Joint Venture Formation Agreement

Exhibit 10.1


[*] indicates that a confidential portion of the text of this
agreement has been omitted and filed separately with the
Securities and Exchange Commission.


JOINT VENTURE FORMATION AGREEMENT


by and among


NC-M CHASSIS SYSTEMS, LLC,


DAIMLERCHRYSLER CORPORATION


and


METALDYNE CORPORATION


Dated as of December 8, 2002


TABLE OF CONTENTS


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ARTICLE I


DEFINITIONS


1.1 Definitions........................................................1


ARTICLE II


CONTRIBUTION OF ASSETS


2.1 Contribution of Assets............................................15 2.2 Excluded Assets...................................................17 2.3 Issuance of Units.................................................18 2.4 Assumption of Liabilities.........................................18 2.5 Excluded Liabilities..............................................19 2.6 Nonassignable Assets and Approvals................................20 2.7 Opening Balance Sheet.............................................21


ARTICLE III


SALE AND PURCHASE OF TRANSFERRED UNITS


3.1 Sale and Purchase of Transferred Units............................22 3.2 Purchase Price for Transferred Units..............................22


ARTICLE IV


THE CLOSING


4.1 Closing...........................................................22 4.2 Closing Deliveries of Seller......................................22 4.3 Closing Deliveries of the Company.................................23 4.4 Closing Deliveries of Metaldyne...................................24


ARTICLE V


REPRESENTATIONS AND WARRANTIES OF SELLER


5.1 Due Incorporation.................................................24 5.2 Due Authorization.................................................25 5.3 Consents and Approvals; No Violations.............................25 5.4 Financial Statements..............................................25


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5.5 Conduct of Business...............................................26 5.6 Title to Properties...............................................27 5.7 Sufficiency of Transferred Assets.................................27 5.8 Real Property.....................................................27 5.9 Personal Property.................................................28 5.10 Inventory.........................................................28 5.11 Engineering and Development.......................................28 5.12 Intellectual Property.............................................28 5.13 Contracts.........................................................29 5.14 No Defaults or Violations.........................................31 5.15 Governmental Approvals............................................31 5.16 Insurance.........................................................31 5.17 Employment and Labor Matters......................................31 5.18 Capital Improvements..............................................32 5.19 Taxes.............................................................32 5.20 Product Claims and Product Warranty...............................32 5.21 Environmental Matters.............................................33 5.22 Litigation........................................................34 5.23 Brokers...........................................................34 5.24 Customers and Suppliers...........................................34 5.25 Health and Safety; Asbestos.......................................35 5.26 Disclosure........................................................35 5.27 No Other Representations or Warranties............................35


ARTICLE VI


ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER


6.1 Due Formation.....................................................36 6.2 Due Authorization.................................................36 6.3 Consents and Approvals; No Violations.............................36 6.4 Capitalization; Title to Units....................................37 6.5 No Liabilities....................................................37 6.6 Brokers...........................................................37 6.7 No Other Representations or Warranties............................38


ARTICLE VII


REPRESENTATIONS AND WARRANTIES OF METALDYNE


7.1 Due Incorporation.................................................38 7.2 Due Authorization.................................................38 7.3 Consents and Approvals; No Violations.............................39 7.4 Subsidiaries; Equity Investments..................................39 7.5 Capitalization....................................................40


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7.6 Metaldyne SEC Documents...........................................41 7.7 Financial Statements..............................................41 7.8 Conduct of Business...............................................42 7.9 Insurance.........................................................43 7.10 Litigation........................................................43 7.11 Outstanding Debt..................................................43 7.12 No Undisclosed Liabilities........................................44 7.13 Brokers...........................................................44 7.14 Investment Company Act............................................44 7.15 Registration Rights...............................................44 7.16 No Other Representations or Warranties............................44


ARTICLE VIII


COVENANTS


8.1 Implementing Agreement............................................44 8.2 Access to Information and Facilities..............................45 8.3 Consents and Approvals............................................45 8.4 Use of Name.......................................................45 8.5 Transfer Taxes....................................................46 8.6 Publicity.........................................................46 8.7 Preservation of Business..........................................46 8.8 Tax Matters.......................................................48 8.9 Maintenance of Insurance..........................................48 8.10 Title Insurance...................................................49 8.11 Survey............................................................49 8.12 Financial Statements..............................................49 8.13 Further Assurances................................................50 8.14 UAW Agreement.....................................................50 8.15 Demolition........................................................51 8.16 Baseline Environmental Remediation................................51 8.17 Intellectual Property Licenses; Discussions Regarding
Ownership of Certain Intellectual Property....................52 8.18 Notification of Certain Matters...................................54 8.19 Cooperation on Subsequent Litigation..............................54 8.20 Board Approval....................................................54 8.21 Finalization of Exhibits..........................................54


ARTICLE IX


CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY


9.1 Governmental Approvals............................................55 9.2 No Adverse Proceedings............................................55


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ARTICLE X


CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE COMPANY AND SELLER


10.1 Accuracy of Representations and Warranties........................55 10.2 Compliance with Agreements and Covenants..........................55 10.3 Certificates......................................................56 10.4 Requisite Consents................................................56 10.5 No Metaldyne Material Adverse Change..............................56 10.6 Board Approval....................................................56


ARTICLE XI


CONDITIONS PRECEDENT TO OBLIGATIONS OF METALDYNE


11.1 Accuracy of Representations and Warranties........................56 11.2 Compliance with Agreements and Covenants..........................56 11.3 Certificates......................................................57 11.4 Contribution......................................................57 11.5 Requisite Consents................................................57 11.6 No Business Material Adverse Change...............................57 11.7 Board Approval....................................................57


ARTICLE XII


TERMINATION


12.1 Termination.......................................................57 12.2 Effect of Termination.............................................58


ARTICLE XIII


INDEMNIFICATION


13.1 Survival..........................................................58 13.2 Indemnification by Seller.........................................59 13.3 Indemnification by Metaldyne......................................60 13.4 Limitations on Liability..........................................60 13.5 Claims............................................................62 13.6 Notice of Third Party Claims; Assumption of Defense...............62 13.7 Settlement or Compromise..........................................64 13.8 Shared Liability..................................................64 13.9 Environmental Indemnification by Seller...........................64 13.10 Resolution of Indemnification Disputes............................66


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ARTICLE XIV


MISCELLANEOUS


14.1 Expenses..........................................................67 14.2 Amendment.........................................................67 14.3 Notices...........................................................67 14.4 Waivers...........................................................69 14.5 Counterparts......................................................69 14.6 Headings..........................................................69 14.7 Interpretation....................................................70 14.8 Applicable Law....................................................70 14.9 Jurisdiction; Waiver of Jury Trial................................70 14.10 Assignment........................................................71 14.11 No Third Party Beneficiaries......................................71 14.12 Severability......................................................71 14.13 Remedies Cumulative...............................................71 14.14 Investigation.....................................................71 14.15 Entire Understanding..............................................72


EXHIBITS


Exhibit A Form of Employee Matters Agreement Exhibit B Form of Supply Agreement Exhibit C Form of Management Agreement Exhibit D Form of Operating Agreement Exhibit E Form of Deed Exhibit F Form of Bill of Sale Exhibit G Description of the Facility Exhibit H Forms of FIRPTA Certificates


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JOINT VENTURE FORMATION AGREEMENT


JOINT VENTURE FORMATION AGREEMENT (this "Agreement"), dated as of December 8, 2002, by and among NC-M Chassis Systems, LLC, a Delaware limited liability company (the "Company"), DaimlerChrysler Corporation, a Delaware corporation ("Seller"), and Metaldyne Corporation, a Delaware corporation ("Metaldyne").


WHEREAS, Seller is currently engaged in the business of designing and engineering ball joints and manufacturing and assembling suspension (including ball joints), exhaust manifold, transmission, steering and engine components for Seller's cars and trucks and as aftermarket parts therefor (such business as conducted at the Facility (as defined below) and not at any other location, the "Business");


WHEREAS, Seller and Metaldyne have agreed to form a joint venture to own and operate the Business and the Facility on the terms and conditions set forth in this Agreement;


WHEREAS, Seller has formed the Company to serve as the vehicle for the joint venture;


WHEREAS, the parties have agreed that Seller will contribute and assign to the Company, and that the Company will receive and assume from Seller, the Transferred Assets (as defined below) and the Assumed Liabilities (as defined below), in exchange for the issuance by the Company to Seller of 100% of the Class A Units (as defined below) and 100% of the Class B Units (as defined below) of the Company, all upon the terms and subject to the conditions of this Agreement;


WHEREAS, Seller has agreed to sell, transfer and convey 40% of the Class A Units (the "Transferred Units") to Metaldyne, and Metaldyne has agreed to purchase the Transferred Units from Seller (the "Transfer"), upon the terms and subject to the conditions set forth in this Agreement; and


WHEREAS, under certain circumstances in the future as provided for in the Operating Agreement (as defined below), (i) Metaldyne may acquire from Seller the remaining Class A Units and 100% of the Class B Units or (ii) Seller may reacquire from Metaldyne the Transferred Units (either of the foregoing, the "JV Termination").


NOW, THEREFORE, in consideration of the foregoing and the covenants, agreements, representations and warranties contained herein, the parties hereto hereby agree as follows:


ARTICLE I


DEFINITIONS


1.1 Definitions. Unless otherwise defined in this Agreement, the following terms shall have the respective meanings set forth below:


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"Accountant" shall have the meaning set forth in Section 2.7(b).


"Affiliate" shall mean, with respect 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, such Person, where "control" means, with respect to any Person the possession, directly or indirectly, of the power to direct the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.


"Agreement" shall mean this Joint Venture Formation Agreement, including all exhibits and schedules hereto, as amended from time to time.


"Assets" shall mean, collectively, the Transferred Assets and the Excluded Assets.


"Assumed Contracts" shall mean all Contracts used exclusively in or related exclusively to, or, except with respect to the Intellectual Property and information technology systems and related software and documentation, used primarily in or related primarily to or necessary for, the conduct of the Business or the ownership or operation of the Facility, other than the Excluded Contracts; provided, however, that any Contracts between the Business, on the one hand, and Seller or any of its Affiliates, on the other hand, shall not be Assumed Contracts.


"Assumed Liabilities" shall have the meaning set forth in Section 2.4.


"Ball Joints" shall mean all Current Products that are ball joints or ball and socket joints, including, without limitation, all integral and cartridge style designs, and all components thereof, including, without limitation, all castings, forgings, casings, pivots, bellows, bearings, shells, studs, seals, liners, sockets, heads, shrouds, housings and covers.


"Business" shall have the meaning set forth in the recitals to this Agreement.


"Business Day" shall mean a day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized or required by Law to close.


"Business Material Adverse Change" shall mean a change (or historical circumstance or event resulting in a prospective change) that is materially adverse with respect to either (i) the business, operations, assets, liabilities, results of operations, cash flows or financial condition of the Business, taken as a whole or (ii) the ability of Seller to consummate the Transactions; provided, however, that any change (or historical circumstance or event resulting in a prospective change) that is generally applicable to (A) the industries and markets in which Seller and its Subsidiaries operate their respective businesses, (B) the United States or global economy or (C) the United States securities markets shall be excluded from the determination of a Business Material Adverse Change; and provided, further, that any change (or historical circumstance or event resulting in a prospective change) resulting from or arising out of the execution of this Agreement or the announcement of this Agreement and the transactions contemplated hereby shall also be excluded from the determination of a Business Material Adverse Change.


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"Business Material Adverse Effect" shall mean an effect (or historical circumstance or event resulting in a prospective effect) that is materially adverse with respect to either (i) the business, operations, assets, liabilities, results of operations, cash flows or financial condition of the Business, taken as a whole or (ii) the ability of Seller to consummate the Transactions; provided, however, that any effect (or historical circumstance or event resulting in a prospective effect) that is generally applicable to (A) the industries and markets in which Seller and its Subsidiaries operate their respective businesses, (B) the United States or global economy or (C) the United States securities markets shall be excluded from the determination of a Business Material Adverse Effect; and provided, further, that any effect (or historical circumstance or event resulting in a prospective effect) resulting from or arising out of the execution of this Agreement or the announcement of this Agreement and the transactions contemplated hereby shall also be excluded from the determination of a Business Material Adverse Effect.


"Cap" shall have the meaning set forth in Section 13.4(a).


"Capital Stock" means: (i) in the case of a corporation, capital stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock; (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.


"CERCLA" shall have the meaning set forth in Section 5.21(d).


"Class A Units" shall mean the Class A limited liability company interests in the Company.


"Class B Units" shall mean the Class B limited liability company interests in the Company.


"Closing" shall have the meaning set forth in Section 4.1.


"Closing Date" shall have the meaning set forth in Section 4.1.


"Code" shall mean the United States Internal Revenue Code of 1986, as amended.


"Common Stock" shall have the meaning set forth in Section 7.5(a).


"Company" shall have the meaning set forth in the preamble to this Agreement.


"Company Indemnified Parties" shall mean the Company and each of its Subsidiaries and their respective officers, directors, employees, members, managers, agents and representatives; provided, however, that in no event shall Seller be deemed a Company Indemnified Party.


"Company Material Adverse Effect" shall mean an effect (or historical circumstance or event resulting in a prospective effect) that is materially adverse with respect to either (i) the busi-


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ness, operations, assets, liabilities, results of operations, cash flows or financial condition of the Company before or after giving effect to the Contribution or (ii) the ability of the Company to consummate the Transactions; provided, however, that any effect (or historical circumstance or event resulting in a prospective effect) that is generally applicable to (A) the industries and markets in which the Company will operate the Business, (B) the United States or global economy or (C) the United States securities markets shall be excluded from the determination of a Company Material Adverse Effect; and provided, further, that any effect (or historical circumstance or event resulting in a prospective effect) resulting from or arising out of the execution of this Agreement or the announcement of this Agreement and the transactions contemplated hereby shall also be excluded from the determination of a Company Material Adverse Effect.


"Complete Financial Statements" shall have the meaning set forth in Section 8.12.


"Consultant" shall have the meaning set forth in Section 8.16(a).


"Contract" shall mean any contract, lease, commitment, understanding, sales order, purchase order, rental agreement, insurance policy, agreement, indenture, mortgage, note, bond, right, instrument of indebtedness, guarantee, warrant, instrument, plan, permit or license, and any and all other binding arrangements.


"Contribution" shall mean the transactions set forth in clauses (i) and (ii) of the definition of the term "Transactions" herein.


"CPR" shall have the meaning set forth in Section 13.10.


"Current Process" means any process used by Seller at the Facility as of the Closing Date or within the 12-month period prior to the Closing Date to manufacture any Current Product or other product.


"Current Product" means any product manufactured by Seller at the Facility as of the Closing Date or within the 12-month period prior to the Closing Date and listed on Schedule A to the Supply Agreement.


"Customer Lists" shall have the meaning set forth in Section 2.1(g).


"DaimlerChrysler Call Option Closing" shall have the meaning set forth in the Operating Agreement.


"DaimlerChrysler Indemnified Parties" shall mean Seller, each of its Subsidiaries and each of their respective Affiliates and the respective officers, directors, employees, members, managers, agents and representatives of Seller, its Subsidiaries and their respective Affiliates; provided, however, that in no event shall the Company or any of its Subsidiaries be deemed a DaimlerChrysler Indemnified Party.


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"Deed" shall mean a special or limited warranty deed including warranties against grantor's acts relating to the Real Property in recordable form granted by Seller in favor of the Company substantially in the form of Exhibit E.


"Demolition Costs" shall have the meaning set forth in Section 8.15.


"Dispute" shall have the meaning set forth in Section 13.10.


"Dollars" or numbers preceded by the symbol "$" shall mean amounts in United States Dollars.


"Employee Benefit Plan" shall mean any "employee benefit pension plan" as defined in Section 3(2) of ERISA, "welfare benefit plan" as defined in Section 3(1) of ERISA, stock bonus, stock option, restricted stock, stock appreciation right, stock purchase, bonus, incentive, deferred compensation, severance and vacation plans, employment or consulting agreements, and any other employee benefit plans, programs, policies or arrangements, covering employees (or former or future employees) of Seller engaged in the Business which is maintained or contributed to by Seller or any of its ERISA Affiliates or to which Seller or any of its ERISA Affiliates contributes or is obligated to make payments thereunder or otherwise may have any Liability.


"Employee Matters Agreement" shall mean the Employee Matters Agreement by and among Seller, the Company and Metaldyne substantially in the form of Exhibit A.


"End Date" shall have the meaning set forth in Section 12.1(b)(i). "Environment" shall mean any of the following media: (i) land, including surface land, sub-surface strata, sea bed and river bed under water (as defined in clause (ii) hereof), and any natural or man-made structures, (ii) water, including coastal and inland waters, surface waters, ground waters, drinking water supplies and waters in drains and sewers, surface and sub-surface strata; and (iii) air, including indoor and outdoor air and air within buildings and other man-made or natural structures above or below ground, in each case, including any living organism or system supported by such media.


"Environmental Claim" shall mean any notice, claim, demand, action, suit, complaint, proceeding or communication by any Governmental Authority or other Person alleging Liability or potential Liability that affects or would reasonably be expected to affect the Business or any of the Transferred Assets (including, without limitation, the Facility) relating to, arising out of, in connection with, based on or resulting from any Environmental Law or Environmental Permit.


"Environmental Condition" shall mean (i) any environmental contamination or pollution or threatened contamination or pollution arising out of any Release or threatened Release of Hazardous Materials that could form the basis for any Environmental Claim against the Business or any of the Transferred Assets, or (ii) any other circumstance or condition that would reasonably be expected to give rise to any violation or alleged violation of any Environmental Law or Environmental Permit or any Liability or potential Liability under any ...