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
January 6, 1999
(Date of earliest event reported)
TEXTRON INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-5480 05-0315468
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
40 Westminster Street, Providence, Rhode Island 02903
(Address of principal executive offices, including zip code)
(401) 421-2800
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On January 6, 1999, Textron completed the sale of
substantially all the assets of its Avco Financial Services,
Inc. ("AFS") unit to Associates First Capital Corporation
("Associates") for $3.9 billion cash. The sale was
consummated pursuant to the previously announced Asset
Purchase Agreement among Textron, AFS and Associates dated
as of August 11, 1998. A copy of the Asset Purchase
Agreement is filed as an exhibit hereto.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Exhibit
2.1 Asset Purchase Agreement ("Purchase
Agreement") among Textron Inc., Avco
Financial Services, Inc. and Associates First
Capital Corporation dated as of August 11,
1998 (incorporated by reference to Exhibit
10.1 to Textron's amended Quarterly Report on
Form 10Q/A for the quarter ended October 3,
1998).
2.2 Amendment to Purchase Agreement dated as of
December 18, 1998.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
TEXTRON INC.
(Registrant)
By: /s/Edward C. Arditte
Name: Edward C. Arditte
Title: Vice President and Treasurer
Dated: January 6, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
2.1 Asset Purchase Agreement ("Purchase Agreement")
among Textron Inc.,
Avco Financial Services, Inc. and Associates
First Capital Corporation dated as of August
11, 1998 (incorporated by reference to
Exhibit 10.1 to Textron's amended Quarterly
Report on Form 10Q/A for the quarter ended
October 3, 1998).
2.2 Amendment to Purchase Agreement dated as of
December 18, 1998.
AMENDMENT
This Amendment, dated as of December 18, 1998 (this
"Amendment"), amends the (i) Asset Purchase Agreement, dated as
of August 11, 1998 (the "Purchase Agreement"), among Textron
Inc., Avco Financial Services, Inc. and Associates First Capital
Corporation and (ii) Tax Allocation Agreement, dated as of August
11, 1998, among Textron Inc., Avco Financial Services, Inc. and
Associates First Capital Corporation. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed
to them in the Purchase Agreement. Except as otherwise provided
in this Amendment, all references herein to sections and exhibits
shall be understood to be references to sections and exhibits of
the Purchase Agreement.
1. Amendments to Article I. (a) Amendment to
Definition. The definition in Section 1.1 of the term
"Subsidiary" is hereby deleted in its entirety and the following
substituted in lieu thereof: "`Subsidiary' shall mean each
corporation and other entity identified in Schedule A to this
Agreement."
(b) New Definitions. The following definitions are
hereby added to Section 1.1 in alphabetical order:
"`AFSI' shall have the meaning ascribed to it in
Section 5.16."
"`Delaware LLC' shall have the meaning ascribed to it
in Section 5.16."
"`Libor Rate' shall mean, with respect to any interest
period, the rate for deposits in United States Dollars for a
period of one week which appears on Telerate page 3750 as of 12
noon, London Time, on January 5, 1999; and "Telerate page 3750"
shall mean the display designated as page 3750 on the Dow Jones
Telerate (or such other pages as may replace page 3750 on that
service for the purpose of displaying London interbank offered
rates for United States Dollar deposits). If for any reason such
page or service is not available or such one-week rate does not
appear on such page or service on January 5, 1999, then the
parties shall agree upon a mutually satisfactory alternative
arrangement for determining the equivalent of such rate.'
"`Plan of Liquidation' shall mean a plan of liquidation
within the meaning of Section 332 of the Code, substantially in
the form attached hereto as Exhibit 6."
"`Pre-Closing Share Transfer Time' shall have the
meaning ascribed to it in Section 5.17(a)."
2. Amendments to Article II. (a) Amendment to
Section 2.1. Section 2.1 is hereby amended and restated to read
in its entirety as follows:
"2.1 Purchase and Sale of Assets. Subject to the
terms and conditions of this Agreement, at the Closing the
Company shall sell, transfer, convey, assign and deliver to Buyer
and Buyer shall purchase, acquire and accept from the Company:
(a) all the outstanding capital stock owned by the Company in the
Directly Owned Subsidiaries (such capital stock, other than the
capital stock of Avco Enterprises, Inc., is referred to herein as
the "Shares") other than the capital stock of the Directly Owned
Subsidiaries identified under the caption "Target" in Exhibit 4
hereto and the capital stock of Avco Enterprises, Inc.; and (b)
all of the Company's other rights, properties, assets, claims,
contracts and businesses of every kind, character and
description, whether tangible or intangible, whether real,
personal or mixed, whether accrued, contingent or otherwise, and
wherever located; except for (v) the receivable from Avco
National Bank in the approximate amount of $543,877, (w) the
shares of Parent Series D Cumulative Preferred Stock, (x) any
rights in or to the names "Textron" and "TFC", alone or in
combination with any other words, and any trade names, trademarks
or service marks relating thereto, (y) any documents or records
which the Company is required by law to retain in its possession
and (z) the Purchase Price. (The Shares and the items listed in
Section 2.1(b) which are being purchased by Buyer are
collectively referred to as the "Assets.")"
(b) Amendment to Section 2.2. Section 2.2 is hereby
amended and restated to read in its entirety as follows:
"2.2 Assumption of Liabilities. Subject to the terms
and conditions of this Agreement, the Tax Allocation Agreement
and the Separation Agreement, at the Closing the Buyer shall
assume all of the liabilities and obligations of the Company
(known and unknown and whether absolute, accrued, contingent or
otherwise) existing as of the Closing Date, whether asserted
before or after such time, other than the liabilities and
obligations of the Company (i) in connection with the
transactions contemplated by this Agreement, (ii) in connection
with the deferred tax liability associated with the Parent Series
D Cumulative Preferred Stock, (iii) for any account payable or
other liability or obligation owed to Avco Enterprises, Inc. or
Avco National Bank or (iv) pursuant to, or as a result of a
breach of, this Agreement or any other Contract entered into in
connection with the Transaction. (The liabilities and
obligations being assumed hereunder are collectively referred to
as the "Liabilities.")"
(c) Amendment to Section 2.3(a). The following is
hereby added as a new second sentence to Section 2.3(a): "If the
Closing takes place on January 6, 1999, Buyer shall also pay to
the Company on the Closing Date, in immediately available funds
by wire transfer to the account referenced in the immediately
preceding sentence, interest on $3,900,000,000 at the Libor Rate,
calculated based on a 360-day year and payable for the two-day
period commencing on January 4, 1999 and ending on January 5,
1999, and in such case, "Purchase Price" shall be deemed to be a
reference to $3,900,000,000 together with such interest."
(d) Amendment to Section 2.3(b)(1). The following is
hereby added as new third and fourth sentences to Section
2.3(b)(1): "The Statement and the schedules required to be
delivered pursuant to the second preceding sentence shall be
prepared without giving effect to the transactions contemplated
by Section 5.17. Notwithstanding anything in this Section
2.3(b)(1) to the contrary, if the Closing is on January 6, 1999,
the Statement shall be as of midnight on December 31, 1998."
(e) Amendment to Section 2.4. Section 2.4 is hereby
amended by deleting the clause beginning "provided, further,
however" in the second sentence in its entirety and substituting
the following therefor: "provided, further, however, that if the
conditions set forth in Article VI are satisfied or waived on or
prior to January 6, 1999, the Closing shall occur on January 6,
1999."
(f) Amendment to Section 2.5(a)(i). Section 2.5(a)(i)
is hereby amended by inserting immediately following the word
"Buyer" the following: "other than certificates representing the
Shares delivered pursuant to Section 2.6(a)".
(g) New Section 2.6. The following is hereby added to
the Purchase Agreement as new Section 2.6:
"2.6 Obligations at the Pre-Closing Share Transfer
Time.
(a) At the Pre-Closing Share Transfer Time, the
Company shall deliver, or cause to be delivered, to Buyer or
Buyer's designee:
(i) certificates or other evidence of ownership
representing the capital stock of or other ownership interest in
the Subsidiaries identified under the column heading "Target" on
Exhibit 4 hereto duly endorsed (or accompanied by duly executed
stock powers) for transfer as contemplated hereby;
(ii) the Officer's Certificate described in
Section 6.2(e);
(iii) all such other documents as may be
necessary to convey to the applicable subsidiary of Buyer the
right, title and interest of the Company and the Subsidiaries, as
applicable, in the Subsidiaries identified under the column
heading "Target" on Exhibit 4 hereto; and
(iv) a certificate or certificates under Section
1445(b)(2) of the Code providing that neither the Company nor any
Subsidiary identified under the column "Seller" in Exhibit 4 is a
foreign Person, in form and substance reasonably satisfactory to
Buyer.
(b) At the Pre-Closing Share Transfer Time, the Buyer
or, in the case of clause (ii) below, the applicable subsidiary
of Buyer specified in Exhibit 4 hereto, shall deliver to the
Company or, in the case of clause (ii) below, the applicable
Subsidiary of the Company specified in Exhibit 4 hereto:
(i) the Officer's Certificate described in Section
6.3(d); and
(ii) the promissory notes in the manner set forth
in Section 5.17.".
3. Amendments to Article III. (a) Amendment to
Section 3.1(a). Section 3.1(a) is hereby amended by adding as a
new final sentence to such Section the following: "The term
"corporation" and phrase "jurisdiction of incorporation" shall be
deemed to include references to limited liability company and
jurisdiction of formation, respectively, to the extent related to
the Delaware LLC. Notwithstanding anything to the contrary, no
representation or warranty is made in this Section 3.1(a)
regarding the due organization of the Delaware LLC.".
(b) Amendment to Section 3.2(d). Section 3.2(d) is
hereby amended by (i) adding immediately following the word
"Liens" in the first sentence of such Section the following:
"other than the Shares sold and purchased at the Pre-Closing
Share Transfer Time" and (ii) adding as the new third sentence of
such Section the following: "Upon consummation of the
transactions contemplated by Section 5.17, the applicable
subsidiary of Buyer identified under the column heading "Buyer"
on Exhibit 4 hereto will acquire valid title to all of the
outstanding capital stock of, or all of the other equity interest
in, the Subsidiaries identified under the column heading "Target"
on Exhibit 4 hereto.".
(c) New Section 3.17. The following is hereby added
to the Purchase Agreement as new Section 3.17:
"3.17 Avco Enterprises, Inc. and Avco National Bank.
Avco Enterprises, Inc. has no assets other than goodwill, the
capital stock of Avco National Bank and a receivable from the
Company, which receivable may be eliminated prior to the Closing
without the direct or indirect transfer of any of the assets of
the Company to Avco Enterprises, Inc. Avco National Bank has no
assets other than cash, cash equivalents, investments and
receivables. Excluding the note receivable due to Avco
Enterprises, Inc. from the Company, the aggregate book value of
the assets of Avco Enterprises Inc. and Avco National Bank shall
not exceed U.S. $6 million as of the date of the Statement."
4. Amendments to Article V. (a) Amendment to Section
5.1(b). Section 5.1(b) is hereby amended by adding as a new
second sentence the following: "Notwithstanding anything herein
to the contrary, from and after the date of the Statement and
prior to the Closing, the Company shall not, nor shall it permit
any Subsidiary to, (i) declare, set aside for payment or pay any
dividend, or make any other actual, constructive or deemed
distribution in respect of, or redeem or repurchase, any of its
capital stock or otherwise make any payment to Parent in its
capacity as a stockholder or (ii) except as required by any
intercompany agreement as in effect on the date hereof which is
not required to be terminated as of the Closing Date, pay,
distribute, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into any agreement or
arrangement with, Parent or any affiliate of Parent, other than
the Company or the Subsidiaries.".
(b) New Sections 5.16, 5.17, 5.18 and 5.19. The
following are hereby added to the Purchase Agreement as new
Sections 5.16, 5.17, 5.18 and 5.19:
"5.16 Pre-Closing Restructuring. (a) UK
Restructuring. Prior to the Closing Date, the Company shall
cause Avco Financial Services International, Inc. ("AFSI") to (i)
form a single member limited liability company under the laws of
the State of Delaware (the "Delaware LLC") by executing and
filing with the Secretary of State of the State of Delaware a
certificate of formation and executing an operating agreement, in
each case reasonably satisfactory to Buyer, (ii) acquire 100% of
the equity interest in the Delaware LLC for $1,000 in cash and
(iii) upon receipt of all material Consents required therefor,
transfer all of the outstanding capital stock of Avco Group
Limited to the Delaware LLC as a contribution to capital.
(b) Canadian Restructuring. Prior to the Closing
Date, (i) the Company shall cause AFSI to adopt the Plan of
Liquidation and (ii) the Company shall cause AFSI to distribute
the capital stock of Avco D.C. Corporation and the capital stock
of AFS Corporation to the Company pursuant to the Plan of
Liquidation. Parent shall file a protective election under
Treasury Regulation section 1.1502-13(f)(5)(ii) with respect to
the deemed liquidation of Avco D.C. Corporation and AFS
Corporation resulting from the election under section 338(h)(10)
of the Code in the manner prescribed by Treasury Regulation
section 1.1502-13(f)(5)(ii)(E).
5.17 Sale of Certain Entities. (a) Sale and Purchase.
Subject to the terms and conditions of this Agreement, on the
Closing Date but prior to the Closing, the Company shall, or
shall cause its Subsidiaries, as applicable, to sell, transfer,
convey, assign and deliver to the applicable subsidiary of Buyer
identified under the column heading "Buyer" on Exhibit 4 hereto,
and Buyer shall cause each such subsidiary of Buyer to purchase,
acquire and accept from the Company or the applicable Subsidiary
of the Company, as the case may be, all of the capital stock or
other ownership interest owned by the Company or such Subsidiary
in the Subsidiaries identified under the column heading "Target"
on Exhibit 4 hereto. The time of such sales and purchases shall
be referred to herein as the "Pre-Closing Share Transfer Time".
In consideration, Buyer will cause each such purchasing
subsidiary of Buyer to deliver a promissory note substantially in
the form of Exhibit 5 hereto to the Company (where the Company is
the seller) or the applicable selling Subsidiary of the Company
identified under the column heading "Seller" on Exhibit 4 hereto
at the Pre-Closing Share Transfer Time in the amount set forth
under the column heading "Price" on Exhibit 4 hereto. The
Company shall, and shall cause each selling Subsidiary to,
maintain sole record and beneficial ownership of the promissory
note received by it and will not, and will not permit any selling
Subsidiary to, create, incur, suffer to exist or assume any Lien
on any such promissory note.
(b) Location of Sale and Purchase. The transactions
described in Section 5.17(a) shall take place at the same place
as the Closing shall take place; provided, that the purchase and
sale of the equity interest of the Delaware LLC shall take place
at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP, One
Canada Square, Canary Wharf, London, England."
(c) Order of Transactions. The transactions
contemplated by Section 5.16 and Section 5.17(a) shall be deemed
to have occurred in the order contemplated by such Sections
regardless of the actual order in which they occur.
5.18 Return of Assets. (a) Avco Enterprises, Inc. and
Avco National Bank. In the event that Avco Enterprises, Inc. or
Avco National Bank owns any assets of any nature at the date of
the Statement other than the assets identified in and in the
amounts permitted by Section 3.17, the Company shall, at Buyer's
option, following the Closing, deliver, or cause to be delivered,
such assets to Buyer without further consideration. For purposes
of Section 6.2(c)(i)(C) hereof, the assets and liabilities of
Avco Enterprises, Inc. and Avco National Bank shall be computed
without regard to any assets other than the assets identified in
and in the amounts permitted by Section 3.17 hereof.
(b) Prohibited Dividends, Distribution and Other
Transactions. In the event that the Company or any of the
Subsidiaries takes any action prohibited by the second sentence
of Section 5.1(b), the Company shall, following the Closing, pay
to Buyer promptly upon request the amount of any direct or
indirect loss of value to Buyer.
5.19 Qualifying Shares. Prior to the Closing, the
Company shall identify to Buyer the owner of all qualifying
shares for each of the Subsidiaries. Except where the owner of a
qualifying share is a Subsidiary, Seller shall arrange for the
transfer (for no additional consideration) by the owner thereof
to Buyer or one or more of its nominees at the Closing of the
qualifying shares of each of the Subsidiaries."
5. Amendments to Article VI. (a) Amendment to
Sections 6.1, 6.2 and 6.3. The text of Sections 6.1, 6.2 and 6.3
preceding Sections 6.1(a), 6.2(a) and 6.3(a), respectively, is
hereby amended by inserting immediately following the word
"Transaction" the following: "and the transactions contemplated
by Section 5.17 hereof" .
(b) Amendment to section 6.2(c). Section 6.2(c) is
hereby amended and restated to read in its entirety as follows:
"(c) Adjusted Stockholder's Equity. Adjusted
Stockholder's Equity, as defined below, shall be greater than one
billion two hundred twenty-seven million four hundred thousand
dollars ($1,227,400,000). (If Adjusted Stockholder's Equity is
less than $1,227,400,000, this condition can be satisfied by a
contribution of cash to the capital of the Company on or before
Closing equal to the difference between Adjust Stockholder's
Equity and $1,227,400,000.) For purposes of this Section, the
term "Adjusted Stockholder's Equity" shall mean stockholder's
equity (i.e., total consolidated assets, less total consolidated
liabilities) of the Company as set forth in the Statement
computed (i) without regard to (A) any securities valuation
adjustment and any currency translation adjustment, (B) the
Parent Series D Cumulative Preferred Stock and the deferred Tax
liability attributable thereto, and (C) the assets and
liabilities of Avco Enterprises, Inc. and Avco National Bank
(computed in accordance with Section 5.18) and any account
payable owed by the Company to Avco Enterprises, Inc., (ii)
without including any of the assets referred to in clauses (v),
(w), (x), (y) and (z) of Section 2.1 to the extent such assets
were reflected on the Interim Statements, (iii) by adding an
amount equal to any accruals or payments made after June 30, 1998
and prior to the date of the Statement pursuant to the agreements
and programs identified as item 2 of Section 3.7(a) of the
Disclosure Schedule, (iv) without giving effect to the
transactions contemplated by Section 5.17, and (v) otherwise
taking into account Sections 19(b) and 19(c) of the Tax
Allocation Agreement."
(c) Amendment to Section 6.3(c). Section 6.3(c) is
hereby amended by deleting the word "assumed" and inserting in
lieu thereof the following: "agreed, effective as of the
Closing, to assume".
(d) New Section 6.4. The following is hereby added to
the Purchase Agreement as new Section 6.4:
"6.4 Waiver. Upon consummation of the transactions
contemplated by Section 5.17, the parties shall have been deemed
to have waived to the extent permitted by applicable Law all
conditions to their respective obligations specified in Article
VI, other than the conditions specified in Section 6.1(a) and
6.2(c)."
6. Amendment to Schedule A. Schedule A is amended
effective as of August 11, 1998 by adding (i) an asterisk in
front of the name Avco Financial Services (Hong Kong) Limited,
(ii) 1154247 Ontario Inc. as a subsidiary of Textron Financial
Corporation (Canada), jurisdiction - Ontario, country of
incorporation - Canada, (iii) the following as subsidiaries of
Commercial Finance Capital PLC, all of whose jurisdiction and
country of Incorporation is the United Kingdom: Commercial
Finance (Eng.) Ltd., Print Skills Holdings Ltd., Impress Graphic
Equipment Ltd. and Advance Machining Systems Ltd., (iv) Ltd. to
the end of Hallmark Life Insurance Company, an Australian
corporation, and (v) Limited to the end of Hallmark General
Insurance Company, a Hong Kong corporation and by deleting
Commercial Graphic Finance Limited, a UK corporation. Schedule A
is amended effective as of the date hereof by adding (i) +AFS
Insurance Services of Hawaii, L.L.C. as a subsidiary of Avco
Money By Mail, Inc., jurisdiction - Hawaii, country of
incorporation - U.S., (ii) Holdco L.L.C. as a subsidiary of Avco
Financial Services International, Inc., jurisdiction - Delaware,
country of formation - U.S. and (iii) Everday Finance Limited as
a subsidiary of Avco Capital PLC, jurisdiction and country of
incorporation - Ireland, and by deleting (y) Avco Servicios
Financieros Establecimiento Financiero de Credito, S.A. and (z)
Avco Financial Services of Billings One, Inc., a Montana
corporation. Schedule A is amended effective as of the Closing
Date to reflect the changes specified in Section 5.16(b) of the
Purchase Agreement.
7. Amendment of Tax Allocation Agreement and Exhibit
2 to the Purchase Agreement. (a) Amendment to Section 1.
Paragraphs (g), (h), (i), (j) and (k) of Section 1 of the Tax
Allocation Agreement and Section 1 of Exhibit 2 to the Purchase
Agreement are hereby renumbered (h), (i), (j), (k) and (l),
respectively, and the following is hereby added as paragraph (g)
of Section 1 of the Tax Allocation Agreement and paragraph (g) of
Section 1 of Exhibit 2 to the Purchase Agreement:
"(g) "Section 338 Ruling" shall have the meaning ascribed to
it in Section 3 of this Agreement."
(b) Amendment to Section 3. Section 3 of the Tax
Allocation Agreement and Section 3 of Exhibit 2 to the Purchase
Agreement are hereby amended (i) by inserting after the word
"Subsidiaries" the following: "(including the purchase and sale
of the stock of Avco D.C. Corporation and AFS Corporation
pursuant to Section 5.17 of the Asset Purchase Agreement)" and
(ii) by inserting after third sentence in such Sections the
following: "With respect to any sale (or deemed sale) of the
Shares of any non-U.S. Subsidiary, a Section 338(g) election
shall not be deemed to result in a significant cost of Parent or
its Affiliates if Parent obtains a ruling from the Internal
Revenue Service regarding any deemed sale gain or loss resulting
from such Section 338(g) election so that when such ruling is
applied by Parent to the facts and circumstances of the
transactions consummated pursuant to the Asset Purchase Agreement
(the "Transactions") Parent reasonably concludes that any such
deemed sale gain or loss would not directly or indirectly reduce
by at least U.S. $1 million the amount of foreign tax credits
that Parent and its Affiliates may use to offset any U.S. federal
income tax imposed on the Transactions as compared to the amount
of foreign tax credits that Parent and its Affiliates would have
been entitled to use to offset any U.S. federal income tax
imposed on the Transactions in the absence of such Section 338(g)
election (a "Section 338 Ruling"). Upon written request from
Buyer, Parent agrees to apply for a Section 338 ruling from the
Internal Revenue Service. The cost of obtaining any Section 338
Ruling shall be shared equally between Buyer and Parent."
(c) Amendment to Section 4. Section 4(a) of the Tax
Allocation Agreement and Section 4(a) of Exhibit 2 of the
Purchase Agreement are hereby amended by adding as a new fifth
sentence the following: "Parent shall report the transactions
consummated pursuant to Sections 5.16(b)(i) and 5.16(b)(ii) of
the Asset Purchase Agreement as distributions of the capital
stock of Avco D.C. Corporation and AFS Corporation in liquidation
of AFSI governed by sections 332 and 337 of the Code." Section
4(b) of the Tax Allocation Agreement and Section 4(b) of Exhibit
2 of the Purchase Agreement are hereby amended by adding as a new
third sentence the following: "Parent shall report the
transactions consummated pursuant to Sections 5.16(b)(i) and
5.16(b)(ii) of the Asset Purchase Agreement as distributions of
the capital stock of Avco D.C. Corporation and AFS Corporation in
liquidation of AFSI governed by Sections 332 and 337 of the
Code."
(d) Amendments to Section 6. (i) Section 6(a) of the
Tax Allocation Agreement and Section 6(a) of Exhibit 2 to the
Purchase Agreement are hereby amended by adding immediately
following the word "obligation" the first time it appears in the
proviso the following: "; provided, further, however, that
Parent shall have no obligation to indemnify Buyer with respect
to any Taxes covered by Section 6(c) of this Agreement."
(ii) Section 6(c) of the Tax Allocation Agreement and
Section 6(c) of Exhibit 2 to the Purchase Agreement are hereby
renumbered as Section 6(d).
(iii) The following is hereby added as Section 6(c) of
the Tax Allocation Agreement and Section 6(c) of Exhibit 2 to the
Purchase Agreement:
"(c) Indemnification. Buyer shall indemnify and hold
Parent harmless from
(i) any stamp or other transfer taxes resulting directly or
indirectly from any of the transactions consummated pursuant to
Sections 5.16 and 5.17 of the Asset Purchase Agreement or the
sale of any Subsidiary to a party other than the Buyer; (ii) any
liability of Parent or its Affiliates for tax imposed under the
Canadian Tax Act (or any provincial taxing statute), including ,
but not limited to, withholding tax, transfer tax, sales tax,
income tax, and capital tax, and interest, fines and penalties
thereon; and (iii) any United States federal and state income tax
liability (including any interest, fines, penalties and additions
to tax thereon) resulting from the distribution by AFSI of the
stock of Avco D.C. Corporation and AFS Corporation to the Company
pursuant to Section 5.16(b) of the Asset Purchase Agreement, in
each case net of any Tax Benefit realized by Parent or its
Affiliates with respect to the underlying item giving rise to
such indemnification obligation; provided, however, that Buyer
shall indemnify Parent under this Section 6(c) only to the extent
the tax liability of Parent or its Affiliates under item (i),
(ii) or (iii) above exceeds the tax liability Parent or its
Affiliates would have incurred with respect to such item had such
Subsidiary not been subject to Section 5.16 or Section 5.17 of
the Asset Purchase Agreement; and provided, further, that Buyer
shall not indemnify Parent for any Taxes imposed as a result of
Parent taking any action not contemplated by the Plan of
Liquidation or preparing any Tax Return in a manner inconsistent
with the fifth sentence of Section 4(a) hereof or the third
sentence of section 4(b) hereof.
(e) Amendment to Section 9. Section 9(b) of the Tax
Allocation Agreement and Section 9(b) of Exhibit 2 to the
Purchase Agreement are hereby amended by adding after the word
"Agreement" the following: "(including any liability of Buyer
under Section 6(c)(iii) of this Agreement)".
(f) Addition of Section 20. The following is hereby
added as new Section 20 of the Tax Allocation Agreement and new
Section 20 of Exhibit 2 to the Purchase Agreement:
"20. Tax Treatment of Delaware LLC. Buyer shall treat
the Delaware LLC as a disregarded entity for U.S. federal income
tax purposes and shall take, or fail to take, as the case may be,
any necessary action so as to comply herewith."
8. Addition of Exhibits. The Exhibits attached
hereto as Exhibit 4, Exhibit 5 and Exhibit 6 are hereby added as
Exhibit 4, Exhibit 5 and Exhibit 6, respectively, to the Purchase
Agreement.
9. Parties in Interest. This Amendment shall be
binding upon and inure solely to the benefit of each party hereto
and its respective successors and assigns. Nothing in this
Amendment, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Amendment.
10. Captions. The section and paragraph captions
herein are for convenience of reference only, do not constitute
part of this Amendment and shall not be deemed to limit or
otherwise affect any of the provisions hereof.
11. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of
New York without giving effect to the principles of conflicts of
laws thereof.
12. Counterparts. For the convenience of the parties
hereto, this Amendment may be executed in any number of
counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts shall together
constitute the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective duly authorized
officers as of the date first above written.
TEXTRON INC.
By: /s/Edward C. Arditte
Name: Edward C. Arditte
Title: Vice President and Treasurer
AVCO FINANCIAL SERVICES, INC.
By: /s/Edward C. Arditte
Name: Edward C. Arditte
Title: Vice President
ASSOCIATES FIRST CAPITAL CORPORATION
By: /s/Roy A. Guthrie
Name: Roy A. Guthrie
Title: Chief Financial Officer
