SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 12, 1996
AlliedSignal Inc.
- ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-8974 22-2640650
-------------- ------------ --------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
101 Columbia Road
P.O. Box 4000
Morristown, New Jersey 07962-2497
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 455-2000
Item 2. Acquisition or Disposition of Assets
------------------------------------
On April 12, 1996, AlliedSignal Inc. (the "Company") completed the
previously announced sale of its hydraulic braking and anti-lock braking
businesses to Robert Bosch GmbH ("Bosch") for $1.5 billion in cash,
subject to certain post-closing adjustments. The consideration received
by the Company was determined through negotiations between the Company
and Bosch.
Included in the sale are the Company's worldwide operations for
conventional hydraulic braking and anti-lock braking systems (ABS) for
cars, light trucks and medium- duty trucks. These operations accounted
for approximately $2.1 billion of the Company's 1995 sales of $14.3
billion. Not affected by the purchase are other Company Automotive
businesses representing $3.4 billion of 1995 sales. These include
friction materials, turbochargers, seat belts, air bags, filters, spark
plugs, and air brakes and ABS for heavy-duty trucks.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits. The following exhibit is filed with this Form 8-K.
---------
99 Asset Purchase Agreement dated as of February 29, 1996
(and the addendums thereto) among Robert Bosch GmbH
and the other purchasers named therein and AlliedSignal
Inc. and the other sellers named therein.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AlliedSignal Inc.
(Registrant)
Date: April 26, 1996 By:/s/ G. Peter D'Aloia
-----------------------------
G. Peter D'Aloia
Vice President and Controller
CONFORMED COPY
ASSET PURCHASE AGREEMENT
Dated as of February 29, 1996
AMONG
ROBERT BOSCH GmbH
AND THE OTHER PURCHASERS NAMED HEREIN
AND
ALLIEDSIGNAL INC.
AND THE OTHER SELLERS NAMED HEREIN
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. CLOSING; TRANSACTIONAL OVERVIEW................................1
1.1 Closing Date.............................................1
1.2 Transactional Overview...................................2
2. PURCHASE AND SALE..............................................5
2.1 Purchase and Sale........................................5
2.2 Excluded Assets..........................................7
2.3 Assignment of Assets.....................................9
2.4 Hankuk Restructuring....................................10
2.5 Safe Harbor Leases......................................11
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION..........12
3.1 Initial Purchase Price..................................12
3.2 Post-Closing Adjustment.................................12
3.3 Net Cash Adjustment.....................................16
3.4 Allocation of Purchase Price............................17
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.....................17
4.1 Assumption of Certain Liabilities and Obligations by
Purchasers..............................................17
4.2 Excluded Liabilities....................................18
5. PENSION, EMPLOYEE AND UNION MATTERS...........................21
6. REPRESENTATIONS AND WARRANTIES OF SELLERS.....................22
6.1 Due Organization........................................22
6.2 Authority...............................................22
6.3 Transferred Entities and Minority Interests.............22
6.4 No Conflict.............................................23
6.5 Financial Statements....................................24
6.6 Real Property...........................................24
6.7 Personal Property.......................................26
6.8 Title to Personal Property..............................26
6.9 Contracts...............................................27
6.10 Intellectual Property...................................28
6.11 Litigation, Claims and Proceedings......................30
6.12 Environmental Conditions................................30
6.13 Permits.................................................32
6.14 Compliance with Law.....................................32
-i-
6.15 Consents................................................32
6.16 Labor and Employee Benefits.............................32
6.17 Health and Safety Conditions............................33
6.18 Customers and Suppliers.................................34
6.19 Insurance...............................................34
6.20 Intercompany Services...................................34
6.21 Taxes...................................................34
6.22 Sufficiency of Assets...................................35
6.23 No Broker or Finders....................................36
6.24 Recall and Service Actions..............................36
6.25 Absence of Certain Changes..............................36
6.26 No Undisclosed Liabilities..............................36
6.27 Business Conduct........................................36
6.28 Accounts Receivable; Intercompany and Intracompany
Accounts................................................37
6.29 Subsidies...............................................37
6.30 Product Warranties......................................37
6.31 Compliance with WARN Act................................37
6.32 Minority Interests......................................37
6.33 WARRANTY DISCLAIMER.....................................38
6.34 Inquiry.................................................38
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS..................38
7.1 Due Organization........................................38
7.2 Authority...............................................38
7.3 Litigation..............................................39
7.4 No Conflict.............................................39
7.5 No Brokers or Finders...................................39
7.6 Consents................................................39
7.7 Certain Acknowledgements and Other Matters..............39
8. PRE-CLOSING COVENANTS.........................................40
8.1 Conduct of Business.....................................40
8.2 Access to Records and Properties........................42
8.3 Consents................................................42
8.4 Public Announcements....................................43
8.5 Assurance of Title to Real Property; Survey.............43
8.6 Notice of Certain Claims................................45
8.7 Spanish Supply Agreements...............................45
8.8 No-Shop.................................................45
8.9 Covenant by Parents.....................................45
8.10 Title Insurance.........................................46
-ii-
9. CONDITIONS TO OBLIGATIONS OF PURCHASERS.......................46
9.1 Injunctions.............................................46
9.2 Consents................................................46
9.3 Competition Law Clearances; Certain Litigation..........46
9.4 Transferred Entities....................................46
9.5 No Breach...............................................46
9.6 Services Agreement......................................47
9.7 Aftermarket Agreements..................................47
9.8 Trademark License Agreement.............................47
9.9 South Bend Lease........................................47
9.10 Spanish Supply Agreements...............................47
9.11 Foreign Transfer Agreements.............................47
9.12 No Material Adverse Change..............................47
10. CONDITIONS TO OBLIGATIONS OF SELLERS..........................47
10.1 Injunctions.............................................47
10.2 Competition Law Clearances; Certain Litigation..........47
10.3 Transferred Entities....................................48
10.4 No Breach...............................................48
10.5 Other Agreements........................................48
11. Termination; Survival.........................................48
11.1 Termination.............................................48
11.2 Effect of Termination...................................49
12. DELIVERIES BY SELLERS AT THE CLOSING..........................49
13. DELIVERIES BY PURCHASERS AT THE CLOSING.......................51
14. POST-CLOSING OBLIGATIONS......................................51
14.1 Covenant Not to Compete; No Raid........................51
14.2 Tax Matters.............................................53
14.3 Further Assurances......................................56
14.4 Reports; Access to Books and Records....................57
14.5 Cooperation in Litigation...............................57
14.6 Names and Marks.........................................57
14.7 Industrial Revenue Bonds................................57
14.8 Transturk Contigent Payment.............................58
14.9 Continued Supply of Friction Materials..................58
14.10 Performance of Obligations..............................58
14.11 ABS Shutdown............................................58
14.12 Confidential Information................................60
14.13 Real Property Deeds.....................................61
-iii-
14.14 Certain Licenses........................................61
14.15 Certain Receivables.....................................61
15. INDEMNIFICATION...............................................61
15.1 Indemnification by Sellers..............................61
15.2 Indemnification by Purchasers...........................62
15.3 Survival................................................63
15.4 Limitations on Indemnity................................63
15.5 IndemnificationProcedure................................65
15.6 Special Provisions Regarding Recalls and Service
Actions.................................................69
15.7 Special Environmental Provisions........................71
15.8 Exclusive Remedy........................................72
16. MISCELLANEOUS.................................................72
16.1 Expenses................................................72
16.2 Bulk Sales..............................................72
16.3 Assignability...........................................73
16.4 Binding Effect..........................................73
16.5 Notices.................................................73
16.6 Counterparts............................................74
16.7 Attachments and Schedules...............................74
16.8 Governing Law...........................................74
16.9 Arbitration.............................................75
16.10 Consent to Jurisdiction.................................75
16.11 Definitions.............................................76
16.12 Headings................................................82
16.13 Amendment...............................................82
16.14 Entire Agreement........................................82
16.15 Waivers.................................................82
16.16 Third Party Rights......................................83
16.17 Severability............................................83
16.18 Agency..................................................83
16.19 Foreign Transfer Agreements.............................83
16.20 Agreement by Parents....................................83
-iv-
ATTACHMENTS
Attachment A Sellers
Attachment B Purchasers
Attachment C Minority Interests
Attachment D Transferred Entities
Attachment E-1 French Restructuring Term Sheet
Attachment E-2 Italian Restructuring Term Sheet
Attachment E-3 Brazilian Restructuring Term Sheet
Attachment F Pension, Employee and Union Matters
Attachment G Labor and Employee Benefits Representations
-v-
SCHEDULES
2.1(n) Shared Assets to be Transferred
2.2(g) Employee Benefit Plans
2.2(n) Shared Assets to be Retained
2.2(u) Excluded OES Assets
2.5 Safe Harbor Leases
3.2(b) Specified Accounting Principles
5.1(b) Employees
5.2(c) Retained Employees
5.3(2) Brazilian Employee Matters
5.7 Severance and WARN Act Liability
5.10 Bargaining Agreements
5.13(b)(i) European Business Employees
5.13(f) Agreements with French Labor Governmental Agencies
5.15.1 Mexican Employees
6.3.2 Equity Interests
6.3.3 Actions Regarding Equity Interests or Minority Interests
6.4 No Conflicts
6.5(a) Initial Balance Sheet and Income Statement
6.6 Real Property
6.6(c) Activities on the Real Property
6.6(d) Real Property Requirements and Conditions
6.6(e) Certain Rights Affecting Title to Real Property
6.7 Personal Property
6.8 Exceptions to Title to Personal Property
6.9(a)(i) Contracts
6.9(a)(ii) Contracts (Personal Property)
6.9(a)(iii) Contracts (Guarantees, etc.)
6.9(a)(iv) Contracts (Financing Commitments)
6.9(a)(v) Contracts (Agency/Distributorship)
6.9(a)(vi) Contracts
6.9(c) Major Products
6.10 Intellectual Property
6.10(g) Patent Assignments
6.10(h) Engineering Drawings
6.11 Litigation, Claims and Proceedings
6.12 Environmental Conditions and Claims
6.13 Permits
6.14 Compliance with Law
6.15 Consents
6.16 Labor and Employee Benefits
6.17(a) Safety Data and Studies
6.17(b) Certain Workers' Compensation, EPA and TSCA Matters
-vi-
6.18 Customers and Suppliers
6.19 Insurance
6.20 Intercompany Services
6.21(a) Taxes
6.21(b) Taxes - Statutes of Limitations
6.22 Location of Documents
6.24 Recall and Service Actions
6.25 Absence of Certain Changes
6.26 Certain Liabilities
6.29 Subsidies
6.30 Product Warranties
6.34 Knowledge of Sellers
7.6 Consents
8.1(j) Intercompany Borrowings
8.3 Sellers' Consents
8.3A Purchasers' Consents
14.7 Industrial Revenue Bonds
16.11 Permitted Liens
-vii-
EXHIBITS
5.4(c)(1) Opinion of Sellers' Counsel re: Sellers' Pension Plans
5.4(c)(2) Opinion of Purchasers' Counsel re: Purchasers' Pension
Plans
8.7(a) and (b) Greyco Agreement; Parets II Agreement
9.6 Services Agreement
9.7(a) and (b) Aftermarket Agreements
9.8 Trademark License
9.9 South Bend Lease
16.11 French Transfer Agreements
-viii-
TABLE OF DEFINED TERMS
Defined Term Section
ABS Agreement 14.11(c)
ABS Reimbursement 14.11(a)
ABS Shutdown 14.11(a)
Accounts 5.4(d)(1)
Accounts Receivable 2.1(i)
Adjusted Purchase Price 3.2(a)
Adjusted Transfer Amount 3.2(a)
Affiliate 16.11
Aftermarket Agreements 9.7
Agreement Preamble
AlliedSignal Preamble
Alternative Procedures 5.9
Arbitration Issue 15.5(c)
Arbitrator 16.9
Assets 16.11
Assumed Liabilities 4.1
Bargaining Agreements 5.2(a)
Brazilian Employees 5.1(b)
Brazilian Newco 1.2(j)
Budd 4.2(k)
Budd Agreement 16.11
Business Preamble A
Business Day 16.11
Cash Disbursements 3.3
Cash Receipts 3.3
CERCLA 16.11
Closing 1.1
Closing Balance Sheet 3.2(b)
Closing Date 1.1
Code 16.11
Commercial Agreements 16.11
Commission 6.15
Comparable Employment 5.2(b)(1), 5.14
Competitive Activities 14.1(a)
Confidential Information 14.12(a)
Contract Assignments 12(h)
Contracts 16.11
Control 16.11
Court 16.9
Covered Employees 5.5(a)
Deadline 16.11
-ix-
Deeds 12(b)
DOJ 8.3(a)
DOL 5.4(c)(3)
E.E.O.C. 16.11
Employees 5.1
Encumbrance 16.11
Enforceability Exceptions 6.2
Environmental Claims 16.11
Environmental Law 16.11
EPA 6.17(b)
Equity 3.2(b)
Equity Interest 6.3.2
ERISA 16.11
European Employees 5.1(b)
Exchange Date 2.3(a)
Excluded ABS Liabilities 4.2(a)
Excluded Assets 2.2
Excluded Businesses 16.11
Excluded Liabilities 4.2
Excluded Loss 15.4(a)
Excluded OES Assets 2.2(u)
Excluded TBS Products 2.2(r)
Facility 16.11
FAS 87 3.2(a)
Final Allocation 3.4(a)
Final Determination 15.5(d)
Final Investment 3.2(b)
Firm 3.2(d)
Foreign Transfer Agreements 16.11
Former Employees 5.1
French Agreements 1.2(b)
French Newco 1.2(b)
French Sellers 1.2(b)
Friction Parts 14.9
FTC 8.3(a)
GAAP 16.11
General Real Property Assignments 12(d)
Governmental Authority 6.15
Greyco 16.11
Greyco Agreement 8.7
H-S-R Act 6.15
Hankuk 16.11
Hankuk Restructuring 2.4
Hazardous Material 16.11
Ill Transferred Employees 5.2A(b)
-x-
Income Statement 6.5(a)
Indemnified Party 15.5(a)
Indemnifying Party 15.5(a)
Indemnity Payments 15.5(d)
Indemnity Tax Opinion 15.5(d)
Industrial Revenue Bonds 14.7
Initial Balance Sheet 6.5(a)
Initial Investment 3.2(a)
Initial Purchase Price 3.1(a)
Intellectual Property 16.11
Intellectual Property Assignments 12(f)
Intellectual Property Claim 6.10(c)
Interests 2.3(a)
Internal Revenue Code 16.11
Inventory 2.1(c)
IRS 5.4(c)(3)
Italian Newco 1.2(e)
Italian Sellers 1.2(e)
JKC JV Agreements 16.11
Key Employees 8.1(f)
Knorr 2.2(x)
Knorr JV 16.11
Knowledge of Sellers 16.11
Known Recall/Service Action 16.11
Laws 6.14
Lease 16.11
Leased Real Property 16.11
LIBOR 3.2(h)
License Assignments 12(g)
Long Term Disability 5.2(A)(a)
Loss(es) 15.1
Material Adverse Effect 16.11
Material Adverse Impact 16.11
Merger Regulation 8.3(b)
Mexican Bargaining Agreement 5.15.2
Mexican Employees 5.1(b)
Mexican Union 5.15.2
Minority Interests Preamble A
Net Cash Balance 3.3
Net Cash Period 3.3
Net Cash Statement 3.3
Newcos 16.11
NHTSA 6.24
N.L.R.B. 16.11
1995 Statements 6.25
-xi-
NOL 14.2(b)
Non-Conforming Exception 15.3
Non-Excluded Losses 15.4(a)
Non-Excluded 6.22 Losses 15.4(c)
Non-Union Employees 5.2(b)(1)
Non-Union Transferred Employees 5.2(b)(1)
OEM 6.24
OES 16.11
OES Employees 5.16
O.F.C.C.P. 16.11
OSHA 16.11
Other Employees 5.1(b)
Owned Real Property 16.11
Parets Facilities 16.11
Parets II Agreement 8.7
Participation Amount 15.5(c)
PBGC 5.4(c)(3)
PCB 16.11
Pension Adjustment Amount 3.2(a)
Permits 16.11
Permitted Liens 16.11
Personal Property 16.11
Person 16.11
Poland Acquisition Agreement 16.11
Post-Closing Transfer Agreements 16.11
Projected Benefit Obligation 3.2(a)
Proprietary Rights 16.11
Proposed Participation Amount 15.5(c)
Purchaser(s) Preamble
Purchaser Parent Preamble
Purchasers' Pension Plans 5.4(c)(1)
Purchasers' Proposed Adjustments 3.2(d)
Purchasers' Thrift Plans 5.4(d)(1)
Qualified Beneficiary 5.8
Qualifying Title Insurance Policy 16.11
RCRA 16.11
Real Property 16.11
Real Property Lease Assignments 12(c)
Recall 6.24
Recall/Service Actions 15.6(c)
Remedial Work 15.7(a)
Requested Endorsements 16.11
Retained Employees 5.2(c)
RFQ 8.1(o)
Safe Harbor Lease 2.5(a)
-xii-
Safe Harbor Lease Assignments 12(n)
Section 2.3 Transferred Entity 16.11
Section 338(h)(10) Election 14.2
Seller(s) Preamble
Sellers' Benefit Plans 6.16(c)
Sellers' Pension Plans 5.4(c)(1)
Sellers' Severance Plan 5.2(b)(3)
Sellers' Thrift Plans 5.4(d)(1)
Sellers' Valuation 3.2(c)
Sellers' Welfare Plans 5.5
Service Action 6.24
Services Agreement 9.6
Servinter Agreement 16.11
Shared Assets 6.22(b)
Shared Services Employees 5.1(b)
6.22 Threshold 15.4(c)
South Bend Facility 16.11
South Bend Lease 9.9
Spanish Supply Agreements 8.7
Specified Accounting Principles 3.2(b)
Subsidiary 16.11
Tax Claim 15.5(d)
Tax Return 16.11
Tax(es) 16.11
TBS 2.2(q)
Tentative Closing Date 1.1
Third Party Claim 15.5(b)
Threshold 15.4(a)
Trademark License 9.8
Transfer Amount 5.4(c)(2)
Transfer Taxes 14.2(c)
Transferred Assets 16.11
Transferred Entities Preamble B
Transturk Acquisition Agreement 16.11
Transturk Contingent Payment 4.2(j)
TSCA 16.11
Union 5.2(a)
Union Employees 5.2(a)
Union Transferred Employees 5.2(a)
United States Business 1.2(a)
Unknown Recall/Service Action 16.11
Unlimited Claims 15.3
Usufruct Agreement 2.2(y)
U.S. Employees 5.1
U.S. Transferred Employees 5.1(b)
-xiii-
WARN Act 5.7
Welfare Plans 5.5(a)
Welfare Plans Transition Period 5.5(a)
-xiv-
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") made as of February 29, 1996
between AlliedSignal Inc. a Delaware corporation ("AlliedSignal"), and the
entities listed on Attachment A (AlliedSignal and each of such entities
being referred to as a "Seller" and collectively referred to as "Sellers"),
and Robert Bosch GmbH, a Gesellschaft mit beschrankter Haftung ("Purchaser
Parent") and the entities listed on Attachment B (each a "Purchaser" and
collectively referred to as "Purchasers").
A. Sellers and the Transferred Entities are engaged in the business
of designing, developing, manufacturing, marketing and selling hydraulic
braking products and systems for passenger cars and light and medium trucks
(which systems and products include but are not limited to master
cylinders, vacuum boosters, brake valves, foundation brakes, wheel end
products, steel wheels and antilock braking systems and products),
conducted by Sellers and their Subsidiaries anywhere in the world (such
business, subject to the following sentence, is hereinafter referred to as
the "Business"). The Business shall not include (a) Excluded Businesses,
or (b) the minority interests owned by Sellers or a Transferred Entity in
the entities set forth on Attachment C ("Minority Interests").
B. Sellers conduct the Business as unincorporated divisions or
branches and/or own equity interests in other entities engaged as of the
Closing in the Business (such other entities are listed on Attachment D and
are referred to as "Transferred Entities").
C. Sellers desire to sell the Business as an ongoing business and
Purchasers desire to acquire the Business and the Assets, except as
otherwise provided herein, for the consideration as stated hereunder and on
the terms and conditions set forth in this Agreement.
D. When used in this Agreement, the defined terms, which are
capitalized, shall have the meanings set forth herein, and an index to such
definitions follows the Table of Contents.
In consideration of the mutual covenants and agreements contained in
this Agreement, Sellers and Purchasers agree as follows:
1. CLOSING; TRANSACTIONAL OVERVIEW
1.1 Closing Date. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place simultaneously at the
offices of Hughes Hubbard & Reed, One Battery Park Plaza, New York, New
York and at its offices at 47, Avenue Georges Mandel, 75116 Paris, France
at 10:00 a.m. (EST) on the day specified below. The time and date on which
the Closing occurs (or, pursuant to the following sentence, is deemed to
occur) is hereinafter referred to as the "Closing Date". If the third
Business Day after the date on which all conditions to the obligations of
Purchasers and Sellers under Articles 9 and 10 of this Agreement (other
than those requiring an exchange of a certificate, opinion or other
document, or the taking of other action at the Closing) shall have been
satisfied or waived (such third Business Day being the "Tentative Closing
Date") is the fifteenth day of the month or an earlier day in the month,
(i) the Closing shall be held on the Tentative Closing Date but the
consummation of the transactions
contemplated by this Agreement and the Closing shall be effective (and
shall be deemed to take place) as of 11:59 p.m. on the last day of the
immediately preceding month for all purposes hereunder (including,
without limitation, for purposes of (x) the Closing Balance Sheet
and (y) the assumption of the Assumed Liabilities by Purchasers
pursuant to Article 4 hereof) and (ii) the parties will subsequently make
a cash adjustment as set forth in Section 3.3. If the Tentative Closing
Date is the sixteenth day of the month or a later day in the month, the
Closing shall be held on the last day of such month, and the
consummation of the transactions contemplated by this Agreement and the
Closing shall be effective (and shall be deemed to take place) as of 11:59
p.m. on such last day of the month, unless the parties mutually agree in
writing to a different time of Closing. Notwithstanding the foregoing,
(i) in the event that the aforementioned Closing conditions are satisfied
or waived on or before March 29, 1996, then the Closing shall be held on
April 1,1996 and the consummation of the transactions contemplated by this
Agreement and the Closing shall be effective (and shall be deemed to take
place) as of 11:59 p.m. on March 31, 1996 and (ii) to the extent that
consummation of the transactions contemplated hereby or by the Foreign
Transfer Agreements necessitates that any actions be taken in jurisdictions
outside the United States of America and the Republic of France, such
actions shall be taken in the appropriate jurisdictions and to the extent
practicable and permitted by law shall be effective as of the time set
forth above.
1.2 Transactional Overview. Subject to the terms and conditions
contained herein, unless otherwise agreed in writing, the parties
contemplate that the global transaction envisioned by this Agreement will
be effected in the following fashion:
(a) United States - Asset/Share Transfers. The Business
conducted by Sellers in the United States (the "United States
Business") will be transferred to Purchasers pursuant to (i) asset
sales and (ii) the sale of Sellers' Equity Interests in AlliedSignal
Jidosha Kiki Corporation and Bayfield Corporation.
(b) France-Contribution. The Business of AlliedSignal
Automotive Europe S.A., AlliedSignal Aftermarket Europe S.A.,
AlliedSignal Europe Services Techniques S.A., and AlliedSignal
Systemes de Freinages S.A. (the "French Sellers") will be contributed
by the French Sellers with a step-up in tax basis to fair market value
of the Assets transferred to a newly-created company formed by Sellers
and the shares of which will be transferred to Purchasers at the
Closing (the "French Newco"). The French Sellers will initiate the
contribution process as soon as practicable after the date of this
Agreement, but the parties anticipate that the contribution will not
be completed until after the Closing Date. During the interim period
between the Closing Date and the date of completion of the
contribution, the Business of the French Sellers will be managed by
the French Newco pursuant to a management lease agreement, and
Purchaser Parent will guarantee the French Newco's obligations
thereunder. The steps involved in the contribution and management
lease procedure are attached as Attachment E-1, and forms of the
agreements required therefor (the "French Agreements") are attached as
Exhibit 16.11. To the extent the attached form agreements need to be
completed with additional data, Sellers and Purchasers shall use
reasonable commercial efforts to agree on such additional data as soon
as practicable. Sellers and Purchasers have been advised that
-2-
the completion of the contribution of the Assets and Assumed Liabilities
of the French Sellers into the French Newco has the following
benefits: it (A) would facilitate the transfer of the Business of the
French Sellers to the French Newco, (B) would render said transfer
enforceable vis-a-vis all concerned third parties in France and
(C) would permit Purchasers to simultaneously acquire all of the
Assets required to run the Business in France. Consequently, Sellers
and Purchasers agree that the manner in which to implement a transfer
of the Business of the French Sellers to Purchasers is by means of the
contribution mechanism described in this Section. However, if the
contribution of the Business of the French Sellers cannot be achieved
for any reason prior to December 1, 1996, then the Business of the
French Sellers, upon request of either the Purchasers or Sellers,
shall be transferred to Purchasers in a manner to be agreed upon and
in accordance with the other Sections of this Agreement, provided that
the transaction resulting in the transfer (i) results in a step-up in
tax basis to fair market value of the Assets transferred and (ii) can
be executed within two weeks after such request of Purchasers or
Sellers. The Purchasers and Sellers acknowledge that in such
transaction they may not be able to achieve all of the benefits of the
contribution to the French Newco described above. If the parties are
able to agree on the final provisions of the French Agreements, then,
notwithstanding anything to the contrary in this Agreement, (x) the
Business of the French Sellers shall be transferred to Purchasers
substantially in accordance with the terms and conditions set forth on
Attachment E-1 and the French Agreements and (y) compliance by Sellers
with their respective obligations pursuant to Attachment E-1 and the
French Agreements shall not itself constitute a breach of any
provision (including, without limitation, any representation or
warranty) of this Agreement.
(c) Spain - Asset/Share Transfers. The Business of
AlliedSignal Automotive Espana, S.A. will be transferred to Purchasers
pursuant to an asset sale in accordance with the other Sections of
this Agreement. Sellers' ownership interest in AlliedSignal JKC
Europe S.A. will be transferred to Purchasers pursuant to the sale of
Sellers' Equity Interests in such entity in accordance with the other
Sections of this Agreement.
(d) Portugal - Asset Transfer. The Business of AlliedSignal
Automotive Portugal, Ltda. will be transferred to Purchasers pursuant
to an asset sale in accordance with the other Sections of this
Agreement.
(e) Italy - Contribution. The Business of AlliedSignal
Automotive Italia S.p.A. and AlliedSignal Freni S.p.A. (the "Italian
Sellers") will be contributed by the Italian Sellers with a step-up in
tax basis of the Assets transferred to a newly-created company formed
by Sellers and the shares of which will be transferred to Purchasers
at the Closing (the "Italian Newco"). The Italian Sellers will
initiate the contribution process as soon as practicable after the
date of this Agreement, but the parties anticipate that the
contribution will not be completed until after the Closing Date.
During the interim period between the Closing Date and the date of
completion of the contribution, if possible under Italian law and
practicable, the Business of the Italian Sellers will be managed by
the Italian Newco pursuant to a management lease agreement reasonably
acceptable to the parties, and
-3-
Purchaser Parent will guarantee the Italian Newco's obligations
thereunder. If a management lease agreement cannot be executed prior
to the Closing Date, then during such interim period the Business of
the Italian Sellers will be managed by the Purchasers pursuant to a
management agreement reasonably acceptable to the parties and Purchaser
Parent will guarantee the Purchaser's obligations thereunder. The steps
involved in the contribution and management agreement or management
lease agreement, as the case may be, are attached as Attachment E-2.
To the extent possible in accordance with applicable Italian law and
to the extent otherwise practicable, the agreements will conform in all
material respects to the agreements set forth in Exhibit 16.11 with
respect to France.
Sellers and Purchasers have been advised that the completion of
the contribution of the Assets and Assumed Liabilities of the Italian
Sellers into the Italian Newco has the following benefits: it
(A) would facilitate the transfer of the Business of the Italian
Sellers to the Italian Newco, (B) would render said transfer
enforceable vis-a-vis all concerned third parties in Italy and
(C) would permit Purchasers to simultaneously acquire all of the
Assets required to run the Business in Italy. Consequently, Sellers
and Purchasers agree that the manner in which to implement a transfer
of the Business of the Italian Sellers to Purchasers is by means of
the contribution mechanism described in this Section. However, if the
contribution of the Business of the Italian Sellers cannot be achieved
for any reason prior to December 1, 1996, then the Business of the
Italian Sellers, upon request of either the Purchasers or Sellers,
shall be transferred to Purchasers in a manner to be agreed upon and
in accordance with the other Sections of this Agreement, provided that
the transaction resulting in the transfer (i) results in a step-up in
tax basis to fair market value of the Assets transferred and (ii) can
be executed within two weeks after such request of Purchasers or
Sellers. The Purchasers and Sellers acknowledge that in such
transaction they may not be able to achieve all of the benefits of the
contribution to the Italian Newco described above. If the parties are
able to agree on the agreements for the contribution to the Italian
Newco described above, then, notwithstanding anything to the contrary
in this Agreement, (x) the Business of the Italian Sellers shall be
transferred to Purchasers substantially in accordance with the terms
and conditions set forth on Attachment E-2 and in such agreements and
(y) compliance by Sellers with their respective obligations pursuant
to Attachment E-2 and such agreements shall not itself constitute a
breach of any provision (including, without limitation, any
representation or warranty) of this Agreement.
(f) Germany - Asset Transfer. The Business of AlliedSignal
Bremssysteme GmbH will be transferred to Purchasers pursuant to an
asset sale in accordance with the other Sections of this Agreement.
(g) Poland - Share Transfer. Sellers' ownership interest in
AlliedSignal Automotive Poland, Sp.z O.O. will be transferred to
Purchasers pursuant to the sale of Sellers' Equity Interests in such
entity in accordance with the other Sections of this Agreement.
-4-
(h) Turkey - Share Transfer. Sellers' ownership interest in
Transturk Fren Donanim Endustrisi San. ve Tic. A.S. will be
transferred to Purchasers pursuant to the sale of Sellers' Equity
Interests in such entity in accordance with the other Sections of this
Agreement.
(i) Mexico - Asset Transfer. The Business of AlliedSignal
Automotive de Mexico S.A. de C.V. will be transferred to Purchasers
pursuant to an asset sale in accordance with the other Sections of
this Agreement.
(j) Brazil - Contribution. The Business of AlliedSignal
Automotive Ltda. will be contributed by such company with a step-up in
tax basis to fair market value of the Assets transferred to a newly-
created company formed by such company, the shares of which will be
transferred to Purchasers at the Closing (the "Brazilian Newco"). The
steps involved in the contribution are attached as Attachment E-3.
(k) Argentina - Share Transfer. Sellers' ownership interest
in AlliedSignal Argentina, S.A. will be transferred to Purchasers
pursuant to the sale of Sellers' Equity Interests in such entity in
accordance with the other Sections of this Agreement.
(l) China - Share Transfer. Sellers' ownership interest in
AlliedSignal Braking Systems (Guangdong) Co. Ltd. will be transferred
to Purchasers pursuant to the sale of Sellers' Equity Interests in
such entity in accordance with the other Sections of this Agreement.
(m) Korea - Restructuring. The transfer of Sellers' Minority
Interest in Hankuk is subject to the terms and conditions set forth in
Section 2.4.
(n) India - Share Transfer. Sellers' Minority Interest in
Kalyani Brakes Limited will be transferred to Purchasers pursuant to
the sale of Sellers' Equity Interests in Bayfield Corporation in
accordance with the other Sections of this Agreement.
2. PURCHASE AND SALE.
2.1 Purchase and Sale. Subject to the terms and conditions
contained herein, and except as otherwise provided below and in Sections
2.2, 2.3 and 2.4 hereof, at the Closing, Sellers shall sell, convey,
transfer, assign and deliver to Purchasers, and Purchasers shall purchase
and accept from Sellers, all of Sellers' right, title and interest in and
to the Transferred Assets. The Transferred Assets shall include, without
limitation, all of the direct right, title and interest of Sellers in and
to the following:
(a) the Owned Real Property owned by Sellers and Leased Real
Property leased by Sellers, and listed in Schedule 6.6 (without regard
to whether such Owned Real Property and Leased Real Property is used
primarily in the Business);
(b) all Personal Property owned or leased by Sellers (including,
without limitation, all such Personal Property of Sellers set forth on
Schedule 6.7, other than
-5-
Excluded Assets and any items disposed of after December 31, 1995
in the ordinary course of business in accordance with Section 8.1);
(c) all inventory, including raw materials, work-in-process and
finished goods, held for sale in the Business by any Seller (the
"Inventory");
(d) all Intellectual Property owned or licensed by Sellers;
(e) all Contracts of Sellers listed in Schedules 6.9(a)(i)-(vi)
(other than Schedule 6.9(a)(iii)) or which are not required pursuant
to Section 6.9 to be listed therein;
(f) all customer and vendor lists, all files and documents
(including credit information) of Sellers relating to customers and
vendors of the Business; and all production data, equipment
maintenance data, accounting records, inventory records, sales and
sales promotional data, advertising materials, cost and pricing
information, business plans, reference catalogs and any other such
data and books and records to the extent relating to the Business;
provided, however, that Sellers shall be entitled to retain copies of
any such materials which are necessary for their tax, accounting or
legal purposes;
(g) all Permits of Sellers, to the extent the same, or a right
to use the same, can be transferred to Purchasers;
(h) all rights of Sellers pursuant to any express or implied
warranties, representations or guarantees made by suppliers to the
Business and, with respect to Real Property, to the extent assignable,
all warranties relating to any work done in respect thereto;
(i) all trade accounts receivable and notes receivable of
Sellers of any nature whatsoever arising from the Business whether
recorded or unrecorded, and all receivables (other than notes
receivable) from other divisions or Affiliates of Sellers or the
Transferred Entities ("Accounts Receivable");
(j) all prepaid expenses and deposits of Sellers, but only to
the extent of the benefit to be conferred by such prepaid expenses and
deposits to the Business after the Closing Date;
(k) Sellers' entire Equity Interests in the Transferred
Entities;
(l) Sellers' entire equity interests in the Newcos;
(m) subject to Section 2.4, the Minority Interests;
(n) the Shared Assets listed in Schedule 2.1(n);
-6-
(o) any and all rights of Sellers under the Budd Agreement, the
Transturk Acquisition Agreement (other than Sellers' rights with
respect to the Transturk Contingent Payment) and related Pledge
Agreement, the Servinter Agreement, the JKC JV Agreements, the Poland
Acquisition Agreement and the Transition Services Agreement between
AlliedSignal and Echlin Inc. in connection with the commercial brake
products manufactured at the Gallatin, Tennessee plant;
(p) all insurance proceeds or condemnation awards for any
casualty, loss, damages or taking of Real Property of Sellers relating
to the Business occurring between the date of this Agreement and the
Closing Date (net of costs of collection and expenditures in
connection with preservation, repair, restoration and/or replacement);
(q) at the option of the applicable Purchaser, all rights and
benefits of Sellers and the Transferred Entities in or under all
exemptions, abatements, or similar benefits involving real property
tax and relating to the Real Property, (i) to the extent such rights
and benefits are assignable without unreasonable burden, or (ii) if
assignable only with unreasonable burden, the applicable Purchaser
satisfies, assumes or indemnifies Sellers against such burden to
Sellers' reasonable satisfaction (subject to Section 14.2(b)(iv)), and
to the extent the applicable Purchaser accepts any post-assignment
obligations reasonably necessary to realize such rights and benefits;
(r) any and all rights of Sellers in connection with Sellers'
proposed joint venture in Thailand relating to the Business; and
(s) all assets reflected on the Closing Balance Sheet.
2.2 Excluded Assets. Notwithstanding anything to the contrary
contained in this Agreement, the following assets ("Excluded Assets") are
not intended to and shall not be sold, assigned, transferred or conveyed to
Purchasers hereunder and such assets shall not be deemed Assets or
Transferred Assets hereunder:
(a) except as set forth in Section 2.1(p), all cash, cash
equivalents and short-term investments of Sellers;
(b) except as otherwise provided in the Aftermarket Agreements
or the Trademark License, Sellers' rights to all names, marks, trade
names and trademarks incorporating "AlliedSignal" or "Bendix" or any
derivation therefrom and all corporate symbols or logos incorporating
"AlliedSignal" or "Bendix" either alone or in combination and any and
all goodwill represented thereby and pertaining thereto;
(c) contracts of insurance maintained by or on behalf of Sellers
(including any return of charges or premiums under retrospective
rating plans) and, except as set forth in Section 2.1(p), all
insurance proceeds or claims made by Sellers thereunder;
-7-
(d) all rights of Sellers under this Agreement or any agreement,
instrument or other document entered into in connection herewith or
any rights in connection with the transactions contemplated hereby and
thereby;
(e) Sellers' corporate seals, minute books and other corporate
records;
(f) any employee data which relates to employees who are not
Transferred Employees or which Sellers are prohibited by law from
disclosing or delivering to Purchasers;
(g) all rights and benefits under employee benefit plans of
Sellers listed on Schedule 2.2(g), except as provided in the Services
Agreement or in Section 5 hereof;
(h) all claims, rights, benefits and interests arising under or
resulting from any Excluded Asset or Excluded Liability;
(i) the South Bend Facility (except that a portion of same will
be leased pursuant to the South Bend Lease);
(j) the Parets Facilities and all assets of Sellers of the types
described in Section 2.1 located thereat or pertaining thereto;
(k) equity interests in Greyco and all assets of Sellers of the
types described in Section 2.1 pertaining to Greyco;
(l) equity interests in Transpar Iberica S.A., a Spanish
corporation;
(m) equity interests in Jidosha Kiki Co., a Japanese
corporation;
(n) the Shared Assets listed on Schedule 2.2(n);
(o) all (i) refunds, rebates, abatements or credits for taxes
due to Sellers or Transferred Entities relating to periods ending on
or prior to the Closing Date that are attributable solely to events
occurring on or prior to the Closing Date, provided that, subject to
Section 14.2(b)(iv), Purchasers shall not be required to obtain any
such refunds, rebates, abatements or credits if to obtain them would
be unreasonably burdensome, and (ii) net operating losses or other tax
assets of any of the Sellers or Transferred Entities;
(p) prepaid expenses and deposits of Sellers, to the extent that
the benefit will not be conferred by such prepaid expenses and
deposits upon the Business after the Closing Date;
(q) all rights granted to AlliedSignal Truck Brake Systems
Company ("TBS") pursuant to that certain License Agreement, effective
as of October 16, 1993, relating to: (i) products and product lines
used in air brake systems for automotive vehicles (which products and
product lines include, without limitation, air compressors, air drying
devices, valves, slack adjusters, brake actuators, ABS/ASR system and
components, and the air
-8-
portion of air over hydraulic units); and (ii) hydraulic parking brake
control systems for medium and heavy trucks (provided that any rights
under the grant back from TBS to AlliedSignal shall not be Excluded
Assets);
(r) all assets, properties and rights of TBS with respect to
(i) hydraulic parking brake control systems for medium and heavy
trucks, and (ii) the hydraulic portion of the air over hydraulic units
referred to in clause (q) of this Section 2.2 (the "Excluded TBS
Products");
(s) all Permits of Sellers, to the extent the same, or a right
to use the same, cannot be transferred to Purchasers;
(t) the 1934 Bendix (SWC) passenger car owned by the Business,
and Bendix memorabilia;
(u) the OES assets listed on Schedule 2.2(u) (the "Excluded OES
Assets");
(v) all notes receivable of Sellers from other divisions or
Affiliates of Sellers or the Transferred Entities, and all accrued
interest thereon if any;
(w) all assets related to the commercial products business sold
to Echlin Inc.;
(x) that portion of the Real Property in Campinas, Brazil, the
beneficial ownership of which has been conveyed to the Brazilian joint
venture with an Affiliate of Knorr-Bremse A.G. ("Knorr"); and
(y) all rights under the Usufruct Agreement made on or about
October 11, 1995 between AlliedSignal International Finance
Corporation and Transturk Holding Inc. (the "Usufruct Agreement").
2.3 Assignment of Assets.
(a) Notwithstanding anything to the contrary in this Agreement
(but subject to Sections 8.1, 9.2, 9.3, 9.4, 10.2 and 10.3), to the
extent that any sale, assignment, transfer or conveyance or attempted
sale, assignment, transfer or conveyance of any Contract, Permit, or
other Transferred Asset described in Section 2.1 to be sold, assigned,
transferred or conveyed to Purchasers (other than the Minority
Interest in Hankuk), or any claim, right or benefit arising thereunder
or resulting therefrom (collectively the "Interests") would constitute
a breach under such Contract or Permit or a violation of any law,
decree, order, regulation or other governmental edict, or is not
capable of being sold, assigned, transferred or conveyed without any
third party consent which has not been obtained by (or does not remain
in full force and effect at) the later of the Tentative Closing Date
and the Closing Date (the "Exchange Date"), this Agreement shall not
constitute a sale, assignment, transfer or conveyance thereof, or an
attempted sale, assignment, transfer or conveyance thereof unless and
until such Interest can be legally transferred or transferred without
breach, at which time each such Contract, Permit or
-9-
Transferred Asset shall be so transferred. Until such transfer, all
such Interests shall be held in trust by Sellers for the sole benefit
of Purchasers (and, with respect to Real Property, Purchasers shall
bear all reasonable expenses incurred in the ordinary course of business or
necessary to make emergency repairs in connection with the ordinary
use and occupancy thereof, but no capital expenses or other expenses
incurred outside of the ordinary course of business shall be made
without the consent of Purchasers). The foregoing is without
limitation of Sellers' and Purchasers' obligations under the
provisions of Section 8.3 with respect to the delivery of consents
required in connection with the foregoing if applicable.
(b) To the extent any of the approvals, consents or waivers
necessary to sell, assign, transfer or convey any Interest have not
been obtained (or do not remain in full force and effect) as of the
Exchange Date, Sellers shall promptly notify Purchasers of each such
occurrence, and Sellers and Purchasers shall, during the remaining
term of such Interest, use all reasonable efforts to (i) cooperate in
any reasonable and lawful arrangements designed to provide the
benefits of such Interest to Purchasers, in which case Purchasers
shall promptly pay or satisfy the corresponding liabilities and
obligations for the enjoyment of such benefits to the extent
Purchasers would have been responsible therefor if such consent,
waiver or approval had been obtained and such Interest had been
transferred to Purchasers; and (ii) enforce, at the request of
Purchasers, any rights of Sellers arising from such Interest against
such issuer thereof or the other party or parties thereto (including
the right to elect to terminate any such Interest in accordance with
the terms thereof with the consent of Purchasers). Except as
otherwise provided in the Services Agreement, Sellers shall pay and
discharge all reasonable costs of obtaining any such consent or
approval whether before or after the Exchange Date. If any Interest
that constitutes a Section 2.3 Transferred Entity has not been so
sold, assigned, transferred or conveyed to Purchasers on the date
which is one year following the Exchange Date, then, unless the
Purchasers shall otherwise direct, Sellers shall thereafter retain
such Interest and shall pay to Purchaser Parent, as an adjustment to
the purchase price hereunder, the greater of (i) the amount reflected
on the Closing Balance Sheet for such Interest, and (ii) the fair
market value of such Interest, as determined by a nationally
recognized independent appraisal firm satisfactory to Purchasers and
Sellers, in each case plus interest thereon from the Closing Date to
the date of such payment at the rate of LIBOR plus .25%. Purchasers
shall be responsible for payment of all fees and expenses of such
appraisal firm.
2.4 Hankuk Restructuring. The parties acknowledge and agree that
Hankuk operates businesses in addition to a braking systems business and,
accordingly, prior to the transfer of the Minority Interest in Hankuk to a
Purchaser, Hankuk must be restructured in a manner reasonably satisfactory
to Purchasers which enables Purchasers to acquire (either through ownership
of such Minority Interest or through another structure reasonably
satisfactory to Purchasers) all of Sellers' interest solely in Hankuk's
braking systems business (the "Hankuk Restructuring"). Sellers shall use
their best efforts to reach agreement with Hankuk's shareholders with
respect to the Hankuk Restructuring as promptly as practicable after the
date hereof. In the event that the Hankuk Restructuring has not been
completed as of the Exchange Date, this Agreement shall not
-10-
constitute a sale, assignment, transfer or conveyance (or an attempted sale,
assignment, transfer or conveyance) of the Minority Interest in Hankuk unless
and until the Hankuk Restructuring has been completed, at which time such
Minority Interest shall be so transferred (or Purchasers shall otherwise
acquire an interest in Hankuk's braking systems business in the manner
contemplated by the Hankuk Restructuring). Until such transfer (or other
acquisition), Sellers shall promptly remit to Purchasers any dividends or
other distributions that they may receive in respect of Hankuk's braking
systems business; provided, however, that in the event that such transfer
(or other acquisition) has not been completed by the second anniversary of
the Exchange Date, then (i) Sellers shall pay to Purchasers, as an adjustment
to the purchase price hereunder, the amount of $4,000,000 in cash and (ii)
upon such payment, Sellers shall have no further obligations under this
Section 2.4.
2.5 Safe Harbor Leases.
(a) Included within the Business conducted by Sellers in the
United States (the "United States Business") are certain items of
equipment which are subject to leases between certain persons as tax
lessors and AlliedSignal as tax lessee (the "Safe Harbor Leases").
AlliedSignal is the only tax lessee with respect to any item of
equipment included within the United States Business. Schedule 2.5
sets forth, with regard to each Safe Harbor Lease, the name of the tax
lessor and the items of equipment subject thereto. Sellers represent
and warrant that, except as set forth on Schedule 2.5, AlliedSignal is
in compliance with all of the provisions of each Safe Harbor Lease to
which it is a party and is in possession of all properties which are
the subject of such Safe Harbor Lease and no payments of termination
value or similar payments are due from AlliedSignal under any Safe
Harbor Lease or will be triggered by the transactions contemplated by
this Agreement. AlliedSignal shall assign to a Purchaser and such
Purchaser shall assume the United States Business's interest in and
obligations under each Safe Harbor Lease (other than any Safe Harbor
Lease as to which AlliedSignal is in material breach), on the terms
and conditions set forth in this Section 2.5 and as are necessary
under Section 168(f)(8) of the Internal Revenue Code and the
regulations promulgated thereunder such that each Safe Harbor Lease
continues to be characterized as a lease and neither AlliedSignal nor
the applicable Purchaser will be required to pay a "termination value"
(as defined under the applicable Safe Harbor Lease) as a result of the
assignment contemplated hereby. Each applicable Purchaser shall
furnish to the lessor under each Safe Harbor Lease, within thirty (30)
days after the Exchange Date, such Purchaser's consent to take the
property subject to the provisions of the applicable Safe Harbor
Lease. In addition, each applicable Purchaser shall file a statement
with its federal income tax returns for the taxable year in which the
transfer occurs containing the information required by Temporary
Regulation 5c.168(f)(8)-2(a)(5) promulgated under the Internal Revenue
Code. Each applicable Purchaser will cooperate with Sellers in
obtaining the consents of the lessor under the related Safe Harbor
Lease and each such lessor's commitment to file the statements
required by Temporary Regulation 5c.168(f)(8)-2(a)(5).
(b) AlliedSignal shall indemnify and hold each applicable
Purchaser harmless from any Loss to the extent such Loss arises out of
(i) AlliedSignal's actions, omissions or
-11-
obligations under any Safe Harbor lease on or prior to the Exchange
Date or (ii) any Safe Harbor Lease which is not assigned by AlliedSignal
to any Purchaser. Purchaser Parent and each applicable Purchaser shall
indemnify and hold AlliedSignal harmless from any Loss to the extent
such Loss arises out of Purchasers' actions or omissions with respect
to the Safe Harbor Leases or the related equipment after the Exchange
Date. The indemnification provided for in this Section 2.5(b) shall not
be subject to, or otherwise affect, the indemnification provided for in
Article 15.
(c) The hypothetical interest income and rental expense
attributable to the period of the Safe Harbor Leases between the most
recent lease payment date prior to Closing Date and the first lease
payment date after Closing Date shall be prorated. AlliedSignal shall
be allocated the portion of such hypothetical interest income and
rental expense attributable after the most recent lease payment date
prior to the Closing Date through the Closing Date, and the applicable
Purchaser shall be allocated the portion of such hypothetical interest
income and rental expense attributable after the Closing Date through
the first lease payment date after the Closing Date.
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION.
3.1 Initial Purchase Price.
(a) The initial purchase price to be paid by Purchasers for the
Assets (the "Initial Purchase Price") shall be One Billion Five
Hundred Million Dollars ($1,500,000,000.00). The Initial Purchase
Price shall be subject to adjustment as hereinafter set forth in
Section 3.2.
(b) At the Closing, Purchaser Parent, for itself and as agent
for the other Purchasers, shall pay the Initial Purchase Price to
AlliedSignal, for itself as a Seller and as agent for the other
Sellers, by a wire transfer of immediately available funds in U.S.
currency to a bank account to be designated in writing by AlliedSignal
not less than two (2) Business Days prior to the Exchange Date.
3.2 Post-Closing Adjustment.
(a) The Initial Purchase Price shall be (i) adjusted by the
amount, if any, by which the "Final Investment" (as hereinafter
defined) is greater or less than $830,300,000 (the "Initial
Investment") (representing the total "Equity" of the Business as set
forth on the Initial Balance Sheet (as defined in Section 6.5(a))) and
(ii) increased by the amount, if any (the "Pension Adjustment
Amount"), by which the Adjusted Transfer Amount (as defined below) is
less than the Transfer Amount determined pursuant to Section
5.4(c)(2).
(x) The "Adjusted Transfer Amount" shall be an amount equal
to the difference between (i) the Projected Benefit Obligation
(as defined below) as of the Closing Date defined within
Financial Accounting Standard No. 87 ("FAS 87") for the pension
benefits of the Union Transferred Employees and the Non-Union
-12-
Transferred Employees under Sellers' Pension Plans and (ii) fifty-
five million dollars ($55,000,000).
(y) The "Projected Benefit Obligation" for the pension
benefits of Union Transferred Employees and Non-Union Transferred
Employees shall be determined by application of the assumptions
and methods utilized by Sellers' actuary for determining expense
pursuant to FAS 87 for Seller's Pension Plans for the plan year
ended December 31, 1995; provided, however, that an annual
discount rate of eight percent (8%), 1983 GAM mortality tables
and a five percent (5%) annual salary increase shall be used as
assumptions in making this determination.
The Initial Purchase Price as adjusted pursuant to this Section
3.2 is hereinafter referred to as the "Adjusted Purchase Price."
(b) Not later than ninety (90) days after the Exchange Date,
Sellers shall prepare and deliver an audited consolidated balance
sheet of the Business (excluding the Excluded Assets and the Excluded
Liabilities), as of the close of business on the Closing Date (the
"Closing Balance Sheet"). The "Equity" of the Business as of the
Closing Date shown on the Closing Balance Sheet shall be the "Final
Investment". The Closing Balance Sheet shall be prepared on the basis
of the accounting principles set forth in Schedule 3.2(b) (the
"Specified Accounting Principles"). The Closing Balance Sheet shall
be accompanied by the report, dated as of the date of delivery of the
Closing Balance Sheet, of Sellers' accountants (Price Waterhouse LLP),
expressing their opinion as to the fair presentation, in all material
respects, of the Closing Balance Sheet and its preparation on the
basis of the Specified Accounting Principles. Purchasers agree to
provide Sellers and Sellers' accountants, at no cost to Sellers,
access to the books and records and the use of the Purchasers'
employees to the extent reasonably necessary for the preparation of
the Closing Balance Sheet and any supporting schedules. Sellers and
Price Waterhouse LLP shall permit Purchasers' accountants (Arthur
Andersen LLP) at the earliest practicable date to review and make
copies of (i) the work papers used to support account balances in the
Closing Balance Sheet and (ii) any supporting schedules and the
calculations used in the preparation of the Closing Balance Sheet.
(c) When Sellers deliver the Closing Balance Sheet Sellers shall
also deliver certificates of AlliedSignal's Chief Financial Officer
certifying that (i) the Closing Balance Sheet, and (ii) the amount of
the Final Investment (as defined below) (with the Sellers'
determination of the Final Investment referred to herein as the
"Sellers' Valuation"), in each case, has been determined in accordance
with the Specified Accounting Principles.
(d) Within ninety (90) days after receipt of the Closing Balance
Sheet and the accompanying report of Price Waterhouse LLP and
certificates of AlliedSignal's Chief Financial Officer, Purchasers
shall notify Sellers of their agreement or disagreement with the
application of the Specified Accounting Principles in the preparation
of the Closing Balance Sheet and the Sellers' Valuation. In the event
of any disagreement, Purchasers
-13-
shall furnish Sellers with a certificate of the Chief Financial Officer
of Purchaser Parent certifying, in reasonable detail, the basis for such
disagreement and the amount of each such item in dispute (the
"Purchasers' Proposed Adjustments") and a letter from Purchasers'
accountants, Arthur Andersen LLP, describing the facts and circumstances
which, in their judgment, caused them to conclude that the items in
dispute as reflected in the Closing Balance Sheet were not properly
determined in accordance with this Agreement or the Specified
Accounting Principles. Failure by Purchasers to advise Sellers of the
Purchasers' agreement or disagreement concerning the Closing Balance
Sheet or the Seller's Valuation within ninety (90) days of receipt of
the Closing Balance Sheet shall be deemed to constitute Purchasers'
acceptance of and agreement with the Closing Balance Sheet and the
Sellers' Valuation.
If Purchasers dispute an item on the Closing Balance Sheet or the
amount of the Sellers' Valuation, then Purchasers shall have the right
to meet with Sellers during a period of thirty (30) days to negotiate
any outstanding differences. Sellers shall not be permitted to
challenge or dispute any item reflected in the Closing Balance Sheet
or Sellers' Valuation, but shall be permitted to challenge or dispute
Purchasers' Proposed Adjustments thereto. If Purchasers, after such
negotiation period, disagree with the Sellers' Valuation, and Sellers
do not accept the Purchasers' Proposed Adjustments, then the New York
office of KPMG Peat Marwick LLP (the "Firm") shall be retained by
Purchasers and Sellers to conduct a review (with the scope of, and
procedures used in, such review to be sufficient, in the opinion of
the Firm, to enable the Firm to render an informed judgment with
respect to the items in dispute on the Closing Balance Sheet). Not
later than thirty (30) days after the engagement of the Firm (as
evidenced by its written acceptance by facsimile or otherwise to both
parties), the parties shall submit simultaneously briefs to the Firm
(with a copy to the other party) setting forth their respective
positions regarding the issues in dispute, and not later than thirty
(30) days after the submission of such briefs the parties shall submit
simultaneously reply briefs (with a copy to the other party). The
Firm shall render its decision resolving the dispute within thirty
(30) days after submission of the reply briefs. If an additional
briefing, a hearing or other information is required by the Firm, the
Firm shall give notice thereof to the parties as soon as practicable
before the expiration of such thirty (30) day period, and the parties
shall promptly respond with a view to minimizing any delay in the
decision date. The Firm shall, after such review, be required to
determine whether, with respect to the items in dispute, the Closing
Balance Sheet and Sellers' Valuation are stated in conformity with
this Agreement and the Specified Accounting Principles. If the Firm
determines that, with respect to the items in dispute, the Closing
Balance Sheet is not stated in conformity with this Agreement and the
Specified Accounting Principles, then such accounting firm shall
determine what adjustments (which adjustments shall not, however, be
in excess of, nor less than, the greatest or lowest value,
respectively, claimed by either party for that particular item) are
necessary for the Closing Balance Sheet to be stated in conformity
with this Agreement and the Specified Accounting Principles with
respect to the items in dispute and shall determine the amount of the
Final Investment. Purchasers and Sellers shall be bound by such
determination of the Final Investment, and this determination shall
-14-
be final and shall not be subject to arbitration pursuant to Section
16.9 hereof. The fees and expenses of the Firm shall be shared equally
by Sellers and Purchasers.
(e) The Closing Balance Sheet and the Final Investment as
finally agreed upon or determined as provided in this Section 3.2
shall be the Closing Balance Sheet and the Final Investment for all
purposes of this Agreement.
(f) Any adjustment required pursuant to Section 3.2(a)(i) shall
be payable as follows:
(i) If the Final Investment is less than the Initial
Investment, within five (5) Business Days of the final
determination of the Final Investment, Sellers shall pay to
Purchasers the difference, plus interest thereon at the rate of
LIBOR (as defined in Section 3.2(h)) plus .25% per annum from
(but excluding) the Closing Date through and including the date
of payment. Such payment shall be made by a wire transfer of
immediately available funds in U.S. currency to a bank account
designated in writing by Purchasers.
(ii) If the Final Investment is more than the Initial
Investment, within five (5) Business Days of the final
determination of the Final Investment, Purchasers shall pay to
Sellers the difference, plus interest thereon at the rate of
LIBOR plus .25% per annum from (but excluding) the Closing Date
through and including the date of payment. Such payment shall be
made by a wire transfer of immediately available funds in U.S.
currency to a bank account designated in writing by Sellers.
(iii) If at any time after the delivery of the Closing
Balance Sheet, Purchasers and Sellers expressly agree that any
portion of any adjustment is not in dispute between the parties
or, if following any such dispute, Purchasers and Sellers
expressly agree that they have resolved their difference with
respect to all or any portion thereof without a determination by
the Firm, Purchasers or Sellers, as the case may be, shall within
five (5) Business Days pay to the other the amount of the
adjustment not previously paid by Purchasers or Sellers and not
in dispute, plus interest thereon at the rate of LIBOR plus .25%
per annum from (but excluding) the Closing Date through and
including the date of payment. Such payment shall be made by a
wire transfer of immediately available funds in U.S. currency to
a bank account designated in writing by Purchasers or Sellers, as
the case may be.
(g) At or before the time Sellers deliver the Closing Balance
Sheet, Sellers will deliver to Purchasers an actuarial valuation and
statement of the Transfer Amount determined pursuant to Section
5.4(c)(2), a statement of the amount transferred or to be transferred
from the Sellers' Pension Plans and a determination of the Pension
Adjustment Amount required pursuant to Section 3.2(a)(ii). Within
ninety (90) days after receipt of Sellers' statement, Purchasers shall
notify Sellers of their agreement or disagreement with Sellers'
determination of the Pension Adjustment Amount. In case of
disagreement, the
-15-
matter will be referred to the Firm for determination in accordance
with the procedures set forth in the second paragraph of Section 3.2(d).
Within five (5) Business Days after agreement or final determination of
the Pension Adjustment Amount, Purchasers shall pay to Sellers the
Pension Adjustment Amount plus interest thereon at the rate of LIBOR
plus .25% per annum from (but excluding) the date of agreement or final
determination of the Pension Adjustment Amount through and including the
date of payment. Such payment shall be made by a wire transfer of
immediately available funds in U.S. currency to a bank account
designated in writing by Sellers.
(h) For purposes of this Agreement "LIBOR" shall mean the rate
for six month United States of America dollar deposits which appears
on the Telerate Page 3750 as of 11:00 a.m., London time, on the last
day for which such rate is available prior to the Closing Date. If
such rate does not so appear on the Telerate Page 3750, "LIBOR" shall
mean the average of the rates at which six month United States of
America dollar deposits are offered by Morgan Guaranty Trust of New
York and Bankers Trust Company to first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) one
Business Day preceding the Closing Date.
(i) The purpose of this Section 3.2 is to determine the purchase
price to be paid by Purchasers under this Agreement. Accordingly, any
determination pursuant to subsection (c) above made by the Firm
selected thereunder and any payment made pursuant to subsection (g)
above shall not be deemed to be an indemnification by either Sellers
or Purchasers, as the case may be, pursuant to Section 15, nor subject
to the limitation on indemnities set forth in Section 15.4 hereof.
3.3 Net Cash Adjustment. If the Closing Date precedes the
Tentative Closing Date, a cash adjustment shall be made in an amount equal
to the "Net Cash Balance" (as defined below) for the period beginning one
day after the Closing Date and ending on the Tentative Closing Date (the
"Net Cash Period"). For purposes of this provision, "Net Cash Balance"
shall mean the difference between "Cash Receipts" and "Cash Disbursements"
(as such terms are defined below) for the Net Cash Period. "Cash Receipts"
means all cash collections attributable to the Business, such as receipts
from customers and rebates from suppliers, but specifically excluding any
cash receipts from Excluded Assets. "Cash Disbursements" means all cash
payments with respect to Assumed Liabilities or liabilities of Transferred
Entities and other expenses or expenditures incurred in the normal course
of business, such as payroll or capital expenditures permitted by
Section 8.1(m); provided, however, that Cash Disbursements shall not
include cash disbursements in respect of (i) Excluded Liabilities, (ii) ABS
supplier settlements (which are handled exclusively by Section 14.11); or
(iii) any other payments, liabilities or obligations as to which Sellers
are expressly entitled to receive reimbursement from Purchasers pursuant to
any other provision of this Agreement. All payments relating to or
involving any indemnification pursuant to other provisions of this
Agreement shall be excluded from the calculation of the Net Cash Statement
and shall be handled in accordance with the other terms of this Agreement.
At the time of delivery of the Closing Balance Sheet, Sellers will also
deliver to Purchasers an audited statement of the Net Cash Balance for the
Net Cash Period (the "Net Cash Statement"), accompanied by a report, dated
as of the date of delivery of the Net Cash Statement, of Sellers'
accountants (Price
-16-
Waterhouse LLP), expressing their opinion as to the fair presentation, in
all material respects, of the Net Cash Statement and its preparation on the
basis described in this Section 3.3. Purchasers shall have the right to
dispute the calculation of the Net Cash Balance, and any such dispute shall
be resolved in accordance with the procedures for such matters set forth in
Section 3.2(d) with respect to the Closing Balance Sheet (but using
accounting and auditing practices appropriate for a cash basis accounting).
If Cash Receipts exceed Cash Disbursements, resulting in a positive Net Cash
Balance, Sellers shall pay to Purchasers the amount of such Net Cash Balance
by no later than the fifth Business Day after the final determination of the
Net Cash Balance. If Cash Disbursements exceed Cash Receipts, resulting in a
negative Net Cash Balance, Purchasers shall pay to Sellers the amount of the
Net Cash Balance by no later than the fifth Business Day after the final
determination of the Net Cash Balance.
3.4 Allocation of Purchase Price.
(a) Sellers and Purchasers shall agree on or before the Exchange
Date as to the allocation (a "Final Allocation"), on a per country and
per Purchaser basis, of the Initial Purchase Price for tax purposes.
Nothing in this Section 3.4 shall be construed as requiring that
either Sellers or Purchasers hire appraisers or otherwise incur out-of-
pocket expenses in order to reach agreement as to any of the
allocations described above. For purposes of this Section 3.4, the
Initial Purchase Price, as defined in Section 3.1(a), shall be deemed
to include that portion of the Assumed Liabilities (as defined in
Section 4.1) that are considered assumed liabilities for federal
income tax purposes. Any post-closing adjustments made in accordance
with Section 3.2 shall be allocated in accordance with the character
of each such adjustment, on a basis consistent with such Final
Allocation. Sellers and Purchasers shall prepare and file, in a
manner consistent with such Final Allocation, such forms or statements
as may be required by law. Sellers and Purchasers shall adhere to any
Final Allocation for all purposes including any federal, foreign,
state, county or local income and franchise Tax Return filed by them
after the Closing Date, including the determination by Sellers of
taxable gain or loss on the sale of the Assets and the determination
by Purchaser of its tax basis with respect to the Assets.
(b) Sellers and Purchasers shall agree on or before the Exchange
Date as to the allocation of the Initial Purchase Price to each Owned
Real Property (and Leased Real Property if any transfer tax is due in
connection with the assignment of the lease thereof), and such
allocation shall be utilized for purposes of (i) calculating all real
property transfer taxes due in connection with the direct or indirect
transfer of the Real Property pursuant to the provisions of this
Agreement and (ii) determining the amount of title insurance to be
purchased for any Owned Real Property.
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
4.1 Assumption of Certain Liabilities and Obligations by Purchasers.
Except as set forth in Section 4.2, from and after the Closing Date,
Purchasers shall, without any further responsibility or liability of, or
recourse to, Sellers, or any of their respective directors, shareholders,
officers, employees, agents, consultants, representatives, Affiliates,
successors and
-17-
assigns (but without limiting Purchasers' rights under any other
provisions of this Agreement, including, without limitation, the
provisions of Article 15), absolutely and irrevocably assume and be liable
and solely responsible for any and all liabilities and obligations of any
kind or nature, whether foreseen or unforeseen, known or unknown, existing
or which may arise in the future, fixed or contingent, matured or unmatured
of Sellers arising out of or relating to (i) the ownership, use or
possession of the Assets, (ii) the Business or (iii) the condition of the
Assets on or prior to the Closing Date (the obligations being assumed by
Purchasers pursuant to this Agreement are collectively referred to as the
"Assumed Liabilities"). The Assumed Liabilities shall include, without
limitation, any intercompany and intracompany trade accounts of the
Business.
4.2 Excluded Liabilities. Notwithstanding any other provision of
this Agreement, Sellers shall, without any responsibility or liability of,
or recourse to Purchasers or any of their directors, shareholders,
officers, employees, agents, consultants, representatives, Affiliates,
successors or assigns (but without limiting Sellers' rights under any other
provisions of this Agreement, including, without limitation, the provisions
of Article 15), absolutely and irrevocably retain and be solely responsible
for the following liabilities and obligations, whether of the Sellers or
the Transferred Entities, foreseen or unforeseen, known or unknown,
existing or which may arise in the future, fixed or contingent, matured or
unmatured (the "Excluded Liabilities"):
(a) any liability or obligation arising out of or relating to
the antilock braking systems known as PLC-1, PLC-3, Bendix 10 or ABX-4
(but in the case of ABX-4, only with respect to the alleged shuttle
valve corrosion problem) (the "Excluded ABS Liabilities"); provided,
however, that with respect to the provision of service parts for PLC-
1, PLC-3 and Bendix 10, (i) Purchasers shall assume the obligation to
provide such service parts, (ii) Sellers shall not, as part of a
settlement between the Sellers and the customer, restrict the
Purchasers, without Purchasers' consent, from selling such service
parts at a reasonable price and on reasonable commercial terms and
conditions and (iii) Purchasers shall indemnify Sellers for any Losses
(as defined in Section 15.1) arising out of a design defect in such
service parts (whether due to a new design or design change) arising
after the Closing Date, or a defect in the manufacture or assembly
(not attributable to a design defect that existed as of the Closing
Date) in such service parts manufactured or assembled by the Business
after the Closing Date;
(b) any liability or obligation (other than those referred to in
clause (a) above) arising out of any claim of or for injury to persons
or property by reason of the improper performance or malfunctioning,
improper design or manufacture, or failure to adequately package,
label or provide warnings as to the hazards of, any product of the
Business, where the injury giving rise to such claim occurred on or
prior to the Closing Date; provided, however, that this clause (b)
does not and shall not apply to any liabilities or obligations (not
involving injury) in connection with a Service Action or Recall (each
as defined in Section 6.24), the treatment of which is addressed
exclusively in Section 15.6;
(c) any Environmental Claim with respect to the South Bend
Facility to the extent arising out of actions or omissions of Sellers
or third parties;
-18-
(d) any Environmental Claim to the extent arising out of actions
or omissions of Sellers or third parties on or prior to the Closing
Date relating to real property not owned or leased by Sellers and on
which the Business (either directly or through third parties acting on
its behalf) disposed, stored or treated, or arranged for the disposal,
storage or treatment, of Hazardous Materials on or prior to the
Closing Date; provided, however, that the foregoing shall not apply to
Environmental Claims relating to the migration, discharge or release
of Hazardous Materials from the Real Property on or prior to the
Closing Date;
(e) any liabilities for Taxes:
(i) imposed on any Seller or Transferred Entity for any
taxable period ending on or before the Closing Date (or, in the
case of any taxable period that begins before and ends after the
Closing Date, for the portion of such taxable period that ends on
the Closing Date);
(ii) imposed upon any Seller or Transferred Entity with
respect to any taxable income arising as a result of any Seller
or Transferred Entity being a member of a consolidated group
under federal or similar state, local or foreign income tax law
for any taxable period ending on or before the Closing Date (or,
in the case of any taxable period that begins before and ends
after the Closing Date, for the portion of such taxable period
that ends on the Closing Date);
(iii) imposed upon or with respect to the Assets or the
ownership, holding, operation, use, leasing or possession thereof
for any taxable period ending on or before the Closing Date, (or,
in the case of any taxable period that begins before and ends
after the Closing Date, for the portion of such taxable period
that ends on the Closing Date);
(iv) imposed on any Seller or Transferred Entity in respect
of transactions contemplated in this Agreement occurring (or
deemed to occur, pursuant to Section 1.1 hereof) on the Closing
Date (except as otherwise provided in this Agreement), or
transactions undertaken between or among AlliedSignal and its
Affiliates to effectuate the terms of this Agreement; provided,
however, that
(v) for purposes of clauses (i), (ii) and (iii) above and
Section 14.2 of this Agreement, in the case of any Taxes that are
imposed for a taxable period that includes but does not end on
the Closing Date, the portion of such Tax related to the portion
of such taxable period ending on the Closing Date shall (A) in
the case of any Taxes other than Taxes based upon or related to
income, be deemed to be either the amount of such Tax (x) imposed
in respect of taxable events occurring on or prior to the Closing
Date, or (y) for the entire taxable period multiplied by a
fraction the numerator of which is the number of days in the
portion of the taxable period ending on the Closing Date and the
denominator of which is the total number of days in the entire
taxable period, whichever apportionment shall more equitably
reflect the appropriate share of Tax, and (B) in the case of any
Tax based
-19-
on or related to income, be deemed equal to the amount
which would be payable at the highest statutory tax rate as if
the relevant taxable period ended on the Closing Date (whether or
not the relevant taxable period in fact ends on such date).
(f) any obligation under any agreement for borrowed money
(except as expressly provided in Section 14.7) or notes payable to
divisions or Affiliates of Sellers or the Transferred Entities;
(g) except as expressly provided in Section 5, all liabilities
or obligations of any nature with respect to the Retained Employees;
(h) any liability or obligation relating to the Excluded Assets;
(i) [INTENTIONALLY DELETED]
(j) any "Excluded Liability" as defined in the Budd Agreement,
any contingent payment obligations under the Transturk Acquisition
Agreement (the "Transturk Contingent Payment") and any liability under
the Usufruct Agreement;
(k) any liability or obligation for retiree medical or retiree
life insurance coverage for former salaried employees of The Budd
Company ("Budd") who became employees of any of the Sellers pursuant
to the Budd Agreement and who, at the date of closing under the Budd
Agreement, had attained age 55 or older and had ten or more years of
credited service under Budd's retiree health and life insurance
benefits plan;
(l) any liability or obligation relating to or arising out of
the use of asbestos products in the Business at any time on or prior
to the Closing Date;
(m) except for liability arising from the continued coverage of
Covered Employees (as defined in Section 5.5(a)) in Sellers' Welfare
Plans pursuant to Section 5.5(a), any liability of Sellers to any
plan, individual or governmental agency arising out of any failure of
Sellers to comply with the applicable provisions of Sellers' Benefit
Plans (as defined in Section 6.16), ERISA, the Code, or other
applicable laws with respect to its employees, including any
obligation or liability of Sellers for any penalty, fine or similar
amount due from Sellers on account of any breach of fiduciary duty or
failure to comply with applicable laws or regulations, the provisions
of Sellers' Benefit Plans, or underfunding liability, with respect to
any of Sellers' Benefit Plans;
(n) except for liability arising under the three employment
agreements listed on Schedule 6.16(a)(i), any liability for severance
pay, leaving allowances, guaranteed fixed terms of employment or
retirement benefits beyond those provided under applicable law,
collective bargaining agreements, or Sellers' plan or programs
applicable to Employees generally, which arises out of any acts or
omissions of Sellers prior to the Closing Date;
-20-
(o) any liability, claim or obligation relating to or arising
out of employment of the Employees or Former Employees of the Business
on or prior to the Closing Date including, but not limited to, salary,
vacation, overtime, bonuses, incentives, profit sharing, stock
options, retirement indemnities that has not been provisioned on the
Closing Balance Sheet;
(p) any liability or obligation, including, without limitation,
any obligation or liability under Sellers' Benefit Plans, with regard
to any Employees or Former Employees of the Business to the extent
such liability or obligation is to be retained by Sellers pursuant to
Section 5 or is not assumed by Purchasers pursuant to Section 5;
(q) any liability, claim or obligation relating to or arising
out of employment of any employee or Former Employee of Sellers who is
not transferred to Purchasers pursuant to Section 5;
(r) any OES accounts payable (other than OES accounts payable
for the Business in Brazil) and any other liabilities to the extent
related to the OES Excluded Assets; and
(s) all obligations to refund or repay tax abatements or
subsidies or other financial benefits granted to any Seller or
Transferred Entity by any U.S. or foreign governmental entity with
regard to any period prior to the Closing Date, to the extent that
such obligation to refund or repay arises as a result of (i) the
transfer to the Purchasers of any of the Transferred Assets or any
Transferred Entity or (ii) the cessation of Sellers' ownership or
operation of the Business.
5. PENSION, EMPLOYEE AND UNION MATTERS.
Attachment F, which is incorporated herein by reference, contains the
covenants and agreements of the parties with respect to the status of
employment of the employees of the Sellers and Transferred Entities
employed in the Business upon the sale of the Business to the Purchasers,
and the employee benefits and employee benefit plans provided or covering
such employees.
6. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers represent and warrant to Purchasers as follows:
6.1 Due Organization. Each of Sellers and the Transferred
Entities is a legal entity of the type described in Attachment A or D, as
the case may be, duly organized, validly existing and, with respect to
entities organized within the United States of America, in good standing
under the laws of the jurisdiction indicated in Attachment A or D, as the
case may be. Each of the Transferred Entities is duly qualified to
transact business in the jurisdictions listed in Attachment D, being all
jurisdictions where the ownership or leasing of the Assets and the conduct
of the Business require it to be so qualified, except where the failure to
be so qualified would not have a Material Adverse Effect. None of the
Sellers or the Transferred Entities is currently insolvent, has suspended
payments, is subject to any judicial receivership or liquidation
-21-
proceedings, or is in bankruptcy, nor has any such or similar proceedings
been commenced with respect to any of them. Sellers and the Transferred
Entities have all requisite corporate power and authority to conduct the
Business as it has been and is now being conducted by them and to enter
into and perform their respective obligations under this Agreement and all
other agreements, instruments and documents to be delivered hereunder to
Purchasers at the Closing.
6.2 Authority. The execution, delivery and performance of this
Agreement and all other agreements, instruments and documents to be
delivered to Purchasers at the Closing have been duly and validly
authorized by all necessary corporate action on the part of Sellers and the
Transferred Entities. This Agreement has been duly and validly executed
and delivered by Sellers and is enforceable against the Sellers in
accordance with its terms except to the extent that (i) such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and is subject
to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law), (ii) specific
performance may not be available as a remedy in certain jurisdictions
outside the United States and (iii) no representation or warranty is made
as to the enforceability of choice of law, consent to jurisdiction and
arbitration provisions with respect to any entity organized in Brazil
(clauses (i), (ii) and (iii) collectively, the "Enforceability
Exceptions"). As of the Closing Date, each of the agreements, instruments
and other documents to be delivered hereunder to Purchasers at the Closing
will have been duly and validly executed and delivered by the applicable
Seller or Sellers and the Transferred Entities and will be enforceable
against the applicable Seller or Sellers and the Transferred Entities in
accordance with its terms, subject to the Enforceability Exceptions.
6.3 Transferred Entities and Minority Interests.
6.3.1 Corporate Status. The copies (and, where only a
translation has been provided, the translation) of the charters and
bylaws or other organization documents of each Transferred Entity,
which have been delivered to Purchasers are true, accurate and
complete.
6.3.2 Equity Interests in the Transferred Entities and
Minority Interests. For each Transferred Entity (other than the
Newcos), Schedule 6.3.2 sets forth (a) the nature of the equity
interest held by Sellers or other Transferred Entities and, if
applicable, the par value thereof; (b) the holder of the equity; (c)
the number of outstanding shares or other equity interests; and
(d) the number and percentage of the outstanding shares or other
equity interests held by Sellers or other Transferred Entities (each
such equity interest to be referred to as an "Equity Interest"). For
the entities in which Sellers or the Transferred Entities hold
Minority Interests, Schedule 6.3.2 sets forth (w) the nature of the
equity interests so held and, if applicable, the par value thereof;
(x) the holder of the equity; (y) the number of outstanding shares or
other equity interests; and (z) the number and percentage of
outstanding shares or other equity interests held by Sellers or
Transferred Entities. Except as set forth on Schedule 6.3.2, the
Equity Interests of the Transferred Entities held by Sellers or other
Transferred Entities constitute, and on the Exchange Date will
constitute, all of the issued and outstanding equity of each
Transferred
-22-
Entity. All Equity Interests have been duly issued and are fully
paid and non-assessable and not subject to any lien, charge or
encumbrance. Neither any Seller nor any Transferred Entity is, and
prior to the Exchange Date no such entity will become, a party to or
subject to any contract or obligation wherein any person has a right,
option or warrant to purchase or acquire any rights in any capital
stock or other equity securities of the Transferred Entities. None of
the Transferred Entities has subsidiaries or investments in the equity
capital of any business or entity other than as set forth on Schedule
6.3.2. Except as set forth in Schedule 6.3.2, there are no
restrictions on the voting rights of Sellers in the Minority
Interests.
6.3.3 No Actions Regarding Equity Interests or Minority
Interests. Except as set forth in Schedule 6.3.3, the consummation
of the transactions contemplated by this Agreement, and all other
agreements, instruments, and documents to be delivered hereunder to
Purchasers at the Closing, shall not result in any obligation for the
Purchasers to subscribe to, purchase or acquire, in any form
whatsoever, including by way of public tender offer, recapitalization
or any other contribution or investment in equity, shares or other
equity interests, whether issued or to be issued, of the Transferred
Entities, or the entities in which the Sellers or the Transferred
Entities hold Minority Interests, other than the Equity Interests and
the Minority Interests.
6.4 No Conflict. Except as set forth on Schedule 6.4, the
consummation of the transactions contemplated by this Agreement and all
other agreements, instruments and documents to be delivered hereunder to
Purchasers at the Closing will not result in (a) the breach of any term or
provision of (i) the charter, articles or certificate of incorporation or
any other organizational document or bylaw, (ii) any mortgage, loan
agreement, capital lease, indenture, debt instrument or other material
agreement, or (iii) any law, rule or regulation or any judgment, order or
decree of any court or governmental agency or authority applicable to any
Seller or any Transferred Entity or (b) the acceleration of any obligation
under any agreement or other material instrument of any kind related to the
Business and constituting an Asset to which any Seller or Transferred
Entity is a party.
6.5 Financial Statements.
(a) Schedule 6.5(a) sets forth the unaudited consolidated
balance sheet of the Business as at September 30, 1995 (the "Initial
Balance Sheet"), and related unaudited consolidated statement of
income of the Business for the nine months then ended (the "Income
Statement"). The Initial Balance Sheet presents fairly in all
material respects the financial position of the Business as a whole as
of the date thereof in conformity with the Specified Accounting
Principles. The Initial Balance Sheet reflects only assets and
liabilities of Sellers and the Transferred Entities related to or
previously used in the Business and the Excluded Assets and the
Excluded Liabilities are excluded therefrom (except as may be
expressly set forth in the Specified Accounting Principles). The
Initial Balance Sheet discloses all liabilities, contingent or
otherwise of the Business, required to be disclosed on a balance sheet
of the Business prepared in accordance with the Specified Accounting
Principles. The Income Statement presents fairly in all material
respects the
-23-
results of the operations of the Business as a whole for
the nine months ended September 30, 1995 in conformity with the
Specified Accounting Principles.
6.6 Real Property.
(a) (i) Schedule 6.6 is a list of all Real Property owned or
leased by Sellers and the Transferred Entities and used or held for
use primarily in the operation of the Business as it is currently
being operated.
(ii) As to each particular parcel of Real Property,
Schedule 6.6 identifies the Seller or Transferred Entity owning or
leasing the parcel.
(iii) The Seller or Transferred Entity so identified on
Part A of Schedule 6.6 has good and marketable title to each parcel of
Owned Real Property listed on Part A of Schedule 6.6 and indicated as
owned by such Seller or Transferred Entity, free and clear of all
Encumbrances, except for Permitted Liens. Each survey obtained by
Sellers pursuant to Section 8.5(a) will not disclose any state of
facts, other than Permitted Liens, which would render title thereto
unmarketable.
(iv) Subject to Permitted Liens, Sellers represent that the
legal description of each Owned Real Property located in the United
States and attached in Schedule 6.6 is true, correct and complete.
(v) Sellers represent, as to Real Property located within
the United States, that the Permitted Liens relating to Real Property
(other than zoning, environmental and other limitations of general
applicability by any Governmental Authority) will not have a Material
Adverse Impact on the Real Property encumbered thereby.
(vi) Sellers represent, as to Real Property located outside
of the United States, that title to each Real Property is subject to
no Encumbrances which will have a Material Adverse Impact on such Real
Property.
(vii) Unless expressly set forth herein, the
representations in this Section 6.6 apply to Real Property wherever
located.
(b) Except as otherwise set forth in Part B of Schedule 6.6,
(i) the Seller or Transferred Entity identified in Part B of Schedule
6.6 holds the interest (as specified therein) in each Leased Real
Property listed on Part B of Schedule 6.6, (ii) the leases and
subleases identified in Part B of Schedule 6.6 are in full force and
effect and Sellers and Transferred Entities have not received any
written notice of any default thereunder since January 1, 1995 and
(iii) to Sellers' Knowledge, there is no default or condition, event
or circumstance which with notice or lapse of time, or both, would
constitute a default thereunder.
-24-
(c) Except as disclosed on Schedule 6.6(c), (i) Sellers' and the
Transferred Entities' activities on the Real Property are in
compliance with applicable zoning regulations, (ii) to the Knowledge
of Sellers, there are no proposed changes in any such regulations that
would materially adversely affect such activities, and (iii) to the
Knowledge of Sellers, there are no special assessments that are
currently due and payable levied against the Real Property.
(d) Except as set forth in Schedule 6.6(d), Sellers and the
Transferred Entities (i) have complied with all development
requirements and conditions (if any) applicable to the construction or
development of any Real Property, (ii) are in compliance with any
conditions or requirements necessary for Sellers to maintain through
to the Exchange Date all exemptions, abatements, or similar benefits
involving real property tax and currently affecting the Real Property,
(iii) except as set forth to the contrary in this Agreement, are in
compliance with the requirements of any industrial subdivision or
business park in which any of the Real Property is located, and
(iv) have not leased or subleased any of the Real Property other than
in the ordinary course of business to tenants, subtenants or other
occupants of less than 25,000 square feet, and pursuant to
arrangements which can be terminated on ninety (90) days or less
notice or which have unexpired terms of less than twelve (12) months,
or as otherwise disclosed in this Agreement or the Schedules annexed
hereto. Except as set forth on Schedule 6.6(d), there are no material
construction projects under way with respect to any of the Real
Property. Except as set forth in Schedule 6.6(d), Sellers do not need
the consent of any landlord or other party to assign a lease or
sublease of any of the Leased Real Property to Purchasers, and the
sale of the Transferred Entities hereunder will not result in a
default under or the termination of any lease or sublease to which any
Transferred Entity is a party. Except as set forth on
Schedule 6.6(d), there are no exemptions or abatements involving real
property tax and affecting the Real Property. Except as disclosed in
Schedule 6.6(c) or Schedule 6.6(d), Sellers and the Transferred
Entities have delivered to Purchasers true, correct, and complete
copies of each written lease or sublease to Sellers or the Transferred
Entities of Leased Real Property (and all written amendments or other
written agreements affecting or comprising such lease).
Schedule 6.6(d) lists all construction, engineering, or design
contracts in excess of $100,000 relating to the Real Property under
which work is not yet complete.
(e) Except as disclosed on Schedule 6.6(e), there are no
options, rights of first refusal or contracts of sale or purchase
affecting title to the Owned Real Property. Sellers have not in the
past two years received any written notice or communication from any
person that owns or leases real property adjacent to the Real Property
alleging that any portion of the Real Property encroaches upon the
real property of such person.
(f) The representations and warranties in this Section 6.6 are
intended to supplement and not limit, the other representations and
warranties in this Agreement.
6.7 Personal Property. Schedule 6.7 contains a list as of
December 31, 1995 of the gross and net book value of all items of Personal
Property (other than customer-owned tooling)
-25-
which are owned or leased (to the extent accounted for as a capitalized
lease) by Sellers and the Transferred Entities in the conduct of the
Business with a net book value in excess of $5,000. As to each item of
Personal Property listed, the location of the asset is also set forth.
Schedule 6.7 also sets forth a list of all leases of Personal Property which
are accounted for as operating leases, other than leases which individually
involve rental payments of less than $100,000 annually.
6.8 Title to Personal Property. Sellers and the Transferred
Entities have good and marketable title to all of their owned Personal
Property, the Inventory and Accounts Receivable, free and clear of all
liens, mortgages, security interests, claims and similar encumbrances,
except for Permitted Liens. With respect to leased Personal Property,
except as set forth on Schedule 6.8, all leases are valid and enforceable
(subject to the Enforceability Exceptions) in full force and effect and
Sellers have not received any notice of any default thereunder, and to
Sellers' Knowledge, there is no default or condition, event or circumstance
which with notice or lapse of time, or both, would constitute a default.
The sale of the Transferred Entities hereunder will not result in a default
under or the termination of any leases for Personal Property to which any
Transferred Entity is a party. The bill of sale and the deeds,
endorsements, assignments and other instruments to be executed and
delivered to Purchasers by Sellers at the Closing will be legal, valid and
binding obligations of Sellers enforceable in accordance with their terms,
subject to the Enforceability Exceptions, and will effectively convey to
Purchasers good, valid and marketable title to the Transferred Assets,
subject only to Permitted Liens.
6.9 Contracts.
(a) Schedules 6.9(a)(i)-(vi) contain lists, as of the date
hereof, of each oral and written Contract (including each written
purchase order) which meets any of the following criteria:
(i) involves future expenditures with respect to the
purchase or sale by the Business of goods or services in
connection with the Business having cash payments in excess of
$500,000 annually; or
(ii) involves a lease, sublease, installment purchase or
similar arrangement for the use of personal property in
connection with the Business requiring cash payments by the
Business in excess of $500,000 annually; or
(iii) contains commitments of suretyship, guaranty or
indemnification in excess of $500,000 annually by the Business in
connection with the Business (except for guarantees, warranties
and indemnities in connection with the sale of goods and/or
services of the Business in the ordinary course of business); or
(iv) contains a financing commitment for the borrowing or
lending of funds by or from the Business from or to any person or
which is binding upon the Business or the Assets (other than
credit terms offered to customers in connection with the sale of
goods and/or services of the Business in the ordinary course of
business); or
-26-
(v) creates an agency or distributorship relationship
relating to the Business which (x) is exclusive, (y) involved
sales by the Business in excess of $500,000 in the Business's
1995 fiscal year, or (z) to the Knowledge of Sellers, involved
sales of $500,000 or less in the Business's 1995 fiscal year; or
(vi) are proposed to be transferred hereunder and will
require consent to assign by any third party and involve or are
expected to involve annual expenditures by the Business in excess
of $500,000.
(b) Except as otherwise indicated in Schedules 6.9(a)(i)-(vi):
(i) neither Sellers nor, to Sellers' Knowledge, any other
party to any of the Contracts listed in Schedules 6.9(a)(i)-(vi)
is in default thereunder, or has since January 1, 1994 given
notice of default to any other party thereunder ;
(ii) to the Knowledge of Sellers, no condition exists which
with notice or lapse of time or both would constitute a default
by Seller under any Contract listed in Schedules 6.9(a)(i)-(vi)
which would constitute a material breach of such Contracts;
(iii) no customer which is a party to a Contract listed
in Schedules 6.9(a)(i)-(vi) is entitled to any retroactive
pricing, refund, rebate, price adjustment, returnable container
audit or other financial settlement for charges in excess of
$500,000 relating to sales by the Business; and
(iv) the sale of the Transferred Entities hereunder will not
result in a default under or the termination of any Contract to
which any Transferred Entity is a party.
(c) Schedule 6.9(c) lists all major products currently being
designed for sale or manufactured by Sellers or the Transferred
Entities in the Business and indicates, with respect to each such
product, whether a sample of such product exists and has been made
available for Purchasers' inspection.
6.10 Intellectual Property.
(a) Schedule 6.10 contains a list of all Proprietary Rights of
Sellers and the Transferred Entities. Schedule 6.10 also lists, as of
the date of this Agreement, all agreements regarding Intellectual
Property (other than those identified as Excluded Assets) which
agreements are used primarily in the conduct of the Business and under
which the Business has any obligations.
(b) Except as disclosed on Schedule 6.10, there are no United
States or foreign patents extant as of the date of this Agreement, the
claims of which prevent or could reasonably be expected to prevent
Purchasers from operating any aspect of the
-27-
Business as currently being operated or currently proposed to be
operated by Sellers and the Transferred Entities.
(c) Except as disclosed on Schedule 6.10 as of the date of this
Agreement, during the period from January 1, 1992 to the present,
Sellers and the Transferred Entities conducted the Business (or such
portions thereof as they have owned since such date) in a manner which
has not been in violation of any intellectual property right of
another as conducted as of the date hereof. To the Knowledge of
Sellers, except as disclosed in Schedule 6.10, since January 1, 1992,
there has been no Intellectual Property Claim received by Sellers or
the Transferred Entities nor, to the Knowledge of Sellers, any
instances in which an Intellectual Property Claim has been alleged.
The term "Intellectual Property Claim" shall mean, as used herein, (i)
any written claim received by Sellers or the Transferred Entities
challenging the scope, validity or enforceability of any of the
Intellectual Property, (ii) any written claim received by Sellers or
the Transferred Entities that any of the products designed,
manufactured or sold by the Business infringes the intellectual
property rights of any third party or (iii) any written claim made by
Sellers or the Transferred Entities that any activity of a third party
infringes upon any of the Intellectual Property of Sellers or the
Transferred Entities related to the conduct of the Business.
(d) The manufacturing and engineering drawings, process sheets,
specifications, trade secrets, computer software, know how and other
like technical information of Sellers or the Transferred Entities
relating to the Business have been preserved and maintained by Sellers
or the Transferred Entities in the ordinary course of business in
accordance with reasonable and customary commercial and technical
standards and procedures to protect confidentiality.
(e) Except for rights granted to or by Sellers or the
Transferred Entities under Intellectual Property agreements listed in
Schedule 6.10, Sellers and the Transferred Entities are the sole and
exclusive owners of the Intellectual Property listed on Schedule 6.10;
no governmental registration of any of the rights related to the
Intellectual Property has lapsed, expired or been canceled, abandoned,
opposed or the subject of a reexamination request except as listed on
Schedule 6.10.
(f) Except as listed on Schedule 6.10, as of the date of this
Agreement, there are no written claims which have been received since
January 1, 1992 and no proceedings are pending, or have been
instituted or, to the Knowledge of Sellers are threatened or impending
which challenge any of the Sellers' or the Transferred Entities'
ownership rights in respect of any of the Intellectual Property listed
on Schedule 6.10. None of the Intellectual Property listed on
Schedule 6.10 is subject to any outstanding order, decree, judgment or
stipulation.
(g) Except as listed on Schedule 6.10(g) with respect to each
patent of which the inventor is or was an employee of Sellers, such
inventor executed a written assignment
-28-
document transferring such inventor's rights to Sellers or such
rights belong to Sellers under applicable law.
(h) Except as disclosed on Schedule 6.10(h), the engineering
drawings for all major products being sold or manufactured by Sellers
or Transferred Entities in the Business represent the most appropriate
revision level of drawings used in the Business and each such drawing
of a currently manufactured product has been approved and accepted
where required by the relevant customer and reflects such product as
it is currently being manufactured with no changes therefrom which
would require any customer approval or authorization which has not
been obtained, except in those circumstances where the Sellers have
obtained engineering deviations from the customers. For the products
currently being developed by the Business, engineering drawings being
transferred represent all drawings used by Sellers or Transferred
Entities for such development work.
(i) The sale of the Transferred Entities hereunder will not
result in a default under or termination of any of the rights of any
Transferred Entity to any Intellectual Property.
6.11 Litigation, Claims and Proceedings.
(a) Schedule 6.11 lists the following for the period from
January 1, 1991 to the present (and, in the case of clause (z), any
other matter referred to therein which is currently in effect): (x)
all fines (civil and criminal), penalties imposed by any governmental
agency or authority (other than short or long-term disability or
medical claims), (y) actions, administrative or arbitration
proceedings requiring a payment by Sellers or the Transferred Entities
in excess of $100,000 (other than short or long-term disability claims
and those listed on Schedule 6.16) and (z) any final order, writ,
judgment, injunction, decree, determination or other award of any
court or any governmental agency, in each case, which are related to
the Business or the Assets.
(b) Except as set forth in Schedule 6.11, there are no
judgments, orders, writs, or injunctions of any foreign, federal,
state or local court or governmental authority, lawsuits,
arbitrations, written claims which are reasonably expected to involve
an amount in excess of $100,000 or governmental proceedings or notices
of violation, presently pending, or to Sellers' Knowledge, threatened,
against Sellers or the Transferred Entities, or by which Sellers or
the Transferred Entities are bound, and which are related to the
Business or the Assets, whether or not covered by insurance.
(c) Except as listed on Schedule 6.11, there is no claim, suit,
action, arbitration, customs proceeding, administrative or other
proceeding, or governmental investigation, pending, or to Sellers'
Knowledge, threatened against Sellers or the Transferred Entities
materially adversely affecting their ability to perform their
obligations hereunder, or under any other agreement, instrument or
document to be executed or delivered hereunder or in connection
herewith.
-29-
6.12 Environmental Conditions.
(a) Except as set forth in Schedule 6.12, and except for such
matters as could not reasonably give rise to a loss, expense or cost
to Purchasers which exceeds $500,000 in the aggregate for each
Facility or $1,000,000 in the aggregate for all Facilities, (i) there
are no Hazardous Materials in excess of applicable environmental
cleanup standards located on, in, under, upon or affecting the Real
Property and (ii) neither Sellers nor the Transferred Entities are in
the conduct of the Business in violation of any Environmental Law and
no expenditures are required in connection with the Business as
presently conducted in order to comply with any such law. Schedule
6.12 sets forth the following information, but excludes such matters
as could not reasonably give rise to a loss, expense or cost to
Purchasers which exceeds $500,000 in the aggregate for each Facility
or $1,000,000 in the aggregate for all Facilities.
(i) A list and description of any evidence of soil,
groundwater or other contamination in excess of applicable
environmental clean-up standards on or migrating from property
which is currently owned or leased by Sellers or the Transferred
Entities (or their predecessors in interest) in connection with
the Facilities;
(ii) A list of all sites to which wastes from the property
which is currently owned or leased by Sellers or the Transferred
Entities (or their predecessors in interest) in connection with
the Assets or the Business have been sent by management since
January 1, 1991, the owner or operator of such off-site
facilities, and method of waste management used;
(iii) Reports in the Sellers' or the Transferred
Entities' possession or control of environmental audits, tests or
inspections of facilities currently owned or leased by the
Business conducted since January 1, 1991, and audit reports,
tests, inspections and action plans relating to the Business;
(iv) A list and brief description of all Environmental
Claims, initiated since January 1, 1991 or currently pending in
connection with the Business. This item includes all
Environmental Claims which have been concluded (e.g., a judgment
or consent decree has been entered) but pursuant to which work is
ongoing (e.g., a decree requiring remedial activity to be
undertaken) or other obligations remain pending;
(v) A list of all permits and licenses pursuant to any
Environmental Law, and pending applications for the same,
relating to each Facility, including the following notices and
reports located on the premises of the Sellers or the Transferred
Entities: Notifications to governmental agencies required by
Sections 3010(a) (notice of hazardous waste activity) and 9002
(underground storage tanks) of RCRA and notices and reports
required pursuant to Sections 302, 311, 312 and 313 of Title III
of the Superfund Amendments and Reauthorization Act of l986;
-30-
(vi) A list of any CERCLA Section 104(e) requests since
January 1, 1991 for information or requests under analogous state
statutes and responses, correspondence and other written
communications relating thereto; and
(vii) A list of all PCB Transformers, PCB- Contaminated
Transformers and PCB Large High or Low Voltage Capacitors as
these terms are defined in 40 CFR 761 which were or are on any of
the Facilities and annual documents required by 40 CFR 761.180
since January 1, 1991 for the Business' U.S. Facilities. At the
Closing, such list will be provided for the Business' non-U.S.
Facilities with respect to any comparable Environmental Law in
any jurisdiction other than the U.S.
(viii) A list of all underground storage tanks at each
Facility.
(b) Except as listed on Schedule 6.12, there is not pending, nor
is there now, to the Knowledge of Sellers, threatened or impending,
any Environmental Claim which is reasonably expected to involve (i)
injunctive relief or (ii) an amount in excess of $500,000 in the
aggregate for any Facility or $1,000,000 in the aggregate for all
Facilities.
6.13 Permits. Sellers and the Transferred Entities have all
Permits which are necessary to own and operate the Assets and to conduct
the Business as it is presently being conducted in all material respects
and are in compliance with all such Permits, except where the absence of
any of the foregoing or the noncompliance therewith would not materially
adversely affect the ownership of the Assets or the conduct of the Business
relating to or requiring the use of such Permit. All such Permits held by
Sellers and the Transferred Entities are assignable to Purchasers, and no
governmental approvals are required for such assignment, except in each
case as set forth on Schedule 6.13. Except as set forth on Schedule 6.13,
the sale of the Transferred Entities or the Assets hereunder will not
result in a default under or the termination of any such Permit.
6.14 Compliance with Law. Except as disclosed on Schedule 6.14,
Sellers, with regard to the Transferred Assets and Business, and the
Transferred Entities are not, in any material respect, in default under or
in violation of any statutes, laws or regulations (other than Environmental
Laws) of any unit of government (collectively "Laws") applicable to any of
the Assets or the operation of the Business. Since January 1, 1992,
Sellers have not received written notice from any governmental agency or
authority alleging any such defaults or violations of Laws which have not
been cured or corrected.
6.15 Consents. No action, approval, consent or authorization,
including but not limited to any action, approval, consent or authorization
by any governmental or quasi-governmental authority, agency, commission,
board, bureau or instrumentality ("Governmental Authority"), financial
institution or other third party is necessary to transfer the Assets and
the Business to Purchasers or for Sellers to enter into this Agreement or
any of the agreements or instruments to be executed and delivered pursuant
hereto by Sellers to Purchasers at the Closing or to permit Sellers to
consummate the transactions contemplated hereunder, except for (i) the
filing under the Hart-Scott-Rodino Antitrust improvements Act of 1976, as
amended (the "H-S-R Act") and the expiration of all applicable waiting
periods; (ii) the filing of a Form CO with the Commission of
-31-
the European Communities (the "Commission") and the approval of the
transaction; (iii) preclosing filing requirements under the competition law
in any other jurisdiction; or (iv) as set forth on Schedule 6.15.
6.16 Labor and Employee Benefits.
Attachment G is incorporated herein by reference.
6.17 Health and Safety Conditions.
(a) To the Knowledge of Sellers, Schedule 6.17(a) lists the
following items with respect to the Business:
(i) Any material safety data sheets for chemical substances
or mixtures used by the Business as of December 31, 1995;
(ii) corporate and Automotive Sector safety and health
audits of the plants relating to the Business and action plans,
if any, for responding to audit findings from January 1, 1992 to
the date of Schedule 6.17 and all corporate and Automotive Sector
employee safety and health studies relating to the Business
prepared during the same period;
(iii) ergonomic, safety or toxicological studies
(excluding drug tests) conducted by or on behalf of the Business
or with respect to the Assets on or after January 1, 1992;
(iv) personnel safety statistics and OSHA Form 200s related
to the Business since January 1, 1992;
(v) citations, notices of violations, orders, consent
orders, administrative or judicial enforcement proceedings from
state and federal OSHA agencies or their foreign equivalents
concerning the Business since January 1, 1994 or which are
currently pending ; and
(vi) all current health and safety permits and licenses.
(b) To the Knowledge of Sellers, Schedule 6.17(b) lists the
following items, with respect to the United States Business:
(i) annual expenses incurred for workers' compensation (i)
related to the Business or the Assets and (ii) related to the use
of asbestos in the Business, in each case from January 1, 1992;
(ii) copies of any material submissions to the Environmental
Protection Agency ("EPA") concerning the Business with respect to
any health and safety reports under TSCA or comparable State and
local laws since January 1, 1992,
-32-
including copies of all compliance records relating to TSCA
Sec. 8(a) and (c) or comparable State and local laws; and
(iii) copies of all TSCA Section 5 PMNs, notices of
commencement of manufacture or import, or consent orders relating
to the Business since January 1, 1992.
6.18 Customers and Suppliers. Schedule 6.18 contains a list of (i)
all customers and suppliers of the Business which have Contracts (including
oral Contracts and purchase orders) with the Business involving purchases
or sales in an amount in excess of $500,000 per annum and (ii) sole source
suppliers to the Business with Contracts with the Business.
6.19 Insurance. Schedule 6.19 lists: all insurance policies in
force for the benefit of Sellers or the Transferred Entities with respect
to the Business or the Assets; and all general liability claims for
compensation in excess of $100,000, including product liability and
automobile liability, from January 1, 1992 to the present. Except as
disclosed on Schedule 6.19, each such insurance policy is in full force and
effect and to the Knowledge of Sellers, except as disclosed on Schedule
6.19, there is no material claim against any such insurance by Sellers .
Except as set forth on Schedule 6.19 Sellers are not involved in any
disputes relating to coverage with Sellers' insurers in excess of $500,000
in the aggregate relating to the Business or the Assets.
6.20 Intercompany Services. Except for services having an
annualized fair market value of less than $100,000, Schedule 6.20 sets
forth all services provided within the last twelve months by any other
division or Affiliate of Sellers (including the corporate or sector offices
of Sellers) to the Business or by the Business to any other division or
Affiliate of Sellers, and for each service indicates whether the Business
charged or was charged directly for such service, allocated or received an
allocation for such service, or did not charge or was not charged for such
service.
6.21 Taxes.
(a) All Tax Returns required to be filed prior to the Closing
Date in respect of the Business and the Transferred Entities have been
(or will have been by the Closing Date) filed and Sellers have paid or
caused to be paid, or will pay or cause to be paid, all such Taxes
required to be paid with respect to the Business or, except as set
forth in the Specified Accounting Principles, any Transferred Entity
with respect to periods ended on or before the Closing Date. Except
as disclosed in Schedule 6.21(a), there are no actions, proceedings,
claims or investigations pending or (to the Knowledge of Sellers)
threatened against any Seller (in relation to the Business) or any
Transferred Entity which action, proceeding, claim or investigation
would be relevant and material to the operation, Tax position or
reporting requirements of the Business after the Closing, nor, except
as set forth in Schedule 6.21(a) are there any matters which are the
subject of written correspondence between any Seller (in relation to
the Business) or any Transferred Entity and any governmental authority
regarding or relating to claims for additional Taxes, proposed or
assessed penalties, interest or deficiencies which would be relevant
and
-33-
material to the operation, Tax position or reporting requirements
of the Business after the Closing Date.
None of the Transferred Entities (A) has been a member of a group
of corporations filing a consolidated Federal income tax return (other
than the group the common parent of which is AlliedSignal) or (B) has
any liability for the Taxes of any person (other than another of the
Transferred Entities) under United States Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as
a transferee or successor, by contract, or otherwise.
(b) With respect to each of the Transferred Entities, the
applicable statute of limitations has expired as shown in Schedule
6.21(b). Except as set forth in Schedule 6.21(b), no waiver or
extension of any time period or applicable statute of limitations with
respect to the assessment or payment of Taxes in any jurisdiction has
been (or, as of the Exchange Date, will have been) granted or agreed
to by or on behalf of any Transferred Entity.
(c) None of the Assets is subject to any lien or encumbrance in
favor of any governmental authority arising as a result of failure (or
alleged failure) to pay any Taxes.
(d) All Taxes required to have been withheld and paid by Sellers
and the Transferred Entities in connection with amounts paid or owing
to any Employee, independent contractor, creditor, shareholder or
other third party have been withheld and paid.
(e) All Tax Returns, examination reports, and statements of
assessed or agreed upon deficiencies of Sellers (including only those
portions of Tax Returns, examination reports, or statements of any
Seller relating to the Business) or the Transferred Entities that have
been delivered to Purchasers are correct and complete copies.
6.22 Sufficiency of Assets.
(a) The Assets (when taken together with the Services Agreement
(as defined in Section 9.6) and all other agreements contemplated by
this Agreement) constitute all of the assets, properties and rights
(tangible or intangible) necessary to conduct the Business as the same
was conducted immediately prior to the date hereof except for (i)
dispositions in the ordinary course of business, and (ii) the Excluded
Assets. Except for matters referred to in the first sentence of this
Section 6.22(a) (when taken together with the Services Agreement and
all other agreements contemplated by this Agreement), there are no
assets, properties or rights necessary to conduct the Business as the
same was conducted immediately prior to the date hereof that are owned
by any Person other than Sellers or the Transferred Entities which
assets, properties or rights are not to be leased or licensed to
Purchasers under valid, current lease or license arrangements.
(b) Except for the shared assets (the "Shared Assets") listed on
Schedules 2.1(n) and 2.2(n), there are no assets which are owned,
leased, licensed or
-34-
used by Sellers or the Transferred Entities in the conduct of
the Business and which are shared to any significant degree
with other divisions of Seller. The originals or copies of all
records and similar documents included in Section 2.1(f), other than
those records regarding employment matters or as disclosed on Schedule
6.22, are located on one or more of the physical premises of the Real
Properties.
6.23 No Brokers or Finders. No Seller or Transferred Entity or any
Affiliate thereof has made any agreement with any person or taken any
action which would cause any person to become entitled to any agent's,
broker's or finder's fee or commission in connection with the transactions
contemplated hereby.
6.24 Recall and Service Actions. Schedule 6.24 lists all Known
Recalls/Service Actions since January 1, 1991. As used herein, with
respect to any product manufactured or sold by the Business, (i) a "Recall"
shall mean any mandatory recall instituted by the National Highway Traffic
Safety Administration ("NHTSA") or any similar governmental or quasi-
governmental entity in any jurisdiction other than the United States or a
voluntary recall instituted by any Seller or Transferred Entity (or any
customer of any of them) pursuant to the terms of the National Traffic
Motor Vehicle Safety Act, as amended, in each case, or similar law or
regulation in any country other than the United States, and (ii) a "Service
Action" shall mean any voluntary systematic campaign instituted by an
Original Equipment Manufacturer ("OEM"), including without limitation, a
dealer service bulletin, service alert campaign, silent warranty campaign
or dealer network swap-out, instituted to remedy a product defect found to
exist in a particular product application, but expressly excluding (x) a
Recall or (y) warranty work conducted by the dealer network of an OEM in
the ordinary course of business.
6.25 Absence of Certain Changes. Except as set forth in Schedule
6.25 and in the unaudited consolidated balance sheet of the Business as at
December 31, 1995 and related unaudited consolidated statement of income
for the twelve months then ended ("1995 Statements") previously delivered
to Purchasers, since the date of the Initial Balance Sheet to the date of
this Agreement (I) there has not been any change in the financial condition
or results of operations or cash flows of the Business or in the condition
of the Assets and the Business has not suffered any damage, destruction or
loss, in each case which has had or which could reasonably be expected to
have a Material Adverse Effect, and (ii) neither any Seller nor any
Transferred Entity has taken any action or engaged in any activity which
would not have been permitted by Section 8.1 had it been in effect on the
date of the Initial Balance Sheet (except for capital expenditures
reflected in the 1995 Statements and actions covered by Sections 8.1(n) and
(o)).
6.26 No Undisclosed Liabilities. Except as set forth on Schedule
6.26, there are no liabilities associated with the Business or the
Transferred Assets or the Transferred Entities (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities of the Business and
the Transferred Entities set forth or reserved against or disclosed in the
Initial Balance Sheet or the notes thereto, (ii) liabilities disclosed in
this Agreement or the Schedules hereto or the other agreements contemplated
by this Agreement, (iii) liabilities incurred in the ordinary course of
business since the date of the Initial Balance Sheet, and (iv) Excluded
Liabilities.
-35-
6.27 Business Conduct. Neither any Seller nor any Transferred
Entity nor any of their officers, directors, employees or agents, nor
persons acting under the authority of any of the foregoing (i) have made,
or have been charged by any governmental authority with making, directly or
indirectly, any domestic or foreign payments for bribes or kickbacks
(governmental or commercial) or unlawful political contributions or other
questionable or illegal payments with respect to the Business or to secure
favorable treatment for the Business or (ii) have maintained or permitted
to exist any use of "off the books" bookkeeping, secret accounts,
unrecorded bank accounts, "slush" funds, falsified books, or any other
device that could have been or could be utilized to distort records or
reports of the true operating results and financial condition of the
Business.
6.28 Accounts Receivable; Intercompany and Intracompany Accounts.
(a) The accounts receivable reflected in the Initial Balance
Sheet and the accounts receivable arising thereafter and prior to the
Closing Date being assigned to Purchasers hereunder represent or will
represent bona fide claims for sales, royalties or other charges
arising in the ordinary course of the Business.
(b) All intercompany and intracompany payables and receivables
reflected on the Initial Balance Sheet represent bona fide receivables
and payables incurred by the Business in the ordinary course of
business for value received and do not reflect any indebtedness for
borrowed money.
6.29 Subsidies. Schedule 6.29, a copy of which will be provided to
Purchasers prior to the Closing, will provide a list and description
(including all investment, research or other programs upon which same are
conditioned) of all subsidies, allowances, grants, loans, tax exemptions or
reductions and, more generally, all monies allocated to Sellers or the
Transferred Entities by supranational, national or local governmental or
administrative authorities.
6.30 Product Warranties. Set forth on Schedule 6.30 are
representative forms of product warranties and guarantees granted or issued
by Sellers and the Transferred Entities in connection with the Business.
None of the other product warranties or guarantees granted or issued by
Sellers and the Transferred Entities in connection with the Business
differs in any material respect from such representative forms. Except as
described in Schedule 6.24, since January 1, 1991, no product warranty or
similar claims have been made against Sellers in connection with the
Business in excess of $1,000,000 annually as to any product.
6.31 Compliance with WARN Act. Sellers have been exempt from, or
have complied with, all applicable provisions of the WARN Act and the
regulations thereunder in connection with all past reductions in work force
relating to the Business.
6.32 Minority Interests. To Sellers' Knowledge, except for matters
referred to in clauses (a) and (b) of the definition of Material Adverse
Effect, no circumstances currently exist which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect
on the Minority Interests taken as a whole.
-36-
6.33 WARRANTY DISCLAIMER. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT AND IN THE SCHEDULES TO THIS AGREEMENT, SELLERS MAKE NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
EITHER HEREIN OR OTHERWISE, AS TO THE ASSETS, THE ASSUMED LIABILITIES, THE
TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER MATTER PERTAINING TO ANY OF
THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND,
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE ASSETS ARE BEING SOLD,
CONVEYED, TRANSFERRED, ASSIGNED AND DELIVERED AND THE ASSUMED LIABILITIES
ARE BEING ASSUMED "AS IS" AND "WHERE IS" AND SELLERS HEREBY DISCLAIM ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OF
THE ASSETS, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 6.32, SELLERS MAKE NO REPRESENTATIONS OR
WARRANTIES AS TO BUSINESSES CONDUCTED BY, OR THE OPERATIONS OF, THE
ENTITIES IN WHICH SELLERS OR TRANSFERRED ENTITIES HOLD MINORITY INTERESTS.
6.34 Inquiry. The persons identified on Schedule 6.34 are the
persons employed by Sellers or the Transferred Entities who after
consultation with Purchasers as to their responsibilities with the
Business, have been asked by Sellers to certify that, based on such
person's actual knowledge, such representations and warranties are accurate
and complete.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Purchasers represent and warrant to Sellers as follows:
7.1 Due Organization. Each of the Purchasers is a corporation
duly organized, validly existing and, with respect to entities organized in
the United States of America, in good standing under the laws of the
jurisdiction set forth in Attachment B and has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and all other agreements, instruments and documents to be
delivered hereunder.
7.2 Authority. The execution, delivery and performance of this
Agreement and all other agreements, instruments and documents to be
delivered hereunder to Sellers at the Closing have been duly and validly
authorized by all necessary corporate action on the part of the Purchasers.
This Agreement has been duly and validly executed and delivered by
Purchasers and is enforceable against Purchasers in accordance with its
terms, subject to the Enforceability Exceptions. As of the Closing Date,
each of the agreements, instruments and other documents to be delivered
hereunder to Sellers at the Closing will have been duly and validly
executed and delivered by the applicable Purchaser or Purchasers and will
be enforceable against the applicable Purchaser or Purchasers in accordance
with its terms, subject to the Enforceability Exceptions.
-37-
7.3 Litigation. There is no claim, suit, action, arbitration,
administrative or other proceeding, or governmental investigation, pending,
or to Purchasers' knowledge, threatened against Purchasers affecting their
ability to perform their obligations hereunder, or under any other
agreement, instrument or document to be executed or delivered hereunder or
in connection herewith.
7.4 No Conflict. The consummation of the transactions
contemplated by this Agreement and all other agreements, instruments and
documents to be executed and delivered hereunder to Sellers at the Closing
will not result in the breach of any term or provision of the charter,
articles or certificate of incorporation or any other organizational
document or bylaw of any Purchaser in any jurisdiction or constitute a
default under or result in a violation of any agreement, contract,
instrument, order, judgment or decree or result in the acceleration of any
obligation under any agreement or other instrument of any kind to which any
Purchaser is a party or by which it or any of its property is bound.
7.5 No Brokers or Finders. No Purchaser or any Affiliate thereof
has made any agreement with any person or taken any action which would
cause any person to become entitled to any agent's, broker's or finder's
fee or commission in connection with the transactions contemplated hereby.
7.6 Consents. No action, approval, consent or authorization,
including but not limited to any action, approval, consent or authorization
by any third party, financial institution, governmental or
quasi-governmental agency, commission, board, bureau or instrumentality, is
necessary to enter into this Agreement or any of the agreements or
instruments to be executed and delivered pursuant hereto by Purchasers to
Sellers at the Closing or to consummate the transactions contemplated
hereunder, except for (a) the filing under the H-S-R Act and the expiration
of all applicable waiting periods; (b) the filing of a Form CO with the
Commission and the approval of the transaction; (c) preclosing filing
requirements under the competition law in any other jurisdiction; or (d) as
set forth in Schedule 7.6.
7.7 Certain Acknowledgements and Other Matters.
(a) Purchasers acknowledge and agree to the application of the
Specified Accounting Principles.
(b) Purchasers are buying the Equity Interests and the Minority
Interests for their own account, for investment purposes only and not
with a view to the distribution or resale thereof. Purchasers will
not sell or transfer the Equity Interests or the Minority Interests in
violation of applicable securities laws.
-38-
8. PRE-CLOSING COVENANTS.
8.1 Conduct of Business. During the period from the date hereof
until the Exchange Date, except as otherwise contemplated or required by
this Agreement or as consented to in writing by Purchaser Parent (which
consent will not be unreasonably withheld), Sellers shall and shall cause
the Transferred Entities to, in connection with the operation of the
Business:
(a) Conduct the Business and utilize the Assets only in the
ordinary course of business, consistent with prior practice;
(b) Refrain from (i) entering into any license or agreement or
(ii) disclosing any Intellectual Property owned by Sellers or the
Transferred Entities, except (x) pursuant to existing agreements or
commitments listed in Schedules 6.9(a)(i)-(vi) or 6.10 or not required
by Section 6.9 to be listed thereon or (y) in the ordinary course of
business, consistent with prior practice, in relation to a customer;
(c) Refrain from selling, transferring, pledging, mortgaging,
encumbering or otherwise granting any rights in any Assets, except for
(I) inventory held for sale in the ordinary course of business, (ii)
sales of receivables, (iii) Permitted Liens and (iv) the disposition
of idle equipment and other Personal Property no longer being used in
the conduct of the Business;
(d) (i) Refrain from renewing or extending any lease for Real
Property, in each case except in the ordinary course of business and
terminable with notice not exceeding ninety (90) days and involving a
commitment not exceeding $50,000 individually or (ii) materially
modifying or canceling any of the Contracts other than in the ordinary
course of business;
(e) Continue to meet their contractual obligations and to pay
their obligations in all material respects as they mature on a timely
basis in the ordinary course of business in accordance with past
practice; provided, however, that Sellers shall be entitled to settle
and pay their obligations with respect to the Transturk Contingent
Payment prior to the Exchange Date;
(f) Use their reasonable efforts consistent with past practices
to preserve and maintain the Business intact, to retain their
Employees, and to preserve the good relations of their suppliers,
customers and others with whom they have business relations (it being
agreed that nothing herein shall prohibit Sellers or the Transferred
Entities from terminating the employment of any Employee if a Seller
or Transferred Entity deems it appropriate under the circumstances to
do so; provided, however, that Sellers or the Transferred Entities
shall not terminate any Key Employees without the prior consent of
Purchasers, which consent shall not be unreasonably withheld). For
purposes of the foregoing sentence, the term "Key Employees" shall
mean all persons with annual base salary in excess of $100,000 each of
whom has been identified in writing by Sellers prior to the execution
of this Agreement;
-39-
(g) Notify Purchasers of (i) any extraordinary casualty loss or
destruction or condemnation of Assets that, immediately prior thereto,
had a fair value in excess of $500,000, (ii) its receipt of written
notice from any unaffiliated customer of the Business accounting for
sales by the Business in 1995 in excess of $500,000 that such customer
is terminating (or intends to terminate) its relationship with the
Business, or is materially modifying (or intends to so modify)
existing contractual commitments including launch dates for new
business in such a manner as to cause a loss, expense or cost to
Purchasers which exceeds $500,000; (iii) its receipt of written notice
from any supplier of goods or services to the Business accounting for
sales to the Business in 1995 in excess of $500,000 that such supplier
is terminating (or intends to so terminate) its relationship with the
Business or is materially modifying (or intends to so modify) existing
contractual commitments in such a manner as to cause a loss, expense
or cost to Purchasers which exceeds $500,000 or (iv) labor unrest or
organizing campaigns, including any strike or boycott by employees of
the Business;
(h) Refrain from making or granting any general wage or salary
increase other than adjustments in wages and salaries consistent with
past practices as set forth on Schedule 6.16 or making any increase in
the payments of benefits under any bonus, insurance, pension or other
employee benefit plan or program, other than as set forth on Schedule
6.16 or increases pursuant to existing agreements or commitments which
are described in Schedule 6.16;
(i) Refrain from changing the organization documents of the
Transferred Entities, except as may be first approved in writing by
Purchasers;
(j) Refrain from changing the authorized or issued capital stock
of the Transferred Entities; provided, however, that the Transferred
Entities may (x) repay intercompany borrowings which are listed in
Schedule 8.1(j) and (y) declare and pay dividends out of retained
earnings, capital surplus or profits for the period ending on the
Closing Date of cash and cash equivalents to the extent permitted by
applicable law;
(k) Maintain in full force and effect all presently existing
insurance coverage for the Business, or insurance comparable to such
existing coverage, to the extent such coverage is reasonably
available; provided, however, that to the extent such coverage is not
reasonably available, Sellers shall give notice to Purchasers a
reasonable time prior to the expiration or lapse of such insurance;
(l) Refrain from making any accounting changes;
(m) Refrain from making any capital expenditures or commitments
for capital expenditures, except in accordance with the 1996 Annual
Operating Plan previously delivered to Purchasers; provided, however,
that Sellers shall be entitled to make unbudgeted capital
expenditures, or commitments therefor, in an amount not to exceed
$1,000,000 per item;
-40-
(n) Refrain from entering into any new significant contracts,
leases, or commitments (other than sales transactions covered by
clause (o)) in an amount in excess of $1,000,000 annually (as to any
single case) or which cannot be terminated without penalty on less
than 180 days notice; provided, however, that Sellers may extend or
amend any existing agreements on the same terms and conditions as
currently exist;
(o) Promptly notify Purchasers of any requests for quotation
from OEMs ("RFQs") and refrain from responding to any RFQs without
approval by Purchasers of a fixed price and quantity with respect to
such RFQ; and
(p) Notify Purchasers of the occurrence of any event or the
existence of any condition which could reasonably be expected to
result in a Material Adverse Effect.
8.2 Access to Records and Properties.
From the date hereof until the Exchange Date or earlier termination of
this Agreement, Sellers shall, and shall cause the Transferred Entities to:
(a) Provide Purchasers and its officers and other
representatives and employees with such access to the facilities of
the Business and its principal personnel and such books and records
pertaining to the Business, as Purchasers may reasonably request in
order to effectuate the transactions contemplated hereby, without
charge by Sellers to Purchasers (but otherwise at Purchasers'
expense), provided that Purchasers agree that to the extent
practicable such access will be requested and exercised during normal
business hours and without causing unreasonable interference with the
operations of the Business;
(b) Furnish to Purchasers or its representatives, upon
reasonable request, such additional financial and operating data and
other information relating to the Business; and
(c) Make available to Purchasers, upon reasonable request, for
inspection and review all documents, or copies thereof and all files,
records and papers of any and all proceedings and matters relating to
the Business.
8.3 Consents.
(a) By the close of business on the Business Day next following
the date of this Agreement, Sellers and Purchasers shall each make
their initial filing and shall thereafter make any required filings
(including responses to requests for additional information) with the
Federal Trade Commission ("FTC") and U.S. Department of Justice
("DOJ") pursuant to the H-S-R Act, with the Commission and any other
national governmental agency whose acquiescence or consent is
necessary in order for the transactions contemplated by this Agreement
to be consummated. The parties shall use reasonable efforts to
demonstrate that such transactions should not be opposed by the FTC,
the DOJ, the Commission, or any such other applicable agency. In the
event of any such opposition by any such governmental agency in the
United States or Europe, the parties shall cooperate in good faith in
determining the appropriate response to such opposition.
-41-
(b) Sellers will use their best efforts to obtain the consents
set forth in Schedule 8.3 and Purchasers will use their best efforts
to obtain the consents on Schedule 8.3A. Purchasers and Sellers shall
cooperate with each other to obtain the approvals and consents set
forth in Schedule 8.3 and 8.3A and to make all necessary filings under
(and obtain all necessary approvals under) the H-S-R Act or the Merger
Regulation, EC Council Regulation No. 4064/89 dated December 21, 1989
on the Control of Concentrations between Undertakings (the "Merger
Regulation") or similar laws or regulations in other jurisdictions;
provided, however, that no party shall be obligated to institute
litigation against any such agency to obtain any clearance or approval
required therefrom.
8.4 Public Announcements. On and after the date hereof and
through the Exchange Date, Sellers and Purchasers shall consult with each
other before issuing any press releases or otherwise making any public
statements with respect to this Agreement and the transactions contemplated
hereby. Neither Sellers nor Purchasers shall issue any press release or
make any public statement prior to obtaining the other party's approval,
which approval shall not be unreasonably withheld, except that no such
approval shall be necessary to the extent that in the opinion of counsel to
such party disclosure is or may be required by law (including, without
limitation, any required disclosures to employee representatives) or any
listing agreement of either party hereto; provided, however, that if
disclosure shall be required pursuant to applicable law or a listing
agreement, the parties shall seek to make such disclosure in a form
mutually acceptable to them.
8.5 Assurance of Title to Real Property; Survey.
(a) United States Real Property. For Owned Real Property
located in the United States:
(i) Sellers have ordered title insurance binders or
commitments for the issuance of a current ALTA Owner's policy or
such other form of policy selected by Purchasers and customarily
used in a particular jurisdiction, together with legible copies
of all matters of record noted as exceptions therein, to be
issued by Lawyers Title Insurance Corporation. Subject to the
foregoing, Sellers shall take reasonable steps (including
delivery of customary title affidavits) as necessary for the
issuance of a Qualifying Title Insurance Policy as contemplated
herein.
(ii) Sellers have ordered and shall furnish to Purchasers,
promptly after receipt, an "as built" survey of each parcel of
such Owned Real Property. The survey shall be prepared by a
licensed surveyor and shall be certified to Purchasers, the title
insurance company, and to other parties as Purchasers may direct,
to a date subsequent to the date hereof and shall be in form
sufficient to permit the title company to issue title insurance
as required by this Agreement. The survey shall, to the extent
permitted by law or in accordance with local practice, be a
"ALTA/ACSM Land Title Survey," prepared in accordance with the
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys" jointly
-42-
established and adopted by ALTA and ACSM in 1992; and shall
meet the currently effective Accuracy Standards adopted by
ALTA and ACSM. The perimeter legal description of the
Real Property shall be included on the survey.
(iii) Purchasers and Sellers agree to each pay one-half
of the costs of the surveys described above and the premiums,
search fees and related charges for the Qualifying Title
Insurance Policy. Purchasers shall reimburse Sellers for one-
half of the costs of the surveys at the Closing (or such later
date as Sellers shall request such payment). With respect to the
Qualifying Title Insurance Policy, the party procuring same shall
bill the other party and such bill shall be paid within ten (10)
days of demand or if the Qualifying Title Insurance Policy shall
have been obtained at Closing, such bill shall be paid at the
Closing.
(iv) Purchasers and Sellers acknowledge and agree that the
mere disclosure of an Encumbrance on a title report (or policy),
survey or other document shall not in and of itself make same a
Permitted Lien.
(b) Non-United States Property.
(i) For Owned Real Property owned by Sellers and located
outside the United States, title to such Real Property will be
verified in each case by the local notary (notaire) or equivalent
official, designated by Purchasers, responsible for preparing and
filing the relevant real estate transfer document at the local
land registry. Within 10 calendar days after the date hereof,
Purchasers will communicate to Sellers the name of a notary or
equivalent official in each jurisdiction to handle such real
estate transfers. Sellers will have five calendar days to object
to Purchasers' proposal, it being understood that Sellers will
not object unless Purchasers' choice of a notary or equivalent
official would, in Sellers' reasonable opinion, give rise to a
significant delay in the execution of any Foreign Transfer
Agreement.
(ii) Title to non-United States Real Property that is owned
by a Transferred Entity may be verified prior to the Exchange
Date by a notary or equivalent official designated by Purchasers,
provided that (x) the cost of such verification shall be borne by
Purchasers and (y) such verification shall not constitute a valid
reason to delay the execution of any Foreign Transfer Agreement.
(iii) Purchasers and Sellers agree that the mere
notation of an Encumbrance by a notary or equivalent official
shall not be deemed to release Sellers from any representation
set forth in Section 6.6(a)(vi).
8.6 Notice of Certain Claims. From the date hereof through the
Exchange Date, Sellers shall promptly notify Purchasers after the receipt
by a Seller or Transferred Entity of any (a) lawsuit seeking compensation
or damages for personal injuries allegedly sustained by a third
-43-
party in connection with the use or operation of a product manufactured or
sold by the Business and (b) written intentional tort claim by an Employee.
8.7 Spanish Supply Agreements. Prior to the Closing, Sellers
intend to enter into (i) an agreement with respect to the supply of casting
products to the Business in Spain (the "Greyco Agreement") and (ii) an
agreement with respect to the supply of rubber products to the Business in
Spain (the "Parets II Agreement"), substantially in the form of
Exhibits 8.7(a) and 8.7(b), respectively. During the period from the date
of such execution to the Closing, any amendment of such agreements shall
require the prior written consent of Purchasers (which consent shall not be
unreasonably withheld with respect to any nonsubstantive amendment). The
Greyco Agreement and the Parets II Agreement, together with the assignment
and assumption documents referred to in the following sentence, are
referred to herein collectively as the "Spanish Supply Agreements". At the
Closing, (i) Sellers shall assign to Purchasers all rights of the "Buyer"
(as defined in each such agreement) under each of the aforementioned
agreements, in form reasonably acceptable to Purchasers, and Purchasers
shall assume all of the obligations of each such "Buyer" thereunder, in
form reasonably acceptable to Sellers. Purchasers acknowledge that Sellers
desire to sell (i) the stock or assets of Greyco and (ii) the rubber parts
business of Parets II, a unit of AlliedSignal Automotive Espana S.A.
Accordingly, Purchasers hereby consent to (i) the assignment of the rights
of the "Seller" (as defined in the Greyco Agreement) under the Greyco
Agreement to any purchaser of the stock or assets of Greyco and (ii) the
assignment of the rights of the "Seller" (as defined in the Parets II
Agreement) under the Parets II Agreement to any purchaser of the rubber
parts business of Parets II, with the understanding that, in connection
with each such assignment, the assignee shall agree to fulfill all of the
obligations of the "Seller" under the applicable agreement.
8.8 No-Shop. From and after the date hereof, Sellers shall not,
and shall cause their officers, directors, employees, agents and
representatives not to, directly or indirectly, encourage, solicit, engage
in discussions with, or provide any information to any person or group
(other than Purchasers and their officers, directors, employees, agents and
representatives) concerning any sale or other disposition by Sellers of all
or any substantial part of the Business or the Assets.
8.9 Covenant by Parents. AlliedSignal shall cause the other
Sellers, and Purchaser Parent shall cause the other Purchasers, to perform
and comply with their respective obligations under this Agreement and the
Foreign Transfer Agreements.
8.10 Title Insurance. If a Qualifying Title Insurance Policy is
not issued within six months of the Exchange Date, Sellers may procure same
and the cost shall be borne in accordance with Section 8.5 (and in such
circumstance Purchasers shall cooperate and sign all customary affidavits).
9. CONDITIONS TO OBLIGATIONS OF PURCHASERS.
The obligation of Purchasers to consummate the transactions
contemplated by this Agreement and the Closing is subject to the
fulfillment of each of the following conditions on or before the Exchange
Date, unless waived by Purchasers:
-44-
9.1 Injunctions. No restraining order or injunction shall be in
effect that prevents the consummation of the transactions contemplated by
this Agreement in any material respect.
9.2 Consents. Sellers shall have obtained and delivered to
Purchasers those consents listed on Schedule 8.3 and Purchasers shall have
obtained and delivered to Sellers those consents listed on Schedule 8.3A.
9.3 Competition Law Clearances; Certain Litigation. The waiting
period under the H-S-R Act applicable to the purchase of the Assets shall
have expired or otherwise been terminated, the Commission shall have
approved without conditions or restrictions the transactions pursuant to
the Merger Regulation, and any approvals or conditions of clearance under
the competition law of any jurisdiction required to consummate the
transactions contemplated hereby shall have been met or obtained. No
action, suit or proceeding by the FTC, the DOJ, the Commission or any
national governmental agency of any jurisdiction shall be pending that
seeks to restrain or prohibit the consummation of the transactions
contemplated hereby in any material respect or seeking material damages in
connection therewith, that Purchasers in good faith believe makes it
undesirable to consummate the transactions contemplated hereby.
9.4 Transferred Entities. With respect to each Transferred Entity
(other than a Section 2.3 Transferred Entity), the parties shall have
obtained all approvals, consents or other authorizations of Governmental
Authorities that are necessary in order for Sellers to transfer the Equity
Interests in such Transferred Entities to Purchasers at the Closing.
9.5 No Breach. Each material covenant of Sellers required by this
Agreement to be performed by them on or prior to the Exchange Date shall
have been duly performed and complied with in all material respects at the
Exchange Date. The representations and warranties of Sellers contained in
this Agreement shall be true and correct as of the Exchange Date as though
made on and as of such date (except to the extent a different date is
specified therein, in which case such representation and warranty shall be
true and correct as of such date) with such exceptions that (i) do not,
individually or in the aggregate, result in a Material Adverse Effect or
(ii) result from changes occurring after the date of this Agreement which
are (x) pursuant to the terms of this Agreement, or (y) consented to in
writing by Purchaser Parent.
9.6 Services Agreement. The applicable Sellers shall have
executed and delivered a services agreement (the "Services Agreement"),
substantially in the form of Exhibit 9.6.
9.7 Aftermarket Agreements. The applicable Sellers shall have
executed and delivered agreements for the supply of brake products by the
Business to certain of Sellers and their Affiliates for resale to the
independent aftermarket (the "Aftermarket Agreements"), substantially in
the form of Exhibits 9.7(a) and 9.7(b), respectively.
9.8 Trademark License Agreement. Sellers have executed and delivered
an agreement for the use of the "Bendix" and "AlliedSignal" trademarks (the
"Trademark License"), substantially in the form of Exhibit 9.8.
-45-
9.9 South Bend Lease. AlliedSignal shall have executed and
delivered a lease agreement relating to a portion of the South Bend
Facility (the "South Bend Lease"), substantially in the form of
Exhibit 9.9.
9.10 Spanish Supply Agreements. The applicable Sellers shall have
executed and delivered the Spanish Supply Agreements.
9.11 Foreign Transfer Agreements. Subject to Section 2.3, the
applicable Sellers shall have entered into the Foreign Transfer Agreements
(other than the Post-Closing Transfer Agreements).
9.12 No Material Adverse Effect. Since the date of the Agreement,
there shall have been no adverse change in the condition of the Assets or
the financial condition or results of operations of the Business which has
resulted or would reasonably be expected to result in a Material Adverse
Effect.
10. CONDITIONS TO OBLIGATIONS OF SELLERS
The obligation of Sellers to consummate the transactions contemplated
by this Agreement and the Closing is subject to the fulfillment of each of
the following conditions by Purchasers on or before the Exchange Date,
unless waived by Sellers:
10.1 Injunctions. No restraining order or injunction shall be in
effect that prevents the consummation of the transactions contemplated by
this Agreement in any material respect.
10.2 Competition Law Clearances; Certain Litigation. The waiting
period under the H-S-R Act applicable to the purchase of the Assets shall
have expired or otherwise been terminated, the Commission shall have
approved without conditions or restrictions the transactions pursuant to
the Merger Regulation, and any approvals or conditions of clearance under
the competition law of any jurisdiction required to consummate the
transactions contemplated hereby shall have been met or obtained. No
action, suit or proceeding by the FTC, the DOJ, the Commission or any
national governmental agency of any jurisdiction shall be pending that
seeks to restrain or prohibit the consummation of the transactions
contemplated hereby in any material respect or seeking material damages in
connection therewith, that Sellers in good faith believe makes it
undesirable to consummate the transactions contemplated hereby.
10.3 Transferred Entities. With respect to each Transferred Entity
(other than a Section 2.3 Transferred Entity), the parties shall have
obtained all approvals, consents or other authorizations of Governmental
Authorities that are necessary in order for Sellers to transfer the Equity
Interests in such Transferred Entities to Purchasers at the Closing.
10.4 No Breach. Each material covenant of Purchasers required by
this Agreement to be performed by them on or prior to the Exchange Date
shall have been duly performed and complied with in all material respects
at the Exchange Date. The representations and warranties of Purchasers
contained in the Agreement shall be true and correct in all material
respects as of the Exchange Date as though made on and as of such date.
-46-
10.5 Other Agreements. The applicable Purchasers shall have
executed and delivered the Commercial Agreements and the Foreign Transfer
Agreements (other than the Post-Closing Transfer Agreements).
11. TERMINATION; SURVIVAL.
11.1 Termination. Notwithstanding anything to the contrary set
forth herein, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing:
(a) by mutual written consent of Purchasers and Sellers;
(b) by Purchasers by written notice to Sellers, if the
transactions contemplated hereby are not consummated on or before the
Deadline, if the failure to consummate the transactions results from a
failure of the conditions in Section 9 other than a failure caused by
Purchasers' breach of a covenant; or
(c) by Sellers by written notice to Purchasers, if the
transactions contemplated hereby are not consummated on or before the
Deadline, if the failure to consummate the transactions results from a
failure of the conditions in Section 10 other than a failure caused by
Sellers' breach of a covenant.
11.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 11.1(a), this Agreement shall become null and void and
of no further force and effect, and none of the parties hereto (nor their
respective Affiliates, directors, shareholders, officers, employees,
agents, consultants, attorneys-in-fact or other representatives) shall have
any liability in respect of such termination. If such termination is
effected pursuant to Section 11.1(b) or (c) and there has been a breach,
the party having so breached shall remain liable to the other party hereto
on account of such breach and the non-breaching party shall retain all
rights in equity or law arising as a result of such breach. The provisions
of Section 14.12 and Section 16.1 shall survive any termination of this
Agreement.
12. DELIVERIES BY SELLERS AT THE CLOSING. At the Closing, Sellers
shall deliver to Purchasers (subject to Section 2.3):
(a) Secretaries' certificates or certificates of authorized
representatives of non-United States entities certifying to (i)
resolutions adopted by Sellers evidencing the authorizations described
in Section 6.2; (ii) the constituent documents of Sellers; and
(iii) incumbency of the officers of Sellers executing documents
required hereunder;
(b) With respect to Owned Real Property owned by Sellers and
located in the United States, executed and acknowledged bargain and
sale deeds without covenants and otherwise in form customarily given
in similar commercial transactions (or, with respect to Owned Real
Property owned by Sellers and located outside the United States,
customary transfer documents), all in form to convey good and
marketable title in the jurisdiction in which the Real Property is
located (collectively, the "Deeds"). Notwithstanding the
-47-
foregoing, with respect to any Owned Real Property located within
the United States, if a Qualifying Policy of Title Insurance shall not
be issued at the Closing, the form of deed shall be a full covenant and
warranty type deed with the following provision included (unless same
shall cause the deed to be unrecordable or invalid): that the warranties
may not be relied upon by persons other than Purchasers (including,
without limitation, title insurers and any owner in the chain of
title);
(c) Executed Assignment and Assumption Agreements (without
additional representations or warranties other than as set forth in
this Agreement), in forms reasonably acceptable to Purchasers, with
respect to all leases or any other rights appurtenant to the Leased
Real Property owned by Sellers listed in Part B of Schedule 6.6 which
cannot be transferred by deed (collectively, the "Real Property Lease
Assignments");
(d) Executed General Assignment Agreements (without additional
representations and warranties other than as set forth in this
Agreement), in a form reasonably acceptable to Purchasers, with
respect to all Permits, warranties, guaranties, and all other rights
and interests relating to the Owned Real Property owned by Sellers
(the "General Real Property Assignments");
(e) An executed bill of sale or other appropriate instruments of
transfer, in form reasonably acceptable to Purchasers, with respect to
all of the owned Personal Property, Inventory, Accounts Receivable and
any other Transferred Assets owned by Sellers not transferred or
assigned by any other documents or instrument described in this
Section;
(f) Separately executed and acknowledged Assignments, in
recordable form and reasonably acceptable to Purchasers, sufficient to
transfer title to the Intellectual Property being conveyed
(collectively, the "Intellectual Property Assignments") and powers of
attorney executed by Sellers permitting Purchasers to prosecute any
pending applications for Intellectual Property rights;
(g) Executed copies of each Assignment and Assumption Agreement,
in forms reasonably acceptable to Purchasers, with respect to the
Intellectual Property Licenses granted to Sellers by third parties and
granted to third parties by Sellers (collectively, the "License
Assignments");
(h) Executed Assignment and Assumption Agreement in a form
reasonably acceptable to Purchasers, with respect to the Contracts to
which any Seller is a party (collectively, the "Contract
Assignments");
(i) Executed Commercial Agreements and Foreign Transfer
Agreements (other than the Post-Closing Transfer Agreements);
(j) Certificates or similar instruments representing the Equity
Interests in the Transferred Entities, the equity interests in the
Newcos and (subject to Section 2.4) the
-48-
Minority Interests, duly endorsed in blank and accompanied by
appropriate stock powers or other appropriate and effective
instruments of transfer;
(k) Resignations of those officers and directors of the
Transferred Entities which Purchasers shall request in writing before
the Closing, and resolutions terminating all delegations of powers or
signature requested by Purchasers with respect to the Transferred
Entities;
(l) Books and records of the Transferred Entities, including for
each, the corporate minute book, seal (where applicable) and stock
ledger book;
(m) The documents required by Section 14.7 in connection with
the Industrial Revenue Bonds (as defined in Section 14.7);
(n) Executed Assignments, in form reasonably acceptable to
Purchasers, with respect to the Safe Harbor Leases (the "Safe Harbor
Lease Assignments");
(o) Originals of all leases of the Leased Real Property (or
copies to the extent any original leases are missing), certified by
Sellers to be true, correct and complete copies of the leases (except
leases noted on Schedule 6.6(d) as oral leases);
(p) Original Foreign Investment in Real Property Transfer Act
certificate (as required by Section 1445 of the Code) executed by the
applicable Sellers; and
(q) Appropriate documentation necessary to claim an exemption or
reduction from any Transfer Taxes.
13. DELIVERIES BY PURCHASERS AT THE CLOSING.
At the Closing, Purchaser Parent shall make the wire transfer of funds
called for by Section 3.1 and 14.11(a) and Purchasers shall execute where
applicable and deliver to Sellers:
(a) Executed undertakings and assumptions of Purchasers, in form
reasonably satisfactory to Sellers, with respect to the assumption by
Purchasers of the Assumed Liabilities, which undertakings and
assumptions shall be dated and by their terms effective as of the
effective time of the Closing as provided in Section 1.1;
(b) Secretaries' certificates or certificates of authorized
representatives of non-United States entities certifying to (i)
resolutions adopted by Purchasers evidencing the authorizations
described in Section 7.2; (ii) the constituent documents of
Purchasers; and (iii) incumbency of the officers of Purchasers
executing documents required hereunder;
(c) Executed Real Property Lease Assignments, General Real
Property Assignments, License Assignments, Contracts Assignments,
Intellectual Property Assignments, Commercial Agreements, Foreign
Transfer Agreements (other than the Post-Closing Transfer Agreements),
and Safe Harbor Lease Assignments; and
-49-
(d) Appropriate documentation necessary to claim an exemption or
reduction from any Transfer Taxes.
14. POST-CLOSING OBLIGATIONS.
14.1 Covenant Not to Compete; No Raid.
(a) Sellers agree that they shall not, shall not permit any
Affiliate, and (except as set forth below) shall use best efforts to
prevent any joint venture of any Seller or any such Affiliate from,
for a period of five (5) years after the Exchange Date, engaging in
the business of designing, developing, manufacturing, marketing and
selling hydraulic braking products and systems for passenger cars and
light and medium trucks (which systems and products include but are
not limited to master cylinders, vacuum boosters, brake valves,
foundation brakes and antilock braking systems and products)
(collectively, "Competitive Activities"); provided, however, that the
foregoing shall not prohibit:
(i) Sellers, any of their Affiliates, any such joint
venture or any of the accounts managed by them, including without
limitation of any pension or other benefit plan of Sellers, from
owning any outstanding capital stock or other equity interests of
any Person engaging in any Competitive Activities provided the
aggregate beneficial ownership of Sellers (without reference to
pension or other benefit plan assets) does not exceed more than
five percent of all issued and outstanding securities of any such
Person;
(ii) except as specifically provided in the Commercial
Agreements, Sellers, any of their Affiliates or any such joint
venture from engaging in any or all of the Excluded Businesses
(including, with respect to the friction material business, the
manufacture of Friction Parts) or any other businesses other than
the Business;
(iii) Sellers, any of their Affiliates or any such joint
venture from acquiring a business that engages in Competitive
Activities provided that (x) such activities do not constitute
more than 20% of the revenues or assets of the business to be
acquired (based on the sales of such business during the
preceding four full calendar quarters) and (y) the applicable
Seller, Affiliate or joint venture divests that portion of the
business to be acquired that engages in Competitive Activities
within twelve months after the acquisition thereof;
(iv) Sellers' existing equity investment in Jidosha Kiki
Company;
(v) TBS or any other Knorr JV which (at the time of the
activity referred to below in this clause (v)) is an Affiliate of
AlliedSignal from (w) buying and reselling hydraulic brake parts
for integration in air over hydraulic systems, (x) buying,
reselling and remanufacturing hydraulic brake parts for sale in
the medium and heavy truck aftermarket, (y) engaging in the
business of assembling, marketing and selling modular assemblies
which may include incidental braking components
-50-
purchased from third parties, and/or (z) engaging in the business
with respect to the Excluded TBS Products; it being agreed that,
in each of the foregoing cases (w), (x) and (y), if Purchasers
desire to sell such brake parts to TBS or any such other Knorr JV
on competitive terms, then AlliedSignal will cause TBS or such other
Knorr JV to use its good faith efforts to purchase such brake
parts from Purchasers;
(vi) Sellers, any of their Affiliates or any such joint
venture from designing and/or developing integrated vehicle
safety systems that may interface with products of the type
manufactured and sold by the Business (but not including any
development work on such products (or parts thereof) or other
products performing such function);
(vii) Sellers or any of their Affiliates from managing,
operating and/or disposing of any of the Excluded OES Assets,
including, without limitation, liquidation of the inventory
constituting Excluded OES Assets; and
(viii) Sellers from owning any and all of the Section 2.3
Transferred Entities during the one year period set forth in
Section 2.3(b) and, if Sellers have not transferred to Purchasers
ownership of any such Section 2.3 Transferred Entity prior to the
expiration of such period, the ownership of such Section 2.3
Transferred Entity and the operation of the Business of such
Section 2.3 Transferred Entity thereafter;
provided, further, that the prohibitions in this Section 14.1(a) shall
cease to apply (effective as of the time of such transfer) to any
businesses or operations of Sellers or any of their Subsidiaries which
are transferred to any third party (other than to a Subsidiary or
Affiliate or any such joint venture of any Sellers) after the date
hereof or to any Subsidiaries of Sellers the stock of which is
transferred to any third party (other than to a Subsidiary or
Affiliate or any such joint venture of any Seller) after the date
hereof. Notwithstanding the foregoing, this Section 14.1 does not and
shall not obligate Sellers to take any action with respect to, and
this Section 14.1 does not and shall not apply to, any Knorr JV which
(at the time of the relevant activity referred to above in this
Section 14.1) is not an Affiliate of AlliedSignal.
(b) No-Raid Covenant. For a period of three years following
the Exchange Date, (i) without the prior approval of Purchaser Parent,
no Seller (nor any of its Affiliates) shall solicit or induce (or
initiate discussions relating to future employment with), any salaried
employee or person employed by any Purchaser or Transferred Entity, as
the case may be, in a management position in the Business on the date
of such solicitation or inducement or the initiation of such
discussions to accept employment with Sellers or any Affiliate thereof
and (ii) without the prior approval of AlliedSignal, no Purchaser (nor
any of its Affiliates) shall solicit or induce (or initiate
discussions relating to future employment with), any salaried employee
or person employed by any Seller, in a management position in Sellers'
friction material business on the date of such solicitation
-51-
or inducement or the initiation of such discussions to accept employment
with any Purchaser or any Affiliate thereof, except in the case of
clauses (i) and (ii) for persons whose employment is solicited or
procured through newspaper ads or through the services of executive
search firms engaged in a broad-based search (and not engaged for the
purpose of circumventing this Section 14.1(b)).
14.2 Tax Matters.
(a) As to Transferred Assets.
(i) Subject to the provisions of Section 14.2(c), all Taxes
related to the Business which are accrued or accruable with
respect to events or conditions occurring prior to the close of
business on the Closing Date shall be borne by Sellers
(regardless of whether assessed against any Purchasers as
transferees or successors). For this purpose, the Closing Date
shall be treated as the last day of a taxable period, whether or
not the taxable period in fact ends on such date.
(b) As to Transferred Entities. With respect to the Transferred
Entities:
(i) Current Taxes. The applicable Transferred Entity
has timely filed, or will timely file, all Tax Returns required
to be filed for all taxable periods ending on or before the
Closing Date and the applicable Transferred Entity has paid or
will pay the Taxes shown on such returns, as well as any required
Tax deposits with respect to such periods, in full. The
applicable Transferred Entity will prepare and timely file all
Tax Returns for taxable periods ending on a date after the
Closing Date (which may include the Closing Date), in a manner
consistent with proper prior practices and the applicable
Transferred Entity will pay the Taxes shown on such returns. The
applicable Seller will remit to the applicable Transferred Entity
an amount equal to the pro-rata portion (as determined in
accordance with the provisions of Section 4.2(e)(v)) of the Taxes
shown on such returns that would have been payable for a taxable
period ending on the close of business on the Closing Date,
reduced by any amounts of such Taxes prepaid or deposited by the
Transferred Entities prior to the Closing Date or any amounts
Sellers have contributed prior to the Closing Date to the
Transferred Entities which have been deposited as payment of such
Taxes at least five days before the date such payment is due
pursuant to written notice of the amount (with supporting
documentation) and the due date. To the extent such prepayment
or deposit exceeds the amount of Taxes payable by Sellers under
this clause (i), such excess will be refunded by the applicable
Transferred Entity to Sellers at least five (5) days before the
date the Tax payment is due if the Transferred Entity applies
such amount to its Tax liability for the year or upon the receipt
of the refund if such amount is to be refunded. Except to the
extent discussed in the Specified Accounting Principles, any
payment by a Seller to an applicable Transferred Entity pursuant
to this paragraph shall be adjusted if necessary, and in
accordance with the principles set forth in Section 15.5(d), to
take into account (i) any Tax liability
-52-
of the applicable Transferred Entity arising from its receipt of
such payment and (ii) the Tax treatment by the applicable
Transferred Entity of any payment of Taxes for which it is being
reimbursed by a Seller pursuant to this paragraph.
(ii) Adjustments. Purchasers shall indemnify and hold
Sellers harmless against all Taxes for all taxable periods ending
after the Closing Date, except to the extent Sellers are
responsible for Taxes with respect to taxable periods including
and ending after the Closing Date. Sellers shall be entitled to
all refunds of Taxes with respect to all taxable periods ending
on or before the Closing Date (except as provided below), and
Purchasers shall pay over to Sellers such amounts received by
Purchasers within ten business days after their receipt thereof.
Notwithstanding the preceding sentence, in the event that (i) a
Transferred Entity shall record a net operating loss ("NOL") or
shall be entitled to any tax credit in or for any period after
the Closing Date, (ii) such NOL or tax credit may be carried back
under applicable law by the Transferred Entity to a taxable
period that ended on or before the Closing Date, and (iii) the
carry-back of such NOL or tax credit results in a refund to the
Transferred Entity for a taxable period that ended on or before
the Closing Date, the Transferred Entity shall be entitled to
retain such refund.
(iii) Termination of Prior Tax Sharing Agreements.
Effective on the Closing Date, all tax sharing agreements,
whether or not written, to which the Sellers and the Transferred
Entities are parties shall be terminated without further
obligations on the part of any party thereto (other than the
obtaining of any consent of a Transferred Entity to such
termination as may be required under applicable law, which
consent the Sellers shall cause to be executed and delivered) and
the provisions of this Agreement shall govern the rights and
obligations of the Sellers and Transferred Entities to make or
receive payments or refunds of Taxes. Sellers shall execute (and
shall cause the Transferred Entities to execute) any documents
that may be reasonably required to evidence agreement with this
Section 14.2(b)(iii).
(iv) Cooperation and Exchange of Information. Sellers
and Purchasers shall provide each other with such cooperation and
information as either of them reasonably may request of the other
in filing any Tax Return, amended return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes
or in conducting any audit or other proceeding in respect of
Taxes. Such cooperation and information shall include providing
copies of all relevant Tax Returns, together with accompanying
schedules and related workpapers, documents relating to rulings
or other determinations by taxing authorities and records
concerning the ownership and tax basis of property, which either
party may possess. Each party shall make its employees available
on a mutually convenient basis to provide explanation of any
documents or information provided hereunder. Notwithstanding the
foregoing, neither party shall be required to prepare any
documents, or determine any information not then in its
possession, in response to
-53-
a request under this Section. Except as otherwise provided
in this Agreement, the party requesting assistance
hereunder shall reimburse the other for any reasonable
out-of-pocket costs incurred in providing any return, document or
other written information, and shall compensate the other for any
reasonable costs (excluding wages and salaries) of making
employees available, upon receipt of reasonable documentation of
such costs. Each party will retain all returns, schedules and
workpapers and all material records or other documents relating
thereto, until the expiration of the statute of limitations
(including extensions) of the taxable years to which such returns
and other documents relate and, unless such returns and other
documents are offered to the other party, until the final
determination of any payments which may be required in respect of
such years under this Agreement. Any information obtained under
this Section shall be kept confidential, except as may be
otherwise necessary in connection with the filing of returns or
claims for refund or in conducting any audit or other proceeding.
The Transferred Entities shall at their own cost and expense
fully and accurately complete and submit any tax data packages
required by Sellers within the time periods established by the
Tax Department of AlliedSignal consistent with past practices,
subject to Sellers' reimbursement of the Transferred Entities'
reasonable out-of-pocket costs and reasonable costs (excluding
wages and salaries) of making employees available for such
purpose, upon Sellers' receipt of reasonable documentation of
such costs.
(v) Filing Procedures. With respect to any Taxes for
which the Transferred Entities bear continuing responsibility
pursuant to the provisions of this Agreement, Purchasers will
cause the Transferred Entities to consult with the Tax Department
of AlliedSignal concerning the position taken and conduct adopted
by the Transferred Entity on any material issue and will conduct
audits or proceedings in a reasonable and diligent fashion;
provided, however, that the Transferred Entities shall make final
decisions with respect to all aspects of such audits and
proceedings.
(vi) The applicable Seller, at the option of the applicable
Purchaser, shall join with the applicable Purchaser in timely
making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local or foreign tax law)
(collectively a "Section 338(h)(10) Election") with respect to
the purchase and sale of the stock of the applicable Transferred
Entity hereunder.
(c) Sellers and Purchasers shall each pay one-half of all sales,
use, registration, non-recoverable value-added, transfer, documentary,
stamp, reporting or recording Taxes or fees (collectively, "Transfer
Taxes"), including interest and penalties thereon imposed as a result
of failure to properly and timely file Transfer Tax returns or
documents or pay to the relevant tax authority any such Transfer
Taxes, to the extent such Transfer Taxes are imposed or incurred by
reason of the transfer of either any Assets or the shares of a
Transferred Entity by Sellers to Purchasers or Transferred Entities
hereunder, provided that neither party to such a transfer shall be
required to share in any interest or penalties to the extent that any
failure to properly and timely file Transfer Tax returns or documents or
-54-
pay Transfer Taxes was due to the other party's negligence or
willful neglect. The non-assessed party shall pay to the assessed
party its 50 percent share of Transfer Taxes within 10 days of receipt
of written demand from the assessed party accompanied by reasonably
appropriate documentation. The applicable parties shall file or
deliver applications or other required documentation to or with each
other and the relevant state, local and foreign tax authorities to
obtain the benefit of any applicable exemptions from Transfer Taxes in
connection with the transfer of any Assets to Purchasers hereunder.
For purposes of this paragraph (c), Transfer Taxes shall be deemed not
to include customs duties or any recapture of tax incentives or
abatements, but shall be deemed to include INVIM in Italy and IMSIV in
Spain, and interest on delayed recovery of value-added taxes, computed
assuming a six month computation period and an interest rate of 7
percent per annum; INVIM, IMSIV and such interest are to be computed
on a net after tax basis assuming a 40 percent income tax rate.
14.3 Further Assurances. From time to time after the Closing,
without further consideration, the parties shall cooperate with each other
and shall execute and deliver instruments of transfer or assignment or
assumption, or such other documents to the other party as such other party
reasonably may request to evidence or perfect Purchasers' right, title and
interest to the Assets or to more effectively relieve Sellers of any
liabilities or obligations to be assumed by Purchasers hereunder, and
otherwise carry out the transactions contemplated by this Agreement.
14.4 Reports; Access to Books and Records. After the Closing,
Purchasers shall permit Sellers to have reasonable access to and the right
to make copies of such of Purchasers' or the Transferred Entities' books,
records and files as constitute part of, or relate to, the Assets or the
Business for any reasonable purpose of Sellers, such as for use in
litigation, financial reporting, workers' compensation matters and other
matters for which Sellers have responsibility pursuant to Article 5, tax
return preparation, or tax compliance matters. In addition, Purchasers
shall make available to Sellers, upon Sellers' reasonable request,
personnel of Purchasers or the Transferred Entities who are familiar with
any such matter requested. Purchasers agree to preserve and keep all of
the books, records and files of the Business for a period of not less than
five (5) years after the Exchange Date, or for any longer period as may be
required for financial or tax purposes (i) by any government agency, (ii)
by any law, rule or regulation or (iii) in connection with any ongoing
litigation, suit or proceeding. Prior to disposing of any such
information, Purchasers shall afford Sellers a reasonable opportunity to
segregate, remove or copy such books, records and files as Sellers may
select. Sellers shall also permit Purchasers reasonable access to Sellers'
corporate books and records pertaining to the Business for any reasonable
purpose of Purchasers, such as for use in litigation, tax return
preparation and for compliance matters. Purchasers shall also make
available to Sellers copies of the following to the extent related to an
Excluded Liability: (i) process, material, test, manufacturing and quality
specifications, and (ii) sales information reflecting volume, customers,
yearly totals and similar information.
14.5 Cooperation in Litigation. Purchasers and Sellers shall
cooperate with each other at the requesting party's expense in the
prosecution or defense of any litigation or other
-55-
proceeding arising from their respective operation of the Business or for
which they are responsible under this Agreement and involving one or more
third parties.
14.6 Names and Marks. Purchasers acknowledge and agree that they
do not by virtue of any of the transactions contemplated by this Agreement
or otherwise, except the Trademark Agreement and the Aftermarket
Agreements, obtain any of Sellers' rights to any names, marks, trade names
or trademarks incorporating "Bendix" or "AlliedSignal" or any derivation
therefrom or any corporate symbols or logos incorporating "Bendix" or
"AlliedSignal" either alone or in combinations or any goodwill represented
thereby and pertaining thereto, all of which shall remain the sole property
of Sellers.
14.7 Industrial Revenue Bonds. Purchasers agree to perform and
satisfy all obligations on the part of Sellers to be performed thereunder,
excluding all payment obligations, which shall be performed by Sellers at
no cost to Purchasers or any Transferred Entity, under the industrial
revenue bonds listed in Schedule 14.7 (the "Industrial Revenue Bonds").
The applicable Sellers represent and warrant that they have performed and
satisfied all obligations required to be performed under all of their
agreements relating to the Industrial Revenue Bonds up to and including the
Exchange Date and that the transactions contemplated by this Agreement will
not result in a determination of taxability with respect to the Industrial
Revenue Bonds, and Sellers agree to indemnify Purchasers for any breach of
this representation and warranty and for any loss resulting to Purchasers
as a result of Sellers' failure so to perform and satisfy such obligations.
If as a result of Purchasers' or the Transferred Entities failure to
perform the above stated obligations after the Exchange Date the interest
on the Industrial Revenue Bonds becomes subject to federal income tax, or
Sellers shall suffer any other loss related to such failure by Purchasers
or the Transferred Entities, the applicable Purchaser shall indemnify the
applicable Seller for losses it may suffer by reason of such event;
provided, however, that (a) the applicable Purchaser must be provided the
opportunity, upon reasonable notice, to participate in any action or
proceeding that may result in a determination of taxability or loss to the
applicable Seller, and (b) the applicable Seller shall take all reasonable
action necessary to mitigate such losses.
14.8 Transturk Contingent Payment. If the Transturk Contingent
Payment is not settled and paid prior to the Closing, Purchasers shall
provide Sellers with such cooperation as Sellers may reasonably request in
satisfying their liabilities and obligations in respect of the Transturk
Contingent Payment, including without limitation, reasonable access for
such purpose to the books, records and personnel of the Business in Turkey,
and in complying with the first paragraph of Section III of the Usufruct
Agreement. Purchasers shall perform, on behalf of Sellers, Section II, the
second and third paragraphs of Section III and Section V of the Usufruct
Agreement. Nothing in this Section shall limit Sellers' obligation to
indemnify Purchasers in connection with the Usufruct Agreement.
14.9 Continued Supply of Friction Materials. From and after the
Exchange Date, Sellers shall perform their obligations under all purchase
orders previously issued by the Business and existing as of the Exchange
Date for the supply of "Friction Parts" (as defined below) to the Business.
To the extent requested by Purchasers, Sellers further agree to accept
future purchase orders on commercially reasonable terms mutually acceptable
to both parties as necessary to
-56-
enable Purchasers to fulfill the obligations of the Business existing
as of the Exchange Date to its OEM and OES customers. As used herein,
"Friction Parts" shall mean brake pads and linings, brake pad backing
plates and brake shoes and webs for use in hydraulic braking systems.
14.10 Performance of Obligations. The applicable Purchasers
shall, and shall cause the applicable Transferred Entities to, perform and
fulfill all obligations and commitments of the Business existing as of the
Closing Date or thereafter incurred, all in accordance with this Agreement.
14.11 ABS Shutdown.
(a) At the Closing, Purchaser Parent shall reimburse Sellers for
the amount of all supplier settlements paid by Sellers after the date
of the Initial Balance Sheet and prior to the Exchange Date as a
result of discontinuing the Anti-lock Braking Systems business that is
included in the Business (the "ABS Shutdown"), up to a maximum
reimbursement of $29,000,000 (such reimbursement, the "ABS
Reimbursement"). Payment of the ABS Reimbursement shall be made at
the Closing by a wire transfer of immediately available funds in U.S.
currency to a bank account to be designated in writing by AlliedSignal
(and accompanied by a certificate of the Chief Financial Officer of
AlliedSignal stating the total amount of the ABS Reimbursement and the
breakdown of the payment) not less than two (2) Business Days prior to
the Exchange Date.
(b) Following the Closing, Sellers shall indemnify and hold
harmless Purchasers and their Affiliates from and against the amount
of all supplier settlements paid by Purchasers or any of their
Affiliates after the Exchange Date as a result of the ABS Shutdown, if
and to the extent that the sum of (i) the amount of such settlements,
plus (ii) the amount of the ABS Reimbursement, exceeds $29,000,000.
Sellers shall pay any such excess as and when it is incurred, upon
notice from Purchasers together with such supporting documentation as
Sellers may reasonably request, by wire transfer of United States
dollars to an account designated by Purchasers. Purchasers shall keep
Sellers apprised of any settlement discussions between Purchasers and
any such supplier after the Exchange Date and, upon Sellers'
reasonable request (unless objected to by the applicable supplier),
shall permit Sellers to participate in such settlement discussions.
Purchasers shall conduct any such settlement discussions in good
faith, but shall not be required to obtain Sellers' consent to any
such settlement. The indemnification provided for in this Section
14.11(b) shall not be subject to, or otherwise affect, the
indemnification provided for in Article 15.
(c) If the sum of (i) the amount of the ABS Reimbursement and
(ii) the aggregate amount of all other supplier settlements resulting
from the ABS Shutdown is less than $29,000,000, then Purchasers shall
pay to Sellers an amount in cash equal to the difference between
(i) $29,000,000 and (ii) the aggregate amount of such settlements.
Purchasers shall pay such amount, if any, within five (5) Business
Days after the parties reasonably agree (which agreement shall not be
unreasonably withheld) that all supplier
-57-
claims in connection with the ABS Shutdown have been settled
and paid. Such payment shall be made to the bank account
designated by Sellers in Section 14.11(a) above.
(d) Prior to the Exchange Date, either (i) AlliedSignal and the
other party to the Requirements Agreement, dated as of October 1,
1988, previously delivered to Purchasers (the "ABS Agreement") shall
terminate such agreement effective on or prior to the Closing Date
(and without any liability or obligation thereunder by Purchasers
after the Closing) or (ii) if the ABS Agreement is not terminated on
or prior to the Closing Date, the ABS Agreement will be an Excluded
Asset and an Excluded Liability. Prior to the Exchange Date,
AlliedSignal shall use reasonable efforts to obtain service part
commitments from suppliers to the Anti-lock Braking Systems business
that is included in the Business (and, in particular, from the other
party to the ABS Agreement).
14.12 Confidential Information.
(a) For a period of five years from the Exchange Date, Sellers
and any corporation, partnership or trust controlled, directly or
indirectly, by Sellers shall maintain the confidentiality of, and
shall not use for the benefit of itself or others, any confidential
information concerning the Business or Assets, including without
limitation any information provided pursuant to Section 8.2 (the
"Confidential Information"); provided, however, that this
paragraph (a) shall not restrict (i) disclosure by Sellers of any
Confidential Information required by applicable statute, rule or
regulation or any court of competent jurisdiction, provided that
Purchasers are given notice and an adequate opportunity to contest
such disclosure, (ii) any disclosure on a confidential basis to
Sellers' attorneys, accountants, lenders and investment bankers,
(iii) any disclosure of information (x) which is available publicly as
of the date of this Agreement, (y) which, after the date of this
Agreement, becomes available publicly through no fault of the
disclosing party, (z) which is disclosed to Sellers by another Person
who acquired it from a third party without an obligation of
confidentiality to Purchasers or Sellers or (zz) which is
independently developed by an employee of Sellers who had no access to
such information, (iv) Sellers' use of such information to protect or
enforce their rights under this Agreement, in connection with tax or
other regulatory filings or their use of such information to protect
their rights against any third party, and (v) Sellers' and their
Affiliates' use of such information in the conduct of their own
businesses if and to the extent not prohibited by Section 14.1.
(b) Any and all information disclosed by Purchasers to Sellers
or by Sellers to Purchasers as a result of the negotiations leading to
the execution of this Agreement, or in furtherance thereof, which
information was not already known to Sellers or to Purchasers, as the
case may be, shall for a period of five years remain confidential to
Sellers and Purchasers and their respective employees and agents;
provided, however, that this paragraph (b) shall not restrict
(i) disclosure of any such information required by applicable statute,
rule or regulation or any court of competent jurisdiction, provided
that the non-disclosing party is given notice and an adequate
opportunity to contest such disclosure, (ii) any disclosure on a
confidential basis to the parties' attorneys, accountants,
-58-
lenders and investment bankers, (iii) any disclosure of information
(x) which is available publicly as of the date of this Agreement,
(y) which, after the date hereof, becomes available publicly through no
fault of the disclosing party or any Person controlled directly or
indirectly by the disclosing party, (z) which is disclosed to the
disclosing party by another Person who acquired it from a third party
without an obligation of confidentiality to Purchasers or Sellers, as
the case may be, or (zz) which is independently developed by an employee
of the disclosing party who had no access to such information, (iv) the
use of such information to protect such party's rights under this
Agreement or in connection with tax or other regulatory filings or
such party's use of such information to protect its rights against any
third party and (v) the use by Purchasers and their Affiliates of any
such information in the operation of their businesses after the
Exchange Date.
14.13 Real Property Deeds. In the event a Qualifying Title
Insurance Policy shall be issued in respect of any Real Property located in
the United States or Mexico for which a warranty type deed (or other
transfer document with warranty, with respect to Mexico) shall have been
delivered at the Closing, if and to the extent such warranty is covered by
a Qualifying Title Insurance Policy, Purchasers may thereafter not enforce
such warranty set forth therein or relating thereto; and with respect to
real property located in the United States, upon the request of Sellers,
Purchasers shall execute and delivery to Sellers a corrective-type deed for
the Real Property (prepared by Sellers and reasonably acceptable to
Purchasers), which corrective type deed shall otherwise be of the type set
forth in Section 12(b) and shall recite that it is being delivered
specifically to delete those warranties included in the deed delivered at
the Closing that are covered by a Qualifying Title Insurance Policy.
Sellers shall bear all costs to record such corrective type deed.
14.14 Certain Licenses.
(a) To the extent that Sellers own or are licensed to use any
patents which relate to the Business but which are not included in the
Intellectual Property, Sellers grant to the Purchasers, effective as
of the Exchange Date, a royalty-free, worldwide, exclusive license
(subject to any existing third party licenses) to use such patent or
patents in the hydraulic brake business, and the right to sublicense
such license to others (subject to any existing third party licenses),
for a term equal to the life of the applicable patent or patents.
(b) To the extent that any of the Intellectual Property relates
to Sellers' friction business, Purchasers grant to the Sellers,
effective as of the Exchange Date, a royalty-free, worldwide, non-
exclusive license (subject to any existing third party licenses) to
use such patent or patents solely in Sellers' friction business, and
the right to sublicense such license to others (subject to any
existing third party licenses), for a term equal to the life of the
applicable patent or patents.
14.15 Certain Receivables. From and after the Exchange Date,
at Sellers' request and if not prohibited by applicable law, Purchasers
shall act as Sellers' agent for the collection of certain trade accounts
receivable and notes receivable arising from the Business and sold by
Sellers prior to the Closing. Purchasers shall provide such services for a
fee, and on such commercial terms, as
-59-
are standard for services of this type, including without limitation,
the prompt remittance to Sellers of any payments received; provided, however,
that Purchasers shall in no event be required to institute or pursue legal
proceedings against any customers in connection with such collection efforts.
15. INDEMNIFICATION.
15.1 Indemnification by Sellers. Subject to Sections 15.4 and
15.6, Sellers shall, jointly and severally, indemnify and hold harmless
Purchasers and their directors, officers, employees, agents, consultants,
representatives, Affiliates, successors by operation of law and permitted
assigns from and against and in respect of, any and all claims,
liabilities, obligations, losses, costs, out of pocket expenses (including
without limitation, reasonable legal, accounting and similar expenses),
fines (civil or criminal), deficiencies, assessments, charges, penalties,
allegations, demands, damages (excluding consequential damages, including
without limitation, lost profits), civil and criminal violations of law,
settlements and judgments of any kind or nature whatsoever (individually a
"Loss" and collectively "Losses"), which any of them may incur arising out
of any one or more of the following:
(a) any breach of any covenant or agreement on the part of
Sellers in this Agreement or any instrument, agreement, certificate or
similar document required to be delivered pursuant to this Agreement
(other than the Commercial Agreements);
(b) any breach of any representation or warranty on the part of
Sellers in this Agreement;
(c) any of the Excluded Liabilities; and
(d) the operation of the Excluded Businesses and the ownership
or use of the Excluded Assets after the Closing Date.
Notwithstanding the foregoing, Purchasers may not make any claim hereunder
for punitive damages, except Purchasers may make a claim under this
Agreement for punitive damages constituting Losses payable by Purchasers
for a third party claim where such third party has been awarded specific
punitive damages in respect to such claim.
15.2 Indemnification by Purchasers. Subject to Sections 15.4 and
15.6, Purchasers shall jointly and severally, indemnify and hold harmless
Sellers and their directors, officers, employees, agents, consultants,
representatives, affiliates, successors by operation of law and permitted
assigns from and against and in respect of, any and all Losses which any
of them may incur arising out of any one or more of the following:
(a) any breach of any covenant or agreement on the part of
Purchasers in this Agreement or any instrument, agreement, certificate
or similar document required to be delivered pursuant to this
Agreement (other than the Commercial Agreements);
-60-
(b) any breach of any representation or warranty on the part of
Purchasers in this Agreement;
(c) any Assumed Liability; and
(d) except for Excluded Liabilities and any Losses for which
Sellers have an obligation to indemnify pursuant to Section 15.1 or
15.6, the operation of the Business and the ownership or use of the
Assets after the Closing Date.
Notwithstanding the foregoing, Sellers may not make any claim hereunder for
punitive damages, except Sellers may make a claim under this Agreement for
punitive damages constituting Losses payable by Sellers for a third party
claim where such third party has been awarded specific punitive damages in
respect to such claim.
15.3 Survival. The parties agree that, regardless of any
investigation made at any time by the parties, the representations and
warranties made by Sellers in this Agreement or in any Schedule (and all
related indemnity obligations) shall terminate, and be of no further force
and effect until, and no claims with respect thereto may be made by
Purchasers after the date which is the last day of the thirtieth month
after the Exchange Date; provided, however, that, notwithstanding the
foregoing, (a) claims for indemnification with respect to any breach of
the representations and warranties set forth in Section 6.12 (Environmental
Conditions), or of any covenant or agreement on the part of Seller in this
Agreement relating to Environmental Claims, shall survive until the fifth
anniversary of the Closing Date and (b) claims for indemnification relating
to Losses referred to in the following clauses (i)-(v) ("Unlimited Claims")
shall survive to the expiration of the applicable statute of
limitations: (i) any Excluded Liability, (ii) any breach of the
representations and warranties set forth in Section 6.21 (Taxes), or of any
covenant or agreement on the part of the Sellers in this Agreement relating
to Taxes, (iii) any liability to the extent arising out of a defect in the
title to any Assets which are not Real Property, (iv) any liability to the
extent arising out of a breach of the representations set forth in Section
6.6(a)(ii), (iii), (iv), (v) and (vi) (defects in title to Real Property);
provided, however, that (A) any representation of Sellers set forth in
Section 6.6(a)(iii) and (iv) and relating to a particular Real Property
shall terminate when a Qualifying Title Insurance Policy shall have been
issued (whether at or after Closing) with respect to such Real Property,
except that if and to the extent such Qualifying Title Insurance Policy
contains any exception that is not a Permitted Lien (a "Non-Conforming
Exception"), this proviso shall not apply and Sellers shall continue to be
responsible for such Non-Conforming Exceptions, and if and to the extent
such Qualifying Title Insurance Policy does not contain a Requested
Endorsement, this proviso shall not apply to the extent of any coverage
which would have been provided by such Requested Endorsement, (B) any
representation of Sellers set forth in Section 6.6(a)(iii) and relating to
a particular Real Property located outside the United States shall
terminate when such Real Property is conveyed to Purchaser through a deed
or other instrument prepared or filed by a notary (notaire) or equivalent
official responsible for verifying title in the relevant jurisdiction and
(C) any representations of Sellers set forth in 6.6(a)(v) and relating to a
Real Property shall terminate if and to the extent that a loss suffered as
a result of a breach of such representation is covered by such Qualifying
Title Insurance Policy, and (v) any criminal penalty, in each case, for
which Sellers are responsible
-61-
pursuant to this Agreement. Further, if any claim for indemnification
hereunder in respect of any inaccuracy or breach of any representation
or warranty, which has been previously asserted by either party
to this Agreement pursuant to a notice of claim in accordance
with Section 15.5 below, is still pending at the expiration of the
applicable survival period, such claim shall continue to be subject to the
indemnification provisions of this Agreement.
15.4 Limitations on Indemnity. Notwithstanding anything to the
contrary contained in this Agreement:
(a) Sellers shall have no liability or obligation to Purchasers
with respect to a claim made pursuant to Section 15.1(a) or 15.1(b)
above except to the extent that aggregate Non-Excluded Losses (as
defined below) exceed $5,000,000 (the "Threshold"), and if aggregate
Non-Excluded Losses exceed the Threshold, the aggregate liability of
all Sellers for such Non-Excluded Losses shall remain limited to such
Non-Excluded Losses that are in excess of the Threshold; provided,
however, that (x) Unlimited Claims shall not be subject to such
limitation as to amount, (y) claims for a breach of the representation
and warranty set forth in Section 6.12 shall be governed by the
provisions of Section 15.4(b) rather than by this Section 15.4(a) and
(z) claims for a breach for the representation and warranty set forth
in Section 6.22 shall be governed by the provisions of Section 15.4(c)
rather than by this Section 15.4(a). "Non-Excluded Losses" shall mean
all Losses incurred by Purchasers in connection with claims made
pursuant to Section 15.1(a) or 15.1(b) other than (i) Excluded Losses
(as defined below) and (ii) Losses relating to a claim for a breach of
any representation or warranty set forth in Section 6.12 or 6.22.
"Excluded Loss" shall mean any Loss in the amount of $100,000 or less.
(b) Sellers shall have no liability or obligation to Purchasers
with respect to a claim made pursuant to Section 15.1(b) above with
respect to a breach of the representation and warranty set forth in
Section 6.12, except to the extent that the Loss with respect to the
claim or claims exceeds the $500,000 and $1,000,000 amounts set forth
in Section 6.12.
(c) Sellers shall have no liability or obligation to Purchasers
with respect to a claim made pursuant to Section 15.1(b) above with
respect to a breach of the representation and warranty set forth in
Section 6.22 except to the extent that aggregate Non-Excluded 6.22
Losses (as defined below) exceed $250,000 (the "6.22 Threshold"), and
if aggregate Non-Excluded 6.22 Losses exceed the 6.22 Threshold, the
aggregate liability of all Sellers for such Non-Excluded 6.22 Losses
shall remain limited to such Non-Excluded 6.22 Losses that are in
excess of the 6.22 Threshold. "Non-Excluded 6.22 Losses" shall mean
all Losses incurred by Purchasers in connection with claims made
pursuant to Section 15.1(b) with respect to a breach of the
representation and warranty set forth in Section 6.22 other than any
such Loss that is $5,000 or less.
(d) In no event shall the aggregate liability of all Sellers
with respect to all claims made pursuant to Section 15.1(a) and
15.1(b) exceed $500,000,000; provided, however, that Unlimited Claims
shall not be subject to such limitation as to amount.
-62-
(e) Sellers shall have no liability or obligation to Purchasers
for any Loss to the extent the liability attributable to such Loss is
reflected or reserved (but only to the extent so reflected or
reserved) for on the Closing Balance Sheet as finally determined
pursuant to Section 3.2 (and such Loss shall not count toward the
Threshold, the thresholds set forth in Section 15.4(b) or the 6.22
Threshold).
(f) Any amounts payable by Sellers pursuant to Section 15.1
shall be reduced by (i) any related insurance recoveries received by
Purchasers net of any costs incurred for such recovery and any
retrospective rate increase, and (ii) any payments from third parties
who are not Affiliates of the indemnified party.
(g) The determination of the amount of any Losses arising out of
the breach of more than one representation or warranty shall be
determined without duplication or double counting of the same Loss.
(h) Upon payment of any amount pursuant to any claim for
indemnification hereunder, the Indemnifying Party (as defined in
Section 15.5(a)) shall be subrogated, to the extent of such payment,
to all of the Indemnified Party's (as defined in Section 15.5(a))
rights of recovery against any third party with respect to the matters
to which such claim relates.
(i) The sole and exclusive remedy of Purchasers for breach of
Sellers' representation and warranty set forth in Section 6.24 shall
be as expressly provided in Section 15.6, and Sections 15.1 and 15.5
shall not be applicable thereto.
(j) No claim may be made by Purchasers for breach of the
representation and warranty in Section 6.26 [No Undisclosed
Liabilities] in respect of the following, as to each of which the
parties have agreed that their rights and obligations are governed
solely by certain provisions of this Agreement other than Section
6.26: (i) liabilities and obligations under Contracts and Permits,
(ii) liabilities arising from or relating to Recalls or Service
Actions, and (iii) Environmental Claims (or any other liabilities
relating to a violation of any Environmental Law or to Hazardous
Materials). In addition, no claim may be made by Purchasers for
breach of the representation and warranty in Section 6.26 in respect
of any liability of which Sellers have no Knowledge if the failure to
disclose such liability would constitute a breach of a Knowledge
representation and warranty (i.e. a representation and warranty that
is qualified as being to the Knowledge (or similar wording) of
Sellers) if Sellers did have Knowledge of such liability.
(k) Notwithstanding anything herein to the contrary, Sellers'
obligations with respect to the Excluded Liabilities in Section 4.2(o)
shall be subject to the limitations set forth in Sections 15.4(a)
(without reference to proviso (x)) and (d), and to the thirty month
survival period set forth in Section 15.3.
-63-
15.5 Indemnification Procedure.
(a) Any party making a claim for indemnification hereunder (an
"Indemnified Party") shall notify the indemnifying party (an
"Indemnifying Party") of the claim in writing promptly after receiving
written notice of any action, lawsuit, proceeding, investigation or
other claim against it (if by a third party) or discovering the
liability, obligation or facts which may give rise to such claim for
indemnification, describing the claim, the amount thereof (if known
and quantifiable), and the basis thereof, provided that the failure to
so notify an Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent such failure
shall have actually prejudiced the Indemnifying Party.
(b) If such claim relates to any action, suit, proceeding or
demand instituted against the Indemnified Party by a third party (a
"Third Party Claim"), upon receipt of such notice from the Indemnified
Party the Indemnifying Party shall be entitled to participate in or
assume the defense of such Third Party Claim. In the case of such an
assumption, (i) the Indemnifying Party shall have the sole power to
direct and control such defense with counsel of its choice (including,
without limitation, the authority to negotiate, compromise and settle
such Third Party Claim), subject to the provisions of Section 15.5(c),
and (ii) the Indemnified Party shall retain the right to employ its
own counsel and to participate in the defense of such Third Party
Claim, but the Indemnified Party shall bear and shall be solely
responsible for its own costs and expenses in connection with such
participation. In addition, the Indemnified Party shall meet with the
Indemnifying Party from time to time to discuss the Third Party Claim
and otherwise provide reasonable cooperation to the Indemnifying Party
in connection with the defense of such Third Party Claim.
(c) Notwithstanding the foregoing provisions of this
Section 15.5, (i) the Indemnifying Party shall be entitled to settle
any Third Party Claim without the Indemnified Party's prior written
consent only if the Indemnifying Party fully satisfies such third
party claim without recourse to the Indemnified Party and such
Indemnified Party is released in writing from all liability
(including, without limitation, any liability to the Indemnifying
Party pursuant to this Article 15) with respect to such Third Party
Claim and (ii) the Indemnified Party shall be entitled to settle such
Third Party Claim without the Indemnifying Party's prior written
consent only if the Indemnified Party fully satisfies such Third Party
Claim without recourse to the Indemnifying Party and such Indemnifying
Party is released in writing from all liability (including, without
limitation, any liability to the Indemnified Party pursuant to this
Article 15) with respect to such settlement and such Third Party
Claim, except to the extent provided in the following paragraph (A):
(A) In connection with a settlement effected by the
Indemnified Party pursuant to clause (ii) of this Section
15.5(c), the Indemnified Party may request the Indemnifying Party
to participate in such settlement by contributing a specified
dollar amount (the "Proposed Participation Amount"), and the
Indemnifying Party shall not unreasonably refuse to comply with
such request. If the Indemnifying
-64-
Party refuses to contribute the Proposed Participation
Amount, and the Indemnified Party believes, in good faith,
that such refusal was unreasonable, then the Indemnified
Party may submit to arbitration the following issue:
whether the Indemnifying Party's refusal to comply was
made unreasonably (the "Arbitration Issue"). If the arbitrator
decides the Arbitration Issue in the affirmative, the arbitrator
shall specify a dollar amount (the "Participation Amount") that
is a reasonable amount for the Indemnifying Party to contribute,
which amount shall not exceed the Proposed Participation Amount,
and the Indemnifying Party shall pay the Participation Amount to
the Indemnified Party within five (5) Business Days of the
arbitrator's decision. If the arbitrator does not decide the
Arbitration Issue in the affirmative, the Indemnifying Party
shall have no liability of any kind (including, without
limitation, pursuant to this Article 15) to the Indemnified Party
with respect to such Third Party Claim.
(d) (i) All payments required to be made pursuant to Sections
15.1 or 15.2 or 15.6 (the "Indemnity Payments") shall be adjusted, if
necessary, in accordance with the following principles to take into
account (x) the amount of any Taxes payable by the Indemnified Party
attributable to the receipt of Indemnity Payments and (y) the tax
treatment of the payment by the Indemnified Party of the Loss.
(ii) With respect to Losses that are deductible or
capitalizable and subject to depreciation or amortization, the
Indemnifying Party shall not be required to gross up the
Indemnity Payments to take into account the amount of any Taxes
payable by such Indemnified Party as a result of the receipt of
such payments and the amount of the payment will equal the amount
of the Loss.
(iii) With respect to Losses that are not deductible,
depreciable or amortizable as provided in clause (ii) above, the
Indemnifying Party shall be required to gross up the Indemnity
Payments to take into account the amount of any Taxes payable by
such Indemnified Party as a result of the receipt of such
payments so that the net after Tax amount received by the
Indemnified Party equals the amount of the Loss.
(iv) In connection with Losses incurred in the United
States, if the Indemnifying Party delivers to the Indemnified
Party upon payment of the Loss an opinion of an independent
nationally recognized tax counsel (which tax counsel shall be
reasonably acceptable to such Indemnified Party) that there is
substantial authority referred to in Section 6662(d) of the Code
and defined in Regulations 1.662-4(d) promulgated thereunder for
taking the position that, at the time of the receipt of the
Indemnity Payments, such payments did not constitute taxable
income to such Indemnified Party (the "Indemnity Tax Opinion"),
then for purposes of clause (ii), the Indemnifying Party shall be
permitted to reduce the Indemnity Payments to the extent
necessary to take into account the Tax benefit attributable to
the deduction, depreciation or amortization net of any Tax
benefit lost due to a reduction in the amount of depreciation or
amortization of a
-65-
Purchaser or a Transferred Entity (due to a reduction or
deemed reduction in the purchase price paid and capitalized
by a Purchaser or a Transferred Entity) such that after
taking into account said net Tax benefit, the Indemnified
Party has received an amount equal to the Loss, and for purposes
of clause (iii), the Indemnifying Party will not be required to
gross up the Indemnity Payment. If the Indemnifying Party cannot
deliver the Indemnity Tax Opinion upon payment but delivers the
Indemnity Tax Opinion within four weeks thereafter, the
Indemnified Party shall reimburse to the Indemnifying Party an
amount which is equal to the difference between the Loss and the
reduced amount or between the Loss and the grossed-up amount,
determined in accordance with this clause (iv). For purposes of
this clause (iv), all depreciation or amortization is deemed to
occur in the year of the Loss.
(v) If the Indemnifying Party makes payment pursuant to
clause (iv) and the IRS or a state tax authority challenges the
position of the Indemnified Party that, at the time of the
receipt by it of the Indemnity Payments, such payments did not
constitute taxable income to it (the "Tax Claim") and there is a
Final Determination that, at the time of the receipt by the
Indemnified Party of the Indemnity payments, such payments did
constitute taxable income to such Indemnified Party, the
Indemnifying Party shall pay or reimburse to the Indemnified
Party any Tax determined to be due pursuant to the Final
Determination, along with any interest or additions to such Tax
and any applicable penalties at the time such Tax is due pursuant
to clause (ii) or clause (iii) as applicable.
For purposes of this Section 15.5(d), "Final Determination"
shall mean (i) a decision, judgment, decree or other order by any
court of competent jurisdiction, which decision, judgment, decree
or other order has become final with respect to the Indemnified
Party (i.e., all allowable appeals have been exhausted by either
party to the action or the time period within which such appeal
may be filed has expired), or (ii) a closing agreement made under
Section 7121 of the Internal Revenue Code binding in respect of
the Indemnified Party, or any other administrative settlement
with the IRS or other relevant taxing authority which is binding
in respect of the Indemnified Party.
For purposes of this Section 15.5(d), the indemnification
procedure of Section 15.5(a), (b) and (c) shall apply with the
following modification: (x) the provisions of Section 15.5(c)(A)
shall not apply; (y) if the Indemnifying Party assumes control of
the Tax Claim, it shall cooperate in good faith with the
Indemnified Party and counsel retained by it pursuant to
Section 15.5(b) with respect to the Tax Claim; and (z) if the
Indemnified Party can ensure that the Tax Claim may be litigated
by a refund claim then the Indemnified Party may settle the Tax
Claim and shall sue for a refund of the Tax Claim, provided that
the Indemnifying Party has paid to the Indemnified Party all
Taxes, interest, additions to Tax and penalties, if any, with
respect to the Tax Claim prior to payment of
-66-
such amounts by the Indemnified Party. The Indemnifying Party
may assume control of the refund claim pursuant to Section
15.5(b) and clause (y) above.
(vi) For purposes of this Section 15.5(d), any gross up or
reduction shall be determined by using the highest statutory rate
for the relevant jurisdiction, reduced by the Tax benefit arising
from an allowable deduction of such income Taxes.
(vii) Any adjustment pursuant to this Section 15.5(d)
shall be given effect without regard to the dollar limitation on
any liabilities for any indemnified claims.
(viii) For purposes of this Article 15, all payments for
a Loss shall be made or deemed made to the entity suffering the
Loss.
(e) So long as the Indemnifying Party is defending in good faith
any such third party claim, demand, suit, action or proceeding, the
Indemnified Party shall at all times cooperate, at its own expense, in
all reasonable ways with, make its relevant files and records
available for inspection and copying by, and make its employees
available or otherwise render reasonable assistance to, the
Indemnifying Party.
15.6 Special Provisions Regarding Recalls and Service Actions.
(a) Notwithstanding anything to the contrary contained in this
Agreement but subject to the limitations set forth below in this
Section 15.6(a) and in Section 15.6(b), after the Closing, Sellers and
Purchasers shall be responsible for Losses arising out of
Recall/Service Actions as follows:
(i) with respect to Losses arising out of Known
Recall/Service Actions paid on or after the Closing Date, Sellers
shall be responsible for 80% of such Losses and Purchasers shall
be responsible for 20% of such Losses;
(ii) with respect to Losses arising out of any Unknown
Recall/Service Action initiated during the first five years after
the Closing Date, (x) Sellers and Purchasers shall each be
responsible for 50% of the first $15 million of Losses
attributable to such Unknown Recall/Service Action and (y) with
respect to any additional Losses attributable to such Unknown
Recall/Service Action, Sellers shall be responsible for 70% of
such Losses and Purchasers shall be responsible for 30% of such
Losses; and
(iii) with respect to Losses arising out of Unknown
Recall/Service Actions initiated after the fifth anniversary of
the Closing Date, Purchasers shall be responsible for all such
Losses and Sellers shall have no responsibility therefor.
Notwithstanding the foregoing, (x) Sellers shall have no
responsibility of any kind under this Section 15.6 or otherwise for
Losses to the extent that such Losses arise out of (A) a
-67-
design defect arising (whether due to a new design or design
change) after the Closing or (B) a defect in the manufacture
or assembly of a product (not attributable to a design defect that
existed as of the Closing Date) in a product manufactured or assembled
by the Business after the Closing Date and (y) Purchasers shall have
no responsibility for any Excluded ABS Liabilities.
(b) Except as set forth in the final sentence of
Section 15.6(a), Sellers shall, jointly and severally, indemnify and
hold harmless Purchasers and their directors, officers, employees,
agents, consultants, representatives, Affiliates, successors by
operation of law and permitted assigns, and Purchasers shall, jointly
and severally, indemnify and hold harmless Sellers and their
directors, officers, employees, agents, consultants, representatives,
Affiliates, successors by operation of law and permitted assigns, in
each case from and against and in respect of Losses which any of them
may incur arising out of any Known Recall/Service Action or any
Unknown/Recall Service Action to the extent of their proportionate
liability as set forth in Section 15.6(a) but subject to the following
limitations:
(i) Sellers shall have no liability or obligation to
Purchasers for any Loss to the extent the liability attributable
to such Loss is reflected or reserved (but only to the extent so
reflected or reserved) for on the Closing Balance Sheet as
finally determined pursuant to Section 3.2 (and such Loss shall
not count toward the $15 million threshold referred to in
Section 15.6(a)(ii));
(ii) Any amounts payable by any indemnifying party pursuant
to Section 15.6(b) shall be reduced by (A) any related insurance
recoveries received by the indemnified parties net of any costs
incurred for such recovery and any retrospective rate increase,
and (B) any payment received by the indemnified parties from
third parties who are not Affiliates of the indemnified party;
and
(iii) Upon payment of any amount pursuant to any claim
for indemnification hereunder, the indemnifying party shall be
subrogated in the same percentage as liability was allocated
pursuant to this Section 15.6, to all of the indemnified party's
rights of recovery against any third party with respect to the
matters to which such claim relates.
(c) Notwithstanding anything to the contrary contained in
Section 15.5, the procedures set forth below shall be applicable to
any claim for indemnification made pursuant to Section 15.6(b).
(i) Any party making a claim for indemnification under
Section 15.6(b) shall notify the indemnifying party of the claim
in writing promptly after receiving written notice of any Unknown
Recall/Service Action or proposed Unknown Recall/Service Action
or otherwise discovering the liability, obligation or facts which
may give rise to such claim for indemnification, describing the
claim, the amount thereof (if known and quantifiable), and the
basis thereof, provided that the failure to so notify an
indemnifying party shall not relieve the indemnifying
-68-
party of its obligations hereunder except to the extent such
failure shall have actually prejudiced the indemnifying party;
(ii) Purchasers shall at all times negotiate in good faith
with respect to the matter at issue with the Person(s)
instituting a Known Recall/Service Action or Unknown
Recall/Service Action (collectively, "Recall/Service Actions")
and shall institute a Recall/Service Action only in good faith;
(iii) Purchasers shall have the authority to defend,
negotiate, compromise and settle (without Sellers' consent)
claims made by, or other disputes with, customers but only to the
extent such claim or dispute is directly related to a
Recall/Service Action involving such customer. Sellers shall
have the right to participate in such defense, negotiation,
compromise or settlement; provided, however, that Sellers shall
not so participate if the customer objects to such participation;
and provided, further, that Purchasers shall not advise a
customer to object to Sellers' participation or do anything else
that is intended to impair Sellers' ability to exercise such
right of participation. In any event, Purchasers shall, at
Sellers' reasonable request, meet with Sellers and/or their
representatives from time to time to discuss any Recall/Service
Action and matters related thereto and provide to Sellers all
information relating thereto reasonably requested by Sellers and
must notify Sellers a reasonable time prior to settling any such
action; and
(iv) Each party shall at all times cooperate, at its own
expense, in all reasonable ways with, make its relevant files and
records available for inspection and copying by, and make its
employees available or otherwise render reasonable assistance to,
the other parties in connection with any Recall/Service Action.
(d) Any dispute between the parties arising out of or relating
to the interpretation or applicability of any provision of this
Section 15.6 shall be subject to the arbitration provisions set forth
in Section 16.9 if and only if (i) Sellers claim that the amount to be
paid to Purchasers pursuant to this Section 15.6 should be reduced
because of a specific quantifiable benefit that Purchasers have
directly or indirectly received or may in the future directly or
indirectly receive from a customer in connection with such settlement
or (ii) Sellers reasonably believe that there is no product defect or
that Sellers are not responsible for the product defect. The parties
agree that Sellers shall bear the burden of proof in any arbitration
proceedings commenced pursuant to this Section 15.6(d) and that
Sellers shall have reasonable discovery rights with respect to such
arbitration proceedings.
15.7 Special Environmental Provisions. In the event that
Purchasers make any claim pursuant to Section 15.1(b) with respect to the
representation and warranty set forth in Section 6.12 that involves a claim
that Sellers are liable for the remediation of soil, groundwater or other
contamination or Hazardous Material in, on, or migrating from Real
Property:
-69-
(a) At Sellers' option, Sellers shall be entitled to conduct and
control any required remediation and, in such event, Sellers shall
cause such remediation to conform to the minimum requirements of
applicable Environmental Law (the "Remedial Work"). Sellers shall
engage, and shall have the sole right to select, such environmental
consultants or other independent professional consultants as they deem
necessary to effect any Remedial Work. All costs and expenses of any
Remedial Work shall be the responsibility of Sellers, subject to the
provisions of Section 15.4.
(b) Purchasers shall provide access to the Real Property and
Facilities in order to investigate the Remedial Work that may be
required and to facilitate any Remedial Work by Sellers and their
consultants. Sellers shall be entitled to perform such tests on or of
the Real Property as are reasonably necessary to effect any Remedial
Work, and to review and inspect any report prepared by or for the
Purchasers relating to any Remedial Work. Sellers shall use all
reasonable efforts to reduce, to the extent possible, any intrusion
upon Purchasers' operations attendant to any Remedial Work.
(c) Purchasers shall promptly notify Sellers of, and transmit to
them, copies of any communications from or with any Governmental
Authority concerning any alleged violation of any Environmental Law or
any alleged environmental liability to a third party for which
Purchasers have claimed Sellers are liable. Sellers shall have the
right to control any and all communications with any Governmental
Authority or third party with respect to any matter as to which
Purchasers claim Sellers are liable, and Purchasers shall provide to
Sellers all reasonable cooperation in connection therewith, including,
upon Sellers' request, copies of their records relating to the alleged
liability or violation in question.
15.8 Exclusive Remedy.
(a) The sole and exclusive remedy of Purchasers for breach of
any representation or warranty made by Sellers, or any breach,
nonfulfillment or nonperformance of any covenant to be performed,
complied with or fulfilled by Sellers, in this Agreement or any
instrument or document furnished to Purchasers by Sellers pursuant to
this Agreement (other than the Commercial Agreements), or for any
Losses referred to in Section 15.1 or 15.6 hereof, shall be as
expressly provided in this Article 15 (or Section 16.2, as
applicable).
(b) If Sellers breach the covenant in Section 14.1, Sellers
acknowledge such violation or breach will cause irreparable injury to
Purchasers, the amount of which will be impossible to estimate or
determine and which cannot be adequately compensated. Accordingly, if
Sellers breach the covenant in Section 14.1, Purchasers shall be
entitled to specific performance, temporary and permanent injunctive
relief or such other equitable remedies as may be available from any
court of competent jurisdiction without the necessity of proving
actual damage. The provisions of Section 16.9 shall not apply to
Section 14.1.
-70-
16. MISCELLANEOUS.
16.1 Expenses. Except as otherwise provided herein, whether or not
the transactions contemplated hereby are consummated, all costs, expenses
and disbursements incurred by Sellers and Purchasers in connection with
this Agreement and the transactions contemplated hereby shall be borne by
them, respectively, and shall not be transferred to the other by reason of
the transfer of the Business or the Transferred Entities.
16.2 Bulk Sales. Purchasers hereby waive compliance with any
applicable bulk sales law; provided, however, that AlliedSignal and each
other Seller hereby agrees jointly and severally to indemnify Purchasers
against, and to hold Purchasers harmless from, at all times after the
Closing Date, any and all loss, damage or liability, and all expenses
(including reasonable legal fees) incurred or arising out of the failure to
comply with such bulk sales laws.
16.3 Assignability. This Agreement shall not be assignable by any
party without the express written consent of AlliedSignal, in the case of a
proposed assignment by any Purchaser, or Purchaser Parent, in the case of
a proposed assignment by any Seller; provided, however, that any Seller may
assign this Agreement to a Subsidiary (whether newly formed or existing on
the date of this Agreement) wholly owned, directly or indirectly, by
AlliedSignal and any Purchaser may assign this Agreement to a Subsidiary
(whether newly formed or existing on the date of this Agreement) wholly
owned, directly or indirectly, by Purchaser Parent, in any case so long all
Sellers and all Purchasers shall remain bound under this Agreement.
16.4 Binding Effect. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the successors and permitted
assigns of the parties hereto.
16.5 Notices. All notices or other communications required or
permitted to be given hereunder shall be (as elected by the party giving
such notice): (i) personally delivered against receipt to the party to whom
it is to be given with copies to all others listed, or (ii) transmitted by
telecopy or (iii) transmitted by postage prepaid certified mail, return
receipt requested, or (iv) delivered by a recognized overnight courier
service (including Federal Express), or (v) delivered by ordinary mail as
follows:
-71-
(a) If to Sellers:
Chairman and Chief Executive Officer
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Telecopy: (201) 455-4002
with a copy to:
Senior Vice President, General Counsel and Secretary
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Telecopy: (201) 455-4217
(b) If to Purchasers:
by mail: by courier:
Robert Bosch GmbH Robert Bosch Plats 1
Postfach 10 60 50 Gerlingen-Schillerhohe
70049 Stuttgart 70839 Stuttgart
Germany Germany
Attn: Zentralabteilung Recht Attn: Zentralabteilung Recht
Telecopy: (49) 711-811-6760
with a copy to:
Robert Bosch Corporation
2800 South 25th Avenue
Broadview, Illinois 60153
Attn: President
Telecopy: (708) 865-5964
All notices and other communications shall be deemed to have been duly
given on (i) the date of receipt if delivered personally or by telecopy
(with issuance by the transmitting machine of confirmation of successful
transmission), or (ii) the day of delivery as indicated on the return
receipt if delivered by mail return receipt requested, or (iii) one
business day after the date of delivery to the overnight courier if sent by
overnight courier, or (iv) five business days after the deposit of such
notice or communication in the ordinary mail. Any party hereto may change
its address for purposes hereof by notice to all other parties.
16.6 Counterparts. This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute and be the same instrument.
-72-
16.7 Attachments and Schedules. All Attachments and Schedules
attached hereto are incorporated herein and expressly made a part of this
Agreement as though completely set forth herein. All references to this
Agreement herein or in any of the Attachments or Schedules shall be deemed
to refer to this entire Agreement, including all Attachments and Schedules.
Any item or matter required to be disclosed on a particular Schedule
pursuant to this Agreement shall be deemed to have been disclosed if
information for such item or matter complying with such disclosure
requirements is set forth on another Schedule under this Agreement where it
would be reasonably expected that it would appear. Subject to the
preceding sentence, any representation or warranty set forth herein that
makes reference to a list or other information set forth in an annexed
Schedule shall be deemed to be a representation and warranty that such list
or other information is true, correct and complete in the context of the
specific representation or warranty. Neither the specification of any
dollar amount in the representations and warranties set forth in Section 6
or elsewhere herein nor the indemnification provisions of Section 15 nor
the inclusion of any Schedule shall be deemed to constitute an admission by
Sellers, or otherwise imply, that any such amounts or the items so included
are material for purposes of this Agreement.
16.8 Governing Law. This Agreement shall in all respects be
interpreted, construed, and governed by and in accordance with the laws of
the State of New York, disregarding any conflict of laws provisions which
may require the application of the law of another jurisdiction.
16.9 Arbitration.
(a) In the event of any dispute between the Purchasers and
Sellers arising after the Exchange Date in connection with this
Agreement, and subject to the provisions of subsection (b) below, the
parties shall first use their best efforts to resolve such dispute
among themselves. If the parties are unable to resolve the dispute
within thirty (30) calendar days of the initiation of such procedure,
the dispute shall be settled by arbitration, in accordance with the
Rules of Conciliation and Arbitration of the International Chamber of
Commerce, carried out by an arbitration panel composed of three
arbitrators, experienced in commercial and business affairs (each an
"Arbitrator"). Each party shall nominate in the Request for
Arbitration and the Answer thereto respectively one Arbitrator for
confirmation by the International Court of Arbitration (the "Court").
Such person shall be independent of the party nominating him. If a
party fails to nominate an arbitrator, the Court shall appoint him.
The third arbitrator, who will act as Chairman of the Arbitral
tribunal, shall be nominated by the two arbitrators nominated by the
Parties within twenty (20) calendar days after the Court's
confirmation of the first two Arbitrators. The nomination of the
third Arbitrator is also subject to confirmation by the Court. Should
the first two Arbitrators fail, within said twenty-day period, to
reach agreement on the third Arbitrator, the Court shall appoint him.
The arbitration proceedings shall take place in New York, New York.
The language of the arbitration shall be English.
(b) The foregoing procedures shall not apply to the
determination of the Final Investment pursuant to Section 3.2.
Furthermore, none of the parties shall be required to use the
foregoing procedures to enforce the provisions of Section 14.1 or
Section 14.12.
-73-
16.10 Consent to Jurisdiction. Subject to Section 16.9, each
Purchaser and each Seller hereby submits to the non-exclusive jurisdiction
of the courts of general jurisdiction of the State of New York and the
federal courts of the United States of America, located in the City of New
York, solely in respect of the interpretation and enforcement of the
provisions of this Agreement and any other agreement, instrument or other
document entered into in connection herewith and hereby waives, and agrees
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement of this Agreement or any such other
agreement, instrument or other document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not
maintainable in such courts or that this Agreement or any such other
agreement, instrument or other document may not be enforced in or by such
courts or that its property is exempt or immune from execution, that the
suit, action or proceeding is brought in an inconvenient forum, or that the
venue of the suit, action or proceeding is improper. Service of process
with respect thereto may be made upon any Purchaser or Seller by mailing a
copy thereof by registered or certified mail, postage prepaid, to such
party at its address as provided in Section 16.5 hereof, provided that
service of process may be accomplished in any other manner permitted by
applicable law.
16.11 Definitions.
"Affiliate" means, as to any specified Person, any other Person,
which, directly, or indirectly controls, is controlled by or is under
common control with, such specified Person. For purposes of this
definition, "control" means the possession of the power to direct or cause
the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Assets" means all of the assets, properties and rights relating
primarily to the Business or which are used in the conduct of the Business
anywhere in the world, and all goodwill associated therewith (except for
the Excluded Assets).
"Budd Agreement" means the Asset Purchase Agreement dated April 1,
1995 between The Budd Company and AlliedSignal.
"Business Day" means a day other than a Saturday, Sunday or other day
on which banks in New York, New York or Stuttgart, Germany are required to
or may be closed.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Agreements" means, collectively, the (i) Aftermarket
Agreements, (ii) Services Agreement, (iii) Trademark License, (iv) South
Bend Lease, and (v) Spanish Supply Agreements.
"Contracts" means all contracts, agreements, arrangements and/or
commitments of Sellers and the Transferred Entities related primarily to
the Business.
-74-
"Deadline" means September 1, 1996.
"E.E.O.C." means the Equal Employment Opportunity Commission.
"Encumbrance" means, with respect to any Real Property, a mortgage,
security interest, lien, lease, sublease, license, judgment, right of way,
covenant, easement or other encumbrance (but shall not include any zoning,
environmental or other limitations of general applicability by any
Governmental Authority).
"Environmental Claims" means, as to the Assets or the Business, any
third party or governmental claim, demand, judgment, or proceeding
(including any proceeding for an injunction or other equitable relief)
giving rise or which might give rise to any liability under any
Environmental Law.
"Environmental Law" means any federal, state or local statute,
regulation, ordinance or common law theory relating to the protection of
the environment including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601
et. seq.), the Hazardous Materials Transportation Act (49 U.S.C. App.
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
6901 et seq.), the Clean Water Act (33 U.S.C. 1251 et seq.), the Clean
Air Act (42 U.S.C. 7401 et seq.), the Toxic Substance Control Act (15
U.S.C. 2601 et seq.), and the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. 136 et seq.), or any environmental or similar
law in any jurisdiction other than the United States, in each case as in
effect on the date of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Businesses" means the following businesses conducted by
AlliedSignal and its Subsidiaries and Affiliates: (a) the friction material
business; (b) the independent automotive aftermarket business (other than
the portion of such business in Brazil with respect to brake hard parts);
(c) all businesses conducted by Greyco; and (d) all businesses conducted at
the Parets Facilities.
"Facility" means each location at which any of the Sellers or the
Transferred Entities conducts the Business (other than the South Bend
Facility).
"Foreign Transfer Agreements" means, collectively, the stock transfer
agreements, asset transfer agreements and/or other instruments of
conveyance and assumption with respect to the transfer of Assets outside
the United States of America (including, without limitation, equity
interests in the Newcos and other entities organized in jurisdictions
outside the United States); provided, however, that in the case of France
(subject to Section 1.2(b)), such agreements will be substantially in the
form of Exhibit 16.11.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States on the date hereof.
-75-
"Greyco" means Greyco S.A., a Spanish corporation wholly-owned by
AlliedSignal Automotive Espana S.A.
"Hankuk" means Hankuk Brake Industrial Co., Ltd., a Korean
corporation.
"Hazardous Material" means any substance, material or waste which is
regulated by the United States, or any state or local government authority
or any national, provincial or local governmental authority other than the
United States, which substance, material or waste includes, without
limitation, petroleum and its by-products, friable asbestos, and any
material or substance which is defined as a "hazardous waste," "hazardous
substance," "hazardous material," "restricted hazardous waste," "industrial
waste," "solid waste," "contaminant," "pollutant," "toxic waste" or "toxic
substance" under any provision of Environmental Law.
"Intellectual Property" means all intellectual property relating
primarily to the Business (except to the extent included in Excluded
Assets) including (i) patents and patent applications, trademarks,
tradenames, service marks and applications therefor, copyrights, copyright
registrations and applications therefor, if any, including but not limited
to, such items set forth on Schedule 6.10 ("Proprietary Rights");
(ii) processes, formulas, computer software and other electronic media,
engineering designs, trade secrets, know-how, inventions and discoveries,
whether patented, patentable or not, and design, manufacturing, engineering
and other technical information (other than Proprietary Rights) that are
owned by or licensed to the Business and are used primarily in carrying out
the Business as it is being conducted as of the date of this Agreement as
currently proposed to be conducted by Sellers and the Transferred Entities;
(iii) Sellers' rights under all agreements (except those which are Excluded
Assets), if any, under which rights relating to the foregoing
subparagraphs (i) and (ii) were granted to Sellers and the Transferred
Entities by a third party, or to a third party by Sellers and the
Transferred Entities, including but not limited to those items listed in
Schedule 6.10, together with renewals, modifications and extensions of any
of the foregoing; (iv) the goodwill associated with such registered
trademarks and such other non-registered trademarks and service marks which
have been used by Sellers in connection with the Business; (v) all shop
rights of the Business; (vi) any of the foregoing types of Proprietary
Rights which derive from the plant production and/or engineering projects,
if any, currently being conducted in other facilities of Sellers and the
Transferred Entities on behalf of the Business; (vii) tangible
documentation of Intellectual Property to the extent relating primarily to
the Business; and (viii) all rights as Sellers and the Transferred Entities
may have to sue for infringement of or interference with the Intellectual
Property.
"Internal Revenue Code" means the United States of America Internal
Revenue Code of 1986, as amended.
"JKC JV Agreements" means (i) the Joint Venture Agreement dated as of
June 4, 1987 among Allied Corporation, a New York corporation, Jidosha Kiki
Company Limited, a Japanese corporation, and Bendix-Jidosha Kiki
Corporation, a Delaware corporation and (ii) the Joint Venture Agreement
dated as of December 9, 1994 among AlliedSignal Automotive Europe S.A., a
French corporation, Jidosha Kiki Company Limited, a Japanese corporation,
AlliedSignal
-76-
Jidosha Kiki Europe S.A., a Spanish corporation and
AlliedSignal Automotive Espana S.A., a Spanish corporation.
"Knorr JV" means any joint venture now or in the future between
AlliedSignal or any of its Affiliates, on the one hand, and Knorr or any of
its Affiliates, on the other hand.
"Knowledge of Sellers" or variants thereof when used to qualify any
representation or warranty of Sellers contained in this Agreement or any
other document or instrument furnished to Purchasers by Seller pursuant to
this Agreement refers to the actual knowledge of the persons employed by
Sellers or by the Transferred Entities whose names are set forth on
Schedule 6.34.
"Known Recall/Service Action" means (i) any Recall or Service Action
which has been instituted prior to the Closing (including without
limitation those listed on Schedule 6.24) or (ii) any Recall or Service
Action instituted after the Closing which arises out of a product
manufactured by the Business if Sellers have Knowledge of the underlying
facts and circumstances giving rise to such Action on or before the Closing
Date.
"Lease" means any lease, amendment of lease, modification of lease,
renewal, or sublease entered into by Sellers (as either the landlord or
tenant) and which is used in connection with the operation of the Business.
"Leased Real Property" means all real property leased on the date
hereof by any Seller or Transferred Entity as lessee, that is used
primarily in the Business, including any buildings, improvements and
structures located thereon and all appurtenances belonging thereto and
rights in respect thereof.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition or results of operations of the Business or
the condition of the Assets taken as a whole, except for (a) changes
resulting from general economic, financial or market conditions, and
(b) changes resulting from conditions generally applicable to the braking
systems or automotive business.
"Material Adverse Impact" means, with respect to a Real Property, a
matter or thing, the existence of which would or will prevent or impair the
use, occupancy, enjoyment or operation of such Real Property by Purchasers
(after Closing) for the same uses and operations to which Sellers are, at
the date of this Agreement, utilizing such Real Property.
"Newcos" means the Brazilian Newco, the Italian Newco and the French
Newco, collectively; and "Newco" means any one of them.
"N.L.R.B." means the National Labor Relations Board.
"OES" means original equipment service.
"O.F.C.C.P." means Office of Federal Contract Compliance Programs.
-77-
"OSHA" means the Occupational Safety and Health Act and the rules and
regulations promulgated thereunder.
"Owned Real Property" means all real property owned by any Seller or
Transferred Entity that is used primarily in the Business, including the
land and all buildings, improvements and structures located thereon and all
appurtenances belonging thereto and all options to purchase and rights of
first refusal, if any, easements, rights of way and other privileges
relating to such real property and all rights of Sellers against any prior
owner of such real property or other parties relating to such real
property; provided, however, that Owned Real Property shall not include any
such property with respect to the South Bend Facility (a portion of which
is being leased pursuant to the South Bend Lease).
"Parets Facilities" means the real property (including the land and
all buildings, improvements and structures located thereon and all
appurtenances belonging thereto) located at Parets, Spain.
"PCB" means polychlorinated biphenyl.
"Permits" means all governmental and other permits, licenses,
approvals, certificates of inspection, filings, franchises and other
authorizations of Sellers and the Transferred Entities relating primarily
to the Business.
"Permitted Liens" means (i) liens for property taxes and assessments
or other government charges or levies not yet in default and not yet due
and payable or the validity of which is being contested in good faith by
appropriate proceedings or liens for any other taxes, assessments or other
government charges or levies (ii) liens of mechanics, materialmen,
laborers, warehousemen, carriers and other similar common law or statutory
liens arising in the ordinary course of business which have been adequately
bonded or which are being contested in good faith or as to which the
Qualifying Title Insurance Policy shall insure against enforcement or
collection, (iii) matters which are set forth on Schedule 16.11,
(iv) zoning, entitlement and other land use and environmental regulations
of general applicability by governmental agencies, (v) liens reflecting
capitalized leases from the person financing a purchase of equipment so
long as the lien is limited to the specific equipment so acquired,
(vi) leases and subleases and other matters expressly disclosed in the
schedules annexed hereto or of the type set forth in Section 6.6(d)(iv),
(vii) for Real Property located outside the United States, any Encumbrance
which does not have a Material Adverse Impact on such Real Property, and
(viii) any matter caused or created by Purchasers after the Closing.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, trust or other entity or
organization.
"Personal Property" means all fixtures, furnishings, furniture, office
equipment and supplies, vehicles, tooling, patterns, dies, jigs, computer
hardware, machinery and equipment, and other tangible personal property
(other than Inventory) owned or leased by any Seller or Transferred Entity
that is used primarily in the Business; provided, however, that in the case
of customer owned tooling, Personal Property shall include only the right
to use such tooling.
-78-
"Poland Acquisition Agreement" means the Asset Purchase Agreement,
dated June 22, 1995, between Fiat Auto Poland, S.A., a Polish company, and
AlliedSignal Automotive Poland Sp. z O.O., a Polish company.
"Proprietary Rights" shall have the meaning ascribed to it in
clause (i) of the definition of Intellectual Property.
"Post-Closing Transfer Agreements" means (i) in the case of the
Business in Italy, any such agreements or other instruments other than the
management agreement or management lease agreement contemplated by
Section 1.2(e) and the transfer order for the shares of the Italian Newco
and (ii) in the case of the Business in France, the contribution agreements
with respect to the French Newco and the associated share transfer order.
"Qualifying Title Insurance Policy" means with respect to any Real
Property, a policy of title insurance (i) issued on a current ALTA Owner's
policy or such other form of policy selected by Purchasers (and Purchaser
shall so select upon request of Sellers) and customarily used in a
particular jurisdiction (which shall include, without limitation, Mexico)
(which policy shall insure good and marketable title), (ii) in the amount
allocated to the Real Property pursuant to Section 3.3(b) (and with such co-
insurance and reinsurance, as Purchasers shall reasonably direct (or if
Purchasers shall fail to so direct, as is reasonable in the industry, as
determined by Sellers)), (iii) insuring title to the Real Property in the
name of Purchasers (or such other party as shall be in title to the Real
Property), (iv) issued by such title insurance companies as Purchasers
shall reasonably direct (which may include First American Title Insurance
Company, Chicago Title Insurance Company or Commonwealth Title Insurance
Company and shall include Lawyers Title Insurance Company (or with respect
to Mexico a title insurance company issuing policies with all required
governmental approvals) and if Purchasers shall fail to reasonably direct
with respect to the United States, by Lawyers Title Insurance Company and
with respect to Mexico, such company satisfying the requirements above and
chosen by Sellers), (v) which shall include a waiver of the insurer's right
of subrogation if available in a particular jurisdiction (unless Sellers
shall waive same) and (vi) which shall include all Requested Endorsements.
Any right of Sellers to select or direct as set forth in this definition
shall be exercised, with respect to any Real Property, only after the
Exchange Date and only if Purchasers have not obtained a Qualifying Title
Insurance Policy within ninety (90) days of the Exchange Date.
"Real Property" means, collectively, the Owned Real Property and the
Leased Real Property.
"RCRA" means Resource Conservation and Recovery Act.
"Requested Endorsements" means those endorsements selected by
Purchasers in advance of Closing (and of which Sellers are notified, in
writing), to the extent same are generally available in the jurisdiction in
which the Real Property is located and obtainable in connection with the
acquisition of commercial Real Property in that jurisdiction (including,
without limitation, survey, contiguity, if applicable, perimeter
description, mechanics liens endorsement, zoning, provided same are subject
to Permitted Liens).
-79-
"Section 2.3 Transferred Entities" means, collectively, the following
entities: AlliedSignal Argentina, S.A., AlliedSignal Automotive Poland,
Sp.z O.O. and AlliedSignal Braking Systems (Guangdong) Co. Ltd.
"Servinter Agreement" means the Stock Purchase Agreement dated
October 13, 1995 between Servinter Limited, an Irish limited liability
company, and AlliedSignal International Finance Corporation, a Delaware
corporation.
"South Bend Facility" means the real property (including the land and
all buildings, improvements and structures located thereon and all
appurtenances belonging thereto) located at 401 N. Bendix Drive, South
Bend, Indiana.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by such Person.
"Tax" or "Taxes" means all taxes, assessments and other governmental
charges, whether federal, state, local or non-United States (including,
without limitation, excise taxes, sales taxes, value added taxes, taxes
withheld from employees' salaries and other withholding taxes and
obligations and all deposits required to be made with respect thereto),
levies, assessments, deficiencies, imposts, customs duties and other
duties, environmental-related taxes (including without limitation
chlorofluorocarbon taxes), licenses and registration fees and charges of
any nature whatsoever, including any interest and penalties thereon or
additions thereto, imposed by any government or taxing authority which are
levied upon the property, assets, activities, income or franchises of
Sellers or the Transferred Entities by virtue of the operations of the
Business, the ownership or lease of the Assets, or the transfer of the
Business and the Assets to the Purchasers hereunder.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Transferred Assets" shall mean, with respect to each Seller, all
Assets as to which such Seller's right, title and interest is held directly
by such Seller, including equity interests in the Transferred Entities and
the Newcos.
"Transturk Acquisition Agreement" means the Stock Purchase Agreement,
dated October 13, 1995, between Transturk Holding A.S., a Turkish joint
stock company, and AlliedSignal International Finance Corporation, a
Delaware corporation.
"TSCA" means the Toxic Substance Control Act.
"Unknown Recall/Service Action" means any Recall or Service Action
which is not a Known Recall/Service Action.
-80-
16.12 Headings. The headings and subheadings hereof are
inserted for convenience of reference only and shall not affect the
interpretation of this Agreement.
16.13 Amendment. This Agreement may be amended only in a
writing signed by all parties hereto.
16.14 Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all previous agreements, understandings or discussions with
respect to the subject matter hereof. Any and all prior arrangements,
representations, promises, understandings and conditions in connection with
said subject matter and any representations, promises or conditions not
expressly incorporated herein or expressly made a part hereof shall not be
binding upon any party hereto.
16.15 Waivers. Any waiver of rights hereunder must be set
forth in writing signed by the party against whom the waiver is to be
effective. A waiver of any breach or failure to enforce any of the terms
or conditions of this Agreement shall not in any way affect, limit or waive
any party's rights at any time to enforce strict compliance thereafter with
every term or condition of this Agreement for any other breach or failure
to comply with the terms and conditions of this Agreement.
16.16 Third Party Rights. Except as otherwise provided in
Article 15 hereof with respect to the indemnification obligations for the
benefit of directors, officers, employees, agents, consultants,
representatives and Affiliates, the provisions of this Agreement are for
the sole benefit of Purchasers, Sellers and the Transferred Entities and
shall not inure to the benefit of any other Person (other than permitted
assigns of the parties hereto) either as a third party beneficiary or
otherwise.
16.17 Severability. If and to the extent that any court of
competent jurisdiction holds any provisions (or any part thereof) of this
Agreement to be invalid or unenforceable, such holding shall in no way
affect the validity of the remainder of the Agreement.
16.18 Agency. All Sellers other than AlliedSignal hereby
appoint AlliedSignal as their agent, and all Purchasers other than
Purchaser Parent hereby appoint Purchaser Parent as their agent, for all
purposes under this Agreement, including the giving of notices and the
conduct of any dispute resolution.
16.19 Foreign Transfer Agreements. The parties agree that in
the event of any conflict or inconsistency between the terms of this
Agreement and any Foreign Transfer Agreement, the terms of this Agreement
shall govern.
16.20 Agreement by Parents. On the date hereof each of
AlliedSignal and Purchaser Parent are executing and delivering this
Agreement. Prior to the Exchange Date, AlliedSignal shall cause each other
Seller to execute and deliver to Purchaser Parent, and Purchaser Parent
shall cause each other Purchaser to execute and deliver to AlliedSignal, a
counterpart of this Agreement pursuant to Section 16.6 hereof.
-81-
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Agreement as of the date first
written above.
ROBERT BOSCH GmbH ALLIEDSIGNAL INC.
/s/ ppa Bleier /s/ ppa Berg /s/ Peter M. Kreindler
- -------------------------------- ------------------------------
Name: Klaus Bleier Dieter Berg Name: Peter M. Kreindler
Title: Prokurist Title: Senior Vice President, General
Counsel & Secretary
-82-
ROBERT BOSCH CORPORATION ALLIEDSIGNAL TECHNOLOGIES INC.
/s/ Gary M. Saunders /s/ Jeffrey M. Lipshaw
- ------------------------------- --------------------------------
Name: Gary M. Saunders Name: Jeffrey M. Lipshaw
Title: Vice President Title:
ROBERT BOSCH ESPANA ALLIEDSIGNAL INTERNATIONAL FINANCE
FINANCIACION Y SERVICIOS, S.A. CORPORATION
/s/ Dieter Berg /s/ Jeffrey M. Lipshaw
- ------------------------------- ---------------------------------
Name: Dieter Berg Name: Jeffrey M. Lipshaw
Title: Attorney-in-Fact Title:
ROBERT BOSCH (FRANCE) S.A. ALLIEDSIGNAL AUTOMOTIVE DE MEXICO,
S.A. DE C.V.
/s/ Dieter Berg /s/ Jorge Sanchez-Devanny
- ------------------------------- --------------------------------
Name: Dieter Berg Name: Jorge Sanchez-Devanny
Title: Attorney-in-Fact Title: Attorney-in-Fact
ROBERT BOSCH LIMITADA ALLIEDSIGNAL AUTOMOTIVE EUROPE S.A.
/s/ Dieter Berg /s/ Jeffrey M. Lipshaw
- ------------------------------- ---------------------------------
Name: Dieter Berg Name: Jeffrey M. Lipshaw
Title: Attorney-in-Fact Title:
ALLIEDSIGNAL AFTERMARKET EUROPE, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
-83-
ALLIEDSIGNAL EUROPE SERVICES
TECHNIQUES, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL SYSTEMES DE FREINAGE, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL AUTOMOTIVE PORTUGAL LTDA.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL AUTOMOTIVE PORTUGAL LTDA.
/s/ Diane de Saint Victor
----------------------------------
Name: Diane de Saint Victor
Title:
ALLIEDSIGNAL AUTOMOTIVE ESPANA, S.A.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
-84-
ALLIEDSIGNAL AUTOMOTIVE LTDA.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL BREMSSYSTEME GmbH
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
-85-
ATTACHMENT A
Sellers
-------------
Name of Seller Type of Legal Entity Place of Organization
- ---------------------------------------------------------------------------
AlliedSignal Inc. Corporation Delaware
AlliedSignal Corporation Arizona
Technologies Inc.
AlliedSignal International Corporation Delaware
Finance Corporation
Paxon Leasing Company, L.P. Limited Partnership Delaware
AlliedSignal Automotive Sociedad Anonima de Mexico
de Mexico, S.A. de C.V. Capital Variable
AlliedSignal Societe Anonyme France
Automotive Europe S.A.
AlliedSignal Europe Societe Anonyme France
Services Techniques, S.A.
AlliedSignal Systemes Societe Anonyme France
de Freinage, S.A.
AlliedSignal Societe Anonyme France
Aftermarket Europe, S.A.
AlliedSignal Limitada Portugal
Automotive Portugal Ltda.
AlliedSignal Sociedad Anonima Spain
Automotive Espana, S.A.
AlliedSignal Sociedad per Azioni Italy
Automotive Italia, S.p.A.
AlliedSignal Freni, S.p.A. Societa per Azioni Italy
AlliedSignal Automotive Ltda. Limitada Brazil
AlliedSignal Bremssysteme GmbH Gesellschaft mit Germany
beschrankter Haftung
ATTACHMENT B
Purchasers
--------------
Name of Purchaser Type of Legal Entity Place of Organization
- ---------------------------------------------------------------------------
Robert Bosch GmbH Gesellschaft mit Germany
beschrankter Haftung
Robert Bosch Corporation Corporation Delaware
Robert Bosch Espana Sociedad Anonima Spain
Financiacion y
Servicios, S.A.
Robert Bosch (France) S.A. Societe Anonyme France
Robert Bosch Limitada Limitada Brazil
ATTACHMENT C
Minority Interests
--------------------
Entity Jurisdiction of Incorporation
- ----------------------------------------------------------------------
Kalyani Brakes, Limited India
Hankuk Brake Industrial Co., Ltd. Korea
ATTACHMENT D
Transferred Entities
---------------------
Name of Where
Transferred Type of Legal Place of Authorized
Entity Entity Organization to do
Business
- ----------------------------------------------------------------------------
AlliedSignal Sociedad Anonima Argentina Argentina
Argentina, S.A.
AlliedSignal Corporation Delaware Delaware
Jidosha Kiki Kentucky
Corporation Tennessee
Bayfield Corporation Corporation Delaware Delaware
AlliedSignal Spolka z Ograniczena Poland Poland
Automotive Poland, Odpowiedzialnoscia
Sp.z. O. O.
AlliedSignal JKC Sociedad Anonima Spain Spain
Europe S.A.
Transturk Fren Sanayi ve Ticaret Turkey Turkey
Donanim Endustrisi Anonim Sirketi
Sanayi ve Ticaret
Anonim Sirketi
AlliedSignal Limited Liability China China
Braking Systems Company
(Guangdong) Co. Ltd.
Newcos, from and after their formation.
ADDENDUM TO ASSET PURCHASE AGREEMENT
ADDENDUM ("Addendum") made as of February 29, 1996 to the Asset
Purchase Agreement dated as of February 29, 1996 (the "Asset Purchase
Agreement") between AlliedSignal Inc., a Delaware corporation
("AlliedSignal"), Robert Bosch GmbH, a Gesellschaft mit beschrankter
Haftung ("Purchaser Parent"), and the other parties thereto.
AlliedSignal and Purchaser Parent are entering into this Addendum
simultaneously with their entry into the Asset Purchase Agreement.
Accordingly, this Addendum shall be deemed to be part of the Asset Purchase
Agreement and all references in the Asset Purchase Agreement to "this
Agreement" (or similar terminology) shall be deemed to refer to the Asset
Purchase Agreement after giving effect to the agreements set forth in this
Addendum. Without limiting the generality of the foregoing, AlliedSignal
shall cause each other Seller to execute and deliver to Purchaser Parent,
and Purchaser Parent shall cause each other Purchaser to execute and
deliver to AlliedSignal, a counterpart of this Addendum concurrently with
such entity's execution and delivery of the Asset Purchase Agreement. All
capitalized terms used herein not defined in this Addendum shall have the
respective meanings set forth in the Asset Purchase Agreement.
In consideration of the mutual covenants and agreements contained in
the Asset Purchase Agreement and in this Addendum (and notwithstanding
anything in the Asset Purchase Agreement to the contrary), Sellers and
Purchasers agree as follows:
1. Excluded Liability. The Excluded Liabilities shall include
any and all liabilities of Sellers or the Transferred Entities for
severance payments to any individuals whose employment in the Business is
or was terminated by Sellers or the Transferred Entities at any time on or
prior to the Closing Date.
2. Chrysler Settlement. In the event that Sellers and Chrysler
Corporation ("Chrysler") enter into the Chrysler Settlement (as defined
below) at any time after the date hereof, Sellers and Purchasers shall be
entitled to payments received under the Chrysler Settlement, if any, as
follows: (i) Purchasers shall be entitled to the first $3,000,000 of such
payments; (ii) Sellers shall be entitled to the next $25,000,000 of such
payments; and (iii)
2
Sellers and Purchasers shall each be entitled to 50% of any additional
such payments. The recipient of such payments shall cause such
payments to be remitted to the other as required by the terms hereof
promptly upon receipt of such payments. All payments to which Purchasers
are entitled pursuant to this Section 2 shall be Transferred Assets and all
payments to which Sellers are entitled pursuant to this Section 2 shall be
Excluded Assets. "Chrysler Settlement" means a written agreement between
Sellers and Chrysler settling all claims of Sellers against Chrysler
arising out of volume shortfalls on Sellers' sales of anti-lock braking
systems to Chrysler and Sellers' investments in capital with respect to the
production of such anti-lock braking systems.
3. ABS Shutdown. Without limiting the agreements set forth in
Section 14.11 of the Asset Purchase Agreement, Sellers and Purchasers agree
that, with respect to the ABS Shutdown, (i) Sellers shall be solely
responsible for any payments made by Sellers prior to the Exchange Date
which are attributable to the matters described on Appendix 1 hereto (the
aggregate amount of such payments is hereinafter referred to as the "ABS
Non-Supplier Payments") and (ii) within five (5) Business Days after the
Exchange Date, Sellers shall make a cash payment to Purchasers in an amount
equal to the positive difference, if any, between (x) $19,800,000 and (y)
the amount of the ABS Non-Supplier Payments. Such payment shall be made by
wire transfer of immediately available funds in U.S. currency to a bank
account designated in writing by Purchasers no later than two (2) Business
Days after the Exchange Date.
4. Transfer Taxes. All Transfer Taxes other than those with
respect to any transactions relating to the Business of the French Sellers
("Non-French Transfer Taxes") shall be shared equally between the parties
up to a total of $10,000,000 in the aggregate of such Non-French Transfer
Taxes, and Sellers shall bear all Non-French Transfer Taxes in excess of
such $10,000,000. For purposes hereof, any Non-French Transfer Tax which
is deductible or amortizable shall be computed net of income tax benefit,
assuming a 40% income tax rate. Any Transfer Taxes relating to the
Business of the French Sellers shall be governed by Section 14.2(c) of the
Asset Purchase Agreement.
3
5. Foreign Transfer Agreements. The parties agree that they will
equalize any lease payments made to Sellers pursuant to the terms of
Attachments E-1 or E-2 or any agreement which is entered into in accordance
with Attachments E-1 or E-2 with any interest earned pursuant to the escrow
arrangements specified in those Attachments or such agreements, which
interest shall be for the account of Purchaser Parent or any other
Purchaser.
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Addendum as of the date first
written above.
ROBERT BOSCH GmbH ALLIEDSIGNAL INC.
/s/ppa Bleier /s/ppa Berg /s/ Peter M. Kreindler
- ---------------------------- ---------------------
Name:Klaus Bleier Dieter Berg Name: Peter M. Kreindler
Title: Prokurist Title: Senior Vice President, General
Counsel and Secretary
ADDENDUM #2 TO ASSET PURCHASE AGREEMENT
ADDENDUM #2 ("Addendum #2") made as of March 31, 1996 to the Asset
Purchase Agreement dated as of February 29, 1996, as amended by the
Addendum dated as of February 29, 1996 (the "Asset Purchase Agreement"),
between AlliedSignal Inc., a Delaware corporation ("AlliedSignal"), Robert
Bosch GmbH, a Gesellschaft mit beschrankter Haftung ("Purchaser Parent"),
and the other parties thereto.
AlliedSignal, Purchaser Parent and the other parties listed on the
signature pages hereto are entering into this Addendum #2 at the Closing
under the Asset Purchase Agreement. Accordingly, this Addendum #2 shall be
deemed to be part of the Asset Purchase Agreement and all references in the
Asset Purchase Agreement to "this Agreement" (or similar terminology) shall
be deemed to refer to the Asset Purchase Agreement after giving effect to
the agreements set forth in this Addendum #2. All capitalized terms used
herein, unless otherwise defined herein, are used as defined in the Asset
Purchase Agreement.
In consideration of the mutual covenants and agreements contained in
the Asset Purchase Agreement and in this Addendum #2 (and notwithstanding
anything in the Asset Purchase Agreement to the contrary), Sellers and
Purchasers agree as follows:
1. Closing Payments.
a. Closing Statement. Purchasers and Sellers acknowledge
and agree that, notwithstanding Section 3.1(b) of the Asset Purchase
Agreement, a portion of the Initial Purchase Price is being paid at the
Closing to certain Sellers other than AlliedSignal, and pursuant to certain
escrow arrangements, as provided in the Closing Statement set forth as
Exhibit 1 hereto (the "Closing Statement"). At the Closing, upon receipt
by AlliedSignal and the other applicable Sellers, and the appropriate
escrow agents, of the payments set forth in the Closing Statement,
AlliedSignal, for itself and on behalf of all other Sellers, and Purchaser
Parent, for itself and on behalf of all other Purchasers, shall execute a
copy of the Closing Statement.
b. Brazil. Purchasers and Sellers acknowledge and agree
that the portion of the Initial Purchase Price with respect to the Business
in Brazil will be paid on the following basis. At the Closing, Purchasers
shall pay to Sellers an amount of Brazilian Reals (Reais) equal to the
portion of the Initial Purchase Price allocated (in United States dollars)
to the Business in Brazil as set forth on Exhibit 15 hereto (the "Brazilian
Amount"), converted into Brazilian Reals based on the mid-point PTAX
exchange rate for April 10, 1996. In the event that such exchange rate
differs from the mid-point PTAX exchange rate for April 12, 1996 (the
"April 12 Rate"), then the Brazilian Amount shall be recalculated in
Brazilian Reals based on the April 12 Rate. If the amount so calculated
exceeds the amount paid by Purchasers to Sellers at the Closing pursuant to
the first sentence of this Section 1(b), then the difference shall be
converted into United States dollars based on the April 12 Rate and shall
be included as an asset on the Closing Balance Sheet. If the amount so
calculated is less than the amount paid by Purchasers to Sellers at the
Closing pursuant to the first sentence of this Section 1(b), then the
difference shall be converted into United States dollars based on the April
12 Rate and shall be included as a liability on the Closing Balance Sheet.
2. Transfer Taxes. Purchasers and Sellers agree that the
settling up, as between Sellers and Purchasers, of Transfer Taxes in
accordance with Section 14.2 of the Asset Purchase Agreement (including
paragraph 4 of the Addendum dated as of February 29, 1996), other than
Transfer Taxes with respect to Owned Real Property in the United States
(which shall be settled up at the Closing), shall take place after the
Closing as follows (such Transfer Taxes are referred to herein as
"Specified Transfer Taxes"):
a. Payment. On or before June 11, 1996, Sellers, on the
one hand, and Purchasers, on the other hand, shall each deliver to the
other documentation (i) evidencing all Specified Transfer Taxes paid by
them and (ii) for each payment made in a currency other than United States
dollars, converting the amount of such payment into United States dollars
based on the exchange rate for such currency reported in the Eastern
Edition of The Wall Street Journal (the "Exchange Rate") in effect on the
date of such payment. If, based on such documentation and after netting
out the relevant payment obligations (as so converted), Sellers are
required to make a payment to Purchasers, or Purchasers are required to
make a payment to Sellers, in accordance with the applicable provisions of
the Asset Purchase Agreement, then, on June 18,
1996 (or, if earlier, the fifth Business Day after completion of
such deliveries), AlliedSignal (in the case of a payment by Sellers)
or Purchaser Parent (in the case of a payment by Purchasers)
shall make such payment in United States dollars by wire transfer
to a bank account designated in writing by the other.
b. Subsequent Payment. In the event that the Initial
Purchase Price is adjusted pursuant to Section 3.2 of the Asset Purchase
Agreement and such adjustment results in an adjustment of the amount of
Specified Transfer Taxes paid or payable, then the settling up procedures
set forth in paragraph (a) above shall again be followed with respect to
such adjustment; provided, however, that (i) the documentation referred to
in paragraph (a) shall be delivered on or before the 30th day following the
final determination of the Adjusted Purchase Price pursuant to Section 3.2
of the Asset Purchase Agreement and (ii) the payment referred to in
paragraph (a) shall be made on the fifth Business Day after completion of
such deliveries.
3. Initial Balance Sheet. The balance sheet set forth in
Schedule 6.5(a) to the Asset Purchase Agreement is hereby amended to read
in its entirety as set forth in Exhibit 2 hereto, which balance sheet shall
be the Initial Balance Sheet for all purposes of the Asset Purchase
Agreement. Without limiting the foregoing, Sellers and Purchasers agree
that the amount of the Initial Investment set forth in Section 3.2(a) of
the Asset Purchase Agreement is hereby amended to equal $825,700,000.
4. Net Cash Adjustment. Notwithstanding Section 3.3 of the
Asset Purchase Agreement:
a. Transferred Entities. No cash adjustment shall be made
in respect of the Cash Receipts and Cash Disbursements of the Transferred
Entities, except to the extent such Cash Receipts or Cash Disbursements
relate to Excluded Assets or Excluded Liabilities. For purposes of
calculating the Daily Net Cash Balance (as defined below) for any
Transferred Entity, Cash Receipts related to Excluded Assets or Excluded
Liabilities shall be treated as Cash Disbursements, and Cash Disbursements
related to Excluded Assets or Excluded Liabilities shall be treated as Cash
Receipts. In the case of Transferred Entities in which parties other than
Sellers hold an equity interest on the Closing Date, references in Section
3.3 of the Asset Purchase Agreement to "Cash Receipts" and "Cash
Disbursements" shall be deemed to refer to the pro rata
portion of such amounts corresponding to Sellers' percentage ownership
interest in such Transferred Entity.
b. Certain Calculations. A "Daily Net Cash Balance" shall
be calculated each day for each currency in which a Cash Receipt or Cash
Disbursement occurs as the difference between Cash Receipts and Cash
Disbursements in such currency on such day. The Daily Net Cash Balance in
any currency other than United States dollars shall be converted to a
United States dollar equivalent in accordance with the Exchange Rate on the
next succeeding New York business day. For purposes of Section 3.3 of the
Asset Purchase Agreement, the "Net Cash Balance" shall be the net amount of
the United States dollar Daily Net Cash Balances and the United States
dollar equivalent Daily Net Cash Balances for each day in the Net Cash
Period. The Net Cash Balance shall be audited and paid in United States
dollars in accordance with the terms and conditions of Section 3.3 of the
Asset Purchase Agreement.
c. Checks. For purposes of clarification, with respect to
checks, (I) the date on which a check is issued shall be the date of such
Cash Disbursement and (ii) the date on which a check is received shall be
the date of such Cash Receipt.
d. Cash in Transferred Entities. Notwithstanding Section
2.2(a) of the Asset Purchase Agreement, and subject to Section 28 hereof,
all cash, cash equivalents and short-term investments of the Transferred
Entities shall not be Excluded Assets and shall be reflected on the Closing
Balance Sheet in accordance with the Specified Accounting Principles.
e. AlliedSignal Argentina. If Sellers advance funds as an
intercompany loan to AlliedSignal Argentina, S.A. during the Net Cash
Period, an amount equal to such funds shall be repaid by Purchaser Parent
(or any of its Affiliates) to AlliedSignal on the date the Net Cash Balance
is paid. With respect to Argentina, friction-related assets shall not be
deemed Excluded Assets and friction-related liabilities shall not be deemed
Excluded Liabilities. Such assets and liabilities will be reflected on the
Closing Balance Sheet.
5. France.
a. Guarantee. Purchaser Parent hereby irrevocably
guarantees the complete and timely performance by Bosch Systemes de
Freinage S.A.S. (the "French Newco") of any and all obligations the French
Newco may have under the Management Lease Agreements (Contrats de Location
Gerance) between the French Newco and each of AlliedSignal Systemes de
Freinage S.A., AlliedSignal Europe Services Techniques S.A. and
AlliedSignal Aftermarket Europe S.A., including, without limitation, the
timely payment of all sums payable now or in the future by the French Newco
to the French Sellers under said Management Lease Agreements.
b. French Newco. Notwithstanding anything in the Asset
Purchase Agreement to the contrary, Purchasers and Sellers acknowledge and
agree that the actions set forth in paragraph 2 of Attachment E-1 of the
Asset Purchase Agreement with respect to the transfer to Purchasers of the
shares of the French Newco will be completed prior to the Closing.
Accordingly, the French Newco shall be a "Purchaser" effective upon the
Exchange Date (and, at the time of the contribution of the Business of
AlliedSignal Systemes de Freinage S.A., AlliedSignal Automotive Europe
S.A., Allied Signal Europe Services Techniques S.A. and AlliedSignal
Aftermarket Europe S.A. (the "French Sellers") to the French Newco, the
French Newco shall execute a counterpart of the Assumption Agreement
contemplated by Section 13(a) of the Asset Purchase Agreement and delivered
by Purchasers to Sellers at the Closing); provided, however, that the
foregoing shall not derogate the rights of Purchasers to make any claim for
indemnification, pursuant to Section 15.1(b) of the Asset Purchase
Agreement and in accordance with the terms of Article 15 thereof, arising
out of the French Newco's status as a Transferred Entity during the period
prior to the Exchange Date.
6. Italy.
a. Transactional Overview. Section 1.2(e) of the Asset
Purchase Agreement is hereby amended in its entirety to read as follows:
(e) Italy - Contribution. The Business
of AlliedSignal Automotive Italia S.p.A. and
AlliedSignal Freni S.p.A. (the "Italian Sellers") will
be contributed by the Italian Sellers with a step-up in
tax basis of the Assets transferred to a newly-created
company
formed by Sellers and the shares of which will
be transferred to Purchasers prior to the Closing (the
"Italian Newco"). The Italian Sellers will initiate
the contribution process as soon as practicable after
the date of this Agreement, but the parties anticipate
that the contribution will not be completed until after
the Closing Date. During the interim period between
the Closing Date and the date of completion of the
contribution, the Business of the Italian Sellers will
be managed by the Italian Newco pursuant to business
lease agreements reasonably acceptable to the parties
("Business Lease Agreements"), and Purchaser Parent
hereby guarantees the Italian Newco's obligations
thereunder.
The steps involved in the contribution and
Business Lease Agreements, as the case may be, are
attached as Attachment E-2. To the extent possible in
accordance with applicable Italian law and to the
extent otherwise practicable, the agreements will
conform in all material respects to the agreements set
forth in Exhibit 16.11 with respect to France. In any
event, Sellers and Purchasers expressly acknowledge
that the Business Lease Agreements which will be
executed by and between the Italian Sellers and Newco
are to be regarded only as a means to implement and
execute the obligations assumed in this Agreement.
Therefore, should any provisions in the Business Lease
Agreements not be in conformity or accordance with any
of the clauses set forth in this Agreement, this
Agreement shall prevail over and above the Business
Lease Agreements. Without prejudice to any provisions
in this Agreement, for all purposes, the Business Lease
Agreements, the Contribution Agreement and all other
related deeds and documents shall be Foreign Transfer
Agreements under the meaning of Section 16.19 herein.
Sellers and Purchasers agree that the manner
in which to implement a transfer of the Business of the
Italian Sellers to Purchasers is by means of the
contribution mechanism described in this Section.
However, if the contribution of the Business of the
Italian Sellers cannot be achieved for any reason prior
to December 1, 1996, then the Business of the Italian
Sellers, upon request of either the Purchasers or
Sellers, shall be transferred to Purchasers in a manner
to be agreed upon and in accordance with the other
Sections of this Agreement, provided that the
transaction resulting in the transfer (i) results in a
step-up in tax basis to fair market value of the Assets
transferred and (ii) can be executed within two weeks
(or other term as provided by mandatory local
applicable laws) after such request of Purchasers or
Sellers. The Purchasers and Sellers acknowledge that
in such transaction they may not be able to achieve all
of the benefits of the contribution to
the Italian Newco described above. If the parties are able
to agree on the agreements for the contribution to the
Italian Newco described above, then, notwithstanding
anything to the contrary in this Agreement, (x) the
Business of the Italian Sellers shall be transferred to
Purchasers substantially in accordance with the terms
and conditions set forth on Attachment E-2 and in such
agreements and (y) compliance by Sellers with their
respective obligations pursuant to Attachment E-2 and
such agreements shall not itself constitute a breach of
any provision (including, without limitation, any
representation or warranty) of this Agreement.
b. Attachment E-2. Attachment E-2 to the Asset Purchase
Agreement is hereby amended in its entirety to read as set forth in Exhibit
3 hereto.
c. Definition. The definition of "Post-Closing Transfer
Agreements" set forth in Section 16.11 of the Asset Purchase Agreement is
hereby amended in its entirety to read as follows:
"Post-Closing Transfer Agreements" means (i) in
the case of the Business in Italy, any agreements
associated with the contribution of the Business in
Italy to the Italian Newco and the subsequent transfer
of shares, as referred to in paragraphs 3 and 6 of
Attachment E-2 and (ii) in the case of the Business in
France, the contribution agreements with respect to the
French Newco and the associated share transfer orders,
as described in paragraphs 3 and 6 of Attachment E-1.
d. Guarantee. Purchaser Parent hereby irrevocably
guarantees the complete and timely performance by Robert Bosch Sistemi
Frenanti S.R.L. (the "Italian Newco") of any and all obligations the
Italian Newco may have under the Business Lease Agreements between the
Italian Newco and each of AlliedSignal Automotive Italia S.p.A. and
AlliedSignal Freni S.p.A. (the "Italian Sellers"), including, without
limitation, the timely payment of all sums payable now or in the future by
the Italian Newco to the Italian Sellers under said Business Lease
Agreements.
e. Italian Newco. Purchasers and Sellers acknowledge and
agree that the actions set forth in paragraph 2 of Attachment E-2 of the
Asset Purchase Agreement with respect to the transfer to Purchasers of the
shares of the Italian Newco will be completed prior to the Closing.
Accordingly, the Italian Newco shall be a "Purchaser" effective upon the
Exchange Date; provided, however, that the foregoing shall not derogate the
rights of Purchasers to make
any claim for indemnification, pursuant to Section 15.1(b) of the
Asset Purchase Agreement and in accordance with the terms of Article
15 thereof, arising out of the Italian Newco's status as a
Transferred Entity during the period prior to the Exchange Date.
7. Spain. Section 1.2(c) of the Asset Purchase Agreement is
hereby amended to add the following two sentences at the end thereof:
The completion by AlliedSignal Automotive Espana
SA of the transactions contemplated in this Agreement,
and in particular the transfer of those Assets
belonging to AlliedSignal Automotive Espana SA and the
entering into force and effect of any agreements, deeds
or documents to be executed by AlliedSignal Automotive
Espana SA as a consequence of this Agreement, is
subject to the condition of the approval by the
shareholders of AlliedSignal Automotive Espana SA in a
General Shareholders Meeting. AlliedSignal shall cause
any and all Affiliates of AlliedSignal owning shares of
AlliedSignal Automotive Espana to vote all such shares
in favor of such approval.
Sellers represent and warrant to Purchasers that the General
Shareholders Meeting referred to above was held on March 30, 1996 and that
all shareholder approvals required in respect of actions contemplated in
the Asset Purchase Agreement have been received.
8. Certain Consents.
a. Satisfaction of Condition. Purchasers hereby agree to
the form of consent attached as Exhibit 4 hereto, utilized by Sellers in
satisfaction of the condition set forth in Section 9.2 of the Asset
Purchase Agreement with respect to each OEM from which the Business
received total payments of less than $50,000 in 1995. Sellers and
Purchasers further agree that the obligation set forth in the first
sentence of Schedule 8.3A of the Asset Purchase Agreement (verification by
Directorate General for External Transactions in Spain) has instead been
satisfied by Sellers' delivery to Purchasers of the legal opinion attached
as Exhibit 5 hereto.
b. Navistar Consent. In consideration of Purchasers'
acceptance of a qualified consent of OEM customer Navistar International
Transportation Corp. ("Navistar") and waiver of the requirement that
Sellers obtain an unqualified consent of Navistar under Section 9.2 of the
Asset Purchase Agreement, Sellers hereby agree to make a payment to
Purchasers at the
Closing in the amount of $50,000 (which payment shall not
be reflected on the Closing Balance Sheet or considered a "Cash
Disbursement" for purposes of Section 3.3 of the Asset Purchase Agreement).
9. Certain Contracts. Sellers and Purchasers agree that each
contract set forth on Exhibit 6A hereto is a Shared Asset and is hereby
added (as indicated in the applicable column set forth in Exhibit 6A) to
Schedule 2.1(n) or 2.2(n) to the Asset Purchase Agreement. Each such
contract added to Schedule 2.2(n) to the Asset Purchase Agreement is hereby
deleted from Schedule 6.9 and/or Schedule 6.15 to the Asset Purchase
Agreement, as applicable, and does not constitute an Asset and, to the
extent that any prepaid expense or deposit relating to any such contract is
set forth on the Initial Balance Sheet, the amount of any prepaid expense
or deposit relating to such contract as of March 31, 1996 shall be set
forth on the Closing Balance Sheet. For purposes of clarification, Sellers
and Purchasers acknowledge that the master lease agreements and master
license agreements between Sellers and the vendors identified on Exhibit 6B
hereto are not being assigned to Purchasers (and, accordingly, constitute
Excluded Assets), but that (subject to Section 2.3 of the Asset Purchase
Agreement), the purchase orders of the Business outstanding under such
agreements, and the licenses granted to the Business under such agreements,
are being assigned (and, accordingly, constitute Transferred Assets).
10.Intellectual Property.
(a)Schedule 6.10. Sellers and Purchasers agree that
Schedule 6.10 to the Asset Purchase Agreement is hereby amended as set
forth on Exhibit 7 hereto.
(b)Certain Fees and Expenses. To the extent necessary for
Purchasers to record the assignments from the Sellers assigning the same
("Assigning Sellers"), Sellers agree to pay all recordation fees, costs,
expenses and taxes, if any, required to separately record the chain of
title in Proprietary Rights from the owner of record to the Assigning
Seller (collectively, the "Intermediate Assignments"). Sellers and
Purchasers shall share the recordation fees, costs, expenses and taxes, if
any, associated with recording and perfecting the transfer of title of the
Proprietary Rights from Assigning Sellers to Purchasers on a fifty-fifty
basis. Purchasers have no obligation to pay any agent's fee in connection
with the recordation of the Intermediate Assignments. Sellers have no
obligation to pay any agent's fee in connection with the recording
of the assignments from the Assigning Sellers to Purchasers. Purchasers and
Sellers agree to cooperate to reduce the fees, costs and expenses relating
to the transfer of the Proprietary Rights.
11.Certain Indebtedness.
a. Assumption; Payment. Notwithstanding Section 4.2(f) of
the Asset Purchase Agreement, Sellers and Purchasers agree that the
Excluded Liabilities shall not include any indebtedness under the financing
commitments set forth on Exhibit 8 hereto (the "Assumed Debt") and that,
accordingly, subject to the remainder of this Section 11(a), the principal
amount of the Assumed Debt, plus accrued interest thereon, as of March 31,
1996 denominated in United States dollars (based on the Exchange Rate as of
March 29, 1996 for each currency in which the debt was incurred) (the
"Closing Date Amount") shall be reflected on the Closing Balance Sheet.
Sellers represent and warrant to Purchasers that the Closing Date Amount is
approximately as set forth in Exhibit 8 hereto. AlliedSignal may, at its
option, at any time prior to delivery of the Closing Balance Sheet (and
upon ten (10) days' prior written notice to Purchaser Parent), (i) pay to
Purchaser Parent (or to the relevant entity, if requested by Purchaser
Parent) by wire transfer to a bank account designated in writing by
Purchaser Parent, an amount in United States dollars equal to the Closing
Date Amount (or any portion thereof), plus interest thereon at the rate of
LIBOR plus .25 percent per annum from (but excluding) the Closing Date
through and including the date of payment, and (ii) deliver to Purchaser
Parent appropriate documentation with respect to the computation of such
amount. In such case, the Closing Date Amount (or such portion thereof)
shall not be reflected on the Closing Balance Sheet.
b. Certain Guarantees. From and after the date hereof,
Purchaser Parent shall use its best efforts to obtain, as soon as
practicable, the release of each of the obligations of AlliedSignal to
guarantee certain of the Assumed Debt, as set forth on Exhibit 8 hereto,
and, to that end, shall provide such guarantees or other credit support as
shall be required to obtain the release. Purchaser Parent hereby assumes
such obligations effective as of the Closing Date and shall indemnify
AlliedSignal in respect of any liability or expense incurred by
AlliedSignal in respect of any claim made after the Closing Date in respect
of any such obligation.
12.Transturk.
a. Schedule 6.3.2. The information set forth on Schedule
6.3.2 to the Asset Purchase Agreement with respect to Transturk Fren
Donanim Endustrisi Sanayi ve Ticaret Anonim Sirketi ("Transturk") is hereby
amended, as set forth in Exhibit 9 hereto. Sellers represent and warrant
to Purchasers that Transturk has not entered into any exclusive sales
arrangement or other contract that would restrict Transturk's ability to
sell its products to any third party. Any indemnification claim relating
to a breach of the foregoing shall be treated as an "Unlimited Claim" for
purposes of Section 15.3 of the Asset Purchase Agreement and shall be
handled in accordance with the procedures set forth in Section 15.5 of the
Asset Purchase Agreement.
b. Stock Exchange. Sellers hereby agree to indemnify and
hold Purchasers harmless from and against any and all losses, liabilities,
damages or penalties arising as a result of Sellers' failure, if any, to
comply with any applicable policies, procedures or regulations of the
Istanbul Stock Exchange or any applicable laws of Turkey relating to the
registration or reporting of (i) any transaction by which Sellers acquired
shares of Transturk or (ii) the ownership interest held by Sellers in
Transturk. Any claim under the indemnification set forth in the preceding
sentence shall be treated as an "Unlimited Claim" for purposes of Section
15.3 of the Asset Purchase Agreement and shall be handled in accordance
with the procedures set forth in Section 15.5 of the Asset Purchase
Agreement.
13.Certain Accounts Receivable.
a. Brazil. Notwithstanding Section 2.1(i) of the Asset
Purchase Agreement, Sellers and Purchasers agree that (I) the Accounts
Receivable shall not include any trade accounts receivable in Brazil
described in the following sentence (the "Specified Brazilian Receivables")
and (ii) Sellers shall retain all claims, rights, benefits and interests
arising from or resulting from the Specified Brazilian Receivables. The
Specified Brazilian Receivables are comprised of (i) all aftermarket trade
accounts receivable in Brazil relating to invoices covering both friction
and brake products and (ii) all trade accounts receivable in Brazil arising
from third party export sales to other Latin American countries. Without
limiting the foregoing, the Specified Brazilian Receivables shall not be
reflected on the Closing Balance Sheet.
b. Payment. AlliedSignal may, at its option, at any time
prior to delivery of the Closing Balance Sheet (and upon ten (10) days'
prior written notice to Purchaser Parent), pay to Purchaser Parent (or to
the relevant entity, if requested by Purchaser Parent), by wire transfer to
a bank account designated in writing by Purchaser Parent, an amount in the
applicable local currency equal to the face amount of any trade accounts
receivable and notes receivable arising from the Business and sold by
Sellers prior to the Closing pursuant to Section 14.15 of the Asset
Purchase Agreement, plus interest thereon in such local currency at the
rate of LIBOR plus .25 percent per annum from (but excluding) the Closing
Date through and including the date of payment; provided, however, that in
the case of France and Italy, such payment, if any, shall be made by the
applicable French Sellers to the French Newco, and by the applicable
Italian Sellers to Purchaser Parent (or any relevant entity designated by
Purchaser Parent), respectively. In such case, (i) the face amount of such
receivables (converted into United States dollars based on the Exchange
Rate as of March 29, 1996 for the currency of each applicable receivable)
shall be included in the "Accounts Receivable-Trade" and/or "Notes
Receivable-Trade" line items on the Closing Balance Sheet and (ii)
AlliedSignal shall hold Purchasers harmless from any and all Taxes arising
out of the sale of the aforementioned receivables and the payments referred
to above in this Section 13(b).
14.Employee Matters.
a. Certain Letters. The letters attached as Exhibit 10
hereto, with respect to (i) the AlliedSignal Supplemental Savings Plans and
(ii) information regarding certain state employment taxes, are hereby
incorporated herein by reference.
b. Brazil. The final sentence of Section 5.14.2 of the Asset
Purchase Agreement (Attachment F) is hereby amended by replacing the word
"prior" with the word "after".
c. Employees. The list of Employees (including OES Employees
and Retained Employees) and the list of Shared Services Employees in new
Schedule 5.1 to the Asset Purchase Agreement which is attached hereto as
Exhibit 11 supersedes any other lists of such employees which may have been
provided by Sellers to Purchasers prior to the date hereof. References in
Sections 5.1, 5.2(c), 5.13, 5.14 and 5.15 of the Asset Purchase Agreement
(Attachment F) to a list of Employees or any subgroup thereof (including
OES Employees and
Retained Employees) and the list of Shared Services Employees are
deemed to refer to the list of such employees in Exhibit 11.
The provisions of Section 5.1, 5.2(c), 5.14 and 5.15 of the Asset Purchase
Agreement that require the delivery prior to the date hereof of a list of
Employees (including OES Employees and Retained Employees) or a list of
Shared Services Employees are deemed to be timely satisfied by the delivery
of the list in Exhibit 11.
Sellers represent and warrant to Purchasers that Schedule 5.1
(excluding tab 11 of Volume 1A) is a list of all Employees and Shared
Services Employees with such additions and deletions as AlliedSignal
reasonably believes have been agreed to by the parties. Without limiting
any rights of the parties under the Asset Purchase Agreement, for a period
of thirty (30) days after the Closing the parties shall engage in good
faith negotiations concerning the accuracy of the list of Employees
(excluding the list of Shared Services Employees, OES Employees and
Retained Employees), including without limitation as to whether an
individual employed in the Business should have been included in such list,
whether the list includes individuals not employed in the Business (other
than any individual not employed in the Business as to whom Sellers and
Purchasers have agreed that Purchasers shall make an offer of employment)
or whether the list accurately identifies any individual or group of
individuals required to be included on such list. Subject to the above-
referenced good faith negotiations between the parties and without
limitation of any right of a party under the Asset Purchase Agreement, the
individuals listed as Employees or Shared Services Employees in Exhibit 11
(other than the Retained Employees and except as otherwise stated in
Schedule 5.1) shall be treated by the parties as transferred to Purchasers
effective as the Closing Date.
d. Certain Cross-References. Attachments F and G to the
Asset Purchase Agreement contain cross-references to the Schedules to the
Asset Purchase Agreement. Certain of such cross-references are hereby
amended, as set forth in Exhibit 12 hereto.
e. AlliedSignal Savings Plan Matching Contribution. During
the month of April 1996, AlliedSignal shall make a matching contribution in
AlliedSignal stock to Sellers' Savings and Thrift Plans in respect of
certain compensation for such month paid to the U.S. Transferred Employees
as the parties shall agree. Purchasers shall reimburse AlliedSignal in
cash for the amount of such stock contribution pursuant to the procedures
in Section 6.8 of the
Services Agreement. Sellers shall provide Purchasers appropriate
documentation supporting the amount of such payment to permit
Purchasers to verify the amount of such contribution.
15.Buelna/Greyco Land Swap. As promptly as practicable after
the Closing and for no additional consideration, AlliedSignal agrees to
cause Greyco to transfer to Bosch Espana Fabrica de Componentes S.L.
("Purchaser - Spain") the 446 square meter parcel identified as Parcel I in
the map attached hereto as Exhibit 13, and Purchaser - Spain shall transfer
to Greyco the 446 square meter parcel identified as Parcel II on Exhibit
13. All Transfer Taxes in connection with such exchange of land ("permuta
de terrenos") shall be allocated in accordance with Section 14.2 of the
Asset Purchase Agreement. The foregoing exchange of land will be
formalized by means of a notarial deed to be executed in Spain and to be
registered in the corresponding property register. As shown on Exhibit 13,
the current property line between Greyco and the Buelna facility is the
line marked A - F. After giving effect to the transfer referred to in the
first sentence of this Section 16, the property line between Greyco and
Buelna will be the line marked A-B-C-D-E.
16.Certain Tax Matters.
a. VAT.
(i)Brazil. Sellers and Purchasers agree that the
Business in Brazil shall be transferred to Purchasers in the form of a
transfer of an establishment to the Brazilian Newco (the shares of which
will be acquired by Purchasers as of the Closing). Accordingly, Sellers
and Purchasers agree that any balance existing in the ICMS/IPI tax books
pertaining to such establishment will be reflected in the Closing Balance
Sheet and will therefore be transferred to Purchasers as of the Closing.
(ii) Payments. With respect to any value added-
taxes ("VAT") imposed or incurred by reason of the transfer by Sellers of
any Assets to Purchasers or the Newcos, Purchaser Parent shall pay (or
cause an Affiliate to pay) to the applicable Seller the amount of such VAT
no later than five (5) Business Days prior to the date on which such Seller
is required to remit such amount to the applicable Governmental Authority.
b. Transferred Entities. The third sentence of Section
14.2(b)(i) of the Asset Purchase Agreement is hereby amended in its
entirety to read as follows:
The applicable Seller will remit to the
applicable Transferred Entity at least five days before
the date such payment is due pursuant to written notice
of the amount (with supporting documentation) and the
due date an amount equal to the pro-rata portion (as
determined in accordance with the provisions of Section
4.2(e)(v)) of the Taxes shown on such returns that
would have been payable for a taxable period ending on
the close of business on the Closing Date, reduced by
any amount of such Taxes prepaid or deposited by the
Transferred Entities prior to the Exchange Date or any
amounts Sellers have contributed prior to the Exchange
Date to the Transferred Entities which have been
deposited as payment of such Taxes; provided, however,
that any amounts remitted by a Seller to a Transferred
Entity pursuant to this sentence during the period from
the Closing Date to the Exchange Date shall not be
considered "Cash Disbursements" for purposes of Section
3.3.
c. Books and Records. Section 2.1(f) of the Asset Purchase
Agreement is hereby amended to add the following proviso to the end
thereof:
; provided, further, that Sellers shall be
entitled to retain the original of any such materials
to the extent required by law, but only for the period
so required (and shall provide Purchasers with a copy
thereof). Upon the expiration of such period, if
Purchasers request, Sellers shall deliver such
originals to Purchasers at Purchasers' expense.
d. Allocation. Section 3.4(b) of the Asset Purchase
Agreement is hereby amended to add the following sentence to the end
thereof:
Notwithstanding the preceding sentence, the
parties shall agree to such allocation of the Initial
Purchase Price to each Owned Real Property (and Leased
Real Property if any Transfer Tax is due in connection
with the assignment of the lease thereof) in France and
Italy on or before the date such property is actually
contributed to the French Newco and Italian Newco,
respectively.
e. Definition of Taxes. For purposes of the Asset Purchase
Agreement, where Sellers are transferring less than 100 percent of the
equity interest in a Transferred Entity,
"Taxes" shall mean a pro rata portion of the Taxes of such entity equal
to Sellers' percentage interest in such entity.
17.New Carlisle.
a. Lease. AlliedSignal represents and warrants to
Purchasers that it has terminated that certain lease between AlliedSignal
as landlord and Automotive Testing Laboratories, Inc. ("ATL") as tenant
relating to the real property in New Carlisle, Indiana (the "New Carlisle
Lease"). Sellers agree to indemnify Purchasers from and against any claim
by or liability to ATL under the New Carlisle Lease arising out of any
claim by ATL in connection with such termination (including, without
limitation, any claim or liability for payment of any lease termination
payment to ATL and any liability arising out of any claim by ATL that the
lease has not been terminated) or any of ATL's rights arising under the New
Carlisle Lease to purchase the premises a portion of which is demised under
the New Carlisle Lease. Any claim under the indemnification set forth in
the preceding sentence shall be treated as an "Unlimited Claim" for
purposes of Section 15.3 of the Asset Purchase Agreement and shall be
handled as a Loss under Section 15.1 of the Asset Purchase Agreement and in
accordance with the procedures set forth in Section 15.5 of the Asset
Purchase Agreement. Use of the term ATL in the preceding sentence shall
include the Third Fifth Bank of Columbus, and its successors and assigns,
as assignee of certain rights of ATL given as security for a debt or debts
of ATL to said bank.
b. Indiana Gross Income Tax. Purchasers and Sellers agree
that Sellers shall pay the Indiana Gross Income Tax imposed on Sellers for
the transfer of the New Carlisle, Indiana property. Such income tax shall
be the sole liability of Sellers, without any adjustment.
18.Effective Time. Subject to the final sentence of Section
1.1 of the Asset Purchase Agreement, any document which is delivered at the
Closing and dated as of March 31, 1996, and which provides for an effective
time of 11:59 p.m. on such date, shall be deemed to be effective (i) in the
case of each Seller organized in the United States, as of 11:59 p.m.
Eastern Standard Time and (ii) in the case of each Seller organized in a
jurisdiction other than the United States, as of 11:59 p.m. local time in
the relevant jurisdiction. Subject to the final sentence of Section 1.1 of
the Asset Purchase Agreement, any document which is delivered at the
Closing and
dated as of March 31, 1996, and which does not provide for an
effective time on such date, shall be deemed to be effective as of 11:59
p.m. in accordance with the preceding sentence.
19.Paxon Leasing Company, L.P. Sellers represent and
warrant to Purchasers that, prior to the Closing Date, Paxon Leasing
Company, L.P. ("PLLP") has transferred to AlliedSignal any and all right,
title or interest previously held by PLLP in or to any of the Assets or the
Business and that PLLP does not have any remaining interest therein. On
the basis of the foregoing, Purchasers acknowledge and agree that PLLP
shall not be required to execute the Asset Purchase Agreement or this
Addendum #2, and that PLLP shall not be considered a "Seller" for any
purpose thereunder or hereunder.
20.Chrysler Settlement Agreement. Sellers and Purchasers
hereby agree that any liabilities or obligations of AlliedSignal to
Chrysler Corporation ("Chrysler") under that certain agreement entered into
by AlliedSignal and Chrysler on or about March 29, 1996 (which agreement
relates to the resolution of product quality and volume pricing issues)
shall be deemed to be Excluded Liabilities under the Asset Purchase
Agreement, except for those obligations expressly acknowledged by Purchaser
Parent in the "Acceptance of Assignment" dated as of March 31, 1996.
Nothing in this Section 20 shall affect the respective rights and
obligations of Purchasers and Sellers pursuant to Section 4.2(a) of the
Asset Purchase Agreement.
21."Star Center" Engineering Unit. Sellers represent and
warrant to Purchasers that the business and financial terms in effect
between AlliedSignal and Chrysler with regard to the independent contractor
engineering unit known as the "Star Center" are substantially as set forth
in Exhibit 14 hereto, and that there exist no claims by Chrysler against
AlliedSignal in respect of such arrangement (other than routine expense
reimbursement claims). On the basis of the foregoing, Purchasers agree to
assume the obligations of AlliedSignal to Chrysler from and after the
Closing Date under the "Star Center" arrangement, and such obligations
shall be deemed to be Assumed Liabilities for purposes of the Asset
Purchase Agreement.
22.Purchase Price Allocation; Real Estate Valuation. Sellers
and Purchasers hereby agree that (i) the Final Allocation of the Initial
Purchase Price shall be as set forth on Exhibit 15 hereto and (ii) except
as provided in Section 16(d) hereof, the valuations of the real properties
included in the Assets and the Business shall be as set forth on Exhibit 16
hereto.
23.Brazil Real Property. With regard to any real property
transferred by AlliedSignal Automotive Ltda. ("AS-Brazil") to the Brazilian
Newco at the Closing, in the event that the formal registration of such
transfer cannot be completed in accordance with the requirements of
applicable Brazilian law as a result of any errors or omissions by AS-
Brazil or its Affiliates in prior compliance with recordation or
registration requirements applicable to the acquisition of such real
property or to the making of any improvements thereon, AS-Brazil shall
prepare and record, as promptly as practicable after the Closing and at its
own expense, any documentation required so as to enable the transfer of
such real property by AS-Brazil to the Brazilian Newco to be properly
registered in accordance with the requirements of Brazilian law. Until the
completion of preparation and filing of any such necessary documentation,
AS-Brazil shall indemnify and hold the Brazilian Newco harmless from and
against any Losses relating to defects in title to such real property that
arise from any such errors or omissions in prior compliance with
recordation or registration requirements. Any indemnification claim
relating to the foregoing shall be treated as an "Unlimited Claim" for
purposes of Section 15.3 of the Asset Purchase Agreement and shall be
handled in accordance with the procedures set forth in Section 15.5 of the
Asset Purchase Agreement.
24.Entire Agreement. Section 16.14 of the Asset Purchase
Agreement is hereby amended by adding immediately after the word
"Agreement" in the first sentence thereof, the clause ", together with any
other written agreements between AlliedSignal and/or any other Sellers, on
the one hand, and Purchaser Parent and/or any other Purchasers (or
permitted assigns thereof), on the other hand, entered into at the
Closing,".
25.Mexico. Sellers and Purchasers agree to the terms set forth
on Exhibit 17 hereto with respect to the Business in Mexico.
26.Hankuk. As promptly as practicable after the date hereof,
AlliedSignal shall take such steps as are necessary to enable Purchaser
Parent to appoint one representative to the Board of Directors of Hankuk;
provided, however, that, at or prior to such appointment, Purchaser Parent
and AlliedSignal shall enter into a voting agreement in substantially the
form of Exhibit 18 hereto.
27.Portuguese Operating Permit. AlliedSignal Automotive
Portugal Ltda. ("AS-Portugal") does not have an up-to-date operating permit
for the operation of the Business in Portugal. A provisional operating
permit was issued in May 1995 but this provisional permit expired on
November 8, 1995. The Delgacao Regional da Industria told AS-Portugal that
the definitive permit would be granted after a survey had been conducted to
verify that certain modifications had been made to the premises to comply
with safety and hygiene rules. All such modifications have been made, and
AS-Portugal is now only awaiting the survey. Upon issuance of the
definitive operating permit, AS-Portugal will take all necessary steps to
transfer such permit to Robert Bosch Travoes Ltda. ("Purchaser-Portugal")
in accordance with Portuguese law. AlliedSignal will hold Purchaser Parent
harmless any Losses arising out of any failure by AS-Portugal to obtain a
definitive permit or the failure by AS-Portugal to transfer such permit to
Purchaser-Portugal. Schedule 6.13 of the Asset Purchase Agreement is
hereby amended to include the foregoing information, and the situation
described above shall not constitute a breach of Section 6.13 of the Asset
Purchase Agreement.
28.AJKC Dividend and Tax Deposits. The cash dividend in the
amount of $3,291,000 paid by AlliedSignal Jidosha Kiki Corporation ("AJKC")
to AlliedSignal and its partner in AJKC on or about April 11, 1996 (the
"Dividend") shall (i) be deemed to relate to the period ending on the
Closing Date, (ii) not be reflected on the Closing Balance Sheet (i.e. cash
in the amount of such dividend shall not be shown as an asset nor shall the
amount payable with respect to such dividend be shown as a liability), and
(iii) not be treated as a Cash Disbursement for purposes of Section 3.3 of
the Asset Purchase Agreement and Section 4 hereof. The reimbursement on
April 10, 1996 by AJKC to AlliedSignal of the payment on April 9, 1996 of
Federal and Tennessee income taxes in the aggregate amount of $955,000
(attributable 51% to AlliedSignal and 49 percent to the other shareholder
of AJKC) by AlliedSignal on behalf of AJKC (i) shall be considered an
amount of Taxes prepaid or deposited by AJKC prior to the Exchange Date for
purposes of Section 16(b) hereof (51 percent of which is attributable to
AlliedSignal), (ii) shall not be reflected as cash, in the aggregate amount
of $955,000 on the Closing Balance Sheet, and (iii) shall not be treated as
a Cash Disbursement for Excluded Liabilities pursuant to Section 4(a)
hereof. Any cash remaining in AJKC as of the Closing Date, net of an
amount equal to the
Dividend and the taxes referred to in the preceding sentence, shall be
reflected on the Closing Balance Sheet in accordance with the Specified
Accounting Principles.
29.Spain Real Property. With regard to the real property
located in Pamplona, Spain transferred by AlliedSignal Automotive Espana
S.A. ("AS-Spain") to Purchaser-Spain at the Closing, in the event of any
defect in title by reason of the failure of AS-Spain to hold any Permit
with respect to such real property, AS-Spain shall indemnify and hold
Purchaser-Spain harmless from and against any Losses arising from such
title defect. For purposes of this Section 29, a defect in title with
respect to a facility shall include such facility's being located in non-
compliance with applicable Spanish laws or regulations or in violation of
any private or public rights of way. Any indemnification claim relating to
the foregoing shall be treated as an "Unlimited Claim" for purposes of
Section 15.3 of the Asset Purchase Agreement and shall be handled in
accordance with the procedures set forth in Section 15.5 of the Asset
Purchase Agreement.
30.Revisions to Certain Exhibits and Schedules to the Asset
Purchase Agreement.
a. Trademark License. Exhibit 9.8 to the Asset Purchase
Agreement is hereby deleted in its entirety and the form of Trademark
Agreement attached hereto as Exhibit 19 is inserted in its place. Exhibit
19 hereto shall be the "Exhibit 9.8" referred to in Section 9.8 of the
Asset Purchase Agreement.
b. Schedule 6.9. Schedule 6.9(a)(i)(v) to the Asset
Purchase Agreement is hereby amended by deleting the reference to Item 41
(intercompany export advance (Mexico) from AlliedSignal to AlliedSignal
Automotive de Mexico, S.A. de C.V. ("ASAM") in the approximate amount of
$1,653,000). AlliedSignal represents and warrants that the amount of the
intercompany export advance from AlliedSignal to ASAM outstanding as of
September 30, 1995 is a trade payable reflected on the Initial Balance
Sheet.
31.No Double Counting. The Asset Purchase Agreement and this
Addendum #2 contain certain cash adjustment provisions (including without
limitation, Section 3.3 of the Asset Purchase Agreement) which contemplate
that Sellers and/or Purchasers may make certain payments to the other
following the Exchange Date in order to put Sellers and Purchasers in the
respective positions of having sold and acquired the Business as of the
Closing Date. Sellers and Purchasers acknowledge and agree that nothing in
the Asset Purchase Agreement or in this Addendum #2 is intended to produce
any double counting of benefits or detriments to Sellers or Purchasers by
reason of such provisions, Section 3.2 of the Asset Purchase Agreement or
any other provision thereof or hereof.
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Addendum #2 as of the date first
written above.
ROBERT BOSCH GmbH ALLIEDSIGNAL INC.
/s/ ppa Bleier /s/ ppa Berg /s/ Peter M. Kreindler
- -------------------------------- ------------------------------
Name:Klaus Bleier Dieter Berg Name: Peter M. Kreindler
Title: Prokurist Title: Senior Vice President, General
Counsel & Secretary
ROBERT BOSCH CORPORATION ALLIEDSIGNAL TECHNOLOGIES INC.
/s/ Gary M. Saunders /s/ Jeffrey M. Lipshaw
- ------------------------------- --------------------------------
Name: Gary M. Saunders Name: Jeffrey M. Lipshaw
Title: Vice President Title:
ROBERT BOSCH ESPANA ALLIEDSIGNAL INTERNATIONAL FINANCE
FINANCIACION Y SERVICIOS, S.A. CORPORATION
/s/ Dieter Berg /s/ Jeffrey M. Lipshaw
- ------------------------------- ---------------------------------
Name: Dieter Berg Name: Jeffrey M. Lipshaw
Title: Attorney-in-Fact Title:
ROBERT BOSCH (FRANCE) S.A. ALLIEDSIGNAL AUTOMOTIVE DE MEXICO,
S.A. DE C.V.
/s/ Dieter Berg /s/ Jorge Sanchez-Devanny
- ------------------------------- --------------------------------
Name: Dieter Berg Name: Jorge Sanchez-Devanny
Title: Attorney-in-Fact Title: Attorney-in-Fact
ROBERT BOSCH LIMITADA ALLIEDSIGNAL AUTOMOTIVE EUROPE S.A.
/s/ Dieter Berg /s/ Jeffrey M. Lipshaw
- ------------------------------- ---------------------------------
Name: Dieter Berg Name: Jeffrey M. Lipshaw
Title: Attorney-in-Fact Title:
ALLIEDSIGNAL AFTERMARKET EUROPE, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL EUROPE SERVICES
TECHNIQUES, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL SYSTEMES DE FREINAGE, S.A.
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL AUTOMOTIVE PORTUGAL LTDA.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL AUTOMOTIVE PORTUGAL LTDA.
/s/ Diane de Saint Victor
----------------------------------
Name: Diane de Saint Victor
Title:
ALLIEDSIGNAL AUTOMOTIVE ESPANA, S.A.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL AUTOMOTIVE LTDA.
/s/ Jeffrey M. Lipshaw
----------------------------------
Name: Jeffrey M. Lipshaw
Title:
ALLIEDSIGNAL BREMSSYSTEME GmbH
/s/ Jeffrey M. Lipshaw
---------------------------------
Name: Jeffrey M. Lipshaw
Title: