EXHIBIT 10.14
DATED JANUARY 22, 1998
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(1) LUCAS INDIEL ARGENTINA S.A.
(2) LUCAS DIESEL DO BRASIL LTDA
SUPPLY AND DISTRIBUTION AGREEMENT
FOR SOUTH AMERICA (EXCLUDING ARGENTINA)
THIS AGREEMENT is made on 22nd day of January 1998
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BETWEEN:
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(1) LUCAS INDIEL ARGENTINA S.A. of ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇ ▇▇▇ - ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ (Pcia. ▇▇▇ ▇▇▇▇) - ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
("Indiel")
(2) LUCAS DIESEL DO BRASIL LTDA of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇, ▇▇▇▇▇ Postal
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14, ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ("Lucas")
RECITALS
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(A) Pursuant to a Share Sale and Purchase Agreement (as defined below) certain
Associated Companies of Lucas ("the Vendors") are selling and/or granting
options over all of their shares in Indiel to Prestolite Electric
Incorporated and Prestolite Newco Incorporated ("the Purchasers").
(B) On completion of the sale of such shares to the Purchasers Lucas wishes to
continue to be supplied with Lucas Branded Products (as defined below).
Indiel is willing to sell and Lucas is willing to purchase such Lucas
Branded Products on the terms set out in this Agreement.
WHEREBY IT IS AGREED as follows:
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1. DEFINITIONS AND INTERPRETATION
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1.1 In this Agreement the expressions set out in Column 1 below shall (unless
inconsistent with the context) have the meanings set out opposite them in
Column 2 below:-
2
COLUMN 1 COLUMN 2
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"the Aftermarket" Means the market for (a) spare and
replacement parts for components or
sub-assemblies comprised within the products
of Original Equipment Manufacturers and (b)
automotive accessories and includes Original
Equipment Service
"Agreement Year" means (i) the period from the Commencement
Date until the 31st December 1998; (ii)
every period of twelve (12) months beginning
thereafter on each 1st January during the
Term except that should this Agreement
terminate on a day other than 31st December
in any year the final "Agreement Year" shall
be the period from the 1st January last
preceding the date of termination to the
date of termination
3
"Associated Company" means any person which is either a holding
company (whether direct or indirect) or a
subsidiary company of the relevant party or
a subsidiary company of any such holding
company or is otherwise directly or
indirectly controlled by, or is under the
same control, direct or indirect, as the
relevant party from time to time and at the
time that the relevant clause in which such
expression appears has application, which
where a claim is to be made under the
relevant clause shall mean when the cause of
action accrued under such clause
"the Commencement Date" means the date of this Agreement
4
"Competing Product" means any product which is interchangeable
in its application and/or function with a
Lucas Branded Product but excludes a product
which is so interchangeable but is a "second
tier product". For the purposes of this
definition a "second tier product" is a
product which is clearly aimed at a
different market sector than Lucas Branded
Products, being a market which does not
require a premium branded product but
requires a product which is markedly cheaper
than a premium branded product and which is
prepared to accept a product which is of
inferior quality and/or is sold with a less
favourable warranty or other less favourable
conditions than that or those applicable to
premium branded products, "second tier
products" being best illustrated by the
products which are manufactured or sourced
at the date hereof by Lucas Automotive (Pty)
Ltd in South Africa and marketed under the
brand name "Electrotech"
"Conditions of Sale" means the conditions of sale in Schedule 3
5
"control" means in relation to a body corporate or
other entity the power of any person to
secure by law or by corporate structure that
the affairs of that body corporate or other
entity are conducted in accordance with the
wishes of that person, and any cognate word
shall be construed accordingly
"Controllers" means persons able to decide or influence
the management or policies of the relevant
company in any material respect including
(without prejudice to the generality of the
foregoing) any of the following from time to
time: its owners, its directors, any of its
partners, or any majority of its shareholders
"Country" means any country, state or principality and
includes any area or part of any of the same
"customer" means a buyer whether such buyer is an end
user, retailer, wholesaler, distributor,
dealer or otherwise
"Distribution Outlet" means a wholesaler, retailer,
sub-distributor, dealer, stockist, service
outlet, garage, workshop or other person who
buys or acquires products from the relevant
party hereto otherwise than as the ultimate
end user of those products
6
"Free Carrier" has the meaning given to such expression in
Incoterms 1990 provided that where there is
any conflict between the rights, duties and
obligations of the parties as set out in
Incoterms and those set out in this
Agreement, those set out in this Agreement
shall prevail
"First Pick Rate" means the percentage of the order quantity
supplied on the due delivery date subject to
the order having been placed in accordance
with the provisions of this Agreement
"Force Majeure" means any event or circumstance of the
following kinds which is beyond the
reasonable control of the party in question:
governmental actions, war, riots, civil
commotion, fire, flood, tempests or other
extreme weather conditions, epidemics, acts
of terrorism, bombings, explosions, acts of
God, other natural disasters or any event or
circumstance similar in nature to the
foregoing
"Freely Distributable Products" means Other Products which are not Competing
Products
7
"holding company" means a company which either (a) holds the
majority of the voting rights in another
company or (b) is a member of another
company and has the right to appoint or
remove a majority of its board of directors
or other corporate officers or (c) is a
member of another company and controls alone
pursuant to an agreement with other
shareholders or members, a majority of the
voting rights in it. Reference to "company"
includes any body corporate
"Improvement" means any invention, discovery or design
comprised within any change made at any time
during the Term to Products or their method
of manufacture or use which makes them of
better quality or more efficient or
adaptable or enables them to be manufactured
more cheaply or more efficiently
"Intellectual Property means any patent, copyright, registered
Rights" design, design right, trade mark,
topography, know-how or similar property or
right by whatever name it is called and in
whatever Country it is registered or subsists
"Lucas Competitor" means any person, or an Associated Company
of any such person, listed in Schedule 2
8
"Lucas Branded means Products (including the packaging for
Products" the same) to which the Trade Marks have been
or are to be applied in accordance with this
Agreement
"Lucas Distribution Outlet" means a wholesaler, retailer,
sub-distributor, dealer, stockist, service
outlet, garage, workshop or other person who
buys or acquires products otherwise than as
the ultimate end user of those products and
who was appointed prior to the date hereof
or is hereafter appointed by Lucas or any
Associated Company of Lucas in any Country
in the world.
"Minimum Period" means the period of 5 years commencing on
the Commencement Date, subject to the
provisions of clause 12.3
9
"New Products" means products which Indiel may after the
date hereof add to its range of products
being of the same generic kind as those
specified in Schedule 1 but, for the
avoidance of doubt, the expression excludes
Products currently offered by Indiel to
which Improvements are made and also
excludes any products which are introduced
hereafter to Indiel's range of Products but
which Indiel is not able to allow Lucas to
distribute in the Territory by reason of
exclusive rights existing at the date of
this Agreement which have been granted by
Indiel, or any Associated Company of Indiel,
in respect of the Territory in relation to
products of the same generic kind as those
specified in Schedule 1
"Original Equipment means any manufacturer or assembler of
Manufacturer" transport vehicles, engines or similar
equipment including, but not limited to, a
manufacturer or assembler of motor cars,
vans, buses, coaches, forklifts, industrial
vehicles, trucks, tractors or marine, motive
power or stationary engines or a
manufacturer of components or sub-assemblies
to be fitted as original equipment to such
vehicles, engines or similar equipment
10
"Original Equipment Service" means the market for supplies of spare and
replacement parts to any Original Equipment
Manufacturer other than for fitting as
original equipment or to any dealer of any
Original Equipment Manufacturer in its
capacity as a dealer for such Original
Equipment Manufacturer
"Other Products" means Products or New Products (including
the packaging for the same) which are either
unbranded or are branded with a trade mark,
name or logo other than any of the Trade
Marks
"person" means any person, firm, company or similar
entity whether corporate or unincorporate
"Products" means those alternators, starter motors,
ignition distributors and various other
products and parts thereof for cars and
commercial and agricultural vehicles
currently manufactured by Indiel which are
supplied to Lucas as part of Indiel's
Aftermarket product programme, the products
supplied to Lucas which are currently
manufactured by Indiel being listed in
Schedule 1 hereto and includes any New
Products and any Improvements to Products or
New Products but excludes any of the
Products which Indiel removes from the ambit
of this Agreement in accordance with clause
8.6
11
"Product Warranty" means the warranty contained in clause 7 of
the Conditions of Sale;
"Relevant Country" means any Country on the South American
continent and in Central America and any
other Country from which it is from time to
time commercially viable to export Products
to any Country in the Territory and for
those Products to be competitive in terms of
price and delivery with Lucas Branded
Products being sold in such Country in the
Territory
"Reserved Territory" means the Country named Argentina
"sale" means any form of supply whether by way of
sale, lease, hire or exchange and any
cognate word shall be construed accordingly
"Share Sale and Purchase means the agreement made between the Vendors
Agreement" and the Purchasers (as defined therein) of
even date herewith for the sale of and/or
grant of options over certain shares of
Indiel and all documents referred to therein
"South African States" means the Republic of South Africa, Namibia,
Botswana, Swaziland and Lesotho and includes
any one or more of such Countries
12
"subsidiary" means a company in which another company (a)
holds a majority of the voting rights; (b)
is a member of it and has the right to
appoint or remove a majority of its board of
directors or other corporate officers; or
(c) is a member of it and controls alone
pursuant to an agreement with other
shareholders or members, a majority of the
voting rights in it and includes a
subsidiary of a company which is itself a
subsidiary of another company. Reference to
"company" includes any body corporate
"the Term" means the period between the Commencement
Date and the termination of this Agreement
howsoever arising
"the Territory" means the continent of South America but
excluding the Reserved Territory and
includes any one or more of such Countries
"Trade Marks" means the trade mark, name and logo (whether
or not registered as a trade mark in any
part of the Territory) "Lucas" and/or the
Lucas diagonal device and/or such other
trade mark, name or logo as Lucas may from
time to time decide in its absolute
discretion and notify in writing to Indiel
shall be used in relation to Lucas Branded
Products to be supplied by Indiel to Lucas
pursuant to this Agreement
13
"Trade Mark Licence" means the licence in relation to the Trade
Marks specified therein granted by Lucas
Industries plc to Indiel and which has the
same date as this Agreement
"Trade Mark Licence Period" means the period during which the Trade Mark
Licence subsists in fact
"Vehicle Parc" means all automotive vehicles in use at any
given time
"Warranty Replacement" means a repair and/or replacement to a Lucas
Branded Product sold by Lucas in the
Aftermarket in the Territory that is also
during the Term sold by Indiel to Lucas and
which a customer is entitled to have carried
out under the terms of the Product Warranty
given to such customer and includes a repair
or replacement carried out after the end of
the Term
1.2 words used in this Agreement which denote the singular shall be deemed to
include the plural and vice versa. References to a particular gender
include all other genders;
1.3 references to clauses and Schedules are to clauses of and Schedules to
this Agreement, and references to paragraphs are to paragraphs in the
Schedule in which such references appear;
1.4 the Schedules form part of this Agreement and will have the same force and
effect as if expressly set out in the body of this Agreement;
1.5 the headings to the clauses of this Agreement and to the paragraphs of any
Schedule will not affect its construction;
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1.6 the word "including" or any cognate word shall be construed as though the
words "without limitation" immediately followed such word;
1.7 references in this Agreement to any instrument or agreement shall include
such instrument or agreement as may have been or may hereafter be varied.
2. APPOINTMENT
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2.1 With effect on and from the Commencement Date Indiel hereby grants Lucas
the right to be the exclusive distributor of Lucas Branded Products in the
Aftermarket in the Territory, and Lucas agrees to act as such exclusive
distributor, in accordance with and subject to the terms set out in this
Agreement. Accordingly Indiel shall not grant any distributor, agent or
person, whether within or outside the Territory other than Lucas, the
right to sell, offer for sale or negotiate the sale of Lucas Branded
Products in the Aftermarket within, or for delivery in, the Territory nor
shall Indiel itself directly or indirectly sell or offer for sale any
Lucas Branded Products in the Aftermarket to customers in, or who require
delivery in, the Territory or who Indiel knows or has good reason to
believe intend to sell Lucas Branded Products in the Aftermarket in the
Territory.
2.2 Lucas shall have the right, in its discretion, to appoint Distribution
Outlets in the Territory for the purposes of distributing Lucas Branded
Products in the Aftermarket.
2.3 Lucas shall have the right, to the exclusion of Indiel or any other person
appointed by Indiel, to provide after sales service in the Aftermarket in
the Territory in relation to Lucas Branded Products purchased by Lucas
pursuant to this Agreement, but without prejudice to Indiel's obligations
under this Agreement in relation to Warranty Replacement.
3. TERM
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Subject to clauses 12.3 and 18, this Agreement shall continue in force for
the Minimum Period and shall thereafter continue in force unless and until
terminated by
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either party giving to the other at least 12 months' prior written notice
expiring on or at any time after the expiry of the Minimum Period.
4. SUPPLY OF PRODUCTS
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4.1 Indiel shall manufacture and/or sell to Lucas and Lucas shall purchase such
quantities of Lucas Branded Products as Lucas orders from Indiel from time
to time in accordance with the terms of this Agreement. Lucas shall (a)
during the Term sell Lucas Branded Products only in the Aftermarket in the
Territory (subject to sub-clause (b) below) and (b) after the end of the
Trade Mark Licence Period be entitled to sell Lucas Branded Products only
in the Aftermarket in the Territory the Reserved Territory and the South
African States, but then not through any Distribution Outlet formally
appointed by Indiel as an authorised Distribution Outlet of Indiel unless
it is also authorised by Indiel to sell Lucas products at the relevant
time.
4.2 Minimum batch quantities and multiples thereof and lead times in relation
to delivery of Lucas Branded Products shall be agreed between the parties
from time to time and subject thereto Indiel shall deliver Lucas Branded
Products at the times required by Lucas.
4.3 Lucas shall from time to time instruct Indiel in writing which of the
Products to be supplied to Lucas pursuant to this Agreement shall have the
Trade Marks applied to them and Indiel shall comply with such instructions.
All Lucas Branded Products supplied by Indiel and the packaging in which
they are supplied shall be labelled with the Trade Marks according to the
specifications for such labelling from time to time reasonably stipulated
by Lucas by giving not less than 90 days notice in writing and the prices
for Lucas Branded Products shall include for this. Indiel shall not be
required to cast, emboss, etch or otherwise permanently incorporate any
Trade Mark on to Products to be supplied to Lucas pursuant to this
Agreement.
4.4 Indiel shall deliver the Lucas Branded Products ordered by Lucas Free
Carrier at Indiel's factory in Argentina or as Lucas may otherwise
reasonably direct in which case additional transport costs shall be for
Lucas' account.
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4.5 Indiel and Lucas respectively agree to co-operate with each other to ensure
that best practice supply chain procedures are used and to use reasonable
endeavours continuously to improve such procedures.
5. MOST FAVOURED CUSTOMER
----------------------
5.1 Indiel shall in supplying Lucas Branded Products to Lucas treat Lucas with
most favoured customer status by which is meant, that:
5.1.1 Indiel will not supply, or offer to supply, Other Products to its
other customers in the Aftermarket on shorter lead times than those
from time to time applicable to equivalent Lucas Branded Products
supplied to Lucas;
5.1.2 where Indiel's production capacity for Products and Other Products
for whatever reason, and whether temporarily or permanently, is
unable to satisfy in terms of time and number all the orders
outstanding and unfulfilled at any one time for the same from Lucas
and Indiel's other customers (including those required for sale by
Indiel itself and any Indiel Associated Company), Indiel shall in
seeking to satisfy such orders or requirement allocate the available
Products and Other Products between all those persons, including
Lucas and Indiel itself and any Indiel Associated Company, who have
ordered or require supplies of Products or Other Products which
cannot be satisfied, pro rata to their respective orders or
requirement. In the operation of this clause 5.1.2 orders from
Original Equipment Manufacturers to Indiel requiring Products or
Other Products in any Country for inclusion in new vehicles shall at
all times take precedence and shall accordingly not be taken into
account provided that nothing herein contained shall be deemed
authority to Indiel to apply the Trade Marks to any products
otherwise than pursuant to the Trade Mark Licence or clause 4.3 of
this Agreement;
17
5.1.3 if at any time the prices (on an equivalent basis having regard to
the place and method of delivery payment and other terms of sale)
charged or offered by Indiel to any of its customers (other than
Lucas and Original Equipment Manufacturers) buying Products or Other
Products for inclusion in new vehicles, in whichever Relevant
Country such customers are carrying on business or are located, for
Products or Other Products of broadly equivalent specification to
that of Lucas Branded Products being supplied to Lucas under this
Agreement, on the basis of broadly equivalent quantities to be
delivered within a broadly equivalent timeframe and having regard to
market structures, are less than the prices then being charged by
Indiel to Lucas for Lucas Branded Products then Indiel shall charge
those more favourable prices to Lucas with immediate effect for as
long as those more favourable prices shall continue to be charged or
offered.
5.2 Indiel will not be in breach of clauses 5.1.2 or 5.1.3 if on infrequent
occasions in relation to the supply of a particular Product or Other
Product to Original Equipment Service and in order to meet the requirements
of an Original Equipment Manufacturer Indiel either gives preference over
Lucas in the allocation of such Product or Other Product or in the price it
charges for such Product or Other Product to Original Equipment Service
provided that in general Indiel maintains a fair overall allocation judged
over a reasonable period of time on the basis laid down in clause 5.1.2 or,
as the case may be, the weighted average of the prices charged by Indiel to
Original Equipment Service shall not on the basis laid down in clause 5.1.3
be more favourable than those charged to Lucas.
6. AVAILABILITY AND VEHICLE PARC
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6.1 Indiel agrees to use reasonable endeavours to achieve a 90% First Pick Rate
for Lucas Branded Products in respect of orders placed by Lucas under and
in accordance with the terms of this Agreement and once such percentage has
been achieved continuously to seek to increase such percentage rate, this
being without prejudice to Indiel's
18
obligations to deliver Lucas Branded Products by other specific delivery
dates agreed between Indiel and Lucas from time to time in respect of
specific orders.
6.2 Indiel agrees that it will from time to time during the Term make available
for purchase by Lucas pursuant to the terms of this Agreement Lucas Branded
Products to cover not less than such proportion of the Vehicle Parc within
that part of the Territory comprising Brazil, Paraguay, Uruguay and Bolivia
as is at the Commencement Date covered by Indiel in the supply of Lucas
Branded Products to Lucas.
7. SPECIFICATION AND QUALITY
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7.1 Indiel will supply Lucas Branded Products to a functional specification
which is not inferior to the functional specification of the equivalent
original equipment and whose appearance is comparable to the appearance of
original equipment of the type in question commonplace in the industry from
time to time. Without limiting the generality of the foregoing Indiel will,
subject to clause 7.2, as from the Commencement Date supply each type of
Lucas Branded Product to no lesser specification than is current at such
date for such type of Lucas Branded Product then being supplied to Lucas.
7.2 Indiel shall not change the specification of Lucas Branded Products
manufactured by it without giving Lucas at least 45 days' written
notification of the intention to change such specification.
7.3 Indiel will use its best endeavours to ensure that all Lucas Branded
Products supplied to Lucas under this Agreement comply with all
requirements imposed by law in the Territory relating to their manufacture,
composition and packaging provided such requirements in relation to each
Country in the Territory have been made known in writing by Lucas to
Indiel, and Indiel is given a reasonable time after Indiel receives such
written notification from Lucas in which to make any necessary changes to
Lucas Branded Products. Indiel shall be entitled to reflect any additional
costs in relation to such compliance in the prices for the relevant Lucas
Branded Products.
19
7.4 Indiel acknowledges that Lucas will not, and shall not be required to,
carry out inspection of Lucas Branded Products before delivery of the same
to Lucas' customers and that accordingly the rights of Lucas under this
Agreement in relation to Lucas Branded Products shall not thereby be
prejudiced.
7.5 Indiel shall incorporate into Lucas Branded Products any Improvement which
is incorporated by Indiel into equivalent Other Products.
8. INDIEL OBLIGATIONS
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8.1 Indiel shall, at the request of Lucas within a reasonable time following
the request, provide Lucas without charge, with such technical information
regarding Lucas Branded Products as Lucas may reasonably require.
8.2 Indiel shall in relation to Warranty Replacement (a) supply free of charge
such replacement parts as are necessary and (b) reimburse Lucas the costs
and expenses incurred by Lucas in honouring the Product Warranty.
8.3 Indiel will appoint a person whose responsibility it will be to ensure that
Lucas has a ready point of contact at all reasonable times for all
operational matters concerning this Agreement. Indiel will notify Lucas of
the name, business address, telephone and fax numbers of such person within
14 days of the Commencement Date. Indiel may change its appointee from time
to time by written notice to Lucas.
8.4 Indiel shall permit Lucas from time to time during the Term to inspect at
any time during normal working hours on reasonable prior notice (a) any
premises where Lucas Branded Products are being manufactured or stored and
(b) the relevant documentation relating to the sale by Indiel of Products,
to verify that Indiel has been and is complying with its duties and
obligations under this Agreement.
8.5 Indiel shall not sell or offer for sale (other than to Lucas) in the
Territory any Products branded, or whose packaging is branded, with any of
the Trade Marks or any
20
confusingly similar trade mark, name or logo whether during the Term or
after the termination of this Agreement.
8.6 Indiel shall have responsibility for Product programme creation and
maintenance. Products may be removed from the ambit of this Agreement by
agreement between the parties or by Indiel giving Lucas at least 6 months'
prior written notice but only where Indiel at the time that it ceases to
supply such Products to Lucas as Lucas Branded Products will also be
ceasing supply of such Products or equivalent Other Products to its other
customers.
9. PRODUCT LIABILITY
-----------------
Indiel will indemnify and hold Lucas harmless against all actions, claims,
costs, demands, expenses and liabilities in respect of any death, personal
injury, loss or damage to property made against, incurred or suffered by
Lucas arising from any defective product (whether a Lucas Branded Product
or Other Product), other than where such defect is a defect in a design
made by Lucas or by a third party at Lucas' instigation , supplied by
Indiel pursuant to this Agreement and provided that the limit of Indiel's
liability under this clause shall be an amount equal to US $10,000,000 for
each and every event and in the aggregate in any one year of insurance
pursuant to the policy of insurance effected under clause 15.
10. EXCLUSIVITY OF PURCHASE
-----------------------
10.1 Lucas shall during the Term purchase all of its requirements for Lucas
Branded Products for sale in the Territory from Indiel provided always that
such obligation on Lucas shall not apply:-
10.1.1 in respect of any particular Lucas Branded Product manufactured and
sold by Indiel to Lucas which is not competitive in the Aftermarket
in any relevant Country in the Territory at the relevant time in
terms of delivery, lead times, price, quality and specification
when compared with an equivalent Other
21
Product being sold by Indiel in the Territory, or in a Relevant
Country for sale and/or delivery to the Territory, at such time;
10.1.2 if Indiel at the relevant time shall be in continuing breach
(meaning having failed to remedy within the time stated in clause
18.1.1) of this Agreement;
10.1.3 in respect of any particular Lucas Branded Product, if Indiel at
the relevant time is incapable of supplying Lucas' requirements for
such Lucas Branded Product for any reason whatsoever, including by
virtue of Force Majeure.
10.2 In circumstances where pursuant to the foregoing provisions Lucas is not
under an obligation to purchase its requirements for any Lucas Branded
Product exclusively from Indiel, or if Lucas requires a Product which is
for part of the Vehicle Parc not covered by Indiel, Lucas may purchase the
same from any other source but only so long as the reason or circumstances
excusing Lucas from such obligation continues to subsist.
11. OBLIGATIONS OF LUCAS
--------------------
11.1 Lucas will use its reasonable endeavours to achieve the maximum possible
sales of Lucas Branded Products throughout the Territory.
11.2 Lucas shall provide such technical facilities and suitably trained staff as
are necessary to enable Lucas to repair and service Lucas Branded Products
and to provide warranty support (without prejudice to the provisions of
clause 8.2) throughout the Territory.
11.3 Lucas shall not during the Trade Mark Licence Period supply customers for
Lucas Branded Products in or for delivery in or who Lucas knows or has good
reason to believe intend to sell Lucas Branded Products in the Reserved
Territory or the South African States.
11.4
11.4.1 Notwithstanding anything implied to the contrary in this
Agreement but subject to its express terms Indiel shall be
free to manufacture, sell, market, distribute and otherwise
deal in
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Freely Distributable Products without restriction in any
part of the world for any purpose.
11.4.2 Lucas shall not restrict or purport to restrict whether by
any contractual provision or in any other way any Lucas
Distribution Outlets from dealing with Indiel or any
corporate body or entity which in relation to Indiel is an
Associated Company as its or their Distribution Outlet in
relation to Freely Distributable Products nor take legal or
commercial action against any Lucas Distribution Outlet if
it hereafter sells Freely Distributable Products by reason
of that fact alone but not so to prevent Lucas from taking
action in relation to any contractual provision relating to
any other matter.
11.5 Lucas shall during the Trade Mark Licence Period refer to Indiel any
enquiries for Lucas Branded Products received from any customer for supply
to the Reserved Territory.
12. PRICE AND PAYMENT
-----------------
12.1 Subject to clause 5.1.3 the prices for Lucas Branded Products
currently supplied by Indiel shall be as set out in Schedule 1 until
such time as they are varied pursuant to clause 12.2 or clause 12.3.
Such prices are in US dollars Free Carrier Indiel's factory Argentina
and are exclusive of VAT or other similar sales taxes which, if
applicable, shall be an addition to such prices.
12.2 Subject to clause 5.1.3, Indiel will be entitled, having first
consulted with Lucas on giving Lucas not less than 90 days' prior
written notice, to increase the prices for Lucas Branded Products
provided always that:-
12.2.1 there shall not be more than one price increase for any Lucas
Branded Product in any Agreement Year save that any price
increase which on the basis of past practice between Indiel
and Lucas would take place after the date hereof but on or
before 31st March 1998 and which takes effect on the basis of
prices laid
23
down by Lucas and not agreed between Indiel and Lucas shall be
disregarded for the purposes of this clause 12.2.1 in the
first Agreement Year but if prices are so agreed between
Indiel and Lucas such prices shall remain fixed for a period
of 12 months notwithstanding the provisions of this clause
12.2;
12.2.2 each such increase shall be shown fairly and reasonably to
reflect any increase in the costs to Indiel of producing Lucas
Branded Products and supplying them to Lucas;
12.2.3 no increase shall affect any order placed by Lucas prior to
notice of such increase having been given;
12.2.4 no increase shall affect any orders placed by Lucas during
such 90 day period insofar as the aggregate number of units of
the Lucas Branded Products affected by the price increase does
not exceed the aggregate number of units of the same Lucas
Branded Products ordered in the 90 day period prior to Indiel
beginning to consult with Lucas about the price increase.
12.3 Notwithstanding the provisions of clause 12.2 Indiel shall be entitled
not earlier than 1st October 1999 and not later than 31st December
1999 to give written notice to Lucas (referring in such notice to this
clause 12.3) that in order to provide Indiel with a commercially
viable profit margin on Lucas Branded Products the prices for the same
will be increased with effect from 1st January 2001 by the amounts
stated in such notice. If Lucas is unwilling to pay such increased
prices or after negotiations in good faith between the parties any
alternative increased prices proposed by Indiel Lucas shall unless
Indiel and Lucas shall by then have determined that there shall not be
any increase in prices be entitled to give written notice to Indiel
not later than 31st March 2000 terminating this Agreement on 31st
December 2000. If Lucas shall not give such notice then the prices
specified by Indiel in its notice given to Lucas pursuant to this
clause 12.3 shall become effective from January 1st 2001, and such
prices shall be fixed until 31st December 2001 and thereafter may only
be increased by Indiel in accordance with the provisions of clause
12.2
24
12.4 Lucas shall pay for Lucas Branded Products in US Dollars within 120 days
from date of invoice which shall not be rendered prior to delivery of Lucas
Branded Products covered by the relevant invoice.
13. INDEMNITY
---------
Indiel will indemnify and hold Lucas harmless against all actions, claims,
costs, demands, expenses and liabilities in respect of any infringement of
the Intellectual Property Rights of any person (other than any Associated
Company of Lucas) made against incurred or suffered by Lucas resulting from
the sale by Lucas (a) of any Lucas Branded Products supplied by Indiel
during the Term or pursuant to clause 19.2.2 in the Aftermarket in the
Territory and (b) in the Reserved Territory after the end of the Trade Mark
Licence Period provided that such indemnity shall not apply to any such
actions, claims, costs, demands, expenses and liabilities (i) arising from
the use of the Trade Marks on Lucas Branded Products in accordance with the
relevant provisions of this Agreement and (ii) to the extent that the same
arise in relation to the design of any Lucas Branded Product in
circumstances where Indiel has not after the Commencement Date made any
change to such design or other aspect (including the re-sourcing of the
same) of the relevant Lucas Branded Product or any design made by Lucas or
by a third party at Lucas' instigation.
14. TRADE MARK PROVISIONS
---------------------
14.1 On the date of this Agreement Lucas will enter into the Trade Mark Licence
with Indiel for Indiel's use of the Trade Marks on Products other than
pursuant to the provisions of this Agreement.
14.2 Without prejudice to the provisions of the Trade Mark Licence, Indiel shall
not (whether during the Term or after the termination of this Agreement)
have any rights pursuant to or deriving from this Agreement to sell or
offer for sale any Lucas Branded Products other than to Lucas.
14.3 Indiel shall not use any of the Trade Marks for any purpose in relation to
the Products other than for labelling the same in accordance with clause
4.3 and in particular but
25
without limiting the generality of the foregoing shall not use any of the
Trade Marks as the whole or part of a corporate or other business name.
14.4 Indiel agrees that the ownership of the Trade Marks and the goodwill
relating thereto shall always remain vested in Lucas, or a Lucas Associated
Company, both during the period of this Agreement and thereafter and that
nothing in this Agreement shall give Indiel any right, title or interest in
the Trade Marks.
14.5 Indiel undertakes not knowingly to do any act in relation to the use of the
Trade Marks pursuant to this Agreement which will invalidate or jeopardise
in any way the rights of any Lucas Associated Company in the Trade Marks.
14.6 Issues associated with marketing and distribution of Products in both
Lucas' branding and that of Indiel will be sought initially to be resolved
by the marketing/sales managers of both parties maintaining a continuing
dialogue in relation to marketing and distribution matters with a view to
avoidance of issues. Where the marketing/sales managers of the parties,
having tried, are unable to resolve any particular issue such issue shall
be referred by either of them to the managing directors of each of the
parties for resolution.
15. INSURANCE
---------
Without prejudice to the provisions of clause 9 Indiel will effect and
maintain or cause another Associated Company of Indiel to effect and
maintain for its and the Associated Company's benefit insurance in respect
of product liability for Lucas Branded Products manufactured and sold by
Indiel to Lucas in an amount equal to not less than US $10,000,000 for each
and every event and in the aggregate in any one year of insurance under
such policy and will at the request of Lucas from time to time during the
Term produce written evidence that such insurance is in force. Insofar as
and to the extent that Indiel or any such other Associated Company of
Indiel receives any proceeds of insurance in respect of a claim made by
Lucas in respect of Products supplied to Lucas pursuant to this Agreement
such proceeds shall be held on trust by Indiel or any such other Associated
Company of Indiel for Lucas, pro rata where the
26
insurance proceeds recovered include monies in respect of claim(s) other
than Lucas' claim.
16. PRODUCTION AND SUPPLY PLAN
--------------------------
Prior to the commencement of each Agreement Year other than the first
Agreement Year Indiel and Lucas shall after discussion with each other and
exchange of relevant market information prepare and agree a production and
supply plan ("the Annual Plan") in respect of Lucas Branded Products for
such Agreement Year. Each such Annual Plan shall include estimates of
purchases in the relevant Agreement Year by Lucas from Indiel of Lucas
Branded Products and estimates by Indiel of planned dates for the
introduction of New Products and/or Improvements as well as additional
products intended to be added as additional Lucas Branded Products by
agreement.
17. CONFIDENTIALITY
---------------
Each party undertakes that it shall not, and shall ensure that its
employees and agents shall not, disclose, use or permit the use of any
confidential information disclosed to it by the other party except as may
be necessary for complying with its obligations under this Agreement and
then only in such a manner as to protect fully the confidentiality of such
confidential information. The obligations of non-disclosure by each party
shall continue to apply notwithstanding the termination of this Agreement
but shall not apply to any information which falls into the public domain
other than by breach of such obligation of non-disclosure. Registration
or notification of this Agreement with or to any regulatory authority shall
not be a breach of confidence for the purposes of this clause.
18. TERMINATION
-----------
18.1 A party shall be entitled to terminate this Agreement summarily by written
notice to the other party if the other party is:
18.1.1 in material breach of this Agreement and shall have failed to
remedy the breach within 3 (three) months after receipt of a
request in writing from the
27
party not in breach to remedy the breach, such request indicating
that failure to remedy the breach may result in termination of this
Agreement;
18.1.2 insolvent or has a receiver, manager, administrator, administrative
receiver, liquidator (other than for the purposes of a solvent
reconstruction or amalgamation) (or a person of similar status in a
Country which has jurisdiction over such other party) appointed
over it or its undertaking assets or income or any part thereof.
18.2 In the event that any Force Majeure event or circumstance subsists for an
aggregate period of 180 days in any period of 365 days during the Term and
during the whole of such aggregate period supplies of Lucas Branded
Products are seriously affected (whether because Indiel is unable to
deliver or Lucas is unable to take delivery of the same) either Indiel or
Lucas shall be entitled to terminate this Agreement summarily by giving
written notice to the other provided that such notice may only be given at
a time when such Force Majeure event or circumstance subsists.
18.3 Lucas shall be entitled to terminate this Agreement summarily within 3
months of becoming aware of any change in the Controllers of:
(a) Indiel
(b) any direct or indirect holding company of Indiel or
(c) any subsidiary of any such holding company to which there has been a
Business Transfer pursuant to clause 21.1 without there being a
Business Transfer back in accordance with the provisions of such
clause
resulting in the new Controllers being a Lucas Competitor. Indiel
undertakes to notify Lucas in writing of any such change within 7 days of
the same occurring.
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19. EFFECTS OF TERMINATION
----------------------
19.1 The termination of this Agreement will be without prejudice to the rights
and duties of either party accrued prior to termination. The clauses in
this Agreement which expressly or impliedly have effect after termination
will continue to be enforceable notwithstanding termination. Indiel will
honour any orders placed by Lucas prior to termination which have not been
performed at termination save where termination is effected by Indiel
pursuant to clause 18.1 or by either party pursuant to clause 18.2. Any
indemnities given in this Agreement will continue to apply notwithstanding
termination.
19.2 As from the date of termination Lucas will forthwith cease to hold itself
out as distributor for Indiel and Indiel will forthwith cease to hold
itself out as a manufacturer for Lucas in each case in respect of Lucas
Branded Products, provided always that following the termination of this
Agreement:
19.2.1 Lucas will be entitled to sell Lucas Branded Products held by it in
stock at termination or which are delivered thereafter by Indiel
pursuant to orders placed by Lucas prior to termination or which are
thereafter obtained by Lucas from any other source.
19.2.2 Indiel will be entitled to sell
(a) all Lucas Branded Products held by it in stock at termination;
or
(b) any Lucas Branded Products which are in the course of
manufacture and which are completed thereafter
provided in each case such sales of Lucas Branded Products shall be
to any Lucas authorised distributor or dealer in the Reserved
Territory and provided such sales are on normal terms and conditions
(including as to price) and are released on to the market in an
orderly way so as not to disrupt the same.
29
19.3 Immediately following termination of this Agreement Indiel shall at its own
cost return to Lucas, unless the Trade Marks have been removed or
obliterated therefrom, all tools, dies, artwork and other similar equipment
and items which have prior to such termination been used by Indiel
exclusively for the purposes of branding the Lucas Branded Products, or
packaging relating thereto, with the Trade Marks.
19.4 Neither party shall be entitled to any compensation, indemnity or damages
on the termination of this Agreement for the loss of its rights under this
Agreement provided always that this clause shall (a) not exempt any party
from liability for a breach of this Agreement by that party which occurred
prior to termination; and (b) only apply to the extent permitted by
applicable law and which cannot be contracted out of under such applicable
law.
19.5 References in this clause 19 to "termination" mean termination howsoever
arising.
20. FORCE MAJEURE
-------------
Neither party shall be liable to the other for any failure or delay in
performing its obligations under this Agreement due to Force Majeure
provided always that:-
20.1 the date for performance of the contractual obligation which has been
delayed by Force Majeure shall be deemed suspended only for a period equal
to the delay thereby caused;
20.2 the party seeking to exempt itself from liability by virtue of the
provisions of this clause 20 shall give notice to the other party within 7
(seven) days of becoming aware of the Force Majeure event or circumstance
and of its consequences and shall at all times use all reasonable
endeavours to mitigate the severity of the same;
20.3 the party seeking to exempt itself from liability by virtue of the
provisions of this clause 20 shall not be entitled to payment from the
other party in respect of extra costs and expenses incurred by virtue of
the Force Majeure event or circumstance.
30
21. ASSIGNMENT
----------
21.1 Neither Lucas nor Indiel will be entitled to assign the benefit or delegate
the burden of this Agreement without the prior written consent of the other
party. Each party hereby consents to a Business Transfer by the other under
clause 21.2 where the transferee in question is a 100% subsidiary of, or a
holding company holding 100% of the shares in, the party concerned or
another 100% subsidiary of such holding company, and the remainder of
clause 21.2 is complied with. If any such Business Transfer occurs and
subsequently, the holding company of any subsidiary to whom there has been
such Business Transfer proposes to enter into any transaction whereby such
holding company no longer has control over such subsidiary Indiel or Lucas
(as the case may be) or the relevant holding company shall procure that
(unless otherwise agreed by the other party hereto) there shall prior to
the proposed change of control of such subsidiary be a Business Transfer of
the whole of the business and assets of such subsidiary back to a company
in the same group of companies as such subsidiary prior to such proposed
change of control and the provisions of clause 21.2 shall apply mutatis
mutandis to such Business Transfer.
21.2 If either party shall during the Term sell or otherwise dispose of its
business and assets, or substantially the whole of its business and assets
(a "Business Transfer") and the other party shall consent to the assignment
to the transferee of the benefit of this Agreement pursuant to clause 21.1,
the party selling or disposing of its business and assets shall require
that the transferee of the same shall as a condition of such sale or other
disposal enter into a novation of this Agreement with the other party, the
form of such novation agreement to be in terms reasonably stipulated by the
other party and which shall require such transferee to covenant with the
other party to be bound by the terms of this Agreement.
21.3 Indiel shall not sub-contract or sub-license the manufacture of Lucas
Branded Products without the prior written consent of Lucas. If and to the
extent that such consent is given Indiel shall be liable for all acts and
omissions of any such sub-contractor or sub-licensee as though such acts or
omissions were acts and
31
omissions of Indiel. This clause 21.3 shall not prevent Indiel from sub-
contracting the manufacture of individual components or sub-assemblies
without consent.
21.4 This Agreement shall be binding on the successors and permitted assigns of
each of the respective parties.
21.5 Lucas shall have power to perform its covenants, to exercise its rights and
to accept benefits accruing to it under this Agreement through the agency
of any other Lucas Associated Company. Lucas nonetheless shall remain
liable for acts and omissions of any Lucas Associated Company who acts as
agent for Lucas pursuant to the foregoing provisions of this clause 21.5 as
though they were acts and omissions of Lucas. In relation to the
indemnities given in favour of Lucas in clauses 9 and 13 Lucas enters into
this Agreement not only for itself but also as trustee for all Associated
Companies of Lucas to the intent that each such Associated Company shall
have the benefit of such indemnities as if it was named in such clauses in
addition to Lucas.
22. SEVERABILITY
------------
The illegality, invalidity or unenforceability of any clause or part of
this Agreement will not affect the legality, validity or enforceability of
the remainder. If any such clause or part is found by any competent court
or competent authority to be illegal, invalid or unenforceable the parties
agree that they will substitute provisions whose effect is as similar to
the offending provisions as is possible without thereby rendering them
illegal, invalid or unenforceable.
23. ENTIRE AGREEMENT
----------------
23.1 This Agreement, and the documents referred to in it, contain the whole
agreement between the parties relating to the transactions contemplated by
this Agreement and supersede all previous agreements between the parties
relating to such transactions.
23.2 Each of the parties acknowledges that in agreeing to enter into this
Agreement it has not relied on any pre-contractual representations
warranties or other assurances in relation to the subject matter of this
Agreement except those set out in this Agreement
32
but without prejudice to any representations, warranties or other
assurances given in any other agreement between the parties or between any
Associated Company of Lucas and Indiel or any Associated Company of the
Purchaser (as specified in the Share Sale and Purchase Agreement).
23.3 Each party hereby agrees that it shall have no remedy against the other
party for any innocent or negligent misrepresentations made by such other
party in relation to such transactions prior to this Agreement being
entered into except to the extent that the same shall have been
incorporated in this Agreement as a warranty representation or indemnity in
which case any claim in relation to the same shall lie only on the basis of
a breach of this Agreement or under the relevant indemnity provision.
24. VARIATIONS
----------
No variation to this Agreement shall be effective unless in writing signed
by a duly authorised representative of each of the parties hereto.
25. WAIVER
------
25.1 Failure to exercise or delay in exercising on the part of either party any
right, power or privilege of that party under this Agreement shall not in
any circumstances operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege in any circumstances
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
25.2 Any waiver of a breach of any of the terms hereof or of any default
hereunder shall not be deemed a waiver of any subsequent breach or default
and shall in no way affect the other terms of this Agreement.
26. NOTICES
-------
33
Any demand, notice or communication in relation to this Agreement shall be
made in writing and served by hand, by registered airmail post, or by
facsimile transmission addressed to the recipient at its registered office
or its address stated below (or such other address or facsimile number as a
party may nominate in writing from time to time).
Indiel
------
Lucas Indiel Argentina S.A.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇ ▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Zona Norte 5700
San Luis (Pcia. ▇▇▇ ▇▇▇▇) - ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
Attn: Managing Director
Facsimile: 0054 1454 5500
With a copy of the notice to be addressed to: "Managing Director and
Finance Director" Prestolite Electric Limited, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Lucas
-----
Lucas Diesel do Brasil LTDA
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇-▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attn: Managing Director
34
Facsimile: 0055 11493 2026
With a copy of the notice to be sent to the Company Secretary of Lucas
Limited at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇.
27. LANGUAGE
--------
27.1 The English language version of this Agreement shall be the authoritative
version even though it may have been translated into some other language.
27.2 All communications between the parties shall unless otherwise agreed in
writing be in the English language.
28. ASSOCIATED COMPANY
------------------
Any act or omission of any Associated Company of Indiel or Lucas (as the
case may be) which if committed or omitted by Indiel or Lucas (as the case
may be) would have been a breach of this Agreement by Indiel or Lucas (as
the case may be) will be deemed to be a breach of this Agreement by Indiel
or Lucas (as the case may be) who will be liable to the other party
accordingly.
29. TERMS AND CONDITIONS OF SALE
----------------------------
29.1 The Conditions of Sale and the terms of this Agreement shall apply in
relation to the sale of Lucas Branded Products by Indiel to Lucas pursuant
to this Agreement which Conditions of Sale and the other provisions of this
Agreement shall apply to the exclusion of any terms and conditions of
purchase from time to time used by Lucas and to the exclusion of any terms
and conditions of sale from time to time used by Indiel, whether or not
such terms and conditions are endorsed upon or delivered with any document
sent by either party to the other from time to time. In the event of any
conflict between the terms of this Agreement and the Conditions of Sale,
the terms of this Agreement including clause 9, shall prevail.
29.2 Lucas acknowledges and agrees that to the extent that Lucas provides to its
customers product warranty commitments or other contractual promises or
terms which are more
35
generous than those set out in the Product Warranty Lucas does so at its
own risk and cost and Indiel's obligations to Lucas under this Agreement
and the Conditions of Sale are not thereby affected or extended.
30. EXPENSES
--------
Except where otherwise expressly provided herein each party will bear its
own costs and expenses in relation to the preparation, completion and
operation of this Agreement.
31. APPLICABLE LAW
--------------
The formation, construction, performance, validity and all aspects
whatsoever of this Agreement shall be governed by the law of Argentina
without regard to the rules of such law relating to conflict of laws and
the parties submit to the non-exclusive jurisdiction of the Argentinian
Courts. Further, the parties agree that the United Nations Vienna
Convention on International Purchases and Sales shall not be applicable to
this Agreement.
36
SIGNED by P. KIM PACKARD )
--------------
as attorney in fact for and on behalf of ) /s/ P. Kim Packard
------------------
LUCAS INDIEL ARGENTINA S.A. ) P. Kim Packard
--------------------------- --------------
SIGNED by CHRIS LONG-LEATHER )
------------------
as attorney in fact for and on behalf of ) /s/ Chris Long-Leather
----------------------
LUCAS DIESEL DO BRASIL LTDA ) Chris Long-Leather
--------------------------- ------------------
37