<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 10, 1997 (September 30, 1997)
ROCKWELL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-12383 25-1797617
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
600 Anton Boulevard, Suite 700, Costa Mesa, California 92626
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 424-4200
2201 Seal Beach Boulevard, Seal Beach, California 90740-8250
(Former name or former address, if changed since last report)
<PAGE> 2
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On September 30, 1997, Rockwell International Corporation
("Registrant") completed the spin-off of its Automotive business to holders of
shares of common stock, par value $1 per share, of Registrant, by means of the
distribution (the "Distribution") to such holders of all outstanding shares of
common stock, par value $1 per share, of Meritor Automotive, Inc., a
wholly-owned Delaware subsidiary of Registrant ("Meritor"), including the
preferred share purchase rights associated with such common stock (collectively,
"Meritor Common Stock"). Meritor began operations as an independent, separately
traded, publicly-held company on October 1, 1997.
The Distribution was made without the payment of any consideration
or the exchange of any shares by Registrant's shareowners. In the Distribution,
Registrant's shareowners received one share of Meritor Common Stock for every
three shares of common stock of Registrant owned on September 17, 1997.
Ownership of Meritor Common Stock was registered in book-entry form and each
shareowner of Registrant will receive a stock distribution statement indicating
the number of full shares of Meritor Common Stock that has been credited to the
shareowner.
In connection with the Distribution, on September 30, 1997
Registrant and Meritor entered into a Distribution Agreement, Employee Matters
Agreement and Tax Allocation Agreement, which are filed herewith as Exhibits
2.1, 2.2 and 2.3, respectively.
As previously announced, Registrant received a ruling from the
Internal Revenue Service that the Distribution will be tax-free to Registrant's
shareowners for United States federal income tax purposes, except to the extent
cash is received by a shareowner in lieu of fractional shares of Meritor Common
Stock.
In connection with the Distribution, Meritor Common Stock was
registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as
amended. "When-issued" trading in Meritor Common Stock commenced on the New York
Stock Exchange on September 15, 1997 under the trading symbol "MRA WI". Meritor
Common Stock began trading independently on the New York Stock Exchange on
October 1, 1997 under the trading symbol "MRA".
(Page 2 of 8 Pages)
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Registrant is not aware of any material relationship between Meritor
and Registrant or any of its affiliates, any director or officer of Registrant
or any associate of any such director or officer that existed at the date of the
Distribution, except that Mr. Donald R. Beall, who stepped down as Chief
Executive Officer of Registrant on September 30, 1997 and who remains Chairman
of the Board of Registrant, serves as a non-executive director of Meritor. Mr.
Charles H. Harff, a non-executive director of Meritor and a former officer of
Registrant, is a consultant to Registrant, and Mr. John J. Creedon, a
non-executive director of Meritor, serves as a consultant to Registrant pursuant
to a retirement policy in effect prior to December 1995 for former directors.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Consolidated Financial Information
reflecting the Distribution.
(c) Exhibits.
2.1 Distribution Agreement dated as of September 30, 1997 by and
between Rockwell International Corporation and Meritor
Automotive, Inc.
2.2 Employee Matters Agreement dated as of September 30, 1997 by and
between Rockwell International Corporation and Meritor
Automotive, Inc.
2.3 Tax Allocation Agreement dated as of September 30, 1997 by and
between Rockwell International Corporation and Meritor
Automotive, Inc.
(Page 3 of 8 Pages)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ROCKWELL INTERNATIONAL CORPORATION
(Registrant)
By /s/ William J. Calise, Jr.
--------------------------------
William J. Calise, Jr.
Senior Vice President, General
Counsel and Secretary
Dated: October 10, 1997
(Page 4 of 8 Pages)
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ROCKWELL INTERNATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance
sheet as of June 30, 1997 and the unaudited pro forma condensed consolidated
statement of income for the year ended September 30, 1996 give effect to the
Distribution. Pro forma consolidated statements of income for the nine months
ended June 30, 1997 are not presented herein, as management believes that any
pro forma adjustments will not have a material effect on the results of
operations of Registrant. The pro forma condensed consolidated financial
statements should be read in conjunction with the historical financial
statements and the related notes thereto of Registrant contained in its 1996
Annual Report on Form 10-K and its Quarterly Report on Form 10-Q for the quarter
ending June 30, 1997.
The pro forma information is presented for information purposes only
and is not necessarily indicative of the results that would have been obtained
had the Distribution actually occurred on the dates assumed nor is it
necessarily indicative of the future results of operations.
(Page 5 of 8 Pages)
<PAGE> 6
Unaudited Pro Forma Consolidated
Condensed Balance Sheet
<TABLE>
<CAPTION>
June 30, 1997
--------------------------------------
Company Pro-Forma Company
Historical Adjustment Pro-Forma
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Cash $ 379 $ 445 (a) $ 764
(60) (b)
Receivables 1,221 - 1,221
Inventories 1,539 - 1,539
Other current assets 546 - 546
Net Assets of Automotive 654 (654) (d) -
--------- --------- ---------
Total current assets 4,339 (269) 4,070
--------- --------- ---------
Property, net 2,107 - 2,107
Intangible assets 1,778 - 1,778
Other assets 272 - 272
--------- --------- ---------
Total assets $ 8,496 $ (269) $ 8,227
========= ========== =========
LIABILITIES AND SHAREOWNERS' EQUITY
Short-term debt $ 346 $ - $ 346
Accounts payable and accrued
liabilities 1,806 20 (c) 1,826
--------- --------- ---------
Total current liabilities 2,152 20 2,172
--------- --------- ---------
Long-term debt 155 155
Accrued retirement benefits 783 783
Other liabilities 272 (50) (b) 222
Shareowners' equity:
Common Stock 216 - 216
Additional paid-in capital 870 - 870
Retained earnings 4,592 445 (a) 4,291
(716) (d)
(10) (b)
(20) (c)
Currency translation (146) 62 (d) (84)
Common stock in treasury (398) - (398)
--------- --------- ---------
Total shareowners' equity 5,134 (239) 4,895
Total liabilities and
shareowners' equity $ 8,496 $ (269) $ 8,227
========== ======== =========
</TABLE>
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet of
the Company:
(a) The receipt of a $445 million dividend from the Automotive business in
connection with the Distribution.
(b) The Automotive business will incur approximately $60 million in Canadian
income taxes in connection with the transfer of assets in Canada prior to
the Distribution and the Company will provide cash to fund the tax payment.
The tax payment will result in a deferred tax asset of approximately $50
million, which the Company will realize in the future as a reduction of
Canadian income taxes.
(c) The liability for expenses incurred in connection with the
Distribution.
(d) To record the Distribution.
(Page 6 of 8 Pages)
<PAGE> 7
Unaudited Pro Forma Consolidated
Condensed Statement of Income
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, 1996
-------------------------------------------
Company Pro-Forma Company
Historical Adjustment(a) Pro-Forma
-------------------------------------------
(in millions, except per share data)
<S> <C> <C> <C>
REVENUES:
Sales $ 10,373 $ (3,145) $ 7,228
Other income 169 (76) 93
--------- ---------- ---------
Total revenues 10,542 (3,221) 7,321
--------- ---------- ---------
Costs and expenses:
Cost of sales 7,877 (2,793) 5,084
Selling, general and administrative 1,494 (206) 1,288
Restructuring 122 (46) 76
Purchased research and development 121 - 121
Interest 32 (10) 22
--------- ---------- ---------
Total costs and expenses $ 9,646 $ (3,055) $ 6,591
--------- ---------- ---------
Income before income taxes 896 (166) 730
Provision for income taxes 341 (62) 279
--------- ----------- ---------
Income from continuing operations $ 555 $ (104) $ 451
========= =========== =========
Earnings per share from continuing
operations $ 2.55 $ (0.48) $ 2.07
========= =========== =========
Average outstanding shares 217.6 217.6 217.6
========= =========== =========
</TABLE>
Notes to Unaudited Pro Forma Consolidated Condensed Statement of Income:
(a) Revenues and expenses of the Automotive business.
(Page 7 of 8 Pages)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Sequentially
Number Numbered Page
<S> <C> <C>
2.1 Distribution Agreement dated as of September 30, 1997 by and between
Rockwell International Corporation and Meritor Automotive, Inc.
2.2 Employee Matters Agreement dated as of September 30, 1997 by and between
Rockwell International Corporation and Meritor Automotive, Inc.
2.3 Tax Allocation Agreement dated as of September 30, 1997 by and between
Rockwell International Corporation and Meritor Automotive, Inc.
</TABLE>
(Page 8 of 8 Pages)
<PAGE> 1
Exhibit 2.1
DISTRIBUTION AGREEMENT
by and between
ROCKWELL INTERNATIONAL CORPORATION
and
MERITOR AUTOMOTIVE, INC.
September 30, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS...............................................................................1
Section 1.01 General......................................................................1
ARTICLE II THE DISTRIBUTION........................................................................17
Section 2.01 The Distribution............................................................17
Section 2.02 Fractional Shares...........................................................18
Section 2.03 Cooperation Prior to the Distribution.......................................18
Section 2.04 Rockwell Board Action; Conditions to the Distribution.......................19
Section 2.05 Waiver of Conditions........................................................21
Section 2.06 Disclosure..................................................................21
ARTICLE III TRANSACTIONS RELATING TO THE DISTRIBUTION..............................................21
Section 3.01 Intercorporate Reorganization...............................................21
Section 3.02 Rockwell Group Obligations Relating to the Automotive Business..............24
Section 3.03 Intercompany Accounts and Arrangements......................................26
Section 3.04 Cash Management.............................................................28
Section 3.05 The Automotive Board........................................................30
Section 3.06 Resignations; Transfer of Stock Held as Nominee.............................31
Section 3.07 Automotive Certificate of Incorporation and By-Laws; Rights Plan............32
Section 3.08 Insurance...................................................................32
Section 3.09 Use of Names, Trademarks, etc...............................................35
Section 3.10 Consents....................................................................41
Section 3.11 Cross-License of Intellectual Property......................................42
ARTICLE IV MUTUAL RELEASE; INDEMNIFICATION.........................................................52
Section 4.01 Mutual Release .............................................................52
Section 4.02 Indemnification by Rockwell.................................................53
Section 4.03 Indemnification by Automotive...............................................54
Section 4.04 Limitations on Indemnification Obligations..................................56
Section 4.05 Procedures Relating to Indemnification......................................57
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 4.06 Remedies Cumulative.........................................................61
Section 4.07 Survival of Indemnities.....................................................61
Section 4.08 Exclusivity of Tax Allocation Agreement.....................................61
ARTICLE V ACCESS TO INFORMATION....................................................................61
Section 5.01 Access to Information.......................................................61
Section 5.02 Production of Witnesses.....................................................63
Section 5.03 Retention of Records........................................................63
Section 5.04 Confidentiality.............................................................64
ARTICLE VI MISCELLANEOUS ........................................................................65
Section 6.01 Entire Agreement; Construction..............................................65
Section 6.02 Survival of Agreements......................................................66
Section 6.03 Expenses .............................................................66
Section 6.04 Governing Law .............................................................66
Section 6.05 Notices .............................................................66
Section 6.06 Consent to Jurisdiction.....................................................68
Section 6.07 Amendments .............................................................68
Section 6.08 Assignment .............................................................69
Section 6.09 Captions; Currency..........................................................69
Section 6.10 Severability .............................................................69
Section 6.11 Parties in Interest.........................................................70
Section 6.12 Schedules .............................................................70
Section 6.13 Termination .............................................................70
Section 6.14 Waivers; Remedies...........................................................70
Section 6.15 Further Assurances..........................................................71
Section 6.16 Counterparts .............................................................71
Section 6.17 Performance .............................................................71
</TABLE>
ANNEXES
Annex A - Employee Matters Agreement
Annex B - Tax Allocation Agreement
SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.1(a) - Automotive 50% or Less Owned
Joint Ventures
Schedule 1.1(b) - Automotive Former Businesses
Schedule 1.1(c) - Automotive Financial Instruments
and Shared Agreements
Schedule 1.1(d) - Automotive Subsidiaries
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.1(e) - Automotive By-Laws
Schedule 1.1(f) - Automotive Certificate of Incorporation
Schedule 3.1(c) - Reorganization Transactions
Schedule 3.3(b)(ii) - Intercompany Agreements
Schedule 3.4 - Automotive Bank Accounts
Schedule 3.6 - Continuing Directors and Officers
Schedule 3.11(a) - Certain Intellectual Property
Licensed By Rockwell
Schedule 3.11(b) - Certain Intellectual Property
Licensed By Automotive
Schedule 4.2 - Certain Form 10 Sections
</TABLE>
iii
<PAGE> 5
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this "Agreement"), dated as of
September 30, 1997, by and between ROCKWELL INTERNATIONAL CORPORATION, a
Delaware corporation ("Rockwell"), and MERITOR AUTOMOTIVE, INC., a Delaware
corporation and, as of the date hereof, a wholly-owned subsidiary of Rockwell
("Automotive").
WHEREAS, the Rockwell Board (as defined herein) has determined
that it is appropriate and desirable to distribute all outstanding shares of
Automotive Common Stock (as defined herein) on a pro rata basis to the holders
of Rockwell Common Stock (as defined herein); and
WHEREAS, Rockwell and Automotive have determined that it is
appropriate and desirable to set forth the principal corporate transactions
required to effect such distribution and certain other agreements that will
govern certain matters relating to such distribution;
NOW, THEREFORE, in consideration of the premises and of the
respective agreements and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Action" means, with respect to any Person, any actual or
threatened or future action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity or any claims or other legal
matters that may be asserted by or against, or otherwise affect, such Person.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or
<PAGE> 6
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified Person; provided, however, that for
purposes of this Agreement, following the Time of Distribution no member of
either Group shall be deemed to be an Affiliate of any member of the other
Group. For purposes of the immediately preceding sentence, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Ancillary Agreements" means, collectively, the Employee
Matters Agreement, the Tax Allocation Agreement, the Transition Agreement and
the Conveyance and Assumption Instruments.
"Assets" means any and all assets, properties and rights,
whether tangible or intangible, real, personal or mixed, fixed, contingent or
otherwise, and wherever located (other than ownership interests in
Subsidiaries), including, without limitation, the following:
(i) real property interests (including leases), land,
plants, buildings and improvements;
(ii) machinery, equipment, tooling, vehicles,
furniture and fixtures, leasehold improvements, repair parts, tools,
plant, laboratory and office equipment and supplies, computer hardware
and software, computer networking equipment, engineering and design
equipment, test equipment and other tangible personal property,
together with any rights or claims arising out of maintenance or
service contracts relating thereto or the breach of any express or
implied warranty by the manufacturers or sellers of any of such assets
or any component part thereof;
2
<PAGE> 7
(iii) inventories, including raw materials,
work-in-process, materials, components, finished goods, parts,
accessories and supplies;
(iv) cash, bank accounts, notes, short-term and
long-term investments, accounts, loans and notes receivable (whether
current or not current), interests as beneficiary under letters of
credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances,
shares of stock, bonds, debentures, evidences of indebtedness,
certificates of interest or participation in profit-sharing agreements,
collateral-trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting-trust
certificates, puts, calls, straddles, options, swaps, collars, caps and
other securities or hedging arrangements of any kind;
(vi) financial, accounting, corporate, operating,
design, manufacturing, test and other data and records (in each case,
in whatever form or medium, including, without limitation, electronic
media), including, without limitation, books, records, notes, sales and
sales promotional material and data, advertising materials, credit
information, cost and pricing information, customer and supplier lists,
business plans, reference catalogs, payroll and personnel records and
procedures, blue-prints, research and development files, data and
laboratory books, sales order files, litigation files, minute books,
stock ledgers, stock transfer records and other similar property,
rights and information;
(vii) (A) inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents (including utility and design patents,
industrial designs and utility models), patent applications, and patent
and invention disclosures, and all other rights of inventorship,
worldwide, together with all reissuances, continuations,
continuations-in-part, divisions, revisions, supplementary protection
certificates, extensions and re-examinations thereof; (B) trademarks,
service marks, trade names, trade dress, logos, business and product
names and
3
<PAGE> 8
slogans and registrations and applications for registration thereof,
worldwide; (C) copyrights in copyrightable works, and all other rights
of authorship, worldwide, and all applications, registrations and
renewals in connection therewith; (D) mask works and semiconductor chip
rights, worldwide, and all applications, registrations and renewals in
connection therewith; (E) trade secrets and confidential business and
technical information (including ideas, research and development,
know-how, formulas, technology, compositions, manufacturing and
production processes and techniques, technical data, engineering,
production and other designs, drawings, engineering notebooks,
industrial models, software and specifications); (F) computer and
electronic data processing programs and software, both source code and
object code (including data and related documentation, flow charts,
diagrams, descriptive texts and programs, computer print-outs,
underlying tapes, computer databases and similar items), computer
applications and operating programs; (G) rights to sue for and remedies
against past, present and future infringements of any or all of the
foregoing and rights of priority and protection of interests therein
under the laws of any jurisdiction worldwide; (H) all copies and
tangible embodiments of any or all of the foregoing (in whatever form
or medium, including, without limitation, electronic media); (I) all
other proprietary and intellectual property rights and interests; and
(J) all other rights relating to any or all of the foregoing;
(viii) Contracts;
(ix) credits, prepaid expenses, deposits and
retentions held by third parties;
(x) claims, causes of action, choses in action,
rights under express or implied warranties, guarantees, indemnities and
similar rights, rights of recovery, rights of set-off, rights of
subrogation and all other rights of any kind;
(xi) Licenses; and
(xii) goodwill and going concern value.
4
<PAGE> 9
"Assigning Party" shall have the meaning ascribed thereto in
Section 3.10.
"Assumed Rockwell Liabilities" means Liabilities of the
Automotive Group as of the Time of Distribution which do not constitute
Automotive Liabilities and which relate to or arise in connection with any
business of Rockwell and the Rockwell Subsidiaries other than the Automotive
Business.
"Automotive" shall have the meaning ascribed thereto in the
preamble.
"Automotive Assets" means, collectively, all Assets (other
than Rockwell Retained Assets) which immediately prior to the Time of
Distribution are owned by Rockwell or any of its Subsidiaries (including,
without limitation, members of the Automotive Group) and which are used
primarily in or relate primarily to the Automotive Business, as the same shall
exist as of such time, including, without limitation (i) all assets reflected in
the Automotive Balance Sheet, as such assets may have been added to or sold or
otherwise changed since the date thereof and (ii) interests in the joint
ventures set forth on Schedule 1.1(a) (in which Rockwell or one of its
Subsidiaries has an ownership interest of not more than 50%). Anything contained
herein to the contrary notwithstanding, Rockwell Retained Assets shall not be
included in Automotive Assets.
"Automotive Balance Sheet" means the balance sheet of the
Automotive Business as of June 30, 1997 contained in the Form 10.
"Automotive Board" means the Board of Directors of Automotive.
"Automotive Business" means (i) the business engaged in at all
times prior to the Time of Distribution by the Pre-Distribution Group of
researching, developing, designing, manufacturing, selling, distributing,
installing, modifying, repairing, servicing and supporting drivetrain systems
and components for heavy-duty and medium-duty trucks, trailers, buses, coaches,
off-highway equipment, specialty vehicles and military vehicles (including,
without limitation, axles, brakes, braking systems, transmissions, suspension
systems, clutches, drivelines and Tripmaster(R) vehicle on-board
5
<PAGE> 10
computers), (ii) the business engaged in at all times prior to the Time of
Distribution by the Pre-Distribution Group of researching, developing,
designing, manufacturing, selling, distributing, installing, modifying,
repairing, servicing and supporting systems and components for passenger cars,
light-, medium- and heavy-duty trucks and sport utility vehicles, including,
without limitation, roof, door, access control and seat adjusting systems,
suspension products and steel wheels, (iii) Former Businesses managed or
operated with any of the foregoing or operationally or otherwise related to any
of the foregoing, including, without limitation, the Former Businesses listed on
Schedule 1.1(b) and (iv) activities related to any of the foregoing.
Notwithstanding anything to the contrary contained herein, the Automotive
Business shall not include the business previously and/or currently engaged in
by the Pre-Distribution Group of researching, developing, designing,
manufacturing, selling, distributing, installing, modifying, repairing,
servicing and supporting automobile global positioning systems and activities
related thereto.
"Automotive Common Stock" means, collectively, the Common
Stock, par value $1.00 per share, of Automotive and the related Rights.
"Automotive Financial Instruments" means all credit
facilities, guaranties, foreign currency forward exchange contracts, comfort
letters, letters of credit and similar instruments related to the Automotive
Business under which any member of the Rockwell Group has any primary,
secondary, contingent, joint, several or other Liability (other than Shared
Agreements), including, without limitation, those set forth on Schedule 1.1(c).
"Automotive Group" means Automotive and the Automotive
Subsidiaries.
"Automotive Indemnitees" means Automotive, each Affiliate of
Automotive, including the Automotive Subsidiaries, each of their respective
Representatives and each of the heirs, executors, successors and assigns of any
of the foregoing.
"Automotive Liabilities" means (i) all Liabilities of any
member of the Automotive Group under
6
<PAGE> 11
any Transaction Agreement to which it is or becomes a party and (ii) all
Liabilities based upon, arising out of, relating to or otherwise in connection
with the Automotive Assets or the Automotive Business, whether based upon,
arising out of, relating to or otherwise in connection with events, actions,
occurrences, omissions, circumstances or conditions occurring, existing or
asserted before, at or after the Time of Distribution, including, without
limitation: (A) all Liabilities reflected (or of the type reflected) on the
Automotive Balance Sheet or described (or of the type described) in the notes
thereto (as such Liabilities may have been reduced or added to or otherwise
changed since the date thereof), (B) all Liabilities in respect of checks
outstanding as of the Time of Distribution relating to the Automotive Business,
(C) all Liabilities in respect of workers' compensation, automobile, general
liability, products liability and other claims and matters relating to the
Automotive Business, (D) except for those Liabilities expressly assumed by the
Rockwell Group pursuant to the Employee Matters Agreement, all Liabilities in
respect of employee welfare and fringe benefits relating to the Automotive
Business (including claims for medical and disability benefits), (E) all
Liabilities for environmental matters based upon, arising out of, relating to or
otherwise in connection with the Automotive Business, including, without
limitation, Liabilities in respect of any facility to the extent relating to the
Automotive Business presently or formerly owned or operated by any member of the
Pre-Distribution Group, (F) all Liabilities based upon, arising out of, relating
to or otherwise in connection with Contracts related to the Automotive Business,
including, without limitation, Liabilities to make payments or otherwise in
connection with the termination thereof as a result of the transactions
contemplated hereby or otherwise and (G) all Liabilities in respect of
commitments of charitable trusts relating to the Automotive Business (except for
an aggregate of $250,000 of such commitments, which shall be funded by such
trusts).
"Automotive Subsidiary" means each Person listed on Schedule
1.1(d) which is a direct or indirect Subsidiary of Automotive as of the Time of
Distribution.
"BNA" means Boeing North American, Inc., a Delaware
corporation formerly named Rockwell International Corporation.
7
<PAGE> 12
"Boeing Post-Closing Covenants Agreement" means the Post-
Closing Covenants Agreement dated as of December 6, 1996 among BNA, The Boeing
Company, Boeing NA, Inc. and Rockwell.
"By-Laws" means Automotive's by-laws substantially in the form
attached hereto as Schedule 1.1(e).
"Canadian Cash Amount" shall have the meaning ascribed thereto
in Section 3.04(b).
"Certificate of Incorporation" means Automotive's certificate
of incorporation substantially in the form attached hereto as Schedule 1.1(f).
"Claims Administration" means the processing of claims made
under the Policies, including the reporting of claims to the insurance carrier,
management and defense of claims, and providing for appropriate releases upon
settlement of claims.
"Claims Made Policies" shall have the meaning ascribed thereto
in Section 3.08(a).
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Consents" means consents, waivers, approvals, allowances,
novations, authorizations, filings, registrations and notifications.
"Contracts" means agreements, leases, contracts, memoranda of
understanding, letters of intent, sales orders, purchase orders, open bids and
other commitments and all rights therein and Liabilities thereunder, including,
in each case, all amendments, modifications and supplements thereto and waivers
and consents thereunder.
"Conveyance and Assumption Instruments" means, collectively,
the various agreements, deeds, bills of sale, stock powers, certificates of
title, instruments of conveyance and assignment, instruments of assumption and
other instruments and documents to be entered into to
8
<PAGE> 13
effect the transfer of Assets and Subsidiaries and the assumption of Liabilities
contemplated by the transactions described in Section 3.01.
"Distribution" means the distribution, on the basis provided
for in Section 2.01, to holders of Rockwell Common Stock of the shares of
Automotive Common Stock owned by Rockwell on the Distribution Date.
"Distribution Agent" means the distribution agent selected by
Rockwell to distribute the Automotive Common Stock in connection with the
Distribution.
"Distribution Date" means the date determined by the Rockwell
Board as the date as of which the Distribution will be effected.
"Employee Matters Agreement" means the Employee Matters
Agreement between Rockwell and Automotive, substantially in the form attached
hereto as Annex A.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form 10" means the registration statement on Form 10 filed by
Automotive with the Commission to effect the registration of the Automotive
Common Stock pursuant to the Exchange Act, including all amendments thereto
filed by Automotive with the Commission prior to the Time of Distribution.
"Former Business" means any corporation, partnership, entity,
division, business unit, business, assets, plants, product line, operations or
contract (including any assets and liabilities comprising the same) that has
been sold, conveyed, assigned, transferred or otherwise disposed of or divested
(in whole or in part) by any member of the Pre-Distribution Group or the
operations, activities or production of which has been discontinued, abandoned,
completed or otherwise terminated (in whole or in part) by any member of the
Pre-Distribution Group.
"Governmental Entity" means any government or any court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, Federal, state, local, domestic, foreign or
international.
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"Group" means the Rockwell Group or the Automotive Group.
"Indemnifiable Losses" means, subject to Section 4.04, any and
all losses, Liabilities, claims, damages, deficiencies, obligations, fines,
payments, Taxes, Liens, costs and expenses, matured or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown,
whenever arising and whether or not resulting from Third Party Claims
(including, without limitation, the costs and expenses of any and all Actions;
all amounts paid in connection with any demands, assessments, judgments,
settlements and compromises relating thereto; interest and penalties recovered
by a third party with respect thereto; out-of-pocket expenses and reasonable
attorneys', accountants' and other experts' fees and expenses reasonably
incurred in investigating, preparing or defending against any such Actions or in
asserting, preserving or enforcing an Indemnitee's rights hereunder; and any
losses that may result from the granting of injunctive relief as a result of any
such Actions).
"Indemnifying Party" shall have the meaning ascribed thereto
in Section 4.04(a).
"Indemnitee" means any of the Rockwell Indemnitees or the
Automotive Indemnitees who or which may seek indemnification under this
Agreement.
"Indemnity Reduction Amounts" shall have the meaning ascribed
thereto in Section 4.04(a).
"Information" means all records, books, contracts,
instruments, computer data and other data and information (in each case, in
whatever form or medium, including, without limitation, electronic media).
"Information Statement" means the information statement with
respect to Automotive sent to the holders of Rockwell Common Stock in connection
with the Distribution.
"Insurance Proceeds" means monies (a) received by an insured
from an insurance carrier, (b) paid by an insurance carrier on behalf of an
insured or (c) received from any third party in the nature of insurance,
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contribution or indemnification in respect of any Liability.
"IRS" means the Internal Revenue Service.
"Liabilities" means any and all claims, debts, liabilities,
commitments and obligations of whatever nature, whether fixed, contingent or
absolute, matured or unmatured, liquidated or unliquidated, accrued or not
accrued, known or unknown, due or to become due, whenever or however arising
(including, without limitation, whether arising out of any contract or tort,
whether based on negligence, strict liability or otherwise) and whether or not
the same would be required by generally accepted accounting principles to be
reflected in financial statements or disclosed in the notes thereto, including,
without limitation, all costs and expenses relating thereto and those claims,
debts, liabilities, commitments and obligations arising under any law, rule,
regulation, Action, order or consent decree of any Governmental Entity or any
award of any arbitrator of any kind, and those arising under any Contract.
"Licensee" shall have the meaning ascribed thereto in Section
3.11(c).
"Licenses" means licenses, permits, authorizations, consents,
certificates, registrations, variances, franchises and other approvals from any
Governmental Entity, including, without limitation, those relating to
environmental matters.
"Licensor" shall have the meaning ascribed thereto in Section
3.11(c).
"Lien" means any lien, security interest, pledge, mortgage,
charge, restriction, claim, retention of title agreement or other encumbrance of
whatever nature.
"Meritor HVS" means Meritor Heavy Vehicle Systems, LLC, a
Delaware limited liability company and a wholly-owned Subsidiary of Automotive.
"No-action Letter" means a letter or letters from the staff of
the Commission indicating, among other things, that the Division of Corporation
Finance will not recommend enforcement action to the Commission if the
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Distribution is effected without registration of the Automotive Common Stock
under the Securities Act of 1933, as amended.
"NYSE" means the New York Stock Exchange, Inc.
"Occurrence Basis Policies" shall have the meaning ascribed
thereto in Section 3.08(a).
"Ordinary Course Intercompany Arrangements" shall have the
meaning ascribed thereto in Section 3.03(b)(ii).
"Person" means any individual, partnership, joint venture,
corporation, limited liability entity, trust, unincorporated organization or
other entity (including a Governmental Entity).
"Policies" means all insurance policies and insurance
contracts of any kind of the Pre-Distribution Group which include Automotive,
the Automotive Subsidiaries and/or the Automotive Business within the definition
of the named insured and which was or is in effect at any time at or prior to
the Time of Distribution, including, without limitation, primary, excess and
umbrella policies, commercial general liability policies, fiduciary liability,
product liability, automobile, aircraft, property and casualty, directors and
officers liability, workers' compensation and employee dishonesty insurance
policies, bonds and captive insurance company arrangements, together with all
rights, benefits and privileges thereunder. Notwithstanding the above, Policies
will not include insurance policies of joint ventures of the Automotive Business
with respect to which Rockwell is not a named insured or Rockwell's political
risk insurance policy with National Union covering the Automotive Business' Ege
Fren Sanayii ve Ticaret A.S. joint venture in Turkey (which political risk
insurance policy will be included in the Automotive Assets).
"Pre-Distribution Group" means (i) each of Rockwell,
Subsidiaries of Rockwell existing immediately prior to the Time of Distribution
(including members of the Automotive Group) and former Subsidiaries of Rockwell,
(ii) each of the predecessors of each of the foregoing (including, without
limitation, BNA) and (iii) each of the present and former Subsidiaries and other
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Affiliates of each of the foregoing, and their predecessors.
"Privileged Information" means, with respect to either Group,
Information regarding a member of such Group, or any of its operations,
employees, assets or Liabilities (whether in documents or stored in any other
form or known to its employees or agents) that is or may be protected from
disclosure pursuant to the attorney-client privilege, the work product doctrine
or other applicable privileges, that a member of the other Group may come into
possession of or obtain access to pursuant to this Agreement or otherwise.
"Recipient Party" shall have the meaning ascribed thereto in
Section 3.10.
"Record Date" means the close of business on the date
determined by the Rockwell Board as the record date for the Distribution.
"Representative" means, with respect to any Person, any of
such Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys and representatives.
"Rights" means the Rights to be issued pursuant to the Rights
Plan.
"Rights Plan" means the rights agreement entered into on or
prior to the Distribution Date between Automotive and First Chicago Trust
Company of New York, as rights agent, substantially in the form filed as an
exhibit to the Form 10.
"Rockwell" shall have the meaning ascribed thereto in the
preamble.
"Rockwell Assets" means, collectively, all Assets which
immediately prior to the Time of Distribution are owned by Rockwell or any of
its Subsidiaries (including, without limitation, members of the Automotive
Group), other than the Automotive Assets. Anything contained herein to the
contrary notwithstanding, Rockwell Retained Assets shall be included in Rockwell
Assets.
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"Rockwell Board" means the Board of Directors of Rockwell or a
duly authorized committee thereof.
"Rockwell Common Stock" means the Common Stock, par value
$1.00 per share, of Rockwell.
"Rockwell Group" means Rockwell and its Affiliates, whether
now or hereafter existing, other than members of the Automotive Group.
"Rockwell Indemnitees" means Rockwell, each Affiliate of
Rockwell, including the Rockwell Subsidiaries, each of their respective
Representatives and each of the heirs, executors, successors and assigns of any
of the foregoing.
"Rockwell Retained Assets" means the following:
(i) all (A) bank accounts of Rockwell and its
Subsidiaries and Affiliates (including members of the Automotive Group)
and cash contained therein, other than those listed on Schedule 3.4 and
(B) cash, cash on hand, cash in transit, cash equivalents, funds,
certificates of deposit, similar instruments and other short-term
investments held by Rockwell and its Subsidiaries and Affiliates (other
than members of the Automotive Group and joint ventures of the
Automotive Business set forth on Schedule 1.1(a)) at the Time of
Distribution (it being understood that cash equivalents do not include
intercompany cash management balances which will be eliminated as of
the Time of Distribution pursuant to Section 3.03(a));
(ii) all Policies and all rights therein and related
thereto, other than the benefits of Occurrence Basis Policies and
Claims Made Policies to the extent described in Section 3.08(a);
(iii) all rights in and use of the names, trademarks,
trade names and service marks "Rockwell" and "Rockwell International"
and all corporate symbols and logos related thereto and all names,
trademarks, trade names and service marks which include the words
"Rockwell" or "Rockwell International" or any derivative thereof (other
than as provided for in Section 3.09);
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(iv) all assets with respect to pension plans of
Rockwell and its Subsidiaries (including members of the Automotive
Group), other than as provided for in the Employee Matters Agreement;
(v) all assets of and related to the Rockwell VEBA;
(vi) all Shared Agreements (subject to the provisions
of Section 3.02(c));
(vii) all assets that are used by Rockwell and its
Subsidiaries and Affiliates in providing corporate, insurance and
administrative services to Subsidiaries, divisions or operating units
of the Rockwell Group not included in the Automotive Business (whether
or not the same or similar services are provided to the Automotive
Business);
(viii) all interests of Rockwell and its Subsidiaries
and Affiliates (including members of the Automotive Group) in
charitable trusts and assets thereof (it being understood that such
charitable trusts will remain obligated to fund an aggregate of
$250,000 of commitments of such charitable trusts relating to the
Automotive Business existing at the Time of Distribution, and that all
other such commitments will constitute Automotive Liabilities); and
(ix) all rights, causes of action and claims arising
out of any asset described in clauses (i) through (viii) above.
"Rockwell Science Center" means Rockwell Science Center, LLC,
a Delaware limited liability company.
"Rockwell Subsidiary" means any Subsidiary of Rockwell other
than Automotive or any Automotive Subsidiary.
"Rockwell VEBA" means the Trust for Employee Welfare Benefit
Programs of Rockwell International Corporation.
"Shared Agreements" means all credit facilities, guaranties,
foreign currency forward exchange
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contracts, comfort letters, letters of credit and similar instruments, bonds,
indemnities, assurances and Contracts under which Rockwell or any Rockwell
Subsidiary has any primary, secondary, contingent, joint, several or other
Liability arising out of or relating to the Automotive Business, as well as
other businesses of Rockwell or any Rockwell Subsidiary (other than the
Automotive Business), which by their terms will be outstanding or in effect as
of or at any time following the Time of Distribution, including, without
limitation, those set forth on Schedule 1.1(c).
"Subsidiary" means, with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, of
which such Person or any Subsidiaries of such Person controls or owns, directly
or indirectly, more than 50% of the stock or other equity interest, or more than
50% of the voting power entitled to vote on the election of members to the board
of directors or similar governing body; provided, however, that for purposes of
this Agreement neither Automotive nor any Automotive Subsidiary shall be deemed
to be a Rockwell Subsidiary (as defined herein).
"Tax" shall have the meaning ascribed thereto in the Tax
Allocation Agreement.
"Tax Allocation Agreement" means the Tax Allocation Agreement
between Rockwell and Automotive, substantially in the form attached hereto as
Annex B.
"Tax Ruling" means a private letter ruling issued by the IRS
in form and substance satisfactory to Rockwell (in its sole discretion)
indicating that the Distribution will qualify as a tax-free spin-off to the
shareowners of Rockwell for federal income tax purposes under Section
368(a)(1)(D) of the Code.
"Third Party Claim" shall have the meaning ascribed thereto in
Section 4.05(a).
"Time of Distribution" means the close of business on the
Distribution Date.
"Transaction Agreements" means, collectively, this Agreement
and each Ancillary Agreement.
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"Transition Agreement" means a transition services agreement
between Rockwell and Automotive which will be entered into on or prior to the
Distribution Date and will provide for various service and other relationships
between Rockwell and Automotive following the Distribution Date.
ARTICLE II
THE DISTRIBUTION
Section 2.01 The Distribution.
(a) Subject to Section 2.04, on or prior to the Distribution
Date, Rockwell will deliver to the Distribution Agent, for the benefit of
holders of record of Rockwell Common Stock as of the Record Date, a certificate
or certificates, endorsed by Rockwell in blank, representing, in the aggregate
(and rounded down to the nearest whole share), a number of shares of Automotive
Common Stock equal to the number of shares of Rockwell Common Stock issued and
outstanding as of the Record Date (excluding treasury shares held by Rockwell)
divided by three, and Rockwell will instruct the Distribution Agent to make
book-entry credits on the Distribution Date or as soon thereafter as practicable
for each holder of record of Rockwell Common Stock as of the Record Date or the
designated transferee or transferees of such holder for, or to distribute on the
Distribution Date or as soon thereafter as practicable to each such holder of
record or designated transferee or transferees a certificate or certificates
representing, one share of Automotive Common Stock for every three shares of
Rockwell Common Stock so held. The Distribution will be effective as of the Time
of Distribution.
(b) Rockwell and Automotive will each provide to the
Distribution Agent all information (including information necessary to make
appropriate book-entry credits) and share certificates, in each case, as may be
required in order to complete the Distribution on the basis of one share of
Automotive Common Stock for every three shares of Rockwell Common Stock issued
and outstanding as of the Record Date (excluding treasury shares held by
Rockwell).
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Section 2.02 Fractional Shares. Anything contained herein to
the contrary notwithstanding, no fractional shares of Automotive Common Stock
will be distributed to holders of Rockwell Common Stock in the Distribution.
Holders that are otherwise entitled to receive less than one whole share of
Automotive Common Stock in the Distribution will receive cash in lieu of such
fractional share as contemplated hereby. As soon as practicable after the
Distribution Date, Rockwell will direct the Distribution Agent to determine in
accordance with its customary practice the number of fractional shares of
Automotive Common Stock otherwise allocable to holders of record or beneficial
owners of Rockwell Common Stock as of the Record Date, to aggregate all such
fractional shares and sell as soon as practicable the whole shares obtained by
aggregating such fractional shares either in open market transactions or
otherwise, in each case at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial
owner, in lieu of any fractional share, such holder's or owner's ratable share
of the proceeds of such sale, after making appropriate deductions of the amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale. Rockwell will direct the Distribution Agent to seek to aggregate
the shares of Rockwell Common Stock that may be held by any such beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.
Section 2.03 Cooperation Prior to the Distribution. Prior to
the Distribution:
(a) Rockwell and Automotive will prepare, and Rockwell will
mail, promptly after effectiveness of the Form 10, to the holders of Rockwell
Common Stock, the Information Statement, which will set forth appropriate
disclosure concerning Automotive, the Distribution and such other matters as
Rockwell and Automotive may determine. Rockwell and Automotive will prepare, and
Automotive will file with the Commission, the Form 10, which will include or
incorporate by reference the Information Statement. Automotive will use its
reasonable best efforts to cause the Form 10 to become effective under the
Exchange Act as soon as practicable following the filing thereof.
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(b) Rockwell and Automotive will cooperate in preparing,
filing with the Commission and causing to become effective any registration
statements or amendments thereof which are required to reflect the establishment
of, or amendments to, any employee benefit and other plans contemplated by the
Employee Matters Agreement.
(c) Rockwell and Automotive will take all such action as may
be necessary or appropriate under the securities or "blue sky" laws of the
states or other political subdivisions of the United States and the securities
laws of any applicable foreign countries or other political subdivisions thereof
in connection with the transactions contemplated by this Agreement.
(d) Rockwell and Automotive will cause to be prepared, and
Automotive will file and use its reasonable best efforts to have approved, an
application for the listing on the NYSE of the Automotive Common Stock to be
distributed in the Distribution.
Section 2.04 Rockwell Board Action; Conditions to the
Distribution. The Rockwell Board will in its discretion establish the Record
Date and the Distribution Date and all appropriate procedures in connection with
the Distribution, but in no event will the Distribution occur prior to such time
as each of the following conditions shall have been satisfied or shall have been
waived by the Rockwell Board in accordance with Section 2.05:
(a) Rockwell shall have received (i) the Tax Ruling or (ii) an
opinion of Chadbourne & Parke LLP or other nationally recognized tax counsel to
the effect that the Distribution will qualify as a tax-free reorganization
within the meaning of Section 368(a)(1)(D) of the Code; and the Tax Ruling or
such tax opinion shall be in full force and effect and shall not have been
modified or amended in any respect adversely affecting the tax consequences set
forth therein;
(b) the Rockwell Board shall have given final approval of the
Distribution;
(c) all material Consents which are required to effect the
Distribution shall have been obtained and shall be in full force and effect;
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(d) the Form 10 shall have been declared effective by the
Commission;
(e) the Certificate of Incorporation, the By-Laws and the
Rights Plan shall each have been adopted and be in effect;
(f) the Automotive Common Stock shall have been approved for
listing upon notice of issuance on the NYSE;
(g) the transactions contemplated by Section 3.01 and Section
3.02 shall have been consummated in all material respects;
(h) Rockwell and Automotive shall have entered into each of
the Ancillary Agreements and each such agreement shall be in full force and
effect;
(i) the No-action Letter shall have been issued and shall be
in full force and effect;
(j) no order, injunction or decree issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the Distribution shall be in effect; and
(k) no suit, action or proceeding by or before any court of
competent jurisdiction or other Governmental Entity shall have been commenced
and be pending to restrain or challenge the Distribution, and no inquiry shall
have been received that in the reasonable judgment of the Rockwell Board may
lead to such a suit, action or proceeding;
provided that the satisfaction of such conditions will not create any obligation
on the part of Rockwell to effect or seek to effect the Distribution or in any
way limit Rockwell's right to terminate this Agreement set forth in Section 6.13
or alter the consequences of any such termination from those specified in such
Section.
Section 2.05 Waiver of Conditions. Any or all of the
conditions set forth in Section 2.04 may be waived, in whole or in part, in the
sole discretion of the Rockwell Board.
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Section 2.06 Disclosure. If at any time after the date hereof
either of the parties shall become aware of any circumstances that will or may
prevent any or all of the conditions contained in Section 2.04 from being
satisfied it will promptly give to the other party written notice of those
circumstances.
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
Section 3.01 Intercorporate Reorganization.
(a) Prior to the Distribution Date, Rockwell and Automotive
will take all actions necessary to increase the outstanding shares of Automotive
Common Stock so that, immediately prior to the Distribution, Rockwell will hold
a number of shares of Automotive Common Stock (rounded down to the nearest whole
share) equal to the number of shares of Rockwell Common Stock issued and
outstanding as of the Record Date (excluding treasury shares held by Rockwell)
divided by three.
(b) Subject to Section 3.10, prior to the Time of
Distribution, Rockwell and Automotive will take, or cause to be taken, all
actions necessary, including, without limitation, the actions specified in
Section 3.01(c), to:
(i) have Rockwell and each Rockwell Subsidiary assign
and transfer, or cause to be assigned and transferred, to Automotive or
an Automotive Subsidiary, as appropriate, any and all right, title and
interest of Rockwell and each of the Rockwell Subsidiaries in the
Automotive Subsidiaries;
(ii) have Rockwell and each Rockwell Subsidiary
assign and transfer, or cause to be assigned and transferred, to an
Automotive Subsidiary any and all right, title and interest of Rockwell
and each of the Rockwell Subsidiaries in the Automotive Assets;
(iii) have Automotive and each Automotive Subsidiary
assign and transfer, or cause to be
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assigned and transferred, to a Rockwell Subsidiary any and all right,
title and interest of Automotive and each of the Automotive
Subsidiaries in all Rockwell Assets (including, without limitation, all
Rockwell Retained Assets);
(iv) have Rockwell and each Rockwell Subsidiary
assign and transfer, or cause to be assigned and transferred, to
Automotive or an Automotive Subsidiary, as appropriate, and have
Automotive or an Automotive Subsidiary, as appropriate, unconditionally
assume and undertake to pay, perform and discharge, in a timely manner
and in accordance with the terms thereof, all of the Automotive
Liabilities; and
(v) have Automotive and each Automotive Subsidiary
assign and transfer, or cause to be assigned and transferred, to
Rockwell or a Rockwell Subsidiary, as appropriate, and have Rockwell or
a Rockwell Subsidiary, as appropriate, unconditionally assume and
undertake to pay, perform and discharge, in a timely manner and in
accordance with the terms thereof, all of the Assumed Rockwell
Liabilities.
In the event that at any time or from time to time (whether
prior to or after the Time of Distribution) either party (or any member of such
party's respective Group) shall receive or otherwise possess any Asset that is
allocated to any other Person pursuant to this Agreement or any Ancillary
Agreement, such party will promptly transfer, or cause to be transferred, such
Asset to the Person so entitled thereto. Prior to any such transfer, the Person
receiving or possessing such Asset will hold such Asset in trust for the benefit
of the Person entitled thereto (at the expense of the Person entitled thereto).
In the event that at any time or from time to time (whether prior to or after
the Time of Distribution) either Rockwell or Automotive determines that the
other party (or any member of such other party's respective Group) shall not
have unconditionally assumed any Liabilities that are allocated to such other
Party (or a member of such other party's respective Group) pursuant to this
Agreement or any Ancillary Agreement, such other party will promptly execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and will take, or cause to be taken, all such actions as the
requesting party may reasonably
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request to unconditionally assume, or cause to be unconditionally assumed, such
Liabilities.
(c) Subject to Section 3.10, Rockwell and Automotive will
take, or cause to be taken, the actions described on Schedule 3.1(c) in
connection with United States and international operations of the Automotive
Business.
(d) In connection with the transfers of Subsidiaries and
Assets and the assumptions of Liabilities contemplated by subsections (b) and
(c) of this Section 3.01, Rockwell and Automotive will execute or cause to be
executed by the appropriate entities the Conveyance and Assumption Instruments.
The transfer of capital stock contemplated by such subsections will be effected
by means of delivery of stock certificates duly endorsed or accompanied by duly
executed stock powers and notation on the stock record books of the corporation
or other legal entities involved and, to the extent required by applicable law,
by notation on appropriate registries.
(e) Each of Rockwell (on behalf of itself and each member of
the Rockwell Group) and Automotive (on behalf of itself and each member of the
Automotive Group) understands and agrees that, except as expressly set forth in
any Transaction Agreement, no party to any Transaction Agreement or any other
agreement or document contemplated by any Transaction Agreement either has or
is, in such agreement or otherwise, representing or warranting in any way as to
the Assets, Subsidiaries, businesses or Liabilities retained, transferred or
assumed as contemplated hereby or thereby, as to any consents or approvals
required in connection with the transactions contemplated by the Transaction
Agreements, as to the value or freedom from any Lien of, or any other matter
concerning, any Assets or Subsidiaries of such party, or as to the absence of
any defenses or rights of setoff or freedom from counterclaim with respect to
any claim or other Assets or Subsidiaries of any party, or as to the legal
sufficiency of any assignment, document or instrument delivered hereunder or
thereunder to convey title to any Asset or Subsidiary or thing of value upon the
execution, delivery and filing hereof or thereof. Except as may expressly be set
forth in any Transaction Agreement, all Assets and Subsidiaries being
transferred or retained as contemplated by any Transaction Agreement or any
other agreement or document contemplated by any
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Transaction Agreement are being transferred, or are being retained, on an "as
is", "where is" basis (and, in the case of the transfer of any real property, by
means of a quitclaim or similar form deed or conveyance) and the respective
transferees shall bear the economic and legal risks that any conveyance shall
prove to be insufficient or that the title to any Asset or Subsidiary shall be
other than good and marketable and free and clear of any Lien.
(f) It is the intention of the parties that payments made by
the parties to each other after the Time of Distribution pursuant to the
Transaction Agreements are to be treated as relating back to the transactions
occurring prior to the Time of Distribution pursuant to this Section 3.01 as an
adjustment to the transfers of Assets, Subsidiaries and Liabilities contemplated
by this Section 3.01, and Rockwell and Automotive will, and will cause their
Subsidiaries to, take positions consistent with such intention with any Tax
authority, unless with respect to any payment any party receives an opinion of
counsel reasonably acceptable to the other party to the effect that there is no
substantial authority for such a position.
Section 3.02 Rockwell Group Obligations Relating to the
Automotive Business.
(a) Automotive will, at its expense, take or cause to be taken
all actions and enter into (or cause its Subsidiaries to enter into) such
agreements and arrangements as shall be necessary to effect the release of and
substitution for each member of the Rockwell Group, effective as of the Time of
Distribution, from all primary, secondary, contingent, joint, several and other
Liabilities in respect of Automotive Financial Instruments (it being understood
that all Liabilities in respect of Automotive Financial Instruments are
Automotive Liabilities).
(b) Automotive will, at its expense, use its reasonable best
efforts to take or cause to be taken all actions and to enter into (or cause its
Subsidiaries to enter into) such agreements and arrangements as shall be
necessary to effect the release of and substitution for each member of the
Rockwell Group, effective as of the Time of Distribution, from all primary,
contingent, secondary, joint, several and other Liabilities in
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respect of bonds, indemnities, assurances and Contracts (other than Automotive
Financial Instruments, which are covered by paragraph (a) above, and Shared
Agreements, which are covered by paragraph (c) below) under which any member of
the Rockwell Group has any primary, contingent, secondary, joint, several or
other Liability arising out of or relating to the Automotive Business which by
their terms will be outstanding or in effect as of or at any time following the
Time of Distribution; provided, however, that Automotive shall not be obligated
to pay any consideration therefor to any third party (it being understood that
all Liabilities in respect of such bonds, indemnities, assurances and Contracts
are Automotive Liabilities).
(c) Automotive will, at its expense, use its reasonable best
efforts to take or cause to be taken all actions and to enter into (or cause its
Subsidiaries to enter into) such agreements and arrangements as shall be
necessary to effect the release of and substitution for each member of the
Rockwell Group, effective as of the Time of Distribution, from all primary,
secondary, contingent, joint, several or other Liabilities arising out of or
relating to the Automotive Business under Shared Agreements; provided, however,
that Automotive shall not be obligated to pay any consideration therefor to any
third party (it being understood that all Liabilities in respect of Shared
Agreements arising out of or relating to the Automotive Business are Automotive
Liabilities). No member of the Automotive Group will incur any Liabilities under
any Shared Agreement or extend or otherwise amend any Shared Agreement after the
Time of Distribution.
(d) Automotive's obligations under this Section 3.02 will
continue to be applicable to all Automotive Financial Instruments, bonds,
indemnities, assurances, Contracts and Shared Agreements identified at any time
by Rockwell, whether before, at or after the Time of Distribution.
Section 3.03 Intercompany Accounts and Arrangements.
(a) Elimination of Intercompany Accounts.
(i) Except as set forth in Section 3.03(a)(ii),
Automotive, on behalf of itself and
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each other member of the Automotive Group, on the one hand, and
Rockwell, on behalf of itself and each other member of the Rockwell
Group, on the other hand, hereby settle and eliminate, by cancellation
or transfer to a member of the other Group (whether to cancel or
transfer and the manner thereof will be determined by Rockwell),
effective as of the Time of Distribution, all intercompany receivables,
payables and other balances (including, without limitation,
intercompany cash management balances) between Automotive and the
Automotive Subsidiaries, on the one hand, and Rockwell and the Rockwell
Subsidiaries, on the other hand.
(ii) The provisions of Section 3.03(a)(i) will not
apply to any intercompany receivables, payables and other balances
incurred in connection with or in contemplation of the transactions
contemplated by Sections 3.01(b) and 3.01(c) (including, without
limitation, the actions described on Schedule 3.1(c)).
(b) Intercompany Agreements.
(i) Except as set forth in Section 3.03(b)(ii), in
furtherance of the releases and other provisions of Section 4.01,
Automotive, on behalf of itself and each other member of the Automotive
Group, on the one hand, and Rockwell, on behalf of itself and each
other member of the Rockwell Group, on the other hand, hereby terminate
any and all agreements, arrangements, commitments or understandings in
existence as of the Time of Distribution, whether or not in writing,
between or among Automotive and/or any Automotive Subsidiary, on the
one hand, and Rockwell and/or any Rockwell Subsidiary, on the other
hand, effective as of the Time of Distribution. No such terminated
agreement, arrangement, commitment or understanding (including any
provision thereof which purports to survive termination) shall be of
any further force or effect after the Time of Distribution.
(ii) The provisions of Section 3.03(b)(i) will not
apply to any of the following agreements, arrangements, commitments or
understandings (or to any of the provisions thereof): (A) the
Transaction Agreements (and each other agreement, instrument or
26
<PAGE> 31
document expressly contemplated by any Transaction Agreement to be
entered into by any of the parties hereto or any of the members of
their respective Groups); (B) any agreement, arrangement, commitment or
understanding relating to any matter described in Section 3.03(a)(ii);
(C) any agreements, arrangements, commitments or understandings listed
or described on Schedule 3.3(b)(ii); (D) any agreements, arrangements,
commitments or understandings to which any Person other than the
parties hereto and their respective Affiliates is a party; (E) any
other agreements, arrangements, commitments or understandings that any
of the Transaction Agreements expressly contemplates will survive the
Time of Distribution; and (F) any agreements, arrangements, commitments
or understandings between Automotive or any Automotive Subsidiary, on
the one hand, and Rockwell or any Rockwell Subsidiary, on the other
hand, for the purchase or sale of goods or services of a type which the
provider thereof provides to unaffiliated third parties in the ordinary
course of business ("Ordinary Course Intercompany Arrangements");
provided, however, that in the event any such Ordinary Course
Intercompany Arrangements do not, as of the Time of Distribution,
contain commercially reasonable arm's-length terms of a type to which
unaffiliated parties would reasonably agree or do not include terms
which would normally appear in such arrangements between unaffiliated
parties, Rockwell and Automotive will cause such Ordinary Course
Intercompany Arrangements to be amended so that they will contain terms
which are, as of the Time of Distribution, commercially reasonable
arm's-length terms of a type to which unaffiliated parties would
reasonably agree.
Section 3.04 Cash Management.
(a) Bank Accounts. Notwithstanding anything to the contrary
contained in the Transaction Agreements, all bank accounts set forth on Schedule
3.4 will constitute Automotive Assets and all other bank accounts of Rockwell
and its Subsidiaries (including members of the Automotive Group) will constitute
Rockwell Assets.
(b) Cash Balances. The parties (i) estimate that cash in bank
accounts set forth on Schedule 3.4
27
<PAGE> 32
(other than those of Automotive Subsidiaries and Affiliates of Automotive
Subsidiaries which are joint ventures) at the Time of Distribution and cash in
transit, cash on hand, cash equivalents, funds, certificates of deposit, similar
instruments and short-term investments held by members of the Automotive Group
(other than members which are joint ventures) at the Time of Distribution will
collectively total approximately $35,000,000 (actual amounts will not be subject
to post-Distribution adjustment) and (ii) contemplate that in order to satisfy
certain obligations of the Automotive Group in connection with transactions
preceding the Distribution, an additional amount (the "Canadian Cash Amount")
equal to an aggregate of approximately $60,000,000 (based on the New York
foreign exchange selling rate applicable to Canadian dollars as published in The
Wall Street Journal, Midwest Edition on the third business day preceding the
Distribution Date) will be held on deposit in one or more bank accounts of
Automotive Canadian Subsidiaries or Subsidiaries of Automotive Canadian
Subsidiaries at the Time of Distribution, contained in cash in transit or cash
on hand of one or more Automotive Canadian Subsidiaries or Subsidiaries of
Automotive Canadian Subsidiaries at the Time of Distribution or invested in
short-term investments of one or more Automotive Canadian Subsidiaries or
Subsidiaries of Automotive Canadian Subsidiaries at the Time of Distribution.
Within 30 days after the Distribution Date, the parties will agree on the actual
Canadian Cash Amount so held on deposit, invested in short-term investments or
contained in cash in transit or cash on hand at the Time of Distribution.
(c) Rockwell Customer Payments. Automotive will, and will
cause its Subsidiaries and Affiliates to, forward promptly to Rockwell (for the
account of Rockwell or its applicable Subsidiary) any customer payments in
respect of accounts receivable owed to any member of the Rockwell Group received
by Automotive or any of its Subsidiaries or Affiliates after the Time of
Distribution, whether received in lock boxes, via wire transfer or otherwise.
Such amounts will be forwarded by wire transfer in the case of customer payments
received within thirty days after the Distribution Date and by check in the case
of customer payments received thereafter.
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<PAGE> 33
(d) Automotive Customer Payments. Rockwell will, and will
cause its Subsidiaries and Affiliates to, forward promptly to Automotive (for
the account of Automotive or its applicable Subsidiary) any customer payments in
respect of accounts receivable owed to any member of the Automotive Group
received by Rockwell or any of its Subsidiaries or Affiliates after the Time of
Distribution, whether received in lock boxes, via wire transfer or otherwise.
Such amounts will be forwarded by wire transfer in the case of customer payments
received within thirty days after the Distribution Date and by check in the case
of customer payments received thereafter.
(e) Funding of Outstanding Checks.
(i) The following subsections of this Section 3.04(e)
are intended to implement the parties' agreement that Automotive or an
Automotive Subsidiary will be liable for payment of checks relating to
the Automotive Business that are outstanding as of the Time of
Distribution and Rockwell or a Rockwell Subsidiary will be liable for
payment of checks relating to businesses of Rockwell and the Rockwell
Subsidiaries other than the Automotive Business that are outstanding as
of the Time of Distribution.
(ii) Automotive or an Automotive Subsidiary will fund
all amounts in respect of checks that are outstanding as of the Time of
Distribution and presented for payment after the Time of Distribution
in disbursement or payroll accounts that are included in Automotive
Assets. Within three business days after Automotive's request, Rockwell
will reimburse Automotive (by wire transfer), for the account of
Automotive or the applicable Automotive Subsidiary, for all such
amounts funded by Automotive or an Automotive Subsidiary in respect of
checks relating to businesses of Rockwell and the Rockwell Subsidiaries
other than the Automotive Business that are outstanding as of the Time
of Distribution and presented for payment after the Time of
Distribution in disbursement or payroll accounts that are included in
the Automotive Assets. No checks relating to any businesses of the
Rockwell Group (as constituted after the Time of Distribution) will be
issued on any accounts that
29
<PAGE> 34
constitute Automotive Assets after the Time of Distribution.
(iii) Rockwell or a Rockwell Subsidiary will fund all
amounts in respect of checks that are outstanding as of the Time of
Distribution and presented for payment after the Time of Distribution
in its disbursement or payroll accounts that are included in the
Rockwell Assets. Within three business days after Rockwell's request,
Automotive will reimburse Rockwell (by wire transfer to Rockwell's bank
account at Mellon Bank, N.A., Pittsburgh, Pennsylvania, account number
102-3474), for the account of Rockwell or the applicable Rockwell
Subsidiary, for all such amounts funded by Rockwell or a Rockwell
Subsidiary in respect of checks relating to the Automotive Business
that are outstanding as of the Time of Distribution and presented for
payment after the Time of Distribution in its disbursement or payroll
accounts that are included in the Rockwell Assets. No checks relating
to the Automotive Business will be issued on any accounts of Rockwell
or any Rockwell Subsidiary that constitute Rockwell Assets after the
Time of Distribution (other than checks relating to payroll payments to
the extent expressly permitted by the Transition Agreement).
Section 3.05 The Automotive Board. Automotive and Rockwell
will take all actions which may be required to elect or otherwise appoint as
directors of Automotive, prior to the Time of Distribution, the persons named in
the Form 10 to constitute the board of directors of Automotive at the Time of
Distribution.
Section 3.06 Resignations; Transfer of Stock Held as Nominee.
(a) Rockwell will cause all of its employees and directors and
all of the employees and directors of each other member of the Rockwell Group to
resign, not later than the Time of Distribution, from all boards of directors or
similar governing bodies of Automotive or any other member of the Automotive
Group on which they serve, and from all positions as officers of Automotive or
any other member of the Automotive Group in which they serve, except as
otherwise specified on Schedule 3.6. Automotive will cause all of its employees
and directors
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<PAGE> 35
and all of the employees and directors of each other member of the Automotive
Group to resign, not later than the Time of Distribution, from all boards of
directors or similar governing bodies of Rockwell or any other member of the
Rockwell Group on which they serve, and from all positions as officers of
Rockwell or any other member of the Rockwell Group in which they serve, except
as otherwise specified on Schedule 3.6.
(b) Rockwell will cause each of its employees, and each of the
employees of the other members of the Rockwell Group, who holds stock, or
similar evidence of ownership, of any Automotive Group entity as nominee for
such entity pursuant to the laws of the country in which such entity is located
to transfer such stock, or similar evidence of ownership, to the Person so
designated by Automotive to be such nominee as of and after the Time of
Distribution. Automotive will cause each of its employees, and each of the
employees of the other members of the Automotive Group, who holds stock, or
similar evidence of ownership, of any Rockwell Group entity as nominee for such
entity pursuant to the laws of the country in which such entity is located to
transfer such stock, or similar evidence of ownership, to the Person so
designated by Rockwell to be such nominee as of and after the Time of
Distribution.
(c) Rockwell will cause each of its employees and each of the
employees of the other members of the Rockwell Group to revoke or withdraw their
express written authority, if any, to act on behalf of any Automotive Group
entity as an agent or representative therefor after the Time of Distribution.
Automotive will cause each of its employees and each of the employees of the
other members of the Automotive Group to revoke or withdraw their express
written authority, if any, to act on behalf of any Rockwell Group entity as an
agent or representative therefor after the Time of Distribution.
Section 3.07 Automotive Certificate of Incorporation and
By-Laws; Rights Plan. Prior to the Time of Distribution, (a) the Automotive
Board will (i) approve the Certificate of Incorporation and will cause the same
to be filed with the Secretary of State of the State of Delaware and (ii) adopt
the By-Laws, and (b) Rockwell, as sole stockholder of Automotive, will approve
the Certificate of Incorporation. Prior to the Time of Distribution, the
Automotive Board will adopt the Rights
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<PAGE> 36
Plan and declare a dividend of the Rights so that each share of Automotive
Common Stock issued and outstanding as of the Time of Distribution will
initially have one Right attached thereto.
Section 3.08 Insurance.
(a) Coverage. Coverage of Automotive and the Automotive
Subsidiaries under all Policies shall cease as of the Time of Distribution. From
and after the Time of Distribution, Automotive and the Automotive Subsidiaries
will be responsible for obtaining and maintaining all insurance coverages in
their own right. All Policies will constitute Rockwell Retained Assets and will
be retained by Rockwell and the Rockwell Subsidiaries (with Rockwell and the
Rockwell Subsidiaries being the only named insureds thereunder), together with
all rights, benefits and privileges thereunder (including, without limitation,
the right to receive any and all return premiums with respect thereto).
Automotive and the Automotive Subsidiaries will have no rights with respect to
any Policies, except that (i) Automotive will have the right to assert claims
(and Rockwell will use reasonable best efforts to assist Automotive in asserting
claims) for any loss, liability or damage with respect to Automotive Assets
under Policies which are third-party "occurrence basis" policies ("Occurrence
Basis Policies") arising out of insured incidents occurring from the date
coverage thereunder first commenced until the Time of Distribution to the extent
that the terms and conditions of any such Occurrence Basis Policies and
agreements relating thereto so allow and (ii) Automotive will have the right to
continue to prosecute claims properly asserted with the insurance carrier prior
to the Time of Distribution (and Rockwell will use reasonable best efforts to
assist Automotive in connection therewith) under Policies which are third-party
Policies written on a "claims made" basis ("Claims Made Policies") arising out
of insured incidents occurring from the date coverage thereunder first commenced
until the Time of Distribution to the extent that the terms and conditions of
any such Claims Made Policies and agreements relating thereto so allow, provided
that, in the case of both clauses (i) and (ii) above, (A) all of Rockwell's and
each Rockwell Subsidiary's reasonable costs and expenses incurred in connection
with the foregoing are promptly paid by Automotive, (B) Rockwell and the
Rockwell Subsidiaries may, at any time, without liability or obligation to
32
<PAGE> 37
Automotive or any Automotive Subsidiary (other than as set forth in Section
3.08(b)), amend, commute, terminate, buy-out, extinguish liability under or
otherwise modify any Occurrence Basis Policies or Claims Made Policies (and such
claims shall be subject to any such amendments, commutations, terminations,
buy-outs, extinguishments and modifications), (C) such claims will be subject to
(and recovery thereon will be reduced by the amount of) any applicable
deductibles, retentions, self-insurance provisions or any payment or
reimbursement obligations of Rockwell, any Rockwell Subsidiary or any Affiliate
of Rockwell or any Rockwell Subsidiary in respect thereof and (D) such claims
will be subject to exhaustion of aggregate limits. Rockwell's obligation to use
reasonable best efforts to assist Automotive in asserting claims under
Occurrence Basis Policies will include using reasonable best efforts in
assisting Automotive to establish its right to coverage under Occurrence Basis
Policies (so long as all of Rockwell's costs and expenses in connection
therewith are promptly paid by Automotive). None of Rockwell or the Rockwell
Subsidiaries will bear any Liability for the failure of an insurance carrier to
pay any claim under any Occurrence Basis Policy or Claims Made Policy. It is
understood that any Claims Made Policies will not provide any coverage to
Automotive and the Automotive Subsidiaries for incidents occurring prior to the
Time of Distribution but which are asserted with the insurance carrier after the
Time of Distribution, except and to the extent that coverage is provided under
discovery coverage purchased by Automotive (at Automotive's expense) with
respect to Rockwell's excess general liability Claims Made Policies.
(b) Rockwell Actions. In the event that Rockwell or any
Rockwell Subsidiary proposes to amend, commute, terminate, buy-out, extinguish
liability under or otherwise modify any Occurrence Basis Policies or Claims Made
Policies under which Automotive has rights to assert claims pursuant to Section
3.08(a) in a manner that would adversely affect any such rights of Automotive,
(i) Rockwell will give Automotive prior notice thereof and consult with
Automotive with respect to such action (it being understood that the decision to
take any such action will be in the sole discretion of Rockwell) and (ii)
Rockwell will pay to Automotive its equitable share (based on the amount of
premiums paid by or allocated to the Automotive Business in respect of the
applicable Policy) of any net proceeds actually received
33
<PAGE> 38
by Rockwell from the insurance carrier of the applicable Policy as a result of
such action by Rockwell (after deducting Rockwell's reasonable costs and
expenses incurred in connection with such action).
(c) Administration. From and after the Time of Distribution:
(i) Rockwell will be responsible for the Claims
Administration with respect to claims of Rockwell and the Rockwell
Subsidiaries under Occurrence Basis Policies and Claims Made Policies;
and
(ii) Automotive or an Automotive Subsidiary, as
appropriate, will be responsible for the Claims Administration with
respect to the claims of Automotive and the Automotive Subsidiaries
under Occurrence Basis Policies and Claims Made Policies.
(d) Insurance Premiums. Rockwell will pay all premiums
(retrospectively-rated or otherwise) as required under the terms and conditions
of the respective Policies in respect of periods prior to the Time of
Distribution, whereupon Automotive will upon receipt of evidence thereof,
forthwith reimburse Rockwell for that portion of such premiums paid by Rockwell
as are attributable to the Automotive Business.
(e) Agreement for Waiver of Conflict and Shared Defense. In
the event that an Occurrence Basis Policy or Claims Made Policy provides
coverage for both Rockwell or a Rockwell Subsidiary, on the one hand, and
Automotive or an Automotive Subsidiary, on the other hand, relating to the same
occurrence, Rockwell and Automotive agree to defend jointly and to waive any
conflict of interest necessary to the conduct of that joint defense. Nothing in
this Section 3.08(e) will be construed to limit or otherwise alter in any way
the indemnity obligations of the parties to this Agreement, including those
created by this Agreement, by operation of law or otherwise.
(f) Directors' and Officers' Insurance. Rockwell will use its
reasonable best efforts to cause the persons currently serving as directors
and/or officers of Rockwell or any Subsidiary of Rockwell who will become
effective as of the Time of Distribution
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<PAGE> 39
directors and/or officers of Automotive or any Automotive Subsidiary to be
covered for a period of six years from the Time of Distribution with respect to
claims arising from facts or events which occurred prior to the Time of
Distribution by the directors' and officers' liability insurance policies
maintained by Rockwell during such six-year period following the Time of
Distribution for all persons who served as directors and/or officers of Rockwell
or any Rockwell Subsidiary prior to the Time of Distribution with respect to
claims arising from facts or events which occurred prior to the Time of
Distribution.
Section 3.09 Use of Names, Trademarks, etc.
(a) From and after the Time of Distribution, Rockwell will
have all rights in and use of the names "Rockwell" and "Rockwell International"
and all corporate symbols and logos related thereto and all derivatives thereof.
Prior to or promptly after the Time of Distribution (but in no event later than
90 days after the Distribution Date in the case of United States Persons and 180
days after the Distribution Date in the case of non-United States Persons),
Automotive will change the name of any Subsidiary or other Person under its
control to eliminate therefrom the names "Rockwell" and "Rockwell International"
and all derivatives thereof.
(b) From and after the Time of Distribution, except as
permitted in this Section 3.09(b), the Automotive Group will not use or have any
rights to the names "Rockwell" or "Rockwell International" or any derivatives
thereof or any other trademark, trade name, service mark or logo of the Rockwell
Group constituting Rockwell Assets, including, without limitation, the
trademarks, trade names and service marks "Rockwell" and "Rockwell
International", or any corporate symbol or logo related thereto or to any
thereof or any name or mark which includes the words "Rockwell" or "Rockwell
International" or any derivative thereof or name or mark confusingly similar
thereto, or any special script, type font, form, style, logo, design, device,
trade dress or symbol used or possessed by the Rockwell Group before or after
the Time of Distribution which contains the trademark, trade name or service
mark "Rockwell" or "Rockwell International" or any derivative thereof or any
name or mark confusingly similar thereto and the Automotive Group will not hold
itself out as having any affiliation with the Rockwell Group. However, Rockwell,
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on behalf of Rockwell Science Center, hereby grants to Meritor HVS a
non-exclusive, non-transferable (other than by way of sublicenses to members of
the Automotive Group and to joint ventures listed on Schedule 1.1(a)) license to
utilize without obligation to pay royalties to Rockwell or Rockwell Science
Center the trademarks or trade names "Rockwell" or "Rockwell International" or
any corporate symbol or logo related thereto in connection with stationery,
supplies, labels, catalogs, vehicles, signs and products of the Automotive
Business only as set forth in paragraphs (i) through (vi) of this Section
3.09(b), subject to the terms and conditions of this Section 3.09(b) and Section
3.09(c), in each case in the same manner and to the same extent as such
trademarks, trade names, corporate symbols or logos were used by the Automotive
Business at any time within the five year period preceding the Distribution:
(i) All documents constituting Automotive Assets as
of the Time of Distribution within the following categories may be used
for the duration of the periods following the Distribution Date
indicated below or until the supply is exhausted, whichever is the
first to occur:
<TABLE>
<CAPTION>
Maximum Period
of Permitted Use
Following the
Category of Documents Distribution Date
--------------------- -----------------
<S> <C>
A. Stationery 6 months
B. Invoices, purchase orders, debit
and credit memos and other similar
documents of a transactional nature 6 months
C. Business cards 6 months
D. Other outside forms such as packing
lists, labels, packing materials
and cartons, etc. 12 months
E. Forms for internal use only 12 months
F. Product literature 12 months;
</TABLE>
provided, however, that Automotive will use its reasonable best efforts
to cause each document
36
<PAGE> 41
within any of the above categories A, B or F used for any purpose
within the stated period to clearly and prominently display a
statement, the form of which is approved by Rockwell, to the effect
that the Automotive Group was formerly affiliated with Rockwell (it
being understood that such reasonable best efforts shall not include
reprinting or relabeling existing stocks of advertising or brochures).
(ii) All documents of the Automotive Business of the
type described in paragraph (i) above and displays and signs of the
Automotive Business of the type described in paragraph (iv) below may,
for a period of 10 years after the Distribution Date, contain the
statement "A Heritage of Rockwell Technology" in conjunction with the
name of Automotive or any Automotive Subsidiary so long as such
statement is of a type no more prominent than such name of Automotive
or the Automotive Subsidiary or other statement, the form of which is
approved by Rockwell, to the effect that the Automotive Group was
formerly affiliated with Rockwell.
(iii) All vehicles constituting Automotive Assets as
of the Time of Distribution may continue to be used without re-marking
(except as to legally required permit numbers, license numbers, etc.)
for a period not to exceed twelve months following the Distribution
Date or the date of disposition of the vehicle, whichever is the first
to occur. Automotive will cause all markings on such vehicles to be
removed or permanently obscured prior to disposition of such vehicles.
(iv) Within six months following the Distribution
Date, Automotive will cause to be removed from display at all
facilities constituting Automotive Assets all demountable displays
which contain the trademarks or trade names "Rockwell" or "Rockwell
International" or any corporate symbol related thereto or any
trademark, trade name or corporate symbol constituting Rockwell Assets
and Automotive will remove, or will cause the removal of, all signs
displaying any such trademark, trade name or corporate symbol at all
such facilities (A) located in the United States, no later than six
months following the Distribution Date and (B)
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located outside the United States, no later than twelve months
following the Distribution Date.
(v) Products of the Automotive Business may have
applied thereto the trademarks or trade names "Rockwell" or "Rockwell
International" or any Rockwell corporate symbol or logo related thereto
for a period of 10 years after the Distribution Date in the same manner
and to the same extent as applied at the Time of Distribution.
(vi) Products of the Automotive Business in finished
goods inventory and work in process (to the extent the same bear the
trademark or trade name "Rockwell" or "Rockwell International" at the
Time of Distribution or have any such trademark or trade name applied
to them in accordance with paragraph (v) above) may be disposed of
without re-marking.
(c)(i) Apart from the rights granted under Section
3.09(b), no member of the Automotive Group or joint venture in which it
has an interest shall acquire any right, title or interest in or to the
use of the trademarks or trade names "Rockwell" or "Rockwell
International" or any corporate symbol or logo related thereto, either
alone or in combination with any other word, name, symbol, device,
trademarks, or any combination thereof. Anything contained herein to
the contrary notwithstanding, except as expressly permitted by Section
3.09(b)(ii), in no event will any member of the Automotive Group or
joint venture in which such member has an interest utilize the
trademarks or trade names "Rockwell" or "Rockwell International" or any
corporate symbol or logo related thereto as a component of a company or
trade name. Automotive will not, will cause each other member of the
Automotive Group not to, and will use reasonable best efforts to cause
each joint venture in which any member of the Automotive Group has an
interest not to, challenge or contest the validity of such trademarks,
trade names, corporate symbols or logos, the registration thereof or
the ownership thereof by the Rockwell Group. Automotive will not, will
cause each other member of the Automotive Group not to, and will use
reasonable best efforts to cause each joint venture in which any member
of the Automotive Group has an interest not to, apply anywhere at any
38
<PAGE> 43
time for any registration as owner or exclusive licensee of such
trademarks, trade names, corporate symbols or logos. If,
notwithstanding the foregoing, any member of the Automotive Group or
joint venture in which it has an interest develops, adopts or acquires,
directly or indirectly, any right, title or interest in or to the use
of any such trademarks, trade names, corporate symbols or logos in any
jurisdiction, or any goodwill incident thereto, Automotive will, upon
the request of Rockwell, and for a nominal consideration of one dollar,
assign or cause to be assigned (or, in the case of any joint venture
listed on Schedule 1.1(a), use reasonable best efforts to cause to be
assigned) to Rockwell or any designee of Rockwell, all right, title and
interest in and to the use of such trademarks, trade names, corporate
symbols or logos in any and all jurisdictions, together with any
goodwill incident thereto.
(ii) If the laws of any country require that any mark
subject to Section 3.09(b) or the right of any member of the Automotive
Group or joint venture listed on Schedule 1.1(a) to use any mark as
permitted by Section 3.09(b) be registered in order to fully protect
the Rockwell Group, Rockwell and Automotive will cooperate in
constituting such member of the Automotive Group or joint venture as a
registered user (or its equivalent) in each of the countries in which
such registration is necessary. If any such laws of any country require
that any such mark or the use by any member of the Automotive Group or
such joint venture of any such mark be registered prior to use in order
to protect fully the Rockwell Group, the license granted pursuant to
Section 3.09(b) will not extend to such country until such registration
has been effected to the reasonable satisfaction of Rockwell. Any
expenses for registering such mark or constituting such member of the
Automotive Group or joint venture as a registered user in any country
shall be borne by Automotive. Any registration of such member of the
Automotive Group or joint venture as a registered user of any mark
hereunder shall be expunged on termination of the period of permitted
use under this Agreement or upon a breach or threatened breach by any
member of the Automotive Group or any such joint venture of the terms
of this Section 3.09 and
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<PAGE> 44
Automotive will, upon request of Rockwell, take all necessary steps to
cause such registration to be so expunged upon such termination or
breach or threatened breach. In addition, Automotive hereby constitutes
and appoints Rockwell the true and lawful attorney of Automotive, with
full power of substitution, in the name and on behalf of Automotive
(and at the cost of Automotive) to take all necessary steps to cause
such registration to be so expunged upon such termination or breach or
threatened breach.
(iii) Automotive will cause each member of the
Automotive Group and will use its reasonable best efforts to cause each
joint venture listed on Schedule 1.1(a) to comply with the provisions
of this Section 3.09. Nothing in this Section 3.09 will prevent any
member of the Rockwell Group from enforcing the provisions of this
Section 3.09 against any member of the Automotive Group or any joint
venture listed on Schedule 1.1(a).
(iv) Rockwell will have the right to terminate the
license granted in Section 3.09(b) upon 30 days written notice for any
failure by any member of the Automotive Group or any joint venture
listed on Schedule 1.1(a) to observe the terms of this Section 3.09(b),
provided that such failure is not remedied prior to the effectiveness
of the termination.
(d) From and after the Distribution Date, the Rockwell Group
will not hold itself out as having an affiliation with the Automotive Group.
However, the Rockwell Group will have rights to use trademarks or trade names or
corporate symbols related thereto or any thereof constituting Automotive Assets
in connection with stationery, supplies, labels, catalogs, vehicles, signs and
finished goods inventory on the same terms and subject to the same conditions as
are set forth in Section 3.09(b).
Section 3.10 Consents. Prior to and after the Distribution
Date, Rockwell and Automotive will, and will cause their respective Subsidiaries
to, use their reasonable best efforts (as requested by the other party) to
obtain, or to cause to be obtained, all Consents and to resolve all
impracticalities of assignments or
40
<PAGE> 45
transfers necessary for the transfer of all Assets, Subsidiaries and Liabilities
contemplated to be transferred pursuant to this Article III; provided, however,
that none of Rockwell or Automotive or their respective Subsidiaries shall be
obligated to pay any consideration or offer or grant any financial accommodation
in connection therewith. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, License or Asset if an assignment or attempted assignment of the same
without the Consent of any other party or parties thereto or other required
Consent would constitute a breach thereof or in any way impair the rights of any
member of the Rockwell Group or the Automotive Group thereunder. If any such
Consent is not obtained or if an attempted assignment would be ineffective or
would impair any member of either Group's rights under any such Contract,
License or Asset so that the contemplated assignee hereunder (the "Recipient
Party") would not receive all such rights, then (x) the party contemplated
hereunder to assign such Contract, License or Asset (the "Assigning Party") will
use reasonable best efforts (it being understood that such efforts shall not
include any requirement of the Assigning Party to pay any consideration or offer
or grant any financial accommodation) to provide or cause to be provided to the
Recipient Party, to the extent permitted by law, the benefits of any such
Contract, License or Asset and the Assigning Party will promptly pay or cause to
be paid to the Recipient Party when received all moneys and properties received
by the Assigning Party with respect to any such Contract, License or Asset and
(y) the Recipient Party will pay, perform and discharge on behalf of the
Assigning Party all of the Assigning Party's Liabilities thereunder in a timely
manner and in accordance with the terms thereof. In addition, the Assigning
Party will take such other actions (at the Recipient Party's expense) as may
reasonably be requested by the Recipient Party in order to place the Recipient
Party, insofar as reasonably possible, in the same position as if such Contract,
License or Asset had been transferred as contemplated hereby and so all the
benefits and burdens relating thereto, including possession, use, risk of loss,
potential for gain and dominion, control and command, shall inure to the
Recipient Party. If and when such Consents are obtained, the transfer of the
applicable Contract, License or Asset shall be effected as promptly
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following the Time of Distribution as shall be practicable in accordance with
the terms of this Agreement. To the extent that any transfers and assumptions
contemplated by this Article III shall not have been consummated on or prior to
the Time of Distribution, the parties shall cooperate to effect such transfers
as promptly following the Time of Distribution as shall be practicable, it
nonetheless being agreed and understood by the parties that neither party shall
be liable in any manner to the other party for any failure of any of the
transfers contemplated by this Article III to be consummated prior to the Time
of Distribution.
Section 3.11 Cross-License of Intellectual Property.
(a) Effective as of the Time of Distribution, Rockwell, on
behalf of itself and the Rockwell Subsidiaries, hereby grants to Meritor HVS a
royalty-free, world-wide, irrevocable, non-exclusive license under all
intellectual property rights (including, without limitation, patents, patent
applications, trade secrets, copyrights or other similar industrial property
rights, except for trademarks, trade names, service marks, trade dress or any
other form of trade identity) which constitute Rockwell Assets and which are
owned by the Rockwell Group or under which the Rockwell Group has a right to
license immediately after the Time of Distribution and which are used in the
conduct of the businesses of the Automotive Group at the Time of Distribution to
make, have made, use, import, sell or otherwise dispose of products, or to
practice any process in connection therewith, in the businesses of the
Automotive Group being conducted at the Time of Distribution; said non-exclusive
license being transferable only by sublicenses to members of the Automotive
Group and in connection with the sale of all or any part of the Automotive
Business to which such intellectual property rights relate. In addition,
effective as of the Time of Distribution, Rockwell, on behalf of itself and the
Rockwell Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide,
irrevocable, non-exclusive license under all intellectual property rights
(including, without limitation, patents, patent applications, trade secrets,
copyrights or other similar industrial property rights, except for trademarks,
trade names, service marks, trade dress or any other form of trade identity)
associated with the
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items listed on Schedule 3.11(a) to make, have made, use, import, sell or
otherwise dispose of products, or to practice any process in connection
therewith, in the businesses of the Automotive Group being conducted at the Time
of Distribution; said non-exclusive license being transferable only by
sublicenses to members of the Automotive Group and in connection with the sale
of all or any part of the Automotive Business to which such intellectual
property rights relate. To the extent that the Automotive Group does not have
copies of any information or materials relating to intellectual property rights
licensed under this Section 3.11(a), Rockwell will, upon reasonable request,
supply to the Automotive Group copies of any such information or materials
relating to such intellectual property rights.
(b) Effective as of the Time of Distribution, Automotive on
behalf of itself and the Automotive Subsidiaries, hereby grants to Rockwell
Science Center a royalty-free, world-wide, irrevocable, non-exclusive license
under all intellectual property rights (including, without limitation, patents,
patent applications, trade secrets, copyrights or other similar industrial
property rights, except for trademarks, trade names, service marks, trade dress
or any other form of trade identity) which constitute Automotive Assets and
which are owned by the Automotive Group or under which the Automotive Group has
a right to license immediately after the Time of Distribution and which are used
in the conduct of the businesses of the Rockwell Group other than the Automotive
Business at the Time of Distribution to make, have made, use, import, sell or
otherwise dispose of products, or to practice any process in connection
therewith, in the businesses of the Rockwell Group (other than the Automotive
Business) being conducted at the Time of Distribution; said non-exclusive
license being transferable only by sublicenses to members of the Rockwell Group
and in connection with the sale of all or any part of the Rockwell Group's
businesses to which such intellectual property rights relate. In addition,
effective as of the Time of Distribution, Automotive, on behalf of itself and
the Automotive Subsidiaries, hereby grants to the Rockwell Science Center a
royalty-free, world-wide, irrevocable, non-exclusive license under all
intellectual property rights (including, without limitation, patents, patent
applications, trade secrets, copyrights or other similar industrial property
rights, except for trademarks, trade
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names, service marks, trade dress or any other form of trade identity)
associated with the items listed on Schedule 3.11(b) to make, have made, use,
import, sell or otherwise dispose of products, or to practice any process in
connection therewith, in the businesses of the Rockwell Group (other than the
Automotive Business) being conducted at the Time of Distribution; said
non-exclusive license being transferable only by sublicenses to members of the
Rockwell Group and in connection with the sale of all or any part of the
Rockwell Group's businesses to which such intellectual property rights relate.
To the extent that the Rockwell Group does not have copies of any information or
materials relating to intellectual property rights licensed under this Section
3.11(b), Automotive will, upon reasonable request, supply to the Rockwell Group
copies of any such information or materials relating to such intellectual
property rights.
(c)(i) The party (and members of such party's Group) which is
licensed ("Licensee") to use the other Group's ("Licensor")
intellectual property rights under the provisions of Section 3.11(a) or
3.11 (b) may enforce those licensed intellectual property rights only
as provided in this Section 3.11(c).
(ii) Only intellectual property rights concerning the
protection of software, patents or copyrights licensed to the Licensee
pursuant to Section 3.11(a) or 3.11(b) shall be covered by the
following provisions of this Section 3.11(c).
(iii) A Licensee may request of the Licensor enforcement of
intellectual property rights within the scope of clause (ii) above only
during the ten-year period following the Distribution Date, and only
if:
(A) (1) a third-party competitor of the Licensee in
the licensed field is allegedly infringing the intellectual
property right to be enforced in conducting a business
activity which harms the business of the Licensee and the
Licensee reasonably believes that enforcement of the
intellectual property right is necessary to abate the
infringement; or (2) a third-party competitor of the Licensee,
who institutes a patent infringement suit against
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the Licensee for activities in the Licensee's field, is
allegedly infringing the intellectual property rights to be
enforced and the Licensee reasonably believes that enforcement
of the intellectual property rights will assist in resolving
that suit, in whole or in part; and
(B) in the situations specified in clause (iii)(A)(1)
or (2) above, the Licensee either:
(1) has attempted unsuccessfully to resolve the
controversy arising out of the competitor's alleged
infringement; or
(2) is reasonably assured that such attempts would be
unsuccessful; or
(3) requires the ability to commence enforcement
proceedings to preserve the status quo.
(iv) A Licensor requested to commence enforcement pursuant to
clause (iii) above may either initiate suit against the alleged
infringer as co-plaintiff with the Licensee or assign to the Licensee
the intellectual property rights necessary for the Licensee to initiate
suit in its own name as plaintiff along with the rights necessary to
obtain remedies for past infringement. The Licensor will cooperate as
reasonably required for the Licensee to resolve the controversy with
the third-party competitor and, if necessary, to enforce the
intellectual property rights, whether as co-plaintiff with the Licensee
or as assignor to the Licensee, provided that all costs to the Licensor
occasioned thereby shall be promptly and fully paid by the Licensee.
(v) If the Licensor elects to commence suit along with the
Licensee as co-plaintiff as provided in clause (iv) above, the Licensee
shall be responsible for all costs for prosecution of the suit and
shall control prosecution of the suit through settlement or judgment as
the Licensee considers appropriate; provided, however, that the
Licensor may, at its own expense, be represented by its own counsel and
participate in the proceedings
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and any settlement, subject to the Licensee's right of control.
(vi) If the Licensor elects to assign the intellectual
property rights to the Licensee as provided in clause (iv) above, any
such assignment shall be subject to the reservation to the Licensor of
an irrevocable, non-exclusive, royalty-free, world-wide license to
practice the assigned intellectual property rights in the Licensor's
business.
(vii) The Licensee shall retain recoveries for damages
suffered as the result of the third party's infringement to the extent
such infringement relates to the Licensee's licensed field of use.
(viii) Anything contained herein to the contrary
notwithstanding, a Licensor will not be required to initiate suit,
assign intellectual property rights to a Licensee or otherwise
cooperate in the enforcement of intellectual property rights if the
putative defendant or party against which enforcement is sought is a
duly authorized licensee or sublicensee of the Licensor under the
intellectual property rights sought to be enforced by the Licensee.
(ix) Each Licensee's right to commence enforcement of
intellectual property rights licensed under Section 3.11(a) or 3.11(b)
shall expire ten years after the Distribution Date (it being understood
that proceedings in respect of enforcement of such rights which were
initiated pursuant to clause (iii) of this Section 3.11(c) prior to the
expiration of such ten-year period may continue after the expiration
thereof).
(x) The enforcement rights granted under this Section 3.11(c)
are not transferable other than to members of the Licensee's Group.
(d)(i) For purposes of this Section 3.11(d), the following
terms will have the following definitions:
(A) "Administrative Services" means services
pertaining to personnel, payroll,
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property management, benefits, human resource management,
financial planning, case docketing and management, contract
and subcontract management, facilities management, proposal
activities and other similar services.
(B) "Administrative Services Software" means software
originated internally and owned by Rockwell or any of its
Subsidiaries (including members of the Automotive Group) prior
to the Time of Distribution and relating to the provision of
Administrative Services to the Automotive Business immediately
prior to the Time of Distribution, regardless of where
ownership of such software vests after the Time of
Distribution. Administrative Services Software also shall
include materials and documentation supplied by one party to
the other pursuant to clause (iv) of this Section 3.11(d).
(C) "Transition Period" means the period from the
Time of Distribution until the termination or expiration of
the provision of services pursuant to the Transition
Agreement.
(ii) Anything contained herein to the contrary
notwithstanding, the following licenses shall govern the licensing of
Administrative Services Software. Effective as of the Time of
Distribution, Rockwell, on behalf of itself and the Rockwell
Subsidiaries, hereby grants to Meritor HVS a royalty-free, world-wide,
irrevocable non-exclusive license under Administrative Services
Software which constitutes Rockwell Assets and which is owned by the
Rockwell Group or under which the Rockwell Group has a right to license
immediately after the Time of Distribution to use such Administrative
Services Software for the internal business purposes of the Automotive
Group, including the right to sublicense only to (x) members of the
Automotive Group and (y) service providers to use the Administrative
Services Software only for or on behalf of the Automotive Group.
Effective as of the Time of Distribution, Automotive, on behalf of
itself and the Automotive Subsidiaries, hereby grants to Rockwell
Science Center a royalty-free, world-wide, irrevocable, non-exclusive
license under Administrative Services
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Software which constitutes Automotive Assets and which is owned by the
Automotive Group or under which the Automotive Group has a right to
license immediately after the Time of Distribution to use such
Administrative Services Software for the internal business purposes of
the Rockwell Group, including the right to sublicense only to (x)
members of the Rockwell Group and (y) service providers to use the
Administrative Services Software only for or on behalf of the Rockwell
Group. Except as set forth in the preceding two sentences, the licenses
granted pursuant to this Section 3.11(d) do not include the right to
sublicense. Software originated or maintained during the Transition
Period by a party and relating to the provision of Administrative
Services to the other party pursuant to the Transition Agreement shall
be considered Administrative Services Software subject to the above
licenses provided that the party to be licensed has paid a mutually
agreeable share of the origination or maintenance costs for such
software and requests during the Transition Period that such software
be subject to such licenses.
(iii) Each party shall have the right to use, disclose,
perform, display, copy, distribute and make derivatives of the
Administrative Services Software within the scope of the licenses
granted herein. Title to Administrative Services Software and all
rights therein, including all rights in patents, copyrights and trade
secrets and any other intellectual property rights applicable thereto,
shall remain vested in the party to which ownership is allocated
pursuant to this Agreement. Each licensed party agrees that it will not
use, copy, disclose, sell, assign or sublicense, or otherwise transfer
Administrative Services Software licensed to it under this Section
3.11(d) or any derivatives thereof, except as expressly provided
herein.
(iv) To the extent that a licensed party does not have copies
of any Administrative Services Software or materials and documentation
(such as source code listings, flow charts, user guides and
programmer's guides) relating to the operation and maintenance of such
Administrative Services Software to which the other party has
ownership, such owning
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party shall, as soon as practicable after request of the licensed
party, supply to the licensed party copies of such Administrative
Services Software and any related operating and maintenance materials
or documentation existing as of the Time of Distribution.
(e)(i) For purposes of this Section 3.11(e), "Application
Software" means software originated internally and owned by Rockwell or
any of its Subsidiaries (including members of the Automotive Group)
prior to the Time of Distribution and relating to
computer-aided-design, computational fluid dynamics, finite element
analysis or other similar engineering or technical analysis functions
and related tools or utilities, regardless of where ownership of such
software vests after the Time of Distribution. Anything contained
herein to the contrary notwithstanding, Application Software does not
include any Administrative Services Software.
(ii) Anything contained herein to the contrary
notwithstanding, the following licenses shall govern the licensing of
Application Software. Effective as of the Time of Distribution,
Rockwell, on behalf of itself and the Rockwell Subsidiaries, hereby
grants to Meritor HVS a royalty-free, world-wide, irrevocable,
non-exclusive license under Application Software which constitutes
Rockwell Assets and which is owned by the Rockwell Group or under which
the Rockwell Group has a right to license immediately after the Time of
Distribution to use, disclose, perform, display, copy, distribute and
make derivatives of such Application Software, in any form, in
connection with the Automotive Business to the same extent as was done
in the Automotive Business at the Time of Distribution, and Meritor HVS
may sublicense only (x) members of the Automotive Group and (y)
suppliers, subcontractors and Affiliates of the Automotive Group to do
so only in connection with work performed by them for the Automotive
Group to the same extent as was done in the Automotive Business at the
Time of Distribution. Effective as of the Time of Distribution,
Automotive, on behalf of itself and the Automotive Subsidiaries, hereby
grants to Rockwell Science Center a royalty-free, world-wide,
irrevocable, non-exclusive license under Application Software which
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constitutes Automotive Assets and which is owned by the Automotive
Group or under which the Automotive Group has a right to license
immediately after the Time of Distribution to use, disclose, perform,
display, copy, distribute and make derivatives of such Application
Software, in any form, in connection with businesses of the Rockwell
Group to the same extent as was done in businesses of the Rockwell
Group (other than the Automotive Business) at the Time of Distribution,
and Rockwell Science Center may sublicense only (x) members of the
Rockwell Group and (y) suppliers, contractors and Affiliates of the
Rockwell Group to do so only in connection with work performed by them
for the Rockwell Group to the same extent as was done in businesses of
the Rockwell Group (other than the Automotive Business) at the Time of
Distribution. Except as set forth in the preceding two sentences, the
licenses granted pursuant to this Section 3.11(e) do not include the
right to sublicense.
(iii) Title to Application Software and all rights therein,
including all rights in patents, copyrights and trade secrets and any
other intellectual property rights applicable thereto, shall remain
vested in the party to which ownership is allocated pursuant to this
Agreement. Each licensed party agrees that it will not use, copy,
disclose, sell, assign, sublicense or otherwise transfer Application
Software licensed to it under this Section 3.11(e) or any derivatives
thereof, except as expressly provided herein.
(f) Other Licenses. If any member of the Rockwell Group
requires a license with respect to any of the intellectual property contained in
the Automotive Assets which is not covered by this Section 3.11 with respect to
its businesses existing at the Time of Distribution, or if any member of the
Automotive Group requires a license with respect to any of the intellectual
property contained in the Rockwell Assets which is not covered by this Section
3.11 with respect to its businesses existing at the Time of Distribution, upon
notice of the party requiring such a license, the parties will negotiate in good
faith the grant of such a license, upon reasonable terms, including royalties,
permitting the requesting party to undertake activities in fields of
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use which do not have an adverse competitive effect on the businesses of the
granting party and its Affiliates.
(g)(i) Rockwell makes no representations or warranties of any
kind with respect to the validity, scope or enforceability of any
intellectual property rights licensed by Rockwell and the Rockwell
Subsidiaries pursuant to this Section 3.11 and Rockwell has no
obligation to file or prosecute any patent applications or maintain any
patents in force in connection therewith. Rockwell will, at no cost to
the Automotive Group, promptly execute or cause a member of the
Rockwell Group promptly to execute such further documents as Automotive
may reasonably request as necessary or desirable to carry out the terms
of this Section 3.11. Notwithstanding anything contained herein to the
contrary, this Section 3.11 will not be applicable to any rights in and
use of the names, trademarks, trade names and service marks "Rockwell"
and "Rockwell International" and all corporate symbols and logos
related thereto and all names, trademarks, trade names and service
marks which include the words "Rockwell" or "Rockwell International" or
any derivative thereof.
(ii) Automotive makes no representations or warranties of any
kind with respect to the validity, scope or enforceability of any
intellectual property rights licensed by Automotive and the Automotive
Subsidiaries pursuant to this Section 3.11 and Automotive has no
obligation to file or prosecute any patent applications or maintain any
patents in force in connection therewith. Automotive will, at no cost
to Rockwell, promptly execute or cause a member of the Automotive Group
promptly to execute such further documents as Rockwell may reasonably
request as necessary or desirable to carry out the terms of this
Section 3.11.
ARTICLE IV
MUTUAL RELEASE; INDEMNIFICATION
Section 4.01 Mutual Release. Effective as of the Time of
Distribution and except as otherwise
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specifically set forth in the Transaction Agreements, each of Rockwell, on the
one hand, and Automotive, on the other hand, on its own behalf and on behalf of
each of its respective Subsidiaries, hereby releases and forever discharges the
other and its Subsidiaries, and its and their respective officers, directors,
agents, Affiliates, record and beneficial security holders (including, without
limitation, trustees and beneficiaries of trusts holding such securities),
advisors and Representatives (in their respective capacities as such) and their
respective heirs, executors, administrators, successors and assigns, of and from
all debts, demands, actions, causes of action, suits, accounts, covenants,
contracts, agreements, damages, claims and Liabilities whatsoever of every name
and nature, both in law and in equity, which the releasing party has or ever
had, which arise out of or relate to events, circumstances or actions taken by
such other party occurring or failing to occur or any conditions existing at or
prior to the Time of Distribution; provided, however, that the foregoing general
release shall not apply to (i) any Liabilities (including Liabilities with
respect to indemnification or contribution) under the Transaction Agreements or
assumed, transferred, assigned, allocated or arising under any of the
Transaction Agreements (including, without limitation, any Liability that the
parties may have with respect to indemnification or contribution pursuant to any
Transaction Agreement for claims brought against the parties by third Persons)
and will not affect any party's right to enforce the Transaction Agreements in
accordance with their terms, (ii) any Liability arising from or relating to any
agreement, arrangement, commitment or undertaking described in Section
3.03(b)(ii) (including, without limitation, Ordinary Course Intercompany
Arrangements) or (iii) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this Section 4.01
(provided that the parties agree not to bring suit or permit any of their
Subsidiaries to bring suit against any Person with respect to any Liability to
the extent such Person would be released with respect to such Liabilities by
this Section 4.01 but for the proviso to this clause (iii)).
Section 4.02 Indemnification by Rockwell. Except as otherwise
specifically provided in any Transaction Agreement and subject to the provisions
of this Article IV, Rockwell shall indemnify, defend and
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hold harmless the Automotive Indemnitees from and against, and pay or reimburse,
as the case may be, the Automotive Indemnitees for, all Indemnifiable Losses, as
incurred, suffered by any Automotive Indemnitee based upon, arising out of,
relating to or otherwise in connection with:
(a) businesses of Rockwell, the Rockwell Subsidiaries and
their respective predecessors (other than the Automotive Business) engaged in at
or prior to the Time of Distribution, the Rockwell Assets or Liabilities of
Rockwell or any Rockwell Subsidiary as of the Time of Distribution which are not
Automotive Liabilities (including, without limitation, the failure by Rockwell
or any other member of the Rockwell Group to pay, perform or otherwise discharge
such Liabilities in accordance with their terms), whether such Indemnifiable
Losses are based upon, arise out of or relate to or are otherwise in connection
with events, occurrences, actions, omissions, facts, circumstances or conditions
occurring, existing or asserted before, at or after the Time of Distribution;
(b) any untrue statement or alleged untrue statement of a
material fact contained in the sections of the Form 10 listed on Schedule 4.2,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; but only in each case
with respect to information relating to the Rockwell Group provided by Rockwell
expressly for use in the sections of the Form 10 listed on Schedule 4.2;
(c) the breach by any member of the Rockwell Group of any
agreement or covenant contained in a Transaction Agreement which does not by its
express terms expire at the Time of Distribution;
(d) the use by members of the Rockwell Group of any
trademarks, trade names or corporate symbols or logos pursuant to Section
3.09(d) or intellectual property licensed by Automotive and the Automotive
Subsidiaries pursuant to Section 3.11;
(e) in the event Automotive or an Automotive Subsidiary is a
Licensor that elects to assign intellectual property rights to a member of the
Rockwell
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Group as provided in Section 3.11(c)(iv), acts of the Licensee taken to enforce,
or in connection with the enforcement of, such intellectual property rights; or
(f) the enforcement by the Automotive Indemnitees of their
rights to be indemnified, defended and held harmless under this Agreement.
Section 4.03 Indemnification by Automotive. Except as
otherwise specifically provided in any Transaction Agreement and subject to the
provisions of this Article IV, Automotive and the Automotive Subsidiaries shall
indemnify, defend and hold harmless the Rockwell Indemnitees from and against,
and pay or reimburse, as the case may be, the Rockwell Indemnitees for, all
Indemnifiable Losses, as incurred, suffered by any Rockwell Indemnitee based
upon, arising out of, relating to or otherwise in connection with:
(a) the Automotive Business, the Automotive Assets or
the Automotive Liabilities (including, without limitation, (i) any
guarantees or obligations to assure performance or perform given or
made by, or other Liabilities of, Rockwell or any Rockwell Subsidiary
with respect to the Automotive Business, (ii) the failure by Automotive
or any other member of the Automotive Group to pay, perform or
otherwise discharge Automotive Liabilities in accordance with their
terms and (iii) any Liabilities relating to the Automotive Business for
which Rockwell has agreed to indemnify BNA and certain other Persons
pursuant to the Boeing Post-Closing Covenants Agreement), whether such
Indemnifiable Losses are based upon, arise out of or relate to or are
otherwise in connection with events, occurrences, actions, omissions,
facts, circumstances or conditions occurring, existing or asserted
before, at or after the Time of Distribution;
(b) any untrue statement or alleged untrue statement
of a material fact contained in the Form 10, or any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except in
each case with respect to information relating to the Rockwell
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Group provided by Rockwell expressly for use in the sections of the
Form 10 listed on Schedule 4.2;
(c) the breach by any member of the Automotive Group
of any agreement or covenant contained in a Transaction Agreement which
does not by its express terms expire at the Time of Distribution;
(d) the use by members of the Automotive Group and
joint ventures in which members of the Automotive Group have an
interest of any trademarks, trade names or corporate symbols or logos
pursuant to Section 3.09(b) or intellectual property licensed by
Rockwell and the Rockwell Subsidiaries pursuant to Section 3.11;
(e) in the event Rockwell or a Rockwell Subsidiary is
a Licensor that elects to assign intellectual property rights to a
member of the Automotive Group as provided in Section 3.11(c)(iv), acts
of the Licensee taken to enforce, or in connection with the enforcement
of, such intellectual property rights;
(f) any Action or other claim alleging that any
Liability was improperly allocated to the Automotive Group or that any
Asset was improperly withheld from the Automotive Group, in each case
pursuant to any of the Transaction Agreements; or
(g) the enforcement by the Rockwell Indemnitees of
their rights to be indemnified, defended and held harmless under this
Agreement.
Section 4.04 Limitations on Indemnification Obligations.
(a) The amount which any party (an "Indemnifying Party") is or
may be required to pay to an Indemnitee in respect of Indemnifiable Losses or
other Liability for which indemnification is provided under this Agreement shall
be reduced by any amounts actually received (including, without limitation,
Insurance Proceeds actually received) by or on behalf of such Indemnitee (net of
increased insurance premiums and charges related directly and solely to the
related Indemnifiable Losses and costs and expenses (including
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reasonable legal fees and expenses) incurred by such Indemnitee in connection
with seeking to collect and collecting such amounts) in respect of such
Indemnifiable Losses or other Liability (such net amounts are referred to herein
as "Indemnity Reduction Amounts"). If any Indemnitee receives any Indemnity
Reduction Amounts in respect of an Indemnifiable Loss for which indemnification
is provided under this Agreement after the full amount of such Indemnifiable
Loss has been paid by an Indemnifying Party or after an Indemnifying Party has
made a partial payment of such Indemnifiable Loss and such Indemnity Reduction
Amounts exceeds the remaining unpaid balance of such Indemnifiable Loss, then
the Indemnitee shall promptly remit to the Indemnifying Party an amount equal to
the excess (if any) of (A) the amount theretofore paid by the Indemnifying Party
in respect of such Indemnifiable Loss, less (B) the amount of the indemnity
payment that would have been due if such Indemnity Reduction Amounts in respect
thereof had been received before the indemnity payment was made. An insurer or
other third party who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to any benefit they would not be entitled to
receive in the absence of the indemnification provisions by virtue of the
indemnification provisions hereof.
(b) In determining the amount of any Indemnifiable Losses,
such amount shall be (i) reduced to take into account any net Tax benefit
realized by the Indemnitee arising from the incurrence or payment by the
Indemnitee of such Indemnifiable Losses and (ii) increased to take into account
any net Tax cost incurred by the Indemnitee as a result of the receipt or
accrual of payments hereunder (grossed-up for such increase), in each case
determined by treating the Indemnitee as recognizing all other items of income,
gain, loss, deduction or credit before recognizing any item arising from such
Indemnifiable Losses.
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Section 4.05 Procedures Relating to Indemnification.
(a) If a claim or demand is made against an Indemnitee, or an
Indemnitee shall otherwise learn of an assertion, by any Person who is not a
party to this Agreement (or an Affiliate thereof) as to which an Indemnifying
Party may be obligated to provide indemnification pursuant to this Agreement (a
"Third Party Claim"), such Indemnitee will notify the Indemnifying Party in
writing, and in reasonable detail, of the Third Party Claim reasonably promptly
(and in any event within 20 business days) after becoming aware of such Third
Party Claim; provided, however, that failure to give such notification will not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Party will not be liable for any expenses
incurred during the period in which the Indemnitee failed to give such notice).
Thereafter, the Indemnitee will deliver to the Indemnifying Party, promptly
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received or transmitted by the Indemnitee relating to
the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in or to assume the defense
thereof (in either case, at the expense of the Indemnifying Party) with counsel
selected by the Indemnifying Party and reasonably satisfactory to the
Indemnitee. Should the Indemnifying Party so elect to assume the defense of a
Third Party Claim, the Indemnifying Party will not be liable to the Indemnitee
for any legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided that, if in the Indemnitee's
reasonable judgment a conflict of interest exists in respect of such claim or if
the Indemnifying Party shall have assumed responsibility for such claim with any
reservations or exceptions, such Indemnitee will have the right to employ
separate counsel reasonably satisfactory to the Indemnifying Party to represent
such Indemnitee and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel for all Indemnitees
similarly situated) shall be paid by such Indemnifying Party. If the
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<PAGE> 62
Indemnifying Party assumes the defense of any Third Party Claim, the Indemnitee
will have the right to participate in the defense thereof and to employ counsel,
at its own expense, separate from the counsel employed by the Indemnifying
Party, it being understood that the Indemnifying Party will control such
defense. The Indemnifying Party will be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof (other than during any period in
which the Indemnitee shall have failed to give notice of the Third Party Claim
as provided above). If the Indemnifying Party assumes the defense of any Third
Party Claim, the Indemnifying Party will promptly supply to the Indemnitee
copies of all correspondence and documents relating to or in connection with
such Third Party Claim and keep the Indemnitee fully informed of all
developments relating to or in connection with such Third Party Claim
(including, without limitation, providing to the Indemnitee on request updates
and summaries as to the status thereof). If the Indemnifying Party chooses to
defend a Third Party Claim, the parties hereto will cooperate in the defense
thereof (such cooperation to be at the expense, including reasonable legal fees
and expenses, of the Indemnifying Party), which cooperation shall include the
retention in accordance with this Agreement and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
(c) If the Indemnifying Party assumes the defense of any Third
Party Claim, the Indemnitee will agree to any settlement, compromise or
discharge of such Third Party Claim which the Indemnifying Party may recommend
and which by its terms obligates the Indemnifying Party to pay the full amount
of Indemnifiable Losses in connection with such Third Party Claim and
unconditionally and irrevocably releases the Indemnitee completely from all
Liability in connection with such Third Party Claim; provided, however, that,
without the Indemnitee's prior written consent, the Indemnifying Party will not
consent to any settlement, compromise or discharge of a Third Party Claim
(including the consent to entry of any judgment), and the Indemnitee may refuse
to agree to any such settlement, compromise or
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discharge (x) that provides for injunctive or other nonmonetary relief affecting
the Indemnitee or (y) that, in the reasonable opinion of the Indemnitee, would
otherwise materially adversely affect the Indemnitee. Whether or not the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnitee will not (unless required by law) admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
Indemnifying Party's prior written consent (which consent will not be
unreasonably withheld).
(d) Any claim on account of Indemnifiable Losses which does
not involve a Third Party Claim will be asserted by reasonably prompt written
notice given by the Indemnitee to the Indemnifying Party from whom such
indemnification is sought. The failure by any Indemnitee so to notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
which it may have to such Indemnitee under this Agreement, except to the extent
that the Indemnifying Party shall have been actually prejudiced by such failure.
Any notice pursuant to this Section 4.05(d) will contain a statement, in
prominent and conspicuous type, that if the Indemnifying Party does not dispute
its liability to the Indemnitee with respect to the claim made in such notice by
notice to the Indemnitee prior to the expiration of a 30-calendar-day period
following the Indemnifying Party's receipt of the second notice of such claim,
the claim shall be conclusively deemed a liability of the Indemnifying Party. If
the Indemnitee has provided the Indemnifying Party two such notices not less
than 30 days apart and the Indemnifying Party does not notify the Indemnitee
prior to the expiration of a 30-calendar-day period following its receipt of the
second such notice that the Indemnifying Party disputes its liability to the
Indemnitee under this Agreement, such claim specified by the Indemnitee in such
notice will be conclusively deemed a liability of the Indemnifying Party under
this Agreement and the Indemnifying Party will pay the amount of such liability
to the Indemnitee on demand or, in the case of any notice in which the amount of
the claim (or any portion thereof) is estimated, on such later date when the
amount of such claim (or such portion thereof) becomes finally determined. If
the Indemnifying Party has timely disputed its liability with respect to such
claim, as provided above, the Indemnifying Party and the Indemnitee will proceed
in good faith to negotiate a
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<PAGE> 64
resolution of such dispute and, if not resolved through negotiations by the
120th day after notice of such claim was given to the Indemnifying Party, the
Indemnifying Party and the Indemnitee will be free to pursue such remedies as
may be available to such parties under this Agreement or under applicable law.
(e) In the event of payment in full by an Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party will be subrogated to and shall stand in the place of such Indemnitee as
to any events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other Person. Such
Indemnitee will cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense of such Indemnifying Party, in prosecuting any
subrogated right or claim.
Section 4.06 Remedies Cumulative. The remedies provided in
this Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 4.07 Survival of Indemnities. The obligations of each
of Rockwell and Automotive under this Article IV will not terminate at any time
and will survive the sale or other transfer by any party of any assets or
businesses or the assignment by any party of any Liabilities with respect to any
Indemnifiable Losses of the other related to such assets, businesses or
Liabilities.
Section 4.08 Exclusivity of Tax Allocation Agreement.
Notwithstanding anything in this Agreement to the contrary, the Tax Allocation
Agreement will be the exclusive agreement among the parties with respect to all
Tax matters, including indemnification in respect of Tax matters.
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ARTICLE V
ACCESS TO INFORMATION
Section 5.01 Access to Information. From and after the Time of
Distribution, Rockwell will, and will cause each Rockwell Subsidiary to, afford
to Automotive and its Representatives (at Automotive's expense) reasonable
access and duplicating rights during normal business hours and upon reasonable
advance notice to all Information within Rockwell's possession or control or in
the possession or control of a Rockwell Subsidiary relating to Automotive, any
Automotive Subsidiary or the Automotive Business, insofar as such access is
reasonably required by Automotive or any Automotive Subsidiary, subject to the
provisions below regarding Privileged Information. Similarly, from and after the
Time of Distribution, Automotive will, and will cause each Automotive Subsidiary
to, afford to Rockwell and its Representatives (at Rockwell's expense)
reasonable access and duplicating rights during normal business hours and upon
reasonable advance notice to all Information within Automotive's possession or
control or in the possession or control of an Automotive Subsidiary relating to
Rockwell, any Rockwell Subsidiary or the businesses of the Pre-Distribution
Group (other than the Automotive Business), insofar as such access is reasonably
required by Rockwell or any Rockwell Subsidiary, subject to the provisions below
regarding Privileged Information. Without limiting the foregoing, Information
may be requested under this Article V for audit, accounting, claims, litigation,
insurance, environmental and safety and tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations and for performing this
Agreement and the transactions contemplated hereby.
In furtherance of the foregoing:
(a) Each party acknowledges that (i) each of Rockwell and
Automotive (and the members of the Rockwell Group and the Automotive Group,
respectively) has or may obtain Privileged Information; (ii) there are a number
of Actions affecting one or more of the members of the Rockwell Group and the
Automotive Group; (iii) the parties may have a common legal interest in Actions,
in the Privileged Information, and in the preservation of the confidential
status of the Privileged Information, in each case relating to the business of
the Rockwell Group
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or the Automotive Group; and (iv) both Rockwell and Automotive intend that the
transactions contemplated by the Transaction Agreements and any transfer of
Privileged Information in connection therewith shall not operate as a waiver of
any potentially applicable privilege.
(b) Each of Rockwell and Automotive agrees, on behalf of
itself and each member of the Group of which it is a member, not to disclose or
otherwise waive any privilege attaching to any Privileged Information relating
to the business of the Automotive Group or the Rockwell Group, respectively,
without providing prompt written notice to and obtaining the prior written
consent of the other, which consent will not be unreasonably withheld. In the
event of a disagreement between any member of the Rockwell Group and any member
of the Automotive Group concerning the reasonableness of withholding such
consent, no disclosure will be made prior to a final, nonappealable resolution
of such disagreement.
(c) Upon any member of the Rockwell Group or any member of the
Automotive Group receiving any subpoena or other compulsory disclosure notice
from a court, other Governmental Entity or otherwise which requests disclosure
of Privileged Information, in each case relating to the business of the
Automotive Group or the Rockwell Group, respectively, the recipient of the
notice will promptly provide to the other party (following the notice provisions
set forth herein) a copy of such notice, the intended response, and all
materials or information relating to the other Group that might be disclosed. In
the event of a disagreement as to the intended response or disclosure, unless
and until the disagreement is resolved as provided in Section 5.01(b), the
parties will cooperate to assert all defenses to disclosure claimed by either
Group, at the cost and expense of the Group claiming such defense to disclosure,
and shall not disclose any disputed documents or information until all legal
defenses and claims of privilege have been finally determined.
Section 5.02 Production of Witnesses. Subject to Section 5.01,
after the Time of Distribution, each of Rockwell and Automotive will, and will
cause each member of the Rockwell Group and the Automotive Group, respectively,
to, make available to the other party and its Subsidiaries, upon written request
and at the cost
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and expense of the party so requesting, its directors, officers, employees and
agents as witnesses to the extent that any such Person may reasonably be
required (giving consideration to business demands of such Representatives) in
connection with any Actions or other proceedings in which the requesting party
may from time to time be involved, provided that the same shall not unreasonably
interfere with the conduct of business by the Group of which the request is
made.
Section 5.03 Retention of Records. Except as otherwise
required by law or agreed to in writing, if any Information relating to the
business, assets or Liabilities of a member of a Group is retained by a member
of the other Group, each of Rockwell and Automotive will, and will cause the
members of the Group of which it is a member to, retain for the period required
by the applicable Rockwell records retention policy in effect immediately prior
to the Time of Distribution all such Information in such Group's possession or
under its control. In addition, after the expiration of such required retention
period, if any member of either Group wishes to destroy or dispose of any such
Information, prior to destroying or disposing of any of such Information, (1)
Rockwell or Automotive, on behalf of the member of its Group that is proposing
to dispose of or destroy any such Information, will provide no less than 30
days' prior written notice to the other party, specifying in reasonable detail
the Information proposed to be destroyed or disposed of, and (2) if, prior to
the scheduled date for such destruction or disposal, the recipient of such
notice requests in writing that any of the Information proposed to be destroyed
or disposed of be delivered to such requesting party, the party whose Group is
proposing to dispose of or destroy such Information promptly will arrange for
the delivery of the requested Information to a location specified by, and at the
expense of, the requesting party.
Section 5.04 Confidentiality. Subject to Section 5.01, which
shall govern Privileged Information, from and after the Time of Distribution,
each of Rockwell and Automotive shall hold, and shall use reasonable efforts to
cause its Affiliates and Representatives to hold, in strict confidence all
Information concerning the other party's Group in its possession or control or
furnished to it by such other party's Group pursuant to
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the Transaction Agreements or the transactions contemplated thereby and will not
release or disclose such Information to any other Person, except its Affiliates
and Representatives, who will be bound by the provisions of this Section 5.04;
provided, however, that any member of the Rockwell Group or the Automotive Group
may disclose such Information to the extent that (a) disclosure is compelled by
judicial or administrative process or, in the opinion of such Person's counsel,
by other requirements of law (in which case the party required to make such
disclosure will notify the other party as soon as practicable of such obligation
or requirement and cooperate with the other party to limit the Information
required to be disclosed and to obtain a protective order or other appropriate
remedy with respect to the Information ultimately disclosed), or (b) such Person
can show that such Information was (i) available to such Person on a
nonconfidential basis (other than from a member of the other party's Group)
prior to its disclosure by such Person, (ii) in the public domain through no
fault of such Person or (iii) lawfully acquired by such Person from another
source after the time that it was furnished to such Person by the other party's
Group, and not acquired from such source subject to any confidentiality
obligation on the part of such source, or on the part of the acquiror, known to
the acquiror. Each party acknowledges that it will be liable for any breach of
this Section 5.04 by its Representatives to whom such Information is disclosed
by such party. Notwithstanding the foregoing, each of Rockwell and Automotive
will be deemed to have satisfied its obligations under this Section 5.04 with
respect to any Information (other than Privileged Information) if it exercises
the same care with regard to such Information as it takes to preserve
confidentiality for its own similar Information.
ARTICLE VI
MISCELLANEOUS
Section 6.01 Entire Agreement; Construction. This Agreement
and the Ancillary Agreements, including any annexes, schedules and exhibits
hereto or thereto, and other agreements and documents referred to herein and
therein, will together constitute the entire agreement
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between the parties with respect to the subject matter hereof and thereof and
will supersede all prior negotiations, agreements and understandings of the
parties of any nature, whether oral or written, with respect to such subject
matter. Notwithstanding any other provisions in the Transaction Agreements to
the contrary, (i) in the event and to the extent that there is a conflict
between the provisions of this Agreement and the provisions of the Employee
Matters Agreement or the Tax Allocation Agreement, the provisions of the
Employee Matters Agreement or the Tax Allocation Agreement, as appropriate, will
control and (ii) in the event and to the extent that there is a conflict between
the provisions of this Agreement and the provisions of any Conveyance and
Assumption Instruments, the provisions of this Agreement will control.
Section 6.02 Survival of Agreements. Except as otherwise
contemplated by the Transaction Agreements, all covenants and agreements of the
parties contained in the Transaction Agreements will remain in full force and
effect and survive the Time of Distribution.
Section 6.03 Expenses. Except as otherwise set forth in any
Transaction Agreement, all costs and expenses incurred through the Time of
Distribution in connection with the Distribution, the preparation, execution and
delivery of the Transaction Agreements and the consummation of the transactions
contemplated thereby will be charged to Rockwell (other than the costs and
expenses of Automotive's credit facilities and costs and expenses to the extent
the same relate to operations of the Automotive Business subsequent to the Time
of Distribution, which will be charged to Automotive). Except as otherwise set
forth in any Transaction Agreement, all costs and expenses incurred following
the Time of Distribution in connection with implementation of the transactions
contemplated by the Transaction Agreements will be charged to the party for
whose benefit the expenses are incurred, with any expenses which cannot be
allocated on such basis to be split equally between the parties.
Section 6.04 Governing Law. This Agreement will be governed by
and construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed entirely within such
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State, without regard to the conflicts of law principles of such State.
Section 6.05 Notices. All notices, requests, claims, demands
and other communications required or permitted to be given hereunder will be in
writing and will be delivered by hand or telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
will be deemed given when so delivered by hand or telecopied, or three business
days after being so mailed (one business day in the case of express mail or
overnight courier service). All such notices, requests, claims, demands and
other communications will be addressed as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) If to Rockwell:
Rockwell International Corporation
600 Anton Boulevard
Costa Mesa, California 92626
Attention: Mr. W. Michael Barnes
Senior Vice President,
Finance and Planning and
Chief Financial Officer
Telecopy: (714) 424-4218
with a copy to:
Rockwell International Corporation
600 Anton Boulevard
Costa Mesa, California 92626
Attention: William J. Calise, Jr., Esq.
Senior Vice President,
General Counsel and
Secretary
Telecopy: (714) 424-4265
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(b) If to Automotive:
Meritor Automotive, Inc.
2135 West Maple Road
Troy, Michigan 48084-7186
Attention: Mr. Thomas A. Madden
Senior Vice President and
Chief Financial Officer
Telecopy: (248) 435-8397
with a copy to:
Meritor Automotive, Inc.
2135 West Maple Road
Troy, Michigan 48084-7186
Attention: David W. Greenfield, Esq.
Senior Vice President,
General Counsel and
Secretary
Telecopy: (248) 435-8397
Section 6.06 Consent to Jurisdiction. Each of Rockwell and
Automotive irrevocably submits to the exclusive jurisdiction of (i) the Court of
Chancery in and for the State of Delaware and the Superior Court in and for the
State of Delaware and (ii) the United States District Court for the District of
Delaware, for the purposes of any suit, action or other proceeding arising out
of the Transaction Agreements or any transaction contemplated thereby (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts). Each of Rockwell and Automotive further agrees that service of any
process, summons, notice or document hand delivered or sent by U.S. registered
mail to such party's respective address set forth in Section 6.05 will be
effective service of process for any action, suit or proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth in
the immediately preceding sentence. Each of Rockwell and Automotive irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of the Transaction Agreements or the transactions
contemplated thereby in (i) the Court of Chancery in and for the State of
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Delaware and the Superior Court in and for the State of Delaware or (ii) the
United States District Court for the District of Delaware, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
Section 6.07 Amendments. This Agreement cannot be amended,
modified or supplemented except by a written agreement executed by Rockwell and
Automotive.
Section 6.08 Assignment. Neither party to this Agreement will
convey, assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party in its sole and
absolute discretion, except that any party may (without obtaining any consent)
assign any of its rights hereunder to a successor to all or any part of its
business. Any such conveyance, assignment or transfer requiring the prior
written consent of another party which is made without such consent will be void
ab initio. No assignment of this Agreement will relieve the assigning party of
its obligations hereunder.
Section 6.09 Captions; Currency. The article, section and
paragraph captions herein and the table of contents hereto are for convenience
of reference only, do not constitute part of this Agreement and will not be
deemed to limit or otherwise affect any of the provisions hereof. Unless
otherwise specified, all references herein to numbered articles or sections are
to articles and sections of this Agreement and all references herein to annexes
or schedules are to annexes and schedules to this Agreement. Unless otherwise
specified, all references contained in this Agreement, in any annex or schedule
referred to herein or in any instrument or document delivered pursuant hereto to
dollars or "$" shall mean United States Dollars.
Section 6.10 Severability. If any provision of this Agreement
or the application thereof to any Person or circumstance is determined by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and
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will in no way be affected, impaired or invalidated thereby. If the economic or
legal substance of the transactions contemplated hereby is affected in any
manner adverse to any party as a result thereof, the parties will negotiate in
good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
Section 6.11 Parties in Interest. This Agreement is binding
upon and is for the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not made for the benefit of
any Person not a party hereto, and no Person other than the parties hereto or
their respective successors and permitted assigns will acquire or have any
benefit, right, remedy or claim under or by reason of this Agreement, except
that the provisions of Sections 4.02 and 4.03 hereof shall inure to the benefit
of the Persons referred to therein.
Section 6.12 Schedules. All annexes and schedules attached
hereto are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. Capitalized terms used in the schedules hereto but not
otherwise defined therein will have the respective meanings assigned to such
terms in this Agreement.
Section 6.13 Termination. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Time of Distribution by and
in the sole discretion of the Rockwell Board without the approval of Automotive
or of Rockwell's shareowners. In the event of such termination, no party will
have any liability of any kind to any other party on account of such
termination.
Section 6.14 Waivers; Remedies. The conditions to Rockwell's
obligation to consummate the Distribution are for the sole benefit of Rockwell
and may be waived in writing by Rockwell in whole or in part in Rockwell's sole
discretion. No failure or delay on the part of either Rockwell or Automotive in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of either Rockwell or Automotive of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder, nor will any single or partial exercise of any
right, power or privilege hereunder
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preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which the parties may
otherwise have at law or in equity.
Section 6.15 Further Assurances. From time to time after the
Distribution, as and when requested by either party hereto, the other party
shall execute and deliver, or cause to be executed and delivered, all such
documents and instruments and shall take, or cause to be taken, all such actions
as the requesting party may reasonably request to consummate the transactions
contemplated by the Transaction Agreements.
Section 6.16 Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement.
Section 6.17 Performance. Each party will cause to be
performed and hereby guarantees the performance of all actions, agreements and
obligations set forth herein to be performed by any Subsidiary or Affiliate of
such party.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties as of the date first
hereinabove written.
ROCKWELL INTERNATIONAL CORPORATION
By: /s/ William J. Calise, Jr.
---------------------------------
William J. Calise, Jr.
Senior Vice President, General
Counsel and Secretary
MERITOR AUTOMOTIVE, INC.
By: /s/ David W. Greenfield
---------------------------------
David W. Greenfield
Senior Vice President, General
Counsel and Secretary
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The schedules and/or exhibits identified in the table of
contents to this agreement are omitted. Registrant will furnish supplementally a
copy of any omitted schedule or exhibit to the Securities and Exchange
Commission upon request.
71
<PAGE> 1
[CONFORMED COPY]
Exhibit 2.2
EMPLOYEE MATTERS AGREEMENT
by and between
ROCKWELL INTERNATIONAL CORPORATION
and
MERITOR AUTOMOTIVE, INC.
September 30, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS .................................................... 1
Section 1.01 General .............................................. 1
ARTICLE II EMPLOYEES ..................................................... 6
Section 2.01 Employees ............................................ 6
Section 2.02 Employee Benefits Generally .......................... 7
Section 2.03 Collective Bargaining Agreements ..................... 8
ARTICLE III PENSION PLANS ................................................ 9
Section 3.01 U.S. Pension Plan .................................... 9
Section 3.02 U.S. Nonqualified Pension Plans ...................... 11
Section 3.03 U.K. Executive Pension Plan .......................... 12
Section 3.04 U.K. Stand-Alone Pension Scheme ...................... 14
Section 3.05 Canadian Automotive Pension Plans .................... 15
Section 3.06 Canadian Non-Automotive Pension Plans ................ 16
Section 3.07 Australian Stand-Alone Pension Plans ................. 17
Section 3.08 German Stand-Alone Pension Plan ...................... 17
Section 3.09 Gordonsville Retirement Plan ......................... 18
ARTICLE IV SAVINGS PLANS ................................................. 19
Section 4.01 U.S. Savings Plan .................................... 19
Section 4.02 Stand-Alone Savings Plans ............................ 20
Section 4.03 Nonqualified Savings Plans ........................... 21
Section 4.04 Canadian Non-Automotive Savings Plans ................ 22
ARTICLE V STOCK PLANS .................................................... 23
Section 5.01 Stock Plans .......................................... 23
ARTICLE VI OTHER EMPLOYEE PLANS AND MATTERS .............................. 24
Section 6.01 Welfare Plans ........................................ 24
Section 6.02 Long-Term Incentive Plan and Incentive
Compensation Plans ............................. 26
Section 6.03 Deferred Compensation Plans .......................... 27
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 6.04 Canadian Automotive Bridging Benefit Plans ........... 28
Section 6.05 Canadian Automotive SUB Plan ......................... 28
Section 6.06 Severance Pay ........................................ 29
Section 6.07 Employment, Consulting and Other Employee
Related Agreements ............................. 30
Section 6.08 Rockwell VEBA ........................................ 30
Section 6.09 Other Liabilities .................................... 31
ARTICLE VII MISCELLANEOUS ................................................ 31
Section 7.01 Indemnification ...................................... 31
Section 7.02 Sharing of Information ............................... 31
Section 7.03 Entire Agreement; Construction ....................... 32
Section 7.04 Survival of Agreements ............................... 32
Section 7.05 Governing Law ........................................ 32
Section 7.06 Notices .............................................. 33
Section 7.07 Amendments ........................................... 33
Section 7.08 Assignment ........................................... 33
Section 7.09 Captions; Currency ................................... 33
Section 7.10 Severability ......................................... 34
Section 7.11 Parties in Interest .................................. 34
Section 7.12 Schedules ............................................ 34
Section 7.13 Termination .......................................... 35
Section 7.14 Change of Name ....................................... 35
Section 7.15 Waivers; Remedies .................................... 35
Section 7.16 Counterparts ......................................... 35
Section 7.17 Performance .......................................... 35
</TABLE>
SCHEDULES
Schedule 2.01 - Certain Automotive Employees
Schedule 2.03(a) - Automotive Collective Bargaining
Agreements
Schedule 2.03(b) - Rockwell Collective Bargaining
Agreements
ii
<PAGE> 4
EMPLOYEE MATTERS AGREEMENT
EMPLOYEE MATTERS AGREEMENT (this "Agreement"), dated as of September
30, 1997, by and between ROCKWELL INTERNATIONAL CORPORATION, a Delaware
corporation ("Rockwell"), and MERITOR AUTOMOTIVE, INC., a Delaware corporation
and, as of the date hereof, a wholly-owned subsidiary of Rockwell
("Automotive").
WHEREAS, the Rockwell Board has determined that it is appropriate
and desirable to distribute all outstanding shares of Automotive Common Stock on
a pro rata basis to the holders of Rockwell Common Stock (the "Distribution");
and
WHEREAS, Rockwell and Automotive are entering into a Distribution
Agreement dated as of the date hereof (the "Distribution Agreement") which,
among other things, sets forth the principal corporate transactions required to
effect the Distribution and certain other agreements that will govern certain
matters relating to the Distribution; and
WHEREAS, in connection with the Distribution, Rockwell and
Automotive have determined that it is appropriate and desirable to provide for
the allocation of certain assets and liabilities and certain other matters
relating to employees, employee benefit plans and compensation arrangements;
NOW, THEREFORE, in consideration of the premises and of the
respective agreements and covenants contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. Capitalized terms used in this Agreement but
not defined herein (other than the names of employee benefit plans) shall have
the meanings ascribed to such terms in the Distribution Agreement. As used in
this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Australian Stand-Alone Pension Plans" shall have the meaning
ascribed thereto in Section 3.07.
<PAGE> 5
"Automotive Canada" shall mean Meritor Automotive Canada Inc., a
Canadian corporation that will be a member of the Automotive Group.
"Automotive Employee" means any individual who will be employed by a
member of the Automotive Group as of the Time of Distribution pursuant to
Section 2.01.
"Automotive Former Employee" means any individual who was, at any
time prior to the Time of Distribution, employed by any member of the
Pre-Distribution Group, who is not as of the Time of Distribution a
Rockwell Employee or an Automotive Employee, and whose most recent active
employment with such member of the Pre-Distribution Group was with the
Automotive Business.
"Automotive Nonqualified Pension Plans" shall have the meaning
ascribed thereto in Section 3.02(a).
"Automotive Nonqualified Savings Plans" shall have the meaning
ascribed thereto in Section 4.03(a).
"Automotive Option" means an option to purchase from Automotive
shares of Automotive Common Stock provided to an Automotive Participant
pursuant to Section 5.01(b).
"Automotive Option Ratio" means the amount obtained by dividing (i)
the Average Price of Automotive Common Stock by (ii) the average of the
daily closing prices per share of Rockwell Common Stock trading on a
"regular way" basis as reported on the New York Stock Exchange ("NYSE")
Composite Transactions reporting system for the five consecutive full NYSE
trading days ending on and including the Distribution Date.
"Automotive Participants" means Automotive Employees, Automotive
Former Employees and their respective beneficiaries.
"Automotive Pension Plan" shall have the meaning ascribed thereto in
Section 3.01(a).
"Automotive Savings Plan" shall have the meaning ascribed thereto in
Section 4.01(a).
"Automotive Welfare Plans" shall have the meaning ascribed thereto
in Section 6.01(a).
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<PAGE> 6
"Average Price of Automotive Common Stock" means the average of the
daily closing prices per share of Automotive Common Stock as reported on
the NYSE Composite Transactions reporting system for the five consecutive
full NYSE trading days ending on and including the Distribution Date (the
"Pre-Distribution Period"), assuming that "when-issued" trading in
Automotive Common Stock occurs during the Pre-Distribution Period in daily
volume of not less than 10,000 shares (and if on any day (an "Automotive
Excluded Day") during the Pre-Distribution Period such trading does not
occur in such volume, then for purposes of this definition trading on each
Automotive Excluded Day shall not be considered and trading on up to five
full NYSE trading days immediately following the Distribution Date shall
be included so that a total of five trading days are included in the
averaging period).
"Canadian Automotive Bridging Benefit Plans" shall have the meaning
ascribed thereto in Section 6.04.
"Canadian Automotive Pension Plans" shall have the meaning ascribed
thereto in Section 3.05.
"Canadian Automotive SUB Plan" shall have the meaning ascribed
thereto in Section 6.05.
"Canadian Non-Automotive Pension Plans" shall have the meaning
ascribed thereto in Section 3.06.
"Canadian Non-Automotive Savings Plans" shall have the meaning
ascribed thereto in Section 4.04.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor legislation.
"German Stand-Alone Pension Plan" shall have the meaning ascribed
thereto in Section 3.08.
"Gordonsville Retirement Plan" shall have the meaning ascribed
thereto in Section 3.09.
"Incentive Compensation Plan" means the Rockwell International
Corporation Incentive Compensation Plan, including all amendments thereto.
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<PAGE> 7
"LTIP" shall have the meaning ascribed thereto in Section
6.02.
"New Rockwell Canada" shall mean the Canadian entity, which will be
a member of the Rockwell Group, formed to carry on the businesses of
Rockwell and its Subsidiaries (other than the Automotive Business) in
Canada that were carried on prior to the Time of Distribution by
Allen-Bradley Canada Limited, Rockwell International of Canada Ltd. and
Rockwell International of Canada.
"Pre-1997 Rockwell Option" means an option to purchase from Rockwell
shares of Rockwell Common Stock granted prior to October 1, 1996 pursuant
to one of the Rockwell Stock Plans.
"Rockwell Deferred Compensation Plan" shall have the meaning
ascribed thereto in Section 6.03.
"Rockwell Employee" means any individual who will be employed by a
member of the Rockwell Group as of the Time of Distribution pursuant to
Section 2.01.
"Rockwell Former Employee" means any individual who was, at any time
prior to the Time of Distribution, employed by any member of the
Pre-Distribution Group, who is not as of the Time of Distribution a
Rockwell Employee or an Automotive Employee, and whose most recent active
employment with a member of the Pre-Distribution Group was with a business
other than the Automotive Business.
"Rockwell Nonqualified Pension Plans" shall have the meaning
ascribed thereto in Section 3.02(a).
"Rockwell Nonqualified Savings Plans" shall have the meaning
ascribed thereto in Section 4.03(a).
"Rockwell 1997 Option" means an option to purchase from Rockwell
shares of Rockwell Common Stock granted after September 30, 1996 pursuant
to one of the Rockwell Stock Plans.
"Rockwell Option Ratio" means the amount obtained by dividing (i)
the average of the daily closing prices per share of Rockwell Common Stock
trading on an "ex-distribution when-issued" basis as reported on the NYSE
Composite Transactions reporting system for the Pre-
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<PAGE> 8
Distribution Period, assuming that "ex-distribution when-issued" trading
in Rockwell Common Stock occurs during the Pre-Distribution Period in
daily volume of not less than 10,000 shares (and if on any day (a
"Rockwell Excluded Day") during the Pre-Distribution Period such trading
does not occur in such volume, then for purposes of this clause (i)
trading on each Rockwell Excluded Day shall not be considered and trading
on up to five full NYSE trading days immediately following the
Distribution Date shall be included so that a total of five trading days
are included in the averaging period) by (ii) the average of the daily
closing prices per share of Rockwell Common Stock trading on a "regular
way" basis as reported on the NYSE Composite Transactions reporting system
for the Pre-Distribution Period; provided, that if the committee appointed
by the Board of Directors of Rockwell shall determine on or before the
opening of trading on the NYSE on the first NYSE trading day following the
Distribution Date that, notwithstanding satisfaction of the 10,000 share
per day minimum trading volume requirement, "ex-distribution when-issued"
trading on one or more days during the Pre-Distribution Period does not
fairly represent the value of Rockwell Common Stock, then for purposes of
clause (i) above, each such day so determined shall be treated as a
Rockwell Excluded Day, trading on each Rockwell Excluded Day shall not be
considered and trading on up to five full NYSE trading days (as determined
by such committee) immediately following the Distribution Date shall be
included so that a total of five trading days are included in the
averaging period.
"Rockwell Participants" means Rockwell Employees, Rockwell Former
Employees and their respective beneficiaries.
"Rockwell Pension Plan" means the Rockwell International Corporation
Retirement Plan for Eligible Employees, including all amendments thereto.
"Rockwell Savings Plan" means the Rockwell International Corporation
Savings Plan, including all amendments thereto.
"Rockwell Stock Plans" means, collectively, the Rockwell 1995
Long-Term Incentives Plan and the Rockwell 1988 Long-Term Incentives Plan,
in each case, including all amendments thereto.
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<PAGE> 9
"Rockwell U.K. Executive Plan" means the Rockwell U.K. Executive
Pension Plan, including all amendments thereto.
"Rockwell Welfare Plans" shall have the meaning ascribed thereto in
Section 6.01(a).
"Stand-Alone Savings Plans" shall have the meaning ascribed thereto
in Section 4.02.
"U.K. Stand-Alone Pension Scheme" means the Rockwell Automotive U.K.
Pension Scheme, as amended through the Time of Distribution.
"U.K. Transferring Employees" shall have the meaning ascribed
thereto in Section 3.03(b).
"Welfare Plan" means an employee welfare benefit plan as defined in
Section 3(1) of ERISA, including, without limitation, medical, vision,
dental and other health plans, retiree health plans, life insurance plans,
retiree life insurance plans, accidental death and dismemberment plans,
long-term disability plans and severance pay plans.
ARTICLE II
EMPLOYEES
Section 2.01 Employees.
(a) Each individual (other than those engaged primarily in the
businesses of Rockwell and its Subsidiaries other than the Automotive Business)
who is employed by any member of the Automotive Group immediately prior to the
Time of Distribution (including, without limitation, those who are actively
employed or on lay-off, leave, short-term or long-term disability or other
permitted absence from employment) will continue to be employed by such member
of the Automotive Group as of the Time of Distribution and will be an Automotive
Employee. In addition, each individual who is employed by Rockwell or any of its
Subsidiaries (other than by members of the Automotive Group) immediately prior
to the Time of Distribution and (x) who is engaged primarily in the Automotive
Business or (y) who Rockwell consents to becoming an Automotive Employee, it
being understood that Rockwell has granted such consent in respect of
individuals identified on the attached Schedule 2.01 (including, in the
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<PAGE> 10
case of both clauses (x) and (y), those who are actively employed or on lay-off,
leave, short-term or long-term disability or other permitted absence from
employment) will be employed by a member of the Automotive Group as of the Time
of Distribution and will be an Automotive Employee.
(b) Each individual (other than those engaged primarily in the
Automotive Business and those who Rockwell consents to becoming an Automotive
Employee) who is employed by any member of the Rockwell Group immediately prior
to the Time of Distribution (including, without limitation, those who are
actively employed or on lay-off, leave, short-term or long-term disability or
other permitted absence from employment) will continue to be employed by a
member of the Rockwell Group as of the Time of Distribution and will be a
Rockwell Employee. In addition, each individual who is employed by any member of
the Automotive Group immediately prior to the Time of Distribution and who is
engaged primarily in businesses of Rockwell and its Subsidiaries other than the
Automotive Business (including those who are actively employed or on lay-off,
leave, short-term or long-term disability or other permitted absence from
employment) will be employed by a member of the Rockwell Group as of the Time of
Distribution and will be a Rockwell Employee.
(c) Nothing contained in this Section 2.01 is intended to confer
upon any employee of the Rockwell Group or the Automotive Group any right to
continued employment after the Distribution Date.
Section 2.02 Employee Benefits Generally. For a period of at least
one year after the Time of Distribution, the Automotive Group will provide to
Automotive Participants employee benefits that are substantially similar in all
material respects to the employee benefits provided to such Automotive
Participants by Rockwell and its Subsidiaries (including members of the
Automotive Group) immediately prior to the Time of Distribution.
Section 2.03 Collective Bargaining Agreements.
(a) Effective as of the Time of Distribution, Automotive will, or
will cause one or more Automotive Subsidiaries to, unconditionally assume or
retain (as applicable) all Liabilities (including, without limitation, those
relating to wages, hours or other terms and conditions of employment) relating
to Automotive Participants under each of the collective bargaining agreements of
the Pre-Distribution Group relating to the Automotive Business and
7
<PAGE> 11
collateral agreements related thereto, including, without limitation, those
listed on Schedule 2.03(a). From and after the Time of Distribution, none of
Rockwell, the Rockwell Subsidiaries or their Affiliates will have any
Liabilities with respect to Automotive Participants under collective bargaining
agreements relating to the Automotive Business or collateral agreements relating
thereto. Rockwell and Automotive will take, or cause to be taken, all such
action as may be necessary or appropriate to establish, effective as of the Time
of Distribution, Automotive or one or more Automotive Subsidiaries as successors
to Rockwell and the Rockwell Subsidiaries as to all rights, duties and
Liabilities under, or with respect to, such collective bargaining agreements and
collateral agreements.
(b) Effective as of the Time of Distribution, Rockwell will, or will
cause one or more Rockwell Subsidiaries to, unconditionally assume or retain (as
applicable) all Liabilities (including, without limitation, those relating to
wages, hours or other terms and conditions of employment) relating to Rockwell
Participants under each of the collective bargaining agreements of the
Pre-Distribution Group relating to businesses of Rockwell and its Subsidiaries
other than the Automotive Business and collateral agreements related thereto,
including, without limitation, those listed on Schedule 2.03(b). From and after
the Time of Distribution, none of Automotive, the Automotive Subsidiaries or
their Affiliates will have any Liabilities with respect to Rockwell Participants
under collective bargaining agreements relating to businesses of Rockwell and
its Subsidiaries other than the Automotive Business or collateral agreements
relating thereto. Rockwell and Automotive will take, or cause to be taken, all
such action as may be necessary or appropriate to establish, effective as of the
Time of Distribution, Rockwell or one or more Rockwell Subsidiaries as
successors to members of the Automotive Group as to all rights, duties and
Liabilities under, or with respect to, such collective bargaining agreements and
collateral agreements.
(c) Rockwell and Automotive will cooperate in engaging in all
appropriate negotiations, implementing all appropriate communications,
transferring appropriate records and taking all other actions as may be
necessary or appropriate to implement the provisions of this Section 2.03.
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<PAGE> 12
ARTICLE III
PENSION PLANS
Section 3.01 U.S. Pension Plan.
(a) As of the Time of Distribution, Automotive will have
established, and will cover Automotive Employees who participated in the
Rockwell Pension Plan immediately prior to the Time of Distribution under, a
defined benefit pension plan (the "Automotive Pension Plan"), which will be
qualified under Section 401(a) of the Code, and will have established a related
trust which will be exempt from taxation under Section 501(a) of the Code. The
Automotive Pension Plan will be substantially similar in all material respects
to the Rockwell Pension Plan as of the Time of Distribution, and will provide a
benefit formula for Automotive Employees which will be substantially similar in
all material respects to the benefit formula that the Rockwell Pension Plan
provides as of the Time of Distribution. The Automotive Pension Plan will be
maintained in such form for a period of at least one year following the Time of
Distribution. The Automotive Pension Plan will credit each Automotive Employee
for purposes of eligibility to participate, vesting, benefit accruals and all
other plan purposes with all service which had been credited to such Automotive
Employee for such purposes under the Rockwell Pension Plan immediately prior to
the Time of Distribution (excluding any such service which was not counted under
the Rockwell Pension Plan by operation of its "break in service" rules);
provided, however, that service with Rockwell and Automotive will not be
aggregated under the Automotive Pension Plan for any periods following the time
at which the plan participant commences the receipt of benefits under the
Rockwell Pension Plan if the plan participant is not also retired under the
Automotive Pension Plan. Notwithstanding the above, the Automotive Pension Plan
will provide that the benefit of each Automotive Employee under the Automotive
Pension Plan will be reduced by the amount of the benefit to which the
Automotive Employee would be entitled under the Rockwell Pension Plan if the
Automotive Employee commenced receipt of benefits from the Rockwell Pension Plan
at the same time as from the Automotive Pension Plan, based on the Automotive
Employee's service and salary history under the Rockwell Pension Plan at the
Time of Distribution. Rockwell will provide Automotive with prompt notice if an
Automotive Employee commences receipt of benefits under the Rockwell Pension
Plan.
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<PAGE> 13
(b) Effective as of the Time of Distribution, the Automotive
Employees who participated in the Rockwell Pension Plan immediately prior to the
Time of Distribution will cease to accrue service credits for benefit, benefit
eligibility, vesting, and all other purposes under the Rockwell Pension Plan and
will have the right to receive a benefit, if any, under the Rockwell Pension
Plan accrued as of the Time of Distribution in accordance with the terms of the
Rockwell Pension Plan; provided, however, that, effective as of the Time of
Distribution, Automotive Employees who participated in the Rockwell Pension Plan
immediately prior to the Time of Distribution will have a nonforfeitable right
to their benefit, if any, under the Rockwell Pension Plan. None of Automotive or
the Automotive Subsidiaries, the Affiliates thereof, the Automotive Pension Plan
or the trust thereunder will have or acquire any interest in or right to any of
the assets of the Rockwell Pension Plan, and Rockwell will retain full power and
authority with respect to the amendment and termination of the Rockwell Pension
Plan and the investment and disposition of assets held in the Rockwell Pension
Plan to the extent permitted by law. From and after the Time of Distribution,
none of Rockwell or the Rockwell Subsidiaries, the Affiliates thereof, the
Rockwell Pension Plan or the trust thereunder will have any Liabilities with
respect to benefits and entitlements of Automotive Participants under the
Rockwell Pension Plan, except with respect to benefits accrued under the
Rockwell Pension Plan prior to the Time of Distribution.
(c) Automotive and Rockwell will cooperate in making all appropriate
filings required under the Code or ERISA, the regulations thereunder and any
other applicable laws, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking such other
actions as may be necessary or appropriate to implement the provisions of this
Section 3.01.
Section 3.02 U.S. Nonqualified Pension Plans.
(a) As of the Time of Distribution, Automotive will establish
nonqualified pension plans (the "Automotive Nonqualified Pension Plans") and
will cover thereunder Automotive Participants who participated immediately prior
to the Time of Distribution in, or retired from Rockwell prior to the Time of
Distribution and are entitled to receive benefits from, the Rockwell
International Corporation Supplemental Retirement Plan for Highly Compensated
Employees or the Rockwell International
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Corporation Excess Benefit Retirement Plan, in each case as amended through the
Time of Distribution (collectively, the "Rockwell Nonqualified Pension Plans").
The Automotive Nonqualified Pension Plans will be substantially similar in all
material respects to the Rockwell Nonqualified Pension Plans as of the Time of
Distribution, and will provide a benefit formula for Automotive Participants
which will be substantially similar in all material respects to the benefit
formula that the Rockwell Nonqualified Pension Plans provide as of the Time of
Distribution. The Automotive Nonqualified Pension Plans will be maintained in
such form for a period of at least one year following the Time of Distribution.
The Automotive Nonqualified Pension Plans will credit each Automotive
Participant for purposes of eligibility to participate, vesting, benefit
accruals and all other plan purposes with all service which had been credited to
such Automotive Participant for such purposes under the Rockwell Nonqualified
Pension Plans immediately prior to the Time of Distribution (excluding any such
service which was not counted under the Rockwell Nonqualified Pension Plans by
operation of their "break in service" rules); provided, however, that service
with Rockwell and Automotive will not be aggregated under the Automotive
Nonqualified Pension Plans for any periods following the time at which the plan
participant commences the receipt of benefits under the Automotive Nonqualified
Pension Plans as a result of retirement under the Rockwell Pension Plan if the
plan participant is not also retired under the Automotive Nonqualified Pension
Plans. The Automotive Nonqualified Pension Plans will provide for benefits based
on Automotive Participants' participation in both the Rockwell Pension Plan and
the Automotive Pension Plan, as applicable.
(b) Effective as of the Time of Distribution, Automotive hereby
assumes and agrees to fully perform, pay and discharge all of Rockwell's and its
Subsidiaries' Liabilities under the Rockwell Nonqualified Pension Plans with
respect to Automotive Participants. From and after the Time of Distribution,
none of Rockwell or the Rockwell Subsidiaries or their Affiliates will have any
Liabilities under the Rockwell Nonqualified Pension Plans with respect to
Automotive Participants. It is the intention of the parties that Automotive will
satisfy its obligations to assume all Liabilities under the Rockwell
Nonqualified Pension Plans with respect to Automotive Participants by granting
to such participants the credit under the Automotive Nonqualified Pension Plans
provided for under paragraph 3.02(a) hereof.
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<PAGE> 15
(c) Rockwell and Automotive will cooperate in making all appropriate
filings required by law, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking all other
actions as may be necessary or appropriate to implement the provisions of this
Section 3.02.
Section 3.03 U.K. Executive Pension Plan.
(a) As of the Time of Distribution, Rockwell and Automotive will
have caused a United Kingdom Subsidiary of Rockwell (which will be a member of
the Rockwell Group) to become the principal company of the Rockwell U.K.
Executive Plan. Rockwell and Automotive will cooperate in making all appropriate
filings under applicable law, including without limitation, filing a deed of
substitution, to cause such Rockwell United Kingdom Subsidiary to become the
principal company of the Rockwell U.K. Executive Plan.
(b) Rockwell will offer to those Automotive Employees who
participated in the Rockwell U.K. Executive Plan immediately prior to the Time
of Distribution the option to consent to the transfer, effective as of the Time
of Distribution, of their benefits thereunder from the Rockwell U.K. Executive
Plan to the U.K. Stand-Alone Pension Scheme. Automotive will cause the U.K.
Stand-Alone Pension Scheme to assume and fully perform, pay and discharge all
Liabilities of the Rockwell U.K. Executive Plan in respect of all such
Automotive Employees who consent to such transfer ("U.K. Transferring
Employees"). Automotive will cause the U.K. Stand-Alone Pension Scheme to credit
each U.K. Transferring Employee for purposes of eligibility to participate,
vesting, benefit accruals and all other plan purposes with all service which had
been credited to such U.K. Transferring Employee for such purpose under the
Rockwell U.K. Executive Plan immediately prior to the Time of Distribution. As
soon as practicable after receipt of consents from U.K. Transferring Employees,
Rockwell will cause the Rockwell U.K. Executive Plan to transfer to the U.K.
Stand-Alone Pension Scheme assets equal in value to the cash equivalent value of
the U.K. Transferring Employees' benefit obligations under the Rockwell U.K.
Executive Plan at the Time of Distribution, based on the salary and service of
the U.K. Transferring Employees as of the Time of Distribution. As and when
required, Automotive will contribute to the U.K. Stand-Alone Pension Scheme such
additional contributions as the trustees of the U.K. Stand-Alone Pension Scheme
may require in order to fund the
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benefits of the U.K. Transferring Employees under the U.K. Stand-Alone Pension
Scheme.
(c) Effective as of the Time of Distribution, the Automotive
Employees who participated in the Rockwell U.K. Executive Plan immediately prior
to the Time of Distribution will cease to accrue service credits for benefit,
benefit eligibility, vesting and all other purposes under the Rockwell U.K.
Executive Plan and will have the right to receive a benefit, if any, under the
Rockwell U.K. Executive Plan accrued as of the Time of Distribution in
accordance with the terms of the Rockwell U.K. Executive Plan; provided,
however, that U.K. Transferring Employees will have no right to receive any
benefit from the Rockwell U.K. Executive Plan. None of Automotive or the
Automotive Subsidiaries or their Affiliates will have or acquire any interest in
or right to any of the assets of the Rockwell U.K. Executive Plan, and Rockwell
and the Rockwell Subsidiaries will retain full power and authority with respect
to the amendment and termination of the Rockwell U.K. Executive Plan and the
investment and disposition of assets held in the Rockwell U.K. Executive Plan to
the extent permitted by law. From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries, the Affiliates thereof or the Rockwell
U.K. Executive Plan will have any Liabilities with respect to benefits and
entitlements of U.K. Transferring Employees under the Rockwell U.K. Executive
Plan or other Automotive Employees (except with respect to such other Automotive
Employees' benefits accrued under the Rockwell U.K. Executive Plan prior to the
Time of Distribution).
(d) Automotive and Rockwell will cooperate in making all appropriate
filings required under applicable law, implementing all appropriate
communications with participants, exchanging and sharing appropriate records and
taking all other actions as may be necessary or appropriate to implement the
provisions of this Section 3.03.
Section 3.04 U.K. Stand-Alone Pension Scheme. Effective as of the
Time of Distribution, Automotive will or will cause an Automotive Subsidiary to
(i) assume and adopt or continue sponsorship of the U.K. Stand-Alone Pension
Scheme, and all assets and Liabilities related thereto, and (ii) fully succeed
to and perform, pay and discharge all of the Pre-Distribution Group's
Liabilities with respect to the U.K. Stand-Alone Pension Scheme, subject to the
Inland Revenue's consent and the governing provisions of the U.K. Stand-Alone
Pension Scheme. The U.K. Stand-Alone Pension
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<PAGE> 17
Scheme will be maintained in a form substantially similar in all material
respects to the form in which it existed immediately prior to the Time of
Distribution for a period of at least one year following the Time of
Distribution. Effective as of the Time of Distribution, Automotive will or will
cause the applicable Automotive Subsidiary to nominate (i) an organization which
is a member of the Investment Management Regulatory Organization as investment
manager of the U.K. Stand-Alone Pension Scheme and (ii) an organization
registered in the United Kingdom as custodian of the assets of the U.K.
Stand-Alone Pension Scheme. Automotive will cause the U.K. Stand-Alone Pension
Scheme to cover, effective as of the Time of Distribution, all Automotive
Employees who participated in the Rockwell U.K. Executive Plan immediately prior
to the Time of Distribution (it being understood that only such Automotive
Employees who are U.K. Transferring Employees will be credited under the U.K.
Stand-Alone Pension Scheme with all service credited to such employees under the
Rockwell U.K. Executive Plan immediately prior to the Time of Distribution).
From and after the Time of Distribution, none of Rockwell or the Rockwell
Subsidiaries or their Affiliates will have any Liabilities with respect to the
U.K. Stand-Alone Pension Scheme. Rockwell and Automotive will take, or cause to
be taken, all such action as may be necessary or appropriate to establish,
effective as of the Time of Distribution, Automotive or the applicable
Automotive Subsidiary as successor to Rockwell and the Rockwell Subsidiaries as
to all rights, assets, duties and Liabilities under, or with respect to, the
U.K. Stand-Alone Pension Scheme. Rockwell and Automotive will cooperate in
making all appropriate filings required by law, implementing all appropriate
communications with participants, transferring appropriate records and taking
all other actions as may be necessary or appropriate to implement the provisions
of this Section 3.04.
Section 3.05 Canadian Automotive Pension Plans. Effective as of the
Time of Distribution, Automotive will cause Automotive Canada to (i) assume and
adopt sponsorship of and all assets and Liabilities of the Pre-Distribution
Group under (A) the Pension Plan for Non-Union Salaried Employees of Rockwell
International of Canada, (B) the Pension Plan for Hourly Employees of Rockwell
International of Canada - C.A.W. Local 1941 (Tilbury, Ontario), (C) the
Non-Contributory Pension Plan for Hourly Employees of Rockwell International of
Canada - C.A.W. Local 61 (Bracebridge, Ontario), (D) the Retirement Income Plan
for Union Employees of Rockwell International of Canada Ltd. - Plastic Products
Division, (E) the Pension Plan for Hourly
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Employees of Rockwell International of Canada Ltd. - U.S.W.A. Local 3209
(Gananoque, Ontario) and (F) the Pensioners' Pension Plan of Rockwell
International of Canada Ltd., in each case as amended through the Time of
Distribution (the plans referred to in clauses (A) - (F) above are referred to
herein collectively as the "Canadian Automotive Pension Plans"), and the
respective trusts or other funding media related to the Canadian Automotive
Pension Plans, and (ii) fully perform, pay and discharge all of the
Pre-Distribution Group's Liabilities with respect to the Canadian Automotive
Pension Plans and the respective trusts or other funding media related thereto.
The Canadian Automotive Pension Plans will be maintained in forms substantially
similar in all material respects to the forms in which they existed immediately
prior to the Time of Distribution for a period of at least one year following
the Time of Distribution. From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries or their Affiliates will have any
Liabilities with respect to the Canadian Automotive Pension Plans and the
respective trusts or other funding media related thereto. Rockwell and
Automotive will take, or cause to be taken, all such action as may be necessary
or appropriate to establish, effective as of the Time of Distribution,
Automotive Canada as successor to Rockwell and the Rockwell Subsidiaries as to
all rights, assets, duties and Liabilities under, or with respect to, the
Canadian Automotive Pension Plans. Rockwell and Automotive will cooperate in
making all appropriate filings required by law, implementing all appropriate
communications with participants, transferring appropriate records, notifying
plan trustees and taking all other actions as may be necessary or appropriate to
implement the provisions of this Section 3.05.
Section 3.06 Canadian Non-Automotive Pension Plans. Effective as of
the Time of Distribution, Rockwell will cause New Rockwell Canada to (i) assume
and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution
Group under (A) the Retirement Plan for Employees of the Allen-Bradley Division
of Rockwell International of Canada, (B) the Pension Plan for Hourly Employees
of Rockwell International of Canada Ltd. - I.M.A.W. Local 92 (Guelph, Ontario),
(C) the Pension Plan for Employees of Rockwell International of Canada Ltd. -
Measurement and Flow Control Division, (D) the Retirement Plan for Production
Employees of Rockwell International of Canada Ltd. - I.B.E.W. Local 1966
(Collins Canada Division) and (E) the Retirement Plan for Salaried Employees of
Rockwell International of Canada Ltd. (Collins Canada
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Division), in each case as amended through the Time of Distribution (the plans
referred to in clauses (A) - (E) above are referred to herein collectively as
the "Canadian Non-Automotive Pension Plans") and the respective trusts or other
funding media related to the Canadian Non-Automotive Pension Plans, and (ii)
fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities
with respect to the Canadian Non-Automotive Pension Plans and the respective
trusts or other funding media related thereto. From and after the Time of
Distribution, none of Automotive or the Automotive Subsidiaries or their
Affiliates will have any Liabilities with respect to the Canadian Non-Automotive
Pension Plans and the respective trusts or other funding media related thereto.
Rockwell and Automotive will take, or cause to be taken, all such action as may
be necessary or appropriate to establish, effective as of the Time of
Distribution, New Rockwell Canada as successor to Rockwell and the Rockwell
Subsidiaries as to all rights, assets, duties and Liabilities under, or with
respect to, the Canadian Non-Automotive Pension Plans. Rockwell and Automotive
will cooperate in making all appropriate filings required by law, implementing
all appropriate communications with participants, transferring appropriate
records, notifying plan trustees and taking all other actions as may be
necessary or appropriate to implement the provisions of this Section 3.06.
Section 3.07 Australian Stand-Alone Pension Plans. Effective as of
the Time of Distribution, Automotive will or will cause one or more Automotive
Subsidiaries to (i) assume and adopt sponsorship of the Rockwell Standard of
Australia Superannuation Plan and the Rockwell A.B.S. Australia Superannuation
Plan, in each case as amended through the Time of Distribution (collectively,
the "Australian Stand-Alone Pension Plans"), the respective trusts related
thereto and all assets and Liabilities related thereto, and (ii) fully perform,
pay and discharge all of the Pre-Distribution Group's Liabilities with respect
to the Australian Stand-Alone Pension Plans and the respective trusts related
thereto. The Australian Stand-Alone Pension Plans will be maintained in forms
substantially similar in all material respects to the forms in which they
existed immediately prior to the Time of Distribution for a period of at least
one year following the Time of Distribution. From and after the Time of
Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates
will have any Liabilities with respect to the Australian Stand-Alone Pension
Plans and the respective trusts related thereto. Rockwell and Automotive
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will take, or cause to be taken, all such action as may be necessary or
appropriate to establish, effective as of the Time of Distribution, Automotive
and the Automotive Subsidiaries as successors to Rockwell and the Rockwell
Subsidiaries as to all rights, assets, duties and Liabilities under, or with
respect to, the Australian Stand-Alone Pension Plans. Rockwell and Automotive
will cooperate in making all appropriate filings required by law, implementing
all appropriate communications with participants, transferring appropriate
records, replacing the trustees under each Australian Stand-Alone Pension Plan
with trustees designated by Automotive and taking all other actions as may be
necessary or appropriate to implement the provisions of this Section 3.07.
Section 3.08 German Stand-Alone Pension Plan. Effective as of the
Time of Distribution, Automotive will or will cause one or more Automotive
Subsidiaries to (i) assume and adopt sponsorship of the Pension Plan for the
Employees of Rockwell-Golde GmbH, as amended through the Time of Distribution
(the "German Stand-Alone Pension Plan"), and all Liabilities related thereto,
and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's
Liabilities with respect to the German Stand-Alone Pension Plan. The German
Stand-Alone Pension Plan will be maintained in a form substantially similar in
all material respects to the form in which it existed immediately prior to the
Time of Distribution for a period of at least one year following the Time of
Distribution. From and after the Time of Distribution, none of Rockwell or the
Rockwell Subsidiaries or their Affiliates will have any Liabilities with respect
to the German Stand-Alone Pension Plan. Rockwell and Automotive will take, or
cause to be taken, all such action as may be necessary or appropriate to
establish, effective as of the Time of Distribution, Automotive and the
Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries
as to all rights, duties and Liabilities under, or with respect to, the German
Stand-Alone Pension Plan. Rockwell and Automotive will cooperate in making all
appropriate filings required by law, implementing all appropriate communications
with participants, transferring appropriate records, replacing any trustees
under the German Stand-Alone Pension Plan with trustees designated by Automotive
and taking all other actions as may be necessary or appropriate to implement the
provisions of this Section 3.08.
Section 3.09 Gordonsville Retirement Plan. Effective as of the Time
of Distribution, Automotive will or
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will cause one or more Automotive Subsidiaries to (i) assume and adopt
sponsorship of the Rockwell International Corporation Retirement Plan for Hourly
Employees, Gordonsville, Tennessee (the "Gordonsville Retirement Plan"), the
respective trust related thereto and all assets and Liabilities related thereto,
and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's
Liabilities with respect to the Gordonsville Retirement Plan and the respective
trust related thereto. The Gordonsville Retirement Plan will be maintained in a
form substantially similar in all material respects to the form in which it
existed immediately prior to the Time of Distribution for a period of at least
one year following the Time of Distribution. From and after the Time of
Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates
will have any Liabilities with respect to the Gordonsville Retirement Plan and
the respective trust related thereto. Rockwell and Automotive will take, or
cause to be taken, all such action as may be necessary or appropriate to
establish, effective as of the Time of Distribution, Automotive and the
Automotive Subsidiaries as successors to Rockwell and the Rockwell Subsidiaries
as to all rights, assets, duties and Liabilities under, or with respect to, the
Gordonsville Retirement Plan. Rockwell and Automotive will cooperate in making
all appropriate filings required by law, implementing all appropriate
communications with participants, transferring appropriate records, replacing
the trustees under the Gordonsville Retirement Plan with trustees designated by
Automotive and taking all other actions as may be necessary or appropriate to
implement the provisions of this Section 3.09.
ARTICLE IV
SAVINGS PLANS
Section 4.01 U.S. Savings Plan.
(a) As of the Time of Distribution, Automotive will have
established, and will cover the Automotive Employees who participated in the
Rockwell Savings Plan immediately prior to the Time of Distribution under, a
defined contribution plan (the "Automotive Savings Plan"), which will be
qualified pursuant to Sections 401(a) and 401(k) of the Code, and will have
established a related trust which shall be exempt from taxation under Section
501(a) of the Code. The Automotive Savings Plan will be substantially similar in
all material respects to
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the Rockwell Savings Plan as of the Time of Distribution, except that Automotive
Common Stock will be substituted for all plan purposes for Rockwell Common Stock
and the other investment vehicles offered by the Automotive Savings Plan will
not be identical to the investment vehicles offered by the Rockwell Savings
Plan. The Automotive Savings Plan will provide the same employer contribution
formula for Automotive Employees as the Rockwell Savings Plan provides as of the
Time of Distribution. The Automotive Savings Plan will be maintained in such
form for a period of at least one year following the Time of Distribution. The
Automotive Savings Plan will credit each Automotive Employee for purposes of
vesting and eligibility with all service which had been credited to such
Automotive Employee for such purposes under the Rockwell Savings Plan
immediately prior to the Time of Distribution (excluding any such service which
was not counted under the Rockwell Savings Plan by operation of its "break in
service" rules).
(b) Effective as of the Time of Distribution, Automotive Employees
who participated in the Rockwell Savings Plan immediately prior to the Time of
Distribution will be treated as terminated, fully vested participants under the
Rockwell Savings Plan, except that they will not be treated as having terminated
employment for purposes of entitlement to distributions or the repayment of
outstanding loans solely as a result of becoming Automotive Employees. Effective
as of the Time of Distribution, Automotive Employees will cease to be eligible
to contribute to, or receive contributions in respect of, their Rockwell Savings
Plan accounts. None of Automotive or the Automotive Subsidiaries, the Affiliates
thereof, the Automotive Savings Plan or the trust thereunder will have or
acquire any interest in or right to any of the assets of the Rockwell Savings
Plan, and Rockwell will retain full power and authority with respect to the
amendment and termination of the Rockwell Savings Plan and the investment and
disposition of assets held in the Rockwell Savings Plan to the extent permitted
by law. From and after the Time of Distribution, none of Rockwell or the
Rockwell Subsidiaries, the Affiliates thereof, the Rockwell Savings Plan or the
trust thereunder will have any Liabilities with respect to benefits and
entitlements of Automotive Employees under the Rockwell Savings Plan, except
with respect to benefits accrued under the Rockwell Savings Plan prior to the
Time of Distribution.
(c) Automotive and Rockwell will cooperate in making all appropriate
filings required under the Code or
19
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ERISA, the regulations thereunder and any other applicable laws, implementing
all appropriate communications with participants, exchanging and sharing
appropriate records and taking all other actions as may be necessary or
appropriate to implement the provisions of this Section 4.01.
Section 4.02 Stand-Alone Savings Plans. Effective as of the Time of
Distribution, Automotive will or will cause one or more Automotive Subsidiaries
to (i) assume and adopt sponsorship of the Asheville Employees Retirement
Savings Plan Truck Axle Division, the Rockwell International Corporation
Gordonsville, Tennessee Employee Savings Plan, and the York Employees Retirement
Savings Plan Truck Axle Division, in each case as amended through the Time of
Distribution (collectively, the "Stand-Alone Savings Plans"), the respective
trusts related thereto and all assets and Liabilities related thereto, and (ii)
fully perform, pay and discharge all of the Pre-Distribution Group's Liabilities
with respect to the Stand-Alone Savings Plans and the respective trusts related
thereto. The Stand-Alone Savings Plans will be maintained in forms substantially
similar in all material respects to the forms in which they existed immediately
prior to the Time of Distribution for a period of at least one year following
the Time of Distribution. From and after the Time of Distribution, none of
Rockwell or the Rockwell Subsidiaries or their Affiliates will have any
Liabilities with respect to the Stand-Alone Savings Plans and the respective
trusts related thereto. Rockwell and Automotive will take, or cause to be taken,
all such action as may be necessary or appropriate to establish, effective as of
the Time of Distribution, Automotive and the Automotive Subsidiaries as
successors to Rockwell and the Rockwell Subsidiaries as to all rights, assets,
duties and Liabilities under, or with respect to, the Stand-Alone Savings Plans.
Rockwell and Automotive will cooperate in making all appropriate filings
required by law, implementing all appropriate communications with participants,
transferring appropriate records, replacing the trustees under each Stand-Alone
Savings Plan with trustees designated by Automotive and taking all other actions
as may be necessary or appropriate to implement the provisions of this Section
4.02.
Section 4.03 Nonqualified Savings Plans.
(a) Rockwell will retain all Liabilities for and will pay when due
all benefits accrued as of the Time of Distribution by, and attributable to,
Automotive Employees under the Rockwell International Corporation Supplemental
20
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Savings Plan for Highly Compensated Employees and the Rockwell International
Corporation Excess Benefit Savings Plan, in each case as amended through the
Time of Distribution (collectively, the "Rockwell Nonqualified Savings Plans").
From and after the Time of Distribution, none of Rockwell or the Rockwell
Subsidiaries, the Affiliates thereof or the Rockwell Nonqualified Savings Plans
will have any Liabilities with respect to benefits and entitlements of
Automotive Employees under the Rockwell Nonqualified Savings Plans, except with
respect to benefits accrued (including earnings thereon) under the Rockwell
Nonqualified Savings Plans prior to the Time of Distribution.
(b) As of the Time of Distribution, Automotive will have established
and will cover Automotive Employees who participated in the Rockwell
Nonqualified Savings Plans immediately prior to the Time of Distribution under
nonqualified savings plans (the "Automotive Nonqualified Savings Plans"). The
Automotive Nonqualified Savings Plans will be substantially similar in all
material respects to the Rockwell Nonqualified Savings Plans. The Automotive
Nonqualified Savings Plans will be maintained in such form for a period of at
least one year following the Time of Distribution. The Automotive Nonqualified
Savings Plans will credit each Automotive Employee for purposes of vesting and
eligibility to participate with all service which had been credited to such
Automotive Employee for such purposes under the Rockwell Nonqualified Savings
Plans immediately prior to the Time of Distribution (excluding any such service
which was not counted under the Rockwell Nonqualified Savings Plans by operation
of their "break in service" rules), but shall not grant past service credit to
Automotive Employees for benefit accruals and any other plan purposes.
Section 4.04 Canadian Non-Automotive Savings Plans. Effective as of
the Time of Distribution, Rockwell will cause New Rockwell Canada to (i) assume
and adopt sponsorship of and all assets and Liabilities of the Pre-Distribution
Group under the Rockwell International of Canada - Allen-Bradley Division
Deferred Profit Sharing Plan, the Rockwell International of Canada -
Allen-Bradley Division Employees' Retirement Savings Plan and the Allen-Bradley
Canada Limited Employees' Non-Registered Savings Plan, in each case as amended
through the Time of Distribution (collectively, the "Canadian Non-Automotive
Savings Plans"), and the respective trusts or other funding media related
thereto, and (ii) fully perform, pay and
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<PAGE> 25
discharge all of the Pre-Distribution Group's Liabilities with respect to the
Canadian Non-Automotive Savings Plans and the respective trusts or other funding
media related thereto. From and after the Time of Distribution, none of
Automotive or the Automotive Subsidiaries or their Affiliates will have any
Liabilities with respect to the Canadian Non-Automotive Savings Plans and the
respective trusts or other funding media related thereto. Rockwell and
Automotive will take, or cause to be taken, all such action as may be necessary
or appropriate to establish, effective as of the Time of Distribution, New
Rockwell Canada as successor to the applicable Automotive Subsidiaries as to all
rights, assets, duties and Liabilities under, or with respect to, the Canadian
Non-Automotive Savings Plans. Rockwell and Automotive will cooperate in making
all appropriate filings required by law, implementing all appropriate
communications with participants, transferring appropriate records, notifying
plan trustees and taking all other actions as may be necessary or appropriate to
implement the provisions of this Section 4.04.
ARTICLE V
STOCK PLANS
Section 5.01 Stock Plans.
(a) Rockwell and Automotive will take all action necessary or
appropriate so that each Pre-1997 Rockwell Option held by an Automotive Employee
that is outstanding as of the Time of Distribution is adjusted pursuant to the
equitable adjustment provisions of the applicable Rockwell Stock Plan under
which such Pre-1997 Rockwell Option was granted (in the case of adjustment of
any such Pre-1997 Rockwell Option that is accompanied by a tandem stock
appreciation right, accompanied by a corresponding adjustment to such tandem
stock appreciation right) so that the number of shares subject to the adjusted
Pre-1997 Rockwell Option will equal the number of shares subject to such
Pre-1997 Rockwell Option immediately prior to the Time of Distribution and prior
to such adjustment, multiplied by the reciprocal of the Rockwell Option Ratio,
and then, if any resultant fractional share of Rockwell Common Stock exists,
rounded down to the nearest whole share. The adjusted Pre-1997 Rockwell Option
will have a per-share exercise price equal to the per-share exercise price of
such Pre-1997 Rockwell Option immediately prior to the Time of Distribution and
prior to such adjustment, multiplied by the
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<PAGE> 26
Rockwell Option Ratio. Such adjusted Pre-1997 Rockwell Option (and, if
applicable, tandem stock appreciation right) will otherwise have the same terms
and conditions as those in effect prior to the adjustment.
(b) Rockwell and Automotive will take all action necessary or
appropriate so that each Rockwell 1997 Option held by an Automotive Employee
that is outstanding as of the Time of Distribution will be and become an
Automotive Option (in the case of any such Rockwell 1997 Option that is
accompanied by a tandem stock appreciation right, with a tandem Automotive stock
appreciation right) pursuant to the equitable adjustment provisions of the
applicable Rockwell Stock Plan under which such Rockwell 1997 Option was
granted. The number of shares of Automotive Common Stock subject to the
Automotive Option will equal the number of shares subject to such Rockwell 1997
Option being replaced immediately prior to the Time of Distribution, multiplied
by the reciprocal of the Automotive Option Ratio, and then, if any resultant
fractional share of Automotive Common Stock exists, rounded down to the nearest
whole share. The Automotive Option shall have a per-share exercise price equal
to the per-share exercise price of such Rockwell 1997 Option being replaced
immediately prior to the Time of Distribution, multiplied by the Automotive
Option Ratio. Such Automotive Option (and, if applicable, tandem stock
appreciation right) will otherwise have the same terms and conditions as the
corresponding Rockwell 1997 Option (and, if applicable, tandem stock
appreciation right) being replaced, except that references to Rockwell will be
changed to refer to Automotive.
ARTICLE VI
OTHER EMPLOYEE PLANS AND MATTERS
Section 6.01 Welfare Plans.
(a) As of the Time of Distribution, Automotive and the Automotive
Subsidiaries will have established or assumed, and will cover Automotive
Participants under, Welfare Plans and other employee welfare benefit and fringe
benefit arrangements (collectively, "Automotive Welfare Plans") that are
substantially similar in all material respects to the Welfare Plans and other
employee welfare benefit and fringe benefit arrangements maintained by Rockwell
and its Subsidiaries (including members of the Automotive Group) immediately
prior to the Time of
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Distribution ("Rockwell Welfare Plans") for the benefit of Automotive
Participants. The Automotive Welfare Plans will be maintained in such form for a
period of at least one year following the Time of Distribution.
(b) The Automotive Welfare Plans will provide for the immediate
participation of those Automotive Participants who participated in the Rockwell
Welfare Plans immediately prior to the Time of Distribution. The Automotive
Welfare Plans will credit each Automotive Participant for all Automotive Welfare
Plan purposes with all service and any other item which had been credited to or
otherwise accumulated for the benefit of such Automotive Participant under the
Rockwell Welfare Benefit Plans immediately prior to the Time of Distribution.
The transition from the Rockwell Welfare Plans to the Automotive Welfare Plans
will not, in and of itself, adversely affect the Automotive Participants.
Without limiting the generality of the foregoing, each Automotive Welfare Plan,
to the extent applicable: (i) will recognize all amounts applied to deductibles,
co-payments, out-of-pocket maximums and lifetime maximum benefits with respect
to Automotive Participants under the corresponding Rockwell Welfare Plan for the
plan year that includes the Time of Distribution and for prior periods (if
applicable); (ii) will recognize all service credited to waiting periods with
respect to Automotive Participants under the corresponding Rockwell Welfare
Plan; (iii) will not impose any limitations on coverage of pre-existing
conditions of Automotive Participants except to the extent such limitations
applied to such Automotive Participants under the corresponding Rockwell Welfare
Plan immediately before such Automotive Welfare Plan became effective; and (iv)
will not impose any other conditions (such as proof of good health, evidence of
insurability or a requirement of a physical examination) upon the participation
by Automotive Participants who were participating in the corresponding Rockwell
Welfare Plan immediately before such Automotive Welfare Plan became effective.
(c) Automotive and the Automotive Subsidiaries will credit each
Automotive Employee with the unused vacation days and personal and sickness days
accrued in accordance with the vacation and personnel policies and labor
agreements of Rockwell and its Subsidiaries (including members of the Automotive
Group) applicable to such employees in effect immediately prior to the Time of
Distribution.
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(d) From and after the Time of Distribution, except as specifically
set forth in this Agreement, Automotive and the Automotive Subsidiaries will
assume or retain, as the case may be, and will be solely responsible for and
will fully perform, pay and discharge, all Liabilities in respect of Automotive
Participants (and claims by or relating to Automotive Participants) with respect
to employee welfare and fringe benefits (including, without limitation, medical,
dental, life, travel, accident, short- and long-term disability,
hospitalization, workers' compensation and other insurance benefits), whether
under the Rockwell Welfare Plans, the Automotive Welfare Plans or otherwise,
whether incurred before, at or after the Time of Distribution and whether any
claim is made with respect thereto before, at or after the Time of Distribution.
Without limiting the generality of the foregoing, from and after the Time of
Distribution, Automotive and the Automotive Subsidiaries (or where appropriate,
the Automotive Welfare Plans) will assume, will be solely responsible for and
will fully perform, pay and discharge all Liabilities in respect of Automotive
Participants with respect to retiree health benefits and retiree life insurance
benefits, whether under the Rockwell Welfare Plans, the Automotive Welfare Plans
or otherwise, whether incurred before, at or after the Time of Distribution and
whether any claim is made with respect thereto before, at or after the Time of
Distribution.
(e) From and after the Time of Distribution, except as specifically
set forth in this Agreement, Rockwell and the Rockwell Subsidiaries will assume
or retain, as the case may be, and will be solely responsible for and will fully
perform, pay and discharge, all Liabilities in respect of Rockwell Participants
(and claims by or relating to Rockwell Participants) with respect to employee
welfare and fringe benefits (including, without limitation, medical, dental,
life, travel, accident, short- and long-term disability, hospitalization,
workers' compensation and other insurance benefits), whether under the Rockwell
Welfare Plans or otherwise, whether incurred before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution. Without limiting the generality of the
foregoing, from and after the Time of Distribution, Rockwell and the Rockwell
Subsidiaries (or where appropriate, the Rockwell Welfare Plans) will assume or
retain, as the case may be, will be solely responsible for and will fully
perform, pay and discharge all Liabilities in respect of Rockwell Participants
with respect to retiree health
25
<PAGE> 29
benefits and retiree life insurance benefits, whether under the Rockwell Welfare
Plans or otherwise, whether incurred before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution.
(f) Automotive and Rockwell will cooperate in making all appropriate
filings required by law, implementing all appropriate communications with
participants, exchanging and sharing appropriate records and taking such other
actions as may be necessary or appropriate to implement the provisions of this
Section 6.01.
Section 6.02 Long-Term Incentive Plan and Incentive Compensation
Plans. Effective as of the Time of Distribution, Automotive hereby assumes and
agrees to fully perform, pay and discharge all Liabilities (including but not
limited to liability for earned but unpaid incentive payments) for, due to or
attributable to Automotive Participants under the Rockwell International
Business Unit Long-Term Incentive Plan (the "LTIP"), the Incentive Compensation
Plan and all other long-term and annual incentive compensation plans of Rockwell
and its Subsidiaries (including members of the Automotive Group) in effect at or
prior to the Time of Distribution. Rockwell and Automotive will cooperate in
taking all actions necessary or appropriate to adjust the performance goals and
other terms and conditions of awards under the LTIP and such other incentive
compensation plans for performance periods that begin before and end after the
Distribution Date as appropriate to reflect the Distribution. From and after the
Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or their
Affiliates will have any Liabilities with respect to benefits of Automotive
Participants under the LTIP, the Incentive Compensation Plan and such other
incentive compensation plans. Rockwell and Automotive will cooperate in making
all appropriate filings required by law, implementing all appropriate
communications with participants, exchanging and sharing appropriate records and
taking all other actions as may be necessary or appropriate to implement the
provisions of this Section 6.02.
Section 6.03 Deferred Compensation Plans. Effective as of the Time
of Distribution, Automotive hereby assumes and agrees to fully perform, pay and
discharge all Liabilities (including but not limited to the obligation to pay
when due all benefits accrued and not paid as of the Time of Distribution) for,
due to or attributable to Automotive Participants under the Rockwell
International
26
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Corporation Deferred Compensation Plan (the "Rockwell Deferred Compensation
Plan"), as in effect immediately prior to the Time of Distribution. From and
after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or
their Affiliates will have any Liabilities with respect to benefits of
Automotive Participants under the Rockwell Deferred Compensation Plan. Rockwell
and Automotive will cooperate in making all appropriate filings required by law,
implementing all appropriate communications with participants, exchanging and
sharing appropriate records and taking all other actions as may be necessary or
appropriate to implement the provisions of this Section 6.03.
Section 6.04 Canadian Automotive Bridging Benefit Plans. Effective
as of the Time of Distribution, Automotive will cause Automotive Canada to (i)
assume and adopt sponsorship of and all Liabilities of the Pre-Distribution
Group under the Bridging Benefit Plan for Hourly Employees of Rockwell
International of Canada - C.A.W. Local 1941 (Tilbury, Ontario) and the Bridging
Benefit Plan for Hourly Employees of Rockwell International of Canada - C.A.W.
Local 61 (Bracebridge, Ontario), in each case as amended through the Time of
Distribution (collectively, the "Canadian Automotive Bridging Benefit Plans"),
and (ii) fully perform, pay and discharge all of the Pre-Distribution Group's
Liabilities with respect to the Canadian Automotive Bridging Benefit Plans. The
Canadian Automotive Bridging Benefit Plans will be maintained in forms
substantially similar in all material respects to the forms in which they
existed immediately prior to the Time of Distribution for a period of at least
one year following the Time of Distribution. From and after the Time of
Distribution, none of Rockwell or the Rockwell Subsidiaries or their Affiliates
will have any Liabilities with respect to the Canadian Automotive Bridging
Benefit Plans. Rockwell and Automotive will take, or cause to be taken, all such
action as may be necessary or appropriate to establish, effective as of the Time
of Distribution, Automotive Canada as successor to Rockwell and the Rockwell
Subsidiaries as to all rights, duties and Liabilities under, or with respect to,
the Canadian Automotive Bridging Benefit Plans. Rockwell and Automotive will
cooperate in making all appropriate filings required by law, implementing all
appropriate communications with participants, transferring appropriate records,
notifying third party administrators and taking all other actions as may be
necessary or appropriate to implement the provisions of this Section 6.04.
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Section 6.05 Canadian Automotive SUB Plan. Effective as of the Time
of Distribution, Automotive will cause Automotive Canada to (i) assume and adopt
sponsorship of and all assets and Liabilities of the Pre-Distribution Group
under the Supplemental Unemployment Benefit Plan for Rockwell International of
Canada Ltd. - C.A.W. Local 1941 (Tilbury, Ontario), as amended through the Time
of Distribution (the "Canadian Automotive SUB Plan"), and the trust related to
the Canadian Automotive SUB Plan, and (ii) fully perform, pay and discharge all
of the Pre-Distribution Group's Liabilities with respect to the Canadian
Automotive Sub Plan and the trust related thereto. The Canadian Automotive SUB
Plan will be maintained in a form substantially similar in all material respects
to the form in which it existed immediately prior to the Time of Distribution
for a period of at least one year following the Time of Distribution. From and
after the Time of Distribution, none of Rockwell or the Rockwell Subsidiaries or
their Affiliates will have any Liabilities with respect to the Canadian
Automotive SUB Plan and the trust related thereto. Rockwell and Automotive will
take, or cause to be taken, all such action as may be necessary or appropriate
to establish, effective as of the Time of Distribution, Automotive Canada as
successor to Rockwell and the Rockwell Subsidiaries as to all rights, assets,
duties and Liabilities under, or with respect to, the Canadian Automotive SUB
Plan. Rockwell and Automotive will cooperate in making all appropriate filings
required by-law, implementing all appropriate communications with participants,
transferring appropriate records, notifying plan trustees and taking all other
actions as may be necessary or appropriate to implement the provisions of this
Section 6.05.
Section 6.06 Severance Pay.
(a) Rockwell and Automotive acknowledge and agree that the
transactions contemplated by the Transaction Agreements will not constitute a
severance of employment of any Automotive Employee or Rockwell Employee prior to
or as a result of the transactions contemplated thereby, and that individuals
who, in connection with the Distribution, become Automotive Employees or
Rockwell Employees pursuant to this Agreement will not be deemed to have
experienced a termination, layoff or severance of employment from Rockwell and
its Subsidiaries (including members of the Automotive Group), in each case for
purposes of any policy, plan, program or agreement of Rockwell or any of its
Subsidiaries (including members of the Automotive Group) that provides
28
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for the payment of severance, salary continuation or similar benefits.
(b) Automotive and the Automotive Subsidiaries will assume or retain
(as applicable) and be solely responsible for, and will fully perform, pay and
discharge, all Liabilities in connection with claims made by or on behalf of
Automotive Participants in respect of severance pay, salary continuation and
similar obligations relating to the termination or alleged termination (whether
voluntary or involuntary) of any such person's employment, whether such
termination or alleged termination occurred before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution (whether or not such claim is based on any
severance policy, agreement, arrangement or program which may exist or arise
under any contract, employment agreement or collective bargaining agreement or
under any Federal, state, local, provincial or foreign law).
(c) Rockwell and the Rockwell Subsidiaries will assume or retain (as
applicable) and be solely responsible for, and will fully perform, pay and
discharge, all Liabilities in connection with claims made by or on behalf of
Rockwell Participants in respect of severance pay, salary continuation and
similar obligations relating to the termination or alleged termination (whether
voluntary or involuntary) of any such person's employment, whether such
termination or alleged termination occurred before, at or after the Time of
Distribution and whether any claim is made with respect thereto before, at or
after the Time of Distribution (whether or not such claim is based on any
severance policy, agreement, arrangement or program which may exist or arise
under any contract, employment agreement or collective bargaining agreement or
under any Federal, state, local, provincial or foreign law).
Section 6.07 Employment, Consulting and Other Employee Related
Agreements. Effective as of the Time of Distribution, Automotive will or will
cause one or more Automotive Subsidiaries to assume or retain (as applicable)
all Liabilities relating to Automotive Participants under their respective
employment, consulting, separation, agreements to arbitrate, and other employee
related agreements with any member of the Pre-Distribution Group, as the same
are in effect immediately prior to the Time of Distribution. Effective as of the
Time of Distribution, Rockwell will or will cause one or more Rockwell
Subsidiaries to assume or retain (as applicable) all
29
<PAGE> 33
Liabilities relating to Rockwell Participants under their respective employment,
consulting, separation, agreements to arbitrate, and other employee related
agreements with any member of the Pre-Distribution Group, as the same are in
effect immediately prior to the Time of Distribution.
Section 6.08 Rockwell VEBA. As of and after the Time of
Distribution, Rockwell will retain all assets of and related to the Trust for
Employee Welfare Benefit Programs of Rockwell International
Corporation.
Section 6.09 Other Liabilities. From and after the Time of
Distribution, except as specifically set forth in this Agreement, Automotive and
the Automotive Subsidiaries will assume or retain, as the case may be, and be
solely responsible for, and will fully perform, pay and discharge, all
Liabilities in respect of Automotive Participants arising out of or relating to
employment by any member of the Pre-Distribution Group, whether pursuant to
benefit plans or otherwise and whether such Liabilities arose before, at or
after the Time of Distribution or any claim is made with respect thereto before,
at or after the Time of Distribution. From and after the Time of Distribution,
except as specifically set forth in this Agreement, Rockwell and the Rockwell
Subsidiaries will assume or retain, as the case may be, and be solely
responsible for, and will fully perform, pay and discharge all Liabilities in
respect of Rockwell Participants arising out of or relating to employment by any
member of the Pre-Distribution Group, whether pursuant to benefit plans or
otherwise and whether such Liabilities arose before, at or after the Time of
Distribution or any claim is made with respect thereto before, at or after the
Time of Distribution.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Indemnification. All Liabilities retained or assumed by
or allocated to Automotive or any Automotive Subsidiary pursuant to this
Agreement will be deemed to be Automotive Liabilities (as defined in the
Distribution Agreement), and all Liabilities retained or assumed by or allocated
to Rockwell or any Rockwell Subsidiary pursuant to this Agreement will be deemed
to be Liabilities of Rockwell which do not constitute such Automotive
Liabilities, and, in each case, will be subject
30
<PAGE> 34
to the indemnification provisions set forth in Article IV of the Distribution
Agreement.
Section 7.02 Sharing of Information. Each of Rockwell and Automotive
will, and will cause each of their respective Subsidiaries to, provide to the
other all such Information in its possession as the other may reasonably request
to enable the requesting party to administer its employee benefit plans and
programs, and to determine the scope of, and fulfill, its obligations under this
Agreement. Such Information will, to the extent reasonably practicable, be
provided in the format and at the times and places requested, but in no event
will the party providing such Information be obligated to incur any direct
expense not reimbursed by the party making such request, nor to make such
Information available outside its normal business hours and premises. The right
of the parties to receive Information hereunder will, without limiting the
generality of the foregoing, extend to any and all reports, and the data
underlying such reports. Any Information shared or exchanged pursuant to this
Agreement will be subject to the same confidentiality requirements set forth in
the Distribution Agreement.
Section 7.03 Entire Agreement; Construction. This Agreement, the
Distribution Agreement and the other Ancillary Agreements, including any
annexes, schedules and exhibits hereto or thereto, and other agreements and
documents referred to herein and therein, will together constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and will supersede all prior negotiations, agreements and understandings
of the parties of any nature, whether oral or written, with respect to such
subject matter. Notwithstanding any other provisions in this Agreement to the
contrary, in the event and to the extent that there will be a conflict between
the provisions of this Agreement and the provisions of the Distribution
Agreement, the provisions of this Agreement will control.
Section 7.04 Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement will remain in full force and effect and survive the
Time of Distribution.
Section 7.05 Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of New York
applicable to contracts made
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<PAGE> 35
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
Section 7.06 Notices. All notices, requests, claims, demands and
other communications required or permitted to be given hereunder will be in
writing and will be delivered by hand or telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
will be deemed given when so delivered by hand or telecopied, or three business
days after being so mailed (one business day in the case of express mail or
overnight courier service). All such notices, requests, claims, demands and
other communications will be addressed as set forth in Section 6.05 of the
Distribution Agreement, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice.
Section 7.07 Amendments. This Agreement cannot be amended, modified
or supplemented except by a written agreement executed by Rockwell and
Automotive.
Section 7.08 Assignment. Neither party to this Agreement will
convey, assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party in its sole and
absolute discretion, except that any party may (without obtaining any consent)
assign any of its rights hereunder to a successor to all or any part of its
business. Any such conveyance, assignment or transfer requiring the prior
written consent of another party which is made without such consent will be void
ab initio. No assignment of this Agreement will relieve the assigning party of
its obligations hereunder.
Section 7.09 Captions; Currency. The article, section and paragraph
captions herein and the table of contents hereto are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof. Unless otherwise
specified, all references herein to numbered articles or sections are to
articles and sections of this Agreement and all references herein to schedules
are to schedules to this Agreement. Unless otherwise specified, all references
contained in this Agreement, in any schedule referred to herein or in any
instrument or document delivered pursuant hereto to dollars will mean United
States Dollars.
32
<PAGE> 36
Section 7.10 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the transactions contemplated hereby is affected in any manner adverse to any
party as a result thereof, the parties will negotiate in good faith in an effort
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
Section 7.11 Parties in Interest. This Agreement is binding upon and
is for the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not made for the benefit of any Person not
a party hereto, and no Person other than the parties hereto or their respective
successors and permitted assigns will acquire or have any benefit, right, remedy
or claim under or by reason of this Agreement. Except as expressly stated
herein, no provision of this Agreement will be construed (a) to limit the right
of Rockwell, any Rockwell Subsidiary, Automotive or any Automotive Subsidiary to
amend any plan or terminate any plan; provided, however, that Automotive and the
Automotive Subsidiaries will be obligated to maintain employee benefit plans and
arrangements for a period of at least one year from the Time of Distribution
which are substantially similar in all material respects to those which had been
maintained or provided by the Pre-Distribution Group immediately prior to the
Time of Distribution, or (b) to create any right or entitlement whatsoever in
any employee, former employee or beneficiary including, without limitation, a
right to continued employment or to any benefit under a plan or any other
benefit or compensation.
Section 7.12 Schedules. All schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Capitalized terms used in the schedules hereto but not otherwise defined
therein will have the respective meanings assigned to such terms in this
Agreement.
Section 7.13 Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Time of Distribution by and in
the sole discretion of
33
<PAGE> 37
the Rockwell Board without the approval of Automotive or of Rockwell's
shareowners. In the event of such termination, no party will have any liability
of any kind to any other party on account of such termination.
Section 7.14 Change of Name. On or promptly after the Distribution
Date, Automotive will take such actions as may be required to change the names
of all employee benefit plans sponsored or maintained by it or its Affiliates to
eliminate therefrom any reference to "Rockwell", "Rockwell International" or any
derivative thereof.
Section 7.15 Waivers; Remedies. No failure or delay on the part of
either Rockwell or Automotive in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any waiver on the part of
either Rockwell or Automotive of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor will any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies which the parties may otherwise
have at law or in equity.
Section 7.16 Counterparts. This Agreement may be executed in
separate counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts will together constitute the same
agreement.
Section 7.17 Performance. Each party will cause to be
performed and hereby guarantees the performance of all
34
<PAGE> 38
actions, agreements and obligations set forth herein to be performed by any
Subsidiary or Affiliate of such party.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties as of the date first
hereinabove written.
ROCKWELL INTERNATIONAL
CORPORATION
By: /s/ William J. Calise, Jr.
-----------------------------------
William J. Calise, Jr.
Senior Vice President,
General Counsel and
Secretary
MERITOR AUTOMOTIVE, INC.
By: /s/ David W. Greenfield
-----------------------------------
David W. Greenfield
Senior Vice President,
General Counsel and
Secretary
The schedules and/or exhibits identified in the table of contents to this
agreement are omitted. Registrant will furnish supplementally a copy of any
omitted schedule or exhibit to the Securities and Exchange Commission upon
request.
35
<PAGE> 1
[CONFORMED COPY]
Exhibit 2.3
TAX ALLOCATION AGREEMENT
by and between
ROCKWELL INTERNATIONAL CORPORATION
and
MERITOR AUTOMOTIVE, INC.
September 30, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS .................................................. 2
1.01 General ........................................................ 2
1.02 Schedules, etc ................................................. 8
ARTICLE II FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS ............ 8
2.01 Preparation of Tax Returns ..................................... 8
2.02 Payment of Taxes ............................................... 12
2.03 Tax Refunds and Carrybacks ..................................... 16
2.04 Allocation of Straddle Period Taxes ............................ 17
2.05 Schedule of Tax Returns Covering Foreign
Income Taxes and Payments ...................................... 18
ARTICLE III TAX INDEMNIFICATION; TAX CONTESTS .......................... 18
3.01 Indemnification ................................................ 18
3.02 Automotive Tax Acts ............................................ 21
3.03 Notice of Indemnity ............................................ 22
3.04 Payments ....................................................... 22
3.05 Tax Contests ................................................... 24
ARTICLE IV COMPENSATION PAYMENTS; OPTIONS; FOREIGN TAX CREDITS ......... 25
4.01 Compensation Payments .......................................... 25
4.02 Stock Options .................................................. 26
4.03 Foreign Tax Credits ............................................ 27
4.04 Change in Law .................................................. 28
ARTICLE V COOPERATION AND EXCHANGE OF INFORMATION ...................... 29
5.01 Inconsistent Actions ........................................... 29
5.02 Ruling Request ................................................. 29
5.03 IRS Gain Recognition Agreement;
Notification of Certain Dispositions ........................... 29
5.04 Cooperation and Exchange of Information ........................ 30
5.05 Tax Records .................................................... 31
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI MISCELLANEOUS .................................... 31
6.01 Entire Agreement; Construction ................... 31
6.02 Effectiveness .................................... 32
6.03 Survival of Agreements ........................... 32
6.04 Governing Law .................................... 32
6.05 Notices .......................................... 32
6.06 Consent to Jurisdiction .......................... 34
6.07 Amendments ....................................... 34
6.08 Successors and Assigns ........................... 35
6.09 Captions; Currency ............................... 35
6.10 Severability ..................................... 35
6.11 No Third Party Beneficiaries ..................... 35
6.12 Schedules ........................................ 36
6.13 Termination ...................................... 36
6.14 Waivers; Remedies ................................ 36
6.15 Counterparts ..................................... 36
6.16 Performance ...................................... 36
</TABLE>
SCHEDULE 1.01 TRANSACTIONS BEING CARRIED OUT FOR BUSINESS
REASONS UNRELATED TO THE DISTRIBUTION
SCHEDULE 2.01 TAX RETURNS TO BE FILED BY NON-RESPONSIBLE
PARTY
SCHEDULE 3.01 PRE-DISTRIBUTION TAX-FREE TRANSACTIONS
SCHEDULE 3.02(A) AUTOMOTIVE TAX ACT
SCHEDULE 3.02(B) AUTOMOTIVE TAX REPRESENTATION LETTER
SCHEDULE 5.03 PARTIES TO IRS GAIN RECOGNITION AGREEMENTS
ii
<PAGE> 4
TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT (this "AGREEMENT") is made and entered
into as of September 30, 1997, by and between ROCKWELL INTERNATIONAL
CORPORATION, a Delaware corporation ("ROCKWELL"), and MERITOR AUTOMOTIVE, INC.,
a Delaware corporation and, as of the date hereof, a wholly-owned subsidiary of
Rockwell ("AUTOMOTIVE").
W I T N E S S E T H :
WHEREAS, the Rockwell Board (as hereinafter defined) has determined
that it is appropriate and desirable to distribute all outstanding shares of
Automotive Common Stock (as hereinafter defined) on a pro rata basis to the
holders of Rockwell Common Stock (as hereinafter defined);
WHEREAS, the Rockwell Board has determined that it is appropriate
and desirable to effectuate the Distribution (as hereinafter defined) in a
transaction that will qualify under Section 368(a)(1)(D) of the Code (as
hereinafter defined) as a tax-free reorganization; and
WHEREAS, Rockwell and Automotive wish to provide for and agree upon
the allocation between the Rockwell Tax Group (as hereinafter defined) and the
Automotive Tax Group (as hereinafter defined) of all responsibilities,
liabilities and benefits relating to or affecting Taxes (as hereinafter defined)
paid or payable by either of them for all taxable periods, whether beginning
before, on or after the Distribution Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and of the
respective agreements contained in this Agreement, the parties hereto hereby
agree as follows:
1
<PAGE> 5
ARTICLE I
DEFINITIONS
1.01 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"ACTUALLY REALIZED" shall mean, for purposes of determining the
timing of any Taxes (or related Tax cost or benefit) relating to any payment,
transaction, occurrence or event, the time at which the amount of Taxes payable
by any person is increased above or reduced below, as the case may be, the
amount of Taxes that such person would be required to pay but for the payment,
transaction, occurrence or event.
"AUTOMOTIVE" shall have the meaning ascribed thereto in the
preamble.
"AUTOMOTIVE COMMON STOCK" shall mean, collectively, the Common
Stock, par value $1 per share, of Automotive and the related Rights.
"AUTOMOTIVE COMMON STOCK OPTIONS" shall mean options to
acquire Automotive Common Stock.
"AUTOMOTIVE GROUP EMPLOYEES AND FORMER EMPLOYEES" shall mean
individuals (i) who are employees of any member of the Automotive Tax Group on
the date of the event giving rise to a deduction in respect of any Compensation
Payments made to such individuals or Stock Options held by such individuals,
(ii) who were employees of any member of the Automotive Tax Group and were not
thereafter employees of any member of the Rockwell Tax Group, or (iii) who were
employees of Old Rockwell and its affiliates who were engaged in the automotive
business and who retired on or before December 6, 1996 and were not thereafter
employees of any member of the Rockwell Tax Group.
"AUTOMOTIVE INTRAGROUP TRANSACTION" shall mean (i) any transaction
in furtherance of the Appropriations Request, submitted by R.A. Calder on May
22, 1996 and approved by D. Davis on June 5, 1997, (ii) any other transfer
between members of the Automotive Tax Group of intangible property rights during
1996 and 1997, (iii)
2
<PAGE> 6
any other similar transfer between members of the Automotive Tax Group of assets
outside the ordinary course of business during 1996 and 1997, and (iv) any sale
to a third party of an Automotive business or part thereof during September 1997
outside the ordinary course of business other than a transaction undertaken in
connection with the Distribution.
"AUTOMOTIVE TAX ACT" shall have the meaning set forth in Section
3.02(a).
"AUTOMOTIVE TAX GROUP" shall mean (i) Automotive, (ii) any
corporation or other legal entity which Automotive directly or indirectly owns
immediately following the Distribution, and (iii) any corporation or other legal
entity engaged in the Automotive business which was sold in September 1997.
"AUTOMOTIVE TAX REPRESENTATION LETTER" shall mean the letter
delivered by Automotive to Rockwell on the Distribution Date, substantially in
the form set forth in Schedule 3.02(b) attached hereto.
"BOEING" shall mean The Boeing Company, a Delaware corporation.
"BOEING TAX GROUP" shall mean Boeing and its affiliates.
"CANADIAN CASH AMOUNT" shall have the meaning set forth in Section
3.04(b) of the Distribution Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or
any successor legislation.
"COMPENSATION PAYMENTS" shall mean all non-qualified employee
benefit plan and welfare benefit plan payments made by any member of the
Automotive Tax Group under Sections 3.02, 6.01, 6.02 and 6.03 of the Employee
Matters Agreement dated as of September 30, 1997 by and between Rockwell and
Automotive.
"DISTRIBUTION" shall mean the distribution of the Automotive Common
Stock on a pro rata basis to holders of Rockwell Common Stock on the
Distribution Date pursuant to the Distribution Agreement.
3
<PAGE> 7
"DISTRIBUTION AGREEMENT" shall mean the Distribution Agreement dated
as of September 30, 1997 by and between Rockwell and Automotive.
"DISTRIBUTION DATE" shall mean the date on which the Distribution
occurs (or, if different, the date on which the Distribution is deemed to occur
for U.S. federal Income Tax purposes). For purposes of this Agreement, the
Distribution shall be deemed effective as of the end of the day on the
Distribution Date.
"DISTRIBUTION TRANSACTION" shall mean any transaction undertaken in
connection with the Distribution and described in the Ruling Request except for
those transactions specified on Schedule 1.01 that are being carried out for
business reasons unrelated to the Distribution.
"INCOME TAX BENEFIT" shall mean for any taxable period the excess of
(i) the hypothetical Income Tax liability of the taxpayer for the taxable period
calculated as if the Timing Difference or Reverse Timing Difference, as the case
may be, had not occurred but with all other facts unchanged, over (ii) the
actual Income Tax liability of the taxpayer for the taxable period, calculated
taking into account the Timing Difference or Reverse Timing Difference, as the
case may be (treating an Income Tax refund or credit as a negative Income Tax
liability for purposes of such calculation).
"INCOME TAX DETRIMENT" shall mean for any taxable period the excess
of (i) the actual Income Tax liability of the taxpayer for the taxable period,
calculated taking into account the Timing Difference or Reverse Timing
Difference, as the case may be, over (ii) the hypothetical Income Tax liability
of the taxpayer for the taxable period, calculated as if the Timing Difference
or Reverse Timing Difference, as the case may be, had not occurred but with all
other facts unchanged (treating an Income Tax refund or credit as a negative
Income Tax liability for purposes of such calculation).
"INCOME TAX RETURN" shall mean any Tax Return that relates to Income
Taxes.
"INCOME TAXES" shall mean (a) any Tax based upon, measured by, or
calculated with respect to (i) net income or profits (including, but not limited
to, any
4
<PAGE> 8
capital gains, minimum Tax and any Tax on items of Tax preference and the
Michigan Single Business Tax, but not including sales, use, real or personal
property, gross or net receipts, transfer or similar Taxes) or (ii) multiple
bases (including, but not limited to, corporate franchise, doing business or
occupation Taxes) if one or more of the bases upon which such Tax may be based,
measured by, or calculated with respect to, is described in clause (i) above, or
(b) any U.S. state or local franchise Tax.
"INDEMNITEE" shall have the meaning set forth in Section 3.03.
"INDEMNITOR" shall have the meaning set forth in Section 3.03.
"INDEMNITY ISSUE" shall have the meaning set forth in Section 3.03.
"IRS" shall mean the Internal Revenue Service.
"IRS GAIN RECOGNITION AGREEMENT" shall mean any gain recognition
agreement entered into between the IRS and any member of the Rockwell Tax Group
or the Automotive Tax Group pursuant to Section 367 of the Code and the
regulations thereunder or the Ruling, and any revised or successor agreement
thereto.
"OLD ROCKWELL" shall mean the corporation, formerly named Rockwell
International Corporation, which owned all of the Rockwell Common Stock prior to
the distribution of the Rockwell Common Stock to the shareholders of such
corporation on December 6, 1996.
"PRE-DISTRIBUTION TAXABLE PERIOD" shall mean a taxable period ending
on or before the Distribution Date.
"POST-DISTRIBUTION TAX ACT" shall have the meaning set forth in
Section 3.01(a).
"POST-DISTRIBUTION TAXABLE PERIOD" shall mean a taxable period
beginning after the Distribution Date.
"POST-TAX INDEMNIFICATION PERIOD" shall mean any Post-Distribution
Taxable Period and that portion of any Straddle Period that begins on the day
after the Distribution Date.
5
<PAGE> 9
"REVERSE TIMING DIFFERENCE" shall mean an increase in income, gain
or recapture, or a decrease in deduction, loss or credit, as calculated for
Income Tax purposes, of the taxpayer for the Tax Indemnification Period coupled
with an increase in deduction, loss or credit, or a decrease in income, gain or
recapture, of the taxpayer for any Post-Tax Indemnification Period.
"RIGHTS" shall have the meaning ascribed thereto in the Distribution
Agreement.
"RISSCO" shall mean Rockwell International Suspension Systems
Company, Inc.
"ROCKWELL" shall have the meaning ascribed thereto in the preamble.
"ROCKWELL BOARD" shall mean the Board of Directors of Rockwell or a
duly authorized committee thereof.
"ROCKWELL COMMON STOCK" shall mean the Common Stock, par value $1.00
per share, of Rockwell.
"ROCKWELL COMMON STOCK OPTIONS" shall mean options to
acquire Rockwell Common Stock.
"ROCKWELL TAX GROUP" shall mean (i) Rockwell, (ii) any corporation
or other legal entity which Rockwell directly or indirectly owns immediately
following the Distribution, (iii) any other corporation or other legal entity
which Rockwell or Old Rockwell directly or indirectly owned at any time prior to
the Distribution (but only with respect to the period such corporation or other
entity was so owned by Rockwell or Old Rockwell) other than a member of the
Automotive Tax Group, and (iv) solely for purposes of this Agreement and not for
purposes of any other Transaction Agreement, for any taxable period up to or
including December 6, 1996, Old Rockwell and any other corporation or legal
entity owned by Old Rockwell other than a member of the Automotive Tax Group.
"RULING" shall mean the private letter ruling issued by the IRS in
reply to the Ruling Request including any amendment or supplement thereto.
6
<PAGE> 10
"RULING REQUEST" shall mean the private letter ruling request dated
March 17, 1997 filed by Rockwell with the IRS (as modified or supplemented by
any materials submitted to the IRS), seeking rulings that, inter alia, the
Distribution will qualify for U.S. federal Income Tax purposes as a tax-free
reorganization under Section 368(a)(1)(D) of the Code.
"STOCK OPTIONS" shall mean Automotive Common Stock Options or
Rockwell Common Stock Options.
"STRADDLE PERIOD" shall mean a taxable period that includes but does
not end on the Distribution Date.
"TAX" and "TAXES" shall mean all forms of taxation, whenever created
or imposed, and whether of the United States or elsewhere, and whether imposed
by a federal, state, municipal, governmental, territorial, local, foreign or
other body, and without limiting the generality of the foregoing, shall include
net income, gross income, gross receipts, sales, use, value added, ad valorem,
transfer, recording, franchise, profits, license, lease, service, service use,
payroll, wage, withholding, employment, unemployment insurance, workers
compensation, social security, excise, severance, stamp, business license,
business organization, occupation, premium, property, environmental, windfall
profits, customs, duties, alternative minimum, estimated or other taxes, fees,
premiums, assessments or charges of any kind whatever imposed or collected by
any governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such tax or additional amounts
imposed with respect thereto by any Tax Authority.
"TAX AUTHORITY" shall mean, with respect to any Tax, any
governmental entity, quasi-governmental body or political subdivision thereof
that imposes such Tax and the agency (if any) charged with the determination or
collection of such Tax for such entity, body or subdivision.
"TAX GROUP" shall mean the Rockwell Tax Group or the Automotive Tax
Group, as the case may be.
"TAX INDEMNIFICATION PERIOD" shall mean any Pre-Distribution Taxable
Period and that portion of any Straddle Period that ends on the Distribution
Date.
7
<PAGE> 11
"TAX RETURN" shall mean any return, filing, questionnaire,
information return, election or other document required or permitted to be
filed, including requests for extensions of time, filings made with respect to
estimated tax payments, claims for refund and amended returns that may be filed,
for any period with any Tax Authority (whether domestic or foreign) in
connection with any Tax (whether or not a payment is required to be made with
respect to such filing).
"TIMING DIFFERENCE" means an increase in income, gain or recapture,
or a decrease in deduction, loss or credit, as calculated for Income Tax
purposes, of the taxpayer for any Post-Tax Indemnification Period coupled with
an increase in deduction, loss or credit, or a decrease in income, gain or
recapture, of the taxpayer for the Tax Indemnification Period.
"TRANSACTION AGREEMENTS" shall have the meaning ascribed thereto in
the Distribution Agreement.
Any capitalized term not otherwise defined in this Agreement shall
have the meaning ascribed to it in the Distribution Agreement.
1.02 SCHEDULES, ETC. References to a "SCHEDULE" are, unless
otherwise specified, to the Schedule attached to this Agreement; references to
"SECTION" or "ARTICLE" are, unless otherwise specified, to one of the Sections
or Articles of this Agreement; references to "SUB-SECTION" are, unless the
context otherwise requires, references to the section in which the reference
appears; and references to this Agreement include the Schedules.
ARTICLE II
FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS
2.01 PREPARATION OF TAX RETURNS.
(a) UNITED STATES FEDERAL INCOME TAX RETURNS. (i) Except as provided
in Section 2.01(a)(ii), Rockwell shall prepare and file or cause to be prepared
and filed all U.S. federal Income Tax Returns (including amendments thereto)
which include a member of the Rockwell Tax Group or a member of the Automotive
Tax Group which are
8
<PAGE> 12
required to be filed for any Pre-Distribution Taxable Period. Automotive hereby
irrevocably designates, and agrees to cause each of its affiliates to so
designate, Rockwell as its agent to take any and all actions necessary or
incidental to the preparation and filing of such U.S. federal Income Tax
Returns.
(ii) Automotive shall prepare and file or cause to be prepared and
filed all U.S. federal Income Tax Returns (including amendments thereto) of
RISSCO which are required to be filed for any Pre-Distribution Taxable Period or
Straddle Period.
(b) UNITED STATES STATE AND LOCAL INCOME TAX RETURNS. (i) Except as
provided in Section 2.01(b)(ii), Rockwell shall prepare and file or cause to be
prepared and filed all U.S. state and local Income Tax Returns (including
amendments thereto) which include a member of the Rockwell Tax Group or a member
of the Automotive Tax Group which are required to be filed for any
Pre-Distribution Taxable Period or Straddle Period. Automotive hereby
irrevocably designates, and agrees to cause each of its affiliates to so
designate, Rockwell as its agent to take any and all actions necessary or
incidental to the preparation and filing of such U.S. state and local Income Tax
Returns.
(ii) Automotive shall prepare and file or cause to be prepared and
filed all U.S. state and local Income Tax Returns (including amendments thereto)
of RISSCO which are required to be filed for any Pre-Distribution Taxable Period
or Straddle Period.
(c) FOREIGN INCOME TAX RETURNS. (i) Automotive shall prepare and
file or cause to be prepared and filed:
(A) all Brazilian, Chinese, Czech Republic, Indian, Irish, Italian,
Mexican, Portuguese, Singapore, Spanish and Turkish Income Tax Returns
(including amendments thereto) which include a member of the Automotive Tax
Group which are required to be filed for any Pre-Distribution Taxable Period or
any Straddle Period; and
(B) all Income Tax Returns (including amendments thereto) which are
required to be filed for any Pre-Distribution Taxable Period or any Straddle
9
<PAGE> 13
Period which are (I) Australian Income Tax Returns which relate to Rockwell
Standard of Australia Limited, (II) Canadian Income Tax Returns which relate to
RISS Holdings, Ltd., (III) Japanese Income Tax Returns which relate to Nippon
Automotive Body Systems Corporation or (IV) Netherlands Income Tax Returns which
relate to ROR Rockwell B.V.
Rockwell hereby irrevocably designates, and agrees to cause each of its
affiliates to so designate, Automotive as its agent to take any and all actions
necessary or incidental to the preparation and filing of such foreign Income Tax
Returns.
(ii) Rockwell shall prepare and file or cause to be prepared and
filed all Argentinean, Australian, Barbadian, Canadian, French, German, Hong
Kong, Japanese, Korean, Netherlands and United Kingdom Income Tax Returns
(including amendments thereto) not referred to in Section 2.01(c)(i) which
include a member of the Automotive Tax Group which are required to be filed for
any Pre-Distribution Taxable Period or any Straddle Period. Automotive hereby
irrevocably designates, and agrees to cause each of its affiliates to so
designate, Rockwell as its agent to take any and all actions necessary or
incidental to the preparation and filing of such foreign Income Tax Returns.
(d) NON-INCOME TAX RETURNS. (i) All Tax Returns (including
amendments thereto) which are not Income Tax Returns for all Pre-Distribution
Taxable Periods and all Straddle Periods shall be the responsibility of the
Rockwell Tax Group if such Tax Returns (A) relate to a member or members of the
Rockwell Tax Group or their respective businesses, assets or activities, (B)
relate to members of each of the Rockwell Tax Group and the Automotive Tax Group
or their respective businesses, assets or activities, or (C) relate to a member
of the Automotive Tax Group for a period in which such member conducts or has
conducted both an automotive business and a nonautomotive business. Automotive
hereby irrevocably designates, and agrees to cause each of its affiliates to so
designate, Rockwell as its agent to take any and all actions necessary or
incidental to the preparation and filing of such Tax Returns.
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(ii) All Tax Returns (including amendments thereto) which are not
Income Tax Returns which relate to a member of the Automotive Tax Group or their
respective businesses, assets or activities for all Pre-Distribution Taxable
Periods and Straddle Periods which are not the responsibility of the Rockwell
Tax Group shall be the responsibility of the Automotive Tax Group.
(e) POST-DISTRIBUTION DATE TAX RETURNS. All Tax Returns (including
amendments thereto) for all Post-Distribution Taxable Periods shall be the
responsibility of the Rockwell Tax Group if such Tax Returns relate to a member
or members of the Rockwell Tax Group or their respective businesses, assets or
activities, and shall be the responsibility of the Automotive Tax Group if such
Tax Returns relate to a member or members of the Automotive Tax Group or their
respective businesses, assets or activities.
(f) CONSISTENT WITH PAST PRACTICE Unless Rockwell and Automotive
otherwise agree in writing, all Tax Returns (including amendments thereto)
described in this Section 2.01 filed after the date of this Agreement, in the
absence of a controlling change in law or circumstances, shall be prepared on a
basis consistent with the elections, accounting methods, conventions and
principles of taxation used for the most recent taxable periods for which Tax
Returns involving similar matters have been filed. Subject to the provisions of
this Agreement, all decisions relating to the preparation of Tax Returns shall
be made in the sole discretion of the party responsible under this Agreement for
such preparation.
(g) RESPONSIBILITY FOR FILING. Although, pursuant to this Agreement,
Rockwell or Automotive may be responsible for filing a particular Tax Return,
Rockwell and Automotive have agreed that the actual preparation and filing of
certain Tax Returns will be done by the non-responsible party. Schedule 2.01
attached hereto sets forth a schedule specifying such Tax Returns. Rockwell and
Automotive may agree from time to time to additions or deletions from Schedule
2.01.
2.02 PAYMENT OF TAXES.
(a) UNITED STATES FEDERAL INCOME TAXES. Except as otherwise provided
in this Agreement:
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(i) Rockwell shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the consolidated U.S. federal Income Tax liability for
all Pre-Distribution Taxable Periods of all members of the Rockwell Tax Group or
the Automotive Tax Group (other than RISSCO); and
(ii) Automotive shall pay or cause to be paid, on a
timely basis, all Taxes due with respect to the U.S. federal Income
Tax liability for any Pre-Distribution Taxable Period or Straddle
Period of RISSCO.
(b) UNITED STATES STATE AND LOCAL INCOME TAXES. Except as otherwise
provided in this Agreement:
(i) Rockwell shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the U.S. state and local Income Tax liability for all
Pre-Distribution Taxable Periods or Straddle Periods of all members of the
Rockwell Tax Group or the Automotive Tax Group (other than RISSCO), provided,
however, that Automotive, on behalf of the Automotive Tax Group, hereby assumes
and agrees to pay directly to or at the direction of Rockwell, at least two days
prior to the date payment (including estimated payment) thereof is due, the
portion of such U.S. state and local Income Taxes for that portion of any
Straddle Period which begins on the day after the Distribution Date which
relates to a member of the Automotive Tax Group or its business, assets or
activities; and
(ii) Automotive shall pay or cause to be paid, on a timely basis,
all Taxes due with respect to the U.S. state and local Income Tax liability for
all Pre-Distribution Taxable Periods and Straddle Periods of RISSCO.
(c) FOREIGN INCOME TAXES. Except as otherwise provided in this
Agreement:
(i) Automotive shall pay or cause to be paid, on a
timely basis, all Taxes due with respect to
(A) the Brazilian, Chinese, Czech Republic, Indian, Irish, Italian,
Mexican, Portuguese, Singapore, Spanish and Turkish Income Tax liability for all
Pre-Distribution Taxable Periods and all Straddle Periods of
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all members of the Automotive Tax Group or their respective businesses, assets
or activities, and
(B) the Income Tax liability for all Pre-Distribution Taxable
Periods and Straddle Periods which relate to (I) the Australian Income Tax
liability of Rockwell Standard of Australia Limited, (II) the Canadian Income
Tax liability of RISS Holdings, Ltd., (III) the Japanese Income Tax liability of
Nippon Automotive Body Systems Corporation and (IV) the Netherlands Income Tax
liability of ROR Rockwell B.V.,
provided, however, Rockwell, on behalf of the Rockwell Tax Group, hereby assumes
and agrees to pay directly to or at the direction of Automotive, at least two
days prior to the date payment (including estimated payment) thereof is due such
foreign Income Tax liability resulting from any Distribution Transaction; and
(ii) Except as provided in Section 2.02(c)(i) above, Rockwell shall
pay or cause to be paid, on a timely basis, all foreign Taxes due with respect
to the Argentinean, Australian, Barbadian, Canadian, French, German, Hong Kong,
Japanese, Korean, Netherlands and United Kingdom Income Tax liability of all
members of the Automotive Tax Group for all Pre-Distribution Taxable Periods and
Straddle Periods, provided, however, that Automotive, on behalf of the
Automotive Tax Group, hereby assumes and agrees to pay directly to or at the
direction of Rockwell, at least two days prior to the date payment (including
estimated payment) thereof is due (A) the portion of such foreign Income Taxes
for that portion of any Straddle Period which begins on the day after the
Distribution Date which relates to a member of the Automotive Tax Group or its
business, assets or activities, (B) any such foreign Income Taxes which may be
due as a result of any Automotive Intragroup Transaction and (C) any such
foreign Income Taxes which may be due as a result of any transaction specified
on Schedule 1.01.
Notwithstanding the foregoing provisions of this Section 2.02(c), Automotive
shall pay or cause to be paid (on a timely basis), the Canadian Income Tax
liability resulting from any Distribution Transaction up to a maximum total
amount equal to the Canadian Cash Amount. If the Canadian Income Tax liability
resulting from any Distribution Transaction shall exceed the Canadian Cash
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Amount, Rockwell shall pay or cause to be paid (on a timely basis) such excess.
If, at the time the Canadian Income Tax Return of Meritor Automotive Canada Inc.
and its affiliates for the year ended September 30, 1997 is filed, Automotive
shall have paid in the aggregate less than the Canadian Cash Amount to the
Canadian Tax Authorities in respect the Canadian Income Tax liability resulting
from any Distribution Transaction, then Automotive, on behalf of the Automotive
Tax Group, hereby assumes and agrees to pay directly to or at the direction of
Rockwell, within two days after such Canadian Income Tax Return is filed, the
difference between the Canadian Cash Amount and the amount paid by Automotive to
the Canadian Tax Authorities in respect of any Distribution Transaction.
(d) NON-INCOME TAXES. Except as otherwise provided in this
Agreement:
(i) Rockwell shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the non-Income Tax liability for all Pre-Distribution
Taxable Periods and Straddle Periods which relate to (A) a member or members of
the Rockwell Tax Group or their respective businesses, assets or activities, (B)
members of each of the Rockwell Tax Group and the Automotive Tax Group or their
respective businesses, assets or activities, or (C) a member of the Automotive
Tax Group for a period in which such member conducts or has conducted both an
automotive business and a nonautomotive business, provided, however, that
Automotive, on behalf of the Automotive Tax Group, hereby assumes and agrees to
pay directly to or at the direction of Rockwell, at least two days prior to the
date payment (including estimated payment) thereof is due (I) the portion of
such non-Income Taxes which relates to a member of the Automotive Tax Group or
its automotive business, assets or activities for such Pre-Distribution Taxable
Periods and Straddle Periods other than any such non-Income Taxes resulting from
any Distribution Transaction, (II) any such non-Income Taxes which may be due as
a result of any Automotive Intragroup Transaction and (III) any such non-Income
Taxes which may be due as a result of any transaction specified on Schedule
1.01; and
(ii) Automotive shall pay or cause to be paid, on a timely basis,
all non-Income Taxes for all Pre-Distribution Taxable Periods and Straddle
Periods which
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relate to a member of the Automotive Tax Group, its business, assets or
activities which are not the responsibility of the Rockwell Tax Group other than
any non-Income Taxes imposed in connection with the transactions contemplated by
the Transaction Agreements or any other agreement entered into for the purpose
of implementing the Distribution.
Notwithstanding the foregoing provisions of this Section 2.02(d), Automotive
shall pay or cause to be paid (on a timely basis) any such non-Income Taxes
imposed in connection with the transactions specified on Schedule 1.01.
(e) POST-DISTRIBUTION DATE TAXES. Except as otherwise provided in
this Agreement, all Taxes for all Post-Distribution Taxable Periods shall be
paid or caused to be paid by the party responsible under this Agreement for
filing the Tax Return pursuant to which such Taxes are due or, if no such Tax
Returns are due, by the party liable for such Taxes.
(f) CREDIT FOR PRIOR TAX PAYMENTS. To the extent any member of a Tax
Group has made a payment of Taxes (including estimated Taxes) on or before the
Distribution Date, the party liable for paying such Taxes under this Agreement
shall be entitled to treat the payment as having been paid or caused to have
been paid by such party, and such party shall not be required to reimburse the
party which actually paid such Taxes. Notwithstanding the foregoing, no payment
of Taxes by any member of a Tax Group on or before the Distribution Date shall
be treated as having been paid in respect of Automotive's obligation to pay the
Canadian Income Taxes resulting from any Distribution Transaction in accordance
with the provisions of Sections 2.02(c) and 3.01(b).
(g) RESPONSIBILITY FOR PAYMENT. Although Rockwell or Automotive may
be responsible for paying a particular Tax liability, Rockwell and Automotive
may agree that the actual payment to a Taxing Authority of certain Tax
liabilities will be made by the non-responsible party. Rockwell and Automotive
may agree to prepare a schedule setting forth such Tax liabilities and may agree
from time to time to additions or deletions from such schedule.
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2.03 TAX REFUNDS AND CARRYBACKS.
(a) RETENTION AND PAYMENT OF TAX REFUNDS. Except as otherwise
provided in this Agreement, Rockwell shall be entitled to retain, and to receive
within ten days after Actually Realized by the Automotive Tax Group, the portion
of all refunds or credits of Taxes for which the Rockwell Tax Group is liable
pursuant to Section 2.02 or Section 3.01(a) or is treated as having paid or
caused to have been paid pursuant to Section 2.02(f), and Automotive shall be
entitled to retain, and to receive within ten days after Actually Realized by
the Rockwell Tax Group, the portion of all refunds or credits of Taxes for which
the Automotive Tax Group is liable pursuant to Section 2.02 or Section 3.01(b)
or is treated as having paid or caused to have been paid pursuant to Section
2.02(f). The amount of any refund or credit of Taxes to which Rockwell or
Automotive is entitled to retain or receive pursuant to the foregoing sentence
shall be reduced to take account of any Taxes incurred by the Automotive Tax
Group, in the case of a refund or credit to which Rockwell is entitled, or the
Rockwell Tax Group, in the case of a refund or credit to which Automotive is
entitled, upon the receipt of such refund or credit.
(b) CARRYBACKS. Unless the parties otherwise agree in writing,
Automotive shall elect and shall cause each member of the Automotive Tax Group
to elect, where permitted by law, to carry forward any net operating loss, net
capital loss, charitable contribution or other item arising after the
Distribution Date that could, in the absence of such election, be carried back
to a Pre-Distribution Taxable Period. Except as otherwise provided in this
Agreement, notwithstanding the provisions of Section 2.03(a), (i) any refund or
credit of Taxes resulting from the carryback of any item of Taxes attributable
to the Automotive Tax Group arising in a Post-Tax Indemnification Period to a
Tax Indemnification Period shall be for the account and benefit of the
Automotive Tax Group, and (ii) any refund or credit of Taxes resulting from the
carryback of any item of Taxes attributable to the Rockwell Tax Group arising in
a Post-Tax Indemnification Period to a Tax Indemnification Period shall be for
the account and benefit of the Rockwell Tax Group.
(c) REFUND CLAIMS. Rockwell shall be permitted to file at Rockwell's
sole expense, and
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Automotive shall reasonably cooperate with Rockwell in connection with, any
claims for refund of Taxes to which Rockwell is entitled pursuant to this
Section 2.03 or any other provision of this Agreement. Rockwell shall reimburse
Automotive for any reasonable out-of-pocket costs and expenses incurred by any
member of the Automotive Tax Group in connection with such cooperation.
Automotive shall be permitted to file at Automotive's sole expense, and Rockwell
shall reasonably cooperate with Automotive in connection with, any claims for
refunds of Taxes to which Automotive is entitled pursuant to this Section 2.03
or any other provision of this Agreement. Automotive shall reimburse Rockwell
for any reasonable out-of-pocket costs and expenses incurred by any member of
the Rockwell Tax Group in connection with such cooperation.
2.04 ALLOCATION OF STRADDLE PERIOD TAXES. In the case of any
Straddle Period:
(a) the periodic Taxes of a member of the Rockwell Tax Group or the
Automotive Tax Group or its business, assets or activities that are not based on
income or receipts (e.g., property Taxes) for that portion of any Straddle
Period beginning after the Distribution Date shall be computed based on the
ratio of the number of days in such portion of the Straddle Period to the number
of days in the entire taxable period;
(b) the Taxes of a member of the Rockwell Tax Group or the
Automotive Tax Group or its business, assets or activities for that portion of
any Straddle Period beginning after the Distribution Date (other than Taxes
described in 2.04(a) above) shall be computed on a "closing-of-the-books" basis
as if such taxable period began on the day after the Distribution Date, and, in
the case of any Taxes of a member of the Rockwell Tax Group or the Automotive
Tax Group or its business with respect to any equity interest in any partnership
or other "flowthrough" entity, as if a taxable period of such partnership or
other "flowthrough" entity began as of the day after the Distribution Date; and
(c) the Taxes of the Rockwell Tax Group and the Automotive Tax Group
with respect to any Tax Return for a Straddle Period which includes a member of
each of the Rockwell Tax Group and the Automotive Tax Group or their respective
businesses, assets or activities shall
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be allocated between the Rockwell Tax Group, on the one hand, and the Automotive
Tax Group, on the other hand, determined in a manner analogous to that set forth
in Treasury Regulation Section 1.1552-1(a)(2).
2.05 SCHEDULE OF TAX RETURNS COVERING FOREIGN INCOME TAXES AND
PAYMENTS. Following the Distribution Date, Rockwell and Automotive agree to use
their best efforts to jointly prepare a schedule showing (a) each Tax Return
covering foreign Income Taxes required to be filed by a member of the Rockwell
Tax Group and each Tax Return covering foreign Income Taxes required to be filed
by a member of the Automotive Tax Group for taxable periods ending after
September 30, 1996 and (b) the party responsible for filing such Tax Returns.
ARTICLE III
TAX INDEMNIFICATION; TAX CONTESTS
3.01 INDEMNIFICATION.
(a) ROCKWELL INDEMNIFICATION. Subject to Section 3.01(b) and Section
3.02, Rockwell shall indemnify, defend and hold harmless each member of the
Automotive Tax Group and each of their respective shareowners, directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing from and against:
(i) all Taxes of the Rockwell Tax Group;
(ii) all Taxes of the Automotive Tax Group for all Pre-Distribution
Taxable Periods and all Straddle Periods for which Rockwell is liable pursuant
to Section 2.02;
(iii) all liability as a result of Treasury Regulation Section
1.1502-6(a) (which imposes several liability on members of an affiliated group
that file a U.S. federal consolidated Income Tax return) or comparable U.S.
state or local provision for Income Taxes of any person which is or has ever
been affiliated with any member of the Rockwell Tax Group or with which any
member of the Rockwell Tax Group joins or has ever joined (or is or has ever
been required to join) in filing any consolidated, combined or unitary Income
Tax Return for
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any Tax period ending on or before or including the Distribution Date;
(iv) all Taxes for any Tax period (whether beginning before, on or
after the Distribution Date) that would not have been payable but for the breach
by any member of the Rockwell Tax Group of any representation, warranty,
covenant or obligation under this Agreement;
(v) all liability for a breach by any member of the Rockwell Tax
Group of any representation, warranty, covenant or obligation under this
Agreement;
(vi) all Income Taxes and non-Income Taxes imposed in connection
with the transactions contemplated by the Transaction Agreements or any other
agreement entered into for the purpose of implementing the Distribution other
than any transaction specified on Schedule 1.01;
(vii) all Taxes for which Rockwell is liable pursuant to Section
3.02; and
(viii) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.
Notwithstanding the foregoing and subject to Section 3.01(b) and Section 3.02,
Rockwell shall not indemnify, defend or hold harmless any member of the
Automotive Tax Group from any liability for Taxes (other than Taxes resulting
from the failure of the Distribution to qualify as a reorganization described in
Section 368(a)(1)(D) of the Code or the failure of any pre-Distribution
transaction specified in Schedule 3.01 to be non-taxable) attributable to any
action (including the making of an election under Section 338 of the Code) taken
by any member of the Automotive Tax Group after the Distribution (other than any
such action expressly required or otherwise expressly contemplated by the
Transaction Agreements or any other agreement entered into for the purpose of
implementing the Distribution or taken in the ordinary course of business) (a
"POST-DISTRIBUTION TAX ACT").
(b) AUTOMOTIVE INDEMNIFICATION. Automotive shall be liable for, and
shall indemnify, defend and hold harmless each member of the Rockwell Tax Group
and each
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of the respective shareowners, directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing
from and against:
(i) all Taxes of any member of the Automotive Tax Group (other than
Taxes for which Rockwell provides indemnification pursuant to Section 3.01(a));
(ii) all Taxes for any Tax period (whether beginning before, on or
after the Distribution Date) that would not have been payable but for the breach
by any member of the Automotive Tax Group of any representation, warranty,
covenant or obligation under this Agreement;
(iii) all liability for a breach by any member of the Automotive Tax
Group of any representation, warranty, covenant or obligation under this
Agreement;
(iv) all Taxes for which Automotive is liable pursuant to Section
3.02;
(v) all Taxes arising under any IRS Gain Recognition Agreement
specified in Schedule 5.03 or any revised or successor agreement thereto;
(vi) all Canadian Income Taxes resulting from any Distribution
Transaction;
(vii) all Taxes attributable to a Post-Distribution Tax Act; and
(viii) all liability for any reasonable legal, accounting,
appraisal, consulting or similar fees and expenses relating to the foregoing.
Notwithstanding the foregoing, Automotive's liability under Section 3.01(b)(vi)
shall not exceed the Canadian Cash Amount reduced by (A) any amounts paid after
the Distribution Date by Automotive to (and not refunded to Automotive by) the
Canadian Tax Authorities in respect of such liability and (B) all amounts paid
to Rockwell pursuant to the last sentence of Section 2.02(c).
3.02 AUTOMOTIVE TAX ACTS.
(a) Notwithstanding Section 3.01, Automotive agrees to indemnify,
defend and hold harmless each member
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of the Rockwell Tax Group and each of the respective shareowners, directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing from and against any Taxes resulting from any
Automotive Tax Act which causes (i) the Distribution to fail to qualify as a
reorganization described in Section 368(a)(1)(D) of the Code or (ii) any
pre-Distribution transaction specified in Schedule 3.01 undertaken in connection
with the Distribution to become taxable. An Automotive Tax Act shall mean any
action specified on Schedule 3.02(a) attached hereto.
(b) Automotive shall, and shall cause each member of the Automotive
Tax Group to, comply with and take no action inconsistent with the Automotive
Tax Representation Letter, unless, pursuant to a favorable ruling letter
obtained from the IRS which is satisfactory to Rockwell or the advice of
Chadbourne & Parke LLP or other nationally recognized tax counsel to Rockwell,
which advice shall be satisfactory to Rockwell, such act or omission would not
adversely affect the U.S. federal Income Tax consequences of the Distribution to
Rockwell or the shareowners of Rockwell. Notwithstanding Sections 3.01(b)(iii),
3.01(b)(iv) and 3.01(b)(vii), the parties intend that the sole remedy for breach
of the covenants contained in this Section 3.02(b) shall be as set forth in
Section 3.02(a).
(c) Notwithstanding the foregoing, an Automotive Tax Act shall not
include any transaction or action specifically disclosed or specifically
described in any of the Transaction Agreements or, except as specifically set
forth in Schedule 3.01 as occurring on or prior to the Distribution Date, any
action taken on or prior to the Distribution Date. An Automotive Tax Act shall
not include any action on the part of any member of the Rockwell Tax Group.
Rockwell agrees to indemnify and hold each member of the Automotive Tax Group
harmless from and against any Taxes resulting from the failure of the
Distribution to qualify under Section 368(a)(1)(D) of the Code, except where
such failure is attributable to an Automotive Tax Act.
3.03 NOTICE OF INDEMNITY. Whenever a party hereto (hereinafter an
"INDEMNITEE") becomes aware of the existence of an issue raised by any Tax
Authority which could reasonably be expected to result in a determination that
would increase the liability for any Tax of the
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other party hereto or any member of its Tax Group for any Tax period or require
a payment hereunder by the other party (hereinafter an "INDEMNITY ISSUE"), the
Indemnitee shall in good faith promptly give notice to such other party
(hereinafter the "INDEMNITOR") of such Indemnity Issue. The failure of the
Indemnitee to give such notice shall not relieve the Indemnitor of its
obligations under this Agreement, except to the extent such Indemnitor or a
member of its Tax Group is actually prejudiced by such failure to give notice.
3.04 PAYMENTS.
(a) TIMING ADJUSTMENTS. (i) Timing Differences. If a Tax audit
proceeding or an amendment of a Tax Return results in a Timing Difference, and
such Timing Difference results in a decrease in an indemnity obligation Rockwell
has or would otherwise have under Section 3.01(a) and/or an increase in the
amount of a Tax refund or credit to which Rockwell is entitled under Section
2.03, then in each Post-Tax Indemnification Period in which the Automotive Tax
Group Actually Realizes an Income Tax Detriment, Rockwell shall pay to
Automotive an amount equal to such Income Tax Detriment; provided, however, that
the aggregate payments which Rockwell shall be required to make under this
Section 3.04(a)(i) with respect to any Timing Difference shall not exceed the
aggregate amount of the Income Tax Benefits realized by the Rockwell Tax Group
for all taxable periods and the Automotive Tax Group for all Tax Indemnification
Periods as a result of such Timing Difference. Rockwell shall make all such
payments within ten days after Automotive notifies Rockwell that the relevant
Income Tax Detriment has been Actually Realized.
(ii) Reverse Timing Differences. If a Tax audit proceeding or an
amendment to a Tax Return results in a Reverse Timing Difference, and such
Reverse Timing Difference results in an increase in an indemnity payment
obligation of Rockwell under Section 3.1 and/or a decrease in the amount of a
Tax refund or credit to which Rockwell is or would otherwise be entitled under
Section 2.03, then in each Post-Tax Indemnification Period in which the
Automotive Tax Group Actually Realizes an Income Tax Benefit, Automotive shall
pay to Rockwell within ten days after Automotive has Actually Realized such
Income Tax Benefit an amount equal to such Income Tax Benefit, provided,
however, that the aggregate
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payments which Automotive shall be required to make under this Section
3.04(a)(ii) with respect to Reverse Timing Differences shall not exceed the
aggregate amount of the Income Tax Detriments realized by the Automotive Tax
Group and the Rockwell Tax Group for all Tax Indemnification Periods as a result
of such Reverse Timing Difference.
(b) TIME FOR PAYMENT. Except as otherwise provided in this Section
3.04(b), any indemnity payment required to be made pursuant to this Agreement
shall be paid within thirty days after the indemnified party makes written
demand upon the indemnifying party, provided that in no event shall such payment
be required to be made earlier than five business days prior to the date on
which the relevant Taxes (including estimated Taxes) are required to be paid (or
would be required to be paid if no such Taxes are due) to the relevant Tax
Authority. Notwithstanding any other provision in this Agreement, to simplify
the administration of this Agreement, the payment of any amount less than
$100,000 required to be made pursuant to this Agreement by one party hereto to
another party hereto need not be made to such other party prior to thirty days
following the later of (i) the close of the calendar quarter during which such
payment obligation arose and (ii) the day during such calendar quarter when the
aggregate amount of all such less than $100,000 payment obligations arising
during such calendar quarter exceeds $500,000. Unless otherwise specified by the
recipient for items exceeding $250,000, any such payment may be made on a net
Tax basis (i.e., reduced to take account of any net Tax benefit to be realized
by the recipient (computed at the effective Tax rate set forth in Section
3.04(c)) to the extent such recipient is entitled to a corresponding deduction.
(c) PAYMENTS NET OF TAXES AND TAX BENEFITS. The amount of any
payment under this Agreement shall be (i) reduced to take into account any net
Tax benefit realized by the recipient's Tax Group arising from the incurrence or
payment by such recipient's Tax Group of any amount in respect of which such
payment is made and (ii) increased to take into account any net Tax cost
incurred by the recipient's Tax Group as a result of the receipt or accrual of
payments hereunder (grossed-up for such increase), in each case determined by
treating the recipient as recognizing all other items of income, gain, loss,
deduction or credit before recognizing any item
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arising from the receipt of accrual of any payment hereunder. In determining the
amount of any such Tax benefit or Tax cost, the recipient's Tax Group shall be
deemed to be subject to (A) U.S. federal Income Taxes and foreign Income Taxes
at the maximum statutory rate then in effect and (B) U.S. state and local Income
Taxes at an assumed rate of five percent net of U.S. federal Income Tax
benefits. Except as otherwise provided in this Agreement or unless the parties
otherwise agree to an alternative method for determining the present value of
any such anticipated Tax benefit or Tax cost, any payment hereunder shall
initially be made without regard to this section and shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
only after the recipient's Tax Group has Actually Realized such Tax cost or Tax
benefit.
(d) RIGHT TO OFFSET. Any party making a payment under this Agreement
shall have the right to reduce any such payment by any undisputed amounts owed
to it by the other party to this Agreement.
(e) CHARACTERIZATION OF PAYMENTS. It is the intention of the parties
to this Agreement that payments made pursuant to this Agreement are to be
treated as relating back to the Distribution as an adjustment to the assets and
liabilities transferred thereunder, and the parties shall not take any position
inconsistent with such intention before any Tax Authority, except to the extent
that a final determination (as defined in Section 1313 of the Code) with respect
to the recipient party causes any such payment not to be so treated.
3.05 TAX CONTESTS. The Indemnitor and its representatives, at the
Indemnitor's expense, shall be entitled to participate (a) in all conferences,
meetings and proceedings with any Tax Authority, the subject matter of which is
or includes an Indemnity Issue and (b) in all appearances before any court, the
subject matter of which is or includes an Indemnity Issue. The party who has
responsibility for filing the Tax Return under this Agreement (the "RESPONSIBLE
PARTY") with respect to which there could be an increase in liability for any
Tax or with respect to which a payment could be required hereunder shall have
the right to decide as between the parties hereto how such matter is to be dealt
with and finally resolved with the appropriate Tax Authority and shall control
all audits and similar proceedings. If no
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Tax Return is or was required to be filed in respect of an Indemnity Issue, the
Indemnitor shall be treated as the Responsible Party with respect thereto. The
Responsible Party agrees to cooperate in the settlement of any Indemnity Issue
with the other party and to take such other party's interests into account.
Notwithstanding any other provision of this Agreement, if Rockwell has
materially satisfied its obligations under this Agreement and if Automotive
fails to permit Rockwell to control any audit or proceeding regarding any
Indemnity Issue relating to the qualification of the Distribution as a
"reorganization" within the meaning of Section 368(a)(1)(D) of the Code or the
qualification of any transactions undertaken pursuant to the Transaction
Documents or described in the Ruling Request as transactions described in
Section 355 of the Code, "reorganizations" within the meaning of Section
368(a)(1)(D) of the Code or as otherwise tax-free transactions, then Rockwell
shall not be liable for and shall not indemnify the Automotive Tax Group for any
Tax deficiency resulting from an adverse determination of such Indemnity Issue.
ARTICLE IV
COMPENSATION PAYMENTS; OPTIONS; FOREIGN TAX CREDITS
4.01 COMPENSATION PAYMENTS.
(a) TAX DEDUCTIONS. Notwithstanding anything to the contrary in this
Agreement, unless Rockwell and Automotive otherwise agree in writing, (i) the
Boeing Tax Group (and not the Automotive Tax Group) shall claim the
post-Distribution Date Tax deductions in respect of Compensation Payments paid
to Automotive Group Employees and Former Employees who ceased employment on or
before December 6, 1996 and Rockwell shall pay to Automotive the amount received
from Boeing as a result of any Tax benefit realized arising in respect of such
Tax deductions within ten days after such amount is received by Rockwell, and
(ii) the Automotive Tax Group (and not the Rockwell Tax Group) shall claim the
post-Distribution Date Tax deductions in respect of Compensation Payments paid
to all other Automotive Group Employees and Former Employees.
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(b) NOTICES, WITHHOLDING, REPORTING. Automotive shall withhold
applicable Taxes and satisfy applicable Tax reporting obligations in connection
with the Compensation Payments made to all Automotive Group Employees and Former
Employees.
(c) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section
4.01(a), in the event a Tax audit proceeding shall determine (by settlement or
otherwise), or the parties otherwise determine pursuant to Section 4.04, that
all or a portion of the Tax deductions in respect of Compensation Payments paid
to Automotive Group Employees or Former Employees was not available to the party
claiming the Tax deduction, then in the case of such Tax deductions claimed by
the Boeing Tax Group, Automotive shall claim such Tax deductions (by an amended
Tax Return or otherwise) and shall pay to Rockwell (which shall in turn pay such
amount to Boeing) the amount of the resulting Tax deficiency within ten days
after such Tax deduction has been Actually Realized by the Automotive Tax Group.
4.02 STOCK OPTIONS.
(a) TAX DEDUCTIONS. Notwithstanding anything to the contrary in this
Agreement, unless the IRS issues a contrary private letter ruling to Rockwell or
Automotive, or Rockwell and Automotive otherwise agree in writing, (i) the
Rockwell Tax Group or the Boeing Tax Group (and not the Automotive Tax Group)
shall claim the post-Distribution Date Tax deductions in respect of Rockwell
Common Stock Options held by Automotive Group Employees and Former Employees and
(ii) the Automotive Tax Group (and not the Rockwell Tax Group or the Boeing Tax
Group) shall claim any post-Distribution Date Tax deductions in respect of
Automotive Common Stock Options held by Automotive Group Employees and Former
Employees.
(b) NOTICES, WITHHOLDING, REPORTING. Rockwell shall promptly notify
Automotive of any post-Distribution Date event giving rise to income to any
Automotive Group Employees and Former Employees in connection with the Rockwell
Common Stock Options and, if required by law, Automotive shall withhold
applicable Taxes and satisfy applicable Tax reporting obligations in connection
therewith. Rockwell shall within ten days of demand thereof reimburse Automotive
for all reasonable out-of-pocket expenses incurred in connection with the
Rockwell
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Common Stock Options, including with respect to incremental Tax reporting
obligations and any incremental employment Tax obligations; provided that
Automotive shall use reasonable efforts to collect any such amounts required to
be paid by Automotive Group Employees and Former Employees from such Automotive
Group Employees and Former Employees.
(c) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section
4.02(a), in the event a Tax audit proceeding shall determine (by settlement or
otherwise), or the parties otherwise determine pursuant to Section 4.04, that
all or a portion of the Tax deductions in respect of Rockwell Common Stock
Options held by Automotive Group Employees and Former Employees should have been
claimed by the Automotive Tax Group, Automotive shall claim such Tax deductions
(by an amended Tax Return or otherwise) and shall pay to Rockwell the amount of
any Tax refund or credit arising in respect of such Tax deduction within ten
days after such Tax refund or credit is Actually Realized by the Automotive Tax
Group.
4.03 FOREIGN TAX CREDITS.
(a) FOREIGN TAX CREDITS. Unless Rockwell and Automotive otherwise
agree in writing, the Rockwell Tax Group (and not the Automotive Tax Group)
shall be entitled to include in its computation of Code Section 901 and 902
credits claimed on its U.S. federal Income Tax Return for the fiscal year ended
September 30, 1997 and associated with pre-Distribution dividends paid or deemed
paid by affiliated Canadian corporations to United States corporations in the
Rockwell Tax Group, any Canadian Income Taxes, including any capital gains
Taxes, paid or accrued by Meritor Automotive Canada Inc. and its affiliates with
respect to pre-Distribution Canadian Distribution Transactions associated with
the Canadian restructuring plus any Code Section 902 credits that would have
been associated with such Canadian dividends absent the Canadian Distribution
Transactions.
(b) TAX AUDIT ADJUSTMENTS. Notwithstanding the provisions of Section
4.03(a), in the event a Tax audit proceeding shall finally determine (by
settlement or otherwise), or the parties otherwise determine pursuant to Section
4.04, that all or a portion of the foreign Tax credits allocated to Rockwell
pursuant to
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Section 4.03(a) should have been claimed by the Automotive Tax Group, Automotive
shall claim such Tax credits (by an amended Tax Return or otherwise) and shall
pay to Rockwell the amount of any Tax refund or credit arising in respect of
such Tax credits within ten days after such Tax refund or credit is Actually
Realized by the Automotive Tax Group. The amount of the Tax refund or credit
Actually Realized by Automotive will be determined by treating all Code Section
902 creditable foreign Taxes in the post-1986 pool of earnings and profits as
being associated with a dividend or other U.S. federal taxable income inclusion
by the Automotive Tax Group on a pro rata basis at the time of the said taxable
income inclusion.
4.04 CHANGE IN LAW. Notwithstanding the agreement with respect to
reporting of Tax items attributable to Compensation Payments and Options set
forth in Sections 4.01 and 4.02 of this Agreement, respectively, and the
claiming of foreign Tax credits set forth in Section 4.03 of this Agreement,
neither the Automotive Tax Group nor the Rockwell Tax Group shall have any
obligation to report any such Tax items or to claim any foreign Tax credits as
set forth in such Sections in the event that either such party determines, based
on an opinion of nationally recognized tax counsel, which opinion shall be
satisfactory to the other party, that there is no substantial authority to
support reporting such Tax items or claiming such Tax credits on a Tax Return
filed by such party as a result of a change in or amendment to any law or
regulation, or any change in the official interpretation thereof, effective or
occurring after the date of this Agreement, and such Tax Group provides prompt
notice to the other Tax Group of any such determination.
ARTICLE V
COOPERATION AND EXCHANGE OF INFORMATION
5.01 INCONSISTENT ACTIONS. Each party to this Agreement agrees (i)
to, and to cause each of the relevant members of its Tax Group to, report the
Distribution as a transaction described in Section 368(a)(1)(D) of the Code on
all Tax Returns and other filings, (ii) to use its best efforts to ensure that
the Distribution receives such treatment for U.S. federal Tax
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purposes and (iii) that, unless it has obtained the prior written consent of the
other party, it (and the members of its Tax Group) shall not take any action
inconsistent with, or fail to take any action required by, the Transaction
Agreements.
5.02 RULING REQUEST. Each party hereto represents that neither it
(nor any of the members of its Tax Group) will take or has any plan or intention
to take any action which is inconsistent with any factual statements,
representations or other similar conditions contained in the Ruling Request or
in the Ruling.
5.03 IRS GAIN RECOGNITION AGREEMENT; NOTIFICATION OF CERTAIN
DISPOSITIONS. Automotive shall give Rockwell at least sixty days prior written
notice in the event that at any time prior to the date which is ten years after
the Distribution Date, Automotive directly or indirectly disposes of all or any
portion of the ownership interest in, or all or a substantial portion of the
assets of, any entity identified on Schedule 5.03. Such notice shall describe
any such disposition in sufficient detail to enable Rockwell (i) to comply with
the requirements of Section 367 of the Code, applicable regulations thereunder
and any IRS Gain Recognition Agreement, and (ii) if applicable, to enter into a
revised IRS Gain Recognition Agreement under Section 367 of the Code and the
applicable regulations thereunder. At the time of the delivery of such notice,
Automotive shall provide to Rockwell security reasonably satisfactory to
Rockwell for the performance of all obligations of Automotive under Section
3.01(b) hereof and this Section 5.03 in respect of the disposition referred to
in such notice.
5.04 COOPERATION AND EXCHANGE OF INFORMATION. Each party hereto
agrees to provide, and to cause each member of its Tax Group to provide, such
cooperation and information as such other party shall request, on a timely
basis, in connection with the preparation or filing of any Tax Return or claim
for Tax refund not inconsistent with this Agreement or in conducting any Tax
audit, Tax dispute, or otherwise in respect of Taxes or to carry out the
provisions of this Agreement. To the extent necessary to carry out the purposes
of this Agreement and subject to the other provisions of this Agreement, such
cooperation and information shall include without limitation the non-exclusive
designation of an
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officer of Rockwell as an officer of Automotive and each of its affiliates for
the purpose of signing Tax Returns, cashing refund checks, pursuing refund
claims, dealing with Tax Authorities and defending audits as well as promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any Tax Authority which relate to the Automotive Tax
Group for the Tax Indemnification Period and providing copies of all relevant
Tax Returns for the Tax Indemnification Period, together with accompanying
schedules and related workpapers, documents relating to rulings or other
determinations by Tax Authorities, including without limitation, foreign Tax
Authorities, and records concerning the ownership and Tax basis of property,
which either party may possess. Subject to the rights of the Automotive Tax
Group under the other provisions of this Agreement, such officer shall have the
authority to execute powers of attorney (including Form 2848) on behalf of each
member of the Automotive Tax Group with respect to Tax Returns for the Tax
Indemnification Period. Each party to this Agreement shall make, or shall cause
its affiliates to make, its employees and facilities available on a mutually
convenient basis to provide an explanation of any documents or information
provided hereunder.
5.05 TAX RECORDS.
(a) Rockwell and Automotive agree to (and to cause each member of
their respective Tax Group to) (i) retain all Tax Returns, related schedules and
workpapers, and all material records and other documents as required under
Section 6001 of the Code and the regulations promulgated thereunder relating
thereto existing on the date hereof or created through the Distribution Date,
for a period of at least ten years following the Distribution Date and (ii)
allow the party to this Agreement, at times and dates reasonably acceptable to
the retaining party, to inspect, review and make copies of such records, as
Rockwell and Automotive may reasonably deem necessary or appropriate from time
to time. In addition, after the expiration of such ten-year period, such Tax
Returns, related schedules and workpapers, and material records shall not be
destroyed or otherwise disposed of at any time, unless, prior to such
destruction or disposal, (A) the party proposing to destroy or otherwise dispose
of such records shall provide no less than 30 days' prior written notice to the
other party, specifying in
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reasonable detail the records proposed to be destroyed or disposed of and (B) if
a recipient of such notice shall request in writing prior to the scheduled date
for such destruction or disposal that any of the records proposed to be
destroyed or disposed of be delivered to such requesting party, the party
proposing the destruction or disposal shall promptly arrange for the delivery of
such requested records at the expense of the party requesting such records.
(b) Notwithstanding anything in this Agreement to the contrary, if
any party fails to comply with the requirements of Section 5.05(a) hereof, the
party failing so to comply shall be liable for, and shall hold the other party,
harmless from, any Taxes (including without limitation, penalties for failure to
comply with the record retention requirements of the Code) and other costs
resulting from such party's failure to comply.
ARTICLE VI
MISCELLANEOUS
6.01 ENTIRE AGREEMENT; CONSTRUCTION. This Agreement, the
Distribution Agreement, all other Transaction Agreements, including any annexes,
schedules and exhibits hereto or thereto, and other agreements and documents
referred to herein and therein, will together constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
shall supersede all prior negotiations, agreements and understandings of the
parties of any nature, whether oral or written, with respect to such subject
matter. Notwithstanding any other provisions in this Agreement to the contrary,
in the event and to the extent that there shall be a conflict relating to Taxes
between the provisions of this Agreement and the provisions of the Distribution
Agreement or any other Transaction Agreement, the provisions of this Agreement
shall control.
6.02 EFFECTIVENESS. All covenants and agreements of the parties
contained in this Agreement shall be subject to and conditioned upon the
Distribution becoming effective.
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6.03 SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall remain in full force and effect and shall survive the Time of
Distribution.
6.04 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal laws of the State of New York applicable to
contracts made and to be performed entirely within such State, without regard to
the conflicts of law principles of such State.
6.05 NOTICES. All notices, requests, claims, demands and other
communications required or permitted to be given hereunder will be in writing
and will be delivered by hand or telecopied or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service and
will be deemed given when so delivered by hand or telecopied, or three business
days after being so mailed (one business day in the case of express mail or
overnight courier service). All such notices, requests, claims, demands and
other communications will be addressed as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive such
notice:
(a) If to Rockwell:
Rockwell International Corporation
600 Anton Boulevard, Suite 700
Costa Mesa, California 92626
Attention: Mr. W. Michael Barnes
Senior Vice President,
Finance and Planning and
Chief Financial Officer
Telecopy: (714) 424-4218
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with a copy to:
Rockwell International Corporation
600 Anton Boulevard, Suite 700
Costa Mesa, California 92626
Attention: William J. Calise, Jr., Esq.
Senior Vice President,
General Counsel and
Secretary
Telecopy: (714) 424-4265
(b) If to Automotive:
Meritor Automotive, Inc.
2135 West Maple Road
Troy, Michigan 48084-7186
Attention: Mr. Thomas A. Madden
Senior Vice President and
Chief Financial Officer
Telecopy: (248) 435-8397
with a copy to:
Meritor Automotive, Inc.
2135 West Maple Road
Troy, Michigan 48084-7186
Attention: David W. Greenfield, Esq.
Senior Vice President,
General Counsel and
Secretary
Telecopy: (248) 435-8397
6.06 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of (a) the Court of Chancery in and for
the State of Delaware and the Superior Court in and for the State of Delaware
and (b) the U.S. District Court for the District of Delaware, for the purposes
of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby (and agrees not to commence any action, suit or
proceeding relating thereto
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except in such courts). Each of the parties further agrees that service of any
process, summons, notice or document hand delivered or sent by U.S. registered
mail to such party's respective address set forth in Section 6.05 will be
effective service of process for any action, suit or proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth in
the immediately preceding sentence. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Court of Chancery in and for the State of Delaware and the
Superior Court in and for the State of Delaware or (ii) the U.S. District Court
for the District of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
6.07 AMENDMENTS. This Agreement may not be amended, modified or
supplemented except by a written agreement executed by Rockwell and Automotive.
6.08 SUCCESSORS AND ASSIGNS. The rights and benefits under this
Agreement may not be assigned and the duties and obligations may not be
delegated by any party in whole or in part without the prior written consent of
the other party, which consent shall not be unreasonably withheld or delayed.
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.
6.09 CAPTIONS; CURRENCY. The article, section and paragraph captions
herein and the table of contents hereto are for convenience of reference only,
do not constitute part of this Agreement and will not be deemed to limit or
otherwise affect any of the provisions hereof. Unless otherwise specified, all
references herein to numbered articles or sections are to articles and sections
of this Agreement and all references herein to schedules are to schedules to
this Agreement. Unless otherwise specified, all references contained in this
Agreement or in any schedule referred to herein to dollars or "$" shall mean
U.S. dollars.
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6.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and will in no way be
affected, impaired or invalidated thereby. If the economic or legal substance of
the transactions contemplated hereby is affected in any manner adverse to the
party as a result thereof, the parties will negotiate in good faith in an effort
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
6.11 NO THIRD PARTY BENEFICIARIES. Except for the provisions of
Article III relating to Tax Indemnification, this Agreement is solely for the
benefit of the parties hereto and the respective members of their Tax Group and
should not be deemed to confer upon third parties (including any employee of
Rockwell or Automotive or of any Rockwell or Automotive subsidiary) any remedy,
claim, reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
6.12 SCHEDULES. All schedules attached hereto are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Capitalized terms used in the schedules hereto but not otherwise defined
therein will have the respective meanings assigned to such terms in this
Agreement.
6.13 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Time of Distribution by and in
the sole discretion of the Rockwell Board without the approval of Automotive or
of Rockwell's shareowners. In the event of such termination, no party will have
any liability of any kind to any other party on account of such termination.
6.14 WAIVERS; REMEDIES. No failure or delay by any party hereto in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor
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will any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which the parties may
otherwise have at law or equity.
6.15 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.
6.16 PERFORMANCE. Each party hereto will cause to be performed, and
hereby guarantees the performance of all actions, agreements and obligations set
forth herein to be performed by any subsidiary or any member of such party's Tax
Group.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties as of the date first
hereinabove written.
ROCKWELL INTERNATIONAL CORPORATION
By: /s/ William J. Calise, Jr.
--------------------------------------------
Name: William J. Calise, Jr., Esq.
Title: Senior Vice President,
General Counsel and
Secretary
MERITOR AUTOMOTIVE, INC.
By: /s/ David W. Greenfield
--------------------------------------------
Name: David W. Greenfield, Esq.
Title: Senior Vice President,
General Counsel and
Secretary
The schedules and/or exhibits identified in the table of contents to this
agreement are omitted. Registrant will
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furnish supplementally a copy of any omitted schedule or exhibit to the
Securities and Exchange Commission upon request.
37
