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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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)
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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)
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WARN Act 5.7
Welfare Plans 5.5(a)
Welfare Plans Transition Period 5.5(a)
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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
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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
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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
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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.
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(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
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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);
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(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;
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(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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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;
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(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
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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;
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(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
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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
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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
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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.
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(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)
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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
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(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
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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 th