
Business in excess of U.S.$50,000 individually or U.S.$100,000 in the aggregate;
(e) not enter into any Contracts in connection with the FPG Business, except for Contracts
made in the ordinary course of business;
(f) not amend or terminate any Material Business Contract, except for amendments or
terminations made in the ordinary course of business;
(g) not engage in any transactions with, or enter into any Material Business Contracts with,
any Affiliate of any Seller in connection with the FPG Business, except for any such transactions
or Material Business Contracts in the ordinary course of business on terms no less favorable than
would be obtained in an arms length third party transaction, and that are terminable on the
Closing Date without penalty or for any such transactions;
(h) not enter into, adopt, amend or terminate any Contract relating to the compensation or
severance entitlement of any employee employed in the FPG Business, except (i) in the ordinary
course of business, (ii) to the extent required by Law or any existing Contracts, or (iii) as to
Retention Agreements (except Assumed Retention Agreements);
(i) not accelerate the rate of collection of accounts receivable in connection with the FPG
Business other than in the ordinary course of business;
36
(j) not amend the organizational documents of any Acquired Company; and
(k) not take any action or actions prohibited by any of the foregoing clauses (a) through (j).
Section 6.3. Bankruptcy Actions.
(a) Within five (5) Business Days after the execution of this Agreement, Dana shall file with
the Bankruptcy Court a motion in substantially the form of Exhibit F hereto (the Sale
Motion) seeking, among other things, entry of (i) an order approving (A) the bidding protections
including the Breakup Fee described and/or set forth in Article XIV of this Agreement or
otherwise set forth in the Sale Motion, and (B) certain bidding procedures for alternative offers
for the Purchased Shares and Purchased Assets, which proposed order shall be substantially in the
form of Exhibit G hereto (collectively, the Bidding Procedures Order), and (ii) an order
approving this Agreement and the transactions contemplated hereby (including the sale of the
Purchased Assets to Purchasers free and clear of all Liens except Permitted Exceptions) should the
purchase offer made by this Agreement constitute the highest and best offer for the Purchased
Shares and Purchased Assets pursuant to the Bidding Procedures Order, which order shall be
substantially in the form of Exhibit H hereto (the Approval Order).
(b) Dana shall use commercially reasonable efforts to have the Bankruptcy Court (i) schedule a
hearing on the Sale Motion, (ii) enter the Bidding Procedures Order as soon as practicable
following the date hereof, but in any case no later than 30 days after the date hereof, and (iii)
enter the Approval Order as and when contemplated by the Bidding Procedures Order, but in any case
no later than 75 days after entry of the Bidding Procedures Order. Dana shall use commercially
reasonable efforts to cause the Bidding Procedures Order and the Approval Order to become Final
Orders as soon as possible after their entry. Furthermore, Dana shall seek any other approvals or
consents from the Bankruptcy Court that may be reasonably necessary to consummate the transactions
contemplated in this Agreement.
(c) Dana shall promptly provide Orhan with drafts of all documents, motions, orders, filings,
or pleadings that Dana or any Affiliate propose to file with the Bankruptcy Court or any other
court or tribunal which relate in any manner, directly or indirectly, to (i) this Agreement or the
transactions contemplated hereby; (ii) the Sale Motion; or (iii) entry of the Bidding Procedures
Order or the Approval Order, and, if practicable, will provide Orhan with a reasonable opportunity
to review and comment upon such documents in advance of their service and filing. To the extent
practicable, Dana shall consult and cooperate with Orhan, and consider in good faith the views of
Orhan, with respect to all such filings.
(d) Dana shall comply with all notice requirements of the Bankruptcy Code, the Federal Rules
of Bankruptcy Procedure and any Order of the Bankruptcy Court in connection with the service of the
Sale Motion and providing notice of the entry of the Bidding Procedures Order and the hearing on
and notice of entry of the Approval Order.
Section 6.4. Regulatory Approvals.
(a) Dana shall, as promptly as practicable, use commercially reasonable efforts to assist and
cooperate with Orhan in the making of all antitrust filings. Dana shall, as
37
promptly as practicable, use commercially reasonable efforts to make all other registrations and
filings with, and obtain all necessary actions or non-actions, waivers, consents and approvals
from, all applicable Governmental Bodies in connection with the transactions contemplated by this
Agreement.
(b) Dana shall keep Orhan apprised of the status of all material matters referred to in
Section 6.4(a), including promptly furnishing Orhan with copies of notices or other
communications received by Dana or by any of its Subsidiaries from any Governmental Body with
respect to the transactions contemplated hereby. Dana shall promptly furnish Orhan with such
necessary information and reasonable assistance as Orhan may request from time to time and shall
promptly provide Orhans counsel with copies of all filings made by Dana or any of its
Subsidiaries, and all correspondence between Dana or any of its Subsidiaries (and Danas advisors)
with any Governmental Body and any other information supplied by Dana and its Subsidiaries to a
Governmental Body in connection therewith and the transactions contemplated hereby; provided,
however, that Dana may, as it deems advisable and necessary, designate any competitively sensitive
material provided to Orhan as outside counsel only, and such materials may be redacted (i) to
remove references concerning the valuation of the FPG Business and (ii) as necessary to comply with
contractual arrangements. Materials designated as for outside counsel only and the information
contained therein shall be given only to the outside legal counsel to Orhan and will not be
disclosed by such outside counsel to employees, officers or directors of Orhan unless express
permission is obtained in advance from Dana or its legal counsel. Dana shall, subject to
applicable Law, permit counsel for Orhan reasonable opportunity to review in advance, and consider
in good faith the views of Orhan in connection with, any proposed written communication to any
Governmental Body in connection with the matters referred to in this Section 6.4. To the
extent practicable, Dana agrees to consult with Orhan prior to participating or permitting its
Subsidiaries to participate, in any substantive meeting or discussion, either in person or by
telephone, with any Governmental Body in connection with the regulatory approvals and, to the
extent not prohibited by such Governmental Body, and deemed advisable by the parties, agrees to
give Orhan the opportunity to participate.
Section 6.5. Assignment of Contracts.
Dana shall use commercially reasonable efforts to include in the Approval Order an
authorization for the applicable Debtor Asset Selling Entity to assume (within the meaning of the
Bankruptcy Code) the relevant Debtor Contracts and assign to the applicable Purchaser such Debtor
Contracts. Upon entry of the Approval Order and as of the Closing Date, the applicable Purchaser
shall be exclusively responsible for any and all obligations of such Debtor Asset Selling Entity
under such Debtor Contracts, including, without limitation, the cure of all monetary defaults with
respect to such Debtor Contracts in accordance with Section 7.2 below.
Section 6.6. Updating of Information.
The parties agree that, if Orhan, or any Seller, obtain Knowledge prior to Closing of any
facts or circumstances that result in, or, if in existence on the Closing Date, would result in, a
material breach of any representation or warranty contained in Article IV, and such breach
causes, or would reasonably be expected to cause, a Material Adverse Effect, (a) such party will
notify the other parties in writing reasonably promptly after learning of such facts or
38
circumstances (but in any event before the Closing Date), and (b) Dana shall have 10 Business
Days within which to cure such breach or potential breach or to notify Orhan that Dana does not
intend to cure such breach or potential breach. If Dana notifies Orhan that it does not intend to
cure such breach or potential breach or Dana has been unable to effect a cure within such 10
Business Day period and is ceasing to pursue a cure, the provisions of Section 14.1 will
apply. If Orhan elects not exercise its termination rights under Section 14.1, this
Agreement, and the schedules hereto shall be deemed amended as necessary to reflect the facts
underlying such breach or potential breach and Orhan shall be deemed to have waived its rights
hereunder or otherwise with respect to such breach or potential breach, except as to Known Claims
as provided in Article XII.
Section 6.7. Intercompany Accounts.
On or prior to the Closing Date, but subject to the entry of the Approval Order, all
intercompany receivables, payables, loans, notes and investments then existing between or among any
Seller and/or any of its Subsidiaries that is not an Acquired Company, on the one hand, and any
Non-JV Acquired Company, on the other hand (except and excluding the Transferred Intercompany
Receivables), shall be paid, settled or otherwise extinguished and fully satisfied.
Section 6.8. Nobel Iberica and Nobel Receivables.
(a) On or prior to the Closing Date, TPF shall cause Nobel Iberica to dividend to Nobel, under
the process described in Schedule 6.8, the intercompany receivables referred to in
Schedule 6.8.
(b) On or prior to the Closing Date, TPF shall cause Nobel to assign to TPF, under the process
described in Schedule 6.8, the intercompany receivables referred to in Schedule
6.8.
(c) The parties acknowledge and agree that the indebtedness from Orda Automotive, A.S. in the
amount of approximately 1.2 million will be modified or restated to reduce the outstanding
principal amount to 600,000 and extend the payment term by twelve months, and that the parties
will prior to the Closing or, in accordance with Section 11.1, after the Closing, take any
necessary steps to ensure that all right, title and interest in and to such note is vested in TPF
or its designee.
Section 6.9. NMD Joint Venture Interest.
The disposition of Danas joint venture interest in NMD will be determined and effected in
accordance with Schedule 6.9.
Section 6.10. China FPG Initiative.
Dana and Orhan will cooperate and work together to identify a site, to lease suitable space
and facilities, and to form the China Subsidiary to position the start up of the FPG Business in
China.
39
ARTICLE VII
COVENANTS OF PURCHASERS
From and after the date hereof and until the Closing Date (except with respect to Section
7.7, which shall survive the Closing in accordance with its terms), Orhan hereby covenants and
agrees, and, effective as of the Closing (with respect to Section 7.7), Orhan, jointly and
severally with the Purchasing Affiliates, and each Purchasing Affiliate, severally and not jointly
(with respect only to itself), hereby covenants and agrees, that:
Section 7.1. Contact with Customers, Suppliers and Employees.
Without the prior consent of Bill Riley or such other authorized representative designation in
writing by Dana, Orhan shall not, either directly or through Affiliates or representatives, contact
any suppliers to, or customers of, the Non-JV Acquired Companies or the FPG Business or any
Business Employees or employees of any Non-JV Acquired Companies in connection with or pertaining
to the disposition of the FPG Business or the terms or any subject matter of this Agreement or any
other Operative Document.
Section 7.2. Cure of Defaults.
Subject to entry of the Approval Order and such Approval Order becoming a Final Order,
including the authorization referred to in Section 6.4, at the Closing, Orhan shall, or
shall cause the applicable Purchaser to, at its expense cure any and all monetary defaults with
respect to the Contracts referred to in Section 6.5 that will be transferred to Orhan or
the applicable Purchaser at Closing as and in the amounts required by the Bankruptcy Court to
assume and assign such Contracts under Section 365 of the Bankruptcy Code (the Cure Costs), such
Cure Costs not to exceed $30,000.
Section 7.3. Bankruptcy Actions.
Orhan shall use commercially reasonable efforts to assist Seller in obtaining entry of the
Bankruptcy Court Orders, including providing testimony, if any, as required at any hearing before
the Bankruptcy Court.
Section 7.4. Consents, Conditions, Antitrust and Competition.
(a) Orhan shall use commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, to consummate and make effective the transactions
contemplated hereby and by the other Operative Documents as promptly as practicable, including, but
not limited to: (i) obtaining all necessary consents, approvals or waivers from, and giving any
necessary notifications to, third parties; (ii) making all registrations and filings with, and
obtaining all necessary actions or non-actions, waivers, consents and approvals from, all
Governmental Bodies (including but not limited to those in connection with the EC Regulation) and
taking all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, a Governmental Body; and (iii) together with Sellers, defending any Legal
Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary
40
restraining order or preliminary or permanent injunction entered by any Governmental Body
vacated or reversed. In furtherance of, and without in any way limiting, the foregoing, Orhan
shall use commercially reasonable efforts to avoid the issuance of a Request for Additional
Information and Documentary Material (Second Request) under 15 U.S.C. § 18a(e)(2) or civil
investigative demand or comparable request in the United States or the issuance of a decision under
Article 6(1)(c) of the EC Regulation initiating a Second Phase investigation (Second Phase) or
the extension by any other Governmental Body of its clearance procedure beyond the initial waiting
period or any steps by an Governmental Body prohibiting or delaying the parties ability to
consummate and make effective the transactions contemplated hereby and by the other Operative
Documents. Without limiting the foregoing, if the staff of a competition authority indicates the
intention to issue a Second Request in the U.S. or to initiate a Second Phase investigation in the
EU or to extend the initial waiting period in any other jurisdiction, then Orhan may in its sole
discretion offer undertakings acceptable to the relevant competition authority, provided that such
undertakings do not result in a change to the terms of this Agreement, including the purchase price
and the identification of assets and businesses to be transferred to the Purchasers, including
proposing, negotiating, committing to and effecting, by consent decree, undertaking, hold separate
order or otherwise, the sale, divestiture or disposition of, or the imposition of any limitation
upon, such assets or businesses of Orhan (including its Subsidiaries) or the FPG Business (so long
as conditioned upon, and not occurring prior to, the Closing and so long as none of the foregoing
has any effect on the terms of the transactions contemplated hereby and by the other Operative
Documents), along with any ancillary agreements (all such undertakings, the Remediations). In
the case of the European Commission, Orhan shall make the offer no later than the end of the 20
working-day period provided by Law for the acceptance of undertakings after submission of a final
notification on Form CO.
(b) In the event that a Second Request or civil investigative demand is issued, a Second Phase
investigation is initiated or clearance from any Governmental Body having jurisdiction over the
transaction is not obtained during the initial waiting period, Orhan may offer all Remediations and
take any and all other steps necessary to obtain all necessary consents, approvals or waivers (so
long as conditioned upon, and not occurring prior to, the Closing and so long as none of the
foregoing has any effect on the terms of the transactions contemplated hereby and by the other
Operative Documents) until the conclusion of any such antitrust investigation.
(c) Orhan shall keep Sellers apprised of the status of material matters relating to the completion
of the transactions contemplated by this Agreement, including promptly furnishing Sellers with
copies of notices or other communications received by Orhan or other Purchasers or by any of their
Subsidiaries from any Governmental Body with respect to the transactions contemplated hereby.
Orhan shall promptly furnish to Sellers such necessary information and reasonable assistance as
Sellers may request from time to time and shall promptly provide counsel for Sellers with copies of
all filings made by Orhan or any of its Subsidiaries, and all correspondence between Orhan and any
of its Subsidiaries (and Orhans advisors) with any Governmental Body and any other information
supplied by Orhan and its Subsidiaries to a Governmental Body in connection therewith and the
transactions contemplated hereby, provided, however, that Orhan may, as it deems advisable and
necessary, designate any competitively sensitive material provided to Sellers as outside counsel
only, and materials may be redacted (i) to remove references concerning the valuation of the FPG
Business and (ii) as
41
necessary to comply with contractual arrangements. Materials designated as for outside counsel
only and the information contained therein shall be given only to the outside legal counsel of
Sellers and will not be disclosed by such outside counsel to employees, officers or directors of
Sellers unless express permission is obtained in advance from Orhan or its legal counsel. Orhan
shall, subject to applicable Law, permit counsel for Sellers reasonable opportunity to review in
advance, and consider in good faith the views of Sellers in connection with, any proposed written
communication to any Governmental Body in connection with the matters referred to in this
Section 7.4. To the extent practicable, Orhan agrees to consult with Sellers prior to
participating, or permitting its Subsidiaries to participate, in any substantive meeting or
discussion, either in person or by telephone, with any Governmental Body in connection herewith and
the transactions contemplated hereby and, to the extent not prohibited by such Governmental Body,
to give Sellers the opportunity to attend and participate.
Section 7.5. Further Actions.
(a) Before the Closing, Orhan shall, and shall cause any applicable Purchasers to, execute and
deliver such instruments and take such other actions as may reasonably be required to (i) carry out
the intent of this Agreement and the other Operative Documents and (ii) consummate the transactions
contemplated hereby and thereby. From the execution hereof until the Closing, Orhan undertakes to
promptly notify Sellers in writing of any known breach of any representation, warranty or covenant
of any Seller or any circumstance or condition that could reasonably be expected to constitute such
a breach.
(b) Orhan shall give any notices required by Law and shall take whatever other actions with
respect to employee benefit plans of Orhan as may be necessary to effectuate the arrangements set
forth in Section 10.1 through 10.4.
(c) Except as may otherwise be provided in Section 10.1 through 10.4, Orhan
shall use commercially reasonable efforts to comply with any and all successorship requirements or
obligations contained in any collective bargaining agreement set forth on Schedule 4.15(a).
Section 7.6. Guarantees; Letters of Credit.
Orhan shall, or shall cause the applicable Purchaser to, be substituted in all respects for a
Stock Selling Entity, effective as of the Closing Date, in respect of all obligations of such
Seller under each of the guarantees, letters of credit, letters of comfort, bid bonds and
performance bonds set forth in Schedule 7.6 (the Guarantees) obtained by such Seller for
the benefit of an Acquired Company (and such Seller shall be released from any such obligations).
As a result of the substitutions contemplated by this Section 7.6, the Stock Selling
Entities shall have no, and shall be released from any, obligation arising from or in connection
with the Guarantees from and after the Closing Date.
Section 7.7. Use of Sellers Name.
Orhan agrees that:
(a) within 90 days after the Closing Date, Orhan shall remove, or cause to be removed, Dana, the
Dana diamond logo and any other similar mark (the Seller Name) and
42
any other Trademark, trade dress, design or logo previously or currently used by Seller or any of
its Affiliates that is not part of the Acquired Intellectual Property from all domain names, web
sites, buildings, signs and vehicles of the FPG Business;
(b) within 90 days after the Closing Date, Orhan shall, and shall cause the applicable
Purchasers to, remove and cease using the Excluded Intellectual Property and the Seller Name and
any other Trademark, trade dress, design or logo previously or currently used by Seller or any of
its Affiliates that is not part of the Acquired Intellectual Property in all invoices, letterhead,
packaging, advertising and promotional materials, office forms, business cards and other written
and electronic materials;
(c) within 90 days after the Closing Date (i) Orhan shall, and shall cause the applicable
Purchasers to, remove and cease using the confetti design packaging from the inventory of
packaging materials and marketing materials of the FPG Business that is in existence as of the
Closing Date (Existing Inventory) and (ii) Orhan shall, and shall cause the applicable Purchasers
to, remove and cease using the Seller Name and any other Trademark, trade dress, design or logo
previously or currently used by any Seller or any of its Affiliates that is not part of the
Acquired Intellectual Property from those assets of the FPG Business that are not Existing
Inventory, including those assets (such as, but not limited to, tools, molds and machines) used in
association with the manufacture of the products of the FPG Business or otherwise reasonably used
in the conduct of the FPG Business after the Closing Date (such assets, Other Marked Assets);
(d) In no event shall Orhan or any of its Affiliates advertise or hold itself out as any
Seller or an Affiliate of any Seller at any time before, on or after the Closing Date; and
(e) As soon as reasonably practicable after the Closing Date, but in no event later than 60
days following the Closing Date, Orhan shall, and shall cause the applicable Purchasers to, change
the names of the Acquired Companies and shall change all filings, licenses, and other items, to
delete references to Dana, if any, and the Excluded Intellectual Property.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASERS OBLIGATIONS
The obligation of Orhan and each other Purchaser to consummate the transactions contemplated
hereby and in the other Operative Documents to which it is a party is subject to the satisfaction
(or, if permitted, waiver by Orhan in its sole discretion), on or before the Closing Date, of each
of the following conditions:
Section 8.1. Accuracy of Representations and Warranties.
Each of the representations and warranties of Sellers contained herein shall be true and
correct in all respects at and as of the Closing Date (except, in each case, to the extent any such
representation or warranty speaks as of a specific date, in which case such representation or
warranty shall be true and correct as of such specific date); provided, however, that,
notwithstanding the breach of any such representation or warranty, the condition set forth in this
43
Section 8.1 shall be deemed satisfied unless such breach has resulted in, or would
reasonably be expected to result in, a Material Adverse Effect.
Section 8.2. Performance of Covenants.
Sellers shall have performed and complied, in all material respects, with the covenants and
provisions hereof required to be performed or complied with by them between the date hereof and the
Closing Date.
Section 8.3. Antitrust and Competition Laws.
Any applicable waiting periods under the HSR Act, the EC Regulation or any similar regulation
of any other Governmental Body relating to the transactions contemplated by this Agreement shall
have expired or been terminated. Each such Governmental Body approval identified in Schedule
8.3 (other than Governmental Body approval in Brazil) shall have been obtained.
Section 8.4. No Injunctions.
No preliminary or permanent injunction or other order of any Governmental Body of competent
jurisdiction restraining or prohibiting the consummation of the transactions contemplated hereby
shall be in place on the Closing Date.
Section 8.5. Entry of Orders By Bankruptcy Court; Consents Obtained.
The Bankruptcy Court shall have entered the Bidding Procedures Order and the Approval Order,
and the Bidding Procedures Order and the Approval Order shall have become Final Orders and shall
not have been vacated, stayed, or reversed, or modified, amended, or supplemented in any material
manner; provided, however, that it shall not be a condition to Orhans obligation to consummate the
transactions contemplated by this Agreement that the Bidding Procedures Order and the Approval
Order be Final Orders if either the Bidding Procedures Order or the Approval Order is not a Final
Order solely as a result of an appeal of the relief granted pursuant to such Order, which appeal
(a) does not challenge Purchasers good faith purchaser status under Section 363(m) of the
Bankruptcy Code, (b) does not assert that the transactions contemplated by this Agreement are
avoidable pursuant to, or otherwise violate, Section 363(n) of the Bankruptcy Code, and (c) has not
resulted in a stay of such Order.
Section 8.6. Consents.
All consents set forth on Schedule 8.6 shall have been obtained.
Section 8.7. Officers Certificate.
Orhan and the other Purchasers shall have received a certificate from each Seller to the
effect set forth in Section 8.1 and 8.2, dated the Closing Date, signed by an
authorized officer of such Seller.
44
Section 8.8. Material Adverse Effect.
Since the date of this Agreement no event shall have occurred that would constitute a Material
Adverse Effect or reasonably would be expected to result in a Material Adverse Effect.
Section 8.9. Selling Affiliates.
Each of the Selling Affiliates shall have entered into and become a party to this Agreement as
provided in Section 1.1(a).
Section 8.10. Other Deliveries.
Orhan shall have received the documents and instruments required by Section 3.2 and
such other documents or instruments as Orhan may reasonably request consistent with Sellers
obligations under this Agreement and the other Operative Documents.
Section 8.11. Other Conditions.
Each of the other conditions described in Schedule 8.11 shall have been satisfied.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLERS OBLIGATIONS
The obligation of Dana and each other Seller to consummate the transactions contemplated
hereby and in the other Operative Documents to which it is a party is subject to the satisfaction
(or, if permitted, waiver by Dana in its sole discretion), on or before the Closing Date, of each
of the following conditions:
Section 9.1. Accuracy of Representations and Warranties.
Each of the representations and warranties of Orhan contained herein shall be true and correct
in all respects at and as of the Closing Date (except, in each case, to the extent any such
representation and warranty speaks as of a specific date, in which case such representation and
warranty shall be true and correct, as of such specific date).
Section 9.2. Performance of Covenants.
Purchasers shall have performed and complied, in all material respects, with the covenants and
provisions hereof required to be performed or complied with by them between the date hereof and the
Closing Date and each Seller Authorization shall have been obtained.
Section 9.3. Antitrust and Competition Laws.
Any applicable waiting periods under the HSR Act, the EC Regulation or any similar regulation
of any other Governmental Body relating to the transactions contemplated by this Agreement shall
have expired or been terminated. Each such Governmental Body approval
45
identified in Schedule 9.3 (other than Governmental Body approval in Brazil) shall
have been obtained.
Section 9.4. No Injunctions.
No preliminary or permanent injunction or other order of any Governmental Body of competent
jurisdiction restraining or prohibiting the consummation of the transactions contemplated hereby
shall be in place on the Closing Date.
Section 9.5. Entry of Orders By Bankruptcy Court.
The Bankruptcy Court shall have entered the Bidding Procedures Order and the Approval Order,
and the Bidding Procedures Order and the Approval Order shall have become Final Orders and shall
not have been vacated, stayed, or reversed, or modified, amended, or supplemented in any material
manner; provided, however, that it shall not be a condition to Sellers obligation to consummate
the transactions contemplated by this Agreement that the Bidding Procedures Order and the Approval
Order be Final Orders if either the Bidding Procedures Order or the Approval Order is not a Final
Order solely as a result of an appeal of the relief granted pursuant to such Order, which appeal
(a) does not challenge Purchasers good faith purchaser status under Section 363(m) of the
Bankruptcy Code, (b) does not assert that the transactions contemplated by this Agreement are
avoidable pursuant to, or otherwise violate, Section 363(n) of the Bankruptcy Code, and (c) has not
resulted in a stay of such Order.
Section 9.6. Officers Certificate.
Dana and the other Sellers shall have received a certificate from Orhan and each other
Purchaser, if any, to the effect set forth in Section 9.1 and 9.2, dated the
Closing Date, signed by an authorized officer of Orhan.
Section 9.7. Other Deliveries.
Each Seller shall have received the documents and instruments required by Section 3.3
and such other documents or instruments as Dana may reasonably request consistent with Orhans
obligations under this Agreement and the other Operative Documents.
ARTICLE X
EMPLOYEES
Section 10.1. Transferred Employees.
(a) Prior to the Closing Date, Orhan shall, or shall cause each applicable Purchaser acquiring
the Purchased Assets to, offer employment to each Business Employee in each case, who:
(i) is actively employed in the FPG Business on such date or is absent from
employment due to vacation, holiday, or sickness other than short or long-term
disability (the Current Employees); or
46
(ii) (A) is absent from work due to short or long-term disability, workers
compensation or other work-related injury schemes, military leave or other
authorized leave of absence or lay off and (B) has the right to return to employment
with the FPG Business following such absence or expiration of such leave under
applicable Law or any applicable agreement (including any collective bargaining
agreement) (the Leave Employees and, together with the Current Employees, the
Closing Date Employees).
With regard to Business Employees located at Sellers Rochester Hills, Michigan, facility and
those located at Sellers San Luis Potosi, Mexico, facility, only those individuals listed on
Schedule 10.1 will be considered Closing Date Employees for purposes hereof. The
Purchasers shall not be required under this Section 10.1 to offer employment to more than
83 Closing Date Employees located at Sellers Paris, Tennessee, facility.
In addition, to the extent that any Purchaser is required by applicable Law to employ or offer
employment to any Business Employees, Orhan shall cause the applicable Purchaser to employ or offer
employment to such Business Employees in the manner described in Schedule 10.4.
All such offers of employment shall be made in accordance with the provisions of this
Section 10.1 and, to the extent applicable, Schedule 10.4. Except as otherwise
required by applicable Law or any applicable collective bargaining agreement, a Closing Date
Employee, who is offered employment by Purchasers or one of their Affiliates, shall be deemed to
have accepted such offer if he or she has presented himself or herself as available for active
employment at his or her then applicable place of employment: (A) in the case of a Current
Employee not absent from work on the Closing Date, on the first Business Day immediately following
the Closing Date, or such subsequent date as Orhan in its sole discretion shall approve, or
thereafter so long as such day is within 10 days following the Closing Date and, from such date and
thru the tenth day following the Closing Date, such Current Employee continues to be actively at
work, (B) in the case of a Current Employee who is absent from work on the Closing Date due to
vacation, holiday, or sickness other than short or long-term disability, the first Business Day
following the Closing Date that such Current Employee is scheduled to return to active employment,
and (C) in case of a Leave Employee, on the first Business Day following the Closing Date that the
Leave Employee is able to return to active employment, but in no event later than six months
following the Closing Date. Each Closing Date Employee who accepts an offer of employment from
such Purchaser (or one of their Affiliates), and each Closing Date Employee whose employment with
such Purchaser continues by operation of law, shall be referred to herein as a Transferred
Employee. Except as otherwise provided in Schedule 10.4, a Closing Date Employee whose
employment does not continue by operation of law must accept Purchasers offer of employment within
ten (10) days of such offer; otherwise said Closing Date Employee will be deemed never to have
become a Transferred Employee. The applicable Asset Selling Entity will be responsible for those
Current Employees and those Leave Employees who do not accept offers of employment from the
applicable Purchaser. Sellers and their Affiliates shall have no responsibility for, and Orhan
shall be responsible for and shall indemnify and hold Sellers and their Affiliates harmless from,
all claims brought by Closing Date Employees relating to the payment of severance (including the
reasonable actual out-of-pocket fees and expenses of counsel) or other liability whatsoever that
arise as a result of Purchasers failure to make an offer
47
of employment to such Closing Date Employees in accordance with the terms of this Section
10.1 or Purchasers failure to employ any such Closing Date Employee who accepts such
employment.
(b) Subject to any additional requirements specified in Schedule 10.4, each offer of
employment extended to a Closing Date Employee (who is not represented by a union) by the
applicable Purchaser pursuant to this Section 10.1 shall be at a base salary or wage at
least equal to the base salary or wage paid to the Closing Date Employee, in the case of a Current
Employee, immediately prior to the Closing Date and, in the case of a Leave Employee, immediately
prior to the commencement of such Leave Employees absence from work, in each case unless a higher
wage is otherwise required by law. During the 6-month period immediately following the Closing
Date, the applicable Purchaser shall continue to provide each Transferred Employee, for so long as
it continues to employ such Transferred Employee during such 6-month period, with an annual salary
or hourly wage rate, as applicable, at least equal to the rate contained in such offer of
employment to such Transferred Employee.
(c) For Transferred Employees who are represented by a union or covered by any collective
bargaining agreement with an Asset Selling Entity as of the date hereof or as of the Closing Date
(Union Transferred Employees), Orhan shall, or shall cause the applicable Purchaser to, adopt
such collective bargaining agreements and assume the collective bargaining obligations of each such
Asset Selling Entity, provided that, with respect to the Archbold, Ohio facility, Orhan and the
union shall bargain in good faith appropriate modifications to the terms of such collective
bargaining agreement relating to benefit plans as would permit Orhan to establish, in lieu of the
Seller employee benefit plans and arrangements specified in the collective bargaining agreements,
plans sponsored solely by Orhan or the applicable Purchaser which provide substantially similar
benefits to Union Transferred Employees as are provided under the plans specified in the collective
bargaining agreement. Seller and Purchaser agree that the appropriate Asset Selling Entities will
retain all liabilities under the Pension Plan For Dana Automotive Aftermarket Group Employees with
respect to the Union Transferred Employees for benefits accrued prior to the Closing Date, and the
Seller and Orhan agree that neither Orhan nor the applicable Purchaser shall provide benefits to
the Union Transferred Employees under the Pension Plan For Dana Automotive Aftermarket Group
Employees. For Union Transferred Employees and each group of Acquired Company Employees who are
covered by a collective bargaining agreement between a union and an Acquired Company as of the date
hereof or the Closing Date, Orhan agrees that such collective bargaining agreement shall remain in
effect under its present terms until such time as the applicable Purchaser or Acquired Company may
have a right to modify or terminate the collective bargaining agreement in accordance with its
terms and applicable Law. Subject to any additional requirements specified in Schedule
10.4, each offer of employment to a Closing Date Employee who is represented by a union shall
be consistent with the applicable Purchasers obligations under this Section 10.1(c).
(d) Effective on and after the Closing Date, Orhan accepts any and all obligations under the
WARN Act, and any comparable state or local law or ordinance including any comparable laws of the
Mexico, with respect to all Transferred Employees.
(e) For the 6-month period immediately following the Closing Date, Orhan shall cause the
applicable Purchaser to provide the Transferred Employees whose employment is
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not governed by the terms of a collective bargaining agreement (Non-Union Transferred
Employees) and their respective eligible dependents, for so long as such Purchaser continues to
employ such Transferred Employee during such 6-month period, with medical, dental, prescription
drug and other welfare benefits (the Purchaser Welfare Plans) under any Purchaser Welfare Plans
that are substantially similar to the benefits and eligibility provided to the Purchasers
employees prior to Closing in comparable positions in comparable locations and, in the event there
are no employees of Purchasers in comparable positions, benefits and eligibility that are
substantially similar to the benefits provided to such Non-Union Transferred Employees immediately
prior to the Closing Date.
(f) (i) The Purchaser Welfare Plans shall (i) treat the Non-Union Transferred Employees and
their respective eligible dependents as eligible to participate in the Purchaser Welfare Plans
immediately upon the Closing Date to the same extent such Non-Union Transferred Employees and their
respective eligible dependents were eligible under the analogous Seller Benefit Plan immediately
prior to the Closing Date and (ii) give to the Non-Union Transferred Employees and their respective
eligible dependents credit under the Purchaser Welfare Plans for service with Sellers, the Acquired
Companies, Sellers and their respective Affiliates prior to the Closing Date to the extent such
credit was given under the analogous Seller Employee Benefit Plans immediately prior to the Closing
Date. Such credit for service shall be given for purposes of eligibility to participate,
eligibility for benefits and satisfaction of any waiting periods under the Purchaser Welfare Plans.
(ii) Each Non-Union Transferred Employee who was eligible under one of the Dana Defined
Contribution Plans (as defined in Section 10.2(a) below) prior to the Closing Date shall be
eligible to participate in the Purchaser Retirement Plans immediately upon the Closing Date. Each
Non-Union Transferred Employee shall, except as provided below, be given credit under the Purchaser
Defined Contribution Plans for all service prior to the Closing Date to the extent such credit was
given under the analogous Dana Defined Contribution Plans immediately prior to the Closing Date.
Such credit for service shall be given for purposes of eligibility to participate, vesting,
eligibility for early retirement, and for all other purposes for which such service is either taken
into account or recognized other than for benefit accrual purposes.
(g) Orhan agrees that (i) all accrued but unused vacation, personal days, floating holidays,
sick pay and other leave or paid time off of the Non-Union Transferred Employees that, in the
ordinary course of business, remains unpaid as of the Closing Date, shall be the applicable
Purchasers responsibility and shall be recognized by the applicable Purchaser under its vacation
and other pay policies to the extent not paid by Sellers on or before the Closing Date and (ii) to
the extent that any Asset Selling Entity is required by applicable Law or the terms of any Seller
Employee Benefit Plan to make any payment to any Non-Union Transferred Employee for any vacation
accrued but unused and unpaid as of the Closing Date in connection with the consummation of the
transaction, Orhan agrees to cause the applicable Purchaser to promptly reimburse Sellers for the
amount of such payment to the extent such Liability was properly reflected on the Closing Statement
of Net Assets.
(h) The applicable Purchaser shall be solely responsible on and after the Closing Date for the
terms and conditions of employment of all Transferred Employees. As to
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any Transferred Employee that any Purchaser terminates after the Closing Date, Purchasers
shall be solely responsible for satisfying any requirements under any applicable Laws and, with
respect to each Transferred Employee, Purchasers shall be solely responsible for (i) any
liabilities, obligations or claims arising under any Acquired Company Benefit Plan; (ii) any
obligations arising on or after the Closing Date under any contract of employment, including, but
not limited to, any Assumed Retention Agreement, (iii) any grievances, arbitrations or unfair labor
practice charges, arising from events that occur on or after the Closing Date, and any non-monetary
relief granted on or after the Closing Date pursuant to grievances, arbitrations or unfair labor
practice charges arising from events that occur on or after the Closing Date (or prior to the
Closing Date in the case of non-monetary relief as to which, because of its nature, the applicable
Seller is incapable of performing), and (iv) any alleged violation of Law (including, but not
limited to, all Law pertaining to employment, discrimination, workers compensation, occupational
safety and health, unfair labor practices, WARN Act violations and similar laws) but only to the
extent such alleged violation occurred after the Closing Date.
(i) Subject to limitation on privacy as required by applicable Law, each Asset Selling Entity
and Orhan agree to furnish to each other such information as may be reasonably required with
respect to one or more Transferred Employees promptly following receipt of any reasonable written
request from the other.
Section 10.2. Seller Benefits Plans.
(a) Effective as of the Closing Date, other than with respect to the Acquired Company Benefit
Plans the Transferred Employees shall cease to be credited with service and to accrue any benefits
under any Seller Employee Benefit Plan which are pension benefit plans (as defined in Section 3(2)
of ERISA) whether or not such plan is subject to ERISA, including, but not limited to (for U.S.
employees) the Dana Corporation Retirement Plan or the Pension Plan for Dana Automotive Aftermarket
Group Employees (the Dana Retirement Plans) and the Dana Corporation Savings and Investment Plan,
Employee Incentive Savings and Investment Plan or the Savings Works Plan (the Dana Defined
Contribution Plans). Each Non-Union Transferred Employee participating in a Dana Retirement Plan
shall be eligible to receive a distribution of his or her vested accrued benefits under such Dana
Retirement Plan in accordance with the terms of such Dana Retirement Plan. Orhan shall arrange to
have the Defined Contribution Plans sponsored by Purchasers accept direct rollovers of eligible
rollover distributions from the Dana Defined Contribution Plans and the Dana Retirement Plans in
the form of cash, or in the case of Transferred Employees who have an outstanding participant loan
under one of the Dana Defined Contribution Plans at the Closing Date, in the form of a promissory
note.
(b) Coverage for all Transferred Employees and their respective eligible dependents under the
Seller Employee Benefit Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA)
whether or not such plan is subject to ERISA (other than the Acquired Company Benefit Plans) (the
Seller Welfare Plans) shall terminate, as of 12:01 a.m. (EST) on the day following the Closing
Date. Except as otherwise required by Law (including the Bankruptcy Code for Seller Employee
Benefit Plans which are maintained in the United States), the Seller Welfare Plans shall be liable
only for claims incurred and benefits earned by the Transferred Employees prior to the Closing
Date. The Purchaser Welfare Plans shall be liable
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for claims incurred and benefits earned by Transferred Employees (and the eligible dependents
of such Transferred Employees) that are properly payable under the Purchaser Welfare Plans on or
after the Closing Date. For purposes of this Section 10.2, a claim is incurred on the
date that the event giving rise to the claim occurred (for purposes of life insurance, sickness and
disability programs) or on the date the applicable medical or dental services are rendered, drugs
or medical equipment is purchased or, in the case of a continuous period of hospitalization or
confinement, the date of commencement of such period of hospitalization or confinement.
(c) Seller will continue to administer the flexible spending accounts of any Transferred
Employees who have such flexible spending accounts under any Seller Welfare Plan maintained in the
United States as of the Closing Date, for the remainder of the applicable plan year, in accordance
with the terms of the applicable Seller Welfare Plan.
(d) Seller will offer and provide group health plan continuation coverage pursuant to the
requirements of COBRA to all the current and former employees of the FPG Business resident in the
United States to whom they are required to offer the same under applicable law.
Section 10.3. Acquired Company Benefit Plans.
Orhan shall, and shall cause each of the applicable Purchasers to, cause each Acquired Company
to continue any and all Seller Employee Benefit Plans it maintained immediately prior to the
Closing Date, as listed in Schedule 10.3 (the Acquired Company Benefit Plans).
Section 10.4. Non-U.S. Employee Matters.
Acquired Company Employees and Closing Date Employees located outside the United States shall
be treated, to the extent practicable under local law, in accordance with the provisions of
Sections 10.1, 10.2, and 10.3, subject to the provisions set forth on
Schedule 10.4.
ARTICLE XI
POST CLOSING COVENANTS
Section 11.1. Further Assurances; Further Conveyances and Assumptions; Consent of Third
Parties.
(a) From time to time after the Closing Date, Dana and Orhan shall, and shall cause their
respective Subsidiaries and Affiliates to, execute, acknowledge and deliver all such further
conveyances, notices, assumptions, releases and acquittances and such other instruments, and shall
take such further actions, as may be necessary or appropriate to assure any Purchaser and such
Purchasers respective successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Purchasers under this Agreement
and the other Operative Documents and to assure fully to Sellers and their successors and assigns,
the assumption by the Purchasers of the Assumed Liabilities, and to otherwise make effective the
transactions contemplated hereby and thereby (including (i) transferring back to the applicable
Seller any Excluded Asset, (ii) transferring back to the applicable Seller any asset or Liability
of any Asset Selling Entity not related to the FPG
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Business and (iii) transferring to the applicable Purchaser any asset or Liability
contemplated by this Agreement to be a Purchased Asset or an Assumed Liability, respectively, which
was not transferred to the applicable Purchaser at the Closing).
(b) Nothing in this Agreement or any other Operative Document nor the consummation of the
transactions contemplated hereby or thereby shall be construed as an attempt or agreement to assign
any Purchased Asset, which by its terms or by Law is nonassignable without the consent of a third
party or a Governmental Body (Nonassignable Assets) unless and until such consent shall have been
obtained.
(c) Unless and until any required consent for any Nonassignable Asset is obtained, such
Nonassignable Asset shall not constitute a Purchased Asset and any Liability associated exclusively
with such Nonassignable Asset shall not constitute an Assumed Liability for any purpose under this
Agreement. Pursuant to Section 11.1(a), as to any Material Contract that constitutes a
Nonassignable Asset because a requisite third-party consent has not been obtained, the applicable
Seller will use commercially reasonable efforts to promptly obtain such consent or approval, and,
prior to obtaining such consent or approval, will use commercially reasonable efforts to provide to
the applicable Purchaser realization of the practical benefits intended to be provided by such
Material Contract.
(d) Once such consent or approval is obtained with respect to a Nonassignable Asset, each
Asset Selling Entity shall promptly assign, transfer, convey and deliver such Nonassignable Asset
to the applicable Purchaser, and the applicable Purchaser shall assume any Assumed Liability
associated exclusively with such Nonassignable Asset, for no additional consideration.
(e) In the event and for so long as any Purchaser actively is contesting or defending against
any action, investigation, charge, claim, or demand by a third party in connection with (i) any
transaction contemplated under this Agreement or the other Operative Documents or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction involving the FPG Business, each Seller will cooperate with
such Purchaser and their counsel in the contest or defense, make available its personnel, and
provide such testimony and access to its books, records and other materials as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and expense of Purchasers
(unless Purchasers are entitled to indemnification therefor under Article XII).
(f) In the event and for so long as any Seller actively is contesting or defending against any
action, investigation, charge, claim, or demand by a third party in connection with (i) any
transaction contemplated under this Agreement or the other Operative Documents or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving the FPG Business,
Orhan will, and will cause each other Purchaser to, cooperate with Seller and its counsel in the
contest or defense, make available its personnel, and provide such testimony and access to its
books, records and other materials as shall be reasonably necessary in connection with the contest
or defense, all at the sole cost and expense of Sellers (unless Sellers are entitled to
indemnification therefor under Article XII).
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Section 11.2. Record Retention, Access to Documents and Cooperation.
(a) Dana shall, and shall cause its Affiliates to, afford to Orhans representatives, upon
reasonable notice and without undue interruption to Danas or the Sellers business and at Orhans
expense, access during normal business hours to the books and records (including any such books and
records in electronic format) of Dana and such Affiliate pertaining to the operations of the FPG
Business prior to the Closing Date for that period of time required by Law or by Danas document
retention policy in connection with (i) the preparation of financial statements, (ii) U.S.
Securities and Exchange Commission reporting obligations, (iii) Excluded Assets and Liabilities,
(iv) the contest or defense of Legal Proceedings and investigations, (v) the Bankruptcy Cases
(including, without limitation, with respect to reconciliation of claims in connection with the
Cases), and (vi) other reasonable business purposes. Orhan shall have the right to receive and
retain copies of all such books and records.
(b) Orhan shall, and shall cause its Affiliates to, afford to Danas representatives, upon
reasonable notice and without undue interruption to Orhans or the Purchasers business and at
Danas expense, access during normal business hours to the books and records (including any such
books and records in electronic format) of Orhan and such Affiliate (including the Acquired
Companies) pertaining to the operations of the FPG Business prior to the Closing Date for that
period of time required by Law or by Orhans document retention policy in connection with (i) the
preparation of financial statements, (ii) U.S. Securities and Exchange Commission reporting
obligations, (iii) Excluded Assets and Liabilities, (iv) the contest or defense of Legal
Proceedings and investigations, (v) the Bankruptcy Cases (including, without limitation, with
respect to reconciliation of claims in connection with the Cases), and (vi) other reasonable
business purposes. Dana shall have the right to receive and retain copies of all such books and
records.
(c) Orhan agrees to hold all of the books and records of the FPG Business (other than records
relating to Taxes, which shall be governed by Section 15.5) existing on the Closing Date or
included in the Purchased Assets for a period of time required by Law; provided, however, that
Orhan shall not destroy, alter or dispose of any of such books and records for a period of ten
years from the Closing Date.
(d) Orhan shall, and shall cause its Subsidiaries to, provide (at Danas sole risk, cost and
expense) such assistance to Dana as Dana may reasonably request with respect to (i) the preparation
of Sellers financial statements and U.S. Securities and Exchange Commission reporting obligations,
(ii) the preparation of Sellers Department of Labor reports, and (iii) Sellers reporting
obligations pursuant to the Losses, in each case, relating to the operation of the FPG Business
prior to the Closing Date.
Section 11.3. Noncompetition.
Each Seller covenants and agrees as set forth on Schedule 11.3.
Section 11.4. Transition Services.
The Transition Agreement shall specify the services to be provided, the scope and duration of
such services, and the pricing and payment provisions relating thereto. Such services
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will include, without limitation (i) the provision of information technology services as described
in Section 4.22; (ii) the applicable Purchasers use of and access to the applicable
Sellers Rochester Hills facility to transition the Purchased Assets and Transferred Employees from
such facility in a reasonable manner and within a reasonable time period following the Closing;
(iii) the applicable Sellers use of and access to the San Luis Potosi II, Mexico facility to
transition the Excluded Assets and non-Transferred Employees from such facility in a reasonable
manner and within a reasonable time period following the Closing as provided in accordance with
Section 6.9; and (iv) other normal and customary transition services, such as accounts
receivable collections and HR services. Charges for services provided by Dana or its Affiliates
under the Transition Agreement shall equal (i) in the case of services provided directly by Dana or
its Affiliates, the cost to Dana (or such Affiliate) of providing such services, and (ii) in the
case of services provided by third parties, the cost charged by such third party (or an allocable
share of such cost, as appropriate), without increase by Dana, plus an allocable share of the costs
to Dana (or its Affiliates) of administering such third-party provider and the provision of such
services.
ARTICLE XII
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
Section 12.1. Survival.
(a) Except as to Known Claims, all representations and warranties contained herein other than
those contained in Sections 4.5, 4.9, 4.10, 4.12, 4.13,
4.14, 4.18, 4.24, and 4.25 shall terminate at the Closing.
Section 4.5 shall survive the Closing indefinitely with respect to FPG Business operations
in Europe (excluding the JV Acquired Companies) only. Each of Section 4.9, 4.10,
4.12, 4.13, 4.14, 4.18, 4.24, and 4.25 shall
survive the Closing for the applicable period and to the extent provided as follows, and, at the
expiration of such applicable period, shall terminate: Section 4.9 as provided in
Section 15.1(d); Sections 4.10, 4.12, 4.13, 4.14, until
the 18 months anniversary of the Closing Date with respect to FPG Business operations in Europe and
Mexico (excluding the JV Acquired Companies) only; Section 4.24 until the one year
anniversary of the Closing Date with respect to FPG Business operations in Europe (excluding the JV
Acquired Companies) only; Section 4.18 until the one year anniversary of the Closing Date
with respect to all FPG Business operations; Section 4.25 until the one-year anniversary of
the Closing with respect to all FPG Business operations. For purposes hereof, Known Claims means
those claims for breaches of representations and warranties contained in Article IV as to
which Orhan has given written notice to Dana on or before the Closing Date. Notwithstanding the
foregoing, the representations and warranties as to which the Known Claims relate will survive
Closing, as to the Known Claims only, for three months following the Closing Date, and, at the
expiration of such of three month period, shall terminate. Upon the termination of representations
and warranties as provided herein, the right to commence any claim with respect thereto shall also
terminate and thereafter neither the Purchasers nor the Sellers shall have any Liability whatsoever
with respect to such representations and warranties.
(b) Each Person entitled to indemnification hereunder shall use commercially reasonable
efforts to mitigate Losses for which it seeks indemnification hereunder. Except as described in
the Closing Claims Schedule and as expressly provided in Section 12.2, no Person shall be
entitled to indemnification for Losses hereunder for breaches of representations and
54
warranties if, on the Closing Date, such Person had knowledge of the existence of the breach with
respect to which such Person is seeking indemnification hereunder.
(c) In calculating the amount of Losses recoverable pursuant to this Article XII, the
amount of such Losses shall be reduced by: (i) any insurance proceeds actually received by the
party seeking indemnification from any unaffiliated insurance carrier offsetting the amount of such
Loss, net of any expenses incurred by such party in obtaining such insurance proceeds (provided
that such party shall be obligated to reasonably seek any such proceeds to which it may be
entitled); (ii) the amount of such Losses shall be reduced by any recoveries from third parties
pursuant to indemnification (or otherwise) with respect thereto, net of any expenses incurred by
the Indemnified Party in obtaining such third party payment; and (iii) the amount of the Loss shall
be adjusted by an amount such that the Indemnified Party shall be, after having been paid the
indemnity from the Sellers and taking into account the Tax consequences of such payment and the
Loss, in the same position as it would have been, had the Loss not occurred. Where the
Indemnified Party cannot effectively enjoy a saving of Tax paid in respect of the year in which the
Loss is accounted for, no reduction of the amount of the Loss attributable to such lack of Tax
saving will be made, and where the Indemnified Party is not effectively subject to a payment of Tax
in respect of the indemnity paid in the year in which the Purchasers account for such indemnity, no
increase of the amount of the Loss will be made in respect of the indemnity payment. If any Losses
for which indemnification is provided hereunder are subsequently reduced by any insurance payment
or other recovery from a third party, the Indemnified Party shall promptly remit the amount of such
reduction to the Indemnifying Party.
(d) No party shall be liable to any Indemnified Party for special, incidental, indirect,
consequential, punitive or exemplary Losses.
Section 12.2. Indemnification.
(a) From and after the Closing, each Seller, severally and not jointly, hereby agrees to
indemnify and hold the Purchaser Indemnified Group harmless from and against any and all claims,
judgments, causes of action, liabilities, obligations, damages, losses, deficiencies, costs,
penalties, interest and expenses (including the reasonable actual out-of-pocket fees and expenses
of counsel) (collectively, Losses) suffered or incurred by the Purchaser Indemnified Group
arising out of or resulting from:
(i) any breach of any representation or warranty of such Seller set forth in
Article IV (excluding Section 4.9)that survives the Closing pursuant
to Section 12.1;
(ii) any breach of, or default in the performance by such Seller of, any
covenant or agreement on the part of such Seller herein that is to be performed by
its terms after the date hereof, subject to the limitations and conditions contained
herein;
(iii) any Excluded Liability; and
(iv) matters described in the Closing Claims Schedule.
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(b) Orhan hereby agrees, jointly and severally with the Purchasing Affiliates, and each
Purchasing Affiliate hereby agrees, severally and not jointly, to indemnify and hold the Seller
Indemnified Group harmless from and against, any and all Losses suffered or incurred by the Seller
Indemnified Group arising out of or resulting from:
(i) any breach of, or default in the performance by such Purchaser of, any
covenant or agreement that is to be performed after the date hereof, subject to the
limitations and conditions contained herein;
(ii) a Purchasers and any of its Subsidiaries ownership or operation of the
FPG Business from and after the Closing Date, except for any matters described in
the Closing Claims Schedule; and
(iii) any Assumed Liabilities or the failure of any of the Acquired Companies
(or their successors or assigns) to pay, perform and discharge when due any of their
respective Liabilities from and after the Closing Date.
(c) From and after the Closing, for a period of five years following the Closing Date, TPF
shall indemnify and hold the Purchaser Indemnified Group harmless from and against (i) 50 percent
of the first $500,000 of Losses incurred during such five-year period, and (ii) 100 percent of up
to an additional $500,000 of Losses incurred during such five-year period, in each case suffered or
incurred by the Purchaser Indemnified Group, arising out of or resulting from any pre-Closing
violation of Environmental Law and that are directly related to the property located in Barcelona,
Spain where Nobel Iberica currently operates the FPG Business.
(d) Indemnification for any and all Tax matters and the procedures with respect thereto shall
be governed exclusively by Article XV.
(e) Except as otherwise required pursuant to a determination under Section 1313(a) of the
Code (or any comparable provision of state, local, or foreign Law), Sellers, Purchasers, the
Acquired Companies and their respective Affiliates shall treat any and all payments under this
Article XII as an adjustment to the purchase price for all Tax purposes.
Section 12.3. Limitations on Amount Seller.
Sellers will have no liability (for indemnification or otherwise) with respect to the matters
governed by Section 12.2(a)(i), (i) unless the aggregate monetary value of any Losses with
respect to a particular matter or set of facts or circumstances, exceeds $25,000.00, and (ii) until
the total monetary value of all Losses with respect to such matters exceeds $250,000.00, in which
case Sellers shall be liable for just the excess provided, however, that Sellers will have no
liability (for indemnification or otherwise) for the amount by which the total monetary value of
all Losses for breaches of representations and warranties exceeds 15% of the Final Cash
Consideration.
Section 12.4. Procedures for Indemnification.
Whenever a claim shall arise for indemnification under this Article XII, the party
entitled to indemnification (the Indemnified Party) shall promptly notify the party from which
56
indemnification is sought (the Indemnifying Party) of such claim and, when known, the facts
constituting the basis for such claim; provided, however, that in the event of any claim for
indemnification hereunder resulting from or in connection with any claim or Legal Proceeding by a
third party, the Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten (10) Business Days prior to the time any response to the asserted claim is required,
if possible, and in any event within five (5) Business Days following receipt of notice thereof;
provided, further, that no delay or failure to give such notice by the Indemnified Party to the
Indemnifying Party shall adversely affect any of the other rights or remedies which the Indemnified
Party has under this Agreement or the other Operative Documents, or alter or relieve the
Indemnifying Party of its obligation to indemnify the Indemnified Party, except to the extent that
such delay or failure has materially prejudiced the Indemnifying Party. In the event of any such
claim for indemnification resulting from or in connection with a claim or Legal Proceeding by a
third party, the Indemnifying Party may, at its sole cost and expense, assume the defense thereof
by written notice within 30 calendar days, using counsel that is reasonably satisfactory to the
Indemnified Party. If an Indemnifying Party assumes the defense of any such claim or Legal
Proceeding, the Indemnifying Party shall be entitled to take all steps necessary in the defense
thereof including the settlement of any case that involves solely monetary damages without the
consent of the Indemnified Party; provided, however, that the Indemnified Party may, at its own
expense, participate in any such proceeding with the counsel of its choice without any right of
control thereof. The Indemnifying Party, if it has assumed the defense of any claim or Legal
Proceeding by a third party as provided herein, shall not consent to, or enter into, any compromise
or settlement of (which settlement (i) commits the Indemnified Party to take, or to forbear to
take, any action or (ii) does not provide for a full and complete written release by such third
party of the Indemnified Party), or consent to the entry of any judgment that does not relate
solely to monetary damages arising from, any such claim or Legal Proceeding by a third party
without the Indemnified Partys prior written consent, which shall not be unreasonably withheld,
conditioned or delayed. The Indemnifying Party and the Indemnified Party shall cooperate fully in
all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement or
discharge of any claim in respect of which indemnity is sought pursuant to this Article
XII, including, but not limited to, by providing the other party with reasonable access to
employees and officers (including as witnesses) and other information. So long as the Indemnifying
Party is in good faith defending such claim or proceeding, the Indemnified Party shall not
compromise or settle such claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed. If the Indemnifying Party does
not assume the defense of any such claim or litigation in accordance with the terms hereof, the
Indemnified Party may defend against such claim or litigation in such manner as it may deem
appropriate, including settling such claim or litigation (after giving prior written notice of the
same to the Indemnifying Party and obtaining the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, conditioned or delayed) on such terms as the
Indemnified Party may reasonably deem appropriate, and the Indemnifying Party will promptly
indemnify the Indemnified Party in accordance with the provisions of this Section 12.4.
Section 12.5. Certain North American Real Property Environmental Matters.
(a) For the period from and after the Closing Date until the first anniversary of the Closing Date
(the Environmental Testing Period), the Purchasers shall have the right to
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conduct such environmental assessments, including, without limitation, physical inspections,
sampling activities and installation of monitoring wells (collectively, Environmental
Assessments), as Purchasers deem advisable at the North American Real Property.
(b) If, during the Environmental Testing Period, any Purchaser discovers the presence of
Hazardous Materials relating to the conduct of the FPG Business at the North American Real Property
prior to the Closing Date in concentrations exceeding the Trigger Levels, as defined below, where
the presence of such Hazardous Materials above Trigger Levels was not identified on Schedule
4.18(b), the presence of any such Hazardous Materials at concentrations exceeding the Trigger
Levels shall be deemed a breach of the representation set forth in Section 4.18(b) and the
Losses resulting therefrom shall be subject to indemnification by Sellers in accordance with the
provisions of Section 12.2(a)(i) and Section 12.3; provided, however, that Sellers
shall not be obligated to indemnify Purchaser Indemnified Group for any increase in any such Losses
to the extent due to acts or omissions of the Purchasers or their employees, contractors,
subcontractors, agents or invitees that exacerbate existing conditions. Purchasers shall be
responsible for all costs incurred by Purchasers in conducting any such Environmental Assessments
up to a determination that Trigger Levels have been exceeded.
(c) Trigger Levels shall mean such standards for industrial properties in effect as of the
Closing Date that have been promulgated or adopted or are used in the ordinary course by the
applicable Governmental Body.
(d) Sellers and Purchasers mutually agree to cooperate in connection with any matters subject
to indemnification under this Section 12.5. Upon request, Orhan shall cause Purchasers to
provide Sellers with (i) any material correspondence, report, technical data or other material
information generated as a result of a remedial action by Purchasers, (ii) reasonable access upon
reasonable notice to the North American Real Property in a manner that will not disrupt the
applicable Purchasers operations, and (iii) the right to take split samples in each case for the
purpose of verifying the performance of any remedial action, correction of noncompliance or other
action, the costs for which any Seller is required to indemnify pursuant to this Article
XII. Sellers and Orhan agree that they each shall maintain in strict confidence any
information concerning any matters subject to indemnification under this Section 12.5;
provided, however, that Sellers and Purchasers may disclose such information to the extent
reasonably necessary to communicate with appropriate Governmental Bodies. If any Law requires any
party or its Affiliates to disclose such information, such party will promptly notify the other
party and will give such other party the opportunity to review and comment in advance upon the
content and timing of any such disclosure. Orhan shall submit or cause to be submitted any
reimbursement requests for which any Purchaser is seeking indemnification pursuant to this
Section 12.5 to the applicable Seller and, as promptly as practicable after receipt of such
reimbursement requests, Sellers shall pay any such reimbursement requests in accordance with, and
subject to, the terms and conditions of Section 12.2.
(e) During the survival period referred to in Section 12.1(a) and in respect of any
Legal Proceedings arising during such survival period, Sellers shall retain exclusive control of
and be solely responsible for the matters subject to indemnification under this Section
12.5, including, without limitation, the sole control of all aspects of any Legal Proceedings.
Following the Closing and during such survival period, Sellers shall use reasonable efforts to
consult with
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Purchasers prior to, and on a periodic basis while, conducting any remedial action, correction of
non-compliance, or engaging in any Legal Proceeding involving the North American Real Property and
shall give the Purchasers the reasonable opportunity to review and comment on any material
governmental filings or other material governmental correspondence relating thereto made by any
Seller or its Affiliates. Sellers agree to use commercially reasonable efforts to consider
Purchasers comments and to minimize the disruption of the FPG Business in connection with the
foregoing.
Section 12.6. Exclusive Remedy.
Except in the case of intentional fraud by any party, or any acts by Purchaser in violation of
Section 363(n) of the Bankruptcy Code, and except as provided in Article XIV with respect
to the Breakup Fee and the Deposit Amount and in Article XV with respect to Taxes, and in
the French Tax Consolidated Group Exit Agreement, each Purchaser and each Seller agrees that the
provisions set forth in this Article XII and the Deposit Agreement shall be their sole and
exclusive remedy for any claims or causes of action for money damages arising out of, based upon or
resulting from the provisions of this Agreement and the transactions contemplated hereby and waive
to the fullest extent permitted by applicable law any and all such other claims or causes of action
for money damages, whether sounding in contract, tort or otherwise, and whether asserted at law or
in equity. Nothing in this Agreement shall impair or limit any remedy Sellers may have for any
breach by Purchasers of Section 363(n) of the Bankruptcy Code.
ARTICLE XIII
NONSOLICITATION; STANDSTILL
Section 13.1. Nonsolicitation of Purchaser Employees.
Each Seller covenants and agrees that for a period of two years following the Closing Date or
termination of this Agreement pursuant to Section 14.1 it shall not, and shall cause its
Subsidiaries not to, solicit any Acquired Company Employee or Transferred Employee (at a time when
such person is an employee of any Purchaser or any of its Subsidiaries) or to terminate his or her
employment relationship with any Purchaser or any of its Subsidiaries; provided, however, that
nothing herein shall prohibit any Seller or any of its Subsidiaries from advertising publicly or
from employing persons who respond to any such advertising whether or not such persons are then
employed by any Purchaser.
Section 13.2. Nonsolicitation of Seller Employees.
Orhan covenants and agrees that for a period of two years following the Closing Date or
termination of this Agreement pursuant to Section 14.1 it shall not, and shall cause its
Subsidiaries not to, solicit any employee of any Seller or any of its Subsidiaries (at a time when
such person is an employee of any Seller or any of its Subsidiaries) or to terminate his or her
employment relationship with any Seller or any of its Subsidiaries; provided, however, that nothing
herein shall prohibit Orhan or any of its Subsidiaries from advertising publicly or from employing
persons who respond to any such advertising whether or not such persons are then employed by any
Seller.
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Section 13.3. Standstill.
Orhan agrees that, for a period of five years from the Closing Date or termination of this
Agreement pursuant to Section 14.1, neither Orhan nor any of its affiliates (as such term
is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) will (and neither
Orhan nor they will assist or encourage others to), without the prior written consent of Dana or
its Board of Directors: (i) acquire or agree, offer, seek or propose to acquire, or cause to be
acquired, directly or indirectly, by purchase or otherwise, ownership (including, without
limitation, beneficial ownership as defined in Rule 13d-3 of the Exchange Act) of any voting
securities or direct or indirect rights or options to acquire any voting securities of Dana or any
of its Subsidiaries, or of any successor to or person in control of Dana, any of the assets or
businesses of Dana or any of its Subsidiaries or divisions thereof or of any such successor or
controlling person or any bank debt, claims or other obligations of Dana or any rights or options
to acquire (other than those currently owned) such ownership (including from a third party); (ii)
seek or propose to influence or control the management or policies of Dana or to obtain
representation on Danas Board of Directors, or solicit, or participate in the solicitation of, any
proxies or consents with respect to any securities of Dana, or make any public announcement with
respect to any of the foregoing or request permission to do any of the foregoing; (iii) make any
public announcement with respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving Seller or its securities or assets; (iv) enter
into any discussions, negotiations, arrangements or understandings with any third party with
respect to any of the foregoing, or otherwise form, join or in any way participate in a group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) in connection with
any of the foregoing; (v) seek or request permission or participate in any effort to do any of the
foregoing or make or seek permission to make any public announcement with respect to the foregoing;
or (vi) request Seller or any of its representatives, directly or indirectly, to amend or waive any
provision of this Section 13.3. Each Purchaser agrees to promptly advise Dana of any
inquiry or proposal made to any Purchaser with respect to any of the foregoing.
Section 13.4. Remedies.
Orhan and Sellers acknowledge and agree that the other remedies provided for in this Agreement
cannot fully compensate either party for a violation of the terms of this Article XIII or
of the terms of Section 11.3 and Schedule 11.3, and that either party shall be
entitled to injunctive relief to prevent any such violation or continuing violation of such
obligations and provisions by the other party.
ARTICLE XIV
TERMINATION
Section 14.1. Termination.
This Agreement may be terminated and the transactions contemplated hereby abandoned at any
time prior to the Closing:
(a) upon the written agreement of Orhan and Dana;
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(b) (i) by Orhan if (A) there is a material breach of any representation or warranty contained
in Article IV, and such breach results in, or would reasonably be expected to result in, a
Material Adverse Effect, and such breach has not been cured within 10 Business Days of notice
thereof (given in accordance with Section 17.1) or been waived by Orhan, or (B) a breach of
any material covenant contained in this Agreement or the Deposit Agreement has been committed by
Dana and such breach has not been cured within 10 Business Days of notice thereof (given in
accordance with Section 17.1) or been waived by Orhan; or (ii) by Dana if (A) there is a
material breach of any representation or warranty contained in Article V, and such breach
results in, or would reasonably be expected to result in, a material adverse effect to the
enforceability of this Agreement or any other Operative Documents against Orhan or any Purchasing
Affiliate that is party thereto or the ability of Orhan or the Purchasing Affiliates to perform
their obligations hereunder or thereunder, and such breach has not been cured within 10 Business
Days of notice thereof (given in accordance with Section 17.1) or been waived by Dana, or
(B) a breach of any material covenant contained in this Agreement or the Deposit Agreement has been
committed by Orhan and such breach has not been cured within 10 Business Days of notice thereof
(given in accordance with Section 17.1) or been waived by Dana;
(c) by Orhan, if the Closing Date has not occurred on or before November 1, 2007, and the
failure to consummate the transactions contemplated by this Agreement on or before such date did
not result from the failure by Orhan or any Purchaser to fulfill any undertaking or commitment
required to be fulfilled by Orhan or such other Purchaser prior to the Closing;
(d) by Dana, if the Closing Date has not occurred on or before November 1, 2007, and the
failure to consummate the transactions contemplated by this Agreement on or before such date did
not result from the failure by Dana or any Seller to fulfill any undertaking or commitment required
to be fulfilled by Dana or such other Seller prior to the Closing Date;
(e) by Dana, if Dana accepts or the Bankruptcy Court approves an alternative bid for any of
the Purchased Shares or Purchased Assets pursuant to the terms of the Bidding Procedures Order;
(f) by Orhan, if any of the conditions set forth in Sections 8.1, 8.2,
8.3, 8.4, 8.5, 8.6, 8.8, 8.9, 8.10 or
8.11 becomes incapable of being satisfied;
(g) by Dana, (i) if any of the conditions set forth in Sections 9.3, 9.4 or
9.5 becomes incapable of being satisfied, or (ii) if any of the conditions set forth in
Sections 9.1, 9.2, 9.6 or 9.7 becomes incapable of being satisfied;
(h) by either Orhan or Dana if any Law prohibits Closing or if the Closing would violate any
non-appealable final order, decree or judgment of any Governmental Body having competent
jurisdiction.
Section 14.2. Effect of Termination.
(a) Effect. Termination under Sections 14.1(b), 14.1(c), 14.1(d),
14.1(e), 14.1(f), 14.1(g), or 14.1(h) shall be effected by giving
written notice to the other party, whereupon this Agreement shall terminate and the transactions
contemplated hereby shall be
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abandoned, without further action by either party, except that Article XIII and
Sections 17.8, 17.9, 17.10, 17.11, 17.13, 17.14,
17.15, 17.16 and 17.17 shall survive such termination. Upon any
termination hereof pursuant to Section 14.1, no party shall thereafter have any further
liability or obligation hereunder or under any other Operative Document (except as expressly
provided herein or therein);
(b) Breakup Fee. If (i) this Agreement is terminated by Dana pursuant to Section
14.1(e) and (ii) an Alternative Transaction(s) is consummated no later than 24 months after
such termination, then, upon the closing of such Alternative Transaction, Dana shall pay to Orhan a
fee (the Breakup Fee) equal to U.S.$2,100,000. Payment of the Breakup Fee will be made by wire
transfer in immediately available funds to an account designated by Orhan, and Orhan shall have the
right to be paid the Breakup Fee from the first proceeds of any Alternative Transaction. Subject
to the approval of the Bankruptcy Court, the obligations of Dana to pay the Breakup Fee (to the
extent the Breakup Fee is not paid in full as required from the first proceeds of an Alternative
Transaction or otherwise) shall be entitled to superpriority administrative expense claim status in
the Cases, senior to all other superpriority administrative expense claims in the Cases, other than
those arising out of the Seller Financing and the Carveout, and payable without further order of
the Bankruptcy Court pursuant to the terms of this Agreement and the Bidding Procedures Order. The
obligation to pay the Breakup Fee in full in immediately available funds when due shall not be
discharged, modified, or otherwise affected by any plan of reorganization or liquidation for Dana
or any of its Affiliates.
(c) Reimbursement of Expenses. In the event that this Agreement is terminated in
circumstances in which the Breakup Fee is payable to Orhan, Seller shall pay or reimburse Orhan for
all of Purchasers actual out-of-pocket costs, fees, expenses (including, without limitation, the
reasonable fees and expenses of consultants, financial advisors, accountants and attorneys),
incurred by Purchasers in connection with the transactions contemplated by this Agreement, whether
or not incurred before or after the date of this Agreement, in an amount not to exceed U.S.$525,000
(the Expense Reimbursement). Orhan shall present reasonable supporting documentation for the
Expense Reimbursement
(d) Release of Deposit.
(i) If this Agreement is terminated pursuant to Sections 14.1(a), 14.1(b)(i),
14.1(c), 14.1(d), 14.1(e), 14.1(f), 14.1(g)(i) or
14.1(h), the Deposit Agent will wire transfer the Deposit Amount to an account designated
by Orhan.
(ii) In the event this Agreement is terminated pursuant to Sections 14.1(b)(ii) or
14.1(g)(ii), the Deposit Agent will wire transfer the Deposit Amount to an account
designated by Dana.
(iii) In the event the terms of this Section 14.2(d) conflict with the terms of the
Deposit Agreement, the terms of the Deposit Agreement shall govern.
(e) If this Agreement is terminated as permitted by Section 14.1, the return of the Deposit
Amount pursuant to the terms of the Deposit Agreement and the payment of the Breakup Fee and the
Expenses Reimbursement, if any, pursuant to the terms of this Section 14.2,
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shall be the sole and exclusive remedy of Purchasers, whether at law or in equity, for any breach
by Sellers or any of their Affiliates of the terms and conditions of this Agreement or the Deposit
Agreement. If this Agreement is terminated by Dana, the forfeiture of the entire Deposit Amount
pursuant to Section 14.2(d)(ii) hereof, shall be the sole and exclusive remedy of Sellers
or their bankruptcy estates, whether at law or in equity, for any breach, other than a breach of
Section 363(n) of the Bankruptcy Code, by Purchasers or any of their Affiliates of the terms and
conditions of this Agreement. The parties agree that the payment to Orhan of the Breakup Fee or
the forfeiture by Orhan of the Deposit Amount, as the case may be, pursuant to this Section
14.2 shall be in the nature of liquidated damages. In the event of a breach by Purchasers or
any of their Affiliates of Section 363(n) of the Bankruptcy Code, Dana shall be entitled to keep
the Deposit Account and to pursue any other remedies available under Section 363(n) of the
Bankruptcy Code. The entry of the Bidding Procedures Order by the Bankruptcy Court is a condition
precedent to Sellers obligation to pay, and payment of, the Breakup Fee as otherwise required by
this Section 14.2.
ARTICLE XV
TAX MATTERS
Section 15.1. Tax Indemnification
(a) To the extent neither paid (including the payment of estimated Taxes) before the Closing
Date nor reflected on the Closing Statement of Net Assets, each Seller severally and not jointly
shall indemnify the Purchaser Indemnified Group and defend and hold it harmless from and against
all Losses arising out of or resulting from (A) Excluded Taxes, (B) Taxes arising from or in
connection with any breach by any Seller of any covenant contained in this Article, and (C) Taxes
arising from any breach of any representation or warranty set forth in , Section 4.10(h)
or Section 4.14.
(b) Orhan hereby agrees, jointly and severally with the Purchasing Affiliates, and each
Purchasing Affiliate, agrees, severally and not jointly, to indemnify the Seller Indemnified Group
and defend and hold it harmless from and against all Losses arising out of or resulting from (A)
any and all Taxes imposed on or payable with respect to the Acquired Companies, other than Excluded
Taxes, (B) Transfer Taxes required to be borne by any Purchaser pursuant to Section 15.8,
and (C) Taxes arising from or in connection with any breach by any Purchaser of any covenant
contained in this Article XV.
(c) Any indemnity payment to be made pursuant to this Section 15.1 shall be paid no
later than the latest of (i) ten (10) days after the indemnified party makes written demand upon
the indemnifying party, (ii) five (5) days prior to the date on which the underlying amount is
required to be paid by the indemnified party, and (iii) five (5) days after any dispute about the
liability for or amount of such indemnity payment is resolved.
(d) The indemnification provisions in this Section 15.1 shall survive the Closing
until 90 days after the expiration of the applicable statute of limitations for the Tax giving rise
to the claim for indemnification including any extensions of time for assessment granted to the
relevant Tax authorities.
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(e) The Closing Statement of Net Assets is to reflect (i) prepaid Property Taxes as an asset
and (ii) accrued Property Taxes as a liability. The parties agree that all Property Taxes imposed
on or with respect to the Purchased Assets or the Acquired Companies will be pro-rated as of the
Closing Date and that, notwithstanding any other provision of this Agreement, the economic burden
of any such Property Tax will be borne by Sellers for all Pre-Closing Tax Periods (including the
portion of a Straddle Period through the Closing Date) and by Purchasers for all Post-Closing Tax
Periods (including the portion of a Straddle Period after the Closing Date). Accordingly,
notwithstanding any other provision of this Agreement, (i) if any Seller or any of its Affiliates
pays (either before or after Closing) any such Property Tax with respect to a Post-Closing Tax
Period, such Purchaser will reimburse the applicable Seller upon demand for the amount of such
Property Tax to the extent it is not reflected as an asset on the Closing Statement of Net Assets;
and (ii) if any Purchaser or any of its Affiliates pays (after Closing) any such Property Tax with
respect to a Pre-Closing Tax Period, such Seller will reimburse the applicable Purchaser upon
demand for the amount of such Property Tax to the extent it is not reflected as a liability on the
Closing Statement of Net Assets.
Section 15.2. Preparation and Filing of Tax Returns.
(a) Sellers shall timely prepare and file or shall cause to be timely prepared and filed: (i)
any combined, consolidated, unitary or similar Tax Return that includes any Acquired Company and a
Seller or any of its Affiliates; (ii) any other Tax Return for any Income Tax of the Acquired
Companies for any Pre-Closing Tax Period other than a Pre-Closing Tax Period which is included
within a Straddle Period; and (iii) any other Tax Returns with respect to the FPG Business which
are due prior to the Closing Date (taking into account valid extensions of the time to file).
Purchaser shall not (and shall not cause any Acquired Company to) amend or revoke such Tax Returns
(or any notification or election relating thereto) without the prior written consent of Seller.
(b) For any Tax Return of the Acquired Companies that relates to a Straddle Period or to a
Pre-Closing Tax Period and that is not the responsibility of Sellers under Section 15.2(a),
Purchasers shall, and shall cause its Affiliates to, timely prepare and file such Tax Return in a
manner consistent with past practices of the Acquired Companies and with respect to the Purchased
Assets and in the case of any Income Tax or Property Tax, Purchasers shall deliver to Dana for its
review, comment and approval (which approval shall not be unreasonably withheld) a copy of such
proposed Tax Return (accompanied, in the case of a Straddle Period Tax Return, by an allocation
between the Pre-Closing Tax Period and the Post-Closing Tax Period of the Taxes shown to be due on
such Tax Return) at least 30 Business Days prior to the due date (giving effect to any validly
obtained extensions) thereof. Purchasers shall reflect in good faith any comments received from
Dana within ten (10) Business Days following Danas receipt of such Tax Return. Purchasers shall
not amend or revoke any Straddle Period Tax Return (or any notification or election relating
thereto) without Danas prior written consent. Purchasers shall promptly reimburse Sellers for any
overpayment of Taxes with respect to a Pre-Closing Tax Period, including by reason of the payment
of any estimated Taxes by any Seller or its Affiliates.
(c) The parties shall provide each other with such powers of attorney or other authorizing
documentation as are reasonably necessary to authorize them to execute and file Tax
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Returns they are responsible for under this Agreement, file refund and equivalent claims for Taxes
they are responsible for under this Agreement, and contest, settle, and resolve any audits and
disputes over which they have control under this Article XV.
Section 15.3. Refunds, Credits and Carrybacks.
(a) The applicable Seller shall be entitled to any refunds of Excluded Taxes, whether any such
refund is realized as a payment by a Governmental Body or by a credit against a Tax liability. The
applicable Purchaser shall, at such Sellers reasonable request and at such Sellers expense, cause
the relevant entity to file for and use commercially reasonable efforts to obtain any refund to
which such Seller is entitled by virtue of this Section 15.3. Except as provided in this
Section 15.3, and subject to Section 15.3(c), Purchasers shall be entitled to any
refunds of any Taxes of the Acquired Companies.
(b) The applicable Purchaser shall, or shall cause the Acquired Companies to, promptly forward
to the applicable Seller an amount equal to any refunds due such Seller pursuant to the terms of
Section 15.3(a) after receipt thereof (including use of such refund as a credit against a
Tax liability), and the applicable Seller shall, or shall cause its Affiliates to, promptly forward
to such Purchaser an amount equal to any refunds of Taxes due such Purchaser pursuant to the terms
of Section 15.3(a) after receipt thereof (including use of such refund as a credit against
a Tax liability).
(c) Without the prior written consent of Dana, no Purchaser shall cause or permit any of the
Acquired Companies to carry back to any Pre-Closing Tax Period any item of loss, deduction or
credit which arises in or is attributable to any taxable period ending after the Closing Date.
(d) In any case where a credit is described in both this Section 15.3 and in
Section 15.6, only Section 15.6 shall apply with respect to such credit.
Section 15.4. Tax Contests.
(a) If any taxing authority asserts a Tax Claim in respect of the Acquired Companies, then the
party hereto first receiving notice of such Tax Claim shall provide written notice thereof to the
other party or parties hereto within fourteen (14) calendar days; provided, however, that the
failure of such party to give timely notice shall not relieve the other party of any of its
obligations under this Article XV, except to the extent that the other party is actually
prejudiced thereby. Such notice shall specify in reasonable detail the basis for such Tax Claim
and shall include a copy of the relevant portion of any correspondence received from the taxing
authority.
(b) Dana shall have the right to control any audit, examination, contest, litigation or other
proceeding by or against any taxing authority (a Tax Proceeding) of the Acquired Companies for
any taxable period that ends on or before the Closing Date or for any taxable period of such Seller
or any of its Affiliates during which any combined, consolidated or unitary Tax Return includes any
Acquired Company and any Seller or any of its Affiliates; provided, however, that with respect to
any Tax Proceeding solely in respect of the Acquired Companies that would reasonably be expected to
have an adverse impact on any Purchaser and
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its Affiliates (i.e., one for which Purchasers and their Affiliates are not entitled to
indemnification under this Article XV), (i) such Seller shall provide the applicable
Purchaser with a timely and reasonably detailed account of each phase of such Tax Proceeding, (ii)
such Seller shall consult with the applicable Purchaser before taking any significant action in
connection with such Tax Proceeding, (iii) such Seller shall consult with such Purchaser and offer
such Purchaser an opportunity to comment before submitting any written materials prepared or
furnished in connection with such Tax Proceeding, (iv) such Seller shall defend such Tax Proceeding
diligently and in good faith as if it were the only party in interest in connection with such Tax
Proceeding, (v) the applicable Purchaser shall be entitled to participate in such Tax Proceeding,
at its own expense, if such Tax Proceeding could have an adverse impact on such Seller or any of
its Affiliates and (vi) such Seller shall not settle, compromise or abandon any such Tax Proceeding
without obtaining the prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed, of Orhan if such settlement, compromise or abandonment would have an
adverse impact on such Purchaser or any of its Affiliates.
(c) In the case of a Tax Proceeding for a Straddle Period of the Acquired Companies, the
applicable Purchaser shall have the right to control such Tax Proceeding; provided, however, that
(i) such Purchaser shall provide the applicable Seller with a timely and reasonably detailed
account of each phase of such Tax Proceeding, (ii) such Purchaser shall consult with such Seller
before taking any significant action in connection with such Tax Proceeding, (iii) such Purchaser
shall consult with such Seller and offer such Seller an opportunity to comment before submitting
any written materials prepared or furnished in connection with such Tax Proceeding, (iv) such
Purchaser shall defend such Tax Proceeding diligently and in good faith as if it were the only
party in interest in connection with such Tax Proceeding, (v) such Seller shall be entitled to
participate in such Tax Proceeding, at its own expense, if such Tax Proceeding could have an
adverse impact on such Seller or any of its Affiliates and (vi) such Purchaser shall not settle,
compromise or abandon any such Tax Proceeding without obtaining the prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, of Dana if such settlement,
compromise or abandonment would have an adverse impact on such Seller or any of its Affiliates.
(d) The applicable Purchaser shall have the right to control any Tax Proceeding involving the
Acquired Companies other than a Tax Proceeding described in Sections 15.4(b) or
15.4(c); provided, however, that the applicable Purchaser shall not settle, compromise or
abandon any such Tax Proceeding, if such action would reasonably be expected to have a significant
adverse impact on any Seller or any Affiliate of any Seller, without obtaining the prior written
consent of Dana, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 15.5. Cooperation.
Each party hereto shall, and shall cause its Affiliates to, provide the other party hereto
with such cooperation, documentation and information as either of them reasonably may request in
(a) filing any Tax Return, amended Tax Return or claim for refund, (b) determining a liability for
Taxes or an indemnity obligation under this Article XV or a right to refund of Taxes, (c)
conducting any Tax Proceeding or (d) determining an allocation of Taxes between a Pre-Closing Tax
Period and Post-Closing Tax Period. Such cooperation and information shall include
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providing copies of all relevant portions of relevant Tax Returns, together with all relevant
accompanying schedules and work papers (or portions thereof) and other supporting documentation,
relevant documents relating to rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property and any other relevant information,
which any such party may possess. Each party will retain all Tax Returns, schedules and work
papers, and all material records and other documents relating to Tax matters, of the relevant
entities for their respective Tax periods ending on or prior to or including the Closing Date until
the later of (x) the expiration of the statute of limitations (taking into account any extensions)
for the Tax periods to which the Tax Returns and other documents relate or (y) eight years
following the due date (without extension) for such Tax Returns. Thereafter, the party holding
such Tax Returns or other documents may dispose of them after offering the other party reasonable
notice and opportunity to take possession of such Tax Returns and other documents at such other
partys own expense. Each party shall make its employees reasonably available on a mutually
convenient basis at its cost to provide explanation of any documents or information so provided.
Section 15.6. Timing Differences.
(a) The applicable Purchaser agrees that if, as a result of any adjustment pursuant to a Tax
Proceeding with respect to any Tax Item that relates to any Excluded Tax, such Purchaser or any of
its Affiliates, including the Acquired Companies, realizes a Tax benefit in the form of a loss,
credit or an increase in depreciation, amortization or other deductions, then such Purchaser shall
pay to the appropriate Seller an amount equal to the value of such Tax benefit promptly after
filing the Tax Return in which such Tax benefit is utilized. For purposes of this Section
15.6, the value of a Tax benefit shall be the related tax savings experienced by the Purchaser
or any of its Affiliates, including the Acquired Companies, as the case may be, for each year to
which such a Tax Return relates. The applicable Purchaser shall notify Dana of the receipt of any
such Tax benefit and shall provide documentation in reasonable detail supporting such notice,
certified by the Purchaser to be consistent with all relevant Tax Returns.
(b) This Section 15.6 shall not apply to any Tax benefits that may result directly or
indirectly from the sale of Nobel on or before June 29, 2007.
(c) If a particular Tax benefit for which payment is to be made to a Seller under Section
15.6 (a) is realized by more than one Purchaser (or by an Affiliate and one or more
Purchasers), only one such Purchaser shall be required to make the payment required under
Section 15.6 (a), provided that such Seller shall be entitled to receive an amount equal to
(but not more than) the entire value of such Tax benefit.
Section 15.7. Tax Treatment of Indemnification Payments.
Except as otherwise required pursuant to a determination under Section 1313(a) of the Code (or
any comparable provision of state, local, or foreign Law), Sellers, Purchasers, the Acquired
Companies and their respective Affiliates shall treat any and all payments under this Article
XV as an adjustment to the purchase price for all Tax purposes. Sellers and Purchasers agree,
for all Tax purposes, to allocate any such adjustment among the Acquired Companies and/or the
Purchased Assets based upon the item or items to which such adjustment is principally
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attributable. In any case, the amount that will be paid pursuant to this Article shall be adjusted
by an amount such that the Indemnified Party shall be, after having been paid the indemnity from
the Sellers and taking into account the Tax consequences of such payment and of the indemnified
Loss, in the same position as it would have been, had the Loss not occurred. Where the Indemnified
Party cannot effectively enjoy a saving of Tax paid in respect of the year in which the Loss is
accounted for, no reduction of the amount of the Loss attributable to such lack of Tax saving will
be made, and where the Indemnified Party is not effectively subject to a payment of Tax in respect
of the indemnity paid in the year in which the Purchasers account for such indemnity, no increase
of the amount of the Loss will be made in respect of the indemnity payment.
Section 15.8. Additional Tax Covenants.
(a) Purchasers shall not make, and shall cause its Affiliates not to make, an election under
Section 338(g) of the Code and the Treasury Regulations promulgated thereunder (or any comparable
election applicable Tax Law) with respect to any of the Acquired Companies without the prior
written consent of Dana.
(b) With respect to any of the Acquired Companies that is characterized as a foreign
corporation for United States federal income Tax purposes, from the date of the Closing through the
end of the taxable period of such entity that includes the Closing Date, without the prior written
consent of Dana, Purchasers shall not, and shall cause their Affiliates (including the Acquired
Companies) not to, (i) except for the payment of cash dividends, take any action or enter into any
transaction outside the ordinary course of business that would be considered under the Code to
constitute the payment of an actual or deemed dividend by such Acquired Company, including pursuant
to Section 304 of the Code, or that would otherwise result in a diminution of foreign tax credits
that, absent such transaction, may be claimed by Sellers or any of their Affiliates, or (ii) take
any action or enter into any transaction outside the ordinary course of business that would
increase the amount includable in the income of a Seller or its Affiliates under Section 951 of the
Code.
(c) No new elections with respect to Taxes, or any changes in current elections with respect
to Taxes, or any revocations or amendments to Tax Returns relating to a Pre-Closing Tax Period, in
each case affecting the FPG Business after the date of this Agreement shall be made after the date
of this Agreement without prior written consent of Orhan, which shall not be unreasonably withheld
or delayed.
Section 15.9. Transfer Taxes.
Orhan, jointly and severally with the Purchasing Affiliates, and each Purchasing Affiliate,
severally and not jointly, shall be responsible for any and all sales, use, registration, transfer
(including all stock transfer and all real estate transfer and conveyance and recording fees, if
any), stamp, stamp duty reserve, stamp duty land tax, VAT, or other similar Taxes and all notarial
fees (collectively, Transfer Taxes) that may be imposed upon, payable, collectible or incurred in
connection herewith and the transactions contemplated hereby, regardless of the Person liable for
such Taxes under applicable Law. Sellers and Purchasers shall cooperate in the execution and
filing of any Tax Returns, affidavits or other documents relating to any Transfer
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Taxes. Dana acknowledges that it will seek from the Bankruptcy Court as part of the Approval
Order a waiver of transfer taxes under section 1146 of the Bankruptcy Code. Dana shall use
commercially reasonable efforts to obtain such relief as part of the Approval Order.
Section 15.10. Other Agreements.
(a) After the Closing, this Article XV shall supersede any and all Tax-sharing or
similar agreements to which (i) any of the Acquired Companies and (ii) Seller or any of its
Affiliates (excluding the Acquired Companies) are parties. Neither the Acquired Companies nor
Seller (and/or such Affiliates) shall have any obligation or right with respect to each other under
any such prior agreement after the Closing.
(b) Except as otherwise expressly provided in the Foreign Country Tax Agreements (including
the French Consolidated Tax Group Exit Agreement), the rights and obligations of the Parties with
respect to indemnification for any and all Tax matters shall be governed solely by this Article
XV; provided , however, that the provisions of Section 12.3 shall apply to Sellers
obligations under this Article XV to indemnify each Purchaser and its Affiliates and defend
and hold them harmless from and against all Losses arising out of or resulting from) Taxes arising
from any breach of any representation or warranty set forth in Section 4.9, Section
4.10(h) or Section 4.14. For purposes of applying each of Section 12.3 and the
immediately preceding proviso, Losses with respect to matters governed by Section
12.2(a)(i) and Losses arising out of or resulting from Taxes arising from any breach of any
representation or warranty set forth in Section 4.9, Section 4.10(h) or Section
4.14 shall be aggregated in determining the applicability of (i) the threshold of $250,000 and
(ii) the limit of 15% of the Final Cash Consideration.
ARTICLE XVI
DEFINITIONS AND TERMS
As used in this Agreement, the following terms shall have the meanings set forth below:
Section 16.1. Acquired Companies.
Acquired Companies has the meaning set forth in the Recitals.
Section 16.2. Acquired Company Benefit Plans.
Acquired
Company Benefit Plans has the meaning set forth in
Section 10.3.
Section 16.3. Acquired Company Employee.
Acquired Company Employee means any individual who is employed by an Acquired Company
immediately before the Closing, including any individual who is absent due to vacation, holiday,
sickness, layoff or other approved leave of absence.
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Section 16.4. Acquired Company Intellectual Property.
Acquired Company Intellectual Property means the Intellectual Property that is owned, in
whole or in part, by any Non-JV Acquired Company.
Section 16.5. Acquired Intellectual Property.
Acquired Intellectual Property means (a) the Purchased Intellectual Property and (b) the
Acquired Company Intellectual Property.
Section 16.6. Affiliate.
Affiliate means, as to any Person, (a) any Subsidiary of such Person and (b) any other
Person that, directly or indirectly, controls, is controlled by, or is under common control with,
such Person. For the purposes of this definition, control means the possession of the power to
direct or cause the direction of management and policies of Person, whether through the ownership
of voting securities, by contract or otherwise.
Section 16.7. Agreement.
Agreement has the meaning set forth in the preamble to this document.
Section 16.8. Alternative Transaction.
Alternative Transaction has the meaning ascribed to it in the Bidding Procedures Order.
Section 16.9. Approval Order.
Approval Order has the meaning set forth in Section 6.3(a).
Section 16.10. Asset Selling Entity.
Asset Selling Entity has the meaning set forth in the Recitals.
Section 16.11. Assignment and Assumption Agreement.
Assignment and Assumption Agreement means one or more assignment and assumption agreements
or other comparable instruments of assignment and assumption, substantially in the form of
Exhibit E hereto, evidencing the assignment of the Contracts and the assumption of the
Assumed Liabilities.
Section 16.12. Assumed Liabilities.
Assumed Liabilities has the meaning set forth in Section 1.5.
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Section 16.13. Assumed Retention Agreements.
Assumed
Retention Agreements has the meaning set forth in
Section 1.3(f).
Section 16.14. Bankruptcy Code.
Bankruptcy Code means 11 U.S.C. Section 101, et. seq., as it may be amended during the
Cases.
Section 16.15. Bankruptcy Court.
Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New
York, or any other court having jurisdiction over the Cases from time to time.
Section 16.16. Bankruptcy Court Orders.
Bankruptcy Court Orders means the Bid Procedures Order and the Approval Order.
Section 16.17. Bidding Procedures Order.
Bidding Procedures Order has the meaning set forth in Section 6.3(a).
Section 16.18. Bill of Sale.
Bill of Sale means one or more bills of sale, substantially in the form of Exhibit C
hereto, transferring to the applicable Purchaser by the relevant Asset Selling Entity all of such
Asset Selling Entitys right, title and interest in the Purchased Assets.
Section 16.19. Breakup Fee.
Breakup
Fee has the meaning set forth in Section 14.2(b).
Section 16.20. Business Day.
Business Day means any day other than a Saturday, a Sunday or a day on which banks in New
York, New York are authorized or obligated by Law to close; provided, however, that for the purpose
of any notice to be delivered hereunder, Business Day shall also exclude any day on which banks are
authorized or obligated by Law to close for business in the jurisdictions of each of the person
giving and the person receiving such notice.
Section 16.21. Business Employee.
Business Employee means any individual who is employed by an Asset Selling Entity
immediately before the Closing, including any individual who is absent due to vacation, holiday,
sickness, layoff, short or long term disability, workers compensation or other work-related injury
or military leave, or other authorized leave of absence.
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Section 16.22. Carveout.
Carveout has the meaning ascribed to it in paragraph 16 of the Final Order (I) Authorizing
Debtors to (A) Obtain Postpetition Secured Financing Pursuant to 11 U.S.C. §§ 105(a), 361, 362,
363, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e) and 507 and Fed. R. Bankr. P. 2002, 4001
and 9014 and (B) Utilize Cash Collateral Pursuant to 11 U.S.C. § 363, and (II) Granting Adequate
Protection to Prepetition Secured Parties Pursuant to 11 U.S.C. §§ 361, 362, 363 AND 364 of the
Bankruptcy Court dated March 29, 2006.
Section 16.23. Case.
Case has the meaning set forth in the Recitals.
Section 16.24. CERCLA.
CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. 9601 et. seq.
Section 16.25. Chapter 11 Expenses.
Chapter 11 Expenses means the costs incurred and expenses paid or payable by the Seller or
any Affiliate in connection with the administration of the Cases, including, without limitation:
(a) fees and expenses related to any debtor-in-possession financing, (b) obligations to pay
professional and other fees and expenses in connection with the Cases (including, without
limitation, fees of attorneys, accountants, investment bankers, financial advisors, noticing
agents, and consultants retained by the Seller or any Affiliate, any creditors or equity
committee, or any debtor-in-possession or pre-petition lender, and any compensation for making a
substantial contribution to the Cases), (c) fees and expenses payable to the United States Trustee
under Section 1930 of title 28, United States Code, and (d) expenses of members of any creditors
or equity holders committee.
Section 16.26. China Subsidiary.
China Subsidiary has the meaning set forth in the Recitals.
Section 16.27. Chosen Court.
Chosen
Court has the meaning set forth in Section 17.14.
Section 16.28. Closing.
Closing
has the meaning set forth in Section 3.1.
Section 16.29. Closing Claims Schedule.
Closing Claims Schedule has the meaning set forth in Section 1.7(a).
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Section 16.30. Closing Date.
Closing Date has the meaning set forth in Section 3.1.
Section 16.31. Closing Date Employees.
Closing Date Employees has the meaning set forth in Section 10.1(a)(ii).
Section 16.32. Closing European Net Working Assets.
Closing European Net Working Assets has the meaning set forth in Section 2.3(e).
Section 16.33. Closing NA Net Working Assets.
Closing NA Net Working Assets has the meaning set forth in Section 2.3(e).
Section 16.34. Closing Statement of European Net Assets.
Closing Statement of European Net Assets has the meaning set forth in Section 2.3(b).
Section 16.35. Closing Statement of NA Net Assets.
Closing Statement of NA Net Assets has the meaning set forth in Section 2.3(b).
Section 16.36. Closing Statement of Net Assets.
Closing Statement of Net Assets has the meaning set forth in Section 2.3(b).
Section 16.37. COBRA.
COBRA means the provisions of Code Section 4980B and Part 6 of Title I of ERISA, as amended,
any implementing regulations, and any applicable similar state law.
Section 16.38. Code.
Code means the Internal Revenue Code of 1986, as amended.
Section 16.39. Contract.
Contract means any contract or agreement, including without limitation any indenture, note,
bond, loan, instrument, lease (including real property leases), conditional sale contract, purchase
or sales orders or mortgage, whether written or oral.
Section 16.40. Cure Costs.
Cure Costs has the meaning set forth in Section 7.2.
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Section 16.41. Current Employees.
Current Employees has the meaning set forth in Section 10.1(a)(i).
Section 16.42. Dana.
Dana has the meaning set forth in the introductory paragraph of this Agreement.
Section 16.43. Dana Defined Contribution Plan.
Dana Defined Contribution Plan has the meaning set forth in Section 10.2.
Section 16.44. Dana Retirement Plan.
Dana Retirement Plan has the meaning set forth in Section 10.2.
Section 16.45. Debtor Asset Selling Entities.
Debtor Asset Selling Entities means those Asset Selling Entities that are Debtors.
Section 16.46. Debtor Contracts.
Debtor Contracts has the meaning set forth in Section 1.3(e).
Section 16.47. Debtors.
Debtors means Dana and those of its Subsidiaries listed on Exhibit A hereto.
Section 16.48. Deposit Agent.
Deposit Agent has the meaning set forth in Section 2.2(a).
Section 16.49. Deposit Agreement.
Deposit Agreement has the meaning set forth in Section 2.2(a).
Section 16.50. Deposit Amount.
Deposit Amount has the meaning set forth in Section 2.2(a).
Section 16.51. DSE.
DSE means Dana Spicer Europe Limited, a limited by shares company (limited liability
company) with its registered office located at Newsome Vaughan, Greyfriars House, Greyfriars Lane,
West Midlands, CV1 2GW, UK registered with the Registry of Commerce in England under number
00467474.
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Section 16.52. EC Regulation.
EC Regulation has the meaning set forth in Section 4.5.
Section 16.53. EFMG
EFMG shall have the meaning set forth in the introductory paragraph of this Agreement.
Section 16.54. Employee Benefit Plans.
Employee Benefit Plan means any employee benefit plan as defined by Section 3(3) of ERISA,
whether or not subject to ERISA and whether or not maintained in the United States, and any other
employee stock option, stock appreciation, stock purchase, phantom stock, or other equity-based
performance, deferred compensation, profit-sharing, pension, retirement, retiree benefit,
termination or severance pay plan, change of control, vacation, medical, life, health, dental, sick
pay or disability, accident, group or individual insurance, vacation pay, holiday pay, or other
welfare or fringe benefit. Employee Benefit Plan shall not include Social Security, Medicare,
workers compensation, or any similar mandated social welfare benefit or scheme administered by any
federal, state or local government.
Section 16.55. Environment.
Environment means any surface water, groundwater, land surface, subsurface strata, man made
structure or building, sediment, plant or animal life, natural resources, indoor or outdoor air and
soil.
Section 16.56. Environmental Assessments.
Environmental Assessments has the meaning set forth in Section 12.5(a).
Section 16.57. Environmental Law.
Environmental Law means any Law concerning: (a) the Environment, including pollution,
contamination, cleanup, preservation, protection, and reclamation of the Environment; (b) health or
safety, including occupational safety and the exposure of employees and other persons to any
Hazardous Material or dangerous condition; (c) any Release or threatened Release of any Hazardous
Material, including investigation, monitoring, clean up, removal, treatment, or any other action to
address such Release or threatened Release; (d) chemical management under the REACH legislation;
and (e) the management of any Hazardous Material, including the manufacture, generation,
formulation, processing, labeling, distribution, introduction into commerce, registration, use,
treatment, handling, storage, disposal, transportation, re-use, recycling or reclamation of any
Hazardous Material, including, but not limited to, CERCLA, RCRA, the Hazardous Materials
Transportation Act, 49 U.S.C. 1802 et. seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et.
seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251 et. seq., the Clean Air Act, 42
U.S.C. 7401 et. seq., Occupational Safety and Health Act, 29 U.S.C. 651 et. seq., Waste Electrical,
Electronic Equipment (WEEE), Integrated Pollution Prevention Program (IPPC), End of Life Vehicle
(ELV) directive.
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Section 16.58. ERISA.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
Section 16.59. European Lower Range.
European Lower Range has the meaning set forth in Section 2.3(d).
Section 16.60. European Upper Range.
European Upper Range has the meaning set forth in Section 2.3(d).
Section 16.61. Excluded Assets.
Excluded Assets has the meaning set forth in Section 1.4.
Section 16.62. Excluded Intellectual Property.
Excluded Intellectual Property has the meaning set forth in Section 1.4(d)
Section 16.63. Excluded Liabilities.
Excluded Liabilities has the meaning set forth in Section 1.6.
Section 16.64. Excluded Taxes.
Excluded Taxes means (a) any Taxes imposed on or payable with respect to any of the Non-JV
Acquired Companies or the FPG Business for any Pre-Closing Tax Period (other than Taxes resulting
from any act or transaction taken by Purchaser or its Affiliates after the Closing without Danas
prior written consent, which shall not be unreasonably withheld or delayed), including any
liability for the payment of any amounts of Tax due by a person other than the Non-JV Acquired
Company and for which any Non-JV Acquired Company would be liable, in particular as a result of any
joint or several obligation with such person, any secondary liability of such person, any
obligation to hold harmless and indemnify such person, any obligation to bear the Taxes of such
person; but in each case excluding any Taxes for a Straddle Period, which Taxes are allocated as
explained below, and (b) any Taxes of any Seller or any of its Affiliates (other than the Acquired
Companies) for which the Acquired Companies may be liable under Section 1.1502 6 of the Treasury
Regulations (or any similar provision of state, local, or foreign Tax Law). For purposes of this
Agreement, in the case of any Straddle Period, (i) Property Taxes or other Taxes that are
calculated based on a flat rate per year of the Acquired Companies or the FPG Business allocable to
the Pre-Closing Tax Period shall be equal to the amount of such Taxes for the entire period
multiplied by a fraction, the numerator of which is the number of calendar days during such period
that are in the Pre-Closing Period and the denominator of which is the number of calendar days in
the entire period, and (ii) Taxes (other than Property Taxes or other Taxes that are calculated
based on a flat rate per year) of the Acquired Companies or the FPG Business allocable to the
Pre-Closing Tax Period shall be computed as if such taxable period ended as of the Closing,
provided that exemptions, allowances or deductions that are
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calculated on an annual basis (including, but not limited to, depreciation and amortization
deductions) shall be allocated between the period ending on the Closing Date and the period
beginning after the Closing Date in proportion to the number of days in each period
Section 16.65. Existing Inventory.
Existing Inventory has the meaning set forth in Section 7.7(c).
Section 16.66. Final Cash Consideration.
Final Cash Consideration has the meaning set forth in Section 2.1(a).
Section 16.67. Final Consideration.
Final Consideration means the sum of the Final Cash Consideration and the Assumed
Liabilities.
Section 16.68. Final Order.
Final Order means an order of the Bankruptcy Court or other court of competent jurisdiction:
(a) as to which no appeal, notice of appeal, motion to amend or make additional findings of fact,
motion to alter or amend judgment, motion for rehearing or motion for new trial, request for stay,
motion or petition for reconsideration, application or request for review, or other similar motion,
application, notice or request (collectively, a Challenge) has been timely filed, or, if any of
the foregoing has been timely filed, it has been disposed of in a manner that upholds and affirms
the subject order in all respects without the possibility for further Challenge thereon; (b) as to
which the time for instituting or filing a Challenge shall have expired; and (c) as to which no
stay is in effect.
Section 16.69. Financial Statements.
Financial Statements has the meaning set forth in Section 4.8.
Section 16.70. FPG Business.
FPG Business has the meaning set forth on Schedule 16.70.
Section 16.71. French Consolidated Tax Group Exit Agreement.
French Consolidated Tax Group Exit Agreement has the meaning set forth in Section
4.9(e).
Section 16.72. GAAP.
GAAP means generally accepted accounting principles in the United States of America, which
are applicable to the circumstances as of the date of determination.
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Section 16.73. Governmental Body.
Governmental Body means any government or governmental or regulatory body thereof, or
political subdivision thereof, of any country or subdivision thereof, whether national, federal,
state or local, or any agency or instrumentality thereof, or any court or arbitrator (public or
private), other than the Bankruptcy Court or any other court of competent jurisdiction over the
Cases or over any appeal of an Order entered in the Cases.
Section 16.74. Guarantees.
Guarantees has the meaning set forth in Section 7.6.
Section 16.75. Hazardous Material.
Hazardous Material means collectively, any material defined as, or considered to be, a
hazardous waste, hazardous substance, regulated substance, pollutant or contaminant under any
Environmental Law including asbestos, PCBs, oil, petroleum or any fraction thereof.
Section 16.76. HSR Act.
HSR Act has the meaning set forth in Section 4.5.
Section 16.77. H&T.
H&T means Hose & Tubing Products, Inc., a corporation organized under the laws of the
Commonwealth of Virginia.
Section 16.78. Income Tax.
Income Tax means any Tax imposed on or measured by net income.
Section 16.79. Indebtedness.
Indebtedness of any Person means, without duplication:
(a) any obligation of such Person for borrowed money, including any obligation of such Person
evidenced by bonds, debentures, notes, reimbursement obligations under any letter of credit or
other similar debt instruments;
(b) all obligations of such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, regardless of whether any personal liability exists
in respect thereof;
(c) any obligation of such Person for the deferred purchase price of any property or services,
regardless of whether any personal liability exists in respect thereof;
(d) obligations in respect of capital leases of such Person;
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(e) all guarantees by such Person, provided, however, that a guarantee will not be considered
Indebtedness if the underlying obligation secured by such guarantee would not constitute
Indebtedness under this Agreement;
(f) any Indebtedness of another Person secured by a Lien on any asset of such first Person,
whether or not such Indebtedness is assumed by such first Person;
(g) any Indebtedness consisting of preferred stock of a Person having a mandatory redemption
prior to the Closing Date; and
(h) any cash liability with respect to hedging agreements.
For purposes of this definition the term Indebtedness shall not include the following direct
and/or contingent obligations: (i) check guarantee letters for payment of sales tax, title,
license and other taxes or fees; and (ii) direct or contingent obligations for risk products
associated with FPG Business depository, treasury, merchant processing and other similar products
and services incurred in the ordinary course of business.
Section 16.80. Indemnified Party.
Indemnified Party has the meaning set forth in Section 12.4.
Section 16.81. Indemnifying Party.
Indemnifying Party has the meaning set forth in Section 12.4.
Section 16.82. Independent Auditors.
Independent Auditors has the meaning set forth in Section 2.3(c).
Section 16.83. Initial Cash Consideration.
Initial Cash Consideration has the meaning set forth in Section 2.1(a).
Section 16.84. Initial Consideration.
Initial Consideration means the sum of the Initial Cash Consideration and the Assumed
Liabilities (other than liabilities or obligations of the Acquired Companies).
Section 16.85. Intellectual Property.
Intellectual Property means all transferable intellectual or industrial property rights or
other similar proprietary rights in any jurisdiction, including such rights in and to: (a)
Trademarks; (b) copyrights and copyrightable works including software source code, object code,
data and documentation; (c) Patents; (d) invention disclosures, discoveries and improvements,
whether or not patentable; (e) Trade Secrets; (f) internet domain names; and (g) the goodwill
associated with each of the foregoing.
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Section 16.86. Intellectual Property Assignment.
Intellectual Property Assignment means one or more instruments of assignment or transfer of
the Purchased Intellectual Property, substantially in the form of Exhibit D hereto.
Section 16.87. IP License.
IP License means one or more agreements or instruments of license and assignment,
substantially in the form of Exhibit M hereto, granting licenses and rights to the
applicable Purchaser in connection with Purchased Intellectual Property.
Section 16.88. Joint Venture Agreements.
Joint Venture Agreements means, collectively, (i) the shareholders agreement, dated as of
December 8, 1999, by and between Orhan and Nobel Plastiques, SAS, and (ii) the Joint Venture
Agreement, dated as of March 1, 2002, by and between Orhan and Dana, in each case as the same has
been amended from time to time.
Section 16.89. Joint Venture Interest Transfer Agreement.
Joint Venture Interest Transfer Agreement means assignments or other instruments of
transfer, substantially in the form of Exhibit N hereto, transferring to the applicable
Purchaser by the relevant Seller all of such Sellers right, title and interest in and to the JV
Acquired Companies.
Section 16.90. JV Acquired Companies.
JV Acquired Companies means Orda Automotive A.S., Nobel Teknik A.S. and Nobel Teknik France
SAS.
Section 16.91. Knowledge.
Knowledge, as such term relates to Sellers, means the actual knowledge, after due inquiry,
of the individuals designated for Sellers as set forth on Schedule 16.91, and, as such term
relates to Orhan or other Purchasers, means the actual knowledge, after due inquiry, of the
individuals designated for Orhan as set forth on Schedule 16.91.
Section 16.92. Known Claims.
Known Claims has the meaning set forth in Section 12.1(a).
Section 16.93. Law.
Law means any international, national, European Union, federal, state or local law
(including common law), treaty, statute, constitutional provision, code, ordinance, rule,
regulation, directive, concession, Order or other requirement or guideline of any country or
subdivision thereof.
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Section 16.94. Lease Agreement/Paris.
Lease Agreement/Paris means a lease agreement, substantially in the form of Exhibit P
hereto, by which the applicable Purchaser will lease real property located in Paris, Tennessee.
Section 16.95. Leased Real Properties.
Leased Real Properties means the real property leased pursuant to, and subject to, the Real
Property Leases.
Section 16.96. Leave Employees.
Leave Employees has the meaning set forth in Section 10.1(a)(ii).
Section 16.97. Legal Proceeding.
Legal Proceeding means any judicial, administrative or arbitral action, suit, proceeding
(public or private) or governmental proceeding.
Section 16.98. Liabilities.
Liabilities means any indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether or not due or to become due or asserted or
unasserted).
Section 16.99. Lien.
Lien means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security
interest, charge, option, right of first refusal, easement, covenant, condition, restriction,
servitude, transfer restriction or encumbrance.
Section 16.100. Local Asset Transfer Agreements.
Local Asset Transfer Agreements means one or more agreements or instruments of transfer,
assignment and assumption, substantially in the form of Exhibit K hereto, transferring to
the applicable Purchaser by the relevant Asset Selling Entity all of such Asset Selling Entitys
right, title and interest in the Purchase Assets and evidencing the assignment of the Contracts and
the assumption of the Assumed Liabilities to and by the applicable Purchaser.
Section 16.101. Local Stock Transfer Documents.
Local Stock Transfer Documents means stock powers or other instruments of transfer,
substantially in the form of Exhibit J hereto, transferring to the applicable Purchaser by
the relevant Seller all of such Sellers right, title and interest in the Purchased Shares.
Section 16.102. Losses.
Losses has the meaning set forth in Section 12.2(a).
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Section 16.103. Material Adverse Effect.
Material Adverse Effect means, any change, event, impairment or effect between the date
hereof and the Closing, that (i) is materially adverse to the financial condition, business,
operations or assets of the FPG Business taken as a whole, (ii) constitutes a material impairment
of the ability of the Sellers to perform their obligations under this Agreement; or (iii)
constitutes a material impairment of the validity or enforceability of this Agreement, except for,
in the case of each of clauses (i), (ii) and (iii), any such change, event, impairment or effect
resulting from or arising out of (a) changes or developments in financial or securities markets
(including currency exchange or interest rates); (b) general economic conditions affecting
industries in which the FPG Business operates; (c) the fact that the Debtors are in bankruptcy
proceedings under the Cases before the Bankruptcy Court, or (d) the effect of the announcement of
the transactions contemplated by this Agreement.
Section 16.104. Material Business Contracts.
Material Business Contracts has the meaning set forth in Section 4.13.
Section 16.105. Modified GAAP.
Modified GAAP means GAAP as modified by the principles, methods and examples set forth in
Schedule 16.105.
Section 16.106. NA Lower Range.
NA Lower Range has the meaning set forth in Section 2.3(d).
Section 16.107. NA Upper Range.
NA Upper Range has the meaning set forth in Section 2.3(d).
Section 16.108. Net Working Assets Adjustment.
Net Working Assets Adjustment has the meaning set forth in Section 2.3(f).
Section 16.109. Net Working Assets European Adjustment.
Net Working Assets European Adjustment has the meaning set forth in Section 2.3(f).
Section 16.110. Net Working Assets NA Adjustment.
Net Working Assets Adjustment has the meaning set forth in Section 2.3(f).
Section 16.111. Net Working Assets of the European Business
Net Working Assets of the European Business has the meaning set forth in Section
2.3(a).
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Section 16.112. Net Working Assets of the NA Business.
Net Working Assets of the NA Business has the meaning set forth in Section 2.3(a).
Section 16.113. NMD.
NMD means NMD Fuel Systems S. de R.L. de C.V., a limited liability company organized under
the laws of Mexico.
Section 16.114. Nobel.
Nobel has the meaning set forth in the Recitals.
Section 16.115. Nobel Iberica.
Nobel Iberica has the meaning set forth in the Recitals.
Section 16.116. Nonassignable Assets.
Nonassignable Assets has the meaning set forth in Section 11.1(b).
Section 16.117. Non-Debtor Asset Selling Entities.
Non-Debtor Asset Selling Entities means those Asset Selling Entities that are not Debtors.
Section 16.118. Non-Debtor Contracts.
Non-Debtor Contracts means those Contracts of the Non-Debtor Asset Selling Entities
primarily related to the ASE Business, including without limitation those set forth on Schedule
16.118.
Section 16.119. Non-JV Acquired Companies.
Non-JV Acquired Companies means Nobel Plastiques SAS, Nobel Plastiques Iberica S.A. and Dana
Fluid Products Slovakia S.R.O.
Section 16.120. Non-JV Acquired Company Contract.
Non-JV Acquired Company Contract means all Contracts to which any Non-JV Acquired Company is
a party (including, but not limited to, any Contract that is an unexpired lease), but excluding any
Contract that is included in the Excluded Assets.
Section 16.121. Non-Union Transferred Employees.
Non-Union Transferred Employees has the meaning set forth in Section 10.1(e).
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Section 16.122. North American Real Property.
North American Real Property means real property that is the subject of any of the Real
Property Leases and located in the United States.
Section 16.123. Operative Documents.
Operative Documents means collectively, this Agreement, the Deposit Agreement, the Bill of
Sale, the Assignment and Assumption Agreement, the Intellectual Property Assignment, the Transition
Agreement, the Local Stock Transfer Documents, the Local Asset Transfer Agreements, the French Tax
Consolidated Group Exit Agreement, the IP Licenses, the Joint Venture Interest Transfer Agreements,
the Satisfactions and Releases and the Lease Agreement/Paris.
Section 16.124. Order.
Order means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award of (i) any Governmental Body or (ii) the Bankruptcy Court or any other court of competent
jurisdiction over the Cases or over any appeal of an Order entered in the Cases.
Section 16.125. Other Marked Assets.
Other Marked Assets has the meaning set forth in Section 7.7(c).
Section 16.126. Owned Real Property.
Owned Real Property means the real property listed on Schedule 4.10(a) together with
any and all buildings, structures, improvements and fixtures located on such real property owned by
(A) the Non-JV Acquired Companies and (B) the Asset Selling Entities exclusively related to the ASE
Business.
Section 16.127. Orhan.
Orhan has the meaning set forth in the introductory paragraph of this Agreement.
Section 16.128. Patents.
Patents means patents, including design patents and utility patents, reissues, divisions,
continuations, continuations-in-part, reexaminations and extensions thereof, in each case including
all applications therefor.
Section 16.129. Permit.
Permit means any approval, authorization, consent, franchise, license, permit or certificate
by any Governmental Body.
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Section 16.130. Permitted Exceptions.
Permitted Exceptions means the items shown on Schedule 16.130 and (a) liens for
current Taxes, assessments or other claims by a Governmental Body not yet delinquent or the amount
or validity of which is being contested in good faith by appropriate proceedings or for which an
appropriate reserve or security deposit is established; (b) except as to the sale and transfer of
Purchased Assets hereunder by Debtor Asset Selling Entities, mechanics, carriers, workers,
repairers and similar Liens arising or incurred in the ordinary course of business; (c) zoning,
subdivision, building code, entitlement and other land use, construction, and environmental
regulations by Governmental Bodies; (d) matters that would be shown or otherwise reflected by an
accurate survey of real property; (e) easements, rights-of-way, licenses, utility agreements,
restrictions, and other similar encumbrances of record; and (f) such other imperfections in title,
charges, easements, restrictions and encumbrances which do not materially diminish the value of, or
materially interfere with, the continued use of such property (real or personal) or asset used in
the FPG Business consistent with past practice.
Section 16.131. Person.
Person means any individual, corporation, partnership, limited liability company, firm,
joint venture, association, joint-stock company, trust, unincorporated organization, representative
office, branch, Governmental Body or other similar entity.
Section 16.132. Personal Property Leases.
Personal Property Leases has the meaning set forth in Section 4.11(a).
Section 16.133. Petition Date.
Petition Date means March 3, 2006.
Section 16.134. Post-Closing Tax Period.
Post-Closing Tax Period means any taxable period (or portion thereof) beginning after the
Closing Date.
Section 16.135. Pre-Closing Tax Period.
Pre-Closing Tax Period means any taxable period (or portion thereof) ending on or before the
Closing Date.
Section 16.136. Property Taxes.
Property Taxes means real, personal, and intangible ad valorem property Taxes.
Section 16.137. PTG Mexico.
PTG Mexico has the meaning set forth in the introductory paragraph of this Agreement.
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Section 16.138. PTG Servicios.
PTG Servicios has the meaning set forth in the introductory paragraph of this Agreement..
Section 16.139. Purchased Assets.
Purchased Assets has the meaning set forth in Section 1.3.
Section 16.140. Purchased Equipment.
Purchased Equipment has the meaning set forth in Section 1.3(b).
Section 16.141. Purchased Intellectual Property.
Purchased Intellectual Property has the meaning set forth in Section 1.3(h).
Section 16.142. Purchased Shares.
Purchased Shares has the meaning set forth in Section 1.2.
Section 16.143. Purchasers.
Purchasers has the meaning set forth in the introductory paragraph of this Agreement.
Section 16.144. Purchaser Indemnified Group.
Purchaser Indemnified Group means Orhan, each Purchaser, their respective Subsidiaries and
Affiliates (including, after the Closing Date and the Non-JV Acquired Companies but excluding the
JV Acquired Companies), together with their successors and assigns, and their officers, directors,
employees and agents.
Section 16.145. Purchaser Welfare Plans.
Purchaser Welfare Plans has the meaning set forth in Section 10.1(e).
Section 16.146. Purchasing Affiliate.
Purchasing Affiliate has the meaning set forth in the introductory paragraph of this
Agreement.
Section 16.147. RCRA.
RCRA means the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et. seq.
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Section 16.148. Real Property Leases.
Real Property Leases means the real property leases listed on Schedule 4.10(b) of (A)
the Non-JV Acquired Companies, and (B) the Asset Selling Entities exclusively related to the ASE
Business.
Section 16.149. Release.
Release means any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration at, or from, into or onto the Environment, including
movement or migration through or in the air, soil, surface water or groundwater, whether sudden or
non-sudden and whether accidental or non-accidental, or any release, emission or discharge as those
terms are defined in any applicable Environmental Law.
Section 16.150. Relevant ASE Business.
Relevant ASE Business has the meaning set forth in Section 1.3.
Section 16.151. Remedial Action.
Remedial Action shall mean any action to investigate, evaluate, assess, test, monitor,
remove, respond to, treat, abate, remedy, correct, clean-up or otherwise remediate the release or
presence of any Hazardous Material.
Section 16.152. Remediations.
Remediations has the meaning set forth in Section 7.4(a).
Section 16.153. Retention Agreements.
Retention Agreements shall mean the retention agreements and replacements or renewals
thereof between Sellers, or Affiliates of Sellers, and the Business Employees and Acquired Company
Employees as set forth in the agreements listed on Schedule 16.153.
Section 16.154. Review Period.
Review Period has the meaning set forth in Section 2.3(c).
Section 16.155. Sale Motion.
Sale Motion has the meaning set forth in Section 6.3(a).
Section 16.156. Satisfaction and Releases.
Satisfaction and Releases means one or more satisfaction and releases, substantially in the
form of Exhibit O hereto, in connection with the transfer and assignment of Sellers right,
title and interest in and to the JV Acquired Companies.
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Section 16.157. Second Phase.
Second Phase has the meaning set forth in Section 7.4(a).
Section 16.158. Second Request.
Second Request has the meaning set forth in Section 7.4(a).
Section 16.159. Seller.
Seller has the meaning set forth in the preamble.
Section 16.160. Seller Authorization.
Seller Authorization has the meaning set forth in Section 1.1(a).
Section 16.161. Seller Employee Benefit Plan.
Seller Employee Benefit Plan means (i) any Employee Benefit Plan established, sponsored or
maintained by any Asset Selling Entity in which any Business Employee is eligible to participate or
receive benefits and (ii) each Employee Benefit Plan sponsored or maintained by any Acquired
Company.
Section 16.162. Seller Financing.
Seller Financing means (i) the postpetition financing facilities or arrangements of the
Debtors and (ii) any financing facilities or arrangements of the Sellers or their Subsidiaries.
Section 16.163. Seller Indemnified Group.
Seller Indemnified Group means Sellers and their Subsidiaries, together with their
successors and assigns, and their officers, directors, employees and agents.
Section 16.164. Seller Name.
Seller Name has the meaning set forth in Section 7.7(a).
Section 16.165. Seller Welfare Plans.
Seller Welfare Plans has the meaning set forth in Section 10.2(b).
Section 16.166. Statement of Net Assets.
Statement of Net Assets has the meaning set forth in Section 4.8.
Section 16.167. Stock Selling Entities.
Stock Selling Entities has the meaning set forth in the Recitals.
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Section 16.168. Straddle Period.
Straddle Period means any taxable period beginning on or prior to and ending after the
Closing Date.
Section 16.169. Subsidiary.
Subsidiary means, with respect to any Person, any other Person of which or in which any
other Person (either alone or through or together with any other Subsidiary) owns, directly or
indirectly, a majority of the outstanding equity securities, capital interests or securities
carrying a majority of the voting power in the election of the board of directors or other
governing body of such Person.
Section 16.170. Tax or Taxes.
Tax or Taxes means all federal, state, local or foreign taxes (including French local
business taxes), corporate income taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross receipts, capital, sales, use, ad valorem, VAT,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, disability, death and retirement, excise, severance, stamp,
occupation, property, rollback and estimated taxes, customs duties, fees, assessments and other
governmental charges of any kind whatsoever, together with all interest, penalties, fines,
additions to tax or additional amounts imposed by any taxing authority with respect to such
amounts.
Section 16.171. Tax Claim.
Tax Claim means any claim with respect to Taxes made by any taxing authority that, if
pursued successfully, would reasonably be expected to serve as the basis for a claim for
indemnification under Article XV.
Section 16.172. Tax Item.
Tax Item means any item of income, gain, loss, deduction, credit, recapture of credit or any
other item which increases or decreases Taxes paid or payable.
Section 16.173. Tax Proceeding.
Tax Proceeding has the meaning set forth in Section 15.4(b).
Section 16.174. Tax Return.
Tax Return means a report, return or other information required to be supplied to a
governmental entity with respect to Taxes (including any amendments and schedules thereto).
Section 16.175. TPF.
TPF means Thermal Products France, a société par actions simplifiée with its registered
office located at ZI de Guiscard, rue du Lieutenant Gabriel Lalanne, 60640 Guiscard,
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registered with the Registry of Commerce and Companies of Compiégne under the number 341 206
183.
Section 16.176. Trade Secrets.
Trade Secrets means trade secret business information including ideas, formulas,
compositions, technical documentation, operating manuals and guides, plans, designs, sketches,
inventions, production molds, product specifications, equipment lists, engineering reports and
drawings, architectural and engineering plans, manufacturing and production processes and
techniques; drawings, specifications, plans, proposals, research records, inspection processes
invention records and technical data; financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and information,
licensing records, advertising and promotional materials, service and parts records, warranty
records, maintenance records that have been and are maintained in confidence and that provide a
competitive business advantage.
Section 16.177. Trademarks.
Trademarks means trademarks, service marks, brand names, logos, certification marks, trade
dress, assumed names and trade names, including all applications for registration therefor,
registrations and all renewals, modifications and extensions thereof and the goodwill associated
with each of the foregoing.
Section 16.178. Transfer Taxes.
Transfer Taxes has the meaning set forth in Section 15.9.
Section 16.179. Transferred Employee.
Transferred Employee has the meaning set forth in Section 10.1.
Section 16.180. Transferred Intercompany Receivables.
Transferred Intercompany Receivables means all intercompany receivables, payables, loans and
investments, in each case, arising after the filing by the Debtors of the Cases, between any Asset
Selling Entity (as relates to the Relevant ASE Business) or Non-JV Acquired Company, on the one
hand, and any other Asset Selling Entity (as relates to the Relevant ASE Business) or Non-JV
Acquired Company, on the other hand.
Section 16.181. Transferred JV Interests.
Transferred JV Interests means the shares of capital stock or equity interests in each JV
Acquired Company owned by Sellers.
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Section 16.182. Transition Agreement.
Transition Agreement means one or more transition services agreements, in form and substance
reasonably acceptable to the parties, providing for the provision of services as among Sellers and
Purchasers following the Closing.
Section 16.183. Trigger Levels.
Trigger Levels has the meaning set forth in Section 12.5(c).
Section 16.184. Union Transferred Employees.
Union Transferred Employees has the meaning set forth in Section 10.1(c).
Section 16.185. VAT.
VAT means any value added Tax, goods and services Tax, sales or turnover Tax or similar Tax,
including such Tax as may be imposed by the Sixth Council Directive of the European Communities and
national legislation implementing or supplemental to that directive.
Section 16.186. WARN ACT.
WARN ACT means the Worker Adjustment and Retraining Notification Act.
Section 16.187. Other Definitional and Interpretive Provisions.
(a) Any reference to any federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context requires
otherwise.
(b) Unless otherwise specified, the terms hereof, herein, hereunder, herewith and
similar terms refer to this Agreement as a whole (including the exhibits, and schedules to this
Agreement), and references herein to Sections and Articles refer to sections and articles of this
Agreement.
(c) Whenever used in this Agreement, except as otherwise expressly provided or unless the
context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as
the singular and to cover all genders, and the terms include and including shall be inclusive
and not exclusive and shall be deemed to be followed by the following phrase without limitation.
(d) The terms Dollars and $ shall mean United States dollars.
(e) Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise
indicated, shall have such meaning throughout this Agreement.
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ARTICLE XVII
MISCELLANEOUS
Section 17.1. Notices.
Any notice or demand to be given hereunder shall be in writing and deemed given when
personally delivered, or two business days after it is sent by express courier and addressed as set
forth below or to such other address as any party shall have previously designated by such a
notice. Any notice so delivered personally shall be deemed to be received on the date of delivery;
any notice so sent by express courier shall be deemed to be received on the date received
(rejection or other refusal to accept or inability to deliver because of a change of address of
which no notice was given shall be deemed to be receipt of the notice); provided however, that
notices or communications described in Article 20/III of the Turkish Commercial Law (consisting
principally of notices of default or termination) shall be sufficiently given only if delivered via
a Turkish Notary or by registered mail, return receipt requested, and shall be deemed to have been
given as of the date of proper service in accordance with Turkish Law.
If to Orhan or Purchasers:
Orhan Holdings A.S.
Yalova Yolu 15 Km
16285 Ovaakca-Bursa Turkey
Attention: Murat Orhan, Chairman and CEO
Telephone No.: +90 (224) 280 4900
With a copy to:
Gide Loyrette Nouel LLP
120 West 45th Street
New York, NY 10036
Attention: Marianne Rosenberg, Esq.
Telephone No.: (212) 403-6700
If to Dana or Sellers:
Dana Corporation
4500 Dorr Street
Toledo, OH 43615
Attention: General Counsel
Telephone No.: (419) 535-4500
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With a copy to:
Hunton & Williams LLP
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
Attention: Robert Acosta-Lewis and Cyane B. Crump
Telephone No.: (804) 788-8200
Section 17.2. Amendment; Waiver.
Any provision of this Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the parties hereto, or in the case
of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law, except as otherwise
expressly provided herein.
Section 17.3. Assignment.
No party to this Agreement may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties hereto and any
purported assignment or delegation without such consent shall be void and of no effect.
Section 17.4. Entire Agreement.
The Schedules and Exhibits attached to this Agreement are an integral part of this Agreement.
This Agreement (together with the Schedules, Exhibits and other agreements referenced herein) and
the other Operative Documents contain, and are intended as, a complete statement of all of the
terms and the arrangements between the parties hereto with respect to the matters provided for
herein, and supersede any previous agreements and understandings between the parties hereto with
respect to those matters. It shall be expressly understood that this Agreement and the other
Operative Documents shall govern the transactions contemplated hereby as a whole and that any local
agreements, instruments, certificates or other documents entered into or delivered in connection
with this Agreement and the other Operative Documents with respect to a particular jurisdiction
shall not be construed as amendments or novations of this Agreement and the other Operative
Documents but rather shall be complemented by and interpreted in light of this Agreement and the
other Operative Documents. Notwithstanding any provision of this Agreement to the contrary, unless
and until the Closing occurs as contemplated hereby, nothing herein shall be deemed to amend, alter
or affect the rights or responsibilities of the parties under or pursuant to the Joint Venture
Agreements, and all rights of Orhan and Dana or TPF, as the case may be, pursuant to the Joint
Venture Agreements are expressly reserved.
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Section 17.5. Fulfillment of Obligations.
Any obligation of any party to any other party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
Section 17.6. Parties in Interest.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
Section 17.7. No Third-Party Rights.
Except as otherwise provided in Sections 10.1, 10.2, 10.3 and
10.4, nothing in this Agreement, express or implied, is intended to confer on any Person not
a party hereto, any rights or remedies by reason of this Agreement.
Section 17.8. Public Disclosure.
Each of the parties to this Agreement and the other Operative Documents hereby agrees with the
other party or parties hereto that the parties shall agree in advance as to the contents of any
press release or other public statement or disclosure with respect to the transactions contemplated
by this Agreement issued prior to Closing, except as may be required to comply with the
requirements of any applicable Laws and the rules and regulations of any stock exchange upon which
the securities of any of the parties (or its Affiliate) is listed, in which case such party shall
use its reasonable best efforts to consult with the other parties before releasing such
information.
Section 17.9. Confidentiality.
This Section 17.9 and Section 17.10 shall not apply to the JV Acquired Companies
if the Closing shall not occur for any reason, and in such event any applicable confidentiality
provisions of any Joint Venture Agreement shall instead apply to any information respecting the JV
Acquired Companies. Subject to Section 17.8, the transactions contemplated by this
Agreement and the other Operative Documents shall be kept confidential by Sellers, Purchasers and
their respective representatives. In the event that the transactions contemplated by this
Agreement are not consummated, each Purchaser and Seller (a Receiving Party) shall, for a period
of five years following the termination of this Agreement, hold any information obtained by it from
the other party (a Disclosing Party) or its Subsidiaries or representatives in strict confidence
and, without the prior written consent of the Disclosing Party, shall not use any of such
information for any purpose (except as required by applicable law, regulation or legal process or
to enforce the rights of the Receiving Party hereunder), unless such information (i) is or becomes
generally available to the public other than as a result of a disclosure by the Receiving Party or
its officers, employees or agents in breach of this Agreement, (ii) was available to the Receiving
Party or its officers, employees or agents on a non-confidential basis prior to its disclosure to
the Receiving Party by or at the request of the Disclosing Party or its Subsidiaries, or (iii)
becomes available to the Receiving Party on a non-confidential basis from a source other than the
Disclosing Party or its Subsidiaries; provided,
however, that such source is
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not bound by a confidentiality agreement with the Disclosing Party or its Subsidiaries or
otherwise prohibited from disclosing such information to the Receiving Party by a contractual,
legal or fiduciary obligation. In the event that a Receiving Party, or any of its Affiliates or
representatives, is required by applicable law, regulation or legal process to disclose any of such
information, the Receiving Party will notify the Disclosing Party promptly (unless prohibited by
law) so that the Disclosing Party may seek an appropriate protective order or other appropriate
remedy. In the event that no such protective order or other remedy is obtained or the Disclosing
Party does not waive compliance with this Section 17.9 and the Receiving Party or any of its
representatives are nonetheless legally compelled to disclose such information, the Receiving Party
or its representatives, as the case may be, will furnish only that portion of the information which
the Receiving Party is, or such representatives are, advised by counsel is required by Law to be
furnished and will give the Disclosing Party written notice (unless prohibited by law) of the
information to be disclosed as far in advance as practicable and exercise all reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded the information.
Section 17.10. Return of Information.
If for any reason whatsoever the transactions contemplated by this Agreement are not
consummated, Orhan shall, and shall cause Purchasers to, promptly return to Sellers all books,
records and other materials furnished by Sellers or any of its agents, employees or representatives
pursuant to this Agreement (including all copies, if any, thereof), and shall not use or disclose
the information contained in such books, records and other materials or make such information
available to any other entity or person.
Section 17.11. Expenses.
Subject to Section 7.2, each of the parties hereto shall bear its own expenses
(including fees and disbursements of its counsel, accountants and other experts) incurred by it in
connection with the preparation, negotiation, execution, delivery and performance hereof, each of
the other documents and instruments executed in connection herewith or contemplated hereby and the
consummation of the transactions contemplated hereby and thereby. In addition, Purchasers shall be
solely responsible for all expenses incurred in connection with its due diligence review of the FPG
Business, including without limitation surveys, title work, title searches, environmental testing
or inspections, building inspections, UCC lien and other searches.
Section 17.12. Bulk Sales Laws.
Purchasers hereby waive compliance by Sellers and their Subsidiaries with any applicable bulk
sales law. Each of the Asset Selling Entities, severally and not jointly, agrees to indemnify
Purchasers and hold Purchasers harmless from and against any and all liability under any bulk sales
law for the sale of assets by such Asset Selling Entity under this Agreement, provided, however,
that this indemnity shall not affect the obligation of Purchasers to pay and discharge the Assumed
Liabilities and no indemnity is made under this Section 17.12 with respect to the Assumed
Liabilities.
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Section 17.13. Governing Law.
This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of New York, including all matters of construction, validity and performance (including
sections 5-1401 and 5-1402 of the New York General Obligations Law but excluding all other choice
of law and conflicts of law rules).
Section 17.14. Submission to Jurisdiction; Selection of Forum.
Each party hereto agrees that any action or proceeding for any claim arising out of or related
to this Agreement or the transactions contained in or contemplated by this Agreement and the other
Operative Documents, whether in tort or contract or at law or in equity, shall be brought (i) in
the case of a proceeding involving Debtors, in the Bankruptcy Court, while the Debtors Cases are
pending, or thereafter, in any other New York federal court sitting in the City of New York, or
(ii) in the case of a proceeding solely involving non-Debtors, in any federal court sitting in the
City of New York, or, if such court indicated in (i) or (ii) does not have jurisdiction, the
relevant New York State court sitting in the Borough of Manhattan (each such court, a Chosen
Court), and each party irrevocably (a) submits to the jurisdiction of the Chosen Courts (and of
their appropriate appellate courts), (b) waives any objection to laying venue in any such action or
proceeding in either Chosen Court, (c) waives any objection that such Chosen Court is an
inconvenient forum for the action or proceeding, and (d) agrees that, in addition to other methods
of service provided by law, to the full extent provided by applicable law service of process in any
such action or proceeding shall be effective if provided in accordance with Section 17.1 of
this Agreement, and the effective date of such service of process shall be as set forth in
Section 17.1.
Section 17.15. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same Agreement.
Section 17.16. Headings.
The heading references herein and the table of contents hereto are for convenience purposes
only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof.
Section 17.17. Severability.
Except for Article II, the provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement other than Article II, or the
application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other Persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such
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invalidity or unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
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Orhan Holding, A.S.,
an anonim sirket organized
under the laws of the Republic
of Turkey |
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Dana Corporation,
a corporation organized under the laws of the
Commonwealth of Virginia |
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By:
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/s/ Murat Orhan
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By:
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/s/ Bill Riley |
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Name: Murat Orhan
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Name: Bill Riley |
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Title: Chairman & CEO
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Title: Director Corporate Development |
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IN WITNESS WHEREOF, the additional Persons made parties hereto in accordance with Section
1.1(a) have executed this Agreement effective as of the Closing Date.
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Dana Spicer Europe Ltd.,
a limited company organized under
the laws of England and Wales |
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Thermal Products France, SAS,
a société par actions simplifiée
organized under the laws of France |
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By:
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By: |
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Name:
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Title:
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Title: |
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Date:
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EFMG, LLC,
a limited liability company
organized under the laws of the
Commonwealth of Virginia |
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PTG
Mexico S. de R.L. de C.V.,
a corporation organized under the
laws of Mexico |
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By:
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By: |
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Name:
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Name: |
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Title:
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Title: |
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Date:
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Date: |
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PTG Servicios S. de R.L. de C.V.,
a corporation organized under the
laws of Mexico |
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Hose & Tubing Products, Inc.,
a corporation organized under the
laws of the Commonwealth of Virginia |
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By:
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By: |
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Name:
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Name: |
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Title:
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Title: |
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Date:
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99
EX-10(W)(1)
Exhibit 10-W(1)
FIRST AMENDMENT TO AGREEMENT TO PURCHASE ASSETS AND STOCK
THIS FIRST AMENDMENT TO AGREEMENT TO PURCHASE ASSETS AND STOCK (this Amendment),
dated as of June 5, 2007, by and between ORHAN HOLDING, A.S., an anonim sirket organized under the
laws of the Republic of Turkey (Orhan), and DANA CORPORATION, a corporation organized
under the laws of the Commonwealth of Virginia (Dana).
RECITALS
A. Orhan and Dana are parties to that certain Agreement to Purchase Assets and Stock, dated as
of March 28, 2007 (the Agreement).
B. The parties desire to amend the Agreement on the terms and conditions set forth in this
Amendment.
AGREEMENT
In consideration of the foregoing, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree
as follows:
1. Amendment to Section 2.1(a). Section 2.1(a) is amended to delete the dollar figure
$70 million and replace it with $85 million.
2. Amendment to Section 4.19. Section 4.19 is amended to add at the end thereof the
following sentence: All of the assets specifically identified on Schedules as Purchased Assets
are primarily related to the Business.
3. Amendment to Section 5.1(b). Section 5.1(b) is amended to insert the words or
other entity after the word corporation in the first line thereof.
4. Amendment to Section 6.6. The first sentence of Section 6.6 is amended to insert
the parenthetical phrase (together with all other breaches which have not been cured) after the
word breach and before the word causes at the end of the third line thereof.
5. Amendment to Subsection 7.4(a)(ii). Subsection 7.4(a)(ii) is amended to insert the
word reasonable after the word all and before the word steps in the fourth line thereof.
6. Amendments to Section 7.5(a). Section 7.5(a) is amended to delete the last
sentence thereof in its entirety.
7. Continuance of Agreement; Single Document. Except as expressly amended by this
Amendment, all provisions of the Agreement remain in full force and effect. The Agreement, as
amended by this Amendment, will hereinafter be read as a single, integrated document, incorporating
the changes effected by this Amendment.
-1-
8. Counterparts. This Amendment may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such counterparts taken
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have caused this First Amendment to Agreement to Purchase and
Assets and Stock to be executed as of the date set forth above.
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ORHAN HOLDING, A.S., an anonim sirket organized under
the laws of the Republic of Turkey
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By: |
/s/ Murat Orhan
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Name: |
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Title: |
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DANA CORPORATION, a corporation organized under the
laws of the Commonwealth of Virginia
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By: |
/s/ Bill Riley
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Name: |
Bill Riley |
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Title Director Corporate Development |
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-2-
EX-10(X)
Exhibit 10-X
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
COUPLED PRODUCTS ACQUISITION LLC
AND
DANA CORPORATION
Dated as of May 28, 2007
TABLE OF CONTENTS
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Page |
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ARTICLE I THE PURCHASE AND SALE |
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1 |
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Section 1.1 Purchase and Sale of the Purchased Assets |
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1 |
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Section 1.2 Excluded Assets |
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3 |
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Section 1.3 Assumed Liabilities |
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5 |
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Section 1.4 Excluded Liabilities |
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6 |
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ARTICLE II CONSIDERATION |
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8 |
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Section 2.1 Amount and Form of Consideration |
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8 |
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Section 2.2 Adjustment |
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9 |
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Section 2.3 Payment of Net Working Assets Adjustment |
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10 |
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Section 2.4 Allocation of Consideration |
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11 |
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Section 2.5 Deposit |
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11 |
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ARTICLE III THE CLOSING |
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12 |
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Section 3.1 Closing Date |
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12 |
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Section 3.2 Deliveries by Seller to Purchaser |
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12 |
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Section 3.3 Deliveries by Purchaser to Seller |
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13 |
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Section 3.4 Proceedings at Closing |
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14 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER |
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14 |
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Section 4.1 Organization and Qualification |
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14 |
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Section 4.2 Corporate Authorization |
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14 |
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Section 4.3 Consents and Approvals |
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14 |
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Section 4.4 Non-Contravention |
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15 |
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Section 4.5 Binding Effect |
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15 |
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Section 4.6 Financial Statements |
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15 |
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Section 4.7 Taxes |
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15 |
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Section 4.8 Real Property |
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16 |
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Section 4.9 Tangible Personal Property |
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18 |
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Section 4.10 Intellectual Property |
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18 |
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Section 4.11 Contracts |
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20 |
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Section 4.12 Employee Benefits |
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22 |
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Section 4.13 Employee and Labor Matters |
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23 |
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Section 4.14 Litigation |
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26 |
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Section 4.15 Compliance with Laws |
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26 |
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Section 4.16 Environmental Matters |
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26 |
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Section 4.17 Ownership of Necessary Assets and Rights |
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27 |
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Section 4.18 Brokers |
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28 |
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Section 4.19 Permits |
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28 |
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Section 4.20 [Intentionally omitted] |
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28 |
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Section 4.21 No Undisclosed Liabilities |
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29 |
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Section 4.22 Accounts Receivable; Inventories |
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29 |
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Section 4.23 Customers and Suppliers |
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29 |
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Section 4.24 Warranties; Product Defects |
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29 |
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Section 4.25 Disclaimers of Seller |
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30 |
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Section 4.26 No Material Misstatements |
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30 |
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Section 4.27 No Other Representations or Warranties |
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31 |
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER |
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31 |
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Section 5.1 Organization and Qualification |
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31 |
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Section 5.2 Corporate Authorization |
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31 |
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Section 5.3 Consents and Approvals |
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31 |
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Section 5.4 Non-Contravention |
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32 |
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Section 5.5 Binding Effect |
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32 |
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Section 5.6 Litigation |
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32 |
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Section 5.7 Financing |
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32 |
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Section 5.8 Brokers |
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32 |
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Section 5.9 No Inducement or Reliance; Independent Assessment |
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33 |
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ARTICLE VI COVENANTS OF SELLER |
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33 |
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Section 6.1 Access/Survey |
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33 |
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Section 6.2 Conduct of Business |
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34 |
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Section 6.3 Bankruptcy Actions |
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36 |
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Section 6.4 Regulatory Approvals |
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37 |
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Section 6.5 Assignment of Debtor Contracts |
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38 |
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Section 6.6 Cure of Defaults |
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39 |
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Section 6.7 Amendment of Purchased and Excluded Assets |
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39 |
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Section 6.8 Updating of Information |
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39 |
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Section 6.9 Litigation Support |
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40 |
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Section 6.10 Transition Agreements |
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40 |
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Section 6.11 Consents and Conditions |
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40 |
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Section 6.12 Further Actions |
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41 |
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ARTICLE VII COVENANTS OF PURCHASER |
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41 |
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Section 7.1 Contact with Customers, Suppliers and Employees |
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41 |
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Section 7.2 Bankruptcy Actions |
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41 |
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Section 7.3 Consents and Conditions |
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41 |
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Section 7.4 Further Actions |
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43 |
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Section 7.5 [Intentionally Omitted.] |
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43 |
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Section 7.6 Use of Sellers Name |
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43 |
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Section 7.7 Litigation Support |
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44 |
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Section 7.8 Transition Agreements |
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44 |
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ARTICLE VIII CONDITIONS PRECEDENT TO PURCHASERS OBLIGATIONS |
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44 |
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Section 8.1 Accuracy of Representations and Warranties |
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45 |
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Section 8.2 Performance of Covenants |
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45 |
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Section 8.3 No Injunctions |
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45 |
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Section 8.4 Entry of Order By Bankruptcy Court; Material Business Contracts |
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45 |
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Section 8.5 Consents |
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45 |
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Section 8.6 Officers Certificate |
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45 |
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Section 8.7 Other Deliveries |
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45 |
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Section 8.8 No Material Adverse Effect |
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46 |
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Section 8.9 Mexican Permits |
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46 |
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Section 8.10 Exon-Florio |
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46 |
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Section 8.11 SLP II |
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46 |
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ARTICLE IX CONDITIONS PRECEDENT TO SELLERS OBLIGATIONS |
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46 |
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Section 9.1 Accuracy of Representations and Warranties |
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46 |
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Section 9.2 Performance of Covenants |
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47 |
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Section 9.3 No Injunctions |
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47 |
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Section 9.4 Entry of Order By Bankruptcy Court |
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47 |
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Section 9.5 Consents |
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47 |
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Section 9.6 Officers Certificate |
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47 |
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Section 9.7 Other Deliveries |
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47 |
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ARTICLE X ADDITIONAL POST-CLOSING COVENANTS |
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47 |
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Section 10.1 Transferred Employees |
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47 |
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Section 10.2 Seller Benefits Plans |
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55 |
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Section 10.3 Assumed Benefit Plans |
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56 |
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Section 10.4 Non-U.S. Employee Matters |
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57 |
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Section 10.5 Further Assurances; Further Conveyances and Assumptions; Consent of Third Parties |
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57 |
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Section 10.6 Record Retention, Access to Documents and Cooperation |
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58 |
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Section 10.7 Post-Closing Assistance |
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59 |
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ARTICLE XI SURVIVAL, INDEMNIFICATION AND RELATED MATTERS |
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59 |
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Section 11.1 Survival |
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59 |
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Section 11.2 Indemnification |
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60 |
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Section 11.3 Limitations on Amount |
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62 |
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Section 11.4 Procedures for Indemnification |
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63 |
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Section 11.5 Certain Environmental Matters |
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64 |
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Section 11.6 Exclusive Remedy |
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66 |
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ARTICLE XII NONSOLICITATION |
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66 |
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Section 12.1 Nonsolicitation of Purchaser Employees |
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66 |
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Page |
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Section 12.2 Nonsolicitation of Seller Employees |
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66 |
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Section 12.3 Remedies |
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67 |
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ARTICLE XIII TERMINATION |
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67 |
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Section 13.1 Termination |
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67 |
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Section 13.2 Effect of Termination |
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68 |
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ARTICLE XIV TAX MATTERS |
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70 |
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Section 14.1 Tax Indemnification |
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70 |
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Section 14.2 Cooperation |
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71 |
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Section 14.3 Tax Treatment of Indemnification Payments |
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71 |
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Section 14.4 Transfer Taxes |
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71 |
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Section 14.5 Other Agreements |
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72 |
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ARTICLE XV DEFINITIONS AND TERMS |
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72 |
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Section 15.1 Affiliate |
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72 |
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Section 15.2 Agreement |
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72 |
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Section 15.3 Allocation Schedule |
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72 |
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Section 15.4 Alternative Transaction |
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72 |
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Section 15.5 Approval Order |
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72 |
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Section 15.6 Assumed Benefit Plans |
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73 |
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Section 15.7 Assumed Collective Bargaining Agreements |
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73 |
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Section 15.8 Assumed Liabilities |
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73 |
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Section 15.9 Bankruptcy Avoidance Actions |
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73 |
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Section 15.10 Bankruptcy Code |
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73 |
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Section 15.11 Bankruptcy Court |
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73 |
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Section 15.12 Bidding Procedures Order |
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73 |
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Section 15.13 Bidding Procedures |
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74 |
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Section 15.14 Business |
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74 |
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Section 15.15 Business Day |
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74 |
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Section 15.16 Business Employee Benefit Plan |
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74 |
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Section 15.17 Business Employee |
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74 |
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Section 15.18 Cases |
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74 |
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Section 15.19 CERCLA |
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74 |
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Section 15.20 Chapter 11 Expenses |
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74 |
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Section 15.21 Chosen Court |
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75 |
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Section 15.22 Closing |
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75 |
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Section 15.23 Closing Date |
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75 |
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Section 15.24 Closing Date Business Employees |
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75 |
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Section 15.25 Closing Net Working Assets |
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75 |
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Section 15.26 Closing Statement of Net Assets |
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75 |
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Section 15.27 COBRA |
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75 |
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Section 15.28 Code |
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75 |
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Section 15.29 Columbia City 401(k) Plan |
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75 |
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Page |
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Section 15.30 Commitments |
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75 |
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Section 15.31 Contract |
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76 |
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Section 15.32 Cure Costs |
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76 |
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Section 15.33 Current Employees |
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76 |
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Section 15.34 Dana Defined Contribution Plan |
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76 |
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Section 15.35 Dana Retirement Plan |
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76 |
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Section 15.36 Debtor Contracts |
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76 |
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Section 15.37 Debtors |
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76 |
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Section 15.38 Deposit Agent |
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76 |
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Section 15.39 Deposit Agreement |
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76 |
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Section 15.40 Deposit Amount |
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76 |
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Section 15.41 Employee Benefit Plan |
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76 |
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Section 15.42 Endorsements |
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77 |
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Section 15.43 Environment |
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77 |
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Section 15.44 Environmental Law |
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77 |
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Section 15.45 Environmental Assessments |
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78 |
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Section 15.46 Environmental Condition |
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78 |
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Section 15.47 Environmental Testing Period |
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78 |
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Section 15.48 ERISA |
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78 |
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Section 15.49 Estimated Adjustment Amount |
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78 |
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Section 15.50 Excluded Assets |
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78 |
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Section 15.51 Excluded Intellectual Property |
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78 |
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Section 15.52 Excluded Liabilities |
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78 |
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Section 15.53 Excluded Taxes |
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78 |
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Section 15.54 Existing Inventory |
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78 |
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Section 15.55 [Intentionally Omitted] |
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79 |
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Section 15.56 Expense Reimbursement Order |
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79 |
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Section 15.57 Expense Reimbursement |
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79 |
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Section 15.58 [Intentionally Omitted] |
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79 |
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Section 15.59 Final Consideration |
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79 |
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Section 15.60 Final Order |
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79 |
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Section 15.61 Financial Statements |
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79 |
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Section 15.62 Foreign Country Tax Agreements |
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79 |
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Section 15.63 GAAP |
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79 |
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Section 15.64 Governmental Body |
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79 |
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Section 15.65 [Intentionally Omitted] |
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80 |
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Section 15.66 Hazardous Material |
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80 |
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Section 15.67 Hourly Business Employees |
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80 |
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Section 15.68 Hose and Tubing Business |
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80 |
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Section 15.69 Indemnified Party |
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80 |
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Section 15.70 Indemnifying Party |
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80 |
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Section 15.71 Independent Auditors |
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80 |
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Section 15.72 Initial Cash Consideration |
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80 |
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Section 15.73 [Intentionally Omitted] |
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80 |
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Section 15.74 Intellectual Property |
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80 |
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Section 15.75 Intellectual Property Contract |
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81 |
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Page |
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Section 15.76 IT Assets |
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81 |
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Section 15.77 Knowledge |
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81 |
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Section 15.78 Law |
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81 |
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Section 15.79 Leased Real Properties |
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81 |
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Section 15.80 Leave Employees |
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81 |
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Section 15.81 Legal Proceeding |
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81 |
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Section 15.82 Liabilities |
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81 |
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Section 15.83 Licensed Intellectual Property |
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82 |
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Section 15.84 Lien |
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82 |
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Section 15.85 Losses |
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82 |
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Section 15.86 Material Adverse Effect |
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82 |
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Section 15.87 Material Business Contracts |
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82 |
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Section 15.88 Michigan Sublease |
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82 |
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Section 15.89 Modified GAAP |
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82 |
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Section 15.90 Net Working Assets Adjustment |
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82 |
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Section 15.91 Net Working Assets Target |
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83 |
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Section 15.92 Net Working Assets of the Business |
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83 |
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Section 15.93 NLRB Proceedings |
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83 |
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Section 15.94 Nonassignable Assets |
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83 |
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Section 15.95 Non-Debtor Contracts |
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83 |
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Section 15.96 Non-Debtor Selling Subsidiaries |
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83 |
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Section 15.97 Non-Union Business Employees |
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83 |
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Section 15.98 Non-Union Transferred Employees |
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83 |
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Section 15.99 Operative Documents |
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83 |
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Section 15.100 Order |
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83 |
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Section 15.101 Other Marked Assets |
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83 |
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Section 15.102 Owned Real Property |
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84 |
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Section 15.103 Patents |
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84 |
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Section 15.104 Permit |
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84 |
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Section 15.105 Permitted Exceptions |
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84 |
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Section 15.106 Person |
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84 |
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Section 15.107 Personal Property Leases |
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84 |
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Section 15.108 Petition Date |
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84 |
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Section 15.109 Post-Closing Tax Period |
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85 |
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Section 15.110 Pre-Closing Tax Period |
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85 |
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Section 15.111 Property Taxes |
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85 |
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Section 15.112 Purchased Assets |
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85 |
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Section 15.113 Purchased Debtor Contracts |
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85 |
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Section 15.114 Purchased Equipment |
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85 |
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Section 15.115 Purchased Intellectual Property |
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85 |
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Section 15.116 Purchaser |
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85 |
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Section 15.117 Purchaser Approved Contract |
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85 |
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Section 15.118 Purchaser Closing Documents |
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85 |
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Section 15.119 Purchaser Financial Advisor |
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85 |
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Section 15.120 Purchaser Indemnified Group |
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86 |
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Section 15.121 Purchaser Labor Designee |
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86 |
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vi
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Page |
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Section 15.122 Purchaser Retirement Plans |
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86 |
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Section 15.123 Purchaser Upper Sandusky Union Defined Contribution Plan |
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86 |
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Section 15.124 Purchaser Welfare Plans |
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86 |
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Section 15.125 RCRA |
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86 |
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Section 15.126 Real Property Leases |
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86 |
|
Section 15.127 Registered Intellectual Property |
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86 |
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Section 15.128 Related to the Business |
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86 |
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Section 15.129 Release |
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86 |
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Section 15.130 Remedial Action |
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87 |
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Section 15.131 Remediation Condition |
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87 |
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Section 15.132 Retention Agreements |
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|
87 |
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Section 15.133 Review Period |
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87 |
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Section 15.134 Salaried Business Employees |
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87 |
|
Section 15.135 Seller |
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87 |
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Section 15.136 Seller Business Facilities |
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87 |
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Section 15.137 Seller Closing Documents |
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87 |
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Section 15.138 Seller Employee Benefit Plan |
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87 |
|
Section 15.139 Seller Financing |
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88 |
|
Section 15.140 Seller Indemnified Group |
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|
88 |
|
Section 15.141 Seller Name |
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|
88 |
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Section 15.142 Seller Portion |
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88 |
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Section 15.143 Seller Union Pension Plans |
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|
88 |
|
Section 15.144 Seller Upper Sandusky Union Defined Contribution Plan |
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|
88 |
|
Section 15.145 Seller Welfare Plans |
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|
88 |
|
Section 15.146 [Intentionally Omitted] |
|
|
88 |
|
Section 15.147 Selling Subsidiaries |
|
|
88 |
|
Section 15.148 SLP I Real Property Leases |
|
|
88 |
|
Section 15.149 Statement of Net Assets |
|
|
88 |
|
Section 15.150 Straddle Period |
|
|
89 |
|
Section 15.151 Subsidiary |
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|
89 |
|
Section 15.152 Surveys |
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|
89 |
|
Section 15.153 Tax or Taxes |
|
|
89 |
|
Section 15.154 Tax Proceeding |
|
|
89 |
|
Section 15.155 Tax Return |
|
|
90 |
|
Section 15.156 Trade Secrets |
|
|
90 |
|
Section 15.157 Trademarks |
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|
90 |
|
Section 15.158 Transfer Taxes |
|
|
90 |
|
Section 15.159 Transferred Employees |
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|
90 |
|
Section 15.160 Transition Agreements |
|
|
90 |
|
Section 15.161 Trigger Level |
|
|
90 |
|
Section 15.162 [Intentionally Omitted] |
|
|
90 |
|
Section 15.163 Union Business Employees |
|
|
90 |
|
Section 15.164 Union Transferred Employees |
|
|
91 |
|
Section 15.165 VAT |
|
|
91 |
|
Section 15.166 WARN ACT |
|
|
91 |
|
Section 15.167 Other Definitional and Interpretive Provisions |
|
|
91 |
|
vii
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Page |
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ARTICLE XVI MISCELLANEOUS |
|
|
91 |
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|
Section 16.1 Notices |
|
|
91 |
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Section 16.2 Amendment; Waiver |
|
|
92 |
|
Section 16.3 Assignment |
|
|
93 |
|
Section 16.4 Entire Agreement |
|
|
93 |
|
Section 16.5 Fulfillment of Obligations |
|
|
93 |
|
Section 16.6 Parties in Interest |
|
|
94 |
|
Section 16.7 No Third-Party Rights |
|
|
94 |
|
Section 16.8 Public Disclosure |
|
|
94 |
|
Section 16.9 Confidentiality |
|
|
94 |
|
Section 16.10 Return of Information |
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|
95 |
|
Section 16.11 Expenses |
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|
95 |
|
Section 16.12 Bulk Sales Laws |
|
|
95 |
|
Section 16.13 Governing Law |
|
|
95 |
|
Section 16.14 Submission to Jurisdiction; Selection of Forum |
|
|
96 |
|
Section 16.15 Counterparts |
|
|
96 |
|
Section 16.16 Headings |
|
|
96 |
|
Section 16.17 Severability |
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|
96 |
|
viii
EXHIBITS
|
|
|
|
|
Exhibit A-1 |
|
|
|
Selling Subsidiaries |
Exhibit A-2 |
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|
|
Debtors |
Exhibit B |
|
|
|
Form of Bill of Sale |
Exhibit C |
|
|
|
[Reserved] |
Exhibit D |
|
|
|
Form of Michigan Sublease |
Exhibit E |
|
|
|
Form of Intellectual Property Assignment |
Exhibit F |
|
|
|
Form of Assignment and Assumption Agreement |
Exhibit I |
|
|
|
Form of Approval Order |
Exhibit J |
|
|
|
Form of Transition Agreement |
Exhibit K |
|
|
|
Form of Deposit Agreement |
Exhibit L |
|
|
|
[Reserved] |
Exhibit M |
|
|
|
Commitments |
ix
SCHEDULES
|
|
|
Schedule 1.1(b) |
|
Purchased Equipment |
Schedule 1.1(e) |
|
Debtor Contracts |
Schedule 1.1(f) |
|
Non-Debtor Contracts |
Schedule 1.1(g) |
|
Purchased Intellectual Property |
Schedule 1.1(l) |
|
Purchased Claims and Causes of Action |
Schedule 1.2(d) |
|
Excluded Intellectual Property |
Schedule 1.2(f) |
|
Excluded Assets, Real Property Leases and Contracts of Debtors |
Schedule 1.2(j) |
|
Hose and Tubing Business |
Schedule 1.2(o) |
|
Excluded Notes Receivable |
Schedule 1.2(q) |
|
Excluded Claims and Causes of Action |
Schedule 1.4(a) |
|
Excluded Debt and Other Liabilities |
Schedule 2.2(a) |
|
Net Working Assets |
Schedule 2.4 |
|
Allocation Schedule |
Schedule 4.3 |
|
Consents and Approvals |
Schedule 4.6 |
|
Financial Statements |
Schedule 4.7 |
|
Tax |
Schedule 4.8(c) |
|
Other Real Estate Matters |
Schedule 4.10(a)(i) |
|
Registered Intellectual Property |
Schedule 4.10(a)(ii) |
|
Intellectual Property Contracts |
Schedule 4.10(c) |
|
Litigation, opposition, cancellation, proceeding, objection or claim |
Schedule 4.11(a) |
|
Material Business Contracts |
Schedule 4.11(c) |
|
Government Contracts |
Schedule 4.11(e) |
|
Outstanding Claims Related to Government Contracts |
Schedule 4.12(a) |
|
Business Employee Benefit Plans |
Schedule 4.12(d) |
|
Pending Audit and Investigation |
Schedule 4.12(g) |
|
Multiemployer Pension Plans |
Schedule 4.12(i) |
|
Certain Employment Agreements |
Schedule 4.12(j) |
|
Employee Welfare Benefit Plans |
Schedule 4.13(a) |
|
Business Employees |
Schedule 4.13(b) |
|
Terminations; Layoffs; Work Reductions |
Schedule 4.13(c) |
|
Employees Not Terminable at Will |
Schedule 4.13(d) |
|
Business Employees Employed outside of the United States or Mexico |
Schedule 4.13(f) |
|
Governmental Matters Related to Employees |
Schedule 4.13(g) |
|
Collective Bargaining Agreements |
Schedule 4.13(h) |
|
Certain Labor Matters |
Schedule 4.13(i) |
|
Strike, Grievances and Unfair Labor Practice |
Schedule 4.13(j) |
|
Ceased Operations |
Schedule 4.14 |
|
Litigation |
Schedule 4.15 |
|
Compliance with Laws |
Schedule 4.16(a) |
|
Environmental Report |
Schedule 4.17 |
|
Certain Assets |
Schedule 4.19(a) |
|
Government Authorizations |
Schedule 4.21 |
|
Liabilities |
Schedule 4.22(b) |
|
Material Inventories |
x
|
|
|
Schedule 4.23 |
|
Customers, Sale Orders and Sale Contracts; Termination |
Schedule 4.24(a) |
|
Warranties |
Schedule 4.24(b) |
|
Products Defects |
Schedule 5.3 |
|
Consents and Approvals |
Schedule 6.2 |
|
Certain Matters Relating to the Conduct of Business |
Schedule 6.2(j)(ii) |
|
Purchaser Labor Designee |
Schedule 6.10 |
|
Transition Agreements |
Schedule 8.5 |
|
Seller Consents |
Schedule 9.5 |
|
Purchaser Consents |
Schedule 10.3 |
|
Assumed Benefit Plans |
Schedule 10.4 |
|
Non-U.S. Employee Matters |
Schedule 15.76 |
|
IT Assets |
Schedule 15.77 |
|
Knowledge |
Schedule 15.89 |
|
Modified GAAP |
Schedule 15.102 |
|
Owned Real Property |
Schedule 15.105 |
|
Permitted Exceptions |
Schedule 15.126 |
|
Real Property Leases |
Schedule 15.132 |
|
Retention Agreements |
xi
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 28, 2007 (this Agreement), by and between Coupled
Products Acquisition LLC, a limited liability company organized under the laws of Delaware
(Purchaser), and Dana Corporation, a corporation organized under the laws of the Commonwealth of
Virginia (Seller).
RECITALS
WHEREAS, Seller and the Subsidiaries listed on Exhibit A-1 hereto (the Selling
Subsidiaries and each, individually, a Selling Subsidiary) are, among other things, engaged
through Sellers Fluid Products Group in the Business;
WHEREAS, upon the terms and subject to the conditions hereinafter set forth, the parties
desire that Seller and the Selling Subsidiaries sell, assign and transfer to Purchaser, and that
Purchaser purchase and acquire from Seller and the Selling Subsidiaries, all of the right, title
and interest of Seller and its Selling Subsidiaries in and to the Purchased Assets, free and clear
of all Liabilities and Liens and that Purchaser assume the Assumed Liabilities;
WHEREAS, Seller and certain of the Selling Subsidiaries, as identified on Exhibit A-2
attached hereto (collectively, the Debtors), have filed voluntary petitions initiating cases
under chapter 11 of the Bankruptcy Code in the Bankruptcy Court (each, a Case and together, the
Cases);
WHEREAS, on March 28, 2007, the Debtors filed a motion seeking, among other things, the
establishment of bidding procedures for the Debtors Fluid Products Group and the approval of the
sale of the assets of the Fluid Products Group to the highest bidder or bidders for those assets;
and
WHEREAS, on April 12, 2007, the Bankruptcy Court entered an order (the Bidding Procedures
Order), among other things, approving bidding procedures for the Fluid Products Group (the
Bidding Procedures) and a $250,000 expense reimbursement payable to Purchaser in certain
circumstances (the Expense Reimbursement).
NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
THE PURCHASE AND SALE
Section 1.1 Purchase and Sale of the Purchased Assets.
On the terms and subject to the conditions hereof, and subject to the exclusions set forth in
Section 1.2, at the Closing, Seller shall sell, assign, transfer, convey and deliver, or
cause one
or more of the Selling Subsidiaries to sell, assign, transfer, convey and deliver to Purchaser
or a designee appointed pursuant to Section 16.3, and Purchaser shall purchase, acquire and
accept from Seller, or the applicable Selling Subsidiary or Selling Subsidiaries, all of the right,
title and interest of Seller, or the applicable Selling Subsidiary or Selling Subsidiaries, in, to
and under the following assets, properties, rights, Contracts and claims of Seller, or such Selling
Subsidiary or Selling Subsidiaries, wherever located, whether tangible or intangible, real,
personal or mixed (collectively, and excluding the Excluded Assets, the Purchased Assets), as
such exist on the Closing Date, free and clear of all Liabilities and Liens, other than Assumed
Liabilities and Permitted Exceptions:
(a) the Owned Real Property and the SLP I Real Property Leases;
(b) all machinery, equipment, furniture, vehicles, tools, tooling and other tangible
personal property Related to the Business, including, without limitation, the items set
forth on Schedule 1.1(b) (the Purchased Equipment);
(c) all inventories and supplies of raw materials, works-in-process, finished goods,
spare parts, supplies, storeroom contents and other inventoried items Related to the
Business;
(d) all trade accounts and other receivables arising out of the sale or other
disposition of goods or services by the Business;
(e) subject to Section 6.7, all rights in, to and under all Contracts of the
Debtors Related to the Business listed on Schedule 1.1(e) (collectively, the Debtor
Contracts and each, individually, a Debtor Contract);
(f) subject to Section 6.7, all rights in, to and under the Contracts of the
Non-Debtor Selling Subsidiaries Related to the Business listed on Schedule 1.1(f)
(collectively, the Non-Debtor Contracts and each, individually, a Non-Debtor Contract);
(g) all Intellectual Property identified on Schedule 1.1(g), including all
rights to enforce and to past and future damages for the infringement of any such
Intellectual Property (the Purchased Intellectual Property);
(h) subject to Section 10.6, all books and records (other than Tax Returns and
related work papers and items set forth in Section 1.2(h)), files, papers, disks,
manuals, keys, reports, plans, catalogs, sales and promotional materials, and all other
printed and written materials, to the extent Related to the Business, to the extent
available;
(i) all Permits Related to the Business to the extent permitted by applicable Law to be
transferred and subject to the required consent of any third party, including any
Governmental Body;
(j) all deferred and prepaid charges, to the extent Related to the Business, other than
those that relate to any Excluded Asset;
2
(k) all rights under or pursuant to all warranties, representations and guarantees,
whether express or implied, made by suppliers, manufacturers, contractors and other third
parties, to the extent Related to the Business, other than any of the foregoing that
exclusively relate to any Excluded Asset or Excluded Liability;
(l) all claims, causes of action, choses in action, rights of recovery, rights of set
off, and rights of recoupment, to the extent Related to the Business, including those listed
on Schedule 1.1(l);
(m) the IT Assets; provided, however that Seller and its Subsidiaries shall not be
required to make any payment to obtain any consent from any third party in connection with
such transfer; and
(n) to the extent provided in Section 10.3, all rights under the trusts, or
other assets held pursuant to, or set aside to fund the obligations of the Seller or its
Subsidiaries under any Assumed Benefit Plan, and any data and records (or copies thereof)
required to administer the benefits of the Transferred Employees under any Assumed Benefit
Plan.
Section 1.2 Excluded Assets.
Notwithstanding anything to the contrary contained in Section 1.1, the parties
expressly understand and agree that the Purchased Assets shall not include, and neither Seller nor
any of the Selling Subsidiaries is hereunder selling, assigning, transferring or conveying to
Purchaser, any right or title to or interest in, any of the following assets, properties, rights,
Contracts and claims, whether tangible or intangible, real, personal or mixed (collectively, the
Excluded Assets):
(a) all cash, cash equivalents, bank deposits, investment accounts, lockboxes,
certificates of deposit, marketable securities or similar cash items, of Seller or any
Subsidiary;
(b) with the exception of direct roll-overs as provided for in Section 10.2(a),
any assets under any Seller Employee Benefit Plan which is not an Assumed Benefit Plan,
including without limitation, any trusts, insurance arrangements or other assets held
pursuant to, or set aside to fund the obligations of Seller or its Subsidiaries under, any
such Seller Employee Benefit Plan and any data and records (or copies thereof) required to
administer the benefits of Business Employees under any such Seller Employee Benefit Plan;
(c) any and all insurance policies, binders and claims and rights thereunder and the
proceeds thereof and all prepaid insurance premiums;
(d) subject to Section 7.6, the Intellectual Property and those Intellectual
Property Contracts listed on Schedule 1.2(d) (the Excluded Intellectual Property);
(e) all tangible personal property disposed of or consumed prior to Closing Date in the
ordinary course of business as permitted by this Agreement;
3
(f) the assets, Real Property Leases and other Contracts of the Seller and Selling
Subsidiaries listed on Schedule 1.2(f), as the same may be amended by Purchaser
prior to the Closing pursuant to Section 6.7;
(g) all Contracts of Seller or any of its Affiliates (other than the Assumed Collective
Bargaining Agreements and the Assumed Benefit Plans and except as provided in Section
10.4) with any of the Transferred Employees, any other Business Employees, or any other
current or former employee or agent of the Seller or any of its Affiliates, including the
Retention Agreements;
(h) subject to Section 10.6, any books, records and other materials that Seller
or any of its Subsidiaries is required by Law to retain, all Tax Returns and related work
papers and, subject to Section 7.6, all Dana marked sales and promotional
materials and brochures;
(i) all claims, defenses, causes of action, choses in action or claims of any kind
relating to either Excluded Assets or Excluded Liabilities;
(j) all assets, business lines, properties, rights, Contracts and claims of Seller or
any Subsidiary not Related to the Business, wherever located, whether tangible or
intangible, real, personal or mixed, including without limitation all assets, business
lines, properties, rights, Contracts and claims of Seller or any Subsidiary related to the
business of Sellers Hose and Tubing Group as set forth on Schedule 1.2(j) (the
Hose and Tubing Business);
(k) all assets associated with facilities Related to the Business which have ceased
operations prior to the date hereof;
(l) all refunds, credits, prepayments or deferrals of or against any Taxes;
(m) all intercompany receivables, loans and investments between or among Seller, or its
Subsidiaries;
(n) all Contracts of the Seller and the Selling Subsidiaries not listed or referenced
on Schedule 1.1(e) or Schedule 1.1(f).
(o) any and all notes receivable listed on Schedule 1.2(o);
(p) any and all avoidance or other causes of action arising under Sections 510, 544
through 550 and 553 of the Bankruptcy Code or under similar state laws (collectively, the
Bankruptcy Avoidance Actions); and
(q) all claims, defenses, causes of actions, choses in action, rights of recovery,
rights of set off and rights of recoupment listed on Schedule 1.2(q).
4
Section 1.3 Assumed Liabilities.
Simultaneously with the Closing, Purchaser shall assume and be liable for, and shall pay,
perform and discharge, the following obligations and Liabilities of the Seller and the Selling
Subsidiaries, whether occurring or accruing before, on or after the Closing Date, whether known or
unknown, fixed or contingent, asserted or unasserted, and not satisfied or extinguished as of the
Closing Date (collectively, and excluding the Excluded Liabilities, the Assumed Liabilities):
(a) all Liabilities relating solely to any Purchased Asset (other than the Debtor
Contracts and Non-Debtor Contracts) and arising exclusively on or after the Closing;
(b) all Liabilities under the Debtor Contracts and the Non-Debtor Contracts arising
exclusively on or after the Closing, excluding any such Liabilities to the extent caused by
or resulting from a breach or default by Seller or any Selling Subsidiary prior to the
Closing under such Debtor Contracts or Non-Debtor Contracts;
(c) (i) all Liabilities arising under the Assumed Collective Bargaining Agreements out
of the employment of the Union Transferred Employees prior to the Closing, subject to
Sections 1.4 and 10.1 through 10.4 and applicable Law; (ii) accrued
unpaid base wages payable by Seller or its Affiliates to the Transferred Employees for any
payroll period preceding the Closing, to the extent reflected as a liability in the
calculation of the Net Working Assets of the Business at the Closing Date (it being
understood that Seller and its Affiliates shall not also be required to indemnify Purchaser
or its Affiliates for such amounts pursuant to Section 11.2), (iii) except as set
forth in Sections 10.1 through 10.4, all Liabilities to the Transferred
Employees and their dependents and beneficiaries arising exclusively out of their employment
by the Purchaser after the Closing, including obligations for any applicable salaries, wages
and any other form of compensation accruing exclusively after the Closing Date as a result
of such employment; and (iv) Liabilities to the Union Transferred Employees for accrued but
not used vacation, personal days and floating holidays, sick pay and any other leave of the
Union Transferred Employees, whether accrued prior to or after the Closing Date, if used or
payable after the Closing Date, to the extent provided in Section 10.1(g) (it being
understood that Seller and its Affiliates shall not also be required to indemnify Purchaser
or its Affiliates for such amounts pursuant to Section 11.2);
(d) all Liabilities with respect to benefits payable after the Closing Date under any
Assumed Benefit Plan;
(e) all Liabilities arising on or after the Closing with respect to the Union
Transferred Employees under the Assumed Collective Bargaining Agreements, subject to
Sections 10.1 through 10.4 and without limiting any right Purchaser may have
under applicable Law;
(f) all Liabilities of the Business (including without limitation accounts and trade
payables) reflected on the Closing Statement of Net Assets;
5
(g) all Liabilities that Purchaser or any of its Subsidiaries has expressly assumed or
agreed to pay for or be responsible for pursuant to the terms of the Transition Agreements;
(h) all Liabilities for claims made on or after the Closing Date for any return,
rebate, recall, warranty or similar claims with respect to products (or any part or
component thereof) designed, manufactured, serviced or sold by the Business and all
Liabilities incurred after the Closing Date in connection with the matter described in Item
2 of Schedule 4.24(b);
(i) all Liabilities for claims made on or after the Closing Date for death, personal
injury, other injury to persons or property damage relating to, resulting from, caused by or
arising out of, directly or indirectly, use of or exposure to any of the products (or any
part or component thereof) designed, manufactured, serviced or sold by the Business
(including asbestos and any such Liabilities for negligence, strict liability, design or
manufacturing defect, failure to warn, or breach of express or implied warranties of
merchantability or fitness for a particular purpose or use);
(j) except as provided in Section 11.5, all Liabilities arising under
Environmental Laws or relating to the presence, handling, use or Release of Hazardous
Materials, but only to the extent they would be imposed upon Purchaser as an owner/operator
by operation of law after the Closing Date in connection with the operation of the Business
as currently conducted at any Owned Real Property, including Liabilities relating to the
Release or threatened Release of any Hazardous Material on, at or from any Owned Real
Property arising prior to the Closing Date, but excluding any Liabilities which relate to
Excluded Assets;
(k) Liabilities to Transferred Employees related to, resulting from, or arising out of
workers compensation, occupational health and safety, occupational disease, injury or
similar workplace injury to the extent provided in Section 10.1(k) below; and
(l) all Taxes imposed on or payable with respect to the Business for which Purchaser is
responsible pursuant to Section 14.1(b).
Section 1.4 Excluded Liabilities.
Except as set forth in Section 1.3, Purchaser shall not assume any Liabilities of
Seller and its Selling Subsidiaries and, notwithstanding the provisions of Section 1.3, it
is expressly understood and agreed that there shall be excluded from the Liabilities being assumed
by Purchaser hereunder the following Liabilities of Seller or the Selling Subsidiaries:
(a) the debt and other Liabilities, including any interest or other amounts in
connection therewith, listed on Schedule 1.4(a);
(b) all Liabilities for which Seller or any of the Selling Subsidiaries is expressly
made responsible pursuant hereto or the Transition Agreements;
6
(c) all Liabilities in respect of any Excluded Assets (including assets associated with
facilities Related to the Business which have ceased operations prior to the Closing Date);
(d) all Excluded Taxes;
(e) fees, expenses, indemnification obligations and other Liabilities owed by Seller or
its Subsidiaries to their respective advisors, including Miller Buckfire & Co., LLC, and
their respective Affiliates, on account of the acquisition advisory services provided to
Seller and its Subsidiaries by such advisors in connection with the transactions
contemplated hereby;
(f) all intercompany payables, loans and investments between or among Seller and its
Subsidiaries;
(g) all Chapter 11 Expenses and other fees and expenses associated with the Cases;
(h) all Liabilities and Liens with respect to which the Purchased Assets are being sold
free and clear of under the Approval Order;
(i) all Liabilities relating to, resulting from, caused by or arising out of
Environmental Law or common law environmental theories not specifically assumed by Purchaser
under Section 1.3(j) above, including those relating to assets, properties or
operations of the Business other than current operations at the Owned Real Property,
including Liabilities relating to use, handling or Release of Hazardous Materials or claims
of exposure to Hazardous Materials involving former assets and properties used,
manufactured, sold, leased, owned or operated by, or services performed in connection with,
the Business, or the generation and off-site disposal of Hazardous Materials by the Business
prior to the Closing Date;
(j) all Liabilities of Seller or its Selling Subsidiaries arising out of any Legal
Proceedings described on Schedule 4.14;
(k) all Liabilities, under any contract or Law, arising under or in connection with any
Seller Employee Benefit Plan other than Liabilities with respect to benefits payable after
the Closing Date under an Assumed Benefit Plan, including all Liabilities for any severance,
retention, notice or other payments or obligations to any Transferred Employees, and all
Liabilities arising under or with respect to any Seller Union Pension Plans;
(l) all Liabilities arising out of: (i) any of the Non-Union Transferred Employees
employment by the Seller or any of its Affiliates prior to the Closing Date, including all
Liabilities for any unused vacation, personal days and floating holidays, sick pay and any
other leave accrued by any of the Non-Union Transferred Employees prior to the Closing,
except as may be otherwise provided for in Section 1.3(c), Section 10.1(g)
or Section 10.4; or (ii) the employment or other engagement of any current or former
7
employee or agent of the Seller or any of its Affiliates, other than the Transferred
Employees, at any time prior to, on or after the Closing
Date;
(m) all Liabilities arising under any employment or other Contract of Seller or any of
its Affiliates (other than the Assumed Collective Bargaining Agreements and except as
provided in Section 1.3(c), Section 1.3(e) and Sections 10.1 through
10.4) with any of the Transferred Employees, any other Business Employees, or any other
current or former employee or agent of the Seller or any of its Affiliates, including the
Retention Agreements;
(n) except as provided in Section 10.1(j), all Liabilities (including
Liabilities under the WARN Act) arising out of the entire or partial closure or cessation of
operations at, or reduction in workforce at, any facility, location or other site of
employment of the Seller or any of its Affiliates (whether or not relating to the Business)
at any time prior to the Closing, including the former facilities located in Mitchell,
Indiana and Andrews, Indiana;
(o) except as expressly set forth in Section 1.3, accrued liabilities of any
kind required to be reflected on the Closing Statement of Net Assets prepared in accordance
with Modified GAAP which were not reflected thereon;
(p) all Liabilities for claims made prior to the Closing Date, for any return, rebate,
recall, warranty or similar claims with respect to products (or any part or component
thereof) designed, manufactured, serviced or sold by the Business; and
(q) all Liabilities for claims made prior to the Closing Date for death, personal
injury, other injury to persons or property damage relating to, resulting from, caused by or
arising out of, directly or indirectly, use of or exposure to any of the products (or any
part or component thereof) designed, manufactured, serviced or sold by the Business
(including asbestos and any such Liabilities for negligence, strict liability, design or
manufacturing defect, failure to warn, or breach of express or implied warranties of
merchantability or fitness for a particular purpose or use).
ARTICLE II
CONSIDERATION
Section 2.1 Amount and Form of Consideration.
The consideration to be paid by Purchaser to Seller, for its own account and for the account
of its Subsidiaries that are selling Purchased Assets, in full consideration of the Purchased
Assets shall consist of:
(a) U.S.$1.00 in cash (the Initial Cash Consideration), subject to adjustment as set
forth in Sections 2.2 and 2.3 (the Initial Cash Consideration, as adjusted,
the Final Cash Consideration) to be paid in cash on the Closing Date; and
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(b) the assumption by Purchaser on and as of the Closing Date of the Assumed
Liabilities.
Section 2.2 Adjustment.
(a) Net Working Assets of the Business as of any date shall mean the amount
calculated by subtracting the Liabilities set forth in Schedule 2.2(a) from the
assets set forth in Schedule 2.2(a). The Net Working Assets Target (the Net
Working Assets Target) is U.S.$39,000,000.
(b) Not more than 14 days after the Closing Date, Seller shall deliver to Purchaser a
certificate duly executed on behalf of Seller, dated the date of its delivery, setting forth
Sellers good faith estimate of the Net Working Assets of the Business as of the Closing
Date (the Estimated Closing Net Working Assets). The amount, if any, by which the Net
Working Assets Target exceeds the Estimated Closing Net Working Assets is hereinafter
referred to as the Estimated Adjustment Amount. With ten days after delivery of such
certificate, Seller shall pay to Purchaser an amount equal to the Estimated Adjustment
Amount together with interest thereon at the rate of 7% per annum from the Closing Date
through the date of payment; provided, however, that, if any such payment is not made within
such ten-day period, the applicable rate of interest shall be increased by 2% per month for
the period from the day following such day through the date payment is made.
(c) As promptly as practicable, but in any event within 60 days following the Closing,
Purchaser, at its sole cost and expense, will prepare and deliver to Seller a statement of
the net assets of the Business at the Closing Date (as such may be adjusted following
resolution of disputes in accordance with Section 2.2(d), the Closing Statement of
Net Assets) and a calculation of the Net Working Assets Adjustment derived from the Closing
Statement of Net Assets. The Closing Statement of Net Assets and the calculation of the Net
Working Assets Adjustment derived from the Closing Statement of Net Assets shall (i) be
prepared on a basis consistent with the preparation of the Statement of Net Assets, and (ii)
be prepared in accordance with Modified GAAP. During the determination of the Estimated
Closing Net Working Assets, the preparation of the Closing Statement of Net Assets, the
calculation of the Net Working Assets Adjustment and the period of any dispute within the
contemplation of this Section 2.2, each party shall: (i) provide the other party
and its authorized representatives with full access to all of such partys relevant books,
records, facilities and employees to the extent reasonably necessary to determine the
Estimated Closing Net Working Assets and to prepare or review the Closing Statement of Net
Assets and the calculation of Net Working Assets Adjustment; and (ii) cooperate fully with
the other party and its authorized representatives, including by providing on a timely basis
all information to the extent necessary or useful in preparing or reviewing the Statement of
Net Assets and calculating the Net Working Assets Adjustment.
(d) Following receipt of the Closing Statement of Net Assets and the Net Working Assets
Adjustment, Seller will be afforded a period of 30 days to review the Closing Statement of
Net Assets and the Net Working Assets Adjustment (the Review
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Period). Seller shall be deemed to have accepted the Net Working Assets Adjustment
unless, prior to the expiration of the Review Period, Seller shall deliver to Purchaser
written notice and a detailed written explanation of those items in the Net Working Assets
Adjustment that Seller disputes, in which case the Net Working Assets Adjustment, to the
extent not affected by the disputed items, will be deemed to be accepted, and the items
identified by Seller shall be deemed to be in dispute. Within a further period of 10 days
from the end of the Review Period, the parties will attempt to resolve in good faith any
disputed items. Failing such resolution, either party may refer the unresolved disputed
items for final binding resolution to a nationally recognized certified public accounting
firm mutually acceptable to Seller and Purchaser (the Independent Auditors). The
unresolved disputed items (if any) will be deemed to be as determined by the Independent
Auditors in accordance with Modified GAAP, consistently applied, within 30 days of such
reference. One-half of the cost of the determination by the Independent Auditors shall be
paid by Purchaser and one-half by Seller. The decision of the Independent Auditors shall
not be subject to appeal or challenge for any reason (other than gross negligence, fraud or
willful misconduct). The definitive Closing Net Working Assets and Net Working Assets
Adjustment shall be the Closing Net Working Assets and Net Working Assets Adjustment, as
applicable, agreed to (or deemed to be agreed to) by Purchaser and Seller in accordance with
the terms of this Section 2.2(d) or the definitive Closing Net Working Assets or Net
Working Assets Adjustment, as applicable, resulting from the determination made by the
Independent Auditors in accordance with this Section 2.2(d) (in addition to those
items theretofore agreed to by Seller and Purchaser).
(e) Closing Net Working Assets is the Net Working Assets of the Business as
calculated from the Closing Statement of Net Assets, as finally determined in accordance
with Section 2.2(d).
(f) Net Working Assets Adjustment shall be determined as follows: (i) if the Closing
Net Working Assets is equal to or greater than the Estimated Closing Net Working Assets,
then the Net Working Assets Adjustment will be a positive amount equal to the amount of such
excess; and (ii) if the Closing Net Working Assets is less than the Estimated Closing Net
Working Assets, then the Net Working Assets Adjustment will be a negative amount equal to
the amount of such difference.
(g) Other than those provisions set forth in this Section 2.2 relating to the
resolution of certain matters by the Independent Auditors, there is no agreement among the
parties to submit disputes under this Agreement to arbitration.
Section 2.3 Payment of Net Working Assets Adjustment.
(a) If the Net Working Assets Adjustment is a positive amount, Purchaser will pay
Seller the amount of the Net Working Assets Adjustment together with interest thereon at the
rate of 7% per annum from the Closing Date through the date of payment, such payment to be
made within ten days after the final determination of the Net
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Working Assets Adjustment; provided, however, that, if payment is not made within such
ten-day period, the applicable rate of interest rate shall be increased by 2% per month for
the period from the day following such day through the date such payment is made.
(b) If the Net Working Assets Adjustment is a negative amount, then Seller will pay to
Purchaser the amount of the Net Working Assets Adjustment, together with interest thereon at
the rate of 7% per annum from the Closing Date through the date of payment, such payment to
be made within ten days after the final determination of the Net Working Assets Adjustment;
provided, however, that, if any such payment is not made within such ten-day period, the
applicable rate of interest shall be increased by 2% per month for the period from the day
following such day through the date payment is made.
Section 2.4 Allocation of Consideration.
Within 45 days following the final determination of the Net Working Assets Adjustment,
Purchaser shall deliver to Seller a proposed Schedule (the Allocation Schedule) allocating the
purchase price (including, for purposes of this Section 2.4, the Assumed Liabilities and
any other consideration paid to Seller and the Selling Subsidiaries) among the Purchased Assets.
The Allocation Schedule shall be reasonable and shall be prepared in accordance with Section 1060
of the Code and the regulations thereunder. If Purchaser and Seller are unable to reach an
agreement with respect to the Allocation Schedule within 30 calendar days after delivery thereof,
the allocation of any disputed item or items shall be resolved within the next 30 calendar days by
an independent accounting firm or valuation expert that is mutually acceptable to both parties and
whose fees shall be borne equally by Purchaser and Seller. Such determination by the accounting
firm or valuation expert shall be binding on the parties without further adjustment. Except as
otherwise required pursuant to a determination under Section 1313(a) of the Code (or any
comparable provision of state, local or foreign Law), Purchaser and Seller agree to act in
accordance with the allocations determined hereunder for all Tax purposes and that neither of them
will (or will permit its Affiliates to) take any position inconsistent therewith in any Tax Returns
or similar filings (including IRS Form 8594 or any similar form required to be filed under state,
local or foreign Law), any refund claim, litigation, or otherwise. Purchaser and Seller each agree
to provide the other party with any additional information reasonably required to complete IRS Form
8594 (or any similar form required to be filed under state, local or foreign Law) and with
completed copies of such forms.
Section 2.5 Deposit.
Within three (3) Business Days after the date hereof, in accordance with the Deposit Agreement
(the form of which is attached as Exhibit K hereto, the Deposit Agreement), Purchaser
will wire transfer in immediately available funds to The Bank of New York, as deposit agent (the
Deposit Agent), an amount equal to U.S. $750,000 (such amount, together with the interest accrued
thereon, the Deposit Amount), to be held in an interest-bearing account by the Deposit Agent and
to be distributed in accordance with the terms of the Deposit Agreement. At the Closing, the
Deposit Agent will wire transfer the Deposit Amount to an account designated by Purchaser in
accordance with the Deposit Agreement.
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ARTICLE III
THE CLOSING
Section 3.1 Closing Date.
Except as hereinafter provided, the closing of the transactions contemplated hereunder (the
Closing) shall take place at the offices of Sidley Austin LLP, 1 S. Dearborn, Chicago, Illinois
at 10:00 a.m. (local time) on July 31, 2007, or on such later date as may be mutually agreed upon
by Purchaser and Seller, but in no event later than the fifth calendar day after all of the
conditions precedent set forth in Article VIII and Article IX have been either
satisfied or waived (such date and time being referred to herein as the Closing Date). The
Closing shall be deemed to occur as of 11:59 p.m. (Eastern Standard Time) on the Closing Date.
Section 3.2 Deliveries by Seller to Purchaser.
At the Closing, Seller shall deliver, or shall cause to be delivered, to Purchaser the
following:
(a) one or more bills of sale, substantially in the form of Exhibit B, or local
transfer agreements as may be necessary or desirable under applicable Law, or comparable
instruments of transfer transferring to Purchaser all of the Purchased Assets, duly executed
by Seller or, as applicable, a Selling Subsidiary thereof;
(b) special warranty deeds, or comparable instruments of transfer and assignment,
customary in the states where the Owned Real Properties are located with respect to the
Owned Real Properties owned by Seller or any of its Subsidiaries, and otherwise in form
mutually acceptable to Purchaser and Seller, duly executed by Seller or, as applicable, a
Subsidiary thereof, together with all recording cover sheets, disclosure forms, certificates
and affidavits as may be required by applicable law in order to record each of the
applicable deeds in the state where it is recorded;
(c) subject to receipt of all applicable lessor consents, a sublease for a portion of
the Rochester Hills, Michigan facility substantially in the form of Exhibit D hereto
(the Michigan Sublease), the size, location and configuration of which shall be mutually
agreed upon by Purchaser and Seller prior to Closing, duly executed by Seller or, as
applicable, a Selling Subsidiary, and an assignment of the SLP I Real Property Leases in
form mutually acceptable to Seller and Purchaser (the Mexico Assignment), duly executed by
Seller or, as applicable, a Selling Subsidiary;
(d) duly executed instruments of assignment or transfer of the Purchased Intellectual
Property, substantially in the form of Exhibit E or local assignment agreements as
may be necessary or desirable under applicable Law;
(e) the certificate referred to in Section 8.6 signed by a duly authorized
officer of Seller;
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(f) the Transition Agreements, duly executed by Seller;
(g) a certificate of non-foreign status pursuant to Treasury Regulations Section
1.1445-2(b)(2) from Seller and each domestic Subsidiary of Seller that transfers
Purchased Assets located in the United States pursuant to this Agreement;
(h) a duly executed assignment and assumption agreement or other comparable instrument
of assignment and assumption, substantially in the form of Exhibit F, evidencing
assumption of the Assumed Liabilities and all other instruments or documents as shall be
necessary in the reasonable judgment of Purchaser to evidence the assignment by Seller and
its Subsidiaries of the Purchased Assets and the assumption by Purchaser or its Subsidiaries
of the Assumed Liabilities, subject to Sections 6.5(a) and 10.5(b);
(i) a copy of the Approval Order; and
(j) an Alta 1992 form owners policy of title insurance for each parcel of Owned Real
Property in an amount equal to the applicable assessed value for real estate tax purposes
and otherwise in form and substance satisfactory to Purchaser issued by First American Title
Insurance Company in conformity with each Commitment, subject only to Permitted Exceptions.
Section 3.3 Deliveries by Purchaser to Seller.
At the Closing, Purchaser shall deliver to Seller the following:
(a) the Initial Cash Consideration;
(b) a duly executed assignment and assumption agreement or other comparable instrument
of assignment and assumption, substantially in the form of Exhibit F, evidencing
assumption of the Assumed Liabilities and all other instruments or documents as shall be
necessary in the reasonable judgment of Seller to evidence the assignment by Seller of the
Purchased Assets and the assumption by Purchaser or its Subsidiaries of the Assumed
Liabilities, subject to Sections 6.4(a) and 10.5(b);
(c) the sublease and assignment referred to in Section 3.2(c), duly executed by
Purchaser or its Subsidiaries;
(d) the assignments referred to in Section 3.2(d), duly executed by Purchaser
or Subsidiary of Purchaser;
(e) the certificate referred to in Section 9.6 signed by a duly authorized
officer of Purchaser;
(f) the Transition Agreements, duly executed by Purchaser; and
(g) the assumption agreement referred to in Section 10.3.
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Section 3.4 Proceedings at Closing.
All acts and proceedings to be taken and all documents to be executed and delivered by the
parties at the Closing shall be deemed to have been taken and executed simultaneously, and, except
as permitted hereunder, no acts or proceedings shall be deemed taken nor any documents executed or
delivered until all have been taken, executed and delivered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller hereby represents and warrants to Purchaser as follows:
Section 4.1 Organization and Qualification.
Each of Seller and the Selling Subsidiaries is an entity duly organized, validly existing and,
if applicable, in good standing under the laws of the jurisdiction of its organization and has the
requisite corporate power and authority to own or lease and operate its properties and to carry on,
in all material respects, its business as currently conducted. Each of Seller and the Selling
Subsidiaries is duly licensed or qualified to conduct its business as a foreign corporation and, if
applicable, is in good standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such license or qualification.
Section 4.2 Corporate Authorization.
Upon entry of the Approval Order and subject to it becoming a Final Order, each of Seller and
the Selling Subsidiaries will have full corporate power and authority to enter into, execute and
deliver (or cause to be entered into, executed and delivered) this Agreement and each other
agreement, document, instrument or certificate to be executed at the Closing by it in connection
with the consummation of the transactions contemplated hereby (all such other agreements,
documents, instruments and certificates required to be executed by Seller or any of the Selling
Subsidiaries being hereinafter referred to, collectively, as the Seller Closing Documents), and
to perform (or cause to be performed) Sellers obligations hereunder and thereunder. The
execution, delivery and performance by Seller of this Agreement has been duly authorized by all
requisite corporate action on the part of Seller and the execution, delivery and performance by
Seller or its Subsidiaries of each of the Seller Closing Documents will be duly authorized by all
requisite corporate action on the part of Seller or such Subsidiaries, as applicable, prior to
Closing.
Section 4.3 Consents and Approvals.
Except as set forth in Schedule 4.3, and after giving effect to the entry of the
Approval Order and subject to it becoming a Final Order, no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Seller or the Selling Subsidiaries in connection with
the execution and delivery of this Agreement or the Seller Closing Documents, the consummation of
the
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transactions contemplated hereby and thereby or the compliance by Seller and its Subsidiaries
with any of the provisions hereof or thereof.
Section 4.4 Non-Contravention.
Upon entry of the Approval Order and subject to it becoming a Final Order, none of the
execution and delivery by Seller of this Agreement and the Seller Closing Documents, the
consummation of the transactions contemplated hereby or thereby or compliance by Seller and its
Subsidiaries with any of the provisions hereof or thereof will, subject to the receipt of the
consents identified on Schedule 4.3, (i) result in the breach of any provision of the
certificate or articles of incorporation, bylaws or similar organizational documents of Seller;
(ii) violate, result in the breach or termination of, or constitute (with or without notice or
lapse of time or both) a default or give rise to any right of consent, cancellation, termination,
vesting or acceleration or right to increase the obligations or otherwise modify the terms under
any Material Business Contract; or (iii) constitute a violation of any Law applicable to Seller or
any of its Affiliates, except in the case of clause (ii) and (iii), for minor violations none of
which are material individually or in the aggregate.
Section 4.5 Binding Effect.
Upon entry of the Approval Order and subject to it becoming a Final Order, this Agreement
constitutes and, when executed and delivered at the Closing, each of the Seller Closing Documents
will constitute, a valid and legally binding obligation of Seller or such of its Subsidiaries as is
party thereto, enforceable in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors rights and to general equity principles (whether in equity or at law).
Section 4.6 Financial Statements.
Schedule 4.6 contains true and correct copies of the unaudited statement of net assets
(the Statement of Net Assets) of the Business, as of December 31, 2006, and the unaudited
statement of operating results of the Business for the year ended December 31, 2006 (collectively,
the Financial Statements). Each of the Financial Statements has been prepared in accordance with
Modified GAAP. The Financial Statements were prepared on the basis of the books and records of the
Business (in each case, as of the date of such Financial Statements) and present fairly, in all
material respects, the financial condition of the Business as of the dates thereof and the results
of its operations for each of the periods then ended in conformity with Modified GAAP.
Section 4.7 Taxes.
Except as set forth on Schedule 4.7:
(a) all Tax Returns required to be filed by or with respect to the Business have been
timely filed (taking into account extensions) and all such Tax Returns are complete and
accurate and disclose all taxes required to be paid in respect of such Tax Returns;
15
(b) all Taxes shown to be due on such Tax Returns (or payable pursuant to any
assessments with respect to such Tax Returns) have been or will be timely paid, except for
any payments by the Debtors which have been stayed by the filing of the Cases under Section
362 of the Bankruptcy Code;
(c) there is no action, suit, investigation, audit, claim or assessment pending with
respect to Taxes of the Business, except for claims being pursued against the Debtors in the
Cases, and to Sellers Knowledge, no basis for any such claim exists;
(d) none of Seller or any of the Selling Subsidiaries is currently the beneficiary of
any extension of time within which to file any Tax Return, except for routine extensions of
the time to file income Tax Returns;
(e) none of Seller or any of the Selling Subsidiaries has waived or been requested to
waive any statute of limitations in respect of Taxes associated with the Business, which
waiver is currently in effect;
(f) all monies required to be withheld by Seller or any of its Subsidiaries (including
from employees of the Business for income Taxes and social security and other payroll Taxes)
have been collected or withheld, and either paid to the respective taxing authorities, set
aside in accounts for such purpose, or accrued, reserved against and entered upon the books
of the Business;
(g) none of the Purchased Assets is properly treated as owned by persons other than
Seller or the Selling Subsidiaries for income Tax purposes;
(h) none of the Purchased Assets is tax-exempt use property within the meaning of
Section 168(h) of the Code; and
(i) no transferor of a United States real property interest contemplated by this
Agreement is a foreign person for purposes of Section 1445 of the Code.
Section 4.8 Real Property.
Except for the filing of the Cases, after giving effect to the entry of the Approval Order and
subject to it becoming a Final Order:
(a) Schedule 15.102 contains a legal description and address of each parcel of
Owned Real Property . To the Knowledge of Seller, there are no options held by Seller or
the Selling Subsidiary to acquire any real property for use with respect to the Business.
Seller, or a Selling Subsidiary, has good and marketable title to each of the Owned Real
Properties, free and clear of all Liens except Permitted Exceptions. Each of the Owned Real
Properties (i) has legal and actual access to publicly dedicated streets whether adjacent or
connected by valid easements thereto, subject to Permitted Exceptions, and (ii) has public
utilities, including water, sewer, gas, electric, telephone and drainage facilities that are
adequate to conduct the Business thereon as is currently being conducted. To the Knowledge
of Seller, complete and correct copies of any engineering
16
plans and specifications, reports or studies of the physical condition of the Owned
Real Property, title opinions, surveys and appraisals in Sellers or the Selling
Subsidiaries possession or any policies of title insurance currently in force and in the
possession of Seller or the Selling Subsidiaries with respect to each parcel of Owned Real
Property have heretofore been delivered by Seller to Purchaser.
(b) Schedule 15.126 contains a brief description of each Real Property Lease.
To the Knowledge of Seller, there are no leases pursuant to which Seller, or its applicable
Selling Subsidiary, is lessor of any of the Owned Real Property. To the Knowledge of
Seller, Seller, or the applicable Selling Subsidiary, has valid leasehold estates in each of
the Leased Real Properties.
(c) Except for the Permitted Exceptions, the Michigan Sublease and as otherwise set
forth on Schedule 4.8(c), none of the Owned Real Properties, nor to the Knowledge of
Seller, the Leased Real Properties, is subject to any lease, sublease, license or other
agreement granting to any other Person any right to the use or occupancy of such Owned Real
Property or Leased Real Property or any part thereof. To the Knowledge of Seller, complete
and correct copies of any engineering plans and specifications, reports or studies of the
physical condition of the Leased Real Property, title opinions, surveys and appraisals in
Sellers or the Selling Subsidiarys possession or any policies of title insurance currently
in force and in the possession of Seller, or the Selling Subsidiary, with respect to each
parcel of Leased Real Property have heretofore been delivered by Seller to Purchaser.
(d) To the Knowledge of Seller, Seller has furnished to Purchaser complete and accurate
copies of the Real Property Leases.
(e) Each Real Property Lease is in full force and effect and is valid and enforceable
against Seller or its applicable Subsidiary and the lessor in accordance with its terms
(subject to bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors rights and to general equity principles,
whether in equity or at law), and there is no current default which cannot be cured under
Section 365 of the Bankruptcy Code.
(f) To the Knowledge of Seller, (i) Seller or its Subsidiaries have all Permits of any
Governmental Body necessary for the current use and operation by Seller or its Subsidiaries
of each Owned Real Property and Leased Real Property, and (ii) no default or violation by
Seller or any of its Subsidiaries has occurred in the due observance of any such Permit.
(g) There are no actions or proceedings pending, or to the Knowledge of Seller,
threatened or contemplated against or relating to the ownership, use, possession or
operation of the Owned Real Property, including, without limitation, actions for
condemnation of all or any part thereof or other taking by any Governmental Body.
17
(h) To the Knowledge of Seller, the present improvements located on and the present use
of the Real Property do not violate any building code, subdivision, entitlement, zoning, or
similar land use law, regulation, ordinance, permit or order.
(i) To the Knowledge of Seller, there are no plans or proposals for changes in road
grade, access or other municipal improvements which would affect the Real Property or result
in any special tax or assessment against it.
Section 4.9 Tangible Personal Property.
Except as would not reasonably be expected to have a Material Adverse Effect, after giving
effect to the entry of the Approval Order and subject to it becoming a Final Order:
(a) Each lease of personal property (i) included in the Purchased Assets requiring
lease payments equal to or exceeding U.S. $60,000 per annum, or (ii) the loss of which would
have a Material Adverse Effect (collectively, the Personal Property Leases) is in full
force and effect and is valid and enforceable in accordance with its terms (subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors rights and to general equity principles, whether in
equity or at law), and there is no default under any Personal Property Lease either by
Seller or its Subsidiaries or, to the Knowledge of Seller, by any other party thereto, and
no event has occurred that, with the lapse of time or the giving of notice or both, would
constitute a default by Seller or its Subsidiaries thereunder which cannot be cured under
Section 365 of the Bankruptcy Code.
(b) Seller or one of its Subsidiaries has good and valid title to each item of owned
Purchased Equipment, free and clear of any and all Liens other than Permitted Exceptions or
Liens under the Seller Financing.
Section 4.10 Intellectual Property.
(a) Schedule 4.10(a)(i) sets forth a true and complete list of all Registered
Intellectual Property owned by Seller or the Selling Subsidiaries that is exclusively
related to the Business, indicating for each item of such Registered Intellectual Property,
the registration or application number and the applicable filing jurisdiction. Schedule
4.10(a)(ii) sets forth a true and complete list of all Licensed Intellectual Property
(other than the Excluded Intellectual Property). Seller and its Selling Subsidiaries
exclusively own (beneficially, and of record where applicable) all Purchased Intellectual
Property, free and clear of all Liens other than Permitted Exceptions and Liens under the
Seller Financing. To the Knowledge of Seller, the Purchased Intellectual Property is valid,
subsisting and enforceable, and is not subject to any outstanding order, judgment, decree or
agreement adversely affecting Sellers or its Selling Subsidiaries use thereof or its
rights thereto. To the Knowledge of Seller, no Person is infringing, violating or has
misappropriated any Purchased Intellectual Property.
(b) To the Knowledge of Seller, each Intellectual Property Contract included in the
Purchased Assets is legal, valid, binding and enforceable against the other party, and
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is in full force and effect, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors rights and to general equity principles (whether in equity or at
law). No claim has been threatened or asserted that Seller or any other Person has breached
any Intellectual Property Contract. There exists no event, condition or occurrence that,
with the giving of notice or lapse of time, or both, would constitute a material breach or
default by Seller or, to the Knowledge of Seller, any other Person, under any Intellectual
Property Contract.
(c) To the Knowledge of Seller, there is no litigation, opposition, cancellation,
proceeding, or claim pending, asserted or threatened in writing against Seller or its
Selling Subsidiaries, or any other Person, concerning the ownership, validity,
registerability, enforceability, infringement, use, or licensed right to use any Purchased
Intellectual Property or rights licensed to Seller or its Selling Subsidiaries in such
Intellectual Property Contract.
(d) To the Knowledge of Seller, the conduct of the Business by Seller and its Selling
Subsidiaries, including their ownership, manufacture, use, operation and sale of Purchased
Assets, does not violate as of the date of this Agreement and has not during the five years
immediately preceding the date of this Agreement violated any Intellectual Property rights
of any Person.
(e) [Intentionally omitted.]
(f) Seller and its Subsidiaries have sufficient rights to assert or use all
Intellectual Property Related to the Business as conducted immediately prior to Closing.
For the avoidance of doubt, following the Closing, the conduct of the Business as conducted
immediately prior to Closing will not infringe, misappropriate or violate any Intellectual
Property rights: (i) acquired by Orhan Holding, A.S., or its Affiliates pursuant to the
Agreement to Purchase Assets and Stock by and between Orhan Holding, A.S. and Seller; or
(ii) of Seller and its Subsidiaries.
(g) The IT Assets operate and perform in all material respects in accordance with its
documentation and functional specifications and otherwise as required by Seller in
connection with the Business. Seller has not incorporated into the IT Assets any time
bombs, Trojan horses, back doors, trap doors, worms, viruses, bugs, faults or other
devices or effects that (i) enable or assist any person to access without authorization the
IT Assets or (ii) otherwise significantly and adversely affect the functionality of the IT
Assets, except as disclosed in its documentation. To the Knowledge of Seller, none of the
IT Assets is subject to or distributed under any license that (A) would require the
distribution of source code with the asset or require source code to be made available when
such is distributed to any third party or (B) would restrict or impair in any way
Purchasers ability to license IT Assets pursuant to terms of Purchasers choosing.
(h) Seller has taken all commercially reasonable measures to protect the secrecy,
confidentiality and value of all Trade Secrets that are owned, used or held for use by
Seller and its Selling Subsidiaries and exclusively related to the Business, and to the
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Knowledge of Seller, such Trade Secrets have not been used by, disclosed to or
discovered by any person except pursuant to valid and appropriate non-disclosure and/or
license agreements and those agreements have not been breached. To the Knowledge of Seller,
as of the date of this Agreement, none of the current employees of Seller and its
Subsidiaries has any Patents issued or applications pending for any device, process, design
or invention of any kind now used or needed by Seller or its Selling Subsidiaries in the
operation of the Business, which Patents or applications have not been assigned to Seller or
its Selling Subsidiaries. To the Knowledge of Seller, the performance by the employees of
Seller and its Selling Subsidiaries of their employment activities in respect of the
development of the IT Assets does not violate any third partys Intellectual Property rights
or such employees contractual obligations to any third person.
Section 4.11 Contracts.
(a) Schedule 4.11(a) sets forth a true, complete and correct list, as of the
date hereof, of each of the following Debtor Contracts and Non-Debtor Contracts
(collectively, the Material Business Contracts):
(i) any Debtor Contract or Non-Debtor Contract not made in the ordinary course
of business involving annual payments in excess of $10,000;
(ii) any Debtor Contract or Non-Debtor Contract or binding commitment for, or
setting forth any of the terms or conditions relating to, the employment or
termination of employment of any officer or non-temporary employee of Seller or the
Selling Subsidiaries whose basic annual compensation (excluding bonus or commission)
is in excess of U.S. $50,000;
(iii) any franchise, distributorship or sales agency agreement of Seller or any
of the Selling Subsidiaries that involves annual payments in excess of U.S.
$200,000;
(iv) any Debtor Contract or Non-Debtor Contract for the purchase, or the sale,
supply or provision, of materials, supplies, services, merchandise or equipment not
capable of being fully performed or not terminable without penalty within a period
of 60 calendar days and involving annual payments in excess of U.S. $150,000;
(v) any agreement for the purchase or sale of any assets of Seller or the
Selling Subsidiaries, to the extent Related to the Business, other than in the
ordinary course of business involving an amount in excess of U.S. $10,000;
(vi) any Debtor Contract or Non-Debtor Contract limiting the freedom of Seller
or the Selling Subsidiaries to engage in any line of business or to compete with any
Person;
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(vii) any commitment of Seller or the Selling Subsidiaries to make any capital
expenditure or to purchase a capital asset Related to the Business in excess of U.S.
$50,000;
(viii) any Debtor Contract or Non-Debtor Contract for the creation or formation
of a joint venture, partnership or limited liability company;
(ix) any Debtor Contract or Non-Debtor Contract relating to any indebtedness
for borrowed money, guaranty, surety, line of credit or other loan or financing
arrangement involving an amount in excess of U.S. $10,000;
(x) any Debtor Contract or Non-Debtor Contract that is a collective bargaining
agreement or other contract with any labor organization relating or applying to the
Business or any Business Employee, including the Assumed Collective Bargaining
Agreements;
(xi) any Debtor Contract or Non-Debtor Contract (other than a collective
bargaining agreement with a labor organization) setting forth terms and conditions
of employment, or separation from employment, of any Business Employee or any other
current or former employee employed in connection with the Business;
(xii) any Debtor Contract or Non-Debtor Contract with any individual Person or
Persons for the performance of any services by any such Person relating to the
Business involving annual payments in excess of $10,000; or
(xiii) any Debtor Contract or Non-Debtor Contract under which Seller or Selling
Subsidiary is obligated or is a party to any option, right of first refusal or other
contractual right to sell, lease or dispose of the Purchased Assets or any portion
thereof or interest therein.
True and correct copies of the Material Business Contracts have been delivered to or made
available to Purchaser.
(b) To the Knowledge of Seller, (x) each Material Business Contract is in full force
and effect and constitutes as of the date hereof the valid and legally binding obligation of
each party thereto, enforceable against Seller and the other parties thereto in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors rights and to general equity principles (whether in equity or at law)
and (y) there are no defaults under the Material Business Contracts which cannot be cured
under Section 365 of the Bankruptcy Code. Seller has made available to Purchaser true and
correct copies of the Material Business Contracts.
(c) Schedule 4.11(c) constitutes a complete list of all of the Contracts
Related to the Business (including subcontracts at any tier to the extent known by Seller)
entered into or being performed by the Selling Subsidiaries with the United States
Government,
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the government of any state or any political subdivision thereof, and any division,
agency or instrumentality of the United States or of any state (hereinafter, the Government
Contracts.).
(d) To the Knowledge of Seller, there are no facts with respect to the Government
Contracts that could give rise to liability under the False Claims Act or any other civil or
criminal statute.
(e) To the Knowledge of Seller, except as described in Schedule 4.11(e), there
are no outstanding claims relating to the Government Contracts that have been brought by the
United States Government, the government of any state or any political subdivision thereof,
or any division, agency or instrumentality of the United States or of any state, or by any
prime contractor, any higher-tier subcontractor or any third party which would reasonably be
expected to have a Material Adverse Effect.
Section 4.12 Employee Benefits.
(a) Schedule 4.12(a) contains a complete and accurate list of each Business
Employee Benefit Plan. Seller has made available to Purchaser, to the extent applicable to
any such Business Employee Benefit Plan, (i) a true and complete copy of the plan document
(including all amendments and modifications thereto) and all related trust agreements,
insurance contacts and other funding arrangements, (ii) the most recently filed United
States Department of Labor Form 5500 series and all Schedules thereto, (iii) the current
summary plan description and all summary material modifications thereto as applicable, and
(iv) to the extent applicable, the most recent determination letter with respect to each
Business Employee Benefit Plan.
(b) Each Assumed Benefit Plan has been maintained, operated and administered in
compliance with its terms and the applicable provisions of ERISA, the Code and other
applicable Law.
(c) Each Assumed Benefit Plan that is intended to meet the qualification requirements
of Section 401(a) of the Code has received a favorable determination letter from the U.S.
Internal Revenue Service.
(d) Except as set forth in Schedule 4.12(d), there is no audit or investigation
pending (other than routine qualification or registration determination filings) with
respect to any Assumed Benefit Plan before the U.S. Internal Revenue Service, the U.S.
Department of Labor or any Governmental Authority and no such audit or investigation has
been threatened in writing.
(e) Other than claims by common law employees for benefits received in the ordinary
course under an Assumed Benefit Plan, neither Seller nor any of its Affiliates has received
written notice of any pending or threatened claim under any Assumed Benefit Plan.
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(f) With respect to any Business Employee Benefit Plan, all contributions, premiums,
expenses and other payments required to be made by Seller or otherwise attributable to
periods, services performed or compensation paid on or before the Closing Date have been
made or will be timely made by Seller. For each Seller Employee Benefit Plan subject to the
minimum funding requirements of ERISA and Section 412 of the Code, all contributions
required to satisfy ERISAs minimum funding requirements have been made and no liens have
been imposed pursuant to Section 412(m) of the Code.
(g) No Seller Employee Benefit Plan is a multiemployer pension plan as defined in
Section 3(37) of ERISA, and neither Seller nor any of its Affiliates is obligated to make
contributions to a multiemployer pension plan on behalf of any Business Employee, except as
described in Schedule 4.12(g). Neither Seller nor any of its Affiliates has
incurred a complete withdrawal as this term is defined in Section 4203 of ERISA or a partial
withdrawal as defined in ERISA Section 4205 from any such multiemployer pension plan. To
the Knowledge of Seller, no such multiemployer pension plan is not in reorganization status
under ERISA Section 4241.
(h) No Seller Employee Benefit Plan that is a defined benefit pension plan subject to
Title IV of ERISA has been terminated during the six year period ending on the Closing Date,
and neither Seller nor any of its Affiliates has incurred liability under Section 4062 of
ERISA.
(i) Neither Seller nor any of its Affiliates is a party to or bound by any employment,
compensation, commission, bonus, benefit, retention, severance, separation, confidentiality,
nonsolicitation, noncompetition or other Contract with or for the benefit of any current or
former Business Employee, with the exception of the Retention Agreements or as described in
Schedule 4.12(i).
(j) Except as listed in Schedule 4.12(j), no Business Employee Benefit Plan
that is an employee welfare benefit plan as defined in Section 3(i) of ERISA provides for
benefits to or on behalf of any retired or other former Business Employee or dependent or
beneficiary thereof except as required by Section 601 et. seq. of ERISA.
Section 4.13 Employee and Labor Matters.
(a) Schedule 4.13(a) contains a true and complete list of all Business
Employees as of the date hereof and as of the Closing Date, and accurately and completely
sets forth for each such Business Employee the following: (i) name, (ii) title or position
(including whether full or part time), (iii) name of employer, (iv) location of employment
(e.g., plant, city and state), (v) leave status (including date leave commenced, nature of
leave (e.g., medical, military) and anticipated return date), (vi) whether the employee is
represented by a labor organization; and (vii) if not represented by a labor union, whether
the employee is paid on a salaried or hourly basis.
(b) Schedule 4.13(b) contains a true and complete list of each current or
former Business Employee, and every other current or former employee of the Seller or any of
its Affiliates who is or was employed at any of the Seller Business Facilities, in each
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case: (x) whose employment has terminated (voluntarily or involuntarily) or who has
been laid off within 6 months prior to the Closing Date, including the date of such
termination or layoff and an indication of the reason therefore (e.g., voluntary
resignation, retirement, for cause, reduction in force); (y) whose hours of work have been
materially reduced within 6 months prior to the Closing Date, including the date of any such
reduction; or (z) who is otherwise on layoff as of the Closing Date and the date of such
layoff, and accurately and completely sets forth for each such Person the following: (i)
name, (ii) name of employer, (iii) location of employment (e.g., plant, city and state), and
(iv) whether the employee is or was represented by a labor organization.
(c) Except as provided in Schedule 4.13(c), each Business Employee employed in
the United States is employed at will and may terminate his or her employment with Seller or
its Affiliates or be terminated from such employment at any time for any or no reason with
or without prior notice, except for any rights, of Business Employees in the State of
Michigan under Michigan common law to enforce handbook representations, if any, and except,
in the case of Union Business Employees, as otherwise provided in the Assumed Collective
Bargaining Agreements.
(d) Except as provided in Schedule 4.13(d), none of the Business Employees is
employed outside of the United States or Mexico.
(e) All Persons engaged in connection with the Business and classified or treated by
the Seller or any of its Affiliates as independent contractors or otherwise as non-employees
satisfy and have satisfied all applicable Laws, in each case in all material respects, to be
so classified or treated, and the Seller and each of its Affiliates have fully and
accurately reported their compensation of any kind on IRS Forms 1099 or as otherwise
required by Law.
(f) Except as provided in Schedule 4.13(f), neither the Seller nor any of its
Affiliates: (i) sells or otherwise provides, or since May 31, 2006 has sold or otherwise
provided, any Governmental Body with any product or service relating to the Business; or
(ii) is or since May 31, 2006 has been a government contractor for purposes of any Law with
respect to the terms and conditions of employment of any Business Employee at any Seller
Business Facility or any other current or former employees employed in connection with the
Business at any Seller Business Facility. The Seller is and has been subject to affirmative
action obligations under Laws, including Executive Order 11246, with respect to the Seller
Business Facilities and Business Employees employed in connection with the Business at the
Seller Business Facilities under affirmative action compliance programs applicable to the
Sellers entire U.S. workforce.
(g) Set forth on Schedule 4.13(g) is a true and correct list, as of the date
hereof, and as of the Closing Date: (i) of each labor or collective bargaining agreement or
other agreement or understanding with any labor organization, to which Seller or any of its
Subsidiaries is a party or by which any of them is bound with respect to the Business or any
of the Business Employees, including the Assumed Collective Bargaining Agreements (and the
term of the Columbia City Assumed Collective Bargaining Agreement has been validly extended
until February 12, 2008, with no other changes to
24
the provisions thereof, by agreement of the parties thereto, subject to a ratification
vote by the relevant bargaining unit employees to be obtained prior to the Closing Date),
and (ii) of each arbitration award to which Seller or any of its Subsidiaries is a party or
by which any of them is bound with respect to the Business or any of the Transferred
Employees, including pursuant to any of the Assumed Collective Bargaining Agreements.
(h) Except as set forth in Schedule 4.13(h): (i) no labor organization
represents, or has made a demand against Seller or any of its Subsidiaries for recognition
with respect to representation of, any Business Employees or group of Business Employees;
(ii) there are no, and have not been any, representation or decertification proceedings or
written petitions seeking a representation or decertification proceeding involving any
Business Employees pending against Seller or any of its Subsidiaries or, to the Knowledge of
Seller, threatened in writing to be brought or filed against Seller or any of its
Subsidiaries with the United States National Labor Relations Board or any other Governmental
Body; (iii) neither Seller nor any of its Subsidiaries is or has been negotiating, or has
been asked to negotiate, any collective bargaining agreement or other agreement or
understanding with any labor organization with respect to any of the Business Employees,
other than requests by the UAW to negotiate an extension of, or a successor agreement to,
one or more of the Assumed Collective Bargaining Agreements following the Scheduled
expiration thereof and other than requests by such UAW entities for effects bargaining in
connection with the transactions contemplated by this Agreement; and (iv) to the Knowledge
of Seller, there is currently no, and there has not within the past twenty-four (24) months
been any, organizing activity involving any Business Employees pending or threatened by any
labor organization, any of the Business Employees or any other Person acting on behalf of or
for the benefit of any of them.
(i) Except as set forth in Schedule 4.13(i) and solely with respect to the
Business, there are not as of the date hereof and as of the Closing Date, and there have not
been at any time during the one (1) year before the Closing Date, any (i) strikes, work
stoppages, slowdowns or lockouts, interruptions of work, or picketing, (ii) grievances,
arbitrations or other material labor disputes, or (iii) unfair labor practice charges, or
complaints, in each case pending or threatened by or on behalf of any Business Employees,
any labor organization or any other Person involving the Business or any Business Employees.
(j) Except as set forth in Schedule 4.13(j), neither Seller nor any of its
Affiliates has entirely or partially closed or ceased operations at, or reduced the
workforce at, any facility, location or other site of employment of the Seller or any of its
Affiliates relating to the Business within one (1) year prior to the Closing Date.
(k) Seller and its Affiliates have complied in all material respects with all Laws
which relate to employment of the Business Employees, including all Laws which relate to
wages, hours, discrimination in employment, equal employment opportunity, immigration,
leaves, reasonable accommodations, occupational safety and health, confidentiality, labor
relations and collective bargaining, facility closures and layoffs
25
(including the WARN Act), and are not liable for any material arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing.
Section 4.14 Litigation.
(a) As of the date hereof and except for the filing of the Cases, there is no material
Legal Proceeding pending or, to the Knowledge of Seller, threatened in writing against
Seller or any of the Selling Subsidiaries that challenges, or questions the validity of,
this Agreement or any Seller Closing Document before any Governmental Body or any action
taken or to be taken by Seller and its Subsidiaries in connection with, or which seeks to
enjoin or obtain monetary damages in respect of, the consummation of the transactions
contemplated hereby or thereby. Except as set forth in Schedule 4.14 hereof,
neither Seller nor any of its Subsidiaries has been charged with, nor to the Knowledge of
Seller, is Seller or any of its Subsidiaries under investigation with respect to, any
violation of any provision of any Law with respect to the Purchased Assets that is
applicable and material to the operation of the Business.
(b) Except for the filing of the Cases, Schedule 4.14 sets forth a true and
correct list, as of the date thereof, of all material pending or, to the Knowledge of
Seller, threatened Legal Proceedings Related to the Business or related to the Purchased
Assets.
Section 4.15 Compliance with Laws.
Except with respect to Environmental matters which are addressed in Section 4.16,
employment matters which are addressed in Sections 4.12 and 4.13, and Real Property
matters which are addressed in Section 4.8, with respect to the Business conducted by it
and the Selling Subsidiaries, Seller and each Selling Subsidiary is in material compliance with all
applicable Laws and all decrees, orders, judgments and Permits of or from Governmental Bodies
except as set forth in Schedule 4.15.
Section 4.16 Environmental Matters.
(a) Seller has provided Purchaser copies of all:
(i) written notices of a currently pending charge, action, hearing,
investigation, claim, demand or notice having been filed or commenced against Seller
or any of its Subsidiaries alleging any failure of the Business to comply with, or
asserting liability under any Environmental Law concerning (i) the release or
threatened release of hazardous material, (ii) pollution or (iii) protection of the
Environment;
(ii) all Permits held by Seller or its Subsidiaries in connection with the
Business and related to any Environmental Law; and
(iii) all environmental reports, which are listed on Schedule 4.16(a).
26
(b) With respect to the Business:
(i) to the Sellers Knowledge, none of the Owned Real Property or the Leased
Real Property is or has been operated in material violation of any Environmental
Law;
(ii) (A) Neither Seller nor any of its Subsidiaries has, with respect to the
Business, transported or disposed, or to Sellers Knowledge, allowed or arranged for
any third parties to transport or dispose of any Hazardous Material or other waste
to or at a site which, pursuant to CERCLA or any applicable state law or national or
international law equivalent, is undergoing cleanup or has been placed on the
National Priorities List, or its state, national or international equivalent; (B)
Seller and its Subsidiaries possess all environmental Permits necessary for the
operation of the Business as currently conducted and are in compliance with the
terms and conditions of such Permits and with applicable Environmental Laws; (C)
Seller and its Subsidiaries have not submitted and were not required to submit any
notice pursuant to Section 103(c) of CERCLA (or any similar notice under equivalent
or similar international law or national law requirements) and have not received a
request for information under Section 104(e) of CERCLA (or under equivalent or
similar international law or national law) and there have been no spills or releases
of Hazardous Materials at any Owned Real Property or Leased Real Property that could
give rise to any material liability on the part of the Business under any
Environmental Law; and (D) Seller has not undertaken, or been ordered, directed or
enjoined to undertake any response or remedial actions or clean-up actions of any
kind by any Governmental Body at any Owned Real Property or Leased Real Property.
(iii) (A) None of the products manufactured by the Business contain, or at any
time have contained, any asbestos or asbestos-containing material; (B) no
asbestos-containing material was used by Seller or its Subsidiaries or, to Sellers
Knowledge, by any predecessor at any Owned or Leased Real Property, in connection
with the production of any product manufactured by the Business; (C) there have been
no claims, demands or proceedings alleging exposure to asbestos or
asbestos-containing material either in any product sold by the Business or at any
Owned Real Property or Leased Real Property relating to the operations of the
Business; and (D) to Sellers Knowledge, any asbestos or asbestos-containing
material present in any Owned Real Property or in any Leased Real Property is in
good condition (is not in friable form) and is and has been properly managed by
Seller under applicable Environmental Laws.
Section 4.17 Ownership of Necessary Assets and Rights.
Except for the (a) Excluded Assets, (b) the Intellectual Property covered by Section
7.6, (c) those assets and services to be provided pursuant to the terms of the Transition
Agreements, and (d) those assets and services listed on Schedule 4.17, the Purchased Assets
on the Closing Date are in all material respects sufficient for the conduct of the Business
immediately following the Closing in substantially the same manner as currently conducted.
27
Section 4.18 Brokers.
Except for Miller Buckfire & Co., LLC, (a) no Person has acted directly or indirectly as a
broker, finder or financial advisor for Seller or any of its Subsidiaries in connection with the
negotiations relating to the transactions contemplated hereby and no (b) Person is entitled to any
fee or commission or like payment in respect thereof from Purchaser based in any way on any
agreement, arrangement or understanding made by or on behalf of Seller or any of its Subsidiaries.
Seller is solely responsible for the fees and expenses of Miller Buckfire & Co., LLC, payable in
connection with the transactions contemplated hereby.
Section 4.19 Permits.
(a) Schedule 4.19(a) to this Agreement lists all material Permits related to
the Purchased Assets or to the current use of the Purchased Assets that Seller or its
Subsidiaries has obtained from any Governmental Body. Except as set forth in Schedule
4.19(a) and with respect to Environmental Matters which are addressed solely in
Section 4.16, to the Knowledge of Seller, (i) all such material Permits are validly
existing authorizations, (ii) Seller and the Selling Subsidiaries have all Permits necessary
for the operation of the Business and the Purchased Assets as currently operated, (iii)
there is no default or violation, in each case, in any material respect, by Seller or any of
the Selling Subsidiaries under any such Permit, and (iv) there is no action pending, nor
threatened, before any Governmental Body to revoke, refuse to renew, suspend or modify any
of the Permits, or any action which is reasonably likely to result in the denial of any
pending applications of Seller. Except as set forth in Schedule 4.19(a), Seller has
not received notice from any Governmental Authority to the effect that any additional
Permits are required for such operation.
(b) To the Knowledge of Seller, neither Seller nor the Selling Subsidiaries, nor any
director, officer, employee, agent, representative, or consultant acting on behalf of Seller
or the Selling Subsidiaries has, with respect to the Business, since May 31, 2006 (i)
exported, re-exported or transferred, via any means, any technology, software or hardware
subject to the U.S. Export Administration Regulations (EAR), via a direct export or via
provision to a non-U.S. person (including any Business Employees located in the U.S. or
abroad); or exported, re-exported, transferred via any means, or temporarily imported a
defense article, including technical data, software and hardware, or provided a defense
service to a non-U.S. person, subject to International Traffic in Arms Regulations (ITAR),
via a direct export or via provision to a non-U.S. person (including any Business Employees
located in the U.S. or abroad) except as pursuant to a valid license or other authorization,
for such importation, exportation, or re-exportation, or for such provision of services, or
pursuant to a valid exception or exemption from the requirement for such a license,
agreement or re-export authorization, or (ii) violated or is in violation of any provision
of the U.S. Export Administration Act, the EAR, the Arms Export Control Act, or the ITAR.
Section 4.20 [Intentionally omitted].
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Section 4.21 No Undisclosed Liabilities.
Except as set forth in Schedule 4.21, Seller is not subject, with respect to the
Business, to any Liability of the type required to be disclosed on the Statement of Net Assets
which is not shown in the Statement of Net Assets, other than (i) Liabilities of the same nature as
those set forth in the Statement of Net Assets and incurred in the ordinary course of the Business
after December 31, 2006 or (ii) other Liabilities that, in the case of clause (i) and clause (ii),
are not reasonably expected to have a Material Adverse Effect, either individually or in the
aggregate.
Section 4.22 Accounts Receivable; Inventories.
(a) To the Knowledge of Seller, all accounts receivable of Seller and the Selling
Subsidiaries with respect to the Business have arisen from bona fide transactions by Seller
and the Selling Subsidiaries in the ordinary course of the Business.
(b) To the Knowledge of Seller, the inventories of Seller and the Selling Subsidiaries
with respect to the Business (including raw materials, supplies, work-in-process, finished
goods and other materials) (i) are in good, merchantable and useable condition and (ii) are,
in the case of finished goods, of a quality and quantity saleable in the ordinary course of
business and, in the case of all other inventories, are of a quality and quantity useable in
the ordinary course of business, subject in each case to applicable reserves. Schedule
4.22(b) sets forth a list of locations other than the Owned Real Property and Leased
Real Property where material inventories of the Business were located as of May 1, 2007.
Section 4.23 Customers and Suppliers.
Schedule 4.23 sets forth (i) a list of names of the ten largest customers and the ten
largest suppliers (measured by dollar volume of purchases or sales in each case) of Seller in
respect of the Business during the year ended December 31, 2006.
Section 4.24 Warranties; Product Defects.
(a) Schedule 4.24(a) sets forth a summary of the warranty expense incurred by
Seller and its Subsidiaries with respect to the Business during each of its last three
fiscal years and from January 1, 2007 through April 30, 2007. To the Knowledge of Seller,
no material liability exists for any return claim, warranty claim or other obligation to
provide parts and service on, or to repair or replace, any products sold or delivered by
Seller and its Subsidiaries in connection with the Business at any time on or prior to the
Closing Date beyond the amounts reserved for warranty expense reflected in the Statement of
Net Assets.
(b) Schedule 4.24(b) sets forth a list of all (i) Products which have been
recalled, withdrawn or suspended (other than (x) Products discontinued or suspended in the
ordinary course of business or by reason of business decisions made without regard to (1)
concerns as to design or other inherent defect or risk to the safety of the users thereof or
(2) concerns of any Governmental Body and (y) isolated instances with respect to
29
particular product units which are not representative of an entire product category)
since January 1, 2004, and (ii) proceedings pending against Seller and its Subsidiaries at
any time since January 1, 2004 (whether such proceeding have since been completed or remain
pending) seeking the recall, withdrawal, suspension or seizure of any Products or seeking to
enjoin Seller from engaging in activities pertaining to any Products.
Section 4.25 Disclaimers of Seller.
EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY TRANSITION AGREEMENT, (A) SELLER EXCLUDES AND
DISCLAIMS ALL WARRANTIES, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE BUSINESS OR THE PURCHASED ASSETS, (B) SELLER MAKES NO
REPRESENTATION OR WARRANTY WITH RESPECT TO THE CONFIDENTIAL INFORMATION MEMORANDUM, FINANCIAL
SUPPLEMENT, PRESENTATIONS, REPORTS, OR ANY FINANCIAL FORECASTS OR PROJECTIONS OR OTHER INFORMATION
FURNISHED BY SELLER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, (C) SELLER
UNDERTAKES NO LIABILITY FOR ANY DAMAGE, LOSS, EXPENSE OR CLAIM OR OTHER MATTER RELATING TO ANY
CAUSE WHATSOEVER ARISING UNDER OR PURSUANT HERETO (WHETHER SUCH CAUSE BE BASED IN CONTRACT,
NEGLIGENCE, STRICT LIABILITY, OTHER TORT OR OTHERWISE) AND IN NO EVENT SHALL SELLER BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, INDIRECT OR PUNITIVE DAMAGES RESULTING FROM ANY SUCH
CAUSE; (D) SELLER SHALL NOT BE LIABLE FOR, AND PURCHASER ASSUMES LIABILITY FOR, ALL PERSONAL INJURY
AND PROPERTY DAMAGE CONNECTED WITH ITS INVESTIGATION AND EXAMINATION OF THE PURCHASED ASSETS, THE
HANDLING, TRANSPORTATION, POSSESSION, PROCESSING, FURTHER MANUFACTURE OR OTHER USE OR RESALE OF ANY
OF THE PURCHASED ASSETS AFTER THE CLOSING DATE, WHETHER SUCH PURCHASED ASSETS ARE USED OR RESOLD
ALONE OR IN COMBINATION WITH OTHER ASSETS OR MATERIALS, AND (E) PURCHASER ACKNOWLEDGES THAT EXCEPT
AS PROVIDED IN THIS AGREEMENT, THE PURCHASED ASSETS ARE BEING SOLD IN THEIR PRESENT STATE AND
CONDITION, AS IS, WHERE IS, WITH ALL FAULTS, AND PURCHASER IS PURCHASING AND ACQUIRING SUCH
PURCHASED ASSETS ON THAT BASIS PURSUANT TO PURCHASERS OWN INVESTIGATION AND EXAMINATION AFTER
HAVING BEEN PROVIDED WITH AN ADEQUATE OPPORTUNITY AND ACCESS TO SUCH PURCHASED ASSETS TO COMPLETE
SUCH INVESTIGATION OR EXAMINATION.
Section 4.26 No Material Misstatements.
To Sellers Knowledge, this Agreement does not, and, when executed and delivered at the
Closing, the other Operative Documents to which such Seller is a party and the documents or
instruments listed under Section 3.2 relating to such Seller will not, contain any material
misstatement of fact, or omit to state any material fact necessary to make statements therein, in
the light of the circumstances under which they were made, not misleading.
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Section 4.27 No Other Representations or Warranties.
Except for the representations and warranties contained in this Article IV, none of
Seller, any Affiliate of Seller or any other Person makes any representations or warranties, and
Seller hereby disclaims any other representations or warranties, whether made by Seller or any
Affiliate of Seller, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or any Seller Closing
Document, the transactions contemplated hereby or the Business, notwithstanding the delivery or
disclosure to Purchaser or its representatives of any documentation or other information with
respect to any one or more of the foregoing and notwithstanding any statements or agreements made
by Seller in the letter agreement between Seller and Plante & Moran, PLLC dated May 18, 2007.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Purchaser hereby represents and warrants to Seller that, except as set forth
in the Schedules hereto:
Section 5.1 Organization and Qualification.
Purchaser is a limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power and authority to own
or lease and operate its properties and to carry on, in all material respects, its business as
currently conducted.
Section 5.2 Corporate Authorization.
Purchaser has full limited liability company power and authority to enter into, execute and
deliver this Agreement and each other agreement, document, instrument or certificate to be executed
at the Closing by Purchaser in connection with the consummation of the transactions contemplated
hereby and thereby (all of such agreements, documents, instruments and certificates required to be
executed by Purchaser and any of its Subsidiaries being hereinafter referred to, collectively, as
the Purchaser Closing Documents), and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Purchaser of this Agreement and by Purchaser of each
Purchaser Closing Document has been duly authorized by all requisite limited liability company
action on the part of Purchaser.
Section 5.3 Consents and Approvals.
Except as set forth in Schedule 5.3, upon entry of the Approval Order and subject to
it becoming a Final Order, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body is required on the
part of Purchaser in connection with the execution and delivery of this Agreement or Purchaser
Closing Documents, the consummation of the transactions contemplated hereby and thereby or the
compliance by Purchaser with any of the provisions hereof or thereof.
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Section 5.4 Non-Contravention.
Upon entry of the Approval Order and subject to it becoming a Final Order, none of the
execution and delivery by Purchaser of this Agreement and Purchaser Closing Documents, the
consummation of the transactions contemplated hereby or thereby or the compliance by Purchaser with
any of the provisions hereof or thereof will (a) result in the breach of any provision of the
certificate of incorporation, limited liability company agreement or similar organizational
documents of Purchaser or (b) violate, result in the breach of, or constitute a default under any
Order by which Purchaser or any of their properties or assets is bound or subject.
Section 5.5 Binding Effect.
This Agreement constitutes and, when executed and delivered at the Closing, each of the
Purchaser Closing Documents will constitute, a valid and legally binding obligation of Purchaser
enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors rights and
to general equity principles (whether in equity or at law).
Section 5.6 Litigation.
As of the date hereof, there is no Legal Proceeding pending or, to the knowledge of Purchaser,
threatened in writing, against Purchaser that challenges, or questions the validity of, this
Agreement, the Purchaser Closing Documents or any action taken or to be taken by Purchaser in
connection with, or that seeks to enjoin or obtain monetary damages in respect of, the consummation
of the transactions contemplated hereby or thereby.
Section 5.7 Financing.
Purchaser has, and will have on the Closing Date, and knows of no circumstance or condition
that would reasonably be expected to prevent the availability at the Closing of, sufficient funds
to consummate the transactions contemplated by this Agreement. Purchaser has not incurred any
commitment, restriction or Liability of any kind, absolute or contingent, present or future, which
would impair or adversely affect its available resources and capabilities (financial or otherwise)
to perform its obligations hereunder and under the Transition Agreements.
Section 5.8 Brokers.
Except for Bay Tree Advisors, (Purchaser Financial Advisor), (a) no Person has acted
directly or indirectly as a broker, finder or financial advisor for Purchaser or any of its
Affiliates in connection with the negotiations relating to or the transactions contemplated hereby
and (b) no Person is entitled to any fee or commission or like payment in respect thereof from
Seller or any of its Subsidiaries based in any way on agreements, arrangements or understandings
made by or on behalf of Purchaser or any of its Affiliates. Purchaser is solely responsible for
all fees and expenses of Purchaser Financial Advisor payable in connection with the transactions
contemplated hereby.
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Section 5.9 No Inducement or Reliance; Independent Assessment.
(a) With respect to the Purchased Assets, the Business or any other rights or
obligations to be transferred hereunder or under the Transition Agreements or pursuant
hereto or thereto, Purchaser has not been induced by and has not relied upon any
representations, warranties or statements, whether express or implied, made by Seller, any
Affiliate of Seller, or any agent, employee, attorney or other representative of Seller
representing or purporting to represent Seller that are not expressly set forth herein or in
the Transition Agreements (including the Schedules and Exhibits hereto and thereto), whether
or not any such representations, warranties or statements were made in writing or orally,
and none of Seller, any Affiliate of Seller, or any agent, employee, attorney, other
representative of Seller or other Person shall have or be subject to any liability to
Purchaser or any other Person resulting from the distribution to Purchaser, or Purchasers
use of, any such information, including the Confidential Information Memorandum prepared by
Miller Buckfire & Co., LLC relating to the Business or, except as expressly provided in this
Agreement any information, documents or material made available in any data rooms or
management presentations or in any other form in expectation of the transactions
contemplated hereby.
(b) Purchaser acknowledges that it has made its own assessment of the present condition
and the future prospects of the Business and is sufficiently experienced to make an informed
judgment with respect thereto. Purchaser acknowledges that, except as explicitly set forth
herein, neither Seller nor any of its Affiliates has made any warranty, express or implied,
as to the prospects of the Business or its profitability for Purchaser, or with respect to
any forecasts, projections or business plans prepared by or on behalf of Seller and
delivered to Purchaser in connection with Purchasers review of the Business and the
negotiation and the execution of this Agreement.
(c) Purchaser is not purchasing the Purchased Assets for resale and has not entered
into negotiations to, and has no plan or intent to, sell any of the Purchased Assets outside
the ordinary course of business.
ARTICLE VI
COVENANTS OF SELLER
From and after the date hereof and until the Closing (except with respect to Section
6.6, Section 6.9 and Section 6.12, which shall survive the Closing in
accordance with their respective terms), Seller hereby covenants and agrees that:
Section 6.1 Access/Survey.
Seller shall, and shall cause its Subsidiaries to, afford to representatives of Purchaser
reasonable access to management of the Business to answer Purchasers questions concerning the
business operations and affairs of the Business, corporate records, books of accounts, Debtor
Contracts, Non-Debtor Contracts, financial statements and all other documents (excluding
confidential portions of personnel and medical records) Related to the Business reasonably
33
requested by Purchaser and shall permit Purchaser and its representatives reasonable access to
the Owned Real Property and the Leased Real Property (but excluding the Excluded Assets and
Excluded Liabilities and subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or third-party confidentiality obligation); provided, however,
that in each case, such access shall be given at reasonable times and upon reasonable prior notice
and without undue interruption to Sellers business or personnel as approved by Seller. All
requests for access shall be made to such representatives of Seller as Seller shall designate, who
shall be solely responsible for coordinating all such requests and access thereunder. In the event
that Purchaser desires to order Surveys, Purchaser and its representatives shall have access to the
Real Property to the extent necessary to complete the Surveys and Purchaser agrees to indemnify
Seller and the Selling Subsidiaries for any injuries, damages or liens resulting from Purchaser or
its representatives presence on the Real Property.
Section 6.2 Conduct of Business.
Unless otherwise ordered by the Bankruptcy Court sua sponte or on motion by a third party, and
provided that no provision of this Section 6.2 shall require a Debtor to make any payment
to any of its creditors with respect to any amount owed to such creditors on the Petition Date or
which would otherwise violate the Bankruptcy Code, until the Closing Date, Seller shall use
commercially reasonable efforts to, and shall use its commercially reasonable efforts to cause its
Subsidiaries to, solely with respect to the operation of the Business (unless Purchaser shall
otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or
delayed) or except as otherwise contemplated hereby or by any Transition Agreement or as disclosed
on Schedule 6.2), to the extent permitted by applicable Law:
(a) (i) operate in the ordinary course in all material respects consistent with past
practice, (ii) preserve its present material business operations, organization and goodwill,
and (iii) manage the level of its inventories, supplies, accounts receivable and accounts
payable in a manner reasonably consistent in all material respects with past practice;
(b) not incur any indebtedness in connection with the Business, other than (i)
indebtedness incurred in the ordinary course of business and (ii) indebtedness under the
Seller Financing;
(c) not acquire or dispose of any material property or assets used in the Business or
create or permit to exist any Lien (other than Permitted Exceptions or Liens securing
obligations under the Seller Financing) on any such property or assets except in the
ordinary course of business or with respect to property or assets not in excess of U.S.
$50,000 in the aggregate;
(d) make, or enter into commitments for, capital expenditures in excess of U.S. $50,000
individually or U.S. $100,000 in the aggregate;
(e) not enter into any Contracts in connection with the Business, except for Contracts
made in the ordinary course of business;
(f) not amend or terminate any Material Business Contract;
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(g) not amend or terminate any other Debtor Contract or Non-Debtor Contract except for
amendments or terminations made in the ordinary course of business;
(h) not engage in any transactions with, or enter into any material Contracts with, any
Affiliate of Seller in connection with the Business, except for any such transactions or
Contracts in the ordinary course of business on terms no less favorable than would be
obtained in an arms length third party transaction;
(i) not enter into, adopt, amend, increase or decrease payments or benefits under, or
terminate any Seller Employee Benefit Plan or any Contract relating to the compensation,
severance or other terms and conditions of employment of any employee employed in the
Business, except (i) in the ordinary course of business, or (ii) to the extent required by
Law or any existing Contracts, or Seller Employee Benefit Plans or (iii) to the extent
previously announced by Seller to its employees including Business Employees;
(j) enter into, amend or negotiate any collective bargaining agreement or other labor
agreement or understanding with any labor organization, including any amendment to any of
the Assumed Collective Bargaining Agreements, except:
(i) any settlement in the ordinary course of business, on an expressly
non-precedent-setting basis, of a grievance filed by a UAW union pursuant to an
Assumed Collective Bargaining Agreement involving (A) the discharge or other
discipline of a Union Business Employee where such settlement reinstates the
grievant or mitigates other discipline, in each case without backpay or other
monetary relief, or (B) the application of a work rule where such settlement
suspends such work rule without backpay or other monetary relief and without
prejudice either to the right of the Purchaser or its Affiliates to reinstate such
work rule after the Closing or the right of the UAW union to grieve any such
reinstatement;
(ii) any other settlement in the ordinary course of business of a grievance
filed by a UAW union pursuant to an Assumed Collective Bargaining Agreement to which
a representative of Purchaser or its Affiliates (the Purchaser Labor Designee)
designated in Schedule 6.2(j)(ii) consents in writing (in his or her
discretion) after the provision by Seller to such Purchaser Labor Designee of
reasonable notice and reasonable information concerning such grievance and the
proposed settlement, provided that such Purchaser Labor Designee shall be deemed to
have given such written consent if such Purchaser Labor Designee does not grant or
deny such consent in writing within seven (7) Business Days after his or her receipt
of such notice and information from Seller;
(iii) any other negotiations or agreements with the UAW entities representing
the Union Business Employees as required by the applicable Assumed Collective
Bargaining Agreement and/or Law, provided that neither the Purchaser nor any of its
Affiliates shall, or shall be deemed to, assume, be bound by or bear any of the
costs or obligations of any such negotiation, amendment or
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other agreement or understanding unless Purchaser expressly agrees in a
separate written document to assume such amendment or other agreement or
understanding, and
(iv) any extension of the term of the Columbia City Assumed Collective
Bargaining Agreement, upon the same terms and conditions of such Assumed Collective
Bargaining Agreement and with no other amendments thereto, to a new expiration date
that is no later than August 12, 2008;
(k) not accelerate the rate of collection of accounts receivable or delay the rate of
payment of accounts payable, in each case, other than in the ordinary course of business;
and
(l) not agree to take any action or actions prohibited by any of the foregoing clauses
(a) through (k).
Seller agrees to use commercially reasonable efforts to oppose any Third Party motion that would
require Seller or any of its Subsidiaries to take any action or actions that would otherwise be
prohibited under this Section 6.2 without the written consent of Purchaser.
Section 6.3 Bankruptcy Actions.
(a) Should the purchase offer made by this Agreement constitute the highest and best
offer for the Purchased Assets, the Debtors, as soon as practicable after making such
determination in accordance with the Bidding Procedures Order, shall submit to the
Bankruptcy Court an order approving this Agreement and the transactions contemplated hereby
(including the sale of the Purchased Assets free and clear of all Liens and Liabilities
except Assumed Liabilities and Permitted Exceptions), which order shall be substantially in
the form of Exhibit I hereto, together with such changes as may be approved by
Seller and Purchaser (the Approval Order).
(b) Seller shall use its reasonable best efforts to have the Bankruptcy Court enter the
Approval Order by June 22, 2007. Seller shall use its reasonable best efforts to cause the
Approval Order, as applicable, to become a Final Order as soon as possible after its entry.
Furthermore, Seller shall use its reasonable best efforts to obtain any other approvals or
consents from the Bankruptcy Court that may be reasonably necessary to consummate the
transactions contemplated in this Agreement.
(c) Seller shall promptly provide Purchaser with drafts of all documents, motions,
orders, filings, or pleadings that Seller or any Affiliate of Seller proposes to file with
the Bankruptcy Court or any other court or tribunal which relate in any manner, directly or
indirectly, to (i) this Agreement or the transactions contemplated thereby; or (ii) entry of
the Approval Order, and, if practicable, will provide the Purchaser with a reasonable
opportunity to review such documents in advance of their service and filing. To the extent
practicable, Seller shall consult and cooperate with Purchaser, and consider in good faith
the views of Purchaser, with respect to all such filings.
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(d) Seller shall comply with all notice requirements of the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure and any Order of the Bankruptcy Court in connection
with the hearing on the Approval Order.
Section 6.4 Regulatory Approvals.
(a) Except with respect to approval by the Bankruptcy Court, within five (5) Business
Days after the date hereof, Seller shall, using its commercially reasonable efforts, begin
taking all steps reasonably necessary to make all required registrations and filings with,
and obtain all necessary actions or non-actions, waivers, consents and approvals from, all
applicable Governmental Bodies in connection with the transactions contemplated by this
Agreement.
(b) Seller shall keep Purchaser reasonably apprised of the status of matters relating
to any of the matters referred to in Section 6.4(a), including promptly furnishing
Purchaser with copies of notices or other communications received by Seller or by any of its
Subsidiaries from any Governmental Body with respect to the transactions contemplated
hereby. In connection with the foregoing, Seller shall promptly furnish to Purchaser such
necessary information and reasonable assistance as Purchaser may request and shall promptly
provide counsel for Purchaser with copies of all filings made by Seller, and all
correspondence between Seller (and its advisors) with any Governmental Body and any other
information supplied by Seller and its Affiliates to a Governmental Body in connection
therewith and the transactions contemplated hereby; provided, however, that Seller may, as
it deems advisable and necessary, reasonably designate any competitively sensitive material
provided to Purchaser as outside counsel only, and materials may be redacted (i) to remove
references concerning the valuation of the Business and (ii) as necessary to comply with
contractual arrangements. Materials designated as for outside counsel only and the
information contained therein shall be given only to the outside legal counsel of Purchaser
and will not be disclosed by such outside counsel to employees, officers or directors of
Purchaser unless express permission is obtained in advance from Seller or its legal counsel.
Seller shall, subject to applicable Law, permit counsel for Purchaser reasonable
opportunity to review in advance, and consider in good faith the views of Seller in
connection with, any proposed written communication to any Governmental Body in connection
with the matters referred to in this Section 6.4. To the extent practicable, Seller
agrees to consult with the Purchaser prior to participating or permitting its Affiliates to
participate, in any substantive meeting or discussion, either in person or by telephone,
with any Governmental Body in connection herewith and, to the extent not prohibited by such
Governmental Body, agrees to give Purchaser the opportunity to attend and participate.
(c) As soon as reasonably practicable after the date hereof, the Seller shall, together
with Purchaser jointly prepare and file with the Committee on Foreign Investment in the
United States (CFIUS) a joint voluntary notice under Section 721 of the Defense Production
Act of 1950, as amended by Section 5021 of the Omnibus Trade and Competitiveness Act of
1988, 50 U.S.C. App. sec. 2170 (the Exon-Florio Amendment) with respect to the transaction
contemplated by this Agreement. Seller
37
shall provide CFIUS with any additional or supplemental information requested from
Seller by CFIUS or its member agencies during the Exon-Florio Amendment review process.
Seller shall, in cooperation with Purchaser, take all commercially reasonable steps
advisable, necessary or desirable to finally and successfully complete the Exon-Florio
Amendment review process as promptly as practicable, and in any event prior to July 31,
2007.
(d) Seller shall use its commercially reasonable efforts to provide to Purchaser a
complete list of all export control licenses and other authorizations, whether issued under
EAR or ITAR, granted to the Seller or to the Selling Subsidiaries in respect of any goods,
services or technical data exported by the Business or produced for export by the Business
since May 31. 2006. As soon as reasonably practicable after such list has been provided,
the Seller shall, together with Purchaser, prepare and file with the United States
Department of State, Directorate of Defense Trade Controls, notifications under 22 U.S.C.
§§2778-2780 of the Arms Export Control Act and the ITAR, and, in cooperation with Purchaser,
shall take all commercially reasonable steps advisable, necessary or desirable to novate all
export licenses or other authorizations, whether issued under the EAR or the ITAR,
applicable to the Business, if any.
Section 6.5 Assignment of Debtor Contracts.
(a) Seller and Purchaser shall use commercially reasonable efforts to have included in
the Approval Order an authorization for Seller to assume the Debtor Contracts and assign to
Purchaser all Debtor Contracts.
(b) Without limiting the generality of the foregoing, the Seller shall use commercially
reasonable efforts to ensure that the Approval Order provides that (1) all right, title, and
interest of the Seller under each of the Debtor Contracts included in the Purchased Assets
(the Purchased Debtor Contracts) shall, upon Closing, be transferred and assigned to and
fully and irrevocably vest in Purchaser and following Closing each such Purchased Debtor
Contract shall remain in force and effect; (2) each Purchased Debtor Contract is in full
force and effect and is an executory contract or unexpired lease of the Seller under Section
365 of the Bankruptcy Code; (3) the Seller may assume each Purchased Debtor Contract
pursuant to Section 365 of the Bankruptcy Code; (4) the Seller may assign each Purchased
Debtor Contract to Purchaser pursuant to Section 365 of the Bankruptcy code free and clear
of all Liens (other than Permitted Exceptions) and any provisions in any such Purchased
Debtor Contract which purport to prohibit or condition the assignment of such contract
constitute unenforceable anti-assignment provisions which are void and of no force or
effect; (5) all other requirements or conditions of Section 365 of the Bankruptcy Code for
the assumption by Seller and assignment to Purchaser of each Purchased Debtor Contract have
been satisfied; (6) the assignment of each Purchased Debtor Contract is in good faith under
Sections 363(b) and 363(m) of the Bankruptcy Code; and (7) the Seller gave due and proper
notice of such assumption and assignment to each party to a Purchased Debtor Contract.
(c) Seller and Purchaser shall promptly take all actions reasonably required to assist
in obtaining a Bankruptcy Court finding that there has been adequate demonstration
38
of adequate assurance of future performance under the Debtor Contracts, such as
furnishing affidavits, non-confidential financial information or other documents or
information for filing with the Bankruptcy Court and making Sellers and Purchasers
employees and representatives available to testify before the Bankruptcy Court.
Section 6.6 Cure of Defaults.
Subject to entry of the Approval Order and it becoming a Final Order, including the
authorization referred to in Section 6.5, Seller shall pay all necessary costs to cure any
and all breaches and defaults with respect to the Debtor Contracts that will be transferred to
Purchaser as and in the amounts required by the Bankruptcy Court to assume and assign the Debtor
Contracts under Section 365 of the Bankruptcy Code (the Cure Costs); provided, however, that,
notwithstanding the foregoing, Seller shall be responsible for such cure whether such defaults
occur or arise prior to or after commencement of the Cases. Seller shall pay the Cure Costs at the
Closing or, with respect to a Cure Cost which is the subject of an objection (a Cure Cost
Objection), upon resolution of such Cure Cost Objection. Purchaser will make commercially
reasonable efforts to provide adequate assurance of future performance under the Debtor Contracts
as required by Section 365 of the Bankruptcy Code.
Section 6.7 Amendment of Purchased and Excluded Assets.
Notwithstanding anything to the contrary in this Agreement or otherwise, (i) Purchaser shall
have the right through Closing to amend Schedule 1.1(e) and Schedule 1.1(f) hereto
to delete any Debtor Contract or Non-Debtor Contract that is not a Purchaser Approved Contract and
to amend Schedule 1.2(f) in a manner consistent with any such permitted amendments to
Schedules 1.1(e) and 1.1(f) and (ii) Purchaser and Seller (as mutually agreed)
shall have the right through Closing to amend Schedule 1.1(e) and Schedule 1.1(f)
hereto, to add any other Contract of the Seller or the Selling Subsidiaries that is Related to the
Business and to amend Schedule 1.2(f) in a manner consistent with any such permitted amendments to
Schedules 1.1(e) and 1.1(f). Seller shall use reasonable commercial efforts to assist Purchaser in
making any deletions or additions to Schedule 1.1(e), Schedule 1.1(f) or
Schedule 1.2(f), including, without limitation providing Purchaser with access to, and
contact and other information it possesses, with respect to all third parties to such Contracts.
Purchaser agrees and acknowledges that its right to take assignment of any Contracts added to
Schedule 1.1(e) is subject to the obligation of the Seller to give reasonable notice to
such parties to such additional contracts of the Sellers intent to assume such contracts and
assign such contracts to Purchaser.
Section 6.8 Updating of Information.
Except with respect to environmental matters, which shall be governed by Section 11.5
below, the parties agree that, if between the date hereof and the Closing Date, Seller obtains
knowledge of any facts or circumstances that result in, or if in existence on the Closing Date,
would reasonably be expected to result in, a material breach of any representation or warranty by
Seller, Seller will notify Purchaser in writing reasonably promptly after learning of such facts or
circumstances. To the extent that any such breach can result in, or would reasonably be expected
to result in, a Material Adverse Effect, Seller shall have 20 calendar days within which to notify
Purchaser that Seller has cured or is proceeding to cure such breach or potential breach or that
39
Seller does not intend to cure such breach or potential breach. If Seller notifies Purchaser
that it is proceeding to cure such breach or potential breach, then Purchaser shall not be entitled
to terminate this Agreement for 20 days following receipt of such notice. If Seller notifies the
Purchaser that it does not intend to cure such breach or potential breach or that despite its
diligent efforts Seller has been unable to effect a cure and is ceasing to pursue a cure, or if
Seller is unable to cure such breach during such 20 day period, then the provisions of Section
13.1(b)(i) will apply. If Purchaser does not terminate this Agreement pursuant to Section
13.1(b)(i) and the Closing occurs, the schedules hereto shall be amended as necessary to
reflect the facts underlying such breach or potential breach and Purchaser shall have no rights
against Seller pursuant to Article XI in respect of such breach or potential breach.
Section 6.9 Litigation Support.
In the event and for so long as Purchaser actively is contesting or defending against any
action, investigation, charge, claim, or demand by a third party in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or
transaction involving the Business, Seller will cooperate with Purchaser and its counsel in the
contest or defense, make available its personnel, and provide such testimony and access to its
books, records and other materials as shall be reasonably necessary in connection with the contest
or defense, all at the sole cost and expense of Purchaser (unless Purchaser is entitled to
indemnification therefor under Article XI).
Section 6.10 Transition Agreements.
At the Closing, Seller, or such of its Subsidiaries as appropriate, shall enter into
agreements substantially in the form of Exhibit J relating to applicable transition
services, each as listed on Schedule 6.10 (collectively, the Transition Agreements).
Section 6.11 Consents and Conditions.
Seller shall use its reasonable best efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with Purchaser in doing, all things
necessary, to consummate and make effective the transactions contemplated hereby as promptly as
practicable, including, but not limited to: (i) obtaining all necessary consents, approvals or
waivers from, and giving any necessary notifications to, third parties; (ii) making all required
registrations and filings with, and obtaining all necessary actions or non-actions, waivers,
consents and approvals from, all Governmental Bodies and taking all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, a Governmental Body;
(iii) assisting Purchaser or its designees in obtaining all Permits referred to in Section
8.9; and (iv) defending any Legal Proceedings challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or temporary restraining
order or preliminary or permanent injunction entered by any Governmental Body vacated or reversed.
40
Section 6.12 Further Actions.
(a) Whether before, at or after the Closing, Seller shall, and shall cause its
Subsidiaries to, execute and deliver such instruments and take such other actions as may
reasonably be required to (i) carry out the intent hereof and of the Transition Agreements
and (ii) consummate the transactions contemplated hereby and thereby including the taking of
all acts necessary to cause the conditions to Closing to be satisfied as promptly as
possible. Prior to the Closing Date, Seller agrees to negotiate the Transition Agreements
in good faith with Purchaser
(b) Seller shall give any notices required by Law and shall take whatever other actions
with respect to the employee plans of Seller as may be necessary to effectuate the
arrangements set forth in Sections 10.1 through 10.4.
ARTICLE VII
COVENANTS OF PURCHASER
From and after the date hereof and until the Closing (except with respect to Sections
7.4, 7.5, and 7.7, which shall survive the Closing in accordance with their
terms), Purchaser hereby covenants and agrees that:
Section 7.1 Contact with Customers, Suppliers and Employees.
Without the prior consent of Seller (acting in accordance with its obligations set forth in
Sections 6.1 and Section 10.1(b)), Purchaser shall not contact any suppliers to, or
customers of, the Business or any Business Employees (other than those listed on Schedule
15.77) in connection with or pertaining to any subject matter of this Agreement or the
Transition Agreements.
Section 7.2 Bankruptcy Actions.
Purchaser shall use its commercially reasonable efforts to assist Seller in obtaining entry of
the Approval Order, including providing testimony as required at any hearing before the Bankruptcy
Court.
Section 7.3 Consents and Conditions.
(a) Purchaser shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with Seller in doing,
all things necessary, to consummate and make effective the transactions contemplated hereby
as promptly as practicable, including, but not limited to: (i) obtaining all necessary
consents, approvals or waivers from, and giving any necessary notifications to, third
parties; (ii) making all required registrations and filings with, and obtaining all
necessary actions or non-actions, waivers, consents and approvals from, all Governmental
Bodies and taking all steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, a Governmental Body; (iii)
41
obtaining all Permits referred to in Section 8.9; (iv) defending any Legal
Proceedings challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order or preliminary or
permanent injunction entered by any Governmental Body vacated or reversed; and (v) promptly
concluding the arrangements referred to in Section 8.11. Without limiting the
generality of the foregoing, Purchaser shall (i) take all actions within Purchasers control
to cause the condition to Closing set forth in Section 8.9 to be satisfied prior to
July 31, 2007 and (ii) negotiate in good faith and otherwise use its reasonable best efforts
to cause the condition to closing in Section 8.11 to be satisfied, prior to July 31,
2007.
(b) Purchaser shall keep Seller reasonably apprised of the status of matters relating
to any of the matters referred to in Section 7.3, including promptly furnishing
Seller with copies of notices or other communications received by Purchaser or by any of its
Subsidiaries from any Governmental Body with respect to the transactions contemplated
hereby. In connection with the foregoing, Purchaser shall promptly furnish to Seller such
necessary information and reasonable assistance as Seller may request and shall promptly
provide counsel for Seller with copies of all filings made by Purchaser, and all
correspondence between Purchaser (and its advisors) with any Governmental Body and any other
information supplied by Purchaser and its Affiliates to a Governmental Body in connection
therewith and the transactions contemplated hereby; provided, however, that Purchaser may,
as it deems advisable and necessary, reasonably designate any competitively sensitive
material provided to Seller as outside counsel only, and materials may be redacted (i) to
remove references concerning the valuation of the Business and (ii) as necessary to comply
with contractual arrangements. Materials designated as for outside counsel only and the
information contained therein shall be given only to the outside legal counsel of Seller and
will not be disclosed by such outside counsel to employees, officers or directors of Seller
unless express permission is obtained in advance from Purchaser or its legal counsel.
Purchaser shall, subject to applicable Law, permit counsel for Seller reasonable opportunity
to review in advance, and consider in good faith the views of Purchaser in connection with,
any proposed written communication to any Governmental Body in connection with the matters
referred to in this Section 7.3. To the extent practicable, Purchaser agrees to
consult with the Seller prior to participating or permitting its Affiliates to participate,
in any substantive meeting or discussion, either in person or by telephone, with any
Governmental Body in connection herewith and, to the extent not prohibited by such
Governmental Body, agrees to give Seller the opportunity to attend and participate.
(c) As soon as reasonably practicable after the date hereof, the Purchaser shall,
together with Seller, jointly prepare and file with the CFIUS a joint voluntary notice under
the Exon-Florio Amendment with respect to the transaction contemplated by this Agreement.
The Purchaser shall provide CFIUS with any additional or supplemental information requested
from Purchaser by CFIUS or its member agencies during the Exon-Florio Amendment review
process. The Purchaser shall, in cooperation with Seller, take all commercially reasonable
steps advisable, necessary or desirable to finally and successfully complete the Exon-Florio
Amendment review process as promptly as practicable and in any event prior to July 31, 2007.
42
(d) As soon as reasonably practicable after receipt of the list referred to in
Section 6.4(d), the Purchaser shall, together with Purchaser, prepare and file with
the United States Department of State, Directorate of Defense Trade Controls, notifications
under 22 U.S.C. §§2778-2780 of the Arms Export Control Act and the ITAR, and, in cooperation
with Purchaser, shall take all commercially reasonable steps advisable, necessary or
desirable to novate all export licenses or other authorizations, whether issued under the
EAR or the ITAR, applicable to the Business, if any.]
Section 7.4 Further Actions.
(a) Whether before, at or after the Closing, Purchaser shall execute and deliver such
instruments and take such other actions as may reasonably be required to (i) carry out the
intent hereof and of the Transition Agreements and (ii) consummate the transactions
contemplated hereby and thereby including the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as possible. From the execution hereof
until the Closing, Purchaser undertakes to promptly notify Seller of any known breach of any
representation, warranty or covenant of Seller or any circumstance or condition that could
reasonably be expected to constitute such a breach. Prior to the Closing Date, Purchaser
agrees to negotiate the Transition Agreements in good faith with Seller.
(b) Purchaser shall give any notices required by Law and shall take whatever other
actions with respect to the employee plans of Purchaser as may be necessary to effectuate
the arrangements set forth in Sections 10.1 through 10.4.
Section 7.5 [Intentionally Omitted.]
Section 7.6 Use of Sellers Name.
Purchaser agrees that:
(a) within 90 days after the Closing Date, Purchaser shall remove Dana, the Dana
Diamond logo and any other similar mark (the Seller Name) and any other Trademark, trade
dress, design or logo previously or currently used by Seller or any of its Affiliates that
is not part of the Purchased Intellectual Property from all web sites, buildings, signs and
vehicles of the Business;
(b) within 120 days after the Closing Date, Purchaser shall remove and cease using the
Excluded Intellectual Property and the Seller Name and any other Trademark, trade dress,
design or logo previously or currently used by Seller or any of its Affiliates that is not
part of the Purchased Intellectual Property in all invoices, letterhead, domain names and
web sites, packaging, advertising and promotional materials, office forms, business cards
and other written and electronic materials;
(c) within 120 days after the Closing Date (i) Purchaser shall remove and cease using
the Confetti Design Packaging from the inventory of packaging materials and marketing
materials of the Business that is in existence as of the Closing Date (Existing
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Inventory) and (ii) Purchaser shall remove and cease using the Seller Name and any
other Trademark, trade dress, design or logo previously or currently used by Seller or any
of its Affiliates that is not part of the Purchased Intellectual Property from those assets
of the Business that are not Existing Inventory, including those assets (such as, but not
limited to, tools, molds and machines) used in association with the manufacture of the
products of the Business or otherwise reasonably used in the conduct of the Business after
the Closing Date (such assets, Other Marked Assets);
(d) In no event shall Purchaser or any Affiliate of Purchaser advertise or hold itself
out as Seller or an Affiliate of Seller at any time before, on or after the Closing Date;
and
(e) As soon as reasonably practicable after the Closing Date, but in no event later
than 90 days following the Closing Date, Purchaser shall change all filings, licenses, and
other items, to the extent applicable, to delete any references to Dana and the Excluded
Intellectual Property.
Section 7.7 Litigation Support.
In the event and for so long as Seller actively is contesting or defending against any action,
investigation, charge, claim, or demand by a third party in connection with (a) any transaction
contemplated under this Agreement or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Business, or the Seller and its Subsidiaries (including,
without limitation, with respect to reconciliation of claims in connection with the Cases),
Purchaser will cooperate with Seller and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books, records and other materials as shall
be reasonably necessary in connection with the contest or defense, all at the sole control, cost
and expense of Seller (unless Seller is entitled to indemnification therefor under Article
XI).
Section 7.8 Transition Agreements.
At the Closing, Purchaser, or such of its Subsidiaries as appropriate, shall enter into the
Transition Agreements.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASERS OBLIGATIONS
The obligation of Purchaser to consummate the transactions contemplated hereby on the Closing
Date is subject to the satisfaction (or, if permitted, waiver by Purchaser in its sole discretion)
of each of the following conditions:
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Section 8.1 Accuracy of Representations and Warranties.
Each of the representations and warranties of Seller contained herein (without regard to any
reference to materiality or Material Adverse Effect set forth therein) shall be true and correct in
all respects at and as of the Closing Date, (except, in each case, to the extent any such
representation or warranty speaks as of a specific date, in which case such representation or
warranty shall be true and correct as of such specific date); except and excluding, and without
regard to, any breach or breaches of one or more of such representations and warranties (without
regard to any reference to materiality or Material Adverse Effect set forth therein) that, in the
aggregate, do not have and are not reasonably expected to have a Material Adverse Effect.
Section 8.2 Performance of Covenants.
Seller shall have performed and complied, in all material respects, with each of the covenants
and provisions hereof required to be performed or complied with by it between the date hereof and
the Closing Date.
Section 8.3 No Injunctions.
No preliminary or permanent injunction or other order of any court of competent jurisdiction
restraining or prohibiting the consummation of the transactions contemplated hereby shall be in
effect.
Section 8.4 Entry of Order By Bankruptcy Court; Material Business Contracts.
(a) The Bankruptcy Court shall have entered the Approval Order and it shall have become
a Final Order.
(b) The Approval Order shall authorize the assumption and assignment of each Material
Business Contract to Purchaser and with respect to each Material Business Contract shall
contain the authorizations and findings set forth in Section 6.5.
Section 8.5 Consents.
All consents set forth on Schedule 8.5 shall have been obtained.
Section 8.6 Officers Certificate.
Purchaser shall have received a certificate from Seller to the effect set forth in
Sections 8.1, 8.2 and 8.8, dated the Closing Date, signed on behalf of
Seller by an authorized officer of Seller.
Section 8.7 Other Deliveries.
Purchaser shall have received the documents and instruments required by Section 3.2
and such other documents or instruments as Purchaser may reasonably request consistent with
Sellers obligations under this Agreement.
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Section 8.8 No Material Adverse Effect.
Between the date hereof and the Closing Date, there shall have been no Material Adverse
Effect.
Section 8.9 Mexican Permits.
All Permits required to operate the Business in all material respects as currently operated in
Mexico (including the registration as a maquiladora under the applicable regulations of Mexico)
which are not permitted by applicable Law to be transferred, shall have been obtained by Purchaser
or its designees.
Section 8.10 Exon-Florio.
CFIUS shall have determined, at the end of the initial 30-day review period (or any additional
investigation period that may be required by CFIUS), that no further investigation of the
transaction contemplated hereby is required.
Section 8.11 SLP II.
Purchaser (or its designees) shall have entered into arrangements with Orhan Holdings, A.S.
(or its Affiliates) that are reasonably satisfactory, in all material respects, to Purchaser with
respect to the continued use by the Business, for a reasonable period of time after the Closing
Date, of the facilities and related services currently used by the Business at the facility
referred to as San Luis Potosi, Mexico II.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLERS OBLIGATIONS
The obligation of Seller to consummate the transactions contemplated hereby on the Closing
Date is subject to the satisfaction (or, if permitted, waiver by Seller in its sole discretion) of
each of the following conditions:
Section 9.1 Accuracy of Representations and Warranties.
Each of the representations and warranties of Purchaser contained herein that is qualified as
to material adverse effect shall be true and correct in all respects at and as of the Closing Date
with the same force as if made on and as of the Closing Date, and each of the representations and
warranties of Purchaser contained herein that is not so qualified shall be true and correct in all
material respects at and as of the Closing Date with the same force as if made on and as of the
Closing Date (except, in each case, to the extent any such representation and warranty speaks as of
a specific date, in which case such representation and warranty shall be true and correct, or true
and correct in all material respects, as the case may be, as of such specific date).
46
Section 9.2 Performance of Covenants.
Purchaser shall have performed and complied, in all material respects, with each of the
covenants and provisions hereof required herein to be performed or complied with by it between the
date hereof and the Closing Date.
Section 9.3 No Injunctions.
No preliminary or permanent injunction or other order of any court of competent jurisdiction
restraining or prohibiting the consummation of the transactions contemplated hereby shall be in
effect.
Section 9.4 Entry of Order By Bankruptcy Court.
The Bankruptcy Court shall have entered the Approval Order and it shall have become a Final
Order.
Section 9.5 Consents.
All consents set forth on Schedule 9.5 shall have been obtained.
Section 9.6 Officers Certificate.
Seller shall have received a certificate from Purchaser to the effect set forth in
Sections 9.1 and 9.2, dated the Closing Date, signed by an authorized officer of
Purchaser.
Section 9.7 Other Deliveries.
The Seller shall have received the documents and instruments required by Section 3.3
and such other documents as Seller may reasonably request consistent with Purchasers obligations
under this Agreement.
ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
Section 10.1 Transferred Employees.
(a) Prior to the Closing Date, Purchaser (or one of its Affiliates) shall offer
employment (each such offer contingent upon the Closing, entry of the Approval Order and it
becoming a Final Order) to:
(i) all but up to 15 percent of the regular, non-temporary salaried Business
Employees employed at Sellers Rochester Hills, Michigan facility, Wharton, Ohio
facility, Upper Sandusky, Ohio facility, Columbia City, Indiana facility or
Pensacola, Florida facility; it being understood that Purchaser and its Affiliates
may select the specific Business Employees at such facilities to receive offers in
its discretion from among the foregoing employee groups (all such
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salaried Business Employees who receive offers from Purchaser or its Affiliates
collectively referred to as the Salaried Business Employees); and
(ii) all but up to 10 percent of the regular, non-temporary hourly Business
Employees employed at Sellers Wharton, Ohio facility and all but up to 10 percent
of the regular, non-temporary hourly Business Employees employed at Sellers
Pensacola, Florida facility who, in each case, are not represented by a labor union;
it being understood that Purchaser and its Affiliates may select the specific
Business Employees at each such facility to receive offers in its discretion from
among the foregoing employee groups (all such hourly Business Employees who receive
offers from Purchaser or its Affiliates collectively referred to as the Hourly
Business Employees, and together with the Salaried Business Employees, the
Non-Union Business Employees); and
(iii) all Business Employees who are represented by a labor union under one of
the Assumed Collective Bargaining Agreements (the Union Business Employees);
provided, however, that Purchaser (or its Affiliates) shall only be obligated to extend
offers, subject to the terms and conditions of this Section 10.1, to those Salaried
Business Employees, Hourly Business Employees and Union Business Employees who in each case:
(I) are actively employed as of the Closing Date or are absent from
employment due to vacation or temporary illness (the Current Employees);
or
(II) (A) are absent from work due to short or long-term disability,
workers compensation or work related injury schemes, military leave or
other authorized leave of absence or lay off as of the Closing Date and (B)
have the right to return to employment with the Business following
expiration of such absence under applicable Law or under the terms of any
Assumed Collective Bargaining Agreement (the Leave Employees and, together
with the Current Employees, the Closing Date Business Employees).
Any such offers of employment that Purchaser makes (or has one of its Affiliates make) shall
be made in accordance with the provisions of this Section 10.1. Neither Purchaser
nor any of its Affiliates shall have any obligation to offer employment to any other Person.
(b) Subject to the approval of Seller (such approval not to be unreasonably withheld),
Purchaser and its Affiliates shall be permitted, within a reasonable period prior to the
Closing Date, to interview Business Employees described in Section 10.1(a) for
purposes of considering such Persons for employment with Purchaser or its Affiliates after
the Closing Date and may discuss terms of post-Closing employment with such Persons.
48
(c) Each offer of employment (i) to a Non-Union Business Employee (A) shall be at a
base salary or other base wage, as applicable, not less than the base salary or other base
wage paid to such Employee immediately prior to the Closing Date (or in the case of a
Non-Union Business Employee who is a Leave Employee, immediately prior to the commencement
of such Leave Employees absence from work), unless in each case, a higher base salary or
other base wage is required by Law, and (B) shall have similar skill requirements to the
Non-Union Business Employees position immediately prior to the Closing Date, and (ii)
solely for offers to Hourly Business Employees (but not for offers to Salaried Business
Employees), also shall be located no more than fifty (50) miles from such Hourly Business
Employees work location immediately prior to the Closing Date. During the six (6) month
period immediately following the Closing Date, for so long as a Non-Union Transferred
Employee continues in employment with Purchaser or one of its Affiliates during such period,
if at all, Purchaser shall continue to abide by the requirements of subparts (i)(A) and
(i)(B) of the preceding sentence for Salaried Business Employees and by the requirements of
subparts (i)(A), (i)(B) and (ii) of the preceding sentence for Hourly Business Employees,
provided that nothing herein limits the Purchasers right to terminate Non-Union Business
Employees pursuant to Section 10.1(l) below. Purchaser and its Affiliates retain
the sole discretion to determine the benefits and other terms and conditions of employment
to be offered or provided to any and all Non-Union Transferred Employees, and nothing in the
Agreement shall be interpreted as requiring Purchaser or its Affiliates to offer or provide
any minimum level of benefits or other terms and conditions of employment, except to the
extent required by Law.
(d) The Non-Union Business Employees who each timely accepts an offer of employment
from Purchaser (or one of its Affiliates) shall be referred to herein as Non-Union
Transferred Employees. The Union Business Employees who each timely accepts an offer of
employment from Purchaser (or one of its Affiliates) shall be referred to herein as Union
Transferred Employees. The Union Transferred Employees and the Non-Union Transferred
Employees shall collectively be referred to as the Transferred Employees. A Current
Employee who receives an offer of employment from Purchaser (or one of its Affiliates) must
accept such offer of employment on or within ten (10) days of such offer or within ten (10)
Business Days of the Closing, if later; otherwise said Business Employee will be deemed
never to have become a Transferred Employee. Notwithstanding the preceding sentence, a
Current Employee who receives an offer of employment from Purchaser (or one of its
Affiliates) and who arrives at his or her then applicable place of employment in the
Business on the first Business Day immediately following the Closing Date shall be deemed
for all purposes of this Agreement to have accepted such offer of employment from Purchaser
(or its Affiliate) hereunder. Each Current Employee who receives and timely accepts an
offer of employment from Purchaser (or one of its Affiliates) shall become an employee of
Purchaser (or one of its Affiliates) as of the Closing Date. Each Leave Employee who
receives an offer of employment from Purchaser (or one of its Affiliates) must accept such
offer of employment on or within ten (10) Business Days before the date of his or her
cessation of leave or layoff and shall following timely acceptance of such offer of
employment become a Transferred Employee of Purchaser (or one of its Affiliates) as of his
or her
49
commencement of active employment, provided that: (i) such commencement of active
employment occurs within 12 months after the Closing Date, or, if later, such date as his or
her reemployment rights under any applicable Law or Assumed Collective Bargaining Agreement
may expire; and (ii) such Leave Employees former position at his or her former site of
employment has not been eliminated at or prior to his or her return to work, except as
otherwise required by applicable Law or an Assumed Collective Bargaining Agreement;
otherwise said Leave Employee will be deemed never to have become a Transferred Employee.
Seller shall remain responsible for any such Leave Employees for any period before they
become Transferred Employees, and shall inform Purchaser if any such Leave Employees
notifies Seller before closing that they are ready to commence employment with Purchaser or
its Affiliates.
(e) Effective as of the Closing Date, Purchaser shall, or shall cause one or more of
its Affiliates to (in each case contingent upon the Closing, entry of the Approval Order and
it becoming a Final Order): (x) assume the Assumed Collective Bargaining Agreements as
provided in Section 1.3 to the extent they are in effect as of the Closing Date; and
(y) recognize the UAW parties to the Assumed Collective Bargaining Agreements as the
collective bargaining representatives of the Union Transferred Employees covered by such
Assumed Collective Bargaining Agreements, in each case without waiving any of Purchasers or
Affiliates rights under applicable Law. Purchaser shall (in each case contingent upon the
Closing, entry of the Approval Order and it becoming a Final Order): (i) recognize the Union
Transferred Employees existing seniority with Seller or its Affiliates, as applicable,
under the Assumed Collective Bargaining Agreements for purposes of such agreements, and (ii)
provide those Union Transferred Employees who are covered by any such Assumed Collective
Bargaining Agreement immediately prior to the Closing Date with the Assumed Benefit Plans
(as described in Section 10.3 below) and with such other compensation and benefits
as may be required by the terms of the Assumed Collective Bargaining Agreements, as in
effect or amended, except as otherwise permitted by Law or as is consented to by any labor
organization that is a party to any Assumed Collective Bargaining Agreement.
Notwithstanding the foregoing or any other provision of this Agreement, Purchaser or one or
more of its Affiliates shall have the opportunity to negotiate with the applicable UAW union
prior to the Closing regarding establishment by the Purchaser, or one or more of its
Affiliates of (A) a defined contribution plan intended to provide benefits for periods
after the Closing Date to Union Transferred Employees employed as of the Closing at Sellers
Upper Sandusky, Ohio facility that are materially consistent with the benefits described for
such employees in the Sellers Upper Sandusky Union Defined Contribution Plan (Purchaser
Upper Sandusky Defined Contribution Plan), and (B) one or more defined benefit plans
intended to provide pension benefits to Union Transferred Employees with respect to service
performed by such employees for Purchaser and its Affiliates after the Closing that are
materially consistent with the pension benefits described in the Assumed Collective
Bargaining Agreements (Purchaser Union Pension Plans). Purchaser and its Affiliates shall
not assume any defined contribution plans maintained by Seller or any of its Affiliates
(other than the one defined contribution Plan for Union Transferred Employees at the
Sellers Columbia City, Indiana facility that is an Assumed Benefit Plan), or any defined
benefit pension plans maintained by Seller or any
50
of its Affiliates, in each case in which any of the Union Transferred Employees
participates immediately prior to Closing (such defined benefit pension plans referred to as
the Seller Union Pension Plans).
(f) Purchaser or its Affiliates shall provide the Non-Union Transferred Employees and
their respective eligible dependents with medical, dental, prescription drug and other
welfare benefits (the Purchaser Welfare Plans), and such retirement benefits (the
Purchaser Retirement Plans) under the Purchaser Welfare Plans and Purchaser Retirement
Plans as Purchaser, in its sole discretion, may determine.
(i) The Purchaser Welfare Plans shall (i) treat the Non-Union Transferred
Employees and their respective eligible dependents as eligible to participate in the
Purchaser Welfare Plans immediately upon the Closing Date to the same extent such
Non-Union Transferred Employees and their respective eligible dependents were so
eligible under the comparable Seller Employee Benefit Plan immediately prior to the
Closing Date and (ii) give to the Non-Union Transferred Employees and their
respective eligible dependents credit under the Purchaser Welfare Plans for service
with Seller and its Affiliates prior to the Closing Date to the extent such credit
was given under the comparable Seller Employee Benefit Plans immediately prior to
the Closing Date. Such credit for service shall be given for purposes of
eligibility to participate, eligibility for benefits and satisfaction of any waiting
periods under the Purchaser Welfare Plans.
(ii) Each Non-Union Transferred Employee shall be eligible to participate in
the Purchaser Retirement Plans immediately upon the Closing Date to the same extent
such Non-Union Transferred Employees were so eligible under the comparable Seller
Employee Benefit Plan and shall, except as provided below, be given credit under the
Purchaser Retirement Plans for all service prior to the Closing Date to the extent
such credit was given under the analogous Seller Employee Benefit Plans immediately
prior to the Closing Date. Such credit for service shall be given for purposes of
eligibility to participate, vesting, eligibility for early retirement, and for all
other purposes for which such service is either taken into account or recognized,
other than for benefit accrual purposes.
(g) Purchaser shall honor all unpaid accrued but unused vacation, personal days,
floating holidays, sick pay and other leave of the Union Transferred Employees as of the
Closing Date, to the extent reflected as a liability in the Closing Statement of Net Assets
(it being understood that Seller and its Affiliates shall not also be required to indemnify
Purchaser or its Affiliates for such amounts pursuant to Section 11.2). Seller
agrees that all unpaid accrued but unused vacation, personal days, floating holidays, sick
pay and other leave of the Non-Union Transferred Employees as of the Closing Date shall be
Sellers responsibility, and Seller shall, to the extent required by applicable local Law,
pay out such unpaid accrued but unused vacation, personal days, floating holidays, sick pay
and other leave to the Non-Union Transferred Employees promptly following the
51
Closing Date (it being understood that Seller and its Affiliates shall not also be
required to indemnify Purchaser or its Affiliates for such amounts pursuant to Section
11.2(a)(iv)).
(h) Without limiting any other provision of this Agreement, Seller and its Affiliates
shall bear and be solely responsible for, and Purchaser and its Affiliates shall have no
responsibility for, any and all Liabilities arising out of or relating to:
(i) Any Non-Union Business Employees who do not become Transferred Employees
(including those who do not receive offers of employment from Purchaser or one of
its Affiliates as permitted under this Agreement or who do not accept offers of
employment from Purchaser or one of its Affiliates, provided that such offer of
employment complies with the requirement of Section 10.1(c) above (Purchaser
shall be given a reasonable opportunity to cure any alleged noncompliance after any
discovery thereof with a complying offer), or in the case of Non-Union Business
Employees who are Leave Employees, who do not commence active employment in the
Business with the Purchaser or one of its Affiliates within the period set forth in
Section 10.1(d)), whether any such Liabilities arise prior to, on or after
the Closing Date, including in each case any severance and retention payments and
other monetary or non-monetary obligations;
(ii) Any Union Business Employees who do not accept offers of employment from
Purchaser or one of its Affiliates, provided that such offer of employment complies
with the requirement of Section 10.1(c) and the applicable terms of the
Assumed Collective Bargaining Agreement (Purchaser shall be given a reasonable
opportunity to cure any alleged noncompliance after any discovery thereof with a
complying offer), or in the case of Union Business Employees who are Leave
Employees, who do not commence active employment in the Business with the Purchaser
or one of its Affiliates within the period set forth in Section 10.1(d)),
whether any such Liabilities arise prior to, on or after the Closing Date, including
in each case any severance and retention payments and other monetary or non-monetary
obligations and all Liabilities with respect to any such Union Business Employees
under any of the Assumed Collective Bargaining Agreements;
(iii) The transfer of employment from Seller (or its Affiliates) to Purchaser
(or its Affiliates) of any of the Transferred Employees, including any severance,
notice and retention payments (other than pursuant to Section 11.2(b)) and
other monetary or non-monetary Liabilities to which any such Transferred Employees
may be or become entitled from Seller (or its Affiliates) in connection with such
transfers or as a result of the execution and delivery by Seller of this Agreement
and the Seller Closing Documents, the consummation of the transactions contemplated
hereby or compliance by Seller or its Subsidiaries with any of the provisions
hereof, except that Purchaser (or its Affiliates) shall be responsible for any such
Liabilities to Union Transferred Employees that arise
52
under the Assumed Collective Bargaining Agreements but may seek indemnification
from Seller for such Liabilities pursuant to Section 11.2;
(iv) Any Seller Employee Benefit Plan other than an Assumed Benefit Plan,
including all Liabilities under any Seller Union Pension Plans;
(v) Any Contract (other than the Assumed Collective Bargaining Agreements to
the extent provided above) between Seller or any of its Affiliates and any
Transferred Employee or former Business Employee, including the Retention Agreements
and any other employment, compensation, commission, bonus, benefit, retention,
severance, separation or other agreement with or for the benefit of any Transferred
Employee or any former Business Employee;
(vi) Any grievances, arbitrations or unfair labor practice charges filed or
arising before the Closing Date with respect to any of the Union Transferred
Employees (subject to Purchasers responsibility under Section 10.1(h)(i)
for any non-monetary relief granted pursuant to grievances, arbitrations, or unfair
labor practice charges arising from events that occur prior to the Closing Date),
and any alleged violation of Law (including all Laws pertaining to employment,
discrimination, workers compensation, occupational safety and health, and unfair
labor practices), subject to Section 10.1(k) below, if such alleged
violation occurred before the Closing Date;
(vii) The entire or partial closure or cessation of operations at, or reduction
in workforce at, any facility, location or other site of employment of the Seller or
any of its Affiliates (whether or not relating to the Business) at any time prior to
the Closing Date, including without limitation the former facilities located in
Mitchell, Indiana and Andrews, Indiana, including any Liabilities under the WARN Act
relating to such closure or cessation of operations; and
(viii) To the extent not addressed in the foregoing provisions of this
Section 10.1(h), Liabilities to the extent such Liabilities are Excluded
Liabilities or are not assumed by Purchaser or its Affiliates under Sections
10.1 through 10.4.
(i) The Purchaser or its Affiliates, as applicable, shall be solely responsible on and
after the Closing Date for the terms and conditions of employment with Purchaser or its
Affiliates of all Transferred Employees and for any change thereof. As to any Transferred
Employee that Purchaser terminates after the Closing Date, Purchaser shall be solely
responsible for satisfying any requirements applicable to such termination under any
applicable Laws and, subject to Section 10.1(j) below, with respect to each
Transferred Employee, Purchaser shall be solely responsible for all Liabilities for (i) any
Assumed Benefit Plan or Purchaser Welfare Plan or Purchaser Retirement Plan; (ii) any
grievances, arbitrations or unfair labor practice charges filed and arising after the
Closing Date with respect to acts or omissions of Purchaser or any of its Affiliates
occurring after the Closing Date; (iii) any non-monetary relief granted with respect to any
of the Union Transferred Employees pursuant to grievances, arbitrations or unfair labor
practice
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charges arising from events that occur prior to the Closing Date (it being understood
that Seller and its Affiliates shall not also be required to indemnify Purchaser or its
Affiliates for such amounts pursuant to Section 11.2); and (iv) any alleged
violation of Law by Purchaser or any of its Affiliates (including, all Laws pertaining to
employment, discrimination, workers compensation, occupational safety and health, unfair
labor practices, and WARN Act violations), if such alleged violation occurred after the
Closing Date.
(j) With respect to any and all Liabilities arising under the WARN Act: (i) Purchaser
shall be solely responsible for such Liabilities with respect to Transferred Employees (but
not any other Business Employees or any other Persons) if such Liabilities arise solely as a
result of a mass layoff, plant closing or similar event under the WARN Act conducted by
Purchaser or any of its Affiliates after the Closing and not as a result of the aggregation
of actions or omissions of Purchaser or its Affiliates after the Closing with actions or
omissions of Seller or its Affiliates prior to or after the Closing, (ii) Seller shall be
solely responsible for such Liabilities with respect to Transferred Employees and any other
Business Employees and Persons if such Liabilities arise as a result of a mass layoff,
plant closing or similar event under the WARN Act conducted by Seller or any of its
Affiliates prior to or after the Closing, but, solely in the case of such Liabilities with
respect to Transferred Employees, only if any actions or omissions of Purchaser or its
Affiliates with respect to such Transferred Employees after the Closing would not
independently constitute a mass layoff, plant closing or similar event under the WARN
Act if considered alone, and (iii) in the event that any WARN Act Liabilities arise as a
result of the aggregation of actions or omissions of Purchaser or its Affiliates with
respect to Transferred Employees after the Closing with any actions or omissions of Seller
or its Affiliates prior to or after the Closing, and neither Sellers and its Affiliates
actions or omissions prior to or after the Closing, if considered alone, nor Purchasers and
its Affiliates actions or omissions after Closing, if considered alone, would independently
constitute a mass layoff, plant closing or similar event under the WARN Act, then Seller
and its Affiliates shall be responsible for any and all such Liabilities to any Business
Employees (other than Transferred Employees) and other Persons, and, provided that Seller
and its Affiliates are in compliance with Section 4.13(b) above, Purchaser and its
Affiliates shall be responsible for any and all such Liabilities to any Transferred
Employees (but not any other Business Employees or any other Persons).
(k) Seller and its Affiliates shall be responsible for (and neither Purchaser nor its
Affiliates are assuming) all Liabilities for workers compensation, occupational health and
safety, occupational disease and occupational injury claims with respect to the Transferred
Employees for any injury or illness occurring prior to the Closing (even if a claim for such
an injury or illness is filed after the Closing). Purchaser and its Affiliates shall be
responsible for all Liabilities for workers compensation, occupational health and safety,
occupational disease and occupational injury claims with respect to the Transferred
Employees for any injury or illness occurring after the Closing. In the event that workers
compensation, any occupational health and safety, occupational disease and occupational
injury claim filed after the Closing Date by, on behalf of or with respect to
54
the Transferred Employees arises out of any injury or illness that occurred, arose,
progressed, was contributed to or was aggravated in part before and in part after the
Closing: (i) Liabilities for such workers compensation, occupational health and safety,
occupational disease and occupational injury claims shall be reasonably apportioned to
Seller and its Affiliates based on the duration and extent of the injured workers exposure
to the cause of such injury or illness prior to Closing (the Seller Portion), and to
Purchaser and its Affiliates based on the duration and extent of the injured workers
exposure to the cause of such injury or illness after Closing, and (ii) Seller and its
Affiliates shall indemnify and hold harmless Purchaser, its Affiliates and the other members
of the Purchaser Indemnified Group from and against any and all such Seller Portion
Liabilities pursuant to Section 11.2(a)(iv).
(l) Nothing in this Agreement shall prevent the Purchaser or any of its Affiliates from
terminating the employment of any of the Transferred Employees at any time after the
Closing, or otherwise shall guarantee any of the Transferred Employees continued employment
with the Purchaser or any of its Affiliates for any period of time, subject to any
obligations that the Purchaser or its Affiliates may have with respect to Union Transferred
Employees under the Assumed Collective Bargaining Agreements. No Transferred Employee or
other agent, nor any beneficiary or dependent thereof, shall be a third party beneficiary of
this Agreement or be entitled to bring any action or claim hereunder.
(m) Seller and Purchaser agree to furnish to each other such information as may be
reasonably required with respect to one or more Transferred Employees promptly following
receipt of any reasonable written request from the other.
Section 10.2 Seller Benefits Plans.
(a) Effective as of 11:59 p.m. on the Closing Date, the Transferred Employees shall
cease to be credited with service and to accrue any benefits under the Dana Corporation
Retirement Plan (the Dana Retirement Plan) and the Dana Corporation Savings and Investment
Plan (the Dana Defined Contribution Plan). Each Non-Union Transferred Employee
participating in the Dana Retirement Plan or the Dana Defined Contribution Plan shall be
eligible to receive a distribution of his or her vested accrued benefits under such plan
accordance with its terms. In the event Purchaser maintains a defined contribution plan on
behalf of Non-Union Transferred Employees, Purchaser shall arrange to have the defined
contribution plan or plans sponsored by Purchaser accept direct rollovers from the Dana
Defined Contribution Plan and the Dana Retirement Plan in the form of cash, or in the case
of Non-Union Transferred Employees who have an outstanding participant loan under the Dana
Defined Contribution Plan at the Closing Date, in the form of a transfer of the promissory
note for such participant loan.
(b) Coverage for all Transferred Employees and their respective eligible dependents
under the Seller Employee Benefit Plans which are welfare benefit plans (as defined in
Section 3(1) of ERISA) (other than the Assumed Benefit Plans) (the Seller Welfare Plans)
shall terminate, as of 11:59 p.m. (EST) on the Closing Date. Except as otherwise required
by federal Law (including the Bankruptcy Code), the Seller Welfare
55
Plans shall be liable only for claims incurred and benefits earned by the Transferred
Employees on or prior to the Closing Date. The Purchaser Welfare Plans shall be liable for
claims incurred and benefits earned by Transferred Employees (and the eligible dependents of
such Transferred Employees) that are properly payable under the Purchaser Welfare Plans
after the Closing Date. For purposes of this Section 10.2, a claim is incurred on
the date the applicable medical or dental services are rendered, drugs or medical equipment
is purchased or, in the case of a continuous period of hospitalization or confinement, the
date of commencement of such period of hospitalization or confinement.
(c) Seller will continue to administer the flexible spending accounts of any
Transferred Employees who have such flexible spending accounts under any Seller Welfare Plan
(or any other cafeteria plan within the meaning of Section 125 of the Code) as of the
Closing Date, for the remainder of the applicable plan year, in accordance with the terms of
the applicable Seller Welfare Plan or cafeteria plan.
(d) Seller will offer and provide, as appropriate, group health plan continuation
coverage pursuant to the requirements of COBRA to all the current and former employees of
Seller, including without limitation, any Business Employees who are offered employment
pursuant to Section 10.1, to whom they are required to offer the same under
applicable law.
Section 10.3 Assumed Benefit Plans.
Effective as of the Closing, Purchaser shall assume sponsorship of the Dana Corporation
Savings and Investment Plan for Hourly Employees of the Coupled Products Inc. Columbia City,
Indiana Facility (the Columbia City 401(k) Plan) and any other Seller Employee Benefit Plans
Seller maintains pursuant to collective bargaining agreements covering only Transferred Union
Employees as described in Schedule 10.3 (the Assumed Benefit Plans) and listed on
Schedule 10.3. With respect to the Columbia City 401(k) Plan, the only Assumed Benefit
Plan listed in Schedule 10.3 which is a tax-qualified retirement plan subject to ERISA,
Purchaser agrees that:
(a) Purchaser shall designate a successor trustee and create as soon as practicable
following the Closing Date a trust that intended to be exempt from Federal Income Tax under
Code Section 501(a) and to satisfy the terms of the applicable collective bargaining
agreement to receive the assets of the Columbia City 401(k) Plan;
(b) At the time of the Closing, Seller shall prepare and sign an amendment to the
Columbia City 401(k) Plan to reflect the change in the sponsoring employer of the Columbia
City 401 Plan to Purchaser or one of its US subsidiaries in a form reasonable acceptable to
Purchaser, and Purchaser or the relevant subsidiary shall execute such plan amendment to
acknowledge its status as the sponsoring employer of the Columbia City 401(k) Plan.
(c) As soon as practicable following the Closing Date, Purchaser shall provide Seller
with a mutually acceptable succession agreement with respect to the Columbia City 401(k)
Plan signed by Purchaser and the trustee it has appointed.
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(d) As soon as practicable following receipt of a succession agreement for such
Columbia City 401(k) Plan, along with all necessary approvals or authorizations, information
or similar requirements to effect the transfer (but in no event earlier than forty-five (45)
days after the date of delivery of such agreement, approvals and information the succession
agreement), Seller shall direct the trustee of the Columbia City 401(k) Plan to transfer to
the successor trustee appointed by Purchaser the assets of the Columbia City 401(k) Plan.
Section 10.4 Non-U.S. Employee Matters.
Business Employees located in Mexico shall be treated, to the extent practicable under local
law, in accordance with the provisions of Sections 10.1, 10.2, and 10.3,
subject to the provisions set forth on Schedule 10.4.
Section 10.5 Further Assurances; Further Conveyances and Assumptions; Consent of Third
Parties.
(a) From time to time following the Closing, Seller and Purchaser shall, and shall
cause their respective Subsidiaries to, execute, acknowledge and deliver all such further
conveyances, notices, assumptions, releases and acquittances and such other instruments, and
shall take such further actions, as may be necessary or appropriate to assure fully to
Purchaser and its respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to Purchaser
under this Agreement and the Transition Agreements and to assure fully to Seller and its
Subsidiaries and their successors and assigns, the assumption of the Assumed Liabilities and
any Liabilities to be assumed by Purchaser under this Agreement and the Transition
Agreements, and to otherwise make effective the transactions contemplated hereby and thereby
(including (i) transferring back to Seller or the applicable Subsidiary any Excluded Asset
and (ii) transferring to Purchaser any asset or Liability contemplated by this Agreement to
be a Purchased Asset or an Assumed Liability, respectively, which was not transferred to
Purchaser at the Closing).
(b) Nothing in this Agreement nor the consummation of the transactions contemplated
hereby shall be construed as an attempt or agreement to assign any Purchased Asset,
including any Contract, Permit, certificate, approval, authorization or other right, which
by its terms or by Law, as modified by the Bankruptcy Code, is nonassignable without the
consent of a third party or a Governmental Body or is cancelable by a third party in the
event of an assignment (Nonassignable Assets) unless and until such consent shall have
been obtained. Seller shall cooperate with Purchaser at its request in endeavoring to
obtain any such consent promptly.
(c) Notwithstanding anything in this Agreement to the contrary, unless and until any
consent or approval with respect to any Nonassignable Asset is obtained, such Nonassignable
Asset shall not constitute a Purchased Asset and any Liability associated exclusively with
such Nonassignable Asset shall not constitute an Assumed Liability for any purpose under
this Agreement, and the failure of any such consent or approval to be obtained or the
failure of any such Nonassignable Asset to constitute a Purchased Asset
57
or any circumstances resulting therefrom shall not, individually or in the aggregate,
constitute a Material Adverse Effect or a breach by Seller of any representation, warranty,
covenant or agreement contained in this Agreement.
(d) Once such consent or approval is obtained with respect to a Nonassignable Asset,
Seller shall, or shall cause its applicable Subsidiary to, promptly assign, transfer, convey
and deliver such Nonassignable Asset to Purchaser, and Purchaser shall assume any Liability
associated exclusively with such Nonassignable Asset, for no additional consideration.
Purchaser shall indemnify Seller against any Liabilities arising from Purchasers use of the
Nonassignable Assets after the Closing.
Section 10.6 Record Retention, Access to Documents and Cooperation.
(a) Purchaser shall, and shall cause its Subsidiaries to, afford to Sellers
representatives, upon reasonable notice and without undue interruption to Purchasers
business, access during normal business hours to the books and records (including any such
books and records in electronic format maintained by Purchaser or its Affiliates or agents)
of Purchaser and its Subsidiaries pertaining to the operations of the Business prior to the
Closing Date for that period of time required by any applicable statute or by Sellers
document retention policy in connection with (i) the preparation of financial statements,
(ii) U.S. Securities and Exchange Commission reporting obligations, (iii) Excluded
Liabilities, (iv) Excluded Assets, (v) the contest or defense by Seller of Legal Proceedings
and investigations, (vi) the Bankruptcy Cases (including, without limitation, with respect
to reconciliation of claims in connection with the Cases), and (vii) other reasonable
business purposes; provided, however, that nothing herein shall limit Sellers rights of
discovery. With respect to clause (a)(vi), such books and records shall include, without
limitation, purchase orders, receipts, invoices, purchasing cards, inventory records, debit
memos, bills of lading and quality rejection slips and Purchaser shall provide, upon
reasonable notice and without undue interruption to Purchasers business, access during
normal business hours in connection with the foregoing to accounts payable clerks or
controllers, receiving persons, purchasing and quality manager personnel. Seller shall have
the right to receive and retain copies of all such books and records.
(b) Seller shall, and shall cause the Selling Subsidiaries to, afford to Purchasers
representatives, upon reasonable notice and without undue interruption to Sellers business,
access during normal business hours to the books and records (including any such books and
records in electronic format maintained by Seller or its Affiliates or agents) of Seller and
the Selling Subsidiaries pertaining to the operations of the Business prior to the Closing
Date in connection with (i) the preparation of financial statements, (ii) Assumed
Liabilities, (iii) Purchased Assets, (iv) the contest or defense by Purchaser of Legal
Proceedings and investigations, and (v) other reasonable business purposes; provided,
however, that nothing herein shall limit Purchasers rights of discovery. Purchaser shall
have the right to receive and retain copies of all such books and records.
(c) Purchaser agrees to (i) hold all of the books and records of the Business (other
than records relating to Taxes, which shall be governed by Section 14.2) existing on
the
58
Closing Date or included in the Purchased Assets for a period of at least twelve months
after the Closing and (ii) not to destroy or dispose of any of such books and records for a
period of ten years after such twelve month period without first offering in writing at
least 30 calendar days prior to such destruction or disposition to surrender them to Seller.
(d) Purchaser shall, and shall cause its Subsidiaries to, provide (at Sellers sole
risk, cost and expense) such assistance to Seller as Seller may reasonably request with
respect to the preparation of Sellers financial statements and U.S. Securities and Exchange
Commission reporting obligations relating to the operation of the Business prior to the
Closing.
Section 10.7 Post-Closing Assistance.
Subject to any applicable confidentiality obligations of the parties and to any other
applicable legal constraints, at the request of Purchaser, Seller will, through December 31, 2008,
provide Purchaser reasonable assistance with transitioning the Business customer relationships
from Seller to Purchaser. Purchaser will reimburse Seller for any and all out-of-pocket costs
incurred by Seller in connection with providing these transition services.
ARTICLE XI
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
Section 11.1 Survival.
(a) All representations and warranties contained herein, and the right to commence any
claim with respect thereto, shall terminate at the close of business on the Closing Date,
and neither Purchaser nor Seller nor their respective Subsidiaries shall have any Liability
whatsoever with respect to such representations or warranties after such date, except that
the right to commence any claim with respect to the representations and warranties set forth
in Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.8(d),
(f), (g), (h) and (i), 4.10(c), (d),
(f) and (g), 4.13(a), 4.13(b), 4.13(g),
4.13(h), 4.15, 4.16(b)(iii), 4.17, 4.18,
4.19, 4.23, 4.24, 4.26, 5.1, 5.2,
5.3, 5.4, 5.5 and 5.8 shall survive the closing until the
first anniversary of the Closing Date. The covenants and agreements of the parties hereto
contained herein (A) that contemplate actions to be taken after Closing shall survive the
Closing and continue in effect in accordance with their terms and (B) that contemplate
actions to be taken only on or prior to Closing shall terminate and cease to be obligations
as of the Closing and no claim, action or proceeding with respect to such covenant or
agreement may be brought after the Closing.
(b) Each Person entitled to indemnification hereunder shall use its commercially
reasonable efforts to mitigate Losses for which it seeks indemnification hereunder. No
Person shall be entitled to indemnification for Losses hereunder if, on the Closing Date,
such Person had actual conscious awareness (without independent investigation and without
attribution of knowledge or awareness of any facts made available to such Person through
access to any data room, by email or otherwise) of the existence of the breach with
respect to which such Person is seeking indemnification hereunder.
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(c) In calculating any amount of Losses recoverable pursuant to this Article
XI, the amount of such Losses shall be reduced by: (i) any insurance proceeds actually
received by the Indemnified Party from any unaffiliated insurance carrier offsetting the
amount of such Loss, net of any expenses incurred by the Indemnified Party in obtaining such
insurance proceeds (provided that the Indemnified Party shall be obligated to reasonably
seek any such proceeds to which it may be entitled); (ii) any recoveries by the Indemnified
Party from third parties pursuant to indemnification (or otherwise) with respect thereto,
net of any expenses incurred by the Indemnified Party in obtaining such third party payment;
and (iii) any net Tax benefit realized by the Indemnified Party in respect of any Losses for
which such indemnification payment is made, and shall be increased by any net Tax cost
incurred by the Indemnified Party on the accrual or the receipt of the indemnity payment
(other than Taxes resulting from a reduction in Tax basis). If any Losses for which
indemnification payments are made hereunder are subsequently reduced by any Tax benefit,
insurance payment or other recovery from a third party, the Indemnified Party shall promptly
remit the amount of such reduction to the Indemnifying Party. To the extent any
indemnification payment can be properly so characterized under applicable Tax law, it shall
be treated by the parties as an adjustment to the purchase price.
(d) Notwithstanding anything herein to the contrary, no party shall be liable to any
Indemnified Party for special, incidental, indirect, consequential, punitive or exemplary
Losses.
(e) Anything in this Article XI to the contrary notwithstanding,
indemnification for any and all Tax matters and the procedures with respect thereto shall be
governed exclusively by Article XIV.
Section 11.2 Indemnification.
(a) From and after the Closing, Seller hereby agrees to indemnify and hold the
Purchaser Indemnified Group harmless from and against any and all claims, judgments, causes
of action, liabilities, obligations, damages, losses, costs of non-monetary relief,
deficiencies, costs, penalties, interest and expenses (including the reasonable actual
out-of-pocket fees and expenses of counsel) (collectively, Losses) arising out of or
resulting from:
(i) any breach of any representation or warranty of Seller set forth in
Article IV that survives the Closing pursuant to Section 11.1;
(ii) any breach of, or default in the performance by Seller of, any covenant or
agreement on the part of Seller herein that is to be performed by its terms after
the Closing Date, subject to the limitations and conditions contained therein;
(iii) any Excluded Liability;
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(iv) except as set forth in Schedule 10.4, the employment of any of the
Transferred Employees by the Seller or any of its Affiliates at any time prior to
the Closing, including any such Liabilities or other Losses (whether or not arising
under any of the Assumed Collective Bargaining Agreements) arising out of or
relating to any acts or omissions of Seller or any of its Affiliates prior to the
Closing that are or may be deemed to have been assumed by or the responsibility of
Purchaser or any of its Affiliates pursuant to Section 1.3 or Section
10.1 through 10.4 above (it being understood by way of example, and
without limiting the generality of the foregoing, that in the event (i) any former
Union Business Employee discharged by Seller or its Affiliates prior to Closing is
granted reinstatement by an arbitrator or court on or after the Closing to
employment at the Columbia City, Indiana or Upper Sandusky, Ohio plant pursuant to
an Assumed Collective Bargaining Agreement, such reinstatement shall be to
employment with Purchaser or its Affiliates, but Seller and its Affiliates shall be
responsible for and indemnify, defend and hold the Purchaser Indemnified Group
harmless from and against any and all backpay and other Losses due and owing to or
with respect to such Union Business Employee for any period prior to and including
the effective date of his or her reinstatement or (ii) any work rule implemented at
the Columbia City, Indiana or Upper Sandusky, Ohio plants pursuant to the terms of
an Assumed Collective Bargaining Agreement prior to the Closing is ruled invalid or
modified by an arbitrator after the Closing, Seller shall indemnify, defend and hold
the Purchaser Indemnified Group harmless from and against any costs of backpay
awards or similar retroactive Losses due and owing to Union Business Employees for
periods prior to the date of award but shall have no obligation to indemnify
Purchaser Indemnified Group for the on-going costs of complying with such ruling
after the date of the arbitration award including costs of prospective non-monetary
relief);
(v) any Assumed Collective Bargaining Agreement to the extent that Purchaser or
its Affiliates could not satisfy an obligation thereunder without the cooperation
and consent of Seller or one or more of its Affiliates (including any such
obligation, if any, under Letter #12 dated December 7, 1992 to the Master Agreement
dated June 9, 2003 among Dana Corporation, the UAW, and UAW Local Unions 644 and
1765 representing certain Pottsdown and Lima employees, which Letter #12 is
incorporated by reference into the Columbia City Assumed Collective Bargaining
Agreement, or Article 80 of the Upper Sandusky Assumed Collective Bargaining
Agreement, or any obligation under Article 71 of the Columbia City Assumed
Collective Bargaining Agreement), provided that Purchaser shall reasonably defend
against any grievance or other labor organization claim that seeks to impose such an
obligation, if any;
(vi) the NLRB Proceedings, but only for retroactive Losses for periods prior to
any final non-appealable judgment, order or award, and not for the ongoing costs of
compliance including the costs of prospective non-monetary relief; and
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(vii) any claim that the conduct of the Business by Purchaser and its
Subsidiaries, to the extent consistent with the conduct of the Business by Seller
and its Subsidiaries immediately prior to the Closing, infringes upon any
Intellectual Property rights of Seller, its subsidiaries, or their successors and
assigns; and
(viii) any warranty claim made by customers with respect to products (or any
part or component thereof) sold by the Business prior to the Closing Date or any
recall of any such products that is mandated by any Governmental Body, but only to
the extent that such Losses exceed $600,000 in the aggregate and then only to the
extent that such Losses from any single claim or group of related claims exceed
$50,000.
(b) From and after the Closing, Purchaser hereby agrees to indemnify and hold the
Seller Indemnified Group harmless from and against any and all Losses arising out of or
resulting from:
(i) any breach of any representation or warranty on the part of Purchaser
herein that survives the Closing pursuant to Section 11.1;
(ii) any breach of, or default in the performance by Purchaser of, any covenant
or agreement that is to be performed after the Closing Date, subject to the
limitations and conditions contained therein;
(iii) Purchasers and any of its Subsidiaries ownership (or effective
ownership) or operation of the Business, the Purchased Assets from and after the
Closing Date;
(iv) any Assumed Liabilities; and
(v) any Severance Payments (as defined in the Retention Agreements) arising
after the Closing Date under any Retention Agreement with any Business Employees who
accepts and executes the written employment offer provided by Purchaser (or one of
its Affiliates) pursuant to Section 10.1 and becomes a Transferred Employee.
Section 11.3 Limitations on Amount.
(a) Seller will have no liability (for indemnification or otherwise) with respect to
the matters governed by Sections 11.2(a)(i) until the total monetary value of all
Losses with respect to such matters exceeds Fifty Thousand Dollars ($50,000), in which case
Seller shall be liable for just the excess; provided, however, that, for the avoidance of
doubt, the foregoing limitation shall not apply to claims for indemnification under
Section 11.2(a)(viii) or Section 11.5, which shall be subject to the
separate limitations set forth therein. In addition, Seller will have no liability (for
indemnification or otherwise) for the amount by which the total monetary value of all Losses
for breaches of representations and warranties (other than those in Sections 4.1,
4.2, 4.3, 4.4, 4.5, and
62
4.18) or the matters governed by Sections 11.2(a)(i)(iv), (v), (vi),
(vii) or (viii) or Section 11.5 exceeds Seven Million Five Hundred
Dollars ($7,500,000).
(b) Purchaser will have no liability (for indemnification or otherwise) with respect to
the matters governed by Section 11.2(b)(i) until the total monetary value of all
Losses with respect to such matters exceeds Fifty Thousand Dollars ($50,000), in which case
Purchaser shall be liable for just the excess. In addition, Purchaser will have no
liability (for indemnification or otherwise) for the amount by which the total monetary
value of all Losses for breaches of representations and warranties (other than those in
Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.8)
exceeds an amount equal to Seven Million Five Hundred Dollars ($7,500,000).
Section 11.4 Procedures for Indemnification.
Whenever a claim shall arise for indemnification under this Article XI, the party
entitled to indemnification (the Indemnified Party) shall promptly notify the party from which
indemnification is sought (the Indemnifying Party) of such claim and, when known, the facts
constituting the basis for such claim; provided, however, that in the event of any claim for
indemnification hereunder resulting from or in connection with any claim or Legal Proceeding by a
third party, the Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten Business Days prior to the time any response to the asserted claim is required, if
possible, and in any event within five Business Days following receipt of notice thereof; provided,
further, that no delay or failure to give such notice by the Indemnified Party to the Indemnifying
Party shall adversely affect any of the other rights or remedies which the Indemnified Party has
under this Agreement, or alter or relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party, except to the extent that such delay or failure has materially prejudiced the
Indemnifying Party. In the event of any such claim for indemnification resulting from or in
connection with a claim or Legal Proceeding by a third party, the Indemnifying Party may, at its
sole cost and expense, assume the defense thereof by written notice within 30 calendar days, using
counsel that is reasonably satisfactory to the Indemnified Party; provided, however, that in the
event of any claim for indemnification by a Purchaser Indemnified Party resulting from a claim or
legal proceeding that is reasonably expected to have a continuing effect in any material respect on
the Business or the Purchased Assets, the Indemnified Party shall have the right to control the
defense thereof pursuant to the last sentence of this Section 11.4. If an Indemnifying
Party assumes the defense of any such claim or Legal Proceeding, the Indemnifying Party shall be
entitled to take all steps necessary in the defense thereof including the settlement of any case
that involves solely monetary damages without the consent of the Indemnified Party; provided,
however, that the Indemnified Party may, at its own expense, participate in any such proceeding
with the counsel of its choice without any right of control thereof. The Indemnifying Party, if it
has assumed the defense of any claim or Legal Proceeding by a third party as provided herein, shall
not consent to, or enter into, any compromise or settlement of (which settlement (i) commits the
Indemnified Party to take, or to forbear to take, any action or (ii) does not provide for a full
and complete written release by such third party of the Indemnified Party), or consent to the entry
of any judgment that does not relate solely to monetary damages arising from, any such claim or
Legal Proceeding by a third party without the Indemnified Partys prior written consent, which
shall not be unreasonably withheld,
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conditioned or delayed. The Indemnifying Party and the Indemnified Party shall cooperate fully
in all aspects of any investigation, defense, pre-trial activities, trial, compromise, settlement
or discharge of any claim in respect of which indemnity is sought pursuant to this Article
XI, including, but not limited to, by providing the other party with reasonable access to
employees and officers (including as witnesses) and other information. So long as the Indemnifying
Party is in good faith defending such claim or proceeding, the Indemnified Party shall not
compromise or settle such claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed. If the Indemnifying Party does
not assume the defense of any such claim or litigation in accordance with the terms hereof, the
Indemnified Party may defend against such claim or litigation in such manner as it may deem
appropriate, including settling such claim or litigation (after giving prior written notice of the
same to the Indemnifying Party and obtaining the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, conditioned or delayed) on such terms as the
Indemnified Party may reasonably deem appropriate, and the Indemnifying Party will promptly
indemnify the Indemnified Party in accordance with the provisions of this Section 11.4.
Section 11.5 Certain Environmental Matters.
(a) The parties acknowledge and agree that Purchaser has retained an environmental
consulting firm or firms to undertake an environmental review of the Business and the Owned
and Leased Real Properties prior to the Closing Date, which review shall be generally
consistent with ASTM 1527-05 or similar international standards and which shall also include
a limited compliance review. Such consultant shall prepare an executive summary chart or
other written summary for each property assessed which identifies : (1) any environmental
condition that constitutes a recognized environmental condition under ASTM 1527-05, or (2)
any condition identified through the limited compliance review that represents a violation
of Environmental Laws ((1) and (2), collectively, an Environmental Condition).
(b) With respect to any Environmental Condition so identified, from and after the
Closing Date until the first anniversary of the Closing Date (the Environmental Testing
Period), Purchaser shall have the right to conduct such follow-up environmental
assessments, including, without limitation, physical inspections, sampling activities and
installation of monitoring wells (collectively, Environmental Assessments), as Purchaser
deems advisable at any Owned or, subject to the consent of the Landlord, Leased Real
Property to verify whether such Environmental Condition is a violation of Environmental Laws
and/or requires cleanup or correction pursuant to Environmental Laws.
(c) If any such Environmental Assessment reveals the presence of Hazardous Material at,
on or beneath any Owned or Leased Real Property in concentrations exceeding the Trigger
Levels (as defined below) (Remediation Condition), or confirms any Environmental Condition
otherwise constituting a non-compliance with Environmental Laws (Noncompliance Condition)
where, in each case, the resulting Loss would reasonably be expected to exceed $25,000,
Purchaser shall provide Seller notice pursuant to Section 11.4 and Seller shall
indemnify and hold harmless the
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Purchaser Indemnified Group from and against any all Losses arising from any such
Remediation Condition or Noncompliance Condition, but only to the extent that such Losses
exceed $25,000 for each such Remediation Condition or Noncompliance Condition; provided
however, that Seller shall not be obligated to indemnify Purchaser for any increase in such
Losses to the extent due to acts or omissions of Purchaser or its employees, contractors,
subcontractors, agents or invitees that exacerbate existing conditions. Purchaser shall be
responsible for all costs incurred by Purchaser in conducting any of the assessment and
investigation activities set forth in Section 11.5(a) and (b).
(d) Trigger Levels shall mean such standards for commercial/industrial properties in
effect as of the Closing Date that have been promulgated, adopted or are used in the
ordinary course by the applicable Governmental Body.
(e) Seller and Purchaser mutually agree to cooperate in connection with any matters
subject to indemnification under this Section 11.5. Upon request, Purchaser shall
provide Seller with (i) any material correspondence, report, technical data or other
material information generated as a result of a remedial action by Purchaser; (ii)
reasonable access, upon reasonable notice, to the Owned Real Property and, subject to the
consent of the landlord, Leased Real Property in a manner that will not disrupt Purchasers
operations; and (iii) the right to take split samples in each case for the purpose of
verifying the performance of any remedial action, correction of non-compliance or other
action, the costs for which Seller is required to indemnify Purchaser under this Section
11.5. Seller and Purchaser agree that they each shall maintain in strict confidence any
information concerning any matters subject to indemnification under this Section
11.5; provided however, that Seller and Purchaser may disclose such information to the
extent reasonably necessary to communicate with appropriate Governmental Bodies. If any Law
requires any party to disclose such information, such party will promptly notify the other
party and will give the other party the opportunity to review and comment in advance upon
the content and timing of any such disclosure to the extent reasonably practicable.
Purchaser shall submit any reimbursement requests for which it is seeking indemnification
pursuant to this Section 11.5 to Seller and, as promptly as practicable after
receipt of such reimbursement requests, Seller shall pay any such reimbursement requests.
(f) Following the Closing, Seller shall control the matters subject to indemnification
under this Section 11.5 and shall consult with Purchaser prior to, and on a periodic
basis while, conducting any remedial action or correction of any non-compliance, or engaging
in any Legal Proceedings involving the Owned Real Property or the Leased Real Property, and
shall give Purchaser the reasonable opportunity to review and comment on any material
governmental filings or other material governmental correspondence relating thereto made by
Seller which comments shall be considered to the extent practicable. Seller shall minimize
the disruption to the Business in connection with any of the foregoing. Purchaser shall
provide Seller with reasonable access to the Owned Real Property as necessary for Seller to
undertake its obligations under this Section 11.5. Sellers obligation for any
Remedial Condition indemnified under this
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Section 11.5 shall be deemed complete only when the affected property meets
applicable commercial/industrial cleanup objectives in effect when such closure
determination is sought, which standards are satisfactory to or used in the ordinary course
by the relevant Governmental Body with authority and which will not unreasonably interfere
with Purchasers continued use or otherwise impair the value of such Owned Real Property for
future industrial or commercial use.
Section 11.6 Exclusive Remedy.
Except in the case of intentional fraud by any party or any acts by Purchaser in violation of
Section 363(n) of the Bankruptcy Code, and except as provided in Article XIV with respect
to Taxes, Purchaser and Seller agree that, from and after the Closing, the provisions set forth in
this Article XI shall be the sole and exclusive remedy for any claims or causes of action
for money damages arising out of, based upon or resulting from the provisions of this Agreement and
the transactions contemplated hereby and waive to the fullest extent permitted by applicable law
any and all such other claims or causes of action for money damages, whether sounding in contract,
tort or otherwise, and whether asserted at law or in equity. Nothing in this Agreement shall
impair or limit any remedy Seller may have for any breach by Purchaser of Section 363(n) of the
Bankruptcy Code.
ARTICLE XII
NONSOLICITATION
Section 12.1 Nonsolicitation of Purchaser Employees.
Seller covenants and agrees that for a period of 2 years following the Closing Date, it shall
not, and shall cause its Subsidiaries not to, solicit any Transferred Employee (at a time when such
person is an employee of Purchaser or any of its Subsidiaries) to terminate his or her employment
relationship with Purchaser or any of its Subsidiaries; provided, however, that nothing herein
shall prohibit Seller or any of its Subsidiaries from advertising publicly or from employing
persons who respond to any such advertising whether or not such persons are then employed by
Purchaser or any of its Subsidiaries, or from employing any individual who contacts Seller or any
of its Subsidiaries on an unsolicited basis.
Section 12.2 Nonsolicitation of Seller Employees.
Purchaser covenants and agrees that for a period of 2 years following the Closing Date or
termination of this Agreement pursuant to Section 13.1, it shall not, and shall cause its
Subsidiaries not to, solicit any employee of Seller or any of its Subsidiaries (at a time when such
person is an employee of Seller or any of its Subsidiaries) to terminate his or her employment
relationship with Seller or any of its Subsidiaries; provided, however, that nothing herein shall
prohibit Purchaser or any of its Subsidiaries from advertising publicly or from employing persons
who respond to any such advertising whether or not such persons are then employed by Seller or any
of its Subsidiaries, or from employing any individual who contacts Purchaser or any of its
Subsidiaries on an unsolicited basis.
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Section 12.3 Remedies.
Purchaser and Seller each acknowledge that the time, scope and other provisions of this
Article XII have been specifically negotiated by sophisticated commercial parties and
specifically hereby agree that such time, scope and other provisions are reasonable under the
circumstances. It is further agreed that other remedies cannot fully compensate either party for a
violation by the other party of the terms of this Article XII and that such party shall be
entitled to injunctive relief to prevent any such violation or continuing violation by the other
party. It is the intent and understanding of each party hereto that if, in any Legal Proceeding,
any term, restriction, covenant or promise herein is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable.
ARTICLE XIII
TERMINATION
Section 13.1 Termination.
This Agreement may be terminated and the transactions contemplated hereby abandoned at any
time prior to the Closing:
(a) upon the written agreement of Purchaser and Seller;
(b) (i) by Purchaser if (A) there are any breaches of any representations or warranties
contained in Article IV, that, individually or in the aggregate, result in, or would
reasonably be expected to result in, a Material Adverse Effect, and such breaches have not
been cured within 20 calendar days after notice thereof has been given pursuant to
Section 6.8 or otherwise been waived by Purchaser or (B) a breach of any material
covenant contained in this Agreement has been committed by Seller and such breach has not
been cured within 20 calendar days after notice thereof or been waived by Purchaser or (ii)
by Seller if (A) there are any breaches of any representations or warranties contained in
Article V, that, individually or in the aggregate, result in, or would reasonably be
expected to result in, a material adverse effect on the enforceability of this Agreement or
any other Operative Documents against Purchaser or the ability of Purchaser to perform its
obligations hereunder or thereunder, and such breach has not been cured within 20 calendar
days after notice thereof or otherwise been waived by Seller or (B) a breach of any material
covenant contained in this Agreement has been committed by Purchaser and such breach has not
been cured within 20 calendar days after notice thereof or been waived by Seller;
(c) by Purchaser, if the Closing has not occurred on or before November 1, 2007, and
the failure to consummate the transactions contemplated by this Agreement on or before such
date did not result from the failure by Purchaser to fulfill any undertaking or commitment
provided for herein that is required to be fulfilled prior to the Closing;
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(d) by Purchaser or Seller, if any Seller or any Selling Subsidiary has (i) closed an
Alternative Transaction; (ii) filed, supported or advocated in any court, a chapter 11 plan
requesting the Bankruptcy Court to approve an Alternative Transaction or (iii) abandoned or
terminated the sale process set forth in the Bidding Procedures for any material portion of
the Purchased Assets;
(e) by Seller, if the Closing has not occurred on or before November 1, 2007, and the
failure to consummate the transactions contemplated by this Agreement on or before such date
did not result from the failure by Seller to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled prior to the Closing;
(f) by Purchaser, if any of the conditions set forth in Article VIII are not
capable of being satisfied;
(g) by Seller or Purchaser if the Bankruptcy Court shall not have entered the Approval
Order by June 22, 2007 (or the Approval Order shall be vacated or stayed as of such date);
(h) by Seller, if any of the conditions set forth in Article IX are not capable
of being satisfied; or
(i) by either Purchaser or Seller if there shall be in effect any Law that prohibits
the consummation of the Closing or if consummation of the Closing would violate any
non-appealable final order, decree or judgment of any Governmental Body having competent
jurisdiction.
Section 13.2 Effect of Termination.
(a) In the event of termination under Sections 13.1(b), 13.1(c),
13.1(d), 13.1(e), 13.1(f), 13.1(g), 13.1(h), or
13.1(i), written notice thereof shall be given to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned, without further
action by either party, upon delivery of such notice, except that Article XII and
Sections 16.9, 16.10, 16.11, 16.13, 16.14,
16.15, 16.16 and 16.17 shall also survive such termination. Upon
any termination hereof pursuant to Section 13.1, no party thereto shall thereafter
have any further liability or obligation hereunder or under any Transition Agreement (except
as expressly provided in Section 13.2(d)).
(b) Notwithstanding anything in Section 13.2 to the contrary, in the event that
(x) this Agreement is terminated by Purchaser pursuant to any subsection of Section
13.1 or by Seller pursuant to Section 13.1(a), 13.(d), 13.1(e),
13.1(g) or 13.1(i) and (y) an Alternative Transaction is consummated
within one year after the date of such termination, Seller shall pay to Purchaser an expense
reimbursement in the amount of $250,000 (the Expense Reimbursement). The Expense
Reimbursement is intended to compensate Purchaser and its Affiliates for the time and
expense dedicated to this transaction and the value added by Purchaser and its Affiliates in
(i) establishing a bid standard or minimum for other bidders, (ii) placing Sellers estate
property in a sales configuration mode attracting other bidders to the auction and (iii) for
serving, by its
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name and its expressed interest, as a catalyst for other potential or actual bidders.
The Expense Reimbursement shall be entitled to super-priority administrative expense status
in the case, senior to all other super-priority expense claims other than claims under the
Seller Financing or the carve-out under such Financing in the Cases and shall be paid
immediately in full in cash, without further order of the Bankruptcy Court, at such time as
the Alternative Transaction is consummated. The obligation of Seller to pay the Expense
Reimbursement shall not be discharged, modified or otherwise affected by any plan of
reorganization or liquidation of Seller or any of its Subsidiaries.
(c) Release of Deposit.
(i) If this Agreement is terminated pursuant to Sections 13.1(a), 13.1(b)(i),
13.1(c), 13.1(d), Section 13.1(e), 13.1(f), 13.1(g), 13.1(h) or 13.1(i), the Parties
will cause the Deposit Agent to wire transfer the Deposit Amount to an account
designated by Purchaser.
(ii) In the event this Agreement is terminated pursuant to Section
13.1(b)(ii), the Parties will cause the Deposit Agent to wire transfer the
Deposit Amount to an account designated by Seller.
(iii) In the event the terms of this Section 13.2(d) conflict with the
terms of the Deposit Agreement, the terms of the Deposit Agreement shall govern.
(d) If this Agreement is terminated as permitted by Section 13.1, the return of
the Deposit Amount pursuant to the terms of the Deposit Agreement and the payment of the
Expense Reimbursement, if any, pursuant to the terms of this Section 13.2, shall be
the sole and exclusive remedies of Purchaser, whether at law or in equity, for any breach by
Seller or any of its Affiliates of the terms and conditions of this Agreement or the Deposit
Agreement. If this Agreement is terminated by Seller, the forfeiture of the entire Deposit
Amount pursuant to Section 13.2(c)(ii) hereof, shall be the sole and exclusive
remedy of Seller or its bankruptcy estate, whether at law or in equity, for any breach,
other than a breach of Section 363(n) of the Bankruptcy Code, by Purchaser or any of its
Affiliates of the terms and conditions of this Agreement. The parties agree that the
forfeiture by Purchaser of the Deposit Amount pursuant to this Section 13.2 shall be
in the nature of liquidated damages. In the event of a breach by Purchaser or any of its
Affiliates of Section 363(n) of the Bankruptcy Code, Seller shall be entitled to keep the
Deposit Amount and to pursue any other remedies available under Section 363(n) of the
Bankruptcy Code.
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ARTICLE XIV
TAX MATTERS
Section 14.1 Tax Indemnification.
(a) To the extent not paid (including the payment of estimated Taxes) before Closing or
reflected as a dollar amount on the Closing Statement of Net Assets, Seller shall indemnify
Purchaser and its Affiliates and hold them harmless from all liability for (A) Excluded
Taxes, (B) Taxes arising from or in connection with any breach by Seller of any covenant
contained in this Article (but only to the extent appropriate to reflect the relative fault
of Seller, on the one hand, and Purchaser, on the other hand), (C) Transfer Taxes required
to be borne by Seller pursuant to Section 14.4, (D) Taxes attributable to a breach
of the representations and warranties set forth in Section 4.7, and (E) all costs
and expenses, including reasonable legal fees and expenses, attributable to any item in
clauses (A) through (D).
(b) Purchaser shall indemnify Seller and its Affiliates and hold them harmless from all
liability for (A) any and all Taxes attributable to a Post-Closing Tax Period of the
Business or reflected as a dollar amount on the Closing Statement of Net Assets, other than
Excluded Taxes, (B) Transfer Taxes required to be borne by Purchaser pursuant to Section
14.4, (C) Taxes arising from or in connection with any breach by Purchaser of any
covenant contained in this Article XIV (but only to the extent appropriate to
reflect the relative fault of Purchaser, on the one hand, and Seller, on the other hand) and
(D) all costs and expenses, including reasonable legal fees and expenses, attributable to
any item in clauses (A) through (C).
(c) Any indemnity payment to be made pursuant to this Section 14.1 shall be
paid no later than the latest of (i) ten (10) days after the indemnified party makes written
demand upon the indemnifying party, (ii) five (5) days prior to the date on which the
underlying amount is required to be paid by the indemnified party and (iii) five (5) days
after any dispute about the liability for or amount of such indemnity payment is resolved.
(d) The indemnification provisions in this Section 14.1 shall survive the
Closing until 90 days after the expiration of the applicable statute of limitations for the
Tax giving rise to the claim for indemnification.
(e) The Closing Statement of Net Assets is to reflect (i) prepaid Property Taxes as an
asset and (ii) accrued Property Taxes as a liability. The parties agree that all Property
Taxes imposed on or with respect to the Purchased Assets will be pro-rated as of the Closing
Date and that, notwithstanding any other provision of this Agreement, the economic burden of
any such Property Tax will be borne by Seller for all Pre-Closing Tax Periods (including the
portion of a Straddle Period through the Closing Date) and by Purchaser for all
Post-Closing Tax Periods (including the portion of a Straddle Period after the Closing
Date). Accordingly, notwithstanding any other provision of this Agreement, (i) if Seller or
any of its Affiliates pays (either before or after Closing) any such Property Tax with
respect to a Post-Closing Tax Period, Purchaser will reimburse
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Seller upon demand for the amount of such Property Tax to the extent it is not
reflected as an asset on the Closing Statement of Net Assets; and (ii) if Purchaser or any
of its Affiliates pays (after Closing) any such Property Tax with respect to a Pre-Closing
Tax Period, Seller will reimburse Purchaser upon demand for the amount of such Property Tax
to the extent it is not reflected as a liability on the Closing Statement of Net Assets.
Section 14.2 Cooperation.
Each party hereto shall, and shall cause its Affiliates to, provide the other party hereto
with such cooperation, documentation and information as either of them reasonably may request in
(a) filing any Tax Return, amended Tax Return or claim for refund, (b) determining a liability for
Taxes or an indemnity obligation under this Article XIV or a right to refund of Taxes, (c)
conducting any Tax Proceeding or (d) determining an allocation of Taxes between a Pre-Closing Tax
Period and Post-Closing Tax Period. Such cooperation and information shall include providing
copies of all relevant portions of relevant Tax Returns, together with all relevant accompanying
Schedules and work papers (or portions thereof) and other supporting documentation, relevant
documents relating to rulings or other determinations by taxing authorities and relevant records
concerning the ownership and Tax basis of property and any other relevant information, which any
such party may possess. Each party will retain all Tax Returns, Schedules and work papers, and all
material records and other documents relating to Tax matters, of the relevant entities for their
respective Tax periods ending on or prior to or including the Closing Date until the later of (x)
the expiration of the statute of limitations (taking into account any extensions) for the Tax
periods to which the Tax Returns and other documents relate or (y) eight years following the due
date (without extension) for such Tax Returns. Thereafter, the party holding such Tax Returns or
other documents may dispose of them after offering the other party reasonable notice and
opportunity to take possession of such Tax Returns and other documents at such other partys own
expense. Each party shall make its employees reasonably available on a mutually convenient basis
at its cost to provide explanation of any documents or information so provided.
Section 14.3 Tax Treatment of Indemnification Payments.
Except as otherwise required pursuant to a determination under Section 1313(a) of the Code
(or any comparable provision of state, local, or foreign Law), Seller, Purchaser, their respective
Affiliates shall treat any and all payments under this Article XIV as an adjustment to the
purchase price for all Tax purposes.
Section 14.4 Transfer Taxes.
To the extent that any sales, use, registration, transfer (including all stock transfer and
all real estate transfer and conveyance and recording fees, if any), stamp, stamp duty reserve,
stamp duty land tax, VAT, or other similar Taxes and all notarial fees (collectively, Transfer
Taxes) that may be imposed upon, payable, collectible or incurred in connection herewith and the
transactions contemplated hereby, the cost of such Transfer Taxes shall be divided evenly between
Purchaser and Seller; provided, however, that any VAT Taxes that are recoverable (by way of refund,
credit, or otherwise) by the Purchaser or any of its Affiliates from the relevant tax authorities
under applicable Law shall be paid entirely by Purchaser. Seller and Purchaser shall
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cooperate in the execution and filing of any Tax Returns, affidavits or other documents
relating to any Transfer Taxes. Seller acknowledges that it will seek from the Bankruptcy Court as
part of the Approval Order a waiver of Transfer Taxes under Section 1146 of the Bankruptcy Code.
Seller shall use commercially reasonable efforts to obtain such relief as part of the Approval
Order.
Section 14.5 Other Agreements.
(a) After the Closing, this Article XIV shall supersede any and all Tax-sharing
or similar agreements to which Seller or any of its Affiliates are parties.
(b) The rights and obligations of the Parties with respect to indemnification for any
and all Tax matters shall be governed solely by this Article XIV.
ARTICLE XV
DEFINITIONS AND TERMS
As used in this Agreement, the following terms shall have the meanings set forth below:
Section 15.1 Affiliate.
Affiliate means, as to any Person, (a) any Subsidiary of such Person and (b) any other
Person that, directly or indirectly, controls, is controlled by, or is under common control with,
such Person, including (without limitation) all entities that, together with the Seller, are
treated as a single employer under Section 414(b) or (c) of the Code. For the purposes of this
definition, control means the possession of the power to direct or cause the direction of
management and policies of Person, whether through the ownership of voting securities, by contract
or otherwise.
Section 15.2 Agreement.
Agreement has the meaning set forth in the preamble.
Section 15.3 Allocation Schedule.
Allocation
Schedule has the meaning set forth in
Section 2.4.
Section 15.4
Alternative Transaction.
Alternative Transaction means a sale or other transaction involving the transfer of any
material portion of the Purchased Assets to a party other than Purchaser.
Section 15.5 Approval Order.
Approval Order has the meaning set forth in Section 6.3.
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Section 15.6 Assumed Benefit Plans
Assumed
Benefit Plans has the meaning set forth in
Section 10.3.
Section 15.7 Assumed Collective Bargaining Agreements.
Assumed Collective Bargaining Agreements means solely the following agreements:
(i) That certain Collective Bargaining Agreement between the International
Union, United Automobile, Aerospace and Agricultural Implement Workers of America,
UAW (UAW), and its affiliated Local Union No. 2049 (Unit #1) and Dana Corporation,
Coupled Products, Columbia City, Indiana, effective September 9, 2004 and
terminating February 12, 2008 (the Columbia City Assumed Collective Bargaining
Agreement), and
(ii) That certain Agreement Between Dana Corporation, Fluid Routing Products
Group, Upper Sandusky, Ohio Plant and the UAW and its affiliated Local Union No.
1588, effective May 11, 2005 and terminating March 31, 2009 (the Upper Sandusky
Assumed Collective Bargaining Agreement),
but, in each case, solely with respect to the Union Transferred Employees, and solely to the extent
provided in, and subject to the limitations of, Sections 1.3, 1.4, 10.1
through 10.4 and 11.2.
Section 15.8 Assumed Liabilities.
Assumed
Liabilities has the meaning set forth in
Section 1.3.
Section 15.9
Bankruptcy Avoidance Actions.
Bankruptcy
Avoidance Actions has the meaning set forth in Section 1.2(p).
Section 15.10
Bankruptcy Code.
Bankruptcy Code means 11 U.S.C. Section 101, et. seq., as it may be amended during the
Cases.
Section 15.11 Bankruptcy Court.
Bankruptcy Court means the United States Bankruptcy Court for the Southern District of New
York, or any other court having jurisdiction over the Cases from time to time.
Section 15.12 Bidding Procedures Order
Bidding Procedures Order has the meaning set forth in the Recitals.
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Section 15.13 Bidding Procedures
Bidding Procedures has the meaning set forth in the Recitals.
Section 15.14
Business.
Business means the design, manufacture, assembly and sale of hose and tube assemblies and
related and associated components thereof for fluid routing products and systems as currently
conducted by and through Sellers Fluid Products Group through facilities in North America, for
ultimate use by original equipment manufacturers and original equipment servicers in fluid routing
applications including fuel, brake, power assisted steering, heating ventilation and air
conditioning for use in light vehicles and commercial and recreational vehicles as engaged in by
Seller and its Selling Subsidiaries prior to the Closing; provided, however, that the Business
shall not include the activities or operations of the Hose and Tubing Business.
Section 15.15 Business Day.
Business Day means any day other than a Saturday, a Sunday or a day on which banks in New
York, New York are authorized or obligated by Law to close.
Section 15.16 Business Employee Benefit Plan
Business Employee Benefit Plan means any Seller Employee Benefit Plan that provides or has
provided benefits to any Business Employee or any beneficiary or dependant thereof.
Section 15.17 Business Employee.
Business Employees means all employees employed immediately prior to the Closing Date by
Seller or any of its Affiliates who are principally dedicated to the Business.
Section 15.18 Cases.
Cases has the meaning set forth in the Recitals.
Section 15.19
CERCLA.
CERCLA means the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. 9601 et. seq.
Section 15.20 Chapter 11 Expenses.
Chapter 11 Expenses means the costs incurred and expenses paid or payable by the Seller or
any Affiliate in connection with the administration of the Cases, including, without limitation:
(a) fees and expenses related to any debtor-in-possession financing, (b) obligations to pay
professional and other fees and expenses in connection with the Cases (including, without
limitation, fees of attorneys, accountants, investment bankers, financial advisors, noticing
agents, and consultants retained by the Seller or any Affiliate, any creditors or equity
committee, or any
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debtor-in-possession or pre-petition lender, and any compensation for making a substantial
contribution to the Cases), (c) fees and expenses payable to the United States Trustee under
Section 1930 of title 28, United States Code, and (d) expenses of members of any creditors or
equity holders committee.
Section 15.21 Chosen Court.
Chosen
Court has the meaning set forth in Section 16.14.
Section 15.22
Closing.
Closing
has the meaning set forth in Section 3.1.
Section 15.23 Closing Date.
Closing Date has the meaning set forth in Section 3.1.
Section 15.24 Closing Date Business Employees.
Closing Date Business Employees has the meaning set forth in Section 10.1(a).
Section 15.25
Closing Net Working Assets.
Closing
Net Working Assets has the meaning set forth in Section 2.2(e).
Section 15.26 Closing Statement of Net Assets.
Closing
Statement of Net Assets has the meaning set forth in Section 2.2(c).
Section 15.27 COBRA.
COBRA means the provisions of Code Section 4980B and Part 6 of Title I of ERISA, as amended,
any implementing regulations, and any applicable similar state law.
Section 15.28
Code.
Code means the Internal Revenue Code of 1986, as amended.
Section 15.29 Columbia City 401(k) Plan.
Columbia
City 401(k) Plan has the meaning set forth in Section 10.3.
Section 15.30
Commitments.
Commitments means the commitments for title insurance issued by First American Title
Insurance Company providing for the issuance of a current owners policy of title insurance showing
title vested in Seller, or the Selling Subsidiary, for each parcel of Owned Real Property in the
forms attached hereto and made a part hereof as Exhibit M.
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Section 15.31 Contract.
Contract means any contract or agreement, including without limitation any indenture, note,
bond, loan, instrument, lease (including real property leases), conditional sale contract, purchase
or sales orders or mortgage, whether written or oral.
Section 15.32 Cure Costs.
Cure Costs has the meaning set forth in Section 6.6.
Section 15.33 Current Employees.
Current Employees has the meaning set forth in Section 10.1(a).
Section 15.34 Dana Defined Contribution Plan.
Dana Defined Contribution Plan has the meaning set forth in Section 10.2.
Section 15.35 Dana Retirement Plan.
Dana Retirement Plan has the meaning set forth in Section 10.2.
Section 15.36 Debtor Contracts.
Debtor Contracts has the meaning set forth in Section 1.1(e).
Section 15.37 Debtors.
Debtors has the meaning set forth in the Recitals.
Section 15.38 Deposit Agent.
Deposit Agent has the meaning set forth in Section 2.5.
Section 15.39 Deposit Agreement.
Deposit Agreement has the meaning set forth in Section 2.5.
Section 15.40 Deposit Amount.
Deposit Amount has the meaning set forth in Section 2.5.
Section 15.41 Employee Benefit Plan.
Employee Benefit Plan means any employee benefit plan as defined by Section 3(3) of ERISA,
whether or not subject to ERISA, and, whether written or oral and whether or not maintained in the
United States, and any other written or oral employee stock option, stock appreciation, stock
purchase, phantom stock, or other equity-based performance, deferred compensation, profit-sharing,
pension, retirement, retiree benefit, employment, termination or
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severance pay, change of control, vacation, medical, life, health, dental, sick pay or
disability, accident, group or individual insurance, vacation pay, holiday pay, or other welfare or
fringe benefit plan, policy, agreement or other obligation. Employee Benefit Plan shall not
include Social Security, Medicare, workers compensation, or any similar mandated social welfare
benefit or scheme administered by any federal, state or local government.
Section 15.42 Endorsements.
Endorsements means contiguity endorsements, if applicable and if available in the State in
which the Owned Real Properties are located, endorsements insuring compliance with any covenants,
conditions and restrictions constituting Permitted Exceptions, access endorsements, endorsements
deleting the so-called creditors rights exception or exclusion, owners comprehensive
endorsements, tax parcel endorsements, survey endorsements, legal description equivalency
endorsements, 3.1 zoning endorsements (with parking), utility facilities endorsements, plat act
endorsements, and such other endorsements as Purchaser shall reasonably request.
Section 15.43 Environment.
Environment means any surface water, groundwater, land surface, subsurface strata, man made
structure or building, sediment, plant or animal life, natural resources, indoor or outdoor air,
soil and subsoil.
Section 15.44 Environmental Law.
Environmental Law means any Law concerning: (a) the Environment, including pollution,
contamination, cleanup, preservation, protection, and reclamation of the Environment; (b) health or
safety, including occupational safety and the exposure of employees and other persons to any
Hazardous Material; (c) any Release or threatened Release of any Hazardous Material, including
investigation, monitoring, clean up, removal, treatment, or any other action to address such
Release or threatened Release; and (d) the management of any Hazardous Material, including the
manufacture, generation, formulation, processing, labeling, distribution, introduction into
commerce, registration, use, treatment, handling, storage, disposal, transportation, re-use,
recycling or reclamation of any Hazardous Material, including, but not limited to, CERCLA, RCRA,
the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et. seq., the Toxic Substances Control
Act, 15 U.S.C. 2601 et. seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251 et. seq., the
Clean Air Act, 42 U.S.C. 7401 et. seq., Occupational Safety and Health Act, 29 U.S.C. 651 et. seq.,
as well as Mexicos General Law of Ecological Equilibrium and Environmental Protection (Ley
General del Equilibrio Ecológico y la Protección al Ambiente), Mexicos General Law for the
Prevention and Integral Management of Wastes (Ley General para la Prevención y Gestión Integral de
los Residuos), Mexicos National Waters Law (Ley de Aguas Nacionales), Mexicos General Health
Law (Ley General de Salud), and their respective and corresponding regulations, including the
Federal Regulation for Safety and Health in the Work Environment (Reglamento Federal de Seguridad,
Higiene y Medio Ambiente en el Trabajo) and Regulations of the General Law for the Prevention and
Integrated Management of Waste (Reglamento de la Ley General para la Prevención y Gestión Integral
de los Residuos) as such laws and regulations have been
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amended or supplemented, and including but not limited to the following Mexican Official
Norms: NOM-052-SEMARNAT-2005, NOM-053-SEMARNAT-1993, NOM-138-SEMARNAT/SS-2003,
NOM-147-SEMARNAT/SSA1-2004, AND NOM-010-STPS-1999.
Section 15.45 Environmental Assessments.
Environmental Assessments has the meaning set forth in Section 11.5(b).
Section 15.46 Environmental Condition.
Environmental Condition has the meaning set forth in Section 11.5(a).
Section 15.47 Environmental Testing Period.
Environmental Testing Period has the meaning set forth in Section 11.5(b).
Section 15.48 ERISA.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder.
Section 15.49 Estimated Adjustment Amount
Estimated Adjustment Amount has the meaning set forth in Section 2.2(a).
Section 15.50 Excluded Assets.
Excluded Assets has the meaning set forth in Section 1.2.
Section 15.51 Excluded Intellectual Property.
Excluded Intellectual Property has the meaning set forth in Section 1.2(d).
Section 15.52 Excluded Liabilities.
Excluded Liabilities means all Liabilities of Seller and any of its Subsidiaries other than
Assumed Liabilities.
Section 15.53 Excluded Taxes.
Excluded Taxes means to the extent not paid (including the payment of estimated Taxes)
before Closing or reflected on the Closing Statement of Net Assets as a dollar amount, any Taxes
imposed on or payable with respect to the Business for any Pre-Closing Tax Period (other than Taxes
resulting from any act or transaction taken by Purchaser or its Affiliates after the Closing).
Section 15.54 Existing Inventory.
Existing Inventory has the meaning set forth in Section 7.6(c).
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Section 15.55 [Intentionally Omitted].
Section 15.56 Expense Reimbursement Order.
Section 15.57 Expense Reimbursement.
Expense Reimbursement has the meaning set forth in Section 13.2(b).
Section 15.58 [Intentionally Omitted].
Final Cash Consideration has the meaning set forth in Section 2.1(a).
Section 15.59 Final Consideration.
Section 15.60 Final Order.
Final Order means an order of the Bankruptcy Court or other court of competent jurisdiction:
(a) as to which no appeal, notice of appeal, motion to amend or make additional findings of fact,
motion to alter or amend judgment, motion for rehearing or motion for new trial, request for stay,
motion or petition for reconsideration, application or request for review, or other similar motion,
application, notice or request (collectively, a Challenge) has been timely filed, or, if any of
the foregoing has been timely filed, it has been disposed of in a manner that upholds and affirms
the subject order in all respects without the possibility for further Challenge thereon; (b) as to
which the time for instituting or filing a Challenge shall have expired; and (c) as to which no
stay is in effect; except that the Approval Order shall be a Final Order if (x) the time for
instituting or filing a Challenge has expired, (y) no stay of the Approval Order is in effect and
(z) in the reasonable opinion of the Purchaser, any Challenge that was timely filed is not likely
to amend, revoke, supplement, vacate or otherwise modify the Approval Order in a manner that would
be materially adverse to the Purchaser.
Section 15.61 Financial Statements.
Financial Statements has the meaning set forth in Section 4.6.
Section 15.62 Foreign Country Tax Agreements.
Foreign Country Tax Agreements means the agreements attached as Exhibit L relating
to Tax allocation and indemnification in certain foreign countries.
Section 15.63 GAAP.
GAAP means generally accepted accounting principles in the United States of America, which
are applicable to the circumstances as of the date of determination.
Section 15.64 Governmental Body.
Governmental Body means any government or governmental or regulatory body thereof, or
political subdivision thereof, of any country or subdivision thereof, whether national,
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federal, state or local, or any agency or instrumentality thereof, or any court or arbitrator
(public or private), other than the Bankruptcy Court or any other court of competent jurisdiction
over the Cases or over any appeal of an Order entered in the Cases.
Section 15.65 [Intentionally Omitted].
Section 15.66 Hazardous Material.
Hazardous Material means collectively, any material defined as, or considered to be, a
hazardous waste, hazardous substance, regulated substance, pollutant or contaminant under any
Environmental Law including asbestos, PCBs, oil, petroleum or any fraction thereof.
Section 15.67 Hourly Business Employees.
Hourly Business Employees has the meaning set forth in Section 10.1(a)(ii).
Section 15.68 Hose and Tubing Business.
Hose and Tubing Business has the meaning set forth in Section 1.2(j).
Section 15.69 Indemnified Party.
Indemnified Party has the meaning set forth in Section 11.4.
Section 15.70 Indemnifying Party.
Indemnifying Party has the meaning set forth in Section 11.4.
Section 15.71 Independent Auditors.
Independent Auditors has the meaning set forth in Section 2.2(d).
Section 15.72 Initial Cash Consideration.
Initial Cash Consideration has the meaning set forth in Section 2.1(a).
Section 15.73 [Intentionally Omitted].
Section 15.74 Intellectual Property.
Intellectual Property means all transferable intellectual or industrial property rights or
other similar proprietary rights in any jurisdiction, including such rights in and to: (a)
Trademarks; (b) copyrights and copyrightable works including software source code, object code,
data and documentation; (c) Patents; (d) invention disclosures, discoveries and improvements,
whether or not patentable; (e) Trade Secrets; (f) Internet domain names; and (g) the goodwill
associated with each of the foregoing.
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Section 15.75 Intellectual Property Contract.
Intellectual Property Contract means all agreements concerning Intellectual Property
exclusively used in the Business to which Seller is a party, including, without limitation,
agreements granting Seller and its Subsidiaries rights to use the Licensed Intellectual Property.
Section 15.76 IT Assets.
IT Assets means the proprietary software Related to the Business set forth on Schedule
15.76.
Section 15.77 Knowledge.
Knowledge means the actual knowledge as of the date hereof, with respect to those
representations and warranties that are deemed made as of the Closing Date pursuant to Section
8.1, of the individuals set forth on Schedule 15.77.
Section 15.78 Law.
Law means any international, national, federal, state or local law (including common law),
treaty, statute, constitutional provision, code, ordinance, rule, regulation, directive,
concession, Order or other requirement or guideline of any country or subdivision thereof.
Section 15.79 Leased Real Properties.
Leased Real Properties means the real property leased pursuant to, and subject to, the Real
Property Leases.
Section 15.80 Leave Employees.
Leave Employees has the meaning set forth in Section 10.1(a).
Section 15.81 Legal Proceeding.
Legal Proceeding means any judicial, administrative or arbitral action, suit, proceeding
(public or private) or governmental proceeding or investigation.
Section 15.82 Liabilities.
Liabilities means any and all: (a) debts; (b) claims, (including, claims as that term is
defined in sections 101(5)(A) and 101(5)(B) of the Bankruptcy Code, except that a right to
equitable remedy shall also be considered a claim whether or not the breach gives rise to a right
to payment); (c) judgments, demands, guarantees, interest, penalties, fines or other charges or
assessments, whether assessed or assessable; (d) rights of setoff, offset or recoupment held, or
any other claims, rights or defenses that may be asserted, by any Person; (e) obligations to comply
with any settlement agreements, voluntary assurances any other similar decrees, agreements and
settlements entered with any Person; and (f) other liabilities, commitments and obligations,
whether or not fixed, contingent or absolute, matured or unmatured, liquidated or
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unliquidated, accrued or unaccrued, known or unknown, whether imposed by agreement,
understanding, Law, equity or otherwise.
Section 15.83 Licensed Intellectual Property.
Licensed Intellectual Property shall mean the Intellectual Property that any third Person
has licensed to Seller or any of its Selling Subsidiaries or otherwise authorized Seller or any of
its Selling Subsidiaries to use exclusively in connection with the Business under the terms of any
Intellectual Property Contract.
Section 15.84 Lien.
Lien means any lien (statutory or otherwise), pledge, mortgage, deed of trust, security
interest, charge, option, right of first refusal, easement, covenant, condition, restriction,
servitude, transfer restriction, encumbrance or conditional sale or other title retention
agreement.
Section 15.85 Losses.
Losses has the meaning set forth in Section 11.2.
Section 15.86 Material Adverse Effect.
Material Adverse Effect means any change, event, impairment or effect that is (or would
reasonably be expected to be) materially adverse to the Purchased Assets or the financial condition
or operations of the Business, taken as a whole, except for any such change, event or effect
resulting from or arising out of (i) changes or developments in financial or securities markets
(including currency exchange or interest rates); (ii) general economic conditions affecting the
industry in which the Business is conducted and which do not have a materially disproportionate
effect on the Business; and (iii) the impact associated with the announcement of the transactions
contemplated hereby.
Section 15.87 Material Business Contracts.
Material Business Contracts has the meaning set forth in Section 4.11.
Section 15.88 Michigan Sublease.
Michigan Sublease has the meaning set forth in Section 3.2.
Section 15.89 Modified GAAP.
Modified GAAP means GAAP as modified by the principles, methods and examples set forth in
Schedule 15.89.
Section 15.90 Net Working Assets Adjustment.
Net Working Assets Adjustment has the meaning set forth in Section 2.2(f).
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Section 15.91 Net Working Assets Target.
Net Working Assets Target has the meaning set forth in Section 2.2(a).
Section 15.92 Net Working Assets of the Business.
Net Working Assets of the Business has the meaning set forth in Section 2.2(a).
Section 15.93 NLRB Proceedings.
NLRB Proceedings means the proceedings in or arising out of NLRB Cases 8-RD-1976, 6-RD-1518
and 6-RD-1519 (see, e.g., 341 NLRB No. 150).
Section 15.94 Nonassignable Assets.
Nonassignable Assets has the meaning set forth in Section 10.5(b).
Section 15.95 Non-Debtor Contracts.
Non-Debtor Contracts has the meaning set forth in Section 1.1(f).
Section 15.96 Non-Debtor Selling Subsidiaries.
Non-Debtor Selling Subsidiaries means the Selling Subsidiaries that are not Debtors.
Section 15.97 Non-Union Business Employees.
Non-Union Business Employees has the meaning set forth in Section 10.1(a).
Section 15.98 Non-Union Transferred Employees.
Non-Union Transferred Employees has the meaning set forth in Section 10.1(d).
Section 15.99 Operative Documents.
Operative Documents means collectively, this Agreement, the Deposit Agreement, the Bill of
Sale, the Assignment and Assumption Agreement, the Intellectual Property Assignment, the Transition
Agreement, and the Michigan Sublease.
Section 15.100 Order.
Order means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award of (i) any Governmental Body or (ii) the Bankruptcy Court or any other court of competent
jurisdiction over the Cases or over any appeal of an Order entered in the Cases.
Section 15.101 Other Marked Assets.
Other Marked Assets has the meaning set forth in Section 7.6(c).
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Section 15.102 Owned Real Property.
Owned Real Property means the real property Related to the Business listed on Schedule
15.102 together with any and all buildings, structures, improvements and fixtures located,
thereon, owned by the Seller or its Subsidiaries.
Section 15.103 Patents.
Patents means patents, including design patents and utility patents, reissues, divisions,
continuations, continuations-in-part, reexaminations and extensions thereof, in each case including
all applications therefor.
Section 15.104 Permit.
Permit means any approval, authorization, consent, franchise, license, permit or certificate
by any Governmental Body.
Section 15.105 Permitted Exceptions.
Permitted Exceptions means the items on Schedule 15.105 and (a) liens for current
Taxes, assessments or other claims by a Governmental Body not yet delinquent or the amount or
validity of which is being contested in good faith by appropriate proceedings or for which an
appropriate reserve or security deposit is established by Seller therefore; (b) mechanics,
carriers, workers, repairers and similar Liens arising or incurred in the ordinary course of
business; (c) zoning, subdivision, building code, entitlement and other land use, construction, and
environmental regulations by Governmental Bodies; (d) matters that would be shown or otherwise
reflected by an accurate survey or are shown on the Surveys which do not materially diminish the
value of or materially interfere with the continued use of the Owned Real Property consistent with
past practice; (e) easements of record, rights-of-way of record, licenses of record, leases of
record, utility agreements of record, restrictions of record, and other similar encumbrances of
record; and (f) with respect to the Personal Property only, such other imperfections in title,
charges, easements, restrictions and encumbrances which do not materially diminish the value of or
materially interfere with the continued use of such personal property or asset used in the Business
consistent with past practice.
Section 15.106 Person.
Person means any individual, corporation, partnership, limited liability company, firm,
joint venture, association, joint-stock company, trust, unincorporated organization, representative
office, branch, Governmental Body or other similar entity.
Section 15.107 Personal Property Leases.
Personal Property Leases has the meaning set forth in Section 4.9(a).
Section 15.108 Petition Date.
Petition Date means March 3, 2006.
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Section 15.109 Post-Closing Tax Period.
Post-Closing Tax Period means any taxable period (or portion thereof) beginning after the
Closing Date.
Section 15.110 Pre-Closing Tax Period.
Pre-Closing Tax Period means any taxable period (or portion thereof) ending on or before the
Closing Date.
Section 15.111 Property Taxes.
Property Taxes means real, personal, and intangible ad valorem property Taxes.
Section 15.112 Purchased Assets.
Purchased Assets has the meaning set forth in Section 1.1.
Section 15.113 Purchased Debtor Contracts.
Purchased Debtor Contracts has the meaning set forth in Section 6.5(b).
Section 15.114 Purchased Equipment.
Purchased Equipment has the meaning set forth in Section 1.1(b).
Section 15.115 Purchased Intellectual Property.
Purchased Intellectual Property has the meaning set forth in Section 1.1(g).
Section 15.116 Purchaser.
Purchaser has the meaning set forth in the preamble.
Section 15.117 Purchaser Approved Contract.
Purchaser Approved Contract means each Contract listed or referred to in Schedule
4.11(a) hereto, other than (i) the Real Property Lease for Rochester Hills and (ii) the
Contracts of the Non-Debtor Subsidiaries listed under the headings San Luis Potosi, Mexico Facility
I.
Section 15.118 Purchaser Closing Documents.
Purchaser Closing Documents has the meaning set forth in Section 5.2.
Section 15.119 Purchaser Financial Advisor.
Purchaser Financial Advisor has the meaning set forth in Section 5.8.
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Section 15.120 Purchaser Indemnified Group.
Purchaser Indemnified Group means Purchaser, its Subsidiaries and their respective
Affiliates, together with their successors and assigns, and their officers, directors, employees
and agents.
Section 15.121 Purchaser Labor Designee.
Purchaser Labor Designee has the meaning set forth in Section 6.2(j).
Section 15.122 Purchaser Retirement Plans.
Purchaser Retirement Plans has the meaning set forth in Section 10.1(f).
Section 15.123 Purchaser Upper Sandusky Union Defined Contribution Plan.
Purchaser Upper Sandusky Union Defined Contribution Plan has the meaning set forth in
Section 10.1(e).
Section 15.124 Purchaser Welfare Plans.
Purchaser Welfare Plans has the meaning set forth in Section 10.1(f).
Section 15.125 RCRA.
RCRA means the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et. seq.
Section 15.126 Real Property Leases.
Real Property Leases means the real property leases of Seller or the Selling Subsidiaries
(as tenants or lessees) Related to the Business listed on Schedule 15.126.
Section 15.127 Registered Intellectual Property
Registered Intellectual Property means: (i) Patents; (ii) registrations and applications for
registration included within Trademarks; (iii) Internet domain names; and (iv) copyright
registrations for copyrightable works and all renewals and pending applications for such copyright
registrations.
Section 15.128 Related to the Business.
Related to the Business means primarily related to, or used primarily in, the Business as
conducted by Seller and the Selling Subsidiaries as of the date hereof.
Section 15.129 Release.
Release means any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration at, or from, into or onto the Environment,
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including movement or migration through or in the air, soil, surface water or groundwater,
whether sudden or non-sudden and whether accidental or non-accidental, or any release, emission or
discharge as those terms are defined in any applicable Environmental Law.
Section 15.130 Remedial Action.
Remedial Action shall mean any action to investigate, evaluate, assess, test, monitor,
remove, respond to, treat, abate, remedy, correct, clean-up or otherwise remediate the release or
presence of any Hazardous Material.
Section 15.131 Remediation Condition.
Remediation Condition has the meaning set forth in Section 11.5(c).
Section 15.132 Retention Agreements.
Retention Agreements shall mean the retention agreements between Seller and the Business
Employees as set forth in the agreements listed on Schedule 15.132.
Section 15.133 Review Period.
Review Period has the meaning set forth in Section 2.2(d).
Section 15.134 Salaried Business Employees.
Salaried Business Employees has the meaning set forth in Section 10.1(a)(i).
Section 15.135 Seller.
Seller has the meaning set forth in the preamble.
Section 15.136 Seller Business Facilities.
Seller Business Facilities means the Rochester Hills, Michigan facility, Wharton, Ohio
facility, Upper Sandusky, Ohio facility, Columbia City, Indiana facility and Pensacola, Florida
facility at which the Business was conducted and the Business Employees were employed by Seller or
any of its Affiliates immediately prior to the Closing Date, and specifically excluding Sellers
closed facilities at Mitchell, Indiana and Andrews, Indiana at which the Business was previously
conducted.
Section 15.137 Seller Closing Documents.
Seller Closing Documents has the meaning set forth in Section 4.2.
Section 15.138 Seller Employee Benefit Plan.
Seller Employee Benefit Plan means any Employee Benefit Plan established, sponsored or
maintained by the Seller or any Affiliate, or any pension plan subject to Title IV of
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ERISA with respect to which Seller or any Affiliate has or has had any obligation, during the
six year period ending on the Closing Date.
Section 15.139 Seller Financing.
Seller Financing means the post-petition financing facilities or arrangements of the
Debtors.
Section 15.140 Seller Indemnified Group.
Seller Indemnified Group means Seller, its Subsidiaries and their respective Affiliates,
together with their successors and assigns, and their officers, directors, employees and agents.
Section 15.141 Seller Name.
Seller Name has the meaning set forth in Section 7.6(a).
Section 15.142 Seller Portion.
Seller Portion has the meaning set forth in Section 10.1(k).
Section 15.143 Seller Union Pension Plans.
Seller Union Pension Plans has the meaning set forth in Section 10.1(e).
Section 15.144 Seller Upper Sandusky Union Defined Contribution Plan.
Seller Upper Sandusky Union Defined Contribution Plan means the Dana Corporation Savings
Works Plan for Collectively Bargained Employees at Certain Facilities (Dana Plan No. 146) in effect
as of the date hereof.
Section 15.145 Seller Welfare Plans.
Seller Welfare Plans has the meaning set forth in Section 10.2(b).
Section 15.146 [Intentionally Omitted].
Section 15.147 Selling Subsidiaries.
Selling Subsidiaries has the meaning set forth in the Recitals.
Section 15.148 SLP I Real Property Leases.
SLP I Real Property Leases means all Real Property Leases listed on Schedule 15.126,
other than the Real Property Lease for Rochester Hills.
Section 15.149 Statement of Net Assets.
Statement of Net Assets has the meaning set forth in Section 4.6.
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Section 15.150 Straddle Period.
Straddle Period means any taxable period beginning on or prior to and ending after the
Closing Date.
Section 15.151 Subsidiary.
Subsidiary means, with respect to any Person, any other Person of which such Person (either
alone or through or together with any other Subsidiary) owns, directly or indirectly, a majority of
the outstanding equity securities or securities carrying a majority of the voting power in the
election of the board of directors or other governing body of such Person.
Section 15.152 Surveys.
Surveys means a plat of survey of each parcel of Real Property, dated no earlier than the
date of this Agreement, showing lot lines and monuments; building lines, setback lines; zoning and
land use information pertaining to the Real Property (including any F.A.R. or green space
requirements, and any height restrictions); easements (both burdening and/or benefiting the Real
Property); all other title exceptions of record (to the extent such items can be located by the
surveyor); access locations; utilities (including, but not limited to, water, sewer, gas, electric
and telephone lines to the point of connection with the public systems); other improvements
(including, but not limited to, roads, streets, driveways, and sidewalks); location of water
courses or water bodies; and the square footage of the Real Property. The Surveys shall evidence
whether or not there are any encroachments of improvements from adjoining properties onto the Real
Property or from the Real Property onto adjoining properties. The Surveys shall contain an
accurate flood plain designation. The Surveys shall be certified by a state appropriate registered
land surveyor as having been prepared in compliance with ALTA/ACSM land survey standards, which
certification shall run to the benefit of the Purchaser, First American Title Insurance Company and
any other party or parties designated by Purchaser. The Surveys shall also include any additional
items required by Purchaser.
Section 15.153 Tax or Taxes.
Tax or Taxes means all federal, state, local or foreign taxes, charges, fees, imposts,
levies or other assessments, including all net income, gross receipts, capital, sales, use, ad
valorem, VAT, transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property,
rollback and estimated taxes, customs duties, fees, assessments and other governmental charges of
any kind whatsoever, together with all interest, penalties, fines, additions to tax or additional
amounts imposed by any taxing authority with respect to such amounts.
Section 15.154 Tax Proceeding.
Tax Proceeding means any audit, examination, contest, litigation or other proceeding by or
against any taxing authority.
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Section 15.155 Tax Return.
Tax Return means a report, return or other information required to be supplied to a
governmental entity with respect to Taxes (including any amendments and Schedules thereto).
Section 15.156 Trade Secrets.
Trade Secrets means trade secret business information including ideas, formulas,
compositions, technical documentation, operating manuals and guides, plans, designs, sketches,
inventions, production molds, product specifications, equipment lists, engineering reports and
drawings, architectural and engineering plans, manufacturing and production processes and
techniques; drawings, specifications, plans, proposals, research records, inspection processes
invention records and technical data; financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and information,
licensing records, advertising and promotional materials, service and parts records, warranty
records, maintenance records that have been and are maintained in confidence and that provide a
competitive business advantage.
Section 15.157 Trademarks.
Trademarks means trademarks, service marks, brand names, logos, certification marks, trade
dress, assumed names and trade names, including all applications for registration therefor,
registrations and all renewals, modifications and extensions thereof and the goodwill associated
with each of the foregoing.
Section 15.158 Transfer Taxes.
Transfer Taxes has the meaning set forth in Section 14.4.
Section 15.159 Transferred Employees.
Transferred Employees has the meaning set forth in Section 10.1(d).
Section 15.160 Transition Agreements.
Transition Agreements has the meaning set forth in Section 6.10.
Section 15.161 Trigger Level.
Trigger Level has the meaning set forth in Section 11.5(d)
Section 15.162 [Intentionally Omitted].
Section 15.163 Union Business Employees
Union Business Employees has the meaning set forth in Section 10.1(a).
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Section 15.164 Union Transferred Employees.
Union Transferred Employees has the meaning set forth in Section 10.1(d).
Section 15.165 VAT.
VAT means any value added Tax, goods and services Tax, sales or turnover Tax or similar Tax,
including such Tax as may be imposed by the Sixth Council Directive of the European Communities and
national legislation implementing or supplemental to that directive.
Section 15.166 WARN ACT.
WARN ACT means the Worker Adjustment and Retraining Notification Act and any other similar
law of any state, locality or other Governmental Body.
Section 15.167 Other Definitional and Interpretive Provisions.
(a) This Agreement is the result of the joint efforts of Purchaser and Seller, and each
provision hereof has been subject to the mutual consultation, negotiation and agreement of
the parties and there is to be no construction against either party based on any presumption
of that partys involvement in the drafting thereof. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
(b) Unless otherwise specified, the terms hereof, herein, hereunder, herewith
and similar terms refer to this Agreement as a whole (including the exhibits, and Schedules
to this Agreement), and references herein to Sections and Articles refer to sections and
articles of this Agreement.
(c) Whenever used in this Agreement, except as otherwise expressly provided or unless
the context otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders, and the terms include and including shall
be inclusive and not exclusive and shall be deemed to be followed by the following phrase
without limitation.
(d) The terms dollars and $ shall mean United States dollars.
(e) Other terms may be defined elsewhere in the text of this Agreement and, unless
otherwise indicated, shall have such meaning throughout this Agreement.
ARTICLE XVI
MISCELLANEOUS
Section 16.1 Notices.
Any notice or demand to be given hereunder shall be in writing and deemed given when
personally delivered, sent by overnight courier or deposited in the mail, postage prepaid, sent
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certified or registered, return receipt requested, and addressed as set forth below or to such
other address as any party shall have previously designated by such a notice. Any notice so
delivered personally shall be deemed to be received on the date of delivery; any notice so sent by
overnight courier shall be deemed to be received on the date received; and any notice so mailed
shall be deemed to be received on the date stamped on the receipt (rejection or other refusal to
accept or inability to deliver because of a change of address of which no notice was given shall be
deemed to be receipt of the notice).
If to Purchaser:
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Coupled Products Acquisition LLC |
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88 Airport Road |
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Elgin, IL 60123 |
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Attention:
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Paul Cumberland |
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Telephone No.:
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(847) 931-4838 |
With a copy to:
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Sidley Austin LLP |
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One South Dearborn |
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Chicago, IL 60603 |
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Attention:
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John Box |
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Fax No.:
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(312) 853-7036 |
If to Seller:
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Dana Corporation |
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4500 Dorr Street |
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Toledo, OH 43615 |
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Attention: General Counsel |
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Telephone No.: (419) 535-4500 |
With a copy to:
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Hunton & Williams LLP |
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Riverfront Plaza, East Tower |
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951 East Byrd Street |
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Richmond, VA 23219-4074 |
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Attention: Robert A. Acosta-Lewis, Esq. |
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Telephone No.: (804) 788-8200 |
Section 16.2 Amendment; Waiver.
Any provision of this Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by Purchaser and Seller, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
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failure or delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided
by law, except as otherwise expressly provided herein.
Section 16.3 Assignment.
(a) No party to this Agreement may assign any of its rights or delegate any of its
obligations under this Agreement without the written consent of the other party hereto and
any purported assignment or delegation without such consent shall be void and of no further
effect; provided, however, that Purchaser shall be entitled to appoint one or more designees
to acquire Purchased Assets from PTG Mexico S. de R.L. de C.V. and PTG Servicios S. de R.L.
de C.V; provided that Purchaser delivers to Seller, on the Closing Date, a
certificate signed on its behalf containing representations and warranties with respect to
each such designee that are similar to those made by Purchaser in Sections 5.1
through 5.5 . Following the Closing, either party may assign any of its rights
hereunder. No assignment or appointment of a designee shall relieve either party of its
obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and permitted assigns. The successors and permitted assigns hereunder
shall include, in the case of Purchaser, any permitted assignee as well as the successors in
interest to such permitted assignee (whether by merger, liquidation (including successive
mergers or liquidations) or otherwise).
Section 16.4 Entire Agreement.
The Schedules and Exhibits attached to this Agreement shall be construed with and as an
integral part of this Agreement to the same extent as if the same had been set forth verbatim
herein. Any matter disclosed by Seller on any one Schedule shall be deemed to have been disclosed
on any other Schedule so long as the relevance of such matter to such other Schedule is reasonably
apparent. This Agreement (together with the Schedules, Exhibits and other agreements referenced
herein) contains, and is intended as, a complete statement of all of the terms and the arrangements
between the parties hereto with respect to the matters provided for herein, and supersedes any
previous agreements and understandings between the parties hereto with respect to those matters.
It shall be expressly understood that this Agreement shall govern the transactions contemplated
hereby as a whole and that any local agreements, instruments, certificates or other documents
entered into or delivered in connection with this Agreement with respect to a particular
jurisdiction shall not be construed as amendments or novations of this Agreement but rather shall
be complemented by and interpreted in light of this Agreement.
Section 16.5 Fulfillment of Obligations.
Any obligation of any party to any other party under this Agreement, which obligation is
performed, satisfied or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
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Section 16.6 Parties in Interest.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
Section 16.7 No Third-Party Rights.
Except as otherwise provided in Sections 10.1, 10.2, 10.3 and
10.4, nothing in this Agreement, express or implied, is intended to confer on any Person
not a party hereto, any rights or remedies by reason of this Agreement. No provision regarding any
Employee Benefit Plan shall be interpreted as a part or amendment thereof.
Section 16.8 Public Disclosure.
Notwithstanding anything herein to the contrary, each of the parties to this Agreement hereby
agrees with the other party or parties hereto that the parties shall agree in advance as to the
contents of any press release or other public statement or disclosure with respect to the
transactions contemplated by this Agreement issued through the time of Closing, except as may be
required to comply with the requirements of any applicable Laws and the rules and regulations of
any stock exchange upon which the securities of one of the parties (or its Affiliate) is listed, in
which case such party shall use its reasonable best efforts to consult with the other party before
releasing such information.
Section 16.9 Confidentiality
Subject to Section 16.8, the transactions contemplated by this Agreement shall be kept
confidential by Seller, Purchaser and their respective representatives and Affiliates. In the
event that the transactions contemplated by the Agreement are not consummated, Purchaser shall, for
a period of three years following the termination of this Agreement, hold any information obtained
by it from Seller or its Subsidiaries or their Affiliates or representatives in strict confidence
and, without the prior written consent of Seller, shall not use any of such information for any
purpose (except as required by applicable law, regulation or legal process), unless such
information (i) is or becomes generally available to the public other than as a result of a
disclosure by Purchaser or its officers, employees or agents in breach of this Agreement, (ii) was
already known to Purchaser or its officers, employees or agents prior to its disclosure to
Purchaser by or at the request of Seller or its Subsidiaries, (iii) becomes available to Purchaser
on a non-confidential basis from a source other than Seller or its Subsidiaries; provided, however,
that such source is not bound by a confidentiality agreement with Seller or its Subsidiaries or
otherwise prohibited from disclosing such information to Purchaser by a contractual, legal or
fiduciary obligation; (iv) is independently developed by Purchaser or its officers, employees or
agents without any use of or reliance upon disclosure hereunder; or (v) is approved for release by
written authority of Seller. In the event that Purchaser, or any of its Affiliates or
representatives, is required by applicable law, regulation or legal process to disclose any of such
information, Purchaser will notify Seller promptly (unless prohibited by law) so that Seller may
seek an appropriate protective order or other appropriate remedy. In the event that no such
protective order or other remedy is obtained or Seller does not waive compliance with this Section
and Purchaser or any of its representatives are nonetheless legally compelled to disclose such
information, Purchaser
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or its representatives, as the case may be, will furnish only that portion of the information
which Purchaser is, or such representatives are, advised by counsel is legally required to be
furnished and will give Seller written notice (unless prohibited by law) of the information to be
disclosed as far in advance as practicable and exercise all reasonable efforts to obtain reliable
assurance that confidential treatment will be accorded the information.
Section 16.10 Return of Information.
If for any reason whatsoever the transactions contemplated by this Agreement are not
consummated, Purchaser shall promptly return to Seller all books, records and other materials
furnished by Seller or any of its agents, employees or representatives (including all copies, if
any, thereof), and shall not use or disclose the information contained in such books, records and
other materials for any purpose or make such information available to any other entity or person.
Section 16.11 Expenses.
Subject to Sections 6.6, 13.2 and 14.4, each of the parties hereto shall bear
its own expenses (including fees and disbursements of its counsel, accountants and other experts)
incurred by it in connection with the preparation, negotiation, execution, delivery and performance
hereof, each of the other documents and instruments executed in connection herewith or contemplated
hereby and the consummation of the transactions contemplated hereby and thereby. In addition,
Purchaser shall be solely responsible for all expenses in connection with its due diligence review
of the Business, including without limitation environmental testing or inspections, building
inspections, UCC lien and other searches, the cost of the Surveys, and the premium for issuing the
Endorsements; provided, however, that Seller shall be solely responsible for the cost of title
work, title inspections, title searches and Commitments, as well as the base form title policies
referred to in Section 3.2(j) but not the cost of the Endorsements.
Section 16.12 Bulk Sales Laws.
Purchaser hereby waives compliance by Seller and its Subsidiaries with any applicable bulk
sales law. The Non-Debtor Seller agrees to indemnify Purchaser and hold Purchaser harmless from
and against any and all liability under any bulk sales law for the sale of assets by the Non-Debtor
Seller under this Agreement, provided, however, that this indemnity shall not affect the obligation
of Purchaser to pay and discharge the Assumed Liabilities and no indemnity is made under this
Section 16.12 with respect to the Assumed Liabilities.
Section 16.13 Governing Law.
This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of New York, including all matters of construction, validity and performance (including
sections 5-1401 and 5-1402 of the New York General Obligations Law but excluding all other choice
of law and conflict of law rules.)
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Section 16.14 Submission to Jurisdiction; Selection of Forum.
Each party hereto agrees that any action or proceeding for any claim arising out of or related
to this Agreement or the transactions contained in or contemplated by this Agreement and the other
Operative Documents, whether in tort or contract or at law or in equity, shall be brought only in
either the Bankruptcy Court, while the Debtors Cases are pending, or thereafter, in any other New
York federal court sitting in the City of New York, or in any New York State court sitting in the
Borough of Manhattan in the City of New York(each such court, a Chosen Court), and each party
irrevocably (a) submits to the jurisdiction of the Chosen Courts (and of their appropriate
appellate courts), (b) waives any objection to laying venue in any such action or proceeding in
either Chosen Court, (c) waives any objection that such Chosen Court is an inconvenient forum for
the action or proceeding, (d) agrees that, in addition to other methods of service provided by law,
to the fullest extent provided by applicable law service of process in any such action or
proceeding shall be effective if provided in accordance with Section 16.1 of this
Agreement, and the effective date of such service of process shall be as set forth in Section
16.1, and (e) agrees that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by law.
Section 16.15 Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same Agreement.
Section 16.16 Headings.
The heading references herein and the table of contents hereto are for convenience purposes
only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof.
Section 16.17 Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity
or enforceability of such provision, or the application thereof, in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
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COUPLED PRODUCTS ACQUISITION LLC
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By: |
/s/ Paul J. Cumberland
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Name: |
Paul J. Cumberland |
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Title: |
Managing |
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DANA CORPORATION
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By: |
/s/ E. P. Haag
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Name: |
Eric P. Haag |
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Title: |
Manager, Corporate Development |
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EX-10(Y)
Exhibit 10-Y
EXECUTIVE BONUS AGREEMENT
BONUSVEREINBARUNG FÜR LEITENDE ANGESTELLTE
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[German translation omitted]
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This Agreement (the Agreement) made and
entered into on June 14, 2007, by and between
Dana Corporation, a Virginia corporation, whose
principal place of business is located at 4500
Dorr Street, Toledo, Ohio (the Corporation),
and Mr. Ralf Göttel (the Executive), effective
as of December 31, 2006. |
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WHEREAS, on March 3, 2006, the Corporation and
forty of its Subsidiaries (the Debtors) filed
voluntary petitions for relief under chapter 11
of title 11 of the United States Code (the
Bankruptcy Code) in the United States
Bankruptcy Court for the Southern District of
New York, Case No. 06-10354 (BRL) (Jointly
Administered), (the Bankruptcy Cases); |
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WHEREAS, in accordance with the Memorandum
Opinion of the United States Bankruptcy Court
for the Southern District of New York (the
Bankruptcy Court) dated November 30, 2006 (the
Opinion), as supplemented by an Order of the
Bankruptcy Court dated December 18, 2006 (the
Order), the Corporation desires to enter into
this agreement, subject to certain conditions
and limitations, as provided herein (the
Agreement) and the Order; and |
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WHEREAS, the Executive, in his capacity as
President Engine Products Group, is exclusively
employed by Reinz-Dichtungs-GmbH (the GmbH), a
limited liability company established under the
laws of the Federal Republic of Germany and a
subsidiary of the Corporation. |
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NOW, THEREFORE, in consideration of the premises
and of the covenants and agreements set forth
herein, the |
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Corporation and the Executive agree as follows: |
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1. |
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Employment and Base Salary. The Executive
shall continue to be exclusively employed by the
GmbH under his existing employment agreement, as
last amended June 27, 2005 (the German
Agreement), and nothing in this Agreement shall
be interpreted to establish an employment
relationship between the Executive and the
Corporation. The Corporation shall ensure that
the GmbH will fix the Executives base gross
salary at the rate of [euros] 305,100 per annum
(the Annual Base Salary). The Annual Base
Salary shall continue to be paid by the GmbH and
not be a payment obligation of the Corporation. |
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2. |
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(a) Additional Benefits and Compensation. |
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(i) |
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Annual Bonus. During the Executives
employment, the Executive shall be eligible to
receive annual short-term incentive awards or
bonuses (each such award or bonus is hereinafter
referred to as an Annual Bonus) pursuant to
the Dana Corporation Annual Incentive Plan, and
any successor or replacement plan (the Dana
Corporation Annual Incentive Plan and such
successor or replacement plans being referred to
herein collectively as the AIP), in accordance
with the terms thereof. Each Annual Bonus shall
be determined and paid in accordance with the
terms of the AIP. |
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(ii) |
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The EIC Plan. The |
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Corporation hereby adopts an Executive Incentive
Compensation Plan for the Executive (the EIC
Plan) under which the Executive shall be
eligible for a 2007 performance based incentive
bonus (the 2007 EIC) and a 2008 performance
based incentive bonus (the 2008 EIC), subject
to the terms and conditions set forth herein and
in the Order. Except as otherwise provided for
herein, the EIC payment shall only be earned and
payable if the Executive is employed at the end
of the applicable fiscal year. |
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The Executive shall be eligible for a 2007
EIC payment of up to $633,333. The first
$422,222 shall be earned by the Executive upon
the achievement by the Corporation of EBITDAR
for 2007 of $250 million and shall be paid in
cash on the later of (a) 30 days following the
filing of the Corporations audited 2007
financial statements with the Securities and
Exchange Commission (the SEC) and (b) 30 days
after the Corporations Emergence (the
applicable date, the 2007 EIC Payment Date),
provided that in the event that the Corporation
achieves EBITDAR for 2007 in excess of $250
million, the Executive shall earn an additional
2007 EIC payment equal to 10.55555 basis points
on EBITDAR for 2007 in excess of $250 million,
up to a cap of $450 million (the |
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Additional 2007 EIC Payment). For purposes of
this Agreement, the term EBITDAR shall have
the meaning set forth in the term sheet attached
as Exhibit A to the Order which is attached
hereto as Exhibit 1 and incorporated herein by
reference. For purposes of this Agreement,
Emergence shall mean consummation by the
Corporation of (i) a plan of reorganization
under the Bankruptcy Code (the Plan) or (ii) a
sale of all or substantially all of the
Corporations assets pursuant to section 363 of
the Bankruptcy Code. The Additional 2007 EIC
Payment shall be paid in common stock (Common
Stock) of the reorganized Corporation on the
2007 EIC Payment Date. |
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The Executive shall be eligible for a 2008
EIC payment of up to $316,667. The first
$70,370 shall be earned by the Executive upon
the achievement by the Corporation of EBITDAR
for 2008 of $375 million, provided that in the
event the Corporation achieves EBITDAR for 2008
in excess of $375 million, the Executive shall
earn an additional 2008 EIC payment equal to (a)
14 basis points on EBITDAR for 2008 in excess of
$375 million, up to a cap |
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of $450 million, and (b) 7 basis points on
EBITDAR for 2008 in excess of $450 million, up
to a cap of $650 million. The entire 2008 EIC
payment shall be paid in Common Stock on the
later of (i) 30 days following the filing of the
Corporations audited 2008 financial statements
with the SEC and (ii) 30 days after the
Corporations Emergence (the 2008 EIC Payment
Date). |
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For purposes of determining the number of
shares of Common Stock to be issued to the
Executive under Sections 2(a)(ii)(1) and (2),
the value of the Common Stock will be its
average closing price on the principal U.S.
stock exchange on which it is traded during the
thirty days before the 2007 EIC Payment Date or
the 2008 EIC Payment Date, as applicable. |
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The 2007 EIC and 2008 EIC awards earned
shall be subject to reduction under the EBITDAR
Adjustment Mechanism. Under the EBITDAR
Adjustment Mechanism, EBITDAR for the purposes
of determining the minimum payment threshold for
the 2007 EIC (excluding the first $422,222 cash
payment in respect of the 2007 EIC award) and
the 2008 EIC shall be reduced by unsecured
claims allowed in the Bankruptcy Cases in excess
of an unsecured claims threshold of $2.85
billion, as |
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12.5% of the first $75 million in additional
claims; |
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(B) |
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25% of the next $100 million in additional
claims in excess of $75 million but not more
than $175 million; and |
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75% of any additional claims in excess of
$175 million. |
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For purposes of this Agreement, the term
allowed in the Bankruptcy Cases shall mean the
earlier of (a) the allowance of an unsecured
claim in the Bankruptcy Cases or (b) an
agreement regarding potentially allowable claims
between the Corporation and the official
committee of unsecured creditors appointed in
the Bankruptcy Cases, or its successor, as
designated in the Plan. |
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Maximum Bonus Compensation. Notwithstanding
anything set forth herein, while the Bankruptcy
Cases are pending the maximum annual
compensation with respect to 2007 under Section
2(a) shall not exceed $1,333,127 (the Maximum
Annual Bonus Compensation). For avoidance of
doubt, the Maximum Annual Bonus Compensation
shall not include (i) the Annual Base Salary and
(ii) any payment made during a relevant fiscal
year in respect of performance measures related
to prior years, regardless whether such payment
is made by the
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3. |
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Certain Definitions. For purposes of this
Agreement, |
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(a) |
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Disability shall mean the absence of the
Executive from the Executives duties with the
Corporation and/or the GmbH, as the case may be,
on a full-time basis for 120 consecutive days as
a result of incapacity due to mental or physical
illness which is determined to be total and
permanent by a German physician selected by the
Corporation or its insurers and acceptable to
the Executive or the Executives legal
representative (such agreement as to
acceptability not to be withheld unreasonably),
whereby the Executive or the Executives legal
representative explicitly waives the physicians
duty to keep confidential patient examination
results and shall instruct the physician to
disclose to the Corporation the examination
result; |
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Cause shall mean: |
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(i) |
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the willful and continued failure of the
Executive to perform substantially the
Executives duties with the Corporation and/or
the GmbH, as the case may be, (other than any
such failure resulting from incapacity due to
physical or mental illness), after a written
demand for substantial performance is delivered
to the Executive by the Board of Directors of
the |
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Corporation (the Board), or a committee
thereof, or the Chief Executive Officer, which
specifically identifies the manner in which the
Board, the committee or the Chief Executive
Officer, as applicable, believes that the
Executive has not substantially performed the
Executives duties, or |
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(ii) |
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the willful engaging by the Executive in
illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Corporation or any company affiliated with the
Corporation, including but not limited to the
GmbH. |
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For purposes of this provision, no act or
failure to act, on the part of the Executive,
shall be considered willful unless it is done,
or omitted to be done, by the Executive in bad
faith or without reasonable belief that the
Executives action or omission was in the best
interests of the Corporation or any company
affiliated with the Corporation, including but
not limited to the GmbH. Any act, or failure to
act, based upon authority given pursuant to a
resolution duly adopted by the Board or a
committee thereof or upon the instructions of
the Chief Executive Officer, or based upon the
advice of counsel for the Corporation or any
instruction by the management or the
shareholder(s) of the GmbH shall be conclusively
presumed to be done, or omitted to be done, by
the Executive in good faith and in the best
interests of the Corporation and/or its
affiliated companies, including the GmbH, as the
case may be. |
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4. |
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Employment with the GmbH; Obligations of the
Corporation and |
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the GmbH upon Termination of Employment. The
Corporation and the Executive agree that the
GmbH is and shall continue to be the only and
exclusive employer of the Executive, and that
this Agreement shall not be construed to be part
of the German Agreement. The Corporation and
the Executive also agree that the compensation
paid by the GmbH to the Executive under the
German Agreement constitutes full and adequate
remuneration for the Executives work and that
the Corporation has no obligation to offer the
Executive the chance and opportunity to earn the
remuneration provided for under this Agreement.
The Corporation and the Executive further agree
that U.S. managers on the same level as the
Executive are employed under at will agreements
which offer less termination protection than
German law does with respect to the Executive
and that it accordingly is fair and appropriate
to approximate the Executives legal position
under this Agreement to the position of a
comparable U.S. manager whose employment can be
terminated by himself or the Corporation at any
time and for any reason. Accordingly, following
the termination of the Executives employment,
the Executive shall be entitled to the
compensation and benefits provided for in this
Section, as applicable depending on the
circumstances of such termination. |
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Termination by the GmbH or Deemed
Termination by the Corporation without Cause or
due to death or Disability. If the GmbH
actually shall terminate the Executives
employment without Cause or |
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if the Executives employment is terminated due
to death or Disability, or if the Corporation
vis-à-vis the Executive (by way of a written
notification in line with Section 8(b)
approximates the termination without Cause of a
U.S. manager (the Deemed Termination Without
Cause) (regardless whether the German Agreement
remains un-terminated or not), subject to and
conditioned upon the execution by the Executive
(or, if applicable, his estate) of, and his (or,
as applicable, his estate) not revoking, a
release in a form reasonably acceptable to the
Corporation, the Executive (or, as applicable,
his estate) shall be entitled to the following: |
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a contingent receivable for his 2007 EIC and
2008 EIC payments if the applicable EBITDAR
thresholds have been or are subsequently met;
provided, however, that the 2007 EIC and 2008
EIC shall each be pro rated for the time worked
during the applicable year, such pro rata EIC to
be determined by multiplying the 2007 EIC or
2008 EIC, as applicable, by a fraction, the
numerator of which is the number of days in the
applicable year through the date of termination,
and the denominator of which is 365. |
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The Deemed Termination Without Cause pursuant to
Section 4 (a) shall contain a |
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reference to this Agreement and the
Corporations declaration that it would
terminate the Executives employment without
Cause if the Executive had an at will employment
relationship with the Corporation; it does not
require an actual termination by the GmbH or any
justification German law would require for a
termination of employment. The Deemed
Termination Without Cause shall take effect at
the same time a respective termination without
Cause would take effect vis-à-vis a U.S.
manager, irrespective of a notice period under
the Executives German Agreement. Payments made
pursuant to Section 4 shall be made in lump sum
on the later of (A) such time as they would
otherwise be payable under this Agreement or the
applicable benefit plans and (B) earliest date
permissible under Section 409A of the Internal
Revenue Code of 1986, as amended (the Code). |
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Cause; Termination by the Executive. If the
Executives employment shall be terminated by
the GmbH for cause under German law
(außerordentliche Kündigung), or if the
Corporation vis-à-vis the Executive (by way of a
written notification in line |
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with Section 8(b) approximates the termination
with Cause of a U.S. manager (the Deemed
Termination With Cause) (regardless whether the
German Agreement remains un-terminated or not),
or if the Executive terminates his employment,
the Corporation shall have no further
obligations to the Executive under this
Agreement other than the obligation to pay to
the Executive through the date of termination
any compensation previously earned, any
compensation previously deferred by the
Executive (together with any accrued interest or
earnings thereon), his vested benefits under any
employee benefit plans maintained by the
Corporation, in each case to the extent not
theretofore paid. |
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The Deemed Termination With Cause pursuant to
Section 4 (b) shall contain a reference to this
Agreement and the Corporations declaration that
it would terminate the Executives employment
with Cause if the Executive had an at will
employment relationship with the Corporation; it
does not require an actual termination for cause
by the GmbH or any justification German law
would require for a termination for cause. For
the avoidance of doubt, it is understood that
Cause shall exclusively have the meaning as
defined in this Agreement and shall not be
influenced by the requirements of a |
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termination for cause under German law, except
that an actual termination for cause served to
the Executive by the GmbH shall in any case also
be considered a termination with Cause under
this Agreement. |
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5. |
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Full Settlement. The Corporations
obligation to make the payments provided for in
this Agreement and otherwise to perform its
obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense
or other claim, right or action which the
Corporation may have against the Executive or
others. |
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6. |
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Successors. Except as otherwise provided
herein, this Agreement shall be binding upon and
shall inure to the benefit of the Executive, the
Executives heirs and legal representatives, and
the Corporation and its successors. |
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7. |
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Amendment or Modification; Waiver. No
provision of this Agreement may be amended,
modified or waived unless such amendment,
modification or waiver shall be authorized by
the Board (and, if the Corporation is still
operating under Chapter 11, the Bankruptcy
Court) or any authorized committee of the Board
and shall be agreed to in writing, signed by the
Executive and by an officer of the Corporation
thereunto duly authorized. Except as otherwise
specifically provided in |
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this Agreement, no waiver by either party hereto
of any breach by the other party hereto of any
condition or provision of this Agreement to be
performed by such other party shall be deemed a
waiver of a subsequent breach of such condition
or provision or a waiver of a similar or
dissimilar provision or condition at the same
time or at any prior or subsequent time. |
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8. |
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Miscellaneous. |
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(a) |
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This Agreement shall be governed by and
construed in accordance with the laws of the
State of Ohio, without reference to principles
of conflict of laws, and exclusive venue and
jurisdiction shall lie in any federal or state
court located in Ohio. The captions of this
Agreement are not part of the provisions hereof
and shall have no force or effect. |
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(b) |
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All notices and other communications
hereunder shall be in writing and shall be given
by hand delivery to the other party or by
registered or certified mail, return receipt
requested, postage prepaid, addressed as
follows: |
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If to the Executive, at the most recent address
for the Executive in the GmbH records, |
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Dana Corporation
P.O. Box 1000
Toledo, Ohio 43697
Attention: Secretary |
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or to such other address as either party shall
have furnished to the other in writing in
accordance herewith. Notice and communications
shall be effective when actually received by the
addressee. |
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(c) |
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The English language version of this
Agreement shall govern, notwithstanding the
existence of the German language translation
which serves information purposes only. |
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(d) |
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The invalidity or unenforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other
provision of this Agreement. The Executive
agrees that the fact of his employment under the
German Agreement, as concluded between him and
the GmbH, may raise issues of interpretation of
this Agreement. The Executive agrees that in
such case the interpretation of this Agreement
shall be made in such way that the economic
purpose of this Agreement is approximated in the
best possible way and that there is no
duplication of benefits to the Executive should
the Executive be entitled under the German
Agreement to any payment or benefit which is
also provided
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under this Agreement with a comparable intent. |
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(e) |
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The Corporation may withhold from any
amounts payable under this Agreement such
Federal, state or local taxes as it determines
is required to be withheld pursuant to any
applicable law or regulation. The same shall
apply with respect to the GmbH, and the
Executive shall undertake to correctly and in a
timely manner inform the GmbH of any payments
under this Agreement of relevance for the German
Agreement and the German payroll calculation. |
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(f) |
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This Agreement (including exhibits hereto)
contain the entire agreement of the parties
concerning the subject matter hereof, and all
promises, representations, understandings,
arrangements and prior agreements concerning the
subject matter are merged herein and superseded
hereby. |
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(g) |
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No right, benefit or interest hereunder,
shall be subject to anticipation, alienation,
sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any
claim, debt or obligation, or to execution,
attachment, levy or similar process, or
assignment by operation of law. Any attempt,
voluntary or involuntary, to |
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effect any action specified in the immediately
preceding sentence shall, to the full extent
permitted by law, be null, void and of no
effect. |
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(h) |
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Nothing contained in this Agreement shall
create or be construed to create a trust of any
kind, or a fiduciary relationship between the
Corporation and the Executive or any other
person. |
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(i) |
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To the extent necessary to effectuate the
terms of this Agreement, the terms of this
Agreement (and the exhibits) which must survive
the termination of the Executives employment or
the termination of this Agreement (and the
exhibits) shall so survive. |
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(j) |
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In the event of the Executives death or a
judicial determination of Executives
incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to
refer to Executives legal representative or,
where appropriate, to Executives beneficiary. |
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(k) |
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If any event provided for in this Agreement
is scheduled to take place on a legal holiday,
such event shall take place on the next
succeeding day that is not a legal holiday.
Where appropriate, this provision shall refer to
German legal
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holidays. |
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(l) |
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Section 409A of the Code. To the extent
applicable, it is intended that this Agreement
comply with the provisions of Section 409A of
the Code. This Agreement shall be administered
in a manner consistent with this intent, and any
provision that would cause the Agreement to fail
to satisfy Section 409A of the Code shall have
no force and effect until amended to comply with
Section 409A of the Code (which amendment may be
retroactive to the extent permitted by Section
409A and may be made by the Corporation without
the consent of the Executive). |
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(m) |
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To the extent this Agreement is inconsistent
with the terms and conditions of the Order, the
Order shall govern. |
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be signed by
its duly authorized representative, and the Executive has executed this
Agreement, as of the day and year first written above. |
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DANA CORPORATION |
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By: |
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Chairman, Compensation Committee/
Vorsitzender, Gehaltsausschuss |
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/s/ R. Göttel |
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Ralf Göttel |
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19
EX-10(Z)(1)
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EXECUTION VERSION
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Exhibit 10-Z(1) |
Dated 18 July 2007
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(1) |
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DANA EUROPE FINANCING (IRELAND) LIMITED, as Borrower |
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(2) |
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DANA INTERNATIONAL LUXEMBOURG SARL, as Servicer |
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(3) |
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The persons from time to time party hereto as Lenders |
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(4) |
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GE LEVERAGED LOANS LIMITED, as Administrative Agent |
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(5) |
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DANA INTERNATIONAL LUXEMBOURG SARL, as Performance Undertaking Provider |
RECEIVABLES LOAN AGREEMENT
LONDON
CONTENTS
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Clause |
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Page |
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1. Definitions |
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1 |
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2. Amounts and terms of the Loans |
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2 |
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3. Conditions to Borrowings |
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23 |
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4. Representations and warranties |
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25 |
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5. Covenants |
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29 |
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6. Administration and collection of Pool Receivables |
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36 |
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7. Suspension and Termination Events |
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38 |
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8. The Administrative Agent |
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41 |
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9. Indemnities by the Borrower |
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45 |
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10. Miscellaneous |
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46 |
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Schedules |
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1 Commitments |
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2 Condition Precedent Documents |
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3 Mandatory Cost Rate |
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EXHIBIT A
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Form of Assignment and Acceptance |
EXHIBIT B
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Form of Borrowing Request |
EXHIBIT C
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Form of Prepayment Notice |
THIS
AGREEMENT (this Agreement) is dated 18 July 2007 and made between:
(1) |
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DANA EUROPE FINANCING (IRELAND) LIMITED, a limited liability company incorporated under the
laws of Ireland, as Borrower; |
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(2) |
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DANA INTERNATIONAL LUXEMBOURG SARL, a company organised under the laws of Luxembourg, as
Servicer; |
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(3) |
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the Lenders from time to time parties hereto; |
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(4) |
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GE LEVERAGED LOANS LIMITED, as Administrative Agent; and |
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(5) |
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DANA INTERNATIONAL LUXEMBOURG SARL, a company organised under the laws of Luxembourg, as
Performance Undertaking Provider. |
BACKGROUND:
(A) |
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The Borrower and the other Purchasers shall from time to time acquire certain Receivables and
any Related Security with respect thereto from the Originators pursuant to Originator Sale
Agreements. |
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(B) |
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In the case of Receivables and Related Security acquired by Purchasers other than the
Borrower, the Borrower will make loans secured by, or otherwise acquire Borrower Receivables
Interests in, such Receivables and Related Security from such other Purchasers pursuant to the
Intermediate Transfer Agreements. |
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(C) |
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The Borrower shall charge or otherwise pledge as security all of its right, title and
interest in such Receivables and Related Security, Borrower Receivables Interests, the
Borrower Operating Accounts and any other Collateral to or for the benefit of the Secured
Parties pursuant to the Security Documents. |
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(D) |
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To fund its acquisitions under the Originator Sale Agreements and Intermediate Transfer
Agreements, as the case may be, the Borrower may from time to time request Loans from the
Lenders on the terms and conditions of this Agreement. |
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(E) |
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The Lenders have agreed that they shall make Loans in any Approved Currency so requested from
time to time, subject to the terms and conditions of this Agreement. |
IT IS AGREED that:
1. |
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DEFINITIONS |
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1.1 |
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Certain defined terms |
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Unless otherwise defined herein, capitalised terms which are used herein shall have the
meanings assigned to such terms in Clause 2.1 (Certain defined terms) of the Master Schedule
of Definitions, Interpretation and Construction, dated 2007 and signed by the parties hereto
and others for the purposes of identification (the Schedule of Definitions). In the case
of any inconsistency between such terms and the terms defined in this Agreement, the terms
defined in this Agreement shall prevail for all purpose of this Agreement. |
1
1.2 |
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Other terms |
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The principles of interpretation set forth in Clauses 2.2 (Other terms) and 2.3 (Computation
of time periods) of the Schedule of Definitions shall apply to this Agreement as if fully
set forth herein. |
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2. |
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AMOUNTS AND TERMS OF THE LOANS |
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2.1 |
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The Loans |
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(a) |
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On the terms and subject to the conditions hereof, on the Closing Date and
thereafter from time to time prior to the Facility Termination Date, each Lender shall
make Loans to the Borrower in an amount in any Approved Currency equal to its Pro Rata
Share of the amount requested by the Borrower pursuant to Clause 2.2 (Borrowing
procedures); provided that, after giving effect to such Loans: |
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(i) |
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the Euro Equivalent of the aggregate outstanding principal
amount of the Loans made by any Lender shall not exceed such Lenders
Commitment; and |
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(ii) |
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the Aggregate Principal Balance will not exceed the Maximum
Aggregate Principal Balance. |
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Each Borrowing hereunder shall be in a minimum principal amount equal to such amount
as will ensure that (A) no Borrowing would be less than 1,000,000 and no
Borrowing denominated in a Local Currency would be less than 250,000 (or the
Euro Equivalent thereof). Subject to the foregoing and to the limitations set forth
herein, the Borrower may borrow, prepay and reborrow the Loans hereunder. |
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(b) |
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The Performance Undertaking Provider may, from time to time upon at least five
(5) Business Days prior written notice to the Administrative Agent and each Lender,
elect to reduce the Facility Limit; provided, that the Facility Limit may not be
reduced below 25,000,000 unless the Facility Limit is reduced to 0; provided,
further, that after giving effect to any such reduction and any principal payments on
such date, the Aggregate Principal Balance will not exceed the Maximum Aggregate
Principal Balance. Any such reduction shall reduce each Lenders Commitment ratably in
accordance with each Lenders Pro Rata Share. Once the Facility Limit is reduced
pursuant to this Clause 2.1(b) it may subsequently be reinstated only by increasing,
with the prior written consent of the relevant Lenders and the Administrative Agent,
the Commitment of one or more Lenders. |
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(i) |
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The Borrower shall request a Borrowing hereunder by submitting
(or causing the Servicer to submit on behalf of the Borrower) to the
Administrative Agent a written notice, substantially in the form of |
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Exhibit B (Form of Borrowing Request) (each, a
Borrowing Request) prior to
2:00 p.m. (London time) on the third Business Day prior to the date of the
proposed Borrowing (each, a Borrowing Date) or such other times agreed
upon by the Borrower, the Servicer and the Administrative Agent. |
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(ii) |
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Each Borrowing Request shall, among other things (A) specify
(I) the desired Approved Currencies for the requested Borrowing, determined in
accordance with Clause 2.2(d), (II) for each such Approved Currency, the amount
of the requested Borrowing and the Spot Rate (used for the purposes of the
Daily Report in connection with which such Borrowing Request is delivered) with
respect to each such Approved Currency, (III) the Aggregate Principal Balance
after giving effect to such Borrowing, and (IV) the desired Borrowing Date
(which shall be an Intra-Month Settlement Date (or such other date as may be
agreed by the Borrower, the Servicer and the Administrative Agent)), and (B)
certify that, after giving effect to the proposed Borrowing, the Aggregate
Principal Balance will not exceed the Maximum Aggregate Principal Balance on
such Borrowing Date. Each Borrowing Request shall be irrevocable and binding
on the Borrower. |
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(i) |
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Any Loan requested by the Borrower in a Borrowing Request shall
be made by the Lenders on a pro rata basis in accordance with their respective
Pro Rata Shares of such Loan. |
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(ii) |
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The obligations of any Lender to make Loans hereunder are
several from the obligations of any other Lenders. The failure of any Lender
to make Loans hereunder shall not release the obligations of any other Lender
to make Loans hereunder, but no Lender shall be responsible for the failure of
any other Lender to make any Loan hereunder. |
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(iii) |
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Notwithstanding anything herein to the contrary, a Lender
shall not be obligated to fund any Loan at any time on or after the Facility
Termination Date, at any time a Facility Event exists or would exist after
making such Loan, or if, after giving effect thereto (A) the Euro Equivalent of
the aggregate outstanding principal balance of the Loans made by such Lender
would exceed such Lenders Commitment (B) the Aggregate Principal Balance will
exceed the Maximum Aggregate Principal Balance. |
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(iv) |
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In the event that the initial Borrowing does not occur before
the date falling three (3) months after the date of this Agreement the
Commitments of the Lenders shall be immediately cancelled on that date. |
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(c) |
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Disbursement of Funds. |
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By no later than 11:00 a.m. (London time) on each Borrowing Date, each Lender shall
remit its Pro Rata Share of the aggregate amount of the Loans |
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requested by the Borrower as determined above in immediately available funds to the
account specified by the Administrative Agent. To the extent that it is in actual
receipt of such funds from each Lender, the Administrative Agent shall remit the
amount of the Loans requested by the Borrower to the account specified by the
Borrower in the relevant Borrowing Request by wire transfer of same day funds. In
the event that one or more such Lenders fails to remit such Pro Rata Share (a Loan
Deficit) as required hereunder (each, a Defaulting Lender), GE and any other
non-defaulting Lenders who agree to fund the whole or part of their Pro Rata Share
of any Loan Deficit (each, a Non-Defaulting Lender) shall lend their Pro Rata
Share of such Loan Deficit (without giving effect to such Defaulting Lenders
Commitment) subject to the other terms and conditions hereof (including Clause
2.2(b)(iii) (Lenders Commitment)). |
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Notwithstanding anything herein to the contrary, each Non-Defaulting Lender shall
have the right, without the consent of any Transaction Party, any other Lender or
the Administrative Agent, to assign to any such Defaulting Lender, upon demand, the
portion of the Loan funded by such Non-Defaulting Lender pursuant to this Clause
2.2(c) for an amount equal to the outstanding principal amount of such portion of
the Loan funded by such Non-Defaulting Lender. |
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(d) |
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Denomination of Loans. |
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(i) |
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Each Loan made by the Lenders hereunder shall be denominated in
an Approved Currency. Notwithstanding anything herein or in any other
Transaction Document to the contrary, the Borrower shall not request any Loan,
and the Lenders shall not be obligated to make any Loan, hereunder if, after
giving effect thereto, the Euro Equivalent of the aggregate Principal Balance
of the Loans held by the Lenders in each Approved Currency would exceed the
product of (A) the Currency Percentage for such Approved Currency set forth in
the most recent Portfolio Report delivered under the Servicing Agreement and
(B) the Maximum Aggregate Principal Balance, as determined by reference to the
most recent Portfolio Report delivered under the Servicing Agreement. |
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(ii) |
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On each Intra-Month Settlement Date, the Borrower shall, to the
extent necessary, make such prepayments and new Borrowings hereunder as may be
necessary to cause the Euro Equivalent of the aggregate Principal Balance of
the Loans held by the Lenders in each Approved Currency to be equal to or less
than the product of (A) the Currency Percentage for such Approved Currency set
forth in the most recent Portfolio Report delivered under the Servicing
Agreement and (B) the Maximum Aggregate Principal Balance, as determined by
reference to the most recent Portfolio Report delivered under the Servicing
Agreement. |
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(e) |
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Redenomination of Local Currencies. |
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(i) |
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Each obligation of any party to this Agreement to make a
payment denominated in the national currency unit of any member state of the |
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European Union that adopts the Euro as its lawful currency after the date
hereof shall be redenominated into Euro at the time of such adoption (in
accordance with the EMU Legislation). If, in relation to the currency of
any such member state, the basis of accrual of interest expressed in this
Agreement in respect of that currency shall be inconsistent with any
convention or practice in the London Interbank Market for the basis of
accrual of interest in respect of the Euro, such expressed basis shall be
replaced by such convention or practice with effect from the date on which
such member state adopts the Euro as its lawful currency; provided that if
any Borrowing in the currency of such member state is outstanding
immediately prior to such date, such replacement shall take effect, with
respect to such Borrowing, at the end of the then current Interest Period. |
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(ii) |
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Without prejudice and in addition to any method of conversion
or rounding prescribed by any EMU Legislation and (A) without limiting the
liability of the Borrower for any amount due under this Agreement and (B)
without increasing any Commitment of any Lender, all references in this
Agreement to minimum amounts (or integral multiples thereof) denominated in the
national currency unit of any member state of the European Union that adopts
the Euro as its lawful currency after the date hereof shall, immediately upon
such adoption, be replaced by references to such minimum amounts (or integral
multiples thereof) as shall be specified herein with respect to Borrowings
denominated in Euro. |
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(iii) |
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Each provision of this Agreement shall be subject to such
reasonable changes of construction as the Administrative Agent may from time to
time agree with the Performance Undertaking Provider to be appropriate to
reflect the adoption of the Euro by any member state of the European Union and
any relevant market conventions or practices relating to the Euro. |
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2.3 |
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Use of proceeds |
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The Borrower shall use the proceeds of the Loans only to (a) pay the purchase price for
Receivables or otherwise acquire Borrower Receivables Interest, in each case, pursuant to
and in accordance with the terms of the Originator Sale Agreements and Intermediate Transfer
Agreements, (b) refinance Loans denominated in one Approved Currency with Loans denominated
in another Approved Currency for the purpose of satisfying the requirements set forth in
Clause 2.2(d) (Denomination of Loans), (c) pay transaction fees, costs and expenses incurred
in connection with the consummation of the transactions contemplated by the Transaction
Documents and (d) make payments of principal and interest in respect of the Subordinated
Loan pursuant to the Subordinated Loan Agreement to the extent that such proceeds when
applied as Collections pursuant to Clause 2.6 (Application of Collection prior to Facility
Termination Date) are available for such application in accordance with Clause 2.6(g)(iii);
provided, that, notwithstanding anything herein or in any other Transaction Document to the
contrary, the Borrower shall not use all or any portion of the proceeds of any Loan to pay
the purchase price for, or grant or otherwise acquire Borrower Receivables Interests in, any
Receivable (i) if a Daily Report has not been |
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delivered on such day pursuant to and in accordance with Clause 2.3 (Reporting requirements)
of the Servicing Agreement, or (ii) that was originated by an Originator with respect to
which a Seller Event has occurred and is continuing. |
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(a) |
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On each Monthly Settlement Date for a Loan, the Borrower shall pay (in
immediately available funds in the currency of such Loan) to the Administrative Agent,
all accrued and unpaid Interest with respect to such Loan. |
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(b) |
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The Borrower shall pay to the Administrative Agent for and on behalf of itself,
the Structuring Agent and the Lenders certain Fees in the amounts and on the dates set
forth in (i) the fee agreement of even date herewith between the Borrower, the
Performance Undertaking Provider and the Administrative Agent (the Administrative
Agent Fee Letter), (ii) the fee agreement of date herewith between the Performance
Undertaking Provider and the Structuring Agent (the Structuring Agent Fee Letter) and
(iii) the fee agreement of even date herewith between the Borrower, the Performance
Undertaking Provider, the Administrative Agent and the Lenders (the Lender Fee
Letter). |
2.5 |
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Payment and prepayment of Loans |
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(a) |
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The Borrower shall repay the outstanding principal amount of each Loan on the
Maturity Date. Prior thereto, the Borrower: |
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(i) |
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shall, immediately upon any acceleration of the Loans pursuant
to Clause 7.3 (Acceleration of maturity), repay the amount of the Loans to the
extent so accelerated; |
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(ii) |
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shall, if on any date the Aggregate Principal Balance exceeds
the Maximum Aggregate Principal Balance, as determined by reference to the most
recent Portfolio Report delivered under the Servicing Agreement, make a
prepayment of the Loans on such date (which prepayment shall be effected by
making a deposit to the applicable Borrower Operating Account (Principal) for
application in accordance with Clause 2.6 (Application of Collections prior to
Facility Termination Date) or Clause 2.7 (Application of Collections after
Facility Termination Date), as applicable) in an amount sufficient to cause the
Aggregate Principal Balance to be less than or equal to the Maximum Aggregate
Principal Balance, as determined by reference to such Portfolio Report; |
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shall, if on any date the Euro Equivalent of the aggregate
outstanding principal amount of the Loans for all Lenders exceeds the Maximum
Aggregate Principal Balance, make a prepayment of the Loans on such date (which
prepayment shall be effected by making a deposit to the applicable Borrower
Operating Account (Principal) for application in accordance with Clause 2.6
(Application of Collections prior to Facility Termination Date) or Clause 2.7
(Application of Collections |
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after Facility Termination Date), as applicable) in an amount sufficient to
cause the Euro Equivalent of the aggregate outstanding principal amount of
the Loans for all Lenders to be less than or equal to the Maximum Aggregate
Principal Balance; |
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(iv) |
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from and after the Facility Termination Date, shall repay the
Loans out of Collections available for such purpose pursuant to Clause 2.7
(Application of Collections after Facility Termination Date); and |
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(v) |
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shall prepay the Loans in the manner specified in, and to the
extent required by, Clause 2.2(d) (Denomination of Loans). |
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(b) |
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The Borrower may, at its option after consultation with the Performance
Undertaking Provider, prepay on any Business Day all or any portion of the Loans upon
prior written notice delivered by it to each Lender not later than five (5) Business
Days prior to the date of such payment. Each such notice shall be in the form attached
as Exhibit C (Form of Prepayment Notice) and shall (i) specify the aggregate amount and
Approved Currency of the prepayment to be made on the Loans and the Loans to which such
prepayment is to be applied and (ii) specify the Business Day on which the Borrower
will make such prepayment. Each such prepayment shall be made ratably among the
Lenders based on the Aggregate Principal Balance of the Loans held by each. |
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(c) |
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If: |
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any amendment or waiver that requires the consent of the
Required Lenders does not receive the consent of the Required Lenders, but does
receive the consent of Lenders representing more than 51% of the Aggregate
Commitments or, if the Commitments have been terminated, Lenders that
represented more than 51% of the Aggregate Commitments immediately prior to
such termination (any Lender that voted or was deemed to have voted against
such amendment or waiver a Dissenting Lender); |
|
|
(ii) |
|
any sum payable to any Lender by the Borrower is required to be
increased under Clause 2.15(a) (Indemnity for Taxes); |
|
|
(iii) |
|
any Lender claims indemnification from the Borrower under
Clause 2.15(c) (Indemnity for Taxes), Clause 2.14 (Indemnity for reserves and
expenses) or Clause 2.17 (Mandatory costs); |
|
|
(iv) |
|
any Lenders Loans are converted into Alternative Rate Loans
under Clause 2.12(a) (Illegality); |
|
|
(v) |
|
any Lender becomes a Defaulting Lender under Clause 2.2(c)
(Disbursement of Funds), |
|
|
|
the Borrower may, at its option after consultation with the Performance Undertaking
Provider: |
7
|
(A) |
|
prepay on any Business Day upon prior written notice delivered
by it to the Administrative Agent not later than five (5) Business Days prior
to the date of such payment all, and not just a portion of, the participation
in the Loans of any Dissenting Lender or Defaulting Lender or, as the case may
be, whilst the circumstance giving rise to the requirement, indemnification or
conversion continues, of any Lender to whom payments are required to be
increased or that is claiming indemnification or whose Eurocurrency Loans have
been converted into Alternative Rate Loans pursuant to the clauses mentioned
above. The Commitment of such Lender shall be automatically cancelled upon
delivery to the Administrative Agent of the Borrowers prepayment notice. Each
such notice shall be in the form attached as Exhibit C (Form of Prepayment
Notice) and shall specify (i) the Lender whose participation in the Loans is to
be prepaid, (ii) the aggregate amount and Approved Currency of the prepayment
to be made on the Loans and the Loans to which such prepayment is to be applied
and (iii) the Business Day on which the Borrower will make such prepayment; or |
|
|
(B) |
|
on five (5) Business Days prior written notice to the
Administrative Agent and such Lender, replace such Lender by requiring such
Lender to (and such Lender shall) transfer pursuant to Clause 10.3
(Assignability) all (and not part only) of its rights and obligations under
this Agreement to a Lender or other Eligible Assignee (a Replacement Lender)
selected by the Performance Undertaking Provider, and which is acceptable to
the Administrative Agent (acting reasonably), which confirms its willingness to
assume and does assume all the obligations of the transferring Lender
(including the assumption of the transferring Lenders participations on the
same basis as the transferring Lender) for a purchase price in cash payable at
the time of transfer equal to the outstanding principal amount of such Lenders
participation in the Aggregate Principal Balance and all accrued Interest
and/or Liquidation Fees, break costs and other amounts payable in relation
thereto under the Transaction Documents. The replacement of a Lender pursuant
to this Clause shall be subject to the following conditions: |
|
(I) |
|
neither the Borrower nor the Performance
Undertaking Provider shall have any right to replace the Administrative
Agent; |
|
|
(II) |
|
neither the Administrative Agent nor the Lender
shall have any obligation to the Borrower or the Performance
Undertaking Provider to find a Replacement Lender; |
|
|
(III) |
|
in the event of a replacement of a Dissenting
Lender such replacement must take place no later than 90 days after the
date the Dissenting Lender notifies the Borrower and the Administrative
Agent of its failure or refusal to agree to any consent, waiver or
amendment to the Transaction Documents requested by the Borrower; and |
8
|
(IV) |
|
in no event shall the Lender replaced under
this Clause 2.5(c)(B) be required to pay or surrender to such
Replacement Lender any of the fees received by such Lender pursuant to
the Transaction Documents. |
|
(d) |
|
Each prepayment of the Loans (whether optional or mandatory) must be
accompanied by a payment of all accrued and unpaid Interest on the amount prepaid and
any other amounts (including amounts payable under Clause 2.11 (Breakage costs)) due
hereunder in respect of such prepayment. |
2.6 |
|
Application of Collections prior to Facility Termination Date |
|
(a) |
|
On each Business Day prior to the Facility Termination Date, the Borrower shall
(and shall cause the Servicer to) cause: |
|
(i) |
|
(x) all Collections and other amounts deposited into any
Existing Collection Account (other than any amount deposited into an Existing
Collection Account solely for the purpose of funding an Other Permitted
Payment), and (y) any Collections or other amounts otherwise received by any
Transaction Party in respect of the Receivables, in each case, to be deposited
into a New Collection Account no later than the Business Day immediately
following the day on which such amounts were deposited into such Existing
Collection Accounts or otherwise received; |
|
|
(ii) |
|
all Collections and other amounts deposited into any New
Collection Account to be deposited into a Borrower Operating Account no later
than the Business Day immediately following the day on which such amounts were
deposited into such New Collection Accounts; and |
|
|
(iii) |
|
(x) all Collections and other amounts in respect of the Pool
Receivables, the Related Security or the Collateral deposited to any Borrower
Operating Account to be retained in such Borrower Operating Account, and (y)
all other amounts deposited to any Borrower Operating Account to be deposited
to the applicable Originators Designated Account, in each case, no later than
the second (2nd) Business Day immediately following the day on which
such amounts were identified by the Borrower (or the Servicer on behalf of the
Borrower) as having been deposited into such New Collection Accounts. |
|
(b) |
|
On each Business Day prior to the Facility Termination Date, the Borrower shall
(and shall cause the Servicer to) cause all Collections retained in such Borrower
Operating Accounts pursuant to Clause 2.6(a)(ii) (including, if applicable, any
investment earnings received with respect to funds on deposit in such Borrower
Operating Accounts) to be applied in the following order of priority: |
|
(i) |
|
on a pro rata basis in no order of priority amongst themselves: |
9
|
(A) |
|
pay all operating costs, expenses, Agreed
Annual Income and Taxes of the Borrower and the Spanish Account SPV
then due and payable, as instructed by the Borrower or the Spanish
Account SPV; provided that the aggregate amount so paid during any
calendar year pursuant to this Clause 2.6(b)(i)(A) shall not exceed
100,000; |
|
|
(B) |
|
deposit to the Borrower Operating Account
(Interest) for the benefit of the Administrative Agent an amount equal
to (i) any Fees then due and payable to the Administrative Agent
pursuant to the Administrative Agent Fee Letter, and (ii) any
unreimbursed Transaction Party Obligations then due and payable to the
Administrative Agent in respect of costs and expenses incurred in
connection with the enforcement of any Transaction Document or the
collection of any amounts due thereunder; and |
|
|
(C) |
|
deposit to the Borrower Operating Account
(Interest) for the benefit of the Lenders, an amount equal to the
aggregate Interest and Fees accrued through such day and not previously
deposited to a Borrower Operating Account (Interest) (such amount to be
allocated among the Lenders ratably in accordance with the proportion
of such amounts owing to each such Person) (provided, that for purposes
of determining the amount of Interest and Fees accrued through (x) any
day (other than a day described in sub-clause (y) below), such
determination shall be made based on the relevant rate, percentage or
other item or amount as of the immediately preceding Monthly Settlement
Date, unless the actual rate, percentage or other item or amount has
been notified to the Borrower and the Servicer, and (y) any day falling
prior to the initial Monthly Settlement Date, any such determination
shall be made on a basis agreed between the Borrower, the Servicer and
the Administrative Agent); |
|
(ii) |
|
if the Aggregate Principal Balance exceeds the Maximum
Aggregate Principal Balance as determined by reference to the most recent
Portfolio Report delivered under the Servicing Agreement, deposit to the
applicable Borrower Operating Account (Principal) an amount necessary to cause
the Aggregate Principal Balance to be less than or equal to the Maximum
Aggregate Principal Balance, as determined by reference to such Portfolio
Report; |
|
|
(iii) |
|
if any Transaction Party Obligations (other than any amount
described in Clauses 2.6(b)(i) and (ii)) are then due and payable by the
Borrower to any Secured Party, pay to each such Secured Party (ratably in
accordance with the amounts owing to each) the Transaction Party Obligations so
due and payable (in the currency in which such Transaction Party Obligations
are payable); |
10
|
(iv) |
|
retain in one or more Borrower Operating Accounts for the
benefit of the Servicer, an amount equal to the aggregate Servicing Fee accrued
through such day and not previously retained for such purpose pursuant to this
sub-clause (iv); |
|
|
(v) |
|
pay all operating costs, expenses, Agreed Annual Income and
Taxes of the Borrower and the Spanish Account SPV then due and payable and not
paid pursuant to Clause 2.6(b)(i)(A) above, as instructed by the Borrower or
the Spanish Account SPV, as the case may be; |
|
|
(vi) |
|
pay to the Servicer, for the benefit of the applicable Italian
Originators, an amount equal to any unreimbursed RIBA Advances; and |
|
|
(vii) |
|
remit any remaining Collections to the Borrower for
application in accordance with Clause 2.6(g) below (any such remittance, a
Release); provided that, if the conditions precedent for such Release set
forth in Clause 3.2 (Conditions precedent to all borrowings and releases) are
not satisfied, the Borrower shall (and shall cause the Servicer to) cause any
such remaining Collections to be retained in the Borrower Operating Accounts
and shall apply such Collections in accordance with this Clause 2.6 or Clause
2.7 (Application of Collections after Facility Termination Date) on the next
Business Day. |
(c) |
(i) |
|
On each Monthly Settlement Date, the Borrower shall (and shall cause the
Servicer to) pay to the Administrative Agent for the account of the Lenders all
Interest accrued during the relevant calendar month from Collections deposited to the
Borrower Operating Account (Interest) for such purpose pursuant to Clause 2.6(b)(i)(C). |
|
|
(ii) |
|
On each date on which any Fees are payable pursuant to the Fee
Letters, the Borrower shall (and shall cause the Servicer to) pay such Fees to
the Persons entitled thereto pursuant to the Fee Letters out of Collections
deposited to the Borrower Operating Account (Interest) for such purpose
pursuant to Clauses 2.6(b)(i)(B) and 2.6(b)(i)(C), as applicable. |
|
|
(iii) |
|
Notwithstanding anything to the contrary in Clause
2.6(b)(i)(C), it is understood and agreed that the Interest and Fees payable
hereunder will be based on the actual rates, percentages, and other items and
amounts during the relevant period. In the event that the amount allocated
during any relevant period in respect of Interest and Fees pursuant to Clause
2.6(b)(i)(C) is (A) greater than the actual Interest and Fees for such period,
the excess shall (on the relevant date of determination) be deposited to one or
more Borrower Operating Accounts and applied in accordance with Clause 2.6(b)
and (B) less than the actual Interest and Fees for such period, the Borrower
shall (and shall cause the Servicer to) cause an additional amount equal to
such shortfall to be deposited into the applicable Borrower Operating Account
(Interest) (on the relevant date of determination). |
11
|
(d) |
|
To the extent practicable, the Servicer shall cause all Collections applied
pursuant to Clause 2.6(b) in respect of any Transaction Party Obligations to be
denominated in the same currency in which such Transaction Party Obligations are
payable. To the extent that Transaction Party Obligations payable or to become payable
in any currency exceed the amount of Collections in that currency and available for
such payment, and Collections in any other currency are available (after giving effect
to the order of priority set forth in Clause 2.6(b)) for such payment, the Servicer
shall allocate such other Collections to the payment of such Transaction Party
Obligations, and on the relevant payment date the Servicer shall cause such other
Collections to be converted into the relevant currency of payment in accordance with
Clause 2.16 (Conversion of Currencies) and shall apply the amounts so converted to the
making of such payment. |
|
|
(e) |
|
In the event any deposit is made to a Borrower Operating Account (Principal)
pursuant to Clause 2.6(b)(ii), the amount of such deposit shall be allocated among all
Lenders by the Administrative Agent ratably in proportion to the Aggregate Principal
Balance of the Loans held by each. On the next Settlement Date, the Borrower shall
(and shall cause the Servicer to) distribute to the Administrative Agent for payment to
each Lender its allocable share of such deposit for application to the repayment of the
Loans held by such Lender. Notwithstanding the foregoing, if on any Business Day after
such deposit is made and prior to the distribution of such deposit pursuant to this
Clause 2.6(e), the Servicer delivers a Portfolio Report with more recent data
indicating that the Aggregate Principal Balance is less than or equal to the Maximum
Aggregate Principal Balance, the Borrower may (or may cause the Servicer to) withdraw
the Collections so deposited for application in accordance with Clause 2.6(b) to the
extent that, after giving effect to such withdrawal and application, the Aggregate
Principal Balance is less than or equal to the Maximum Aggregate Principal Balance, as
determined by reference to such Portfolio Report. |
|
|
(f) |
|
On each Servicing Fee Payment Date, the Borrower shall (and shall direct the
Servicer to) pay to the Servicer the accrued and unpaid Servicing Fee allocable to it
out of Collections retained in the Borrower Operating Accounts for such purpose
pursuant to Clause 2.6(b)(iv). |
|
|
(g) |
|
Any Collections remitted to the Borrower pursuant to Clause 2.6(b)(vii) shall
be applied by the Servicer, on behalf of the Borrower: |
|
(i) |
|
first, if so requested by the Borrower (acting upon the
instructions of the Servicer), to pay or prepay (or set aside for the payment
or prepayment of) Loans or other Transaction Party Obligations that are then
due and payable; |
|
|
(ii) |
|
second, to pay the purchase price for Receivables or to grant
or otherwise acquire Borrower Receivables Interests, in each case pursuant to
(and in accordance with) the Originator Sale Agreements or Intermediate
Transfer Agreements, as the case may be (provided, that, notwithstanding
anything herein or in any other Transaction Document to the contrary, the
Borrower shall not use all or any portion |
12
|
|
|
of the proceeds of any Release to pay the purchase price for, or grant or
otherwise acquire Borrower Receivables Interests in, any Receivable that was
originated by an Originator with respect to which a Seller Event has
occurred and is continuing); |
|
|
(iii) |
|
third, only if no Facility Event then exists or the Final
Payout Date has occurred, to make payments of principal and interest in respect
of the Subordinated Loans and any other amounts owing to the Subordinated
Lender pursuant to the Subordinated Loan Agreement; and |
|
|
(iv) |
|
fourth, in such other manner as the Borrower (acting upon the
instructions of the Servicer) may specify and that is permitted by the terms of
the Transaction Documents; provided that, if all or any portion of the
Collections remitted to the Borrower pursuant to Clause 2.6(b)(vii) are not
applied pursuant to this Clause 2.6(g), the Borrower shall (and shall cause the
Servicer to) cause any such remaining Collections to be retained in one or more
Borrower Operating Accounts and shall apply such Collections in accordance with
this Clause 2.6 or Clause 2.7 (Application of Collections after Facility
Termination Date) on the next Business Day; provided, further, that after the
Final Payout Date any funds available pursuant to this Clause 2.6(g)(iv) shall
be paid by the Borrower to the Subordinated Lender as additional interest under
the Subordinated Loan Agreement. |
|
(h) |
|
Unless otherwise agreed by the Originators, in each case, to the extent
affected thereby, the amount of Collections remitted to the Borrower pursuant to Clause
2.6(b)(vii) or Clause 2.7(b)(ix) (Application of Collections after Facility Termination
Date), as the case may be, on any day shall be applied to the payment of amounts
described in Clauses 2.6(g)(ii) or Clause 2.7(d)(i) (Application of Collections after
Facility Termination Date), as applicable, on a pro rata basis according to the amounts
owing to such Persons. |
2.7 |
|
Application of Collections after Facility Termination Date |
|
(a) |
|
On the Facility Termination Date, and on each Business Day thereafter until the
Final Payout Date, the Borrower shall (and shall cause the Servicer to) cause: |
|
(i) |
|
(x) all Collections and other amounts deposited into any
Existing Collection Account, and (y) any Collections or other amounts otherwise
received by any Transaction Party in respect of the Receivables, in each case,
to be deposited into a New Collection Account no later than the Business Day
immediately following the day on which such amounts were deposited into such
Existing Collection Accounts or otherwise received; |
|
|
(ii) |
|
all Collections and other amounts deposited into any New
Collection Account to be deposited into a Borrower Operating Account no later
than the Business Day immediately following the day on which such amounts were
deposited into such New Collection Accounts; and |
13
|
(iii) |
|
(x) all Collections and other amounts in respect of the Pool
Receivables, the Related Security or the Collateral deposited to any Borrower
Operating Account to be retained in such Borrower Operating Account, and (y)
all other amounts deposited to any Borrower Operating Account to be deposited
to the applicable Originators Designated Account, in each case, no later than
the second (2nd) Business Day immediately following the day on which
such amounts were identified by the Borrower (or the Servicer on behalf of the
Borrower) as having been deposited into such Borrower Operating Accounts; |
|
(b) |
|
On each Settlement Date to occur on or after the Facility Termination Date, the
Borrower (or the Administrative Agent acting on behalf of the Borrower) shall cause all
funds on deposit in the Borrower Operating Accounts from time to time, including any
investment earnings received with respect to such funds, (collectively, Borrower
Operating Account Funds), to be distributed in the following order of priority: |
|
(i) |
|
first, to pay, on a pro rata basis in no order of priority
amongst themselves: |
|
(A) |
|
to the Administrative Agent an amount equal to
any unreimbursed Transaction Party Obligations then owing to the
Administrative Agent in respect of costs and expenses incurred in
connection with the enforcement of any Facility Account or Transaction
Document or the collection of any amounts due thereunder; and |
|
|
(B) |
|
all operating costs, expenses, Agreed Annual
Income and Taxes of the Borrower and the Spanish Account SPV then due
and payable, as instructed by the Borrower or the Spanish Account SPV;
provided that the aggregate amount so paid during any calendar year
pursuant to this Clause 2.7(b)(i)(B), when combined with the aggregate
amount paid during such calendar year pursuant to Clause 2.6(b)(i)(C),
shall not exceed 100,000; |
|
(ii) |
|
second, if the Servicer is a Person other than a Transaction
Party or an Affiliate thereof, to pay to such Servicer the accrued and unpaid
Servicing Fee; |
|
|
(iii) |
|
third, to pay to the Lenders and the Administrative Agent an
amount equal to the aggregate accrued and unpaid Interest and Fees payable to
each such Person (ratably in accordance with the proportion of such amounts
owing to each such Person); |
|
|
(iv) |
|
fourth, to pay to the Lenders an amount equal to the Aggregate
Principal Balance of the Loans (ratably in accordance with the Euro Equivalent
of the outstanding Principal Balance of the Loans held by each); |
14
|
(v) |
|
fifth, if any Transaction Party Obligations (other than any
amount described in Clauses 2.7(b)(i) to (iv) above are then due and payable to
any Secured Party, to pay to each such Secured Party (ratably in accordance
with the amounts owing to each) the Transaction Party Obligations so due and
payable; |
|
|
(vi) |
|
sixth, to pay all operating costs, expenses, Agreed Annual
Income and Taxes of the Borrower and the Spanish Account SPV then due and
payable and not paid pursuant to Clause 2.7(b)(i)(B) above, as instructed by
the Borrower or the Spanish Account SPV, as the case may be; |
|
|
(vii) |
|
seventh, if the Servicer is a Transaction Party or an
Affiliate thereof, pay to the Servicer the accrued and unpaid Servicing Fee; |
|
|
(viii) |
|
eighth, pay to the Servicer, for the benefit of the applicable Italian
Originators, an amount equal to any unreimbursed RIBA Advances; and |
|
|
(ix) |
|
ninth, after all Transaction Party Obligations are paid in
full, pay to the Borrower any remaining Collections for application in
accordance with Clause 2.7(d). |
|
(c) |
|
To the extent practicable, the Borrower (or the Administrative Agent acting on
behalf of the Borrower) shall apply Borrower Operating Account Funds denominated in a
currency to the payment of amounts payable pursuant to Clause 2.7(b) in the same
currency. To the extent that aggregate amounts payable or to become payable in any
currency exceed the amount of Borrower Operating Account Funds denominated in that
currency and available for such payment, and Borrower Operating Account Funds
denominated in any other currency are available (after giving effect to the order of
priority set forth in Clause 2.7(b)) for such payment, the Borrower (or the
Administrative Agent acting on behalf of the Borrower) shall allocate such other
Borrower Operating Account Funds to the payment of such amount, and on the relevant
payment date the Borrower (or the Administrative Agent acting on behalf of the
Borrower) shall cause such other Borrower Operating Account Funds to be converted into
the relevant currency of payment using commercially reasonable methods and shall apply
the amounts so converted to the making of such payment. |
|
|
(d) |
|
Any Collections remitted to the Borrower pursuant to Clause 2.7(b)(ix) shall be
applied by the Servicer, on behalf of the Borrower (i) first, to make payments of
principal and interest in respect of the Subordinated Loans and any other amounts owing
to the Subordinated Lender pursuant to the Subordinated Loan Agreement; and (ii)
second, in such other manner as the Borrower may specify and that is permitted by the
terms of the Transaction Documents; provided, that after the Final Payout Date any
funds available pursuant to this Clause 2.7(d) shall be paid by the Borrower to the
Subordinated Lender as additional interest under the Subordinated Loan Agreement. |
15
2.8 |
|
Deemed Collections; application of payments |
|
(a) |
|
Each of the parties hereto agrees that, unless otherwise required by contract
or applicable Law or clearly indicated by facts or circumstances or unless an Obligor
designates that a payment be applied to a specific Receivable, all Collections from an
Obligor shall be applied to the oldest Receivables (whether or not such Receivables are
Pool Receivables) of such Obligor. |
|
|
(b) |
|
If and to the extent the Administrative Agent, any Lender or any Indemnified
Party shall be required for any reason to pay over to an Obligor, any Transaction Party
or any other Person (other than in accordance herewith) any amount received on its
behalf hereunder, such amount shall be deemed not to have been so received but rather
to have been retained by the Borrower and, accordingly, the Administrative Agent, such
Lender or such Indemnified Party, as the case may be, shall have a claim against the
Borrower for such amount, payable when and to the extent that any distribution from or
on behalf of such Obligor is made in respect thereof. |
|
|
(c) |
|
If on any day a Pool Receivable or any part thereof becomes a Diluted
Receivable, the Borrower shall be deemed to have received on such day a Collection of
such Pool Receivable in the amount of such Diluted Receivable or part thereof. |
|
|
(d) |
|
If on any day it is determined that any of the representations or warranties in
Clause 4.1 (Representations and warranties of the Borrower) was untrue with respect to
a Pool Receivable or the nature of any Purchasers or the Administrative Agents
interest in such Pool Receivable, the Borrower shall be deemed to have received on such
day a Collection of such Pool Receivable in an amount equal to the Unpaid Balance
thereof. |
|
|
(e) |
|
If on any day a RIBA Dilution occurs, the Borrower shall be deemed to have
received on such day a Collection in the amount of such RIBA Dilution. |
|
|
(f) |
|
Not later than the first Business Day after the Borrower is notified in writing
or otherwise becomes aware that it has been deemed pursuant to this Clause 2.8 to have
received a Deemed Collection, the Borrower shall deposit in a Borrower Operating
Account, in same day funds, the amount of such Deemed Collection; provided that the
amount so payable by the Borrower shall not exceed the amount (if any) required (after
giving effect to any Deemed Collection to be paid by any other Transaction Party on
such day) in order to cause the Aggregate Principal Balance to be less than or equal to
the Maximum Aggregate Principal Balance. Any such amount shall be applied as a
Collection in accordance with Clauses 2.6 (Application of Collections prior to Facility
Termination Date) or 2.7 (Application of Collections after Facility Termination Date),
as applicable. |
2.9 |
|
Payments and computations, etc |
|
(a) |
|
All amounts to be paid by the Borrower or the Servicer to the Administrative
Agent, any Lender or any other Secured Party shall be paid no later than 11:00 a.m.
(London time) on the day when due in immediately available funds |
16
|
|
|
(without counterclaim, setoff, deduction, defense, abatement, suspension or
deferment) to the account designated by such Person. All amounts to be deposited by
the Borrower or the Servicer into any Facility Account, the Administrative Agents
Account or any other account shall be deposited in immediately available funds no
later than 11:00 a.m. (London time) on the date when due. |
|
|
(b) |
|
The Borrower shall (and shall cause the Servicer to), to the extent permitted
by Law, pay interest on any amount not paid or deposited by it when due hereunder
(after as well as before judgment), at an interest rate per annum equal to the Default
Rate, payable on demand. |
|
|
(c) |
|
All computations of Interest and other amounts hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first but
excluding the date of payment) elapsed, except that (i) computations of Interest with
respect to any amount denominated in Sterling or any amount in respect of Fees shall be
made on the basis of a year of 365 days (or 366, as applicable), and (ii) in any case
where the practice of the relevant interbank market differs, computations of interest
and Interest shall be made in accordance with that market practice. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a Business
Day, such payment or deposit shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of such payment or deposit. Any
computations by the Administrative Agent or the applicable Lender of amounts payable by
the Borrower hereunder shall be binding upon the Borrower absent manifest error. |
|
|
(d) |
|
All payments of principal and interest in respect of any Loan shall be made in
the same Approved Currency as the Approved Currency in which such Loan is denominated.
All other payments to be made by the Servicer or the Borrower hereunder shall be made
solely in Euro. |
|
(a) |
|
When an Interest Period for a Loan denominated in one Approved Currency ends on
the same day as the current Interest Period for any other Loan denominated in the same
Approved Currency, those Loans will be consolidated and treated as one Loan. |
|
(a) |
|
The Borrower shall indemnify each Lender and the Administrative Agent against
any loss, cost or expense incurred by it as a result of the failure of any Borrowing to
be made for any reason on the date specified by the Borrower pursuant to, and in
accordance with, Clause 2.2 (Borrowing procedures), (other than by reason of default,
gross negligence or wilful misconduct of that Person alone). |
|
|
(b) |
|
The Borrower further agrees to pay all Liquidation Fees associated with a
reduction of the Principal Balance of any Loan other than on an Intra-Month Settlement
Date. |
17
|
(c) |
|
A certificate as to any loss, expense or Liquidation Fees payable pursuant to
this Clause 2.11 submitted by any Lender to the Borrower shall be conclusive in the
absence of manifest error. |
|
(a) |
|
Notwithstanding any other provision of this Agreement, if the adoption of or
any change in any Law or in the interpretation or application thereof by any relevant
Official Body shall make it unlawful for any Lender to make or maintain Loans for which
Interest is calculated by reference to the Adjusted Eurocurrency Rate (each a
Eurocurrency Loan) as contemplated by this Agreement or to obtain in the interbank
Eurocurrency market the funds with which to make or maintain any such Eurocurrency Loan
(a) such Lender shall promptly notify the Administrative Agent, the Servicer and the
Borrower thereof, (b) the obligation of such Lender to fund or maintain Eurocurrency
Loans or continue Eurocurrency Loans as such shall forthwith be cancelled and (c) such
Lenders Loans then outstanding as Eurocurrency Loans, if any, shall be converted on
the last day of the Interest Period for such Loans or within such earlier period as
required by Law into a Loan that accrues Interest based on the Alternative Rate (each
an Alternative Rate Loan). |
|
|
(b) |
|
In this Agreement, Alternative Rate means the rate of interest determined by
the Administrative Agent pursuant to a substitute basis for determining the rate of
interest agreed between the Administrative Agent and the Performance Undertaking
Provider, provided that if the Administrative Agent and the Performance Undertaking
Provider have not agreed a substitute basis for determining the rate of interest
hereunder within 10 Business Days of the date on which the circumstances necessitating
the determination of the Alternative Rate were notified to the Administrative Agent,
the Alternative Rate shall be that which expresses as a percentage rate per annum the
cost to that Lender of funding its participation in that Loan from whatever source it
may reasonably request. |
|
|
(c) |
|
Any substitute basis agreed pursuant to paragraph (b) above shall, with the
prior consent of all the Lenders and the Performance Undertaking Provider, be binding
on all Parties. |
2.13 |
|
Inability to determine Eurocurrency Rate |
|
|
|
If prior to the commencement of any Interest Period for a Eurocurrency Loan: |
|
(a) |
|
the applicable Lender determines (which determination shall be conclusive
absent manifest error) that adequate and reasonable means do not exist for ascertaining
on a timely basis the Adjusted Eurocurrency Rate or the Eurocurrency Rate, as
applicable, for such Interest Period; or |
|
|
(b) |
|
the applicable Lender determines that the Adjusted Eurocurrency Rate or the
Eurocurrency Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lender of making or maintaining the related Loan for
such Interest Period; |
18
|
|
|
then, such Lender shall give notice thereof to the Borrower and the Administrative Agent by
telephone or facsimile as promptly as practicable thereafter and, until the circumstances
giving rise to such notice no longer exist any Eurocurrency Loan shall as of the last day of
the Interest Period applicable thereto be converted to or continued as an Alternative Rate
Loan. |
2.14 |
|
Indemnity for reserves and expenses |
|
(a) |
|
If any Change in Law shall: |
|
(i) |
|
impose or modify any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Indemnified Party (except any such reserve requirement
reflected in the Adjusted Eurocurrency Rate or those for which payment has been
made pursuant to Clause 2.17 (Mandatory Costs)); or |
|
|
(ii) |
|
impose on any Indemnified Party (or on the U.S. market for
certificates of deposit or the London interbank market) any other cost
affecting or with respect to this Agreement or any other Transaction Document
or Eurocurrency Loans made or maintained by such Indemnified Party (except
those for which payment has been made pursuant to Clause 2.15 (Indemnity for
Taxes) or 2.17 (Mandatory Costs)) or the maintenance or financing of the Loans
hereunder, directly or indirectly; |
|
|
|
and the result of any of the foregoing shall be to increase the cost to such
Indemnified Party of making or maintaining any Loan (or of maintaining its
obligation to fund any such Loan) or to reduce the amount of any sum received or
receivable by such Indemnified Party hereunder (whether of principal, interest or
otherwise), or to reduce the rate of return from a Loan or on an Indemnified Partys
overall capital, then on the tenth (10th) day immediately following notification
thereof pursuant to Clause 2.14(d) the Borrower will pay to such Indemnified Party
such additional amount or amounts as will compensate such Indemnified Party for such
additional costs incurred or reduction suffered. |
|
|
(b) |
|
A certificate of an Indemnified Party setting forth the amount or amounts
necessary to compensate such Indemnified Party or its holding company, as applicable,
as specified in clause (a) of this Clause 2.14 shall be delivered to the Borrower and
the Servicer and shall be conclusive absent manifest error. |
|
|
(c) |
|
Promptly after any Indemnified Party has determined that it will make a request
for compensation pursuant to this Clause 2.14, such Indemnified Party shall notify the
Borrower of such determination. Failure or delay on the part of any Indemnified Party
to demand compensation pursuant to this Clause 2.14 shall not constitute a waiver of
such Indemnified Partys right to demand such compensation. |
|
|
(d) |
|
Notwithstanding anything in this Clause 2.14 to the contrary, the Borrower
shall not be required to pay to any Indemnified Party any amount pursuant to |
19
|
|
|
this Clause 2.14 to the extent (i) such amount has been fully and finally paid in
cash to such Indemnified Party pursuant to any other provision of this Agreement or
any other Transaction Document or (ii) such amounts constitute Excluded Taxes. |
|
(a) |
|
Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction for any Indemnified
Taxes provided that if the Borrower shall be required to deduct any Indemnified Taxes
from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional
sums payable under this Clause 2.15) the recipient of such payment receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount
deducted to the relevant Official Body in accordance with applicable Law. |
|
|
(b) |
|
The Borrower is not required to make an increased payment to a Lender under
paragraph (a) above, if on the date on which the payment falls due the payment could
have been made to the relevant Lender without a deduction for Indemnified Taxes if it
was a Qualifying Lender, but on that date that Lender is not or has ceased to be a
Qualifying Lender other than as a result of any change in Law after the date it became
a Lender under this Agreement. |
|
|
(c) |
|
The Borrower shall indemnify each Indemnified Party within ten (10) days after
written demand therefor, for the full amount of any Indemnified Taxes paid by such
Indemnified Party on or with respect to any payment by or on account of any obligation
of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Clause 2.15) and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto. A certificate as to the
amount of such payment or liability delivered to the Borrower by an Indemnified Party,
or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error. |
|
|
(d) |
|
As soon as practicable after any payment of Indemnified Taxes by the Borrower
to an Official Body, the Borrower shall deliver to the applicable Person the original
or a certified copy of a receipt issued by such Official Body evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to such Person. |
|
|
(e) |
|
Any Foreign Lender that is entitled to an exemption from or reduction of
withholding Tax under the law of the jurisdiction in which the Borrower is located, or
any treaty to which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative Agent) and
file with the appropriate Official Body (if required), at the time or times prescribed
by applicable Law, such properly completed and executed documentation prescribed by
applicable Law or reasonably requested by the Borrower as will permit such payments to
be made without withholding or at a reduced rate. |
20
|
(f) |
|
If the Borrower makes a payment to an Indemnified Party under this Clause 2.15
and the relevant Indemnified Party determines that: |
|
(i) |
|
a Tax Credit is attributable to such payment; and |
|
|
(ii) |
|
that Indemnified Party has obtained, utilised and retained that
Tax Credit, that Indemnified Party shall pay an amount to the Borrower which
that Indemnified Party determines will leave it (after that payment) in the
same after-Tax position as it would have been in had the payment not been
required to be made by the Borrower. For the purpose of this Clause 2.15(f)
Tax Credit means a credit against, relief on remission for, or repayment of,
any tax. |
|
|
|
This Clause 2.15 shall not be construed to require any Indemnified Party to make
available its Tax returns (or any other information relating to its Taxes which it
deems confidential) to the Borrower or any other Person. |
|
|
(g) |
|
Notwithstanding anything in this Clause 2.15 to the contrary, the Borrower
shall not be required to pay to any Indemnified Party any amount pursuant to this
Clause 2.15 to the extent (i) such amount has been fully and finally paid in cash to
such Indemnified Party pursuant to any other provision of this Agreement or any other
Transaction Document or (ii) such amounts constitute Excluded Taxes. |
|
|
(h) |
|
Each of the initial Lenders hereby represents and warrants to the Borrower that
as of the Closing Date it is a Qualifying Lender. |
2.16 |
|
Conversion of currencies |
|
(a) |
|
If, on any day a payment is due and payable hereunder or under any other
Transaction Document, it is necessary for funds in one currency to be converted into
another currency in order to make any payment required to be made pursuant to Clauses
2.6 (Application of Collections prior to Facility Termination Date) or 2.7 (Application
of Collections after Facility Termination Date), as applicable, the Borrower shall (and
shall cause the Servicer to) solicit offer quotations from at least two foreign
exchange dealers reasonably acceptable to the Administrative Agent for effecting such
exchange and shall select the quotation which provides for the best exchange rate. The
Borrower shall (and shall cause the Servicer to) effect such exchange (or, if
applicable, shall instruct the Administrative Agent to effect such exchange) as soon
thereafter as is reasonably practicable but in no event later than two Business Days
thereafter. |
|
|
(b) |
|
On each Exchange Rate Determination Date, the Borrower shall (and shall cause
the Servicer to) determine the Spot Rate for each Local Currency and give notice
thereof to the Administrative Agent. In the event the Spot Rate for such Local
Currency cannot be determined by the Servicer because the relevant exchange rate does
not appear on any European Central Bank or Bloomberg historical pricing page for such
currency as set forth in the definition of Spot Rate, then the Spot Rate shall be
determined by the |
21
|
|
|
Administrative Agent and notified to the Borrower and the Servicer in accordance
with such definition. |
|
(c) |
|
Whenever any computation or calculation hereunder requires the aggregation of
amounts denominated in more than one currency, all amounts that are denominated in a
Local Currency shall be converted to Euro using the Spot Rate determined for the
Exchange Rate Determination Date immediately preceding the date of such calculation. |
|
(a) |
|
In order to compensate each Lender for the cost of its compliance (if any) with
the requirements of the Bank of England, the Financial Services Authority and/or the
European Central Bank (or, in each case, any other authority which replaces all or any
of its functions), each such Lender may (only to the extent not reflected in the
Statutory Reserves and the Eurocurrency Rate Reserve Percentage) require the Borrower
to pay, contemporaneously with each payment of Interest on each of such Loans,
additional interest on such Loan at a rate per annum equal to the Mandatory Costs Rate
calculated in accordance with the formula and in the manner set forth in
Schedule 3 (Mandatory Cost Rate). |
|
|
(b) |
|
Any additional interest owed pursuant to Clause 2.17(a) shall be determined by
the applicable Lender, which determination shall be conclusive absent manifest error,
and notified to the Borrower (with a copy to the Administrative Agent) at least five
(5) Business Days before each date on which Interest is payable for the applicable
Loan, and such additional interest so notified to the Borrower by such Lender shall be
payable to such Lender on each date on which Interest is payable for such Loan. |
2.18 |
|
Mitigation obligations |
|
|
|
If an event occurs as a result of which any Indemnified Party requests compensation under
Clause 2.11 (Breakage costs), Clause 2.14 (Indemnity for reserves and expenses) or 2.17
(Mandatory costs), or if any cancellation occurs under Clause 2.12 (Illegality) or if the
Borrower is required to pay any additional amount to any Indemnified Party or any Official
Body for the account of any Indemnified Party pursuant to Clause 2.15 (Indemnity for Taxes),
then such Indemnified Party shall, in consultation with the Borrower, use reasonable efforts
to mitigate or avoid the effects of such event. For the avoidance of doubt, an Indemnified
Party is not obliged to take any steps under this Clause 2.18 if in the opinion of that
Indemnified Party (acting reasonably) to do so might be prejudicial to it and the Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Indemnified Party in
connection with any action taken by such Indemnified Party pursuant to, or in connection
with, this Clause 2.18. |
|
2.19 |
|
Proceeds of Subordinated Loans |
|
(a) |
|
On the Closing Date the Borrower shall request a Subordinated Loan in an amount
equal to the excess of (i) the aggregate purchase price of the Receivables to be
transferred to the Borrower pursuant to the Intermediate |
22
|
|
|
Transfer Agreements and the Originator Sale Agreements, over (ii) the aggregate
amount of the Loans made by the Lenders to the Borrower on the Closing Date in
respect of such Receivables. |
|
|
(b) |
|
If on any day the Borrower has insufficient funds to pay the full purchase
price of Receivables to be purchased on such day pursuant to, and in accordance with
the terms and conditions of, the Intermediate Transfer Agreements and the Originator
Sale Agreements, the Borrower shall request a Subordinated Loan on such day in amount
equal to such insufficiency. |
2.20 |
|
Adjustments to the Applicable MAPB Percentage |
|
|
|
If as at the end of any Calculation Period, (i) from and including the Calculation Period
commencing on 1 October 2007 but prior to the end of the Initial Ratio Period the Dilution
Ratio exceeds 6% or thereafter the three month rolling average Dilution Ratio exceeds the
Dilution Benchmark Percentage plus 3.5% or (ii) the Days Sales Outstanding exceeds 85 days,
the Administrative Agent may (and, if instructed by the Required Lenders, shall) upon six
(6) Business Days written notice to the Borrower and the Servicer make such adjustments to
the Applicable MAPB Percentage as it shall see fit acting in good faith. Any notice of an
adjustment to the Applicable MAPB Percentage shall also indicate the percentage level of the
Dilution Ratio and number of days Days Sales Outstanding that shall be required to trigger a
further review and increase or reduction by the Administrative Agent of the Applicable MAPB
Percentage. Any adjustment to the Applicable MAPB Percentage pursuant to this Clause shall
cease to apply to the Applicable MAPB Percentage after the third consecutive Ratio Reporting
Date on which the three month rolling average Dilution Ratio is less than or equal to the
Dilution Benchmark Percentage plus 3.5% or the Days Sales Outstanding is less than or equal
to 85 days, as applicable. |
|
3. |
|
CONDITIONS TO BORROWINGS |
|
3.1 |
|
Conditions precedent to initial borrowing |
|
|
|
The occurrence of the Closing Date and the initial Borrowing under this Agreement is each
subject to the conditions precedent that: |
|
(a) |
|
consummation of the transactions contemplated herein shall have occurred or
shall occur simultaneously with the initial purchase by the Purchasers under the
applicable Originator Sale Agreements; and |
|
|
(b) |
|
the Administrative Agent shall have received on or before the date of such
Borrowing all of the instruments, documents, agreements and certificates specified on
Schedule 2 (Conditions Precedent Documents), each (unless otherwise indicated) dated
the Closing Date, in form and substance satisfactory to the Administrative Agent and
such other instruments, documents, agreements, certificates and opinions as the
Administrative Agent shall otherwise require. The Administrative Agent shall notify
the Borrower and the Lenders promptly upon being so satisfied. |
23
3.2 |
|
Conditions precedent to all borrowings and releases |
|
|
|
Each Borrowing (including the initial Borrowing) and each Release hereunder shall be subject
to the further conditions precedent that (a) each Lender shall have received any necessary
approvals, documents, instruments, certificates and opinions for that Borrowing and (b) on
the date of such Borrowing or Release the following statements shall be true (and acceptance
of the proceeds of any such Borrowing or Release shall be deemed a representation and
warranty by the Borrower that such statements are then true by reference to the facts and
circumstances existing on the date of such Borrowing or Release): |
|
(i) |
|
In the case of a Borrowing, the making of such Loan does not
violate any provisions of Clause 2.1 (The Loans); |
|
|
(ii) |
|
In the case of a Borrowing, the Borrower has delivered a
Borrowing Request, appropriately completed, within the time period required by
Clause 2.2 (Borrowing procedures); |
|
|
(iii) |
|
In the case of any Borrowing or Release, the Servicer shall
have delivered a Daily Report pursuant to and in accordance with Clause 2.3
(Reporting requirements) of the Servicing Agreement on the date of such
Borrowing or Release; |
|
|
(iv) |
|
The Facility Termination Date has not occurred and no event
exists, or would result from such Borrowing or Release, that constitutes a
Facility Termination Event or Facility Suspension Event or, in the case of a
Borrowing only, a Potential Facility Termination Event or Potential Facility
Suspension Event; |
|
|
(v) |
|
All Fees required to be paid on or prior to the date of such
Borrowing or Release in accordance with the Fee Letters and the Commitment
Letter and all fees and expenses described in Clauses 10.4 (Costs and expenses)
to the extent then due and payable shall have been paid in full in accordance
with the terms thereof; |
|
|
(vi) |
|
No portion of the proceeds of such Borrowing or Release will be
used by the Borrower to pay the purchase price for, or grant or otherwise
acquire Borrower Receivables Interests in, any Receivable that was originated
by an Originator with respect to which a Seller Event has occurred and is
continuing; |
|
|
(vii) |
|
After giving effect to such Borrowing or Release and the use
of the proceeds thereof in accordance with Clause 2.3 (Use of proceeds) the
Aggregate Principal Balance does not exceed the Maximum Aggregate Principal
Balance; and |
|
|
(viii) |
|
Any Subordinated Loan requested on the date of such Borrowing or Release
shall have been (or shall simultaneously with such Borrowing or Release be)
made by the Subordinated Lender. |
24
4. |
|
REPRESENTATIONS AND WARRANTIES |
|
4.1 |
|
Representations and warranties of the Borrower |
|
|
|
The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that
on the Closing Date: |
|
(a) |
|
It (i) is a limited liability company duly incorporated and validly existing
under the laws of its jurisdiction of incorporation, (ii) is duly qualified to do
business in every other jurisdiction where the nature of its business requires it to be
so qualified, unless the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect, and (iii) has all corporate or other organisational power
and authority and all licences, authorisations, consents, approvals and qualifications
of and from all Official Bodies and other third parties required to perform its
obligations under the Transaction Documents to which it is a party and to carry on its
business in each jurisdiction in which its business is now conducted unless the failure
to have such power, authority licences, authorisations, consents, approvals and
qualifications would not reasonably be expected to have a Material Adverse Effect. |
|
|
(b) |
|
The execution, delivery and performance by it of this Agreement and the other
Transaction Documents to which it is a party, including the Borrowers use of the
proceeds of Loans (i) are within its corporate powers, (ii) have been duly authorised
by all necessary corporate action, (iii) are in its interest and it will receive the
corporate benefit as a result of the transactions contemplated hereby and thereby and
the value of the consideration obtained by it under the transactions contemplated
hereby and thereby is not less than the value of, and is fully and fairly equivalent
to, the consideration which it provides, (iv) do not contravene or constitute a default
under (A) its Organic Documents, (B) any applicable Law, (C) any contractual
restriction binding on or affecting it or its property or (D) any order, writ,
judgment, award, injunction or decree which is valid and binding on or affecting it or
its property except in each case where any such contravention or default would not
reasonably be expected to have a Material Adverse Effect and (v) do not result in or
require the creation or imposition of any Adverse Claim (other than Permitted Adverse
Claims) upon or with respect to any of its properties. Each Transaction Document to
which the Borrower is a party has been duly executed and delivered by the Borrower. |
|
|
(c) |
|
No authorisation or approval or other action by, and no notice to or filing or
registration with, any Official Body or official thereof or any third party is required
for the due execution, delivery and performance by it of this Agreement or any other
Transaction Documents to which it is a party or any other document to be delivered by
it hereunder or thereunder, except for the actions taken or referred to in Schedule 2
(Conditions Precedent Documents) all of which have been (or on or before the Closing
Date will have been) duly made or taken, as the case may be, and are in full force and
effect and except where the failure to have obtained any such authorization or approval
or taken any such action or made any such filing or notice would not reasonably be
expected to have a Material Adverse Effect. |
25
|
(d) |
|
Each of this Agreement and the other Transaction Documents to which it is a
party constitutes the legal, valid and binding obligation of the Borrower enforceable
against it in accordance with its terms, subject to the Legal Reservations. |
|
|
(e) |
|
There are no actions, suits, investigations by an Official Body, litigation or
proceedings at law or by or before any Official Body or in arbitration now pending or,
to its knowledge, threatened against or affecting the Borrower or its Subsidiaries or
any of its businesses, properties or revenues (i) which involve or question the
validity of this Agreement or any other Transaction Documents to which it is a party or
any of the transactions contemplated hereby or thereby (excluding any litigation or
proceeding against any Obligor) or (ii) which, individually or in the aggregate, are
reasonably likely to be adversely determined and if so determined would reasonably be
expected to have a Material Adverse Effect. The Borrower is not in default or
violation of any valid and binding order, judgment or decree of any Official Body or
arbitrator which would reasonably be expected to have a Material Adverse Effect. |
|
|
(f) |
|
No event has occurred and is continuing, or would result from any Borrowing or
application of the proceeds therefrom, which constitutes a Facility Event which has not
been (i) notified to the relevant parties to the Transaction Documents or (ii) remedied
or waived, in each case, in accordance with the Transaction Documents. |
|
|
(g) |
|
Each Receivable treated as or represented to be a Pool Receivable is owned by
the applicable Purchaser, free and clear of any Adverse Claim (other than Permitted
Adverse Claims). The Administrative Agent, for the benefit of the Secured Parties, has
a valid and perfected first priority charge, security interest or pledge, ranking ahead
of any other charge, security interest or pledge and the interest of any other creditor
of any Transaction Party (other than Permitted Adverse Claims) in each Pool Receivable
and in the Related Security and Collections related thereto, all of the Borrower
Receivables Interests acquired by, or granted to, the Borrower, the Borrower Operating
Accounts and all other Collateral, in each case, free and clear of any Adverse Claim
(other than Permitted Adverse Claims). No effective financing statement or other
instrument similar in effect is filed in any recording office listing any Transaction
Party as debtor, covering any Receivable, Related Security, Borrower Receivables
Interest or other Collateral, or any interest therein or proceeds thereof, other than
in respect of a Permitted Adverse Claim. |
|
|
(h) |
|
(i) Each Portfolio Report, Data Feed, Roll-Forward Report and Monthly Ratio
Report is complete and accurate in all material respects as of its date, (ii) all other
non-verbal information, data, exhibits, documents, books, records and reports furnished
by or on behalf of the Borrower in connection with this Agreement, any other
Transaction Document or any transaction contemplated hereby or thereby is complete and
accurate in all material respects as of its date and no such item contains any untrue
statement of a material fact or omits to state a material fact necessary in order to
make the statements contained therein, in the light of the circumstances under which
they were made, not |
26
|
|
|
misleading, and (iii) all financial statements which have been furnished by or on
behalf of the Borrower (A) have been prepared in accordance with GAAP consistently
applied and (B) fairly present in all material aspects, the financial condition of
the Borrower and, if applicable, its consolidated Subsidiaries as of the dates set
forth therein and the results of any operations of the Borrower and, if applicable,
its consolidated Subsidiaries for the periods ended on such dates. |
|
|
(i) |
|
It has (i) timely filed or caused to be filed all material Tax returns required
to be filed and (ii) paid or made adequate provision for the payment of all Taxes,
assessments and other governmental charges due and payable by it except to the extent
that failure to do so would not reasonably be expected to have a Material Adverse
Effect. |
|
(j) |
|
For the purposes of the EU Insolvency Regulation, the Borrowers centre of main
interest (as that term is used in Article 3(1) of the EU Insolvency Regulation) is
situated in Ireland and it has no establishment (as that term is used in Article 2(h)
of the EU Insolvency Regulation) in any other jurisdiction. |
|
|
(k) |
|
(i) The names and addresses of all the Borrower Operating Account Banks
together with the account numbers of the Borrower Operating Accounts at such Borrower
Operating Account Banks are as specified in Schedule 8 (Facility Accounts and Account
Banks) of the Schedule of Definitions, as such Schedule 8 (Facility Accounts and
Account Banks) may be updated from time to time pursuant to Clause 5.1(g) (Deposits to
Borrower Operating Accounts). (ii) All Borrower Operating Accounts are subject to a
valid and enforceable Security Document and the Administrative Agent, on behalf of the
Secured Parties, has a valid and perfected security interest or pledge of the Borrower
Operating Accounts, free and clear of any Adverse Claims (other than Permitted Adverse
Claims). Only Collections and other amounts payable in respect of Pool Receivables are
deposited into the Borrower Operating Accounts. Each of the Borrower Operating Account
Banks is an Eligible Account Bank. |
|
|
(l) |
|
Since its incorporation, the Borrower has not used any company name, tradename
or doing-business-as name other than the name in which it has executed this Agreement. |
|
|
(m) |
|
The Borrower was incorporated on 21 December 2006 under the Laws of Ireland and
the Borrower did not engage in any business activities prior to such date. The
Borrower has no Subsidiaries (other than the Spanish Account SPV). |
|
|
(n) |
|
The Borrower is able to pay its debts and liabilities, direct, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured.
The Borrower is not insolvent within the meaning of Section 214 of the Irish Companies
Act, 1963 or Section 2(3) of the Irish Companies (Amendment) Act, 1990. The Borrower
does not intend to, and does not believe that it will, incur debts or liabilities
beyond its ability to pay such debts and liabilities as they mature, taking into
account the timing and amounts of |
27
|
|
|
cash to be received by it and the timing and amounts of cash to be payable on or in
respect of its Indebtedness. |
|
|
(o) |
|
With respect to each Receivable treated as or represented to be a Pool
Receivable, the applicable Purchaser purchased such Receivable from the applicable
Originator in accordance with the terms of the applicable Originator Sale Agreement in
exchange for payment (made by the applicable Purchaser to such Originator in accordance
with the provisions of the applicable Originator Sale Agreement) of cash, in an amount
which constituted fair consideration, reasonably equivalent value and fair market
value. With respect to each Borrower Receivables Interest made by, granted to or
acquired by, the Borrower, such Borrower Receivables Interest has been made by, granted
to or acquired by the Borrower in accordance in all material respects with the terms of
the applicable Intermediate Transfer Agreement. Each such purchase, acquisition or
other transaction referred to above shall not have been made for or on account of an
antecedent debt owed by the applicable Originator to the Borrower, or by the
Intermediate Transfer to the Borrower, as the case may be, and no such sale,
acquisition or other transaction is or may be voidable or subject to avoidance under
any section of any applicable Insolvency Law or by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at law). |
|
|
(p) |
|
None of the Borrower or any of its Subsidiaries has operations, property,
assets or employees in the U.S. |
|
|
(q) |
|
The Borrower is in compliance with any material provisions of all applicable
Data Protection Laws applicable to it or its business or properties, except where the
failure to comply would not reasonably be expected to have a Material Adverse Effect. |
4.2 |
|
Times when representations made |
|
(a) |
|
All the representations and warranties in this Clause 4 (Representations and
Warranties) are deemed to be made by the Borrower on the Closing Date and as of the
date of each Borrowing and each Release hereunder. |
|
|
(b) |
|
The representations and warranties in Clauses 4.1(g), (h) and (o) are deemed to
be made by the Borrower as of each Reporting Date, and in the case of all non-verbal
information, data, exhibits, documents, books and records furnished by or on behalf of
the Borrower in connection with this Agreement, any other Transaction Document or any
transaction contemplated hereby or thereby on the date on which such information, data,
exhibits, documents, books and records are furnished. |
|
|
(c) |
|
Each representation or warranty deemed to be made after the Closing Date shall
be deemed to be made by reference to the facts and circumstances existing at the date
the representation or warranty is deemed to be made. |
28
5. |
|
COVENANTS |
|
5.1 |
|
Covenants of the Borrower |
|
|
|
Until the Final Payout Date: |
|
(a) |
|
Compliance with laws, etc |
|
|
|
|
The Borrower will comply in all material respects with all applicable Laws and
preserve and maintain its corporate existence, rights, franchises, qualifications,
and privileges except to the extent that the failure so to comply with such Laws or
the failure so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not reasonably be expected have a Material
Adverse Effect. |
|
|
(b) |
|
Offices, records and books of account |
|
|
|
|
The Borrower will keep its records concerning the Receivables and Borrower
Receivables Interests at (i) the address of the Borrower in Ireland, the address of
the Servicer in Luxembourg or the address of Dana Europe S.A. in Switzerland in each
case specified in Clause 10.2 (Notices, etc) as of the date of this Agreement or
(ii) upon thirty (30) days prior written notice to the Administrative Agent, at any
other locations in jurisdictions where all actions reasonably requested by the
Administrative Agent to protect and perfect its security interest in the Collateral
have been taken and completed. The Borrower also will maintain and implement, or
cause the Servicer to maintain and implement, administrative and operating
procedures (including an ability to recreate records evidencing Pool Receivables and
related Contracts in the event of the loss or destruction of the originals thereof),
and keep and maintain all Records and other information reasonably necessary or
advisable for the collection of all Pool Receivables (including records adequate to
permit the identification of each Pool Receivable and all Collections of and
adjustments to each existing Pool Receivable). The Borrower shall give the
Administrative Agent prompt notice of any material change in its administrative and
operating procedures referred to in the previous sentence. |
|
|
(c) |
|
Notice of Borrowers interest |
|
|
|
|
In the event that the Borrower shall sell, hold in trust or otherwise transfer any
interest in any financial assets relating to any Pool Receivable, any Related
Security or any other Collateral (other than as contemplated by the Transaction
Documents), any computer tapes or files or other documents or instruments provided
in connection with any such sale or transfer shall disclose the applicable
Purchasers ownership of the Pool Receivables and the Administrative Agents and
Secured Parties interest therein. |
|
|
(d) |
|
Sales, Liens, etc. |
|
|
|
|
The Borrower will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim (except for Permitted
Adverse Claims) upon or with respect to, the Pool Receivables, any |
29
|
|
|
Borrower Operating Account, any other Collateral or any other asset of the Borrower,
or assign any right to receive income in respect thereof and the Borrower shall not
issue any Equity Interest to any other Person other than the Equity Holder or permit
any such Equity Interests or any Equity Interest in the Spanish Account SPV to be
subject to any Adverse Claim, except as otherwise expressly provided for in the
Transaction Documents. Nothing in this Clause 5.1(d) shall prevent the Borrower
from making Restricted Payments otherwise permitted under Clause 5.1(n). |
|
|
(e) |
|
Extension or amendment of Pool Receivables and Contracts |
|
|
|
|
Except as provided in Clause 2.2(c) (Duties of the Servicer) of the Servicing
Agreement, the Borrower will not (i) extend, amend or otherwise modify the terms of
any Pool Receivable or any Related Security, or (ii) amend, modify or waive any term
or condition of any Contract related thereto in a manner that would reasonably be
expected to have a Material Adverse Effect. |
|
|
(f) |
|
Change in Business |
|
|
|
|
The Borrower will not make any substantial change to the general nature of its
business. |
|
|
(g) |
|
Change in payment instructions to Obligors |
|
|
|
|
The Borrower will not add or terminate any Borrower Operating Account from those
listed in Schedule 8 (Facility Accounts and Account Banks) of the Schedule of
Definitions, or make any change in any instruction to Obligors regarding payments to
be made in respect of the Receivables or payments to be made to any Borrower
Operating Account unless each Lender shall have received at least fifteen (15) days
prior written notice of such addition, termination or change (including an updated
Schedule 8 (Facility Accounts and Account Banks) to the Schedule of Definitions) and
a fully executed Security Document with respect to each new Borrower Operating
Account has been delivered to the Administrative Agent. Each Borrower Operating
Account shall be maintained at all times in the name of the Borrower, except as
otherwise agreed by the Administrative Agent. |
|
|
(h) |
|
Deposits to Borrower Operating Accounts |
|
|
|
|
If the Borrower shall receive any Collections directly, the Borrower shall (or will
cause the Servicer to) promptly (and in any event within one (1) Business Day) cause
such Collections to be deposited into a Borrower Operating Account. The Borrower
will not permit and will (and will cause the Servicer Parties to) use all reasonable
efforts to prevent funds which do not constitute Collections of Receivables from
being deposited into any Borrower Operating Account. |
|
|
(i) |
|
Further Assurances; Change in Name or Jurisdiction of Organisation, etc |
|
(i) |
|
With the exception of the notifications and other actions
referred to in Clause 6.2 (Certain rights of the Administrative Agent) which
need |
30
|
|
|
only be given or taken in accordance with that Clause, the Borrower agrees
from time to time, at its expense, promptly to execute and deliver all
further instruments and documents, and to take all further actions, that may
be reasonably necessary, or that the Administrative Agent may reasonably
request, to perfect, protect or more fully evidence the Administrative
Agents security interest in the Borrower Operating Accounts and the
Collateral, or to enable the Lenders or the Administrative Agent to exercise
and enforce their respective rights and remedies under this Agreement.
Without limiting the foregoing, the Borrower will at its expense, upon the
request of the Administrative Agent, duly execute, file or serve in or on
the appropriate filing office, Official Body or other Person in each
jurisdiction reasonably deemed necessary or desirable all registrations,
notices, financing or continuation statements, or amendments thereto, and
such other instruments and documents, that may be necessary, or that the
Administrative Agent may reasonably request, to perfect, protect or evidence
the Administrative Agents security interest in the Borrower Operating
Accounts and the Collateral. The Borrower authorises the Administrative
Agent to file financing or continuation statements or similar instruments,
and amendments thereto and assignments thereof, relating to the Borrower
Operating Accounts and the Collateral for the purpose of evidencing or
protecting its security interest in connection therewith without the
signature of the Borrower. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted by
Law. |
|
(ii) |
|
The Borrower will at all times be incorporated under the laws
of Ireland and will not take any action to change its jurisdiction of
organisation. |
|
|
(iii) |
|
The Borrower will not change its name, identity, corporate
structure, location, registered office, its centre of main interests, its
principal place of management or tax identification number or make any other
change which could render any financing statement or similar instrument filed
in connection with any Transaction Document seriously misleading or otherwise
ineffective under applicable Law, unless the Administrative Agent shall have
received at least thirty (30) days advance written notice of such change prior
to the effectiveness thereof and all action by the Borrower necessary or
appropriate to perfect or maintain the perfection of the Administrative Agents
security interest in the Borrower Operating Accounts and the Collateral
(including the filing of all financing statements or similar instruments and
the taking of such other action as the Administrative Agent may request in
connection with such change) shall have been duly taken. |
|
(i) |
|
The Borrower will pay its own liabilities out of its own funds. |
31
|
(ii) |
|
The Borrower will hold itself out and identify itself as a
separate and distinct entity under its own name and not as a division or part
of any other Person. |
|
|
(iii) |
|
The Borrower will promptly correct any misunderstanding of
which it has knowledge regarding its separate existence and identity. |
|
|
(iv) |
|
The Borrower will prepare and maintain its own full and
complete books, records and financial statements separate from any other
Person. The Borrowers financial statements will comply with GAAP. |
|
|
(v) |
|
The Borrower will maintain at least one bank account in its own
name. |
|
|
(vi) |
|
The Borrower will not assume or guarantee or become obligated
for debts of any Person and no Person will assume or guarantee or become
obligated for the debts of the Borrower, other than as provided in the
Transaction Documents. The Borrower will not hold its credit out as being
available to satisfy the obligations of any other Persons. |
|
|
(vii) |
|
The Borrower will not acquire obligations or securities of any
Person (other than the Equity Interest in the Spanish Account SPV) except as
otherwise expressly contemplated in the Transaction Documents. The Borrower
will not make loans, advances or otherwise extend credit to any Person except
as expressly contemplated by the Transaction Documents. |
|
|
(viii) |
|
Except to the extent provided in the Transaction Documents, the Borrower will
not commingle any of its money or other assets with the money or assets of any
other Person. |
|
|
(ix) |
|
Except as expressly contemplated in the Transaction Documents,
the Borrower will engage in transactions and conduct all other business
activities solely in its own name and through its own authorised officers and
agents. The Borrower will present itself to the public as a separate company.
Except to the extent provided in, or anticipated by, the Transaction Documents,
no Person will be appointed agent of the Borrower. |
|
|
(x) |
|
The Borrower will duly observe, in a timely manner in all
material respects, all material obligations, including any filing and
publication requirements, of a private limited liability company incorporated
under the laws of Ireland. |
|
(k) |
|
Transaction Documents |
|
|
(i) |
|
Except as permitted under Clause 10.12 (Limitation on the addition and
termination of Originators) or as otherwise expressly permitted by the Transaction
Documents, the Borrower will not terminate, amend, waive or modify, or consent to
any termination, amendment, waiver or modification of, any provision of any
Transaction Document or grant any other consent or other indulgence under any
Transaction Document, in each case, without the |
32
|
|
|
prior written consent of the Administrative Agent and the Required Lenders (such
consent not to be unreasonably withheld); provided that the consent of each Lender
shall be required for any such amendment, waiver, modification, consent or other
indulgence that would (A) release any portion of the Collateral or (B) release the
Performance Undertaking Provider from its obligations under the Performance
Undertaking. (ii) The Borrower will perform in all material respects all of its
obligations under the Transaction Documents and will enforce the Transaction
Documents in accordance with their respective terms. The Borrower will take all
actions to perfect and enforce its rights and interests (and the rights and
interests of the Administrative Agent and the Secured Parties as assignees of
Borrower) under the Transaction Documents as the Administrative Agent or the
Required Lenders may from time to time reasonably request, including making claims
to which it may be entitled under any indemnity, reimbursement or similar provision
contained in any Transaction Document. |
|
(l) |
|
Nature of Business; No Subsidiaries |
|
|
|
|
The Borrower will not engage in any business other than the financing of
Receivables, Related Security and Collections originated by the Originators pursuant
to and in accordance with terms of the Transaction Documents. The Borrower will not
create or form any Subsidiary (other than the Spanish Account SPV). The Borrower
will not amend, modify, change or repeal any of its Organic Documents without the
prior written consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed). The Borrower will not make any change in the
Credit and Collection Policies or the Standard Terms and Conditions without the
prior written consent of the Administrative Agent, except in either case for any
such change in a Credit and Collection Policy or Standard Terms and Conditions that
would not (A) impair the collectibility of any Pool Receivables in any material
respect, (B) otherwise reasonably be expected to have a Material Adverse Effect or
(C) materially adversely affect the interests or remedies of the Secured Parties.
The Borrower will not have any employees. |
|
|
(m) |
|
Mergers, etc |
|
|
|
|
Except to the extent expressly permitted by the Transaction Documents, the Borrower
will not liquidate or dissolve or merge with or into or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions), all or substantially all of its assets (whether now owned
or hereafter acquired) to, or acquire all or substantially all of the assets or
capital stock or other ownership interest of, or enter into any joint venture or
partnership agreement with, any Person. |
|
|
(n) |
|
Distributions, etc |
|
|
|
|
The Borrower will not (i) declare or make any dividend payment or other distribution
of assets, properties, cash (other than as permitted pursuant to the Declaration of
Trust entered into on the date hereof by the Equity Holder), rights, obligations or
securities on account of any membership interests or other Equity Interests in the
Borrower, or return any capital to its members or |
33
|
|
|
other equity holders as such, or purchase, retire, defease, redeem or otherwise
acquire for value or make any payment in respect of any membership interests or
other equity of the Borrower or any warrants, rights or options to acquire any
membership interests or other equity of the Borrower, now or hereafter outstanding,
(ii) prepay, purchase or redeem any Indebtedness (other than Indebtedness
hereunder), (iii) lend or advance any funds or (iv) repay any loans or advances to,
for or from any of its Affiliates (the amounts described in Clauses 5.1(n)(i) to
(iv) being referred to as Restricted Payments); provided, however, that the
Borrower may (x) purchase Receivables and any Related Security and Collections
related thereto and make, purchase or otherwise acquire Borrower Receivables
Interests, and (y) pay amounts owing in respect of the Subordinated Loans, in each
case, pursuant to and in accordance with the terms and conditions of the Transaction
Documents, including Clause 2.6 (Application of Collections prior to Facility
Termination Date), Clause 2.7 (Application of Collections after Facility Termination
Date) and Clause 3 (Conditions to Borrowings). |
|
|
(o) |
|
Indebtedness |
|
|
|
|
The Borrower will not create, incur, guarantee, assume or suffer to exist any
Indebtedness or other liabilities, whether direct or contingent, funded or unfunded,
other than (i) as a result of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business, (ii) the
incurrence of obligations under this Agreement, (iii) the incurrence of other
obligations pursuant to, and, as expressly set forth in, the Transaction Documents
or (iv) the incurrence of operating expenses in the ordinary course of business in
an amount not to exceed 10,000 at any time outstanding. |
|
|
(p) |
|
Taxes |
|
|
|
|
The Borrower will file all tax returns and reports required by Law to be filed by it
and will promptly pay all Taxes and governmental charges at any time owing by it.
The Borrower will pay when due any Taxes (other than Excluded Taxes) payable by the
Borrower in connection with the Collateral. |
|
|
(q) |
|
Enforcement |
|
|
|
|
The Borrower on its behalf, and on behalf of the Secured Parties, shall (or shall
cause the Servicer Parties to) promptly enforce all covenants and obligations in its
favour of the Intermediate Transferor contained in the Intermediate Transfer
Agreements, all covenants and obligations in its favour of the Spanish Account SPV
contained in any Transaction Document and all covenants and obligations in its
favour of the Originators under the Originator Sale Agreements. The Borrower shall
also use reasonable efforts to deliver consents, approvals, acknowledgements,
directions, notices, waivers and take such further actions thereunder as may be
reasonably directed by the Administrative Agent. |
34
|
(r) |
|
Borrower Operating Accounts and New Collection Accounts |
|
|
|
|
The Borrower will cause all Borrower Operating Accounts to be subject at all times
to a Security Agreement. The Borrower will ensure that each New Collection Account
(other than any New Spanish Collection Account) shall be maintained at all times in
the name of the Borrower and will cause each New Spanish Collection Account to be
maintained at all times in the name of the Spanish Account SPV. |
|
|
(s) |
|
Change in accountants or accounting policies |
|
|
|
|
The Borrower shall promptly notify the Administrative Agent of any change in its
accountants or material change in its accounting policy. |
|
|
(t) |
|
Power of Attorney |
|
|
|
|
The Borrower will not revoke or attempt to revoke any power of attorney granted by
it in connection with the transactions contemplated by the Transaction Documents. |
|
|
(u) |
|
Instruments |
|
|
|
|
The Borrower shall not take any action to cause any Pool Receivable not evidenced by
a negotiable instrument upon origination to become evidenced by a negotiable
instrument, except in connection with the enforcement or collection of a Defaulted
Receivable. |
|
|
(v) |
|
Delivery of Financial Statements |
|
|
|
|
The Borrower shall deliver to the Administrative Agent, within 120 days after the
close of each of its fiscal years, a copy of its statutory accounts prepared in
accordance with GAAP. |
|
|
(w) |
|
Licences, etc. |
|
|
|
|
The Borrower shall maintain in full force and effect all licences, approvals,
authorisations, consents, registrations and notifications which are at any time
required in connection with the performance of its duties and obligations hereunder
and under the other Transaction Documents, except to the extent the failure to do so
would not reasonably be expected to have a Material Adverse Effect. |
|
|
(x) |
|
Notices under Transaction Documents |
|
|
|
|
Promptly after receipt thereof by the Borrower, the Borrower shall furnish or cause
to be furnished to the Administrative Agent copies of all notices received by the
Borrower from any Originator or the Intermediate Transferor in connection with any
Transaction Document to the extent not previously provided to the Administrative
Agent by another Transaction Party. |
35
5.2 |
|
Inspections; agreed upon procedures audit |
|
|
|
Until the Final Payout Date the Borrower will, at the expense of the Borrower, from time to
time during regular business hours as requested by the Administrative Agent upon reasonable
prior notice, permit the Administrative Agent or its agents or representatives (including
independent accountants, which may be the Borrowers or the Servicers independent
accountants), (i) to conduct periodic audits of the Borrowers accounting records,
correspondence and such other documents as the Administrative Agent may reasonably require
including the Receivables, the Related Security, the other Collateral and the related books
and records, including the Contracts, and collections systems of the Borrower, as agreed
upon from time to time between the Administrative Agent and the Master Servicer, such audits
to include procedures to satisfy the Administrative Agent as to the existence of the
receivables, (ii) to examine and (to the extent permitted by applicable law) make copies of
and abstracts from all documents, purchase orders, invoices, agreements, books, records and
other information (including computer programs, tapes, discs, punch cards, data processing
software, storage media and related property and rights subject to any restrictions in any
licence with respect thereto) relating to Receivables, the Related Security and the other
Collateral, including the Contracts and (iii) to visit the offices and properties of the
Borrower for the purpose of examining such materials described in Clauses 5.2(i) and (ii),
and to discuss matters relating to Receivables, the Related Security and the other
Collateral or the Borrowers performance under the Transaction Documents or under the
Contracts with any of the officers or employees of the Borrower having knowledge of such
matters. |
|
6. |
|
ADMINISTRATION AND COLLECTION OF POOL RECEIVABLES |
|
6.1 |
|
Designation of Servicer |
|
|
|
The servicing, administration and collection of the Pool Receivables shall be conducted by
the Servicer so designated under the Servicing Agreement from time to time. |
|
6.2 |
|
Certain Rights of the Administrative Agent |
|
(a) |
|
The Administrative Agent may (and if so directed by the Required Lenders,
shall), at any time following the occurrence and during the continuation of an Exercise
Event, have each Borrower Operating Account transferred into the name of the
Administrative Agent for the benefit of the Secured Parties and/or assume exclusive
control of the Borrower Operating Accounts and, in each case, take such actions to
effect such transfer or assumption as it may determine to be necessary or appropriate
(including delivering the notices attached to the applicable Security Documents). |
|
|
(b) |
|
At any time following the occurrence and during the continuation of an Exercise
Event: |
|
(i) |
|
At the Administrative Agents request (acting either on its own
initiative or at the request of the Required Lenders) and at the Borrowers
expense, the Borrower shall, or shall cause each Servicer Party to (and if any
Servicer Party shall fail to do so within two (2) |
36
|
|
|
Business Days, the Administrative Agent may) (i) notify each Obligor of Pool
Receivables of the transfer, sale, trust, assignation and assignment of the
Pool Receivables and the Related Security with respect thereto pursuant to
the Transaction Documents and of the applicable Purchasers ownership of,
and the Administrative Agents security interest in, the Pool Receivables
and the Related Security with respect thereto, (ii) direct such Obligors
that payments under any Pool Receivable or any Related Security with
respect thereto be made directly to the Administrative Agent or its designee
and (iii) execute any power of attorney or other similar instrument and/or
take any other action reasonably necessary or desirable to give effect to
such notice and directions, including any action required (x) to convey or
perfect the relevant Purchasers title or the Administrative Agents
security interest in the Pool Receivables and Related Security, or (y) to be
taken so that the obligations or other indebtedness of such Obligors in
respect of any Pool Receivables and any Related Security with respect
thereto may no longer be legally satisfied by payment to the applicable
Originator or any of its Affiliates. |
|
|
(ii) |
|
At the Administrative Agents request (acting either on its own
initiative or at the request of the Required Lenders) and at the Borrowers
expense, the Borrower shall, or shall cause each Servicer Party to (A) assemble
all of the Contracts, documents, instruments and other records (including
computer tapes and disks) that evidence or relate to the Collateral, or that
are otherwise reasonably necessary or desirable to collect the Collateral, and
shall make the same available to the Administrative Agent at a place selected
by the Administrative Agent or its designee and (B) segregate all cash, cheques
and other instruments received by it from time to time constituting Collections
of Collateral in a manner acceptable to the Administrative Agent and, promptly
upon receipt, remit all such cash, cheques and instruments, duly endorsed or
with duly executed instruments of transfer, to the Administrative Agent or its
designee. |
|
(c) |
|
The Borrower authorises the Administrative Agent, following the occurrence and
during the continuation of an Exercise Event, to take any and all steps in the
Borrowers name and on behalf of the Borrower that are necessary or desirable, in the
determination of the Administrative Agent, to collect amounts due under the Collateral,
including (i) endorsing the Borrowers or any other Transaction Partys name on cheques
and other instruments representing Collections, (ii) enforcing the Receivables and the
Related Security and the Security Agreements and other Transaction Documents, including
to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with therewith and
(iii) to file any claims or take any action or institute any proceedings that the
Administrative Agent (or such designee) may deem to be necessary or desirable for the
collection thereof or to enforce compliance with the terms and conditions of, or to
perform any obligations or enforce any rights of the Borrower or any other Transaction
Party in respect of, the Receivables and the Related Security and the other Transaction
Documents. |
37
6.3 |
|
Performance of obligations |
|
(a) |
|
If the Servicer or the Borrower fails to perform any of its material
obligations under this Agreement or any other Transaction Document, the Administrative
Agent may (but shall not be required to) itself perform, or cause performance of, such
obligation; and the Administrative Agents costs and expenses reasonably incurred in
connection therewith shall be payable by the Servicer or the Borrower, as applicable. |
|
|
(b) |
|
The Borrower shall, and shall cause the Servicer to, perform their respective
obligations, and exercise their respective rights, under the Contracts and the
Transaction Documents to the same extent as if a security interest therein had not been
granted to the Administrative Agent. The exercise by the Administrative Agent on
behalf of the Secured Parties of their rights under this Agreement shall not release
the Servicer or the Borrower from any of their duties or obligations with respect to
any Contracts or Transaction Documents. None of the Administrative Agent or the
Lenders shall have any obligation or liability with respect to any Transaction
Documents or Contracts, nor shall any of them be obligated to perform the obligations
of any Transaction Party under any Transaction Document or Contract. |
|
|
(c) |
|
The Administrative Agents rights and powers under this Clause 6 and under the
Servicing Agreement shall not subject the Administrative Agent to any liability if any
action taken by it proves to be inadequate or invalid nor shall such powers confer any
obligation whatsoever upon the Administrative Agent. |
7. |
|
SUSPENSION AND TERMINATION EVENTS |
|
7.1 |
|
Facility Suspension Events |
|
|
|
Each of the events or circumstances set out in this Clause 7.1 is a Facility Suspension
Event. |
|
(a) |
|
any Facility Party shall fail to make any payment or deposit required to be
made by it hereunder or under any other Transaction Document to which it is a party
when due hereunder or thereunder and such failure remains unremedied for three (3)
Business Days; |
|
|
(b) |
|
any representation, warranty, certification or statement made by any Facility
Party in any Transaction Document shall prove to have been incorrect in any material
respect when made or deemed made (other than any breach of a representation, warranty,
certification or statement solely relating to a Pool Receivable for which a Deemed
Collection has been received in an amount equal to the full Unpaid Balance thereof
pursuant to any Specified Deemed Collection Clause (unless not required to be so
remitted pursuant to the terms of the Transaction Documents)) and, if the circumstances
causing such representation, warranty, certification or statement to be incorrect are
capable of being remedied, such Facility Party shall have failed to remedy such
circumstances in a manner such that such representation, warranty, certification or
statement is true and correct in all material respects within five |
38
|
(5) |
|
Business Days after a Responsible Officer of such Facility Party obtained
knowledge or received notice thereof; |
|
(c) |
|
any Facility Party shall fail to perform or observe any term, covenant or
agreement in any Transaction Document in any material respect, and, if such failure is
capable of being remedied, such Facility Party shall have failed to remedy such failure
within seven (7) Business Days after a Responsible Officer of such Facility Party
obtained knowledge or received notice thereof; or |
|
|
(d) |
|
any Material Indebtedness (or any amount in respect of Material Indebtedness)
of any Transaction Party or any other Dana European Entity (i) is not paid when due
(after the expiry of any originally applicable grace period), or is declared or
otherwise becomes due prior to its scheduled maturity as a result of any event of
default (however described), or (ii) is capable of being declared by or on behalf of a
creditor to be prematurely due and payable or of being placed on demand as a result of
any event of default (however described), or (iii) any pledge, charge or security
interest securing the Material Indebtedness of any Dana European Entity is enforced, in
whole or in part as a result of any event of default (however described); |
|
|
(e) |
|
a Servicer Default shall occur and be continuing; |
|
|
(f) |
|
the Aggregate Principal Balance exceeds the Maximum Aggregate Principal Balance
for three (3) consecutive Business Days; |
|
|
(g) |
|
as at the end of any Calculation Period, from and including the Calculation
Period commencing on 1 October 2007 but prior to the end of the Initial Ratio Period
the Dilution Ratio exceeds 8.0% on two consecutive Ratio Reporting Dates or thereafter
the three month rolling average Dilution Ratio exceeds the Dilution Benchmark
Percentage plus 5%; |
|
|
(h) |
|
as at the end of any Calculation Period, Days Sales Outstanding is greater than
90 days; |
|
|
(i) |
|
the failure by any Facility Party or any other Dana European Entity (other than
the Spanish Account SPV or Originator) to pay one or more final judgments requiring
such Person to pay a sum or sums of money (whether or not such judgment may be stayed
or further appealed) aggregating in excess of 5,000,000 or the Euro Equivalent
thereof in any other currency, which judgments are not discharged or effectively waived
or stayed for a period of thirty (30) consecutive days, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of any such Person to
enforce any such judgment; |
|
|
(j) |
|
the failure by the Borrower to pay one or more final judgments requiring the
Borrower to pay a sum or sums of money (whether or not such judgment may be stayed or
further appealed) which judgments are not discharged or effectively waived or stayed
for a period of thirty (30) consecutive days, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower to enforce any such
judgment; or |
39
|
(k) |
|
the Subordinated Lender fails for any reason (including as the result of the
failure to meet any condition precedent) to make a Subordinated Loan under the
Subordinated Loan Agreement following delivery by the Borrower of a Subordinated Loan
Borrowing Request; or |
|
|
(l) |
|
the Servicer shall have failed to commence providing Roll-Forward Reports after
each Intra-month Settlement Date in accordance with Clause 2.3(d) (Roll-Forward
Reports) of the Servicing Agreement by 31 December 2007. |
7.2 |
|
Facility Termination Events |
|
|
|
If any of the following events (each a Facility Termination Event) shall occur and be
continuing: |
|
(a) |
|
an Event of Bankruptcy shall occur with respect to: |
|
(i) |
|
any Transaction Party; or |
|
|
(ii) |
|
any Dana European Entity (other than a Transaction Party) and
the occurrence of such Event of Bankruptcy has, or is reasonably expected to
have, a Material Adverse Effect; |
|
(b) |
|
the Administrative Agent, on behalf of the Secured Parties, shall, for any
reason, fail or cease to have a valid and perfected first priority charge, security
interest or pledge in the Collateral prior to all other interests, or there shall exist
any Adverse Claims on such Collateral other than Permitted Adverse Claims; |
|
|
(c) |
|
any Change of Control shall occur with respect to any Facility Party or any
other Dana European Entity (other than the Spanish Account SPV or any Originator); |
|
|
(d) |
|
the Fixed Charge Coverage Ratio shall at any time be less than: |
|
(i) |
|
1.25:1 and the Fixed Charge Coverage Ratio has not been
recalculated and increased back up to at least 1.25:1 in accordance with Clause
10.3 (Financial covenant) of the Performance Undertaking within the time
specified in such Clause; or |
|
|
(ii) |
|
1.15:1; |
|
(e) |
|
except in the case of a termination expressly permitted under Clause 10.12
(Limitation on the addition and termination of Originators), any Transaction Document
(other than any Originator Sale Agreement, Account Security Agreement or the Spanish
Account Agency Agreement, in each case, to the extent any termination thereof
constitutes a Seller Termination Event under an Originator Sale Agreement) or any
material provision thereof shall cease, for any reason, to be in full force and effect,
or any Transaction Party shall so assert in writing or any Transaction Party shall
otherwise seek to terminate or disaffirm its material obligations under any such
Transaction Document; |
40
|
(f) |
|
any Facility Suspension Event is continuing after, or not otherwise remedied
prior to, 15 Business Days after such Facility Suspension Event occurred; |
|
|
(g) |
|
the issue of a moral hazard notice by tPR to any Dana European Entity; |
|
|
then, and in any such event, the Administrative Agent may, in its discretion, and shall, at
the direction of the Required Lenders, declare the Facility Termination Date to have
occurred upon notice to the Borrower (in which case the Facility Termination Date shall be
deemed to have occurred); provided that automatically upon the occurrence of any event
(without any requirement for the giving of notice) described in Clause 7.2(a), the Facility
Termination Date shall occur. Upon any such declaration or upon such automatic termination,
the Lenders and the Administrative Agent shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies provided after
default under applicable Law, which rights and remedies shall be cumulative. |
|
7.3 |
|
Acceleration of maturity |
|
|
|
If a Facility Termination Event shall have occurred and be continuing, then and in every
such case the Administrative Agent may, and if so directed by the Required Lenders shall,
declare all of the Loans to be immediately due and payable by a notice in writing to the
Borrower, and upon any such declaration the unpaid principal amount of the Loans, together
with accrued and unpaid interest thereon, shall become immediately due and payable; provided
that in the case of any event described in Clause 7.2(a), the Loans shall become immediately
and automatically due and payable, without notice of any kind being given to the Borrower. |
|
8. |
|
THE ADMINISTRATIVE AGENT |
|
8.1 |
|
Authorisation and Action |
|
|
|
Each Lender hereby irrevocably appoints and authorises the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement and the other
Transaction Documents as are delegated to the Administrative Agent by the terms hereof and
the other Transaction Documents, together with such powers as are reasonably incidental
thereto. Without limiting the foregoing, the Administrative Agent is empowered and
authorised, on behalf of the Secured Parties, to hold and administer the Collateral as
trustee for the benefit of the Secured Parties under the Security Documents. The
Administrative Agent shall not have any duties other than those expressly set forth in the
Transaction Documents, and no implied obligations or liabilities shall be read into any
Transaction Document, or otherwise exist, against the Administrative Agent. The
Administrative Agent does not assume, nor shall it be deemed to have assumed, any duty of
care or obligation to, or relationship of trust or agency with, any Transaction Party, the
Lenders or any other Secured Party, except as expressly set out in the Transaction
Documents. Notwithstanding any provision of this Agreement or any other Transaction
Document, in no event shall the Administrative Agent ever be required to take any action
which exposes the Administrative Agent to personal liability or which is contrary to any
provision of any Transaction Document or applicable Law. Without limiting the generality of
the foregoing sentence, the use of the term agent in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or |
41
|
|
other implied (or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting parties. With
respect to any Belgian Account Security Agreement governed by the laws of Belgium, the
Administrative Agent acts as an agent (représentant), as defined in Article 5 of the Belgian
law of 15 December 2004 relative aux sûretés financières et portant des dispositions
fiscales diverses en matière de conventions constitutives de sûreté réelle et de prêts
portant sur les instruments financiers". With respect to the applicable Italian Account
Security Agreement, each Lender also appoints the Administrative Agent as mandatario con
rappresentanza pursuant to Section 1704 of the Italian Civil Code in relation to the
entering into, holding and administering collateral under, and exercising all rights and
powers under, the applicable Italian Accounts Security Agreement, in each case in the name
and on behalf of the Secured Parties. |
|
8.2 |
|
Liability of Agent |
|
|
|
Neither the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as Administrative
Agent under or in connection with the Transaction Documents (including the Administrative
Agents servicing, administering or collecting Receivables as Servicer pursuant to Clause 6
(Administration and Collection of Receivables)), in the absence of its or their own gross
negligence or wilful misconduct. Without limiting the generality of the foregoing, the
Administrative Agent: |
|
(a) |
|
may consult with legal counsel (including counsel for the Borrower or any
Servicer Party), independent accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; |
|
|
(b) |
|
makes no warranty or representation to any Lender or other Secured Party
(whether written or oral) and shall not be responsible to any Lender or other Secured
Party for any statements, warranties or representations (whether written or oral) made
in or in connection with this Agreement or any other Transaction Document; |
|
|
(c) |
|
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or any other
Transaction Document on the part of any Transaction Party or to inspect the property
(including the books and records) of any Transaction Party; |
|
|
(d) |
|
shall not be responsible to any Lender or other Secured Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Transaction Document; and |
|
|
(e) |
|
shall incur no liability under or in respect of this Agreement or any other
Transaction Document by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be |
42
|
|
|
by facsimile) believed by it in good faith to be genuine and signed or sent by the
proper party or parties. |
8.3 |
|
GE and Affiliates |
|
|
|
The obligation of GE to fund Loans under this Agreement may be satisfied by GE or any of its
Affiliates. With respect to any Loan or interest therein owned by it, GE shall have the
same rights and powers under this Agreement as any Lender and may exercise the same as
though it were not the Administrative Agent. GE and any of its Affiliates may generally
engage in any kind of business with the Transaction Parties or any Obligor, any of their
respective Affiliates and any Person who may do business with or own securities of the
Transaction Parties or any Obligor or any of their respective Affiliates, all as if GE were
not the Administrative Agent and without any duty to account therefor to the Lenders or
other Secured Parties. |
|
8.4 |
|
Indemnification of Administrative Agent and Intermediate Transferor |
|
|
|
Whether or not the transactions contemplated hereby are consummated, each Lender severally
agrees to indemnify the Administrative Agent and the Intermediate Transferor (to the extent
not reimbursed by the Transaction Parties), ratably based on the Commitment of such Lender
(or, if the Commitments have terminated, ratably according to the respective Commitment of
such Lender immediately prior to such termination), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Administrative Agent or the Intermediate Transferor, as the case
may be, in any way relating to or arising out of this Agreement or any other Transaction
Document or any action taken or omitted by the Administrative Agent or the Intermediate
Transferor, as the case may be, under this Agreement or any other Transaction Document,
provided that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agents or Intermediate Transferors gross negligence or
willful misconduct; provided, however, that no action taken in accordance with the direction
of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct
for purposes of this Clause 8.4. Without limitation of the foregoing, each Lender shall
reimburse the Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including attorneys fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement, any other
Transaction Document, or any document contemplated by or referred to herein, to the extent
that the Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrower. The undertaking in this Clause 8.4 shall survive payment on the Final Payout Date
and the resignation or replacement of the Administrative Agent. |
|
8.5 |
|
Delegation of Duties |
|
|
|
The Administrative Agent may execute any of its duties through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Administrative Agent shall not be responsible for the |
43
|
|
negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable
care. |
|
8.6 |
|
Action or inaction by Administrative Agent |
|
|
|
The Administrative Agent shall in all cases be fully justified in failing or refusing to
take action under any Transaction Document unless it shall first receive such advice or
concurrence of the Required Lenders and assurance of its indemnification by the Lenders, as
it deems appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Transaction Document
in accordance with a request or at the direction of the Required Lenders, and such request
or direction and any action taken or failure to act pursuant thereto shall be binding upon
all Lenders. Unless any action to be taken by the Administrative Agent under a Transaction
Document specifically provides that it be taken by the Administrative Agent alone or without
any advice or concurrence of any Lender, then the Administrative Agent may (and shall, to
the extent required hereunder) take action based upon the advice or concurrence of the
Required Lenders. |
|
8.7 |
|
Notice of Facility Events; Action by Administrative Agent |
|
|
|
The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence
of any Facility Event or any other default or termination event under the Transaction
Documents, as the case may be, unless the Administrative Agent has received notice from any
Lender, any Servicer Party or the Borrower stating that a Facility Event has occurred
hereunder or thereunder and describing such termination event or default. If the
Administrative Agent receives such a notice, it shall promptly give notice thereof to each
Lender. The Administrative Agent shall take such action concerning a Facility Event or any
other matter hereunder as may be directed by the Required Lenders, (subject to the other
provisions of this Clause 8), but until the Administrative Agent receives such directions,
the Administrative Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, as the Administrative Agent deems advisable and in the best
interests of the Lenders. |
|
8.8 |
|
Non-Reliance on Administrative Agent and Other Parties |
|
|
|
Each Lender expressly acknowledges that neither the Administrative Agent nor any of its
directors, officers, agents or employees has made any representations or warranties to it
and that no act by the Administrative Agent hereafter taken, including any review of the
affairs of the Transaction Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent. Each Lender represents and warrants to the
Administrative Agent that, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has deemed
appropriate, it has made and will continue to make its own appraisal of and investigation
into the business, operations, property, prospects, financial and other conditions and
creditworthiness of each Transaction Party and the Receivables and its own decision to enter
into this Agreement and to take, or omit, action under any Transaction Document. Except for
items expressly required to be delivered under any Transaction Document by the
Administrative Agent to any Lender, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any information concerning the Transaction Parties
or any of their |
44
|
|
Affiliates that comes into the possession of the Administrative Agent or any of its
directors, officers, agents, employees, attorneys-in-fact or Affiliates. |
|
8.9 |
|
Successor Administrative Agent |
|
|
|
The Administrative Agent may, upon at least thirty days notice to the Borrower, the Servicer
and each Lender, resign as Administrative Agent. Except as provided below, such resignation
shall not become effective until a successor Administrative Agent is appointed by the
Required Lenders (with the consent of the Servicer, such consent not to be unreasonably
withheld or delayed) and has accepted such appointment. If no successor Administrative
Agent shall have been appointed within 30 days after the departing Administrative Agents
giving of notice of resignation, the departing Administrative Agent may appoint a successor
Administrative Agent, which successor Administrative Agent shall be either a commercial bank
having a combined capital and surplus of at least $250,000,000 or a Subsidiary of such an
institution and shall be acceptable to the Servicer (such acceptance not to be unreasonably
withheld or delayed). If no successor Administrative Agent shall have been appointed within
60 days after the departing Administrative Agents giving of notice of resignation, the
departing Administrative Agent may petition a court of competent jurisdiction to appoint a
successor Administrative Agent, which successor Administrative Agent -shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000 or a
Subsidiary of such an institution. Upon such acceptance of its appointment as
Administrative Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall succeed to and become vested with all the rights and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged
from any further duties and obligations under the Transaction Documents. After any retiring
Administrative Agents resignation hereunder, the provisions of Clause 2.6 (Indemnities by
Servicer) of the Servicing Agreement and Clause 9 (Indemnities by the Borrower) and this
Clause 8 shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Agent. |
|
8.10 |
|
Consent to agreed upon procedures |
|
|
|
Each Lender, by becoming a party to this Agreement, authorises the Administrative Agent (a)
to execute on its behalf a letter agreement with respect to the limited engagement of, and
consenting to the agreed upon procedures to be performed by, a firm of nationally recognised
independent accountants acceptable to the Administrative Agent in connection with the
transactions contemplated by the Transaction Documents so long as such procedures are
consistent with Clause 5.2 (Inspections; agreed upon procedures audit); and (b) to approve
additional agreed upon procedures. |
|
9. |
|
INDEMNITIES BY THE BORROWER |
|
|
|
Without limiting any other rights that the Administrative Agent, the Lenders, the
Intermediate Transferor or any of their respective officers, directors, agents, employees,
controlling Persons or Affiliates of any of the foregoing (each, an Indemnified Party) may
have hereunder, under any other Transaction Document or under applicable Law the Borrower
hereby agrees to indemnify and hold harmless each Indemnified Party from and against any and
all damages, losses, claims, |
45
|
|
liabilities, deficiencies, costs, disbursements and expenses, including interest, penalties,
amounts paid in settlement and reasonable internal and external attorneys fees and
out-of-pocket expenses (all of the foregoing being collectively referred to as Indemnified
Amounts) incurred by any Indemnified Party (including in connection with or relating to any
investigation by an Official Body, litigation or lawsuit (actual or threatened) or order,
consent decree, judgment, claim or other action of whatever sort (including the preparation
of any defense with respect thereto)), in each case, arising out of or resulting from this
Agreement or any other Transaction Document or any transaction contemplated hereby or
thereby, excluding, however (a) Indemnified Amounts to the extent that such Indemnified
Amounts resulted from the gross negligence, fraud or wilful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in this Agreement
or any other Transaction Document) for uncollectible Pool Receivables and Related Security
with respect thereto, (c) any Excluded Taxes, and (d) any Indemnified Amount to the extent
the same has been fully and finally paid in cash to such Indemnified Party pursuant to any
other provision of this Agreement or any other Transaction Document. |
|
10. |
|
MISCELLANEOUS |
|
10.1 |
|
Amendments, etc |
|
|
|
No failure on the part of the Lenders or the Administrative Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or further exercise thereof or
the exercise of any other right. No amendment or waiver of any provision of this Agreement
or consent to any departure by any Transaction Party therefrom shall be effective unless in
writing signed by the Administrative Agent, with the prior written consent of the Required
Lenders (and, in the case of any amendment, also signed by the Borrower, the Servicer and
the Performance Undertaking Provider), and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given;
provided that no amendment, waiver or consent shall, unless in writing and signed by each
Lender (or, in the case of Clause 10.1(b), each Lender having its fees reduced or delayed or
its Commitment increased) and the Administrative Agent be effective, if the effect of such
amendment: |
|
(a) |
|
reduces the Principal Balance of, or Interest that is payable on, account of
any Loan or delay any scheduled date for payment thereof; |
|
|
(b) |
|
reduces the fees payable by the Borrower to the Lenders, increases a Lenders
Commitment or delays the dates on which such fees are payable; |
|
|
(c) |
|
extends the Scheduled Commitment Facility Termination Date or the Maturity
Date; |
|
|
(d) |
|
releases any portion of the Collateral if a Facility Event has occurred and is
continuing or would result therefrom; |
|
|
(e) |
|
changes any of the provisions of this Clause or the definition of Required
Lenders; |
46
|
(f) |
|
amends the definition of Facility Suspension Event or any Facility Termination
Event set forth in Clause 7.1 (Facility Termination Events); |
|
|
(g) |
|
amends the definition of Approved Currency, Defaulted Receivable, Maximum
Aggregate Principal Balance or increase the Applicable MAPB Percentage or any
Concentration Limit; or |
|
|
(h) |
|
releases the Performance Undertaking Provider from its obligations under the
Performance Undertaking; |
|
|
and provided, further, that no amendment, waiver or consent shall increase the Commitment of
any Lender unless in writing and signed by such Lender. |
|
|
|
Any Lender that does not respond to any request for a waiver, consent or amendment pursuant
to this Agreement within 30 Business Days (or such longer time as may be agreed by the
Administrative Agent and the Servicer) of the date of such Lenders receipt of such request
shall be deemed to have voted in favour of such request. |
|
10.2 |
|
Notices, etc |
|
|
|
All communications and notices provided for hereunder shall be provided in the manner
described in Schedule 1 (Address and Notice Information) of the Schedule of Definitions. |
|
10.3 |
|
Assignability |
|
(a) |
|
General |
|
|
|
|
This Agreement and each Lenders rights and obligations hereunder shall be
assignable by such Lender and its successors and permitted assigns to any Eligible
Assignee subject to Clauses 10.3(b). Each assignor of a Loan or any interest
therein shall notify the Administrative Agent and the Borrower of any such
assignment. Each assignor of a Loan or any interest therein may, in connection with
the assignment or participation, disclose to the assignee or participant any
information relating to the Transaction Parties, including the Collateral, furnished
to such assignor by or on behalf of any Transaction Party or by the Administrative
Agent; provided that, prior to any such disclosure, the assignee or participant
agrees to preserve the confidentiality of any confidential information relating to
the Transaction Parties received by it from any of the foregoing entities in a
manner consistent with Clause 10.5(b) (Confidentiality). |
|
|
(b) |
|
Assignment by Lenders |
|
|
|
|
Each Lender may assign to any Eligible Assignee all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and
any Loans or interests therein owned by it); provided, however that: |
|
(i) |
|
notwithstanding that the consent of the Borrower, the Servicer
or any other person is not required for an assignment by a Lender to an
Eligible Assignee, prior to the occurrence of a Facility Suspension |
47
|
|
|
Event or Facility Termination Event such Lender shall consult with the
Servicer prior to any such assignment; |
|
(ii) |
|
each such assignment shall be of a constant, and not a varying,
percentage of all rights and obligations under this Agreement; |
|
|
(iii) |
|
the amount being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to
such assignment) shall in no event be less than the lesser of (A)
10,000,000 (in Euro or the Euro Equivalent) and (B) all of the assigning
Lenders Commitment; |
|
|
(iv) |
|
the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register
(as defined below), an Assignment and Acceptance, together with a processing
and recordation fee of 2,500. The Borrower shall have no responsibility
for such fee; and |
|
|
(v) |
|
if a Lender assigns or transfers any of its rights or
obligations under this Agreement and as a result of circumstances existing at
the date the assignment or transfer occurs, the Borrower would be obliged to
make a payment to the Eligible Assignee under Clause 2.14 (Indemnity for
reserves and expenses) or Clause 2.15 (Indemnity for Taxes), then the Eligible
Assignee is only entitled to receive payment under those Clauses to the same
extent as the assigning Lender would have been if the assignment, transfer or
change had not occurred. |
|
|
|
Upon such execution, delivery, acceptance and recording from and after the effective
date specified in such Assignment and Acceptance, (x) the assignee thereunder shall
be a party to this Agreement and, to the extent that rights and obligations under
this Agreement have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (y) the assigning Lender
shall, to the extent that rights and obligations have been assigned by it pursuant
to such Assignment and Acceptance, relinquish such rights and be released from such
obligations under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lenders rights and
obligations under this Agreement, such Lender shall cease to be a party hereto). In
addition, any Lender or any of its Affiliates may assign any of its rights
(including rights to payment of Principal Balance and Interest) under this Agreement
to any U.S. Federal Reserve Bank without notice to or consent of any Transaction
Party, any other Lender or the Administrative Agent. |
|
|
(c) |
|
Register |
|
|
|
|
At all times during which any Loan is outstanding, the Administrative Agent shall
maintain at its address referred to in Clause 10.2 (or such other address of the
Administrative Agent notified by the Administrative Agent to the other parties
hereto) a register as provided herein (the Register). All Loans and any interest
therein, and any Assignments and Acceptances of any Loans and any interest therein
delivered to and accepted by the Administrative Agent, |
48
|
|
|
shall be registered in the Register, and the Register shall serve as a record of
ownership that identifies the owner of each Loan and any interest therein.
Notwithstanding any other provision of this Agreement, no transfer of any Loan or
any interest therein shall be effective unless and until such transfer has been
recorded in the Register. The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Servicer, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in
the Register as a Lender under this Agreement for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice. |
|
|
(d) |
|
Procedure |
|
|
|
|
Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and
an Eligible Assignee, the Administrative Agent shall, if such Assignment and
Acceptance has been duly completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. |
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(e) |
|
Participations |
|
|
|
|
Each Lender may sell participations to one or more banks or other entities that are
Eligible Assignees on the date of such sale (each a Participant) in or to all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its interests in the Loans owned by it and its Commitment); provided,
however, that: |
|
(i) |
|
such Lenders obligations under this Agreement shall remain
unchanged; |
|
|
(ii) |
|
such Lender shall remain solely responsible to the other
parties to this Agreement for the performance of such obligations; |
|
|
(iii) |
|
the Administrative Agent, the other Lenders, the Borrower and
the Servicer shall have the right to continue to deal solely and directly with
such Lender in connection with such Lenders rights and obligations under this
Agreement; and |
|
|
(iv) |
|
any such participation is notified to the Administrative Agent
and the Servicer. |
|
|
|
Any agreement or instrument pursuant to which a Lender sells such a participation
shall provide that the Participant shall not have any right to direct the
enforcement of this Agreement or other Transaction Documents or to approve any
amendment, modification or waiver of any provision of this Agreement or the other
Transaction Documents; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver of a type that would require the consent of each
Lender affected thereby pursuant to Clause 10.1 (Amendments, etc.). |
49
|
(f) |
|
Borrower and Servicer Assignment |
|
|
|
|
Neither the Borrower nor the Servicer may assign any of its rights or obligations
hereunder or any interest herein without the prior written consent of the
Administrative Agent and the Required Lenders. |
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(g) |
|
Cooperation |
|
|
|
|
The Borrower and the Servicer agree to assist each Lender, upon its reasonable
request, in syndicating their respective Commitments hereunder, including making
management and representatives of the Servicer and the Borrower reasonably available
to participate in informational meetings with potential assignees. |
10.4 |
|
Costs and Expenses |
|
|
|
In addition to the rights of indemnification granted under Clause 9 (Indemnities by the
Borrower) and the other obligations herein, the Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses (including reasonable counsels fees and
expenses) plus, in each case, any applicable VAT thereon, of (a) the Administrative Agent
and GE in its capacity as Lender, incurred in connection with the preparation, execution,
delivery, administration, amendment or modification of, or any waiver or consent issued in
connection with this Agreement, the Transaction Documents and the other documents to be
delivered thereunder, and (b) any Indemnified Party incurred in connection with the
amendment or modification of, or any waiver or consent issued in connection with this
Agreement, the Transaction Documents and the other documents to be delivered thereunder or
in connection therewith, including, without limitation (i) the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent with respect thereto and with
respect to advising the Administrative Agent as to its respective rights and remedies under
the Transaction Documents and the other documents to be delivered in connection therewith,
(ii) all reasonable fees and expenses of GE associated with any due diligence conducted by
it or on behalf of the other Indemnified Parties prior to the Closing Date and (iii) all
reasonable fees and expenses associated with any collateral audits and field examinations
conducted by the Administrative Agent or on behalf of the other Indemnified Parties after
the Closing Date in accordance with the Transaction Documents. In addition, the Borrower
agrees to pay on demand all out of pocket costs and expenses, if any (including reasonable
counsels fees and expenses), plus, in each case, any applicable VAT thereon, incurred by
the Lenders, the Administrative Agent and the other Indemnified Parties in connection with
the enforcement of this Agreement, the other Transaction Documents and any other document to
be delivered in connection therewith, including any restructuring, workout or administration
in connection with any Transaction Documents to which it is a party or such other documents. |
|
10.5 |
|
Confidentiality |
|
(a) |
|
Subject to Clause 10.5(c), the Fee Letters (including any prior drafts thereof)
and any other pricing information relating to the facility contemplated by the
Transaction Documents (including such information set forth in any commitment letter,
term sheet or proposal prior to the Closing Date) |
50
|
|
|
(collectively, Product Information) is confidential. Each of the Borrower, the
Performance Undertaking Provider and the Servicer agrees: |
|
(i) |
|
to keep all Product Information confidential and to disclose
Product Information only to those of its officers, employees, agents,
accountants, legal counsel and other representatives (collectively
Representatives) who have a need to know such Product Information for the
purpose of assisting in the negotiation, completion and administration of the
facility contemplated hereby (the Facility); |
|
|
(ii) |
|
to use the Product Information only in connection with the
Facility and not for any other purpose; and |
|
|
(iii) |
|
to cause its Representatives to comply with these provisions
and to be responsible for any failure of any Representative to so comply. |
|
|
|
The provisions of this Clause 10.5 shall not apply to Product Information that is or
hereafter becomes (other than as a result of a breach of this Clause 10.5(b)) a
matter of general public knowledge. The provisions of this Clause 10.5 shall not
prohibit the Borrower, the Performance Undertaking Provider or the Servicer from
filing with any governmental or regulatory agency any information or other documents
with respect to the Facility as may be required by applicable Law. |
|
|
(b) |
|
Each Lender and the Administrative Agent agrees to maintain the confidentiality
of all non-public information with respect to the Transaction Parties, the Receivables,
the Collections, the Related Security, the Collection Accounts or any other matters
furnished or delivered to it pursuant to or in connection with the Commitment Letter,
the term sheet, this Agreement or any other Transaction Document; provided, that such
information may be disclosed (i) to such partys Affiliates and its and their
respective officers, employees, agents, accountants, legal counsel and other
representatives (collectively Lender Representatives) who have a need to know such
information for the purpose of assisting in the negotiation, completion and
administration of the facility contemplated hereby, (ii) to such partys permitted
assignees and participants to the extent such disclosure is made pursuant to a written
agreement of confidentiality substantially similar to this Clause 10.5(b), (iii) to the
extent required by applicable Law or by any Official Body and (iv) to the extent
necessary in connection with the enforcement of any Transaction Document. |
|
|
The provisions of Clause 10.5(b) shall not apply to information that is or hereafter becomes
(through a source other than the applicable Lender or the Administrative Agent or any Lender
Representative associated with such party) a matter of general public knowledge. The
provisions of this Clause 10.5 shall not prohibit any Lender or the Administrative Agent
from filing with or making available to any governmental or regulatory agency any
information or other documents with respect to the Facility as may be required by applicable
Law or requested by such governmental or regulatory agency. |
51
10.6 |
|
Execution in Counterparts |
|
|
|
This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile or by electronic file in a format that is accessible by the recipient
shall be effective as delivery of a manually executed counterpart of this Agreement. |
|
10.7 |
|
Integration; Binding Effect; Survival of Termination; Severability |
|
|
|
This Agreement and the other Transaction Documents executed by the parties hereto on the
date hereof contain the final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof superseding all
prior oral or written understandings. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction. This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms and shall remain in full force and effect until
the Final Payout Date; provided, however, that the provisions of Clauses 2.11 (Breakage
Costs), 2.12, 2.13, 2.14, 2.15, 9, 10.4, 10.5, 10.9, 10.11, 10.13, 10.15 and 10.16 shall
survive any termination of this Agreement. If any one or more of the provisions of this
Agreement shall for any reason whatsoever be held invalid, then such provisions shall be
deemed severable from the remaining provisions of this Agreement and shall in no way affect
the validity or enforceability of such other provisions. |
|
10.8 |
|
Governing law; submission to jurisdiction; appointment of process agent |
|
(a) |
|
This Agreement and the rights and obligations of the parties hereto shall be
governed by and construed in accordance with English law. |
|
|
(b) |
|
Each party hereto agrees that the courts of England shall have jurisdiction to
hear and determine any suit, action or proceeding, and to settle any dispute, which may
arise out of or in connection with this Agreement, any other Transaction Document or
the transaction contemplated hereby or thereby and, for such purposes, irrevocably
submits to the non-exclusive jurisdiction of such courts. |
|
|
(c) |
|
Each of the parties hereto irrevocably waives any objection which it might now
or hereafter have to the courts referred to in Clause 10.8(b) being nominated as the
forum to hear and determine any suit, action or proceeding, and to settle any dispute,
which may arise out of or in connection with this Agreement, any other Transaction
Document or the transactions contemplated hereby or thereby and agrees not to claim any
such court is not a convenient or appropriate forum. |
52
|
(d) |
|
Each of the parties hereto (other than such parties as are registered in
England and Wales or otherwise have a place of business in England and Wales) agrees
that the process by which any suit, action or proceeding is begun may be served on it
by being delivered in connection with any suit, action or proceeding in England to the
English Process Agent for such party. |
|
|
(e) |
|
The submission to the jurisdiction of the courts referred to in Clause 10.8(b)
shall not (and shall not be construed so as to) limit the right of any party to take
proceedings against any other party or any of its respective property in any other
court of competent jurisdiction nor shall the taking of proceedings in any other
jurisdiction preclude the taking of proceedings in any other jurisdiction, whether
concurrently or not. |
10.9 |
|
Right of Setoff |
|
|
|
Each Lender is hereby authorised (in addition to any other rights it may have) at any time
after the occurrence of the Facility Termination Date due to the occurrence of a Facility
Termination Event to set off, appropriate and apply (without presentment, demand, protest or
other notice which are hereby expressly waived) any amounts and any other indebtedness held
or owing by such Lender to, or for the account of, the Borrower against the amount of the
Transaction Party Obligations owing by the Borrower to such Person. |
|
10.10 |
|
Ratable payments |
|
|
|
If any Lender, whether by setoff or otherwise, has payment made to it with respect to any
Transaction Party Obligation in a greater proportion than that received by any other Lender
entitled to receive a ratable share of such Transaction Party Obligation, such Lender
agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of
such Transaction Party Obligation held by the other Lenders so that after such purchase each
Lender will hold its ratable proportion of such Transaction Party Obligation; provided that
if all or any portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of such recovery,
but without interest. |
|
10.11 |
|
Limitation of Liability |
|
|
|
No claim may be made by any party against any other party or their respective Affiliates,
directors, officers, employees, attorneys or agents (each a
Default Party) for any
special, indirect, consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any other Transaction Document, or any act, omission or
event occurring in connection herewith or therewith, except with respect to any claim
arising out of the willful misconduct or gross negligence of such Default Party; and each
party hereto hereby waives, releases, and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist in its
favour. |
53
10.12 |
|
Limitation on the addition and termination of Originators |
|
(a) |
|
Without limiting the right of any Originator to terminate its rights and
obligations to sell Receivables to a Purchaser pursuant to and in accordance with the
applicable Originator Sale Agreement, the Borrower shall not consent to any request
made to terminate any Originator Sale Agreement or to terminate the right or obligation
of any Originator to continue selling its Receivables to the Borrower or the
Intermediate Transferor (as applicable) thereunder, nor will any Originator which is
the subject of such request be terminated under an Originator Sale Agreement, in each
case unless (i) the Servicer provides the Administrative Agent with a certificate
(signed by a Responsible Officer of the Servicer) which attaches a Daily Report giving
pro forma effect to any reduction in the Net Eligible Receivables Balance and Net
Eligible Funding Balance resulting from the termination of such Originator or
Originator Sale Agreement, and which certifies that, after giving pro forma effect to
such termination and any prepayments of Loans on or prior to the date of such
termination, the Aggregate Principal Balance does not exceed the Maximum Aggregate
Principal Balance, (ii) no Facility Event (other than with respect to the Originator so
terminated) has occurred and is continuing (both before and after giving effect to such
termination) and (iii) the Administrative Agent will have received five (5) Business
Days prior written notice of such termination. |
|
|
(b) |
|
The Borrower will not consent to the addition of a new Originator under an
Originator Sale Agreement except (i) with the consent of the Administrative Agent and
the Required Lenders (such consent not to be unreasonably withheld), (ii) upon the
satisfaction of the conditions precedent specified in such Originator Sale Agreement
and (iii) upon the delivery of an amendment hereto reflecting the addition of such new
Originator. |
|
|
(c) |
|
The Borrower will not enter into any new Originator Sale Agreement and the
Borrower will not enter into any new Intermediate Transfer Agreement unless (i) each
Person proposed to become a new Originator thereunder is organised under the laws of an
Approved Originator Jurisdiction, and to the extent permitted by Law, has become a
party to the Servicing Agreement as a Sub-Servicer and, with respect to a new
Intermediate Transferor, is reasonably satisfactory to each Lender, (ii) the Originator
Sale Agreement is in form and substance reasonably satisfactory to the Required
Lenders, (iii) the Borrower shall have delivered such instruments, opinions and other
documents as the Required Lenders (or all Lenders with respect to any new Intermediate
Transferor) may reasonably request in connection therewith (including amendment of the
Performance Undertaking to include the obligations of any new Originator and amendment
of Clause 2.6 (Application of Collections prior to Facility Termination Date) to adjust
the allocations therein), all of which shall be in form and substance reasonably
satisfactory to the Required Lenders, (iv) no Facility Event has occurred and is
continuing or would result therefrom and (v) the Administrative Agent shall have
received an amendment hereto reflecting such new Originator Sale Agreement and/or
Intermediate Transfer Agreement. |
54
|
(d) |
|
The provisions of paragraphs (b) and (c) above shall not apply to the addition
of an Originator the accession of whom to the Transaction Documents is effected in
accordance with Clause 4 (Accession of Originators) in connection with the satisfaction
of the relevant conditions precedent to the Initial Effective Date applicable to such
Originator. |
|
(a) |
|
If, for the purpose of obtaining judgment in any court, it is necessary to
convert a sum owing hereunder in one currency into another currency, each party hereto
agrees, to the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other currency on
the Business Day immediately preceding the day on which final judgment is given. |
|
|
(b) |
|
The obligations of the Borrower in respect of any sum due to any party hereto
or any holder of the obligations owing hereunder (the Applicable Creditor) shall,
notwithstanding any judgment in a currency (the Judgment Currency) other than the
currency in which such sum is stated to be due hereunder (the Agreement Currency), be
discharged only to the extent that, on the Business Day following receipt by the
Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the
Applicable Creditor may in accordance with normal banking procedures in the relevant
jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount
of the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor
against such loss. The obligations of the Borrowers contained in this Clause 10.13
shall survive the termination of this Agreement and the payment of all other amounts
owing hereunder. |
10.14 |
|
Contracts (Rights of Third Parties) Act (1999) |
|
(a) |
|
Except in respect of the Indemnified Parties, Transaction Parties and Secured
Parties not party hereto which Persons (including, for the avoidance of doubt their
respective successors and permitted assigns) are intended to have the benefit of this
Agreement pursuant to the Contracts (Rights of Third Parties) Act (1999), the parties
hereto do not intend any terms of this Agreement to be enforceable pursuant to the
Contracts (Rights of Third Parties) Act (1999). |
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|
(b) |
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Notwithstanding Clause 10.14(a) and any other term or condition of this
Agreement, but subject to Clause 10.1 (Amendments, etc.), the consent of any Person who
is not a party hereto (other than the Transaction Parties) is not required to rescind
or vary this Agreement at any time. |
10.15 |
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USA Patriot Act |
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|
|
Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA
Patriot Act (Title III of US Pub. L. 107-56 (signed into law October 26, 2001)) |
55
|
|
and any similar Law in any relevant jurisdiction (the Acts), it is required to obtain,
verify and record information that identifies the Transaction Parties, which information
includes the name and address of each Transaction Party and other information that will
allow such Lender to identify such Transaction Party in accordance with the Acts. |
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10.16 |
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No proceeding; limited recourse |
|
(a) |
|
Each of the parties hereto hereby agrees that (i) it will not institute against
any Transaction SPV any proceeding of the type referred to in the definition of Event
of Bankruptcy until there shall have elapsed two years plus one day since the Final
Payout Date (or, in the case of the Spanish Account SPV, the Seller Payout Date with
respect to all Originators related to the Spanish Account SPV) and (ii) notwithstanding
anything contained herein or in any other Transaction Document to the contrary, the
obligations of each Transaction SPV under the Transaction Documents are solely the
corporate obligations of such Transaction SPV and shall be payable solely to the extent
of funds which are received by such Transaction SPV pursuant to the Transaction
Documents and available for such payment in accordance with the terms of the
Transaction Documents and shall be non-recourse other than with respect to such
available funds and, without limiting Clause 10.16, if ever and until such time as such
Transaction SPV has sufficient funds to pay such obligation shall not constitute a
claim against such Transaction SPV. |
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|
(b) |
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No recourse under any obligation, covenant or agreement of any Transaction SPV
contained in this Agreement or any other Transaction Document shall be had against any
incorporator, stockholder, officer, director, member, manager, employee or agent of
such Transaction SPV by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement and the other Transaction Documents are solely a
corporate obligation of such Transaction SPV, and that no personal liability whatever
shall attach to or be incurred by any incorporator, stockholder, officer, director,
member, manager, employee or agent of any Transaction SPV or any of them under or by
reason of any of the obligations, covenants or agreements of such Transaction SPV
contained in this Agreement or any other Transaction Document, or implied therefrom,
and that any and all personal liability for breaches by any Transaction SPV of any of
such obligations, covenants or agreements, either at common law or at equity, or by
statute, rule or regulation, of every such incorporator, stockholder, officer,
director, member, manager, employee or agent is hereby expressly waived as a condition
of and in consideration for the execution of this Agreement; provided that the
foregoing shall not relieve any such Person from any liability it might otherwise have
as a result of fraudulent actions taken or fraudulent omissions made by them. |
56
[Schedules and Exhibits Omitted]
EXECUTION of Receivables Loan Agreement:
The parties have shown their acceptance of the terms of this Agreement by executing it below.
The Borrower
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Given under the Common Seal |
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of Dana Europe Financing (Ireland) Limited: |
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Director |
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Secretary |
Structured Finance Management (Ireland) Limited |
as Secretary |
S-1
EXECUTION of Receivables Loan Agreement:
The Servicer
DANA INTERNATIONAL LUXEMBOURG SARL
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Signature:
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/s/ Cornelia v. Künsberg |
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Name:
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Cornelia von Künsberg |
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Title/Authority: Authorised Director and
PoA Holder |
S-1
EXECUTION of Receivables Loan Agreement:
Lender
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Signed by Adrian Spurling as attorney |
for GE Leveraged Loans Limited |
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under a power of attorney dated 22 March 2007 |
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Attorney for GE Leveraged Loans Limited |
S-3
EXECUTION of Receivables Loan Agreement:
The Administrative Agent
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Signed by Adrian Spurling as attorney |
for GE Leveraged Loans Limited |
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under a power of
attorney dated 22 March 2007 |
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Attorney for GE
Leveraged Loans Limited |
S-4
EXECUTION of Receivables Loan Agreement:
Performance Undertaking Provider
DANA INTERNATIONAL LUXEMBOURG SARL
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Signature:
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/s/ Cornelia v. Künsberg |
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Name:
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Cornelia von Künsberg |
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Title/Authority:
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Authorised Director and PoA Holder |
S-2
EX-10(Z)(2)
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EXECUTION VERSION
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Exhibit 10-Z(2) |
Dated 18 July 2007
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(1) |
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DANA EUROPE FINANCING (IRELAND) LIMITED |
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(2) |
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DANA INTERNATIONAL LUXEMBOURG SARL |
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(3) |
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The Originators |
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(4) |
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GE LEVERAGED LOANS LIMITED |
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(5) |
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GE FACTOFRANCE SNC |
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(6) |
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DANA EUROPE S.A. |
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(7) |
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The Lenders |
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(8) |
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Certain other parties from time to time party to the Transaction Documents
described herein. |
MASTER SCHEDULE OF DEFINITIONS,
INTERPRETATION AND CONSTRUCTION
LONDON
CONTENTS
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Clause |
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Page |
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1. |
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Schedule Documents |
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1 |
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2. |
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Definitions |
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1 |
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2.1 Certain defined terms |
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1 |
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2.2 Other terms |
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52 |
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2.3 Computation of time periods |
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54 |
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3. |
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Miscellaneous |
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54 |
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3.1 Amendment |
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54 |
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3.2 Notices |
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55 |
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3.3 Governing Law |
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55 |
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3.4 Execution in counterparts |
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55 |
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4. |
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Accession of Originators |
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56 |
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4.1 Deed of Accession |
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56 |
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4.2 Effect of Deed of Accession |
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56 |
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4.3 Acknowledgements and confirmations |
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56 |
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Schedules
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1.
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Address and Notice Information |
2.
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Conditions Precedent for the Initial Austrian Effective Date |
3.
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Conditions Precedent for the Initial Belgian Effective Date |
4.
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Conditions Precedent for the Initial French Effective Date |
5.
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Conditions Precedent for the Initial Italian Effective Date |
6.
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Conditions Precedent for the Initial Spanish Effective Date |
7.
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Form of Deed of Accession |
8.
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Facility Accounts and Account Banks |
9.
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Dana Europe Organisational Chart |
10.
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Permitted Disposals |
11.
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Repatriation Plan |
12.
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Permitted Indebtedness |
13.
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Permitted Loans |
14.
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Permitted Transactions |
i
MASTER SCHEDULE OF DEFINITIONS, INTERPRETATION AND CONSTRUCTION
1. |
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SCHEDULE DOCUMENTS |
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The Schedule Documents are as follows: |
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(a) |
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this Master Schedule of Definitions, Interpretation and Construction; |
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(b) |
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the Receivables Loan Agreement; |
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(c) |
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the Servicing Agreement; |
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(d) |
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the Performance Undertaking; |
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(e) |
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the Subordinated Loan Agreement; |
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(f) |
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each Originator Sale Agreement, other than the Italian RPA; |
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(g) |
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each Intermediate Transfer Agreement; |
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(h) |
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the Security Agreement; |
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(i) |
|
each Account Security Agreement; |
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(j) |
|
the Spanish Account Agency Agreement; |
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(k) |
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the Spanish Seller Payout Call Option Agreements; |
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(l) |
|
the Corporate Services Agreements; |
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(m) |
|
each Fee Letter; and |
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(n) |
|
each other Transaction Document and each other instrument, document and other
agreement from time to time executed in connection with the foregoing. |
2. |
|
DEFINITIONS |
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2.1 |
|
Certain defined terms |
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Except where the context otherwise requires, the following terms used in the Schedule
Documents have the following meanings: |
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Account Security Agreements means, as the context requires all or any one of, the Austrian
Account Security Agreements, the Belgian Account Security Agreements, the French Account
Security Agreements, the German Account Security Agreements, the Italian Account Security
Agreements and the Spanish Account Security Agreements. |
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|
Adjusted EBITDA means, for any period determined on an aggregated basis for the Dana
European Entities, the Borrower and the Spanish Account SPV in accordance with Modified
GAAP, without duplication as calculated below: |
1
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(a) |
|
Net Income less (without duplication and to the extent included in Net Income)
(i) income from forward contracts (on a mark-to-market basis), (ii) net income from
discontinued operations (iii) interest income, (iv) corporate and income tax credits
(v) non-recurring, transactional or unusual gains and (vi) equity earnings from
Affiliates, |
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(b) |
|
plus (without duplication and to the extent deducted in calculating Net Income)
(i) expense from forward contracts (on a mark-to-market basis), (ii) net losses from
discontinued operations, (iii) interest expense, (iv) tax expense relating to corporate
or income tax, (v) depreciation expense, (vi) amortisation expense, (vii) amounts
deposited or invested in the Dana European Legal Group under the circumstances
described in Clause 10.3(a) (Financial covenant) of the Performance Undertaking which
amounts, for the avoidance of doubt, shall only be included in the calculation of
Adjusted EBITDA under the circumstances where the Fixed Charges Coverage Ratio is to be
recalculated treating such amounts as part of Adjusted EBITDA in accordance with the
terms of the Transaction Documents, (viii) facility fees, unused commitment fees,
letter of credit fees and similar fees, (ix) non-cash non-recurring transactional or
unusual losses (provided such losses are adequately demonstrated to the Administrative
Agent to be non-cash in nature), (x) non-cash Restructuring Charges (provided such
Restructuring Charges are adequately demonstrated to the Administrative Agent to be
non-cash in nature), (xi) cash non-recurring transactional or unusual losses and cash
Restructuring Charges up to an aggregate amount of 5,000,000 in any rolling 12 month
period, (xii) Transaction Fees, (xiii) equity losses from Affiliates and (xiv) minority
interests. |
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Adjusted Eurocurrency Rate means, for any Interest Period, an interest rate per annum
obtained by dividing (a) the Eurocurrency Rate for such Interest Period by (b) a percentage
equal to 100% minus the Eurocurrency Rate Reserve Percentage for such Interest Period. |
|
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Administrative Agent means GE Leveraged Loans Limited, in its capacity as administrative
agent for the Lenders, and any successor thereto in such capacity appointed pursuant to
Clause 8 (The Administrative Agent) of the Receivables Loan Agreement. |
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Administrative Agent Fee Letter has the meaning specified in Clause 2.4(b) (Interest and
Fees) of the Receivables Loan Agreement. |
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Adverse Claim means a mortgage, charge, pledge, lien or other security interest (including
any lien by attachment, retention of title and any form of extended retention of title),
securing any obligation of any Person or any other agreement or arrangement having a similar
effect. |
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Affiliate means any Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, another Person or any subsidiary of such other
Person. A Person shall be deemed to control another Person if the controlling Person owns
51% or more of any class of equity voting securities or other ownership interests in the
controlled Person or possesses, directly or indirectly, the |
2
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power to direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of share capital, by contract or otherwise. |
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Agreed Annual Income means, with respect to (a) the Spanish Account SPV, the amount
payable to the Spanish Account SPV pursuant to the Transaction Documents to which the
Spanish Account SPV is a party or such other amount as may otherwise be agreed between the
Borrower, the Administrative Agent and the Spanish Account SPV and (b) the Borrower, 1,000
per annum or such other amount as may be agreed between the Borrower, the Servicer and the
Administrative Agent. |
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Agreed Form in relation to any document means the form agreed by, and initialled for the
purpose of identification by or on behalf of, the Administrative Agent and the Performance
Undertaking Provider, as amended from time to time with the consent of the Performance
Undertaking Provider and the Administrative Agent in writing. |
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|
Aggregate Commitment means, at any time, the sum of the Commitments then in effect. The
initial Aggregate Commitment as of the Closing Date shall be equal to 170,000,000. |
|
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Aggregate Principal Balance means the aggregate outstanding Principal Balance (in Euro or
the Euro Equivalent) of the Loans hereunder provided that, solely for the purposes of
computing whether the Aggregate Principal Balance exceeds the Maximum Aggregate Principal
Balance, the Aggregate Principal Balance on any day shall be deemed to be reduced by an
amount equal to the aggregate amount of funds (in Euro or the Euro Equivalent) then held in
the Borrower Operating Account (Principal) and which are then available to be withdrawn and
applied to reduce the Aggregate Principal Balance on the date of such computation. |
|
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Alternative Rate has the meaning specified in Clause 2.12(b) (Illegality) of the
Receivables Loan Agreement. |
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|
Alternative Rate Loan has the meaning specified in Clause 2.12(a) (Illegality) of the
Receivables Loan Agreement. |
|
|
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Applicable MAPB Percentage means the sum of: |
|
(a) |
|
(i) during a Trigger Period, 85%; or |
|
(ii) |
|
during the period commencing on the last day of the immediately
preceding Trigger Period and ending on the second consecutive quarterly Testing
Date thereafter on which the Fixed Charges Coverage Ratio is at least 1.5:1,
92.5%; or |
|
|
(iii) |
|
at all other times, 100%, |
|
(b) |
|
at all times whilst the Servicer is delivering Roll-Forward Reports pursuant to
Clause 2.3(d) (Roll-Forward Reports) of the Servicing Agreement in respect of the
Receivables of any Originator on a monthly basis in accordance with the proviso set
forth in that Clause, 5%; and |
3
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(c) |
|
after 31 October 2007, at all times whilst the Servicer is delivery
Roll-Forward Reports pursuant to Clause 2.3(d) (Roll-Forward Reports) of the Servicing
Agreement in respect of the Receivables of any Originator on a monthly basis in
accordance with the proviso set forth in that Clause, a further 5% (which further
reduction in the Applicable MAPB Percentage is, for the avoidance of doubt, in addition
to any reduction pursuant to paragraph (b) above); and |
|
|
(d) |
|
during a Dilution Trigger Period, 5% or such other percentage as may otherwise be
determined by the Administrative Agent and notified to the Borrower in accordance with
Clause 2.20 (Adjustments to the Applicable MAPB Percentage) of the Receivables Loan
Agreement; and |
|
|
(e) |
|
during a DSO Trigger Period, 5% or such other percentage as may otherwise be determined
by the Administrative Agent and notified to the Borrower in accordance with Clause 2.20
(Adjustments to the Applicable MAPB Percentage) of the Receivables Loan Agreement, |
|
|
provided that for the purposes of determining the Applicable MAPB Percentage the Fixed
Charges Coverage Ratio as of each Testing Date shall have been calculated without taking
into account any Covenant Correction Amount. |
|
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|
Applicable Margin has the meaning specified in the Lender Fee Letter. |
|
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Approved Currency means Euros, U.S. Dollars and Sterling. |
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|
Approved Obligor Jurisdiction means any Approved Originator Jurisdiction, Australia,
Canada (excluding the province of Quebec), Czech Republic, Finland, Ireland, Japan, the
Netherlands, Norway, Portugal, Scotland, Sweden, Switzerland, England and Wales, the U.S.
and any other jurisdiction approved in writing by the Administrative Agent. |
|
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|
Approved Originator Jurisdiction means Austria, Belgium, France, Germany, Italy and Spain
and any other jurisdiction approved in writing by the Administrative Agent and the Required
Lenders. |
|
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|
Assignment and Acceptance means an assignment and acceptance agreement entered into by a
Lender, an Eligible Assignee and the Administrative Agent, pursuant to which such Eligible
Assignee may become a party to the Receivables Loan Agreement in substantially the form of
Exhibit A (Form of Assignment and Acceptance) to the Receivables Loan Agreement. |
|
|
|
Austrian Account Security Agreement means any agreement designated as such in any Austrian
RPA. |
|
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|
Austrian Collection Account Bank means any bank or other financial institution set forth
on Schedule 8 (Facility Accounts and Account Banks) under the heading Austrian
Collection Account Banks, as such Schedule may be amended from time to time in accordance
herewith. |
4
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Austrian Intermediate Transfer Agreement means the Austrian Intermediate Transfer
Agreement, dated on or about the Initial Austrian Effective Date, among the Intermediate
Transferor and the Borrower. |
|
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|
Austrian Originators means each entity designated as a Seller under an Austrian RPA. |
|
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|
Austrian RPA means the receivables purchase agreement, dated on or about the Initial
Austrian Effective Date, between Dana Austria GmbH and the Intermediate Transferor, and such
additional Austrian law receivables purchase agreements as may be entered into from time to
time pursuant to Clause 10.12(b) (Limitation on the addition and termination of Originators)
of the Receivables Loan Agreement, for so long as such agreements remain in full force and
effect. |
|
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|
Belgian Account Security Agreement means any agreement designated as such in any Belgian
RPA. |
|
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|
Belgian Collection Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading Belgian Collection
Account Banks, as such Schedule may be amended from time to time in accordance herewith. |
|
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|
Belgian Originators means each entity designated as a Seller under a Belgian RPA. |
|
|
|
Belgian RPA means the receivables purchase agreement, dated on or about the Initial
Belgian Effective Date, between Spicer Off-Highway Belgium and the Borrower, and such
additional Belgian law receivables purchase agreements as may be entered into from time to
time pursuant to Clause 10.12(b) (Limitation on the addition and termination of Originators)
of the Receivables Loan Agreement, for so long as such agreements remain in full force and
effect. |
|
|
|
Bills of Exchange Redirection Date means in respect of an Originator, the day falling
thirty (30) days after the Initial Effective Date applicable to such Originator. |
|
|
|
Borrower means Dana Europe Financing (Ireland) Limited, a limited liability company
incorporated under the laws of Ireland. |
|
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|
Borrower Operating Account means any account set forth on Schedule 8 (Facility Accounts
and Account Banks) under the heading Borrower Operating Accounts, as such Schedule may be
amended from time to time in accordance herewith. |
|
|
|
Borrower Operating Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading Borrower Operating
Account Bank, as such Schedule may be amended from time to time in accordance herewith. |
|
|
|
Borrower Operating Account (Interest) means the internal sub-account or ledger of such
name created and maintained by or on behalf of the Borrower as records in the books of the
Borrower for the purposes of allocating the proceeds of |
5
|
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Collections paid into and standing to the credit of the Borrower Operating Accounts in
accordance with the terms of the Transaction Documents. |
|
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|
Borrower Operating Account (Principal) means the internal sub-account or ledger of such
name created and maintained by or on behalf of the Borrower as records in the books of the
Borrower for the purposes of allocating the proceeds of Collections paid into and standing
to the credit of the Borrower Operating Accounts in accordance with the terms of the
Transaction Documents. |
|
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|
Borrower Receivables Interest means any ownership interest, participation interest,
security interest or other interest or right of any nature in Receivables and any Related
Security with respect thereto (together with rights to payment in respect of any loan
secured by such security interest) that has been acquired by or has accrued to the benefit
of the Borrower from an Intermediate Transferor pursuant to an Intermediate Transfer
Agreement. |
|
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|
Borrowing means the amount requested by the Borrower in a Borrowing Request pursuant to
Clause 2.2 (Borrowing procedures) of the Receivables Loan Agreement. |
|
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|
Borrowing Date has the meaning specified in Clause 2.2(a)(i) (Borrowing procedures) of the
Receivables Loan Agreement. |
|
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|
Borrowing Request has the meaning specified in Clause 2.2(a)(i) Borrowing procedures) of
the Receivables Loan Agreement. |
|
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|
Business Day means a day (other than a Saturday or Sunday) on which banks are open for
general business in London, New York City, Dublin, Luxembourg, Paris, Amsterdam and Zurich
and: |
|
(a) |
|
(in relation to any date for payment or purchase of a currency other than Euro)
the principal financial centre of the country of that currency; |
|
|
(b) |
|
(in relation to any date for payment or purchase of Euro) any TARGET Day; |
|
|
(c) |
|
for the purposes of the German RPA, a day (other than a Saturday or Sunday) on
which banks are open for general business in Frankfurt; |
|
|
(d) |
|
for the purposes of the Austrian RPA and the Austrian Intermediate Transfer
Agreement, a day (other than a Saturday or Sunday) on which banks are open for general
business in Vienna; |
|
|
(e) |
|
for the purposes of the Belgian RPA, a day (other than a Saturday or Sunday) on
which banks are open for general business in Brussels; |
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(f) |
|
for the purposes of the Spanish RPA, a day (other than a Saturday or Sunday) on
which banks are open for general business in Madrid; or |
|
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(g) |
|
for the purposes of the Italian RPA and the Italian Intermediate Transfer
Agreement, a day (other than a Saturday or Sunday) on which banks are open for general
business in Milan. |
6
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Calculation Period means each period from and including the first day of a calendar month
to and including the last day of such calendar month (whether such month occurs before or
after the Closing Date). |
|
|
|
Capital Expenditures means, for any period, the sum (without duplication) of all
expenditures made, directly or indirectly, by the Dana European Entities, the Borrower and
the Spanish Account SPV determined on an aggregated basis in accordance with Modified GAAP
as reported by HFM during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions thereto, that
should be, in accordance with Modified GAAP, reflected as additions to property, plant or
equipment on a Persons balance sheet. For purposes of this definition, the purchase price
of equipment that is purchased simultaneously with the trade in of existing equipment or
with insurance proceeds shall be included in Capital Expenditures only to the extent of the
gross amount of such purchase price less the credit granted by the seller of such equipment
for the equipment being traded in at such time or the amount of such proceeds, as the case
may be. |
|
|
|
Capitalised Lease Obligation means, of any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person under GAAP
and, for purposes hereof, the amount of such obligations at any time shall be the
capitalised amount thereof at such time determined in accordance with GAAP. |
|
|
|
Change in Law means (a) the adoption of any Law after the Closing Date, (b) any change in
Law or in the interpretation or application thereof by any Official Body after the Closing
Date or (c) compliance by any Indemnified Party, by any lending office of such Indemnified
Party or by such Indemnified Partys holding company, if any, with any request, guideline or
directive (whether or not having the force of law) of any Official Body made or issued after
the Closing Date. |
|
|
|
Change of Control means the occurrence of any of the following: |
|
(a) |
|
there is any change in the aggregate outstanding Equity Interests owned
(directly or indirectly) by Dana International Luxembourg SARL in any Originator (other
than a Spanish Originator) or the Subordinated Lender from those shown on the
organisational chart set forth on Schedule 9 (Dana Europe Organisational Chart); |
|
|
(b) |
|
any Spanish Originator ceases to be a direct or indirect wholly-owned
subsidiary of Dana Corporation or Dana International Luxembourg SARL; |
|
|
(c) |
|
the Equity Holder ceases to own, directly or indirectly free and clear of any
Adverse Claim, 100% of the outstanding Equity Interests of the Borrower; |
|
|
(d) |
|
the Borrower ceases to own, free and clear of any Adverse Claim (other than a
Permitted Adverse Claim), 100% of the outstanding Equity Interests of the Spanish
Account SPV; or |
7
|
(e) |
|
the Servicer (for so long as it is Dana International Luxembourg SARL) or the
Performance Undertaking Provider ceases to be a direct or indirect wholly-owned
Subsidiary of Dana Corporation. |
|
|
Closing Date means 18 July 2007. |
|
|
|
Collateral means (a) the Charged Property under and as defined in the Security Agreement
and (b) any other assets, property, rights, interests, claims or benefits in respect of
which an Adverse Claim has been created under or pursuant to the Security Documents. |
|
|
|
Collection Account Banks means, as the context requires, all or any one of the Austrian
Collection Account Banks, the Belgian Collection Account Banks, the French Collection
Account Banks, the German Collection Account Banks, the Italian Collection Account Banks and
the Spanish Collection Account Banks. |
|
|
|
Collection Accounts means, as the context requires, all or any one of the Existing
Collection Accounts or New Collection Accounts. |
|
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|
Collections means, collectively (without duplication) (a) all cash collections (including,
if applicable, any value added taxes) and other cash proceeds of the Pool Receivables,
including all Finance Charges, cash proceeds of Related Security with respect to any such
Receivable, any Deemed Collections of such Receivables and any payments made by any
Originator or the Servicer with respect to such Receivables (including any payments made
with respect to a Diluted Receivable or other Deemed Collections pursuant to the terms of
the relevant Originator Sale Agreement or the Servicing Agreement), (b) if applicable, all
recoveries of value added tax from any relevant Official Body relating to any Pool
Receivable that is a Defaulted Receivable and (c) all other cash collections and other cash
proceeds of the Collateral. |
|
|
|
Commitment means, in respect of any Lender the Euro amount set forth on Schedule 1
(Commitments) of the Receivables Loan Agreement opposite such Lenders name or, in the case
of a Lender that became a party to the Receivables Loan Agreement pursuant to an Assignment
and Acceptance, the Euro amount set forth therein as such Lenders Commitment, in each case
as such amount may be (a) reduced or increased by any Assignment and Acceptance entered into
by such Lender in accordance with the terms of the Receivables Loan Agreement and (b)
reduced in accordance with Clause 2.1(b) (The Loans) of the Receivables Loan Agreement. |
|
|
|
Commitment Letter means the commitment letter, dated 9 February 2007, between the
Structuring Agent and Dana Europe S.A.. |
|
|
|
Concentration Limit means, with respect to any Obligor (treating each Obligor and its
Affiliates as if they were a single Obligor) at any time, 10% of the aggregate Outstanding
Balance of the Pool Receivables that qualify as Eligible Receivables at such time. |
|
|
|
Contract means, in relation to any Receivable, any and all contracts, instruments,
agreements, invoices, notes or other writings (including an agreement evidenced by a
purchase order or similar document) pursuant to or under which an Obligor becomes or is
obligated to make payments on or in respect of such Receivable. |
8
|
|
Contribution Notice means a contribution notice issued by tPR under Section 38 or Section
42 of the Pensions Act. |
|
|
|
Corporate Services Agreements means the Borrower corporate services agreement between,
amongst others, the Borrower and Structured Finance Management (Ireland) Limited as
Corporate Services Provider dated on or about the Closing Date, and the Spanish corporate
services agreement between, amongst others, the Spanish Account SPV and Structured Finance
Management (Spain), S.L. as Corporate Services Provider. |
|
|
|
Corporate Services Provider means, in respect of the Borrower, Structured Finance
Management (Ireland) Limited and, in respect of the Spanish Account SPV, Structured Finance
Management (Spain), S.L. |
|
|
|
Covenant Correction Amount means an amount, if any, in Euro equal to the Euro Equivalent
of the aggregate amount deposited or invested or required to be deposited or invested in the
Dana European Legal Group pursuant to Clause 10.3(a) (Financial covenant) of the Performance
Undertaking as at the immediately preceding Testing Date so that a recalculation in
accordance with such Clause of the Fixed Charges Coverage Ratio at as the relevant Testing
Date would be at least 1.25:1. |
|
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|
Credit and Collection Policies means, with respect to any Originator, those credit and
collection policies and practices of that Originator in effect on the Closing Date or, if
applicable, the date on which such Person becomes an Originator pursuant to Clause 10.12
(Limitation on the addition and termination of Originators) of the Receivables Loan
Agreement, and described in Schedule 2 (Credit and Collection Policies) of the relevant
Originator Sale Agreement, as modified in compliance with the Receivables Loan Agreement,
the relevant Originator Sale Agreement and the Servicing Agreement. |
|
|
|
Currency Percentage means, on any date of determination for any Approved Currency, the
percentage of the aggregate Outstanding Balance of the Pool Receivables that are Eligible
Receivables represented by Eligible Receivables denominated in such Approved Currency,
rounded up or down by up to two decimal points by the Servicer. The aggregate Currency
Percentages for all Approved Currencies, as so rounded by the Servicer, shall in all cases
be equal to 100%. |
|
|
|
Daily Report means a report furnished by or on behalf of the Servicer pursuant to Clause
2.3 (Reporting requirements) of the Servicing Agreement substantially in the form attached
as Exhibit A-1 (Form of Daily Report) to the Servicing Agreement. |
|
|
|
Dana European Entity means any of (i) Dana Automocion S.A., (ii) Spicer Ayra Cardan, S.A.,
(iii) Dana International Luxembourg SARL, (iv) Dana SAS, (v) Thermal Products France SAS,
(vi) Spicer France Sarl, (vii) Dana Two SAS, (viii) Dana Europe Holdings B.V., (ix) Spicer
Nordiska Kardan AB, (x) Dana Europe SA, (xi) Dana Belgium BVBA, (xii) Spicer Off-Highway
Belgium, (xiii) Dana Italia S.p.A., (xiv) Dana Hungary Gyor kft, (xv) Dana Investment GmbH,
(xvi) Dana GmbH (Germany), (xvii) Dana (Deutschland) Grundstucksverwaltung GmbH, (xviii)
Reinz-Dichtungs GmbH, (ixx) Dana Holding GmbH, (xx) Spicer Off-Highway GmbH, (xxi) Spicer
Gelenkwellenbau GmbH and (xxii) Dana Austria GmbH but, as |
9
|
|
the context may require, excluding the divisions of such entities that are scheduled for
disposal as described on Schedule 10 (Permitted Disposals). |
|
|
|
Dana European Legal Group means the Dana European Entities other than Dana Automocion,
S.A. and Spicer Ayra Cardan, S.A. for so long as such entities are not Material Subsidiaries
of Dana International Luxembourg SARL. |
|
|
|
Data Feed means a report furnished by the Servicer pursuant to Clause 2.3 (Reporting
requirements) of the Servicing Agreement substantially in the form attached as Exhibit A-2
(Form of Data Feed) to the Servicing Agreement. |
|
|
|
Data Protection Law means the EU Data Protection Directive (95/46/EC), the Irish Data
Protection Act, 1988 and the Irish Data Protection (Amendment) Act 2003 or any other
applicable law or regulation relating to data protection or privacy. |
|
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|
Days Sales Outstanding in respect of any Calculation Period shall be calculated by
comparing the aggregate Outstanding Balance of all Pool Receivables as at the end of the
relevant Calculation Period (the Gross Outstanding Receivables Balance) against the
aggregate Outstanding Balance of Pool Receivables generated in that Calculation Period and
in each consecutive preceding Calculation Period until the aggregate Outstanding Balance
(when generated) of Pool Receivables generated in those preceding Calculation Periods (the
Look Back Aggregate Outstanding Receivables Balance) exceeds the Gross Outstanding
Receivables Balance; the average number of days shall then be calculated by adding together
(a) the number of days in each Calculation Period in which the Look Back Aggregate
Outstanding Receivables Balance did not exceed the Gross Outstanding Balance and (b) the
number of days in the Calculation Period in which the Look Back Aggregate Outstanding
Receivables Balance exceeded the Gross Outstanding Receivables Balance multiplied by a
fraction the numerator of which is the Gross Outstanding Receivables Balance less the Look
Back Aggregate Outstanding Receivables Balance calculated for those Calculation Periods
included in paragraph (a) above, and the denominator of which is the aggregate Outstanding
Balance of Pool Receivables generated in that Calculation Period, as such calculation and
applicable Calculation Periods may be more particularly described in the Agreed Form of the
Monthly Ratio Report. For purposes of the definition of Days Sales Outstanding, the first
Calculation Period shall be the first calendar month after the calendar month in which the
Closing Date occurred and each subsequent Calculation Period for purposes of this definition
shall be determined accordingly. |
|
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|
Declaration of Trust means the charitable share declaration of trust dated on or about the
Closing Date given by the Share Trustee as trustee of the Dana Europe Trust. |
|
|
|
Deed of Accession means a deed substantially in the form set out in 7 (Form of Deed of
Accession). |
|
|
|
Deemed Collections means any Collections on any Receivable paid or payable, as the context
requires, by an Originator pursuant to an Originator Sale Agreement, by the Servicer or a
Sub-Servicer pursuant to the Servicing Agreement or by the Borrower under the Receivables
Loan Agreement (regardless of whether received by any Person). |
10
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Default Rate means a rate per annum equal to the Standard Rate plus 2.00%. |
|
|
|
Defaulted Receivable means, without duplication, a Receivable (a) as to which any payment,
or part thereof, remains unpaid for 91 or more days from the original due date for such
Receivable, (b) as to which any payment, or part thereof, remains unpaid for 210 or more
days from the invoice date of such Receivable, (c) as to which an Event of Bankruptcy has
occurred and is continuing with respect to the Obligor thereof, (d) which has been
identified by the relevant Originator as uncollectable in accordance with the applicable
Credit and Collection Policy, or (e) which, in accordance with the applicable Credit and
Collection Policies, has been or should be written off as uncollectable. |
|
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|
Designated Account means, with respect to any Originator, the Servicer, the Subordinated
Lender, the Performance Undertaking Provider or the Spanish Account SPV, any bank account
designated from time to time by such Person with the approval of the Performance Undertaking
Provider and notified in writing to the Borrower, the Servicer and the Administrative Agent. |
|
|
|
Diluted Receivable means any Receivable or part thereof which is either (a) reduced,
cancelled or adjusted as a result of (i) any defective, rejected or returned goods,
merchandise or services or any failure by the relevant Originator to deliver any merchandise
or goods or provide any services or otherwise to perform under any related Contract, (ii)
any change in the terms of, or cancellation of, a Contract or invoice or any rebate,
administrative fee, discount, credit memo, refund, non-cash payment (other than payments by
cheque), chargeback, allowance or any billing or other adjustment by the relevant Originator
(except any such change or cancellation made in settlement of such Receivable in accordance
with the Credit and Collection Policies resulting from the financial inability of the
Obligor to pay such Receivable) or (iii) any set off or offset in respect of a claim by the
relevant Obligor (whether such claim arises out of the same or a related transaction or an
unrelated transaction), or (b) subject to any specific counterclaim or defence whatsoever
(except the discharge in a proceeding under applicable Insolvency Law of the Obligor
thereof). |
|
|
|
Dilution means any (a) reduction, cancellation or adjustment in a Receivable as a result
of (i) any defective, rejected or returned goods, merchandise or services or any failure by
the relevant Originator to deliver any merchandise or goods or provide any services or
otherwise to perform under any related Contract, (ii) any change in the terms of, or
cancellation of, a Contract or invoice or any rebate, administrative fee, discount, credit
memo, refund, non-cash payment (other than payments by cheque), chargeback, allowance or any
billing or other adjustment by the relevant Originator or (iii) any set off or offset in
respect of a claim by the relevant Obligor (whether such claim arises out of the same or a
related transaction or an unrelated transaction), or (b) subject to any specific
counterclaim or defence whatsoever, or (c) as to which an Event of Bankruptcy has occurred
and is continuing with respect to the Obligor thereof, or (d) which has been identified by
the relevant Originator as uncollectible in accordance with the applicable Credit and
Collection Policy, or (e) which, in accordance with the applicable Credit and Collection
Policies, has been or should be written off as uncollectible. |
|
|
|
Dilution Benchmark Percentage means the average Dilution Ratio calculated on the basis of
the actual Dilution Ratios calculated as at the end of each of the |
11
|
|
Calculation Periods from and including 1 August 2007 to and including 30 November 2007
provided that, in calculating the Dilution Ratios for the purposes of determining the
Dilution Benchmark Percentage, Pool Receivables generated by the Dana Austria Axel Assembly
Plant in Voelkemarkt, Austria and Driveshaft Assembly Plant in Villefranche, France and
Dilutions arising in respect of such Pool Receivables shall be excluded from the
calculation. |
|
|
|
Dilution Ratio means the ratio (expressed as a percentage) computed as of each Ratio
Reporting Date for the immediately preceding Calculation Period by dividing (a) the
aggregate amount (in Euro or the Euro Equivalent) of Dilutions arising during that
Calculation Period in respect of Pool Receivables, by (b) the aggregate amount (in Euro or
the Euro Equivalent) of all Pool Receivables that were generated during that Calculation
Period, as such calculation and applicable Calculation Period may be more particularly
described in the Agreed Form of Monthly Ratio Report. For purposes of the definition of
Dilution Ratio, the first Calculation Period shall be the first calendar month after the
calendar month in which the Closing Date occurred and each subsequent Calculation Period for
purposes of this definition shall be determined accordingly. |
|
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|
Dilution Trigger Period means the period commencing on (i) during the first three months
after 1st October 2007, the second consecutive Ratio Reporting Date on which the Dilution
Ratio is calculated to be more than 4%, and (ii) at all other times, the first Ratio
Reporting Date (and if there has been any Dilution Trigger Period prior to such Ratio
Reporting Date, on the first Ratio Reporting Date after the end of such Dilution Trigger
Period) that the three month rolling average Dilution Ratio is calculated to be more than
the Dilution Benchmark Percentage plus 2% and in each case ending on the third consecutive
Ratio Reporting Date thereafter on which the Dilution Ratio is less than or equal to the
Dilution Benchmark Percentage plus 2%. |
|
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|
DIP means the senior secured superpriority debtor-in-possession credit agreement dated as
of 13 April 2006 between, amongst others, Dana Corporation as debtor and
debtor-in-possession, and Citigroup North America, Inc. as administrative agent. |
|
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|
Dollar Equivalent means, at any time in relation to an amount denominated in a currency
other than U.S. Dollars, the U.S. Dollar equivalent of such amount determined by reference
to the Spot Rate determined as of the most recent Exchange Rate Determination Date pursuant
to Clause 2.16 (Conversion of currencies) of the Receivables Loan Agreement. |
|
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|
DSO Trigger Period means the period commencing on (i) during the first three months after
the Closing Date, the second consecutive Ratio Reporting Date, and (ii) at all other times,
the first Ratio Reporting Date (and if there has been any DSO Trigger Period prior to such
Ratio Reporting Date, on the first Ratio Reporting Date after the end of such DSO Trigger
Period) that the Days Sales Outstanding is calculated to be more than 79 days and ending on
the third consecutive Ratio Reporting Date thereafter on which the Days Sales Outstanding is
less than or equal to 79 days. |
|
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|
Effective Redirection Percentage means, as of any Ratio Reporting Date, the ratio
(expressed as a percentage) computed by reference to the immediately preceding Calculation
Period with respect to: |
12
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(a) |
|
the Originators (other than an Italian Originator), by dividing (i) the
aggregate amount of Collections and other amounts payable in respect of Receivables
originated by such Originators that were paid by the Obligors into the New Collection
Accounts (other than the New Italian Collection Accounts) during such Calculation
Period, by (ii) the aggregate amount of Collections and other amounts payable in
respect of Receivables originated by such Originators that were paid by the Obligors
into the Collection Accounts (other than the New Italian Collection Accounts and the
Existing Italian Collection Accounts) during such Calculation Period; and |
|
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(b) |
|
the Italian Originators, by dividing (i) the aggregate amount of Collections
and other amounts payable in respect of Receivables originated by such Italian
Originators that were paid by the Obligors into the New Italian Collection Accounts
during such Calculation Period, by (ii) the aggregate amount of Collections and other
amounts payable in respect of Receivables originated by such Italian Originators that
were paid by the Obligors into the New Italian Collection Accounts and the Existing
Italian Collection Accounts during such Calculation Period. |
|
|
Effective Redirection Target Percentage means, as of any Ratio Reporting Date with respect
to which the immediately preceding Calculation Period was: |
|
(a) |
|
in the case of each German Originator: |
|
(i) |
|
the first or second Calculation Period falling after the
Closing Date, 0% |
|
|
(ii) |
|
the third, fourth or fifth Calculation Period falling after the
Closing Date, 20%; |
|
|
(iii) |
|
the sixth, seventh or eighth Calculation Period falling after
the Closing Date, 75%; and |
|
|
(iv) |
|
the ninth Calculation Period falling after the Closing Date or
any Calculation Period thereafter, 95%; |
|
(b) |
|
in the case of each Italian Originator: |
|
(i) |
|
the first or second Calculation Period falling after the
Initial Effective Date, 0%; |
|
|
(ii) |
|
the third, fourth or fifth Calculation Period falling after the
Initial Effective Date, 50%; and |
|
|
(ii) |
|
the sixth Calculation Period falling after the Initial
Effective Date or any Calculation Period thereafter, 95%; and |
|
(c) |
|
in the case of an Originator other than a German Originator and an Italian
Originator: |
|
(i) |
|
the first or second Calculation Period falling after the
Initial Effective Date applicable to such Originator, 0% |
13
|
(ii) |
|
the third, fourth or fifth Calculation Period falling after the
Initial Effective Date applicable to such Originator, 20%; |
|
|
(iii) |
|
the sixth, seventh or eighth Calculation Period falling after
the Initial Effective Date applicable to such Originator, 75%; and |
|
|
(iv) |
|
the ninth Calculation Period falling after the Initial
Effective Date applicable to such Originator or any Calculation Period
thereafter, 95%; |
|
|
provided, that solely for purposes of the definition of Effective Redirection Target
Percentage, (i) in the case of the German Originator, the first Calculation Period shall be
the first calendar month after the calendar month in which the Closing Date occurred; and
(ii) in the case of an Originator other than a German Originator the first Calculation
Period shall be the first calendar month after the calendar month in which the Initial
Effective Date applicable to such Originator occurred, and each subsequent Calculation
Period for purposes of this definition shall be determined accordingly. |
|
|
|
Eligible Account Bank means |
|
(a) |
|
in the case of an Existing Collection Account, the bank or other financial
institution set forth on Schedule 8 (Facility Accounts and Account
Banks) as the account bank in respect of such Existing Collection Account as at the
Closing Date, or |
|
|
(b) |
|
an entity (i) authorised to accept deposits in the relevant jurisdiction, (ii)
unless the Administrative Agent consents in writing otherwise, which has, or whose
direct or indirect parent undertaking has, unsecured and uncollateralised debt
obligations rated at least A-1 by S&P and P-1 by Moodys and (iii) has a combined
capital and surplus of at least 100,000,000 (or the Euro Equivalent thereof). |
|
|
Eligible Assignee means, with respect to any Lender, any Person (a) that is a Qualifying
Lender at the time of the related assignment and that is an institutional investor who
regularly engages in the ordinary course in the origination of, or participation in the
primary syndication of, asset-backed and/or asset-based financings in the European and/or
U.S. markets, and (b) any other Person that is a Qualifying Lender and that has been
approved by the Servicer provided that no such Approval shall be required after the
occurrence and during the continuance of a Facility Termination Event or Facility Suspension
Event. |
|
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|
Eligible Obligor means any Obligor (a) that is a resident of an Approved Obligor
Jurisdiction, (b) that is not an Official Body (other than any Official Body that is a body
corporate created under public Law all or part of whose activities is commercial and which
does not benefit from sovereign immunity) or an Affiliate of any Transaction Party, (c) that
is not an individual, (d) that is not the subject of an Event of Bankruptcy, and (f) with
respect to which not more than 50% of the aggregate Outstanding Balance of the Receivables
owing by such Obligor are more than 90 days past their original due date. |
14
|
|
Eligible Receivable means, at any time, any Receivable: |
|
(a) |
|
which has been originated by an Originator and validly sold by such Originator
to a Purchaser pursuant to (and in accordance in all material respects with) an
Originator Sale Agreement with the result that such Purchaser has good and marketable
title thereto (together with the Collections and Related Security related thereto),
free and clear of all Adverse Claims (other than Permitted Adverse Claims); and |
|
|
(b) |
|
which does not arise from the sale of any inventory (or other materials used to
render or process the goods related to such Receivable) that is subject to an Adverse
Claim (other than any Permitted Adverse Claim) covering the proceeds of such inventory,
if such Adverse Claim would extend to such Receivable; and |
|
|
(c) |
|
the Obligor of which is an Eligible Obligor; and |
|
|
(d) |
|
which has been billed to the relevant Obligor and, according to the terms
thereof and any Contract related thereto, is required to be paid in full (subject to
any contractual rebate or discount) within 150 days from the original billing date
therefore (provided, that, upon such Receivable becoming a Pool Receivable, the
aggregate Outstanding Balance of all Pool Receivables which according to the terms
thereof and any Contract related thereto are not required to be paid in full within 120
days from the original billing date therefore will not exceed an amount equal to 10%
times the aggregate Outstanding Balance of all Eligible Receivables that are Pool
Receivables at such time); and |
|
|
(e) |
|
which is denominated and payable only in an Approved Currency; and |
|
|
(f) |
|
which is not a Defaulted Receivable at such time; and |
|
|
(g) |
|
(i) which arises pursuant to a Contract with respect to which the applicable
Originator has performed all obligations required to
be performed by it thereunder in
order to have such Receivable become due and payable thereunder; |
|
(ii) |
|
which does not arise from a sale pursuant to which the
applicable Obligor has the right to return the goods for which it has become
obligated to pay in the event it is unable to sell such goods and in respect of
which the applicable Originator is obligated to refund to such Obligor any
amount in respect of such returned goods, and |
|
|
(iii) |
|
as to which the Originator is in compliance in all material
respects with the terms of such Receivable or the related Contract; and |
|
(h) |
|
which, is not evidenced or otherwise payable by chattel paper, a promissory
note, a bill of exchange or other instrument other than (A) a cheque (including those
cheques falling into the definition of Spanish Draft Instrument), (B) in the case of a
Receivable originated by a Spanish Originator (I) on or prior to the Bills of Exchange
Redirection Date, a Spanish Draft Instrument, and (II) |
15
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|
|
after the Bills of Exchange Redirection Date, a Spanish Draft Instrument (except for
those mentioned in subparagraph (A) above) which is made payable to the order of the
Spanish Account SPV after the Bills of Exchange Redirection Date, and (C) in the
case of a Receivable originated by a French Originator (I) on or prior to the Bills
of Exchange Redirection Date, a French Bill of Exchange; and (II) after the Bills of
Exchange Redirection Date, a French Bill of Exchange which is made payable to the
order of the Borrower after the Bills of Exchange Redirection Date; and |
|
|
(i) |
|
which arises under a Contract that, together with such Receivable, is in full
force and effect and constitutes the legal, valid and binding obligation of the related
Obligor, enforceable against such Obligor except as such enforcement against such
Obligor may be limited by any applicable Insolvency Law or by general principles of law
or equity (regardless of whether enforcement is sought in a proceeding in equity or at
law), in each case, under all applicable Law, and is not subject to any litigation,
dispute, offset, counterclaim or other defence other than unexpired volume or pricing
discounts or rebates to which the Obligor thereon may be entitled; and |
|
|
(j) |
|
which, together with the Contract related thereto, does not contravene in any
material respect any Laws applicable thereto (including Laws relating to truth in
lending, cost of credit disclosure, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy); and |
|
|
(k) |
|
which satisfies in all material respects all applicable requirements of the
applicable Originators Credit and Collection Policies; and |
|
|
(l) |
|
which was originated in the ordinary course of the applicable Originators
business and represents the purchase price of goods or services sold by such
Originator; and |
|
|
(m) |
|
the Obligor of which has been directed to make all payments (i) with respect to
any Receivable originated on or prior to the Closing Date, to an Existing Collection
Account or New Collection Account, in each case, with respect to which a valid and
enforceable Account Security Agreement and, in the case of a New Spanish Collection
Account, Spanish Account Agency Agreement is in effect, and (ii) with respect to any
Receivable originated after the Closing Date to a New Collection Account with respect
to which a valid and enforceable Account Security Agreement and, in the case of a New
Spanish Collection Account, Spanish Account Agency Agreement is in effect; and |
|
|
(n) |
|
which has not been compromised, adjusted or modified for credit reasons nor is
it subject to any downward adjustment for Tax, rebates or other reasons (including by
the extension of time for payment or the granting of any discounts, allowances or
credits); and |
|
|
(o) |
|
(i) the assignment of which (together with the Collections and Related Security
related thereto) under the applicable Originator Sale greement to a
Purchaser; and |
16
|
(ii) |
|
the grant of a charge, security interest or pledge in respect
thereof (together with the Collections and Related Security related thereto) to
the Administrative Agent, on behalf of the Secured Parties, pursuant to the
Security Documents; |
|
|
|
in each case, does not in any material respect violate, conflict with or contravene
any applicable Laws or any contractual or other restriction, limitation or
encumbrance (including any restriction or limitation under the related Contract) and
does not require the consent of or notice to the applicable Obligor or any other
Person other than such consents as have been obtained and notices that have been
given (copies of which have been provided to the Administrative Agent); and |
|
|
(p) |
|
which, together with the Contract related thereto, has not been rewritten,
varied, waived or extended or otherwise been re-invoiced and has not otherwise had its
invoice date or due date changed; and |
|
|
(q) |
|
with respect to which all of the Borrowers right, title and interest in such
Receivable or any Borrower Receivables Interest in respect thereof, in each case,
(together with the Related Security is subject to a first priority charge, security
interest or pledge under all applicable Law in favour of the Administrative Agent, on
behalf of the Secured Parties, free and clear of all Adverse Claims (other than
Permitted Adverse Claims); and |
|
|
(r) |
|
which is governed by the Laws of the jurisdiction under which the related
Originator is organised or by the Laws of another Approved Originator Jurisdiction
subject to the receipt by the Administrative Agent of documentation or other evidence
reasonably satisfactory to it that such Receivable will otherwise satisfy all of the
other requirements for an Eligible Receivable under this definition; and |
|
|
(s) |
|
with respect to which there exists no prohibition or restriction (whether under
the related Contract or applicable Law) on the disclosure of the related Contract or
any other information relating to such Receivable or the related Obligor or with
respect to which the consent of the related Obligor to such disclosure has been
obtained (provided that on or prior to the date falling 8 weeks after the Closing Date
this sub-clause (s) shall not apply to any Italian DPA Receivable to the extent the
relevant Receivable would otherwise satisfy this sub-clause (s) but for the fact that
the Italian Originator has not notified the applicable Obligor of the transfer of its
personal information); and |
|
|
(t) |
|
(i) the Originator Sale Agreement under which such Receivable was sold to a
Purchaser is in full force and effect; |
|
(ii) |
|
the Originator of such Receivable has not been terminated as a
Seller under the relevant Originator Sale Agreement; and |
|
|
(iii) |
|
the Seller Termination Date has not occurred with respect to
that Originator; and |
17
|
(u) |
|
which is subject to the applicable Originators Standard Terms and Conditions,
unless the failure of such Receivable to be subject to such Standard Terms and
Conditions would not reasonably be expected to have a Material Adverse Effect; and |
|
|
(v) |
|
which complies with such other reasonable criteria and reasonable requirements
beginning six (6) Business Days from the date after receipt by the Servicer of written
notice from the Administrative Agent setting forth such additional reasonable criteria
and reasonable requirements following a detailed analysis of the Receivables and
discussion with the Servicer; and |
|
|
(w) |
|
with respect to which sufficient information in relation to the Obligor of such
Receivable must be capable of being disclosed to the Administrative Agent to enable it
to collect such Receivable after the occurrence of a Facility Event (provided that on
or prior to the date falling 8 weeks after the Closing Date this sub-clause (w) shall
not apply to any Italian DPA Receivable); or |
|
|
(x) |
|
any other Receivable approved in writing by the Administrative Agent. |
|
|
EMU Legislation means the legislative measures of the European Union for the introduction
of, changeover to or operation of the Euro in one or more member states of the European
Union. |
|
|
|
English Process Agent means, with respect to any Person, the Person (if any) identified on
Schedule 1 (Address and Notice Information) as the English Process Agent for such Person. |
|
|
|
Equity Holder means Structured Finance Management Corporate Services (Ireland) Limited. |
|
|
|
Equity Interests of any Person means any and all shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options or other
rights entitling the holder thereof to purchase or acquire any such equity interest. |
|
|
|
EU Insolvency Regulation means the Council of the European Union Regulation No. 1346/2000
on Insolvency Proceedings. |
|
|
|
Euro means the lawful currency of the Participating Member States. |
|
|
|
Euro Equivalent means, at any time in relation to an amount denominated in a currency
other than Euro, the Euro equivalent of such amount determined by reference to the Spot Rate
determined as of the most recent Exchange Rate Determination Date pursuant to Clause 2.16
(Conversion of currencies) of the Receivables Loan Agreement. |
|
|
|
Eurocurrency Loan has the meaning specified in Clause 2.12 (Illegality) of the Receivables
Loan Agreement. |
|
|
|
Eurocurrency Rate means, for any Loan for any Interest Period, the applicable FT Rate on
the first Business Day of the calendar month in which the first day of such |
18
|
|
Interest Period occurs. In the event that no FT Rate is available at such time for any
reason, then the Eurocurrency Rate shall be the arithmetic mean of the rates (rounded
upwards to four decimal places) as supplied to the Administrative Agent at its request
quoted by the Reference Banks to leading banks in the London interbank market at
approximately 11:00 a.m., London time, on the date of such request by the Administrative
Agent, for the offering of deposits in the currency of that Loan and for a period of one
month. |
|
|
|
Eurocurrency Rate Reserve Percentage means, for any Interest Period in respect of which
Interest is computed by reference to the Eurocurrency Rate (a) in the case of a Loan
denominated in U.S. Dollars, the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to time by the Board of
Governors of the U.S. Federal Reserve System (or any successor) (or if more than one such
percentage shall be applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) for determining the
maximum reserve requirement (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurocurrency Liabilities
is determined) having a term equal to such Interest Period and (b) with respect to a Loan
denominated in any currency (other than U.S. Dollars), any applicable Statutory Reserves
with respect to such currency. |
|
|
|
Event of Bankruptcy means, with respect to any Person, the occurrence of any of the
following: |
|
(a) |
|
such Person shall voluntarily commence any case, proceeding or
other action, or present a petition or make an application under any Insolvency
Law: |
|
(i) |
|
relating to bankruptcy, insolvency, court
protection, reorganisation or relief of debtors, seeking to have an
order for relief entered with respect to it or seeking to adjudicate it
a bankrupt or insolvent, or seeking reorganisation, arrangement,
adjustment, winding-up, examination, liquidation, administration,
administrative receivership, dissolution, court protection,
composition, declaration or other similar relief with respect to it or
any of its debts; or |
|
|
(ii) |
|
seeking the appointment of a liquidator,
receiver, administrative receiver, examiner, security trustee,
custodian, compulsory manager, administrator or other similar official
for it or for all or any substantial part of its assets, other than in
connection with the solvent liquidation or reorganisation of such
Person so long as any payments or assets distributed as a result of
such liquidation or reorganisation are distributed to an Originator; |
|
(b) |
|
there shall be commenced, presented or made against such Person
any case, proceeding or other action referred to in (a) above which is not |
19
|
|
|
dismissed by the relevant court, tribunal or authority within twenty-one
(21) days after its commencement; |
|
(c) |
|
there shall be commenced against such Person any case,
proceeding or other action seeking issuance of a warrant of attachment,
sequestration, distress, expropriation, execution, distraint or similar process
against all or any substantial part of its assets which is not dismissed within
twenty-one (21) days after its commencement; |
|
|
(d) |
|
such Person ceasing or threatening to cease to carry on its
business or stopping payment or threatening to stop payment of its debts or
being, being deemed to be or becoming unable to pay its debts within the
meaning of Clause 214 of the Irish Companies Act, 1963 as amended or Clause
2(3) of the Irish Companies Amendment Act, 1990, (or as the case may be, any
analogous provision in any applicable jurisdiction, including section
123(1)(a), (b) or (c) of the Insolvency Act of 1986, as that section may be
amended from time to time) or otherwise unable to pay its debts as they fall
due or the value of its assets falling to less than the amount of its
liabilities (taking into account for both these purposes its contingent and
prospective liabilities) or such Person otherwise becoming insolvent; |
|
|
(e) |
|
in the case of the Borrower, the enforcement of any Adverse
Claim (other than any Permitted Adverse Claim); or |
|
|
(f) |
|
a moratorium is declared in respect of any of its debt. |
|
|
Exchange Rate Determination Date means (a) the last Business Day of each Calculation
Period, (b) the Business Day immediately preceding each Reporting Date, (c) the date of the
Daily Report in connection with which any Borrowing Request is delivered and (d) if a
Facility Event has occurred and is continuing hereunder, any Business Day designated as such
by the Administrative Agent in its sole discretion. |
|
|
|
Excluded Receivable means (a) any Receivable that is a Restricted Receivable and with
respect to which the related Obligor has refused to consent or has not consented to the
assignment of such Restricted Receivable, (b) Receivables in respect of which the Obligor is
an Affiliate of any Transaction Party, (c) any Receivable which is a qualifying asset under
Section 110 of the Irish Taxes Consolidation Act 1997, (d) any Receivable in respect of
which Collections are paid into bank accounts located in the U.S. or are otherwise
administered by Dana Corporation or any of its Affiliates in the U.S., (e) any Receivable
which is governed by the Laws of a jurisdiction other than the jurisdiction under which the
related Originator is organised other than such a Receivable which satisfies the
requirements of paragraph (r) of the definition of Eligible Receivable, (f) any Receivable
of an Obligor whose customary practice is to prepay in full the principal amount of the
Receivables owing by it and which is not reported as a Receivable in any Daily Report, (g)
any Italian DPA Receivable that has not been assigned (or purported to have been assigned)
pursuant to an Italian RPA and in respect of which the Italian Originator has not on or
prior to the date falling 8 weeks after the Closing Date notified the applicable Obligor of
the transfer of such Obligors personal information in accordance with applicable Law, (h)
any Receivable created prior to the Closing Date, which is a Defaulted Receivable and
against which |
20
|
|
the relevant Originator has fully and specifically provided on its balance sheet and
financial statements, (i) any Receivable which is not denominated and payable in an Approved
Currency and (j) unless otherwise agreed by the Performance Undertaking Provider and the
Administrative Agent, any Receivable originated by an Italian Originator which is evidenced
or otherwise payable by chattel paper, a promissory note, a bill of exchange or other
instrument other than a cheque, wire transfer or similar method of payment. |
|
|
|
Excluded Taxes means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any Transaction Party Obligation (a)
income taxes imposed on (or measured by) its net income or franchise taxes imposed on (or
measured by) its gross or net income by the jurisdiction under the laws of which such
recipient is organised or in which its principal office is located, or the jurisdiction in
which it is treated as resident for tax purposes or, in the case of any Lender, in which its
applicable lending office is located, in each case including any political subdivision
thereof, (b) any branch profits taxes imposed by any jurisdiction described in clause (a)
above, (c) any Tax to the extent such Tax is attributable to the Administrative Agents or
such Lenders or other recipients failure to comply with Clause 2.15(e) (Indemnity for
Taxes) of the Receivables Loan Agreement or any similar provision of any other Transaction
Document, (d) with respect to any amount payable to the Administrative Agent or a Lender by
the Borrower pursuant to this Agreement, any Tax to the extent such Tax would not have
arisen had the Administrative Agent or Lender been or not ceased to be a Qualifying Lender
as of the date on which such payment is to be made, other than as a result of Change in Law
after the date on which the Administrative Agent or such Lender became a party hereto, or
(e) any Tax to the extent such Tax would not have arisen had there been no assignment or
transfer pursuant to Clause 10.3 (Assignability) of the Receivables Loan Agreement or change
in the office or offices through which such Lender or the Administrative Agent performs its
obligations under this Agreement, in each case, other than Tax arising as a result of Change
in Law after the date on which either the assignment or transfer occurred or the date on
which the Administrative Agent or such Lender changed the office or offices through which
the Administrative Agent or such Lender performs its obligations under this Agreement (as
applicable). |
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Exercise Event means with respect to (i) any Transaction Document, the occurrence of a
Facility Termination Event or Facility Suspension Event, and (ii) any Originator Sale
Agreement, in addition the occurrence of a Seller Termination Event or Seller Suspension
Event under such Originator Sale Agreement. |
|
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|
Existing Austrian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading Existing Austrian Collection Accounts, as
such Schedule may be amended from time to time in accordance herewith. |
|
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|
Existing Belgian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading Existing Belgian Collection Accounts, as
such Schedule may be amended from time to time in accordance herewith. |
21
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|
Existing Collection Accounts means, as the context requires, all or any one of the
Existing Austrian Collection Accounts, Existing Belgian Collection Accounts, Existing French
Collection Accounts, Existing German Collection Accounts, Existing Italian Collection
Accounts or Existing Spanish Collection Accounts. |
|
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|
Existing French Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading Existing French Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
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|
Existing German Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading Existing German Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
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|
Existing Italian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading Existing Italian Collection Accounts, as
such Schedule may be amended from time to time in accordance herewith. |
|
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|
Existing Spanish Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) hereto under the heading Existing Spanish Collection Accounts,
as such Schedule may be amended from time to time in accordance herewith. |
|
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|
Facility Account means, as the context requires, all or any one of the Collection Accounts
or the Borrower Operating Accounts. |
|
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|
Facility Event means a Facility Termination Event, Facility Suspension Event, Potential
Facility Termination Event or Potential Facility Suspension Event. |
|
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Facility Limit means 170,000,000. |
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Facility Party means any Transaction Party other than the Spanish Account SPV and the
Originators. |
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Facility Suspension Event means each event or circumstance set out in Clause 7.1 (Facility
Suspension Events) of the Receivables Loan Agreement. |
|
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|
Facility Termination Date means the earliest of (a) the Scheduled Commitment Facility
Termination Date, (b) the date that the Facility Termination Date is declared or
automatically occurs pursuant to Clause 7.2 (Facility Termination Events) of the Receivables
Loan Agreement and (c) any date specified by the Performance Undertaking Provider on not
less than five (5) Business Days prior written notice to the Administrative Agent and each
Lender. |
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|
Facility Termination Event has the meaning specified in Clause 7.1 (Facility Termination
Events) of the Receivables Loan Agreement. |
|
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|
Federal Funds Rate means, for any period, a fluctuating interest rate per annum equal for
each day during such period to the weighted average of the rates on overnight U.S. Federal
funds transactions with members of the U.S. Federal Reserve |
22
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|
System arranged by U.S. Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the U.S. Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by the Administrative
Agent from three U.S. Federal funds brokers of recognised standing selected by it. |
|
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Fee Letters means, collectively, the Administrative Agent Fee Letter, the Structuring
Agent Fee Letter and each Lender Fee Letter. |
|
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Fees means the fees payable pursuant to any Fee Letter. |
|
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Final Payout Date means the date after the Facility Termination Date on which all the
Transaction Party Obligations have been reduced to zero by payment in full in cash. |
|
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Finance Charges means, with respect to a Receivable, any finance, interest, late payment
or similar charges owing by an Obligor in respect of such Receivable. |
|
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Financial Support Direction means a financial support direction issued by tPR under
Section 43 of the Pensions Act. |
|
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|
Fixed Charges means, with respect to any period, the sum, determined on an aggregated
basis (excluding discontinued operations) for the Dana European Entities, the Borrower and
the Spanish Account SPV in accordance with Modified GAAP, of (a) Net Interest Expense, (b)
principal payments on indebtedness for borrowed money other than principal repayments under
(i) the Transaction Documents, (ii) any other revolving credit facility provided such
repayments are capable of being redrawn and (iii) any intercompany Indebtedness, and (c)
cash taxes paid relating to corporate or income tax for any Dana European Entity, the
Borrower or the Spanish Account SPV. |
|
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|
Fixed Charges Coverage Ratio means, at any time, determined on an aggregated basis for the
Dana European Entities, the Borrower and the Spanish Account SPV in accordance with Modified
GAAP, the ratio of (a) Adjusted EBITDA for the period for twelve consecutive calendar months
ending on, or most recently ended prior to, such time, minus Capital Expenditures for such
period to (b) Fixed Charges for such period. |
|
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Foreign Lender shall mean any Lender that is organised under the laws of a jurisdiction
other than that in which the Borrower is located. |
|
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French Account Security Agreement means any agreement designated as such in any French
RPA. |
|
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|
French Bill of Exchange means, with respect to any Receivable originated by any French
Originator, any lettre de change as defined by Clause L.511-1 of the French Commercial Code
that has been issued in respect of such Receivable (which for purposes of this definition
shall include any lettre de change relevé magnétique or virement commercial électronique)
and payable to the order of the Borrower or, in the case of any such Receivable that was
originated on or prior to the Bills of Exchange |
23
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|
Redirection Date, payable to the order of such French Originator and endorsed or otherwise
redirected by the French Originator in favour of the Borrower. |
|
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French Collection Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading French Collection
Account Banks, as such Schedule may be amended from time to time in accordance herewith. |
|
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French Intermediate Transfer Agreement means the French Intermediate Transfer Agreement,
dated on or about the Initial French Effective Date, among the Intermediate Transferor and
the Borrower. |
|
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French Originators means each entity designated as a Seller under a French RPA. |
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|
French RPAs means the receivables purchase agreements, dated on or about the Initial
French Effective Date, between (i) Thermal Products France S.A.S. and the Intermediate
Transferor and (ii) Spicer France S.A.R.L. and the Intermediate Transferor, and such
additional French law receivables purchase agreements as may be entered into from time to
time pursuant to Clause 10.12(b) (Limitation on the addition and termination of Originators)
of the Receivables Loan Agreement, for so long as such agreements remain in full force and
effect. French RPA means either of them. |
|
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|
FT Rate means, on any date, the rate published by the Financial Times (or any successor of
it) as the preceding Business Days London Inter Bank Offer Rate for deposits in the
currency of the relevant Loan and for a period of one month. |
|
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|
Funding Percentage in respect of each manufacturing plant of each Originator means the
percentage agreed between the Performance Undertaking Provider and the Administrative Agent
as the Funding Percentage set out in the form of Daily Report agreed between the
Performance Undertaking Provider and the Administrative Agent, which percentage as at the
Closing Date is as set out in the form of Daily Report attached as Exhibit A-1 (Form of
Daily Report) to the Servicing Agreement. |
|
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GAAP means, with respect to any Person, generally accepted accounting principles
applicable to such Person (including generally accepted accounting principles applicable to
such Person by Law) or the consolidated group of which such Person is a member (as the
context requires). |
|
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|
GE means GE Leveraged Loans Limited, in its individual capacity. |
|
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|
German Account Security Agreement means any agreement designated as such in any German
RPA. |
|
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|
German Collection Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading German Collection
Account Banks, as such Schedule may be amended from time to time in accordance herewith. |
24
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|
German Originators means each entity designated as a Seller under a German RPA. |
|
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|
German RPAs means the receivables purchase agreements, dated the Closing Date, between (i)
Reinz Dichtungs GmbH and the Borrower and (ii) Spicer Gelenkwellenbau GmbH and the Borrower,
and such additional German law receivables purchase agreements as may be entered into from
time to time pursuant to Clause 10.12(b) (Limitation on the addition and termination of
Originators) of the Receivables Loan Agreement, for so long as such agreements remain in
full force and effect. German RPA means either of them. |
|
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|
Guarantee of or by any Person (the guarantor) means any guarantee, letter of credit,
bond, indemnity or similar assurance against loss, or any obligation, direct or indirect,
actual or contingent, to purchase or assume any indebtedness of any person or to make an
investment in or loan to any person or to purchase assets of any person where, in each case,
such obligation is assumed in order to maintain or assist the ability of such person to meet
its indebtedness. |
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HFM means Hyperion Financial Management. |
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Indebtedness means any indebtedness for or in respect of (without duplication): |
|
(a) |
|
monies borrowed; |
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(b) |
|
any amount raised by acceptance under any acceptance credit facility or
dematerialised equivalent; |
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(c) |
|
any amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument; |
|
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(d) |
|
the amount of any liability in respect of any Capitalised Lease Obligation; |
|
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(e) |
|
receivables sold or discounted (other than any receivables to the extent they
are sold on a non-recourse basis); |
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(f) |
|
any derivative transaction entered into in connection with protection against
or benefit from fluctuation in any rate or price (and, when calculating the value of
that derivative transaction, only the marked to market value as at the relevant date on
which Indebtedness is calculated (or, if any actual amount is due as a result of the
termination or close-out of that derivative transaction, that amount) shall be taken
into account); |
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(g) |
|
any counter-indemnity obligation in respect of a guarantee, bond, standby or
documentary letter of credit or any other instrument issued by a bank or financial
institution; |
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(h) |
|
any amount of any liability under an advance or deferred purchase agreement if
(a) one of the primary reasons behind entering into the agreement is to raise finance
or (b) the agreement is in respect of the supply of assets or services and payment is
due more than 180 days after the date of supply; |
25
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(i) |
|
any amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing; |
|
|
(j) |
|
all payment obligations in respect of securitisations; and |
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(k) |
|
the amount of any liability in respect of any Guarantee for any of the items
referred to in paragraphs (a) to (j) above. |
|
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Indemnified Amounts has the meaning specified in Clause 9 (Indemnities by the Borrower) of
the Receivables Loan Agreement. |
|
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|
Indemnified Party has the meaning specified in Clause 9 (Indemnities by the Borrower) of
the Receivables Loan Agreement. |
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Indemnified Taxes means Taxes other than Excluded Taxes. |
|
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|
Initial Effective Date means: |
|
(a) |
|
in respect of the Austrian Originator, the Initial Austrian Effective Date; |
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(b) |
|
in respect of the Belgian Originator, the Initial Belgian Effective Date; |
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(c) |
|
in respect of the French Originator, the Initial French Effective Date; |
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(d) |
|
in respect of the Italian Originator, the Initial Italian Effective Date; |
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(e) |
|
in respect of the Spanish Originator, the Initial Spanish Effective Date; |
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Initial Austrian Effective Date means the date agreed by the Borrower, the Intermediate
Transferor, the Austrian Originator, the Performance Undertaking Provider, the
Administrative Agent provided that such agreed date shall be a date falling after the day
upon which each of the conditions precedents set forth in Schedule 2 have been satisfied. |
|
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|
Initial Belgian Effective Date means the date agreed by the Borrower, the Belgian
Originator, the Performance Undertaking Provider, the Administrative Agent provided that
such agreed date shall be a date falling after the day upon which each of the conditions
precedents set forth in Schedule 3 have been satisfied. |
|
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|
Initial French Effective Date means the date agreed by the Borrower, the Intermediate
Transferor, the French Originators, the Performance Undertaking Provider, the Administrative
Agent provided that such agreed date shall be a date falling after the day upon which each
of the conditions precedents set forth in Schedule 4 have been satisfied. |
|
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|
Initial Italian Effective Date means the date agreed by the Borrower, the Intermediate
Transferor, the Italian Originators, the Performance Undertaking Provider, the
Administrative Agent provided that such agreed date shall be a date falling after the day
upon which each of the conditions precedents set forth in Schedule 5 have been satisfied. |
26
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|
Initial Spanish Effective Date means the date agreed by the Borrower, the Spanish
Originator, the Performance Undertaking Provider, the Administrative Agent provided that
such agreed date shall be a date falling after the day upon which each of the conditions
precedents set forth in Schedule 6 have been satisfied. |
|
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|
Initial Ratio Period means the period commencing on the Closing Date and ending on the
fourth (4th) consecutive Ratio Reporting Date after the Closing Date. |
|
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|
Insolvency Law means any Law relating to bankruptcy, insolvency, administration,
receivership, examination, administrative receivership, reorganisation, winding up or
composition, moratorium or adjustment of debts or the rights of creditors generally (whether
by way of voluntary arrangement or otherwise). |
|
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|
Interest means, for any Loan and any Interest Period, the sum of: |
|
(a) |
|
for each day during such Interest Period of the following: |
|
(b) |
|
the Liquidation Fee, if any, for such Loan for such Interest Period |
|
IR = the Interest Rate for such Loan for such day; |
|
|
PB = the Principal Balance of such Loan on such day; |
|
|
Y = (a) in the case of a Loan denominated in Sterling, 365 or 366, as applicable,
and (b) in the case of any other Loan, 360 (or, in the event the practice of the
relevant interbank market differs, in accordance with such market practice); and |
|
|
provided, that no provision of the Receivables Loan Agreement shall require the payment or
permit the collection of Interest in excess of the maximum permitted by applicable Law; and
provided further that Interest for any Loan shall not be considered paid by any distribution
to the extent that at any time all or a portion of such distribution is rescinded or must
otherwise be returned for any reason. |
|
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|
Interest Period means, with respect to any Loan (a) initially the period commencing on
(and including) the applicable Borrowing Date and ending on (and excluding) the next
succeeding Intra-Month Settlement Date and (b) thereafter, each successive period commencing
on (but including) the last day of the immediately preceding Interest Period for such Loan
and ending on (and excluding) the next succeeding Intra-Month Settlement Date for such Loan;
provided, however, that: |
|
(i) |
|
any Interest Period which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day (provided, however, that if
Interest in respect of such Interest Period is computed by reference to the Adjusted
Eurocurrency Rate, and such Interest |
27
|
|
|
Period would otherwise end on a day which is not a Business Day, and there is no
subsequent Business Day in the same calendar month as such day, such Interest Period
shall end on the next preceding Business Day); |
|
(ii) |
|
in the case of any Interest Period of one day (A) if such Interest Period is
the initial Interest Period for a Loan, such Interest Period shall be the applicable
Borrowing Date, (B) any subsequently occurring Interest Period which is one day shall,
if the immediately preceding Interest Period is more than one day, be the last day of
such immediately preceding Interest Period and, if the immediately preceding Interest
Period is one day, be the day next following such immediately preceding Interest Period
and (C) if such Interest Period occurs on a day immediately preceding a day which is
not a Business Day, such Interest Period shall be extended to the next succeeding
Business Day; and |
|
|
(iii) |
|
in the case of any Interest Period for any Loan which commences before the
Facility Termination Date and would otherwise end on a date occurring after the
Facility Termination Date, such Interest Period shall end on the Facility Termination
Date and the duration of each Interest Period which commences on or after the Facility
Termination Date shall be as selected by the applicable Lender. |
|
|
Interest Rate means, with respect to any Loan for any day, the applicable Standard Rate;
provided that, and notwithstanding anything herein to the contrary, at all times that a
Facility Event has occurred and is continuing the Interest Rate for all Loans shall be an
interest rate per annum equal to the Default Rate. |
|
|
|
Intermediate Transfer Agreements means the Austrian Intermediate Transfer Agreement, the
French Intermediate Transfer Agreement and the Italian Intermediate Transfer Agreement. |
|
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|
Intermediate Transferor means GE Factofrance SNC. |
|
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|
Intra-Month Settlement Date means Wednesday of each week, or if any such day is not a
Business Day, the next following Business Day. |
|
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|
Ireland means the island of Ireland excluding Northern Ireland. |
|
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|
Italian Account Security Agreement means any agreement designated as such in any Italian
RPA. |
|
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|
Italian Civil Code means the Italian Royal Decree (Region Decreto) no. 262, dated 16 March
1942. |
|
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|
Italian Collection Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading Italian Collection
Account Banks, as such Schedule may be amended from time to time in accordance herewith. |
|
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|
Italian DPA Receivable means any Receivable originated by an Italian Originator in respect
of which pursuant to the Italian Legislative Decree no. 196 dated 30 June |
28
|
|
2003 and the Provvedimento of the Italian Data Protection Authority dated 18 January 2007
the Italian Originator is required to notify the Obligor of the transfer of such Obligors
personal information to the Borrower. |
|
|
|
Italian Intermediate Transfer Agreement means the Italian Intermediate Transfer Agreement,
dated on or about the Initial Italian Effective Date, among the Intermediate Transferor and
the Borrower. |
|
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|
Italian Originators means each entity designated as a Seller under an Italian RPA. |
|
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|
Italian RPA means the receivables purchase agreement, dated on or about the Initial
Italian Effective Date, between Dana Italia S.p.A. and the Intermediate Transferor, and such
additional Italian law receivables purchase agreements as may be entered into from time to
time pursuant to Clause 10.12(b) (Limitation on the addition and termination of Originators)
of the Receivables Loan Agreement, for so long as such agreements remain in full force and
effect. |
|
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|
Joint Venture means any joint venture entity, whether a company, unincorporated firm,
undertaking, association, joint venture or partnership or any other entity. |
|
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|
Law means any law (including common law), constitution, statute, treaty, regulation, rule,
ordinance, order, injunction, writ, decree or award of any Official Body. |
|
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|
Legal Opinion means any legal opinion delivered to the Administrative Agent under Clause
3.1 (Conditions precedent to initial borrowing) of the Receivables Loan Agreement. |
|
|
|
Legal Reservations means: |
|
(a) |
|
the principle that equitable remedies may be granted or refused at the
discretion of a court and the limitation of enforcement by laws relating to insolvency,
reorganisation and other laws generally affecting the rights of creditors; |
|
|
(b) |
|
the time barring of claims under the Limitation Acts, the possibility that an
undertaking to assume liability for or indemnify a person against non-payment of UK
stamp duty may be void and defences of set-off or counterclaim; and |
|
|
(c) |
|
similar principles, rights and defences under the laws of any Relevant
Jurisdiction; and |
|
|
(d) |
|
any other matters which are set out as qualifications or reservations as to
matters of law of general application in the Legal Opinions. |
|
|
Lender Fee Letter has the meaning specified in Clause 2.4(b) (Interest and Fees) of the
Receivables Loan Agreement. |
|
|
|
Lenders means, collectively, the Persons identified as Lenders on Schedule 1
(Commitments) of the Receivables Loan Agreement as amended from time to time. |
29
|
|
Liquidation Fee means for any Interest Period for which Interest is computed by reference
to the Eurocurrency Rate and a reduction of the Principal Balance of the relevant Loan is
made for any reason, in each case, on any day other than the last day of such Interest
Period, the amount, if any, by which (a) the additional Interest (calculated without taking
into account any Applicable Margin or any Liquidation Fee or any shortened duration of such
Interest Period) which would have accrued during such Interest Period on the reductions of
Principal Balance of the Loan relating to such Interest Period had such reductions not
occurred, exceeds (b) the income, if any, received by the Lender which holds such Loan from
the investment of the proceeds of such reductions of Principal Balance. A certificate as to
the amount of any Liquidation Fee (including the computation of such amount) shall be
submitted by the affected Lender to the Borrower and shall be conclusive and binding for all
purposes, absent manifest error. |
|
|
|
Loan means a loan made to the Borrower pursuant to Clause 2 (Amounts and Terms of the
Loans) of the Receivables Loan Agreement. |
|
|
|
Local Currency means any Approved Currency other than Euro. |
|
|
|
Mandatory Costs Rate has the meaning specified in Schedule 3 (Mandatory Cost
Rate) of the Receivables Loan Agreement. |
|
|
|
Material Adverse Effect means, with respect to any event or circumstance, a material
adverse effect, individually or in the aggregate with other events or circumstances, on: (a)
the business, financial condition, operations or assets of the Dana European Entities taken
as a whole; (b) the ability of any Transaction Party to perform any of its material
obligations under any Transaction Document to which it is a party; (c) the status,
existence, perfection or priority of the rights, title and interest of the Borrower, the
Intermediate Transferor, the Spanish Account SPV or any Secured Party in and to the Pool
Receivables, Collections or Related Security related thereto or any Facility Account or any
other Collateral; or (d) the validity, enforceability or collectibility (if applicable) of
all or any material portion of the Pool Receivables, Collections or Related Security related
thereto or any other Collateral. |
|
|
|
Material Indebtedness means Indebtedness (other than the Loans or other Indebtedness
arising pursuant to and contemplated by the Transaction Documents and intercompany
indebtedness) of any one or more of the Dana European Entities, other than any Transaction
SPV, in an aggregate principal amount exceeding 5,000,000 and, with respect to any
Transaction SPV, in an aggregate principal amount exceeding 10,000. |
|
|
|
Material Subsidiary means, with respect to any Person (herein referred to as the
parent), any corporation, limited company, partnership, association or other business
entity (a) of which securities or other ownership interests representing more than 95% of
the equity or more than 95% of the ordinary voting power or more than 95% of the general
partnership interests are, at the time any determination is being made, directly or
indirectly, owned, controlled or held and (b) that is, at the time any determination is
made, otherwise controlled (as defined in the definition of Affiliate), in each case of
clauses (a) and (b), by the parent or one or more Subsidiaries of the parent or by the
parent and one or more Subsidiaries of the parent. |
30
|
|
Maturity Date means the earlier of (a) the first Settlement Date that occurs six months
after the Facility Termination Date, and (b) the date on which the Loans become due and
payable pursuant to Clause 7.3 (Acceleration of maturity) of the Receivables Loan Agreement. |
|
|
|
Maximum Aggregate Principal Balance means at any time any amount equal to the lesser of
(a) the Facility Limit, and (b)(i) the sum of the Net Eligible Funding Balance, multiplied
by (ii) the Applicable MAPB Percentage, less (iii) the Covenant Correction Amount. |
|
|
|
Modified GAAP means GAAP as modified for the simple aggregation of balances among the
Borrower, the Spanish Account SPV, and the Dana European Entities. |
|
|
|
Monthly Ratio Report means a report in the Agreed Form setting out the calculations of the
Dilution Ratio and Days Sales Outstanding duly completed and furnished by the Servicer
pursuant to Clause 2.3 (Reporting requirements) of the Servicing Agreement and containing
the certification of the Servicer. |
|
|
|
Monthly Settlement Date means the second Business Day of each calendar month. |
|
|
|
Moodys means Moodys Investors Service, Inc. |
|
|
|
moral hazard notice means any of (a) a warning notice for the purposes of Section 96(2)
of the Pensions Act or (b) a determination notice for the purposes of Sections 96(2) or
98(2) of the Pensions Act, in respect of a proposal to issue a Contribution Notice or
Financial Support Direction for the purposes of Part 1 of the Pensions Act. |
|
|
|
Net Eligible Funding Balance means at any time an amount equal to the aggregate of each
Net Individual Plant Funding Balance. |
|
|
|
Net Eligible Receivables Balance means at any time an amount equal to (a) the aggregate
Outstanding Balance of Pool Receivables that qualify as Eligible Receivables at such time,
minus (b) the aggregate amount for all Obligors by which the Outstanding Balance of all of
the Pool Receivables that qualify as Eligible Receivables of each Obligor ((treating each
Obligor and its Affiliates as if they were a single Obligor) exceeds the Concentration Limit
for such Obligor at such time, minus (c) unapplied cash Collections of the Receivables (in
Euro or the Euro Equivalent) at such time, minus (d) the Euro Equivalent of the
Non-Effective Redirection Amount at such time, minus (e) the Set-Off Reduction at such time,
minus (f) the other specific reserves that are to be applied to the determination of the Net
Eligible Receivables Balance as set out in the form of Daily Report agreed between the
Performance Undertaking Provider and the Administrative Agent, which as at the Closing Date
is substantially in the form attached as Exhibit A-1 (Form of Daily Report) to the Servicing
Agreement. |
|
|
|
Net Income means the aggregate earnings of the Dana European Entities, the Borrower and
the Spanish Account SPV as determined in accordance with Modified GAAP. |
31
|
|
Net Individual Plant Funding Balance means at any time for each manufacturing plant of
each Originator, the Net Eligible Receivables Balance (calculated on a manufacturing plant
by manufacturing plant basis) of the Pool Receivables that qualify as Eligible Receivables
at such time that have been generated by that manufacturing plant multiplied by the Funding
Percentage applicable to the Receivables that have been generated by such manufacturing
plant. |
|
|
|
Net Interest Expense means, determined in accordance with Modified GAAP, (a) the aggregate
third party interest expense (calculated on an annualised basis where necessary) of the Dana
European Entities, the Borrower and the Spanish Account SPV minus (b) the aggregate third
party interest income (calculated on an annualised basis where necessary) of the Dana
European Entities, the Borrower and the Spanish Account SPV. |
|
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|
New Austrian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading New Austrian Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
|
|
New Belgian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading New Belgian Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
|
|
New Collection Accounts means, as the context requires, all or any one of the New Austrian
Collection Accounts, New Belgian Collection Accounts, New French Collection Accounts, New
German Collection Accounts, New Italian Collection Accounts or New Spanish Collection
Accounts. |
|
|
|
New French Collection Account means any account set forth on Schedule 8 (Facility Accounts
and Account Banks) under the heading New French Collection Accounts, as such Schedule may
be amended from time to time in accordance herewith. |
|
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|
New German Collection Account means any account set forth on Schedule 8 (Facility Accounts
and Account Banks) under the heading New German Collection Accounts, as such Schedule may
be amended from time to time herewith. |
|
|
|
New Italian Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading New Italian Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
|
|
New Spanish Collection Account means any account set forth on Schedule 8 (Facility
Accounts and Account Banks) under the heading New Spanish Collection Accounts, as such
Schedule may be amended from time to time in accordance herewith. |
|
|
|
Non-Effective Redirection Amount means, as of any Ratio Reporting Date and continuing
until (but not including) the next Ratio Reporting Date, an amount equal to the product of
(a) the Effective Redirection Target Percentage applicable to such |
32
|
|
earlier Ratio Reporting Date minus the Effective Redirection Percentage as of such earlier
Ratio Reporting Date (provided that such percentage shall not be less than zero), times (b)
the aggregate Outstanding Balance (as of the last day of such Calculation Period) of Pool
Receivables. |
|
|
|
Obligations means, collectively, all covenants, agreements, terms, conditions, deemed
collection undertakings, indemnities and other obligations of whatever nature to be
performed and observed by each Performance Party under the Transaction Documents to which it
is a party, whether monetary or non-monetary. |
|
|
|
Obligor means, with respect to any Receivable, each Person obligated to make payments in
respect of such Receivable pursuant to a Contract. |
|
|
|
Official Body means any government or political subdivision or any agency, authority,
bureau, central bank, commission, department or instrumentality of any such government or
political subdivision, or any court, tribunal, grand jury or arbitrator, or any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government, or any accounting board or authority (whether or not a part
of government) which is responsible for the establishment or interpretation of national or
international accounting principles. |
|
|
|
Organic Documents of any Person means its memorandum and articles of association, articles
or certificate of incorporation and by laws, limited liability agreement, partnership
agreement or other comparable charter or organisational documents as amended from time to
time. |
|
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|
Originators means any of the Austrian Originators, the Belgian Originators, the French
Originators, the German Originators, the Italian Originators and the Spanish Originators. |
|
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|
Originator Sale Agreement means any of the Austrian RPAs, the Belgian RPAs, the French
RPAs, the German RPAs, the Italian RPAs or the Spanish RPAs. |
|
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|
Other Permitted Deposits means, with respect to any Existing Collection Account, any
deposit made to such account in respect of amounts payable to the related Originator, in
each case, where (i) such deposit is made prior to the day falling 90 days after the Closing
Date, and (ii) the payor of such amount was instructed to deposit such payment to such
Existing Collection Account, or the relevant arrangements for such payment to be deposited
in such Existing Collection Account was established, prior to the Closing Date. It is
understood and agreed that the relevant Originators will take reasonable steps to ensure
that any such payor is instructed to make payments to a non-Facility Account (including by
modifying any such arrangements) as soon as possible after the Closing Date. |
|
|
|
Other Permitted Payments means, with respect to any Existing Collection Account, any
payment or debit from such Existing Collection Account in respect of an amount payable by
the related Originator that was made (which for purposes of payments by cheque means the
date on which the cheque was written) prior to the date falling 90 days after the Closing
Date (with respect to any payment made by cheque, regardless of when such cheque is
presented to the relevant bank or financial |
33
|
|
institution for payment). It is understood and agreed that the relevant Originators will
take reasonable steps to ensure that any such payment or debit is made from a non-Facility
Account as soon as possible after the Closing Date. |
|
|
|
Outstanding Balance means, with respect to any Receivable at any time, the then
outstanding principal amount thereof (in Euro or the Euro Equivalent), excluding any Finance
Charges related thereto. |
|
|
|
Participant has the meaning specified in Clause 10.3(e) (Participations) of the
Receivables Loan Agreement. |
|
|
|
Participating Member States means any member state of the European Community that adopts
or has adopted the Euro as its lawful currency in accordance with legislation of the
European Community relating to Economic and Monetary Union. |
|
|
|
Pensions Act means the United Kingdom Pensions Act 2004. |
|
|
|
Performance Undertaking means the Performance and Indemnity Deed, dated the Closing Date,
issued by the Performance Undertaking Provider in favour of, among others, the Borrower, the
Administrative Agent and the Secured Parties. |
|
|
|
Performance Undertaking Provider means Dana International Luxembourg SARL. |
|
|
|
Performance Parties means (i) each of the Originators, (ii) each of the Servicer Parties
that is an Affiliate or direct or indirect Subsidiary of the Performance Undertaking
Provider, (iii) the Spanish Account SPV and (iv) the Subordinated Lender, in each case, in
any capacity in which it is a party to any Transaction Document. |
|
|
|
Permitted Acquisition means an acquisition on an arms length basis of (A) all or any part
of the Equity Interests of a person or (B) a business or undertaking carried on as a going
concern, but only if: |
|
(a) |
|
no Facility Event is continuing on the closing date for the acquisition or
would occur as a result of the acquisition; and |
|
|
(b) |
|
the consideration (including associated costs and expenses) for the acquisition
(when aggregated with the consideration (including associated costs and expenses) for
any other Permitted Acquisition (the Total Purchase Price) together with the amount
of any Joint Venture Investment in respect of Permitted Joint Ventures in that rolling
twelve (12) month period), in each case paid or otherwise contributed by the Dana
European Legal Group, does not in any rolling twelve (12) month period exceed
5,000,000 (or equivalent currency). |
|
|
Permitted Adverse Claim means any Adverse Claim (a) created under the Security Documents
or the other Transaction Documents, (b) in respect of taxes, assessments or other
governmental charges or levies not yet due and payable or, in the case of any Transaction
Party (other than a Transaction SPV), the validity of which |
34
|
|
are being contested by such Transaction Party in good faith by appropriate proceedings and
with respect to which appropriate reserves have been established in conformity with GAAP by
such Transaction Party, (c) in respect of any Receivable which will be released on, or prior
to the sale or transfer (or purported sale or transfer) of such Receivable under an
Originator Sale Agreement, and (d) with respect to any Facility Account, any Adverse Claim
of the bank or other financial institution at which such Facility Account is maintained and
that arose in the ordinary course of business between the relevant account holder and such
bank or other financial institution. |
|
|
Permitted Disposal means any disposal which (except in the case of paragraph (b)) is on
arms length terms: |
|
(a) |
|
of trading stock or cash made by any Dana European Entity in the ordinary
course of trading of the disposing Person; |
|
|
(b) |
|
of any asset by a member of the Dana European Legal Group to a member of the
Dana European Legal Group; |
|
|
(c) |
|
of any asset by a Dana European Entity to a member of the Dana European Legal
Group; |
|
|
(d) |
|
of assets in exchange for other assets comparable or superior as to type, value
or quality, provided that if the Performance Undertaking Provider has disposed of any
Equity Interests of any Dana European Entity that it holds in exchange for cash, the
Performance Undertaking Provider shall not make any Permitted Transaction Payment in
respect of such cash to any Person other than a Dana European Entity to the extent that
the sum of the aggregate principal amount of all Permitted Transaction Payments to any
Person other than a Dana European Entity plus the aggregate principal amount of all
loans made by the Performance Undertaking Provider or any Dana European Entity to the
Performance Undertaking Provider or any of its Affiliates who are not members of the
Dana European Legal Group plus the aggregate amount of all dividends made by a Dana
European Entity to its direct parent company who is either the Performance Undertaking
Provider or not a Dana European Entity (other than those dividends described in
paragraph (b) of the definition of Permitted Distributions) plus the aggregate amount
of all dividends described under paragraph (b)(ii) of the definition of Permitted
Distributions shall not in any financial year of the Performance Undertaking Provider
exceed the greater of (A) 10,000,000 (or the equivalent in any other currency) and (B)
90% of the aggregate distributable earnings of the Dana European Entities generated on
or after 1 January 2007; |
|
|
(e) |
|
of obsolete, worn-out or redundant assets or property for cash; |
|
|
(f) |
|
sales for cash of assets or property no longer used or useful; |
|
|
(g) |
|
sales, transfers or other dispositions of assets in connection with the Tooling
Programme; |
35
|
(h) |
|
any sale, lease, transfer or other disposition made in connection with any
investment in any member of the Dana European Legal Group; |
|
|
(i) |
|
licences, sublicences or similar transactions of intellectual property in the
ordinary course of business and the abandonment of intellectual property deemed no
longer useful; |
|
|
(j) |
|
equity issuances by any Dana European Entity to a member of the Dana European
Legal Group; |
|
|
(k) |
|
transfers of receivables and receivables related assets or any interest therein
pursuant to the Transaction Documents and the transactions contemplated thereby; |
|
|
(l) |
|
of cash equivalents for cash or in exchange for other cash equivalents; |
|
|
(m) |
|
arising as a result of any Permitted Encumbrances or Permitted Transactions; |
|
|
(n) |
|
described on Schedule 10 (Permitted Disposals) hereto; |
|
|
(o) |
|
not otherwise permitted by the preceding paragraphs provided that the aggregate
book value of all assets disposed of in reliance on this paragraph shall not exceed
10,000,000 (or equivalent currency) in any financial year of the Performance
Undertaking Provider; and |
|
|
(p) |
|
which has been approved in writing by the Administrative Agent. |
|
|
Permitted Distributions means: |
|
(a) |
|
the making of a dividend to its direct parent company who is a Dana European
Entity (excluding the Performance Undertaking Provider); |
|
|
(b) |
|
the making of a dividend (other than in respect of a dividend or distribution
received directly or indirectly from a Person that is not a Dana European Entity and
from whom that dividend or distribution initially originated) to its direct parent
company who is not a Dana European Entity provided that such direct parent company
shall promptly (and in any event within five (5) Business Days) make a dividend in
respect of the dividend which it received to its own direct parent company who is (i) a
Dana European Entity (other than the Performance Undertaking Provider) or (ii) subject
to the proviso in the last paragraph of this definition, the Performance Undertaking
Provider; |
|
|
(c) |
|
subject to the proviso in the last paragraph of this definition, the making of
a dividend to its direct parent company who is either the Performance Undertaking
Provider or not a Dana European Entity; |
|
|
(d) |
|
the payment of royalties and management fees in the manner, at the times and
calculated on a comparable basis consistent with such Dana European Entitys past
business practices; |
|
|
(e) |
|
the making of a dividend or other distribution as described in Schedule 11
(Repatriation Plan); |
36
|
(f) |
|
the making of a dividend or distribution as part of a Permitted Transaction; |
|
|
(g) |
|
the making of a dividend to its direct parent company who is either the
Performance Undertaking Provider or not a Dana European Entity in respect of dividends
or distributions received directly or indirectly from a Person that is not a Dana
European Entity and from whom that dividend or distribution initially originated; and |
|
|
(h) |
|
the making of a dividend which has been approved in writing by the
Administrative Agent, |
|
|
provided that the aggregate principal amount of distributions described under paragraphs
(b)(ii) and (c) of this definition shall not exceed 90% of the aggregate distributable
earnings of the Dana European Entities and (ii) the sum of the aggregate principal amount of
such distributions plus the aggregate principal amount of all loans made by the Performance
Undertaking Provider or any Dana European Entity to the Performance Undertaking Provider or
its Affiliates who are not members of the Dana European Legal Group plus the aggregate
amount of any Permitted Transaction Payments made to any Person other than a Dana European
Entity does not exceed in any financial year of the Performance Undertaking Provider the
greater of (A) 10,000,000 (or equivalent currency) and (B) 90% of the aggregate
distributable earnings of the Dana European Entities generated on or after 1 January 2007 |
|
|
|
Permitted Encumbrance means: |
|
(a) |
|
any lien arising by operation of law and in the ordinary course of trading and
not as a result of any default or omission by any Dana European Entity; |
|
|
(b) |
|
any netting or set-off arrangement entered into by any Dana European Entity in
the ordinary course of its banking arrangements for the purpose of netting debit and
credit balances of the Dana European Entities; |
|
|
(c) |
|
any Adverse Claim over or affecting any asset acquired by a Dana European
Entity after the Closing Date if: |
|
(i) |
|
the Adverse Claim was not created in contemplation of the
acquisition of that asset by a Dana European Entity; |
|
|
(ii) |
|
the principal amount secured has not been increased in
contemplation of or since the acquisition of that asset by a Dana European
Entity; and |
|
|
(iii) |
|
the Adverse Claim is removed or discharged within three (3)
months of the date of acquisition of such asset; |
|
(d) |
|
any Adverse Claim over or affecting any asset of any company which becomes a
Dana European Entity after the Closing Date, where the Adverse Claim is created prior
to the date on which that company becomes a member of the Group if: |
|
(i) |
|
the Adverse Claim was not created in contemplation of the
acquisition of that company; |
37
|
(ii) |
|
the principal amount secured has not increased in contemplation
of or since the acquisition of that company; and |
|
|
(iii) |
|
the Adverse Claim is removed or discharged within three (3)
months of that company becoming a Dana European Entity; |
|
(e) |
|
any Adverse Claim arising under any retention of title, hire purchase or
conditional sale arrangement or arrangements having similar effect in respect of goods
supplied to a Dana European Entity in the ordinary course of trading and on the
suppliers standard or usual terms and not arising as a result of any default or
omission by any Dana European Entity; |
|
|
(f) |
|
any Adverse Claim arising as a result of a disposal which is a Permitted
Disposal; |
|
|
(g) |
|
any Adverse Claim in respect of Indebtedness permitted pursuant to paragraph
(j) of the definition of Permitted Indebtedness; |
|
|
(h) |
|
any Adverse Claim existing as at the Closing Date in respect of Indebtedness
permitted pursuant to paragraph (b) of the definition of Permitted Indebtedness and
listed on Schedule 12 (Permitted Indebtedness); and |
|
|
(i) |
|
any Adverse Claim which has been approved in writing by the Administrative
Agent. |
|
|
Permitted Guarantee means: |
|
(a) |
|
the endorsement of negotiable instruments in the ordinary course of trade; |
|
|
(b) |
|
any performance or similar bond guaranteeing performance by a Dana European
Entity under any contract entered into in the ordinary course of trade; |
|
|
(c) |
|
any guarantee constituting Permitted Indebtedness (except under paragraph (c)
of that definition); |
|
|
(d) |
|
any guarantee given in respect of the netting or set-off arrangements permitted
pursuant to paragraph (b) of the definition of Permitted Encumbrance; and |
|
|
(e) |
|
any guarantee which has been approved in writing by the Administrative Agent. |
|
|
Permitted Indebtedness means Indebtedness: |
|
(a) |
|
arising under any of the Transaction Documents; |
|
|
(b) |
|
in existence or committed at the Closing Date and listed on Schedule 12
(Permitted Indebtedness) hereto including any replacement or successor Indebtedness in
an amount not exceeding the principal or committed amount of the original Indebtedness; |
38
|
(c) |
|
arising under or in respect of a Permitted Loan or a Permitted Guarantee or an
investment in a member of the Dana European Legal Group; |
|
|
(d) |
|
in respect of letter of credit facilities to be made available to the Dana
European Entities in an aggregate face amount not to exceed 30,000,000 (or equivalent
currency); |
|
|
(e) |
|
arising under a foreign exchange transaction for spot or forward delivery
entered into in connection with protection against fluctuation in currency rates where
that foreign exchange exposure arises in the ordinary course of trade or in respect of
Borrowings made in Approved Currencies, but not a foreign exchange transaction for
investment or speculative purposes; |
|
|
(f) |
|
arising from the honouring by a bank or other financial institution of a
cheque, draft or similar instrument inadvertently drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
extinguished within five (5) Business Days of incurrence thereof; |
|
|
(g) |
|
of a person existing at the time such person is acquired by or merged with or
into or consolidated with any Dana European Entity or is assumed in connection with the
acquisition of assets from such person, but not incurred or increased or its maturity
date extended in contemplation thereof, or since that acquisition and outstanding only
for a period of three (3) months following the date of acquisition; |
|
|
(h) |
|
constituting trade payables and incurred in the ordinary course of business
(including open accounts extended by suppliers on normal trade terms in connection with
purchases of goods and services); |
|
|
(i) |
|
payables owing to suppliers in connection with the Tooling Programme; |
|
|
(j) |
|
which is secured, including under finance or capital leases, in an aggregate
principal amount at any time not to exceed 50,000,000 (or equivalent currency); |
|
|
(k) |
|
which is unsecured, not permitted by the preceding paragraphs and is in an
aggregate principal amount at any time not to exceed 40,000,000 (or equivalent
currency); |
|
|
(l) |
|
not permitted by the preceding paragraphs provided that prior to incurring, or
concurrently with the incurrence of, any such Indebtedness the Performance Undertaking
Provider shall deliver to the Administrative Agent a certificate signed by a
Responsible Officer of the Performance Undertaking Provider with calculations showing
in reasonable detail that the Performance Undertaking Provider will remain in
compliance with its obligations under Clause 10.3 (Financial covenant) of the
Performance Undertaking if the covenant tests were to be calculated on the basis of
projections for the relevant period ending on the first Testing Date to occur twelve
(12) months after the date of such calculation incorporating the contemplated
Indebtedness therein on a pro forma basis and as if such Indebtedness had been incurred
at the start of the relevant period; |
39
|
(m) |
|
arising under an overdraft facility granted by a bank or other financial
institution in the ordinary course of business, provided that such Indebtedness is
extinguished by close of business on the same Business Day on which it arose; and |
|
|
(n) |
|
which has been approved in writing by the Administrative Agent, |
|
|
provided that Permitted Indebtedness of a Transaction Party shall not include any
Indebtedness owing to any Collection Account Bank other than fees and other transactional
expenses incurred in connection with the operation of the Facility Accounts maintained with
that Collection Account Bank and any Indebtedness constituting Permitted Indebtedness under
paragraph (m) of this definition except where the Administrative Agent has received a waiver
(in form and substance satisfactory to the Administrative Agent) from the relevant
Collection Account Bank in respect of any bankers lien or other right of set-off over the
relevant Facility Accounts. |
|
|
|
Permitted Investments means, with respect to any Borrower Operating Account, any of the
following investments denominated and payable solely in the Approved Currency for which such
Borrower Operating Account is maintained: (a) readily marketable debt securities issued by,
or the full and timely payment of which is guaranteed by the full faith and credit of, the
central government of any Approved Originator Jurisdiction, (b) insured demand deposits,
time deposits and certificates of deposit of any Eligible Account Bank that is organised
under the laws of an Approved Originator Jurisdiction, (c) repurchase obligations with a
term of not more than 45 days for underlying securities of the types described in clause (a)
above entered into with a bank meeting the qualifications described in clause (b) above, (d)
money market funds rated in the highest ratings category by each of Moodys and S&P (which
rating, in the case of S&P, shall be AAAm or AAAmg and shall not have the r symbol
attached to such rating and, in the case of Moodys P-1 or Aaa and MR1+), (e)
commercial paper of any corporation incorporated under the laws of an Approved Originator
Jurisdiction or any political subdivision thereof, provided that such commercial paper is
rated at least A-1 (and without any r symbol attached to any such rating) by S&P and at
least Prime-1 by Moodys, and (f) cash; provided that in each case such investments shall be
a qualifying asset within the meaning of Section 110 of the Irish Taxes Consolidation Act
1997. |
|
|
|
Permitted Joint Venture means any investment in any Joint Venture where in any rolling
twelve (12) month period the aggregate (Joint Venture Investment) of all amounts
subscribed for shares in, or invested in all such Joint Ventures by any Dana European Entity
in respect of such investment when aggregated with the Total Purchase Price in respect of
Permitted Acquisitions in that rolling twelve (12) month period permitted pursuant to
paragraph (c) of the definition of Permitted Acquisition, in each case paid or otherwise
contributed by the Dana European Legal Group, does not exceed 5,000,000 (or equivalent
currency). |
|
|
|
Permitted Loans means: |
|
(a) |
|
any trade credit extended to customers on normal commercial terms and in the
ordinary course of its trading activities; |
40
|
(b) |
|
any loan constituting Permitted Indebtedness (except under paragraph (c) of
that definition); |
|
|
(c) |
|
any loan to a member of the Dana European Legal Group (excluding the
Performance Undertaking Provider); |
|
|
(d) |
|
any loan to the Performance Undertaking Provider or any of its Affiliates who
are not members of the Dana European Legal Group provided that (i) the aggregate
principal amount of such loans shall not exceed 10,000,000 (or the equivalent in any
other currency) in any financial year of the Performance Undertaking Provider and (ii)
the sum of the aggregate principal amount of such loans plus the aggregate amount of
all dividends made by a Dana European Entity to its direct parent company who is either
the Performance Undertaking Provider or not a Dana European Entity (other than those
dividends described in paragraph (b) of the definition of Permitted Distributions) plus
the aggregate amount of all dividends described under paragraph (b)(ii) of the
definition of Permitted Distributions plus the aggregate amount of any Permitted
Transaction Payments made to a Person other than a Dana European Entity does not exceed
in any financial year of the Performance Undertaking Provider the greater of (A)
10,000,000 (or the equivalent in any other currency) and (B) 90% of the aggregate
distributable earnings of the Dana European Entities generated on or after 1 January
2007. |
|
|
(e) |
|
a loan to an employee or director of any Dana European Entity provided that the
aggregate amount of all such loans shall not exceed 1,000,000 (or equivalent currency)
from time to time; |
|
|
(f) |
|
loans described on Schedule 13 (Permitted Loans) hereto; |
|
|
(g) |
|
Permitted Guarantees; |
|
|
(h) |
|
any loan arising under the Intra-Group Consolidated Payment System Agreement
dated 27 October 2003 between Dana Corporation, Echlin Europe Limited, Dana SAS, Dana
Automocion S.A., Dana Europe Holding B.V., Dana Italia S.p.A. and others provided that
the aggregate of all such loans shall not exceed 12,000,000 (or equivalent currency)
from time to time; |
|
|
(i) |
|
any loan to a Spanish Originator (whilst such Spanish Originator is not a
member of the Dana European Legal Group) extended for working capital purposes in the
ordinary course of its trading activities and for capital expenditures budgeted for in
the latest annual budget of the relevant Spanish Originator provided to the
Administrative Agent, provided that any such loans extended for the purposes of capital
expenditure shall not exceed an aggregate principal amount of 8,000,000 (or equivalent
currency) per annum; |
|
|
(j) |
|
other loans or guarantees not exceeding an aggregate principal amount of
1,000,000 (or equivalent currency) from time to time; and |
|
|
(k) |
|
loans, guarantees and the granting of credit which have been approved in
writing by the Administrative Agent. |
41
|
|
Permitted Transaction means: |
|
(a) |
|
a Permitted Acquisition; |
|
|
(b) |
|
a Permitted Joint Venture; |
|
|
(c) |
|
the solvent liquidation or reorganisation of any member of the Dana European
Legal Group which is not a Transaction Party so long as any payments or assets
distributed as a result of such liquidation or reorganisation are distributed to other
members of the Dana European Legal Group, provided that the sum of the aggregate amount
of any Permitted Transaction Payments made by the Performance Undertaking Provider to
any Person other than a Dana European Entity plus the aggregate principal amount of all
loans made by the Performance Undertaking Provider or any Dana European Entity to the
Performance Undertaking Provider or any of its Affiliates who are not members of the
Dana European Legal Group plus the aggregate amount of all dividends made by a Dana
European Entity to its direct parent company who is either the Performance Undertaking
provider or not a Dana European Entity (other than those dividends described in
paragraph (b) of the definition of Permitted Distributions) plus the aggregate amount
of all dividends described under paragraph (b)(ii) of the definition of Permitted
Distributions shall not exceed in any financial year of the Performance Undertaking
Provider the greater of (A) 10,000,000 (or the equivalent in any other currency) and
(B) 90% of the aggregate distributable earnings of the Dana European Entities generated
on or after 1 January 2007; |
|
|
(d) |
|
any transaction, investment or acquisition described on Schedule 14 (Permitted
Transactions) hereto; and |
|
|
(e) |
|
any transaction which has been approved in writing by the Administrative Agent. |
|
|
Permitted Transaction Payment means any payment, distribution (by way of dividend or
otherwise) or other application by the Performance Undertaking Provider of (a) any proceeds
distributed to the Performance Undertaking Provider from a solvent liquidation or
reorganisation of any member of the Dana European Legal Group which is not a Transaction
Party, and (b) any cash received by the Performance Undertaking Provider in exchange for the
disposal of any Equity Interest that it holds in any Dana European Entity. |
|
|
|
Person means an individual, partnership, corporation (including a business trust), limited
liability company, joint stock company, trust, unincorporated association, joint venture,
Official Body or any other entity. |
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Pool Receivable means any Receivable (i) which has been sold and/or otherwise assigned (or
purported to be sold) and or otherwise assigned) by an Originator to a Purchaser pursuant to
an Originator Sale Agreement, and (ii) if such Purchaser is other than the Borrower, which
has been sold or otherwise transferred by such Purchaser to the Borrower, or in which such
Purchaser has granted or otherwise sold a Borrower Receivables Interest to the Borrower, in
each case, pursuant to an Intermediate Transfer Agreement. |
42
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Portfolio Report means any Daily Report. |
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Potential Facility Suspension Event means an event or circumstance which would (with the
expiry of a grace period, the giving of notice, the making of any determination under the
Transaction Documents or any combination of the foregoing) be a Facility Suspension Event. |
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Potential Facility Termination Event means an event or circumstance which would (with the
expiry of a grace period, the giving of notice, the making of any determination under the
Transaction Documents or any combination of the foregoing) be a Facility Termination Event. |
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Potential Seller Suspension Event means an event or circumstance which would (with the
expiry of a grace period, the giving of notice, the making of any determination under the
Transaction Documents or any combination of the foregoing) be a Seller Suspension Event. |
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Potential Seller Termination Event means an event or circumstance which would (with the
expiry of a grace period, the giving of notice, the making of any determination under the
Transaction Documents or any combination of the foregoing) be a Seller Termination Event. |
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Potential Servicer Default means an event or circumstance which would (with the expiry of
a grace period, the giving of notice, the making of any determination under the Transaction
Documents or any combination of the foregoing) be a Servicer Default. |
|
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Principal Balance means, with respect to any Loan, the principal amount outstanding of
such Loan made hereunder, as such amount may be consolidated with the principal amount of
any other Loan in accordance with Clause 2.10 (Consolidation), in each case as reduced from
time to time by amount paid to the applicable Lender(s) holding such Loan pursuant to Clause
2.6 (Application of Collections prior to Facility Termination Date) or Clause 2.7
(Application of Collections after Facility Termination Date) of the Receivables Loan
Agreement, as applicable, on account of the Principal Balance of such Loan; provided that if
such Principal Balance shall have been reduced by any distribution and thereafter all or a
portion of such distribution is rescinded or must otherwise be returned for any reason, such
Principal Balance shall be increased by the amount of such rescinded or returned
distribution, as though it had not been received by such Lender(s). |
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Pro Rata Share means, with respect to any Lender (a) the Commitment of such Lender,
divided by the sum of the Commitments of all Lenders and (b) after the Commitments of all
the Lenders have been terminated, the outstanding principal amount (in Euro or the Euro
Equivalent) of the Loans funded by such Lender, divided by the outstanding principal amount
(in Euro or the Euro Equivalent) of the Loans funded by all the Lenders. |
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Purchaser means the Borrower or the Intermediate Transferor. |
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Qualifying Lender means any Lender which is beneficially entitled to interest payable to
that Lender in respect of an advance under a Transaction Document and is: |
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(a) |
|
which is licensed, pursuant to Clause 9 of the Irish Central Bank Act, 1971, to
carry on banking business in Ireland and whose facility office is located in Ireland
and which is carrying on a bona fide banking business in Ireland for the purposes of
Clause 246(3) of the Irish Taxes Consolidation Act, 1997; or |
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(b) |
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which is an authorised credit institution under the terms of the European Union
Consolidation Directive (formerly the First European Union Banking Co-Ordination
Directive and the Second European Union Banking Co-Ordination Directive) and has duly
established a branch in Ireland or has made all necessary notifications to its home
state competent authorities required thereunder in relation to its intention to carry
on banking business in Ireland and such financial institution is recognised by the
Revenue Commissioners in Ireland as carrying on a bona fide banking business in Ireland
for the purposes of Clause 246(3) of the Irish Taxes Consolidation Act, 1997 and has
its facility office located in Ireland; or |
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(c) |
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which is a Person resident in and under the laws of a country with which
Ireland has a double taxation treaty or resident in a member state of the European
Communities (other than Ireland) (provided, that such Lender does not provide its
commitment through a branch or agency in Ireland), including a corporation incorporated
in the U.S. and subject to U.S. tax on its worldwide income and a U.S. limited
liability company (provided the ultimate recipients of the interest through the limited
liability company are persons resident in a member state of the European Union (other
than Ireland) or resident in a country with which Ireland has a double taxation treaty
and the business is conducted through the limited liability company for market reasons
rather than tax avoidance purposes) in either case not providing its commitment through
a branch or agency in Ireland; or |
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(d) |
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which is a body corporate which advances money in the ordinary course of a
trade which includes the lending of money; provided, that the interest is paid in
Ireland, the interest is taken into account in computing the trading income of such
Lender, and which has complied with the notification requirements under section 246(5)
of the Irish Taxes Consolidation Act, 1997; or |
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(e) |
|
in respect of which an authorisation granted by the Revenue Commissioners of
Ireland is subsisting on each interest payment date entitling the Borrower to pay such
Lender interest without deduction of income tax, by virtue of an applicable double
taxation treaty between Ireland and the country in which such Lender is resident for
the purposes of such treaty, where such double taxation treaty specifies that no
withholding tax is to be made on interest provided such Lender does not provide its
commitment through a branch or agency in Ireland; or |
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(f) |
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which is a qualifying company (within the meaning of Clause 110 of the Irish
Taxes Consolidation Act, 1997). |
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Quotation Day means, with respect to any Borrowing and any Interest Period, the day on
which it is market practice in the relevant interbank market for prime banks to give
quotations for deposits in the currency of such Borrowing for delivery on the first day of
such Interest Period, as determined by the Administrative Agent. If such quotations would
normally be given by prime banks on more than one day, the Quotation Day will be the last of
such days. |
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Rate Type means the Adjusted Eurocurrency Rate or the Alternative Rate. |
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Ratio Reporting Date means the tenth (10th) Business Day after the end of each
Calculation Period. For the purposes of the definition of Ratio Reporting Date, the first
Calculation Period shall be the first calendar month after the calendar month in which the
Closing Date occurred and each subsequent Calculation Period for the purposes of this
definition shall be determined accordingly. |
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Receivable means any indebtedness and other payment obligations of any Obligor resulting
from the provision or sale of merchandise, goods or services by an Originator, including the
right to payment of any interest or Finance Charges, value added taxes or sales taxes, late
payment charges, delinquency charges, extension or collection fees but excluding any
Excluded Receivable. |
|
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Receivables Loan Agreement means the Receivables Loan Agreement, dated the Closing Date,
made between the Buyer, Dana International Luxembourg SARL, as the Servicer and, Performance
Undertaking Provider, the Persons from time to time party thereto as Lenders and GE
Leveraged Loans Limited, as the Administrative Agent. |
|
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Records means, with respect to any Receivable, all Contracts, purchase orders, invoices,
customer lists, credit files and other agreements, documents, books, records (including
records relating to billing and collection matters) and other media for the storage of
information (including tapes, disks, punch cards, computer software and databases) related
to such Receivable, the Related Security or the related Obligors. |
|
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Reference Banks means the principal London offices of Barclays Bank plc and The Royal Bank
of Scotland plc or such other banks as may be appointed by the Administrative Agent in
consultation with the Borrower. |
|
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|
Register has the meaning specified in Clause 10.3(c) (Register) of the Receivables Loan
Agreement. |
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Related Security means, with respect to any Receivable, all of the Originators or
Borrowers, as applicable, right, title and interest in, to and under: |
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(a) |
|
all security interests, hypothecs, reservations of ownership, liens or other
Adverse Claims and property subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to the Contract related to such Receivable
or otherwise, together with all financing statements, registrations, hypothecs, charges
or other similar filings or instruments against an Obligor and all security agreements
describing any collateral securing such Receivable; |
45
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(b) |
|
all guarantees, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise (provided, that it is
understood and agreed that notwithstanding anything herein or in any other Transaction
Document to the contrary (i) no Transaction Party shall be required to take any action
to cause any such guarantee, insurance or other agreement or arrangement to be
transferred to or for the benefit of, or otherwise assigned, to any Purchaser to the
extent any such transfer or assignment requires the consent of any Person (other than a
Transaction Party) or is prohibited by applicable Law, and (ii) any amounts received by
any Transaction Party in respect of, or otherwise in connection with, such guarantee,
insurance or other agreement or arrangement shall constitute Related Security for all
purposes of the Transaction Documents, including any obligation of any Transaction
Party under the Transaction Documents to promptly deposit amounts received in respect
of Collections to a Facility Account (other than an Existing Collection Account)); |
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(c) |
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all Records related to such Receivable; |
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(d) |
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any and all goods (including Returned Goods, if any) and documentation or title
evidencing the shipment or storage of any goods, the sale of which by the applicable
Originator gave rise to such Receivable; |
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(e) |
|
all of the Borrowers right, title and interest in, to and under the
Transaction Documents, including any Borrower Receivable Interest; and |
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(f) |
|
all collections and proceeds of the foregoing. |
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Notwithstanding anything herein or in any other Transaction Document to the contrary, it is
acknowledged and agreed that for all purposes under the Transaction Documents, no action
(other than the transfer and assignment set forth in Clause 2.1 (Agreement to Purchase) of
the German RPA (and any corresponding provisions to any other Originator Sale Agreement) and
any action set forth or otherwise referenced in Schedule 2 (Conditions Precedent for the
Initial Austrian Effective Date), Schedule 3 (Conditions Precedent for the Initial Belgian
Effective Date), Schedule 4 (Conditions Precedent for the Initial French Effective Date),
Schedule 5 (Conditions Precedent for the Initial Italian Effective Date), Schedule 6
(Conditions Precedent for the Initial Spanish Effective Date) and Schedule 2 (Conditions
Precedent Documents) of the Receivables Loan Agreement) is required to be taken by any
Originator to transfer or otherwise assign or perfect any Persons interest in any Related
Security to any Person pursuant to the Transaction Documents. Any representation, warranty
or covenant of any Person in any Transaction Document as to its or another Persons
ownership of, or security interest in, the proceeds of any Related Security and to the
assignment or transfer of any Related Security shall be deemed subject to the proviso
contained in this paragraph. |
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Release has the meaning specified in Clause 2.6(b)(vii) (Application of Collections prior
to Facility Termination Date) of the Receivables Loan Agreement. |
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Relevant Jurisdiction means, in relation to an Transaction Party: |
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(a) |
|
its jurisdiction of incorporation; |
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(b) |
|
any jurisdiction where any asset subject to or intended to be subject to the
Adverse Claims to be created by it pursuant to the Security Documents is situated; |
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(c) |
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any jurisdiction where it conducts its business; and |
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(d) |
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the jurisdiction whose laws govern the perfection of any of the Security
Documents entered into by it. |
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Reporting Date means any date on which a Portfolio Report is delivered or required to be
delivered by the Servicer pursuant to Clause 2.3 (Reporting requirements) of the Servicing
Agreement. |
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Required Lenders means, at any time when there is more than one Lender, at least two
Lenders (that are not Affiliates of each other) representing in
aggregate more than
662/3% of
the Aggregate Principal Balance, or if the Aggregate Principal Balance is zero, the
Aggregate Commitment or, if the Commitments have been terminated, at least two Lenders (that
are not Affiliates of each other) that represented in aggregate more than 662/3% of the
Aggregate Principal Balance, or if the Aggregate Principal Balance is zero, the Aggregate
Commitment immediately prior to such termination. If, at any time, there is only one
Lender, Required Lenders shall mean such Lender. |
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Responsible Officer means, with respect to any Transaction Party, the president, any vice
president, a director, any duly authorised officer, the chief financial officer, the
treasurer, the comptroller, the assistant comptroller, the assistant treasurer or, to the
extent any of the foregoing are not recognised in a jurisdiction, the equivalent thereof in
such jurisdiction, of such Transaction Party. |
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Restricted Payments has the meaning specified in Clause 5.1(n) (Distributions, etc) of the
Receivables Loan Agreement. |
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Restricted Receivable means any Receivable that arose under a Contract the terms of which
require notice to, or the consent of, the relevant Obligor to the assignment of such
Receivable. |
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Restructuring Charges means non-recurring and other one-time costs incurred by any Dana
European Entity in connection with the reorganisation or discontinuation of its business,
operations and structuring in respect of (a) facility closures and the consolidation,
relocation or elimination of operations and (b) related severance costs and other costs
incurred in connection with the termination, relocation and training of employees. |
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Returned Goods means all right, title and interest in and to returned, repossessed or
foreclosed goods and/or merchandise the sale of which gave rise to a Receivable; provided
that such goods shall no longer constitute Returned Goods after a Deemed Collection has been
received with respect to the full Unpaid Balance of the related Receivables. |
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RIBA Advance means any amount paid by an Italian Originator to an Italian Collection
Account Bank in respect of any amount credited by such Italian Collection Account Bank to an
Existing Italian Collection Account or New Italian Collection Account in respect of a
payment to be made by an Obligor of a Pool Receivable via the RIBA system and in respect of
which such Obligor subsequently defaulted in the making such of payment via the RIBA system. |
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RIBA Dilution means any reduction in the funds on deposit in any Existing Italian
Collection Account or New Italian Collection Account by an Italian Collection Account Bank
in respect of any amount credited or otherwise advanced by such bank or financial
institution in respect of a payment to be made by an Obligor of a Receivable (other than a
Pool Receivable) via the RIBA system and in respect of which such Obligor subsequently
defaulted in the making of such payment via the RIBA system. |
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Roll-Forward Report means a report in the Agreed Form furnished by or on behalf of the
Servicer pursuant to Clause 2.3 (Reporting Requirements) of the Servicing Agreement. |
|
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S&P means Standard & Poors Rating Services, a division of McGraw Hill Companies, Inc. |
|
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|
Schedule of Definitions means this Master Schedule of Definitions, Interpretations and
Construction, signed by the parties hereto for the purposes of identification. |
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Scheduled Commitment Facility Termination Date means the day falling five (5) years after
the Closing Date. |
|
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|
Secured Parties means, collectively, the Lenders, the Administrative Agent and each other
Indemnified Party. |
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|
Security Agreement means the Deed of Charge and Assignment, dated the Closing Date,
between the Borrower and the Administrative Agent. |
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Security Documents means the Security Agreement, each Account Security Agreement and each
other document entered into by any Transaction Party creating or expressing to create any
Adverse Claim over all or any part of its assets in respect of the obligations of any of the
Transaction Parties under any of the Transaction Documents. |
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Seller Event means a Seller Termination Event, Seller Suspension Event, Potential Seller
Termination Event or Potential Seller Suspension Event. |
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|
Seller Payout Date means a Seller Payout Date under, and as defined in, any Originator
Sale Agreement. |
|
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|
Seller Suspension Event means a Seller Suspension Event under, and as defined in, any
Originator Sale Agreement. |
|
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Seller Termination Date means the Termination Date under, and as defined in, any
Originator Sale Agreement. |
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Seller Termination Event means a Seller Termination Event under, and as defined in, any
Originator Sale Agreement. |
|
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|
Servicer means at any time the Person then authorised pursuant to Clause 2.1 (Designation
of Servicer; power of attorney) of the Servicing Agreement to administer and collect the
Receivables which shall, as at the Closing Date, be Dana International Luxembourg SARL. |
|
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Servicer Default has the meaning specified in Clause 2.9 (Servicer Default) of the
Servicing Agreement. |
|
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|
Servicer Parties means, collectively, the Servicer and the Sub-Servicers. |
|
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|
Servicing Agreement means the Servicing Agreement, dated the Closing Date among the
Servicer, the Borrower, the Sub-Servicers and the Administrative Agent. |
|
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|
Servicing Fee has the meaning specified in Clause 2.10 (Servicing Fee) of the Servicing
Agreement. |
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|
Servicing Fee Payment Date means the tenth (10th) Business Day after the end of
each Calculation Period. |
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|
Servicing Fee Percentage means 0.1 % or such other rate as may be reasonably agreed in
writing between the Servicer and the Administrative Agent (provided that the agreement in
writing of the Administrative Agent shall not be required for any increase or decrease in
the Servicing Fee Percentage which results in the Servicing Fee Percentage being equal to or
greater than 0.1% and less than or equal to 0.5% subject to the Administrative Agent
receiving prior written notification from the Servicer of any such increase or decrease) or,
following a Servicer Default and the appointment of a successor Servicer pursuant to, and in
accordance with, the Transaction Documents, such other rate per annum as may be reasonably
agreed by such successor Servicer and the Administrative Agent (with the prior written
consent of the Required Lenders). |
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Set-Off Reduction means, on the tenth (10th) Business Day of any calendar month
and continuing until (but not including) the tenth (10th) Business Day of the
next calendar month, the Euro Equivalent determined as of the last day of the immediately
preceding Calculation Period of the sum for each Obligor of a Pool Receivable originated by
any Originator of the lesser of (a) the aggregate of all amounts owed by any such Originator
as of such last day to such Obligor, and (b) the Unpaid Balance of Pool Receivables of such
Obligor. |
|
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Settlement Date for any Loan means (a) each Intra-month Settlement Date and (b) on and
after the occurrence of the Facility Termination Date, each Business Day. |
|
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Share Trustee means Structured Finance Management Corporate Services (Ireland) Limited. |
|
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|
Spanish Account Agency Agreement means any agreement designated as such in any Spanish
RPA. |
49
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|
Spanish Account Security Agreement means any agreement designated as such in any Spanish
RPA. |
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|
Spanish Account SPV has the meaning specified in the Spanish RPA. |
|
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|
Spanish Collection Account Bank means any bank or other financial institution set forth on
Schedule 8 (Facility Accounts and Account Banks) under the heading Spanish Collection
Account Banks, as such Schedule may be amended from time to time in accordance herewith. |
|
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|
Spanish Corporate Services Provider means, in respect of the Spanish Account SPV,
Structured Finance Management (Spain), S.L.. |
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Spanish Draft Instrument means any negotiable instrument in the form of a bill of exchange
(letra de cambio), a promissory note (pagare) or a cheque (cheque); provided that (a) any
such instrument has been issued pursuant to Spanish Law 19/1985 dated July 16 (Ley 19/1985,
de 16 de julio, Cambiaria y del Cheque), as amended from time to time, and complies with all
formalities under such Law, (b) all Taxes payable as a result of the issuance and
negotiation of such instrument have been duly and timely paid, and (c) such instrument is
fully enforceable against the relevant Obligor, freely transferable and free from any
Adverse Claims or other rights of any third party. |
|
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Spanish Originators means each entity designated as a Seller under a Spanish RPA. |
|
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|
Spanish RPAs means the receivables purchase agreements, dated on or about the Initial
Spanish Effective Date, between (i) Dana Automoción, S.A. and the Borrower and (ii) Spicer
Ayra Cardan, S.A. and the Borrower, and such additional Spanish law receivables purchase
agreements as may be entered into from time to time pursuant to Clause 10.12(b) (Limitation
on the addition and termination of Originators) of the Receivables Loan Agreement, for so
long as such agreements remain in full force and effect. Spanish RPA means either of them. |
|
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|
Spanish Seller Payout Call Option Agreement means the Spanish seller payout call option
agreement dated on or about the Closing Date between Dana Automocion, S.A. and the Borrower. |
|
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|
Specified Deemed Collection Clauses means Clause 2.8 (Deemed Collections; application of
payments) of the Receivables Loan Agreement, Clause 2.13 of the Servicing Agreement and
Clause 2.3 of the German RPA (or any corresponding Clause of any other Originator Sale
Agreement). |
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Spot Rate means on any day, for the purpose of determining the Euro Equivalent or Dollar
Equivalent, as applicable of any currency, the rate at which such currency may be exchanged
into Euro or U.S. Dollars, as the case may be, as set forth on the European Central Bank
page for foreign currency exchange reference rates for such day and for such currency. Such
reference rates are based on the regular daily concentration procedure between central banks
within and outside the European System of Central Banks, which normally takes place at
2:15p.m. (Central European Time). In the event that such rate is not available, the Spot
Rate shall be determined |
50
|
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by referencing the Bloomberg historical pricing page for the applicable currency conversion
with the applicable rate being the closing rate for the London foreign exchange market on
the relevant Business Day; provided, that if at the time of any such determination, for any
reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable
method it deems appropriate to determine such rate, and such determination shall be
conclusive absent manifest error. |
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Standard Rate means for any Loan during any Interest Period, an interest rate per annum
equal to the sum of the Applicable Margin plus the Adjusted Eurocurrency Rate for such
Interest Period; provided, however, that in case of any Interest Period with respect to
which the Adjusted Eurocurrency Rate is not available pursuant to Clause 2.12 (Illegality)
or 2.13 (Inability to determine Eurocurrency Rate) of the Receivables Loan Agreement, the
Standard Rate for such Interest Period shall be an interest rate per annum equal to the sum
of the Applicable Margin plus the Alternative Rate in effect from time to time during such
Interest Period. |
|
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|
Standard Terms and Conditions means, with respect to any Originator, the standard terms
and conditions of such Originator in effect on the Closing Date and set forth in Schedule 3
(Standard Terms and Conditions) of the relevant Originator Sale Agreement, as modified (i)
in compliance with the Receivables Loan Agreement, the Originator Sale Agreements and the
Servicing Agreement, or (ii) by the application of Law. |
|
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Statutory Reserves means, with respect to any Lender and any Loan made in any currency
(other than U.S. Dollars), any currency, maximum reserve, liquid asset, fees or similar
requirements (including any marginal, special, emergency or supplemental reserves or other
requirements) established by any central bank, monetary authority, the Bank of England, the
Financial Services Authority, the European Central Bank or other Official Body for any
category of deposits or liabilities customarily used to fund loans in such currency or by
reference to which interest rates applicable to loans in such currency are determined, in
each case expressed as a percentage of the Principal Balance of such Loan, as determined by
the Administrative Agent. The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve, liquid asset or similar requirement. |
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Sterling and £ means the lawful currency of the United Kingdom. |
|
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Structuring Agent means GE Leveraged Loans Limited. |
|
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|
Structuring Agent Fee Letter has the meaning specified in Clause 2.4(b) (Interest and
Fees) of the Receivables Loan Agreement. |
|
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|
Sub-Servicer has the meaning specified in Clause 2.5 (Sub-Servicers) of the Servicing
Agreement. |
|
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Subordinated Guarantor means Dana International Luxembourg SARL or any permitted successor
thereto or assignee thereof under the Subordinated Loan Agreement. |
|
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|
Subordinated Lender means Dana Europe S.A. or any permitted successor thereto or assignee
thereof under the Subordinated Loan Agreement. |
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Subordinated Loan has the meaning specified in the Subordinated Loan Agreement. |
|
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|
Subordinated Loan Agreement means the Subordinated Loan Agreement, dated the Closing Date,
between the Borrower, the Administrative Agent, the Servicer and the Subordinated Lender. |
|
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|
Subordinated Loan Borrowing Request has the meaning specified in the Subordinated Loan
Agreement. |
|
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|
Subsidiary means, with respect to any Person (herein referred to as the parent), any
corporation, limited company, partnership, association or other business entity (a) of which
securities or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power or more than 50% of the general partnership interests
are, at the time any determination is being made, directly or indirectly, owned, controlled
or held or (b) that is, at the time any determination is made, otherwise controlled (as
defined in the definition of Affiliate), in each case of clauses (a) and (b), by the parent
or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of
the parent. |
|
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TARGET means Trans-European Automated Real-time Gross Settlement Express Transfer payment
system. |
|
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|
TARGET Day means any day on which TARGET is open for the settlement of payments in Euro. |
|
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|
Taxes means any tax, levy, impost, duty or other charge or withholding of a similar nature
(including any penalty or interest payable in connection with any failure to pay or any
delay in paying any of the same) imposed by an Official Body. |
|
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Testing Date means (a) during the Trigger Period, the last day of each calendar month, and
(b) otherwise the last day of each financial quarter of the Performance Undertaking
Provider. |
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|
Tooling Programme means any program whereby tooling equipment is purchased or progress
payments are made to facilitate production customers products and whereby the customer will
ultimately repurchase the tooling equipment after the final approval by such customer. |
|
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tPR means the body corporate called the Pensions Regulator established under Part I of the
Pensions Act. |
|
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|
Transaction Documents means this Schedule of Definitions, the Receivables Loan Agreement,
the Intermediate Transfer Agreements, the Originator Sale Agreements, the Servicing
Agreement, the Security Documents, the Spanish Account Agency Agreement, the Performance
Undertaking, the Subordinated Loan Agreement, the Fee Letters and all other instruments,
documents and agreements executed and/or delivered pursuant to or in connection therewith. |
52
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Transaction Fees means legal, appraisal, financing, consulting, other advisor, and other
fees and costs incurred in connection with the Transaction Documents and the transactions
contemplated thereby. |
|
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|
Transaction Parties means, collectively, each Transaction SPV, each Originator, the
Performance Undertaking Provider, the Servicer (so long as it is an Originator or an
Affiliate thereof), each Sub-Servicer (so long as it is an Originator or an Affiliate
thereof) and the Subordinated Lender. |
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Transaction Party Obligations means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, or due or to become due) of the Borrower or any other
Transaction Party to the Secured Parties arising under or in connection with the Receivables
Loan Agreement or any other Transaction Document or the transactions contemplated hereby or
thereby. |
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Transaction SPV means the Borrower or the Spanish Account SPV. |
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Trigger Period means the period commencing on the first quarterly Testing Date (and if
there has been any Trigger Period prior to such Testing Date, on the first quarterly Testing
Date after the end of such prior Trigger Period) on which the Fixed Charges Coverage Ratio
is less than 1.50:1 and ending on the sixth consecutive monthly Testing Date thereafter on
which the Fixed Charges Coverage Ratio (calculated without taking into account any Covenant
Correction Amount) is at least 1.50:1. |
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"U.K. Pension Schemes means all of (a) the Dana Manufacturing Group pension Scheme
established by a trust deed dated 8 June 1993, (b) the Hobourn Group Pension Scheme
established by a trust deed dated 22 December 1983, (c) the Dana UK Pension Scheme,
established by a trust deed dated 5 April 1996 and (d) the Q. H. Pension Plan, established
by a trust deed dated 25 June 1957. |
|
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U.K. PensionCo means that Subsidiary of Dana Corporation established (or to be
established) in the United Kingdom that has assumed (or will assume) the pensions
liabilities of all of the U.K Pensions Schemes. |
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Unpaid Balance means, with respect to any Receivable at any time, the unpaid amount of
such Receivable at such time, excluding any Finance Charges. |
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U.S. means the United States of America. |
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U.S. Dollars and $ each mean the lawful currency of the United States of America. |
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2.2 |
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Other terms |
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All terms defined directly or by incorporation herein shall have the defined meanings when
used in any certificate or other document delivered pursuant hereto unless otherwise defined
therein. For purposes of this Schedule of Definitions and all such certificates and other
documents, unless the context otherwise requires: (a) accounting terms not otherwise defined
herein, and accounting terms partly defined herein to the |
53
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extent not defined, shall have the respective meanings given to them under, and shall be
construed in accordance with, GAAP; (b) references to any amount as on deposit or
outstanding on any particular date means such amount at the close of business on such day;
(c) the words hereof, herein and hereunder and words of similar import refer to this
Schedule of Definitions (or the certificate or other document in which they are used) as a
whole and not to any particular provision of this Schedule of Definitions (or such
certificate or document); (d) references to any Clause, Schedule or Exhibit are references
to Clauses, Schedules and Exhibits in or to this Schedule of Definitions (or the certificate
or other document in which the reference is made) and references to any paragraph,
subsection, clause or other subdivision within any Clause or definition refer to such
paragraph, subsection, clause or other subdivision of such Clause or definition; (e) the
term including means including without limitation; (f) references to any Law refer to
that Law as amended or re-enacted from time to time and include any successor Law; (g)
references to any agreement refer to that agreement as from time to time amended,
supplemented, extended, restated or novated or as the terms of such agreement are waived or
modified in accordance with its terms; (h) references to any Person include that Persons
successors and permitted assigns; (i) references to set-off shall include analogous rights
under applicable Law; (j) references to good and marketable title shall include analogous
ownership rights under applicable Law; (k) references to the knowledge of any Responsible
Officer of a Person shall be the facts or circumstances actually known to such Person or of
which such Person should have had knowledge after reasonable inquiry, (l) headings are for
purposes of reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof; (m) wherever in this Agreement or any other Transaction Document a
requirement appears or a statement is made that, as a result of the transaction contemplated
by the relevant Transaction Documents the Borrower must have perfected and enforceable
title to the Receivables, or that such Receivables must be free and clear of any Adverse
Claim, such requirement or statement, where applicable to the Receivables transferred
pursuant to the French Intermediate Transfer Agreement, shall not be deemed to be breached
merely because under French law a notice needs to be given to the relevant Obligors in order
to ensure that the transfer is enforceable against third parties, (n) wherever in this
Agreement or any other Transaction Document a requirement appears or a statement is made
that, as a result of the transaction contemplated by the relevant Transaction Documents the
Administrative Agent (acting on its own behalf or on behalf of other parties) must have a
legal, valid, perfected and enforceable security interest under a French Account
Security Agreement, such requirement or statement, where applicable to a security interest
assigned pursuant to the Security Agreement, shall not be deemed to be breached merely
because under French law (x) the security holder under such French Account Security
Agreement is viewed as being the Borrower or the Intermediate Transferor as applicable, or
(y) the Security Agreement will produce an effect under French law different from the effect
that the Security Agreement would have had under Irish law and the Borrower or the
Intermediate Transferor as applicable remain the direct security holders under the French
Account Security Agreements under French law, (o) notwithstanding any term herein or in any
other Transaction Document to the contrary, prior to the Initial Austrian Effective Date the
terms Existing Austrian Collection Account, Austrian Account Security Agreement,
Austrian Collection Account Bank, Austrian Intermediate Transfer Agreement, Austrian
Originators, Austrian RPA, and terms related thereto shall be disregarded for all
purposes of the Transaction Documents, including for the |
54
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purposes of the Facility Events and the representations, warranties, covenants and
indemnities therein, provided that this sub-clause (o) shall not apply with respect to (i)
the definitions of Initial Austrian Effective Date, (ii) the Austrian RPA, and (iii) Clause
3 (General Undertaking) of the Performance Undertaking, (p) notwithstanding any term herein
or in any other Transaction Document to the contrary, prior to the Initial Belgian Effective
Date the terms Existing Belgian Collection Account, Belgian Account Security Agreement,
Belgian Collection Account Bank, Belgian Originators, Belgian RPA, and terms related
thereto shall be disregarded for all purposes of the Transaction Documents, including for
the purposes of the Facility Events and the representations, warranties, covenants and
indemnities therein, provided that this sub-clause (p) shall not apply with respect to (i)
the definitions of Initial Belgian Effective Date, (ii) the Belgian RPA, and (iii) Clause 3
(General Undertaking) of the Performance Undertaking, (q) notwithstanding any term herein or
in any other Transaction Document to the contrary, prior to the Initial French Effective
Date the terms Existing French Collection Account, French Account Security Agreement,
French Collection Account Bank, French Intermediate Transfer Agreement, French
Originators, French RPA, French Bill of Exchange and terms related thereto shall be
disregarded for all purposes of the Transaction Documents, including for the purposes of the
Facility Events and the representations, warranties, covenants and indemnities therein,
provided that this sub-clause (q) shall not apply with respect to (i) the definitions of
Initial French Effective Date, (ii) the French RPA, and (iii) Clause 3 (General Undertaking)
of the Performance Undertaking, (r) notwithstanding any term herein or in any other
Transaction Document to the contrary, prior to the Initial Italian Effective Date the terms
Existing Italian Collection Account, Italian Account Security Agreement, Italian
Collection Account Bank, Italian Intermediate Transfer Agreement, Italian Originators,
Italian RPA, RIBA Advance, RIBA Dilution and terms related thereto shall be disregarded
for all purposes of the Transaction Documents, including for the purposes of the Facility
Events and the representations, warranties, covenants and indemnities therein, provided that
this sub-clause (r) shall not apply with respect to (i) the definitions of Initial Italian
Effective Date, (ii) the Italian RPA, and (iii) Clause 3 (General Undertaking) of the
Performance Undertaking, and (s) notwithstanding any term herein or in any other Transaction
Document to the contrary, prior to the Initial Spanish Effective Date the terms Existing
Spanish Collection Account, Spanish Account Security Agreement, Spanish Collection
Account Bank, Spanish Originators, Spanish RPA, Spanish Draft Instrument, Spanish
Account SPV, Spanish Corporate Services Provider and terms related thereto shall be
disregarded for all purposes of the Transaction Documents, including for the purposes of the
Facility Events and the representations, warranties, covenants and indemnities therein,
provided that this sub-clause (s) shall not apply with respect to (i) the definitions of
Initial Spanish Effective Date, (ii) the Spanish RPA, and (iii) Clause 3 (General
Undertaking) of the Performance Undertaking. |
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2.3 |
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Computation of time periods |
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|
Unless otherwise stated in a Transaction Document, in the computation of a period of time
from a specified date to a later specified date, the word from means from and including,
the words to and until each means to but excluding, and the word within means from
and excluding a specified date and to and including a later specified date. |
55
3. |
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MISCELLANEOUS |
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3.1 |
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Amendment |
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|
No amendment or waiver of any provision of this Schedule of Definitions or consent to any
departure by any Transaction Party therefrom shall be effective unless in writing signed by
the Administrative Agent, with the prior written consent of the Required Lenders (and, in
the case of any amendment, also signed by the Borrower, the Servicer and the Performance
Undertaking Provider), and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided that no
amendment, waiver or consent shall: |
|
(a) |
|
unless in writing and signed by each Lender (or, in the case of Clause
3.1(a)(ii), each Lender having its fees reduced or delayed or its Commitment increased)
and the Administrative Agent be effective, if the effect of such amendment: |
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(i) |
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reduces the Principal Balance of, or Interest that is payable
on, account of any Loan or delay any scheduled date for payment thereof; |
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(ii) |
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reduces the fees payable by the Borrower to the Lenders,
increases a Lenders Commitment or delays the dates on which such fees are
payable; |
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(iii) |
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extends the Scheduled Commitment Facility Termination Date or
the Maturity Date; |
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(iv) |
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releases any portion of the Collateral if a Facility Event has
occurred and is continuing or would result therefrom; |
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(v) |
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changes any of the provisions of this Clause or the definition
of Required Lenders; |
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(vi) |
|
amends any Facility Suspension Event set forth in Clause 7.1
(Facility Suspension Events) of the Receivables Loan Agreement or any Facility
Termination Event set forth in Clause 7.2 (Facility Termination Events) of the
Receivables Loan Agreement; |
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(vii) |
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amends the definition of Approved Currency, Defaulted
Receivable, Maximum Aggregate Principal Balance or increase the Applicable
MAPB Percentage, the Maximum Percentage Factor or any Concentration Limit; or |
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(viii) |
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releases the Performance Undertaking Provider from its obligations under the
Performance Undertaking; |
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(b) |
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increase the Commitment of any Lender unless in writing and signed by such
Lender; |
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(c) |
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change any term used in any Originator Sale Agreement, unless signed by the
Originator which is a party to such Originator Sale Agreement; or |
56
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(d) |
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change any terms used in any Intermediate Transfer Agreement, unless signed by
the Intermediate Transferor. |
3.2 |
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Notices |
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All communications and notices provided for under any Transaction Document shall be provided
in the manner described in Schedule 1 (Address and Notice Information). |
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3.3 |
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Governing Law |
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This Schedule of Definitions shall be governed by and construed in accordance with
English law. |
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3.4 |
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Execution in counterparts |
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This Schedule of Definitions may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Schedule of Definitions by facsimile or by electronic file in a
format that is accessible by the recipient shall be effective as delivery of a manually
executed counterpart of this Schedule of Definitions. |
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4. |
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ACCESSION OF ORIGINATORS |
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4.1 |
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Deed of Accession |
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Prior to the Initial Effective Date applicable to an Originator (other than a German
Originator) (an Acceding Originator), the Performance Undertaking Provider shall procure
that such Originator shall execute and deliver to the Administrative Agent a Deed of
Accession. |
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4.2 |
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Effect of Deed of Accession |
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Immediately upon the Deed of Accession being countersigned by the Administrative Agent,
subject to agreement between the relevant parties of the applicable Initial Effective Date: |
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(a) |
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the Acceding Originator shall accede to, and shall be bound by and have the
benefit of: |
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(i) |
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this Schedule of Definitions as an Originator; and |
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(ii) |
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the Servicing Agreement as an Original Sub-Servicer; and |
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(b) |
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by doing so, the Acceding Originator: |
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(i) |
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becomes an Originator for the purposes of the Transaction
Documents; |
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(ii) |
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is appointed by the Servicer as an Original Sub-Servicer
pursuant to Clause 2.5(b) (Sub-Servicers) of the Servicing Agreement; |
57
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(iii) |
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confirms that its address for communications and notices is as
set out in Schedule 1 (Address and Notice Information); and |
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(iv) |
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confirms the appointment of its English Process Agent as its
agent for service of process. |
4.3 |
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Acknowledgements and confirmations |
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(a) |
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The Performance Undertaking Provider acknowledges and confirms that upon the
accession of the Acceding Originator to this Schedule of Definitions and the Servicing
Agreement, its performance undertaking in Clause 2 (Performance Undertaking) and
indemnity in Clause 3 (General Indemnity) of the Performance Undertaking shall extend
to the Obligations of the Acceding Originator under the Schedule of Definitions, the
Servicing Agreement and the other Transaction Documents to which such Acceding
Originator is party. |
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(b) |
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The provision of this Clause 4 (Accession of Originators) only applies to the accession to the
Transaction Documents of those Originators expressly referred to by their corporate name in the
definitions of Austrian RPA, Belgian RPA, French RPA, Italian RPA and Spanish RPA. The addition of
any other new Originator shall be effected in accordance with Clause 10.12 (Limitation on the
addition and termination of Originators) of the Receivables Loan Agreement. |
58
EXECUTION of Schedule of Definitions
The parties have shown their acceptance of the terms of this Schedule of Definitions by signing it
below for the purposes of identification as of the date first written above.
The Borrower
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Given under the Common Seal |
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of Dana Europe Financing (Ireland) Limited: |
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Director |
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Secretary |
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Structured Finance Management (Ireland) Limited |
as Secretary |
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S-1
EXECUTION of Schedule of Definitions
The Servicer
DANA INTERNATIONAL LUXEMBOURG SARL
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Signature:
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/s/ Cornelia v. Künsberg |
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Name:
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Cornelia v. Künsberg |
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Title/Authority
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: Authorised Director and PoA Holder |
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EXECUTION of Schedule of Definitions
The Lender
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Signed by Adrian Spurling as attorney for |
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GE LEVERAGED LOANS LIMITED |
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under a power of attorney dated 22 March 2007 |
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Attorney for GE LEVERAGED LOANS LIMITED |
S-3
EXECUTION of Schedule of Definitions
The Administrative Agent
Signed by Adrian Spurling as attorney for
GE LEVERAGED LOANS LIMITED
under a power of attorney dated 22 March 2007
Attorney for GE LEVERAGED LOANS
LIMITED
EXECUTION of Schedule of Definitions
The Performance Undertaking Provider
DANA INTERNATIONAL LUXEMBOURG SARL
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Signature:
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/s/ Cornelia v. Künsberg |
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Name:
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Cornelia von Künsberg |
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Title/Authority: Authorised Director and
PoA Holder |
EXECUTION of Schedule of Definitions
The Intermediate Transferor
Signed by Adrian Spurling as attorney for
GE FACTOFRANCE SNC
under a power of attorney dated 16 July 2007
Attorney for GE FACTOFRANCE SNC
S-6
EXECUTION of Schedule of Definitions
The Subordinated Lender
DANA EUROPE S.A.
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Signature:
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/s/ Teresa Mulawa
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Name: |
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Title/Authority: |
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S-7
EXECUTION of Schedule of Definitions
Corporate Services Provider
STRUCTURED FINANCE MANAGEMENT (IRELAND) LIMITED
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Signature:
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/s/ Frank Heffernan
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Name: Frank Heffernan |
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Title/Authority: Director |
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S-9
EXECUTION of Schedule of Definitions
REINZ-DICHTUNGS-GMBH
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Signature:
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/s/ Cornelia v. Künsberg
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Name: Cornelia von Künsberg |
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Title/Authority: PoA Holder |
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EXECUTION of Schedule of Definitions
SPICER GELENKWELLENBAU GMBH
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Signature:
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/s/ Cornelia v. Künsberg
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Name: Cornelia von Künsberg |
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Title/Authority: PoA Holder |
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EXECUTION of Schedule of Definitions
The Subordinated Guarantor
DANA INTERNATIONAL LUXEMBOURG SARL
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Signature:
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/s/ Teresa Mulawa
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Name: |
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Title/Authority: |
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S-19
EX-10(Z)(3)
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EXECUTION VERSION
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Exhibit 10-Z(3) |
Dated 18 July 2007
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(1) |
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DANA INTERNATIONAL LUXEMBOURG SARL, as Performance Undertaking Provider |
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(2) |
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THE INTERMEDIATE TRANSFEROR |
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(3) |
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DANA EUROPE FINANCING (IRELAND) LIMITED, as Borrower |
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(4) |
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GE LEVERAGED LOANS LIMITED, as Administrative Agent |
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(5) |
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THE OTHER SECURED PARTIES |
PERFORMANCE AND INDEMNITY DEED
LONDON
CONTENTS
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Clause |
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Page |
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1. Definitions |
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2 |
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2. Performance Undertaking |
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3 |
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3. General indemnity |
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3 |
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4. Taxes |
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4 |
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5. Agreement to pay Stamp Taxes |
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5 |
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6. Obligations absolute; waiver of defences |
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6 |
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7. Immediate recourse; Deferral of rights |
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6 |
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8. Additional Security |
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7 |
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9. Representations and warranties |
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7 |
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10. Covenants |
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11 |
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11. Subrogation; subordination |
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18 |
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12. Termination; reinstatement |
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19 |
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13. Effect of bankruptcy |
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19 |
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14. Judgment Currency |
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19 |
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15. Benefit of Deed |
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20 |
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16. Assignment |
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20 |
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17. Amendments and waivers |
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20 |
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18. Notices |
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21 |
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19. Governing law, jurisdiction and process |
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21 |
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20. No proceedings; limited recourse |
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21 |
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21. Entire agreement; severability |
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22 |
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22. Execution |
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23 |
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THIS DEED is dated 18 July 2007 and executed by:
(1) |
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DANA INTERNATIONAL LUXEMBOURG SARL, a company formed under the laws of Luxembourg (the
Performance Undertaking Provider), in favour of: |
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(2) |
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GE FACTOFRANCE SNC as Intermediate Transferor; |
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(3) |
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DANA EUROPE FINANCING (IRELAND) LIMITED, a limited liability company incorporated under the
laws of the Republic of Ireland (the Borrower); |
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(4) |
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GE LEVERAGED LOANS LIMITED, as Administrative Agent on behalf of the Secured Parties under
the Receivables Loan Agreement and the other Transaction Documents referred to below (in such
capacity, the Administrative Agent); and |
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(5) |
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THE OTHER SECURED PARTIES, as defined in the Receivables Loan Agreement referred to below
(the Intermediate Transferor, the Borrower, the Administrative Agent and the other Secured
Parties are referred to herein as, the Beneficiaries). |
BACKGROUND:
(A) |
|
Each Originator has entered into an Originator Sale Agreement with the Intermediate
Transferor or with the Borrower as purchaser, pursuant to which such Originator, subject to
the terms and conditions of such Originator Sale Agreement, has sold, contributed or otherwise
conveyed and will sell, contribute or otherwise convey to such Purchaser all of its right,
title and interest in certain Receivables and Related Security. |
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(B) |
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In order to finance its purchases of Receivables and Related Security pursuant to each
Originator Sale Agreement to which it is a party, the Intermediate Transferor has entered into
Intermediate Transfer Agreements pursuant to which the Borrower, subject to the terms and
conditions of such Intermediate Transfer Agreements, will from time to time purchase, make
loans secured by, or otherwise acquire Borrower Receivables Interests in such Receivables and
Related Security. |
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(C) |
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In order to obtain the funds with which to acquire Receivables and Related Security from
Originators and Borrower Receivables Interests from the Intermediate Transferor, the Borrower
has entered into the Receivables Loan Agreement, pursuant to which the Lenders shall make
Loans requested by the Borrower from time to time, in each case subject to the terms and
conditions of the Receivables Loan Agreement. |
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(D) |
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Each of the Originators and Dana International Luxembourg SARL (Dana) have entered into a
Servicing Agreement with the Purchasers and the Administrative Agent, pursuant to which, among
other things, Dana has agreed to act as initial servicer and each of the Originators have
agreed to act as sub-servicers, in each case, for the Purchasers and the Administrative Agent
with respect to the servicing and collection of Receivables and Related Security. |
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(E) |
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The Subordinated Lender has entered into a Subordinated Loan Agreement with the Borrower,
pursuant to which the Subordinated Lender has agreed, among other things, to make subordinated
loans to the Borrower in order to finance a portion of the |
1
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purchase price of Receivables and Related Security or Borrower Receivables Interests to be
acquired by the Borrower from the Originators and the Intermediate Transferor. |
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(F) |
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The Account SPVs have entered into certain Account Security Agreements with the Borrower and
others, pursuant to which, among other things, the Account SPVs have granted security
interests in the Facility Accounts held by them in order to secure obligations to remit moneys
to or at the direction of the Borrower. |
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(G) |
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Each of the Originators, the Servicer and the Subordinated Lender is (and any future
Originator will be) an Affiliate or direct or indirect Subsidiary of the Performance
Undertaking Provider, the Spanish Account SPV has been established at the request of the
Performance Undertaking Provider and the Originators in connection with the transactions
contemplated by the Transaction Documents, and the Performance Undertaking Provider expects to
receive substantial direct and indirect benefits from the transactions described above and the
other transactions contemplated by the Originator Sale Agreements, the Intermediate Transfer
Agreements, the Servicing Agreement, the Subordinated Loan Agreement and the other Transaction
Documents. |
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(H) |
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As an inducement for (a) the Purchasers to purchase or otherwise acquire Receivables and
Related Security from the Originators pursuant to the Originator Sale Agreements, (b) the
Borrower to purchase, make loans secured by or otherwise acquire Borrower Receivables
Interests pursuant to the Intermediate Transfer Agreements, (c) the Lenders to make Loans to
the Borrower under the Receivables Loan Agreement and (d) the Administrative Agent, the
Lenders and the other Secured Parties to participate in the transactions contemplated by the
Receivables Loan Agreement and the other Transaction Documents, the Performance Undertaking
Provider has agreed, on the terms provided in this Deed, to cause the due and punctual
performance by each of the Originators and the other Performance Parties of their respective
Obligations and to indemnify the Beneficiaries for any failure of such performance. |
THIS DEED WITNESSES that:
1. |
|
DEFINITIONS |
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1.1 |
|
Terms in Receivables Loan Agreement |
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|
|
Unless otherwise defined herein, capitalised terms which are used in this Deed shall have
the meanings assigned to such terms in Clause 2.1 (Certain defined terms) of the Master
Schedule of Definitions, Interpretation and Construction, dated 18 July 2007, and signed
by the parties hereto and others for the purposes of identification (the Schedule of
Definitions). In the case of any inconsistency between such terms and the terms defined in
Clause 2.2 (Other defined terms) of this Deed, the terms defined in Clause 2.2 (Other
defined terms) of this Agreement shall prevail for all purpose of this Deed. The principles
of interpretation set forth in Clauses 2.2 (Other terms) and 2.3 (Computations of time
periods) of the Schedule of Definitions apply to this Deed as if fully set out herein. |
2
1.2 |
|
Other defined terms |
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|
|
As used in this Deed, capitalised terms defined in the preamble have the meanings as so
defined, and the following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined): |
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|
Indemnified Amounts is defined in Clause 3 (General indemnity). |
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|
Indemnified Party is defined in Clause 3 (General indemnity). |
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2. |
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PERFORMANCE UNDERTAKING |
|
(a) |
|
The Performance Undertaking Provider hereby agrees for the benefit of each of
the Beneficiaries to cause each Performance Party to pay and perform its Obligations
when and as due in accordance with the Transaction Documents. |
|
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(b) |
|
If any Performance Party fails to pay or perform any of its Obligations when
and as due (and payable in respect of monetary Obligations) in accordance with the
Transaction Documents, then the Performance Undertaking Provider shall within three (3)
Business Days of demand perform, or cause the performance of, such Obligations, and
shall within three (3) Business Days of demand pay to the Administrative Agent for the
account of the relevant Beneficiaries, in same day funds, any such Obligations for the
payment of money. |
3. |
|
GENERAL INDEMNITY |
|
|
|
Without limiting any other rights that any Beneficiary or any of their respective officers,
directors, agents, employees, controlling Persons or Affiliates of any of the foregoing
(each an Indemnified Party) may have hereunder, under any other Transaction Document or
under applicable Law, the Performance Undertaking Provider hereby agrees to indemnify and
hold harmless each Indemnified Party from and against any and all damages, losses, claims,
liabilities, deficiencies, costs, disbursements and expenses, including interest, penalties,
amounts paid in settlement and reasonable attorneys fees and out-of-pocket expenses (all of
the foregoing being collectively referred to as Indemnified Amounts) incurred by any
Indemnified Party (including in connection with or relating to any investigation by an
Official Body, litigation or lawsuit (actual or threatened) or order, consent, decree,
judgment, claim or other action of whatever sort (including the preparation of any defence
with respect thereto)), in each case, arising out of or resulting from this Deed or any
other Transaction Document or any transaction contemplated hereby or thereby, excluding,
however (a) Indemnified Amounts to the extent that such Indemnified Amounts resulted from
the gross negligence, fraud or wilful misconduct on the part of such Indemnified Party, (b)
recourse (except as otherwise specifically provided in this Deed or any other Transaction
Document) for uncollectible Pool Receivables and Related Security with respect thereto, (c)
any Excluded Taxes, and (d) any Indemnified Amount to the extent the same has been fully and
finally paid in cash to such Indemnified Party pursuant to any other provision of this Deed
or any other Transaction Document. |
3
|
(a) |
|
Any and all payments by the Performance Undertaking Provider under this Deed
shall be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Performance Undertaking Provider shall be required to
deduct any Indemnified Taxes or Other Taxes from any such payment, then (i) the sum
payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Clause 4) the
recipient of such payment receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Performance Undertaking Provider shall make
such deductions, and (iii) the Performance Undertaking Provider shall pay the full
amount deducted to the relevant Official Body in accordance with applicable Law. |
|
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(b) |
|
If any Indemnified Tax or Other Tax is required to be deducted or withheld from
any payment or distribution made in respect of Receivables or Related Security
transferred pursuant to the French Intermediate Transfer Agreement, Italian
Intermediate Transfer Agreement or any payment or distributions made or deemed to be
made by the Intermediate Transferor pursuant thereto or pursuant to any other
Transaction Document, the Performance Undertaking Provider shall indemnify each
Indemnified Party within ten (10) days after written demand therefor, for the full
amount of any such Indemnified Taxes (including Indemnified Taxes imposed or asserted
on or attributable to amounts payable under this Clause) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Official Body. A certificate as to the amount of such payment or liability delivered
to the Performance Undertaking Provider by an Indemnified Party, or by the
Administrative Agent on its own behalf or on behalf of another Indemnified Party, shall
be conclusive absent manifest error. |
|
|
(c) |
|
The Performance Undertaking Provider shall indemnify each Indemnified Party
within ten (10) days after written demand therefor, for the full amount of any
Indemnified Taxes paid by such Indemnified Party on or with respect to any payment by
or on account of any obligation of the Performance Undertaking Provider under this Deed
(including Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Clause 4) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly
or legally imposed or asserted by the relevant Official Body. A certificate as to the
amount of such payment or liability delivered to the Performance Undertaking Provider
by an Indemnified Party, or by the Administrative Agent on its own behalf or on behalf
of another Indemnified Party, shall be conclusive absent manifest error. |
|
|
(d) |
|
As soon as reasonably practicable after any payment of Indemnified Taxes by the
Performance Undertaking Provider to an Official Body, the Performance Undertaking
Provider shall deliver to the applicable Indemnified Party the original or a certified
copy of a receipt issued by such Official Body |
4
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evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to such Indemnified Party. |
|
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(e) |
|
Any Indemnified Party that is entitled to an exemption from or reduction of
withholding Tax under the Law of the jurisdiction in which the Performance Undertaking
Provider is located, or any treaty to which such jurisdiction is a party, with respect
to payments under this Deed shall deliver to the Performance Undertaking Provider (with
a copy to the Administrative Agent), at the time or times prescribed by applicable Law,
such properly completed and executed documentation prescribed by applicable Law, or
reasonably requested by the Performance Undertaking Provider, as will permit such
payments to be made without withholding or at a reduced rate. |
|
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(f) |
|
If the Performance Undertaking Provider makes a payment to an Indemnified Party
under this Clause 4 and the relevant Indemnified Party determines that: |
|
(i) |
|
a Tax Credit is attributable to such payment; and |
|
|
(ii) |
|
that Indemnified Party has obtained, utilised and retained that
Tax Credit, that Indemnified Party shall pay an amount to the Performance
Undertaking Provider which that Indemnified Party determines will leave it
(after that payment) in the same after-Tax position as it would have been in
had the payment not been required to be made by the Performance Undertaking
Provider. For the purpose of this Clause 4(f) Tax Credit means a credit
against, relief on remission for, or repayment of, any tax. |
|
|
|
This Clause 4 shall not be construed to require any Indemnified Party to make
available its Tax returns (or any other information relating to its Taxes which it
deems confidential) to the Performance Undertaking Provider or any other Person. |
|
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(g) |
|
Notwithstanding anything in this Clause 4 to the contrary, the Performance
Undertaking Provider shall not be required to pay to any Indemnified Party any amount
pursuant to this Clause 4 to the extent (i) such amount has been fully and finally paid
in cash to such Indemnified Party pursuant to any other provision of this Deed or any
other Transaction Document or (ii) such amounts constitute Excluded Taxes. |
5. |
|
AGREEMENT TO PAY STAMP TAXES |
|
|
|
The Performance Undertaking Provider further agrees, as the principal obligor and not as a
surety, to pay to the Administrative Agent for the benefit of the relevant Beneficiaries
within three (3) Business Days of demand and in immediately available funds any and all
stamp duty, registration and other similar Taxes and fees payable in connection with the
execution, delivery, filing and recording of any of the Transaction Documents (or any
instrument or other document to be executed, delivered, filed or recorded under or in
connection with any of the Transaction Documents); and the Performance Undertaking Provider
agrees to save each Indemnified Party harmless from and against any liabilities with respect
to or resulting from any delay in paying or omission to pay such Taxes and fees. |
5
6. |
|
OBLIGATIONS ABSOLUTE; WAIVER OF DEFENCES |
|
|
|
The Performance Undertaking Providers obligations under this Deed are absolute,
unconditional and continuing and are in no way conditioned upon any of the matters listed
below in this Clause 6. The obligations of the Performance Undertaking Provider under this
Deed will not be affected by an act, omission, matter or thing which, but for this Clause 6,
would reduce, release or prejudice any of its obligations under this Deed (without
limitation and whether or not known to it or any Beneficiary) including: |
|
(a) |
|
any time, waiver or consent granted to, or composition with, any Transaction
Party or any other Person; |
|
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(b) |
|
the release of any other Transaction Party or any other Person under the terms
of any composition or arrangement with any creditor of any Dana European Entity; |
|
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(c) |
|
the taking, variation, compromise, exchange, renewal or release of, or refusal
or neglect to perfect, take up or enforce, any rights against, or security over assets
of, any Transaction Party or other Person or any non-presentation or non-observance of
any formality or other requirement in respect of any instrument or any failure to
realise the full value of any security; |
|
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(d) |
|
any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of a Transaction Party or any other
Person; |
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(e) |
|
any amendment, novation, supplement, extension, restatement (however
fundamental and whether or not more onerous) or replacement of any Transaction Document
or any other document or security including without limitation any change in the
purpose of, any extension of or any increase in any facility or the addition of any new
facility under any Transaction Document or other document or security; |
|
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(f) |
|
any unenforceability, illegality or invalidity of any obligation of any Person
under any Transaction Document or any other document or security; or |
|
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(g) |
|
any insolvency or similar proceedings. |
|
|
Without prejudice to the generality of this Clause 6, the Performance Undertaking Provider
confirms that it intends this Deed shall extend from time to time to any (however
fundamental) variation, increase, extension or addition of or to any of the Transaction
Documents and/or any Obligation. |
|
7. |
|
IMMEDIATE RECOURSE; DEFERRAL OF RIGHTS |
|
(a) |
|
The Performance Undertaking Provider waives any right it may have of first
requiring any Beneficiary (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any Person before claiming
from the Performance Undertaking Provider under this Deed. This waiver applies
irrespective of any law or any provision of a Transaction Document to the contrary. |
6
|
(b) |
|
Until the Final Payout Date and unless the Administrative Agent otherwise
directs, the Performance Undertaking Provider will not exercise any rights which it may
have by reason of performance by it of its obligations under the Finance Documents: |
|
(i) |
|
to be indemnified by the Borrower, the Spanish Account SPV or
any other Dana European Entity; |
|
|
(ii) |
|
to claim any contribution from any other guarantor of any
obligations of the Borrower, the Spanish Account SPV or any other Dana European
Entity under the Transaction Documents; and/or |
|
|
(iii) |
|
to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Beneficiaries under the
Transaction Documents or of any other guarantee or security taken pursuant to,
or in connection with, the Transaction Documents by any Beneficiary. |
|
(a) |
|
This Deed shall be in addition to any other guarantee, indemnity or other
security for the Obligations, and shall not be rendered unenforceable by the invalidity
of any such other guarantee, indemnity or security. |
|
|
(b) |
|
In the event that acceleration of the time for payment of any of the
Obligations is stayed upon the insolvency, bankruptcy, arrangement or reorganisation of
any Performance Party or for any other reason with respect to any Performance Party,
all such amounts then due and owing with respect to the Obligations under the terms of
the Transaction Documents, or any other agreement evidencing, securing or otherwise
executed in connection with the Obligations, shall be immediately due and payable by
the Performance Undertaking Provider. |
9. |
|
REPRESENTATIONS AND WARRANTIES |
|
9.1 |
|
Representations and warranties of the Performance Undertaking Provider |
|
|
|
The Performance Undertaking Provider hereby represents and warrants to each Beneficiary, as
of the date of this Deed that: |
|
(a) |
|
the Performance Undertaking Provider (i) is a limited liability company duly
organised and validly existing under the laws of its jurisdiction of organisation, and
(ii) has the power and authority and all licences, authorisations, consents and
approvals required to perform its obligations under the Transaction Documents to which
it is a party and to carry on its business in each jurisdiction in which its business
is now conducted unless the failure to have such power, authority, licences,
authorisations, consents and approvals would not reasonably be expected to have a
Material Adverse Effect; |
7
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(b) |
|
the execution, delivery and performance by the Performance Undertaking Provider
of this Deed and any other Transaction Document to which it is a party (i) are within
the Performance Undertaking Providers corporate powers, (ii) have been duly authorised
by all necessary corporate action, and (iii) do not contravene or constitute a default
under (A) its Organic Documents, (B) any applicable Law, (C) any contractual
restriction binding on or affecting the Performance Undertaking Provider or its
property or (D) any order, writ, judgment, award, injunction or decree which is valid
and binding on or affecting the Performance Undertaking Provider or its property,
except in each case where any such contravention or default would not reasonably be
expected to have a Material Adverse Effect, and (iv) do not result in or require the
creation or imposition of any Adverse Claim (other than with respect to any Receivable
or Facility Account, Permitted Adverse Claims, and with respect to any other assets of
the Performance Undertaking Provider, Permitted Encumbrances) upon or with respect to
its present or future assets including any Pool Receivable, any Related Security, any
Collateral or any Facility Account; |
|
|
(c) |
|
no authorisation or approval or other action by, and no notice to or filing or
registration with, any Official Body or official thereof or any third party is required
for the due execution, delivery and performance by the Performance Undertaking Provider
of this Deed or any other Transaction Document to which it is a party or any other
document to be delivered by it hereunder or thereunder, except for the actions taken or
referred to in Schedule 2 (Conditions precedent documents) to the Receivables Loan
Agreement, all of which have been (or on or before the Closing Date will have been)
duly made or taken, as the case may be, and are in full force and effect, except where
the failure to have obtained any such authorisation or approval or taken any such
action or made any such filing, notice or registration would not have a Material
Adverse Effect; |
|
|
(d) |
|
this Deed and each of the other Transaction Documents to which it is a party
constitutes the legal, valid and binding obligation of the Performance Undertaking
Provider enforceable against the Performance Undertaking Provider in accordance with
its terms, subject to the Legal Reservations; |
|
|
(e) |
|
all non-verbal information, data, exhibits, documents, books, records and
reports furnished by or on behalf of the Performance Undertaking Provider in connection
with this Deed, any other Transaction Document or any transaction contemplated hereby
or thereby is complete and accurate in all material respects as of its date and no such
item contains any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. All financial statements
which have been furnished by or on behalf of the Performance Undertaking Provider, the
Servicer or any Originator (i) have been prepared in accordance with, in the case of
the Performance Undertaking Provider and the Servicer, Modified GAAP or, in the case of
each Originator, GAAP consistently applied and (ii) fairly present, in all material
aspects, the financial condition of the Performance Undertaking Provider, the Servicer
or the relevant Originator, as |
8
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the case may be, and in each case, if applicable, its consolidated Subsidiaries or,
as the case may be, the Dana European Entities on an aggregated basis, as of the
dates set forth therein and the results of any operations of the Performance
Undertaking Provider, the Servicer or the relevant Originator, as the case may be,
and in each case, if applicable, its consolidated Subsidiaries for the periods ended
on such dates; |
|
|
(f) |
|
there are no actions, suits, investigations, litigation or proceedings at law
or in equity or by or before any Official Body now pending or in arbitration or, to the
Performance Undertaking Providers knowledge, threatened against or affecting the
Performance Undertaking Provider or any of its Subsidiaries or any of its or their
business, revenues or other property (i) which question the validity of this Deed or
any other Transaction Document to which it is a party or any of the transactions
contemplated hereby or thereby (excluding any litigation or proceeding against any
Obligor) or (ii) which, individually or in the aggregate, are reasonably likely to be
adversely determined and if so determined would reasonably be expected to have a
Material Adverse Effect. The Performance Undertaking Provider is not in default or
violation of any valid and binding order, judgement or decree of any Official Body or
arbitrator which would reasonably be expected to have a Material Adverse Effect; |
|
|
(g) |
|
the Performance Undertaking Provider has (i) timely filed or caused to be filed
all material Tax returns required to be filed, and (ii) paid or made adequate provision
for the payment of all Taxes, assessments and other governmental charges due and
payable by it, except (A) any such Taxes, assessments or other governmental charges
that are being contested in good faith by appropriate proceedings and for which the
Performance Undertaking Provider has set aside in its books adequate reserves in
accordance with GAAP as reasonably determined by the Performance Undertaking Provider,
or (B) to the extent that such failure to do so would not reasonably be expected to
have a Material Adverse Effect; |
|
|
(h) |
|
the direct and indirect benefits to the Performance Undertaking Provider from
the transactions contemplated by the Transaction Documents provide fair consideration
and reasonably equivalent value to the Performance Undertaking Provider for the
obligations it undertakes pursuant to this Deed; |
|
|
(i) |
|
the Performance Undertaking Providers obligations under this Deed and the
other Transaction Documents to which it is a party rank at least pari passu with all of
its unsecured unsubordinated Indebtedness; |
|
|
(j) |
|
the Performance Undertaking Provider either has, or otherwise has adequate
means to obtain from such Performance Party, information concerning the financial
condition of each Performance Party, and it is not relying on any Beneficiary to
provide any such information; |
|
|
(k) |
|
neither the Performance Undertaking Provider nor any other Dana European Entity
has any Indebtedness (other than Permitted Indebtedness); |
9
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(l) |
|
neither the Performance Undertaking Provider nor any other Dana European Entity
has created or granted any Adverse Claim (other than, with respect to any Receivable or
Facility Account, Permitted Adverse Claims, or, with respect to any of its other
assets, Permitted Encumbrances) upon or with respect to its present or future assets; |
|
|
(m) |
|
for the purposes of the EU Insolvency Regulation, the Performance Undertaking
Providers centre of main interest (as that term is used in Article 3(1) of the EU
Insolvency Regulation) is situated in the Grand Duchy of Luxembourg and it has no
establishment (as that term is used in Article 2(h) of the EU Insolvency Regulation)
in any other jurisdiction; |
|
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(n) |
|
neither Performance Undertaking Provider nor any other Dana European Entity is,
or will become, a borrower, guarantor or otherwise incur any obligation under or in
connection with the DIP; |
|
|
(o) |
|
neither the Performance Undertaking Provider nor any other Dana European
Entity, nor any of their respective assets, have been or will be consolidated with
those of Dana Corporation or any other Affiliate of Dana Corporation that is subject to
an Event of Bankruptcy under the Insolvency Laws of the U.S. or any State thereof; |
|
|
(p) |
|
neither the Performance Undertaking Provider nor any other Dana European Entity
has, or will have, a place of business (other than Spicer Gelenkwellenbau GmbH) or any
material property located in the U.S.; |
|
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(q) |
|
the execution, delivery and performance by any Transaction Party of any
Transaction Document to which it is a party do not contravene or constitute a default
under the DIP; |
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(r) |
|
for so long as the DIP is in force, the Aggregate Principal Balance constitutes
Debt for the purposes of the DIP and that the aggregate outstanding principal amount of
the Dollar Equivalent of the Aggregate Principal Balance and all other Debt of Foreign
Subsidiaries owing to third parties will not at any time exceed $400,000,000 (excluding
Debt of Canadian Subsidiaries of Dana Corporation under the Canadian Revolving
Facility). For the purposes of this Clause 9(r) the terms Canadian Revolving
Facility, Canadian Subsidiary, Debt and Foreign Subsidiary have the meaning
specified in the DIP; |
|
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(s) |
|
no Material Adverse Effect has occurred; |
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|
(t) |
|
clearance statements have been issued by tPR, for the purposes of Sections
42(2) and 46(2) of the Pensions Act, in relation to all the U.K. Pension Schemes (the
Clearance Statements), such that in the opinion of tPR, and in the circumstances
described in the application made for the purposes of the Clearance Statements: |
|
(i) |
|
no Dana European Entity would be subject to a contribution
notice as a result of the satisfaction of either, or both of, Sections 42(2)(a)
and 42(2)(b) of the Pensions Act; and |
10
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(ii) |
|
no Dana European Entity would be the subject of a financial
support direction as a result of the satisfaction of any, or all of, Sections
46(2)(a), 46(2)(b) and 46(2)(c) of the Pensions Act; |
|
(u) |
|
all of the information contained in the applications made in respect of the
Clearance Statements as to the circumstances of each of the Dana European Entities are
true and accurate, and that there are no material omissions of relevant information in
the applications made for the Clearance Statements; |
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(v) |
|
U.K. PensionCo has no creditors other than the U.K. Pension Schemes or the
United Kingdom Board of the Pension Protection Fund, as the case may be; and |
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(w) |
|
the company voluntary arrangement of U.K. PensionCo has been implemented in
accordance with its terms and completed (as such term is used in Rule 1.29 Insolvency
Rules 1986) and all conditions thereunder have been satisfied. |
9.2 |
|
Times when representations made |
|
(a) |
|
All the representations and warranties in this Clause 9 (Representations and
Warranties) are deemed to be made by the Performance Undertaking Provider on the
Closing Date and as of the date of each Borrowing and each Release under the
Receivables Loan Agreement. |
|
|
(b) |
|
The representations and warranties in Clause 9.1(e) are deemed to be made by
the Performance Undertaking Provider as of each Testing Date and on each date on which
any financial statements to be delivered pursuant to this Deed are delivered by the
Performance Undertaking Provider or in the case of all other non-verbal information,
data, exhibits, documents, books and records furnished by or on behalf of the
Performance Undertaking Provider in connection with this Deed on the date on which such
information, data, exhibits, documents, books and records are furnished. |
|
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(c) |
|
Each representation or warranty deemed to be made after the Closing Date shall
be deemed to be made by reference to the facts and circumstances existing at the date
the representation or warranty is deemed to be made. |
10. |
|
COVENANTS |
|
|
|
Until the Final Payout Date: |
|
10.1 |
|
Compliance with Laws, etc. |
|
|
|
the Performance Undertaking Provider will comply in all material respects with all Laws to
which it may be subject if failure so to comply with such Laws would reasonably be expected
to have a Material Adverse Effect; |
|
10.2 |
|
Reporting requirements |
|
|
|
the Performance Undertaking Provider will furnish or cause to be furnished: |
|
(a) |
|
Annual financial statements |
11
|
(i) |
|
to the Administrative Agent as soon as available after the end
of each of its financial years and in any event within the period required for
the production and filing of such accounts under the law of its jurisdiction of
incorporation, the statutory accounts of each Dana European Entity and its
consolidated Subsidiaries as of the end of and for that financial year in each
case prepared in accordance with GAAP consistently applied, certified by a
Responsible Officer of that Dana European Entity and by its independent public
accountants; and |
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(ii) |
|
to the Administrative Agent as soon as available after the end
of each of its financial years and in any event within 60 days after the end of
each of its financial years (commencing from the financial year ending 31
December 2008) the annual budget in respect of each Originator prepared on an
individual basis and in respect of the Dana European Entities prepared on an
aggregated basis. |
|
(b) |
|
Quarterly and monthly financial statements |
|
(i) |
(A) |
during the Trigger Period, to the Administrative Agent as
soon as available and in any event within 30 days after the end of each
calendar month, a statement of financial performance of each Originator
prepared on an individual basis and of the Dana European Entities prepared on
an aggregated basis as of the end of and for that calendar month as reported by
HFM in accordance with Modified GAAP consistently applied, with the statement
prepared on an aggregated basis being certified by a Responsible Officer of the
Performance Undertaking Provider; and |
|
|
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(B) |
otherwise, to the Administrative Agent as soon
as available and in any event within 45 days after the end of each of
its financial quarters, a statement of financial performance of each
Originator prepared on an individual basis and of the Dana European
Entities prepared on an aggregated basis as of the end of and for that
financial quarter as reported by HFM in accordance with Modified GAAP
consistently applied, with the statement prepared on an aggregated
basis being certified by a Responsible Officer of the Performance
Undertaking Provider |
|
(ii) |
|
Each statement of financial performance provided hereunder in
respect of an Originator shall be accompanied by a certificate of solvency in
the Agreed Form signed by a Responsible Officer of that Originator. |
|
|
(iii) |
|
For the purposes of this Clause a statement of financial
performance shall include a profit and loss statement (in the case of any
statement of financial performance to be delivered hereunder in respect of an
Originator prepared on a manufacturing plant by manufacturing plant basis),
cash receipts and payments statement (prepared solely on an aggregated basis),
a balance sheet (in the case of any statement of financial performance to be
delivered hereunder in respect of an Originator, prepared on an aggregated
basis with respect |
12
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|
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to the manufacturing plants owned or operated by such Originator) and a
management commentary on the financial results shown in the statement of
financial performance prepared on an aggregated basis (which management
commentary shall include commentary on any material change in the financial
results of any individual Originator). |
|
(c) |
|
Officers certificate |
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|
|
to the Administrative Agent and concurrently with each of the financial statements
to be delivered under Clauses 10.2(a) and (b), a certificate of a Responsible
Officer of the Performance Undertaking Provider stating that no Facility Event has
occurred and is continuing (or, if any such event is continuing, describing in
reasonable detail such event and the steps, if any, being taken or to be taken by
the Performance Undertaking Provider or any of the Performance Parties to remedy
such event). |
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(d) |
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Change in business |
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|
at least thirty (30) days prior to any substantial change in the general nature of
its business, to the Administrative Agent a written notice describing in reasonable
detail any such substantial change in the general nature of its business; |
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(e) |
|
Notice of Facility Events |
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|
|
as soon as possible and in any event within three (3) Business Days after a
Responsible Officer of the Performance Undertaking Provider obtains knowledge of the
occurrence of any Facility Event, to the Administrative Agent a statement of a
Responsible Officer of the Performance Undertaking Provider setting forth details of
such Facility Event and, if applicable, the action that the Performance Undertaking
Provider or any of the Facility Parties has taken and proposes to take with respect
thereto; |
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(f) |
|
Termination or Suspension of Originator Sale Agreement or Intermediate Transfer
Agreements |
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|
|
as soon as possible and in any event within three (3) Business Days after a
Responsible Officer of the Performance Undertaking Provider obtains knowledge of the
occurrence thereof, to the Administrative Agent notice that any Originator has
stopped selling or contributing Receivables originated by such Originator to the
Borrower or the Intermediate Transferor, as the case may be, pursuant to the related
Originator Sale Agreement to which such Originator is a party or any other Seller
Event thereunder; |
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(g) |
|
Litigation; Material Adverse Effect |
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|
|
promptly after a Responsible Officer of the Performance Undertaking Provider obtains
knowledge thereof, to the Administrative Agent notice of the filing or commencement
of, or any written threat or notice of intention of any Person to file or commence,
any action, suit, litigation or proceeding, whether at law or in equity or by or
before any Official Body or in arbitration against, or any |
13
|
|
|
investigation by any Official Body that may exist with respect to any Transaction
Party, the Facility Accounts, the Transaction Documents or the transactions
contemplated thereby, in each case, that is reasonably likely to be determined
adversely and if so determined would reasonably be expected to have a Material
Adverse Effect. |
|
|
(h) |
|
Other information |
|
|
|
|
as soon as reasonably practical and in any event no later than ten (10) Business
Days after a request by the Administrative Agent, furnish or cause to be furnished
to the Administrative Agent such other information with respect to (i) the Pool
Receivables, the Related Security, the Facility Accounts, the Collateral as the
Administrative Agent may from time to time reasonably request in writing (which
shall include an explanation of the reason for such request), (ii) any Facility
Event or Material Adverse Effect related to the Performance Undertaking Provider as
the Administrative Agent may from time to time reasonably request in writing (which
shall include an explanation of the reason for such request) or, (iii) its business,
operations and financial condition as the Administrative Agent may reasonably
require (subject to a written request which shall include an explanation of the
reason for such request). |
|
|
(i) |
|
Information relating to U.K. pensions |
|
|
|
|
promptly after a Responsible Officer of the Performance Undertaking Provider obtains
knowledge thereof, to the Administrative Agent full details of: |
|
(i) |
|
(A) any material changes in the circumstances described in; or |
|
(B) |
|
any material omissions of relevant information
contained in, |
|
|
|
the applications made for the Clearance Statements; and |
|
|
(ii) |
|
any investigation or proposed investigation by tPR which may
lead to the issue of a financial support direction or contribution notice
(for the purposes of Part 1 of the Pensions Act) against any Dana European
Entity; and |
|
|
(iii) |
|
(A) any warning notice for the purposes of Section 96(2) of
the Pensions Act; |
|
(B) |
|
any determination notice for the purposes of
Section 96(2) or 98(2) of the Pensions Act in relation to a
Contribution Notice or Financial Support Direction for the purposes of
Part 1 of the Pensions Act 2004, |
|
|
|
issued by tPR to any Dana European Entity. |
14
|
(j) |
|
Subordinated Loan book entries |
|
|
|
|
to the Administrative Agent on a fortnightly basis evidence substantially in the
Agreed Form of book entry movement pursuant to the Subordinated Loan Agreement. |
|
(a) |
|
The Performance Undertaking Provider will not permit the Fixed Charges Coverage
Ratio as at each Testing Date to be less than 1.25:1 unless within 3 Business Days
after the day on which the compliance certificate to be delivered pursuant to Clause
10.4 (Compliance Certificate) has been delivered showing that the Fixed Charged
Coverage Ratio is less than 1.25:1 a Person (other than the Borrower, the Spanish
Account SPV or any Dana European Entity) invests in the Dana European Legal Group or
deposits into the Borrower Operating Account (Principal) an amount such that a
recalculation of the Fixed Charges Coverage Ratio as at such Testing Date, treating the
amount of such investment or deposit as part of Adjusted EBITDA, would be at least
1.25:1. |
|
|
(b) |
|
If, as at such Testing Date, as a result of applying the necessary Covenant
Correction Amount to the calculation of Maximum Aggregate Principal Balance the
Aggregate Principal Balance exceeds the Maximum Aggregate Principal Balance on such
date, the Borrower shall make a prepayment of the Loan in accordance with Clause
2.5(a)(ii) (Payment and prepayment of Loans) of the Receivables Loan Agreement on the
same day as the Covenant Correction Amount is invested or deposited in accordance with
Clause 10.3(a) and such prepayment must be funded wholly from cash constituting the
whole or part of the applicable Covenant Correction Amount. |
|
|
(c) |
|
The Performance Undertaking Provider will not permit the Fixed Charges Coverage
Ratio as at each Testing Date to be less than 1.15:1. |
10.4 |
|
Compliance Certificate |
|
(a) |
|
The Performance Undertaking Provider will furnish to the Administrative Agent
within 30 days, after each Testing Date a compliance certificate in a form reasonably
acceptable to the Administrative Agent, setting out (in reasonable detail) computations
as to compliance with the financial covenant set out in Clause 10.3 as at the date as
such Testing Date; |
|
|
(b) |
|
Each compliance certificate shall be signed by a Responsible Officer of the
Performance Undertaking Provider. |
10.5 |
|
Disposals |
|
|
|
the Performance Undertaking Provider will not, and will procure that no other Dana European
Entity will, either in a single transaction or in a series of transactions and whether
related or not and whether voluntarily or involuntarily, dispose of all or any part of its
or their assets save for any Permitted Disposal; |
15
10.6 |
|
Financial Indebtedness |
|
|
|
the Performance Undertaking Provider will not, and will procure that no other Dana European
Entity will, incur or permit to be outstanding any Indebtedness or enter into any
off-balance sheet financing arrangement other than Indebtedness incurred under the
Transaction Documents and any Permitted Indebtedness; |
10.7 |
|
Loans out |
|
|
|
the Performance Undertaking Provider will not, and will procure that no other Dana European
Entity will, make any loans or grant any credit other than Permitted Loans; |
|
10.8 |
|
Dividends and share redemption |
|
|
|
the Performance Undertaking Provider shall not (and will ensure that no other Dana European
Entity will): |
|
(a) |
|
declare, make or pay any dividend, charge, fee or other distribution (or
interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or
in kind) on or in respect of its share capital (or any class of its share capital); |
|
|
(b) |
|
repay or distribute any dividend or share premium reserve; |
|
|
(c) |
|
pay or allow any other Dana European Entity to pay any management, advisory or
other fee to or to the order of any of the shareholders of the Performance Undertaking
Provider; or |
|
|
(d) |
|
redeem, repurchase, defease, retire or repay any of its share capital or
resolve to so do, |
|
|
other than Permitted Distributions; |
|
10.9 |
|
Mergers, Investments, etc. |
|
(a) |
|
the Performance Undertaking Provider shall ensure that each Originator (other
than any Spanish Originator until such time as it becomes a direct or indirect
Subsidiary of the Performance Undertaking Provider) shall at all times be a direct or
indirect Subsidiary of the Performance Undertaking Provider and that each Spanish
Originator (which for the time being is not a direct or indirect Subsidiary of the
Performance Undertaking Provider) shall at all times be a direct or indirect Subsidiary
of Dana Corporation; |
|
|
(b) |
|
except to the extent expressly permitted by the Transaction Documents, the
Performance Undertaking Provider will not, and will procure that no other Dana European
Entity will, liquidate or dissolve or merge with or into or consolidate with or into
any Person, or enter into any corporate restructuring, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of transactions), all
or substantially all of its property (whether now owned or hereafter acquired) to any
Person, or acquire all or part of the business or undertaking of a Person, or acquire
any Equity Interest of a Person, or enter into any joint venture or partnership
agreement with, any Person other than a Permitted Transaction; |
16
10.10 |
|
Taxes |
|
|
|
the Performance Undertaking Provider will file all Tax returns and reports required by Law
to be filed by it and promptly pay all Taxes and governmental charges at any time then due
and payable by it, except to the extent such Taxes or governmental charges are being
contested in good faith by appropriate proceedings and the Performance Undertaking Provider
has set aside in its books adequate reserves in accordance with Modified GAAP as reasonably
determined by the Performance Undertaking Provider or the failure to do so would not
reasonably be expected to have a Material Adverse Effect. The Performance Undertaking
Provider will pay when due any Taxes payable in connection with the Pool Receivables,
Related Security with respect thereto, the Facility Accounts and the other Collateral,
exclusive of Taxes constituting Excluded Taxes or Taxes payable and actually previously paid
by another Transaction Party except to the extent such Taxes are being contested in good
faith by appropriate proceedings and the Performance Undertaking Provider has set aside in
its books adequate reserves in accordance with Modified GAAP as reasonably determined by the
Performance Undertaking Provider or the failure to do so would not reasonably be expected to
have a Material Adverse Effect; |
|
10.11 |
|
Sales, liens, etc. |
|
|
|
the Performance Undertaking Provider will not, and will procure that no other Dana European
Entity will, sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim (except for, in the case of any Receivable or
Facility Account, Permitted Adverse Claims, and in the case of any other assets of any Dana
European Entity, Permitted Encumbrances) upon or with respect to its assets to secure any
indebtedness of any person (including, upon or with respect to the Pool Receivables, the
Related Security with respect thereto or any other Collateral, the Facility Accounts or any
other asset of the Transaction SPVs, or any of its rights, title, interest in, to and under
any of them (including any right to receive income in respect thereof)) except pursuant to,
and in accordance with, the Transaction Documents; |
|
10.12 |
|
Change in business |
|
|
|
the Performance Undertaking Provider will not make any substantial change in the general
nature of its business without the prior written consent of the Administrative Agent, except
for any such change: |
|
(a) |
|
that would not (i) impair the collectibility of any Pool Receivable in any
material respect, (ii) otherwise reasonably be expected to have a Material Adverse
Effect, or (iii) materially adversely affect the interests or remedies of any
Beneficiary; or |
|
|
(b) |
|
as required by applicable Law; |
10.13 |
|
Amendments |
|
|
|
the Performance Undertaking Provider will not make any material amendment or other
modification to any Transaction Document to which it is a party except in |
17
|
|
accordance with the amendment provisions thereof (which will require the written consent of
the Administrative Agent); |
|
10.14 |
|
Organic Documents |
|
|
|
the Performance Undertaking Provider will not amend, modify, change or repeal any of its
Organic Documents, unless such amendment, modification, change or repeal would not
reasonably be expected to have a Material Adverse Effect; |
|
10.15 |
|
Licences, etc. |
|
|
|
the Performance Undertaking Provider will maintain in full force and effect all licences,
approvals, authorisations, consents, registrations and notifications which are at any time
required in connection with the performance of its duties and obligations hereunder and
under the other Transaction Documents to which it is a party, except to the extent failure
to do so would not reasonably be expected to have a Material Adverse Effect; |
|
10.16 |
|
Separateness |
|
|
|
the Performance Undertaking Provider will take such actions as may reasonably be required to
maintain each Transaction SPV as a legal entity separate and apart from the Performance
Undertaking Provider, any Affiliate or Subsidiary thereof and any other Person; and |
|
10.17 |
|
Change in accountants or accounting policies |
|
|
|
the Performance Undertaking Provider will promptly notify the Administrative Agent of any
change in its accountants or material change in its accounting policy. |
|
11. |
|
SUBROGATION; SUBORDINATION |
|
11.1 |
|
Notwithstanding anything to the contrary contained herein, the Performance Undertaking
Provider: |
|
(a) |
|
will not exercise or assert until the Final Payout Date any rights of
subrogation (whether contractual, at law or in equity or otherwise) to the claims of
any Beneficiary against any Performance Party, and until the Final Payout Date hereby
waives any and all contractual, statutory or legal or equitable rights of contribution,
reimbursement, indemnification and similar rights and claims which the Performance
Undertaking Provider might now have or hereafter acquire against any Performance Party
in connection with, or as a result of, the existence or performance of the Performance
Undertaking Providers obligations under this Deed; |
|
|
(b) |
|
will not claim any setoff, recoupment or counterclaim against any Performance
Party in respect of any liability of the Performance Undertaking Provider to any
Performance Party until the Final Payout Date; and |
|
|
(c) |
|
waives any benefit of and any right to participate in any collateral security
which may be held by any Beneficiary (or its assigns). |
18
11.2 |
|
The payment of any amounts due with respect to any indebtedness of any Performance Party now
or hereafter owed to the Performance Undertaking Provider is hereby subordinated to the
Obligations. The Performance Undertaking Provider agrees that, after the occurrence of any
default in the payment or performance of any of the Obligations, until the Final Payout Date,
the Performance Undertaking Provider will not demand, sue for or otherwise attempt to collect
any indebtedness of any Performance Party to the Performance Undertaking Provider. If,
notwithstanding the foregoing sentence, the Performance Undertaking Provider collects,
enforces or receives any amounts in respect of such indebtedness before the Final Payout Date,
it shall collect, enforce or receive and hold such amounts as trustee for the Beneficiaries
and shall pay such amounts to the Administrative Agent on behalf of the Beneficiaries on
account of the Obligations, without affecting in any manner the liability of the Performance
Undertaking Provider under the other provisions of this Deed. |
|
11.3 |
|
The provisions of this Clause shall be supplemental to and not in derogation of any rights
and remedies of any Beneficiary under any separate subordination agreement which any
Beneficiary may at any time and from time to time enter into with the Performance Undertaking
Provider. |
|
12. |
|
TERMINATION; REINSTATEMENT |
|
|
|
The Performance Undertaking Providers obligations under this Deed shall continue in full
force and effect until the Final Payout Date; provided, that this Deed shall continue to be
effective or shall be reinstated, as the case may be, if at any time payment or other
satisfaction of any of the Obligations is rescinded or must otherwise be restored or
returned upon the bankruptcy, insolvency, arrangement or reorganisation of any Performance
Party or otherwise, as though such payment had not been made or such other satisfaction had
not occurred and each Beneficiary shall be entitled to recover the value or amount of that
Obligation from each Transaction Party, as though such payment has not been made or such
other satisfaction had not occurred. |
|
13. |
|
EFFECT OF BANKRUPTCY |
|
|
|
This Deed shall survive the bankruptcy, insolvency, reorganisation or arrangement of any
Performance Party and the commencement of any case or proceeding by or against any
Performance Party under any applicable bankruptcy, insolvency or similar Law of any
jurisdiction. No stay of actions or remedies under any applicable bankruptcy, insolvency or
similar Law of any jurisdiction to which any Performance Party is subject shall postpone the
obligations of the Performance Undertaking Provider under this Deed, except to the extent
required by Law. |
|
14. |
|
JUDGMENT CURRENCY |
|
14.1 |
|
If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum
owing under this Deed in one currency into another currency, each party hereto agrees, to the
fullest extent that it may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures in the relevant jurisdiction the first
currency could be purchased with such other currency on the Business Day immediately preceding
the day on which final judgment is given. |
19
14.2 |
|
The obligations of the Performance Undertaking Provider in respect of any sum due to any
Beneficiary shall, notwithstanding any judgment in a currency (the Judgment Currency) other
than the currency in which such sum is stated to be due under this Deed (the Agreement
Currency), be discharged only to the extent that, on the Business Day following receipt by
that Beneficiary of any sum adjudged to be so due in the Judgment Currency, the Beneficiary
may in accordance with normal banking procedures in the relevant jurisdiction purchase the
Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so
purchased is less than the sum originally due to the Beneficiary in the Agreement Currency,
the Performance Undertaking Provider agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Beneficiary against such loss. The obligations of the
Performance Undertaking Provider contained in this Clause shall survive the termination of
this Deed and the payment of all other amounts owing under this Deed. |
|
15. |
|
BENEFIT OF DEED |
|
15.1 |
|
This Deed shall be binding upon the Performance Undertaking Provider, its successors and
permitted assigns, and shall inure to the benefit of and be enforceable by each Beneficiary
and its successors and assigns. |
|
15.2 |
|
No Person other than the Performance Undertaking Provider and the Beneficiaries and their
respective successors and assigns shall have any rights under this Deed pursuant to the
Contracts (Rights of Third Parties) Act 1999. |
|
16. |
|
ASSIGNMENT |
|
16.1 |
|
The Performance Undertaking Provider may not assign or transfer any of its obligations under
this Deed without the prior written consent of the Administrative Agent and the Required
Lenders. |
|
16.2 |
|
The Intermediate Transferor may assign or otherwise transfer its rights under this Deed to
the Borrower pursuant to each Intermediate Transfer Agreement to which it is a party. The
Borrower may assign or otherwise transfer its rights under this Deed to the Administrative
Agent on behalf of the Secured Parties. |
|
16.3 |
|
The Performance Undertaking Provider acknowledges that the Borrower has assigned will assign
to the Administrative Agent, for the benefit of the Secured Parties, all of its rights,
remedies, powers and privileges under this Deed, and that each Secured Party may further
assign such rights, remedies, powers and privileges to the extent permitted in the Receivables
Loan Agreement and the other Transaction Documents. The Performance Undertaking Provider
agrees that the Administrative Agent, as the assignee of the Borrower, shall have the right to
enforce this Deed and to exercise directly all of the Borrowers rights and remedies under
this Deed (including the right to give or withhold any consents or approvals to be given or
withheld by the Borrower under this Deed). |
|
17. |
|
AMENDMENTS AND WAIVERS |
|
|
|
No amendment or waiver of any provision of this Deed and no consent to any departure by the
Performance Undertaking Provider from any provision of this Deed |
20
|
|
shall be effective unless the same is in writing and signed by the Administrative Agent
(with the consent or at the direction of the Required Lenders) and, in the case of an
amendment, by the Borrower, the Intermediate Transferor and the Performance Undertaking
Provider; provided that no amendment, waiver or consent, unless in writing and signed by the
Intermediate Transferor, the Borrower and the Administrative Agent (with the consent or at
the direction of all the Lenders), shall release the Performance Undertaking Provider from
its obligations under this Deed. No failure on the part of any Beneficiary to exercise, and
no delay in exercising, any power, right or remedy under this Deed shall operate as a waiver
of that power, right or remedy; nor shall any single or partial exercise of any power, right
or remedy under this Deed preclude any other or further exercise of that power, right or
remedy or the exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and non-exclusive of any rights and remedies provided by law. |
|
18. |
|
NOTICES |
|
|
|
All communications and notices provided for under this Deed shall be provided in the manner
and to the addresses set out in Schedule 1 (Address and Notice Information) to the Schedule
of Definitions. |
21
19. |
|
GOVERNING LAW, JURISDICTION AND PROCESS |
|
19.1 |
|
This Deed and the rights and obligations of the parties hereto shall be governed by and
construed in accordance with English law. |
|
19.2 |
|
Each party hereto agrees that the courts of England shall have jurisdiction to hear and
determine any suit, action or proceeding, and to settle any dispute, which may arise out of or
in connection with this Deed, any other Transaction Document or the transaction contemplated
hereby or thereby and, for such purposes, irrevocably submits to the non-exclusive
jurisdiction of such courts. |
|
19.3 |
|
Each of the parties hereto irrevocably waives any objection which it might now or hereafter
have to the courts referred to in Clause 19.2 being nominated as the forum to hear and
determine any suit, action or proceeding, and to settle any dispute, which may arise out of or
in connection with this Deed, any other Transaction Document or the transactions contemplated
hereby or thereby and agrees not to claim any such court is not a convenient or appropriate
forum. |
|
19.4 |
|
Each of the parties hereto (other than such parties as are registered in England and Wales or
otherwise have a place of business in England and Wales) agrees that the process by which any
suit, action or proceeding is begun may be served on it by being delivered in connection with
any suit, action or proceeding in England to the English Process Agent for such party. |
|
19.5 |
|
The submission to the jurisdiction of the courts referred to in Clause 19.2 shall not (and
shall not be construed so as to) limit the right of the Administrative Agent to take
proceedings against the Performance Undertaking Provider or any of its respective property in
any other court of competent jurisdiction nor shall the taking of proceedings in any other
jurisdiction preclude the taking of proceedings in any other jurisdiction, whether
concurrently or not. |
|
20. |
|
NO PROCEEDINGS; LIMITED RECOURSE |
|
(a) |
|
Each of the parties hereto agrees that (i) it will not institute against, or
join any other Person in instituting against, any Transaction SPV any proceeding of the
type referred to in the definition of Event of Bankruptcy so long as there shall not
have elapsed two years plus one day since the Final Payout Date (or, in the case of an
Account SPV, the Seller Payout Date with respect to all Originators related to such
Account SPV); and (ii) notwithstanding anything contained herein or in any other
Transaction Document to the contrary, the obligations of each Transaction SPV under the
Transaction Documents are solely the corporate obligations of such Transaction SPV and
shall be payable solely to the extent of funds which are received by such Transaction
SPV pursuant to the Transaction Documents and available for such payment in accordance
with the terms of the Transaction Documents and shall be non-recourse other than with
respect to such available funds and, without limiting Clause 20, if ever and until such
time as such Transaction SPV has sufficient funds to pay such obligation, shall not
constitute a claim against such Transaction SPV. |
|
|
(b) |
|
No recourse under any obligation, covenant or agreement of any Transaction SPV
contained in this Deed or any other Transaction Document shall be had |
22
|
|
|
against any incorporator, stockholder, officer, director, member, manager, employee
or agent of such Transaction SPV by the enforcement of any assessment or by any
legal or equitable proceeding, by virtue of any statute or otherwise; it being
expressly agreed and understood that this Deed and the other Transaction Documents
are solely a corporate obligation of such Transaction SPV, and that no personal
liability whatever shall attach to or be incurred by any incorporator, stockholder,
officer, director, member, manager, employee or agent of any Transaction SPV or any
of them under or by reason of any of the obligations, covenants or agreements of
such Transaction SPV contained in this Deed or any other Transaction Document, or
implied therefrom, and that any and all personal liability for breaches by any
Transaction SPV of any of such obligations, covenants or agreements, either at
common law or at equity, or by statute, rule or regulation, of every such
incorporator, stockholder, officer, director, member, manager, employee or agent is
hereby expressly waived as a condition of and in consideration for the execution of
this Deed; provided that the foregoing shall not relieve any such Person from any
liability it might otherwise have as a result of fraudulent actions taken or
fraudulent omissions made by them. |
21. |
|
ENTIRE AGREEMENT; SEVERABILITY |
|
(a) |
|
This Deed constitutes the entire agreement of the parties hereto with respect
to the matters set forth herein. |
|
|
(b) |
|
The rights and remedies provided in this Deed are cumulative and not exclusive
of any remedies provided by law or any other agreement. |
|
|
(c) |
|
In any action or proceeding in any jurisdiction, if the obligations of the
Performance Undertaking Provider under this Deed would otherwise be held or determined
to be avoidable, invalid or unenforceable on account of the amount of the Performance
Undertaking Providers liability under this Deed, then, notwithstanding any other
provision of this Deed to the contrary, the amount of such liability shall, without any
further action by the Performance Undertaking Provider or any Beneficiary, be
automatically limited and reduced to the highest amount that is valid and enforceable
as determined in such action or proceeding. |
|
|
(d) |
|
The provisions of this Deed are severable. Any provision of this Deed which is
prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of
such prohibition or unenforceability in that jurisdiction without invalidating or
making unenforceable any of the remaining provisions in that jurisdiction or that
provision or any other provision in any other jurisdiction. |
22. |
|
EXECUTION |
|
|
|
This Deed may be executed in any number of counterparts, and by different parties on
separate counterparts, each of which shall be an original and all of which shall constitute
one and the same agreement. Delivery by facsimile transmission or by electronic file in a
format that is accessible by the recipient of a copy of an executed signature page of this
Deed shall operate as delivery of an executed counterpart of this Deed. |
23
EXECUTION:
The parties have shown their acceptance of the terms of this Deed by executing it as a deed below.
24
Execution of Performance and Indemnity Deed:
The Performance Undertaking Provider
DANA INTERNATIONAL LUXEMBOURG SARL
|
|
|
Signature:
|
|
/s/ Cornelia v. Künsberg |
|
|
|
Name:
|
|
Cornelia von Künsberg |
|
|
|
Title/Authority: Authorised Director
and PoA Holder |
S-1
Execution of Performance and Indemnity Deed:
The Borrower
Given under the Common Seal
of Dana Europe Financing (Ireland) Limited:
|
|
|
|
|
|
|
|
|
Director |
|
|
|
|
|
|
|
|
|
|
|
Secretary |
|
|
Structured Finance Management (Ireland) Limited
as Secretary |
S-2
Execution of Performance and Indemnity Deed:
The Administrative Agent
Signed as a deed by Adam Johnson / Adrian Spurling as
attorney for GE LEVERAGED LOANS
LIMITED
|
|
|
/s/ Adam Johnson |
/s/ Adrian Spurling |
|
under a power of attorney dated 22 March 2007 in
the presence of Richard Todd
as
attorney for
|
|
|
/s/ Richard J. Todd |
|
|
Name of witness: Richard Todd
|
|
|
|
|
|
Address of witness: |
|
Mayer, Brown, Rowe & Maw LLP, 11 Pilgrim Street,
London EC4V GRW |
Occupation of witness: Solicitor
S-3
Execution of Performance and Indemnity Deed:
The Intermediate Transferor
Signed as a deed by Adam Johnson / Adrian Spurling
as attorney for GE FACTOFRANCE SNC
under a power of attorney dated 16 July 2007 in
the presence of Richard Todd
as
attorney for
|
|
|
/s/ Richard J. Todd |
|
|
Name of witness: Richard Todd
|
|
|
|
|
|
Address of witness: |
|
Mayer, Brown, Rowe & Maw LLP, 11 Pilgrim Street,
London EC4V GRW |
Occupation of witness: Solicitor
S-4
EX-31(A)
EXHIBIT 31-A
Certification of Chief Executive Officer
I, Michael J. Burns, certify that:
|
1. |
|
I have reviewed this Quarterly Report on Form 10-Q of Dana Corporation; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
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5. |
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The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
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Date: August 9, 2007
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/s/ Michael J. Burns |
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Michael J. Burns |
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Chief Executive Officer |
83
EX-31(B)
EXHIBIT 31-B
Certification of Chief Financial Officer
I, Kenneth A. Hiltz, certify that:
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1. |
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I have reviewed this Quarterly Report on Form 10-Q of Dana Corporation; |
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2. |
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Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
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3. |
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Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
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4. |
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The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this
report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
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5. |
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The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
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Date: August 9, 2007
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/s/ Kenneth A. Hiltz |
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Kenneth A. Hiltz
Chief Financial Officer |
84
EX-32
EXHIBIT 32
Certifications Pursuant to 18 U.S.C. Section 1350
In connection with the Quarterly Report of Dana Corporation (Dana) on Form 10-Q for the three
months ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof
(the Report), each of the undersigned officers of Dana certifies pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officers
knowledge:
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(1) |
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
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(2) |
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The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of Dana as of the dates and for the periods
expressed in the Report. |
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Date: August 9, 2007
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/s/ Michael J. Burns |
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Michael J. Burns |
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Chief Executive Officer |
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/s/ Kenneth A. Hiltz |
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Kenneth A. Hiltz |
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Chief Financial Officer |
85