<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) May 7, 1999
--------------
LEAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-11311 13-3386776
- -------------------------------- ---------------------- ---------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
21557 Telegraph Road
Southfield, Michigan 48086-5008
- -------------------------------------------------- ---------------------
(Address of principal executive offices) (zip code)
(248) 447-1500
---------------------------------------------------------
(Telephone number, including
area code, of agent for service)
No Change
--------------------------------------------------------
(Former name or former address,
if changes since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On May 7, 1999, Lear entered into a definitive purchase agreement with
Johnson Electric Holdings Limited to sell its recently acquired Electric Motor
Systems (EMS) business for $310 million, subject to certain post-closing
adjustments. Lear acquired the EMS business in its May 4, 1999 acquisition of UT
Automotive, Inc. EMS is a supplier of industrial and automotive electric motors
and starter motors for small gasoline engines. EMS had 1998 sales of $351
million and has approximately 3,300 employees operating at locations in 10
countries.
Consummation of the acquisition is contingent upon expiration or
termination of applicable waiting periods provided under the Hart-Scott-Rodino
Antitrust Improvements Act, applicable foreign competition act approvals and
certain other customary conditions.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
B. Unaudited Pro Forma Consolidated Financial Statements.
The following unaudited pro forma consolidated statement of operations
of Lear for the year ended December 31, 1998 was prepared to illustrate the
effects of the completion of the acquisition of Delphi Seating, which was
completed on September 1, 1998, the UT Automotive acquisition, the amendment and
restatement of our prior senior credit facility in connection with the UT
Automotive acquisition, borrowings under our new credit facilities in connection
with the UT Automotive acquisition and the anticipated sale of EMS to Johnson
Electric Holdings Limited (collectively, the "Transactions"), as if such
Transactions had occurred on January 1, 1998.
The following unaudited pro forma consolidated balance sheet
(collectively with the unaudited pro forma consolidated statement of operations,
the "Pro Forma Statements") was prepared as if the Transactions had occurred as
of December 31, 1998. The Pro Forma Statements are not necessarily indicative of
the results that actually would have been achieved if the Transactions reflected
therein had been completed on the dates indicated or the results which may be
attained in the future.
The pro forma adjustments are based upon available information and upon
certain assumptions that we believe are reasonable. The Pro Forma Statements
exclude the estimated effects related to our planned refinancing of the $1.4
billion interim term loan incurred to provide a portion of the UT Automotive
purchase price. The Pro Forma Statements and accompanying notes should be read
in conjunction with the historical financial statements of Lear, UT Automotive
and Delphi Seating, including the notes thereto.
3
<PAGE> 4
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
====================================================================================================================
Operating and Lear/UT Delphi Pro Forma
Lear UT Automotive Financing Automotive Seating as
Historical Historical(1) Adjustments Pro Forma Pro Forma (2) Adjusted
- --------------------------------------------------------------------------------------------------------------------
(In millions, except per share data)
<S> <C> <C> <C> <C> <C>
Net sales $ 9,059.4 $ 2,900.3 $ - $11,959.7 $ 669.0 $12,628.7
Cost of sales 8,198.0 2,365.4 - 10,563.4 651.2 11,214.6
- -------------------------------------------------------------------------------------------------------------------
Gross profit 861.4 534.9 - 1,396.3 17.8 1,414.1
Selling, general and
administrative expenses 337.0 362.7 - 699.7 41.5 741.2
Restructuring and other charges 133.0 - - 133.0 - 133.0
Amortization 49.2 13.0 20.2 (3) 82.4 3.2 85.6
- -------------------------------------------------------------------------------------------------------------------
Operating income 342.2 159.2 (20.2) 481.2 (26.9) 454.3
Interest expense 110.5 22.2 140.4 (4) 273.1 9.1 282.2
Other (income)/expense, net 22.3 (.6) - 21.7 (6.1) 15.6
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes 209.4 137.6 (160.6) 186.4 (29.9) 156.5
Income taxes 93.9 57.5 (49.1)(5) 102.3 (11.9) 90.4
- -------------------------------------------------------------------------------------------------------------------
Net income $ 115.5 $ 80.1 $(111.5) 84.1 $ (18.0) $ 66.1
===================================================================================================================
Diluted net income per share $ 1.70
Weighted average shares
outstanding (in millions) 68.0
EBITDA (6) $ 561.9 $ 283.5 - $ 845.4 $ (14.8) $ 830.6
===================================================================================================================
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
=========================================================================
Pro Forma Elimination
as of EMS
Adjusted Pro Forma(7) Pro Forma
- -------------------------------------------------------------------------
Net sales $12,628.7 $ (351.1) $12,277.6
Cost of sales 11,214.6 (282.8) 10,931.8
- -------------------------------------------------------------------------
Gross profit 1,414.1 (68.3) 1,345.8
Selling, general and
administrative expenses 741.2 (35.7) 705.5
Restructuring and other charge 133.0 - 133.0
Amortization 85.6 (5.2) 80.4
- -------------------------------------------------------------------------
Operating income 454.3 (27.4) 426.9
Interest expense 282.2 (19.1) 263.1
Other (income)/expense, net 15.6 - 15.6
- -------------------------------------------------------------------------
Income before income taxes 156.5 (8.3) 148.2
Income taxes 90.4 (6.3) 84.1
- -------------------------------------------------------------------------
Net income $ 66.1 $ (2.0) $ 64.1
=========================================================================
Diluted net income per share $ 0.94
Weighted average shares
outstanding (in millions) 68.0
EBITDA (6) $ 830.6 $ (47.5) $ 783.1
=========================================================================
</TABLE>
(1) The UT Automotive historical information represents amounts derived from
the audited results of operations for UT Automotive's fiscal year ended
December 31, 1998. Certain amounts have been reclassified to conform to
Lear's presentation.
(2) The Delphi Seating pro forma information reflects (i) Delphi Seating
historical unaudited results of operations for the period from January 1,
1998 through September 1, 1998, the date on which Delphi Seating was
acquired by Lear and (ii) adjustments to reflect the elimination of net
sales between Delphi Seating and Lear, estimated interest on borrowings to
finance the acquisition of Delphi Seating, amortization of goodwill from
the acquisition of Delphi Seating, income tax effects of the adjustments
and the elimination of items with no continuing impact on Lear's results of
operations, including the capitalization of fixed asset purchases which
were accounted for as impaired assets by Delphi Seating, operating losses
at plants which were not included in the acquisition, a charge related to
the employee benefit obligations not assumed by Lear and the elimination of
certain expenses allocated from the parent.
(3) The adjustment to amortization represents the following:
<TABLE>
<CAPTION>
=========================================================================================================================
Year Ended
December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C>
Amortization of goodwill from the acquisition of UT Automotive (over 40 years) $ 33.2
Elimination of the historical goodwill amortization of UT Automotive (13.0)
- ---------------------------------------------------------------------------------------------------------------------------
$ 20.2
=========================================================================================================================
</TABLE>
(4) The adjustment to interest expense represents the following:
<TABLE>
<CAPTION>
=========================================================================================================================
Year Ended
December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
(In millions)
<S> <C>
Estimated interest on borrowings under our primary credit facilities to finance
the UT Automotive acquisition $ 145.7
Other changes in interest expense, commitment fees and amortization of
deferred finance fees due to the new credit facilities and the amendment and restatement
of our prior senior credit facility 15.0
Elimination of interest expense on UT Automotive intercompany debt retired upon acquisition (20.3)
- ---------------------------------------------------------------------------------------------------------------------------
$ 140.4
===========================================================================================================================
</TABLE>
(5) Reflects the income tax effects of the operating and financing adjustments.
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles. Excluding the $133.0 million restructuring and other
charges recorded in 1998, EBITDA would have been $694.9 million for Lear
on a historical basis and $916.1 million on a pro forma basis.
(7) The pro forma EMS information reflects (i) the elimination of EMS's
historical unaudited results of operations for the fiscal year ended
December 31, 1998 and (ii) adjustments to reflect reduced goodwill
amortization of $5.2 million resulting from the elimination of goodwill
from the anticipated sale of EMS, reduced interest expense of $19.1 million
resulting from the application of the proceeds from the anticipated sale
of EMS to reduce the borrowings under our amended and restated $2.1 billion
revolving credit facility and the income tax effects of the adjustments.
4
<PAGE> 5
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
===========================================================================================================================
Acquisition Operating and Lear/UT
Lear UT Automotive and Valuation Financing Automotive
Historical Historical(1) of UT Automotive(2) Adjustments Pro Forma
- ---------------------------------------------------------------------------------------------------------------------------
(In millions)
ASSETS
Current assets:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 30.0 $ 43.4 $(2,312.9) $2,312.9(4) $ 73.4
Accounts receivable, net 1,373.9 575.2 - - 1,949.1
Inventories 349.6 170.7 - - 520.3
Recoverable customer engineering and tooling 221.4 - - - 221.4
Other current assets 223.1 70.0 - - 293.1
- -----------------------------------------------------------------------------------------------------------------------
2,198.0 859.3 (2,312.9) 2,312.9 3,057.3
- -----------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 1,182.3 709.7 - - 1,892.0
Goodwill and other intangibles, net 2,019.8 333.1 993.5 - 3,346.4
Other 277.2 85.3 (26.7)(3) 18.6(5) 354.4
- -----------------------------------------------------------------------------------------------------------------------
$ 5,677.3 $ 1,987.4 $(1,346.1) $2,331.5 $ 8,650.1
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 82.7 $ 7.8 $ - $ - $ 90.5
Accounts payable and drafts 1,600.8 377.0 - - 1,977.8
Accrued liabilities 797.5 193.5 (15.2)(3) - 975.8
Current portion of long-term debt 16.5 1.6 - - 18.1
- -----------------------------------------------------------------------------------------------------------------------
2,497.5 579.9 (15.2) - 3,062.2
Long-term liabilities:
Long-term debt 1,463.4 5.2 - 2,331.5(6) 3,800.1
Deferred national income taxes 39.0 38.4 - - 77.4
Other 377.4 98.9 (65.9)(3) - 410.4
- -----------------------------------------------------------------------------------------------------------------------
1,879.8 142.5 (65.9) 2,331.5 4,287.9
Stockholders' Equity 1,300.0 1,265.0 (1,265.0) - 1,300.0
- -----------------------------------------------------------------------------------------------------------------------
$ 5,677.3 $ 1,987.4 $(1,346.1) $ 2,331.5 $8,650.1
=======================================================================================================================
</TABLE>
<TABLE>
<CAPTION> Lear/UT
Automotive Elimination of
ASSETS Pro Forma EMS Pro Forma(7) Pro Forma
------------ ----------------- ---------
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 73.4 $ (3.2) $ 70.2
Accounts receivable, net 1,949.1 (85.9) 1,863.2
Inventories 520.3 (21.2) 499.1
Recoverable customer engineering and tooling 221.4 - 221.4
Other current assets 293.1 (6.7) 286.4
- ---------------------------------------------------------------------------------------------------
3,057.3 (117.0) 2,940.3
- ---------------------------------------------------------------------------------------------------
Property, plant and equipment, net 1,892.0 (72.0) 1,820.0
Goodwill and other intangibles, net 3,346.4 (204.8) 3,141.6
Other 354.4 (27.8) 326.6
- ---------------------------------------------------------------------------------------------------
$ 8,650.1 $(421.6) $8,228.5
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 90.5 $ - $ 90.5
Accounts payable and drafts 1,977.8 (60.8) 1,917.0
Accrued liabilities 975.8 (17.6) 958.2
Current portion of long-term debt 18.1 - 18.1
- ---------------------------------------------------------------------------------------------------
3,062.2 (78.4) 2,983.8
Long-term liabilities:
Long-term debt 3,800.1 (314.6) 3,485.5
Deferred national income taxes 77.4 - 77.4
Other 410.4 (28.6) 381.8
- ---------------------------------------------------------------------------------------------------
4,287.9 (343.2) 3,944.7
Stockholders' equity 1,300.0 - 1,300.0
- ---------------------------------------------------------------------------------------------------
$8,650.1 $(421.6) $8,228.5
===================================================================================================
</TABLE>
(1) The UT Automotive historical information represents amounts obtained from
the audited balance sheet of UT Automotive as of December 31, 1998.
Certain amounts have been reclassified to conform to Lear's presentation.
(2) Assumes a purchase price of $2,312.9 million which consists of $2,300.0
million to acquire UT Automotive and $12.9 million to pay estimated fees
and expenses related to the acquisition of UT Automotive. The acquisition
of UT Automotive was accounted for using the purchase method of accounting,
and the total purchase price was allocated first to assets and liabilities
based on their respective fair values, with the remainder ($1,326.6
million) allocated to goodwill. The adjustment to stockholders' equity
reflects the elimination of UT Automotive's equity. The allocation of the
purchase price above is based on historical costs and management's
estimates which may differ from the final allocation due to appraisals of
fixed assets and the finalization of plans of restructuring.
(3) Represents the elimination of certain items which are being retained by the
seller of UT Automotive.
(4) Reflects proceeds of borrowings under our primary credit facilities of
$2,312.9 million.
(5) Reflects the capitalization of fees incurred in establishing our new credit
facilities of $18.6 million.
(6) Reflects the effects of the Transactions as follows:
<TABLE>
<CAPTION>
===========================================================================================================================
<S> <C>
Borrowings under our primary credit facilities to finance the acquisition of UT
Automotive $ 2,312.9
Borrowings under our primary credit facilities to pay fees and expenses incurred
in establishing the new credit facilities 18.6
- ---------------------------------------------------------------------------------------------------------------------------
$ 2,331.5
===========================================================================================================================
</TABLE>
(7) The pro forma EMS information reflects (i) the elimination of EMS's
historical unaudited balance sheet as of December 31, 1998, including
$204.8 million of goodwill recorded in connection with the acquisition of
UT Automotive and (ii) an adjustment to reflect reduced borrowings under
the amended and restated $2.1 billion revolving credit facility resulting
from the application of the assumed proceeds of $310.0 million from the
anticipated sale of EMS.
5
<PAGE> 6
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C. Exhibits
10.1 Stock Purchase Agreement, dated as of May 7, 1999, between Lear
Corporation and Johnson Electric Holdings Limited.
6
<PAGE> 7
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.
LEAR CORPORATION
/s/ Donald J. Stebbins
-------------------------------
Donald J. Stebbins
Senior Vice President and
Chief Financial Officer
May 11, 1999
<PAGE> 8
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Stock Purchase Agreement, dated as of May 7, 1999, between
Lear Corporation and Johnson Electric Holdings Limited.
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
dated as of May 7, 1999
by and between
Lear Corporation
and
Johnson Electric Holdings Limited
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I CERTAIN DEFINITIONS.....................................................................................1
ARTICLE II SALE OF STOCK; CLOSING.................................................................................13
SECTION 2.1 PURCHASE AND SALE; CONSIDERATION FOR SHARES........................................................13
SECTION 2.2 DELIVERIES BY SELLER...............................................................................13
SECTION 2.3 DELIVERIES BY BUYER................................................................................13
SECTION 2.4 TIME AND PLACE OF CLOSING..........................................................................14
SECTION 2.5 PURCHASE PRICE ADJUSTMENT..........................................................................14
SECTION 2.6 RETAINED ASSETS....................................................................................17
SECTION 2.7 INDEMNIFICATION FOR UTA RETAINED LIABILITIES.......................................................17
SECTION 2.8 MANAGEMENT OF ENVIRONMENTAL CLAIMS.................................................................18
SECTION 2.9 ADDITIONAL RETAINED LIABILITY......................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................20
SECTION 3.1 INCORPORATION; AUTHORIZATION; ETC..................................................................20
SECTION 3.2 CAPITALIZATION; STRUCTURE..........................................................................21
SECTION 3.3 FINANCIAL STATEMENTS...............................................................................22
SECTION 3.4 UNDISCLOSED LIABILITIES............................................................................22
SECTION 3.5 ABSENCE OF CERTAIN CHANGES.........................................................................22
SECTION 3.6 PROPERTIES AND NECESSARY ASSETS....................................................................23
SECTION 3.7 LITIGATION; ORDERS.................................................................................23
SECTION 3.8 INTELLECTUAL PROPERTY..............................................................................23
SECTION 3.9 LABOR MATTERS......................................................................................24
SECTION 3.10 COMPLIANCE WITH LAWS..............................................................................24
SECTION 3.11 INSURANCE.........................................................................................24
SECTION 3.12 SCHEDULED CONTRACTS...............................................................................25
SECTION 3.13 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS, REPORTS, ETC.................................25
SECTION 3.14 ENVIRONMENTAL MATTERS.............................................................................26
SECTION 3.15 BROKERS, FINDERS, ETC.............................................................................26
SECTION 3.16 SCHEDULES AND EXHIBITS............................................................................27
SECTION 3.17 NO IMPLIED REPRESENTATIONS........................................................................27
SECTION 3.18 SUPPLEMENTAL SCHEDULES............................................................................27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER................................................................28
SECTION 4.1 INCORPORATION; AUTHORIZATION; ETC..................................................................28
SECTION 4.2 BROKERS, FINDERS, ETC..............................................................................29
SECTION 4.3 APPROVALS, OTHER AUTHORIZATIONS, CONSENTS, REPORTS, ETC............................................29
SECTION 4.4 ACQUISITION OF SHARES FOR INVESTMENT...............................................................29
SECTION 4.5 FINANCIAL CAPABILITY...............................................................................29
ARTICLE V COVENANTS OF SELLER AND BUYER...........................................................................30
SECTION 5.1 INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND RECORDS........................................30
SECTION 5.2 REASONABLE EFFORTS; OBTAINING CONSENTS.............................................................31
SECTION 5.3 FURTHER ASSURANCES.................................................................................33
SECTION 5.4 CONDUCT OF BUSINESS................................................................................34
SECTION 5.5 PRESERVATION OF BUSINESS...........................................................................36
SECTION 5.6 PUBLIC ANNOUNCEMENTS...............................................................................36
SECTION 5.7 NON-SOLICITATION...................................................................................36
SECTION 5.8 GUARANTEES.........................................................................................36
SECTION 5.9 INTERCOMPANY ACCOUNTS..............................................................................37
SECTION 5.10 CORPORATE NAMES...................................................................................37
SECTION 5.11 ADDITIONAL AGREEMENTS.............................................................................39
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.12 CERTAIN INSURANCE MATTERS.........................................................................39
SECTION 5.13 PERFORMANCE OF COMPANY OBLIGATIONS................................................................40
SECTION 5.14 PRE-CLOSING TRANSACTIONS..........................................................................40
ARTICLE VI EMPLOYEE BENEFITS......................................................................................40
SECTION 6.1 EMPLOYEE BENEFIT PLANS.............................................................................40
SECTION 6.2 COLLECTIVE BARGAINING AGREEMENTS...................................................................43
SECTION 6.3 BUYER'S OBLIGATIONS................................................................................43
SECTION 6.4 PLANT CLOSING LAWS.................................................................................45
SECTION 6.5 ACCRUED VACATION...................................................................................45
SECTION 6.6 ACQUIRED RIGHTS DIRECTIVE..........................................................................45
SECTION 6.7 MISCELLANEOUS......................................................................................45
ARTICLE VII TAX MATTERS...........................................................................................46
SECTION 7.1 TAX RETURNS OF THE COMPANY AND THE SUBSIDIARIES....................................................46
SECTION 7.2 TAX INDEMNIFICATION BY SELLER......................................................................46
SECTION 7.3 TAX INDEMNITY BY BUYER.............................................................................46
SECTION 7.4 FILING RESPONSIBILITY..............................................................................47
SECTION 7.5 REFUNDS AND CARRYBACKS.............................................................................47
SECTION 7.6 COOPERATION AND EXCHANGE OF INFORMATION............................................................48
SECTION 7.7 PURCHASE PRICE.....................................................................................50
SECTION 7.8 OTHER TAX AGREEMENTS...............................................................................50
SECTION 7.9 DEFINITIONS........................................................................................51
ARTICLE VIII CONDITIONS TO BUYER'S OBLIGATION TO CLOSE............................................................52
SECTION 8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER................................................52
SECTION 8.2 FILINGS; CONSENTS; WAITING PERIODS.................................................................53
SECTION 8.3 NO INJUNCTION......................................................................................53
ARTICLE IX CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.............................................................53
SECTION 9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.................................................53
SECTION 9.2 FILINGS; CONSENTS; WAITING PERIODS.................................................................54
SECTION 9.3 NO INJUNCTION......................................................................................54
ARTICLE X SURVIVAL; INDEMNIFICATION...............................................................................54
SECTION 10.1 SURVIVAL PERIODS..................................................................................54
SECTION 10.2 INDEMNIFICATION BY THE BUYER......................................................................54
SECTION 10.3 INDEMNIFICATION BY SELLER.........................................................................56
SECTION 10.4 THIRD-PARTY CLAIMS................................................................................56
ARTICLE XI TERMINATION............................................................................................57
SECTION 11.1 TERMINATION.......................................................................................57
SECTION 11.2 PROCEDURE AND EFFECT OF TERMINATION...............................................................58
ARTICLE XII MISCELLANEOUS.........................................................................................58
SECTION 12.1 COUNTERPARTS......................................................................................58
SECTION 12.2 GOVERNING LAW.....................................................................................59
SECTION 12.3 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES.......................................................59
SECTION 12.4 EXPENSES..........................................................................................60
SECTION 12.5 NOTICES...........................................................................................60
SECTION 12.6 SUCCESSORS AND ASSIGNS............................................................................61
SECTION 12.7 HEADINGS; DEFINITIONS.............................................................................61
SECTION 12.8 AMENDMENTS AND WAIVERS............................................................................61
SECTION 12.9 INTERPRETATION....................................................................................62
</TABLE>
ii
<PAGE> 4
Exhibits
- --------
<TABLE>
<S> <C>
Exhibit A Variations from GAAP
Exhibit B Unaudited Financial Statements
Schedules
- ---------
Schedule 1(a)(i) Columbus Real Property
Schedule 1(a)(ii) Matamoros Real Property
Schedule 1(b) Permitted Liens
Schedule 1(c) Retained Assets
Schedule 3.1(b) Incorporation; Authorization; No Conflicts
Schedule 3.2(a) Subsidiaries
Schedule 3.2(b) Additional Subsidiaries
Schedule 3.4 Undisclosed Liabilities
Schedule 3.5 Certain Changes
Schedule 3.6 Property Liens
Schedule 3.7 Litigation; Orders
Schedule 3.8 Intellectual Property
Schedule 3.9 Labor Matters
Schedule 3.10 Compliance with Laws
Schedule 3.12 Scheduled Contracts
Schedule 3.12(a) Lendings and Borrowings
Schedule 3.12(b) Intercompany Agreements
Schedule 3.13 Licenses, Approvals, Other Authorizations, Consents, Reports, etc.
Schedule 3.14 Environmental Matters
Schedule 4.3 Approvals, Other Authorizations, Consents, Reports, etc.
Schedule 5.4 Conduct of Business
Schedule 5.8 Guarantees
Schedule 6.1(a) Employee Benefit Plans
Schedule 6.1(e) Material Payments
Schedule 6.1(f) Non-Compliance of Foreign Company Plans
Schedule 6.1(g) UTC Retiree Medical Plans
</TABLE>
iii
<PAGE> 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
May 7, 1999, is by and between Lear Corporation, a Delaware corporation
("Seller"), and Johnson Electric Holdings Limited, a Bermuda corporation
("Buyer").
WHEREAS, as of the Closing Date, Seller shall own all of the
outstanding capital stock (the "Shares") of Motors Acquisition Corporation, a
Delaware corporation (the "Company");
WHEREAS, Seller has entered into a Stock Purchase Agreement
dated as of March 16, 1999 (as the same may be amended, the "UTA Stock Purchase
Agreement") between Seller and Nevada Bond Investment Corp. II, a Nevada
corporation (the "UTA Seller"), pursuant to which Seller shall purchase all of
the outstanding capital stock of UT Automotive, Inc., a Delaware corporation
("UTA"), including the Motors Business (as defined below) to be owned by the
Company on the Closing Date; and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, the Shares upon the terms and subject to the
conditions set forth herein (such sale and purchase, the "Stock Purchase");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
-------------------
As used in this Agreement the following terms shall have the
following respective meanings:
"1998 Average Working Capital" shall mean the mathematical
average of Monthly Working Capital for the twelve monthly periods ended on
December 31, 1998.
"Action" shall mean any actual or threatened action, suit,
arbitration, inquiry, proceeding or investigation by or before any court,
governmental or other regulatory or administrative agency or commission or
arbitral panel.
<PAGE> 6
"Affiliate" (and, with a correlative meaning, "Affiliated")
shall mean, with respect to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such first Person. As used in this definition,
"control" (including, with correlative meanings, "controlled by" and "under
common control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
"Agreement" shall have the meaning set forth in the preamble
hereto.
"Antitrust Laws" shall have the meaning set forth in Section
5.2(b) hereof.
"Automotive Business" shall mean the electronic and electrical
distribution systems businesses, the interior systems business and the
electrical motors business conducted by UTA and its Affiliates, taken as a whole
which, for purposes of this definition, shall include the automotive business as
of the date hereof conducted by Otis GmbH.
"Balance Sheet" shall mean the combined balance sheet of the
Motors Business as of December 31, 1998 included in the Financial Statements.
"Business Condition" shall have the meaning set forth in
Section 3.1(a) hereof.
"Buyer" shall have the meaning set forth in the preamble
hereto.
"Buyer Indemnified Party" shall have the meaning set forth in
Section 10.3 hereof.
"Cash" shall mean all cash, time deposits, certificates of
deposit, marketable securities and short-term investments of the Motors
Business.
"Closing" shall mean the consummation of the transactions
contemplated by Section 2.1 hereof.
"Closing Balance Sheet" shall have the meaning set forth in
Section 2.5(a) hereof.
2
<PAGE> 7
"Closing Balance Sheet Date" shall mean the last day of the
last month ending on or prior to the Closing Date.
"Closing Cash" shall mean the amount of Cash set forth in the
Closing Balance Sheet less the amount of debt set forth in such Closing Balance
Sheet.
"Closing Date" shall mean the later of (a) the third business
day after expiration or termination of all waiting periods prescribed under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (b) the third business day after clearance by Autorita Garante della
Concorrenza e del Mercato (Italian Antitrust Authority) pursuant to Legge n. 287
del 10 ottobre 1990 (Law No. 287 of October 10, 1990) (the "Italian Act") and
other material foreign antitrust approvals, (c) the first business day after the
Pre-Closing Transactions have been completed and (d) the date on which the
conditions set forth in Articles VIII and IX hereof shall be satisfied or duly
waived or, if Seller and Buyer mutually agree on a different date, the date upon
which they have mutually agreed.
"Closing Financial Data" shall have the meaning set forth in
Section 2.5(b) hereof.
"Closing Working Capital" shall have the meaning set forth in
Section 2.5(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"Columbus Real Property" shall mean the property described on
Schedule 1(a)(i) hereto.
"Company" shall have the meaning set forth in the first
recital hereof.
"Company Plan" shall have the meaning set forth in Section
6.1(a) hereof.
"Continuing Affiliate" shall mean any Affiliate of Seller,
other than the Company and the Subsidiaries.
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"Covered Liabilities" shall mean any and all debts, losses,
liabilities, claims, damages, fines, penalties, obligations, payments
(including, without limitation, those arising out of any demand, assessment,
settlement, judgment or compromise relating to any Action), costs and expenses
(including, without limitation, costs and expenses of investigation and fees and
disbursements of counsel and other experts), mature or unmatured, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown,
including, without limitation, any of the foregoing arising under, out of or in
connection with any Environmental Liabilities or any Action, order or consent
decree of any governmental entity or award of any arbitrator of any kind, or any
law, rule, regulation, contract, commitment or undertaking.
"Domestic Returns" shall have the meaning set forth in Section
7.9 hereof.
"Employee Benefit Plans" shall have the meaning set forth in
Section 6.1(a) hereof.
"Environmental Law" shall have the meaning set forth in
Section 3.14 hereof.
"Environmental Liabilities" shall mean any and all claims,
demands, penalties, fines, liabilities, settlements, damages, losses, costs and
expenses (including, without limitation, reasonable attorneys' and reasonable
consultants' fees and disbursements, remedial investigation and feasibility
study costs, clean-up costs and other response costs under any Environmental
Laws currently in existence or which may be enacted in the future, laboratory
fees, court costs and litigation expenses) of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of or in any way related to (a)
the presence, disposal or release of any Hazardous Materials which are on, from
or which affect any property or any part thereof, including, without limitation,
soil, water, vegetation, buildings, equipment, personal property, or which
affect persons, animals or otherwise; (b) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials or damage to wetlands whether or not relating to
Hazardous Materials; (c) any Action, settlement reached, or government order or
directive relating to such Hazardous Materials; and/or (d) any violation of any
requirement of law or requirements or demands of any governmental authority
which are based upon or in any way related to Hazardous Materials.
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Excluded Income Taxes" shall have the meaning set forth in
Section 7.2 hereof.
"Final 1998 Average Working Capital" shall have the meaning
set forth in Section 2.5(d) hereof.
"Final Closing Cash" shall have the meaning set forth in
Section 2.5(d) hereof.
"Final Closing Date Financial Data" shall have the meaning set
forth in Section 2.5(d) hereof.
"Final Closing Working Capital" shall have the meaning set
forth in Section 2.5(d) hereof.
"Financial Statements" shall have the meaning set forth in
Section 3.3 hereof.
"Ford" shall have the meaning set forth in Section 2.9 hereof.
"Ford Letter" shall mean that certain letter dated May 3, 1999
from John Wolford of Ford to N. Robert Couet of UTA, a copy of which is included
in Schedule 3.4 hereto.
"Foreign Company Plan" shall have the meaning set forth in
Section 6.1(f) hereof.
"GAAP" shall mean generally accepted accounting principles as
used in the United States applied on a basis consistent with the historical
policies and practices utilized by UTA and the Subsidiaries.
"Gate" shall mean Gate S.p.A., an entity organized under the
laws of Italy.
"Gate Companies" shall mean Gate together with its direct and
indirect subsidiaries.
"Governmental Antitrust Authority" shall have the meaning set
forth in Section 5.2(a) hereof.
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"Guaranteed Bonds" shall mean those instruments set forth
under the heading "UTA Surety Bonds Issued by American Casualty Co. of Redding
Pa. under Indemnity Agreement with UTC dated 12/4/94" on Schedule 5.8 hereto.
"Guarantees" shall have the meaning set forth in Section 5.8
hereof.
"Hazardous Materials" shall mean any flammable material,
explosives, radioactive materials, gasoline, petroleum products, asbestos, urea
formaldehyde, polychlorinated biphenyls and other hazardous materials, hazardous
wastes, hazardous or toxic substances, or related materials as defined in the
Environmental Laws.
"Historical Risk Management Programs" shall mean any and all
insurance policies and risk management products and services benefiting UTA, the
Company and the Subsidiaries, directly or indirectly, on or at any time prior to
the Closing Date, including, without limitation, any and all insurance policies,
service agreements, claim agreements, reinsurance agreements, deductible or
retention buy-down agreements, and broker agreements, concerning or related to
comprehensive liability, workers' compensation, automobile, aviation, property,
political risk, crime, marine, directors and officers, fiduciary, employment
practices, and special employee benefits, or any other form of insurance or risk
protection, obtained directly or indirectly by UTC or Seller or directly or
indirectly by UTA, the Company and the Subsidiaries from any insurer, reinsurer
or broker, including, without limitation, any captive insurer owned, in whole or
in part, by UTC or any affiliate of UTC.
"HSR Act" shall have the meaning set forth in the definition
of "Closing Date" in Article I hereof.
"Income Tax Returns" shall have the meaning set forth in
Section 7.9 hereof.
"Income Taxes" shall have the meaning set forth in Section 7.9
hereof.
"Indemnified Party" shall have the meaning set forth in
Section 10.4 hereof.
"Initial Purchase Price" shall mean $310 million.
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"Intellectual Property" shall have the meaning set forth in
the definition of "Motors Americas Intellectual Property".
"Interim Services Agreement" shall mean the interim services
agreement to be entered into by the parties hereto effective as of the Closing
pursuant to which Seller, directly or indirectly, shall make available to Buyer
certain services to be mutually agreed upon by Buyer and Seller.
"IRS" shall have the meaning set forth in Section 7.9 hereof.
"Italian Act" shall have the meaning set forth in the
definition of "Closing Date" in Article I hereof.
"Licenses" shall have the meaning set forth in Section 3.13(a)
hereof.
"Lien" shall mean any security interest, pledge, mortgage,
lien, charge, encumbrance, proxy, voting trust or voting agreement.
"Monthly Working Capital" shall mean Working Capital as at
month-end calculated in accordance with GAAP.
"Matamoros Real Property" shall mean the real property
described on Schedule 1(a)(ii) hereto.
"Motors Americas Assets" shall mean all of UTA's and UTA
Mexico's right, title and interest in:
(a) the property and assets of UTA and UTA Mexico
reflected in the Balance Sheet, including, without limitation, the Columbus
Real Property and the Matamoros Real Property and all improvements and
structures thereon, inventories, plants, machinery, equipment, tools,
supplies, spare parts, furniture, fixtures, leasehold improvements,
accounts and notes receivable and prepaid expenses (and including all items
which would be included on the Balance Sheet except for the fact that such
items are fully depreciated or expensed), plus all items of a nature
customarily carried as assets in the accounts of the Motors Americas
Business which are acquired in the ordinary
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course of business by the Motors Americas Business between December 31,
1998 and the Closing Date, less any items which are disposed of or consumed
by the Motors Americas Business between December 31, 1998 and the Closing
Date in the ordinary course of business;
(b) the Motors Americas Contracts;
(c) the Motors Americas Intellectual Property;
(d) the Motors Americas Books and Records (subject
to the provisions of Section 5.1(c) hereof);
(e) the Motors Americas Leases; and
(f) the goodwill of the Motors Americas Business.
"Motors Americas Books and Records" shall mean all of the
UTA's and UTA Mexico's books and records (or copies of relevant portions
thereof) relating primarily to the operations of the Motors Business, other than
Returns and related work papers.
"Motors Americas Business" shall mean that portion of the
Motors Business currently conducted directly by UTA and UTA Mexico.
"Motors Americas Contracts" shall mean all existing contracts,
agreements and commitments of UTA and UTA Mexico relating primarily to the
Motors Americas Business (including, without limitation, the contracts set forth
on Schedule 3.12 hereof) and all contracts, agreements and commitments of UTA
and UTA Mexico relating to the Motors Americas Business, which are entered into
between the date of this Agreement and the Closing Date.
"Motors Americas Employees" shall mean all employees of UTA
and UTA Mexico immediately prior to the UTA Closing Date whose duties
principally relate to the Motors Americas Business.
"Motors Americas Intellectual Property" shall mean (a) all
patents, patent rights, trademarks, trademark registrations, trade names,
service marks, service mark registrations,
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copyrights, inventions, trade secrets and other similar rights (including
other unpatented and/or unpatentable proprietary or confidential
information systems or procedures), applications for any of the foregoing,
and licenses therefore (collectively, "Intellectual Property"), in each
case used primarily in the Motors Americas Business and (b) all such items
that are acquired or developed for use primarily in the Motors Americas
Business between the date of this Agreement and the Closing Date,
excluding, however, all such items which expire, or, in the case of
applications or issued patent or trademark registrations, are withdrawn or
abandoned in the ordinary course of business on or prior to the Closing
Date.
"Motors Americas Leases" shall mean the leases for Real
Property relating to the Motors Americas Business.
"Motors Business" shall mean the electrical motors business
currently conducted by the members of the Motors Group, taken as a whole, and,
after the UTA Closing, to be conducted by the Company and the Subsidiaries,
taken as a whole.
"Motors Business Employees" shall mean the employees of the
Gate Companies and the Motors Americas Employees.
"Motors Intellectual Property" shall mean (a) the
Intellectual Property used in the Motors Business and (b) all such items that
are acquired or developed for use in the Motors Business between the date of
this Agreement and the Closing Date, excluding, however, all such items which
expire, or, in the case of applications or issued patent or trademark
registrations, are withdrawn or abandoned in the ordinary course of business on
or prior to the Closing Date.
"Motors Group" shall mean the Gate Companies, UTA and UTA
Mexico.
"Motors Subsidiaries" shall mean the direct or indirect
subsidiaries of UTA and its Affiliates engaged in the Motors Business which
shall become direct or indirect subsidiaries of the Company pursuant to the
Pre-Closing Transactions and which are set forth on Schedule 3.2(b) hereof.
"Names" shall have the meaning set forth in Section 5.9(a)
hereof.
"Neutral Auditors" shall have the meaning set forth in Section
2.5(d) hereof.
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"Newco Subsidiaries" shall mean any Persons to be newly formed
in connection with the Pre-Closing Transactions to hold assets of the Motors
Business.
"Permitted Liens" shall mean all Liens (a) that are set forth
on Schedule 1(b) hereto, (c) that are reflected or reserved against in the
Balance Sheet, (c) that arise out of Taxes or general or special assessments not
in default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings, (d) of carriers,
warehousemen, mechanics, materialmen and other similar persons or otherwise
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, (e) that relate to deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or (f) that do not
have a material adverse effect on the Business Condition of the Motors Business.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Pre-Closing Transactions" shall mean certain transactions to
be consummated by Seller and its Affiliates and UTC and its Affiliates prior to
the Closing, to the end that, as of the Closing Date, (i) the capital stock or
other equity interests in the Motors Subsidiaries and the Newco Subsidiaries
shall be held directly or indirectly by the Company, (ii) Seller and the
Continuing Affiliates shall not own any assets of the Motors Business, except as
expressly provided herein and (iii) the Company shall directly or indirectly own
all of the equity interests in the Gate Companies and all of the Motors Americas
Assets and the joint-venture interests of the Motors Business.
"Real Property" shall mean the Columbus Real Property, the
Matamoros Real Property, the Motors Americas Leases, and any and all other real
property (whether owned or leased) used primarily in the Motors Business or
otherwise being transferred to Buyer pursuant to this Agreement.
"Resolution Period" shall have the meaning set forth in
Section 2.5(c) hereof.
"Retained Assets" shall be those assets set forth on Schedule
1(c) hereof.
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"Retained Liabilities" shall have the meaning set forth in
Section 2.7 hereof.
"Returns" shall have the meaning set forth in Section 7.9
hereof.
"Scheduled Contracts" shall have the meaning set forth in
Section 3.12 hereof.
"Seller" shall have the meaning set forth in the preamble
hereto.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 10.2 hereof.
"Seller Representatives" shall have the meaning set forth in
Section 5.1(a) hereof.
"Settlement Payments" shall mean payments by certain insurance
companies pursuant to settlement agreements entered into by UTC and various
subsidiaries, including UTA, with insurers under which the parties settled
claims of UTC and various subsidiaries, including UTA and certain of the
Subsidiaries, for coverage for environmental liabilities and losses under
certain general liability and property policies.
"Shares" shall have the meaning set forth in the first recital
hereof.
"Stock Purchase" shall have the meaning set forth in the third
recital hereof.
"Subsequent Loss" shall have the meaning set forth in Section
7.5(d) hereof.
"Subsidiaries" shall mean the Motors Subsidiaries (including,
without limitation, the Gate Companies) and the Newco Subsidiaries; provided,
however, that no reference herein to a Subsidiary or Subsidiaries shall include
or apply to any of the Newco Subsidiaries unless and until such Newco
Subsidiaries are in existence.
"Subsidiary" of a corporation shall mean any corporation or
other Person more than 50% of whose outstanding voting securities or other
equity interests are directly or indirectly owned by the first corporation.
"Tax Benefit" shall have the meaning set forth in Section 7.9
hereof.
"Taxes" shall have the meaning set forth in Section 7.9
hereof.
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"Technology License Agreement" shall mean the technology
license agreement, to be mutually agreed to prior to Closing.
"To Seller's knowledge" shall have the meaning set forth in
Section 12.9 hereof.
"Transfer Laws" shall have the meaning set forth in Section
6.6 hereof.
"U.S. Company Employees" shall have the meaning set forth in
Section 6.1(b) hereof.
"U.S. Corporation" shall have the meaning set forth in Section
3.1(a) hereof.
"U.S. Employee Benefit Plans" shall have the meaning set forth
in Section 6.1(b) hereof.
"U.S. Taxing Authority" shall have the meaning set forth in
Section 7.9 hereof.
"UTA" shall have the meaning set forth in the second recital
hereof.
"UTA Closing" shall mean the purchase of UTA pursuant to the
UTA Stock Purchase Agreement.
"UTA Mexico" shall mean United Technologies Automotive
Electrical Systems de Mexico, S.A. de C.V., an entity organized under the laws
of Mexico, or any successor thereto.
"UTA Closing Date" shall mean the date that the UTA Closing
occurs except, with respect to the Gate Companies, the UTA Closing Date shall be
the date that Seller or its Subsidiary purchases Gate, (which shall be the
business day prior to UTA Closing Date).
"UTA Seller" shall have the meaning set forth in the second
recital hereof.
"UTA Stock Purchase Agreement" shall have the meaning set
forth in the second recital hereof.
"UTA Subsidiaries" shall mean the subsidiaries of UTA at the
time of the UTA Closing.
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"UTC" shall mean United Technologies Corporation, a Delaware
corporation.
"UTC Plan" shall mean an Employee Benefit Plan that is not a
Company Plan.
"Warranty Liability" shall have the meaning set forth in
Section 2.7(c) hereof.
"Working Capital" shall mean accounts receivable and
inventories less accounts payable.
ARTICLE II
Sale of Stock; Closing
Section 2.1. Purchase and Sale; Consideration for Shares. On
the basis of the representations, warranties, covenants and agreements and
subject to the satisfaction or waiver of the conditions set forth herein, at the
Closing Seller shall sell to Buyer and Buyer shall purchase from Seller all of
the Shares. Subject to Section 2.5 hereof, the aggregate consideration for the
Shares shall consist of cash in the amount of the Initial Purchase Price.
Section 2.2. Deliveries by Seller. At the Closing hereof,
Seller shall deliver the following to Buyer:
(a) certificates for the Shares with appropriate stock powers
attached and properly signed;
(b) the certificate contemplated by Article VIII hereof; and
(c) a duly executed receipt for the Initial Purchase Price.
Section 2.3. Deliveries by Buyer. At the Closing hereof,
Buyer shall deliver to Seller:
(a) cash in the amount of the Initial Purchase Price, by wire
transfer of immediately available funds to a bank account or bank accounts
designated by Seller (or by such means as are otherwise agreed upon by Buyer and
Seller); and
(b) the certificate contemplated by Article IX hereof.
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\
Section 2.4. Time and Place of Closing. The Closing shall
take place on the Closing Date at 9:00 A.M., Chicago time, at the offices of
Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois, 60601.
Section 2.5. Purchase Price Adjustment. (a) As soon as
practicable, but in no event later than 65 days following the Closing Date,
Seller shall prepare a combined balance sheet of the Company and the
Subsidiaries including the notes thereto as of the close of business on the
Closing Balance Sheet Date (the "Closing Balance Sheet"), a calculation of
Working Capital based on the Closing Balance Sheet ("Closing Working Capital"),
a calculation of Closing Cash based on the Closing Balance Sheet and a
calculation of 1998 Average Working Capital. The Closing Balance Sheet shall be
prepared in accordance with GAAP, using the same accounting principles,
procedures, policies and methods that were employed in preparing the Financial
Statements as set forth in Exhibit B and Closing Working Capital shall be
calculated using the same accounting principles, procedures, policies and
methods employed in calculating Monthly Working Capital for purposes of 1998
Average Working Capital. For purposes of the foregoing calculations,
intercompany receivables, payables and loans of the type specified in Section
5.9 shall be eliminated as set forth in Section 5.9.
(b) During the preparation of the Closing Balance Sheet and
the calculation of Closing Working Capital, Closing Cash and 1998 Average
Working Capital (the "Closing Financial Data"), and the period of any dispute
within the contemplation of this Section 2.5, Buyer shall cause the Company and
each Subsidiary to (i) provide Seller and Seller's authorized representatives
with full access to the books, records, facilities and employees of the Company
and each Subsidiary, (ii) provide Seller, within 10 business days after the
Closing Date, with normal month-end closing financial information for the period
ending on the Closing Balance Sheet Date, and (iii) cooperate fully with Seller
and Seller's authorized representatives, including by providing on a timely
basis all information necessary or useful in preparing the Closing Financial
Data.
(c) Seller shall deliver a copy of the Closing Financial Data
to Buyer promptly after it has been prepared. After receipt of the Closing
Financial Data, Buyer shall have 30 days to review the Closing Financial Data,
together with the workpapers used in the
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preparation thereof. Buyer and its authorized representatives shall have full
access to all relevant books and records and employees of Seller to the extent
required to complete their review of the Closing Financial Data. Buyer may
dispute items reflected in the calculation of Closing Working Capital, Closing
Cash and 1998 Average Working Capital only on the basis that such amounts were
not arrived at in conformity with GAAP. Unless Buyer delivers written notice to
Seller on or prior to the 30th day after Buyer's receipt of the Closing
Financial Data specifying in reasonable detail the amount, nature and basis of
all disputed items, Buyer shall be deemed to have accepted and agreed to the
calculation of Closing Working Capital, Closing Cash and 1998 Average Working
Capital. If Buyer so notifies Seller of its objection to the calculation of
Closing Working Capital, Closing Cash and 1998 Average Working Capital, Buyer
and Seller shall, within 30 days (or such longer period as the parties may
agree) following such notice (the "Resolution Period"), attempt to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive. If following resolution of any disputed amounts
there do not remain in dispute amounts the aggregate net effect of which exceeds
$1.0 million, then all amounts remaining in dispute shall be deemed to have been
resolved in favor of the calculation of Closing Working Capital delivered by
Seller to Buyer.
(d) If, at the conclusion of the Resolution Period, the
aggregate net effect of all amounts remaining in dispute exceeds $1.0 million,
then all amounts remaining in dispute shall be submitted to a firm of nationally
recognized independent public accountants (the "Neutral Auditors") selected by
Seller and Buyer within 10 days after the expiration of the Resolution Period.
If Seller and Buyer are unable to agree on the Neutral Auditors, then each of
Seller and Buyer shall have the right to request the American Arbitration
Association to appoint the Neutral Auditors who shall not have had a material
relationship with Seller, Buyer or any of their respective Affiliates within the
past two years. Each party agrees to execute, if requested by the Neutral
Auditors, a reasonable engagement letter, including customary indemnities. All
fees and expenses relating to the work, if any, to be performed by the Neutral
Auditors shall be borne pro rata as between Seller on the one hand and Buyer on
the other, in proportion to the allocation of the dollar amount of the amounts
remaining in dispute between Seller and Buyer made by the Neutral Auditors such
that the prevailing party pays the lesser proportion of the fees and expenses.
The Neutral Auditors shall act as an arbitrator to determine, based solely on
the provisions of this Section 2.5 and the presentations by Seller and Buyer,
and not by independent
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review, only those issues still in dispute and only as to whether such amounts
were arrived at in conformity with GAAP. The Neutral Auditors' determination
shall be made within 30 days of their selection, shall be set forth in a written
statement delivered to Seller and Buyer and shall be final, binding and
conclusive. If following resolution of any disputed amounts by the Neutral
Auditors, the aggregate net effect of such resolved amounts is less than $1.0
million, then all amounts that were initially in dispute shall be deemed to have
been resolved in favor of the calculation of Closing Working Capital, Closing
Cash and 1998 Average Working Capital delivered by Seller to Buyer (without
regard to the final determination by the Neutral Auditors). The term "Final 1998
Average Working Capital" shall mean the definitive 1998 Average Working Capital,
the term "Final Closing Working Capital" shall mean the definitive Closing
Working Capital and the term "Final Closing Cash" shall mean the definitive
Closing Cash, respectively agreed to (or deemed to be agreed to) by Buyer and
Seller in accordance with Section 2.5(c) hereof or the definitive Closing Date
Financial Data ("Final Closing Date Financial Data") resulting from the
determinations made by the Neutral Auditors in accordance with this Section
2.5(d) (in addition to those items theretofore agreed to by Seller and Buyer).
(e) The Initial Purchase Price shall be (i) (A) increased
dollar for dollar to the extent the Final Closing Working Capital exceeds the
Final 1998 Average Working Capital, or (B) decreased dollar for dollar to the
extent the Final Closing Working Capital is less than the Final 1998 Average
Working Capital and (ii) (A) increased dollar for dollar to the extent Final
Closing Cash is greater than $0 and (B) decreased dollar for dollar to the
extent Final Closing Cash is less than $0. Any adjustments to the Initial
Purchase Price made pursuant to this Section 2.5(e) shall bear interest from the
Closing Date through the date of payment at the rate of interest publicly
announced by Citibank, N.A., in New York, New York, from time to time as its
prime rate, from the Closing Date to the date of such payment. Any adjustments
to the Initial Purchase Price made pursuant to this Section 2.5(e) shall be paid
by wire transfer of immediately available funds to the account or accounts
specified by Seller, if Seller is owed payment, or by Buyer, if Buyer is owed
payment, within five business days after the Final Closing Working Capital is
agreed to by Buyer and Seller or any remaining disputed items are ultimately
determined by the Neutral Auditors.
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Section 2.6. Retained Assets. Notwithstanding anything to the
contrary herein, the Stock Purchase shall not include the Retained Assets, and
each of the Company and/or the Subsidiaries, as applicable, shall grant,
bargain, sell, assign, transfer, convey and set over to Seller or its designee
as of the Closing all of its right, title and interest in the Retained Assets.
Section 2.7. Indemnification for UTA Retained Liabilities.
Notwithstanding anything to the contrary herein, Seller shall remain liable for,
and Seller agrees to indemnify and hold harmless Buyer and each of the other
Buyer Indemnified Parties, in accordance with the provisions set forth in
Section 10.3, from and against, any and all Covered Liabilities incurred by or
asserted against any Buyer Indemnified Party, whether or not a claim is asserted
prior to the Closing Date (except as provided in Section 2.7(b) and 2.7(c)
hereof), arising from or relating to:
(a) any Environmental Liability to the extent such liability
arises out of or in connection with any act or omission that occurred, or
condition that existed, relating to a discontinued operation which was
discontinued as of the UTA Closing Date or assets no longer, as of the UTA
Closing Date, used by UTA or any of the Subsidiaries in the conduct of the
Motors Business;
(b) any Environmental Liabilities to the extent (i) such
liability arises out of or in connection with any act or omission that occurred,
or condition that existed, relating to an operating business of UTA, (including,
without limitation, the Motors Business) and (ii) the UTA Seller has received
actual notice of claim with respect to such Environmental Liability prior to the
UTA Closing Date;
(c) any warranty (express or implied), recall or other
corrective action liability (a "Warranty Liability") in respect of products of
the Motors Business manufactured by UTA or any Subsidiary prior to March 16,
1999 and of which the UTA Seller has received actual notice of claim prior to
March 16, 1999; provided that, to the extent that the Company continues to
manufacture or sell such product after the Closing Date the Covered Liabilities
shall be equitably allocated between the UTA Seller and the Company and
provided, further, that the Company shall cooperate with Seller to mitigate
damages; and
(d) except as set forth in Section 7.8(b), the Pre-Closing
Transactions.
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The liabilities set forth in Section 2.7(a) through Section
2.7(d) shall be referred to herein collectively as the "Retained Liabilities."
Notwithstanding anything to the contrary herein, Seller also is not
transferring, and any of Buyer, the Company or one or more of the Subsidiaries,
as applicable, shall transfer and assign or otherwise make available the
benefits of, (i) any rights of indemnification against or rights of contribution
from third parties, including the right to enforcement thereof and any
insurance, and (ii) any reserves, in each case with respect to the Retained
Liabilities.
Section 2.8. Management of Environmental Claims. (a) Buyer
agrees that the UTA Seller or UTC may, in the name of the Company and the
Subsidiaries, but at the UTA Seller's and UTC's sole cost and expense, manage
and control Environmental Liabilities that are included in Retained Liabilities.
(b) Cooperation. Buyer shall and shall cause the Company and
the Subsidiaries to cooperate with Seller and the UTA Seller in the UTA Seller's
discharge of its obligations with respect to the Retained Liabilities,
including, without limitation, providing the UTA Seller or Seller with
reasonable access to relevant records and officers, employees and consultants
with knowledge of the matters at issue and executing such powers of attorney as
the UTA Seller or Seller may reasonably request. Buyer shall inform the UTA
Seller and Seller promptly of all significant developments concerning conditions
or actions giving rise to or associated with claims for indemnification under
Section 2.7. Seller shall promptly upon receipt by Seller provide copies to
Buyer of all notices, correspondence, draft reports and final reports related to
any Environmental Liabilities that the UTA Seller or UTC elects to manage or
control.
(c) Access. Seller, the UTA Seller and their respective
representatives shall have the right, at reasonable times subsequent to Closing
and upon reasonable prior notice, to enter the properties subject to
Environmental Liabilities included in Retained Liabilities for the purpose of
undertaking activities relating to its obligations pursuant to Section 2.7, so
long as such entry or activity does not unreasonably interfere with the
operations of the Motors Business. Seller and its representatives shall
undertake any such activities in a manner designed to minimize any disruption,
to the greatest extent reasonably possible, with the operations of the Motors
Business.
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(d) Buyer Control. If UTA Seller and UTC decline to manage and
control any Environmental Liability that is included in Retained Liabilities
after Buyer makes a written request (with a copy to Seller), Buyer shall manage
and control any such Environmental Liability. Buyer shall promptly provide
copies to Seller of all notices, correspondence, draft reports and final reports
related to such matter. Buyer's activities to manage and control such
Environmental Liability shall not limit or affect Seller's obligation to
indemnify and hold harmless Buyer and the Company from and against any such
Environmental Liability, including any of the limitations thereto, except for
Buyer's negligence or willful misconduct in the management of such Environmental
Liabilities.
Section 2.9. Additional Retained Liability.
(a) Seller shall indemnify and hold Buyer harmless against any
actual damages, loss or liability to Ford Motor Company ("Ford") arising
directly from (i) claims set forth in the second and third paragraphs of the
Ford Letter regarding Ford's assertion that UTA made unauthorized use of Ford
tooling in manufacturing the door lock actuators and window lift motors
described in the Ford Letter and (ii) other claims relating to the manufacture
by the Motors Business of motors for sale in the after market using tooling that
is also used to produce such motors for Ford (collectively, the "Claims");
provided, however, that any obligation by Seller under this Section 2.9 shall
cease to accrue with respect to any products described in clause (i) or (ii)
above manufactured and sold after the Closing Date.
(b) Buyer agrees that Seller and UTC may, in the name of the
Company or any of its Subsidiaries subject to the Claims, but at Seller's or
UTC's respective sole cost and expense, conduct and control any potential
defense of the Claims, and any negotiations, compromise, settlement or other
disposition of the Claims. Buyer agrees, and agrees to cause the Company and the
Subsidiaries, to cooperate with Seller in Seller's discharge of its obligations
pursuant to this Section 2.9 and with UTC in UTC's discharge of its obligations
to Seller with respect to the Claims, and to provide Seller and UTC with access
to all information, records and files with respect to, and employees with
knowledge of, the matters at issue in the Claims and take any other actions
reasonably requested by Seller or UTC with respect to the Claims. Buyer agrees
promptly to inform Seller of any notices or other communications received by
Buyer, the
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Company or any of their respective Affiliates with respect to the Claims and, if
in documentary form, promptly to forward such notices or communications to
Seller at the address for notices to Seller set forth in Section 12.5 hereof,
including to the facsimile number set forth therein.
(c) Buyer agrees that the purpose of this Section 2.9 is
solely to allocate potential financial responsibility with respect to the Claims
as between Buyer and Seller and is not intended, and shall not be deemed to
constitute, an admission or concession of any liability by Seller, UTC, UTA or
any of their Affiliates to Ford.
ARTICLE III
Representations and Warranties of Seller
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Incorporation; Authorization; Etc. (a) Each of
the Company and the Subsidiaries is duly organized and validly existing and,
with respect to those corporations organized under the laws of one of the states
of the United States of America (a "U.S. Corporation"), in good standing, under
the laws of the jurisdiction of its organization. Each of the Company and the
Subsidiaries (i) has all requisite corporate power and authority to own its
properties and assets (which includes the Motors Americas Assets) and to carry
on its business as it is now being conducted (which includes the Motors
Business); and (ii) is in good standing (with respect to U.S. Corporations) and
is duly qualified to transact business in each jurisdiction in which the nature
of property owned or leased by it or the conduct of its business requires it to
be so qualified, except where the failure to be in good standing or to be duly
qualified to transact business, would not, individually or in the aggregate,
have a material adverse effect on the business, results of operations or
financial condition (collectively, the "Business Condition") of the Motors
Business. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with all requisite corporate
power and authority to own the Shares.
(b) Seller has full corporate power to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions
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contemplated hereby have been duly and validly authorized by all necessary
corporate proceedings on the part of Seller, its Board of Directors and
stockholders. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of Seller's or the Company's Certificate of Incorporation or By-laws,
(ii) violate any provision of any Subsidiary's charter or by-laws or similar
organizational instrument, (iii) except as disclosed on Schedule 3.1(b) hereto,
violate any provision of, or be an event that is (or with the passage of time
will result in) a violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the imposition of any Lien upon any of
the Shares or any of the Company's or any of the Subsidiaries' assets or
properties pursuant to, any Lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which Seller, the Company or any of the
Subsidiaries is a party or by which any of them is bound, or (iv) except as
listed on Schedule 3.1(b) hereto, violate or conflict with any provision of law,
order, judgment or ruling of any governmental authority or any other restriction
of any kind or character to which Seller, the Company or any of the Subsidiaries
is subject, that, in the case of either of clauses (iii) and (iv), would,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Motors Business or prevent the Stock Purchase. This Agreement
has been duly executed and delivered by Seller, and, assuming the due execution
hereof by Buyer, this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, liquidation,
dissolution, moratorium or other similar laws relating to or affecting the
rights of creditors generally and to the effect of the application of general
principles of equity (regardless of whether considered in proceedings at law or
in equity).
(c) Upon consummation of the Stock Purchase at the Closing, as
contemplated by this Agreement, Seller will deliver to Buyer good title to the
Shares free and clear of any Liens.
Section 3.2. Capitalization; Structure. The authorized
capital stock of the Company consists of 1000 shares of common stock, par value
$.01 per share, 100 of which shares are outstanding. All of the Shares are
validly issued, fully paid and nonassessable and as of the Closing Date shall be
owned by Seller free and clear of any Liens. Except as set forth on
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Schedule 3.2 hereto and except for directors' qualifying shares and other
nominal share interests issued to third parties to comply with requirements of
law, all of the outstanding shares of capital stock or other equity interests of
each of the Subsidiaries have been validly issued and are fully paid and
nonassessable and as of the Closing Date, shall be owned directly or indirectly
by the Company free and clear of any Liens. Except as disclosed on Schedule 3.2,
there are no outstanding options, warrants or other rights of any kind to
acquire, or obligations to issue, shares of capital stock of any class of, or
other equity interests in, (i) the Company or any of the Subsidiaries that will
at the Closing be directly or indirectly wholly owned by the Company or (ii) any
other Subsidiary which have been issued, granted or entered into by the Company
or any of the Subsidiaries, respectively, in the case of any such other
Subsidiary.
Section 3.3. Financial Statements. Seller has delivered to
Buyer the unaudited combined balance sheets of the Motors Business as of
December 31, 1998, and the related unaudited combined statements of operations,
and statements of cash flows for the year ended December 31, 1998, attached
hereto as Exhibit B (collectively the "Financial Statements"). The Financial
Statements present fairly in all material respects the combined financial
position, results of operations and cash flows of the Motors Business, for the
period or as of the date set forth therein, and, except that such Financial
Statements do not include notes, were prepared in conformity with GAAP.
Section 3.4. Undisclosed Liabilities. Except as disclosed in
Schedule 3.4 hereto, and except to the extent reflected, reserved against or
otherwise disclosed in the Financial Statements, none of the Company, UTA or any
Subsidiary has, at the date hereof, any liabilities or obligations relating to
the Motors Business that would be required to be reflected on a combined balance
sheet prepared in conformity with GAAP, except for liabilities or obligations
arising in the ordinary course of business since December 31, 1998 or which do
not have a material adverse effect on the Business Condition of the Motors
Business.
Section 3.5. Absence of Certain Changes. Except as disclosed
in Schedule 3.5 hereto, since December 31, 1998: (a) there has been no material
adverse change in the Business Condition of the Motors Business except for any
change resulting from general economic, financial or market conditions and for
any change resulting from conditions or circumstances
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generally affecting the industry in which the Motors Business operates and (b)
with respect to the Motors Business, there has been no physical damage,
destruction or loss that would have a material adverse effect on the Business
Condition of the Motors Business.
Section 3.6. Properties and Necessary Assets. With the
exception of properties disposed of since the date of the Balance Sheet and
except as set forth on Schedule 3.6 hereto, UTA or one of the Subsidiaries has,
and at the Closing the Company will directly or indirectly have, good and
marketable title to all properties used in the Motors Business (including,
without limitation, the Real Property), or holds, or will hold, such properties
by valid and existing lease or license, free and clear of all Liens except
Permitted Liens. All personal property in active use by the Motors Business is
in good working order, ordinary wear and tear excepted, except to the extent
that any failure would not have a material adverse effect on the Business
Condition of the Motors Business. The Gate Companies, the Motors Americas
Assets, the Motors Business joint venture interests to be held directly or
indirectly by the Buyer upon Closing, the Interim Services Agreement and the
Technology License Agreement provide Buyer with all of the assets and
contractual rights necessary to operate the Motors Business as currently
conducted in all material respects.
Section 3.7. Litigation; Orders. Except as disclosed on
Schedule 3.7 hereto, there are no lawsuits, actions, administrative or
arbitration or other proceedings or governmental investigations pending or, to
Seller's knowledge, threatened against any of the Company, UTA or any of the
Subsidiaries that would reasonably be expected to, individually or in the
aggregate, have a material adverse effect on the Business Condition of the
Motors Business. Except as disclosed on Schedule 3.7 hereto, there are no
judgments or outstanding orders, injunctions, decrees, stipulations or awards
(whether rendered by a court or administrative agency, or by arbitration)
against the Company, UTA or any of the Subsidiaries or any of their respective
properties or businesses that would reasonably be expected to, individually or
in the aggregate, have a material adverse effect on the Business Condition of
the Motors Business or that would prohibit the Stock Purchase.
Section 3.8. Intellectual Property. Except as set forth on
Schedule 3.8 hereto, UTA and the Subsidiaries, and at the Closing the Company
will directly or indirectly, own,
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possess or license the Motors Intellectual Property that is presently employed
or licensed by them in connection with the Motors Business, and material to the
Motors Business, except where the failure to own or possess such Motors
Intellectual Property would not reasonably be expected to, individually or in
the aggregate, have a material adverse effect on the Business Condition of the
Motors Business. Except as set forth on Schedule 3.8 hereto, to Seller's
knowledge, there are no existing material claims of any third party based on the
use by, or challenging the ownership of, the Company, UTA or any of the
Subsidiaries of any of the Motors Intellectual Property that would reasonably be
expected to, individually or in the aggregate, have a material adverse effect on
the Business Condition of the Motors Business.
Section 3.9. Labor Matters. Schedule 3.9 hereto sets forth
all material agreements with labor unions or associations representing employees
of the Motors Business. No material work stoppage against the Company, UTA or
any of the Subsidiaries is pending or, to Seller's knowledge, threatened. None
of the Company, UTA or the Subsidiaries is involved in or, to Seller's
knowledge, threatened with any labor dispute, arbitration, lawsuit or
administrative proceeding relating to labor matters involving the employees of
the Motors Business (excluding routine workers' compensation claims) that would
reasonably be expected to have a material adverse effect on the Business
Condition of the Motors Business.
Section 3.10. Compliance with Laws. Except as set forth in
Schedule 3.10 hereto, the conduct of the business of each of the Company, UTA
and the Subsidiaries substantially complies with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto,
except for violations or failures so to comply, if any, that, individually or in
the aggregate, are not reasonably expected to have a material adverse effect on
the Business Condition of the Motors Business.
Section 3.11. Insurance. With respect to the Motors
Business, each of UTA and the Subsidiaries is covered by valid and currently
effective insurance policies issued in favor of UTC, the UTA Seller and/or
Seller, UTA or a Subsidiary that, in the judgment of the UTA Seller, are
customary for subsidiaries and affiliates of companies of similar size and
business as UTC or in the judgment of Seller are customary for subsidiaries and
affiliates of companies of similar size and business as Seller.
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Section 3.12. Scheduled Contracts. Except as set forth or
described on Schedule 3.12 hereto, none of the Company, UTA or any of the
Subsidiaries is a party to any of the following relating to the Motors Business
(a) material joint venture or similar contract or agreement; (b) contract that
is material to the Motors Business which is terminable by the other party
thereto upon a change of control of UTA; (c) material supply arrangements with
any material original equipment manufacturer in the automotive industry; or (d)
other contract, agreement or arrangement, entered into other than in the
ordinary course of business, involving an estimated total future payment or
payments in excess of $1 million. The contracts required to be so listed on
Schedule 3.12 are referred to herein as "Scheduled Contracts." With respect to
all such Scheduled Contracts, except as set forth on Schedule 3.12 hereto, none
of the Company, UTA or the Subsidiaries nor, to Seller's knowledge, any other
party to any such Scheduled Contract is, as of the date hereof, in material
breach thereof or material default thereunder and there does not exist under any
provision thereof, to Seller's knowledge, any event that, with the giving of
notice or the lapse of time or both, would constitute such a breach or default,
except for such breaches, defaults and events as to which requisite waivers or
consents have been or are obtained or which would not, individually or in the
aggregate, have a material adverse effect on the Business Condition of the
Motors Business. Schedule 3.12(a) hereto lists, as of the date hereof, all
notes, mortgages, indentures, guarantees and other obligations and agreements
and other instruments for or relating to any lending or borrowing (including
assumed debt) of $1 million or more effected by the Company, UTA or any of the
Subsidiaries to which any properties or assets of any of the foregoing are
subject. Schedule 3.12(b) hereto lists, as of the date or dates indicated on
such Schedule, all material contracts, agreements, licenses and leases between
the Company, UTA or the Subsidiaries, on the one hand, and UTC, Affiliates of
UTC, Seller or the Continuing Affiliates, on the other hand.
Section 3.13. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc. Except as set forth in Schedule 3.13 hereto, UTA or the
Subsidiaries possess or have been granted, and at the Closing the Company will
possess or have been granted, all governmental licenses, permits, franchises and
other authorizations of any federal, state, local or foreign governmental
authority in connection with the operation of the Motors Business, in each case
material to the Motors Business (the "Licenses"). Except as noted on Schedule
3.13 hereto, all such Licenses are in full force and effect except for those
whose failure to be in full force and
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effect would not reasonably be expected to have a material adverse effect on the
Business Condition of the Motors Business. Except as noted on Schedule 3.13
hereto, as of the date hereof no proceeding is pending or, to Seller's
knowledge, threatened seeking the revocation or limitation of any License the
revocation or limitation of which would reasonably be expected to have a
material adverse effect on the Business Condition of the Motors Business.
(b) Schedule 3.13 hereto contains a list of all registrations,
filings, applications, notices, consents, approvals, orders, qualifications and
waivers required to be made, filed, given or obtained by any of Seller, the
Company, UTA or any of the Subsidiaries with, to or from any persons or
governmental authorities in connection with the consummation of the Stock
Purchase, except for those (i) that become applicable solely as a result of the
specific regulatory status of Buyer or its Affiliates, or (ii) the failure to
make, file, give or obtain which would not, individually or in the aggregate,
have a material adverse effect on the Business Condition of the Motors Business
or the ability of Seller to consummate the Stock Purchase.
Section 3.14. Environmental Matters. Except as set forth on
Schedule 3.14 hereto, to Seller's knowledge, (a) neither the conduct nor
operation of the Motors Business, nor any condition of any real property
presently owned, leased or operated by Seller, UTA or the Subsidiaries relating
to the Motors Business, violates any Environmental Laws, and (b) neither Seller,
the Subsidiaries, the UTA Seller nor UTA has received any written notice from
any Person stating that the operation or condition of any real property
presently owned, leased or operated in connection with the Motors Business is in
violation of any Environmental Law except, in each case, for such violations as
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the Business Condition of the Motors Business. The
term "Environmental Law" shall mean all applicable local, state and federal laws
regulating Hazardous Materials, including the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act and the Federal Clean Air Act, each as amended, and the
regulations promulgated thereunder.
Section 3.15. Brokers, Finders, Etc. Neither Seller nor the
Company has employed, or is subject to any valid claim of, any broker, finder,
consultant or other intermediary
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in connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
Section 3.16. Schedules and Exhibits. Disclosure of any fact
or item in any Schedule or Exhibit hereto referenced by a particular paragraph
or Section in this Agreement shall, should the existence of the fact or item or
its contents be relevant to any other paragraph or Section, be deemed to be
disclosed with respect to that other paragraph or Section whether or not an
explicit cross-reference appears.
Section 3.17. No Implied Representations. Notwithstanding
anything contained in this Article III or any other provision of this Agreement,
it is the explicit intent of each party hereto that Seller is making no
representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including, but not limited to, any implied
warranty or representation as to the value, condition, merchantability or
suitability as to any of the properties or assets of the Motors Business and it
is understood that Buyer takes the business of the Company and the Subsidiaries
as is and where is. In furtherance and not in limitation of the foregoing, it is
expressly understood by each party hereto that any cost estimates, projections
or other predictions contained or referred to in the Schedules hereto or in the
offering materials that have been provided to Buyer are not and shall not be
deemed to be representations or warranties of Seller.
Section 3.18. Supplemental Schedules. Seller may supplement
any of the Schedules hereto and deliver such Schedules (as so supplemented, the
"Supplemental Schedules") on or prior to the UTA Closing Date. Such Supplemental
Schedules shall not be considered in determining whether the condition set forth
in Section 8.1 with respect to representation and warranties has been met;
provided, however, that in determining whether there is a breach of any
representation or warranty of Seller contained in Sections 3.1 through 3.18
hereof for purposes of the indemnification to be provided by Seller pursuant to
Section 10.3 hereof, such representation or warranty shall be qualified by the
Supplemental Schedules.
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ARTICLE IV
Representations and Warranties of Buyer
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
Section 4.1. Incorporation; Authorization; Etc. Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of Bermuda and its capital stock is listed on the Hong Kong Stock Exchange.
Buyer has full corporate power to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement, the performance of Buyer's
obligations hereunder and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Buyer
and no other corporate proceedings or actions on the part of Buyer, its Board of
Directors or stockholders are necessary therefor. The execution, delivery and
performance of this Agreement will not (a) violate any provision of the charter
or by-laws or similar organizational instrument of Buyer or any of its
Affiliates, (b) violate any provision of, or be an event that is (or with the
passage of time will result in) a violation of, or result in the acceleration of
or entitle any party to accelerate (whether after the giving of notice or lapse
of time or both) any obligation under, or result in the imposition of any Lien
upon any of Buyer's or any of its Affiliates' assets or properties pursuant to,
any Lien, lease, agreement, instrument, order, arbitration award, judgment or
decree to which Buyer or any of its Affiliates is a party or by which Buyer or
any of its Affiliates is bound, or (c) violate or conflict with any other
material restriction of any kind or character to which Buyer or any of its
Affiliates is subject, that, in the case of clauses (b) and (c), would,
individually or in the aggregate, have a material adverse effect on the ability
of Buyer to consummate the Stock Purchase. This Agreement has been duly executed
and delivered by Buyer, and, assuming the due execution hereof by Seller, this
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, liquidation, dissolution, moratorium or
other similar laws relating to or affecting the rights of creditors generally
and to the effect of the application of general principles of equity (regardless
of whether considered in proceedings at law or in equity).
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Section 4.2. Brokers, Finders, Etc. Except for the services
of Merrill Lynch (Asia Pacific) Limited ("ML") Buyer has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who might be entitled to a fee or commission from Seller or any of its
Affiliates in connection with such transactions. Buyer is solely responsible for
any payment, fee or commission that may be due to ML in connection with the
transactions contemplated hereby.
Section 4.3. Approvals, Other Authorizations, Consents,
Reports, Etc. Schedule 4.3 hereto contains a list of all registrations, filings,
applications, notices, consents, approvals, orders, qualifications or waivers
required to be made, filed, given or obtained by Buyer or any of its Affiliates
with, to or from any Persons or governmental authorities or private agencies in
connection with the consummation of the Stock Purchase except for those (a) that
become applicable solely as a result of the specific regulatory status of
Seller, UTA, UTA Seller, the Company or the Subsidiaries or (b) the failure to
make, file, give or obtain which would not, individually or in the aggregate,
have a material adverse effect on the Business Condition of Buyer or of Buyer
and its subsidiaries, taken as a whole, or on the ability of the Buyer to
consummate the Stock Purchase.
Section 4.4. Acquisition of Shares for Investment. Buyer is
acquiring the Shares for investment and not with a view toward or for sale in
connection with any distribution thereof, or with any present intention of
distributing or selling the Shares. Buyer agrees that the Shares may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under the Securities Act of 1933, as amended, except
pursuant to an exemption from such registration available under such Act, and
without compliance with foreign securities laws, in each case, to the extent
applicable.
Section 4.5. Financial Capability. Buyer has immediately
available cash and available unused lines of credit in the amount of the Initial
Purchase Price and Buyer will have available as of the Closing Date (either from
its immediately available cash or from such lines of credit, or a combination
thereof) funds sufficient to pay the Initial Purchase Price. Buyer, based on
conditions that are now prevailing, knows of no present circumstance or
condition that would
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prevent the availability at the Closing of the requisite financing to consummate
the transactions contemplated by this Agreement on the terms set forth herein.
ARTICLE V
Covenants of Seller and Buyer
-----------------------------
Section 5.1. Investigation of Business; Access to Properties
and Records. (a) After the date hereof and subject to applicable law, Seller
shall use its best efforts to cause the UTA Seller, UTA and the Subsidiaries to
afford to representatives and agents of Buyer reasonable access to the offices,
plants, properties, books and records of UTA and the Subsidiaries relating to
the Motors Business during normal business hours, in order that Buyer may have
full opportunity to make such investigations as it desires of the affairs of UTA
and the Subsidiaries; provided, however, that such investigation shall not
unreasonably disrupt the personnel and operations of any of the UTA Seller, UTA
or any of the Subsidiaries. All requests for access to the offices, plants,
properties, books, and records relating to the Motors Business shall be made to
such representatives of Seller as Seller shall designate in writing to Buyer
(the "Seller Representatives"), which the Seller Representatives shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. It is further understood and agreed that neither Buyer nor its
representatives shall contact any of the employees, customers or suppliers of
Seller, the UTA Seller, UTA or the Subsidiaries, in connection with the
transactions contemplated hereby, whether in person or by telephone, mail or
other means of communication, without the specific prior written authorization
of the Seller Representatives.
(b) Any information provided to Buyer or its representatives
pursuant to this Agreement shall be held by Buyer and its representatives in
accordance with, and shall be subject to the terms of, the Confidentiality
Agreement dated March 25, 1999 by and between Seller and Buyer, which is hereby
incorporated in this Agreement as though fully set forth herein. At the time of
the Closing, such Confidentiality Agreement shall terminate and be of no further
force or effect. Following the Closing, Seller shall hold in confidence all
knowledge and information of a secret or confidential nature with respect to the
Motors Business and shall not disclose or publish the same without the prior
written consent of Buyer except as otherwise required by law.
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(c) Buyer agrees to (i) hold all of the books and records of
the Company and the Subsidiaries existing on the Closing Date and not to destroy
or dispose of any thereof for a period of 10 years from the Closing Date or such
longer time as may be required by law, and thereafter, if it desires to destroy
or dispose of such books and records, to offer first in writing at least 65 days
prior to such destruction or disposition to surrender them to Seller and (ii)
following the Closing Date to afford Seller and UTA Seller and their respective
accountants and legal counsel, during normal business hours, upon reasonable
request, at any time, full access to such books, records and other data and to
the employees of the Company and any of the Subsidiaries to the extent that such
access may be requested for any legitimate purpose at no cost to Seller or UTA
Seller (other than for reasonable out-of-pocket expenses); provided, however,
that nothing herein shall limit any of Seller's rights of discovery. Buyer shall
have the same rights, and Seller the same obligations, as are set forth above in
this Section 5.1(c) with respect to any non-privileged records of Seller
pertaining to the Company and any of the Subsidiaries that are retained by
Seller, with the exception of Returns relating to Taxes that, pursuant to
Article VII, are not the responsibility of Buyer.
Section 5.2. Reasonable Efforts; Obtaining Consents. (a)
Subject to the terms and conditions herein provided, Seller and Buyer each agree
to use their reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and to cooperate with the other in connection
with the foregoing, including using its reasonable efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to material loan
agreements, leases and other contracts, (ii) to obtain all consents, approvals
and authorizations that are required to be obtained under any federal, state,
local or foreign law or regulation, (iii) to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
hereto to consummate the transactions contemplated hereby, (iv) to effect all
necessary registrations and filings including, but not limited to, filings and
submissions of information requested or required by any domestic or foreign
government or governmental or multinational authority, including, without
limitation, the Antitrust Division of the United States Department of Justice,
the Federal Trade Commission, any State Attorney General, the European
Commission or the relevant competition commission or similar body in any
relevant European country ("Governmental Antitrust Authority"), and (v)
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to fulfill all conditions to this Agreement. Seller and Buyer further covenant
and agree, with respect to a threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby, to use their respective
reasonable efforts to prevent the entry, enactment or promulgation thereof, as
the case may be. In no event, however, shall Buyer, Seller or any Continuing
Affiliate be obligated to pay any money to any Person or to offer or grant other
financial or other accommodations to any person in connection with its
obligations under this Section 5.2.
(b) In furtherance and not in limitation of the foregoing,
Buyer shall use all reasonable efforts to resolve such objections, if any, as
may be asserted with respect to the transactions contemplated hereby under any
antitrust, competition or trade regulatory laws of any domestic or foreign
government or governmental authority or any multinational authority, or any
regulations issued thereunder ("Antitrust Laws"). Without limiting the
generality of the foregoing, Buyer shall use all reasonable efforts to avoid the
entry of, or to have vacated or terminated, any decree, order, or judgment that
would restrain, prevent, or delay the consummation of the transactions
contemplated hereby, including, without limitation, defending through litigation
on the merits and through any available appeals any claim asserted in any court
by any party. Notwithstanding the foregoing, however, neither Buyer, Seller nor
any Continuing Affiliate shall be required to divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, the Motors Business or the Automotive
Business, respectively, or any portion thereof, or any of their other assets or
businesses.
(c) Seller and Buyer shall keep the other party apprised of
the status of matters relating to the completion of the transactions
contemplated hereby and work cooperatively in connection with obtaining the
requisite approvals, consents or orders of any Governmental Antitrust Authority,
including, without limitation: (i) cooperating with the other party in
connection with filings under the HSR Act, the Italian Act or any other
Antitrust Laws, including, with respect to the party making a filing, (A)
providing copies of all such documents to the non-filing party and its advisors
prior to filing (other than documents containing confidential business
information that shall be shared only with outside counsel to the non-filing
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party), and (B) if requested, to accept all reasonable additions, deletions or
changes suggested in connection with any such filing; (ii) furnishing to each
other all information required for any application or other filing to be made
pursuant to the HSR Act, the Italian Act or any other Antitrust Laws in
connection with the transactions contemplated by this Agreement; (iii) promptly
notifying the other of, and if in writing furnishing the other with copies of,
any communications from or with any Governmental Antitrust Authority with
respect to the transactions contemplated by this Agreement; (iv) permitting the
other party to review in advance and considering in good faith the views of one
another in connection with any proposed communication with any Governmental
Antitrust Authority in connection with proceedings under or relating to the HSR
Act, the Italian Act or any other Antitrust Laws; (v) not agreeing to
participate in any meeting or discussion with any Governmental Antitrust
Authority in connection with proceedings under or relating to the HSR Act, the
Italian Act or any other Antitrust Laws unless it consults with the other party
in advance, and, to the extent permitted by such Governmental Antitrust
Authority, gives the other party the opportunity to attend and participate
thereat; and (vi) consulting and cooperating with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto in
connection with proceedings under or relating to the HSR Act, the Italian Act or
any other Antitrust Laws. If either party or any Affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Antitrust Authority with respect to the transactions contemplated
hereby, then such party will endeavor in good faith to make, or cause to be
made, as soon as practicable and after consultation with the other party, an
appropriate response in compliance with such request. Buyer will advise Seller
promptly in respect of any understandings, undertakings or agreements (oral or
written) which Buyer proposes to make or enter into with any Governmental
Antitrust Authority in connection with the transactions contemplated hereby.
Section 5.3. Further Assurances. Seller and Buyer agree that,
from time to time, whether before, at or after the Closing Date, each of them
will execute and deliver such further instruments of conveyance and transfer and
take such other action as may be necessary to carry out the purposes and intents
of this Agreement and the transactions contemplated thereby, including, without
limitation, taking or causing the taking of all such actions and the making,
execution and delivery, of any and all documents, instruments and certificates,
in such form and
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with such terms as Seller may reasonably request to effect the assignment of the
Historical Risk Management Programs.
Section 5.4. Conduct of Business. From the date hereof through
the Closing, except as disclosed on Schedule 5.4 hereto or otherwise provided
for in, or contemplated by, this Agreement, except for actions in connection
with the Pre-Closing Transactions, and except as consented to or approved by
Buyer in writing, (i) Seller shall enforce, and not waive, any provision of
Section 5.4 of the UTA Stock Purchase Agreement to the extent any such provision
relates to the Motors Business and (ii) Seller covenants and agrees, with
respect to the Company only prior to the UTA Closing and with respect to the
Company, UTA and the Subsidiaries after the UTA Closing, that:
(a) each of the Company, UTA and the Subsidiaries shall
operate the Motors Business in the ordinary and usual course in all material
respects in accordance with past practices;
(b) none of the Company or any of the Subsidiaries shall
issue, sell or agree to issue or sell (i) any shares of its capital stock, or
(ii) any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of its capital stock;
(c) none of the Company or any of the Subsidiaries shall amend
its certificate of incorporation or by-laws (or other charter documents) other
than to change its name;
(d) except in the ordinary course of business or as required
by law or by contractual obligations or other understandings or arrangements
existing on the date hereof or as a result of an action applicable to a broad
group of other similarly situated employees of UTC prior to the UTA Closing and
Seller thereafter, none of the Company, UTA or any of the Subsidiaries shall (i)
increase in any manner the base compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of its directors, officers or other
employees; (ii) pay or agree to pay any pension, retirement allowance or other
employee benefit to any such director, officer or employee, whether past or
present; (iii) enter into any new employment, severance, consulting, or other
compensation agreement with any director, officer or employee; or (iv) commit
itself to any additional pension, profit-sharing, deferred
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compensation, group insurance, severance pay, retirement or other employee
benefit plan, fund or similar arrangement or amend or commit itself to amend any
of such plans, funds or similar arrangements in existence on the date hereof;
(e) except in the ordinary course of business or as otherwise
provided for in or contemplated by this Agreement, none of the Company, UTA or
any of the Subsidiaries shall (i) sell, transfer or otherwise dispose of any of
its assets (including the Real Property) relating to the Motors Business, (ii)
create any new Lien on its properties or assets (including the Real Property)
relating to the Motors Business (other than Permitted Liens), (iii) enter into
any joint venture, partnership or other similar arrangement relating to the
Motors Business or form any other new material arrangement for the conduct of
the Motors Business, (iv) incur any indebtedness for borrowed money of the
Company or any of the Subsidiaries in excess of $10 million in the aggregate
that would be outstanding immediately subsequent to the Closing or (v) purchase
any material assets or securities of any person to be included in the Motors
Business;
(f) none of the Company or the Subsidiaries shall enter into
binding commitments to make capital expenditures after the Closing in an
aggregate amount exceeding $3.5 million;
(g) none of the Company or the Subsidiaries nor, with respect
to Tax liabilities of the Motors Business, Seller or its Subsidiaries shall
settle any material Tax audit, make or change any material Tax election or file
any amended Return amending a Return in any material respect; and
(h) none of the Company, UTA or the Subsidiaries shall agree
to take any action prohibited by this Section 5.4.
Notwithstanding the provisions of this Section 5.4, nothing in
this Agreement shall be construed or interpreted to prevent any of the Company,
UTA or the Subsidiaries from (i) paying or making regular or special dividends
or other distributions consisting of Cash, or the shares of, or other interests
in, entities not included in the Motors Business, (ii) making or accepting
inter-company or intra-company advances to, from or with one another or with
Seller or any of its Affiliates or the UTA Seller or any of its Affiliates, or
(iii) engaging in any
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transaction incident to the normal cash management procedures of Seller and its
Affiliates or the UTA Seller or any of its Affiliates.
Section 5.5. Preservation of Business. Subject to the terms
and conditions of this Agreement, Seller shall, and shall cause the Company, and
after the UTA Closing, UTA and the Subsidiaries to, use all reasonable efforts
to preserve the Motors Business intact, to keep available to the Company, the
Subsidiaries and Buyer the services of the employees of the Motors Business, to
preserve its relationship with customers and others having business relations
with the Motors Business, in each case in all material respects. Seller shall
enforce, and not waive, any provision of Section 5.5 of the UTA Stock Purchase
Agreement to the extent any such provision relates to the Motors Business.
Section 5.6. Public Announcements. Except as may otherwise be
required by applicable law, prior to the Closing, Seller and Buyer will consult
with each other before issuing, or permitting any agent or Affiliate to issue,
any press releases or otherwise making, or permitting any agent or Affiliate to
make, any public statements with respect to this Agreement and the transactions
contemplated hereby.
Section 5.7. Non-Solicitation. If this Agreement is
terminated, Buyer will not, for a period of three years thereafter, without the
prior written approval of Seller, directly or indirectly, solicit, encourage,
entice or induce any person who is an employee of the Motors Business at the
date hereof or at any time hereafter that precedes such termination, to
terminate his or her employment with the Motors Business. Buyer agrees that any
remedy at law for any breach by it of this Section 5.7 would be inadequate, and
Seller would be entitled to injunctive relief in such a case. If it is ever held
that the restriction placed on Buyer by this Section 5.7 is too onerous and is
not necessary for the protection of Seller, Buyer agrees that any court of
competent jurisdiction may impose lesser restrictions which such court may
consider to be necessary or appropriate to properly protect Seller.
Section 5.8. Guarantees. Buyer shall use all reasonable
efforts to cause itself or one or more of its Affiliates or, with respect to the
Guaranteed Bonds, equivalent insurers, to be substituted in all respects for the
UTA Seller, its Affiliates, Seller or any Continuing Affiliate, or, with respect
to the Guaranteed Bonds, the issuer thereof, effective as of the Closing, in
respect of
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all obligations of the UTA Seller, its Affiliates, Seller and any Continuing
Affiliate under each of the guarantees, letters of credit, letters of comfort
and similar arrangements obtained or provided by the UTA Seller, its Affiliates,
Seller or any of the Continuing Affiliates for the benefit of any of the
Company, UTA or any of the Subsidiaries which guarantees, letters of credit and
letters of comfort and similar arrangements are set forth in Schedule 5.8 hereto
and which shall include additions, replacements, deletions and substitutions
thereof consistent with current levels from the date hereof until the Closing
Date (the "Guarantees"). If Buyer is unable to effect such a substitution with
respect to any Guarantee after using its reasonable efforts to do so, Buyer
shall obtain letters of credit, on terms and from financial institutions
reasonably satisfactory to Seller, with respect to the obligations covered by
each of the Guarantees for which Buyer does not effect such substitution. As a
result of the substitution contemplated by the first sentence of this Section
5.8 and/or the letter or letters of credit contemplated by the second sentence
of this Section 5.8, the UTA Seller, its Affiliates, Seller and the Continuing
Affiliates shall from and after the Closing cease to have any obligation
whatsoever arising from or in connection with the Guarantees except for
obligations, if any, for which the UTA Seller, its Affiliates, Seller or the
appropriate Continuing Affiliate will be fully indemnified pursuant to a letter
of credit obtained by Buyer.
Section 5.9. Intercompany Accounts. Immediately prior to the
Closing, all intercompany receivables or payables and loans then existing
between Seller or any of the Continuing Affiliates, on the one hand, and any of
the Company or the Subsidiaries, on the other hand, shall be settled by way of
capital contribution or repayment (with respect to intercompany payables or
loans due to Seller or any Continuing Affiliate) or by way of dividend in kind
(with respect to receivables of the Company or the Subsidiaries owed by Sellers
or any Continuing Affiliate). As of the Closing, there shall be no intercompany
receivables or payables or loans then existing between Seller or any of the
Continuing Affiliates or any Affiliates of UTC, on the one hand, and any of the
Company or the Subsidiaries, on the other hand, and the Balance Sheets has been
prepared and the Closing Financial Data prepared pursuant to Section 2.5(a)
hereof shall be prepared, accordingly.
Section 5.10. Corporate Names. (a) Buyer acknowledges that,
from and after the Closing Date, (i) the UTA Seller and its Affiliates have the
absolute and exclusive
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proprietary right to all names, marks, trade names and trademarks (collectively,
"Names") incorporating "United Technologies" or "UT," by itself or in
combination with any other Name, including, without limitation, the corporate
design logo associated with "United Technologies," and (ii) Seller and the
Continuing Affiliates have the absolute and exclusive proprietary right to all
Names incorporating "Lear," by itself or in combination with any other Name,
including, without limitation, the corporate design logo associated with Seller
and that, with respect to clauses (i) and (ii), none of the rights thereto or
goodwill represented thereby or pertaining thereto are being transferred hereby
or in connection herewith. Buyer agrees that from and after the Closing Date it
will not, nor will it permit any of its Affiliates to, use any Name, phrase or
logo incorporating "United Technologies", "UT" or "Lear" or any such corporate
design logo in or on any of its literature, sales materials or products or
otherwise in connection with the sale of any products or services; provided,
however, that Buyer may continue to use any printed literature, sales materials,
purchase orders and sales or lease agreements, and sell any products, that are
included in the inventories of the Motors Business on the Closing Date and that
bear a Name, phrase or logo incorporating "United Technologies", "UT" or "Lear"
or any such corporate design logo until the supplies thereof existing on the
Closing Date have been exhausted, but in any event for not longer than 90 days
from the UTA Closing Date, except as set forth below. With respect to the
printed purchase orders and sale or lease agreements referred to in the
preceding sentence, from and after the Closing Date Buyer shall sticker or
otherwise mark such documents as necessary in order to indicate clearly that
neither the UTA Seller, its Affiliates, Seller nor any of its Continuing
Affiliates is a party to such documents. From and after the expiration of such
90 day period, Buyer shall: cease to use any such literature and sales
materials; delete or cover (as by stickering) any such Name, phrase or logo from
any item included in the inventories of the Motors Business that bears any such
Name, phrase or logo; and take such other actions as may be necessary or
advisable to clearly and prominently indicate that neither Buyer, the Company
nor any of their respective Affiliates is affiliated with the UTA Seller, any of
its Affiliates, Seller or any of the Continuing Affiliates.
(b) On or prior to the Closing Date, Seller shall file an
amended certificate of incorporation for the Company changing, effective as of
the Closing Date, the name of such company to a name designated by the Buyer
which does not contain "Lear," "United Technologies" or "UT." As promptly as
practicable after the Closing Date, but in any event
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within 90 days thereafter, Buyer shall change or shall cause the relevant
Affiliate of Buyer to change the name of any of the other Subsidiaries that
includes the name "Lear," "United Technologies" or "UT" to a corporate or entity
name that does not include the name "Lear," "United Technologies" or "UT."
Section 5.11. Additional Agreements. At the Closing, the
parties thereto shall execute and deliver the Technology License Agreement, the
Interim Services Agreement and any instruments of transfer, assignment or
conveyance necessary or desirable to consummate the transactions contemplated by
this Agreement.
Section 5.12. Certain Insurance Matters. The interest, if any,
of the Company, UTA and the Subsidiaries as insureds under or beneficiaries or
in any other capacity of Historical Risk Management Programs shall terminate
effective as of (i) the UTA Closing Date for UTA and the Subsidiaries and (ii)
the Closing Date for the Company, except for any insurance proceeds payable in
respect of any physical damage, destruction or loss occurring prior to the
Closing. Except for any such insurance proceeds, on or prior to the Closing
Date, any and all rights, title and interests of the Company, UTA and the
Subsidiaries, if any, to or under the Historical Risk Management Programs as
insureds or beneficiaries or in any other capacity, including rights, title and
interests to proceeds payable by such Historical Risk Management Programs and
the rights, if any, to the Settlement Payments, shall be unconditionally and
irrevocably assigned (i) to UTC with respect to UTA and the Subsidiaries for
periods prior to the UTA Closing Date and (ii) to Seller in all other cases, in
each case effective as of the Closing Date.
(b) Buyer hereby agrees to assume responsibility to pay or to
cause the Company and the Subsidiaries to pay, or at Seller's option, promptly
reimburse Seller for, and indemnify Seller and the Continuing Affiliates
against, any and all charges incurred by or assessed against Seller or a
Continuing Affiliate arising out of or related to the Company's, UTA's and the
Subsidiaries' rights, title and interests in or under the Historical Risk
Management Programs prior to the assignment to UTC or Seller pursuant to Section
5.12(a) including, without limitation, charges for premiums, including
retrospective premiums adjustments, expenses, taxes, claims handling fees and
expenses, letters of credit and other security instruments required by
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insurers, broker fees and expenses, defense or expense costs, deductibles,
settlement payments, the satisfaction of any judgments arising out of any claims
or occurrences and any other like charges, costs and expenses, including any
such charges, costs and expenses relating to any insurance proceeds payable in
respect of any physical damage, destruction or loss occurring prior to the
Closing.
(c) Buyer agrees that UTC and Seller may, in the name of the
Company and the Subsidiaries, but at UTC's or Seller's sole cost and expense,
pursue any action necessary or desirable to enforce any settlement agreements
and that Buyer will and will cause the Company and the Subsidiaries to cooperate
with UTC and Seller, at UTC's or Seller's expense, in any such actions
including, but not limited to, allowing UTC or Seller to prosecute such actions
in the name of the Company and the Subsidiaries and the Buyer.
Section 5.13. Performance of Company Obligations. Buyer agrees
from and after the Closing Date to cause the Company and the Subsidiaries to
perform and fulfill all of their respective obligations and commitments whether
existing as of the Closing Date or arising or incurred thereafter.
Section 5.14. Pre-Closing Transactions. Prior to the Closing
Seller and its Affiliates shall consummate the Pre-Closing Transactions.
ARTICLE VI
Employee Benefits
-----------------
Section 6.1. Employee Benefit Plans. (a) Schedule 6.1(a)
hereto lists all material compensation and benefit plans, contracts and
arrangements maintained by, sponsored or participated in by UTA or the
Subsidiaries relating to the Motors Business (other than routine administrative
procedures or government-required programs) in effect as of the date hereof
including, without limitation, all pension, profit-sharing, savings and thrift,
bonus, incentive or deferred compensation, severance pay and medical and life
insurance plans in which any current or former Motors Business Employees
participate (collectively, "Employee Benefit Plans"). Schedule 6.1(a) hereto
sets forth each Employee Benefit Plan which is solely sponsored or
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maintained by UTA or one of the Subsidiaries relating to the Motors Business (a
"Company Plan").
(b) Except as would not reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the Business Condition
of the Motors Business, all Employee Benefit Plans in which the Motors Business
Employees in the United States ("U.S. Company Employees") participate ("U.S.
Employee Benefit Plans") and which are "employee benefit plans," as defined in
Section 3(3) of ERISA, in all material respects are in compliance with and have
been administered in accordance with its terms and in compliance with all
applicable requirements of law, including, but not limited to, the Code and
ERISA, and all contributions required to be made to each such plan by or on
behalf of the Company or the Subsidiaries under the terms of such plan, ERISA or
the Code prior to the date hereof and the Closing Date have been or will be, as
the case may be, made or accrued.
(c) Except as would not reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the Business Condition
of the Motors Business, the Company and the Subsidiaries have performed all
material obligations required to be performed by them under, and are not in
default under or in violation of, the terms of any of the U.S. Employee Benefit
Plans. Except as would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Business Condition of the
Motors Business, neither the Company nor the Subsidiaries nor any other
"disqualified person" (as such term is defined in Section 4975 of the Code) has
engaged in any "prohibited transaction" (as such term is defined in Section 4975
of the Code), which would reasonably be expected to subject any Company Plan (or
its related trust), of the Company or any of the Subsidiaries or any officer,
director or employee of the Company or any of the Subsidiaries to the tax or
penalty imposed under Section 4975 of the Code. Except as would not reasonably
be expected, individually or in the aggregate, to have a material adverse effect
on the Business Condition of the Motors Business, none of the Company or the
Subsidiaries has incurred any material liability under Title IV of ERISA which
has not been satisfied in full, no event has occurred and no condition exists
that would reasonably be expected to result in the Company or any of the
Subsidiaries incurring a material liability under Title IV of ERISA, and no U.S.
Employee Benefit Plan which is subject to Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code has incurred an
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"accumulated funding deficiency" as defined in Section 412 of the Code or
Section 302 of ERISA.
(d) None of the Company or the Subsidiaries is required to
contribute to, or during the five-year period ending on the Closing Date will
have been required to contribute to, any "multiemployer plan," as such term is
defined in Section 4001(a)(3) of ERISA, and none of the Company or the
Subsidiaries is subject to any withdrawal or partial withdrawal liability within
the contemplation of Section 4201 of ERISA and will not become subject thereto
as a result of the transactions contemplated by this Agreement.
(e) Except as otherwise set forth on Schedule 3.12 or Schedule
6.1(e) hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due from the Company or
any of the Subsidiaries under any Company Plan, (ii) materially increase any
benefits otherwise payable under any Company Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(f) Except as otherwise set forth on Schedule 6.1(f) hereto or
as would not reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the Business Condition of the Motors Business, each
Company Plan which is not a U.S. Company Employee Benefit Plan (a "Foreign
Company Plan") has been maintained in all material respects in accordance with
its terms and with all legal requirements applicable thereto and is funded
and\or book reserved for in accordance with applicable laws.
(g) Except as set forth in Schedule 6.1(g), no U.S. Company
Plan provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees for periods extending
beyond their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the current or former employee
(or his beneficiary).
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Section 6.2. Collective Bargaining Agreements. Anything
herein to the contrary notwithstanding, the obligations of any of the Company or
any of the Subsidiaries to provide continuing benefits for periods after the UTA
Closing Date as required under collective bargaining agreements shall remain in
effect and Buyer shall indemnify and hold Seller and its Affiliates harmless
from and against any and all Covered Liabilities relating to such obligations.
Section 6.3. Buyer's Obligations. (a) Subject to the other
provisions of this Section 6.3, Buyer agrees that for a period of at least two
years after the UTA Closing Date Buyer will (i) continue in full force and
effect the Foreign Company Plans in accordance with their terms without any
reduction of benefits or other amendment or modification (except to the extent
necessary to comply with applicable law); (ii) provide all U.S. Company
Employees with severance benefits at least as favorable as those provided to
U.S. Company Employees immediately prior to the UTA Closing Date; (iii) provide
all U.S. Company Employees with medical and other welfare benefits no less
favorable in the aggregate than those provided to U.S. Company Employees
immediately prior to the UTA Closing Date; (iv) provide all Motors Business
Employees with a wage and salary program no less favorable in the aggregate than
that in place at UTA or the Subsidiaries, as applicable immediately prior to the
UTA Closing Date; and (v) provide all U.S. Company Employees with other
compensation and benefits no less favorable in the aggregate than the
corresponding compensation and benefits provided to U.S. Company Employees
immediately prior to the UTA Closing Date. In addition, Buyer agrees to give
Company Employees service credit for all periods of employment with UTC, Seller
or an Affiliate of either (including UTA and the Subsidiaries) prior to the
Closing Date for purposes of vesting and eligibility (not for pension benefit
accruals) under any plan adopted or maintained by Buyer, any of its
subsidiaries, the Company or any of the Subsidiaries in which Motors Business
Employees participate. Buyer agrees to waive any limitations regarding
preexisting conditions, and to give full credit for any copayments made and
deductibles fully or partially satisfied prior to the UTA Closing Date with
respect to Employee Benefit Plans, under any welfare or other employee benefit
plans maintained by Buyer, any of its subsidiaries, the Company or any of the
Subsidiaries in which Motors Business Employees participate after the Closing.
From and after the UTA Closing Date, Buyer and the Company and the Subsidiaries
shall be solely responsible for all termination and severance benefits, costs,
charges and liabilities of any nature incurred with respect to the termination
of a Motors Business Employee on or after the Closing Date,
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including, without limitation, any claims arising out of or relating to any
plant closing, mass layoff or similar event under applicable law occurring on or
after the Closing Date.
(b) Buyer agrees to continue to provide retiree medical and
life insurance coverage on terms no less favorable than those provided by the
Employee Benefit Plans to those U.S. Company Employees who are eligible to
participate in such plans and are "eligible to retire" as of the UTA Closing
Date.
(c) Seller shall be liable for, and shall hold Buyer, the
Company and the Subsidiaries harmless from and against any claims for the
benefits under U.S. Employee Benefits Plans that are welfare benefit plans
described below by participants of such plans which are incurred prior to the
Closing Date; provided, that, with respect to claims described in (i) or (ii)
below, such claims are submitted for reimbursement within 120 days following the
Closing Date. For purposes of this Agreement, the following claims shall be
deemed to be incurred as follows: (i) life, accidental death and dismemberment
and business travel accident insurance benefits, upon the death or accident
giving rise to such benefits; (ii) health, dental, and/or prescription drug
benefits, upon provision of such services, materials or supplies, (iii)
long-term disability benefits, upon the commencement of the period of the
continuing disability; and (iv) workers' compensation claims, upon the event
giving rise to the claim.
(d) Seller shall be liable for, and shall hold Buyer, the
Company and the Subsidiaries harmless from and against any benefits accrued as
of the Closing Date under U.S. Employee Benefits Plans that are pension plans.
(e) Seller shall be responsible for and shall hold Buyer, the
Company and the Subsidiaries harmless against any retiree welfare benefits to be
provided to retirees of the Company and the Subsidiaries who have actually
retired prior to the Closing Date under any U.S. Employee Benefit Plan.
(f) Buyer shall be responsible for the administration of and
shall assume any and all obligations arising under the continuation coverage
requirements of Section 4980B of the Code and Part 6 of Title I of ERISA for
those plan participants in, and beneficiaries under, the
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Employee Benefit Plans who are eligible to exercise their rights to such
coverage as of or following the Closing Date.
(g) Unless specifically provided otherwise in this Article VI,
Buyer shall be liable for and shall hold Seller and its Affiliates harmless from
and against any and all Covered Liabilities with respect to or arising out of:
(i) Motors Business Employees' employee benefits, including, without limitation,
Covered Liabilities arising from or with respect to, the Foreign Company Plans;
(ii) the participation of Motors Business Employees in the employee benefit
plans referred to in this Section 6.3; or (iii) the employment of Motors
Business Employees by Buyer of the Company or any of the Subsidiaries, in each
case from and after the Closing.
Section 6.4. Plant Closing Laws. Buyer shall be responsible
for providing any notice required, pursuant to the United States Federal Worker
Adjustment and Retraining Act of 1988, any successor United States federal law,
and any applicable plant closing notification law with respect to a layoff or
plant closing relating to the Motors Business that occurs as a result of or
after the Closing. Seller shall be responsible for providing any such notice
with respect to a layoff or plant closing occurring prior to the Closing.
Section 6.5. Accrued Vacation. Buyer will permit Motors
Business Employees to carry over and take accrued, but unused, vacation days
with pay in accordance with the applicable policies of UTC, the Company and the
Subsidiaries as in effect as of the UTA Closing Date.
Section 6.6. Acquired Rights Directive. To the extent
necessary to comply with the Acquired Rights Directive (77/187 EEC) as enacted
in the Member States of the European Union and similar laws in other
jurisdictions which safeguard the rights of employees in transfers of
undertakings, businesses or parts of businesses (collectively, the "Transfer
Laws"), Seller and Buyer shall comply with their respective obligations under
the Transfer Laws, including any obligations to maintain certain terms and
conditions of employment of the Motors Business Employees.
Section 6.7. Miscellaneous. Seller and Buyer agree to furnish
each other with such information concerning Motors Business Employees and
benefit plans, and to take all such
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other reasonable action, as is necessary and appropriate to effect the
transactions contemplated by this Article VI, in each case to the extent
permitted under applicable law.
ARTICLE VII
Tax Matters
-----------
Section 7.1. Tax Returns of the Company and the
Subsidiaries. Seller represents and warrants that (a) all material Income Tax
Returns required to be filed for taxable periods ending on or prior to the
Closing Date by, or with respect to any activities of, the Company or the
Subsidiaries have been or will be filed on a timely basis, and all Taxes shown
to be due on such Returns have been or will be paid, and (b) all other material
Returns required to be filed before the Closing Date by, or with respect to any
activities of, the Company or the Subsidiaries have been or will be filed on a
timely basis and all Taxes shown as due on such Returns have been or will be
paid, except, in the case of (a) and (b), where the failure to file such Returns
or pay such Taxes would not have a material adverse effect on the Business
Condition of the Motors Business. All such Returns were correct and complete in
all material respects, except for failures, that would not have a material
adverse effect on the Business Condition of the Motors Business.
Section 7.2. Tax Indemnification by Seller. Except as
otherwise provided in Section 7.3 hereof and except to the extent of any
reserves for Excluded Income Taxes accrued on the Final Closing Date Financial
Data, Seller shall be liable for, and shall hold Buyer, the Company and the
Subsidiaries harmless from and against, any and all Income Taxes with respect to
the Company or any of the Subsidiaries for any taxable period ending on or
before the Closing Date to the extent such Income Taxes are reportable on a
consolidated, combined or unitary Domestic Return which (i) includes Seller or
any subsidiary of Seller other than the Company and the Subsidiaries or (ii) UTC
or any subsidiary of UTC other than the Company and the Subsidiaries
(collectively, "Excluded Income Taxes").
Section 7.3. Tax Indemnity by Buyer. Buyer shall be liable
for, and shall hold the Seller Indemnified Parties harmless from and against,
any and all Taxes, other than Excluded Income Taxes, of or with respect to the
Company, any of the Subsidiaries or the Motors Business for any taxable period
(whether beginning and/or ending before, on or after the Closing Date),
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including, without limitation, (a) any and all Taxes not incurred in the
ordinary course of business attributable to the acts or omissions of Buyer,
Buyer's Affiliates, the Company or the Subsidiaries after the Closing, and (b)
all Taxes, other than Excluded Income Taxes and, except as provided in Section
7.8(b), Taxes reportable by Seller or a Continuing Affiliate as a result of the
Pre-Closing Transactions resulting from or arising out of any transaction
contemplated by this Agreement. Buyer shall also be liable for, and shall hold
the Seller Indemnified Parties harmless from and against any and all Excluded
Income Taxes to the extent of any reserves for Taxes accrued on the Final
Closing Date Financial Data.
Section 7.4. Filing Responsibility. (a) Seller or UTC shall
prepare and file (i) all Domestic Returns with respect to Excluded Income Taxes,
(ii) any other Return that includes any of Seller or any of the Continuing
Affiliates or UTC or any of its subsidiaries, on the one hand, and any of the
Company or the Subsidiaries, on the other hand and (iii) any Return that does
not include any of the Company or the Subsidiaries.
(b) Buyer shall prepare and file, with respect to the Company
and the Subsidiaries all other Returns not described in Section 7.4(a) hereof in
accordance with the procedures described in Section 7.6(d).
(c) Buyer agrees that, except to the extent contrary to law or
applicable regulation, neither Buyer, the Company nor the Subsidiaries shall
take any position in the Returns referred to in Section 7.4(b) hereof
inconsistent with that taken in a Return described in Section 7.4(a).
Section 7.5. Refunds and Carrybacks. (a) Seller shall be
entitled to any refunds or credits of Excluded Income Taxes.
(b) Except as otherwise provided herein, Buyer, the Company or
the Subsidiaries, as the case may be, shall be entitled to any refunds or
credits of Taxes of any of the Company or any of the Subsidiaries, other than
refunds or credits of Excluded Income Taxes.
(c) Buyer shall cause the Company and the Subsidiaries
promptly to forward to Seller or to reimburse Seller for any refunds or credits
due Seller (pursuant to the terms of this Article VII) after receipt thereof,
and Seller and the Continuing Affiliates shall promptly forward
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to Buyer (pursuant to the terms of this Article VII) or reimburse Buyer for any
refunds or credits due Buyer after receipt thereof.
(d) Buyer agrees that none of the Company or the Subsidiaries
shall elect to carry back any item of loss, deduction or credit which arises in
any taxable period ending after the Closing Date and which relates to or affects
any Excluded Income Tax ("Subsequent Loss") into any taxable period ending on or
before the Closing Date. If a Subsequent Loss is carried back into any taxable
period ending on or before the Closing Date, Seller shall be entitled to any
refund of Taxes realized as a result thereof.
Section 7.6. Cooperation and Exchange of Information. (a)
Seller shall prepare and submit to Buyer, no later than three months after the
Closing Date, 1998 and 1999 blank Return workpaper packages. Buyer shall, and
shall cause the Company and each of its appropriate Subsidiaries to, prepare
completely and accurately and submit to Seller, within three months of receipt,
all information as Seller shall reasonably request in such Return workpaper
packages.
(b) As soon as practicable, but in any event within 30 days
after Seller's request, from and after the Closing Date, Buyer shall provide
Seller or UTC with such cooperation and shall deliver to Seller or UTC such
information and data concerning the pre-Closing operations of the Company and
the Subsidiaries and make available such knowledgeable employees of the Company
and the Subsidiaries as Seller or UTC may request, including providing the
information and data required by Seller's customary Tax and accounting
questionnaires, in order to enable Seller or UTC to complete and file all
Returns which they may be required to file with respect to the operations and
business of the Company and the Subsidiaries through the Closing Date or to
respond to audits by any taxing authorities with respect to such operations, and
to otherwise enable Seller or UTC to satisfy their internal accounting, Tax and
other legitimate requirements. Such cooperation and information shall include,
without limitation, designation of an officer of Seller or UTC as an officer of
any of the Company or any of the Subsidiaries for the purpose of signing Returns
and defending audits and promptly forwarding copies of appropriate notices and
forms or other communications received from or sent to any taxing authority
which relate to the Company or the Subsidiaries, and
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providing copies of all relevant Returns, together with accompanying schedules
and related workpapers, documents relating to rulings or other determinations by
taxing authorities, including, without limitation, foreign taxing authorities,
and records concerning the ownership and tax basis of property, which Buyer, the
Company or the Subsidiaries may possess. Each of Buyer, the Company and the
Subsidiaries shall make its employees and facilities available on a mutually
convenient basis to provide explanation of any documents or information provided
hereunder.
(c) For a period of 10 years after the Closing Date, Buyer
shall, and shall cause the Company and the Subsidiaries to, retain all Returns,
books and records (including computer files) of, or with respect to the
activities of, the Company and the Subsidiaries for all taxable periods ending
on or prior to the Closing Date. Thereafter, Buyer shall not dispose of any such
Returns, books or records unless it first offers such Returns, books and records
to Seller and UTC and Seller and UTC fail to accept such offer within 60 days of
its being made.
(d) Buyer and Seller shall, and shall cause their respective
subsidiaries to, cooperate in the preparation of all Returns relating in whole
or in part to taxable periods ending on or before the Closing Date that are
required to be filed after such date and all Returns for taxable periods
beginning before the Closing Date and ending after the Closing Date; provided
that Seller shall have the sole authority to determine the manner in which such
Returns are prepared to the extent such determinations may affect the amount of
Taxes for which Seller is liable.
(e) Whenever any taxing authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which Seller or any of
the Continuing Affiliates or UTC or any of its Affiliates are liable, Buyer
shall promptly inform UTC and Seller, and Seller and any such Continuing
Affiliates or UTC and any of its Affiliates, as the case may be, shall have the
right to control any resulting meetings, conferences or proceedings and to
determine whether and when to settle any such claim, assessment or dispute to
the extent such proceedings or determinations may affect the amount of Taxes for
which Seller or any of the Continuing Affiliates or UTC or any of its Affiliates
are liable. None of Buyer, the Company or any of their respective subsidiaries
or Affiliates shall be entitled to participate in any Tax audit, defense,
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litigation, contest or other proceeding with respect to any consolidated,
combined or unitary Domestic Return which includes any of (i) Seller or any
subsidiary (other than the Company and the Subsidiaries) of Seller or (ii) UTC
or any subsidiary (other than the Company and the Subsidiaries) of UTC.
(f) If Buyer or any of the Company or the Subsidiaries, as the
case may be, fails to provide any information requested by Seller in the time
specified herein, or if no time is specified pursuant to this Section 7.6,
within a reasonable period, as determined in good faith by Seller, or otherwise
fails to do any act required of it under this Section 7.6, then Buyer shall be
obligated, notwithstanding any other provision of this Agreement, to indemnify
the Seller Indemnified Parties and Buyer shall so indemnify the Seller
Indemnified Parties and hold the Seller Indemnified Parties harmless from and
against any and all costs, claims or damages, including, without limitation, all
Taxes or deficiencies thereof, payable as a result of such failure.
Section 7.7. Purchase Price. Buyer and Seller agree that the
consideration provided for pursuant to this Agreement is being paid solely to
acquire the Shares and neither party will (or will permit any Affiliate to)
report or treat any part of such consideration as allocable to anything other
than payment for the Shares.
Section 7.8. Other Tax Agreements. (a) Anything in any other
agreement to the contrary notwithstanding, all liabilities and obligations
between Seller and any Continuing Affiliate on the one hand and the Company and
the Subsidiaries on the other hand, under any other Tax allocation or Tax
sharing agreement in effect prior to the Closing Date (other than this
Agreement) shall cease and terminate as of the Closing Date.
(b) All transfer, sales, stamp, registration, excise and
similar Taxes on or with respect to the Pre-Closing Transactions or the sale of
the Shares shall be borne by Buyer.
(c) Buyer shall not make an election under Section 338 of the
Code or any state, local or foreign equivalent thereof in respect of the Company
or any of the Subsidiaries.
(d) Buyer agrees that for the fiscal year ending on December
31, 1999 in the case of United Technologies Automotive Electrical Systems, S.A.
de C.V. and United Technologies Automotive (Philippines), Inc. and November 30,
1999 in the case of each other
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foreign Subsidiary, neither Buyer nor any successor, transferee or assignee
thereof will cause or permit any foreign Subsidiary to declare or pay any
dividend, or shall cause or permit the Company or any of the Subsidiaries to
enter into any transaction or take any action (i) that would be considered for
U.S. federal income tax purposes to constitute the declaration or payment of a
dividend by any foreign Subsidiary, including, without limitation, pursuant to
Section 304 of the Code, or (ii) that otherwise would result in the diminution
of the foreign tax credits that, absent any such transaction, may be claimed by
UTC or Seller in respect of their U.S. federal income tax liability, including
any transaction (other than in the ordinary course of business) that would
result in the increase or diminution of any amount of earnings and profits of
any foreign Subsidiary for U.S. federal income tax purposes for periods through
the end of any such fiscal year, or any loss carryback or loss surrender or
other action not in the ordinary course of business that would reduce the
effective rate of creditable tax paid by any foreign Subsidiary for any such
period.
(e) Buyer agrees that if as the result of any audit adjustment
made with respect to any Excluded Income Tax by any taxing authority with
respect to a taxable period ending on or prior to the Closing Date, Buyer or any
of its affiliates, including the Company and the Subsidiaries, receives a Tax
Benefit, then Buyer shall pay to Seller the amount of such Tax Benefit within 15
days of filing the Return in which such Tax Benefit is realized or utilized. For
purposes of determining the amount and timing of any Tax Benefit, the recipient
of the Tax Benefit shall be deemed to pay tax at the highest marginal rate in
effect in the year such Tax Benefit is realized or utilized and shall be deemed
to realize or utilize any Tax Benefit in the first taxable year that such Tax
Benefit may be realized or utilized under the law.
Section 7.9. Definitions. For purposes of this Article VII,
the following terms shall have the meanings ascribed to them below:
(a) "Domestic Returns" means returns, reports and
forms required to be filed with any taxing authority of the United
States of America, any state thereof or the District of Columbia and
any local governmental subdivision thereof (a "U.S. Taxing Authority").
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(b) "Income Tax Returns" means federal, state or
local Returns for Income Taxes required to be filed with any U.S.
Taxing Authority that include any of the Company or the Subsidiaries.
(c) "Income Taxes" means U.S. federal, state or local
net income or franchise Taxes or other Taxes measured by net income,
together with any interest or penalties imposed with respect thereto.
(d) "IRS" means the Internal Revenue Service.
(e) "Returns" means returns, reports and forms
required to be filed with any U.S. Taxing Authority or foreign taxing
authority.
(f) "Tax Benefit" means the Tax effect of any item of
loss, deduction or credit or any other item which decreases Taxes paid
or payable or increases tax basis, including any interest with respect
thereto or interest that would have been payable but for such item.
(g) "Taxes" means all taxes (whether U.S. federal,
state, local or foreign) based upon or measured by income and any other
tax whatsoever, including, without limitation, gross receipts, profits,
sales, use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, or property taxes, together
with any interest or penalties imposed with respect thereto.
ARTICLE VIII
Conditions to Buyer's Obligation to Close
-----------------------------------------
Buyer's obligation to consummate the Stock Purchase shall be
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions:
Section 8.1. Representations, Warranties and Covenants of
Seller. The representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date except for representations and warranties that speak as
of a specific date or time other than the Closing Date (which need
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only be true and correct in all material respects as of such date or time), the
covenants and agreements of Seller to be performed on or before the Closing Date
in accordance with this Agreement shall have been duly performed in all material
respects, and Buyer shall have received at the Closing a certificate to that
effect dated the Closing Date and validly executed on behalf of Seller.
Section 8.2. Filings; Consents; Waiting Periods. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers listed on Schedule 3.13 or 4.3 hereto and indicated
therein as being a condition to the Closing for Buyer shall have been filed,
made or obtained, and all waiting periods applicable under the HSR Act shall
have expired or been terminated. Notwithstanding anything herein to the
contrary, no approval or other consent, order, qualification or waiver of any
governmental authority pursuant to any foreign law, rule or regulation shall be
a condition to Buyer's obligation to consummate the Stock Purchase.
Section 8.3. No Injunction. At the Closing Date, there
shall be no injunction, restraining order or decree of any nature of any court
or governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Stock Purchase.
ARTICLE IX
Conditions to Seller's Obligation to Close
------------------------------------------
Seller's obligation to consummate the Stock Purchase is
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions:
Section 9.1. Representations, Warranties and Covenants of
Buyer. The representations and warranties of Buyer in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date except for representations and warranties that speak as of a
specific date or time other than the Closing Date (which need only be true and
correct in all material respects as of such date or time), the covenants and
agreements of Buyer to be performed on or before the Closing Date in accordance
with this
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Agreement shall have been duly performed in all material respects, and Seller
shall have received at the Closing a certificate to that effect dated the
Closing Date and validly executed on behalf of Buyer.
Section 9.2. Filings; Consents; Waiting Periods. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers listed on Schedule 3.13 or 4.3 hereto and indicated
therein as being a condition to the Closing for Seller shall have been filed,
made or obtained, and all applicable waiting periods under the HSR Act shall
have expired or been terminated. Notwithstanding anything herein to the
contrary, no approval or other consent, order, qualification or waiver of any
governmental authority pursuant to any foreign law, rule or regulation shall be
a condition to Seller's obligation to consummate the Stock Purchase.
Section 9.3. No Injunction. At the Closing Date, there shall
be no injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Stock Purchase.
ARTICLE X
Survival; Indemnification
-------------------------
Section 10.1. Survival Periods. The respective representations
and warranties of Seller and Buyer shall survive the Closing Date and will
remain in full force and effect thereafter until December 31, 2000. Those
covenants that contemplate or may involve actions to be taken or obligations in
effect after the Closing shall survive in accordance with their terms.
Section 10.2. Indemnification by the Buyer. From and after the
Closing Date, the Buyer shall indemnify and hold harmless Seller and the
Continuing Affiliates, each of their respective directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Seller Indemnified Parties") from and against
any and all Covered Liabilities incurred by or asserted against any of the
Seller Indemnified Parties in connection with or arising from (i) any breach by
Buyer of its covenants and agreements contained herein or (ii) any breach by
Buyer of its representations and warranties
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contained herein (it being agreed that solely for purposes of establishing
whether any matter is indemnifiable pursuant to this clause (ii), the accuracy
of such representations and warranties shall be determined without giving effect
to the qualifications to such representations and warranties, if any, concerning
"materiality" or "Material Adverse Effect"); and (iii) any Covered Liability of
the Company or any of the Subsidiaries or arising out of or in connection with
the Motors Business, as heretofore, currently or hereafter owned or conducted,
as the case may be, including, without limitation, any Covered Liability based
on negligence, gross negligence, strict liability or any other theory of
liability, whether in law (whether common or statutory) or equity; provided,
however, that there shall be excluded from the foregoing indemnity obligation
those Covered Liabilities specified in Section 7.2 hereof that Seller has agreed
to assume pursuant hereto, Covered Liabilities arising from a breach of Seller's
representations and warranties and Covered Liabilities with respect to Retained
Liabilities. Notwithstanding the foregoing, (A) the Buyer shall be required to
indemnify Seller Indemnified Parties pursuant to clause 10.2(ii) only to the
extent that the aggregate Covered Liabilities indemnifiable pursuant to clause
10.2(ii) exceeds $5.8 million in the aggregate (provided that no claim may be
counted toward such $5.8 million unless it exceeds $270,000), (B) the Buyer
shall not be required to indemnify the Seller Indemnified Parties pursuant to
clause 10.2 (ii) in an aggregate amount in excess of $75 million and (C) any
claim for indemnification under clause 10.2 (ii) must be made during the
applicable survival period set forth in Section 10.1. Any payment made pursuant
to this Section 10.2 shall be treated by Seller and Buyer as an adjustment to
the Initial Purchase Price, and Seller and Buyer agree, and Buyer agrees to
cause the Company and the Subsidiaries, not to take any position inconsistent
therewith for any purpose. To the extent that the Buyer's undertakings set forth
in this Section 10.2 may be unenforceable, the Buyer shall contribute the
maximum amount that it is permitted under applicable law to the payment and
satisfaction of all indemnifiable liabilities incurred by the Seller Indemnified
Parties. Each Subsidiary shall be jointly and severally liable for the Buyer's
indemnification obligations pursuant to this Agreement, including, without
limitation, pursuant to this Section 10.2, and to Section 10.3, Section 5.12(b),
Section 6.2 and Section 6.3(g) and the Buyer shall, if so requested by Seller,
cause each Subsidiary to sign such instruments evidencing the foregoing
obligations as Seller may reasonably request.
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Section 10.3. Indemnification by Seller. From and after the
Closing Date, Seller shall indemnify and hold harmless Buyer and the Company,
each of their respective directors, officers, employees and agents, and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from and against any and all
Covered Liabilities incurred by or asserted against any of the Buyer Indemnified
Parties in connection with or arising from (i) any breach by Seller of its
covenants and agreements contained herein; (ii) the Retained Liabilities or
(iii) any breach by Seller of its representations and warranties contained
herein (it being agreed that solely for purposes of establishing whether any
matter is indemnifiable pursuant to this clause (iii), with the exception of the
representations and warranties set forth in Section 3.14 hereof, the accuracy of
such representations and warranties shall be determined without giving effect to
the qualifications to such representations and warranties, if any, concerning
"materiality" or "Material Adverse Effect"); provided that (A) Seller shall be
required to indemnify Buyer Indemnified Parties pursuant to this clause
10.3(iii) only to the extent that the aggregate Covered Liabilities
indemnifiable pursuant to this clause 10.3(iii) exceeds $5.8 million in the
aggregate (provided that no claim may be counted toward such $5.8 million unless
it exceeds $270,000), (B) Seller shall not be required to indemnify the Buyer
Indemnified Parties pursuant to this clause (iii) in an aggregate amount in
excess of $75 million and (C) any claim for indemnification under this clause
(iii) must be made during the applicable survival period set forth in Section
10.1. Any payment made pursuant to this Section 10.3 shall be treated by Seller
and Buyer as an adjustment to the Initial Purchase Price, and Seller and Buyer
agree, and Buyer agrees to cause the Company and the Subsidiaries, not to take
any position inconsistent therewith for any purpose. If any of Seller's
undertakings set forth in this Section 10.3 should be unenforceable, Seller
shall contribute the maximum amount that it is permitted under applicable law to
the payment and satisfaction of all indemnifiable liabilities incurred by the
Buyer Indemnified Parities. The parties acknowledge and agree that Seller's tax
indemnification obligations shall be governed by Article VII.
Section 10.4. Third-Party Claims. If a claim by a third party
is made against a Seller Indemnified Party or a Buyer Indemnified Party (an
"Indemnified Party"), and if such Indemnified Party intends to seek indemnity
with respect thereto under this Article X, such Indemnified Party shall promptly
notify indemnifying party of such claims. The failure to provide such notice
shall not result in a waiver of any right to indemnification hereunder except
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to the extent the indemnifying party is actually materially prejudiced by such
failure. The indemnifying party shall have 30 days after receipt of such notice
to undertake, conduct and control, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and the Indemnified Party
shall cooperate with it in connection therewith; provided that (a) the
indemnifying party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party; provided
that the fees and expenses of such counsel shall be borne by such Indemnified
Party and (b) the indemnifying party shall promptly assume and hold such
Indemnified Party harmless from and against the full amount of any Covered
Liability resulting therefrom. So long as the indemnifying party is reasonably
contesting any such claim in good faith, the Indemnified Party shall not pay or
settle any such claim. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such claim; provided that in such
event it shall waive any right to indemnity therefor by indemnifying party. If
the indemnifying party does not notify the Indemnified Party within 30 days
after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the Indemnified Party
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement.
Indemnifying party shall not, except with the consent of the Indemnified Party,
enter into any settlement that does not include as an unconditional term thereof
the giving by the person or persons asserting such claim to all Indemnified
Parties of unconditional release from all liability with respect to such claim
or consent to entry of any judgment.
ARTICLE XI
Termination
-----------
Section 11.1. Termination. Upon the termination of the UTA
Stock Purchase Agreement without the UTA Closing having occurred, this Agreement
shall terminate. This Agreement also may be terminated at any time prior to the
Closing by:
(a) the mutual consent of Seller and Buyer;
(b) either Seller or Buyer if the Closing has not occurred by
the close of business on August 31, 1999 and if the failure to consummate the
Stock Purchase on or before
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such date did not result from the failure by the party seeking termination of
this Agreement to fulfill any undertaking or commitment provided for herein that
is required to be fulfilled prior to the Closing; or
(c) either Seller or Buyer if a United States federal or state
court of competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and non-appealable;
provided, however, that the party seeking to terminate this Agreement pursuant
to this Section 11.1(c) shall have complied with Section 5.2 hereof, and with
respect to other matters not covered by Section 5.2 hereof, shall have used all
reasonable efforts to remove such injunction, order or decree.
Section 11.2. Procedure and Effect of Termination. In the
event of termination of this Agreement by either or both of Seller and Buyer
pursuant to Section 11.1 hereof, written notice thereof shall forthwith be given
by the terminating party (or in the case of a termination pursuant to the first
sentence of Section 11.1 by Seller) to the other party hereto, and this
Agreement shall thereupon terminate and become void and have no effect, and the
transactions contemplated hereby shall be abandoned without further action by
the parties hereto, except that the provisions of Sections 5.1(b) (first
sentence only), 5.7 and 12.4 hereof shall survive the termination of this
Agreement; provided, however, that such termination shall not relieve any party
hereto of any liability for any breach of this Agreement. If this Agreement is
terminated as provided herein all filings, applications and other submissions
made pursuant to Sections 3.13 and 4.3 hereof shall, to the extent practicable,
be withdrawn from the agency or other persons to which they were made.
ARTICLE XII
Miscellaneous
-------------
Section 12.1. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
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Section 12.2. Governing Law. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without reference to the choice of law principles thereof.
(b) Each of the Seller and Buyer irrevocably submits to the
jurisdiction of the Courts of the State of Delaware and the United States
District Court for the District of Delaware in any Action arising out of or
relating to this Agreement, and hereby irrevocably agrees that all claims in
respect of such Action may be heard and determined in such state or federal
court. Each of Seller and Buyer hereby irrevocably waives, to the fullest extent
it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties further agree, to the
extent permitted by law, that final and unappealable judgment against any of
them in any action or proceeding contemplated above shall be conclusive and may
be enforced in any other jurisdiction within or outside the United States by
suit on the judgment, a certified copy of which shall be conclusive evidence of
the fact and amount of such judgment.
(c) To the extent that Buyer or Seller have or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, each of Buyer and the Seller hereby irrevocably waive such immunity in
respect of its obligations under this Agreement.
Section 12.3. Entire Agreement; Third-Party Beneficiaries.
This Agreement (including agreements incorporated herein) and the Schedules
hereto contain the entire agreement between the parties with respect to the
subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein. This Agreement is not intended to confer upon any Person not
a party hereto (and their successors and assigns permitted by Section 12.6
hereof) any rights or remedies hereunder, except that (a) Section 10.2 and 10.3
hereof are intended to benefit, and to be enforceable by, any of the Seller
Indemnified Parties and (b) UTC shall be an express third party beneficiary of
this Agreement, entitled to enforce this Agreement in accordance with its terms.
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Section 12.4. Expenses. Except as set forth in this
Agreement, whether the Stock Purchase is or is not consummated, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
Section 12.5. Notices. All notices hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, facsimile or other electronic transmission
service to the appropriate address or number as set forth below. Notices to
Seller shall be addressed to:
Lear Corporation
21557 Telegraph Road
Southfield, MI 48086
Attn: Joseph F. McCarthy, Esq.
Facsimile No.: (248) 447-1677
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: John L. MacCarthy, Esq.
Facsimile No.: (312) 558-5700
or at such other address and to the attention of such other
person as Seller may designate by written notice to Buyer. Notices to Buyer
shall be addressed to:
Johnson Electric Holdings Limited
Johnson Building
6-22 Dai Shun Street
Tai Po Industrial Estate
Tai Po, New Territories Hong Kong
Attn: Paul Tong
Facsimile No.: 852-2897-2054
with a copy to:
Skadden Arps Slate Meagher & Flom
333 West Wacker Drive, Suite 2100
Chicago, Illinois 60606
Attn: William R. Kunkel
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Facsimile No.: (312) 407-0411
or at such other address and to the attention of such other
person as Buyer may designate by written notice to Seller.
Section 12.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto shall assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto except that (i) Seller may
transfer or assign any or all of its rights and obligations hereunder to any
wholly-owned subsidiary of Seller without the consent of any other party hereto,
and (ii) Buyer may transfer or assign any or all of its rights and obligations
hereunder to any wholly-owned subsidiary of Buyer without the consent of any
other party hereto. In the case of such a transfer or assignment to a
wholly-owned subsidiary of Seller, such subsidiary shall be the "Seller" for all
purposes hereunder, however, Lear Corporation shall remain jointly and severally
liable for all obligations of Seller hereunder. In the case of such a transfer
or assignment to a wholly-owned subsidiary of Buyer, such subsidiary shall be
the "Buyer" for all purposes hereunder, however, Johnson Electric Holdings
Limited shall remain jointly and severally liable for all obligations of Buyer
hereunder.
Section 12.7. Headings; Definitions. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and shall not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles of
this Agreement unless otherwise stated. All defined terms and phrases herein are
equally applicable to both the singular and plural forms of such terms.
Section 12.8. Amendments and Waivers. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought. Seller may waive compliance by Buyer or Buyer may waive compliance by
the Seller with any term or provision of this Agreement on the part of such
party to be performed or complied with, but only by an instrument in writing.
The waiver by any party hereto of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any subsequent breach.
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Section 12.9. Interpretation. For the purposes of this
Agreement, "to Seller's knowledge" shall mean the actual knowledge of Seller's
or UTA Seller's executive officers after due inquiry, which may be satisfied by
consultation with UTA's executive officers. It is understood and agreed that the
specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the
Schedules is not intended to imply that such amounts or higher or lower amounts,
or the items so included or other items, are or are not material, and neither
party shall use the fact of the setting of such amounts or the fact of the
inclusion of any such item in the Schedules in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
herein or included in a Schedule is or is not material for purposes of this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
LEAR CORPORATION
By: /s/
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Name:
Title:
JOHNSON ELECTRIC HOLDINGS LIMITED
By: /s/
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Name:
Title:
