TRUCK BUSINESS RELATIONSHIP AGREEMENT by and among CATERPILLAR INC., NAVISTAR, INC. and NAVISTAR INTERNATIONAL CORPORATION Dated as of April 3, 2009
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EXHIBIT
99.1
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by
and among
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NAVISTAR,
INC.
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and
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NAVISTAR
INTERNATIONAL CORPORATION
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Dated
as of April 3, 2009
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TABLE OF CONTENTS
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1.
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FORMATION OF
COMPANY
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1.1
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Formation of
the Company
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2.
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CLOSING
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2.1
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Closing
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2.2
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Closing
Sequence
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3.
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REPRESENTATIONS
AND WARRANTIES
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3.1
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Representations
and Warranties of Navistar and Navistar
Parent
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3.2
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Representations
and Warranties of Caterpillar
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4.
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PRE-CLOSING
COVENANTS
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4.1
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Good Faith
Efforts
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4.2
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Filings,
Notices and Consents.
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4.3
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Amendment of
Disclosure Schedules.
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4.4
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Access to
Information.
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4.5
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Exclusivity.
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4.6
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Expected
Liability Determinations.
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5.
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CONDITIONS TO
OBLIGATIONS TO CLOSE
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5.1
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Conditions to
Each Party’s Obligations to Close
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5.2
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Conditions to
Navistar’s Obligations to Close
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5.3
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Conditions to
Caterpillar’s Obligations to Close
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5.4
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Materiality
Threshold
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6.
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OTHER
COVENANTS
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6.1
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General
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6.2
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Confidentiality;
Public Announcements
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6.3
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Mahindra
Waiver
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7.
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TERMINATION
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7.1
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Termination
of Agreement
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7.2
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Effect of
Termination; Remedies
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7.3
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No
Termination on Account of Breach
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8.
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INDEMNIFICATION
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8.1
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Survival of
Representations and Warranties.
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8.2
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Indemnification
by Navistar and Navistar Parent
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8.3
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Indemnification
by Caterpillar
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8.4
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Limitations
on Indemnification.
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8.5
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Indemnification
Procedures.
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8.6
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Mitigation
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8.7
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Fraud
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8.8
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No
Waiver
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9.
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MISCELLANEOUS
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9.1
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Disclaimer
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9.2
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Expenses
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9.3
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Force
Majeure
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9.4
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Survival
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9.5
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Good Faith
Reliance on Terms of Agreement
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9.6
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Counterparts
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9.7
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Entire
Agreement
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9.8
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Succession
and Assignment
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9.9
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Amendments
and Waiver
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9.10
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Applicable
Law
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9.11
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Venue; Waiver
of Jury Trial; Specific Performance.
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9.12
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Exclusive
Remedy
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9.13
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Remedies
Cumulative
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9.14
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Severability
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9.15
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No Third
Party Beneficiaries
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9.16
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Construction
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9.17
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Headings
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9.18
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Notices
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9.19
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Disclosure
Schedules.
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9.20
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Incorporation
of Schedules and Exhibits
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9.21
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Exception to
Required Use of Commercially Reasonable
Efforts
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10.
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DEFINITIONS
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SCHEDULES
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Schedule
1
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Schedule of
Certain Transaction Agreements
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Schedule
4.1
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Transaction
Items and Actions
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Schedule
4.1(a)
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ROW Medium
and Heavy Duty Truck Navistar Business Contracts
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Schedule
4.2.3
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Antitrust
Approvals and Consents
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EXHIBIT
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Exhibit
1
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Company
Operating Agreement
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This TRUCK BUSINESS
RELATIONSHIP AGREEMENT (this “Agreement”) is
entered into as of April 3, 2009, by and among
(i) Caterpillar Inc., a corporation incorporated under the Laws of the state of
Delaware and having its principal place of business at ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Caterpillar”), (ii)
Navistar, Inc., a corporation incorporated under the Laws of the state of
Delaware and having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Navistar”) and (iii)
Navistar International Corporation, a corporation incorporated under the Laws of
the state of Delaware and having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Navistar Parent”)
(each of Caterpillar, Navistar and Navistar Parent, a “Party”, and
collectively the “Parties”). Capitalized
terms not otherwise defined herein shall have the meaning set forth in the
Company Operating Agreement (as defined below).
RECITALS
WHEREAS,
Caterpillar and Navistar desire to cause the formation of the Company (as
defined below) to conduct the Business (as defined below) upon the terms and
subject to the conditions contained herein; and
WHEREAS,
Caterpillar and Navistar desire to enter into a strategic alliance involving,
among other things, the sale of certain Caterpillar Trucks (as defined below) by
Navistar to Caterpillar in the United States, Canada and Mexico upon the terms
and subject to the conditions contained herein.
NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties hereby agree as follows:
1. FORMATION
OF COMPANY
1.1 Formation of the
Company
No later than two
(2) Business Days prior to the Closing Date, Caterpillar and Navistar shall
cause there to be filed a Certificate of Formation in the form agreed to by
Caterpillar and Navistar with the Secretary of State of the State of Delaware to
form NC2 Global
LLC (the “Company”) as a
Delaware limited liability company under and pursuant to the Act, and
Caterpillar and Navistar shall be the sole members of the Company at the time of
such formation.
2. CLOSING
2.1 Closing
Upon the terms and
subject to the conditions set forth herein, the closing of the transactions set
forth in Section 2.2 (the “Closing”) shall be
held at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m. Central on the date that is three (3)
Business Days after the date on which all of the conditions to the obligations
of the Parties set forth in Section 5 (other
than conditions with respect to actions the Parties shall take at the Closing
itself or which shall be satisfied contemporaneously with the Closing) are
satisfied or waived, or at such other time or on such other date as the Parties
may mutually agree. The date on which the Closing actually occurs is
hereinafter referred to as the “Closing
Date”.
2.2 Closing
Sequence
All proceedings to
be taken and all documents to be executed and delivered by all parties thereto
at the Closing will be deemed to have been taken and executed in the following
sequence on the Closing Date; provided, that no
proceedings will be deemed to have been taken nor documents executed or
delivered until all have been taken, executed and delivered:
2.2.1 Company Operating Agreement;
Capital Contributions Pursuant to Company Operating
Agreement. Caterpillar and Navistar shall, and shall cause the
Company to, execute and deliver the Joint Venture Operating Agreement in the
form attached hereto as Exhibit 1, as such
form shall be modified as a result of the satisfaction of the applicable
conditions set forth in Section 5.1.4 and in
Schedule 4.1
hereto (the “Company
Operating Agreement”), and simultaneously with the execution and delivery
of the Company Operating Agreement, as provided therein, (a) Caterpillar shall
contribute $45.5 million to the Company as a
Capital Contribution and (b) Navistar shall contribute $45.5 million to the
Company as a Capital Contribution.
2.2.2 Additional Deliveries by
Caterpillar, Navistar, Navistar Parent, their Affiliates and the Company at
Closing. Immediately following the transactions contemplated
by Section 2.2.1, Caterpillar,
Navistar, and Navistar Parent shall, and shall cause their Affiliates and the
Company to, as applicable, execute and deliver the following agreements to which
it is a party:
2.2.2.1 each
agreement set forth in Schedule 1 hereto,
either (a) in the form exchanged between the Parties on the date hereof, as such
form may be modified as a result of the satisfaction of the applicable
conditions set forth in Section 5.1.4 and in
Schedule 4.1
hereto or (b) if no form of such agreement is exchanged between the Parties on
the date hereof, in the form to be agreed upon by the Parties after the date
hereof and prior to the Closing as a result of the satisfaction of the
applicable conditions set forth in Section 5.1.4 and in
Schedule 4.1
hereto; and
2.2.2.2 any
other Contract executed by Caterpillar, Navistar, Navistar Parent or any of
their Affiliates in connection with the transactions contemplated by this
Agreement that the Parties agree should be executed and delivered at the
Closing.
3. REPRESENTATIONS
AND WARRANTIES
3.1 Representations and
Warranties of Navistar and Navistar Parent
Navistar and
Navistar Parent each hereby jointly and severally represent and warrant to
Caterpillar, on behalf of themselves, that the following statements are true and
correct as of the date of this Agreement and as of the Closing Date (except to
the extent that representations expressly speak to an earlier date, in which
case such representations and warranties are true and correct as of such earlier
date):
3.1.1 Organization, Qualification
and Corporate Power. Each of Navistar and Navistar Parent is a
corporation duly organized, validly existing and in good standing under the Laws
of the state of Delaware, and has all requisite corporate power and authority to
own, lease and operate its assets and to carry on its businesses as they are now
being conducted. Each of Navistar and Navistar Parent has made
available to Caterpillar true and complete copies of its certificate of
incorporation and bylaws. Each of Navistar and Navistar Parent is not
in default under or in violation of any provision of its certificate of
incorporation or bylaws.
3.1.2 Authorization of
Transactions; Validity and Enforceability. Each of Navistar,
Navistar Parent and their Affiliates has all requisite corporate, limited liability company or
similar entity power and authority to execute and deliver this Agreement and
each Transaction Agreement to which it will become a party (as applicable), and,
subject to the obtaining and making (as applicable) of all consents and notices
set forth in Section 3.1.2 of
the Navistar Disclosure Schedule, to consummate the transactions contemplated by
the terms of this Agreement and such Transaction Agreement (as applicable) and
perform its obligations arising hereunder and thereunder (as
applicable). The execution, delivery and performance by each of
Navistar, Navistar Parent and their Affiliates of this Agreement and each
Transaction Agreement to which it will become a party (as applicable) and the
consummation by Navistar, Navistar Parent and their Affiliates of the
transactions contemplated by the terms of this Agreement and such Transaction
Agreement (as applicable) have been duly authorized by all necessary corporate
or other action on the part of Navistar, Navistar Parent and their Affiliates,
as applicable. This Agreement has been, and each Transaction
Agreement to which Navistar, Navistar Parent or their Affiliates will become a
party will, on the Closing Date, be, duly executed and delivered by Navistar,
Navistar Parent and their Affiliates (as applicable), and, assuming the due
authorization, execution and delivery hereof and thereof by each of the other
parties hereto and thereto, constitutes, or will constitute, when executed and
delivered, a legal, valid and binding obligation of Navistar, Navistar Parent
and their Affiliates (as applicable) enforceable against Navistar, Navistar
Parent and their Affiliates (as applicable) in accordance with their terms,
except as limited by (a) applicable bankruptcy, reorganization, insolvency,
moratorium, and other similar Laws and court decisions of general application,
including statutory and other laws regarding fraudulent or preferential
transfers relating to, limiting, or affecting the enforcement of creditors’
rights generally, and (b) general principles of equity, including the
effect of such general principles of equity upon the specific enforceability of
any of the remedies, covenants, or other provisions contained herein and
therein, and their application (regardless of whether enforcement is considered
in a proceeding at law or in equity) as such principles relate to, limit, or
affect the enforcement of creditors’ rights generally (clauses (a) and (b), collectively,
the “Bankruptcy and
Equity Exceptions”).
3.1.3 Noncontravention; Consents
and Approvals.
3.1.3.1 The
execution, delivery and performance by Navistar, Navistar Parent and their
Affiliates of this Agreement and each Transaction Agreement to which it will
become a party, as applicable, with or without the giving of notice or the lapse
of time or both, do not and will not (a) violate any provision of the
certificate of incorporation or bylaws or other governing documents, as
applicable, of Navistar, Navistar Parent or any of their Affiliates that will be
party to a Transaction Agreement, (b) violate any provision of any Law
(other than antitrust and competition Laws, as to which no representation is
made) or any Order, in each case applicable to Navistar, Navistar Parent or any
of their Affiliates that will be party to a Transaction Agreement,
(c) except as set forth in Section 3.1.3.1
of the Navistar Disclosure Schedule or other than with respect to Contracts with
dealers or distributors, violate or result in or give any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
any material Contract to which Navistar, Navistar Parent or any of their
Affiliates is a party, or (d) result in the creation or imposition of any
material Lien (other than Permitted Liens) upon Navistar, Navistar Parent, any
of their Affiliates, the Company or any of its direct or indirect wholly owned
subsidiaries or any of their respective properties under any Contract to which
Navistar, Navistar Parent or any of their Affiliates is a party.
3.1.3.2 The
execution, delivery and performance by Navistar, Navistar Parent and their
Affiliates of this Agreement and each Transaction Agreement to which it will
become a party, as applicable, do not and will not require any consent, approval
or authorization of, or filing with or notification to, any antitrust, merger
control or competition Governmental Authority in the Core ROW Countries by
Navistar, Navistar Parent or any of their Affiliates, except (a) for the
filings and consents set forth on Schedule 4.2.3
hereto, and (b) where the failure to take such action would not reasonably
be expected to be material to Navistar and its Affiliates, taken together, or
the Company.
3.1.4 Absence of Certain Changes
and Events. Except as set forth in Section 3.1.4 of
the Navistar Disclosure Schedule, since October 31, 2008, no event pertaining to
Navistar or any of its Affiliates, the Worldwide Medium and Heavy Duty Truck
Navistar Business or the ROW Medium and Heavy Duty Truck Navistar Business has
occurred that has had or would reasonably be expected to have, individually or
in the aggregate with any other such event, a Material Adverse Effect on
Navistar and its Affiliates (taken as a whole), the North American Severe
Service Navistar Business, the ROW Medium and Heavy Duty Truck Navistar Business
or the Company.
3.1.5 Solvency. (a)
Navistar and Navistar Parent are executing and delivering this Agreement, and,
on the Closing Date, will, together with certain of their Affiliates, execute
and deliver each Transaction Agreement to which each such Person will become a
party, and Navistar, Navistar Parent and their Affiliates are, or will be,
entering into the transactions contemplated hereby and thereby (as applicable),
for legitimate business purposes, and specifically, none of Navistar, Navistar
Parent or any of their Affiliates intends (whether by virtue of the transactions
contemplated by this Agreement or any of the Transaction Agreements or
otherwise), to hinder, defraud, or delay any of their present or future
creditors, (b) except as set forth in Section 3.1.5 of the
Navistar Disclosure Schedule, Navistar, Navistar Parent and their Affiliates are
solvent (as such term is determined for purposes of Sections 547 and 548 of
Title 11 of the United States Code and under any applicable state Law, including
the Uniform Fraudulent Transfer Act or the Uniform Fraudulent Conveyance Act, or
other Law, as enacted or otherwise applicable in such applicable jurisdiction),
(c) none of Navistar, Navistar Parent or any of their Affiliates is engaged
in a business or a transaction, or is about to be engaged in a business or a
transaction, for which any property remaining with Navistar, Navistar Parent or
any of their Affiliates is an unreasonably small amount of capital, and
(d) none of Navistar, Navistar Parent or any of their Affiliates intends to
incur, or believes that it is about to incur, debts that would be beyond the
ability of Navistar, Navistar Parent or any of their Affiliates to pay as such
debts become due and payable.
3.1.6 Contract
Restrictions. Without limiting the generality of Section 3.1.3, except
as set forth in Section 3.1.6 of the
Navistar Disclosure Schedule, none of the Company or any direct or indirect
wholly owned subsidiary of the Company shall, as of the Closing Date, be subject
to any of the restrictions, covenants, terms or conditions set forth in any
Contract to which Navistar, Navistar Parent or any of their Affiliates is a
party, including any such Contract providing for the creation, incurrence or
assumption of any Indebtedness of Navistar, Navistar Parent or any of their
Affiliates, that could reasonably be expected to affect the ROW Medium and Heavy
Duty Truck Company Business.
3.1.7 Legal
Compliance.
3.1.7.1 Except
as set forth in Section 3.1.7.1 of
the Navistar Disclosure Schedule, since October 31, 2008, Navistar, Navistar
Parent and their Affiliates, (a) solely in relation to the ROW Medium and Heavy
Duty Truck Navistar Business, have been and are in compliance in all material
respects with all Laws and Orders applicable to the ROW Medium and Heavy Duty
Truck Navistar Business, and (b) have been and are in compliance with all Laws
and Orders applicable to its respective business except as would not reasonably
be expected to have a Material Adverse Effect on Navistar and its Affiliates
(taken as a whole) or the Company.
3.1.7.2 Except
as set forth in Section 3.1.7.2 of
the Navistar Disclosure Schedule, since October 31, 2008, none of Navistar,
Navistar Parent or any of their Affiliates, (a) solely in relation to the ROW
Medium and Heavy Duty Truck Navistar Business, (i) has been subject to any Order
with respect to any material actual or alleged non-compliance by the ROW Medium
and Heavy Duty Truck Navistar Business with any Law or (ii) received any written
notice from any Governmental Authority or any other Person with respect to any
material actual or alleged non-compliance with any Law by the ROW Medium and
Heavy Duty Truck Navistar Business, or (b) (i) has been subject to any Order
with respect to any actual or alleged non-compliance with any Law or (ii)
received any written notice from any Governmental Authority or any other Person
with respect to any actual or alleged non-compliance with any Law, except, in
each case of this clause (b), as would
not reasonably be expected to have a Material Adverse Effect on Navistar and its
Affiliates (taken as a whole) or the Company.
3.1.7.3 None
of Navistar, Navistar Parent or any of their Affiliates is subject to any Order
that would prevent or otherwise materially restrict the consummation of any of
the transactions contemplated by this Agreement or any of the Transaction
Agreements.
3.1.8 Intellectual
Property.
3.1.8.1 Except
as set forth in Section 3.1.8.1 of the Navistar
Disclosure Schedule, (a) Navistar or any of its Affiliates is the exclusive
owner of the Navistar Licensed Intellectual Property or has the right to use the
Navistar Licensed Intellectual Property, as currently used in the Worldwide
Medium and Heavy Duty Truck Navistar Business, in accordance with any relevant
license terms, in each case, free and clear of any Liens (other than Permitted
Liens), (b) no Actions have been instituted or are pending or, to the Knowledge
of Navistar, are threatened in writing that challenge, and, to the Knowledge of
Navistar, no investigation or inquiry has been instituted or pending with
respect to, the rights of Navistar or any of its Affiliates in or the validity
or enforceability of the Navistar Licensed Intellectual Property; (c) to the
Knowledge of Navistar, the conduct of the Worldwide Medium and Heavy Duty Truck
Navistar Business by Navistar and its Affiliates, as presently conducted, does
not infringe, unlawfully dilute, misappropriate or otherwise violate in any
material respect the Intellectual Property rights of any Person; and (d) to the
Knowledge of Navistar, no Person is infringing, unlawfully diluting,
misappropriating or otherwise violating in any material respect any of the
Navistar Licensed Intellectual Property.
3.1.8.2 Except
for non-exclusive licenses granted by Navistar or any of its Affiliates in the
ordinary course of business or as set forth in Section 3.1.8.2 of the
Navistar Disclosure Schedule, none of Navistar or any of its Affiliates has
permitted or licensed any Person to use any Navistar Licensed Intellectual
Property that is material to the conduct of the Worldwide Medium and Heavy Duty
Truck Navistar Business as presently conducted.
3.1.8.3 Section 3.1.8.3 of the
Navistar Disclosure Schedule sets forth a list of all Intellectual Property (i)
that is used by Navistar or any of its Affiliates in the Worldwide Medium and
Heavy Duty Truck Navistar Business; (ii) that is material to the Worldwide
Medium and Heavy Duty Truck Navistar Business, and (iii) to which Navistar or
any of its Affiliates do not have the right to license or sublicense to (a) the
Company under the Navistar-Company License Agreement, and (b) Caterpillar under
the Navistar-Caterpillar Post-Termination License Agreement.
3.1.9 Contracts.
3.1.9.1 Other
than with respect to the Mahindra Agreement and the MAN Agreement, Section 3.1.9.1 of
the Navistar Disclosure Schedule sets forth a true, correct and complete list of
all Contracts of the following types to which Navistar, Navistar Parent or any
of their Affiliates is a party (collectively, the “Navistar
Contracts”):
3.1.9.1.1. any
Contract relating to the North American Severe Service Navistar Business or the
ROW Medium and Heavy Duty Truck Navistar Business that creates or governs a
partnership, joint venture or other similar cooperative or collaborative
undertaking with a third party;
3.1.9.1.2. any
Contract that would reasonably be expected to restrict in any material respect
any activity of the ROW Medium and Heavy Duty Truck Company Business;
and
3.1.9.1.3. any
Contract that would reasonably be expected to restrict in any material respect
the ability of Navistar, Navistar Parent or any of their Affiliates to comply
with any of its obligations under this Agreement or any Transaction Agreement to
which it will become a party; and
3.1.9.2 Other
than with respect to the Mahindra Agreement and the MAN Agreement, Navistar has
provided Caterpillar (i) a true, correct and complete copy of each Navistar
Contract set forth on Section 3.1.9.2(a) of
the Navistar Disclosure Schedule, (ii) a true, correct and complete copy of the
relevant provisions of each Navistar Contract set forth on Section 3.1.9.2(b) of
the Navistar Disclosure Schedule, and (iii) a true and correct description in
reasonable detail of all covenants of each Navistar Contract set forth on Section 3.1.9.2(c) of
the Navistar Disclosure Schedule, in each case that (a) would reasonably be
expected to restrict in any material respect any activity of the ROW Medium and
Heavy Duty Truck Company Business or (b) would reasonably be expected to
restrict in any material respect the ability of Navistar, Navistar Parent or any
of their Affiliates to comply with any of its obligations under this Agreement
or any Transaction Agreement to which it will become a party.
3.1.10 Ownership of Certain
Persons. Except as set forth in Section 3.1.10 of the
Navistar Disclosure Schedule, none of the Persons in which Navistar Parent owns,
directly or indirectly, five percent (5%) or greater (but less than one hundred
percent (100%)) of (a) the total combined voting power of all classes of stock
or other equity interests of such Person entitled to vote or (b) the total value
of all stock or other equity interests of such Person, is engaged anywhere in
the ROW in any business substantially similar to or in competition with the
Business (excluding the activities described in clause (b) of the definition
thereof).
3.1.11 Mahindra.
3.1.11.1 The
Mahindra Agreement is in full force and effect.
3.1.11.2 Navistar
has delivered to Caterpillar a true, correct and complete copy of the
non-competition provisions of the Mahindra Agreement applicable to Navistar and
its Affiliates and a true, correct and complete copy of the fully executed
Mahindra Waiver.
3.1.11.3 Pursuant
to the Mahindra Agreement, International Truck and Engine Mauritius Holding Ltd.
owns 49% and Mahindra & Mahindra Limited owns 51% of Mahindra Navistar
Automotives Limited (f/k/a Mahindra International Private Limited).
3.1.11.4 The
Mahindra Agreement remains in full force and effect for so long as it is not
terminated in accordance with the Mahindra Agreement.
3.1.12 Other Contractual
Representations.
3.1.12.1 None
of Navistar or its Affiliates is a party to any agreement that would prohibit or
materially restrict Caterpillar Trucks from utilizing 11L and 13L Maxxforce
engines based on MAN 11L and 13L engine platforms in North America.
3.1.12.2 None
of Navistar or its Affiliates is a party to any agreement with MAN, ▇▇▇▇▇▇ ▇▇▇▇▇
LLC, ▇▇▇▇▇▇▇ Transmission, Inc. or any of their respective Affiliates that would
prohibit or materially restrict JV Dealers from performing in-house warranty and
retail repairs on all truck and engine components manufactured or distributed by
any of them for any truck brand.
3.1.13 Product
Liability. Section 3.1.13 of the
Navistar Disclosure Schedule sets forth a list of all Actions during the three
(3) years prior to the date of this Agreement through the Closing Date against
Navistar, Navistar Parent or any of their Affiliates that gave rise or would
reasonably be expected to give rise to any Liability arising out of any injury
to individuals or property as a result of the ownership, possession, or use of
any product manufactured, sold, leased, or delivered by Navistar, Navistar
Parent or any of their Affiliates in connection with the Worldwide Medium and
Heavy Duty Truck Navistar Business, other than such Actions which in the
aggregate are less than $250,000.
3.1.14 Disclaimer. Except
for the representations and warranties expressly set forth in Section 3.1 (and
the corresponding section of the Navistar Disclosure Schedule) or in another
provision of this Agreement (or, if and when executed by Navistar, Navistar
Parent or their Affiliates, a Transaction Agreement), Navistar and Navistar
Parent make no other representations or warranties, express or implied, at Law
or in equity and Caterpillar acknowledges that it has not relied on any other
representations or warranties of Navistar, Navistar Parent or any of their
Affiliates. Other than the indemnification obligations and the remedy
provisions set forth in Sections 7.2,
8, 9.12 and 9.13 hereof, none of
Navistar, Navistar Parent or their Affiliates shall have or be subject to any
Liability or indemnification obligation to any Caterpillar Indemnified Person or
any Company Indemnified Person resulting from the use of any information
relating to Navistar, Navistar Parent or their Affiliates by any Caterpillar
Indemnified Person or any Company Indemnified Person, including any information,
documents, materials or presentations made, or made available, to any such
Person (or their respective Representatives and Affiliates), whether orally or
in writing or in any other form, in expectation of the transactions contemplated
by this Agreement or any of the Transaction Agreements. Any such
other representation and warranty is hereby expressly disclaimed by Navistar and
Navistar Parent.
3.2 Representations and
Warranties of Caterpillar
Caterpillar hereby
represents and warrants to Navistar and Navistar Parent on behalf of itself,
that the following statements are true and correct as of the date of this
Agreement and as of the Closing Date (except to the extent that representations
expressly speak to an earlier date, in which case such representations and
warranties are true and correct as of such earlier date):
3.2.1 Organization, Qualification
and Corporate Power. Caterpillar is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
Delaware, and has all requisite corporate power and authority to own, lease and
operate its assets and to carry on its businesses as they are now being
conducted. Caterpillar has made available to Navistar true and
complete copies of its certificate of incorporation and
bylaws. Caterpillar is not in default under or in violation of any
provision of its certificate of incorporation or bylaws.
3.2.2 Authorization of
Transactions; Validity and Enforceability. Caterpillar has all
requisite corporate power and authority to execute and deliver this Agreement
and each Transaction Agreement to which it will become a party, and, subject to
the obtaining and making (as applicable) of all consents and notices set forth
in Section 3.2.2 of
the Caterpillar Disclosure Schedule, to consummate the transactions contemplated
by the terms of this Agreement and such Transaction Agreement and perform its
obligations arising hereunder and thereunder. The execution, delivery
and performance by Caterpillar of this Agreement and each Transaction Agreement
to which it will become a party and the consummation by Caterpillar of the
transactions contemplated by the terms of this Agreement and such Transaction
Agreement have been duly authorized by all necessary corporate action or other
action on the part of Caterpillar. This Agreement has been, and each
Transaction Agreement to which Caterpillar will become a party will, on the
Closing Date, be, duly executed and delivered by Caterpillar, and, assuming the
due authorization, execution and delivery hereof and thereof by each of the
other parties hereto and thereto, constitutes, or will constitute, when executed
and delivered, a legal, valid and binding obligation of Caterpillar enforceable
against Caterpillar in accordance with their terms, except as limited by the
Bankruptcy and Equity Exceptions.
3.2.3 Noncontravention; Consents
and Approvals.
3.2.3.1 The
execution, delivery and performance by Caterpillar of this Agreement and each
Transaction Agreement to which it will become a party, with or without the
giving of notice or the lapse of time or both, do not and will not
(a) violate any provision of the certificate of incorporation or bylaws of
Caterpillar, (b) violate any provision of any Law (other than antitrust and
competition Laws, as to which no representation is made) or any Order, in each
case applicable to Caterpillar, (c) except as set forth in Section 3.2.3.1
of the Caterpillar Disclosure Schedule, violate or result in or give any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, any material Contract to which Caterpillar or any of its Affiliates
is a party, or (d) result in the creation or imposition of any material Lien
(other than Permitted Liens) upon Caterpillar or any of its Affiliates, the
Company or any of its direct or indirect wholly owned subsidiaries or any of
their respective properties under any Contract to which Caterpillar or any of
its Affiliates is a party.
3.2.3.2 The
execution, delivery and performance by Caterpillar of this Agreement and each
Transaction Agreement to which it will become a party, do not and will not
require any consent, approval or authorization of, or filing with or
notification to, any antitrust, merger control or competition Governmental
Authority in the Core ROW Countries by Caterpillar, except (a) for the
filings and consents set forth on Schedule 4.2.3
hereto, and (b) where the failure to take such action would not reasonably
be expected to be material to Caterpillar and its Affiliates, taken together, or
the Company.
3.2.4 Absence of Certain Changes
and Events. Except as set forth in Section 3.2.4 of
the Caterpillar Disclosure Schedule, since December 31, 2008, no event
pertaining to Caterpillar or any of its Affiliates has occurred that has had or
would reasonably be expected to have, individually or in the aggregate with any
other such event, a Material Adverse Effect on Caterpillar and its Affiliates
(taken as a whole) or the Company.
3.2.5 Solvency. (a)
Caterpillar is executing and delivering this Agreement, and, on the Closing
Date, will, execute and deliver each Transaction Agreement to which it will
become a party, and Caterpillar is, or will be, entering into the transactions
contemplated hereby and thereby, for legitimate business purposes, and
specifically, neither Caterpillar nor any of its Affiliates intends (whether by
virtue of the transactions contemplated by this Agreement or any of the
Transaction Agreements or otherwise), to hinder, defraud, or delay any of their
present or future creditors, (b) except as set forth in Section 3.2.5 of the
Caterpillar Disclosure Schedule, Caterpillar and its Affiliates are solvent (as
such term is determined for purposes of Sections 547 and 548 of Title 11 of the
United States Code and under any applicable state Law, including the Uniform
Fraudulent Transfer Act or the Uniform Fraudulent Conveyance Act, or other Law,
as enacted or otherwise applicable in such applicable jurisdiction),
(c) neither Caterpillar nor any of its Affiliates is engaged in a business
or a transaction, or is about to be engaged in a business or a transaction, for
which any property remaining with Caterpillar or any of its Affiliates is an
unreasonably small amount of capital, and (d) neither Caterpillar nor any
of its Affiliates intends to incur, or believes that it is about to incur, debts
that would be beyond the ability of Caterpillar or any of its Affiliates to pay
as such debts become due and payable.
3.2.6 Contract
Restrictions. Without limiting the generality of Section 3.2.3, except
as set forth in Section 3.2.6 of the
Caterpillar Disclosure Schedule, none of the Company or any direct or indirect
wholly owned subsidiary of the Company shall, as of the Closing Date, be subject
to any of the restrictions, covenants, terms or conditions set forth in any
Contract to which Caterpillar or any of its Affiliates is a party, including any
such Contract providing for the creation, incurrence or assumption of any
Indebtedness of Caterpillar or any of its Affiliates, that could reasonably be
expected to affect the ROW Medium and Heavy Duty Truck Company
Business.
3.2.7 Legal
Compliance.
3.2.7.1 Except
as set forth in Section 3.2.7.1 of
the Caterpillar Disclosure Schedule, since December 31, 2008, Caterpillar and
its Affiliates have been and are in compliance with all Laws and Orders
applicable to its respective business, except as would not reasonably be
expected to have a Material Adverse Effect on Caterpillar and its Affiliates
(taken as a whole) or the Company.
3.2.7.2 Except
as set forth in Section 3.2.7.2 of
the Caterpillar Disclosure Schedule, since December 31, 2008, none of
Caterpillar or any of its Affiliates, (a) has been subject to any Order with
respect to any actual or alleged non-compliance with any Law or (b) received any
written notice from any Governmental Authority or any other Person with respect
to any actual or alleged non-compliance with any Law, except, in each case, as
would not reasonably be expected to have a Material Adverse Effect on
Caterpillar and its Affiliates (taken as a whole) or the Company.
3.2.7.3 None
of Caterpillar or any of its Affiliates is subject to any Order that would
prevent or otherwise materially restrict the consummation of any of the
transactions contemplated by this Agreement or any of the Transaction
Agreements.
3.2.8 Intellectual
Property.
3.2.8.1 Except
as set forth in Section 3.2.8.1 of
the Caterpillar Disclosure Schedule, (a) Caterpillar or any of its
Affiliates is the exclusive owner of the Caterpillar Licensed Intellectual
Property or has the right to use the Caterpillar Licensed Intellectual Property
in accordance with any relevant license terms, in each case, free and clear of
any Liens (other than Permitted Liens), (b) no Actions have been instituted or
are pending or, to the Knowledge of Caterpillar, are threatened in writing that
challenge, and, to the Knowledge of Caterpillar, no investigation or inquiry has
been instituted or pending with respect to, the rights of Caterpillar or any of
its Affiliates in or the validity or enforceability of the Caterpillar Licensed
Intellectual Property; (c) to the Knowledge of Caterpillar, the use of the
Caterpillar Licensed Intellectual Property in the conduct of Caterpillar’s
business, as presently conducted, does not infringe, unlawfully dilute,
misappropriate or otherwise violate in any material respect, the Intellectual
Property rights of any Person; and (d) to the Knowledge of Caterpillar, no
Person is infringing, unlawfully diluting, misappropriating or otherwise
violating in any material respect any of the Caterpillar Licensed Intellectual
Property.
3.2.8.2 Except
for non-exclusive licenses granted by Caterpillar or any of its Affiliates in
the ordinary course of business or as set forth in Section 3.2.8.2
of the Caterpillar Disclosure Schedule, none of Caterpillar or any of its
Affiliates has permitted or licensed any Person to use any Caterpillar Licensed
Intellectual Property that would reasonably be expected to be material to the
conduct of the Business (excluding the activities described in clause (b) of the
definition thereof) as presently conducted.
3.2.8.3 Section 3.2.8.3 of
the Caterpillar Disclosure Schedule sets forth a list of
all Intellectual Property owned by Caterpillar that would reasonably be
expected to be directly relevant and material to the Business to which
Caterpillar or any of its Affiliates do not have the right to license or
sublicense to (a) the Company under the Caterpillar-Company License Agreement
and (b) Navistar under the Caterpillar-Navistar Post Termination License
Agreement.
3.2.9 Ownership of Certain
Persons. Except as set forth in Section 3.2.9 of the
Caterpillar Disclosure Schedule, none of the Persons in which Caterpillar owns,
directly or indirectly, five percent (5%) or greater (but less than one hundred
percent (100%)) of (a) the total combined voting power of all classes of stock
or other equity interests of such Person entitled to vote or (b) the total value
of all stock or other equity interests of such Person, is engaged anywhere in
the ROW in any business substantially similar to or in competition with the
Business (excluding the activities described in clause (b) of the definition
thereof).
3.2.10 Disclaimer. Except
for the representations and warranties expressly set forth in Section 3.2 (and
the corresponding section of the Caterpillar Disclosure Schedule) or in another
provision of this Agreement (or, if and when executed by Caterpillar, a
Transaction Agreement), Caterpillar makes no other representations or
warranties, express or implied, at Law or in equity and Navistar and Navistar
Parent acknowledge that they and their Affiliates have not relied on any other
representations or warranties of Caterpillar or any of its
Affiliates. Other than the indemnification obligations and the remedy
provisions set forth in Sections 7.2,
8, 9.12 and 9.13 hereof, none of
Caterpillar or its Affiliates shall have or be subject to any Liability or
indemnification obligation to any Navistar Indemnified Person or any Company
Indemnified Person resulting from the use of any information relating to
Caterpillar or its Affiliates by any Navistar Indemnified Person or any Company
Indemnified Person, including any information, documents, materials or
presentations made, or made available, to any such Person (or their respective
Representatives and Affiliates), whether orally or in writing or in any other
form, in expectation of the transactions contemplated by this Agreement or any
of the Transaction Agreements. Any such other representation and
warranty is hereby expressly disclaimed by Caterpillar.
4. PRE-CLOSING
COVENANTS
The Parties agree
as follows with respect to the period between the execution of this Agreement
and the Closing Date.
4.1 Good Faith
Efforts
4.1.1 Each
of the Parties will act in good faith and use its commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including timely satisfaction of the conditions to Closing set forth
in Section 5). Without
limiting the generality of the foregoing, each of Caterpillar, Navistar and
Navistar Parent agrees to, between the date of this Agreement and the Closing
Date, (a) conduct their respective businesses in the ordinary course, consistent
with past practice, and (b) refrain from taking any action, or entering into any
transaction, that would compete with any or all of the ROW Medium and Heavy Duty
Truck Company Business. Without limiting the generality of this Section 4.1.1, each
of Caterpillar, Navistar and Navistar Parent will, and will cause each of its
Affiliates to, act in good faith and use its commercially reasonable efforts to,
as soon as practicable after the date of this Agreement, agree upon each of the
matters and take all of the actions, in each case, set forth in Schedule 4.1
hereto.
4.1.2 As
soon as reasonably practicable following the execution of this Agreement,
Navistar will provide to Caterpillar and its Representatives reasonable access
to all due diligence materials that Caterpillar reasonably requests in
connection with the determination of an appropriate adjustment, if any, to the
estimated Baseline Profit Amount. Each of the Parties will act in
good faith and use its commercially reasonable efforts to reach agreement on and
finalize any such adjustment within six (6) weeks after the date of this
Agreement. Any such adjustment agreed upon by the Parties will be
made to the dollar amount set forth in Section 2.3.5.1 of the Company Operating
Agreement.
4.2 Filings, Notices and
Consents.
4.2.1 Navistar. As
promptly as practicable after the execution of this Agreement, each of Navistar
and Navistar Parent will, and will cause its Affiliates to, (a) make all filings
and give all notices reasonably required to be made and given in order to obtain
or make (as applicable) the Navistar Required Consents and (b) act in good faith
and use its commercially reasonable efforts to obtain or make (as applicable)
the Navistar Required Consents; provided, however, that
Navistar, Navistar Parent and their Affiliates shall not be required to pay or
commit to pay any amount to (or incur any obligation in favor of) any Person
from whom any Navistar Required Consent with respect to a Contract may be
required, except that Navistar, Navistar Parent and their Affiliates shall be
required to pay any filing fees or application fees in connection with any
Navistar Required Consents that must be obtained by or made with any
Governmental Authority. Caterpillar acknowledges
that certain Navistar Required Consents may be required from parties to
Contracts and that such Navistar Required Consents may not be
obtained. None of Navistar, Navistar Parent or any of their
respective Affiliates shall have any liability whatsoever to Caterpillar or any
of its Affiliates arising out of or relating to the failure to obtain any
Navistar Required Consent because of the termination of any Contract as a result
thereof, except to the extent that Navistar or Navistar Parent does not act, or
cause its Affiliates to act, in good faith or exercise commercially reasonable
efforts to obtain such Navistar Required Consent in accordance with the terms of
this Agreement. Caterpillar acknowledges that no representation,
warranty or covenant of Navistar or Navistar Parent contained herein shall be
breached or deemed breached as a result of (A) the failure to obtain any
such Navistar Required Consent, (B) any such termination, or (C) any
Action commenced or threatened by or on behalf of any Person arising out of or
relating to the failure to obtain any such Navistar Required Consent or any such
termination, except (in the case of each of clauses (A), (B) and (C)), to the extent
that Navistar or Navistar Parent does not act, or cause it Affiliates to act, in
good faith or exercise commercially reasonable efforts to obtain such Navistar
Required Consent in accordance with the terms of this Agreement.
4.2.2 Caterpillar. As
promptly as practicable after the execution of this Agreement, Caterpillar will,
and will cause its Affiliates to, (a) make all filings and give all notices
reasonably required to be made and given in order to obtain or make (as
applicable) the Caterpillar Required Consents and (b) act in good faith and use
its commercially reasonable efforts to obtain or make (as applicable) the
Caterpillar Required Consents; provided, however, that
Caterpillar and its Affiliates shall not be required to pay or commit to pay any
amount to (or incur any obligation in favor of) any Person from whom any
Caterpillar Required Consent with respect to a Contract may be required, except
that Caterpillar and its Affiliates shall be required to pay any filing fees or
application fees in connection with any Caterpillar Required Consents that must
be obtained by or made with any Governmental Authority. Navistar and Navistar
Parent acknowledge
that certain Caterpillar Required Consents may be required from parties to
Contracts and that such Caterpillar Required Consents may not be
obtained. None of Caterpillar or its Affiliates shall have any
liability whatsoever to Navistar, Navistar Parent or any of their Affiliates
arising out of or relating to the failure to obtain any Caterpillar Required
Consent because of the termination of any Contract as a result thereof, except
to the extent that Caterpillar does not act, or cause its Affiliates to act, in
good faith or exercise commercially reasonable efforts to obtain such
Caterpillar Required Consent in accordance with the terms of this
Agreement. Navistar and Navistar Parent acknowledge that no
representation, warranty or covenant of Caterpillar contained herein shall be
breached or deemed breached as a result of (A) the failure to obtain any
such Caterpillar Required Consent, (B) any such termination, or
(C) any Action commenced or threatened by or on behalf of any Person
arising out of or relating to the failure to obtain any such Caterpillar
Required Consent or any such termination, except (in the case of each of clauses (A), (B) and (C)), to the extent
that Caterpillar does not act, or cause its Affiliates to act, in good faith or
exercise commercially reasonable efforts to obtain such Caterpillar Required
Consent in accordance with the terms of this Agreement.
4.2.3 Antitrust
Filings.
4.2.3.1 In
furtherance of and not in limitation of Sections 4.2.1 and
4.2.2, each of
Navistar, Navistar Parent and Caterpillar undertakes and agrees to file, and
cause each of its Affiliates to file, as soon as reasonably practicable after
the execution of this Agreement or when such filing obligation arises as a
result of the activities contemplated herein, such filings and apply for such
approvals and consents as are required by the non-U.S. antitrust Governmental
Authorities set forth on Schedule 4.2.3
hereto.
4.2.3.2 Each
of Navistar, Navistar Parent and Caterpillar shall, and shall cause each of its
Affiliates to, (a) respond as promptly as practicable under the circumstances to
any inquiries received from any Governmental Authority enforcing applicable Laws
for additional information or documentation and to all inquiries and requests
received from any other Governmental Authority in connection with antitrust
matters, (b) promptly notify the other Parties as to any such inquires, and (c)
not extend any antitrust-related waiting period or enter into any agreement with
any Governmental Authority not to consummate the transactions contemplated by
this Agreement, except with the prior written consent of the other Parties,
which consent shall not be unreasonably withheld, conditioned or
delayed.
4.2.3.3 Navistar,
Navistar Parent and Caterpillar shall, and shall cause each of its Affiliates
to, during the period between the execution of this Agreement and the Closing
Date, act in good faith to avoid the entry of, or to have vacated or terminated,
any Order that would restrain, prevent or delay the Closing. Upon the
mutual consent of both Navistar and Caterpillar, the Parties will contest
through litigation on the merits, negotiation or other action any position or
claim, including any demands for sale, divestiture or disposition of assets or
business of Navistar, Navistar Parent, Caterpillar or any of their Affiliates,
asserted by any Governmental Authority in connection with antitrust matters
which would operate to hinder or delay the Closing. Navistar and
Caterpillar shall jointly direct and control any such litigation, negotiation or
other action, with counsel of their choosing, and each agrees to reasonably
cooperate with the other with respect thereto.
4.2.3.4 Notwithstanding
anything in this Agreement to the contrary, none of the Parties shall have any
obligation to dispose of any of its assets or businesses or to limit its freedom
of action with respect to any of its assets or businesses, whether before or
after the Closing, or to agree or commit to do any of the foregoing in order to
obtain any consent or approval of a Governmental Authority.
4.2.3.5 Navistar
and Caterpillar shall each be responsible for paying one-half (1/2) of all
filing fees relating to compliance with (a) all of the non-U.S. antitrust Laws
set forth on Schedule
4.2.3 hereto and (b) this Section 4.2.3.
4.2.3.6 Each
Party shall, subject to applicable Law and except as prohibited by any
applicable representative of any applicable Governmental Authority, (a) promptly
notify the other Parties of any written or oral communication to that Party from
any Governmental Authority with respect to this Agreement and the transactions
contemplated hereby (or any other matter that could reasonably be expected to
affect this Agreement and the transactions contemplated hereby), and permit the
other Parties to review in advance any proposed written communication to any of
the foregoing with respect to this Agreement and the transactions contemplated
hereby (provided, however, that no
Party shall be entitled to review any portion of such written communication that
contains Confidential Information or otherwise sensitive information of the
other Parties whose review by such Party is not reasonably necessary to
facilitate the transactions contemplated by this Agreement and the Transaction
Agreements); and (b) not agree to participate in any substantive meeting or
discussion with any Governmental Authority in respect of any filings,
investigation or inquiry with respect to this Agreement and the transactions
contemplated hereby unless such Party consults with the other Parties in advance
and, to the extent permitted by such Governmental Authority, gives the other
Parties the opportunity to attend and participate thereat.
4.3 Amendment of Disclosure
Schedules.
4.3.1 Navistar
Updates. From the date of this Agreement until the earlier of
the Closing Date and the date of termination of this Agreement, Navistar shall
promptly prepare and deliver to Caterpillar a supplement or amendment to the
Navistar Disclosure Schedule (each such supplement or amendment being referred
to as, a “Navistar
Update”), to reflect any matter arising or, to Navistar’s Knowledge,
discovered after the date of this Agreement which, if existing or known by
Navistar as of the execution of this Agreement, would have been required to be
set forth in the Navistar Disclosure Schedule as of the date of this
Agreement. Each Navistar Update shall be deemed to have amended the
Navistar Disclosure Schedule and, solely with respect to matters arising after
the date of this Agreement, to have qualified the representations and warranties
contained in this Agreement and, accordingly, no such representation or warranty
will be deemed to be inaccurate or to have been breached by reason of such
development. Notwithstanding the foregoing, no Navistar Update shall
be deemed to have (i) qualified or cured any inaccuracy in or breach of any
representation or warranty existing as of the date of this Agreement, (ii)
qualified or cured any inaccuracy in or breach of any representation or warranty
for purposes of determining the satisfaction of the conditions set forth in
Section 5, or
(iii) modified a Party’s right to terminate this Agreement pursuant to Section
7.
4.3.2 Caterpillar
Updates. From the date of this Agreement until the earlier of
the Closing Date and the date of termination of this Agreement, Caterpillar
shall promptly prepare and deliver to Navistar a supplement or amendment to the
Caterpillar Disclosure Schedule (each such supplement or amendment being
referred to as, a “Caterpillar Update”),
to reflect any matter arising or, to Caterpillar’s Knowledge, discovered after
the date of this Agreement which, if existing or known by Caterpillar as of the
execution of this Agreement, would have been required to be set forth in the
Caterpillar Disclosure Schedule as of the date of this
Agreement. Each Caterpillar Update shall be deemed to have amended
the Caterpillar Disclosure Schedule and, solely with respect to matters arising
after the date of this Agreement, to have qualified the representations and
warranties contained in this Agreement and, accordingly, no such representation
or warranty will be deemed to be inaccurate or to have been breached by reason
of such development. Notwithstanding the foregoing, no Caterpillar
Update shall be deemed to have (i) qualified or cured any inaccuracy in or
breach of any representation or warranty existing as of the date of this
Agreement, (ii) qualified or cured any inaccuracy in or breach of any
representation or warranty for purposes of determining the satisfaction of the
conditions set forth in Section 5, or (iii)
modified a Party’s right to terminate this Agreement pursuant to Section
7.
4.4 Access to
Information.
4.4.1 Navistar. Except
as set forth in Section 4.4.1 of the
Navistar Disclosure Schedule, from the date of this Agreement until the earlier
of the Closing Date and the date of termination of this Agreement, Navistar,
Navistar Parent and each of their Affiliates will provide to Caterpillar and its
Representatives reasonable access to all documents and information that
Caterpillar reasonably requests in connection with the transactions contemplated
by this Agreement and the Transaction Agreements (whether such request is made
before, on or after the date of this Agreement), except to the extent that doing
so would result in a loss of attorney-client privilege for Navistar, Navistar
Parent or any of their Affiliates, or that Navistar, Navistar Parent or any of
their Affiliates is required by Law to withhold, or the provision of which would
constitute a breach of a Contract to which Navistar, Navistar Parent or any of
their Affiliates is a party; provided, that
Navistar shall provide to Caterpillar a reasonably detailed summary of any such
documents if such summary would not result in a loss of attorney-client
privilege for Navistar, Navistar Parent or any of their Affiliates, is
permissible under Law and would not constitute a breach of a Contract to which
Navistar, Navistar Parent or any of their Affiliates is a party; provided further, with respect
to such documents a summary of which (a) would result in a loss of
attorney-client privilege for Navistar, Navistar Parent or any of their
Affiliates, (b) is not permissible under Law or (c) would constitute a breach of
a Contract to which Navistar, Navistar Parent or any of their Affiliates is a
party, Navistar shall provide to Caterpillar a list of the names of, and parties
to, such documents. The information Caterpillar or any of its
Affiliates receive from Navistar, Navistar Parent or any of their Affiliates in
the course of the reviews contemplated by this Section 4.4.1 shall be
considered Confidential Information.
4.4.2 Caterpillar. Except
as set forth in Section 4.4.2 of the
Caterpillar Disclosure Schedule, from the date of this Agreement until the
earlier of the Closing Date and the date of termination of this Agreement,
Caterpillar and each of its Affiliates will provide to Navistar and its
Representatives reasonable access to all documents and information that Navistar
or Navistar Parent reasonably requests in connection with the transactions
contemplated by this Agreement and the Transaction Agreements (whether such
request is made before, on or after the date of this Agreement), except to the
extent that doing so would result in a loss of attorney-client privilege for
Caterpillar or any of its Affiliates, or that Caterpillar or any of its
Affiliates is required by Law to withhold, or the provision of which would
constitute a breach of a Contract to which Caterpillar or any of its Affiliates
is a party; provided, that
Caterpillar shall provide to Navistar a reasonably detailed summary of any such
documents if such summary would not result in a loss of attorney-client
privilege for Caterpillar or any of its Affiliates, is permissible under Law and
would not constitute a breach of a Contract to which Caterpillar or any of its
Affiliates is a party; provided further, with respect
to such documents a summary of which (a) would result in a loss of
attorney-client privilege for Caterpillar or any of its Affiliates, (b) is not
permissible under Law or (c) would constitute a breach of a Contract to which
Caterpillar or any of its Affiliates is a party, Caterpillar shall provide to
Navistar a list of the names of, and parties to, such documents. The
information Navistar, Navistar Parent or any of their Affiliates receive from
Caterpillar or any of its Affiliates in the course of the reviews contemplated
by this Section 4.4.2 shall be
considered Confidential Information.
4.5 Exclusivity.
4.5.1 Navistar. From
the date hereof through the Closing Date, unless and until this Agreement shall
have been terminated in accordance with the provisions of Section 7, none
of Navistar, Navistar Parent, any of their Affiliates or any of their respective
Representatives shall, except as expressly permitted by this Section 4.5.1,
directly or indirectly: (a) authorize, execute, consummate or enter into
any letter of intent, agreement in principle, understanding, agreement or
commitment with respect to any Navistar Alternative Transaction or
(b) initiate, solicit, respond to or encourage (including by way of
furnishing information or assistance) any proposal or offer or enter into,
engage in or continue any discussions or negotiations with any party (other than
Caterpillar and its Affiliates and Representatives) concerning any Navistar
Alternative Transaction. Navistar, Navistar Parent and their
Affiliates and Representatives shall cease immediately all discussions and
negotiations regarding any Navistar Alternative Transaction that commenced prior
to the date of this Agreement and are in progress on the date of this
Agreement. Each of Navistar and Navistar Parent shall promptly advise
Caterpillar in writing of any proposal or offer that it or any of its Affiliates
receives from a third party (orally or in writing) after the date of this
Agreement and prior to the Closing to enter into any Navistar Alternative
Transaction or any inquiry that Navistar, Navistar Parent or any of their
Affiliates receives from a third party (orally or in writing) after the date of
this Agreement and prior to the Closing that would reasonably be expected to
lead to an offer to enter into any Navistar Alternative
Transaction. For purposes hereof, “Navistar Alternative
Transaction” means (i) any joint venture or strategic alliance involving
Navistar, Navistar Parent or any of their Affiliates that is similar to the
transactions contemplated by this Agreement and the Transaction Agreements, (ii)
any joint venture or strategic alliance involving the ROW Medium and Heavy Duty
Truck Navistar Business, excluding Blue Diamond, IVECO Trucks Australia
Limited and the Mahindra JV, in each case as currently conducted or contemplated
to be conducted in the definitive, binding agreement governing such joint
venture or strategic alliance as in effect on January 1, 2009, or (iii) any
transaction (other than a Navistar Change in Control) that would reasonably be
expected to prevent, impede or delay (either directly or indirectly) the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements.
4.5.2 Caterpillar. From
the date hereof through the Closing Date, unless and until this Agreement shall
have been terminated in accordance with the provisions of ▇▇▇▇▇▇▇ ▇, ▇▇▇▇
of Caterpillar, any of its Affiliates or any of their respective Representatives
shall, except as expressly permitted by this Section 4.5.2,
directly or indirectly: (a) authorize, execute, consummate or enter into
any letter of intent, agreement in principle, understanding, agreement or
commitment with respect to any Caterpillar Alternative Transaction or
(b) initiate, solicit, respond to or encourage (including by way of
furnishing information or assistance) any proposal or offer or enter into,
engage in or continue any discussions or negotiations with any party (other than
Navistar, Navistar Parent and their Affiliates and Representatives) concerning
any Caterpillar Alternative Transaction. Caterpillar and its
Affiliates and Representatives shall cease immediately all discussions and
negotiations regarding any Caterpillar Alternative Transaction that commenced
prior to the date of this Agreement and are in progress on the date of this
Agreement. Caterpillar shall promptly advise Navistar in writing of
any proposal or offer that it or any of its Affiliates receives from a third
party (orally or in writing) after the date of this Agreement and prior to the
Closing to enter into any Caterpillar Alternative Transaction or any inquiry
that Caterpillar or any of its Affiliates receives from a third party (orally or
in writing) after the date of this Agreement and prior to the Closing that would
reasonably be expected to lead to an offer to enter into any Caterpillar
Alternative Transaction. For purposes hereof, “Caterpillar Alternative
Transaction” means (i) any joint venture or strategic alliance involving
Caterpillar or any of its Affiliates that is similar to the transactions
contemplated by this Agreement and the Transaction Agreements or (ii) any
transaction (other than a Caterpillar Change in Control) that would reasonably
be expected to prevent, impede or delay (either directly or indirectly) the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements.
4.6 Expected Liability
Determinations.
4.6.1 Caterpillar Expected
Liability Determination. No later than two (2) Business Days
prior to Closing, Caterpillar shall provide Navistar written notice of a breach
of any representation or warranty of Navistar or Navistar Parent set forth in
Section 3.1 of
this Agreement of which Caterpillar has Knowledge and whether it reasonably
believes that the Caterpillar Expected Liabilities resulting from such breach
will be greater or less than the Materiality Threshold set forth in Section 5.4 (each
such notification, a “Caterpillar Expected
Liabilities Determination”); provided however, that Caterpillar will, if
earlier, so inform Navistar within ten (10) Business Days after Caterpillar’s
internal or external legal counsel becomes aware of such breach.
4.6.2 Navistar Expected Liability
Determination. No later than two (2) Business Days prior to
Closing, Navistar shall provide Caterpillar written notice of a breach of any
representation or warranty of Caterpillar set forth in Section 3.2 of this
Agreement of which Navistar has Knowledge and whether it reasonably believes
that the Caterpillar Expected Liabilities resulting from such breach will be
greater or less than the Materiality Threshold set forth in Section 5.4 (each
such notification, a “Navistar Expected
Liabilities Determination”); provided however, that Navistar will, if
earlier, so inform Caterpillar within ten (10) Business Days after Navistar’s
internal or external legal counsel becomes aware of such breach.
5. CONDITIONS
TO OBLIGATIONS TO CLOSE
5.1 Conditions to Each Party’s
Obligations to Close
The respective
obligations of each Party to consummate the transactions to be performed by it
in connection with the Closing are subject to satisfaction as of the Closing of
the following conditions, which conditions may be waived by the
Parties:
5.1.1 Governmental
Approvals. All applicable waiting periods (and any extensions)
required under any Laws applicable to the
transactions contemplated by this Agreement and the Transaction Agreements will
have expired or otherwise been terminated, and the Parties will have received
all other necessary authorizations, consents and approvals of any Governmental
Authority, all of
which must be final and non-appealable.
5.1.2 No Orders or Laws;
Illegality. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Order or any Law (whether temporary, preliminary or permanent) that has the
effect of making the transactions contemplated by this Agreement or any
Transaction Agreement illegal or otherwise restraining or prohibiting the
consummation of the transactions contemplated under this Agreement or any
Transaction Agreement or restraining or limiting the operations of the Company
after the Closing Date; provided, that any
Party that invokes this condition must (prior to doing so) have acted in good
faith and used its commercially reasonable efforts to cause any such Order or
Law to be terminated or vacated.
5.1.3 No
Litigation. There shall not be pending before any Governmental
Authority or threatened in writing by any Governmental Authority any Action
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (a) prevent consummation of any of the transactions contemplated by this
Agreement or the Transaction Agreements, (b) cause any of the transactions
contemplated by this Agreement or the Transaction Agreements to be rescinded
following consummation, (c) materially adversely affect the right of Navistar or
Caterpillar to own equity interests in the Company, or (d) materially adversely
affect the right of the Company to operate the Business; provided, that any
Party that invokes this condition must (prior to doing so) have acted in good
faith and used its commercially reasonable efforts to cause any such Action to
be terminated or vacated.
5.1.4 Provisions; Transaction
Agreements. Each Party shall have agreed upon, in its sole
discretion, (a) the content of each provision described in Schedule 4.1 hereto
and (b) the execution version of each Transaction Agreement set forth in Schedule 1
hereto.
5.1.5 Actions. Each
of the actions described in Schedule 4.1 hereto
shall have been completed.
5.2 Conditions to Navistar’s
Obligations to Close
The obligations of
Navistar, Navistar Parent and their Affiliates to consummate the transactions to
be performed by it in connection with the Closing are subject to satisfaction as
of the Closing of the following conditions, which conditions may be waived by
Navistar:
5.2.1 Representations and
Warranties. The representations and warranties set forth in
Section 3.2 of this
Agreement shall be true and correct in all material respects (without giving
effect to any limitation as to “materiality” or like wording or “Material
Adverse Effect” or like wording set forth therein) as of the date of this
Agreement and as of the Closing Date (except to the extent the representations
and warranties speak as of an earlier date, in which case such representations
and warranties shall be true and correct in all material respects, without
giving effect to any limitation as to “materiality” or like wording or “Material
Adverse Effect” or like wording set forth therein, as of such earlier
date).
5.2.2 Covenants. Caterpillar
and its Affiliates shall have performed or complied with, in all material
respects, all of the covenants and agreements required by this Agreement to be
performed or complied with by Caterpillar or its Affiliates at or before the
Closing.
5.2.3 Third Party Consents and
Notices. Caterpillar and its Affiliates (a) shall have
obtained or caused to be obtained, each consent or approval set forth under
“Consents” in Section
5.2.3(a) of the Caterpillar Disclosure Schedule, and (b) shall have
provided or caused to be provided, all notices set forth under “Notices” in
Section
5.2.3(b) of the Caterpillar Disclosure Schedule and shall have received
no notices of termination, acceleration, amendment or cancellation as a result
of any such notice.
5.2.4 Material Adverse
Effect. There shall not have occurred any event, fact or
circumstance pertaining to Caterpillar or any of its Affiliates that would
reasonably be expected to result in a Material Adverse Effect on Caterpillar and
its Affiliates (taken as a whole), the Worldwide Medium and Heavy Duty Truck
Navistar Business, the ROW Medium and Heavy Duty Truck Navistar Business or the
Company.
5.2.5 Certificate. Navistar
shall have received a certificate signed by Caterpillar to the effects set forth
in Sections 5.2.1 and 5.2.2.
5.2.6 Closing
Deliverables. Caterpillar shall, and shall have caused the
Company to, have delivered to Navistar, Navistar Parent, their Affiliates and
the Company, as applicable, all of the Closing deliverables of Caterpillar and
its Affiliates and the Company pursuant to Section 2.2 of
this Agreement.
5.3 Conditions to Caterpillar’s
Obligations to Close
The obligations of
Caterpillar and its Affiliates to consummate the transactions to be performed by
it in connection with the Closing are subject to satisfaction as of the Closing
of the following conditions, which conditions may be waived by
Caterpillar:
5.3.1 Representations and
Warranties. The representations and warranties set forth in
Section 3.1 of
this Agreement shall be true and correct in all material respects (without
giving effect to any limitation as to “materiality” or like wording or “Material
Adverse Effect” or like wording set forth therein) as of the date of this
Agreement and as of the Closing Date (except to the extent the representations
and warranties speak as of an earlier date, in which case such representations
and warranties shall be true and correct in all material respects, without
giving effect to any limitation as to “materiality” or like wording or “Material
Adverse Effect” or like wording set forth therein, as of such earlier
date).
5.3.2 Covenants. Navistar,
Navistar Parent and their Affiliates shall have performed or complied with, in
all material respects, all of the covenants and agreements required by this
Agreement to be performed or complied with by Navistar, Navistar Parent or their
Affiliates at or before the Closing.
5.3.3 Third Party Consents and
Notices. Navistar, Navistar Parent and their Affiliates (a)
shall have obtained or caused to be obtained, each consent or approval set forth
under “Consents” in Section 5.3.3(a) of
the Navistar Disclosure Schedule, and (b) shall have provided or caused to be
provided, all notices set forth under “Notices” in Section 5.3.3(b) of
the Navistar Disclosure Schedule and shall have received no notices of
termination, acceleration, amendment or cancellation as a result of any such
notice.
5.3.4 Material Adverse
Effect. There shall not have occurred any event, fact or
circumstance pertaining to Navistar or any of its Affiliates, the Worldwide
Medium and Heavy Duty Truck Navistar Business or the ROW Medium and Heavy Duty
Truck Navistar Business that would reasonably be expected to result in a
Material Adverse Effect on Navistar and its Affiliates (taken as a whole), the
Worldwide Medium and Heavy Duty Truck Navistar Business, the ROW Medium and
Heavy Duty Truck Navistar Business or the Company.
5.3.5 Certificate. Caterpillar
shall have received a certificate signed by Navistar and Navistar Parent to the
effects set forth in Sections 5.3.1
and 5.3.2.
5.3.6 Closing
Deliverables. Navistar and Navistar Parent shall, and shall
have caused the Company to, have delivered to Caterpillar, its Affiliates and
the Company, as applicable, all of the Closing deliverables of Navistar,
Navistar Parent, their Affiliates and the Company pursuant to Section 2.2 of
this Agreement.
5.4 Materiality
Threshold
Solely for purposes
of determining the satisfaction of the conditions set forth in Sections 5.2.1
and 5.3.1, the
failure of any representation or warranty to be true and correct shall be
material if the Liabilities incurred or suffered or reasonably expected to be
incurred or suffered by the Caterpillar Indemnified Persons (on the one hand) or
the Navistar Indemnified Persons (on the other hand), respectively, to the
extent arising out of such failure to be true and correct (without taking into
account any indemnification, insurance or third party proceeds and without
giving effect to any limitation as to “materiality” or like wording or “Material
Adverse Effect” or like wording set forth therein) (such Liabilities, “Caterpillar Expected
Liabilities” and “Navistar Expected
Liabilities,” respectively), would reasonably be expected by the
non-breaching party to exceed $250,000, individually or in the aggregate (the
“Materiality
Threshold”).
6. OTHER
COVENANTS
6.1 General
In case at any time
after the Closing any further actions are necessary to carry out the purposes of
this Agreement, each of the Parties will take such further actions (including
the execution and delivery of such further instruments and documents) as the
other Parties may reasonably request, all at the sole cost and expense of the
requesting Party, except to the extent the requesting Party is entitled to
indemnification under Section
8.
6.2 Confidentiality; Public
Announcements
6.2.1 Treatment of Confidential
Information. The Party receiving Confidential Information (a
“Receiving
Party”) from another Party (a “Disclosing Party”)
shall (a) accord Confidential Information received by it from the Disclosing
Party with the same degree of confidential treatment that it accords its similar
proprietary and confidential business and technical information, which shall not
be less than the care a reasonable business Person would exercise under similar
circumstances, (b) use such Confidential Information only in connection with
this Agreement, the applicable Transaction Agreements or the Business, and (c)
not disclose any of such Confidential Information to any Person other than its
Affiliates and its and their managers, directors, officers, employees, agents,
advisors, Representatives, consultants, contractors, and licensees who have a
need to know in connection with this Agreement, the Transaction Agreements or
the Business. The Receiving Party shall (i) notify the Persons
described in clause
(c) of this Section 6.2.1 of the
terms of Section
6.2 and instruct them to abide by the terms of Section 6.2 and (ii)
be responsible to the Disclosing Party for any disclosure or use of the
Disclosing Party’s Confidential Information by the Persons described in clause (c) of this
Section 6.2.1
contrary to the terms of this Agreement.
6.2.2 Permitted
Disclosure. Notwithstanding any other provision of this
Agreement, the Receiving Party may disclose Confidential Information of the
Disclosing Party, without Liability for such disclosure, to the extent that such
disclosure is (a) required to be made pursuant to applicable Law, stock exchange
rule, any Governmental Authority, duly authorized subpoena, or court order, (b)
required to be made to a court or other tribunal in connection with the
enforcement of the Receiving Party’s rights under this Agreement, or (c)
approved by the prior written consent of the Disclosing Party.
6.2.3 Disclosure Pursuant to
Law. In the event that a Party receives a subpoena or
otherwise becomes aware of events which may legally require it to disclose
Confidential Information, it shall promptly notify the Party that owns the
Confidential Information, and cooperate with that Party (at the expense of that
Party) to obtain an order quashing or otherwise modifying the scope of said
subpoena or legal requirement in an effort to prevent or limit the disclosure of
such Confidential Information. In the event that such efforts are
unsuccessful, a Party’s disclosure pursuant to Law shall not constitute a breach
of this Agreement.
6.2.4 Survival of Confidentiality
Obligations. All obligations of confidentiality and all
restrictions on the use of Confidential Information under this Agreement shall
remain in effect for a period of four (4) years following the date of disclosure
of such Confidential Information. Upon the request of the Disclosing
Party following the expiration or termination of this Agreement, the Receiving
Party shall, at the Disclosing Party’s option and expense, return all of the
Disclosing Party’s Confidential Information or destroy the same, including by
deleting from its computers and storage media any software, data files or CAD
files containing Confidential Information, except that the Receiving Party may
retain but must keep confidential (except as provided in Section 6.2.2)
Confidential Information of the Disclosing Party that is necessary in connection
with the enforcement of the Receiving Party’s rights under this
Agreement. Notwithstanding anything to the contrary in this
Agreement, if (and only if) the Closing occurs, then from and after the Closing,
the provisions of Section 6.2
shall be of no further force and effect with respect to Confidential Information
to which one or more Transaction Agreements is applicable and shall be
superseded in their entirety by the confidentiality provisions of the applicable
Transaction Agreements, including the Company Operating Agreement and the
Strategic Alliance Agreement, as applicable. Section 6.2 shall
continue to apply from and after the Closing to all Confidential Information
with respect to which no Transaction Agreement is applicable.
6.2.5 Non-Disclosure of Agreement;
Publicity. Except as may be required by applicable Law,
securities regulatory authorities or stock exchange rule, no Party will make
public the existence or content of this Agreement or the negotiations leading to
or pursuant to this Agreement without the written consent of the other Parties;
provided, that
no Party shall be prohibited from disclosing the general nature of the business
relationship established hereby at any time.
6.2.6 No
License. Other than the express licenses granted in this
Agreement or the Transaction Agreements, no license, express or implied, by
estoppel or otherwise, is granted, by virtue of the disclosure of Confidential
Information under this Agreement, to any Intellectual Property that is now or
may hereafter be owned by a Party.
6.3 Mahindra
Waiver
Caterpillar and
Navistar shall cause a duly authorized representative of the Company to execute
immediately following the Closing a supplemental deed in the form attached as
Schedule B to the Mahindra Waiver pursuant to which the Company acknowledges and
agrees to comply with certain restrictions set forth in such supplemental
deed.
7. TERMINATION
7.1 Termination of
Agreement
Notwithstanding
anything to the contrary in this Agreement, the Parties may terminate this
Agreement as provided below.
7.1.2 Caterpillar
or Navistar may terminate this Agreement by giving written notice to the other
Parties if the Closing has not occurred by
September 30, 2009, or such later date as
the Parties may agree in writing (the “Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 7.1.2 shall not be
available to any Party whose failure to fulfill any
obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing to occur on or prior to such
date.
7.1.3 Caterpillar
may terminate this Agreement by giving written notice to Navistar at any time
prior to the Closing if (a) Navistar or Navistar Parent shall be in breach
of any of its representations, warranties, covenants or other agreements
contained in this Agreement such that the conditions set forth in Section 5.3 would not be
satisfied, (b) Caterpillar has notified Navistar of the breach in writing,
and (c) the breach is not cured by the earlier of (i) ten (10) Business
Days after such notice of breach or (ii) three (3) Business Days prior to the
Outside Date; provided, however, that no cure
period will be permitted for any such breach that by its nature cannot be cured;
provided further that
Caterpillar shall not have the right to terminate this Agreement pursuant to
this Section 7.1.3 if
Caterpillar is then in material breach of this Agreement.
7.1.4 Navistar
may terminate this Agreement by giving written notice to Caterpillar at any time
prior to the Closing if (a) Caterpillar shall be in breach of any of its
representations, warranties, covenants or other agreements contained in this
Agreement such that the conditions set forth in Section 5.2 would not be
satisfied, (b) Navistar has notified Caterpillar of the breach in writing,
and (c) the breach is not cured by the earlier of (i) ten (10) Business
Days after such notice of breach or (ii) three (3) Business Days prior to the
Outside Date; provided, however, that no cure
period will be permitted for any such breach that by its nature cannot be cured;
provided further that Navistar
shall not have the right to terminate this Agreement pursuant to this Section 7.1.4.
if Navistar or Navistar Parent is then in material breach of this
Agreement.
7.1.5 Caterpillar
may terminate this Agreement by giving written notice to Navistar at any time
prior to the Closing, and Navistar may terminate this Agreement by giving
written notice to Caterpillar at any time prior to the Closing, in each case, if
any Order or Law contemplated by Section 5.1.2
shall have become effective, final and nonappealable; provided, however, that the
Party seeking to terminate this Agreement pursuant to this Section 7.1.5
has acted in good faith and used its commercially reasonable efforts to remove
such Order or Law.
7.1.6 Caterpillar
may terminate this Agreement by giving written notice to Navistar at any time
prior to the Closing if a Navistar Change in Control occurs.
7.1.7 Navistar
may terminate this Agreement by giving written notice to Caterpillar at any time
prior to the Closing if a Caterpillar Change in Control occurs.
7.1.8 Navistar
may terminate this Agreement by giving written notice to Caterpillar at any time
prior to the Closing if, pursuant to the terms of the Navistar Credit Agreement,
Navistar and its applicable Affiliates shall, at the time of the Closing, not be
in pro forma compliance with the obligation to maintain a Fixed Charge Coverage
Ratio (as defined in the Navistar Credit Agreement) of not less than 1.1 to 1.0
after giving effect to Navistar’s (or any of its Affiliates’) investment in the
Company.
7.2 Effect of Termination;
Remedies
In the event of
termination of this Agreement pursuant to Section 7.1,
this Agreement shall forthwith become void and have no
effect (subject to Section 9.4), without any
Liability on the part of any Party; provided, however, that (a) if
this Agreement is validly terminated by Caterpillar pursuant to Section 7.1.3 or
Section 7.1.6,
or by Navistar pursuant to Section 7.1.4 or
Section 7.1.7,
or (b) if this Agreement is validly terminated by Navistar pursuant to Section 7.1.8, then,
in the case of clause
(a), the terminating Party or, in the case of clause (b),
Caterpillar shall be promptly reimbursed by the other Party the out-of-pocket
fees, costs and expenses actually incurred by such terminating Party or
Caterpillar (as applicable) in connection with the transactions contemplated by
this Agreement and the Transaction Agreements (including reasonable legal fees
actually incurred). In the event of termination of this Agreement
pursuant to Section
7.1, the Development Agreement will be automatically terminated and
become void and have no effect (subject to Section 9.16 of the
Development Agreement). If all of the conditions to Closing set forth
in Section 5 of
this Agreement (other than Section 5.3.1 of this
Agreement) have been satisfied or waived in writing and this Agreement is
validly terminated by Caterpillar pursuant to Section 7.1.3 because
Caterpillar reasonably believes (as set forth in a validly delivered Caterpillar
Expected Liabilities Determination) that the Caterpillar Expected Liabilities
exceed the Materiality Threshold and as a result the conditions set forth in
Section 5.3.1
would not be satisfied, Navistar shall not challenge Caterpillar’s right to
terminate this Agreement pursuant to Section 7.1.3
(provided that the other requirements of Section 7.1.3 have
been satisfied), even if Navistar believes that the Caterpillar Expected
Liabilities are (or they actually are) less than the Materiality
Threshold. If all of the conditions to Closing set forth in Section 5 of this
Agreement (other than Section 5.2.1 of this
Agreement) have been satisfied or waived in writing and this Agreement is
validly terminated by Navistar pursuant to Section 7.1.4 because
Navistar reasonably believes (as set forth in a validly delivered Navistar
Expected Liabilities Determination) that the Navistar Expected Liabilities
exceed the Materiality Threshold and as a result the conditions set forth in
Section 5.2.1
would not be satisfied, Caterpillar shall not challenge Navistar’s right to
terminate this Agreement pursuant to Section 7.1.4
(provided that the other requirements of Section 7.1.4 have
been satisfied), even if Caterpillar believes that the Navistar Expected
Liabilities are (or they actually are) less than the Materiality
Threshold.
7.3 No Termination on Account of
Breach
Notwithstanding
anything to the contrary in this Section 7 or in this
Agreement, and for the avoidance of doubt, (a) a breach of any provision of this
Agreement by Navistar or Navistar Parent shall not entitle either Navistar or
Navistar Parent to terminate this Agreement and (b) a breach of any provision of
this Agreement by Caterpillar shall not entitle Caterpillar to terminate this
Agreement.
8. INDEMNIFICATION
8.1 Survival of Representations
and Warranties.
8.1.1 Except
as set forth in Sections 8.1.2 and
8.1.3, none of
the representations and warranties or covenants of the Parties contained in this
Agreement shall survive the Closing and, except as set forth in Sections 8.1.2 and
8.1.3, no claim
for a breach of any representation, warranty or covenant may be brought by any
Party after the Closing.
8.1.2 The
representations and warranties of Navistar and Navistar Parent contained in
Section 3.1.10,
and the representations and warranties of Caterpillar contained in Section 3.2.9, shall
survive the Closing until the 18-month anniversary of the Closing
Date.
8.1.3 The
representations and warranties of Navistar and Navistar Parent contained in
Sections 3.1.1,
3.1.2, 3.1.3, 3.1.6, 3.1.8, 3.1.9, 3.1.11, and 3.1.12, and the
representations and warranties of Caterpillar contained in Sections 3.2.1, 3.2.2, 3.2.3, 3.2.6, and 3.2.8, shall survive
the Closing until the third anniversary of the Closing Date.
8.2 Indemnification by Navistar
and Navistar Parent
From and after the
Closing and subject to the limitations set forth in this Section 8, Navistar
and Navistar Parent agree, on a joint and several basis, to indemnify the
Caterpillar Indemnified Persons against, and to hold the Caterpillar Indemnified
Persons harmless from, any and all Liabilities incurred or suffered by such
Persons and, without duplication, one-half (or, if different, the Caterpillar
Indemnified Persons’ Percentage Interest) of any and all Liabilities incurred or
suffered by the Company, in each case to the extent arising out of (a) any
breach of or any inaccuracy in any representation or warranty made by Navistar
or Navistar Parent in this Agreement or (b) any breach of or failure by Navistar
or Navistar Parent or any of their Affiliates to perform any covenant or
obligation of Navistar or Navistar Parent or any of their Affiliates set forth
in this Agreement.
8.3 Indemnification by
Caterpillar
From and after the
Closing and subject to the limitations set forth in this Section 8,
Caterpillar agrees to indemnify the Navistar Indemnified Persons against, and to
hold the Navistar Indemnified Persons harmless from, any and all Liabilities
incurred or suffered by such Persons and, without duplication, one-half (or, if
different, the Navistar Indemnified Persons’ Percentage Interest) of any and all
Liabilities incurred or suffered by the Company, in each case to the extent
arising out of (a) any breach of or any inaccuracy in any representation or
warranty made by Caterpillar in this Agreement or (b) any breach of or failure
by Caterpillar or any of its Affiliates to perform any covenant or obligation of
Caterpillar or any of its Affiliates set forth in this Agreement.
8.4 Limitations on
Indemnification.
8.4.1 No
claim for indemnification may be asserted nor may any Action be
commenced by either the Navistar Indemnified Persons or the Caterpillar Indemnified Persons for
breach of any representation, warranty,
covenant or agreement contained herein, unless written notice (satisfying the
requirements of Section 8.5.1) of
such claim or Action is delivered to the
Indemnifying Person on or prior to the
date on which the representation, warranty, covenant or
agreement on which such claim or Action
is based ceases to survive as set forth in Section 8.1.
8.4.2 Notwithstanding
anything to the contrary contained in this Agreement:
8.4.2.1 an
Indemnifying Person shall not be liable for
any claim for indemnification pursuant to Section 8.2 or 8.3, unless and until
the aggregate amount of indemnifiable Liabilities which may
be recovered from the Indemnifying Person and its Affiliates equals or exceeds $250,000, after which the Indemnifying Person and its Affiliates shall be
liable only for Liabilities in excess of such amount;
8.4.2.2 the
maximum amount of indemnifiable Liabilities which may be recovered from an Indemnifying Person and its Affiliates arising out of or resulting from the
causes set forth in Section 8.2 or 8.3 shall be an
amount equal to $17,500,000;
8.4.2.3 in
the event Closing occurs, no breach by Navistar or Navistar
Parent or their Affiliates of any representation and warranty set forth in Section 3.1 shall be
deemed to be a breach of this Agreement
for any purpose hereunder, and none of Caterpillar or its Affiliates shall have any claim or recourse against any
of Navistar or Navistar Parent or their respective Affiliates or Representatives, if any of Caterpillar or any of its Affiliates
had, prior to the Closing, Knowledge of any such breach;
provided, however, that the
foregoing provisions of this Section 8.4.2.3 shall
not apply if any such breach did not result in a failure of the conditions set
forth in Section
5.3.1 to be satisfied; provided, further, that if a
Caterpillar Expected Liabilities Determination provided to Navistar by
Caterpillar pursuant to Section 4.6.1 states
that Caterpillar reasonably believes that the Caterpillar Expected Liabilities
are below the Materiality Threshold, and the Liabilities incurred or suffered by
the Caterpillar Indemnified Persons resulting from the breach of or inaccuracy
in any of the representations and warranties contained in Section 3.1 exceed
the Materiality Threshold, then for purposes of this Section 8, the amount
of such Liabilities shall be deemed to be equal to $250,000, which shall be
applied to the $250,000 deductible set forth in Section
8.4.2.1;
8.4.2.4 in
the event Closing occurs, no breach by Caterpillar or its Affiliates of any
representation and warranty set forth in Section 3.2
shall be deemed to be a breach of this Agreement for any purpose hereunder, and
none of Navistar or Navistar Parent or their Affiliates shall have any claim or
recourse against any of Caterpillar or its Affiliates or Representatives, if any
of Navistar or Navistar Parent or any of their Affiliates had, prior to the
Closing, Knowledge of any such breach; provided, however, that the
foregoing provisions of this Section 8.4.2.4 shall
not apply if any such breach did not result in a failure of the conditions set
forth in Section
5.2.1 to be satisfied; provided, further, that if a
Navistar Expected Liabilities Determination provided to Caterpillar by Navistar
pursuant to Section
4.6.2 states that Navistar reasonably believes that the Navistar Expected
Liabilities are below the Materiality Threshold, and the Liabilities incurred or
suffered by the Navistar Indemnified Persons resulting from the breach of or
inaccuracy in any of the representations and warranties contained in Section 3.2 exceed
the Materiality Threshold, then for purposes of this Section 8, the amount
of such Liabilities shall be deemed to be equal to $250,000, which shall be
applied to the $250,000 deductible set forth in Section
8.4.2.1;
8.4.2.5 no Party shall have any Liability under any provision of this Agreement
for any covenant or condition expressly waived in writing by
the other Parties on or prior to the
Closing Date;
8.5 Indemnification
Procedures.
8.5.1 Claims. As
promptly as is reasonably practicable after obtaining knowledge of or receiving
notice of the assertion of any claim for indemnification under any provision in
Section 8.2 or
8.3 not
involving a claim of the type described in Section 8.5.2, but in
any event no later than fifteen (15) Business Days after first obtaining any
such knowledge or receiving any such notice, the Indemnified Person shall give
written notice to the Indemnifying Person of such claim, which notice shall
specify in reasonable detail the facts alleged to constitute the basis for such
claim and, if known, the amount of such claim, the method of computation thereof
and a reference to the provision(s) of this Agreement in respect of which such
right to indemnification arises; provided, that the
failure of the Indemnified Person to timely give such notice shall not relieve
the Indemnifying Person of its obligations under this Section 8 except to
the extent (if any) that the Indemnifying Person shall have been prejudiced
thereby.
8.5.2 Notice of Third Party
Claims. As promptly as is reasonably practicable after
obtaining knowledge of or receiving notice of the assertion of any claim, or the
commencement of any suit, action, or proceeding, by any Person not a Party in
respect of which indemnity may be sought under the terms of Section 8.2 or Section 8.3 (a
“Third Party
Claim”), but in any event no later than fifteen (15) Business Days after
first obtaining any such knowledge or receiving any such notice, the Indemnified
Person shall give written notice to the Indemnifying Person of such claim, suit,
action, or proceeding, which notice shall specify in reasonable detail the
nature of, the facts known to the Indemnified Party regarding, and, if known,
the amount of, such claim, suit, action, or proceeding; provided, that the
failure of the Indemnified Person to timely give such notice shall not relieve
the Indemnifying Person of its obligations under this Section 8 except to
the extent (if any) that the Indemnifying Person shall have been prejudiced
thereby; provided further the
Indemnifying Person is not obligated to indemnify the Indemnified Person for the
increased amount of Liabilities incurred with respect to such claim, suit,
action, or proceeding that would otherwise not have been payable or incurred if
such notice had been timely delivered.
8.5.3 Defense of Third Party
Claims. The Indemnifying Person will defend, in good faith and
at its expense, any suit, action, or proceeding set forth in a notice delivered
pursuant to Section 8.5.2
and the Indemnified Person, at its expense, may participate in the
defense. The Indemnifying Person will defend the Indemnified Person
against the matter with counsel of its reasonable choice approved by the
Indemnified Person, such approval not to be unreasonably withheld, conditioned
or delayed, and the Indemnified Person may retain separate co-counsel at its
sole cost and expense. If the Indemnifying Person does not assume the
defense of the Indemnified Person in a reasonably timely manner or does not
defend the claim in good faith, the Indemnified Person may retain counsel, as an
indemnification expense, to defend and control the defense of such suit, action,
or proceeding, and the Indemnifying Person may join but not control the
Indemnified Person in the defense of such suit, action, or proceeding and shall
be responsible for its own costs and expenses. The Indemnifying
Person shall not consent to the entry of any judgment with respect to the matter
or enter into any settlement with respect to the matter (a “Proposed
Settlement”), without the prior written consent of the Indemnified
Person, which shall not be unreasonably withheld, conditioned or delayed, except if: (x) the
relief sought is limited to money damages, and (y) the Indemnifying Person
obtains an unconditional release of the Indemnified Person, in which case, (i)
the Indemnifying Person shall notify the Indemnified Person in writing of the
Proposed Settlement, which notification shall contain all material terms of the
Proposed Settlement, and (ii) the Indemnified Person, within five (5) Business
Days after receipt of the notice, shall either consent to or refuse to consent
to, in writing, the Proposed Settlement; provided, however, that, if the
Indemnified Person refuses to consent to the Proposed Settlement, then the
Indemnified Person shall be entitled to defend and control the defense of the
matter and shall irrevocably assume all Liabilities in excess of the Proposed
Settlement amount, including all indemnifiable costs incurred after, but not
before, the date the Indemnified Person was notified of the Proposed
Settlement. A failure of the Indemnified Person to reply to the
aforementioned notice within the five (5) Business Day time frame shall be
deemed to be a consent to the Proposed Settlement.
8.5.4 Cooperation Relating to
Third Party Claims.
8.5.4.1 The
Party defending the Third Party Claim shall promptly deliver, or cause to be
delivered, to the other Parties copies of all correspondence, pleadings,
motions, briefs, appeals or other written statements relating to or submitted in
connection with the defense of the Third Party Claim and timely notices of, and
the right to participate (as an observer) in, any hearing or court proceeding or
any other proceeding relating to the Third Party Claim. The Party
defending the Third Party Claim will consider in good faith the suggestions of
the other Parties with respect to the conduct of the defense. Each
Party will make available to the other Parties or their Representatives all
records and other materials reasonably required by them for use in defending any
Third Party Claim (subject to obtaining an agreement to maintain the
confidentiality of confidential or proprietary materials in a form reasonably
acceptable to the Parties). If requested by the Party defending the
Third Party Claim, the other Parties will use their commercially reasonable
efforts to cooperate with the defending Party and its counsel in defending any
Third Party Claim or, if appropriate, in making any counterclaim against the
Person asserting the Third Party Claim, or any cross-complaint against any
Person. The defending Party will reimburse the other Parties for any
reasonable expenses directly incurred by them in cooperating with or acting at
the request of the defending Party.
8.6 Mitigation
Each Indemnified
Person shall act in good faith to mitigate Liabilities in conjunction with all
claims for which a party seeks indemnification under this Section
8.
8.7 Fraud
Nothing in this
Agreement, including Sections 3.1.14,
3.2.10, 7.2, 8.1 and 8.4, shall be deemed
to limit any rights of any Party to recover Liabilities for fraud.
8.8 No
Waiver
For the avoidance
of doubt, in the event Closing occurs, (a) neither Caterpillar’s failure to
terminate this Agreement pursuant to Section 7.1.3
nor Navistar’s failure to terminate this Agreement pursuant to Section 7.1.4
shall constitute a waiver of the rights of any Caterpillar Indemnified Person or
any Navistar Indemnified Person, respectively, with respect to any inaccuracy in
or breach of any representation or warranty set forth in this Agreement that
Caterpillar or Navistar, respectively, did not have Knowledge of at Closing, and
(b) neither the satisfaction of the conditions set forth in Section 5.3.1 nor the
satisfaction of the conditions set forth in Section 5.2.1 shall
constitute a waiver of the rights of any Caterpillar Indemnified Person or any
Navistar Indemnified Person, respectively, with respect to any inaccuracy in or
breach of any representation or warranty set forth in this Agreement that did
not result in a failure of the conditions set forth in Section 5.3.1 or
5.2.1,
respectively, to be satisfied.
9. MISCELLANEOUS
9.1 Disclaimer
THE WARRANTIES OF
EACH PARTY CONTAINED HEREIN ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
SPECIFICALLY EXCLUDED AND DISCLAIMED.
9.2 Expenses
Each Party shall
bear all of its own costs and expenses incurred in negotiating this
Agreement. No Party may make any offset against amounts due to
another Party or any of such other Party’s Affiliates pursuant to this Agreement
or otherwise.
9.3 Force
Majeure
A Party shall be
excused for any failure or delay in the performance of any of its obligations
under this Agreement (other than for the payment of money) if such failure or
delay is due to a fire, flood, earthquake, severe weather, act of God, accident,
act of war, terrorism or threats of same, condition caused by national
emergency, new or changed Law or any other act or cause beyond the reasonable
control or without the fault of such Party, whether similar to or different from
the causes above enumerated, for as long as such circumstances
prevail. The affected Party will as soon as practicable notify the
other Parties of any actual or anticipated failure or delay, and such affected
Party will act in good faith and use its commercially reasonable efforts to
mitigate any force majeure event and its consequences on performance
hereunder. The Parties shall remain liable for those obligations
under this Agreement that are not affected by the force majeure
event.
9.4 Survival
Irrespective of the
expiration or termination of this Agreement, the rights and obligations set
forth in Sections 6.2 and 7.2, 8.7 and this Section 9 shall
remain in full force and effect to the extent required for their full observance
and performance.
9.5 Good Faith Reliance on Terms
of Agreement
The Parties hereby
agree that each Party shall be entitled to rely on the provisions of this
Agreement, and no Party shall be liable to any other Party for any action or
refusal to act taken in good faith based on the terms of this
Agreement.
9.6 Counterparts
This Agreement may
be executed in one or more counterparts (including by means of facsimile), each
of which shall be deemed an original but all of which together will constitute
one and the same instrument.
9.7 Entire
Agreement
This Agreement
(including the Transaction Agreements and other documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements or representations by the Parties, written or oral,
to the extent they relate in any way to the subject matter hereof (including (a)
the Memo of Understanding, dated as of June 9, 2008, by and between
Caterpillar Inc. and Navistar International Corporation, as heretofore amended
from time to time, and (b) the Confidentiality Agreement entered into as of
May 31, 2007 between Caterpillar Inc. and International Truck and Engine
Corporation, as heretofore amended from time to time).
9.8 Succession and
Assignment
This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party may assign any
of its rights or obligations hereunder, directly or indirectly, without the
prior written consent of the other Parties.
9.9 Amendments and
Waiver
No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by each Party. No waiver by a Party of any provision of
this Agreement or any default, misrepresentation, or breach of warranty
hereunder, whether intentional or not, shall be valid unless the same shall be
in writing and signed by the Party making such waiver nor shall such waiver be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such default, misrepresentation, or breach of
warranty.
9.10 Applicable
Law
This Agreement
shall be governed by and construed and enforced in accordance with the domestic
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule (whether the State of Delaware or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than the
State of Delaware.
9.11 Venue; Waiver of Jury Trial;
Specific Performance.
9.11.1 Venue. All
suits, actions, or proceedings brought by a Party arising out of or relating to
this Agreement or any matters contemplated hereby shall be heard and determined
in a state or federal court sitting in New Castle County, Delaware, U.S.A. and
the Parties hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such suit, action, or proceeding and irrevocably waive the defense
of an inconvenient forum to the maintenance of any such suit, action, or
proceeding; provided, that the
foregoing shall not limit the rights of the Parties to obtain judgment in any
other jurisdiction or to serve process in any manner permitted by
law.
9.11.2 Waiver of Jury
Trial. EACH PARTY IRREVOCABLY AND ABSOLUTELY WAIVES THE RIGHT
TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY A PARTY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY, AND
AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH
WAIVER.
9.11.3 Specific
Performance. Notwithstanding any other provision of this
Agreement, the Parties agree that irreparable damage would occur if any of the
provisions of Section
6.2 were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties shall
be entitled to an injunction or injunctions solely to prevent breaches of Section 6.2 and to
enforce specifically the terms and provisions thereof, in addition to any other
remedy to which they are entitled at law or in equity. Except as
provided in the preceding sentence with respect to Section 6.2, the
Parties agree that neither Party shall be entitled to enforce specifically the
terms and provisions of this Agreement.
9.12 Exclusive
Remedy
The Parties acknowledge and agree that except for
cases of fraud or of breach of Section 6.2, (a) in
the event Closing does not occur, Section 7 shall be
the sole and exclusive remedy of a Party for any breach by any other Party of
the representations and warranties in this Agreement and for any failure by any
other Party to perform and comply with any covenants and agreements in this
Agreement, (b) in the event Closing occurs, the
indemnification provisions of Section 8.2 and 8.3 shall be the sole
and exclusive remedies of a Party for any breach by any other Party of the
representations and warranties in this Agreement and for any
failure by any other Party to perform and comply with any
covenants and agreements in this Agreement, and (c) anything herein to the contrary notwithstanding, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to
any right on the part of any Party, after the Closing, to rescind this Agreement or any of the transactions contemplated hereby.
9.13 Remedies
Cumulative
The remedies
provided in this Agreement shall be cumulative and, except as expressly limited
in this Agreement, shall not preclude the assertion or exercise of any other
rights or remedies available under law, in equity, or otherwise.
9.14 Severability
Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other
jurisdiction. The Parties agree to attempt in good faith to replace
any such invalid or unenforceable provision with a valid and enforceable
provision designed to achieve, to the extent possible under applicable law, the
business purpose and intent of such invalid or unenforceable
provision.
9.15 No Third Party
Beneficiaries
This Agreement
shall not confer any rights or remedies upon any Person other than the Parties
and, to the extent expressly set forth herein, their Affiliates, the Navistar
Indemnified Persons, the Caterpillar Indemnified Persons and all of their
respective successors and permitted assigns.
9.16 Construction
The Parties have
participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. 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. Unless the context requires otherwise, singular includes
plural and vice versa and any gender includes every gender, and where any word
or phrase is given a defined meaning, any other grammatical form of that word or
phrase will have a corresponding meaning. The word “including” shall
mean “including without limitation.” Unless the context requires
otherwise, the words “hereof,” “herein,” “hereunder,” “hereby,” or words of
similar import refer to this Agreement as a whole and not to any particular
Section, subsection, clause or other subdivision hereof. The word
“or” shall be disjunctive but not exclusive.
9.17 Headings
The section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this
Agreement.
9.18 Notices
Any notice,
request, instruction, or other document to be given hereunder by a Party shall
be in writing and shall be deemed to have been given (a) when received, if given
in person or by courier or a courier service, (b) on the date of transmission,
if sent by facsimile or other wire transmission (receipt confirmed), or (c) five
(5) Business Days after being deposited in the mail, certified or registered,
postage prepaid:
If to
Caterpillar:
10▇ ▇.▇. ▇▇▇▇▇
▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Deputy
General Counsel
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
If to Navistar or
Navistar Parent:
Navistar,
Inc.
42▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General
Counsel
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
With a copy (which
shall not constitute notice) to:
▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP
23▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
9.19 Disclosure
Schedules.
9.19.1 A
disclosure made by a Party in any Section of this Agreement or any Section of
such Party’s Disclosure Schedule shall not be deemed to be a disclosure for
purposes of any other Section of such Party’s Disclosure Schedule or any other
Section of this Agreement unless such disclosure is sufficient on its face to
with reasonable particularity inform the non-disclosing Party of information
required to be disclosed in another Section of this Agreement or another Section
of the Disclosure Schedule in order to avoid a misrepresentation
thereunder. In no event shall the mere listing in a Section of the
Disclosure Schedule (or the mere provision by a Party of a copy) of a document
or other item be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself, or unless the listing of a
document or item in a Section of the Disclosure Schedule informs the
non-disclosing Party with reasonable particularity of an exception to such
representation or warranty).
9.19.2 Notwithstanding
anything to the contrary contained herein, nothing in any of the Disclosure
Schedules attached hereto shall be deemed adequate to disclose an exception to a
representation or warranty made by a Party herein unless such Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail.
9.20 Incorporation of Schedules
and Exhibits
The Schedules and
Exhibits identified in this Agreement are incorporated herein by reference and
made a part hereof.
9.21 Exception to Required Use of
Commercially Reasonable Efforts
Notwithstanding
anything to the contrary contained in this Agreement, any requirement that a
Party use its commercially reasonable efforts shall not apply to matters
relating to the adoption or amendment of an Annual Business Plan or a Rolling
Business Plan.
10. DEFINITIONS
The following terms
when set forth in initial capital letters in this Agreement shall have the
respective meanings:
“Act” shall mean the
Delaware Limited Liability Company Act, Title 6, Section 18-101, et. Seq. of the
Delaware Code, and any successor statute, as the same may be amended from time
to time.
“Action” shall mean
any action, claim, lawsuit, complaint, litigation, arbitration, administrative
action, proceeding, hearing or investigation, whether by or on behalf of any
Person or any Governmental Authority.
“Affiliate” shall
mean, as to any Person, any other Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the specified Person. For purposes of this Agreement,
the term “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise;
and the terms “affiliated,” “controlling,” and “controlled” have the meanings
correlative of the foregoing. A Person shall be deemed to control
another Person if such first Person owns (a) greater than 50% of the total
combined voting power of all classes of stock or other equity interests of such
other Person entitled to vote or (b) greater than 50% of the total value of all
stock or other equity interests of such other Person. For purposes of
this Agreement, the term “Affiliate,” as it relates to either Caterpillar,
Navistar or Navistar Parent, shall be defined so as to not include the Company
or any direct or indirect wholly owned subsidiary of the Company.
“Agreement” is defined
in the preamble.
“Bankruptcy and Equity
Exceptions” is defined in Section 3.1.2.
“Blue Diamond” shall
mean, collectively, Blue Diamond Truck S.R.L. de C.V. and Blue Diamond Parts,
LLC.
“Business” shall have
the same meaning as “Business” in the Company Operating Agreement.
“Business Day” shall
mean any day that is not a Saturday, a Sunday, a legal holiday, or a day on
which banking institutions or trust companies in Illinois are authorized or
obligated by Law to close.
“Capital Contribution”
is defined in the Company Operating Agreement.
“Caterpillar” is
defined in the preamble.
“Caterpillar Alternative
Transaction” is defined in Section 4.5.2.
“Caterpillar Change in
Control” shall mean a Change in Control of Caterpillar.
“Caterpillar-Company License
Agreement” shall mean the Intellectual Property License Agreement whereby
Caterpillar and its Affiliates shall license to the Company certain Intellectual
Property.
“Caterpillar Disclosure
Schedule” shall mean the Caterpillar Disclosure Schedule set forth in the
letter, dated as of the date hereof, delivered by Caterpillar to Navistar and
Navistar Parent prior to the execution of this Agreement.
“Caterpillar Expected
Liabilities” is defined in Section
5.4.
“Caterpillar Expected
Liabilities Determination” is defined in Section
4.6.1.
“Caterpillar Indemnified
Person” shall mean Caterpillar and its Affiliates and their respective
successors, assigns, agents, employees, officers, and directors.
“Caterpillar Licensed
Intellectual Property” shall mean all Intellectual Property to be
licensed by Caterpillar and its Affiliates to the Company pursuant to the
Caterpillar-Company License Agreement.
“Caterpillar Required
Consents” shall mean all of the consents, filings and notices that are
required to be set forth in Section 5.2.3(a) of
the Caterpillar Disclosure Schedule.
“Caterpillar Trucks”
has the meaning given in the Strategic Alliance Agreement.
“Caterpillar Update”
is defined in Section 4.3.2.
“Change in Control”
shall mean, with respect to any Person, any of the following: (a) a
sale of all or substantially all of such Person’s assets (whether directly or
indirectly through one or more of such Person’s subsidiaries or Affiliates) to
one or more Competing Persons, (b) a sale of more than 50% of all of the
outstanding voting equity interests in such Person to one or more Competing
Persons acting individually or as a “group” under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, (c) a merger or consolidation of
such Person with one or more Competing Persons in which the stockholders of such
Competing Persons as of immediately prior to the record date pertaining to such
merger or consolidation are in control of the Person surviving such merger or
consolidation, and (d) the entry by such Person into a definitive agreement with
respect to any of the transactions described in clauses (a), (b) and (c) or the public
announcement by one or more Competing Persons (acting individually or as a
"group" under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) of their intent to acquire more than fifty percent (50%) of the
outstanding voting equity interests in such Person, in the case of each of clauses (a), (b), and (c), in a single
transaction or through a series of related transactions. For purposes
of clause (c)
of the immediately preceding sentence, the term “control” when used with respect
to any Person means the ownership of more than fifty percent (50%) of the
outstanding voting equity interests in such Person.
“Closing” is defined
in Section 2.1.
“Closing Date” is
defined in Section 2.1.
"Company" is defined
in Section 1.1.
“Company Indemnified
Person” is defined in the Company Operating Agreement.
“Company Operating
Agreement” is defined in Section
2.2.1.
“Competing Person”
shall mean, as to any particular time, (a) a Person that manufactures trucks
that are in competition with any or all of the ROW Defined Business, any
business of Caterpillar that generated more than $300,000,000 in annual revenue
during the then most recent complete fiscal year of Caterpillar, or any business
of Navistar that generated more than $300,000,000 in annual revenue during the
then most recent complete fiscal year of Navistar, and (b) any subsidiary or
Affiliate of such Person.
“Confidential
Information” shall mean information disclosed by the Disclosing Party to
the Receiving Party in connection with this Agreement that is confidential or
proprietary. Notwithstanding the foregoing, Confidential Information
does not include information that is (a) at the time of its disclosure, or
thereafter becomes, part of the public domain through no act or fault of the
Receiving Party, (b) known to the Receiving Party at the time of its disclosure
by the Disclosing Party, (c) independently developed by the Receiving Party
without reference to the information disclosed, or (d) rightfully disclosed to
the Receiving Party by a third party not subject to an obligation of
confidentiality with respect to the information disclosed.
“Contract” shall mean
any agreement, contract, lease, sublease, note, loan, evidence of Indebtedness,
indenture, guarantee, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, sublicense,
instrument, obligation, commitment, purchase and sales order, quotation and
other executory commitment, whether oral or written, express or implied, and
that pursuant to its terms has not expired, terminated or been fully performed
by the parties thereto.
“Core ROW Countries”
shall mean China, Russia, Brazil, South Africa, Australia, and
Turkey.
“Development
Agreement” shall mean that certain Development Agreement, dated as of
September 3, 2008, between Navistar and Caterpillar.
“Disclosing Party” is
defined in Section 6.2.1.
“Disclosure Schedule”
shall mean the Caterpillar Disclosure Schedule and the Navistar Disclosure
Schedule.
“GAAP” means United
States generally accepted accounting principles and practices applied on a
consistent basis.
“Governmental
Authority” shall mean any domestic or foreign governmental,
administrative, legislative, judicial, regulatory or arbitral
authority.
“Heavy Duty Truck” is
defined in the Company Operating Agreement.
“Indebtedness” shall
mean, with respect to any Person, the sum of the following (without
duplication): (a) all Liabilities of such Person for borrowed money,
including any and all interest, prepayment penalties, premiums, fees and
expenses, breakage and similar charges payable); (b) all Liabilities of
such Person evidenced by notes, bonds, debentures or other similar instruments
or under any interest rate swap agreements or other derivative instruments; (c)
all Liabilities of such Person as lessee under leases that have been or should
be, in accordance with GAAP, recorded on the balance sheet of such Person on
account of capital leases plus all balloon, residual, buy back or similar
payments payable or otherwise required to convey to the company good and valid
title to the related underlying assets, free and clear of all Liens; (d) all
Liabilities of such Person under acceptance, letter of credit or similar
facilities or by which a Person otherwise assures a creditor against loss, other
than Liabilities of such Person under letters of credit created in the ordinary
course of business of such Person; and (e) all indebtedness of others
referred to in clauses
(a) through (d) above guaranteed
directly or indirectly in any manner by such Person.
“Indemnified Person”
shall mean the Person or Persons entitled to, or claiming a right to,
indemnification under Section 8.
“Indemnifying Person”
shall mean the Person or Persons obligated to provide indemnification under
Section 8.
“Intellectual
Property” shall mean trade secrets, ideas, inventions, designs, utility
models, developments, devices, methods or processes (whether patented or
patentable and whether or not reduced to practice) and all patents and patent
applications related thereto; copyrightable works and mask works (whether or not
registered); trademarks, service marks and trade dress; all registrations and
applications for registration related thereto; know-how; and all other
intellectual or industrial property rights in any jurisdiction.
“Knowledge” shall mean
the actual knowledge, following reasonable inquiry, of (a) with respect to
Navistar, those Persons listed in Section A of the
Navistar Disclosure Schedule and (b) with respect to Caterpillar, those Persons
listed in Section
A of the Caterpillar Disclosure Schedule. The standard of
reasonable inquiry set forth in the preceding sentence shall include making
reasonable inquiry of those Persons who report directly to any of the Persons
listed in Section
A of the Navistar Disclosure Schedule and Section A of the
Caterpillar Disclosure Schedule, as applicable.
“Law” shall mean any
foreign or domestic law, statute, code, ordinance, rule, regulation, order,
judgment, writ, stipulation, award, injunction or decree of a Governmental
Authority.
“Liabilities” means
any and all liability, debt, obligation, deficiency, Tax, penalty, fine, claim,
cause of action, or other loss, fee, cost or expense of any kind or nature
whatsoever, in each case whether asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, and whether due or to become
due and regardless of when asserted.
“Lien” shall mean any
lien, pledge, claim, security interest, encumbrance or similar interest of any
kind whatsoever.
“Mahindra Agreement”
shall mean that certain Joint Venture Agreement, dated November 17, 2005, by and
among Mahindra & Mahindra Limited, International Truck and Engine
Corporation, Mahindra International Private Limited, International Truck and
Engine Mauritius Holding Ltd. and International Truck and Engine Corporation
Cayman Islands Holding Company.
“Mahindra JV” shall
mean the joint venture that exists pursuant to the Mahindra
Agreement.
“Mahindra Territory”
shall mean India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Myanmar and
Malaysia.
“Mahindra Waiver”
shall mean that certain Waiver of Certain Provisions to Joint Venture Agreement
to be entered into by and among Mahindra & Mahindra Limited, Navistar Inc.
(f/k/a International Truck and Engine Corporation), Mahindra Navistar
Automotives Limited (f/k/a Mahindra International Private Limited),
International Truck and Engine Mauritius Holding Ltd. and International Truck
and Engine Corporation Cayman Islands Holding Company substantially in the form
agreed to by the Parties.
“MAN” shall mean MAN
Nutzfahreuge AG, a company of the Federal Republic of Germany.
“MAN Agreement” shall
mean, collectively, that certain Strategic Cooperation Agreement, dated as of
October 1, 2004, as amended by Amendment No. 1 to the Strategic Cooperation
Agreement, dated as of December 3, 2004, that certain Genesis Engine Project
Development and License Agreement, dated as of December 3, 2004, and that
certain Supply Agreement, dated as of March 1, 2007, each by and between MAN and
International Truck and Engine Corporation.
“Material Adverse
Effect” shall mean, with respect to any Person, the ROW Medium and Heavy
Duty Truck Navistar Business or the Worldwide Medium and Heavy Duty Truck
Navistar Business, any change, event, development or effect that would be
materially adverse to the business, assets, Liabilities, condition (financial or
otherwise) or results of operations, in each case, when viewed on both a
short-term basis and a long-term basis, of such Person (and such Person’s
Affiliates, taken as a whole), the ROW Medium and Heavy Duty Truck Navistar
Business or the Worldwide Medium and Heavy Duty Truck Navistar Business, or to
the ability of such Person to consummate timely the transactions contemplated
hereby; provided, that none
of the following shall be deemed to constitute, and none of the following shall
be taken into account in determining whether there has been, a Material Adverse
Effect: (a) any adverse change, event, development, or effect arising from
or relating to (i) general business or economic conditions,
(ii) national or international political or social conditions, including
the engagement by the United States in hostilities, whether or not pursuant to
the declaration of a national emergency or war, or the occurrence of any
military or terrorist attack upon the United States, or any of its territories,
possessions, or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (iii) financial,
banking, credit, or securities markets, including any disruption thereof and any
decline in the price of any security or any market index, (iv) changes in
GAAP, (v) changes in Laws, (vi) the taking of any action required by
this Agreement or any Transaction Agreement, or (vii) the disclosure of
this Agreement or the transactions contemplated hereby, (b) any existing
event, occurrence, or circumstance that is disclosed in reasonable detail on the
Navistar Disclosure Schedule or the Caterpillar Disclosure Schedule, and
(c) any adverse change in or effect on such Person, the ROW Medium and
Heavy Duty Truck Navistar Business or the Worldwide Medium and Heavy Duty Truck
Navistar Business that is cured before the earlier of (i) the Closing Date
and (ii) the date on which this Agreement is terminated pursuant to Section 7.
“Materiality
Threshold” is defined in Section
5.4.
“Medium Duty Truck” is
defined in the Company Operating Agreement.
“Navistar” is defined
in the preamble.
“Navistar Alternative
Transaction” is defined in Section 4.5.1.
“Navistar Change in
Control” shall mean a Change in Control of Navistar.
“Navistar-Caterpillar
Post-Termination License Agreement” shall mean the Post-Termination
License Agreement whereby, upon termination of the Company Operating Agreement,
Navistar and its Affiliates shall license to Caterpillar certain Intellectual
Property.
“Navistar-Company License
Agreement” shall mean the Intellectual Property License Agreement whereby
Navistar and its Affiliates shall license to the Company certain Intellectual
Property.
“Navistar Contracts”
is defined in Section 3.1.9.
“Navistar Credit
Agreement” shall mean that certain Credit Agreement, dated as of January
19, 2007, as may be amended from time to time, among Navistar International
Corporation (as Borrower), the Subsidiary Guarantors party thereto, the Lenders
party thereto, JPMorgan Chase Bank, N.A. (as Administrative Agent), Credit
Suisse Securities (USA) LLC (as Syndication Agent), Banc of America Securities
LLC, Citigroup Global Markets Inc. (as Co-Documentation Agents), ▇.▇. ▇▇▇▇▇▇
Securities Inc. (as Joint Lead Arranger and Joint Bookrunner), Credit Suisse
Securities (USA) LLC (as Joint Lead Arranger and Joint Bookrunner), and Banc of
America Securities LLC (as Joint Lead Arranger).
“Navistar Disclosure
Schedule” shall mean the Navistar Disclosure Schedule set forth in the
letter, dated as of the date hereof, delivered by Navistar and Navistar Parent
to Caterpillar prior to the execution of this Agreement.
“Navistar Expected
Liabilities” is defined in Section
5.4.
“Navistar Expected
Liabilities Determination” is defined in Section
4.6.2.
“Navistar Indemnified
Person” shall mean Navistar, Navistar Parent and their Affiliates, and
their respective successors, assigns, agents, employees, officers, and
directors.
“Navistar Licensed
Intellectual Property” shall mean all Intellectual Property to be
licensed by Navistar and its Affiliates to the Company pursuant to the
Navistar-Company License Agreement.
“Navistar Parent” is
defined in the preamble.
“Navistar Required
Consents” shall mean all of the consents, filings and notices that are
required to be set forth set forth in Section 5.3.3(a) of
the Navistar Disclosure Schedule.
“Navistar Update” is
defined in Section 4.3.1.
“North American Severe
Service Navistar Business” shall mean Navistar’s development, production,
sales and support of Caterpillar Trucks pursuant to the terms and conditions of
the Strategic Alliance Agreement and its Related Agreements (as defined in the
Strategic Alliance Agreement).
“Order” shall mean any
award, decision, injunction, judgment, order, decree, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Authority or by any arbitrator.
“Outside Date” is
defined in Section
7.1.2.
“Party” or “Parties” is defined
in the preamble.
“Permitted Liens”
means (a) Liens for Taxes that are not yet delinquent or that are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP; (b) workers’, mechanics’,
materialmen’s, repairmen’s, suppliers’, carriers’ or similar Liens arising in
the ordinary course of business with respect to obligations that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP; (c)
covenants, zoning restrictions, easements, licenses, or other restrictions on
the use of real property or other irregularities in title (including leasehold
title) thereto that do not or would not reasonably be expected to materially
impair the use of such real property, leases or leasehold estates; and (d) Liens
released at or prior to the Closing.
“Person” means any
individual or corporation, association, partnership, limited liability company,
joint venture, joint stock, or other company, business trust, trust,
organization, Governmental Authority, or other entity of any kind.
“Proposed Settlement”
is defined in Section
8.5.3.
“Receiving Party” is
defined in Section 6.2.1.
“Representatives”
shall mean the officers, employees, consultants, agents, accountants, attorneys,
and other representatives of a Person.
“ROW” shall mean every
country in the world other than the United States (which shall exclude all
territories thereof other than Puerto Rico), Canada, and Mexico and the Mahindra
Territory.
“ROW Defined Business”
shall mean, with respect to any Person, (a) developing, designing, testing,
manufacturing, assembling, branding, marketing, selling (including providing
purchase financing to customers), and distributing and providing product support
for Medium Duty Trucks and Heavy Duty Trucks and replacement parts therefor, and
(b) licensing to any other Person the right to perform the actions set forth in
clause (a) on
behalf of such first Person or its subsidiaries, in each case, as conducted by
such first Person and its subsidiaries from time to time in the
ROW.
“ROW Medium and Heavy Duty
Truck Company Business” shall mean (a) developing, designing, testing,
manufacturing, assembling, branding, marketing, selling (including providing
purchase financing to customers), and distributing and providing product support
for Medium Duty Trucks and Heavy Duty Trucks and replacement parts therefor, and
(b) licensing to any Person the right to perform the actions set forth in clause (a) on behalf
of the Company or its subsidiaries, in each case, as conducted by the Company
and its subsidiaries from time to time in the ROW.
“ROW Medium and Heavy Duty
Truck Navistar Business” shall mean (a) developing, designing, testing,
manufacturing, assembling, branding, marketing, selling (including providing
purchase financing to customers), and distributing and providing product support
for Medium Duty Trucks and Heavy Duty Trucks and replacement parts therefor, and
(b) licensing to any Person the right to perform the actions set forth in clause (a) on behalf
of Navistar, Navistar Parent or their Affiliates, in each case, as conducted by
Navistar, Navistar Parent and their Affiliates from time to time in the
ROW.
“Strategic Alliance
Agreement" is defined in Schedule 1
hereto.
“Tax” means any
federal, state, local or foreign net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, value-added, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax of any kind whatsoever imposed by any
Taxing Authority.
“Taxing Authority”
means any Governmental Authority responsible for the administration or
imposition of any Tax.
“Third Party Claim” is
defined in Section
8.5.2.
“Transaction
Agreements” shall mean each agreement described in Section
2.2.
“Worldwide Medium and Heavy
Duty Truck Navistar Business” shall mean (a) developing, designing,
testing, manufacturing, assembling, branding, marketing, selling (including
providing purchase financing to customers), and distributing and providing
product support for Medium Duty Trucks and Heavy Duty Trucks and replacement
parts therefor, and (b) licensing to any Person the right to perform the actions
set forth in clause
(a) on behalf of Navistar, Navistar Parent or their Affiliates, in each
case, as conducted by Navistar, Navistar Parent and their Affiliates from time
to time anywhere in the world.
IN WITNESS WHEREOF,
Caterpillar, Navistar and Navistar Parent have caused this Truck Business
Relationship Agreement to be signed by their respective duly authorized
representatives as of the day and year first above written.
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇
Name: ▇▇▇▇▇
▇. ▇▇▇▇▇
Its: Chairman
of the Board and Chief Executive
Officer
NAVISTAR,
INC.
By: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Its: Chairman,
President and Chief Executive
Officer
NAVISTAR
INTERNATIONAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇.
Ustain
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Its: Chairman,
President and Chief Executive
Officer
SCHEDULE
1
ROW JV
AGREEMENTS
1. Company
Operating Agreement.
2. Master
Component Supply Agreement No. 1 between the Company and Caterpillar whereby the
Company agrees to purchase and Caterpillar agrees to sell the components, parts
and other products described therein.
3. Master
Component Supply Agreement No. 2 between the Company and Navistar whereby the
Company agrees to purchase and Navistar agrees to sell the components, parts and
other products described therein.
4. Master
Component Supply Agreement No. 3 between Navistar and Caterpillar whereby
Navistar agrees to purchase and Caterpillar agrees to sell the components
described therein.
5. Master
Terms for Purchased Services between the Company and Caterpillar whereby
Caterpillar agrees to provide certain services to the Company.
6. Master
Terms for Purchased Services between the Company and Navistar whereby Navistar
agrees to provide certain services to the Company.
7. Intellectual
Property License Agreement between the Company and Caterpillar whereby
Caterpillar and its Affiliates grant to the Company a royalty-free license to
the Intellectual Property described therein.
8. Intellectual
Property License Agreement between the Company and Navistar whereby Navistar and
its Affiliates grant to the Company a royalty-free license to the Intellectual
Property described therein.
9. Trademark
License Agreement between the Company and Caterpillar whereby Caterpillar agrees
to license the trademarks described therein to the Company.
10. Trademark
License Agreement between the Company and Navistar whereby Navistar agrees to
license the trademarks described therein to the Company.
11. Intellectual
Property License Agreement between the Company and Caterpillar whereby the
Company grants Caterpillar a royalty-bearing license to utilize the Intellectual
Property described therein.
12. Intellectual
Property License Agreement between the Company and Navistar whereby the Company
grants Navistar a royalty-bearing license to utilize the Intellectual Property
described therein.
13. Master
Development Services Agreement between the Company and Caterpillar whereby
Caterpillar agrees to perform development work that is funded in its entirety by
the Company.
14. Master
Development Services Agreement between the Company and Navistar whereby Navistar
agrees to perform development work that is funded in its entirety by the
Company.
15. Purchase
Schedule to Master Component Supply Agreement No. 2 between Navistar and the
Company whereby Navistar agrees to sell and the Company agrees to purchase the
components that are part of
complete knock-down kits for JV Trucks to be sold in South Africa, Australia and
Russia immediately following the Closing.
16. Purchase
Schedule to Master Component Supply Agreement No. 1 between Caterpillar and the
Company whereby Caterpillar agrees to sell and the Company agrees to purchase
the components that are part of
complete knock-down kits for JV Trucks to be sold in South Africa, Australia and
Russia immediately following the Closing.
17. Truck
Sales Agreement between Navistar and the Company setting forth terms and
conditions of the production and sale of JV Trucks by Navistar to the Company
(the “ROW
TSA”).
18. Employee
Secondment Agreement between the Company and Caterpillar whereby Caterpillar
agrees to second certain employees to the Company.
19. Employee
Secondment Agreement between the Company and Navistar whereby Navistar agrees to
second certain employees to the Company.
20. Sharing
Agreement between Caterpillar and Navistar setting forth their respective rights
and obligations regarding certain profit sharing matters.
NORTH AMERICAN SEVERE
SERVICE AGREEMENTS
1. NASS
Strategic Alliance Agreement between Navistar and Caterpillar (the “Strategic Alliance
Agreement”).
2. NASS
Truck Sales Agreement between Navistar and Caterpillar.
3. Master
Component Supply Agreement No. 4 between Navistar and Caterpillar.
4. NASS
Master Development Agreement between Navistar and Caterpillar.
5. NASS
General Terms.
6. NASS
Program Description No. 1.
CROSSOVER
AGREEMENTS
1. Master
Component Supply Agreement No. 5 between Navistar and Caterpillar.
2. Master
Component Supply Agreement No. 6 between Caterpillar and the Company whereby the
Company agrees to sell and Caterpillar agrees to purchase the replacement parts
described therein.
3. Master
Component Supply Agreement No. 7 between Navistar and the Company whereby the
Company agrees to sell and Navistar agrees to purchase the replacement parts
described therein.
4. Master
Component Supply Agreement No. 9 between Caterpillar and the Company whereby the
Company agrees to sell and Caterpillar agrees to purchase the components, parts
and other products described therein.
5. Master
Component Supply Agreement No. 8 between Navistar and the Company whereby the
Company agrees to sell and Navistar agrees to purchase the components, parts and
other products described therein.
SCHEDULE
4.1
I. ITEMS TO
BE AGREED UPON.
A. ROW
JV.
1. The
plans for each of Russia, South Africa and Australia with respect to definitive
branding strategy, a list of those particular Navistar Truck Models (if any) and
Caterpillar Truck Models (if any) to be sold by the Company (together with an
introduction date for each such model) and a selection of the JV Dealer(s) and
incorporation of such agreed upon plans into the Initial Annual Business Plan
and the Initial Rolling Business Plan.
2. Mutually
acceptable agreement regarding the Company’s purchase of inventory and related
assets associated with the ROW Medium and Heavy Duty Truck Navistar Business,
which agreement will not be unreasonably withheld by Caterpillar or
Navistar.
3. Mutually
acceptable agreement (e.g., assumption by the Company, sublease by Navistar to
the Company, termination by Navistar, or otherwise) regarding contracts related
to the ROW Medium and Heavy Duty Truck Navistar Business, including those
contracts identified on Schedule 4.1(a),
which agreement will not be unreasonably withheld by Caterpillar or
Navistar.
4. Initial
Staffing Plan.1
5. Employee
Secondment Agreement between the Company and Navistar, whereby Navistar agrees
to second certain employees to the Company.
6. Employee
Secondment Agreement between the Company and Caterpillar, whereby Caterpillar
agrees to second certain employees to the Company.
7. Initial
compensation plans applicable to Company employees.
8. Initial
incentive compensation plans applicable to Company employees and Company
seconded personnel.
9. JV Dealer Agreement(s) for
JV Dealers selling Navistar Truck Models.
10. JV
Dealer Agreement(s) for JV Dealers selling Caterpillar Truck
Models.
11. Heavy
Duty ▇▇▇ Truck Sales Agreement between the Company and Navistar whereby the
Company agrees to sell Heavy Duty ▇▇▇ Trucks to Navistar for re-sale in North
America.
12. North
American Medium Duty ▇▇▇ Truck Sales Agreement between the Company and Navistar
whereby the Company agrees to sell North American Medium Duty ▇▇▇ Trucks to
Navistar for re-sale in North America.
13. Heavy
Duty ▇▇▇ Truck Master Development Services Agreement whereby the Company agrees
to perform development work that is funded in its entirety by Navistar for
Navistar’s Heavy Duty ▇▇▇ Trucks sold in North America.
14. North
American Medium Duty ▇▇▇ Truck Master Development Services Agreement whereby the
Company agrees to perform development work that is funded in its entirety by
Navistar for Navistar’s North American Medium Duty ▇▇▇ Trucks sold in North
America.
15. Vocational
Heavy Duty ▇▇▇ Truck Sales Agreement between the Company and Caterpillar whereby
the Company agrees to sell Vocational Heavy Duty ▇▇▇ Trucks to Caterpillar for
re-sale in North America.
16. Vocational
Heavy Duty ▇▇▇ Truck Master Development Services Agreement whereby the Company
agrees to perform development work that is funded in its entirety by Caterpillar
for Caterpillar’s Vocational Heavy Duty ▇▇▇ Trucks sold in North
America.
17. Post-Termination
Truck Sales Agreement2 between Caterpillar and Navistar setting forth
terms and conditions of the production and sale of JV Trucks by Navistar to
Caterpillar.
18. Post-Termination
Truck Sales Agreement2 between
the Company and Caterpillar setting forth terms and conditions of the production
and sale of JV Trucks by the Company to Caterpillar.
19. Post-Termination
Truck Sales Agreement2 between
the Company and Navistar setting forth terms and conditions of the production
and sale of JV Trucks by the Company to Navistar.
20. Post-Termination
Truck Sales Agreement2 between
Navistar and the Company setting forth terms and conditions of the production
and sale of JV Trucks by Navistar to the Company.
21. Post-Termination
Master Component Supply Agreement3 between Caterpillar and Navistar whereby
Caterpillar agrees to purchase and Navistar agrees to sell the components, parts
and other products described therein.
22. Post-Termination
Master Component Supply Agreement3 between
Navistar and Caterpillar whereby Navistar agrees to purchase and Caterpillar
agrees to sell the components, parts and other products described
therein.
23. Post-Termination
Master Component Supply Agreement4 between
Caterpillar and the Company whereby Caterpillar agrees to purchase and the
Company agrees to sell the components, parts and other products described
therein.
24. Post-Termination
Master Component Supply Agreement4 between the Company and Caterpillar whereby
the Company agrees to purchase and Caterpillar agrees to sell the components,
parts and other products described therein.
25. Post-Termination
Master Component Supply Agreement4 between
Navistar and the Company whereby Navistar agrees to purchase and the Company
agrees to sell the components, parts and other products described
therein.
26. Post-Termination
Master Component Supply Agreement4 between
the Company and Navistar whereby the Company agrees to purchase and Navistar
agrees to sell the components, parts and other products described
therein.
27. Post-Termination
Transition Services Agreement5 between Caterpillar and Navistar whereby
Caterpillar agrees to provide certain transition services to
Navistar.
28. Post-Termination
Transition Services Agreement5 between
Navistar and Caterpillar whereby Navistar agrees to provide certain transition
services to Caterpillar.
29. Post-Termination
Transition Services Agreement5 between
the Company and Caterpillar whereby Caterpillar agrees to provide certain
transition services to the Company.
30. Post-Termination
Transition Services Agreement5 between
the Company and Navistar whereby Navistar agrees to provide certain transition
services to the Company.
31. Post-Termination
Transition Services Agreement5 between
Caterpillar and the Company whereby the Company agrees to provide certain
transition services to Caterpillar.
32. Post-Termination
Transition Services Agreement5 between
Navistar and the Company whereby the Company agrees to provide certain
transition services to Navistar.
33. Post-Termination
Marketing Services Fee Agreement6 between Caterpillar and Navistar whereby
Navistar agrees to pay a marketing services fee to Caterpillar.
34. Post-Termination
Marketing Services Fee Agreement6 between
the Company and Navistar whereby Navistar agrees to pay a marketing services fee
to the Company (if buy-out of Navistar's interest by Caterpillar).
35. Post-Termination
Marketing Services Fee Agreement6 between
the Company and Caterpillar whereby the Company agrees to pay a marketing
services fee to Caterpillar (if buy-out of Caterpillar's interest by
Navistar).
36. Engine
strategy that meets the Company's product needs through the expiration of Euro
IV and Euro V emissions standards, and all necessary consents and authorizations
satisfactory to Caterpillar and Navistar to allow the Company to carry out such
engine strategy.
37. Adjustment
of the Baseline Profit Amount in accordance with Section 4.1.2 of the Truck
Business Relationship Agreement.
38. Finalization
of invoice timing and passage of title under the ROW TSA with respect to JV
Trucks sent to body builders or truck processing centers prior to delivery to
Buyer.
39. Metrics
for Navistar's on-time delivery performance and quality performance for trucks
sold to the Company.
40. Company
truck equipment manufacturer (“TEM”) strategy and
the rights of Caterpillar and Navistar with respect thereto.
41. Statements
of Work under the Master Terms for Purchased Services between Navistar and the
Company and the Master Terms for Purchased Services between Caterpillar and the
Company, for the provision of services to the Company including Statements of
Work for: (a) Contract Administration; Warranty Recovery; Supplier Negotiations;
(b) General Accounting and Finance; (c) Financial Management/Treasury; (d)
General IT Services; (e) Marketing Services; (f) Marketing Research; (g)
Purchasing; (h) Application Software/System Development; (i) Technical Services
Support; (j) Parts and Service; (k) Payroll; (l) HR and Employee Benefits
Administration; (m) Safety; (n) Environmental Services; (o) Compliance; (p)
Audit; (q) Tax; and (r) Research and Development Services and Engineering
Services other than such services related to product design and product
development (including manufacturing engineering, application engineering and
sales engineering).
42. Mutually
acceptable agreement regarding the Company’s purchase of IIAA’s ICMS tax
credits, which agreement will not be unreasonably withheld by Caterpillar or
Navistar.
B. NORTH
AMERICAN SEVERE SERVICE.
1. Strategic
Alliance Agreement:
a. 2.1.b.
Exclusions from Keep Fair Standard (including Ex. G to the Strategic Alliance
Agreement).
b. 2.3.b.ii.
Dashboard Methodology in the Strategic Alliance Agreement between Navistar and
Caterpillar.
c. 3.2.d.
Methodology to determine "Obligation Range" in the Strategic Alliance Agreement
between Navistar and Caterpillar.
d. 7.2.c.ii.
Finalize Material Breach Cure Periods.
e. 7.3.
Contractual Structure for the post-termination supply of Caterpillar Trucks
(where applicable).
f. 9.12.
Survival and Post-Termination agreements.
2. NASS
Truck Sales Agreement between Navistar and Caterpillar:
a. Sections
2.11.1 and 2.11.2 - Sale of Trucks within the Territory and export outside the
Territory.
b. Section
5.7.b. - Emissions Compliance for use outside the Territory – (linked to a.
above).
c. Section
7.6 - Survival rights and obligations.
d. Exhibit
H – Pricing, Sec. II.4 – more detailed definition of Net Plant Cost to be
agreed.
3. Post-Termination
IP License Agreement between Navistar and Caterpillar.
4. Other
Post-Termination Agreements TBD.
II. ACTIONS
TO BE TAKEN.
A. ROW
JV.
1. Caterpillar
will appoint the three individuals who will serve as Caterpillar's
Representatives on the Board.
2. Navistar
will appoint the three individuals who will serve as Navistar's Representatives
on the Board.
3. Caterpillar
will appoint one of its three Representatives on the Board as the initial
chairman of the Board.
4. Nomination
and appointment of the initial President, Chief Financial Officer and Secretary
of the Company.
5. Navistar
to implement the U.S. export parts policy mutually agreed by the Parties prior
to the signing of this Agreement.
6. If
required, formation of subsidiaries in Core ROW Countries and/or making any
required governmental filings and obtaining required consents in such
countries.
7. Agree
on:
A. Company's
accounting information systems and processes.
B. Company's
financial auditors.
C. Company's
treasury systems and processes.
D. Company's
tax structure and filing processes (federal and state income taxes, sales taxes,
property taxes, employment taxes, and international taxes).
E. Percentage
▇▇▇▇-up for engineering services provided to the Company by the
Members.
8. Navistar
and Caterpillar to complete Schedule 15.3.3.2 to
the Company Operating Agreement.
9. Receipt
of written consent from the Mahindra JV regarding Caterpillar’s rights under
Section 3 of
the Sharing Agreement.
10. Mutually
acceptable agreement on the Company’s insurance coverage and
requirements.
11. Receipt
of the Mahindra Waiver duly executed and delivered by the parties thereto and in
substantially the form agreed by Navistar, Caterpillar and Mahindra prior to the
date of this Agreement.
B. NORTH
AMERICAN SEVERE SERVICE.
1. Navistar
to petition Alabama Department of Environmental Management once Navistar’s
environmental group approves use of such paint.
2. Strategic
Alliance Agreement Exhibit H: Navistar to insert existing performance
metrics.
1 Initial
Staffing Plan to include seconded employees to perform an appropriate level of
engineering, manufacturing engineering, application engineering and sales
engineering.
2 Term for
Post-Termination Truck Sales Agreement not to exceed four (4)
years. Pricing methodology will be the same as under the applicable
Related Agreement.
3 Term for
Post-Termination Master Component Supply Agreement not to exceed eight (8)
years. Pricing methodology will be the same as under the applicable
Related Agreement.
4 Term for
Post-Termination Master Component Supply Agreement not to exceed eight (8)
years. Pricing methodology will be the same as under the applicable
Related Agreement.
5 Term for
Post-Termination Transition Services Agreements not to exceed one (1)
year. Pricing methodology will be the same as under the applicable
Related Agreement.
6 Term for
Post-Termination Marketing Services Fee Agreement not to exceed seven (7)
years. Marketing services fee will be equal to 2% of truck sales
revenues.
1. Agreement
of Lease, commencing June 1, 2003, between Navistar International Trucks
Southern Africa (Proprietary) Limited and Imperial Group (Propriety)
Limited.
2. Agreement
of Lease, commencing September 1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ (Proprietary) Limited and Corporate Park South Phase 5
(Proprietary) Limited.
3. Agreement
of Lease, commencing January 2, 2008, between International Truck & Engine
Overseas Corporation and Two-Tyre Services (Proprietary) Limited.
4. Service
Agreement, dated as of June 15, 2008, between Easi Wan CC and Navistar
International Trucks Southern Africa (Proprietary) Limited.
5. Acceptance
of Quotation for Supplying Payroll Outsourcing Services provided to Navistar
International Trucks Southern Africa by Softline VIP Payroll a division of
Softline (Proprietary) Limited (VIP).
6. Lease
agreement(s) for photocopiers with Nashua.
7. Lease
agreement(s) for forklifts with Toyota.
8. Non-Residential
Lease Agreement, effective as of May 10, 2004, among Fundação Corsan as Landlord
and International Caminhões do Brasil Ltda. as Tenant, related to the property
located at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇, conjunto 1002 and Boxes 98, 99, 168,
169, 170, 171, 172 and 173.
9. Simple
Lease and Services Agreement, dated as of August 4, 2007, among Copyland
Comercio Imp. e Exp. Ltda as Lessor and International Indústria Automotiva da
América Do Sul Ltda as Lessee, related to two copy machines and related
equipment.
10. Equipment
Lease Agreement, dated as of September 28, 2006, among Empresa Brasileira de
Telecomunicações S.A. - EMBRATEL as Lessor and International Indústria
Automotiva da América do Sul Ltda as Lessee, related to telephone/electrical
equipment.
11. Equipment
Lease Agreement, dated as of December 10, 2007, among SigmaOne Distribuidora de
Produtos de Teleinformática Ltda as Lessor and International Indústria
Automotiva da América do Sul Ltda as Lessee, related to
telephone/electrical equipment.
12. Parking
Spaces Lease Agreement, dated as of May 29, 2002, among ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
as Lessor and International Caminhões do Brasil Ltda. as Lessee, related to 10
parking spots at Centro Empresarial Quebec at ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇.
13. Informational
Services Agreement, dated as of January 22, 2002, among Processor Informática
Ltda as Provider and Navistar International Corp. Do Brasil Ltda. as Client,
related to Microsoft and Symantec software.
14. Services
Agreement, undated, among E-Trust S.A. as Provider and International Caminhões
Ltda. as Client, related to management of a firewall.
15. Proposal
for Warehouse Design and Implementation of New PDC in Midrand South Africa,
provided by Barloworld Logistics Africa (Proprietary) Limited on October 27,
2008, and accepted to by Navistar International Southern Africa on November 3,
2008.
16. Proposal
for IT Implementation Services, provided by Barloworld Logistics Africa
(Proprietary) Limited on January 1, 2009, and accepted by Navistar International
Southern Africa on February 10, 2009.
SCHEDULE
4.2.3
1. Brazil
2. South
Africa
EXHIBIT 1
JOINT
VENTURE
OPERATING
AGREEMENT
by
and among
NAVISTAR,
INC.
and
NC2
GLOBAL LLC
Dated
as of [__________] [·], 2009
TABLE OF
CONTENTS
|
1. GENERAL
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|
1.1 Definitions
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1.2 Effective
Date
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1.3 Formation
of the Company
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1.4 Offices
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|
1.5 Term
of Existence
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|
1.6 Related
Agreements
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|
|
1.7 Registered
Office/Agent
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2. BUSINESS
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2.1 Business
Generally
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2.2 Business
Plans
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2.3 Operations
in Core ROW Countries, Legacy Countries, and other Non-Core ROW
Countries
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|
2.4 Formation
of Subsidiaries
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2.5 Modifications
to Structure
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3. CAPITAL
STRUCTURE; FINANCING; DISTRIBUTION POLICY
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3.1 Initial
Contributions; Percentage Interests
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3.2 Additional
Contributions and Funding
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4. MEMBERS
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4.1 No
Management by Members
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4.2 Limited
Liability
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4.3 Withdrawal
or Resignation
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4.4 Meetings
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4.5 Proxies
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4.6 Action
by Members without a Meeting
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4.7 Waiver
of Notice
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4.8 Actions
Requiring Unanimous Member Consent
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4.9 Other
Activities
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4.10 Deficit
Upon Liquidation
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4.11 Company
Property; Membership Interests
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5. BOARD
OF REPRESENTATIVES
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5.1 Board
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5.2 Chairman
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5.3 Required
Vote
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5.4 Term
and Removal; Resignation of Representatives
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5.5 Vacancies
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5.6 Authority
of the Representatives
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5.7 No
Reimbursement for Expenses or Compensation
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5.8 Meetings
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5.9 Action
by Written Consent
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5.10 Waiver
of Notice
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5.11 Committees
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|
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5.12 Limitation
of Liability of Representatives
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5.13 Actions
Requiring Majority Consent of Board
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5.14 Indemnification
of Representatives, Officers, Employees and Other
Agents
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5.15 Control
of Certain Legal Proceedings
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6. OFFICERS
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6.1 Qualifications
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6.2 Nomination
and Appointment
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6.3 President
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6.4 Chief
Financial Officer
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6.5 Vice
Presidents
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6.6 Secretary
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6.7 Treasurer
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6.8 Other
Officers
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6.9 Compensation;
Reimbursement of Expenses
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7. SECONDED
PERSONNEL AND EMPLOYEES
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|
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7.1 Initial
Staffing Plan
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7.2 Seconded
Personnel
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7.3 Employees
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7.4 Compensation
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|
7.5 Management
Positions
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7.6 Labor
and Union Issues
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7.7 Non-Hire
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8. PRODUCTS
AND SERVICES SOLD BY MEMBERS TO THE COMPANY
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8.1 Generally
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8.2 Certain
Principles
|
|
|
9. JV
TRUCK MODELS; MANUFACTURE AND ASSEMBLY OF JV TRUCKS
|
|
|
9.1 JV
Truck Models
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|
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9.2 Manufacture
of JV Trucks by Navistar
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|
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9.3 Establishment
of JV Truck Assembly Facility
|
|
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9.4 JV
Truck Components
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|
|
10. JV
TRUCK REPLACEMENT PARTS
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|
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10.1 Generally
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10.2 Organization
and Management
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10.3 Purchase
and Distribution of JV Truck Replacement Parts
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10.4 Remanufacturing
Services
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|
|
10.5 Allocation
of JV Truck Replacement Parts Sold by the Company
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|
|
10.6 Allocation
of JV Truck Components and JV Truck Replacement Parts that are Sourced by
the Company from a Member
|
|
|
11. DISTRIBUTION
AND SALES; JV DEALERS
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|
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11.1 Truck
Sales
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|
11.2 Branding
Strategy; Selection of JV Truck Models
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|
|
11.3 Selection
of JV Dealers; Agreements with JV Dealers
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|
|
11.4 Marketing,
Sales, and Dealer Support and Administrative Services
|
|
|
11.5 Product
Support Responsibilities
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11.6 Financing
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12. SERVICE
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|
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12.1 Certification
as Service Providers
|
|
|
12.2 Training
of JV Dealers
|
|
|
12.3 Service
Campaigns and Guidelines for Repair
|
|
|
12.4 Service
Publications and Technical Information
|
|
|
13. WARRANTY
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|
|
13.1 Generally
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|
13.2 Sales
by the Members to the Company
|
|
|
13.3 Legacy
Warranties
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|
|
13.4 Goodwill
Policy
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|
13.5 Warranty
Administration
|
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|
13.6 Extended
Warranty or Service Coverage
|
|
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14. INTELLECTUAL
PROPERTY RIGHTS
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|
|
14.1 Members’
Intellectual Property Licenses
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14.2 Members’
Background Intellectual Property
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14.3 Company
Intellectual Property
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|
|
14.4 R&D;
Development
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|
|
14.5 Third
Party Infringement Claims
|
|
|
14.6 Post-Termination
Ownership of Certain Intellectual Property
|
|
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15. NON-COMPETITION
COVENANTS
|
|
|
15.1 Business
|
|
|
15.2 Contracts
Restricting the Company
|
|
|
15.3 Certain
Exceptions to Non-Competition Covenants
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|
|
15.4 Acquisition
of Publicly-Traded Securities
|
|
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15.5 Member
Acquisition
|
|
|
15.6 Additional
Agreements
|
|
|
16. INDEMNIFICATION
FOR DEALER LIABILITY
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|
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16.1 Dealer
Liability Indemnities
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|
16.2 Indemnification
Procedures
|
|
|
16.3 Liability
Insurance
|
|
|
17. REPRESENTATIONS
AND WARRANTIES
|
|
|
17.1 Representations
and Warranties of Members
|
|
|
17.2 Survival
of Warranties
|
|
|
18. CAPITAL
ACCOUNTS; DISTRIBUTIONS; TAX MATTERS; RECORDS
|
|
|
18.1 Capital
Account Maintenance
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|
|
18.2 Capital
Account Balances
|
|
|
18.3 Allocation
of Profits and Losses
|
|
|
18.4 Distributions
|
|
|
18.5 Regulatory
Allocations
|
|
|
18.6 Section 704(c)
of the Code; Other Tax Allocation Rules
|
|
|
18.7 Allocation
of Nonrecourse Liabilities
|
|
|
18.8 Partnership
Treatment
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|
|
18.9 Tax
Return
|
|
|
18.10 Tax
Matters Partner; Tax Elections
|
|
|
18.11 Accounting
Records
|
|
|
18.12 Reports
|
|
|
18.13 Other
Tax Information
|
|
|
18.14 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act; Internal Controls
|
|
|
18.15 Tax
Decisions by the Members
|
|
|
19. TRANSFER
OF MEMBERSHIP INTERESTS
|
|
|
19.1 Restriction
on Transfers
|
|
|
19.2 Permitted
Transfers to Subsidiaries
|
|
|
19.3 Absolute
Prohibitions on Transfers
|
|
|
20. DISPUTES
AND DEADLOCKS
|
|
|
21. TERM;
TERMINATION; DISTRIBUTIONS ON TERMINATION
|
|
|
21.1 Term
|
|
|
21.2 Termination
|
|
|
21.3 Dissolution
and Liquidation
|
|
|
21.4 Proceeds
in Liquidation
|
|
|
21.5 Distribution
of Assets on Dissolution of the Company
|
|
|
21.6 Buy-Out
Interest Option and Buy/Sell Option
|
|
|
21.7 Post-Termination
Commercial Arrangements
|
|
|
21.8 Additional
Rights
|
|
|
22. CONFIDENTIALITY;
PUBLIC ANNOUNCEMENTS
|
|
|
22.1 Treatment
of Confidential Information
|
|
|
22.2 Permitted
Disclosures
|
|
|
22.3 Disclosure
Pursuant to Applicable Law
|
|
|
22.4 Survival
of Confidentiality Obligations
|
|
|
22.5 Non-Disclosure
of Agreement; Publicity
|
|
|
22.6 No
License
|
|
|
23. MISCELLANEOUS
|
|
|
23.1 Disclaimer
|
|
|
23.2 Limitation
of Damages
|
|
|
23.3 Expenses
|
|
|
23.4 Force
Majeure
|
|
|
23.6 Further
Actions and Assurances
|
|
|
23.7 Good
Faith Reliance on Terms of Agreement
|
|
|
23.8 Counterparts
|
|
|
23.9 Entire
Agreement
|
|
|
23.10 Succession
and Assignment
|
|
|
23.11 Amendments
and Waiver
|
|
|
23.12 Applicable
Law
|
|
|
23.13 Venue
|
|
|
23.14 WAIVER
OF JURY TRIAL
|
|
|
23.15 Specific
Performance
|
|
|
23.16 Determination
of Fair Market Value
|
|
|
23.17 Remedies
Cumulative
|
|
|
23.18 Severability
|
|
|
23.19 No
Third Party Beneficiaries
|
|
|
23.20 Construction
|
|
|
23.21 Headings
|
|
|
23.22 Notices
|
|
|
23.23 Partition
|
|
|
23.24 Incorporation
of Exhibits
|
|
|
24. DEFINITIONS
|
|
EXHIBITS
Exhibit A
Certificate of Formation
Exhibit
B Navistar Legacy Profit Amount Calculation and
Indexing Methodology
SCHEDULES
Schedule
2.3.5 Legacy
Countries
Schedule
3.1.2 Percentage
Interest of each Member
Schedule
15.3.3.2 Existing Arrangements for Sales of Engine
Parts
JOINT VENTURE OPERATING
AGREEMENT
This Joint Venture
Operating Agreement (this “Agreement”) is
entered into as of [__________] [·], 2009 (the “Effective Date”), by
and among Caterpillar Inc., a corporation incorporated under the laws of the
State of Delaware and having its principal place of business at ▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Caterpillar”),
Navistar, Inc., a corporation incorporated under the laws of the State of
Delaware and having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Navistar”) (each of
Caterpillar and Navistar, a “Member” and
collectively the “Members”), NC2 Global
LLC, a limited liability company organized under the laws of the State of
Delaware and having its principal place of business at [__________], Illinois (the
“Company”)
(each of Caterpillar, Navistar, and the Company, a “Party” and
collectively the “Parties”).
RECITALS
WHEREAS, on
April [·], 2009, Caterpillar and
Navistar entered into a Truck Business Relationship Agreement (together with the
exhibits thereto, the “Truck Business Relationship
Agreement”), pursuant to which, among other things, Caterpillar and
Navistar agreed to form a joint venture company to conduct the
Business;
WHEREAS, pursuant
to the Truck Business Relationship Agreement, on [_______] [·], 2009, Caterpillar and
Navistar caused there to be filed a Certificate of Formation with the Secretary
of State of the State of Delaware to form the Company as a Delaware limited
liability company under and pursuant to the Act, and Caterpillar and Navistar
were the sole members of the Company at the time of its formation;
and
WHEREAS, pursuant
to the Truck Business Relationship Agreement, the Parties desire to enter into
this Agreement for the purpose of setting forth the respective rights, powers
and interests of the Members with respect to the Company and providing for the
operation of the Company from and after the Effective Date.
NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties hereby agree as follows:
1. GENERAL
1.1 Definitions
Unless otherwise
defined herein, capitalized terms used in this Agreement are defined in Section 24.
1.2 Effective
Date
The provisions of
this Agreement shall take effect on the Effective Date.
1.3 Formation of the
Company
On
[__________] [·], 2009, Caterpillar and
Navistar caused the Company to be formed under the laws of the State of Delaware
as a limited liability company named NC2 Global
LLC. All business of the Company shall be conducted under that name
or any fictitious name selected by the Board from time to time upon Majority
Consent; provided, that any
such name reflects the Company’s status as a limited liability company and is
otherwise permitted by applicable law. A copy of the Certificate of
Formation of the Company is attached as Exhibit
A.
1.4 Offices
From and after the
Effective Date, the principal office of the Company shall be located at [_______], Illinois or any
other location or locations approved by the Board from time to time upon
Majority Consent. The Company shall qualify to do business or
register as a foreign limited liability company in each jurisdiction in which
the Board deems such qualification or registration to be necessary.
1.5 Term of
Existence
The term of the
existence of the Company shall be as provided in Section 21.
1.6 Related
Agreements
Each Party, as
applicable, has executed and delivered, as of the Effective Date, or has agreed
upon the final form of, the agreements or documents set forth in this Section 1.6
(collectively, the “Related Agreements”)
to which it is or shall be a party. Each Related Agreement that is
not executed and delivered on or prior to the Effective Date shall be executed
and delivered by the parties thereto, in the form thereof agreed to by the
Parties, at such time as is provided for under the terms of this Agreement1.
1.6.1 (i) a Master
Component Supply Agreement between the Company (on the one hand) and Caterpillar
or Navistar (on the other hand), in each case, whereby the Company agrees to
purchase and such Member agrees to sell the JV Truck Components, JV Truck
Replacement Parts and other products described therein; (ii) a Master Component
Supply Agreement between Navistar and Caterpillar, whereby Navistar agrees to
purchase and Caterpillar agrees to sell the JV Truck Components, JV Truck
Replacement Parts and other products described therein; (iii) a Master Component
Supply Agreement between the Company (on the one hand) and Caterpillar or
Navistar (on the other hand), in each case, whereby the Company agrees to sell
and such Member agrees to purchase the replacement parts described therein; and
(iv) a Master Component Supply Agreement between the Company (on the one hand)
and Caterpillar and Navistar (on the other hand), in each case, whereby the
Company agrees to sell and such Member agrees to purchase the components,
replacement parts and other products described therein (each such agreement, a
“Master Component
Supply Agreement”);
1.6.2 the Master Terms
for Purchased Services between the Company (on the one hand) and Caterpillar or
Navistar (on the other hand), in each case, whereby such Member agrees to
provide certain services to the Company (each such agreement, a “Master Terms for Purchased
Services”);
1.6.3 an Intellectual
Property License Agreement between the Company (on the one hand) and Navistar or
Caterpillar or any of their Affiliates (on the other hand), in each case,
whereby such Member agrees to license the Intellectual Property described
therein to the Company (each such agreement, an “Intellectual Property
License Agreement”);
1.6.4 a Trademark License
Agreement between the Company (on the one hand) and Navistar or Caterpillar (on
the other hand), in each case, whereby such Member agrees to license the
trademarks described therein to the Company (each such agreement, a “Trademark License
Agreement”);
1.6.5 an Intellectual
Property License Agreement between the Company (on the one hand) and Navistar or
Caterpillar or any of their Affiliates (on the other hand), in each case,
whereby the Company grants such Member a royalty-bearing license to utilize the
Intellectual Property described therein (each such agreement, a “Royalty-Bearing IP License
Agreement”);
1.6.6 a Master
Development Services Agreement between the Company (on the one hand) and
Navistar or Caterpillar (on the other hand), in each case, whereby such Member
agrees to perform development work that is funded in its entirety by the Company
(each such agreement, a “Master Development Services
Agreement”);
1.6.7 a Truck Sales
Agreement between Navistar and the Company setting forth terms and conditions of
the production and sale of JV Trucks by Navistar to the Company (the “Truck Sales
Agreement”);
1.6.8 an Employee
Secondment Agreement between the Company (on the one hand) and Caterpillar or
Navistar (on the other hand), in each case, whereby such Member agrees to second
certain employees to the Company (each such agreement, an “Employee Secondment
Agreement”);
1.6.9 an Intercompany
Promissory Note between the Company (on the one hand) and Caterpillar or
Navistar (on the other hand), in each case, setting forth terms and conditions
of any intercompany loans by such Member to the Company (each such agreement, an
“Intercompany
Promissory Note”); and
1.6.10 a Sharing Agreement
between Caterpillar and Navistar (the “Sharing
Agreement”).
1.7 Registered
Office/Agent
The registered
office of the Company in the State of Delaware is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent
of the Company for service of process at such address is The Corporation Trust
Company. The registered office and registered agent of the Company
may be changed by the Board at any time in accordance with the Act upon Majority
Consent.
2. BUSINESS
2.1 Business
Generally
Subject to the
terms and conditions of this Agreement, the scope of the business of the Company
shall be (a) developing, designing, testing, manufacturing, assembly, branding,
marketing, selling (including providing purchase financing to customers), and
distributing and providing product support for (including providing JV Truck
Replacement Parts and service for) JV Trucks, in each case for all market
segments (including Governmental ▇▇▇ Customers and Governmental Conventional
Customers as set forth in Section 11.1.3; provided, however, that the
scope of the business shall not include the sale of vehicles (including military
vehicles, tactical vehicles, COTS vehicles with military features, COTS vehicles
and related parts, and Mine Resistant Ambush Protected vehicles) to military
customers (including sales through sales and resale agents, procurement agents,
prime contractors, and subcontractors where such sales are for use exclusively
by military customers), (b) all things incidental thereto or connected therewith
to the extent permitted under the Act and not in conflict with the terms of this
Agreement (the activities described in clauses (a) and (b), collectively,
the “Business”), and (c)
to the extent approved by the Board upon Majority Consent such other business
that a limited liability company organized in Delaware may lawfully conduct and
that is not otherwise in conflict with the terms of this
Agreement. Except as set forth in Sections 2.3.7, 2.3.8 and 10.1.12 of this
Agreement or as approved by the Board upon Majority Consent, the Company shall
sell JV Trucks and JV Truck Replacement Parts solely in the ROW. It
is the intent of each of the Parties that the Business be conducted in
accordance with the timetables and schedules set forth in this Agreement
(including the Annual Business Plans and the Rolling Business Plans of the
Company, as such plans are described in Section 2.2). The
Company shall conduct the Business in full compliance with all applicable laws,
Caterpillar’s Worldwide Code of Conduct, Navistar’s Code of
Conduct and the terms and conditions of this Agreement and the Related
Agreements. For purposes of the preceding sentence, if there is any
inconsistency between Caterpillar’s Worldwide Code of Conduct and Navistar’s
Code of Conduct, the Board shall resolve such discrepancy.
2.2 Business
Plans
2.2.1 Annual Business
Plan. The Parties have agreed to the initial Annual Business
Plan (covering the period from the Effective Date through and until
October 31, 2009) (as may be modified, amended or supplemented by the
Members in accordance with this Agreement, the “Initial Annual Business
Plan”).2 The Parties agree and acknowledge
that although the Initial Annual Business Plan covers the remaining portion of
the 2009 Fiscal Year, all subsequent Annual Business Plans shall cover one (1)
full Fiscal Year. Not later than sixty (60) calendar days prior to
the end of the Initial Annual Business Plan and each subsequent Fiscal Year, the
President shall cause to be prepared and shall present to the Board a business
plan (the “Annual
Business Plan”) for the succeeding Fiscal Year. Each Annual
Business Plan (including both the Initial Annual Business Plan and each
subsequent Annual Business Plan) shall contain, inter alia, (a) pro forma
financial statements (projected profit and loss, balance sheet, and changes in
financial position) for the succeeding Fiscal Year, (b) projected expenditures
(expense and capital) for the succeeding Fiscal Year, (c) financing plans, cash
requirements, loan commitments (each, an “Annual Business Plan Loan
Commitment”) and Capital Contribution commitments (each, an “Annual Business Plan Capital
Contribution Commitment”) for the succeeding Fiscal Year, (d) projected
distributions for the succeeding Fiscal Year, (e) the amount of money to be
spent by the Company on research and development and Intellectual Property
development activities for the succeeding Fiscal Year, (f) decision rules
regarding the timing and allocation of resources of Navistar or the Company, as
applicable (in the case of Navistar, subject to Section 9.2.2), for
the manufacture or assembly by Navistar or the Company, as applicable, of (i)
Caterpillar Truck Models and (ii) Navistar Truck Models, which shall be
consistent with achieving the timelines and milestones set forth in such Annual
Business Plan, and (g) such other relevant reports and topics as are set forth
in the Initial Annual Business Plan. The Members shall be obligated
to fund the Annual Business Plan Loan Commitments and the Annual Business Plan
Capital Contribution Commitments in proportion to their respective Percentage
Interests at the time such loan or Capital Contribution is required to be funded
by such Annual Business Plan, except to the extent the Board determines by
Majority Consent that such Annual Business Plan Loan Commitments or Annual
Business Plan Capital Contribution Commitments shall be funded in a different
proportion. Other than with regard to the Initial Annual Business
Plan, each Annual Business Plan shall be subject to the approval of the Board
upon Majority Consent. If Caterpillar, Navistar and their respective
Representatives, as applicable, fail to mutually agree upon and adopt an Annual
Business Plan for the Company and a Rolling Business Plan for the Company prior
to the first day of the Fiscal Year to be covered by such plans, the Company
shall continue operating under this Agreement under that portion of the Rolling
Business Plan most recently approved by the Board upon Majority Consent that
relates to such Fiscal Year (and such portion of the Rolling Business Plan most
recently approved by the Board shall be deemed to be the Annual Business Plan
for such Fiscal Year). Any approved Annual Business Plan shall not be
changed, except upon Majority Consent of the Board. The President
shall analyze any variance between the actual and planned performance under the
Annual Business Plan, and report to the Board the results of such analysis,
promptly after the end of each fiscal quarter.
2.2.2 Five-Year Business
Plan. Concurrently with the preparation of the Annual Business
Plan for each Fiscal Year, the President shall cause to be prepared and shall
present to the Board a five (5) year rolling business plan (the “Rolling Business
Plan”) of which the first year shall be the Annual Business Plan for such
Fiscal Year. Each Rolling Business Plan shall contain, inter alia,
(a) pro forma financial statements (projected profit and loss, balance sheet,
and changes in financial position) for the succeeding five (5) Fiscal Year
period, (b) projected expenditures (expense and capital) for the succeeding five
(5) Fiscal Year period, (c) financing plans, cash requirements, loan commitments
and Capital Contribution commitments for the succeeding five (5) Fiscal Year
period, (d) projected distributions for the succeeding five (5) Fiscal Year
period, (e) the amount of money to be spent by the Company on research and
development and Intellectual Property development activities for each Fiscal
Year in the succeeding five (5) Fiscal Year period, and (f) such other relevant
reports and topics as are set forth in the initial Rolling Business Plan (as may
be modified, amended or supplemented by the Members in accordance with this
Agreement, the “Initial Rolling Business
Plan”). The Members shall be obligated to fund (i) (A) the
loan commitments scheduled to occur during the first thirty-six (36) months in
the Initial Rolling Business Plan and (B) the loan commitments scheduled to
occur during the first three (3) Fiscal Years in each other Rolling Business
Plan approved by Majority Consent of the Board (each such loan, a “Three-Year Business Plan
Loan Commitment”) and (ii) (A) the Capital Contribution commitments
scheduled to occur during the first thirty-six (36) months in the Initial
Rolling Business Plan and (B) the Capital Contribution commitments scheduled to
occur during the first three (3) Fiscal Years in each other Rolling Business
Plan approved by Majority Consent of the Board (each such Capital Contribution,
a “Three-Year Business
Plan Capital Contribution Commitment”), in the case of each of clauses (i) and (ii), in proportion
to their respective Percentage Interests at the time such loan or Capital
Contribution is required to be funded by such Rolling Business Plan, except to
the extent the Board determines by Majority Consent such Three-Year Business
Plan Loan Commitments or Three-Year Business Plan Capital Contribution
Commitments shall be funded in a different proportion. Other than
with regard to the Initial Rolling Business Plan adopted by the Parties
concurrent with the execution of this Agreement, each Rolling Business Plan
shall be subject to the approval of the Board upon Majority
Consent. If the Board fails to adopt a new Rolling Business Plan upon
Majority Consent prior to the first day of the five (5) Fiscal Year period to be
covered by such Rolling Business Plan, the Company shall continue operating
under the Rolling Business Plan most recently approved by the Board upon
Majority Consent (i.e., the existing Rolling Business Plan shall continue as a
four (4) year rolling business plan, with the first year being deemed (but not
for purposes of determining whether a Company Deadlock exists with respect to
Section 5.13.1
or for purposes of Section 21.2.5(a)) to
be the Annual Business Plan, and so forth for subsequent years), it being
understood that only the funding amounts for the first thirty-six (36) months of
a Rolling Business Plan will be binding on the Members. Any approved
Rolling Business Plan shall not be changed, except upon Majority Consent of the
Board. The Parties have agreed to the Initial Rolling Business Plan
(covering the period from the Effective Date until
October 31, 2013). The Parties agree and acknowledge that
although the Initial Rolling Business Plan covers both the remaining portion of
the 2009 Fiscal Year and the succeeding four (4) Fiscal Year period ending on
October 31, 2013, all subsequent Rolling Business Plans shall cover five (5)
full Fiscal Year periods. For the avoidance of doubt, the Members
shall be obligated to fund the loan commitments and the Capital Contribution
commitments set forth in the Initial Rolling Business Plan for the period from
the Effective Date through the date that is thirty-six (36) months after the
Effective Date.
2.2.3 Efforts to Adopt Annual
Business Plan and Rolling Business Plan. Each of Caterpillar
and Navistar shall cause its respective Representatives to, subject to the
second and third sentences of Section 5.12, meet
and seek in good faith to adopt, prior to the commencement of each Fiscal Year,
an Annual Business Plan for such Fiscal Year and a Rolling Business Plan of
which the first year shall be the Annual Business Plan, as provided in Section 2.2.2.
2.3 Operations in Core ROW
Countries, Legacy Countries, and other Non-Core ROW
Countries
2.3.1 Commencement of Operations;
Required Governmental Filings and Consents. Notwithstanding
anything to the contrary in this Agreement, the Company shall not commence sales
or other operations in any ROW country unless and until all notices, reports,
applications, and other filings required to be made prior to the commencement of
such operations by the Company in such ROW country with, and all consents,
registrations, approvals, permits, clearances and authorizations required to be
obtained prior to the commencement of such operations by the Company from, any
governmental authority having jurisdiction in such ROW country in connection
with the transactions and other matters contemplated by this Agreement and the
Related Agreements shall have been made or obtained (as the case may
be).
2.3.2 Branding Strategy; JV Truck
Models; JV Dealer Selection. As noted in greater particularity
in this Section
2.3, and subject to the terms of Sections 2.3.5
and 2.3.6, the
Company shall not commence the sale of JV Trucks or JV Truck Replacement Parts
in any ROW country unless the Board has approved, by Majority Consent, (a) the
Company’s branding strategy with respect to such ROW country, (b) a list of
those particular Navistar Truck Models (if any) and Caterpillar Truck Models (if
any) to be sold by the Company in such ROW country (together with an
introduction date for each such model) and (c) the selection of the JV Dealer(s)
with respect to such ROW country.
2.3.3 Core ROW
Countries.
2.3.3.1 The Members agree
and acknowledge that, as of the Effective Date, while the Initial Annual
Business Plan and the Initial Rolling Business Plan cover all of the Core ROW
Countries (except China), such business plans contain a definitive branding
strategy, a list of those particular Navistar Truck Models (if any) and
Caterpillar Truck Models (if any) to be sold by the Company (together with an
introduction date for each such model) and a selection of the JV Dealer(s), in
each case, solely with respect to Russia, South Africa and Australia (but not
with respect to Brazil, Turkey or China). Accordingly, except as
provided in Section 2.3.3.2,
immediately following the Effective Date, the Company shall initially
concentrate on selling JV Trucks and JV Truck Replacement Parts solely in Russia
and South Africa and, pursuant to Section 15.3.8.2,
parts, components and trucks in Australia.
2.3.3.2 Notwithstanding the
terms of Section
2.3.3.1, immediately following the Effective Date, the Company shall (i)
sell replacement parts for Medium Duty Trucks and Heavy Duty Trucks (but, for
the avoidance of doubt, not Medium Duty Trucks or Heavy Duty Trucks) in each of
Brazil and Turkey, and (ii) until such time as the Board determines by Majority
Consent to sell JV Trucks in China, sell Medium Duty Trucks and Heavy Duty
Trucks and replacement parts for Medium Duty Trucks and Heavy Duty Trucks in
China, in each case consistent with Navistar’s past practice in such countries
prior to the Effective Date and on the same terms and conditions used for sales
of such products by Navistar in such countries as of immediately prior to the
Effective Date. The Company shall make such sales in each such
country to Navistar’s dealer in such country or to a JV Dealer if such a dealer
has been appointed in accordance with the terms of this
Agreement. For the avoidance of doubt, all profits and losses arising
from such sales shall be for the account of the Company.
2.3.3.3 Subject to the
terms of Section
2.3.3.2, the Company shall not commence the sale of any JV Trucks or JV
Truck Replacement Parts in Brazil, Turkey or China until the Board has finalized
and adopted, by Majority Consent, that portion of the Initial Annual Business
Plan and the Initial Rolling Business Plan pertaining to such Core ROW Country,
including (a) the Company’s branding strategy with respect to such Core ROW
Country, (b) a list of those particular Navistar Truck Models (if any) and
Caterpillar Truck Models (if any) to be sold by the Company in such Core ROW
Country (together with an introduction date for each such model), and (c) the
selection of the JV Dealer(s) with respect to such Core ROW
Country. The Members and the Representatives shall meet and seek in
good faith to, in cooperation with the President and other management personnel
of the Company, as soon as practicable after the Effective Date, agree upon
updated, more detailed versions of the Initial Annual Business Plan and the
Initial Rolling Business Plan incorporating the items described in the
immediately preceding sentence with respect to Brazil, Turkey, and China, which
versions shall supersede and replace the Initial Annual Business Plan and the
Initial Rolling Business Plan in the forms agreed to by the Members on the
Effective Date. Notwithstanding the foregoing, (i) the Company shall
operate in accordance with the Initial Annual Business Plan and the Initial
Rolling Business Plan, and (ii) the Members shall be obligated to fund the
Capital Contribution Commitments and Loan Commitments set forth in the Initial
Annual Business Plan and in the Initial Rolling Business Plan for the period
from the Effective Date through the date that is thirty-six (36) months after
the Effective Date unless and until such commitments are superseded and replaced
by more detailed versions of such plans.
2.3.4 China. Without
limiting the generality of Section 2.3.3, the
Members and the Representatives shall meet and seek in good faith to, in
cooperation with the President and other management personnel of the Company, as
soon as practicable after the Effective Date, prepare and agree upon a business
plan for the Company for the development, manufacture, sale, and distribution of
Medium Duty Trucks, Heavy Duty Trucks, and replacement parts therefor in China
and the export of such products from China to other ROW countries (the “China Business Plan”)
that (a) is based on reasonable assumptions and thorough, reliable market
research, (b) identifies a Chinese truck manufacturer with which the Company
shall seek to cooperate in executing such business plan, (c) contains, inter
alia, (i) pro forma financial statements (projected profit and loss, balance
sheet, and changes in financial position) for the succeeding five (5) Fiscal
Year period and (ii) projected expenditures (expense and capital) for the
succeeding five (5) Fiscal Year period, and (d) can reasonably be expected to
yield an internal rate of return for the Company that is mutually agreeable to
each of the Members in its sole discretion. Once the China Business
Plan is adopted by the Board by Majority Consent, the Members and the
Representatives will meet and seek in good faith to, in cooperation with the
President and other management personnel of the Company, incorporate and expand
upon such plan in the next Annual Business Plan and Rolling Business Plan of the
Company (such that the next Annual Business Plan and Rolling Business Plan of
the Company contain Capital Contribution Commitments and Loan Commitments
pertaining to the Company’s contemplated operations in China).
2.3.5 Legacy
Countries. Notwithstanding anything to the contrary in this
Agreement, following the Effective Date Navistar shall be entitled to continue
to sell Medium Duty Trucks, Heavy Duty Trucks, and replacement parts therefor in
each Legacy Country consistent with past practice prior to the Effective Date;
provided, however, that
Navistar shall cease all such sales in each Legacy Country, and the Company
shall commence sales of JV Trucks and JV Truck Replacement Parts in such Legacy
Country, upon the earlier to occur of the following dates (such date, the “Legacy Country Commencement
Date”): (a) the second (2nd)
anniversary of the Effective Date, and (b) such date as determined by the Board
by Majority Consent. For the avoidance of doubt, if, on or before the
Legacy Country Commencement Date with respect to any Legacy Country, the Board
has not yet adopted by Majority Consent a version of that portion of the Initial
Rolling Business Plan pertaining to such Legacy Country (including the Company’s
branding strategy for such Legacy Country, a list of those particular Navistar
Truck Models (if any) and Caterpillar Truck Models (if any) to be sold by the
Company in such Legacy Country (together with an introduction date for each such
model), and the selection of the JV Dealer(s) with respect to such Legacy
Country) that is more detailed than as set forth in the Initial Rolling Business
Plan, the Company shall adhere to the plan set forth in the Initial Rolling
Business Plan. Notwithstanding the foregoing or any other provision
of this Agreement (including Section 11.3), if, on
or before the Legacy Country Commencement Date with respect to any Legacy
Country, the Board has not yet selected, by Majority Consent, the JV Dealer(s)
for such Legacy Country, the Company shall seek to enter into JV Dealer sales
and service agreements with the existing Navistar dealers in such Legacy Country
to sell in such Legacy Country all JV Trucks and JV Truck Replacement Parts sold
by Navistar in such Legacy Country immediately prior to the Legacy Country
Commencement Date until such selection is made. From and after the
Legacy Country Commencement Date, neither Navistar nor its 5% Affiliates
(excluding the Mahindra JV) shall sell any Medium Duty Trucks, Heavy Duty Trucks
or replacement parts therefor in such Legacy Country; provided, however, that until
such time as the Rolling Business Plan adopted by the Board provides for the
sale of JV Trucks and JV Truck Replacement Parts in such Legacy Country, the
Company shall be required to sell to the former Navistar dealers in such Legacy
Country, Medium Duty Trucks, Heavy Duty Trucks, and replacement parts therefor
consistent with past practice prior to the Legacy Country Commencement
Date.
2.3.5.1 The Members have
agreed to an aggregate baseline amount of profits for the Legacy Countries equal
to $25,408,000, which amount shall be indexed in accordance with the procedures
and methodologies set forth in Exhibit B for each
Fiscal Year occurring during the period from the Effective Date to (and
including) the fifth (5th)
anniversary of the Effective Date (such amount, as indexed, the “Baseline Profit
Amount”).
2.3.5.2 For the Legacy
Countries, during the period from the Effective Date to (but not including) the
Legacy Country Commencement Date with respect to each such Legacy Country, the
Company shall provide Navistar with Marketing Services in support of sales by
Navistar of Medium Duty Trucks, Heavy Duty Trucks, and replacement parts
therefor in such Legacy Country. In exchange for such Marketing
Services, with respect to each Fiscal Year (or portion thereof) occurring during
the period from the Effective Date to (but not including) the earlier of (a) the
second (2nd)
anniversary of the Effective Date, and (b) the date on which the Company has
commenced sales of JV Trucks and JV Truck Replacement Parts in all of the Legacy
Countries, the Company shall be entitled to receive from Navistar any Navistar
Legacy Profit Amount with respect to such Fiscal Year (or portion thereof) in
excess of the Baseline Profit Amount.
2.3.5.3 With respect to
each Fiscal Year (or portion thereof) occurring during the period from the
earlier of (a) the second (2nd)
anniversary of the Effective Date, and (b) the date on which the Company has
commenced sales of JV Trucks and JV Truck Replacement Parts in all of the Legacy
Countries to (but not including) the tenth (10th)
anniversary of the Effective Date, Navistar shall be entitled to receive from
the Company distributions in an amount equal to the lesser of (a) the amount of
profits earned by the Company during such Fiscal Year
(or portion thereof) in connection with the sale of JV Trucks and JV Truck
Replacement Parts in the Legacy Countries and (b) the Baseline Profit
Amount.
2.3.5.4 For purposes of
Sections
2.3.5.2 and 2.3.5.3, with respect
to each Fiscal Year (or portion thereof) occurring during the period from the
Effective Date to (but not including) the tenth (10th)
anniversary of the Effective Date, the Members shall determine and agree upon,
in accordance with the procedures and methodologies set forth in Exhibit B, (a) no
later than thirty (30) calendar days following the end of
each fiscal quarter in such Fiscal Year, the actual Navistar Legacy Profit
Amount during such quarter period or profits earned by the
Company from sales of JV Trucks and JV Truck Replacement Parts in the Legacy
Countries during such quarter period and (b) no later than ninety (90) calendar
days following the end of such Fiscal Year (or portion thereof), the actual
Navistar Legacy Profit Amount during such Fiscal Year (or portion thereof), or
profits earned by the Company from sales of JV Trucks and JV Truck Replacement
Parts, in the Legacy Countries during such Fiscal Year (or portion
thereof).
2.3.6 Non-Core ROW Countries other
than Legacy Countries.
2.3.6.1 The Company shall
not commence the sale of JV Trucks or JV Truck Replacement Parts in any Non-Core
ROW Country other than the Legacy Countries until the Board approves, by
Majority Consent, (a) the Company’s branding strategy with respect to such ROW
country, (b) a list of those particular Navistar Truck Models (if any) and
Caterpillar Truck Models (if any) to be sold by the Company in such ROW country
(together with an introduction date for each such model), and (c) the selection
of the JV Dealer(s) with respect to such ROW country.
2.3.6.2 Notwithstanding
Section
2.3.6.1, if the Company has an opportunity to make a one-time sale of JV
Trucks or JV Truck Replacement Parts in any ROW country in which the Company is
not otherwise systematically conducting any operations or sales, the Company may
make such sale; provided, however, that
Majority Consent of the Board shall be required for the Company to make such
sale if doing so would require the incurrence of costs and expenses (other than
expenditures to purchase inventory of JV Trucks and JV Truck Replacement Parts)
of more than $100,000 and such costs and expenses are not already specifically
provided for in an Annual Business Plan (it being understood that, for purposes
of this proviso, the amount of such costs and expenses shall be deemed to
include all costs and expenses incurred by the Company with respect to all
one-time sales made by the Company in any ROW country pursuant to this Section 2.3.6.2
during the twelve (12) month period preceding the date on which the Board is
presented with the subject one-time sale opportunity).
2.3.7 Sales of Medium Duty ▇▇▇
Trucks.
2.3.7.1 It is the intention
of the Members that the Company be in the business of developing, designing,
testing, manufacturing, assembly, branding, marketing, selling (including
providing purchase financing to customers), and distributing and providing
product support for (including providing JV Truck Replacement Parts and service
for), Medium Duty ▇▇▇ Trucks throughout the ROW. Each Member will use
its good faith efforts to make this a successful segment of the Company’s
Business throughout the ROW. Notwithstanding the foregoing, on or
about four (4) years following the Effective Date, Caterpillar will declare its
intention, determined in its sole discretion, as to whether Caterpillar desires
the Company to remain in or exit the Medium Duty ▇▇▇ Truck Business in the
ROW. If Caterpillar declares that it wants the Company to remain in
the Medium Duty ▇▇▇ Truck Business in the ROW, then the Company shall continue
in such business. If Caterpillar declares that it wants the Company
to exit the Medium Duty ▇▇▇ Truck Business in the ROW, then the Company’s Medium
Duty ▇▇▇ Truck Business shall continue for an additional two (2) years, during
which time the Members will (i) continue to explore ways to make the Company’s
Medium Duty ▇▇▇ Truck Business acceptable to both Members, determined in their
sole discretion, and (ii) develop and implement strategies to exit such
business. Unless the Board agrees otherwise by Majority Consent, upon
the expiration of such two (2) year period, (i) the Company shall cease being in
the Medium Duty ▇▇▇ Truck Business in the ROW, (ii) the non-competition and
exclusivity provisions of this Agreement, including Sections 11.1 and
15.1, shall
cease and be of no further force or effect with respect to the Medium Duty ▇▇▇
Truck Business, (iii) Navistar and its Affiliates shall be permitted to sell
Navistar-branded Medium Duty ▇▇▇ Trucks through Navistar-branded JV Dealers,
including those owned by Caterpillar dealers (provided that Navistar pays
Caterpillar a marketing services fee (not to exceed 3% of dealer net sales) as
determined by Caterpillar solely in connection with sales of Navistar-branded
Medium Duty ▇▇▇ Trucks through Navistar-branded JV Dealers owned by Caterpillar
dealers), and (iv) the Board by Majority Consent may determine to sell,
distribute or dispose of all Company Intellectual Property and other assets
solely to the extent related to the Company’s Medium Duty ▇▇▇ Truck
Business.
2.3.7.2 Notwithstanding
anything in this Agreement to the contrary, until such time as the Mahindra JV
Agreement is amended to permit the Company to market, sell and distribute Medium
Duty ▇▇▇ Trucks in regions of the ROW other than ▇▇▇ China, Central America and
South America, the Company shall not be permitted to market, sell or distribute,
or provide product support for, Medium Duty ▇▇▇ Trucks anywhere in the world
other than ▇▇▇ China, Central America and South America. Prior to
commencing sales of Medium Duty ▇▇▇ Trucks in ▇▇▇ China, Central America or
South America, the President shall prepare and present to the Board a separate
business case for the sale of such trucks in such territories. The
commencement of sales of Medium Duty ▇▇▇ Trucks in ▇▇▇ China, Central America or
South America shall require the Majority Consent of the Board; provided, however, that,
notwithstanding anything to the contrary in this Agreement, Navistar may,
following notice to and discussion by the Board (but without a requirement for
Board approval), commence developing, designing, testing, manufacturing,
assembly, branding, marketing, selling, and distributing and providing product
support for (including providing replacement parts and service for),
Navistar-branded (but not Mahindra-branded or Mahindra JV-branded) Medium Duty
▇▇▇ Trucks for sale solely through Navistar dealers and Navistar-branded JV
Dealers that are not owned by Caterpillar dealers in those Legacy Countries
listed on Schedule
2.3.5 that are located in Central America or South America and may
continue such activities for the period of time permitted under Section 2.3.5
(provided that such Navistar-branded Medium Duty ▇▇▇ Trucks may not use a cab
developed or designed by JAC Co. Ltd or its Affiliates without prior approval by
the Board with Majority Consent).
2.3.7.3 Caterpillar shall
not be permitted to develop, design, test, manufacture, assemble, brand, market,
sell or distribute, or provide product support for, North American Medium Duty
▇▇▇ Trucks in North America except through the Company.
2.3.7.4 Navistar shall be
permitted to engage, for its own account, in developing, designing, testing,
servicing, manufacturing, assembly, branding, marketing, selling and
distributing, and providing product support for, and managing the replacement
parts business relating to, North American Medium Duty ▇▇▇ Trucks sold in North
America (either, at its option, directly or indirectly by contracting with any
Person, including the Company, to perform one or more of such activities), it
being understood that, irrespective of whether Navistar performs any or all of
such activities directly or indirectly by contracting with another Person, (i)
such North American Medium Duty ▇▇▇ Trucks
shall not constitute a JV Truck Model, such related replacement parts shall not
constitute JV Truck Replacement Parts and such activities to the extent relating
to such North American Medium Duty ▇▇▇ Trucks
or related replacement parts shall not be deemed to be included in the Business,
and (ii) all revenues, expenses, profits and losses arising from such North
American Medium
Duty ▇▇▇ Trucks or related replacement parts sold in North America and the
conduct of such activities by Navistar shall be entirely for the account of
Navistar (and not for the Company or Caterpillar). Navistar may, at
its option, require the Company to perform some or all of the development,
designing, testing, manufacturing, and assembly of such North American Medium Duty ▇▇▇ Trucks
or related replacement parts pursuant to one or more of a development service
agreement, a component supply agreement and a truck sales agreement (as
applicable), in the forms agreed to by both Members, and the Parties hereby
agree to negotiate in good faith regarding the pricing terms thereof; provided, however, that the
terms of any such development services agreement shall provide that Navistar
shall own all rights to any Intellectual Property developed
thereunder.
2.3.7.5 Neither Member
shall sell unique replacement parts for the other Member’s brand of Heavy Duty
▇▇▇ Trucks in North America to any Navistar or Caterpillar (as applicable)
dealer. Navistar shall adopt and implement policies, processes, and
systems to (i) monitor, to the extent practicable, the end-user customers to
which replacement parts for Navistar-branded North American Medium Duty ▇▇▇
Trucks are sold, and (ii) discourage Navistar’s dealers from selling such
replacement parts to end-user customers for use in Caterpillar-branded
Vocational Heavy Duty ▇▇▇ Trucks in North America. If, at any time
during the term of this Agreement, Caterpillar reasonably believes in good faith
that Navistar’s dealers have, in fact, sold such replacement parts to end-user
customers for use in Caterpillar-branded Vocational Heavy Duty ▇▇▇ Trucks in
North America, (A) the Members shall cooperate with each other in furtherance of
investigating such matter and, subject to applicable law, taking corrective
actions to discourage such sales from occurring, and (B) in the event that a
material amount of such sales did, in fact, occur, bring such matter to the
Board to determine any appropriate remediation action it deems
necessary.
2.3.8 Sales of Heavy Duty ▇▇▇
Trucks.
2.3.8.1 Subject to the
terms set forth in this Section 2.3.8,
Navistar may at anytime require the Company to develop, design, test,
manufacture, and assemble Heavy Duty ▇▇▇ Trucks and replacement parts therefor
for, and sell to, Navistar for re-sale in North America. In such
event, subject to the terms set forth in this Section 2.3.8,
Caterpillar may at anytime thereafter require the Company to develop, design,
test, manufacture, and assemble Vocational Heavy Duty ▇▇▇ Trucks and replacement
parts therefor for, and sell to, Caterpillar for re-sale in North America; provided, however, that such
Vocational Heavy Duty ▇▇▇ Trucks must be appropriately brand differentiated from
the Heavy Duty ▇▇▇ Trucks being sold by Navistar in North
America. Notwithstanding the foregoing, (i) upon Board approval with
Majority Consent or (ii) in the event that the market share of Vocational Heavy
Duty ▇▇▇ Trucks (but only with respect to the high cab over engine segment) is
equal to or greater than ten percent (10%) of the total market share of
Vocational Heavy Duty Trucks in North America (as determined using independent
third party market share data), subject to the terms set forth in this Section 2.3.8,
Caterpillar may at anytime thereafter require the Company to develop, design,
test, manufacture, and assemble Vocational Heavy Duty ▇▇▇ Trucks and replacement
parts therefor for, and sell to, Caterpillar for re-sale in North America; provided, however, that such
Vocational Heavy Duty ▇▇▇ Trucks must be appropriately brand differentiated from
any Heavy Duty ▇▇▇ Trucks being sold by Navistar in North
America. Notwithstanding anything to the contrary in this Agreement,
Caterpillar and its Affiliates shall not sell any Vocational Heavy Duty ▇▇▇
Truck to military customers (including sales through sales and resale agents,
procurement agents, prime contractors, and subcontractors where such sales are
for use exclusively by military customers) anywhere in the world.
2.3.8.2 None of Navistar,
Caterpillar or any of their 5% Affiliates may (i) develop or design Heavy Duty
▇▇▇ Trucks for sale in North America except through the Company or (ii)
manufacture, assemble, brand, market, sell, distribute, or provide product
support for, any Heavy Duty ▇▇▇ Trucks in North America that were not developed
and designed by or through the Company. Such Heavy Duty ▇▇▇ Trucks
shall not constitute a JV Truck Model and related replacement parts therefor
shall not constitute JV Truck Replacement Parts and such activities to the
extent relating to such Heavy Duty ▇▇▇ Trucks or related replacement parts shall
not be deemed to be included in the Business, and (ii) all revenues, expenses,
profits and losses arising from such Heavy Duty ▇▇▇ Trucks or related
replacement parts sold in North America and the conduct of such activities by
such Member shall be entirely for the account of such Member (and not for the
Company or the other Member).
2.3.8.3 In addition to the
development and designing of such Heavy Duty ▇▇▇ Trucks, such Member may, at its
option, require the Company to also perform some or all of the testing,
manufacturing, and assembly of such Heavy Duty ▇▇▇ Trucks or related replacement
parts pursuant to one or more of a development services agreement, a component
supply agreement and a truck sales agreement (as applicable), in the forms
agreed to by the Members, and shall provide pricing terms of Cost-plus-2.5%
(except for development services, which shall be priced at Cost-plus-[5][7]%);
provided, however, that the
terms of any such development services agreement shall provide that such Member
shall own all rights to any Intellectual Property developed thereunder; provided, further, however, that the
Company may perform such services for Caterpillar only for Vocational Heavy Duty
▇▇▇ Trucks. If such Member requires the Company to perform some or
all of the testing, manufacturing, and assembly of such Heavy Duty ▇▇▇ Trucks or
related replacement parts pursuant to this Section 2.3.8,
and such activities require the use of any machinery, equipment or tooling that
is not already owned by the Company, then at the option of such Member, (a) the
Company shall lease such machinery, equipment and tooling from a third party,
and such Member shall reimburse the Company for all costs and expenses incurred
in connection with such lease or (b) such Member shall lease such machinery,
equipment and tooling to the Company (at no cost or expense to the
Company).
2.3.8.4 In the event that
the Company desires to sell or distribute a Caterpillar Truck in the ROW that
has been developed and designed for Caterpillar in North America, Navistar shall
sell such Caterpillar Trucks to the Company for re-sale in the ROW pursuant to
and upon the terms (including price) set forth in the Truck Sales
Agreement.
2.3.8.5 Notwithstanding any
other provision of this Agreement, without the Majority Consent of the Board,
Navistar shall not sell, contribute, license or otherwise provide any
Intellectual Property related exclusively to the Global Eagle cab (or any
successor cab) to any third party (including the Mahindra JV) for use in
connection with developing,
designing, testing, manufacturing, assembly, branding, marketing, selling, or
distributing any Medium Duty ▇▇▇ Trucks or Heavy Duty ▇▇▇ Trucks in the
ROW.
2.3.9 Mahindra JV
Royalties. If Navistar or any of its Affiliates is
contractually obligated pursuant to the Mahindra JV Agreement and actually pays
the Mahindra JV royalties as a direct result of the sale and distribution by the
Company of Medium Duty ▇▇▇ Trucks in the ROW, the Company shall reimburse
Navistar on an annual basis (within thirty (30) calendar days following the
Company’s receipt of reasonably satisfactory evidence from Navistar verifying
such payment) for fifty-one percent (51%) of such royalties actually paid by
Navistar to the Mahindra JV during the prior fiscal year of the Mahindra
JV.
2.3.10 Mahindra JV Replacement
Parts. Navistar shall use its commercially reasonable efforts
to (i) limit the Mahindra JV’s sales of replacement parts for Medium Duty Trucks
and Heavy Duty Trucks in the ROW to those that are reasonable in relation to the
volume of Medium Duty Trucks and Heavy Duty Trucks sold by the Mahindra JV prior
to such replacement parts sales, and (ii) cause the Mahindra JV to adopt and
implement policies, processes and systems to (x) monitor, to the extent
practicable, the end-user customers to which such replacement parts are sold,
and (y) discourage the Mahindra JV’s dealers from selling such replacement parts
to end-user customers for use in trucks other than Medium Duty Trucks and Heavy
Duty Trucks sold by the Mahindra JV in the ROW. If, at any time
during the term of this Agreement, Caterpillar reasonably believes in good faith
that the Mahindra JV’s dealers have, in fact, sold such replacement parts to
end-user customers for use in trucks other than as permitted above, (A) the
Members shall cooperate with each other, and Navistar shall use its commercially
reasonable efforts to cause the Mahindra JV to cooperate with the Members, in
furtherance of investigating such matter and, subject to applicable law, taking
corrective actions to discourage such sales from occurring, and (B) in the event
that a material amount of such sales did, in fact, occur, bring such matter to
the Board to determine any appropriate remediation action it deems
necessary.
2.4 Formation of
Subsidiaries
The Parties agree
and acknowledge that, under certain circumstances, upon Majority Consent of the
Board in accordance with Section 5.13.25, the
Company may cause one or more direct or indirect wholly owned subsidiaries of
the Company to be organized under the laws of the United States or any other
jurisdiction. For purposes of this Agreement, the business and
affairs of the Company shall be deemed to include the business and affairs of
each such subsidiary, and any reference in this Agreement to the Company shall
be deemed to include all of its direct and indirect wholly owned subsidiaries
(unless the context explicitly requires a different
interpretation). The governing documents of each such subsidiary
shall be drafted in such a manner so as to effectively provide that the business
and affairs of such subsidiary shall be managed in accordance with the
provisions of this Agreement as if such business and affairs were the business
and affairs of the Company.
2.5 Modifications to
Structure
In determining the scope of the Business
under Section
2.1 and in preparing any
Annual Business Plan or any Rolling Business Plan under Section
2.2, each of Caterpillar
and Navistar shall cause its respective Representatives to use their
commercially reasonable efforts to adapt the structure and manner in which the
Company does business to take into account evolving legal, regulatory, and
business considerations affecting the Company or either Member, including
changes that are needed by either Member, so long as the costs of any such
change are borne (a) solely by either Member, as applicable (in the case of a
benefit to only such Member) or (b) proportionately by both Members (in the case
of a benefit to both Members), and the aggregate economic interests of the
Members are not altered as a result of such structure. Without
limiting the generality of the foregoing, the Parties shall cooperate in
determining whether, in certain circumstances, the Company should arrange for
separate and distinct legal entities to conduct (i) that portion of the Business
relating to all or any part of developing, designing, testing, manufacturing,
assembly, branding, marketing, selling, and distributing JV Trucks (on the one
hand) and (ii) the provision of product support and other services relating to
JV Trucks (on the other hand).
3. CAPITAL
STRUCTURE; FINANCING; DISTRIBUTION POLICY
3.1 Initial Contributions;
Percentage Interests
3.1.1 Each of Caterpillar
and Navistar has made a cash Capital Contribution to the Company in an amount
equal to all Annual Business Plan Loan Commitments and Annual Business Plan
Capital Contribution Commitments scheduled to occur during the first six (6)
months of the Initial Annual Business Plan.
3.1.2 Each Member’s
percentage interest (the “Percentage Interest”)
in the Company, calculated based solely on such Member’s Capital Contribution,
shall initially be the amount set forth opposite such Member’s name on Schedule 3.1.2, as
may be amended, modified, or supplemented from time to time pursuant to the
terms of this Agreement with Unanimous Consent of the Members.
3.2 Additional Contributions and
Funding
3.2.1 No
Obligation. Except (a) as set forth in Section 2.2, this
Section 3.2,
Section 5.13.34,
or the Initial Annual Business Plan, (b) for any Capital Contribution
Commitments or Loan Commitments for the period from the Effective Date through
the first thirty-six (36) months following the Effective Date, (c) for any
Capital Contribution Commitments or Loan Commitments set forth in any Annual
Business Plan, or (d) for any Capital Contribution Commitments or Loan
Commitments set forth in any Rolling Business Plan (in the case of each of clauses (c) and (d), as approved by
the Board upon Majority Consent), or as approved by the Board upon Majority
Consent, no Member shall be obligated or permitted to make any additional
Capital Contribution or to loan any funds to the Company.
3.2.2 Majority Consent; Annual
Business Plan. The Board, upon Majority Consent, may require
the Members to make a Capital Contribution to the Company or loan funds
(pursuant to the terms of the Intercompany Promissory Note) to the Company on a
pro rata basis in accordance with the Percentage Interest of each Member or, as
applicable, on some other basis as determined by the Board by Majority
Consent. Furthermore, any amount that is required to be provided to
the Company as a Capital Contribution Commitment or Loan Commitment pursuant to
an Annual Business Plan or a Rolling Business Plan shall be funded by the
Members on a pro rata basis in accordance with the Percentage Interest of each
Member at the time such funding is required by such Annual Business Plan or such
Rolling Business Plan, except to the extent the Board determines by Majority
Consent such amount shall be funded in a different proportion (it being
understood that such amount shall be funded as a Capital Contribution unless the
Board determines by Majority Consent that such amount shall be funded as a
loan).
3.2.3 Failure to Fund Approved
Capital Contribution Commitment or Loan Commitment. If a
Member fails to fund a Capital Contribution Commitment or a Loan Commitment that
is required to be funded by such Member pursuant to this Agreement,
then the following provisions of this Section 3.2.3
shall apply:
3.2.3.1 with regard to the
non-defaulting Member’s Capital Contribution Commitment or Loan Commitment, no
later than the date that is ten (10) calendar days following the date on which
such Capital Contribution Commitment or Loan Commitment was required to be
funded (the “Required
Funding Date”), the non-defaulting Member shall have the option,
exercisable in its sole discretion, to take any of the following
actions:
3.2.3.1.1 in the case of a
Loan Commitment, requiring the Company to return to such non-defaulting Member
the amount of such Loan Commitment that such non-defaulting Member so funded to
the Company pursuant to the terms of this Agreement, it being understood that
the amount so returned shall include both the principal amount of the loan and
the interest accrued under the terms of applicable Intercompany Promissory Note
through the date of payment, and such Intercompany Promissory Note shall be
cancelled upon the receipt of such amount by such non-defaulting
Member;
3.2.3.1.2 in the case of a
Loan Commitment, leaving in the Company the entire amount of such Loan
Commitment already funded to the Company pursuant to the terms of this Agreement
(in which case each of the Intercompany Promissory Notes pertaining to such Loan
Commitment shall remain in full force and effect in accordance with their
terms);
3.2.3.1.3 in the case of a
Capital Contribution Commitment, requiring the Company to return to such
non-defaulting Member the entire amount of such Capital Contribution Commitment
that it so funded to the Company; and
3.2.3.1.4 in the case of a
Capital Contribution Commitment, leaving in the Company the entire amount of any
portion of such Capital Contribution Commitment already funded to the Company by
such non-defaulting Member, for credit to such non-defaulting Member’s Capital
Account, and the Percentage Interests of each Member shall be adjusted in the
manner described in Section 3.2.6 based
on the Fair Value of the Company as of the Required Funding Date;
and
3.2.3.2 with regard to the
defaulting Member’s Capital Contribution Commitment or Loan Commitment, at any
time following the date that is ten (10) calendar days following the Required
Funding Date, the non-defaulting Member shall have the option, exercisable in
its sole discretion, to take one or none of the following actions (it being
understood that the non-defaulting Member shall not be entitled to take any of
the following actions if such non-defaulting Member took any of the actions
described in Section
3.2.3.1.1 or Section
3.2.3.1.3):
3.2.3.2.1 with the consent of
the defaulting Member, making a loan (a “Member Loan”) to the
defaulting Member (in an amount equal to the defaulting Member’s Capital
Contribution Commitment or Loan Commitment), which such loan shall bear an
interest rate of fifteen percent (15%), mature on the two-year anniversary of
the Required Funding Date and otherwise contain terms that are substantially
similar to the terms set forth in the Intercompany Promissory Note in order to
enable the defaulting Member to make such required Capital Contribution
Commitment or Loan Commitment to the Company, and if the defaulting Member does
not repay such loan in accordance with its terms, at the lending Member’s
option, (a) the lending Member shall be entitled to terminate this
Agreement in accordance with Section 21.2.4,
or (b) such loan shall convert into a Capital Contribution by the lending
Member to the Company, creditable to such lending Member’s Capital Account, and
the Percentage Interests of each Member shall be adjusted in the manner
described in Section
3.2.6 based on the Fair Value of the Company as of the maturity date of
such Member Loan; and
3.2.3.2.2 making directly to
the Company, for credit to such non-defaulting Member’s Capital Account, a
Capital Contribution in the amount of such defaulting Member’s required Capital
Contribution Commitment or Loan Commitment, and the Percentage Interests of each
Member shall be adjusted in the manner described in Section 3.2.6 based
on the Fair Value of the Company as of the time at which such Capital
Contribution is made (such contributing Member referred to as the “Contributing Member”
and each such contribution, a “Substitute
Contribution”); provided, however, if the
non-Contributing Member (the “Non-Contributing
Member”) fails to, within two (2) years following the Required Funding
Date pertaining to such Capital Contribution Commitment or Loan Commitment,
exercise its option to purchase, pursuant to Section 3.2.5, that
portion of the Membership Interest of the Contributing Member pertaining to such
Contributing Member’s Substitute Contribution, then the Contributing Member
shall be entitled to terminate this Agreement in accordance with Section
21.2.4.
For the avoidance
of doubt, a defaulting Member’s failure to fund a Capital Contribution
Commitment or a Loan Commitment that is required pursuant to this Agreement
shall not, in and of itself, constitute a Material Breach, and the
non-defaulting Member shall not be entitled to terminate this Agreement in
accordance with Section 21.2.4 with respect to such failure to fund such
particular Capital Contribution Commitment or Loan Commitment; provided, that
the foregoing shall not prohibit the non-defaulting Member from exercising its
rights under, as applicable, (i) clause (a) or clause (b) of
Section 3.2.3.2.1 above, or (ii) the proviso in Section 3.2.3.2.2
above.
3.2.4 Funding
Methodology. Each Member required under Sections 3.2.2
or 5.13.34, any
Annual Business Plan or Rolling Business Plan (in each case as approved by the
Board upon Majority Consent, other than with regard to the Initial Annual
Business Plan and the Initial Rolling Business Plan, in each case as of the
Effective Date), or otherwise by the Board upon Majority Consent to make a
contribution of cash to the capital of the Company or to loan funds to the
Company, as applicable, shall transfer to the Company’s account an amount in
cash (by wire transfer of immediately available funds) equal to the Percentage
Interest of such Member (or such other amount determined by Majority Consent of
the Board expressed as a percentage), multiplied by the
aggregate amount required to be contributed or loaned, as applicable, to the
Company on the date specified in the applicable Annual Business Plan, the
Rolling Business Plan, or otherwise by the Board upon Majority
Consent.
3.2.5 Purchase
Option. If a Contributing Member makes a Capital Contribution
pursuant to Section 3.2.3.2.2,
the Non-Contributing Member shall have the right to, at any time prior to the
two-year anniversary of the Required Funding Date associated with such
Substitute Contribution, exercisable by giving written notice to the Company and
the Contributing Member (the “Exercise Notice”),
elect to purchase that portion of the Contributing Member’s Membership Interest
pertaining to such Contributing Member’s Substitute Contribution for the
Repurchase Price on the terms and conditions set forth in this Section 3.2.5
(the “Purchase
Option”). If the Non-Contributing Member does not exercise the
Purchase Option within the time period set forth in the preceding sentence and
then consummate such Purchase Option in accordance with this Section 3.2.5,
the Contributing Member shall be entitled to terminate this Agreement in
accordance with Section 21.2.4. If
the Non-Contributing Member exercises the Purchase Option, the Members shall use
commercially reasonable efforts to consummate the closing of the transactions
contemplated by such Purchase Option no later than thirty (30) calendar days
following the date of delivery of the Exercise Notice, at which such closing the
Non-Contributing Member shall pay to the Contributing Member an amount in cash
equal to the Repurchase Price and automatically and without any action on the
part of the Members or the Company, the Contributing Member’s Substitute
Contribution shall be cancelled and deleted from such Contributing Member’s
Capital Account.
3.2.6 Percentage Interest
Adjustment. For purposes of adjusting the Percentage Interest
of each Member under Section
3.2.3:
3.2.6.1 the defaulting
Member shall have a Percentage Interest immediately following such adjustment
equal to the percentage determined by dividing (a) the product of (i) its
Percentage Interest immediately prior to such adjustment and (ii) the Fair Value
of the Company immediately prior to such adjustment, by (b) the sum of (i) Fair
Value of the Company immediately prior to such adjustment and (ii) the amount of
the Capital Contribution made by the non-defaulting Member at the time of such
adjustment; and
3.2.6.2 the non-defaulting
Member shall have a Percentage Interest equal to one hundred percent (100%) less
the amount determined in Section
3.2.6.1.
Upon the
consummation of an exercise of the Purchase Option pursuant to Section 3.2.5, if
applicable, the defaulting Member’s Percentage Interest shall be adjusted to
reflect such purchase, and the non-defaulting Member’s Percentage Interest shall
be adjusted to reflect the deletion of the Substitute Contribution from the
non-defaulting Member’s Capital Account as provided in Section
3.2.5.
4. MEMBERS
4.1 No Management by
Members
Except as expressly
set forth in the Act or this Agreement, the Members shall not have any vote or
take any part in the control or management of the Business or have any authority
or power to act for or on behalf of the Company in any manner
whatsoever.
4.2 Limited
Liability
No
Member shall be obligated or liable to the Company, any creditor of the Company,
or any other Person, for any Liabilities or debts of the Company, whether
arising in contract, tort, or otherwise, solely by reason of being a Member,
except as specifically set forth herein or as otherwise agreed to in writing by
such Member. Except as required by law, no Member shall be liable to
the Company, any other Member, any creditor of the Company, or any other Person
for the repayment of amounts received from the Company. The failure
of the Company to observe any formalities or requirements relating to the
exercise of its powers or management of its Business or affairs under this
Agreement or the Act shall not be grounds for imposing personal liability on the
Members or the Representatives for Liabilities or debts of the Company, whether
arising in contract, tort, or otherwise, solely by reason of being a Member or
Representative.
4.3 Withdrawal or
Resignation
Except as provided
in Section 19
or 21, no
Member shall have the right to withdraw or resign as a Member. No
Member shall take any voluntary action that would result in dissolution of the
Company pursuant to the Act.
4.4 Meetings
Regular meetings of
the Members may be held without notice at such time and at such place as shall
from time to time be determined by the Members by Unanimous
Consent. The Company may, but shall not be required to, hold an
annual meeting of the Members. The President or any Representative,
unless otherwise prescribed by law, may call special meetings of the Members for
any purpose. Unless otherwise determined by the Members by Unanimous
Consent, all meetings of the Members shall be held at the Company’s principal
place of business. Members may participate in any regular or special
meeting of the Members by means of conference telephone or similar
communications equipment pursuant to which all Persons participating in the
meeting can hear each other or by any other means permitted by the Act, and such
participation shall constitute presence in person at such
meeting. Except as provided herein, written notice stating the place,
day, and hour of a special meeting of the Members and the purpose or purposes
for which the meeting is called shall be delivered not less than ten (10) or
more than sixty (60) calendar days before the date of a special meeting to each
Member, subject to such shorter notice as an emergency situation shall
reasonably dictate. No actions other than those specified in the
notice may be considered at a special meeting of the Members unless such
consideration is approved by Unanimous Consent of the
Members. Notwithstanding anything to the contrary in this Agreement,
if all of the Members shall meet at any time and place and determine by
Unanimous Consent to hold a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any lawful action may be
taken. Accurate minutes of any meeting of the Members shall be taken
and filed with the minute books or other records of the Company.
4.5 Proxies
At
all meetings of the Members, a Member may vote in person or by proxy executed in
writing by the Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the Secretary of the Company before or at the time of
the meeting.
4.6 Action by Members without a
Meeting
Any action required
or permitted to be taken at a meeting of the Members may be taken without a
meeting if the action is authorized or approved by a written consent describing
the action taken, signed by all Members, and delivered to the Company for
inclusion in the minute books or for filing with the Company
records. A written consent may be delivered by fax or other
electronic means and there shall be no requirement for maintaining original
executed counterparts in the minute books or other records of the
Company. Any such action by written consent shall be sent to each
Member within five (5) calendar days after the consent is executed and filed in
the minute books or with the Company records.
4.7 Waiver of
Notice
When any notice of
a meeting of the Members is required to be given to any Member, a waiver thereof
in writing signed by or on behalf of the Member entitled to such notice, whether
before, at, or after such meeting, or such Member’s presence at such meeting,
shall be equivalent to the giving of such notice.
4.8 Actions Requiring Unanimous
Member Consent
Notwithstanding
anything to the contrary in this Agreement, no decisions or actions involving
the Company as enumerated below shall be made or taken, as applicable, without
Unanimous Consent of the Members:
4.8.1 except as otherwise
set forth in this Agreement, (a) the sale or issuance to any Person (including
any Member or its Affiliates) of any equity interests in the Company or options
to purchase equity interests in the Company (or any other securities, options,
warrants, debentures, or other rights to acquire, or that are convertible into,
equity interests in the Company), or (b) the adjustment of the Percentage
Interests held by the Members;
4.8.2 except as provided
in Section 19.2,
the admittance of new Members;
4.8.3 the place and time
of Member meetings held without notice;
4.8.4 except as provided
in Section 21, the
voluntary liquidation, dissolution, or winding up of the Company or the
initiation of any bankruptcy proceedings involving the Company;
4.8.5 any merger,
consolidation, or conversion of the Company with or into any other Person, or,
except as provided in Section 21, the
Transfer (by lease, assignment, sale, or otherwise), or proposal to Transfer,
all or substantially all of the Company’s assets in a single transaction or
through a series of related transactions;
4.8.6 any change in the
size of the Board;
4.8.7 any amendment of
this Agreement or the Certificate of Formation of the Company attached as Exhibit
A;
4.8.8 any modification,
amendment, termination, or replacement of, or grant of any waiver under, any of
the Related Agreements;
4.8.9 the registration of
any securities of the Company with the U.S. Securities and Exchange Commission
or the listing of any securities of the Company on any stock exchange or
over-the-counter market;
4.8.10 any action by the
Members taken without a meeting of the Members;
4.8.11 the extension of
the term of this Agreement pursuant to Section 21.1;
4.8.12 any other decision
of the Company set forth in this Agreement expressly requiring Unanimous Consent
of the Members; and
4.8.13 the agreement or
commitment to do any of the foregoing.
4.9 Other
Activities
Subject to Section 15, each
Member and its Affiliates may engage in or possess an interest in all business
ventures of every nature and description, independently or with others, even if
such activities compete directly with the business of the other Member and its
Affiliates, and neither the Company nor the other Member shall have any rights
by virtue of this Agreement in and to such independent ventures or the income or
profits derived from them.
4.10 Deficit Upon
Liquidation
Upon liquidation as
provided in ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
of the Members shall be liable to the Company for any deficit in its Capital
Account, nor shall such deficits be deemed assets of the Company.
4.11 Company Property; Membership
Interests
All property owned
by the Company, whether real or personal, tangible or intangible, and wherever
located, shall be deemed to be owned by the Company and no Member, individually,
shall have any ownership of such property. The Membership Interests
shall constitute personal property.
5. BOARD
OF REPRESENTATIVES
5.1 Board
Except as otherwise
set forth in this Agreement, the Business and affairs of the Company shall be
managed by or under the exclusive direction of the Board. The Board
shall consist of six (6) Representatives, three (3) of whom shall be appointed
by Caterpillar (which appointees shall not be an officer or employee of the
Company or an employee of Caterpillar or one of its Affiliates who is seconded
to the Company), and three (3) of whom
shall be appointed by Navistar (which appointees shall not be an officer or
employee of the Company or an employee of Navistar or one of its Affiliates who
is seconded to the Company). Each Representative shall be authorized
to act on behalf of the Member appointing such Representative for all purposes
of this Agreement, and all actions taken by such Representative shall be binding
on such Member. Caterpillar’s initial appointees shall be [___________], [___________] and [___________]. Navistar’s
initial appointees shall be [___________], [___________]
and [___________]. Each
of the Representatives shall be authorized to appoint a proxy to participate for
him or her on all actions of the Board. Any such proxy shall be filed
with the Secretary at or prior to the meeting at which any action is taken
pursuant to such proxy.
5.2 Chairman
The initial
chairman of the Board shall serve from the Effective Date through the date that
is one (1) year from the last day of the month in which the Effective Date
occurs. Each subsequent chairman of the Board shall serve a twelve
(12) month term. The initial chairman of the Board shall be, in
Caterpillar’s discretion, one of the three (3) Representatives appointed by
Caterpillar with respect to such period. The next chairman of the
Board shall be, in Navistar’s discretion, one of the three (3) Representatives
appointed by Navistar with respect to such period. Caterpillar and
Navistar shall thereafter rotate each twelve (12) month term in determining
which of its respective three (3) Representatives shall serve as chairman of the
Board. The role of the chairman is to chair the meetings of the
Board.
5.3 Required
Vote
The affirmative
vote of a majority of all of the Representatives comprising the Board (and not,
for the avoidance of doubt, a majority only of the Representatives in attendance
at a particular Board meeting) shall be the act of the Board, unless the vote of
a greater proportion of the Representatives comprising the Board is otherwise
required by this Agreement or the Act.
5.4 Term and Removal;
Resignation of Representatives
5.4.1 Term and
Removal. Representatives shall serve in such capacity until
their death, disability, resignation, or removal. The Member
appointing a Representative shall at any time be entitled to remove and replace
such Representative, with or without cause. The Member replacing such
Representative shall promptly deliver a copy of the notice of such removal and
replacement to such Representative, the Board and the other
Member. Removal shall be effective upon receipt of the written notice
of such removal by each of such Representative, the Board and the other
Member.
5.4.2 Resignation. Any
Representative may resign at any time by giving written notice to the Board and
each Member. The resignation of any Representative shall take effect
upon receipt of such notice by the Board and each Member or at such later time
as shall be specified in the notice.
5.5 Vacancies
If
a vacancy occurs as a result of the death, disability, resignation, or removal
of a Representative, the Member appointing such Representative shall promptly,
and in any event no later than the next regularly scheduled meeting, appoint a
replacement Representative.
5.6 Authority of the
Representatives
Unless authorized
to do so by this Agreement or by the Board in accordance with the provisions of
this Agreement, no Representative shall have any power or authority to bind the
Company in any way, to act as an agent of the Company, to pledge the Company’s
credit, or to render the Company liable for any purpose.
5.7 No Reimbursement for
Expenses or Compensation
The Representatives
shall not be entitled to reimbursement from the Company for costs and expenses
incurred in connection with the management of the Company and in attending Board
meetings. Such expenses may be reimbursed by the Member appointing
such Representatives, in the sole discretion of such Member. The
Representatives shall not receive any compensation or salaries from the Company
for performing their duties.
5.8 Meetings
Unless otherwise
agreed to by the Board by Majority Consent, regular meetings of the Board shall
be held bi-monthly, and all such meetings shall be held at the Company’s
principal place of business or at such other place determined by the Board by
Majority Consent. Representatives may participate in any regular or
special meeting of the Board by means of conference telephone or similar
communications equipment pursuant to which all Persons participating in the
meeting can hear each other or by any other means permitted by the Act, and such
participation shall constitute presence in person at such
meeting. Unless otherwise prescribed by law, special meetings of the
Board shall be held whenever called by any Representative. Written
notice stating the place, day, and hour of a special meeting and the purpose or
purposes for which the meeting is called shall be delivered not less than
forty-eight (48) hours before the time of a special meeting to each
Representative, subject to such shorter notice as an emergency situation shall
reasonably dictate. No actions other than those specified in the
notice may be considered at a special meeting of the Board unless such
consideration is approved by Majority Consent of the
Board. Notwithstanding anything to the contrary in this Agreement, if
all of the Representatives shall meet at any time and place and determine by
Majority Consent to hold a meeting at such time and place, such meeting shall be
valid without call or notice, and at such meeting any lawful action may be
taken. Accurate minutes of any meeting of the Board shall be taken
and filed with the minute books or other records of the Company.
5.9 Action by Written
Consent
Any action required
or permitted to be taken at a meeting of the Board, or of any committee thereof,
may be taken without a meeting if the action is authorized or approved by a
written consent describing the action taken, signed by all of the
Representatives comprising the Board, and delivered to the Company for inclusion
in the minute books or for filing with the Company records. A written
consent may be delivered by fax or other electronic means and there shall be no
requirement for maintaining original executed counterparts in the minute books
or other records of the Company.
5.10 Waiver of
Notice
When any notice of
a meeting of the Board is required to be given to any Representative, a waiver
thereof in writing signed by the Representative entitled to such notice, whether
before, at, or after such meeting, or such Representative’s presence at such
meeting, shall be equivalent to the giving of such notice.
5.11 Committees
By
a resolution adopted with Majority Consent of the Board, the Board may designate
such committees as the Board shall determine and shall prescribe the manner in
which proceedings of such committees shall be conducted. The
provisions of this Agreement with respect to notice and conduct of meetings of
the Board shall govern meetings of committees of the Board. In
resolutions adopted with Majority Consent of the Board authorizing any
committee, the Board shall specify the authority of any such committee, subject
to any limitations imposed by the Act.
5.12 Limitation of Liability of
Representatives
The Liabilities and
debts of the Company, whether arising in contract, tort, or otherwise, shall be
solely the Liabilities and debts of the Company, and no Representative shall be
obligated personally for any such Liability or debt of the Company solely by
reason of being a Representative, except as otherwise required by
law. No Representatives shall owe a fiduciary duty to the Company or
to a Member not appointing such Representative, except for the implied
contractual covenant of good faith and fair dealing provided for under the
Act. Without limiting the generality of the foregoing, except as
otherwise required by the Act or any other applicable law, in taking any action
with respect to the Company (including determining whether to vote in favor of
or against a matter requiring Majority Consent of the Board), each
Representative is obligated to consider only the interests of the Member that
appointed such Representative to the Board.
5.13 Actions Requiring Majority
Consent of Board
Notwithstanding
anything to the contrary in this Agreement, no decisions or actions involving
the Company enumerated below (other than any such decision that is already
provided for in this Agreement or in any Related Agreement) shall be made or
taken, as applicable, without Majority Consent of the Board:
5.13.1 other than with
regard to the Initial Annual Business Plan and the Initial Rolling Business
Plan, in each case as of the Effective Date, adoption of each Annual Business
Plan and each Rolling Business Plan and all changes thereto, including all
changes to the Initial Annual Business Plan and the Initial Rolling Business
Plan contemplated by Section
2.3.3;
5.13.2 any change in the
policy of the Company relating to distributions to the Members, including any
amendment to or modification of Section
18;
5.13.3 the declaration of
any distribution to the Members not in accordance with the Company’s policy
relating to distributions to the Members or any of the provisions of this
Agreement;
5.13.4 other than with
respect to Related Agreements, which are addressed in Section 4.8.8,
any transaction or series of related transactions between the Company (on the
one hand) and Caterpillar or Navistar or one of their respective Affiliates (on
the other hand) (including the entering into, amendment or modification of any
agreement between the Company and Caterpillar, Navistar, or one of their
respective Affiliates);
5.13.5 except as set forth
in Section
5.14, any transaction or series of related transactions between the
Company (on the one hand) and any Representative or officer or employee of the
Company (on the other hand) (including the entering into, amendment or
modification of any agreement between the Company and any Representative or
officer or employee of the Company), except, with respect to officers and
employees of the Company, for any employment agreement, employee benefit plan or
any other arrangement relating to their employment;
5.13.6 capital
expenditures that would result (together with any prior capital expenditures in
any Fiscal Year) in the relevant amount set forth in the Annual Business Plan
being exceeded by more than ten percent (10%) of such amount in such Fiscal
Year;
5.13.7 any lease of
personal property by the Company that would result (together with any prior
leases in any Fiscal Year) in the relevant amount set forth in the Annual
Business Plan being exceeded by more than ten percent (10%) of such amount in
such Fiscal Year;
5.13.8 except as set forth
in Section 21, any
disposition of assets by the Company (including by lease from the Company),
other than the sale or lease of JV Trucks and JV Truck Replacement Parts in the
ordinary course of business, that would result (together with any prior
dispositions in any Fiscal Year) in the relevant amount set forth in the Annual
Business Plan being exceeded by more than ten percent (10%) of such amount in
such Fiscal Year;
5.13.9 any pledge or
hypothecation of, or grant of any lien or other encumbrance on, assets of the
Company (together with any such prior pledges, hypothecations, liens, or other
encumbrances) for an aggregate consideration in excess of $100,000;
5.13.10 except as set forth
in Sections 3.2
and 5.13.34,
any arrangement relating to the creation of indebtedness of the Company for
borrowed money (other than trade payables in the ordinary course of business)
(a) that (together with any prior indebtedness) would result in the relevant
aggregate indebtedness amount set forth in the Annual Business Plan being exceeded, or (b)
on terms materially different than the terms for such indebtedness contemplated
by the Annual Business Plan;
5.13.11 any real property
leasehold commitment, contract, agreement, or other arrangement involving
consideration or the creation of a liability, contingent or otherwise, that
(together with any prior payments of consideration or incurrence of liability in
any Fiscal Year under any such commitment, contract, agreement, or other
arrangement) would result in the relevant amount set forth in the Annual
Business Plan being exceeded by more than ten percent (10%) of such amount in
such Fiscal Year;
5.13.12 except as expressly
provided in this Agreement (including Section 14), the entering into of any
contract by the Company relating to the licensing or transfer of ownership of,
or granting of rights to, any Intellectual Property of the Company to another
Person (other than a direct or indirect wholly owned subsidiary of the
Company);
5.13.13 subject to Section 6, the
appointment or removal of the President, the CFO, the Secretary, or any other
officer designated by the Board (which designation, in any case, shall be
pursuant to Section 6.2);
5.13.14 any guarantee of
the payment of any money by or debt of, or the performance of any other
obligation of, another Person, in excess of $50,000, individually or in the
aggregate;
5.13.15 except as set forth
in Section
5.15, the waiver, release, or abandonment of any legitimate right or
claim against any Person (including any Member or Affiliate thereof) potentially
liable to the Company for an amount in excess of $250,000;
5.13.16 except as set forth
in Section 5.15,
the initiation or settlement, or any material decision relating to the
prosecution or defense, of any lawsuit, arbitration, administrative proceeding,
or other legal claim involving an amount at issue in excess of
$250,000;
5.13.17 the grant of any
general power of attorney or other unlimited authority to act on behalf of or in
the name of the Company;
5.13.18 the Gross Asset
Value of any in-kind contribution made in lieu of cash as consideration for an
equity interest in the Company;
5.13.19 the redemption,
purchase, or other acquisition of any outstanding equity interest in the
Company;
5.13.20 the execution,
modification, extension, renewal, or termination of any material contract,
lease, or other agreement outside the ordinary course of business of the
Company;
5.13.21 any material change
in the nature or scope of the Business conducted by the Company, including the
commencement of any new line of business or the conduct of any business not
contemplated by this Agreement;
5.13.22 the delegation by
the Board of any of its powers (provided, that such
delegation shall not relieve the Board of its obligations with respect
thereto);
5.13.23 the purchase or
other acquisition or the sale or other disposition of any equity or debt
securities of another Person, or the entering into of a joint venture,
partnership, or similar arrangement between the Company and another
Person;
5.13.24 the purchase or
other acquisition of all or substantially all of the assets, or any line of
business, of another Person;
5.13.25 the establishment
of any direct or indirect subsidiary of the Company, or the issuance, Transfer,
pledge, or encumbrance of any equity or debt securities of any direct or
indirect subsidiary of the Company;
5.13.26 any change in the
Company’s name or use of a fictitious name;
5.13.27 the establishment,
approval, or material modification of any benefit or incentive plans for
employees of the Company;
5.13.28 any decision
related to the compensation of any officer set forth in Section 6 who is
an employee of the Company (and not an employee of Caterpillar, Navistar, or one
of their Affiliates who is seconded to the Company);
5.13.29 except as set forth
in Section
11.1, the direct sale of JV Trucks by the Company to any Person other
than JV Dealers and, to the extent permitted pursuant to Section 11.1.3,
Governmental ▇▇▇ Customers and Governmental Conventional Customers;
5.13.30 any loans or
advances made by the Company in excess of $50,000, individually or in the
aggregate, including intercompany loans and advances to Caterpillar or
Navistar;
5.13.31 except as provided
in this Agreement, in the Initial Annual Business Plan, in the Initial Rolling
Business Plan, or in any subsequent Annual Business Plan or any subsequent
Rolling Business Plan adopted by Majority Consent of the Board, the commencement
of the manufacture or assembly of any JV Trucks by the Company and the selection
of any location for any JV Truck Assembly Facility;
5.13.32 the establishment
or modification of JV Truck product development plans (including the attributes
and characteristics of current and potential JV Trucks and the objectives
relating thereto, the timing of the development of such JV Trucks, and the
funding and other resources necessary for the development of such JV
Trucks);
5.13.33 the establishment
or material modification of the terms of the Company’s standard
warranties;
5.13.34 any requirement
that the Members make loans or additional Capital Contributions to the Company
in addition to those Capital Contribution Commitments and Loan Commitments set
forth in the Initial Annual Business Plan, the Initial Rolling Business Plan, or
any subsequent Annual Business Plan or any subsequent Rolling Business Plan
adopted by Majority Consent of the Board;
5.13.35 the entering into
of any futures trading, swap, financial derivative, or other hedging
arrangement;
5.13.36 subject to Section 18.12, (a)
the selection, change or termination of the Company’s independent auditor, (b)
the selection or material change of the accounting methods, methodologies,
practices, procedures, or policies utilized by the Company (except for those
changes that are required by any new accounting standards or any regulatory
requirements), and (c) the approval of the financial statements of the Company
(including the monthly financial statements, the annual financial statements for
the twelve (12) month period ended at the end of each Fiscal Year and the
financial statements for the twelve (12) month period ended each December
31);
5.13.37 any action,
decision, or election made by the Members in connection with taxes (including
the preparation and filing of the Company’s federal and state income tax
returns, or in directing the actions of the Tax Matters Partner) to the extent
the Members do not otherwise agree pursuant to Section 8.2.10 and
Article
18;
5.13.38 the establishment
of any account with any bank or other financial institution to hold the funds
and securities of the Company;
5.13.39 any other decisions
of the Company set forth in this Agreement expressly requiring Majority Consent
of the Board;
5.13.40 take any action
expressly prohibited to be taken by the Company under the Mahindra Waiver;
and
5.13.41 the agreement or
commitment to do any of the foregoing.
5.14 Indemnification of
Representatives, Officers, Employees and Other Agents
The Company shall
indemnify and hold harmless the Representatives, officers, employees (including
employees of Caterpillar, Navistar, or one of their Affiliates who are seconded
to the Company), and other agents of the Company (each an “Indemnitee”) against
any Liabilities arising out of any claim, demand, action, suit, or proceeding
related to the performance or non-performance of any act concerning the Business
or the activities of the Company, if (a) such Indemnitee acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interests of
the Company (subject to the provisions of Section 5.12), (b)
such Indemnitee’s action or inaction does not constitute recklessness, and (c)
with respect to any criminal action or proceeding, had no reasonable cause to
believe that his or her conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
(i) that such Indemnitee did not act in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best interests of the
Company, (ii) that such Indemnitee’s action or inaction constitutes
recklessness, or (iii) with respect to any criminal action or proceeding, that
such Indemnitee had reasonable cause to believe that his or her conduct was
unlawful. Any expenses covered by the foregoing indemnification shall
be paid by the Company in advance of the final disposition of such action, suit,
or proceeding; provided, that it
appears reasonably likely in the good faith judgment of the Board (as determined
by Majority Consent) that such Indemnitee is or shall be entitled to
indemnification, and provided further that such Indemnitee agrees to repay such
amounts if it is ultimately determined that he or she is not entitled to be
indemnified.
5.15 Control of Certain Legal
Proceedings
Notwithstanding anything to the contrary
in this Agreement (including Section 5.13.15 and Section 5.13.16), the initiation, prosecution,
settlement, and defense of any lawsuit, arbitration, administrative proceeding,
or other legal claim by a Member or any of its Affiliates against or involving
the Company or any of its direct or indirect wholly owned subsidiaries or by the
Company or any of its direct or indirect wholly owned subsidiaries against or
involving a Member or any of its Affiliates shall be controlled solely by the
Representatives appointed to the Board by the other Member. Such
Representatives shall have the right, to the exclusion of the other
Representatives, (a) to manage and control any such lawsuit, arbitration,
administrative proceeding, or other legal claim, and (b) to direct the officers
and employees of the Company with respect to any such lawsuit, arbitration,
administrative proceeding, or other legal claim.
6. OFFICERS
6.1 Qualifications
Each officer of the
Company shall be a natural person. An officer need not be a resident
of the State of Delaware. No officer of the Company shall be a
Representative. Each of the President and the Chief Financial Officer
(“CFO”) shall
dedicate all of his business time and attention to the business and affairs of
the Company.
6.2 Nomination and
Appointment
The officers of the
Company shall consist of a President, a CFO, a Secretary, and such other
officers as determined by the Board by Majority Consent. Subject to
the selection process set forth in this Section 6.2 with
respect to the President, the CFO, and the Secretary, all officers shall be
appointed by the Board by Majority Consent. The initial President,
and each subsequent President, shall be nominated by the Representatives
appointed by Navistar. The initial CFO and Secretary, and each
subsequent CFO and Secretary, shall be nominated by the Representatives
appointed by Caterpillar. Each nominee for President, CFO and
Secretary may be (a) an employee of Navistar, Caterpillar, or the Company, or
(b) any other person. The appointment of a nominee to any officer
position of the Company (including any nominee for President, CFO or Secretary)
shall be subject to the Majority Consent of the Board, it being understood that
each Representative may withhold his approval in his discretion for the
appointment of such nominee. Except as otherwise determined by the
Board by Majority Consent, each of the President, the CFO and the Secretary
shall serve in such office for a term of three (3) years, or until his or her
earlier death, disability, resignation, or, upon the request of the Member
nominating such officer, removal by the Board by Majority Consent (it being
understood that each Representative may withhold his approval in his discretion
for the removal of such officer). At the end of the three (3) year
term of service of each of the President, CFO and Secretary, the Member’s
Representatives responsible for selecting the nominee for such office shall
designate as the nominee for such office, in their discretion, either the
individual who then holds such office or another individual. If any
individual’s term of service as an officer expires prior to the approval of the
reinstatement of such individual to such office or the replacement of such
individual with another individual for such office, in each case, by the Board
by Majority Consent, all management vested in such office pursuant to this
Agreement or otherwise by the Board shall be vested in the Board until such
reinstatement or replacement is approved by the Board by Majority
Consent.
6.3 President
The President shall
be the chief executive officer of the Company, and, under the direction and
subject to the control of the Board, the President in general shall, subject to
Section 5,
manage the Business and affairs of the Company and shall see that all orders and
resolutions of the Board are carried into effect.
6.4 Chief Financial
Officer
The CFO shall have
the care and custody of all the funds and securities of the
Company. Subject to Section 5, the
CFO may endorse checks, drafts, and other instruments for the payment of money
for deposit or collection when necessary or proper and may deposit the same to
the credit of the Company in such banks or depositories as the Board may
designate from time to time, and the CFO may endorse all financial documents
requiring endorsements for or on behalf of the Company. The CFO may
sign all receipts and vouchers for payments made to the Company. The
CFO shall render an account of his or her transactions to the Board or President
as the Board or President shall require from time to time. The CFO
shall enter regularly in the books to be kept by him or her for that purpose, a
full and adequate account of all monies received and paid by him or her on
account of the Company. The CFO shall also perform, under the
direction and subject to the control of the Board and the President, such other
duties as may be assigned to him or her from time to time.
6.5 Vice
Presidents
Any Vice President
nominated and appointed by the Board shall act subject to the direction and
control of the President. Subject to Section 5, each
Vice President may execute and deliver any deeds, mortgages, bonds, contracts,
or other instruments that the Board or the President has authorized to be
executed and delivered, except in cases where the execution and delivery thereof
shall be expressly and exclusively delegated to another officer of the Company
by the Board or this Agreement, or where the execution and delivery thereof
shall be required by law to be executed and delivered by another
Person. In general, each Vice President shall perform all duties as
may be prescribed from time to time by the Board. Each Vice President
shall consult with the President in connection with the performance of his or
her duties.
6.6 Secretary
The Secretary shall
attend all meetings of the Members and of the Board and record correctly the
proceedings of such meetings and record all votes in a minute book suitable for
such purposes. The Secretary shall give, or cause to be given, notice
of all meetings of the Members and of the Board. The Secretary shall
attest with his or her signature all deeds, conveyances, or other instruments
requiring the seal of the Company. The Secretary shall keep in safe
custody the seal, if any, of the Company. The Secretary shall also
perform, under the direction and subject to the control of the Board, such other
duties as may be assigned to him or her from time to time.
6.7 Treasurer
Any Treasurer
designated and appointed by the Board shall be subject to the direction of the
CFO and shall assist the CFO in the performance of his or her
duties. At the direction of the CFO or in the event of his or her
absence or disability, the Treasurer shall perform the duties of the
CFO. The Treasurer shall have custody of the Company funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Company and shall deposit all moneys and
other valuable effects in the name and to the credit of the Company in such
banks or depositories as may be designated by the CFO or the
Board. The Treasurer shall disburse the funds of the Company as may
be ordered by the President, the CFO or the Board, taking proper vouchers for
such disbursements, and shall render to the Board at its regular meetings or
when the Board so requires, an account of all of the Treasurer’s transactions
and of the financial condition of the Company. The Treasurer shall
also perform such other duties as may be assigned to him or her from time to
time by the CFO or the Board.
6.8 Other
Officers
In
general, any other officer nominated and appointed by the Board and not
otherwise described in Sections 6.3
through 6.7
shall perform all duties as may be prescribed from time to time by the Board and
shall be subject to the direction and control of the President in connection
with the performance of his or her duties.
6.9 Compensation; Reimbursement
of Expenses
The salaries or
other compensation of each officer of the Company who is an employee of the
Company (and not an employee of Caterpillar, Navistar, or one of their
Affiliates who is seconded to the Company) shall be fixed from time to time by
the Board, upon Majority Consent, as part of the Annual Business
Plan. The officers of the Company shall be entitled to prompt
reimbursement from the Company of all reasonable out-of-pocket expenses incurred
in the course of the performance of their duties.
7. SECONDED
PERSONNEL AND EMPLOYEES
7.1 Initial Staffing
Plan
The Company shall
be staffed with personnel in accordance with the Initial Staffing Plan agreed to
by the Members (the “Initial Staffing
Plan”)3, which sets forth the name and job title of
each salaried or management seconded personnel of the Company. All
subsequent staffing plans for the Company (each a “Subsequent Staffing
Plan”) shall be incorporated into the Annual Business Plan and the
Rolling Business Plan of the Company and shall include (i) each salaried or
management direct employee of the Company, (ii) each salaried or management
seconded personnel of the Company, and (iii) the approximate number of hourly
direct employees of the Company.
7.2 Seconded
Personnel
Caterpillar and
Navistar shall second, or cause their respective Affiliates to second, to the
Company such salaried and management personnel in accordance with the Initial
Staffing Plan and all Subsequent Staffing Plans and pursuant to the terms of the
applicable Employee Secondment Agreement between the Company (on the one hand)
and each of Caterpillar or its Affiliates and Navistar or its Affiliates (on the
other hand). All decisions relating to the identification of any
Member employee to be seconded to the Company and the significant terms of such
secondment arrangement (including the date on which such employee’s secondment
to the Company commences and the duration of such secondment period), to the
extent not already set forth in the Initial Staffing Plan or a Subsequent
Staffing Plan, or in the applicable Employee Secondment Agreement, shall be
determined by the Board by Majority Consent.
7.3 Employees
The Company shall
hire such employees in accordance with a Subsequent Staffing Plan, as may be
amended by the Board by Majority Consent. No current employees of
either Member shall become direct employees of the Company at the Effective
Date. All decisions relating to the hiring and employment terms of
the President or any Company employee who reports directly to the President or
whose annual base salary exceeds $150,000, to the extent not set forth in a
Subsequent Staffing Plan, shall be determined by the Board by Majority
Consent. The Board, by Majority Consent, shall develop rules and
regulations pertaining to its internal affairs and operations and the conduct of
employees that shall be compatible with those of Caterpillar and Navistar, and
which rules and regulations shall also apply to the seconded
personnel. From and after the commencement of the secondment period
provided for in each Employee Secondment Agreement, if the Company advertises
any job opening that an employee of Caterpillar or Navistar voluntarily applies
for and fills, then upon filling such job opening, such employee shall cease
being an employee of Caterpillar or Navistar (as applicable) and shall become a
Company employee (it being understood, for the avoidance of doubt, that any
employee transfers described in this sentence shall be separate and distinct
from the secondment arrangement described in Section
7.2).
7.4 Compensation
The Board shall,
upon Majority Consent, develop and implement the initial compensation plans
applicable to Company employees and the initial incentive compensation plans
applicable to Company employees and Company seconded personnel. All
subsequent compensation plans for the Company shall be incorporated into the
Annual Business Plan and the Rolling Business Plan of the
Company. The compensation plans and the incentive compensation plans
for the Company employees shall be designed to focus Company employees on
achieving the business objectives of the Company. The incentive
compensation plans for the Company seconded personnel shall be designed to focus
each seconded individual on achieving both the business objectives of such
individual’s employer (i.e., Caterpillar or Navistar, as applicable) and the
business objectives of the Company.
7.5 Management
Positions
The Members agree
to allocate certain initial Company management positions in accordance with
Section 6.2 and
the Initial Staffing Plan. Subject to Section 6.2, for
subsequent appointments, the President shall nominate replacements for these
positions due to death, disability, resignation, retirement, or termination,
without regard to Member alignments, which nominations shall be subject to the
approval of the Board by Majority Consent.
7.6 Labor and Union
Issues
Caterpillar and
Navistar shall work to minimize the influence of third parties in the Company
work force. Neither Caterpillar nor Navistar shall agree to any union
agreement provisions that limit the ability of either Member or the Company to
operate independently. Caterpillar and Navistar shall work together
to coordinate all communication with unions that are related to the formation of
the Company.
7.7 Non-Hire
7.7.1 Without the prior
written consent of Navistar, neither Caterpillar nor any of its Affiliates
shall, directly or indirectly, employ (a) any Navistar employee who is seconded
to the Company pursuant to the applicable Employee Secondment Agreement during
the period that such Navistar employee is seconded to the Company, or (b) any
Company employee during the period that such individual is a Company employee;
provided that,
in the case of each of clauses (a) and (b), neither
Caterpillar nor any of its Affiliates shall be precluded from hiring any such
individual who (A) initiates discussions regarding such employment, or (B)
responds to any public advertisement, unless the advertisement is undertaken
with the intention of violating this Section 7.7.1, placed
by Caterpillar or one of its Affiliates.
7.7.2 Without the prior
written consent of Caterpillar, neither Navistar nor any of its Affiliates
shall, directly or indirectly, employ (a) any Caterpillar employee who is
seconded to the Company pursuant to the applicable Employee Secondment Agreement
during the period that such Caterpillar employee is seconded to the Company, or
(b) any Company employee during the period that such individual is a Company
employee; provided that, in the
case of each of clauses (a) and (b), neither Navistar
nor any of its Affiliates shall be precluded from hiring any such individual who
(A) initiates discussions regarding such employment, or (B) responds to any
public advertisement, unless the advertisement is undertaken with the intention
of violating this Section 7.7.2, placed
by Navistar or one of its Affiliates.
8. PRODUCTS
AND SERVICES SOLD BY MEMBERS TO THE COMPANY
8.1 Generally
Each Member shall
provide the Company with certain products and services pursuant to the terms of
one or more sales agreements and service agreements. Certain of such
agreements are being entered into by the Members and the Company simultaneously
with the execution and delivery of this Agreement pursuant to Section 1.6, and
certain of such agreements shall be entered into by the Members and the Company
following the Effective Date as and when approved by the Board by Majority
Consent. All such agreements shall follow the general principles set
forth in Section
8.2.
8.2 Certain
Principles
8.2.1 The Company may
purchase, in its discretion, completely built JV Trucks and JV Truck Components
that are part of knock-down kits for JV Trucks.
8.2.2 Completely built JV
Trucks shall be sold by Navistar to the Company pursuant to the Truck Sales
Agreement.
8.2.3 JV Truck Components
(whether or not part of a knock-down kit) and JV Truck Replacement Parts shall
be sold by each Member to the Company pursuant to the applicable Master
Component Supply Agreements, and the Company shall be permitted to source
components and parts from any Person, including third parties or the
Members.
8.2.4 Costs and expenses
associated with kitting a knock-down kit shall be paid for by the
Company.
8.2.5 All research and
development services and ▇▇▇▇-Up Engineering Services, in each case, relating to
product design and product development provided by a Member shall be sold to the
Company at Cost–plus-[5][7]%.
8.2.6 All parts
distribution services performed by Caterpillar with respect to Caterpillar Brand
JV Truck Replacement Parts (to the extent that Caterpillar is retained by the
Company to perform such services), parts distribution services performed by
Navistar with respect to Navistar Brand JV Truck Replacement Parts (to the
extent that Navistar is retained by the Company to perform such services), and
logistics services through Caterpillar Logistics Services, Inc. (to the extent
that Caterpillar is retained by the Company to perform such services) shall be
sold to the Company at prices that are negotiated by such Member or, in the case
of logistics services, Caterpillar Logistics Services, Inc., and the
Company. If the Company does not retain Caterpillar or one of its
Affiliates or Navistar or one of its Affiliates to provide such services, it
shall be permitted with the Majority Consent of the Board to retain any other
Person, including third parties, to provide parts distribution services or
logistics services related to Caterpillar Brand JV Truck Replacement Parts or
Navistar Brand JV Truck Replacement Parts.
8.2.7 The terms on which
Caterpillar Financial shall provide financing
services in connection with the Company’s Business, if Caterpillar Financial is
retained by the Company to provide such services, will be negotiated by
Caterpillar Financial and the Company. The Company, with the Majority
Consent of the Board, may also retain other Persons, including third parties or
Navistar or one of its Affiliates, to provide financing services to or on behalf
of the Company or with respect to JV Trucks or JV Truck Replacement
Parts.
8.2.8 Any service not
described in Sections
8.2.1 through 8.2.7 that is
rendered directly by a Member or any of its Affiliates to the Company shall be
sold to the Company at Cost-plus-2.5% to the extent permissible under applicable
law.
8.2.9 All services that
are purchased by a Member or any of its Affiliates from a third party and then
re-sold to the Company shall be so sold to the Company on a pass-through basis
without ▇▇▇▇-up.
8.2.10 Each of the
principles set forth in this Section 8.2 and any
dealings or arrangements between the Members or any of their Affiliates and the
Company shall conform to the transfer pricing rules and guidelines (when
applicable) and any other applicable tax law. The Members jointly
shall decide whether such dealings and arrangements conform and shall provide
recommendations to meet the requirements of such rules and
guidelines. The Parties will use their commercially reasonable
efforts to source services and goods in such a manner as to reduce or eliminate
intercompany ▇▇▇▇-ups for cross border services and goods.
9. JV
TRUCK MODELS; MANUFACTURE AND ASSEMBLY OF JV TRUCKS
9.1 JV Truck
Models
JV
Truck Models shall include all of Navistar’s models for Medium Duty Trucks and
Heavy Duty Trucks set forth in the Initial Rolling Business Plan. JV
Truck Models may also include (a) any and all of Navistar’s models for Medium
Duty Trucks and Heavy Duty Trucks existing as of the Effective Date
(irrespective of where in the world such models are sold by Navistar or any of
its Affiliates) and, to the extent not included in clause (a), (b) any
model for Medium Duty Trucks or Heavy Duty Trucks developed by Navistar or the
Company after the Effective Date, and (c) any truck model sold by Navistar or
any of its Affiliates to Caterpillar or any of its Affiliates in the U.S.,
Canada or Mexico under the North American Severe Service Truck Sales Agreement,
in each of clauses
(a), (b)
and (c) as
approved by the Board by Majority Consent.
9.2 Manufacture of JV Trucks by
Navistar
9.2.1 Generally. Beginning
on the Effective Date, subject to the terms and conditions of this Agreement and
the Truck Sales Agreement, Navistar (or, with the Majority Consent of the Board,
any third party) shall manufacture, assemble and sell to the Company, and the
Company shall purchase from Navistar (or such third-party manufacturer, if
applicable), finished Navistar Truck Models and Caterpillar Truck Models
pursuant to the Truck Sales Agreement or a truck sales agreement with such
third-party manufacturer.
9.2.2 Allocation of Production
Resources. Navistar’s obligation to supply Navistar Truck
Models and Caterpillar Truck Models to the Company under the Truck Sales
Agreement shall be subject to the terms, conditions and allocation methodologies
agreed to by the Members.
9.3 Establishment of JV Truck
Assembly Facility
At
any time following the Effective Date, upon the determination of the Board by
Majority Consent, the Company may establish a JV Truck Assembly Facility for the
manufacture or assembly of JV Truck Models. The Company, upon the
determination of the Board by Majority Consent, may establish a separate direct
or indirect wholly owned subsidiary in each country in which the Company intends
to manufacture or assemble JV Trucks.
9.4 JV Truck
Components
9.4.1 After any JV Truck
Assembly Facility commences the assembly of a JV Truck model (or any JV Truck
Component relating thereto), the Company may purchase JV Truck Components
directly from Navistar or Caterpillar pursuant to Master Component Supply
Agreements or from any third party. Notwithstanding the foregoing,
the Members agree and acknowledge that (a) differences may arise in the pricing,
terms, and availability with respect to direct material purchases by the Company
(on the one hand) and the Members (on the other hand) if and when the Company
chooses suppliers or JV Truck Components that differ from what is consistent
with the Members’ then-current sourcing strategies, and (b) other factors,
including loss of scale, logistics, country duties, and taxes, may impact the
pricing, terms, and availability of direct material purchases by the
Company. Accordingly, in order to facilitate the identification of
market-competitive opportunities for direct material purchases, the Company
shall form a sourcing council (the “Sourcing
Council”). The Sourcing Council shall include, at a minimum,
one Company executive member and a representative from each Member’s global
purchasing organization, with such three (3) members being the sole voting
members. All strategic sourcing decisions, including any decisions to
source from a Member’s internal division(s), must be approved (i) by a unanimous
vote of the Sourcing Council, or (ii) in the absence of a unanimous vote of the
Sourcing Council on any strategic sourcing decision, by Majority Consent of the
Board.
9.4.2 The Company, upon
Majority Consent by the Board, may contract with the Members to provide JV Truck
Component purchasing services, which allocation of services between the Members
shall be determined by the Board by Majority Consent.
9.4.3 Notwithstanding
Sections 9.4.1
and 9.4.2,
unless the Board agrees otherwise by Majority Consent, any JV Truck manufactured
or assembled by Navistar or the Company on or prior to December 31, 2010 and
containing an automatic transmission shall be manufactured or assembled to
include exclusively automatic transmissions manufactured or assembled by ▇▇▇▇▇▇▇
Transmission, Inc. Navistar shall not, without the Majority Consent
of the Board, amend or renew its purchase agreement with ▇▇▇▇▇▇▇ Transmission,
Inc. in any manner that would restrict any activities of the
Company.
9.4.4 Furthermore, as
part of the ongoing efforts by Navistar or any of its Affiliates to develop its
transmission strategy for vehicles that are not JV Truck Models, Caterpillar
will be given the opportunity and a reasonable period of time to be included
among the consideration set of potential suppliers for new transmission business
prior to Navistar materially amending or renewing its purchase agreement with
▇▇▇▇▇▇▇ Transmission, Inc., or prior to executing any new transmission purchase
agreement between Navistar or any of its Affiliates (on the one hand) and any
other Person (on the other hand), in any case, with respect to any trucks or
other vehicles to be sold by Navistar or its Affiliates anywhere in the
world. If Caterpillar makes a bona fide offer for such new
transmission business, Navistar shall consider, and shall cause its Affiliates
to consider and discuss, such offer in good faith, but is not required to accept
or negotiate such offer and is free to amend or renew such purchase agreement
with ▇▇▇▇▇▇▇ Transmission, Inc. or execute a new transmission purchase agreement
with any third party.
10. JV
TRUCK REPLACEMENT PARTS
10.1 Generally
The Company shall
be accountable for all JV Truck Replacement Parts and shall manage the JV Truck
Replacement Parts business according to the following general principles:
10.1.1 Profits from the
sales of JV Truck Replacement Parts shall be for the account of the
Company;
10.1.2 The overall goal of
the Company shall be to focus and grow the JV Truck Replacement Parts revenue,
profitability, and market share;
10.1.3 Pricing for all JV
Truck Replacement Parts shall be established by the Company. In
determining such pricing, the Company shall (a) consider pricing between similar
Caterpillar Brand parts, Navistar Brand parts, and Common Parts, and (b) seek to
discourage JV Dealers from sourcing parts outside of the Company’s intended
distribution channels for such parts. Navistar may provide pricing
research and recommendations to the Company as a service pursuant to the Master
Terms for Purchased Services. Caterpillar and Navistar may provide
engine pricing research and recommendations to the Company as a service pursuant
to the Master Terms for Purchased Services;
10.1.4 The Caterpillar
Brand and Navistar Brand JV Truck Replacement Parts business shall be managed by
the Company in a manner consistent with the brand management strategy of
Caterpillar and Navistar, respectively, including new product introduction and
support activities;
10.1.5 Caterpillar Brand
parts (e.g., Caterpillar filters, belts, batteries, oil, coolant, etc.) shall be
used on Caterpillar Truck Models and engines where possible;
10.1.6 Navistar Brand
parts (e.g., Navistar filters, belts, batteries, oil, coolant, etc.) shall be
used on Navistar Truck Models and engines where possible;
10.1.7 Caterpillar, in its
sole discretion, shall determine whether All-Makes Parts shall be distributed to
JV Dealers that sell Caterpillar Truck Models or Caterpillar Brand JV Truck
Replacement Parts unless such JV Dealer also sells Navistar Truck Models, in
which event such determination shall be made by the Board upon Majority
Consent;
10.1.8 Navistar, in its
sole discretion, shall determine whether All-Makes Parts shall be distributed to
JV Dealers that sell only Navistar Truck Models or only Navistar Brand JV Truck
Replacement Parts unless such JV Dealer also sells Caterpillar Truck Models, in
which event such determination shall be made by the Board upon Majority
Consent;
10.1.9 Except for sales to
military customers and certain Governmental Conventional Customers by Navistar
and its Affiliates pursuant to the provisions of Section 11.1.3.2
or otherwise pursuant to the provisions of Section 15.3.4,
none of the Company, Caterpillar, Navistar or their respective 5% Affiliates
(excluding the Mahindra JV) shall sell Will-Fit Parts for JV Trucks in the ROW
(it being understood and agreed that Navistar will use its commercially
reasonable efforts to prevent the Mahindra JV from selling Will-Fit Parts for JV
Trucks in the ROW);
10.1.10 Caterpillar or
Navistar, as applicable, shall seek to obtain for the Company or seek to pass on
to the Company any supplier incentives or rebates in connection with the
Company’s purchase of JV Truck Components and JV Truck Replacement
Parts;
10.1.11 The Company and
each Member shall seek to avoid public disclosure of JV Truck Replacement Parts
revenues and profits, except as may be required by applicable law or securities
regulatory authorities; and
10.1.12 Replacement Parts and
Components Sold by the Company to the Members.
10.1.12.1 Pursuant to Master
Component Supply Agreement No. 6, Caterpillar shall have the right to purchase
all replacement parts from the Company for re-sale by Caterpillar in North
America solely for use in connection with Caterpillar Trucks and
Caterpillar-branded Vocational Heavy Duty ▇▇▇ Trucks sold in North
America. Navistar shall sell such replacement parts that are produced
by Navistar or its direct or indirect wholly owned subsidiaries or that are
sourced by Navistar or its direct or indirect wholly owned subsidiaries from a
third party supplier to the Company (for re-sale to Caterpillar) pursuant to the
terms (including price) and subject to the conditions set forth in Master
Component Supply Agreement No. 2. Pursuant to Master Component Supply
Agreement No. 7, Navistar shall have the right to purchase (i) all JV Truck
Replacement Parts (but only to the extent that the Company has used or is using
that replacement part on JV Trucks) and (ii) all replacement parts for North
American Medium Duty ▇▇▇ Trucks and Heavy Duty ▇▇▇ Trucks that are manufactured
or assembled by the Company for Navistar, in the case of each of clauses (i) and
(ii), from the Company for re-sale by Navistar in North America solely for use
in connection with any Navistar Vehicles sold in North
America. Caterpillar shall sell such replacement parts that are
produced by Caterpillar or its direct or indirect wholly owned subsidiaries or
that are sourced by Caterpillar or its direct or indirect wholly owned
subsidiaries from a third party supplier to the Company (for re-sale to
Navistar) pursuant to the terms (including price) and subject to the conditions
set forth in Master Component Supply Agreement No. 1. The selling Member under each applicable
Master Component Supply Agreement will not unreasonably withhold its
agreement to, or attach unreasonable conditions in, the negotiation or execution
of any purchase schedule under any Master Component Supply Agreement. The Members will use good
faith efforts to act reasonably in negotiating to enter into each purchase
schedule under any Master Component Supply Agreement.
10.1.12.2 Pursuant to Master
Component Supply Agreement No. 9, Caterpillar shall have the right to purchase
from the Company all replacement parts and components produced by the Company or
sourced by the Company from third party suppliers (other than from Navistar),
but only to the extent that the Company is using that replacement part or
component on JV Trucks. Subject to any other provision in this
Agreement, including Section 15,
Caterpillar may purchase (i) components solely for use in connection with
Caterpillar components or Caterpillar products (including heavy equipment) sold
anywhere in the world, and (ii) replacement parts solely for use in connection
with (A) Caterpillar Trucks and Caterpillar-branded Vocational Heavy Duty ▇▇▇
Trucks sold in North America and (B) Caterpillar products (including heavy
equipment) sold anywhere in the world, in the case of both clauses (A) and (B) above, subject to
the applicable purchase schedule under Master Component Supply Agreement No. 9;
provided, however, that the
components and replacement parts purchased by Caterpillar under clauses (i) and (ii) above may not be
used in connection with JV Trucks sold in ROW. Pursuant to Master
Component Supply Agreement No. 8, Navistar shall have the right to purchase from
the Company all replacement parts and components produced by the Company or
sourced by the Company from third party suppliers (other than Caterpillar), but
only to the extent that the Company is using that replacement part or component
on JV Trucks. Subject to any other provision in this Agreement,
including Section
15, Navistar may purchase (x) components solely for use in connection
with the manufacture or assembly by Navistar of Navistar Vehicles,
Navistar-branded North American Medium Duty ▇▇▇ Trucks and Heavy Duty ▇▇▇
Trucks, JV Trucks, Caterpillar Trucks, and Caterpillar-branded Vocational Heavy
Duty ▇▇▇ Trucks sold anywhere in the world subject to the applicable purchase
schedule under Master Component Supply Agreement No. 8, and (y) replacement
parts solely for use in connection with Navistar Vehicles sold anywhere in the
world or Navistar-branded North American Medium Duty ▇▇▇ Trucks or Heavy Duty
▇▇▇ Trucks sold in North America subject to the applicable purchase schedule
under Master Component Supply Agreement No. 8; provided, however, that the
components and replacement parts purchased by Navistar under clauses (x) and (y) above may not be
used in connection with JV Trucks sold in ROW.
10.1.12.3 The Company shall
sell the replacement parts and components described in Sections 10.1.12.1
and 10.1.12.2
above to Caterpillar and Navistar on the terms (including price) and subject to
the conditions set forth in the applicable Master Component Supply
Agreements. Sales of such replacement parts by the Company to a
Member shall be made only to the extent that the volume of such replacement
parts is reasonable in relation to the volume of trucks or other products (as
applicable) sold by such Member prior to such replacement parts
sales. The Members shall adopt and implement policies, processes, and
systems to (i) monitor, to the extent practicable, the end-user customers to
which such replacement parts are sold, (ii) discourage Caterpillar’s dealers
from selling such replacement parts to end-user customers for use in trucks or
other products (as applicable) other than (x) Caterpillar Trucks and
Caterpillar-branded Vocational Heavy Duty ▇▇▇ Trucks sold in North America or
(y) Caterpillar components and Caterpillar products (including heavy equipment
but excluding JV Trucks sold by the Company or its direct or indirect
subsidiaries in the ROW) sold anywhere in the world, and (iii) discourage
Navistar’s dealers from selling such replacement parts to end-user customers for
use in trucks or other products (as applicable) other than any Navistar Vehicles
sold anywhere in the world (excluding JV Trucks sold by the Company or its
direct or indirect subsidiaries in the ROW) or Navistar-branded North American
Medium Duty ▇▇▇ Trucks or Heavy Duty ▇▇▇ Trucks sold in North
America. If, at any time during the term of this Agreement, a Member
reasonably believes in good faith that the other Member’s dealers have, in fact,
sold such replacement parts to end-user customers for use in trucks or other
products (as applicable) other than as permitted above, (A) the Members shall
cooperate with each other in furtherance of investigating such matter and,
subject to applicable law, taking corrective actions to discourage such sales
from occurring, and (B) in the event that a material amount of such sales did,
in fact, occur, bring such matter to the Board to determine any appropriate
remediation action it deems necessary.
10.2 Organization and
Management
The JV Truck
Replacement Parts business shall be managed by the Company’s Parts and Services
Manager, who shall be a Vice-President and report to the
President. The Company’s Parts and Services Manager shall have the
following parts and product support responsibilities, provided, that (a) as
applicable, such responsibilities shall be subject to each Member’s brand
requirements, and (b) the Company, with the Majority Consent of the Board, may
engage Caterpillar or Navistar to perform any or all of such responsibilities
pursuant to the Master Terms for Purchased Services: (i) establishing service
standards, including time allowed for providing parts and product support; (ii)
pricing of JV Truck Replacement Parts for JV Dealers; (iii) developing parts
business plans (including profit and loss); (iv) providing forecasted JV Truck
Replacement Parts requirements; (v) managing JV Truck Replacement Parts and
product support related needs associated with the introduction of new JV Trucks
models; (vi) providing parts stock, service tooling, technical information,
suggested parts stocking list, training, and related matters; (vii) acquiring
parts distribution and logistics services; (viii) providing critical technical
marketing support (including application and installation) and field service
support (including service engineering) functions for both Caterpillar Truck
Models and Navistar Truck Models; and (ix) acquiring parts and service
publications (parts books, service manuals, operation and maintenance manuals,
SIS Web, and related documents) for both Caterpillar Truck Models and Navistar
Truck Models, per brand requirements.
10.3 Purchase and Distribution of
JV Truck Replacement Parts
10.3.1 Generally. Subject
to Sections
10.3.2 and 10.3.3 and unless
otherwise determined by the Board by Majority Consent, the Company shall be
responsible for purchasing, owning, managing the inventory of, and reselling and
distributing to JV Dealers both Caterpillar Brand JV Truck Replacement Parts and
Navistar Brand JV Truck Replacement Parts. The Company shall, and
shall cause any purchasing agent it retains to, use commercially reasonable
efforts to purchase JV Truck Replacement Parts from the Members to the extent
commercially practicable, but may also purchase JV Truck Replacement Parts from
suppliers of Caterpillar and Navistar and other third parties. All
such purchases shall be in accordance with sourcing decisions by the Sourcing
Council and certain branding guidelines agreed to by the
Members. Neither the Company nor either Member shall sell JV Truck
Replacement Parts of one Member’s brand to any JV Dealer that is not selling JV
Truck Models of such Member’s brand. No document setting forth a part
number cross-reference between Navistar Brand parts and Caterpillar Brand parts
shall exist for JV Dealers or be published externally. The Parties
agree that the Company should utilize common parts logistics services for
Navistar Brand parts and Caterpillar Brand parts whenever practicable and
minimize duplication of inventory and logistics costs.
10.3.2 Caterpillar
Brand. The Company may retain, upon the determination of the
Board by Majority Consent, either Member (pursuant to the terms of the Master
Terms for Purchased Services between the Company and such Member) to serve as
the purchasing agent for the Company for Caterpillar Brand JV Truck Replacement
Parts using such Member’s Purchasing Group in accordance with sourcing decisions
made by the Sourcing Council. The systems utilized by the purchasing
agent shall be configured to handle Caterpillar’s numbering or nomenclature for
Caterpillar Brand JV Truck Replacement Parts. The Company may retain,
upon the determination of the Board by Majority Consent, the appropriate
logistics services provider (including Caterpillar) for the distribution of
Caterpillar Brand JV Truck Replacement Parts. If the Company retains
Caterpillar to provide distribution and other logistics services with respect to
Caterpillar Brand JV Truck Replacement Parts, then, in exchange for a services
fee to be paid by the Company to Caterpillar, Caterpillar or its Affiliates
shall use their respective parts distribution systems and processes to sell and
distribute Caterpillar Brand JV Truck Replacement Parts (including engine parts)
to JV Dealers. This arrangement may, under certain circumstances,
require Caterpillar to purchase certain Caterpillar Brand JV Truck Replacement
Parts from the Company or a third-party supplier and resell such parts to
certain JV Dealers or, alternatively, to sell to certain JV Dealers
Caterpillar’s own inventory of Caterpillar Brand replacement parts for Medium
Duty Trucks and Heavy Duty Trucks. The profits from such sales, less
the aforementioned services fee for Caterpillar’s services, shall be for the
account of the Company. Caterpillar shall determine its JV Truck
Replacement Parts brand strategy and numbering requirements. All
Caterpillar Brand JV Truck Replacement Parts shall have Caterpillar part
numbering nomenclature and be packaged in a Caterpillar container per
Caterpillar guidelines, unless otherwise approved by Caterpillar, and any JV
Dealer that distributes Caterpillar Brand parts shall abide by Caterpillar Brand
guidelines as set forth by Caterpillar from time to time.
10.3.3 Navistar
Brand. The Company may retain, upon the determination of the
Board by Majority Consent, either Member (pursuant to the terms of the Master
Terms for Purchased Services between the Company and such Member) to serve as
the purchasing agent for the Company for Navistar Brand JV Truck Replacement
Parts using such Member’s Purchasing Group in accordance with sourcing decisions
made by the Sourcing Council. The systems utilized by the purchasing
agent shall be configured to handle Navistar’s numbering or nomenclature for
Navistar Brand JV Truck Replacement Parts. The Company may retain,
upon the determination of the Board by Majority Consent, the appropriate
logistics services provider (including Caterpillar Logistics Services, Inc.) for
the distribution of Navistar Brand JV Truck Replacement Parts. Navistar shall determine
its JV Truck Replacement Parts brand strategy and numbering
requirements. The Company shall use its commercially reasonable
efforts to include in its sales and services agreements with the applicable JV
Dealers in the relevant territories a provision authorizing such JV Dealers to
sell Navistar Brand JV Truck Replacement Parts to any former Navistar dealer
solely to enable such former Navistar dealer to service any products utilizing a
Navistar brand sold by such dealer prior to the Effective Date.
10.3.4 Exclusivity and Common
Parts.
10.3.4.1 Subject to
applicable law and except for sales to military customers and certain
Governmental Conventional Customers by Navistar and its Affiliates pursuant to
the provisions of Section 11.1.3.2
or otherwise pursuant to the provisions of Section 15.3.4,
the Members and the Company shall implement policies, processes and systems to
cause JV Truck Replacement Parts, other than Common Parts, to be sold in the ROW
exclusively through the JV Dealers (except where required for the sale of JV
Truck Replacement Parts to certain Governmental ▇▇▇ Customers or Governmental
Conventional Customers in the ROW as permitted by Section
11.1.3). For example, a Member may assign separate dealer
codes to help track and manage the Business.
10.3.4.2 The Company shall
endeavor with each Member to offer competitive parts pricing for Common Parts to
maximize opportunities with JV Dealers to order such Common Parts from the
Company.
10.3.4.3 Notwithstanding
anything to the contrary in this Agreement, (a) each Member and its Affiliates
may market and sell at any time in any ROW country Common Parts except to the
extent that such Member or such Affiliate reasonably believes that such Common
Parts will ultimately be used in a JV Truck sold by the Company, and (b) if any
of such sales of Common Parts by a Member or its Affiliates that such Member or
such Affiliate reasonably believes will not ultimately be used in a JV Truck
sold by the Company, as permitted by clause (a), are made
by the Company (rather than by Caterpillar, Navistar, or their respective
Affiliates, as applicable), all profits or losses arising from the Company’s
sale shall be entirely for the account of Caterpillar or Navistar, respectively,
and shall be transferred to Caterpillar or Navistar,
respectively. The Company and each Member shall adopt and implement
policies, processes, and systems to monitor, to the extent reasonably
practicable, the end-user customers to which Common Parts are
sold. If, at any time during the term of this Agreement, either
Member reasonably believes in good faith that the other Member is selling in any
ROW country Common Parts that are ultimately being used in a JV Truck sold by
the Company, (A) the Company and the Members shall investigate such matter and,
(B) in the event that a material amount of such sales did occur, bring such
matter to the Board to determine any appropriate remediation action it deems
necessary.
10.4 Remanufacturing
Services
The Company shall
consider Caterpillar’s Remanufacturing Division as its lead remanufacturing
provider (i.e., preferred source of remanufactured products and services) and
shall invite Caterpillar to bid on remanufacturing services and product supply
on terms to be negotiated by the Sourcing Council and Caterpillar on an arms’
length basis. Navistar and the Company shall grant, and shall cause
each of their Affiliates to grant, to the Person retained by the Company to
provide remanufacturing services (and any Affiliates or subcontractors of such
entity) a nonexclusive, royalty-free license under any Intellectual Property
owned prior to, on or after the Effective Date by Navistar or the Company, or
any of their Affiliates, or to which Navistar or the Company, or any of their
Affiliates, prior to, on or after the Effective Date holds rights to for the
purpose of providing or arranging to be provided remanufactured products or
remanufacturing services to the Company. For the avoidance of doubt,
the Master Plan of Cooperation for Remanufacturing Services, dated August 24,
2006, between Navistar and Caterpillar (the “MPC”), the Master
Reman Supply Agreement and Reman Product Development Agreement (as defined in
the MPC) shall not be deemed to be superseded or otherwise amended by this
Agreement.
10.5 Allocation of JV Truck
Replacement Parts Sold by the Company
In
the event of any shortage in the supply of JV Truck Replacement Parts, the
Company shall determine the allocation of the available supply, in accordance
with the following order of priority:
10.5.1 In compliance with
applicable law or the requirements of any governmental authority;
10.5.2 JV Truck
Replacement Parts for emergency and truck down situations (based on the date the
order is received) where the JV Truck is under warranty;
10.5.3 JV Truck
Replacement Parts for emergency and truck down situations (based on the date the
order is received) where the JV Truck is
not under warranty;
10.5.4 JV Truck
Replacement Parts for JV Truck production as set forth in the Annual Business
Plan; and
10.5.5 JV Truck
Replacement Parts to JV Truck Replacement Part stock needs.
Whether and when to
put particular JV Truck Replacement Parts on allocation or remove such JV Truck
Replacement Parts from allocation shall be decided by the Company.
10.6 Allocation of JV Truck
Components and JV Truck Replacement Parts that are Sourced by the Company from a
Member
The Company shall
have access to each Member’s inventory as a source of JV Truck Components and JV
Truck Replacement Parts. If either Member is on allocation with
respect to JV Truck Components or JV Truck Replacement Parts, the Company shall
have priority according to such Member’s allocation guidelines, as agreed to by
the Members. Each Member may amend, modify or revise such guidelines
and such amended, modified or revised guidelines shall replace any previous
version of the applicable guidelines; provided, however, that
Unanimous Consent of the Members shall be required for a Member to amend, modify
or revise such guidelines to the extent such amendment, modification or revision
adversely affects the Company’s priority under such allocation guidelines.4
11. DISTRIBUTION
AND SALES; JV DEALERS
11.1 Truck
Sales
11.1.1 To JV
Dealers. Unless otherwise approved by the Board by Majority
Consent, except where required for the sale of JV Trucks and JV Truck
Replacement Parts to certain Governmental ▇▇▇ Customers or Governmental
Conventional Customers in the ROW pursuant to Section 11.1.3, the
Company shall distribute and sell JV Trucks and JV Truck Replacement Parts
solely through direct sales to JV Dealers, and the Company shall not sell any JV
Trucks or JV Truck Replacement Parts directly to any Caterpillar dealers,
Navistar dealers, or any retail customers other than pursuant to the Fleet Sale
Policies that may be approved by the Board by Majority Consent from time to
time. Each Fleet Sale Policy shall provide for either (a) the Company
to make “fleet sales” of JV Trucks directly to end-user customers in the
territory covered by a JV Dealer and to make payments to such JV Dealer with
respect to such “fleet sales” in accordance with the payment guidelines set
forth in such Fleet Sale Policy or (b) the Company to broker “fleet sales” of JV
Trucks in a process whereby the Company offers to sell such JV Trucks to a JV
Dealer and the JV Dealer, in turn, accepts such offer and sells such JV Trucks
to an end-user customer on terms, conditions and prices negotiated by the
Company and such end-user customer in accordance with such Fleet Sale
Policy. The Company shall apply the Fleet Sale Policies in the same
manner with respect to all JV Dealers.
11.1.2 Sales to Military
Customers. Notwithstanding anything to the contrary in this
Agreement, Navistar and its Affiliates shall be permitted, in their discretion,
and shall have the exclusive right to develop, design, test, manufacture,
assemble, brand, market, sell (including providing purchase financing to
customers), and distribute and provide product support for (including providing
replacement parts and service for), Medium Duty Trucks and Heavy Duty Trucks
(other than Caterpillar-branded Medium Duty Trucks and Heavy Duty Trucks) and
replacement parts therefor (including military vehicles, tactical vehicles, COTS
vehicles with military features, COTS vehicles and related parts, and Mine
Resistant Ambush Protected vehicles) for and to military customers (including
sales through sales and resale agents, procurement agents, prime contractors,
and subcontractors where such sales are for use exclusively by military
customers), anywhere in the world, including the ROW. Navistar and
its Affiliates are permitted to make such sales through any JV Dealer without
Board approval and without paying the Company any fee therefor. In
the event Navistar and its Affiliates desire to conduct their parts and service
business to the extent related to providing product support for such sales
through any dealer or distributor, Navistar and its
Affiliates shall use commercially reasonable efforts (but shall not be
obligated) to conduct such parts and service business through JV Dealers; provided, however, that in the
event Navistar and its Affiliates source JV Trucks from the Company for such
sales, Navistar and its Affiliates shall (x) be required to source unique JV
Truck Replacement Parts from the Company and (y) use commercially reasonable
efforts (but shall not be obligated) to source other replacement parts from the
Company, in the case of each of clauses (x) and (y), solely to the
extent related to providing product support for such sales. Navistar
and its Affiliates shall adopt and implement policies, processes, and systems to
(i) monitor, to the extent practicable, the end-user customers to which such
replacement parts are sold, and (ii) discourage such military customers from
selling such replacement parts to end-user customers for use in trucks other
than the trucks sold by Navistar and its Affiliates to such military
customers. If, at any time during the term of this Agreement,
Caterpillar reasonably believes in good faith that the such military customers
have, in fact, sold such replacement parts to end-user customers for use in
trucks other than the trucks sold by Navistar and its Affiliates to such
military customers, (A) the Members shall cooperate with each other in
furtherance of investigating such matter and, subject to applicable law, taking
corrective actions to discourage such sales from occurring, and (B) in the event
that a material amount of such sales did, in fact, occur, bring such matter to
the Board to determine any appropriate remediation action it deems
necessary.
11.1.3 Sales to Governmental ▇▇▇
Customers and Governmental Conventional Customers.
11.1.3.1 Governmental ▇▇▇
Customers. The Company and its direct and indirect
subsidiaries shall be permitted, in their discretion, and shall have the
exclusive right to develop, design, test, manufacture, assemble, brand, market,
sell (including providing purchase financing to customers), and distribute and
provide product support for (including providing replacement parts and service
for), cab over engine JV Trucks and cab over engine JV Truck Replacement Parts
for and to Governmental ▇▇▇ Customers (including sales through sales and resale
agents, procurement agents, prime contractors, and subcontractors where such
sales are for use exclusively by Governmental ▇▇▇ Customers), anywhere in the
ROW. Without the express written Majority Consent of the Board,
Navistar and its 5% Affiliates (excluding the Mahindra JV) shall not be
permitted to market or sell cab over engine Medium Duty Trucks or cab over
engine Heavy Duty Trucks or cab over engine truck replacement parts therefor to
Governmental ▇▇▇ Customers (including sales through sales and resale agents,
procurement agents, prime contractors, and subcontractors where such sales are
for use exclusively by Governmental ▇▇▇ Customers), anywhere in the
ROW.
11.1.3.2 Governmental Conventional
Customers.
11.1.3.2.1 Core ROW
Countries. The Company and its direct and indirect
subsidiaries shall be permitted, in their discretion, and shall have the
exclusive right to develop, design, test, manufacture, assemble, brand, market,
sell (including providing purchase financing to customers), and distribute and
provide product support for (including providing replacement parts and service
for), conventional (non-cab over engine) JV Trucks and conventional (non-cab
over engine) JV Truck Replacement Parts for and to Governmental Conventional
Customers (including sales through sales and resale agents, procurement agents,
prime contractors, and subcontractors where such sales are for use exclusively
by Governmental Conventional Customers) in the Core ROW Countries.
11.1.3.2.2 Navistar Conventional
Countries. Notwithstanding anything to the contrary in this
Agreement, Navistar and its Affiliates shall be permitted, in their discretion,
and shall have the exclusive right to develop, design, test, manufacture,
assemble, brand, market, sell (including providing purchase financing to
customers), and distribute and provide product support for (including providing
replacement parts and service for), conventional (non-cab over engine) Medium
Duty Trucks and Heavy Duty Trucks (other than Caterpillar-branded Medium Duty
Trucks and Heavy Duty Trucks) and conventional (non-cab over engine) replacement
parts therefor for and to Governmental Conventional Customers (including sales
through sales and resale agents, procurement agents, prime contractors, and
subcontractors where such sales are for use exclusively by Governmental
Conventional Customers) in Navistar Conventional Countries. Navistar
and its Affiliates are permitted to make such sales through any JV Dealer
without Board approval and without paying the Company any fee
therefor. In the event Navistar and its Affiliates desire to conduct
their parts and service business to the extent related to providing product
support for such sales through any dealer or distributor, Navistar and its
Affiliates shall use commercially reasonable efforts (but shall not be
obligated) to conduct such parts and service business through JV Dealers; provided, however, that in the
event Navistar and its Affiliates source JV Trucks from the Company for such
sales, Navistar and its Affiliates shall (x) be required to source unique JV
Truck Replacement Parts from the Company and (y) use commercially reasonable
efforts (but shall not be obligated) to source other replacement parts from the
Company, in the case of each of clauses (x) and (y), solely to the
extent related to providing product support for such sales. Navistar
and its Affiliates shall adopt and implement policies, processes, and systems to
(i) monitor, to the extent practicable, the end-user customers to which such
replacement parts are sold, and (ii) discourage such Governmental Conventional
Customers from selling such replacement parts to end-user customers for use in
trucks other than the trucks sold by Navistar and its Affiliates to such
Governmental Conventional Customers. If, at any time during the term
of this Agreement, Caterpillar reasonably believes in good faith that the such
Governmental Conventional Customers have, in fact, sold such replacement parts
to end-user customers for use in trucks other than the trucks sold by Navistar
and its Affiliates to such Governmental Conventional Customers, (A) the Members
shall cooperate with each other in furtherance of investigating such matter and,
subject to applicable law, taking corrective actions to discourage such sales
from occurring, and (B) in the event that a material amount of such sales did,
in fact, occur, bring such matter to the Board to determine any appropriate
remediation action it deems necessary.
11.1.3.2.3 Non-Core ROW Conventional
Countries.
(a) Notwithstanding
anything to the contrary in this Agreement, but subject to Section
11.1.3.2.3(c), Navistar and its Affiliates shall be permitted, in their
discretion, to develop, design, test, manufacture, assemble, brand, market, sell
(including providing purchase financing to customers), and distribute and
provide product support for (including providing replacement parts and service
for), in each case for all market segments, conventional (non-cab over engine)
Medium Duty Trucks and Heavy Duty Trucks (other than Caterpillar-branded Medium
Duty Trucks and Heavy Duty Trucks) and conventional (non-cab over engine)
replacement parts therefor for and to Governmental Conventional Customers
(including sales through sales and resale agents, procurement agents, prime
contractors, and subcontractors where such sales are for use exclusively by
Governmental Conventional Customers) in the Non-Core ROW Conventional
Countries. Navistar and its Affiliates are not permitted to make such
sales through any JV Dealer or use any JV Dealer to assist with or facilitate
any such sales without the Majority Consent of the Board. In the event Navistar
and its Affiliates source JV Trucks from the Company for such sales, Navistar
and its Affiliates shall be required to source unique JV Truck Replacement Parts
from the Company. Navistar and its Affiliates shall adopt and
implement policies, processes, and systems to (i) monitor, to the extent
practicable, the end-user customers to which such replacement parts are sold,
and (ii) discourage such Governmental Conventional Customers from selling such
replacement parts to end-user customers for use in trucks other than the trucks
sold by Navistar and its Affiliates to such Governmental Conventional
Customers. If, at any time during the term of this Agreement,
Caterpillar reasonably believes in good faith that the such Governmental
Conventional Customers have, in fact, sold such replacement parts to end-user
customers for use in trucks other than the trucks sold by Navistar and its
Affiliates to such Governmental Conventional Customers, (A) the Members shall
cooperate with each other in furtherance of investigating such matter and,
subject to applicable law, taking corrective actions to discourage such sales
from occurring, and (B) in the event that a material amount of such sales did,
in fact, occur, bring such matter to the Board to determine any appropriate
remediation action it deems necessary.
(b) Notwithstanding
anything to the contrary in this Agreement, but subject to Section
11.1.3.2.3(c), the Company and its direct and indirect subsidiaries shall
be permitted, in their discretion, to develop, design, test, manufacture,
assemble, brand, market, sell (including providing purchase financing to
customers), and distribute and provide product support for (including providing
replacement parts and service for), conventional (non-cab over engine) JV Trucks
and conventional (non-cab over engine) JV Truck Replacement Parts for and to
Governmental Conventional Customers (including sales through sales and resale
agents, procurement agents, prime contractors, and subcontractors where such
sales are for use exclusively by Governmental Conventional Customers) in the
Non-Core ROW Conventional Countries.
(c) At such time as the
Company or any of its direct and indirect subsidiaries resolves to market and
sell such JV Trucks and JV Truck Replacement Parts in one of the Non-Core ROW
Conventional Countries, the Members shall develop a marketing strategy for such
Non-Core ROW Conventional Country with respect to the marketing and sale of such
JV Trucks and JV Truck Replacement Parts in such Non-Core ROW Conventional
Country. Such marketing strategy may provide for (i) the Company and
its direct and indirect subsidiaries to exclusively make such sales in such
Non-Core ROW Conventional Country, (ii) Navistar and its Affiliates to
exclusively make such sales in such Non-Core ROW Conventional Country, or (iii)
both the Company and its direct and indirect subsidiaries and Navistar and its
Affiliates to make such sales in such Non-Core ROW Conventional Country on a
non-exclusive basis. Until such time as the Members have mutually
agreed to such marketing strategy for a particular Non-Core ROW Conventional
Country, both the Company and its direct and indirect subsidiaries, on the one
hand, and Navistar and its Affiliates, on the other hand, shall be permitted to
market and sell such JV Trucks and JV Truck Replacement Parts and Medium Duty
Trucks, Heavy Duty Trucks and replacement parts therefor, respectively, for and
to Governmental Conventional Customers in such Non-Core ROW Conventional Country
on a non-exclusive basis in accordance with Sections
11.1.3.2.3(b) and 11.1.3.2.3(a),
respectively.
11.1.4 Export
Guidelines
11.1.4.1 Subject to
applicable law, Caterpillar and Navistar shall establish and implement, on or
prior to the Effective Date, export guidelines for Caterpillar dealers anywhere
in the world and Navistar dealers
anywhere in the world, respectively, with respect to trucks and replacement
parts competitive with JV Trucks and JV Truck Replacement Parts in order to
discourage export sales of such products by (i) dealers in countries outside the
European Union and the European Free Trade Association into any country other
than the country assigned to such dealer or (ii) dealers in countries inside the
European Union or the European Free Trade Association into countries outside the
European Union and the European Free Trade Association.
11.1.4.2 Subject to
applicable law, the Company shall establish and implement (a) exclusive sales
territories, or (b) export guidelines for JV Dealers with respect to JV Trucks
and JV Truck Replacement Parts in order to discourage export sales of such
products by (i) JV Dealers in countries outside the European Union and the
European Free Trade Association into any country other than the country assigned
to such dealer, (ii) JV Dealers in countries inside the European Union or the
European Free Trade Association into countries outside the European Union and
the European Free Trade Association, or (iii) JV Dealers into non-ROW
countries. Subject to applicable law, JV Dealers will be required to
respect their sales territories and adhere to the export guidelines as a
condition of their sales and service agreement.
11.1.4.3 The Company and
each Member shall adopt and implement policies, processes, and systems to
monitor, to the extent reasonably practicable, a Member’s dealers’ and JV
Dealers’ compliance with the export guidelines. If, at any time
during the term of this Agreement, a Member’s dealer or a JV Dealer claims that
another dealer has made export sales of trucks or replacement parts competitive
with JV Trucks or JV Truck Replacement Parts (i) in the case of such export
sales by such dealer in a country outside the European Union and the European
Free Trade Association, into any country other than the country assigned to such
dealer or (ii) in the case of such export sales by such dealer inside the
European Union or the European Free Trade Association, into any country outside
the European Union and the European Free Trade Association, (A) the Company and
the Members shall investigate such matter and, (B) in the event that a material
amount of such sales did occur, bring such matter to the Board to determine any
appropriate remediation action it deems necessary.
11.1.5 Alternative Branded JV
Trucks; Will-Fit Parts. If the Company decides to sell any JV
Trucks that are not Caterpillar Brand or Navistar Brand or any Will-Fit Parts,
the Board shall determine the appropriate distribution channel; provided, that unless
the Board decides otherwise by Majority Consent, such JV Trucks and Will-Fit
Parts shall not be sold through either (a) any JV Dealer owned by a Caterpillar
dealer, or (b) any JV Dealer owned by a Navistar dealer.
11.1.6 Other
Products. Except as otherwise provided in this Agreement and
subject to the immediately following two (2) sentences in this Section 11.1.6, each
Member and its Affiliates are permitted to sell (provided such sales are not in
violation of any provision of this Agreement, including Section 15) any of
their commercial vehicles through any JV Dealer without Board approval and
without paying the Company any fee therefor; provided, however, that subject
to clause (iii)
of the last sentence of Section 2.3.7.1,
without the Majority Consent of the Board, Navistar and its 5% Affiliates are
not permitted to sell any Medium Duty Truck or Heavy Duty Truck through any
Caterpillar-branded JV Dealer or any Navistar-branded JV Dealer owned by a
Caterpillar dealer. Except as otherwise provided in this Agreement,
if a Member (the “Triggering Member”)
desires to sell its commercial vehicles in the ROW through any JV Dealer that
(x) is owned by one of non-Triggering Member’s dealers or (y) sells the
non-Triggering Member’s brand of JV Trucks, the Triggering Member and its
Affiliates may, following notice to and discussion by the Board (but without a
requirement for Board approval), in their sole discretion, sell such commercial
vehicles through such JV Dealer subject to the following:
11.1.6.1 such sales are not
in violation of any provision of this Agreement, including Section
15;
11.1.6.2 if such JV Dealer
is located in a country in which the Company sells both Caterpillar Truck Models
and Navistar Truck Models, the Triggering Member and its Affiliates may make
such sales through such JV Dealer only if such JV Dealer sells the Triggering
Member’s brand of JV Trucks (it being understood and agreed that the Triggering
Member and its Affiliates may also make such sales through any other JV Dealer
in such country that sells the Triggering Member’s brand of JV Trucks);
and
11.1.6.3 if such JV Dealer
is located in a country in which the Company sells only one Member’s brand of JV
Trucks, the Triggering Member and its Affiliates may make such sales through
such JV Dealer, including any other JV Dealer in such country, regardless of the
brand of JV Trucks sold by such JV Dealer.
In the event that
the Triggering Member makes any such sales of commercial vehicles in the ROW
through such a JV Dealer, except as otherwise provided in this Agreement, the
non-Triggering Member and its Affiliates may, following notice to and discussion
by the Board (but without a requirement for Board approval), in their sole
discretion, sell such commercial vehicles through any JV Dealer that (x) is
owned by one of Triggering Member’s dealers or (y) sells the Triggering Member’s
brand of JV Trucks subject to the following:
11.1.6.4 such sales are not
in violation of any provision of this Agreement, including Section
15;
11.1.6.5 if such JV Dealer
is located in a country in which the Company sells both Caterpillar Truck Models
and Navistar Truck Models, the non-Triggering Member and its Affiliates may make
such sales through such JV Dealer only if such JV Dealer sells the
non-Triggering Member’s brand of JV Trucks (it being understood and agreed that
the non-Triggering Member and its Affiliates may also make such sales through
any other the JV Dealer in such country that sells the non-Triggering Member’s
brand of JV Trucks); and
11.1.6.6 if such JV Dealer
is located in a country in which the Company sells only one Member’s brand of JV
Trucks, the non-Triggering Member and its Affiliates may make such sales through
such JV Dealer, including any other JV Dealer in such country, regardless of the
brand of JV Trucks sold by such JV Dealer.
11.2 Branding Strategy; Selection
of JV Truck Models
11.2.1 The Company’s
branding strategy with respect to each ROW country shall be subject to the
approval of the Board by Majority Consent. Without limiting the
generality of the preceding sentence, for each country in which the Company
determines to sell JV Trucks, the Board shall determine by Majority Consent if
the Company shall sell in such country (a) solely Caterpillar Truck Models, (b)
solely Navistar Truck Models, or (c) both Caterpillar and Navistar Truck
Models.
11.2.2 The Company’s
branding strategy with respect to each ROW country shall be designed to (a)
maximize commercial opportunities for the Company in such country, (b) achieve
the maximum potential profit for the Company, and (c) expand each of the
Navistar Brand and the Caterpillar Brand presence globally, consistent with the
worldwide positioning of each of the Navistar Brand and the Caterpillar
Brand.
11.2.3 In preparing a
branding strategy for each ROW country, the Company shall take into account,
among other things, (a) market research regarding brand value, customer
preferences and suitability in such country, (b) a reasonable estimate of the
incremental cost
for maintaining multiple brands in such country, (c) a strategic and financial
evaluation of alternative branding strategies, and (d) the potential
distribution strategies in such country.
11.2.4 All specifications
for each Caterpillar Truck Model, including upgrades, shall be approved by (a)
the Board by Majority Consent and (b) Caterpillar. All specifications
for each Navistar Truck Model, including upgrades, shall be approved by (i) the
Board by Majority Consent and (ii) Navistar.
11.2.5 All decisions with
respect to the use of a Member’s brand in the conduct of the Company’s Business
shall be subject to the consent of such Member in its sole
discretion.
11.3 Selection of JV Dealers;
Agreements with JV Dealers
11.3.1 Subject to the
other provisions of this Section 11.3, the
Company (not the Members) shall have the exclusive right to manage its JV Dealer
relationships and, with Majority Consent of the Board, to appoint or terminate
any JV Dealer selling or servicing JV Trucks and JV Truck Replacement Parts
pursuant to sales and service agreements that the Company enters into with such
JV Dealers.
11.3.2 If the Board
determines by Majority Consent that the Company shall sell solely Caterpillar
Truck Models in a given country, the JV Dealer in such country shall be a
subsidiary of a Caterpillar dealer in such country; provided, that such
subsidiary submits an application to the Company. If a Caterpillar
dealer declines to form a subsidiary to sell JV Trucks or the Board determines
by Majority Consent not to enter into a sales and service agreement with a
subsidiary of such Caterpillar dealer, the Board may, by Majority Consent,
determine to seek applications to form a subsidiary to serve as the JV Dealer in
such country from another Caterpillar dealer.
11.3.3 If the Board
determines by Majority Consent that the Company shall sell solely Navistar Truck
Models in a given country, the JV Dealer in such country shall be a subsidiary
of a Navistar dealer in such country; provided, that such
dealer submits an application to the Company. If a Navistar dealer
declines to form a subsidiary to sell JV Trucks or the Board determines by
Majority Consent not to enter into a sales and service agreement with a
subsidiary of such Navistar dealer, the Board shall seek applications to form a
subsidiary to serve as the JV Dealer in such country from both Navistar dealers
and Caterpillar dealers.
11.3.4 If the Board
determines by Majority Consent that the Company shall sell both Caterpillar
Truck Models and Navistar Truck Models in a given country:
11.3.4.1 A current Navistar
dealer in such country, if any, shall be given a first right of refusal to form
a subsidiary to serve as the JV Dealer in such country with respect to Navistar
Truck Models; provided, that such
dealer submits an application to the Company. If such Navistar dealer
declines to form a subsidiary to sell JV Trucks or the Board determines by
Majority Consent not to enter into a sales and service agreement with a
subsidiary of such Navistar dealer as the JV Dealer with respect to Navistar
Truck Models in such country, a Caterpillar dealer in such country, as selected
by the Board by Majority Consent, shall be given an opportunity to submit an
application to the Company, as a preferred dealer, to form a subsidiary to serve
as the JV Dealer with respect to Navistar Truck Models in such
country. Notwithstanding the foregoing, in the event the Caterpillar
dealer selected by the Board as a preferred dealer declines to form a subsidiary
to sell JV Trucks or the Board determines by Majority Consent not to enter into
a sales and service agreement with a subsidiary of such Caterpillar dealer as
the JV Dealer with respect to Navistar Truck Models in such country, the Board
shall seek applications to form a subsidiary to serve as the JV Dealer with
respect to Navistar Truck Models in such country from both Navistar dealers and
Caterpillar dealers.
11.3.4.2 A current
Caterpillar dealer in such country, if any, shall be given a first right of
refusal to form a subsidiary to serve as the JV Dealer in such country with
respect to Caterpillar Truck Models; provided, that such
dealer submits an application to the Company. If such Caterpillar
dealer declines to form a subsidiary to sell JV Trucks or the Board determines
by Majority Consent not to enter into a sales and service agreement with a
subsidiary of such Caterpillar dealer as the JV Dealer with respect to
Caterpillar Truck Models in such country, the Company shall seek applications to
form a subsidiary to serve as the JV Dealer with respect to Caterpillar Truck
Models in such country from another Caterpillar dealer (either in another
territory of such country or in another country).
11.3.5 If the Board
determines by Majority Consent that the Company shall sell both Caterpillar
Truck Models and Navistar Truck Models in a given country in which there are no
existing Navistar dealers at such time, no Caterpillar dealer (or any subsidiary
or Affiliate thereof) shall be permitted to sell Caterpillar Truck Models unless
such Caterpillar dealer also forms a subsidiary, which subsidiary agrees to
serve as the JV Dealer in such country for Navistar Truck Models pursuant to the
Company’s standard sales and service agreement. If such Caterpillar
dealer declines to form a subsidiary to serve as the JV Dealer in such country
for Navistar Truck Models, the Company shall seek applications from a
Caterpillar dealer in another country to form a subsidiary to serve as such JV
Dealer with respect to both Caterpillar Truck Models and Navistar Truck Models
in such country.
11.3.6 Subject to
applicable law, (a) the Company shall not select as a JV Dealer any Person in a
given territory (other than an existing Navistar or Caterpillar dealer, as
applicable, located in such territory) that serves as, or whose Affiliate serves
as, a dealer of any third-party original equipment manufacturer (other than the
Company) (a “Competitive OEM”)
whose products and services are in competition with the products and services of
the Company in such territory (such dealer, a “Competitive OEM
Dealer”) without the Majority Consent of the Board, (b) in each instance
where a Person selected by the Board as a JV Dealer, at the time of such
selection, is not, and none of such Person’s Affiliates is, a Competitive OEM
Dealer, the Board shall endeavor to include in the Company’s sales and service
agreement with such Person a prohibition on such Person and its Affiliates from
ever forming or acquiring a Competitive OEM Dealer, and (c) if the Board does,
in fact, upon Majority Consent or pursuant to Sections 11.3.2,
11.3.3, 11.3.4, or 11.3.5, select as a
JV Dealer a Person that serves as, or whose Affiliate serves as, a Competitive
OEM Dealer, the Board shall endeavor to include in the Company’s sales and
service agreement with such Person provisions that provide that such Person and
its Affiliates sell the products of the Company (on the one hand) and the
products of the Competitive OEM (on the other hand) in different locations and
through different legal entities.
11.3.7 To the extent
requested by the Company, each of Caterpillar and Navistar shall use its
commercially reasonable efforts to encourage those of its existing dealers that
demonstrate compliance with certain standards set by the Company to establish
(a) a subsidiary to serve as a JV Dealer and (b) cause such JV Dealer to enter
into sales and service agreements with the Company to distribute JV Trucks and
JV Truck Replacement Parts. In any instance in which the Company
appoints a single dealer to be a JV Dealer with respect to both Caterpillar
Truck Models and Navistar Truck Models, the Company shall enter into separate
sales and service agreements with such JV Dealer for the sale and service of
Caterpillar Truck Models (on the one hand) and Navistar Truck Models (on the
other hand).
11.3.8 The Company shall
use its reasonable best efforts to enter into with each JV Dealer that sells
Navistar Truck Models sales and service agreements in the forms agreed to by the
Members (it being understood that each such agreement will permit sales and
servicing of either (i) Medium Duty ▇▇▇ Trucks or (ii) conventional (non-cab
over engine) Medium Duty Trucks and all Heavy Duty Trucks, but not
both). The Company will use its reasonable best efforts to enter into
with each JV Dealer that sells Caterpillar Truck Models sales and service
agreements in the forms agreed to by the Members (it being understood that each
such agreement will permit sales and servicing of either (i) Medium Duty ▇▇▇
Trucks or (ii) conventional (non-cab over engine) Medium Duty Trucks and all
Heavy Duty Trucks, but not both). Without limiting the
generality of the preceding sentence, each JV Dealer sales and service agreement
shall contain provisions stipulating that (a) such agreement may be assigned by
the Company to the Member whose branded JV Truck models are sold pursuant to
such agreement without the consent of the JV Dealer, (b) such agreement may be
terminated unilaterally by the Company with or without cause to the extent
permitted, and pursuant to the process required, if any, under applicable law,
(c) such JV Dealer shall be prohibited from selling (i) JV Trucks or JV Truck
Replacement Parts to any military customer (without Navistar’s prior written
consent) and (ii) JV Trucks or JV Truck Replacement Parts in contravention of
the exclusivity and non-competition provisions of this Agreement, and (d)
subject to applicable law, with respect to each such agreement with a
Navistar-branded JV Dealer owned by a Caterpillar dealer, such agreement will
automatically terminate upon the seventh (7th)
anniversary of (i) the termination of this Agreement or (ii) the closing of any
sale and purchase of the Membership Interest pursuant to the Buy-Out Interest
Option or pursuant to the Buy/Sell Option (as provided in Section
21.6.4).
11.4 Marketing, Sales, and Dealer
Support and Administrative Services
In
each ROW country in which the Company ▇▇▇▇▇ ▇▇ Trucks or JV Truck Replacement
Parts, the Company and the JV Dealers in such country may receive (pursuant to
the terms of the Master Terms for Purchased Services) traditional marketing,
sales, pricing, administrative, and traditional dealer relations and support
services in connection with the sale of the JV Trucks and JV Truck Replacement
Parts in such country, in each case, from a Member selected by the Board by
Majority Consent. The Board shall make such selection for each such
service based on the Members’ comparative level of expertise with respect to
such service. To enable the applicable Member to provide such
services, the Company shall provide, at no charge to such Member, technical
marketing support (e.g., application and installation) and application
engineering support to such Member for the applicable JV Trucks and JV Truck
Replacement Parts at such levels agreed upon by the Board by Majority
Consent.
11.5 Product Support
Responsibilities
The Company shall
perform, or shall retain one or both of the Members or a third party to perform
(in each case, at prices that are negotiated by such Person and the Company),
the following product support functions (collectively, the “Product Support
Services”) in support of the Company’s branding strategy, distribution
channels, and brand requirements with respect to each Navistar Truck Model and
each Caterpillar Truck Model:
11.5.1 Parts delivery and
return policies,
11.5.2 Establishment of
parts service performance levels,
11.5.3 Parts pricing
publications,
11.5.4 Export parts policy
and enforcement,
11.5.5 Dealer management
and traditional marketing functions,
11.5.6 Parts marketing and
support,
11.5.7 Technical service
and support,
11.5.8 Service engineering
services, and
11.5.9 Technical
training.
11.6 Financing
In
evaluating financing options for the Company and its sales, Caterpillar
Financial shall be evaluated as the preferred source of working capital
financing for the Company and all wholesale and retail sales financing of JV
Trucks (both Caterpillar Truck Models and Navistar Truck Models) by the
Company. If the Company and Caterpillar Financial agree to have
Caterpillar Financial provide financing services in one or more ROW countries,
or, if Caterpillar Financial provides financing services to a JV Dealer in an
ROW country, Caterpillar Financial shall make financing services similar to
those offered to such JV Dealer available to all JV Dealers in such ROW country,
including any JV Dealers selling Navistar Truck Models (it being understood that
the particular pricing for such services offered by Caterpillar Financial to any
given JV Dealer may differ from the pricing offered by Caterpillar Financial to
a Caterpillar dealer or to another JV Dealer based on the creditworthiness and
other objective characteristics of such dealers customarily utilized in
evaluating the extension and pricing of credit). Further evaluation
of the Company’s marketing strategy and associated costs and revenues is
required before Caterpillar Financial participation can be evaluated and
understood.
12. SERVICE
12.1 Certification as Service
Providers
Consistent with
applicable law, the Company shall establish requirements for JV Dealers to
become certified service providers. Caterpillar and Navistar shall
assist the Company with the determination of certification requirements pursuant
to the Master Terms for Purchased Services. To the extent consistent
with applicable law, JV Dealers shall be required to participate in certified
service training programs as a precondition to selling, and being certified as a
warranty and service provider for, JV Trucks.
12.2 Training of JV
Dealers
The Company shall
have responsibility for training JV Dealers and their respective service
providers; provided, however, that the
Company may utilize Navistar and Caterpillar to provide JV Dealers with
appropriate training pursuant to the Master Terms for Purchased Services (e.g.,
Navistar may provide truck related sales and service training to JV Dealers and
Caterpillar may provide powertrain sales and service training to JV
Dealers).
12.3 Service Campaigns and
Guidelines for Repair
Caterpillar and
Navistar shall, pursuant to the Master Terms for Purchased Services, jointly
assist the Company with the determination of all truck service campaigns and
guidelines for repair, subject to appropriate Caterpillar and Navistar
policies. The Company may engage Caterpillar or Navistar, as
appropriate, pursuant to the Master Terms for Purchased Services, to administer
such service campaigns or guidelines for repair (e.g., supplier recovery,
distribution logistics, etc.); provided, however, that the
Company shall be responsible for the costs of such service campaigns or
guidelines for repair.
12.4 Service Publications and
Technical Information
The Company shall
be responsible for publishing and distributing appropriate service publications
and technical and tooling information. Navistar and Caterpillar
shall, for a fee and pursuant to the Master Terms for Purchased Services,
jointly assist the Company with the preparation of such publications and
information. The portion of such publications and information
pertaining to (a) Caterpillar Truck Models shall conform with the current
Caterpillar Brand guidelines, and (b) Navistar Truck Models shall conform with
the current Navistar Brand guidelines, in each case to the fullest extent
possible.
13. WARRANTY
13.1 Generally
The Company shall
issue Caterpillar Brand or Navistar Brand warranties (as applicable) for JV
Trucks and JV Truck Replacement Parts sold or distributed by the Company and
shall be liable for truck and service parts claims made
thereunder. Warranties shall be JV Truck-brand specific to allow for
differentiation between claims attributable to Caterpillar Truck Models and
Navistar Truck Models.
13.2 Sales by the Members to the
Company
13.2.1 Navistar shall
provide the Company with the product warranties for those JV Trucks, JV Truck
Components, and JV Truck Replacement Parts sold by Navistar to the Company as
set forth in the Truck Sales Agreement, the Master Component Supply Agreement
and any other relevant agreement.
13.2.2 Caterpillar shall
provide the Company with the product warranties for those JV Truck Components
and JV Truck Replacement Parts sold by Caterpillar to the Company as set forth
in the Master Component Supply Agreement and any other relevant
agreement.
13.2.3 The Company shall
endeavor to provide in its agreements with its other suppliers (beside the
Members) that recalls of any product purchased by the Company that are or were
subject to such supplier’s warranty and generate an amount of liabilities in
excess of the amount attributable to the regular warranty for such product shall
be the responsibility of such supplier.
13.3 Legacy
Warranties
13.3.1 Core ROW
Countries. Subject to the terms and conditions of this Section 13.3.1,
the Company shall assume the liabilities arising from the Standard Warranty with
respect to Medium Duty Trucks, Heavy Duty Trucks, and replacement parts therefor
sold prior to the Effective Date by Navistar in the Core ROW Countries; provided, however, that, for
the avoidance of doubt, no liabilities arising from any extended
service contract or any Goodwill Policy relating to any such truck or part shall
be transferred to or otherwise assumed by the Company.
13.3.1.1 Reserves for Standard
Warranty. At the Effective Date, the Members shall agree upon,
and the Company shall record on its balance sheet, for all of the Medium Duty
Trucks, Heavy Duty Trucks and replacement parts therefor sold by Navistar in all
of the Core ROW Countries prior to the Effective Date, a reserve (the “Aggregate Navistar Standard
Warranty Reserve”) estimating the aggregate amount of liabilities to be
incurred in the future by the Company with respect to the Standard Warranty
issued by Navistar for such trucks and parts.
13.3.1.2 Adjustment of Warranty
Reserve. The Members agree and acknowledge that the Aggregate
Navistar Standard Warranty Reserve will change over time based upon, among other
things, (a) the ongoing satisfaction of Standard Warranty claims with respect to
the applicable trucks and parts and (b) based upon the experience of Navistar
and the Company with respect to clause (a), changes
in the Members’ expectations regarding the amount of costs to be incurred in the
future to satisfy Standard Warranty claims with respect to such trucks and
parts. Accordingly, each time the Company prepares its audited,
annual financial statements pursuant to Section 18.12 (or,
upon mutual agreement of the Members, on a more frequent basis), the Company
shall, in accordance with the process described in the following sentence,
adjust its estimate for the Aggregate Navistar Standard Warranty
Reserve. With respect to each adjustment to be made to the Aggregate
Navistar Standard Warranty Reserve, (i) Navistar shall provide Caterpillar and
the Company with a statement setting forth the amount of the proposed adjustment
and the back-up materials justifying such proposed adjustment, and (ii) the
Members shall use their commercially reasonable efforts to agree upon, through
Majority Consent of the Board, the amount of the adjustment to the Aggregate
Navistar Standard Warranty Reserve. Any such adjustment to the
Aggregate Navistar Standard Warranty Reserve shall require the Majority Consent
of the Board.
13.3.1.3 Payments with respect to
Warranty Reserve. No later than sixty (60) calendar days
following the end of each Fiscal Year, the Company shall deliver to the Members
a statement setting forth (a) the Aggregate Navistar Standard Warranty Reserve
that was recorded on the balance sheet of the Company as of October 31 of the
Fiscal Year preceding such Fiscal Year (such amount, the “Prior Aggregate Navistar
Standard Warranty Reserve”), (b) the aggregate amount of liabilities
arising from the Standard Warranty with respect to the applicable trucks and
parts actually incurred by the Company during such Fiscal Year (such amount, the
“Actual Warranty
Expenses”; for purposes of this paragraph, the amount equal to the Prior
Aggregate Navistar Standard Warranty Reserve minus the Actual
Warranty Expenses shall hereinafter be referred to as the “Default Warranty
Reserve”), and (c) the Aggregate Navistar Standard Warranty Reserve that
was recorded on the balance sheet of the Company as of October 31 of such Fiscal
Year (such amount, the “Current Aggregate Navistar
Standard Warranty Reserve”). No later than seventy (70)
calendar days following the end of such Fiscal Year, (i) if the Current
Aggregate Navistar Standard Warranty Reserve is greater than the Default
Warranty Reserve, then Navistar shall pay the amount of such difference in cash
to the Company, and (ii) if the Current Aggregate Navistar Standard Warranty
Reserve is less than the Default Warranty Reserve, then the Company shall pay
the amount of such difference in cash to Navistar. For the avoidance
of doubt, in implementing the provisions of this paragraph, if, in any instance,
the Default Warranty Reserve is a negative number, the payment obligations
contained in the preceding sentence shall be determined using such negative
number (and not the absolute value of such negative number). The
Company and the Members shall adhere to the provisions of this paragraph with
respect to all of the Medium Duty Trucks, Heavy Duty Trucks and replacement
parts therefor sold by Navistar in all of the Core ROW Countries prior to the
Effective Date until the Standard Warranties for such trucks and parts have
fully expired in accordance with their terms.
13.3.2 Non-Core ROW Countries
(except Legacy Countries). With respect to each Non-Core ROW
Country (except the Legacy Countries), the Company shall not assume any legacy
warranties with respect to any Medium Duty Trucks, Heavy Duty Trucks or
replacement parts therefor sold by any Person other than the
Company.
13.3.3 Legacy
Countries. With respect to each Legacy Country, the Company
shall not assume the legacy warranties with respect to any Medium Duty Trucks,
Heavy Duty Trucks and replacement parts therefor sold in such country prior to
the Effective Date.
13.4 Goodwill
Policy
To
the extent the costs for Goodwill Policy are reflected in the Annual Business
Plan, the Company shall abide by the Goodwill Policy of Caterpillar for
Caterpillar Truck Models and the Goodwill Policy of Navistar for Navistar Truck
Models, which Goodwill Policies shall compensate customers for certain
non-warranty servicing of JV Trucks. The Goodwill Policy for
Caterpillar Truck Models shall be a differentiating factor compared to the
Goodwill Policy for Navistar Truck Models, and the Company sales prices
pertaining to Caterpillar Truck Models and Navistar Truck Models shall reflect
this differentiating factor. Caterpillar and Navistar, when acting on
behalf of the Company pursuant to the Master Terms for Purchased Services, shall
cause their respective sales and service personnel for JV Trucks to abide by the
applicable Goodwill Policy. The Company shall bear the costs and
expenses associated with the Goodwill Policies; provided, however, that each
Member shall be responsible for all expenses arising from the Goodwill Policy of
such Member’s JV Truck models incurred by the Company in excess of the relevant,
accrued, budgeted amount set forth in the Annual Business Plan.
13.5 Warranty
Administration
13.5.1 The Company shall
be responsible for warranty administration with respect to JV Trucks and JV
Truck Replacement Parts.
13.5.2 JV Dealers that
sell Caterpillar Truck Models or Caterpillar Brand JV Truck Replacement Parts
will submit all claims related thereto via the Caterpillar warranty
systems. Caterpillar’s accounting function shall regularly invoice
the Company for reimbursement with respect to such warranty claims and
applicable expenses.
13.5.3 JV Dealers that
sell Navistar Truck Models or Navistar Brand JV Truck Replacement Parts will
submit all claims related thereto via the Navistar warranty
systems. Navistar’s accounting function shall regularly invoice the
Company for reimbursement with respect to such claims and applicable
expenses.
13.5.4 The Company may
engage either Member, pursuant to the Master Terms for Purchased Services, to
provide additional services (other than those described in Sections 13.5.2 and
13.5.3) with
respect to warranty administration related to such Member’s JV Truck Models and
such Member’s brand JV Truck Replacement Parts.
13.5.5 JV Dealers that
sell Caterpillar Truck Models (and their respective service providers) and JV
Dealers that sell Navistar Truck Models (and their respective service providers)
shall perform warranty administration, including administration of extended
warranties and extended service coverage, on all warranty claims tendered by any
end-user on Caterpillar Truck Models sold by the Company or by any end-user on
Navistar Truck Models sold by the Company, respectively, in each case whether or
not sold by such JV Dealer. Exceptions to the rules set forth in the
immediately preceding sentence shall be handled on a case-by-case basis in order
to minimize the downtime of JV Trucks sold by the Company and enhance the
Company’s customer service.
13.5.6 The Company shall
be responsible for, and shall reimburse JV Dealers and their service providers
for, defined costs and expenses incurred by such Persons in connection with
warranty administration on JV Trucks.
13.5.7 In the case of any
third-party suppliers offering warranties directly to the customer, such
suppliers shall be responsible for administering their own warranty, and
financial liability shall be predetermined by the contractual relationship with
such suppliers.
13.6 Extended Warranty or Service
Coverage
All extended
warranty or service coverage (“ESC”) with respect to
JV Trucks shall be offered through a designated ESC service provider (which may
be a Member) and sold pursuant to the following provisions: (a) the Company
shall select any ESC provider to be engaged; (b) the Company shall negotiate and
approve all ESC terms and conditions to develop a market competitive ESC package
with input from the Members; and (c) the Members may, as a service to the
Company pursuant to the Master Terms for Purchased Services, provide for
purchasing ESC from the designated ESC provider at market-based prices.
14. INTELLECTUAL
PROPERTY RIGHTS
14.1 Members’ Intellectual
Property Licenses
14.1.1 Each Member shall
license (or shall cause its designated Affiliate to license) to the Company, on
a royalty-free basis, certain Intellectual Property of such Member and its
Affiliates pursuant to the applicable Intellectual Property License Agreement
and the applicable Trademark License Agreement. If necessary, the
Company shall, in turn, sublicense such Intellectual Property, on a
royalty-bearing basis, to one or more direct or indirect wholly owned
subsidiaries of the Company established outside of the U.S.; provided, however, that (a) the
Company shall not sublicense any trademarks of either Member to any direct or
indirect wholly owned subsidiary of the Company and (b) each Member shall
license (or shall cause its designated Affiliate to license), on a
royalty-bearing basis, directly to each applicable direct or indirect wholly
owned subsidiary of the Company established outside of the U.S., the applicable
trademarks of such Member.
14.1.2 For the avoidance
of doubt, neither Member shall be required to license to the Company any
Intellectual Property for the purpose of manufacturing or selling any JV Truck
Components.
14.2 Members’ Background
Intellectual Property
For the avoidance
of doubt, subject to the terms of the Intellectual Property License Agreements
referenced in Section
14.1, all Background Intellectual Property of a Member shall remain the
property solely of such Member.
14.3 Company Intellectual
Property
Except as otherwise
agreed by the Members, the Company shall own any and all Intellectual Property
that is developed by the Company or by a Member retained for such purpose on the
Company’s behalf. The Company shall grant each Member a
royalty-bearing license to utilize the Intellectual Property owned by the
Company, subject to Section 15, pursuant
to the applicable Royalty-Bearing IP License Agreement.
14.4 R&D;
Development
The Company shall
determine the extent to which it conducts the research and development and
Intellectual Property activities set forth in the Annual Business Plan and the
Rolling Business Plan with internal resources or by retaining one or both
Members or a third party to provide product development services on a contract
basis (in the case of the Members, pursuant to the applicable Master Development
Services Agreement), and in such event, Navistar shall be evaluated as the
preferred source of such product development services.
14.5 Third Party Infringement
Claims
If
any activity in connection with the conduct of the Business is alleged by a
third party to infringe a third party’s Intellectual Property rights, the Party
becoming aware of such allegation shall promptly notify the other Parties
thereof in writing, reasonably detailing the claim.
14.6 Post-Termination Ownership
of Certain Intellectual Property
The provisions in
this Section
14.6 shall apply to any Intellectual Property of the Company (a) that is
distributed to both Members as joint owners pursuant to Section 21.5.1, such
provisions to take effect from and after the date of such distribution, or (b)
joint ownership of which is distributed to the Seller Member and retained by the
Company pursuant to Section 21.6.5, such
provisions to take effect simultaneously with the closing of the sale and
purchase of the Membership Interest pursuant to the Buy-Out Interest Option or
pursuant to the Buy/Sell Option (as provided in Section
21.6.4). For purposes of this Section 14.6, such
Intellectual Property shall be referred to as the “Jointly Owned Intellectual
Property”, and each of the two joint owners of the Jointly Owned
Intellectual Property shall be referred to as a “Joint
Owner”.
14.6.1 Prosecution and Maintenance;
Enforcement
14.6.1.1 Subject to the
other provisions of this Section 14.6, the
Joint Owners shall mutually agree on all decisions relating to the procurement,
prosecution, and maintenance of all Jointly Owned Intellectual
Property.
14.6.1.2 If either Joint
Owner wishes to commence proceedings against a third party for infringement of
any Jointly Owned Intellectual Property, the non-enforcing Joint Owner shall
cooperate in good faith to facilitate the commencement of those proceedings by
voluntarily joining as a plaintiff in such lawsuit, unless the non-enforcing
Joint Owner has a reasonable business justification for not cooperating (e.g.,
the alleged infringer is a customer of such Joint Owner). In that event,
the non-enforcing Joint Owner hereby grants to the enforcing Joint Owner (a) the
unilateral right to ▇▇▇ any third party for infringement of any Jointly Owned
Intellectual Property, and (b) the right to seek joinder of the non-cooperating
party as an involuntary plaintiff. The non-enforcing Joint Owner
hereby agrees not to contest any attempted joinder as an involuntary plaintiff
by the enforcing Joint Owner in any proceeding against a third party for
infringement of any Jointly Owned Intellectual Property.
14.6.1.3 The enforcing Joint
Owner shall indemnify the non-enforcing Joint Owner with respect to any
Liabilities (including liability for costs or assessment of attorney fees)
arising from the proceedings, and the enforcing Joint Owner may conduct the
proceedings as it wishes, for its own benefit. The non-enforcing
Joint Owner may, at the enforcing Joint Owner’s expense and subject to the
enforcing Joint Owner’s consent, not to be unreasonably withheld, retain counsel
to represent it in any proceedings against a third party for infringement of any
Jointly Owned Intellectual Property.
14.6.1.4 If both Joint
Owners wish to take part in proceedings against a third party for infringement
of any Jointly Owned Intellectual Property, the Joint Owners shall cooperate in
good faith with respect to the conduct of the proceedings, including voluntarily
joining as plaintiffs in the suit and agreeing in writing to the manner in which
the costs of the proceedings will be shared. The costs of the proceedings
shall be paid first with any amounts recovered, with the remaining costs being
shared equally by the Joint Owners, or as otherwise agreed by the Joint Owners
in writing.
14.6.2 Licensing
Notwithstanding any
statutes, rules or regulations of any ROW country to the contrary, each Joint
Owner shall have the right to license any Jointly Owned Intellectual Property
for use anywhere in the ROW to any Person (including any Affiliate) without the
consent of the other Joint Owner; provided, however, that (a) any
such license to a Person that is not an Affiliate of such Joint Owner shall be
in exchange for a commercially reasonable royalty to be paid by the licensee,
and (b) the Joint Owner licensor shall be required to account to and pay over
to, promptly upon receipt, the other Joint Owner fifty percent (50%) of any such
royalty consideration actually received by such Joint Owner
licensor. For the avoidance of doubt, each Joint Owner shall have the
right to license any Jointly Owned Intellectual Property for use anywhere in the
ROW to any Affiliate of such Joint Owner on a royalty-free basis.
15. NON-COMPETITION
COVENANTS
15.1 Business
Subject to the
terms and conditions of this Agreement and the Related Agreements and except as
otherwise provided herein, during the period commencing on the Effective Date
and ending upon the expiration or termination of this Agreement, neither Member
nor its respective 5% Affiliates shall, directly or indirectly, (a) engage in,
or own any ownership interest equal to or greater than five percent (5%) in, any
business substantially similar to or in competition with the Business or any
part thereof, in each case, anywhere in the ROW, or (b) grant any license or
sublicense of Intellectual Property of Caterpillar, Navistar, the Company or
their respective 5% Affiliates to any person for any use within the scope of the
Business anywhere in the ROW, except in each case as otherwise agreed to in
writing by both Members. Without limiting the generality of the
foregoing, subject to the terms and conditions of this Agreement and the Related
Agreements and except as otherwise provided herein, neither Member nor its
respective 5% Affiliates shall, independent of the Company, market or sell in
the ROW any JV Truck Replacement Parts (including, for the avoidance of doubt,
Will-Fit Parts) in connection with Medium Duty Trucks or Heavy Duty
Trucks. Notwithstanding the foregoing, neither Member nor any of its
5% Affiliates shall be prohibited from licensing or sublicensing any of the
Intellectual Property of such Member or any of its 5% Affiliates to any Person
for purposes of settling a bona fide Intellectual Property
dispute. Notwithstanding the foregoing, in the event of a Change in
Control of either Member after the date hereof by a Person that is a competitor
of any or all of the Business, the non-competition provisions and the
exclusivity provisions of this Agreement, including Section 11.1 and this
Section 15.1,
shall cease upon and be of no further force or effect following such Change in
Control.
15.2 Contracts Restricting the
Company
Without the
Majority Consent of the Board, and except as otherwise provided in this
Agreement, neither Member shall, and each Member shall
cause its respective 5% Affiliates not to, enter into any contract that would
restrict the activities of the Company contemplated by this Agreement, including
(a) any contract for the purchase of JV Truck Components or JV Truck Replacement
Parts that would restrict the activities of the Company contemplated by this
Agreement or (b) any contract pursuant to which such Member or 5% Affiliate
incurs indebtedness for borrowed money or becomes a guarantor or surety or
pledged its credit for or otherwise becomes responsible with respect to any
undertaking of another Person that would restrict the activities of the Company
contemplated by this Agreement, including the Company becoming a “Restricted
Subsidiary” as defined in the Credit Agreement, dated as of January 19, 2007, as
may be amended from time to time, among Navistar International Corporation, as
Borrower, the Subsidiary Guarantors Party thereto, the lenders party thereto,
JPMorgan Chase Bank, N.A., as Administrative Agent, Credit Suisse Securities
(USA) LLC, as Syndication Agent, and Banc of America Securities LLC and
Citigroup Global Markets Inc., as Co-Documentation Agents (the “Credit Agreement”) or
any similar agreement or arrangement; provided, however, that no
amendment to the Credit Agreement or any similar agreement or arrangement will
restrict the activities of the Company contemplated by this Agreement; provided further, nothing
shall prohibit the Company from becoming a Restricted Subsidiary of Navistar in
the event Navistar’s Percentage Interest increases beyond fifty percent (50%)
pursuant to Article
3, nor impact Navistar’s obligations under the Credit Agreement or any
similar agreement or arrangement as a result thereof.
15.3 Certain Exceptions to
Non-Competition Covenants
15.3.1 Development, Manufacture and
Assembly. Nothing contained in this Agreement shall prohibit a
Member from developing, manufacturing or assembling Medium Duty Trucks, Heavy
Duty Trucks, JV Truck Components and replacement parts therefor anywhere in the
ROW on its own or from developing JV Truck Replacement Parts for Legacy Trucks;
provided, that,
subject to Sections 2.3.5,
10.3.4.3, 15.3.2 and 15.3.3, such Member
shall not market or sell any such Medium Duty Trucks, Heavy Duty Trucks, JV
Truck Components or replacement parts (other than Common Parts or JV Truck
Components utilized by other products in addition to Medium Duty Trucks or Heavy
Duty Trucks; provided, that the
volume of such Common Part or JV Truck Component sales made by such Member must
be reasonable in relation to the volume of such other products sold by such
Member prior to such Common Part or JV Truck Component sales in the relevant
geographic area) anywhere in the ROW.
15.3.2 Sales of Loose Engines by
Members. Notwithstanding anything to the contrary in this
Agreement, each Member and its 5% Affiliates shall be permitted to market and
sell at any time to any Person engines for use in Medium Duty Trucks, Heavy Duty
Trucks or any other applications anywhere in the world, including the ROW
(whether or not in competition with the Company); provided, however, that neither
Member nor its 5% Affiliates shall be entitled to use any resources of the
Company or any JV Dealers to facilitate any such sales, except with the express
written Majority Consent of the Board. Notwithstanding the foregoing,
Navistar and its 5% Affiliates may sell such engines and replacement parts
therefor (to the extent permitted pursuant to Section 15.3.3)
through Navistar dealers and JV Dealers owned by Navistar dealers without Board
approval and without paying the Company any fee therefor; provided, however, that
Navistar and its 5% Affiliates may not sell such engines or replacement parts
therefor through Caterpillar dealers or JV Dealers owned by Caterpillar
dealers.
15.3.3 Sales of Engine Parts by
Members.
15.3.3.1 Notwithstanding
anything to the contrary in this Agreement:
15.3.3.1.1 Caterpillar and its
5% Affiliates may market and sell at any time in any ROW country Caterpillar
Brand engine parts except to the extent that (x) Caterpillar reasonably believes
that such engine parts will ultimately be used in an engine included in a JV
Truck sold by the Company or (y) the volume of engine part sales made by
Caterpillar and its 5% Affiliates is not reasonable in relation to the volume of
engines sold by Caterpillar and its 5% Affiliates prior to such engine part
sales in the relevant geographic area;
15.3.3.1.2 Navistar and its 5%
Affiliates may market and sell at any time in any ROW country Navistar Brand
engine parts except to the extent that (x) Navistar reasonably believes that
such engine parts will ultimately be used in an engine included in a JV Truck
sold by the Company or (y) the volume of engine part sales made by Navistar and
its 5% Affiliates is not reasonable in relation to the volume of engines sold by
Navistar and its 5% Affiliates prior to such engine part sales in the relevant
geographic area; and
15.3.3.1.3 if any of the
permitted sales by Caterpillar and Navistar, as described in Section 15.3.3.1.1
and 15.3.3.1.2,
are made by the Company (rather than by Caterpillar, Navistar, or their
respective 5% Affiliates, as applicable), and the Company reasonably believes
that such engine parts will ultimately be used in an engine not used in a JV
Truck, all profits or losses arising from the Company’s sale shall be entirely
for the account of Caterpillar or Navistar, respectively, and shall be
transferred to Caterpillar or Navistar, respectively.
15.3.3.2 Other than existing
arrangements set forth on Schedule 15.3.3.2,
Caterpillar, Navistar and their 5% Affiliates shall not market or sell any
engine parts to any third party at any price that is lower than the price at
which Caterpillar, Navistar or their 5% Affiliates has sold such engine parts to
the Company within the immediately prior one hundred and eighty (180) days from
such sale.
15.3.3.3 The Company and
each Member shall adopt and implement policies, processes, and systems to (i)
monitor, to the extent practicable, the end-user customers to which Caterpillar
Brand engine parts and Navistar Brand engine parts (as applicable) are sold, and
(ii) discourage such Member’s dealers from selling Caterpillar Brand engine
parts or Navistar Brand engine parts (as applicable) to end-user customers for
use in JV Trucks sold by the Company. If, at any time during the term
of this Agreement, either Member reasonably believes in good faith that the
other Member’s dealers have, in fact, sold engine parts to end-user customers
for use in JV Trucks sold by the Company, (A) the other Member shall cooperate
with such Member in furtherance of investigating such matter and, subject to
applicable law, taking corrective actions to discourage such sales from
occurring, and (B) in the event that a material amount of such sales did, in
fact, occur, bring such matter to the Board to determine any appropriate
remediation action it deems necessary.
15.3.3.4 Caterpillar and its
5% Affiliates and Navistar and its 5% Affiliates shall not promote or market
actions, programs, or tools specifically designed to take business away from a
JV Dealer.
15.3.4 Legacy Warranty
Obligations. Notwithstanding anything to the contrary in this
Agreement, each Member shall be permitted to fulfill its legacy warranty
obligations with respect to any Medium Duty Trucks, Heavy Duty Trucks and
replacement parts therefor sold by such Member in any Non-Core ROW Country prior
to the Effective Date.
15.3.5 Certain Ancillary
Functions. Notwithstanding anything to the contrary in this
Agreement, none of remanufacturing products and services, logistics services,
financing services [or research and development services]5 shall be deemed to be subject to any of the
restrictions contained in this Section 15, and each
Member shall be permitted to engage in any and all such activities, and provide
any and all such products and services to any third party, for its own account;
provided, however, that during
any period while Caterpillar Financial or Navistar Financial is retained by the
Company to provide any financing services in connection with the Business, such
Person shall be permitted to provide financing in connection with products and
services of any third party (other than the Company) that are in competition
with the products and services of the Company only to the extent that (a) such
financing is not systematically offered as part of a formal, ongoing finance
program of such Person but instead is provided on an ad hoc basis, and (b) such
type of financing is also made available by such Person to JV Dealers
and end-user customers of the Company in connection with products and services
of the Company, including both Caterpillar Truck Models and Navistar Truck
Models and JV Truck Replacement Parts therefor.
15.3.6 Notwithstanding
anything to the contrary in this Agreement, each of Caterpillar and Navistar
shall be permitted to develop, design, test, manufacture, assemble, brand,
market, sell (including providing purchase financing to customers for), and
distribute and provide product support for (including providing replacement
parts for), vehicles that are not Medium Duty Trucks or Heavy Duty
Trucks.
15.3.7 Notwithstanding
anything to the contrary in this Agreement, Blue Diamond will be permitted to
continue to develop and manufacture anywhere in the world and, as set forth
below, market and sell in the ROW Medium Duty Trucks of the types marketed and sold by
Blue Diamond as of January 1, 2009, or replacement models of such types of
Medium Duty Trucks and replacement parts therefor; provided, that such
Medium Duty Trucks and replacement parts therefor are sold exclusively to (i)
Navistar, or its 5% Affiliates, for subsequent resale in the ROW only to the
Company; or (ii) Ford Motor Company, or its 5% Affiliates, which shall be
permitted to sell such trucks and parts anywhere in the world (provided that
such trucks are not Navistar Brand); provided further, that the
volume of replacement parts sales made by Blue Diamond in the ROW is reasonable
in relation to the volume of Medium Duty Trucks sold by Blue
Diamond.
15.3.8 Notwithstanding
anything to the contrary in this Agreement, Navistar and its 5% Affiliates will
be permitted to:
15.3.8.1 solely through the
Mahindra JV or any of its direct or indirect wholly owned subsidiaries, develop,
design, test, manufacture, assemble, brand, market, sell, and distribute and
provide product support for (including providing replacement parts and service
for), Medium Duty Trucks and Heavy Duty Trucks in the ROW (including granting a
license or sublicense of Intellectual Property of Navistar or its Affiliates to
the Mahindra JV in connection therewith) solely to the extent expressly
permitted pursuant to the Mahindra JV Agreement as in effect on the date of the
Mahindra Waiver; provided, however, that without
the Majority Consent of the Board, no such activities shall be assisted by or
made through a Caterpillar dealer-owned JV Dealer or a Caterpillar dealer; provided, further, that
Navistar and its Affiliates hereby covenant and agree not to consent to any
amendment to the Mahindra JV Agreement that would adversely effect the Company
in any manner, unless the Board by Majority Consent agrees to such
amendment;
15.3.8.2 continue to market
and sell parts, components or trucks exclusively to IVECO Trucks Australia
Limited for manufacture, assembly and sale in Australia until the termination of
the Supply, Technical Assistance and License Agreement on October 9, 2010; and,
if such agreement is not otherwise assigned or transferred to the Company, such
sales following the Effective Date shall be for the account of the Company and
Navistar shall account for any profits or losses from such sales, and payments
related to such profits or losses shall be remitted to the Company on a
quarterly basis;
15.3.8.3 begin or continue
(as applicable) to develop, manufacture, market and sell a low-cab over engine
truck anywhere in the ROW through a joint venture with American ▇▇▇▇▇▇▇▇, LLC;
provided that the Company will (without a requirement for Board approval),
unless the Board otherwise determines, distribute such trucks in the ROW and
earn and retain all profits in connection with such distribution, other than
such countries in which American ▇▇▇▇▇▇▇▇, LLC has distribution capabilities as
of the date of this Agreement; and provided further that the Company shall also
have the right to develop, manufacture, market and sell a low-cab over engine
truck anywhere in the ROW, which truck may compete with such American ▇▇▇▇▇▇▇▇,
LLC joint venture truck;
15.3.8.4 other than with
respect to Navistar components and replacement parts for sale or assembly in the
ROW, continue to perform kitting services through Newstream Enterprises, LLC to
the extent such services are permitted to be performed under the Operating
Agreement for Newstream Enterprises, LLC, dated January 28, 2003, by and among
Remanufacturing Sales Company and International Truck and Engine Corporation in
effect as of January 1, 2009; and
15.3.8.5 engage in any of
the activities described in the last sentence of Section 2.3.7.2
in accordance with the terms and conditions thereof.
15.4 Acquisition of
Publicly-Traded Securities
Notwithstanding
anything to the contrary in this Agreement, the acquisition by a Member or its
5% Affiliates of the publicly-traded equity securities or debt securities of any
Person that competes with the Business shall be permitted to the extent that (a)
such acquisition does not result, directly or indirectly, in the ownership by
such Member or its 5% Affiliates of five percent (5%) or more of any class of
publicly-traded equity securities or debt securities of such Person, and (b) the
investment in such Person held by such Member is purely passive, and such Member
has no governance or control rights in such Person (including any right to
appoint any member of the board of such Person, the right to appoint any officer
of such Person, or the right to veto any significant decision of such Person)
other than the right to cast votes (on a one share, one vote basis) with respect
to the publicly traded equity securities or debt securities of such Person held
by such Member.
15.5 Member
Acquisition
Notwithstanding
anything to the contrary in this Agreement, if a Member or any of its 5%
Affiliates desires to acquire a business or operation of any Person that
competes with the Business, whether through the purchase of stock or other
voting securities, merger, consolidation, or other similar corporate
transformation, or through the purchase of assets (a “Member Acquisition”),
and the operation of the business acquired by reason of the Member Acquisition
is not otherwise permitted by the provisions of this Agreement, such Member may
make the Member Acquisition so long as, no later than the consummation of the
Member Acquisition, such Member sends the Company a written offer to sell to the
Company that portion of the business acquired through the Member Acquisition
that competes with the Business (the “Competing
Operations”). For purposes of this Section 15.5, all
decisions of the Company shall be made by the other Member’s Representatives
(acting and deciding on behalf of the Company). If the Company
desires to pursue such offer, the Company must so notify such Member in writing
no later than twenty (20) calendar days after receiving such written
offer. If the Company submits such written notice to such Member in
accordance with the immediately preceding sentence, the Company and such Member
shall attempt in good faith to agree upon, no later than twenty (20) calendar
days after the Company submits such written notice to such Member, (a) those
particular assets, liabilities and operations of the business acquired through
the Member Acquisition that constitute the Competing Operations, and (b) a
purchase price for the Competing Operations. If the Company and such
Member agree in writing upon the items referenced in the immediately preceding
sentence within such twenty (20) calendar day period, the Company shall be
deemed to have accepted such offer on the date such agreement is
reached. If the Company and such Member fail to so agree upon such
items within such twenty (20) calendar day period, the Company and such Member
shall seek to agree upon and retain an Independent Valuation Firm pursuant to
the selection procedures set forth in Section 23.16 to (i)
identify those particular assets, liabilities and operations of the business
acquired through the Member Acquisition that constitute the Competing
Operations, and (ii) determine a purchase price that is equal to the Fair Market
Value of the Competing Operations taking into account, among other factors that
are relevant to the Independent Valuation Firm’s determination of such Fair
Market Value, the purchase price of the Member Acquisition. The
decision of the Independent Valuation Firm shall be final and binding on, and
nonappealable by, the Company and such Member. The Independent
Valuation Firm shall act as an expert and not as an arbitrator. The
fees and expenses of the Independent Valuation Firm shall be paid one half by
each Member (and not, for the avoidance of doubt, one half by the Company and
such Member). No later than thirty (30) calendar days after the
Company and such Member receive written notice from the Independent Valuation
Firm setting forth its determination of the items referenced in clauses (i) and (ii) above, the
Company must send a written notice to such Member indicating if the Company
desires to accept such offer at the purchase price stipulated by the Independent
Valuation Firm. If the Company decides to accept such offer, either
at the purchase price that is agreed upon by the Company and such Member or at
the purchase price determined by the Independent Valuation Firm, the sale of the
Competing Operations by such Member to the Company shall be consummated no later
than forty-five (45) calendar days after the date on which the Company is deemed
to have accepted such offer; provided, that the
closing shall in no event occur earlier than three (3) Business Days after
receipt of all approvals required from, and expiration of all waiting periods
(including waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) imposed by, any
governmental authorities in connection with the purchase and sale. If
the Company decides not to accept such offer, then (A) if the Competing
Operations did not generate greater than $300,000,000 in revenues during the
calendar year preceding the year in which the Member Acquisition was
consummated, then such Member shall be permitted to retain, own, and operate the
Competing Operations (provided, that the
Competing Operations shall not be permitted to use, and shall not be provided
access to, any Intellectual Property of the Company), and (B) if the Competing
Operations generated greater than $300,000,000 in revenues during the calendar
year preceding the year in which the Member Acquisition was consummated, then
such Member shall divest the Competing Operations no later than six (6) months
after the date on which such Member receives notice that the Company decided to
not accept such offer. If such Member retains the Competing
Operations in accordance with clause (A) of the
immediately preceding sentence and continues to own and operate such Competing
Operations on the third (3rd)
anniversary of the consummation of the Member Acquisition, the Company shall
have the option (but not the obligation) to purchase the Competing Operations
from such Member. If the Company desires to pursue such option, the
Company must so notify such Member in writing no later than twenty (20) calendar
days after the third (3rd)
anniversary of the consummation of the Member Acquisition. The terms
of such option shall be the same as the terms of the first option set forth
above in this Section
15.5.
15.6 Additional
Agreements
The Members agree
and acknowledge that the restrictions contained in this Section 15 are
reasonable in scope and duration in light of the nature, size and location of
the Business. The Members further agree and acknowledge that the
restrictions contained in this Section 15 are
necessary to protect each Member’s significant investment in the Business,
including its goodwill. The Members are of equal bargaining
power. It is the desire and intent of the Members that the provisions
of this Section
15 be enforced to the fullest extent permissible under applicable
law. If all or part of this Section 15 is held
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. If any part of this Section 15 is held to
be excessively broad as to duration, scope, activity, or subject, such part
shall be construed by limiting and reducing it so as to be enforceable to the
maximum extent permissible under applicable law.
16. INDEMNIFICATION
FOR DEALER LIABILITY
16.1 Dealer Liability
Indemnities
Navistar shall
defend, indemnify, and hold harmless each Company Indemnified Person and each
Caterpillar Indemnified Person against any and all claims made by any dealer or
distributor of Navistar or its Affiliates, in such Person’s capacity as a dealer
or distributor of Navistar or its Affiliates, against any Company Indemnified
Person or Caterpillar Indemnified Person for lost revenues, lost profits,
injunctive relief, or any other damages arising from business activities related
to this Agreement (and the Related Agreements); except for claims for product
liability related to the safety or performance of a particular product, the
defense and indemnity of which, if any, shall be handled pursuant to the terms
of the applicable Related Agreements or otherwise shall be negotiated by the
relevant parties on a case-by-case basis. Caterpillar shall defend,
indemnify and hold harmless each Company Indemnified Person and each Navistar
Indemnified Person against any and all claims made by any dealer or distributor
of Caterpillar or its Affiliates, in such Person’s capacity as a dealer or
distributor of Caterpillar or its Affiliates, against any Company Indemnified
Person or Navistar Indemnified Person for lost revenues, lost profits,
injunctive relief, or any other damages arising from business activities related
to this Agreement (and the Related Agreements); except for claims for product
liability related to the safety or performance of a particular product, the
defense and indemnity of which, if any, shall be handled pursuant to the terms
of the applicable Related Agreements or otherwise shall be negotiated by the
relevant parties on a case-by-case basis.
16.2 Indemnification
Procedures
16.2.1 Notice of Dealer Claims;
Assumption of Defense. The Indemnified Person shall give
notice as promptly as is reasonably practicable, but in any event no later than
ten (10) Business Days after receiving notice thereof, to the Indemnifying
Person of the assertion of any claim, or the commencement of any suit, action,
or proceeding, by any Person not a party hereto in respect of which indemnity
may be sought under the terms of Section 16.1
(which notice shall specify in reasonable detail the nature and amount of such
claim); provided, that the
failure of the Indemnified Person to give such notice shall not relieve the
Indemnifying Person of its obligations under this Section 16
except to the extent (if any) that the Indemnifying Person shall have been
prejudiced thereby. The Indemnifying Person may, at its own expense,
(a) participate in the defense of any such claim, suit, action, or proceeding,
and (b) upon notice to the Indemnified Person, at any time during the course of
any such claim, suit, action, or proceeding, assume the defense thereof with
counsel of its own choice and in the event of such assumption, shall have the
exclusive right, subject to clause (a) in the
proviso in Section 16.2.2,
to settle or compromise such claim, suit, action, or proceeding. If
the Indemnifying Person assumes such defense, the Indemnified Person shall have
the right (but not the duty) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Person. Whether or not the Indemnifying Person chooses
to defend or prosecute any such claim, suit, action, or proceeding, all of the
Parties shall cooperate, at the Indemnifying Person’s cost and expense, in the
defense or prosecution thereof.
16.2.2 Settlement or
Compromise. Any settlement or compromise made or caused to be
made by the Indemnified Person (unless the Indemnifying Person has the exclusive
right to settle or compromise under clause (b) of Section 16.2.1)
or the Indemnifying Person, as the case may be, of any such claim, suit, action,
or proceeding of the kind referred to in Section 16.2.1
shall also be binding upon the Indemnifying Person or the Indemnified Person, as
the case may be, in the same manner as if a final judgment or decree had been
entered by a court of competent jurisdiction in the amount of such settlement or
compromise; provided, that (a) no
obligation, restriction, or Liability shall be imposed on the Indemnified Person
as a result of such settlement or compromise without its prior written consent,
which consent shall not be unreasonably withheld, conditioned, or delayed, and
(b) the Indemnified Person shall not compromise or settle any claim, suit,
action, or proceeding without the prior written consent of the Indemnifying
Person, which consent shall not be unreasonably withheld, conditioned, or
delayed.
16.3 Liability
Insurance
6 The Company shall maintain in
effect during the term of this Agreement and for a period of no less than [ten
(10)] years after the expiration or termination of this Agreement, appropriate
liability (including product liability) insurance policies with products and
completed operations coverage with an internationally recognized
carrier. The Company’s purchase of any such liability insurance
policy shall be subject to the approval of the Board by Majority
Consent. Such policies shall require the Company to receive not less
than thirty (30) calendar days’ prior written notice of any modification or
cancellation of such policies.
17. REPRESENTATIONS
AND WARRANTIES
17.1 Representations and
Warranties of Members
As
of the Effective Date, each Member hereby represents and warrants to the Company
and to the other Member that:
17.1.1 Such Member
understands and acknowledges that its Membership Interest has not been, and
shall not be, registered under the Securities Act or any state securities
laws;
17.1.2 Such Member
understands and acknowledges that its Membership Interest may not be sold or
otherwise assigned unless it is registered under the Securities Act and
applicable state securities laws, or unless such sale or assignment is offered
pursuant to an exemption from such registration requirements;
17.1.3 The obligations and
restrictions contained in this Agreement regarding the purchase, sale, transfer,
or assignment of Membership Interests create an economic risk that such Member
is capable of bearing;
17.1.4 Such Member is
acquiring its Membership Interest for investment and not with a view to the
resale or distribution thereof;
17.1.5 Such Member has the
full power and authority to enter into this Agreement, to subscribe for and
purchase or otherwise hold the Membership Interest to be issued to or held by
it, to perform its obligations hereunder, and to consummate the transactions
contemplated hereby;
17.1.6 Such Member’s
purchase of its Membership Interest and its execution and delivery of this
Agreement have been duly authorized by all necessary corporate action on its
behalf, and this Agreement shall be, upon execution and delivery on behalf of
such Member, its legal, valid, and binding obligation, enforceable in accordance
with its terms, except as such enforceability may be affected by
(a) applicable bankruptcy, reorganization, insolvency, moratorium, and
other similar laws and court decisions of general application, including
statutory and other laws regarding fraudulent or preferential transfers relating
to, limiting, or affecting the enforcement of creditors’ rights generally, and
(b) general principles of equity, including the effect of such general
principles of equity upon the specific enforceability of any of the remedies,
covenants, or other provisions contained herein and therein, and their
application (regardless of whether enforcement is considered in a proceeding at
law or in equity) as such principles relate to, limit, or affect the enforcement
of creditors’ rights generally;
17.1.7 The execution and
delivery by such Member of this Agreement, the consummation of the transactions
contemplated in accordance with the terms of this Agreement, and the performance
of such Member’s obligations hereunder shall not conflict with, or result in any
violation of or default under, any provision of any governing instrument
applicable to such Member, or any agreement or other instrument to which such
Member is a party or by which such Member or any of its properties are bound, or
any permit, franchise, judgment, decree, statute, rule, or regulation applicable
to such Member or its properties;
17.1.8 Such Member has
such knowledge and experience in financial affairs that it is capable of
evaluating the merits and risks of purchasing and holding its Membership
Interest, and it has not relied in connection with this investment upon the
identity of or advice from the other Member or upon any representations,
warranties or agreements other than those set forth in this Agreement and the
Related Agreements;
17.1.9 Such Member’s
financial situation is such that it can afford to bear the economic risk of
holding its Membership Interest for an indefinite period of time, and it can
afford to suffer the complete loss of its investment in the Company;
and
17.1.10 Such Member is not
relying on the Company, the other Member, any Representative, or any director,
officer, employee, manager, agent, or Affiliate of any of such Person, with
respect to the United States and foreign income tax considerations involved in
purchasing, holding, and disposing of Membership Interests.
17.2 Survival of
Warranties
All representations
and warranties contained in Section 17.1
shall survive the execution and delivery of this Agreement.
18. CAPITAL
ACCOUNTS; DISTRIBUTIONS; TAX MATTERS; RECORDS
18.1 Capital Account
Maintenance
A
separate “Capital
Account” shall be maintained for each Member under Section 18.2 for
the full term of this Agreement in accordance with the requirements of Section
704(b) of the Code and the Treasury Regulations thereunder. A
Member’s Capital Account shall be determined as provided in Section 18.2.
18.2 Capital Account
Balances
Pursuant to the
basic rules of Section 1.704-1(b)(2)(iv) of the Treasury Regulations, the
balance of the Capital Account of each Member shall be:
18.2.1 initially, the
amount of such Member’s initial Capital Contribution described in Section 3.1.1;
18.2.2 increased by the
amount of any additional money contributed by such Member to the capital of the
Company;
18.2.3 increased by the
Gross Asset Value (determined without regard to Section 7701(g) of the
Code) of each property contributed by such Member to the capital of the Company
and decreased by the Gross Asset Value (determined without regard to Section
7701(g) of the Code) of each property distributed to such Member by the
Company;
18.2.4 increased by the
amount of any Company liabilities assumed by such Member or that are secured by
any property distributed to such Member;
18.2.5 increased by the
amount of each item of Profit allocated to such Member pursuant to this
Agreement;
18.2.6 decreased by the
amount of each item of Loss allocated to such Member pursuant to this
Agreement;
18.2.7 decreased by the
amount of any liabilities of such Member assumed by the Company or that are
secured by any property contributed by such Member to the Company;
and
18.2.8 otherwise adjusted
in accordance with the other capital account maintenance rules of Section
1.704-1(b)(2)(iv) of the Treasury Regulations.
18.2.9 If any interest in
the Company is transferred in accordance with the terms of this Agreement, the
transferee will succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest.
18.3 Allocation of Profits and
Losses
18.3.1 A special
allocation of gross income (e.g., gross sales revenues) shall be allocated to
Navistar in an amount equal to the cumulative cash distributions to which
Navistar is entitled pursuant to Section 18.4.1, less
any amount of gross income previously allocated to Navistar pursuant to this
Section
18.3.1. Any prior allocation of gross income allocated
pursuant to this Section 18.3.1 that
is later offset by Losses, deductions or other specially allocated losses
pursuant to Section
18.5 shall be replenished dollar-for-dollar with subsequent allocations
of gross income.
18.3.2 After taking into
account Section
18.3.1 in calculating Profits and Losses, Profits and Losses shall be
allocated to the Members in proportion to their respective Percentage
Interests.
18.4 Distributions
The Company
shall, no later
than thirty (30) calendar days following the end of each fiscal half year
(unless the Board determines by Majority Consent that a distribution shall be at
another time), distribute to the Members any cash of the Company not necessary
for its financial obligations or working capital needs or for funding its then
current Annual Business Plan and its then current Rolling Business Plan, unless
the Board determines otherwise by Majority Consent. Except as
otherwise provided elsewhere in this Agreement or as otherwise determined by the
Board by Majority Consent, each distribution of cash by the Company shall be
made to the Members in accordance with the provisions of this Section
18.4.
18.4.1 Distributions of
cash by the Company that are attributable to the Company’s operations in the
Legacy Countries in any Fiscal Year (or portion thereof) occurring during the
period from the earlier of (a) the second (2nd)
anniversary of the Effective Date, and (b) the date on which the Company has
commenced sales of JV Trucks and JV Truck Replacement Parts in each of the
Legacy Countries to (but not including) the tenth (10th) anniversary of the
Effective Date shall be allocated entirely to Navistar (and not to Caterpillar)
until the amount of such cash so distributed to Navistar is equal to the lesser
of (a) the amount of any profits earned by the Company during
such Fiscal Year (or portion thereof) in connection with the sale of JV Trucks
and JV Truck Replacement Parts in the Legacy Countries, as calculated per the
Baseline Profit Amount calculation methodology agreed to by the Members, and (b)
the Baseline Profit Amount.
18.4.2 All other
distributions shall be made to the Members in proportion to their respective
Percentage Interests at the time of such distribution (without preference to any
Member).
18.5 Regulatory
Allocations
18.5.1 Limit on Allocation of
Losses. Notwithstanding anything to the contrary in Section 18.3, Losses
allocated pursuant to Section 18.3 shall
not exceed the maximum amount that can be so allocated without causing any
Member to have an Adjusted Capital Account Deficit at the end of any allocation
period. In the event that some but not all of the Members would have
Adjusted Capital Account Deficits as a consequence of an allocation pursuant to
Section 18.3,
the limitation set forth in this Section 18.5.1 shall
be applied on a Member-by-Member basis so as to allocate the maximum permissible
Losses to each Member under Treasury Regulations
Section 1.704-1(b)(2)(ii)(d).
18.5.2 Partnership Minimum Gain
Chargeback. If there is a net decrease in Partnership Minimum
Gain during any taxable year or other period for which allocations are made,
before any other allocation under this Agreement, each Member will be specially
allocated items of Company income and gain for that period (and, if necessary,
subsequent periods) in proportion to, and to the extent of, an amount equal to
such Member’s share of the net decrease in Partnership Minimum Gain during such
year determined in accordance with Treasury Regulations Section
1.704-2(g)(2). The items to be allocated will be determined in
accordance with Treasury Regulations Section 1.704-2(g). This
Section 18.5.2
is intended to comply with the Minimum Gain chargeback requirements of the
Treasury Regulations, shall be interpreted consistently therewith.
18.5.3 Member Minimum Gain
Chargeback. Notwithstanding any other provision of this Section 18.5, if
during a Fiscal Year there is a net decrease in any Member Minimum Gain, each
Member with a share of such Member Minimum Gain, determined in accordance with
Treasury Regulation Section 1.704-2(i)(5) as of the beginning of such
Fiscal Year, shall be allocated items of income and gain for the Fiscal Year
(and, if necessary, succeeding Fiscal Years) in the manner and to the extent
provided in Treasury Regulation Section 1.704-2(i)(4). This
Section 18.5.3
is intended to comply with the partner nonrecourse debt minimum gain chargeback
requirement of Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
18.5.4 Qualified Income
Offset. After applying Sections 18.5.2
and 18.5.3, if
a Member unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4) through
1.704-1(b)(2)(ii)(d)(6), items of income and gain of the Company shall be
specially allocated to the Member in an amount sufficient to eliminate, to the
extent required by Treasury Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible. This Section 18.5.4
is intended to constitute a “qualified income offset” provision within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. If a Member otherwise has an
Adjusted Capital Account Deficit, the Member shall be allocated items of income
and gain of the Company in an amount sufficient to eliminate such deficit as
quickly as possible.
18.5.5 Nonrecourse
Deductions. Nonrecourse Deductions for any taxable year or
other period for which allocations are made will be allocated among the Members
in proportion to their relative Capital Contributions.
18.5.6 Partner Nonrecourse
Deductions. Notwithstanding anything to the contrary in this
Agreement, any Partner Nonrecourse Deductions for any taxable year or other
period for which allocations are made will be allocated to the Member who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
the Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
18.5.7 Code Section 754
Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset under Code Sections 734(b) or 743(b) is required to
be taken into account in determining Capital Accounts under Treasury Regulations
Section 1.704-1(b)(2)(iv)(m), the amount of the
adjustment to the Capital Accounts will be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis), and the gain or loss will be specially allocated to the
Members in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted under Treasury Regulations
Section 1.704-1(b)(2(iv)(m).
18.5.8 Interpretation. The
foregoing provisions of this Section 18.5 are
intended to comply with Treasury Regulations Section 1.704-1(b) and 1.704-2 and
any successor Treasury Regulations, and shall be interpreted consistently with
this intention. Any terms used in such provisions that are not
specifically defined in this Agreement shall have the meaning, if any, given
such terms in the Treasury Regulations cited above.
18.5.9 Curative
Allocations. If any allocation of income, gain, loss,
deduction, or any other item is made pursuant to this Section 18.5
(the “Regulatory
Allocations”), then, to the extent consistent with Section 704 of the
Code and the Treasury Regulations thereunder, the Regulatory Allocations shall
be taken into account in allocating other items of income, gain, loss, and
deduction among the Members, if any (in the current and all subsequent Fiscal
Years), so that, to the extent possible, the net effect of such allocations of
other items and the Regulatory Allocations to each Member shall be to implement
the allocation scheme described in Section 18.3.
18.6 Section 704(c) of the
Code; Other Tax Allocation Rules
18.6.1 In accordance with
Section 704(c) of the Code and the Treasury Regulations thereunder, items of
taxable income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for income tax purposes,
be allocated among the Members so as to take account of any variation between
the adjusted basis of such property to the Company for federal income tax
purposes and the property’s Gross Asset Value on the date of its contribution to
the Company, using any method selected by the Members under Treasury Regulations
Section 1.704-3.
18.6.2 In the event the
book value of any Company asset is adjusted pursuant to clauses (b) or (d) of the definition
of Gross Asset Value in Section 24,
subsequent allocations of items of taxable income, gain, loss, and deduction
with respect to such asset shall, solely for income tax purposes, take account
of any variation between the adjusted basis of such asset for federal income tax
purposes and its book value in the same manner as under Section 704(c) of the
Code and the Treasury Regulations thereunder.
18.6.3 The Profits, Losses
and other items of the Company shall be allocated according to the Members’
varying Percentage Interests during the Fiscal Year, using the daily proration
method except that such items arising from transactions outside the ordinary
course of business shall be allocated to the date on which such transactions
occur.
18.6.4 Except as otherwise
provided in this Agreement, each item of Company income, gain, loss, deduction,
or credit shall be allocated among the Members for tax purposes in the same
manner that the corresponding items of Profits and Losses have been allocated
among the Members’ respective Capital Accounts for the Fiscal Year in
question.
18.6.5 The Parties intend
that all transactions between the Company and another Party shall be conducted
on an arm’s-length basis.
18.6.6 Upon the
distribution to the Members of property other than cash, the difference between
the Gross Asset Value of such property and its book value shall be treated as an
item of gain or loss, as the case may be, and shall be allocated pursuant to the
provisions of Section 18.3 and
18.5 in the
same manner that gain or loss on a sale of such property would have been
allocated.
18.6.7 The Members may
vary the allocations set forth in this Section 18 as
determined to be necessary or appropriate to cause the allocations set forth
herein to be consistent with applicable provisions of the Code and the Treasury
Regulations; provided, that such
variance does not affect distributions.
18.7 Allocation of Nonrecourse
Liabilities
Solely for the
purpose of allocating excess Nonrecourse Liabilities of the Company among the
Members in connection with the determination of the Members’ adjusted tax bases
in their respective Membership Interests in accordance with Section 752 of the
Code and the Treasury Regulations from time to time promulgated thereunder, the
Members shall allocate excess Nonrecourse Liabilities in the manner determined
by the Members.
18.8 Partnership
Treatment
No
election shall be made by the Company to be excluded from the application of the
provisions of Subchapter K of the Code, or to be treated as an association
taxable as a corporation, and all Members agree to treat the Company as a
partnership for all federal, state, and local income tax purposes unless
otherwise specifically required by law.
18.9 Tax
Return
The Company shall
prepare at the expense of the Company and shall, no later than April 30 of each Fiscal Year,
provide to each Member a draft of the Company’s federal and state income tax
returns for the Company’s prior Fiscal Year for (a) review and comment by
each Member, and (b) approval by each Member. The Members shall
agree on the establishment or material modification of tax reporting positions,
including making, revoking or declining to make tax elections in connection with
the preparation and filing of the Company’s or any subsidiary’s federal, state,
local or applicable foreign tax returns.
18.10 Tax Matters
Partner; Tax
Elections
18.10.1 Navistar is hereby
appointed the “Tax
Matters Partner” of the Company for all purposes pursuant to Sections
6221 through 6231 of the Code. Subject to the immediately following
sentence, the Tax Matters Partner shall (a) furnish to each Member affected
by an audit of the Company income tax returns a complete copy of each notice or
other communication received from the Internal Revenue Service or applicable
state authority within five (5) calendar days of receipt (except such notices or
communications as are sent directly to such Member), (b) keep such Member
reasonably informed of any administrative or judicial proceedings, as required
by Section 6623(g) of the Code, (c) allow each Member an opportunity to
participate in all such administrative and judicial proceedings, and
(d) advise and consult with each Member (and assignee) as to proposed
adjustments to the federal or state income tax returns of the
Company. The Tax Matters Partner shall act at the direction of the
Members and in any event shall not have the authority, unless such action has
been approved by the Members, to take any material action or make any material
decision, including (i) entering into a settlement agreement with the
Internal Revenue Service which purports to bind Members other than the Tax
Matters Partner, (ii) filing a petition as contemplated in Section 6226(a)
or 6228 of the Code, (iii) intervening in any action as contemplated in
Section 6226(b) of the Code, (iv) filing any request contemplated in
Section 6227(b) of the Code, or (v) entering into an agreement extending
the period of limitations as contemplated in Section 6229(b)(1)(B) of the
Code. The Company shall not be obligated to pay any fees or other
compensation to the Tax Matters Partner in its capacity as such, but the Company
shall reimburse the Tax Matters Partner for all reasonable out-of-pocket costs
and expenses (including attorneys’ and other professional fees) incurred by it
in its capacity as Tax Matters Partner. The Company shall defend,
indemnify, and hold harmless the Tax Matters Partner against any and all
Liabilities sustained or incurred as a result of any act or decision concerning
Company tax matters and within the scope of such Member’s responsibilities as
Tax Matters Partner, so long as such act or decision was done or made in good
faith and does not constitute gross negligence or willful
misconduct.
18.10.2 If there is a
distribution of Company property as described in Code Section 734 or if there is
a transfer of a Company interest as described in Code Section 743 then, upon the
written request of any Member, the Company shall file an election pursuant to
Code Section 754, in accordance with the procedures set forth in the applicable
Treasury Regulations to adjust the basis of Company properties. Upon
the request of the Company, each Member shall provide the Company with all the
information not then possessed by the Company necessary to give effect to any
election under Code Section 754.
18.11 Accounting
Records
The Company shall
maintain true and accurate business and accounting records of all of its
operations in accordance with GAAP, and, to the extent applicable, the specific,
reasonable requirements of the Members. Each Member, and its duly
authorized representatives, shall have the right, at any time, to inspect, copy,
and audit all of the business records and accounts of the Company.
18.12 Reports
The Company shall
have monthly unaudited financial statements prepared in accordance with GAAP no
later than fifteen (15) Business Days after the end of each
month. Unless otherwise determined by the Board by Majority Consent,
the Company shall arrange for its annual financial statements to be audited by
an independent auditor no later than sixty (60) calendar days after the
end of each Fiscal Year. Furthermore, upon Caterpillar’s request
prior to October 1 of each year, the
Company shall arrange for its financial statements relating to the twelve (12)
month period ended each December 31 to be audited by an independent auditor no
later than sixty (60) calendar days following such December 31. All
of the financial statements described in the two immediately preceding sentences
shall include all year-end accruals required by GAAP. All of the
financial statements of the Company shall be prepared so as to enable each
Member to satisfy all of the financial reporting requirements to which such
Member is subject. From and after the Effective Date until such time
as the Board changes the independent auditor of the Company pursuant to the next
sentence, the initial independent auditor of the Company shall be
[PricewaterhouseCoopers LLP] [KPMG LLP]. The selection, change, or
termination of the Company’s independent auditor shall require the Majority
Consent of the Board. Furthermore, the selection or change of the
accounting methods, methodologies, practices, procedures, or policies utilized
by the Company (except for those changes that are required by any new accounting
standards or any regulatory requirements), and the approval of the financial
statements of the Company (including the monthly financial statements, the
annual financial statements for the twelve (12) month period ended at the end of
each Fiscal Year and the financial statements for the twelve (12) month period
ended each December 31), in each case, shall require the Majority Consent of the
Board.
18.13 Other Tax
Information
The Company shall
provide to each Member such other information as is reasonably necessary or
reasonably requested by such Member to enable such Member to comply with such
Member’s tax obligations. In addition, each Member shall provide to
the Company such information as is reasonably necessary by the Company to enable
the Company to comply with its tax obligations.
18.14 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act; Internal
Controls
The Company shall
employ internal controls and related processes that are no less rigorous than
the internal controls and related processes that are required in order for each
Member to be in full compliance with the requirements of Section 404 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
18.15 Tax Decisions by the
Members
Representatives
selected by Navistar and Caterpillar from their respective tax departments shall
act on behalf of the Members with respect to tax decisions that are expressly to
be made by the Members under this Agreement. Pursuant to Section 5.13.37, the
Board is authorized to resolve any disputes regarding such tax
decisions.
19. TRANSFER
OF MEMBERSHIP INTERESTS
19.1 Restriction on
Transfers
19.1.1 Generally
19.1.1.1 Except as set forth
in Section 3.2.5
and Section 19.2,
neither Member shall, without the prior written consent of the other Member,
which consent may be withheld in the sole discretion of the other Member,
Transfer, pledge, or in any manner encumber its Membership Interest, and any
Transfer, pledge, or encumbrance of a Membership Interest by a Member made
without such consent shall be null and void and of no effect whatsoever and
shall not be recorded upon the books of the Company.
19.1.1.2 If a Transfer of
all or part of a Member’s Membership Interest results in the termination of the
Company under Code Section 708, then such new or resulting Member shall have
indemnified each remaining Member (or agreed to indemnify each such remaining
Member in writing reasonably acceptable to such remaining Member), in an amount
equal to the Net Present Value of Increased Tax Liability, if any, applicable to
such remaining Member, as determined by the Board in its reasonable
discretion.
19.1.2 Restrictions on Transfers to
Certain Competing Persons; Right of First Refusal. If Section 19.1.1
is determined to be invalid or unenforceable in any situation, then except as
set forth in Section 3.2.5
and Section
19.2, the Parties instead shall adhere to this Section 19.1.2
with respect to such situation.
19.1.2.1 Restriction on Transfers to
Certain Competing Persons. Caterpillar shall not, without the
prior written consent of Navistar, which consent may be withheld in the sole
discretion of Navistar, Transfer its Membership Interest to, or pledge or in any
manner encumber its Membership Interest in favor of, any Navistar Competing
Person. Navistar shall not, without the prior written consent of
Caterpillar, which consent may be withheld in the sole discretion of
Caterpillar, Transfer its Membership Interest to, or pledge or in any manner
encumber its Membership Interest in favor of, any Caterpillar Competing
Person. Any Transfer, pledge or encumbrance of a Membership Interest
by a Member made without such consent shall be null and void and of no effect
whatsoever and shall not be recorded upon the books of the Company.
19.1.2.2 Right of First Refusal for
all other Transfers. If at any time a Member (the “Offeror”) desires to
Transfer or offer for a bona fide sale any or all of such Member’s Membership
Interest to any third party or receives a bona fide offer from a prospective
purchaser to purchase any or all of such Member’s Membership Interest and such
Member desires to Transfer such portion or all of such Membership Interest (the
“Offered Membership
Interest”), and such Transfer or offer is not otherwise subject to Section 19.1.2.1,
the other Member (the “Beneficiary”) shall
have the right of first refusal with respect to the Offered Membership Interest
as provided by this Section 19.1.2.2
(the “Right of First
Refusal”).
A. Offer. The
Offeror shall first furnish to the Beneficiary a document setting forth the
proposed price for the applicable Membership Interest and other material terms
and conditions of the proposed Transfer or sale, together with an irrevocable
offer to sell to the Beneficiary all and not less than all of the Offered
Membership Interest on such price, terms and conditions (the “Offer”). If
the Offeror receives a bona fide offer to purchase the Offered Membership
Interest from a proposed purchaser, the Offer shall also include the name and
address of the proposed purchaser of the Offered Membership
Interest. If the Offer specifies consideration other than cash, the
Beneficiary shall be entitled to pay the Fair Market Value of such consideration
in cash, which Fair Market Value shall be determined by the Board by Majority
Consent.
B. Exercise of Right of First
Refusal. For a period of thirty (30) calendar days after the
receipt by the Beneficiary of the Offer, the Beneficiary shall have the right,
at its option, to purchase all, but not less than all, of the Offered Membership
Interest. To validly exercise the Right of First Refusal, the
Beneficiary shall notify the Offeror in writing of such exercise within such
thirty (30) calendar day period.
C. Closing. If
the Beneficiary validly exercises its Right of First Refusal, the closing of the
sale and purchase of the Offered Membership Interest shall take place at the
offices of the Beneficiary’s counsel forty-five (45) calendar days after the
date of the Beneficiary’s acceptance of the Offer; provided, that the
closing shall in no event occur earlier than three (3) Business Days after
receipt of all approvals required from, and expiration of all waiting periods
(including waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) imposed by, any
governmental authorities in connection with the purchase and sale. At
closing, (a) the Offeror shall represent and warrant to the Beneficiary that the
Beneficiary is receiving good and marketable legal and beneficial title to such
Offered Membership Interest, free and clear of any liens, pledges, claims,
security interests, encumbrances, and similar interests of any kind whatsoever
(other than restrictions imposed by the Securities Act, applicable state
securities laws, and this Agreement), which representations and warranties shall
be the sole representations and warranties required of the Offeror, and (b) the
Beneficiary shall deliver to the Offeror the purchase price specified in the
Offer in immediately available funds. Notwithstanding anything to the
contrary in this Section 19.1.2.2,
if the Beneficiary exercises its Right of First Refusal and, in connection
therewith, a governmental authority whose approval is required to consummate the
purchase of the Offered Membership Interest fails to approve such transaction or
imposes a condition on its approval that, in the reasonable discretion of the
Beneficiary, would make the purchase by it of the Offered Membership Interest
impractical or not otherwise in the best interests of the Beneficiary, then the
Beneficiary may terminate the purchase of the Offered Membership Interest, and
upon such termination, the Beneficiary shall have no further obligation with
respect thereto.
D. Failure to Exercise Right of
First Refusal. If the Beneficiary does not exercise the Right
of First Refusal within the thirty (30) calendar day period described in Section 19.1.2.2(B),
or if the Beneficiary terminates the purchase and sale of the Offered Membership
Interest pursuant to the last sentence of Section 19.1.2.2(C),
the Offeror shall then have a period of sixty (60) calendar days from the later
of (a) the date on which the Right of First Refusal shall have expired, and (b)
if applicable, the date on which the Beneficiary terminates the purchase and
sale of the Offered Membership Interest pursuant to the last sentence of Section 19.1.2.2(C),
to consummate the sale of all, but not less than all, of the Offered Membership
Interest. Such sale shall be at a price and on other terms that are
in the aggregate no more favorable to the proposed purchaser than as set forth
in the Offer. Any third party purchasing such Offered Membership
Interest must agree in writing to be bound by all of the terms and conditions of
this Agreement. If such sale is not consummated within such sixty
(60) calendar day period, the Offeror shall then be required to offer the
Offered Membership Interest to the Beneficiary pursuant to the Right of First
Refusal before making such sale to any Person.
19.1.3 Right of First Refusal for
all Transfers. If both Sections 19.1.1
and 19.1.2 are
determined to be invalid or unenforceable in any situation, then except as set
forth in Section
3.2.5 and Section 19.2,
the Parties shall adhere to Section 19.1.2.2
with respect to such situation, it being understood that the Parties shall so
adhere to Section 19.1.2.2
irrespective of whether or not the relevant third party or prospective purchaser
is a Caterpillar Competing Person or a Navistar Competing Person.
19.1.4 Right of First Refusal for
Transfers to Certain Competing Persons. If each of Sections 19.1.1,
19.1.2, and
19.1.3 are
determined to be invalid or unenforceable in any situation, then except as set
forth in Section
3.2.5 and Section 19.2,
the Parties shall adhere to Section 19.1.2.2
with respect to such situation, it being understood that the Parties shall so
adhere to Section 19.1.2.2
only if, (a) where the Offeror is Caterpillar, the relevant third party or
prospective purchaser is a Navistar Competing Person, and (b) where the
Offeror is Navistar, the relevant third party or prospective purchaser is a
Caterpillar Competing Person.
19.2 Permitted Transfers to
Subsidiaries
Notwithstanding
Section 19.1,
any Member may Transfer all, but not less than all, of its Membership Interest
to any one of its direct or indirect wholly owned subsidiaries without the
consent of the other Member; provided, that (a)
such transferred Membership Interest shall remain subject to all of the terms
and conditions of this Agreement, (b) such direct or indirect wholly owned
subsidiary shall
become liable for all of the transferring Member’s obligations under this
Agreement and shall agree in writing to be bound by all of the terms and
conditions of this Agreement, (c) unless the transferee has a net worth equal to
or greater than the net worth of the transferring Member, the transferring
Member guarantees all financial obligations of the transferee, (d) such
transferee is obligated to Transfer such Membership Interest back to the
transferring Member if the transferee ceases to be a direct or indirect wholly
owned subsidiary of the transferring Member, and (e) no further Transfer of such
transferred Membership Interest shall be permitted unless such Transfer complies
with all of the terms and conditions of this Agreement.
19.3 Absolute Prohibitions on
Transfers
Notwithstanding
anything to the contrary in this Agreement, a Member may not Transfer, pledge,
or in any manner encumber its Membership Interest during any period while such
Member is in Material Breach.
20. DISPUTES
AND DEADLOCKS
In
the event (a) of a dispute, controversy, or claim between the Members under or
in any manner related to this Agreement other than a Company Deadlock (a “Company Dispute”), or
(b) that any matter that is submitted to a vote by the Members or the Board,
after good faith discussion and negotiation among the Members or the
Representatives, as applicable, does not receive the required vote to approve
such matter and is not withdrawn from consideration by the Member or the
Representative(s) submitting such matter to a vote upon the failure to receive
such approval (a “Company Deadlock”),
the Members shall meet and work together in good faith and use commercially
reasonable efforts to expeditiously resolve the Company Dispute or the Company
Deadlock internally by reference to their respective senior management promptly
following written notice given by either Member to the other Member; provided, however, that the
foregoing requirement to use commercially reasonable efforts shall not apply to
any Company Dispute or Company Deadlock over matters relating to the adoption or
amendment of an Annual Business Plan or a Rolling Business Plan. If
the Members are unable to internally resolve the Company Dispute or the Company
Deadlock within thirty (30) calendar days after such notice, then at anytime
thereafter:
20.1 In the event of any
Company Dispute, each Party shall be entitled to exercise any and all rights and
remedies available to such Party under law, in equity or otherwise, subject to
the terms of Sections 23.12,
23.13, 23.14 and 23.15.
20.2 In the event of a
Company Deadlock the matter shall be deemed not approved and withdrawn from
consideration (it being understood that with respect to Section 5.13.18,
such in-kind contribution shall not be made) and the Company shall continue
operating in the ordinary course of business.
20.3 In the event of a
Company Deadlock with respect to an Annual Business Plan pursuant to Section 5.13.1,
the Company shall continue operating under the Rolling Business Plan most
recently approved by the Board. If, after the date that is sixty (60)
months following the Effective Date, upon the expiration of the then current
Rolling Business Plan, the Board shall not have adopted a new Annual Business
Plan for the following Fiscal Year or a new Rolling Business Plan to commence
the following Fiscal Year, this Agreement shall be deemed terminated (as
provided in Section 21.2.5).
21. TERM;
TERMINATION; DISTRIBUTIONS ON TERMINATION
21.1 Term
This Agreement
shall become effective on the Effective Date and shall continue in full force
and effect, unless
earlier terminated in accordance with this Agreement, for a period of
twenty-five (25) years from the Effective Date; provided, that (a)
upon the twenty (20) year anniversary of the Effective Date, the Members may
agree in writing to extend the term of this Agreement by another five (5) years
beyond the initial twenty five (25) year term, and (b) every five (5) years
after such twenty (20) year anniversary, the Members may agree in writing to
further extend the term of this Agreement for another five (5) years beyond the
then extended term.
21.2 Termination
This Agreement
shall be terminated:
21.2.1 at any time by the
mutual written consent of the Members;
21.2.2 at the option of a
Member, if the continued membership of the other Member in the Company is
terminated under applicable law;
21.2.3 at the option of a
Member, if a final and non-appealable decree of judicial dissolution is entered
against the other Member or against the Company by a court of competent
jurisdiction, in each case, under applicable law;
21.2.4 at the option of a
Member, if the other Member is in Material Breach and has failed to cure such
Material Breach within ninety (90) calendar days of notice thereof from the
non-breaching Member, provided, that such
notice is delivered in writing by the non-breaching Member within ninety (90)
calendar days of the date such Member first obtains knowledge that the other
Member is in Material Breach; provided, that such
ninety (90) calendar day cure period shall be extended by an additional ninety
(90) calendar days if (a) such Material Breach does not arise out of clause (a), clause (b) or clause (c) of the
definition of “Material Breach,” (b) such Material Breach by its nature cannot
be cured within ninety (90) calendar days but is capable of being cured within
one hundred eighty (180) calendar days, (c) the breaching Member is using
and continues to use best efforts to effect a cure, and (d) the non-breaching
Member reasonably believes that such Material Breach shall be cured within the
ninety (90) calendar day extension period; provided, further, that,
notwithstanding the foregoing, if such Material Breach arises out of clause (c) of the
definition of “Material Breach,” the Member that is in Material Breach shall be
entitled to cure such Material Breach only within ten (10) calendar days of
notice thereof from the non-breaching Member; provided, further, that, if the
other Member is in Material Breach and such Material Breach by its nature cannot
be cured, the non-breaching Member may terminate this Agreement at any time
without the lapse of any cure period;
21.2.5 after the date that
is sixty (60) months following the Effective Date, automatically in the event
that (a) there is a Company Deadlock with respect to Section 5.13.1,
(b) the three (3) year period of committed funding set forth in the then current
Rolling Business Plan has expired, as applicable, and (c) the Board has not
adopted, by Majority Consent, a new Annual Business Plan for the following
Fiscal Year or a new Rolling Business Plan to commence the following Fiscal
Year;
21.2.6 at the option of
either Member, if the Percentage Interest in the Company held by either Member
is less than twenty-five percent (25%); or
21.2.7 at the option of a
Member, if the other Member undergoes a Change in Control.
(the exercise of
any of the foregoing, a “Termination
Event”). Notwithstanding anything to the contrary in this
Agreement, and for the avoidance of doubt, a breach of any provision of this
Agreement by a Party shall not entitle such breaching Party to terminate this
Agreement.
21.3 Dissolution and
Liquidation
21.3.1 Subject to Section 21.6, upon
the expiration or termination of this Agreement, the President, as liquidating
trustee, shall immediately commence to wind up the Company’s affairs and
liquidate the assets of the Company. In the event the President is
unable to perform in the capacity of liquidating trustee or in the case of a
dissolution of the Company pursuant to Section 21.2.3, the
liquidating trustee shall be a Person approved by the Members
21.3.2 Profits and Losses
from an event causing dissolution pursuant to Section 21.2
shall be allocated among the Members so that after such allocations and the
other allocations under this Agreement, to the maximum extent possible the final
Capital Account balances of the Members are at levels which would permit
liquidating distributions, if made in accordance with such final Capital Account
balances, to be equal to the distributions that will occur under Section 21.4.3. To
the extent that the allocation provisions of this Agreement would not produce
such target Capital Account balances, the Members agree to take such actions as
are reasonably necessary to amend such allocation provisions to produce such
balances so long as such amendments are permissible under the applicable tax
law.
21.3.3 Upon the expiration
or termination of this Agreement, the Company shall assign and transfer to each
Member, and each Member shall assume from the Company, fifty percent (50%) of
the Company’s outstanding warranty liability provided pursuant to the terms and
conditions of sale with respect to any JV Truck Model or any JV Truck
Replacement Part (in each case, regardless of brand).
21.4 Proceeds in
Liquidation
Subject to Section 21.5,
proceeds in liquidation shall be applied:
21.4.1 First, to the payment
and discharge of all of the Company’s debts and liabilities to creditors other
than the Members and their Affiliates;
21.4.2 Second, to the
payment and discharge of any debts owed by the Company to the Members and their
Affiliates; and
21.4.3 Finally, between the
Members in accordance with Section 18.4; provided, that if the
Fair Market Value of all assets that are to be distributed to a Member pursuant
to Sections
18.4 and 21.5 (other than
Sections 21.5.1
and 21.5.2)
exceeds the Fair Market Value of all assets that would have been distributed to
such Member pursuant to Section 18.4 (other
than assets described in Sections 21.5.1 and
21.5.2), such
Member shall make a Capital Contribution to the Company in an amount equal to
the Fair Market Value of assets (other than assets described in Sections 21.5.1 and
21.5.2) to be
distributed to such Member over the Fair Market Value of such assets
that would have been received under Section 18.4 and such
Capital Contribution shall be distributed to the other Member in liquidation of
the other Member’s Membership Interest. For convenience of the
Members and the Company, the Member obligated to make a Capital Contribution
shall make the payment directly to the other Member.
21.5 Distribution of Assets on
Dissolution of the Company
In
the event of a dissolution of the Company, to the extent permitted by applicable
law, the assets of the Company shall be used to satisfy the Company’s
obligations under Section 21.4 in the
following order of precedence: (a) first, money,
accounts receivable, chattel paper, documents, instruments, and investment
property shall be used to satisfy amounts owing under Sections 21.4.1
and 21.4.2, (b)
second, to the
extent amounts remain owing under Sections 21.4.1
and 21.4.2, the
remaining assets of the Company (other than Intellectual Property and the
agreements between the Company and JV Dealers) shall be used to satisfy amounts
owing under Sections
21.4.1 and 21.4.2, and (c) third, to the extent
amounts remain owing under Sections 21.4.1
and 21.4.2, the
Company owned Intellectual Property and the agreements between the Company and
JV Dealers shall be used to satisfy amounts owing under Sections 21.4.1
and 21.4.2. To
the extent assets of the Company remain after satisfying all amounts owing under
Sections 21.4.1
and 21.4.2,
such assets shall be distributed pursuant to Section 21.4.3
as follows:
21.5.1 Intellectual
Property. The Company shall distribute (a) the Company-owned
trademarks, service marks and trade dress unique to Caterpillar Truck Models to
Caterpillar, (b) the Company-owned trademarks, service marks and trade dress
unique to Navistar Truck Models to Navistar, and (c) all other Company-owned
Intellectual Property to both Members as joint owners (it being understood the
terms of such joint ownership are set forth in Section 14.6).
21.5.2 JV Dealer
Agreements. The Company shall distribute (a) each JV Dealer
agreement pertaining to the sale of Caterpillar Truck Models to Caterpillar and
(b) each JV Dealer agreement pertaining to the sale of Navistar Truck Models to
Navistar (in each case, irrespective of whether the JV Dealer party to such
agreement is owned by a Caterpillar dealer or a Navistar dealer, but in the case
of a JV Dealer party owned by a Caterpillar dealer, subject to Navistar and
Caterpillar entering into the Post-Termination Marketing Services Fee Agreement
pursuant to Section
21.7.1). Notwithstanding the preceding sentence, if a
Termination Event occurs prior to the third (3rd)
anniversary of the Effective Date, then the Company shall cause each of its JV
Dealer agreements to be terminated in connection with the dissolution of the
Company; provided, however, that (i) if
the Termination Event occurs pursuant to Section 21.2.4 (in
connection with a Material Breach by a Member), Section 21.2.6 (in
connection with a decrease of the Percentage Interest held by a Member) or Section 21.2.7 (in
connection with a Change in Control of a Member), then each JV Dealer agreement
pertaining to the sale of JV Truck models of the other Member’s brand
(irrespective of whether the JV Dealer party to such agreement is owned by a
Caterpillar dealer or a Navistar dealer) shall not be terminated by the Company
but instead shall be distributed to such other Member (it being understood, for
the avoidance of doubt, that in each of the circumstances described in this
clause (i), the
JV Dealer agreements pertaining to the sale of JV Truck models of the brand of
the Member that committed such Material Breach, whose Percentage Interest
decreased or that underwent such a Change in Control (irrespective of whether
the JV Dealer party to such agreement is owned by a Caterpillar dealer or a
Navistar dealer) shall be terminated by the Company in connection with the
dissolution of the Company and shall not be distributed to such Member), and
(ii) in any event, each JV Dealer agreement pertaining to the sale of Navistar
Truck Models with a JV Dealer that is owned by a Navistar dealer that was
serving as a Navistar dealer as of the Effective Date shall not be terminated by
the Company but instead shall be distributed to Navistar.
21.5.3 Assets other than
Intellectual Property and JV Dealer Agreements.
21.5.3.1 The Members shall
use their commercially reasonable efforts to agree, as promptly as practicable
after the occurrence of a Termination Event, on an allocation between the
Members of the remaining assets of the Company other than the Intellectual
Property of the Company and the agreements between the Company and JV Dealers
(the “Remaining
Assets”). If the Members agree on an allocation between the
Members of any of the Remaining Assets within forty (40) calendar days after the
occurrence of a Termination Event, such assets (the “Non-Disputed Remaining
Assets”) shall be so distributed to the Members as so
agreed.
21.5.3.2 If the Members
cannot agree on an allocation of all of the Remaining Assets between the Members
within forty (40) calendar days after the occurrence of a Termination Event, the
Members shall promptly retain an Independent Valuation Firm. If the
Members cannot agree on an Independent Valuation Firm within forty five (45)
calendar days after the occurrence of a Termination Event, the Members shall
cause an Independent Valuation Firm to be appointed pursuant to the procedures
set forth in Section
23.16. The Independent Valuation Firm shall determine, in
accordance with the procedures set forth in Section 23.16, the
Fair Market Value of each of (a) the Non-Disputed Remaining Assets and (b) those
Remaining Assets for which the Members cannot agree on an allocation between the
Members (the “Disputed
Remaining Assets”). No later than ten (10) calendar days after
the Independent Valuation Firm renders its decision as to the Fair Market Value
of the items set forth in the preceding sentence, each Member shall deliver a
written notice to the Company indicating if such Member offers to make a Capital
Contribution in order to receive a distribution of all, but not less than all,
of the Disputed Remaining Assets from the Company based on the Fair Market Value
of such assets (as determined pursuant to the preceding
sentence).
21.5.3.3 If one Member (but
not the other Member) offers to make a Capital Contribution in order to receive
a distribution of all, but not less than all, of the Disputed Remaining Assets
from the Company based on the Fair Market Value of such assets, the Company
shall distribute such assets to such Member and, if applicable, the Member shall
make a Capital Contribution determined under Section
21.4.3.
21.5.3.4 If both Members
offer to make a Capital Contribution in order to receive a distribution of all,
but not less than all, of the Disputed Remaining Assets from the Company based
on the Fair Market Value set forth in Section 21.5.3.2,
then on the day that is ten (10) calendar days after the end of the
aforementioned ten (10) calendar day period, the Independent Valuation Firm
shall determine the value of the Disputed Remaining Assets to the Members
pursuant to a one (1) bid, sealed first price reserve auction in which each
Member shall submit a bid and the winning, highest-bidding Member shall be
obligated to make a Capital Contribution based on the price of the Disputed
Remaining Assets equal to the winning, highest bid (it being understood that the
reserve price in such auction shall be deemed to be equal to such Fair Market
Value). The Company shall distribute the Disputed Remaining Assets to
the winning, highest- bidding Member and, if applicable, such Member shall make
a Capital Contribution determined under Section
21.4.3.
21.5.3.5 If neither Member
offers to acquire all (but not less than all) of the Disputed Remaining Assets
at such Fair Market Value, the Company shall sell such assets to the highest
bidding third party (which such third party may not be an Affiliate of either
Member) and shall thereafter distribute the proceeds of such sale in accordance
with Section
21.4.3 (taking into account (a) the Fair Market Value of the Non-Disputed
Remaining Assets and (b) the distribution of such assets to the Members in
accordance with Section
21.4.3).
21.6 Buy-Out Interest Option and
Buy/Sell Option.
21.6.1 Buy-Out Interest Option on
Termination Event.
21.6.1.1 Determination of Fair Value
of Company. Notwithstanding anything to the contrary in this
Agreement, if a Termination Event occurs pursuant to Section 21.2.4 (in
connection with a Material Breach by a Member) or Section 21.2.6 (in
connection with a decrease of the Percentage Interest held by a Member), the
other Member (the “Buy-Out Member”) may,
by delivering written notice to such Member (the “Termination Event
Member”) within thirty (30) calendar days of the occurrence of the
Termination Event, require that (a) the process of dissolving and liquidating
the Company pursuant to Sections 21.3, 21.4, and 21.5 be suspended
pending the implementation of the terms of this Section 21.6, and (b)
the Members attempt in good faith to agree on the Fair Value of the
Company. If the Members have not agreed on the Fair Value of the
Company within thirty (30) calendar days after the date on which the Buy-Out
Member delivers such written notice to the Termination Event Member, the Members
shall promptly retain a nationally recognized investment banking
firm. In the absence of mutual agreement on an investment banking
firm within forty (40) calendar days after the date on which the Buy-Out Member
delivers such written notice to the Termination Event Member, each Member shall
designate within five (5) calendar days thereafter a nationally recognized
investment banking firm for the sole purpose of selecting an investment banking
firm to determine the Fair Value of the Company pursuant to this Section
21.6.1.1. If a Member fails to designate such an investment
banking firm within such five (5) calendar day period, then the other Member’s
designated investment banking firm shall be deemed the mutually agreed
investment banking firm to serve for all purposes of this Section
21.6.1.1. If each Member designates an investment banking firm
within such five (5) calendar day period, then the two (2) such designated firms
shall promptly select a nationally recognized investment banking firm to
determine the Fair Value of the Company pursuant to this Section 21.6.1.1,
which investment banking firm shall be independent from the two (2) designated
investment banking firms and the Members. The investment banking firm
selected pursuant to this Section 21.6.1.1 is
referred to as the “Investment
Banker.” After the selection of the Investment Banker, (a)
each Member shall submit to the Investment Banker in writing, not later than ten
(10) calendar days after the Investment Banker is retained, its position with
respect to the Fair Value of the Company, together with such supporting
documentation as it deems necessary or as the Investment Banker requests, (b)
the Company shall promptly make available to the Investment Banker such
financial and other information and documentation as is requested by the
Investment Banker to make its determination, and (c) the Investment Banker
shall, within fifteen (15) calendar days after receiving the positions of the
Members and the information and documentation requested by the Investment Banker
(or if a Member or the Company fails or refuses to provide such information and
documentation within a reasonable period of time, upon the expiration of a
reasonable period of time), render its decision as to the Fair Value of the
Company, which decision shall be final and binding on, and nonappealable by, the
Members. The Investment Banker shall act as an expert and not as an
arbitrator. The fees and expenses of the Investment Banker shall be
paid one half by each Member.
21.6.1.2 Exercise of Buy-Out Interest
Option. The Buy-Out Member shall have the option, but not the
obligation (the “Buy-Out Interest
Option”), to purchase from the Termination Event Member, and to require
the Termination Event Member to sell to the Buy-Out Member, all (but not less
than all) of the Termination Event Member’s Membership Interest in the Company
(the “Buy-Out
Interest”) for a purchase price (the “Buy-Out Interest Purchase
Price”) equal to the Termination Event Member’s Percentage Interest multiplied by the
Fair Value of the Company (as finally determined pursuant to Section
21.6.1.1). The Buy-Out Interest Option shall be exercisable by
the Buy-Out Member, in its sole discretion and at its sole option, by delivering
written notice (which written notice shall be irrevocable except as provided in
Section 21.6.4)
to the Termination Event Member at any time during the period commencing on the
date on which the Fair Value of the Company is finally determined pursuant to
Section
21.6.1.1 and ending thirty (30) calendar days after such date (the “Buy-Out Interest Option
Period”). Such written notice shall obligate the Termination
Event Member to sell and the Buy-Out Member to purchase the
Buy-Out Interest as herein provided. The failure of the
Buy-Out Member to deliver the written notice in accordance with the second
previous sentence (or the delivery of a written notice by the Buy-Out Member
declining to exercise the Buy-Out Interest Option) shall result in the
termination of the Buy-Out Interest Option, and the Termination Event Member
shall continue to own the Buy-Out Interest and the Members shall recommence the
process of dissolving and liquidating the Company pursuant to Sections 21.3, 21.4, and 21.5. If
the Buy-Out Member validly exercises the Buy-Out Interest Option, (a) the
Members shall not recommence the process of dissolving and liquidating the
Company pursuant to Sections 21.3, 21.4, and 21.5, and (b) the
Termination Event Member shall sell, and the Buy-Out Member shall purchase, the
Buy-Out Interest for the Buy-Out Interest Purchase Price, and an agreement for
the sale and purchase of the Buy-Out Interest shall automatically be deemed to
exist between the Termination Event Member and the Buy-Out Member as set forth
in this Section
21.6.1.2.
21.6.2 Buy/Sell Option on Change in
Control
21.6.2.1 Determination of
Value. No later than ten (10) days after a Member undergoes a
Change in Control, the Member undergoing such Change in Control (the “Change in Control
Member”) shall deliver written notice (a “Change in Control
Notice”) to the other Member (the “Buy/Sell
Member”). For a period not to exceed thirty (30) days
following the ninety (90) day anniversary of the Change in Control of the Change
in Control Member if the Buy/Sell Member has not yet triggered a termination of
this Agreement pursuant to Section 21.2.7, the
Buy/Sell Member shall have the option, but not the obligation, to deliver to the
Change in Control Member a written notice (the “Valuation Notice”),
indicating a valuation of one hundred percent (100%) of the equity of the
Company (the “Valuation Price”)
based on which the Buy/Sell Member is committed to either (i) purchase all (but
not less than all) of the Change in Control Member’s Membership Interest in the
Company, or (ii) sell all (but not less than all) of the Buy/Sell Member’s
Membership Interest in the Company, each transaction to be effected at the
Valuation Price multiplied by the Seller Member’s Percentage
Interest. If the Buy/Sell Member fails to provide a Valuation Notice
within the thirty (30) day period set forth herein, the Buy/Sell Member shall
forever waive its right to deliver a Valuation Notice or to establish a
Valuation Price. For the avoidance of doubt, nothing in this Section 21.6.2 is
intended to limit or restrict the Buy/Sell Member’s right to terminate this
Agreement pursuant to Section 21.2.7; provided, however, that from
and after the delivery of the Valuation Notice until such time of a termination
of the Buy/Sell Option, the Buy/Sell Member shall not be permitted to exercise
its termination rights pursuant to Section
21.2.7.
21.6.2.2 Option of Change in Control
Member. No later than ninety (90) days following the Change in
Control Member’s receipt of a Valuation Notice, the Change in Control Member
shall deliver written notice (the “Buy/Sell Notice”) to
the Buy/Sell Member of its decision whether, at its sole option (but it must
select to either purchase or sell), to (i) purchase all (but not less than all)
of the Buy/Sell Member’s Membership Interest in the Company, or (ii) sell all
(but not less than all) of the Change in Control Member’s Membership Interest in
the Company, each transaction to be effected at a purchase price (the “Buy/Sell Purchase
Price”) equal to the Valuation Price multiplied by the Seller Member’s
Percentage Interest (the “Buy/Sell
Option”).
21.6.2.3 Agreement for the Sale and
Purchase of Membership Interest. If the Change in Control
Member elects to purchase the Buy/Sell Member’s Membership Interest, the
Buy/Sell Member shall be required to sell, and the Change in Control Member
shall be required to purchase, all of the Buy/Sell Member’s Membership Interest
at the Buy/Sell Purchase Price, pursuant to Section
21.6.4. If the Change in Control Member (i) elects to sell all
of its Membership Interest to the Buy/Sell Member or (ii) fails to deliver the
Buy/Sell Notice to the Buy/Sell Member within such ninety (90) day period, the
Buy/Sell Member shall be required to purchase, and the Change in Control Member
shall be required to sell, all of the Change in Control Member’s Membership
Interest at the Buy/Sell Purchase Price, pursuant to Section
21.6.4. In either event, an agreement for the sale and
purchase of the Membership Interest shall be deemed to exist between the Change
in Control Member and the Buy/Sell Member as a result of the Buy/Sell
Option.
21.6.3 Actions of the
Company. During the period (a) commencing on the date on which
the Buy-Out Member requires the Members to determine the Fair Value of the
Company pursuant to Section 21.6.1.1 and
ending on either (i) the date on which the Buy-Out Interest Option Period lapses
(if the Buy-Out Interest Option is not exercised) or (ii) the date on which the
closing of the sale and purchase of the Buy-Out Interest pursuant to a valid
exercise of the Buy-Out Interest Option occurs (if the Buy-Out Interest Option
is exercised) or (b) commencing on the date of the Change in Control of the
Change in Control Member and ending on the earlier to occur of (i) the date on
which the closing of the sale and purchase of the Membership Interest pursuant
to the Buy/Sell Option occurs and (ii) if the Buy/Sell Member fails to properly
deliver the Valuation Notice, the date that is thirty (30) days after the ninety
(90) day anniversary of the Change in Control of the Change in Control Member,
the Members shall cause the Company to (a) operate in the ordinary course of
business, (b) not take any action that would have the primary purpose of
altering the Fair Value of the Company, and (c) not incur any additional
indebtedness for borrowed money (other than trade payables in the ordinary
course of business).
21.6.4 Closing. The
closing of the sale and purchase of the Membership Interest pursuant to the
Buy/Sell Option or pursuant to the Buy-Out Interest Option shall take place at
the offices of the Purchaser Member’s counsel forty-five (45) calendar days
after either (i) the date of the exercise of the Buy-Out Interest Option or (ii)
the date of the exercise of the Buy/Sell Option (or the date the Buy/Sell Option
was to be exercised if the Change in Control Member failed to timely exercise
the Buy/Sell Option); provided, that the
closing shall in no event occur earlier than three (3) Business Days after
receipt of all approvals required from, and expiration of all waiting periods
(including waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) imposed by, any
governmental authorities in connection with the purchase and sale. At
closing, (a) the Member selling its Membership Interest (the “Seller Member”) shall
represent and warrant to the Member purchasing such Membership Interest (the
“Purchaser
Member”) that the Purchaser Member is receiving good and marketable legal
and beneficial title to the Seller Member’s Membership Interest, free and clear
of any Liens (other than restrictions imposed by the Securities Act, applicable
state securities laws, and this Agreement), which representations and warranties
shall be the sole representations and warranties required of the Seller Member,
(b) the Seller Member shall deliver to the Purchaser Member resignations from
those Representatives the Seller Member has appointed to the Board, and (c) the
Purchaser Member shall deliver to the Seller Member an amount equal to either
the Buy-Out Interest Purchase Price (in the case of the purchase of the
Membership Interest pursuant to the Buy-Out Interest Option) or the Buy/Sell
Purchase Price (in the case of the purchase of the Membership Interest pursuant
to the Buy/Sell Option) in immediately available funds. Subject to
the provisions of Section 21.6.5, if
the closing occurs, the Members shall not be required to recommence the process
of dissolving and liquidating the Company pursuant to Sections 21.3,
21.4, and 21.5. Notwithstanding
anything to the contrary in this Section 21.6.4,
if a governmental authority whose approval is required to consummate the
purchase of the Membership Interest fails to approve such transaction or imposes
a condition on its approval that, in the sole discretion of the Purchaser
Member, would make the purchase by it of the Membership Interest pursuant to the
Buy-Out Interest Option or pursuant to the Buy/Sell Option impractical or not
otherwise in the best interests of the Purchaser Member, then the Purchaser
Member may terminate the purchase of the Membership Interest by and upon
delivery of written notice to the Seller Member and, solely in the case of the
Buy/Sell Option, the Seller Member’s receipt of payment in an amount equal to
the Seller Member’s reasonable expenses (or share of the Company’s reasonable
expenses) incurred in connection with the Purchaser Member’s exercise of the
Buy/Sell Option, and upon such termination, (i) neither Member shall have any
further obligation under this Section 21.6 with
respect thereto, (ii) the Seller Member shall continue to own its Membership
Interest, (iii) in the case of a termination of the Buy-Out Interest Option, the
Members shall recommence the process of dissolving and liquidating the Company
pursuant to Sections
21.3, 21.4, and 21.5 and (iv) in the
case of a termination of the Buy/Sell Option, the Buy/Sell Member shall have the
right within thirty (30) days of such termination to trigger a termination of
this Agreement pursuant to Section 21.2.7.
21.6.5 Certain Transactions in
Connection with Closing. The following shall occur
simultaneously with the closing of the sale and purchase of the Membership
Interest pursuant to the Buy-Out Interest Option or pursuant to the Buy/Sell
Option (as provided in Section
21.6.4):
21.6.5.1 The Company shall
distribute (a) the Company-owned trademarks, service marks and trade dress
unique to the Seller Member’s branded JV Truck Models to the Seller Member, and
(b) joint ownership of all other Company-owned Intellectual Property (other than
trademarks, service marks and trade dress unique to the Purchaser Member’s
branded JV Truck Models) to the Seller Member as a joint owner with the Company,
all in accordance with the provisions of Section 21.5.1,
as if the Company were being dissolved and liquidated (it being understood the
terms of such joint ownership are set forth in Section
14.6).
21.6.5.2 Each JV Dealer
agreement pertaining to the sale of Seller Member branded JV Truck Models
(irrespective of whether the JV Dealer party to such agreement is owned by a
Caterpillar dealer or a Navistar dealer) shall be terminated or distributed to
the Seller Member in accordance with the provisions of Section 21.5.2, as if
the Company were being dissolved and liquidated.
21.6.5.3 For the avoidance
of doubt, all of the non-competition and exclusivity provisions contained in
this Agreement (including the provisions of Sections 11.1
and 15)
shall terminate and be of no further force or effect.
21.6.6 Further Actions by
Members. The Members shall take all necessary actions required
to give effect to the provisions of this Section 21.6,
including (a) the passing of such Member and Board resolutions of the Company as
may be reasonably necessary to facilitate the relevant transaction, and (b) the
filing of all necessary notices to and requests for consent of any governmental
authorities, and the Members shall equally share any filing fees required in
connection therewith.
21.6.7 Related
Agreements. From and after the closing of any sale and
purchase of the Membership Interest pursuant to the Buy-Out Interest Option or
pursuant to the Buy/Sell Option (as provided in Section 21.6.4),
each Related Agreement between the Seller Member, on the one hand, and the
Company or the Purchaser Member, on the other hand, shall be deemed terminated
and the Seller Member and the other relevant Person shall enter into
post-termination commercial arrangements pursuant to Section
21.7.
21.7 Post-Termination Commercial
Arrangements
21.7.1 Immediately
following the distributions provided in Sections 21.4
and 21.5 or the closing of any purchase of the Seller Member’s Membership
Interest by the Purchaser Member pursuant to Section 21.6,
Caterpillar and Navistar and the other relevant Persons (including the Company,
in the case of an exercise of the Buy-Out Interest Option or the Buy/Sell Option)
shall enter into one or more of the following agreements, in each case, upon the
delivery of a written request by the relevant Member to the other Member that
the relevant Persons enter into such agreement(s): (a) the Post-Termination
License Agreements in the forms agreed to by the Members (subject to the terms
of Sections 21.7.2
and 21.7.3), (b) the
Post-Termination Truck Sales Agreements in the forms agreed to by the Members,
(c) the Post-Termination Master Component Supply Agreements in the forms agreed
to by the Members, (d) the Post-Termination Transition Services Agreements in
the forms agreed to by the Members, and (e) the Post-Termination Marketing
Services Fee Agreements in the forms agreed to by the Members, which among other
things shall prohibit Navistar and its Affiliates from selling Medium Duty
Trucks and Heavy Duty Trucks and replacement parts therefor (including military
vehicles, tactical vehicles, COTS vehicles with military features, COTS vehicles
and related parts, and Mine Resistant Ambush Protected vehicles) to military
customers (including sales through sales and resale agents, procurement agents,
prime contractors, and subcontractors where such sales are for use exclusively
by military customers) through any Navistar-branded JV Dealer owned by a
Caterpillar dealer, or use any such JV Dealer to assist with or facilitate any
such sales by Navistar or its Affiliates, at any time during the term
thereof.
21.7.2 If a Termination
Event (other than a Termination Event that occurs pursuant to Section 21.2.7)
occurs prior to the third (3rd)
anniversary of the Effective Date, the licensee Member requesting that the
relevant Persons enter into a Post-Termination License Agreement shall not be
entitled to receive such license unless such Termination Event occurs pursuant
to Section 21.2.4
(in connection with a Material Breach by the licensor Member) or Section 21.2.6
(in connection with a decrease of the Percentage Interest held by the licensor
Member).
21.7.3 If (i) a
Termination Event occurs pursuant to Section 21.2.7 (in
connection with a Change in Control of the licensor Member) or (ii) an exercise
of the Buy/Sell Option occurs, in either case prior to the second (2nd)
anniversary of the Effective Date, the licensee Member requesting that the
relevant Persons enter into a Post-Termination License Agreement shall not be
entitled to receive such license.
21.8 Additional
Rights
Without limiting
the generality of Section 23.17, the
right of termination and other rights provided in this Section 21 are
in addition to, and not in lieu of, any other rights or remedies a Party may
have under this Agreement or applicable law, including the right to damages for
breach with or without exercising a right to terminate this
Agreement.
22. CONFIDENTIALITY;
PUBLIC ANNOUNCEMENTS
22.1 Treatment of Confidential
Information
The Receiving Party
shall (a) accord Confidential Information received by it from the Furnishing
Party with the same degree of confidential treatment that it accords its similar
proprietary and confidential business and technical information, which shall not
be less than the care a reasonable business person would exercise under similar
circumstances, (b) use such Confidential Information only in connection with
this Agreement or the Business, and (c) not disclose any of such Confidential
Information to any Person other than its Affiliates and its and their directors,
officers, employees, contractors, subcontractors, agents, advisors and licensees
who have a need to know in connection with this Agreement or the
Business.
22.2 Permitted
Disclosures
Notwithstanding any
other provision of this Agreement, the Receiving Party may disclose Confidential
Information of the Furnishing Party, without liability for such disclosure, to
the extent that such disclosure is (a) required to be made pursuant to
applicable law, stock exchange rule, government authority, duly authorized
subpoena, or court order, (b) required to be made to a court or other tribunal
in connection with the enforcement of the Receiving Party’s rights under this
Agreement, or (c) approved by the prior written consent of the Furnishing
Party.
22.3 Disclosure Pursuant to
Applicable Law
In
the event that a Party receives a subpoena or otherwise becomes aware of events
which may legally require it to disclose Confidential Information, it shall
promptly notify the Party that owns the Confidential Information, and cooperate
with that Party (at the expense of that Party) to obtain an order quashing or
otherwise modifying the scope of said subpoena or legal requirement in an effort
to prevent or limit the disclosure of such Confidential
Information. In the event that such efforts are unsuccessful, a
Party’s disclosure as required by applicable law shall not constitute a breach
of this Agreement.
22.4 Survival of Confidentiality
Obligations
All obligations of
confidentiality and all restrictions on the use of Confidential Information
under this Agreement shall remain in effect during the term of this Agreement
and thereafter until the date that is two (2) years following the expiration or
termination of this Agreement. Upon the request of the Furnishing
Party following the expiration or termination of this Agreement, the Receiving
Party shall, at the Furnishing Party’s option and expense, return all of the
Furnishing Party’s Confidential Information or destroy the same, except that the
Receiving Party may retain but must keep confidential (except as provided in
Section 22.2)
Confidential Information of the Furnishing Party that is necessary in connection
with the enforcement of the Receiving Party’s rights under this
Agreement.
22.5 Non-Disclosure of Agreement;
Publicity
Except as may be
required by applicable law, securities regulatory authorities, stock exchange
rule, government authorities, or as provided in Section 22.2, no
Party shall make public the existence or content of this Agreement or the
negotiations leading to or pursuant to this Agreement without the written
consent of the other Parties; provided, that no
Party shall be prohibited from disclosing the general nature of the business
relationship established hereby at any time. Caterpillar acknowledges
and agrees that Navistar will file a copy of this Agreement with the Securities
and Exchange Commission and will file a Form 8-K with the Securities and
Exchange Commission which will summarize the materials terms of this
Agreement.
22.6 No
License
Other than the
express licenses granted in this Agreement, no license, express or implied, by
estoppel or otherwise, is granted to any Intellectual Property that is now or
may hereafter be owned by a Party by virtue of the disclosure of Confidential
Information under this Agreement.
23. MISCELLANEOUS
23.1 Disclaimer
THE WARRANTIES OF
EACH PARTY CONTAINED HEREIN ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY
SPECIFICALLY EXCLUDED AND DISCLAIMED.
23.2 Limitation of
Damages
IN
NO EVENT SHALL A PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL,
INDIRECT OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF
ITS RIGHTS HEREUNDER, INCLUDING ANY LOSS OF FUTURE REVENUE OR INCOME OR LOSS OF
BUSINESS REPUTATION OR OPPORTUNITY ARISING FROM OR RELATING TO ANY BREACH OF
THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN
THIS SECTION
23.2 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF A PARTY PURSUANT TO SECTIONS 5.14 or
16 IN REGARD TO
AMOUNTS PAYABLE TO THIRD PARTIES.
23.3 Expenses
Each Party shall
bear all of its own costs and expenses incurred in negotiating this
Agreement. No Party may make any offset against amounts due to
another Party or any of such other Party’s Affiliates pursuant to this Agreement
or otherwise.
23.4 Force
Majeure
A
Party shall be excused for any failure or delay in the performance of any of its
obligations under this Agreement (other than for the payment of money) if such
failure or delay is due to a strike, lockout, work stoppage, labor dispute,
material shortage, utility outage, delay in transportation, fire, flood,
earthquake, severe weather, act of God, accident, trade sanction, embargo, act
of war, terrorism or threats of same, condition caused by national emergency,
new or changed law, or any other act or cause beyond the reasonable control or
without the fault of such Party, whether similar to or different from the causes
above enumerated, and whether affecting such Party or its agents,
subcontractors, or suppliers, for as long as such circumstances
prevail. The affected Party shall as soon as practicable notify the
other Parties of any actual or anticipated failure or delay, and such affected
Party shall use its commercially reasonable efforts to mitigate any force
majeure event and its consequences on performance hereunder. The
Parties shall remain liable for those obligations under this Agreement that are
not affected by the force majeure event.
23.5 Survival
Irrespective of the
expiration or termination of this Agreement, the rights and obligations set
forth in Sections
4.2, 4.10, 5.7, 5.12, 5.14, 5.15, 10.1.12, 13, 14, 15.2, 15.6, 16, 17, 18, 19, 21, 22, 23, and 24 shall remain in
full force and effect to the extent required for their full observance and
performance. The transfer of a Member’s Membership Interest pursuant
to Section 19 or
the expiration or termination of this Agreement pursuant to Section 21 shall
not affect any right or obligation of a Party which shall have accrued prior to
the effective date of such transfer, expiration, or termination.
23.6 Further Actions and
Assurances
The Parties shall
execute and deliver any and all documents, and shall cause any and all other
reasonable action to be taken, which may be necessary or proper to effect or
evidence the provisions of this Agreement and the transactions contemplated
hereby.
23.7 Good Faith Reliance on Terms
of Agreement
The Parties hereby
agree that each Party shall be entitled to rely on the provisions of this
Agreement, and no Party shall be liable to any other Party for any action or
refusal to act taken in good faith based on the terms of this
Agreement.
23.8 Counterparts
This Agreement may
be executed in one or more counterparts (including by means of facsimile), each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
23.9 Entire
Agreement
This Agreement
(including the Related Agreements and other documents referred to herein and
therein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by the Parties, written or
oral, to the extent they relate in any way to the subject matter
hereof.
23.10 Succession and
Assignment
This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Except as provided in
Section 19.2, no
Party may assign any of its rights or obligations hereunder, directly or
indirectly, without the prior written consent of the other Parties.
23.11 Amendments and
Waiver
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each Party. No waiver by a Party of
any provision of this Agreement or any default, misrepresentation, or breach of
warranty hereunder, whether intentional or not, shall be valid unless the same
shall be in writing and signed by the Party making such waiver nor shall such
waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such default,
misrepresentation, or breach of warranty.
23.12 Applicable
Law
This Agreement
shall be governed by and construed and enforced in accordance with the domestic
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule (whether the State of Delaware or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than the
State of Delaware.
23.13 Venue
All suits, actions,
or proceedings brought by a Party arising out of or relating to this Agreement
or any matters contemplated hereby shall be heard and determined in a state or
federal court sitting in New Castle County, Delaware, U.S.A., and the Parties
hereby irrevocably submit to the exclusive jurisdiction of such courts in any
such suit, action, or proceeding and irrevocably waive the defense of an
inconvenient forum to the maintenance of any such suit, action, or proceeding;
provided, that
the foregoing shall not limit the rights of the Parties to obtain judgment in
any other jurisdiction or to serve process in any manner permitted by
law.
23.14 WAIVER OF JURY
TRIAL
EACH PARTY
IRREVOCABLY AND ABSOLUTELY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY SUIT,
ACTION, OR PROCEEDING BROUGHT BY A PARTY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY, AND AGREES TO TAKE ANY AND ALL
ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
23.15 Specific
Performance
Notwithstanding any
other provision of this Agreement, the Parties agree that irreparable harm will
occur if any of the provisions of this Agreement is not performed in accordance
with its specific terms or is otherwise breached. The Parties further
agree in the event of a breach there will be no adequate remedy at
law. Without limiting the foregoing, the Parties specifically agree
such would be the case for a breach of any of the provisions of Sections 11.1 and
15. It is
accordingly agreed that each Party shall be entitled to a preliminary and/or
permanent injunction or injunctions to remedy breaches of this Agreement and to
enforce specifically the terms and provisions hereof, in addition to any other
remedy to which they are entitled at law or in equity. The Party
seeking an injunction shall not be obligated to post a bond or other security in
connection therewith, and the non-seeking Party will not dispute irreparable
harm or request a bond or other security.
23.16 Determination of Fair Market
Value
If
the Members or the Board (as applicable) fail to unanimously agree on the Fair
Market Value of any property or assets under any provision of this Agreement,
within twenty (20) calendar days after delivery of a notice from a Member
requesting a determination, the Members or the Board (as applicable) shall
promptly retain a nationally recognized independent valuation firm to determine
such Fair Market Value. In the absence of mutual agreement by the
Members or Majority Consent of the Board (as applicable) on a valuation firm
within five (5) calendar days of the expiration of such twenty (20) calendar day
period, each Member shall designate within five (5) calendar days thereafter a
nationally recognized valuation firm for the sole purpose of selecting a
valuation firm to determine such Fair Market Value. If a Member fails
to designate such a valuation firm within such five (5) calendar day period,
then the other Member’s designated valuation firm shall be deemed the mutually
agreed accounting firm to serve for all purposes of this Section
23.16. If each Member designates a valuation firm within such
five (5) calendar day period, then the two (2) such designated firms shall
promptly select a nationally recognized valuation firm to determine such Fair
Market Value pursuant to this Section 23.16, which
valuation firm shall be independent from the two (2) designated valuation firms,
the Members and the Company. The valuation firm selected pursuant to
this Section 23.16 is
referred to as the “Independent Valuation
Firm.” After the selection of the Independent Valuation Firm,
(a) each Member shall submit to the Independent Valuation Firm in writing, not
later than ten (10) calendar days after the Independent Valuation Firm is
retained, its position with respect to such Fair Market Value, together with
such supporting documentation as it deems necessary or as the Independent
Valuation Firm requests, and (b) the Independent Valuation Firm shall, within
fifteen (15) calendar days after receiving the positions of the Members and all
supplementary supporting documentation requested by the Independent Valuation
Firm (or if a Member fails or refuses to provide such information and
documentation within a reasonable period of time, upon the expiration of a
reasonable period of time), render its decision as to such Fair Market Value,
which decision shall be final and binding on, and nonappealable by, the Members
and the Company. The Independent Valuation Firm shall act as an
expert and not as an arbitrator. The fees and expenses of the
Independent Valuation Firm shall be paid one half by each
Member.
23.17 Remedies
Cumulative
The remedies
provided in this Agreement shall be cumulative and, except as expressly limited
in this Agreement, shall not preclude the assertion or exercise of any other
rights or remedies available under law, in equity, or otherwise.
23.18 Severability
Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other
jurisdiction. The Parties agree to attempt in good faith to replace
any such invalid or unenforceable provision with a valid and enforceable
provision designed to achieve, to the extent possible under applicable law, the
business purpose and intent of such invalid or unenforceable
provision.
23.19 No Third Party
Beneficiaries
This Agreement
shall not confer any rights or remedies upon any Person other than the Parties
and, to the extent expressly set forth herein, their Affiliates, the
Indemnitees, the Navistar Indemnified Persons, the Caterpillar Indemnified
Persons, and the Company Indemnified Persons, and all of their respective
successors and permitted assigns.
23.20 Construction
The Parties have
participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. 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. Any reference to the consent or approval of the Board
shall be deemed to mean the consent or approval of a simple majority of the
Representatives unless such reference expressly refers to Majority
Consent. Unless the context requires otherwise, singular includes
plural and vice versa and any gender includes every gender, and where any word
or phrase is given a defined meaning, any other grammatical form of that word or
phrase shall have a corresponding meaning. The word “including” shall
mean “including without limitation.” Unless the context requires
otherwise, the words “hereof,” “herein,” “hereunder,” “hereby,” or words of
similar import refer to this Agreement as a whole and not to any particular
Section, subsection, clause or other subdivision hereof. The word
“or” shall be disjunctive but not exclusive. Unless otherwise
expressly provided herein, all decisions, elections and other actions to be made
by the Company hereunder shall be made by the officers of the Company at the
direction and control of the President and in accordance with Section 6.
23.21 Headings
The section
headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this
Agreement.
23.22 Notices
Any notice,
request, instruction, or other document to be given hereunder by a Party shall
be in writing and shall be deemed to have been given (a) when received, if given
in person or by courier or a courier service, (b) on the date of transmission,
if sent by facsimile or other wire transmission (receipt confirmed), or (c) five
(5) Business Days after being deposited in the mail, certified or registered,
postage prepaid:
If to
Caterpillar:
▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Deputy
General Counsel
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
If to
Navistar:
Navistar,
Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General
Counsel
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
With a copy (which
shall not constitute notice) to:
▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
If to the
Company:
__________________________
__________________________
__________________________
Attn: President
Facsimile: __________
23.23 Partition
Each of the Members
hereby irrevocably waives, to the extent it may lawfully do so, any right that
such Member may have to maintain any action for partition with respect to
Company property.
23.24 Incorporation of
Exhibits
The Exhibits
identified in this Agreement are incorporated herein by reference and made a
part hereof.
24. DEFINITIONS
The following terms
when set forth in initial capital letters in this Agreement shall have the
respective meanings:
“5% Affiliates” shall
mean, as to any Member, any Person in which such Member owns any equity interest
equal to or greater than five percent (5%); provided, however, that, with
respect to Navistar, 5% Affiliates shall not include DealCor
Dealers.
“Act” shall mean the
Delaware Limited Liability Company Act, Title 6, Sections 18-101, et. seq. of
the Delaware Code, and any successor statute, as the same may be amended from
time to time.
“Actual Warranty
Expenses” is defined in Section
13.3.1.3.
“Adjusted Capital Account
Deficit” shall mean, with respect to any Member, the deficit balance, if
any, in such Member’s Capital Account, maintained pursuant to Section 18.1, as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments: (a) credit to such Capital Account any amounts which
such Member is obligated to restore, because of a promissory note to the Company
or otherwise, or is deemed to be obligated to restore pursuant to the
penultimate sentence in each of Treasury Regulations Sections 1.704-2(g)(1) (ii)
and 1.704-2(i)(5), and (b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.
“Affiliate” shall
mean, as to any Person, any other Person that directly, or indirectly though one
or more intermediaries, controls, is controlled by, or is under common control
with, the specified Person. For purposes of this Agreement, the term
“control” when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract, or otherwise; and the terms
“affiliated,” “controlling,” and “controlled” have the meanings correlative to
the foregoing. A Person shall be deemed to control another Person if
such first Person owns (a) greater than 50% of the total combined voting power
of all classes of stock or other equity interests of such other Person entitled
to vote or (b) greater than 50% of the total value of all stock or other equity
interests of such other Person. For purposes of this Agreement, the
term “Affiliate,” as it relates to either Caterpillar or Navistar, shall be
defined so as to not include the Company or any of its direct or indirect wholly
owned subsidiaries, irrespective of the Percentage Interest held by either
Member at any given time.
“Aggregate Navistar
Standard Warranty Reserve” is defined in Section
13.3.1.1.
“Agreement” is defined
in the preamble.
“All-Makes Parts”
shall mean any part for a Medium Duty Truck or a Heavy Duty Truck, other than
Navistar Brand parts and Caterpillar Brand parts, that is produced by an OEM
supplier to meet OEM specifications for such Medium Duty Truck or Heavy Duty
Truck.
“Annual Business Plan”
is defined in Section
2.2.1.
“Annual Business Plan Capital
Contribution Commitment” is defined in Section
2.2.1.
“Annual Business Plan Loan
Commitment” is defined in Section
2.2.1.
“Auditor” is defined
in Section
15.3.8.1.
“Background Intellectual
Property” shall mean all Intellectual Property that (a) was the property
of, is jointly owned or is licensed from a third party by, one Member or its
Affiliates prior to the Effective Date, or (b) is independently developed by a
Member or its Affiliates.
“Baseline Profit
Amount” is defined in Section
2.3.5.1.
“Beneficiary” is
defined in Section
19.1.2.2.
“Blue Diamond” shall
mean, collectively, Blue Diamond Truck S.R.L. de C.V. and Blue Diamond Parts,
LLC.
“Board” shall mean the
Board of Representatives of the Company elected in accordance with Section 5.
“Business” is defined
in Section
2.1.
“Business Day” shall
mean any day that is not a Saturday, a Sunday, a legal holiday, or a day on
which banking institutions or trust companies in Illinois are authorized or
obligated by law to close.
“Buy-Out Interest” is
defined in Section
21.6.1.2.
“Buy-Out Interest
Option” is defined in Section
21.6.1.2.
“Buy-Out Interest Option
Period” is defined in Section
21.6.1.2.
“Buy-Out Interest Purchase
Price” is defined in Section
21.6.1.2.
“Buy-Out Member” is
defined in Section
21.6.1.1.
“Buy/Sell Member” is
defined in Section
21.6.2.1.
“Buy/Sell Notice” is
defined in Section
21.6.2.2.
“Buy/Sell Option” is
defined in Section
21.6.2.2.
“Buy/Sell Purchase
Price” is defined in Section
21.6.2.2.
“Capital Account” is
defined in Section 18.1.
“Capital Contribution”
shall mean, with respect to any Member, the amount of cash or the Gross Asset
Value of any other property (net of the amount of any liabilities to which such
property is subject) contributed to the Company with respect to such Member’s
Membership Interest.
“Capital Contribution
Commitment” shall mean (a) an Annual Business Plan Capital Contribution
Commitment, or (b) a Three-Year Business Plan Capital Contribution
Commitment.
“Caterpillar” is
defined in the preamble.
“Caterpillar Brand”
shall mean any brand maintained or used by Caterpillar or any of its Affiliates
for use or in connection with JV Trucks (including any engines, parts and
components used in JV Trucks).
“Caterpillar Competing
Person” shall mean, as to any particular time, (a) a Person that is a
competitor of any or all of the Business and any business of Caterpillar at such
time, or (b) any Affiliate of such Person (provided, however, that neither
Navistar nor any Affiliate of Navistar shall be deemed to be a Caterpillar
Competing Person).
“Caterpillar
Financial” shall mean Caterpillar Financial Services Corporation and its
Affiliates.
“Caterpillar Indemnified
Person” shall mean Caterpillar and its Affiliates and their respective
successors, assigns, agents, employees, officers, and directors.
“Caterpillar Truck”
shall have the meaning set forth in the Strategic Alliance
Agreement.
“Caterpillar Truck
Model” shall mean any JV Truck Model that, upon the determination of the
Board by Majority Consent and the determination of Caterpillar in its
discretion, shall be sold under the Caterpillar Brand by the Company from time to
time.
“CFO” is defined in
Section
6.1.
“Change in Control” of
a Member shall mean, with respect to such Member’s ultimate parent company, any
of the following: (a) a sale of all or substantially all of such
Person’s assets (whether directly or indirectly through one or more of such
Person’s subsidiaries or Affiliates) to one or more Competing Persons, (b) a
sale of more than 50% of all of the outstanding voting equity interests in such
Person to one or more Competing Persons acting individually or as a “group”
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and
(c) a merger or consolidation of such Person with one or more Competing Persons
in which the stockholders of such Competing Persons as of immediately prior to
the record date pertaining to such merger or consolidation are in control of the
Person surviving such merger or consolidation, in the case of each of clauses (a), (b), and (c), in a single
transaction or through a series of related transactions. For purposes
of clause (c)
of the immediately preceding sentence, the term “control” when used with respect
to any Person means the ownership of more than fifty percent (50%) of the
outstanding equity interests in such Person.
“Change in Control
Member” is defined in Section
21.6.2.1.
“Change in Control
Notice” is defined in Section
21.6.2.1.
“China” shall mean the
People’s Republic of China.
“China Business Plan”
is defined in Section
2.3.4.
“Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time.
“Common Parts” means
replacement parts that are used in both JV Truck Models and in vehicles and
machines that are not JV Truck Models.
“Company” is defined
in the preamble.
“Company Deadlock” is
defined in Section 20.
“Company Dispute” is
defined in Section 20.
“Company Indemnified
Person” shall mean the Company and its direct and indirect wholly owned
subsidiaries, and their respective successors, assigns, agents, employees,
officers, and directors.
“Competing Operations”
is defined in Section
15.5.
“Competing Person”
shall mean, as to any particular time, (a) a Person that manufactures trucks
that are in competition with any or all of the Business, any business of
Caterpillar that generated more than $300,000,000 in annual revenue during the
then most recent complete fiscal year of Caterpillar, and any business of
Navistar that generated more than $300,000,000 in annual revenue during the then
most recent complete Fiscal Year of Navistar, and (b) any subsidiary or
Affiliate of such Person.
“Competitive OEM” is
defined in Section
11.3.6.
“Competitive OEM
Dealer” is defined in Section
11.3.6.
“Confidential
Information” shall mean information disclosed by the Furnishing Party to
the Receiving Party in connection with this Agreement that is reasonably
considered confidential or proprietary by the Furnishing Party, whether written
or oral or in electronic or other form. Notwithstanding the
foregoing, Confidential Information does not include information that is (a) at
the time of its disclosure, or thereafter becomes, part of the public domain
through no act or fault of the Receiving Party, (b) known to the Receiving Party
at the time of its disclosure by the Furnishing Party, (c) independently
developed by the Receiving Party without reference to the information disclosed,
or (d) rightfully disclosed to the Receiving Party by a third party not subject
to an obligation of confidentiality with respect to the information
disclosed.
“Contributing Member”
is defined in Section 3.2.3.2.2.
“Core ROW Country” or
“Core ROW
Countries” shall refer to China, Russia, Brazil, South Africa, Australia,
or Turkey.
“Cost” shall have the
meaning set forth in (i) the applicable Master Component Supply Agreements with respect to JV Truck
Components and JV Truck Replacement Parts sold to the Company by a Member, (ii)
the applicable Master Component Supply Agreements with respect to
components and replacement parts sold by the Company to a Member, (iii) the
Master Terms for Purchased Services with respect to services performed for the
Company by a Member, (iv) the Truck Sales Agreement for JV Trucks sold to the
Company by Navistar, and (v) the Master Development Services Agreements for
development services performed for the Company by a Member.
“▇▇▇ China” shall mean
the People’s Republic of China (including Hong Kong, Macau, and Tibet) and
Taiwan.
“COTS” shall mean
commercial off-the-shelf vehicles.
“Credit Agreement” is
defined in Section
15.2.
“Current Aggregate Navistar
Standard Warranty Reserve” is defined in Section
13.3.1.3.
“DealCor Dealer” shall
mean any existing or future dealer owned by Navistar or any of its Affiliates
that is located in North America and subject to Navistar’s export guidelines
with respect to trucks and replacement parts (it being understood and agreed
that Navistar will strictly enforce such guidelines against such dealer to
prevent such dealer from exporting trucks and replacement parts into the
ROW).
“Default Warranty
Reserve” is defined in Section
13.3.1.3.
“Disputed Remaining
Assets” is defined in Section
21.5.3.2.
“Effective Date” is
defined in the preamble.
“Employee Secondment
Agreement” is defined in Section 1.6.8.
“ESC” is defined in
Section
13.6.
“Exercise Notice” is
defined in Section
3.2.5.
“Fair Market Value”
shall mean the price at which a willing seller and a willing buyer would trade
the relevant property or assets. If the Members or the Board (as
applicable) fail to agree on the Fair Market Value of any property or assets
under any provision of this Agreement, the determination shall be made by the
Independent Valuation Firm under the procedure set forth in Section 23.16.
“Fair Value of the
Company” shall mean the price at which a willing seller and a willing
buyer would trade and shall take into account all relevant factors, including
the Company’s assets, liabilities, earnings, goodwill, going concern value, and
future prospects (in each case after taking into account those certain
transactions set forth in Sections 21.6.5,
21.6.7 and
21.7), and
shall be determined pursuant to the relevant provisions of this Agreement using
standard valuation methodologies, including discounted cash flows, comparable
companies and precedent transaction analyses as well as any other techniques
deemed applicable by both Members under the market conditions existing at the
time at which such determination is made.
“First-Fit Parts”
shall mean parts for a Medium Duty Truck or a Heavy Duty Truck that are
originally installed in such vehicle by the OEM of such vehicle.
“Fiscal Year” shall
mean the period commencing on November 1st of each year and ending as of October
31st of that same year; provided, however, that the
first Fiscal Year of the Company shall commence as of the Effective Date and end
on the following October 31st.
“Fleet Sale Policy”
shall mean the policy agreed to by the Members.
“Furnishing Party”
shall mean the Party furnishing Confidential Information under Article 22.
“GAAP” shall mean
United States generally accepted accounting principles and
practices applied on a consistent basis.
“Goodwill Policy”
shall mean a policy or practice of servicing out-of-warranty
customers.
“Governmental ▇▇▇
Customers” shall mean non-military, governmental, cab over engine Medium
Duty Truck and Heavy Duty Truck customers.
“Governmental Conventional
Customers” shall mean non-military, governmental, conventional (non-cab
over engine) Medium Duty Truck and Heavy Duty Truck customers.
“Gross Asset Value”
shall mean, with respect to any asset, the asset’s adjusted basis for federal
income tax purposes, except as follows:
(a) The
initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross Fair Market Value of such asset, as determined by the
contributing Member and the Company; provided, that the
determination by the Company of the Fair Market Value of a contributed asset
shall be made by Majority Consent of the Board.
(b) The
Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross Fair Market Values as of the following times: (i) the
acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution, (ii)
the distribution by the Company to a Member of more than a de minimis amount of
property as consideration for an interest in the Company, (iii) the liquidation
of the Company within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g), and (iv) at such other times as is reasonably necessary or
advisable to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2 or
to reflect the relative economic interests of the Members; provided, that
adjustments pursuant to clauses (i) and (ii) shall be made
except to the extent that the Board reasonably determines by Majority Consent
that such adjustments are not necessary or appropriate to reflect the relative
economic interests of the Members and the Company.
(c) The
Gross Asset Value of any Company asset distributed to any Member shall be the
gross Fair Market Value of such asset, as determined by the Board by Majority
Consent, on the date of distribution.
(d) The
Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section 18.1;
provided, that
Gross Asset Value shall not be adjusted pursuant to this clause (d) to
the extent the Members determine that an adjustment pursuant to clause (b) is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this clause
(d).
(e) If
the Gross Asset Value of an asset has been determined or adjusted pursuant to
clauses (a),
(b), or (d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Profits and
Losses.
“Heavy Duty ▇▇▇ Truck”
shall mean a cab over engine Heavy Duty Truck utilizing an engine with
displacement of nine (9) liters or more.
“Heavy Duty Truck”
shall mean any on-highway truck (including any off-highway derivative of any
on-highway truck) with a gross vehicle weight rating equal to or greater than
fifteen (15) metric tons.
“Indemnified Person”
shall mean the Person or Persons entitled to, or claiming a right to,
indemnification under Section 16.
“Indemnifying Person”
shall mean the Person or Persons obligated to provide indemnification under
Section 16.
“Indemnitee” is
defined in Section 5.14.
“Independent Valuation
Firm” is defined in Section
23.16.
“Initial Annual Business
Plan” is defined in Section
2.2.1.
“Initial Rolling
Business Plan” is defined in Section 2.2.2.
“Initial Staffing
Plan” is defined in Section 7.1.
“Intellectual
Property” shall mean trade secrets, ideas, inventions, designs, utility
models, developments, devices, methods or processes (whether patented or
patentable and whether or not reduced to practice) and all patents and patent
applications related thereto; copyrightable works and mask works (whether or not
registered); trademarks, service marks and trade dress; all registrations and
applications for registration related thereto and know-how; and all other
intellectual or industrial property rights in any jurisdiction.
“Intellectual Property
License Agreement” is defined in Section 1.6.3.
“Intercompany Promissory
Note” is defined in Section 1.6.10.
“Investment Banker” is
defined in Section
21.6.1.1.
“Joint Owner” is
defined in Section
14.6.
“Jointly Owned Intellectual
Property” is defined in Section
14.6.
“JV Dealer” shall mean
any Person who signs a sales and service agreement with the Company for the sale
and servicing of JV Trucks and JV Truck Replacement Parts.
“JV Truck” shall mean
Medium Duty Trucks and Heavy Duty Trucks. JV Trucks shall not include
buses or military or tactical vehicles (including Mine Resistant Ambush
Protected vehicles).
“JV Truck Assembly
Facility” shall mean any facility and associated land purchased, leased
or otherwise procured by the Company or any of its direct or indirect wholly
owned subsidiaries to assemble or manufacture JV Trucks in a particular
territory in the ROW.
“JV Truck Components”
shall mean first fit, production use, direct materials required for the assembly
of Medium Duty Trucks or Heavy Duty Trucks, including engines and
transmissions.
“JV Truck Models”
shall mean those truck models that are sold by the Company.
“JV Truck Replacement
Parts” shall mean all new or remanufactured replacement parts, service
parts, and maintenance parts for JV Trucks.
“Legacy Country” shall
mean each of the Non-Core ROW Countries set forth on Schedule
2.3.5
“Legacy Country Commencement
Date” is defined in Section
2.3.5.
“Legacy Trucks” shall
mean any Medium Duty Truck or Heavy Duty Truck sold by Navistar to any Person
prior to the Effective Date.
“Liabilities” shall
mean losses, demands, claims, liabilities, obligations, causes of action,
assessments, damages, fines, penalties and expenses (including reasonable
attorneys’, professional, and expert witness fees and expenses).
“Loan Commitment”
shall mean (a) an Annual Business Plan Loan Commitment, or (b) a Three-Year
Business Plan Loan Commitment.
“Losses” is defined in
conjunction with “Profits.”
“Mahindra JV” shall
mean the joint venture that exists pursuant to the Mahindra JV
Agreement.
“Mahindra JV
Agreement” shall mean collectively that certain (i) Joint Venture
Agreement, dated November 17, 2005, by and among Mahindra & Mahindra
Limited, International Truck and Engine Corporation, Mahindra International
Private Limited, International Truck and Engine Mauritius Holding Ltd and
International Truck and Engine Corporation Cayman Islands Holding Company, and
(ii) Waiver of Certain Provisions to Joint Venture Agreement, dated _______,
2009 (the “Mahindra
Waiver”), signed by all of the foregoing parties, in the case of each of
clauses (i) and
(ii), as in
effect on the signing date of the Mahindra Waiver.
“Mahindra JV
Royalties” is defined in Section
2.3.9.
“Mahindra Territory”
shall mean India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Myanmar and
Malaysia.
“Majority Consent” of
the Board shall mean the approval, authorization or ratification of at least
four (4) of the Representatives comprising the Board, which approval,
authorization or ratification may be given or withheld for any or no reason in
the sole and absolute discretion of each Representative.
“Marketing Services”
shall mean market analysis, competitive analysis, product support plans, future
product plans, marketing plans, assistance with business plans, sales
plans and transition plans to move the Legacy Country sales from Navistar to the
Company.
“▇▇▇▇-Up Engineering
Services” shall mean those services described under the Service Category
Code ES in Exhibit
3 to the Master Terms for Purchased Services.
“Master Component Supply
Agreement” is defined in Section
1.6.1.
“Master Development Services
Agreement” is defined in Section
1.6.6.
“Master Terms for Purchased
Services” is defined in Section
1.6.2.
“Material Breach”
shall mean (a) one or more failures (irrespective of whether or not such
failures pertain to related events) to pay any monies required to be paid under
this Agreement or a Related Agreement exceeding $2,000,000 in the aggregate (and
not disputed in good faith) when such monies become due and payable (other than
(i) any Capital Contribution or loan that is approved by the Board upon Majority
Consent or (ii) any Capital Contribution Commitment or Loan Commitment set forth
in the Initial Annual Business Plan, the Initial Rolling Business Plan, any
subsequent Annual Business Plan, or any subsequent Rolling Business Plan (with
respect to each such subsequent Annual Business Plan and subsequent Rolling
Business Plan, as approved by the Board upon Majority Consent), the failure of
which to pay when due and payable shall be governed by Section 3.2.3), (b)
any fraud or willful misconduct, (c) any failure of a Member to repay a Member
Loan in accordance with its terms under which such Member is the borrowing
Member, (d) any failure of a Non-Contributing Member to exercise the Purchase
Option within the applicable time period set forth in the first sentence of
Section 3.2.5
and then to consummate such Purchase Option in accordance with Section 3.2.5,
or (e) any material breach of Section 11.1.2,
11.1.3, 14, 15 or 19.
“Medium Duty ▇▇▇
Truck” shall mean a cab over engine, on-highway truck (including any
off-highway derivative of any on-highway truck) with a gross vehicle weight
rating equal to or greater than eight (8) metric tons and utilizing an engine
with displacement of less than nine (9) liters.
“Medium Duty Truck”
shall mean any on-highway truck (including any off-highway derivative of any
on-highway truck) with a gross vehicle weight rating equal to or greater than
eight (8) metric tons and less than fifteen (15) metric tons.
“Member” or “Members” shall refer
to Caterpillar and Navistar and any other Person that has been admitted as a
member of the Company pursuant to the terms of this Agreement.
“Member Acquisition”
is defined in Section
15.5.
“Member Loan” is
defined in Section 3.2.3.2.1.
“Member Minimum Gain”
shall mean an amount, determined in accordance with Treasury Regulation Section
1.704-2(i)(3) with respect to each “partner nonrecourse debt” (within the
meaning of Treasury Regulation Section 1.704-2(b)(4)), which equals the Minimum
Gain that would result if such partner nonrecourse debt were treated as a
“nonrecourse liability” (within the meaning of Treasury Regulation Section
1.752-1(a)(2)).
“Membership Interest”
shall mean a Member’s interest in the Company, including the right, if any, to
participate in the management of the business and affairs of the Company,
including the right, if any, to vote on, consent to or otherwise participate in
any decision or action of or by the Members and the right to receive information
concerning the Business and affairs of the Company, in each case to the extent
expressly provided in this Agreement or otherwise required by the
Act.
“MPC” is defined in
Section 10.4.
“Navistar” is defined
in the preamble.
“Navistar Brand” shall
mean any brand maintained or used by Navistar or any of its Affiliates for use
or in connection with JV Trucks (including any engines, parts, and components
used in JV Trucks).
“Navistar Competing
Person” shall mean, as to any particular time, (a) a Person that is a
competitor of any or all of the Business and any business of Navistar at such
time, or (b) any Affiliate of such Person (provided, however, that neither
Caterpillar nor any Affiliate of Caterpillar shall be deemed to be a Navistar
Competing Person).
“Navistar Conventional
Countries” shall mean Iraq, Afghanistan, Taiwan, United Kingdom, Poland,
Romania, Italy, Israel, Egypt, Netherlands, Saudi Arabia, UAE, Oman, Yemen,
Thailand, Colombia, Singapore, Greece and Portugal.
“Navistar Financial”
shall mean Navistar Financial Corporation and its Affiliates.
“Navistar Indemnified
Person” shall mean Navistar and its Affiliates and their respective
successors, assigns, agents, employees, officers, and directors.
“Navistar Legacy Profit
Amount” shall mean, with respect to each Fiscal Year and with respect to
the Legacy Countries, the actual aggregate amount of profits earned by Navistar
from sales of Medium Duty Trucks, Heavy Duty Trucks and replacement parts
therefor in the Legacy Countries as calculated in accordance with the
methodologies agreed upon by the Members.
“Navistar Truck Model”
shall mean any JV Truck Model that, upon the determination of the Board by
Majority Consent and the determination of Navistar in its discretion, shall be
sold under the Navistar Brand by the Company from time to time.
“Navistar Vehicle”
shall have the meaning set forth in the Strategic Alliance
Agreement.
“Net Present Value of
Increased Tax Liability” means the net present value of the increased
income tax liability incurred by the remaining Member or Members of the Company
in the event of a termination of the Company pursuant to Code Section 708 caused
solely by a Transfer by one Member of a 50% interest in the profits and capital
of the Company within the meaning of Code Section 708(b)(1)(B) within the
12-month period, calculated as to each remaining Member as the joint product of
the following three variables:
(a) the
maximum U.S. federal corporate tax rate applicable at that time plus
3.5%;
(b) the
Percentage Interest in the Company of such remaining Member; and
(c) the
net present value of the difference (whether positive or negative)
between:
(i) the
projected tax depreciation each year in the absence of a termination of the
Company pursuant to Code Section 708; and
(ii) the
maximum tax depreciation available each year under tax law as of the time of
calculation in light of the termination of the Company pursuant to Code Section
708, in each case determined with reference to the assets of the Company subject
to tax depreciation at the time of termination for each year following the
termination in which such property is expected to be depreciated.
For purposes of the
net present value calculation, the differences in tax depreciation shall be
discounted using an annual discount rate equal to
8.0%. Notwithstanding anything to the contrary contained in this
definition, in no event shall the Net Present Value of Increased Tax Liability
be a negative number, and in the event that the above calculation would
otherwise result in a negative number, the Net Present Value of Increased Tax
Liability shall be deemed to be $0.
“Non-Contributing
Member” is defined in Section
3.2.3.2.2.
“Non-Core ROW Conventional
Countries” shall mean all Non-Core ROW Countries excluding the Navistar
Defense Conventional Countries.
“Non-Core ROW Country”
or “Non-Core ROW
Countries” shall refer to any country in the ROW that is not a Core ROW
Country.
“Non-Disputed Remaining
Assets” is defined in Section
21.5.3.1.
“Nonrecourse
Deductions” has the meaning assigned to it in Regulations Sections
1.704-2(b)(1) and 1.704-2(c).
“North American Medium Duty
▇▇▇ Trucks” shall mean a cab over engine Medium Duty Truck without regard
to engine displacement.
“North American Severe
Service Truck Sales Agreement” shall mean that certain NASS Truck Sales
Agreement by and between Navistar and Caterpillar entered into as of the date
hereof.
“OEM” shall mean an
original equipment manufacturer.
“Offer” is defined in
Section
19.1.2.2(A).
“Offeror” is defined
in Section
19.1.2.2.
“Offered Membership
Interest” is defined in Section
19.1.2.2.
“Partner Nonrecourse
Deductions” has the meaning assigned to it in Regulations
Section 1.704-2(i)(2).
“Partnership Minimum
Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(2), and the amount of Minimum Gain, as well as any net
increase or decrease in Minimum Gain, for a Fiscal Year shall be determined in
accordance with the rules of Treasury Regulation Section
1.704-2(d).
“Party” or “Parties” is defined
in the preamble.
“Percentage Interest”
is defined in Section
3.1.2.
“Person” shall mean an
individual, or a corporation, limited liability company, partnership (whether
general or limited), joint venture, trust (including a business trust or real
estate investment trust), unincorporated organization, joint stock company,
association, or other entity, or any government, or any agency or subdivision
thereof.
“Prior Aggregate Navistar
Standard Warranty Reserve” is defined in Section
13.3.1.3.
“Product Support
Services” is defined in Section
11.5.
“Profits” and “Losses” shall mean,
for each Fiscal Year, an amount equal to the Company’s taxable income or loss,
as applicable, for such Fiscal Year, determined in accordance with Section
703(a) of the Code (but including in taxable income or loss, for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code), with the following
adjustments:
(a) any
income or loss of the Company exempt from federal income tax and not otherwise
taken into account in computing Profits or Losses pursuant to this definition
shall be added to such taxable income or subtracted in computing such gain or
loss;
(b) any
expenditures of the Company described in Section 705(a)(2)(B) of the Code (or
treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(i)), and not otherwise taken
into account in computing Profits or Losses pursuant to this definition, shall
be subtracted from such taxable income or loss;
(c) in
the event the Gross Asset Value of any Company asset is adjusted in accordance
with clauses
(b) or (d) of the definition
of Gross Asset Value, the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(d) depreciation,
amortization and any other cost recovery deductions with respect to, and any
gain or loss resulting from any disposition of, any asset of the Company whose
adjusted tax basis differs from its Gross Asset Value shall be computed by
reference to the Gross Asset Value of such asset;
(e) gain
or loss shall be computed on any asset that is distributed by the Company to any
Member (whether pursuant to a liquidation of the Company or otherwise) by
treating such asset as having been sold for its Fair Market Value, as determined
by the Board by Majority Consent, on the date of such distribution;
(f) items
of income, gain, loss and deduction that are specially allocated pursuant to
Section 18.5
shall not be taken into account; and
(g) the
deduction described in Section 199 of the Code shall not be taken into
account.
“Purchase Option” is
defined in Section 3.2.5.
“Purchaser Member” is
defined in Section
21.6.4.
“Receiving Party”
shall mean the Party receiving Confidential Information under Article 22.
“Regulatory
Allocations” is defined in Section 18.5.9.
“Related Agreements”
is defined in Section 1.6.
“Remaining Assets” is
defined in Section 21.5.3.1.
“Representative” shall
mean a member of the Board appointed by a Member in accordance with the terms of
this Agreement.
“Repurchase Price”
shall mean, with respect to a Substitute Contribution that was credited to a
Contributing Member’s Capital Account, an amount equal to (a) the amount of the
Substitute Contribution, multiplied by (b)
1.15, multiplied
by (c) the number of days elapsed from the date of the Substitute
Contribution to (but not including) the day on which the Non-Contributing Member
pays to the Contributing Member an amount in cash equal to the Repurchase Price,
divided by (d)
three hundred sixty-five (365).
“Required Funding
Date” is defined in Section 3.2.3.1.
“Right of First
Refusal” is defined in Section
19.1.2.2.
“Rolling Business
Plan” is defined in Section
2.2.2.
“ROW” shall mean every
country in the world other than the United States (which shall exclude all
territories thereof other than Puerto Rico), Canada, and Mexico and the Mahindra
Territory.
“Royalty-Bearing IP License
Agreement” is defined in Section
1.6.5.
“Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations for
the Securities and Exchange Commission promulgated pursuant
thereto.
“Seller Member” is
defined in Section
21.6.4.
“Sharing Agreement” is
defined in Section
1.6.10.
“Sourcing Council” is
defined in Section
9.4.1.
“Standard Warranty”
shall mean the warranty provided pursuant to the terms and conditions of sale
with respect to any Medium Duty Truck, any Heavy Duty Truck or any replacement
part therefor. Any reserve that is recorded on the balance sheet of
the Company with respect to Standard Warranty shall be calculated on a
manufacturer’s cost basis (not on a dealer net price basis).
“Strategic Alliance
Agreement” shall mean that certain Strategic Alliance Agreement between
the Members dated as of the date hereof.
“Subsequent Staffing
Plan” is defined in Section
7.1.
“Substitute
Contribution” is defined in Section 3.2.3.2.2.
“Tax Matters Partner”
shall mean the Member designated as such pursuant to Section 18.10.1.
“Termination Event” is
defined in Section
21.2.
“Termination Event
Member” is defined in Section
21.6.1.1.
“Three-Year Business Plan
Capital Contribution Commitment” is defined in Section 2.2.2.
“Three-Year Business Plan
Loan Commitment” is defined in Section
2.2.2.
“Trademark License
Agreement” is defined in Section
1.6.4.
“Transfer” shall mean
a sale, assignment, transfer, exchange or other disposition.
“Treasury Regulation”
shall include temporary and final regulations promulgated under the Code, as
such regulations are amended from time to time.
“Triggering Member” is
defined in Section
11.1.6.
“Truck Business Relationship
Agreement” is defined in the recitals.
“Truck Sales
Agreement” is defined in Section
1.6.7.
“Unanimous Consent” of
the Members shall mean the approval, authorization, or ratification of all of
the Members duly given, which approval may be given or withheld for any or no
reason in the sole and absolute discretion of any Member.
“Valuation Notice” is
defined in Section
21.6.2.1.
“Valuation Price” is
defined in Section
21.6.2.1.
“Vocational” shall
mean designed for use for one or more of the applications specified on Exhibit F
to the Strategic Alliance Agreement and expressly excludes those applications
specified as excluded on Exhibit F to the Strategic Alliance
Agreement.
“Will-Fit Parts” shall
mean any part for a Medium Duty Truck or a Heavy Duty Truck other than Navistar
Brand parts, Caterpillar Brand parts, First-Fit Parts and All-Makes
Parts. For the avoidance of doubt, a Will-Fit Part is not installed
by an OEM of such vehicle and is not a proprietary part of an OEM.
1 The
Members to exchange an e-mail on or about the date of the Truck Business
Relationship Agreement agreeing to the forms of these agreements.
2 The
Members to exchange an e-mail on or about the date of the Truck Business
Relationship Agreement agreeing to the Initial Annual Business Plan and the
Initial Rolling Business Plan. If the Members do not agree to update
such business plans prior to the Effective Date, the form agreed to at the time
of signing the Truck Business Relationship Agreement shall the Initial Annual
Business Plan and the Initial Rolling Business Plan.
3 Initial
Staffing Plan to include seconded employees to perform an appropriate level of
engineering, manufacturing engineering, application engineering and sales
engineering.
4 To be
revised to sync with Severe Service allocation principles.
6 Need to
determine what insurance will be necessary.
IN WITNESS WHEREOF,
Caterpillar, Navistar, and the Company have caused this Joint Venture Operating
Agreement to be signed by their respective duly authorized representatives as of
the day and year first above written.
|
By: __________________________
Name:
Title:
|
NAVISTAR,
INC.
By: __________________________
Name:
Title:
|
|
NC2
GLOBAL LLC
By: __________________________
Name:
Title:
|
SCHEDULE
2.3.5
LEGACY
COUNTRIES
Algeria
Bahamas
Chile
Colombia
Costa
Rica
Curacao
Dominican
Republic
Ecuador
Egypt
El
Salvador
Ghana
Granada
Guam
Guatemala
Haiti
Honduras
Iraq
Israel
Jamaica
Kuwait
Morocco
New
Zealand
Nicaragua
Oman
Panama
Peru
Qatar
Saudi
Arabia
Slovakia
Taiwan
Tanzania
Trinidad and
Tobago
Tunisia
United Arab
Emirates
Uruguay
U.S. Virgin
Islands
Venezuela
SCHEDULE
3.1.2
MEMBERS’
PERCENTAGE INTEREST
|
Member
|
Percentage
Interest
|
|
Caterpillar
|
50%
|
|
Navistar
|
50%
|
SCHEDULE
15.3.3.2
EXISTING
ARRANGEMENTS FOR SALES OF ENGINE PARTS
[To
come.]