Exhibit 2.8

 

 

 

EXECUTION VERSION

 

 

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Contents

 

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MASTER SALE AND PURCHASE AGREEMENT dated ___ November 2016

Between:

Background

GKN has agreed to sell and transfer (or procure the sale and transfer of) certain assets comprising the Businesses and to sell and transfer (or procure the sale and transfer of) the Shares and the Purchaser has agreed to purchase (or procure the purchase of) the same and to assume certain of the liabilities and other obligations of the Worldwide Business on the terms of this Agreement.

It is now agreed that:

1.Interpretation

1.1Defined terms

In this Agreement, the following words and expressions shall have the following meanings:

30 June Net Debt Statement means the net debt statement set out in Part D of Schedule 9 (Net Debt);

AB&C Law(s) means:

 

 

 

in each case, to the extent applicable to any Target Group Member or Business Seller with respect to the Worldwide Business;

Applicable Law(s) means all laws, regulations, directives, statutes, subordinate legislation, common law and civil codes of any jurisdiction, all judgments, orders, notices, instructions, decisions and awards of any court or competent authority or tribunal exercising statutory or delegated powers and all codes of practice having force of law, statutory guidance and policy notes, in any jurisdiction and in each case to the extent applicable to the parties or any of them, any Target Group Member, any Business Seller in respect of the Worldwide Business or as the context requires;

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Asbestos Liabilities has the meaning given in Clause 19.1(a);

Assets means the assets of the Target Group;

Assignment Condition has the meaning given in Clause 34.1;

Assumed Liabilities means all Business Liabilities excluding all Liabilities relating to Tax except a liability to pay Operating Tax to the extent that specific provision or reserve has been made for such Operating Tax in the Working Capital Statement or such Operating Tax has otherwise been taken into account in computing and reducing Working Capital;

Assurances means any indemnity, counter indemnity, guarantee, suretyship, letter of comfort or any other similar commitment given by any member of the GKN Group to any person (including any other member of the GKN Group);

Auditors means the auditor(s) from time to time of each of the Target Group Members (if any);

Balancing Payment Date means the fifth Business Day after the issue of the later of the outstanding Final Certificate of the Working Capital Adjustment or the Final Certificate of the Net Debt Adjustment;

Belgian Business means the business carried on by GKN Service Benelux BV through its Belgian branch to the extent that it forms part of the Worldwide Business;

Belgian Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Belgian Business by GKN Service Benelux BV in a form substantially similar to the Local Business Transfer Agreement;

Brazilian Business means the business carried on by GKN do Brasil Ltda to the extent that it forms part of the Worldwide Business;

Brazilian Business Consideration means the BRL equivalent of €1,300,000 calculated on the basis of the Exchange Rate;

Brazilian Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Brazilian Business by GKN do Brasil Ltda in a form substantially similar to the Local Business Transfer Agreement;

Bribery Act means the Bribery Act 2010;

Business means, in relation to each Business Seller, all of the business carried on by that Business Seller as at the date of the French Agreement which forms part of the Worldwide Business but, for the avoidance of doubt, excluding any Shares held by that Business Seller and excluding the Excluded Business and Businesses shall be construed accordingly;

Business Assets means, in relation to each Business, all the property, undertaking rights and assets of the relevant Business Seller relating to the Business agreed to be

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sold and purchased pursuant to Clause 2.1 (Sale and purchase of the Businesses), but for the avoidance of doubt excluding any of the Shares, the Excluded Assets and the Excluded Contracts;

Business Cash Consideration means the sum specified in the second column of Part B of Schedule 6 (Allocation of Consideration) representing the unadjusted consideration for the Business Assets;

Business Contracts means in relation to each Business Seller, all the contracts, engagements, licences, guarantees and other commitments or arrangements (whether oral, written, by course of conduct or otherwise) relating to the relevant Business which also relate exclusively to the Worldwide Business and which have been entered into or undertaken by any Business Seller and which remain (in whole or in part) unperformed at the Transfer Time (excluding (i) the agreements, licences, leases or other documents relating to the ownership or occupation of or interests in the Business Property (ii) any employment or service agreement entered into with any Employee or Former Employee and (iii) the Excluded Contracts), including those listed in Division 1 of the List of Contracts;

Business Day means any day (not being a Saturday or Sunday) when clearing banks are open for the transaction of general banking business in London and in New York, the United States of America;

Business Creditors means such of the Creditors as are owed by any of the Business Sellers as at the Transfer Time;

Business Debtors means such of the Debtors as are owned by or due to any of the Business Sellers as at the Transfer Time;

Business Employees means the Offered Business Employees and the Non-Offered Business Employees and Business Employee shall mean any one of them;

Business Goodwill means, as at the Transfer Time, all the goodwill relating to each Business, including the exclusive right for the Business Purchaser(s) to represent itself (themselves) as carrying on such Business in succession to the relevant Business Seller as from the Transfer Time, but excluding all goodwill attaching to and all rights under the Excluded Trade Marks and Excluded IP;

Business IP means all Intellectual Property other than the Business Know-How which at the Transfer Time is owned by any of the Business Sellers and which is used (whether commercially or in development) exclusively or primarily in, or which exclusively or primarily relates to, one or more of the Businesses excluding for the avoidance of doubt the Excluded IP;

Business Know-How means all Know-How which at the Transfer Time is owned by any of the Business Sellers and which is used (whether commercially or in development) exclusively or primarily in, or which exclusively or primarily relates to, one or more of the Businesses excluding for the avoidance of doubt the Excluded IP;

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Business Liabilities means the Liabilities of the Business Sellers to the extent that they relate to any of the Businesses or the Business Assets, and Business Liability means any one of them;

Business Plant and Machinery means all the plant, machinery, equipment, computer and communications hardware, loose tools, fixtures, fittings, furniture, vehicles and other goods owned by any of the Business Sellers and used exclusively or primarily in each Business as at the Transfer Time;

Business Property means the freehold property real estate units located at Cologno Monzese, as more fully described in the Italian Deed of Transfer;

Business Purchasers means the Purchaser and/or such other wholly owned members of the Purchaser’s Group (as notified to GKN in accordance with Part C of  Schedule 10 (The Companies, Subsidiaries and Purchasers) as the Purchaser shall procure to purchase all or part of the Businesses and Business Purchaser shall mean any one of them;

Business Sellers means the members of the GKN Group who own and carry on the Business set out in the first column of Part B of Schedule 6 (Allocation of Consideration) and/or as specified in any Local Agreement and Business Seller shall mean any one of them;

Chinese Business means the business carried on by GKN (Taicang) Co Ltd to the extent that it forms part of the Worldwide Business;

Chinese Business Consideration means the RMB equivalent of €2,200,000 calculated on the basis of the Exchange Rate;

Chinese Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Chinese Business by GKN (Taicang) Co Ltd in a form substantially similar to the Local Business Transfer Agreement;

Closing Net Debt Statement means a statement as at the Completion Date prepared in accordance with Schedule 9 (Net Debt);

Companies means each of the companies of which details are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

Company Employees means those employees of the Target Group Members at the Completion Date excluding Retained Employees;

Company IP means all Intellectual Property which at the Transfer Time is owned by any of the Target Group Members including (without limitation) the Intellectual Property listed in the List of Registered Company IP;

Company IP Contracts means all contracts, engagements, licences or other commitments or arrangements, entered into by any of the Target Group Members prior to and remaining in effect (in whole or in part) at the date of the French Agreement:

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excluding any of these which relates to the licensing of software or other Information Technology;

Company Property means each of the properties described in Schedule 2 (List of Company Properties);

Company Purchasers means the Purchaser and/or such other wholly owned members of the Purchaser’s Group (as notified to GKN in accordance with Part C of Schedule 10 (The Companies, Subsidiaries and Purchasers) as the Purchaser shall procure to purchase all or a proportion of the Shares from the Company Sellers and Company Purchaser shall mean any one of them;

Company Sellers means the owners of the Shares, being GKN, GKN Automotive SAS and GKN Driveline International GmbH (each a Company Seller);

Company Specific Warranties means those Warranties set out in Part B of Schedule 4 (Warranties);

Competent Authority means any competent court or regulatory authority with responsibility for the enforcement of or regulation under Environmental Laws;

Competition Law means any antitrust or competition law or regulation, or equivalent, in any jurisdiction (including, without limitation, the European Union);

Completion means completion of the sale and purchase of the Businesses, the Business Assets and the Shares in accordance with the provisions of this Agreement;

Completion Date has the meaning given to it in Clause 10.1;

Compliance Integration has the meaning given to it in paragraph 1.3 of Schedule 1 (Conduct until Completion);

Condition means the condition to Completion set out in Clause 3.1;

Confidentiality Agreement means the agreement entered into by GKN and the Purchaser on 21 December 2015;

Connected Person has the meaning given in Clause 29 (Entire Agreement);

Costs means obligations, liabilities, losses, damages, costs (including reasonable legal costs) and expenses (including Taxation), actions, proceedings, claims and demands, in each case of any nature whatsoever;

Creditors means amounts owed (whether accrued, due or to become due) as at the Transfer Time by the Target Group Members or the Business Sellers in connection

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with the Worldwide Business calculated on a basis consistent with the Year End Working Capital Statement, being the categories of creditor reported in Hyperion and referred to under the heading "Creditors" in the table set out at Part B (Pro-Forma Working Capital Statement) of Schedule 8 (and with the HFM Account Code stated therein), in each case related to the operation of the Worldwide Business, but excluding (i) any amounts due in respect of Intra-Group Borrowings, Final Financial Debt or Debt Like Items, (ii) any Tax other than Operating Tax of any of the Target Group Members or the Business Sellers and (iii) any Provisions;

Czech Business means the business carried on by GKN Service Austria GmbH to the extent that it forms part of the Worldwide Business;

Czech Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Czech Business by GKN Service Austria GmbH in a form substantially similar to the Local Business Transfer Agreement;

Czech Business Transfer Record means the business transfer record made pursuant to Section 2180 (1) of Act No. 89/2012 Coll., Civil Code of the Czech Republic, as amended, to be entered into in connection with the sale and transfer of the Czech Business by GKN Service Austria GmbH;

Data Room means the data room set up by GKN through RR Donnelley, Venue in connection with the Transaction for the purpose of allowing the Purchasers to undertake due diligence with respect to the Worldwide Business and the Target Group;

Data Room Index means the data room index contained in the schedule to the Disclosure Letter;

Debt Like Items means, in relation to any Target Group Member and to the extent not otherwise included in the Working Capital, the aggregate amount expressed in Euros of:

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Debtors means all amounts owed (whether accrued, due or to become due) as at the Transfer Time to the Target Group Members or the Business Sellers in connection with the Worldwide Business calculated on a basis consistent with the Year End Working Capital Statement, being the categories of debtor reported in Hyperion and referred to under the heading "Debtors" in the table set out at Part B (Pro-Forma Working Capital Statement) of Schedule 8 (and with the HFM Account Code stated therein), in each case related to the operation of the Worldwide Business but excluding (i) any amounts due in respect of Intra-Group Lendings and the Final Cash Balance and (ii) amounts owing or accrued due to any Target Group Member or the Business Sellers in respect of Tax other than Operating Tax;

Defaulting Party has the meaning given in Clause 10.4;

Default Rate means in relation to interest accruing in respect of any day falling after a Due Date, a rate of 4 per cent. per annum above the base rate of Barclays Bank plc prevailing at the close of business on that day;

Disclosed means fairly disclosed (with sufficient details to allow the Purchaser to identify the nature and scope of the matter disclosed);

Disclosed Information means all facts, matters, events or circumstances Disclosed in:

Disclosure Letter means the letter of the same date as the French Agreement from GKN and addressed to the Purchaser, together with the appendix to such letter, the documents indexed in or attached as a schedule to such letter and the Data Room Index contained in the schedule to that Disclosure Letter;

Dispute has the meaning given to it in Clause 36.1;

Dispute Notice has the meaning given to it in Clause 36.1;

Distribution Agreement means the distributor agreement to be entered into between GKN Stromag AG and GKN Engineering (RUS) LLC in the Agreed Terms;

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Due Date means, in respect of any sum payable or obligation to be performed under any of the Transaction Documents, the day specified for that payment to be made or that obligation to be performed or, if that day is not a Business Day, the immediately following Business Day;

Employees means the Business Employees and the Company Employees;

Employee List means the list of Employees in the Agreed Terms as updated between signing and Completion and provided to the Purchaser(s) in accordance with Paragraph 1.8 of Schedule 12 to reflect any changes made in accordance with the provisions of Schedule 1;

Employment Matter means any matter relating to the employment or termination of employment of any Employee or Former Employee;

Encumbrances means any interest or equity of any person (including any right to acquire, option or right of pre-emption or conversion) or any mortgage, charge, pledge, lien, assignment, hypothecation, security interest, by the retention or any other security agreement or arrangement, or any agreement to create any of the above;

Environmental Claim means a claim by the Purchaser under the Environmental Indemnity;

Environment means all or any of the following media: the air, water including without limitation territorial, coastal and inland waters, surface waters and ground waters and land (including land under water, surface land and sub-surface land) and any organisms or ecosystems supported by the air, water or land, and includes such media within any building or natural or man-made structures above or below ground;

Environmental Indemnity means the environmental deed of indemnity to be executed and delivered by GKN and the Purchaser on the date of Completion in the Agreed Terms;

Environmental Laws means any European Union, national, regional, state or local law (including statute, secondary legislation, directives, regulations, resolutions, statutory guidance and codes of practice having the force of law (or their equivalent in other jurisdictions in which the Business is situated, operates or trades), civil, criminal or administrative law or common law) concerning the pollution or protection of the Environment or human health and safety including where the same relate to the generation, transportation, storage, treatment, disposal or presence of any Hazardous Substance (but except in relation to town and country planning or zoning or any law in relation to the Asbestos Liabilities);

Environmental Permit means all or any Permits required under Environmental Laws for the operation of the Business or the occupation or use of any of the Properties by the Business on or before the date of the French Agreement;

Environmental Warranties means those Warranties (and only those Warranties) in Paragraph 15 (Environment) of Part A (General Warranties (Businesses and Companies)) of Schedule 4 (Warranties);

Escrow Agent has the meaning given in Clause 19.1(b);

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Escrow Agreement has the meaning given in Clause 19.1(b);

Escrow Amount has the meaning given in Clause 19.1(b);

Escrow Assignment Agreement means the agreement to assign the Escrow Agreement from GKN to the Purchaser in the Agreed Terms;

Estimated Net Debt means GKN's estimate (determined in good faith) of the amounts of Net Debt in respect of each Target Group Member at the Transfer Time;

Estimated Net Debt Statement means the statement setting out the Estimated Net Debt in the format set out in Part D of Schedule 9 (Net Debt);

Estimated Working Capital means GKN's estimate (determined in good faith) of the amounts of Working Capital in respect of each Business and each Target Group Member at the Transfer Time;

Estimated Working Capital Adjustment means an amount equal to the Estimated Working Capital less the Normal Working Capital;

Estimated Working Capital Statement means the statement setting out the Estimated Working Capital in the format set out in Part B of Schedule 8 (Determination and Certification of Working Capital);

Exchange Rate has the meaning given to it in Clause 28.4 (Exchange Rate for Foreign Currencies);

Excluded Assets means collectively each of those assets which are listed in Part A (The Excluded Assets) of Schedule 7 (The Excluded Assets and Excluded Contracts);

Excluded Business means the GKN Rockford Inc fan clutch business;

Excluded Contracts means, in relation to any Business Seller, the contracts and commitments of the Business Seller relating to its business listed in Part A of Schedule 7 (The Excluded Assets and Excluded Contracts);

Excluded IP means collectively:

Excluded Trade Marks means the list of excluded trade marks in the Agreed Terms;

Factoring Payables means any payables or other liabilities in respect of factoring or other supply chain financing arrangements either owed by a Target Group Member to any member of the GKN Group or pursuant to a factoring arrangement under which there is an explicit financial cost to the relevant Target Group Member;

FCO means the German Federal Cartel Office;

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FCPA means the United States Foreign Corrupt Practices Act 1977;

Final Cash Balance means, in relation to each Target Group Member, the aggregate amount expressed in Euros of its cash or cash equivalents (in any event as defined in IFRS) in hand or credited to any account with any Financial Institution, including all interest accrued thereon as at the Transfer Time, as set out in the accounting records of the relevant Target Group Member (but, for the avoidance of doubt, excluding Intra-Group Lendings (and any interest thereon) and all Debtors included in the Working Capital Statement) calculated in accordance with the provisions of Schedule 9 (Net Debt) and on a consistent basis with the corresponding assets and liabilities (if any) reflected in the Working Capital Statement, the value of which shall be determined in accordance with Schedule 9 (Net Debt);

Final Certificate of the Net Debt Adjustment has the meaning given to it in Part B of Schedule 9 (Net Debt);

Final Certificate of the Working Capital Adjustment has the meaning given to it in Paragraph 5.5 of Part A of Schedule 8 (Determination and Certification of Working Capital);

Final Financial Debt means, in relation to any Target Group Member, the aggregate amount expressed in Euros and calculated as at the Transfer Time of all borrowings and indebtedness, loan stocks, bonds, debentures, notes and overdrafts (together with all accrued interest) of that Target Group Member owed to a Financial Institution (apart from indebtedness resulting from operating leases) together with all Debt Like Items in each case as set out in the accounting records of that Target Group Member (but, for the avoidance of doubt, excluding Intra‑Group Borrowings (and any interest thereon) and all Creditors included in the Working Capital Statement) and calculated in accordance with Schedule 9 (Net Debt) and on a consistent basis with the corresponding assets and liabilities (if any) reflected in the Working Capital Statement, the value of which shall be determined in accordance with Schedule 9 (Net Debt);

Financial Institution means any banking, lending or other similar institution or organisation, which, in each case, is not a member of the GKN Group;

Financial Records has the meaning given in Clause 23.1 (Provision of records);

Former Employee means any person employed by any Target Group Member or any Business Seller in relation to the Worldwide Business and whose contract of employment was terminated or expired prior to the Completion Date;

French Accounts means the audited accounts of GKN Land Systems SAS for the financial year ended on 31 December 2015, the auditor's report on those accounts, the directors' report for that year and the notes to those accounts;

French Agreement means the signing protocol executed prior to the date of this Agreement by the Seller and the Purchaser on 21 October 2016;

French Companies means GKN Land Systems SAS, a company incorporated in France, and GKN Stromag France SAS, a company incorporated in France, details of

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which are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

French Implementing Agreement means the implementing agreement in the Agreed Terms to give effect to the transfer of all of the issued shares in the share capital of GKN Land Systems SAS to Warner Electric (Holding) SAS;

French Share Transfer Form means the share transfer form to be executed by GKN Automotive SAS and Warner Electric (Holding) SAS to give effect to the transfer of all of the issued shares in the share capital of GKN Land Systems SAS to such Purchaser in the Agreed Terms;

Full Title Guarantee means with the benefit of the implied covenants set out in Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 when a disposition is expressed to be made with full title guarantee;

Fundamental Warranties means the Title and Capacity Warranties and the Warranties at Paragraph 6.1 (Insolvency) of Part B of Schedule 4;

General Warranties means those Warranties set out in Part A of Schedule 4 (Warranties);

German Accounts means the audited accounts of each of GKN Stromag Holding GmbH and GKN Stromag AG for the financial year ended on 31 December 2015, the auditor's report on those accounts, the directors' report for that year and the notes to those accounts;

German Companies means GKN Stromag Dessau GmbH, a company incorporated in Germany, GKN Stromag Holding GmbH, a company incorporated in Germany, and GKN Stromag AG, a company incorporated in Germany, details of which are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

German Share Sale and Transfer Agreement means the German-law share sale and transfer agreement for the sale and transfer of the entire issued share capital in GKN Stromag Holding GmbH by GKN Driveline International GmbH and GKN Industries Limited to Warner Electric Group GmbH in the Agreed Terms;

GKN Group means any of the following from time to time: GKN, its subsidiaries and subsidiary undertakings and any direct or indirect holding company of GKN and all other subsidiaries and subsidiary undertakings of any holding company of GKN including for the avoidance of doubt the Companies and Subsidiaries up to and including the Completion Date, but from the Completion Date, excluding the Companies and Subsidiaries and member of the GKN Group shall be construed accordingly;

GKN Driveline means GKN Driveline International GmbH;

GKN’s Lawyers means Clifford Chance LLP;

GKN Stromag means GKN Stromag Holding GmbH;

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GKN Stromag PLTA Accounts means the accounts of GKN Stromag prepared as of the Transfer Time or the PLTA Transfer Time (as applicable);

Group means, in relation to any party, that party and each of its subsidiaries and subsidiary undertakings from time to time, any holding companies it may have from time to time and all other subsidiaries or subsidiary undertakings of any such holding companies, all of them and each of them as the context admits and Group Member shall mean any of those entities;

GSA means the Supplemental Agreement to a General Services Agreement dated 23 November 2010 which has effect from 5 September 2011;

GWB means the Gesetz gegen Wettbewerbsbeschraenkungen (German Act against Restraints of Competition);

Hazardous Substances means any natural or artificial substance (whether in solid, liquid or gaseous form) which alone, within an article, or in combination with one or more others is a dangerous, hazardous, toxic or flammable substance, material or pollutant and which is present in such quantities and concentrations as may result in harm to the Environment or human health or any living organism supported by the Environment;

Hyperion means the financial consolidation system used by the GKN Group;

Indemnified Sites has the meaning given in the Environmental Indemnity;

Indemnity Agreement has the meaning given in Clause 19.1(a);

Indemnity Assignment Agreement has the meaning given in Clause 19.3;

Indian Company means GKN Land Systems India Private Limited, a company incorporated in India, details of which are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

Indian Parent Guarantee means the guarantee by GKN (United Kingdom) PLC in favour of The Hong Kong and Shanghai Banking Corporation Ltd. dated 16 December 2015 and contained in Data Room document 3.17.1.1;

Information Technology means computer systems, communications systems (other than public communications networks), Software, hardware, devices data applications and websites;

Initial Payment means the sum of €183,700,000, the Estimated Net Debt and the Estimated Working Capital Adjustment less an amount equal to the sum of the Chinese Business Consideration, the Brazilian Business Consideration and the US Business Consideration, to be paid by the Purchaser on the Completion Date;

Intellectual Property means all patents, utility models, rights in inventions (whether patentable or not) trade and service marks, rights in logos, get‑up and trade names and the goodwill attaching to any of them, domain names, right in designs, copyrights, moral rights, topography rights, rights in databases, trade secrets, confidential information and know‑how, and any rights or forms of protection of a similar nature

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and having equivalent or similar effect to any of them which subsist anywhere in the world in all cases whether or not registered or registrable and including registrations and applications for registration or grant of any of these and rights to apply for the same and such expression includes Know-How where the context so requires;

Intra‑Group Arrangement means any agreement, agency arrangement, undertaking or commitment of any nature whatsoever, other than Intra-Group Borrowings, Intra-Group Lendings, Intra-Group Trading Amounts, the Transitional Services Agreement and all other Transaction Documents and any such agreement, arrangement, undertaking or commitment relating to the provision or supply of goods, between, in each case, any Business Seller in relation to a Business or the Target Group Members and any member of the GKN Group or a Target Group Member which are outstanding as at the Transfer Time, whether oral, written, by course of conduct or otherwise;

Intra‑Group Borrowings means in relation to each of the Target Group Members the aggregate intra‑group financial indebtedness expressed in Euros owing to any members of the GKN Group outstanding as at the Transfer Time, including all cash sums held by the Target Group Members for or on behalf of members of the GKN Group (apart from amounts representing Intra‑Group Trading Amounts), accrued dividends payable (if any) including, without limitation, any accrued dividends payable or deemed payable as a result of this Agreement or the Transaction and any Tax payable thereon, plus all accrued interest (if any) on such indebtedness as at the Transfer Time, the value of which shall be determined in accordance with Schedule 9 (Net Debt);

Intra‑Group Lendings means in relation to each of the Target Group Members the aggregate intra‑group financial indebtedness expressed in Euros owed by any members of the GKN Group to any Target Group Member outstanding as at the Transfer Time including all cash sums held by members of the GKN Group for or on behalf of the Target Group Members (apart from amounts representing Intra‑Group Trading Amounts), accrued dividends receivable (if any), plus all accrued interest (if any) on such indebtedness as at the Transfer Time, the value of which shall be determined in accordance with Schedule 9 (Net Debt);

Intra‑Group Trading Amounts means all amounts owed by or to any Target Group Member or any Business Seller in respect of the Worldwide Business as a result of the ordinary course of business to or by any member of the GKN Group or any Target Group Member any as at the Transfer Time but excluding any amounts payable in relation to management fees, brand licence fees and over-head recharges payable to the GKN Group whether or not related to the operations of the Target Group;

Italian Business has the meaning given to it in the Italian Deed of Transfer;

Italian Deed of Transfer means the notarial deed of transfer to be entered into to give effect to the sale and transfer of the Italian Business, including the Business Property, by GKN Service Italia SpA to Bauer Gear Motor Europe GmbH in the Agreed Terms;

IP Matter means any matter relating to Intellectual Property;

Know-How means confidential ideas, trade secrets, concepts, methods, processes, formulae, recipes, compositions, data or other proprietary technical and commercial

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information of whatever nature howsoever recorded, stored, represented and maintained;

Korean Company means Stromag Korea Limited, details of which are set out in Part D of Schedule 10 (The Companies, Subsidiaries and Purchasers);

Land Systems Division means the division of the GKN Group which makes up the segment reported as GKN Land Systems in the consolidated financial statements of the GKN Group for the year ended 31 December 2015;

LCIA means the London Court of International Arbitration;

Liabilities means all liabilities, duties and obligations of every description, whether deriving from contract, common law, statute or otherwise, whether arising at any time before, on or after Completion, actual or contingent or ascertained or unascertained and whether owed or incurred severally or jointly or as principal or surety;

List of Contracts means the list of contracts in the Agreed Terms comprising:

List of Registered Company IP means the list of registered Company IP (and pending applications therefor) in the Agreed Terms;

Local Agreements means each of the French Stock Transfer Form, the German Share Sale and Transfer Agreement, the Belgian Business Transfer Agreement, the Brazilian Business Transfer Agreement, the Chinese Business Transfer Agreement, the Czech Business Transfer Agreement, the Norwegian Business Transfer Agreement, the Spanish Business Transfer Agreement, the Swedish Business Transfer Agreement, the US Business Transfer Agreement, the Italian Deed of Transfer and the Stock Transfer Form and Local Agreement shall mean any one of them;

Local Business Transfer Agreement means the pro forma business transfer agreement in the Agreed Terms;  

Longstop Date means 31 May 2017;

Losses includes, in respect of any matter, event or circumstance, all damages, losses, costs, expenses or other liabilities (including all interest, penalties, reasonable legal and other reasonable professional costs and expenses) arising or incurred in connection with such matter, event or circumstance;

Material Adverse Change means any event, development, change, occurrence, circumstances, state of facts or effect that, individually or in the aggregate, (a) has, or would reasonably be expected to have, a material adverse effect on the business, financial condition or results of operations (including, without limitation, revenues and costs and the assets and liabilities) of the Worldwide Business taken as a whole, or (b) causes any interruption to the operations of any Target Group Member carried on at, or which restricts access to the Properties located at Unna, Germany; Dessau, Germany; and La Guerche, France, which has, or would reasonably be expected to

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have, a material adverse effect on the business, financial condition or results of operations (including, without limitation, revenues and costs and the assets and liabilities) of the Worldwide Business taken as a whole, provided, however, that, none of the following shall be deemed to constitute a Material Adverse Change:

 

Material Contracts means any contract (other than contracts with any Employee or contracts, leases or licences relating to the Properties or Intellectual Property) evidenced in writing relating exclusively to the Worldwide Business, and to which any member of the GKN Group or a Target Group Member is a party which:

Names means company names, business names, trading names, internet domain names, social media user names and all and any other business identifiers;

Net Debt has the meaning given in Paragraph 2.3 of Part A of Schedule 9 (Net Debt);

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Non-Defaulting Party has the meaning given in Clause 10.4;

Non-Offered Business Employees means those employees of the Business listed in Part B of the Employee List;

Normal Working Capital means an amount equal to €37,000,000, representing the normal working capital for the Worldwide Business on a consolidated basis;

Norwegian Business means the business carried on by GKN Stromag Scandinavia AB in Norway to the extent that it forms part of the Worldwide Business;

Norwegian Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Norwegian Business by GKN Stromag Scandinavia AB in a form substantially similar to the Local Business Transfer Agreement;

Offered Business Employees means those employees of the Business listed in Part A of the Employee List;

Operating Tax means any Tax which is not a Tax on income, profits or gains;

Other Sites means those Properties that are not Indemnified Sites or the Business Property;

Parent Company has the meaning given in Clause 1.6(e);

Patent Licence Agreement means the patent licence agreement in the Agreed Terms;

Permit means an authorisation, certificate, approval, permit, licence, registration, or consent or agreement issued by or with or entered into by or with a governmental or other regulatory body;

Permitted Assignee has the meaning given in Clause 34.1(b);

Permitted Encumbrances means security interests arising by operation of law, security interests arising under sales contracts with title retention provisions and equipment leases with third parties entered into in the ordinary course of business;

PLTA means the profit and loss transfer agreement between GKN Driveline and GKN Stromag dated 23 October 2012;

PLTA Termination Date has the meaning given to it in Paragraph 1 of Schedule 16;

PLTA Transfer Time means 24:00 (CET) on PLTA Termination Date;

Prepayments means all amounts paid (whether by deposit, prepayment or otherwise) prior to the Transfer Time by or on behalf of any of the Sellers so far as the same relate to expenses, liabilities or obligations, or the right to receive goods or services, in connection with the carrying on of the Worldwide Business in respect of any period after the Transfer Time;

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Primary Books and Records means all lists of customers and suppliers, business plans and forecasts (prepared by anyone employed in the Businesses), notices, enquiries, orders, correspondence, computer disks, tapes or other machine readable or other records to the extent that they relate exclusively or primarily to the Businesses and are owned by any Business Seller, but excluding Tax records save to the extent required by law to be held by the relevant Business Purchaser after Completion;

Proceedings has the meaning given to it in Clause 23.3 (Litigation);

Products comprise and are limited to brakes, clutches, high flexible couplings, rigid and semi-rigid couplings, friction discs for clutches and brakes, disc brakes, limit switches and wind brakes, but excludes, fan clutches and clutches for power take off drive shafts;

Profit and Loss Transfer Agreement means the profit and loss transfer agreement between GKN Driveline International GmbH and GKN Stromag Holding GmbH dated 23 October 2012;

Properties means the Business Property and the Company Properties;

Property Matter means any matter relating to the Properties or any matter arising from the occupation of or interest in any property by any member of the GKN Group including the Target Group or the Businesses;

Provisions means provisions for warranty exposures, provisions for various claims and litigations and other provisions relative to customer and supplier exposures calculated on a basis consistent with the draft audited Stromag Business Historical Financial Information prepared by PriceWaterhouseCoopers LLP;

Purchaser’s Claim means any claim for breach of the Warranties;

Purchaser’s Group means any of the following from time to time: the Purchaser, its subsidiaries and subsidiary undertakings and any holding company of the Purchaser from time to time, and all other subsidiaries and subsidiary undertakings of any holding company of the Purchaser (including, in each case, the Target Group following the Completion Date) and member of the Purchaser’s Group shall be construed accordingly;

Purchaser’s Lawyers means Herbert Smith Freehills LLP;

Purchasers or Purchasing Entities means collectively the Business Purchasers and the Company Purchasers;

Purchaser Warranties means the warranties referred to in Clause 17.1 (Purchaser’s Warranties);

Relevant Capacity means for GKN's own account or for that of any other person, firm or company, directly or indirectly, and whether as shareholder (other than as a holder of shares or debentures listed on a stock exchange representing not more than 5 per cent. interest in any one company), investor, principal, partner, director, employee, consultant or agent;

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Relevant Records has the meaning given in Clause 23.3(a);

Relief includes any loss, relief, allowance, set‑off, exemption, deduction or credit in respect of any Tax or relevant to the computation of any income, profits or gains for the purposes of any Tax and any right to repayment or saving of taxation including any repayment supplement or interest in respect of Tax, and any reference to the use or set‑off of Relief shall be construed accordingly;

Repetition Date means the date which is five Business Days prior to the Completion Date;

Restricted Business means that part of the business of the Land Systems Division of the GKN Group trading under the name of Stromag (excluding that part of the business of the Land Systems Division of the GKN Group trading under names other than Stromag) and carried on by the Land Systems Division of the GKN Group, as at the date of the Agreement, which relates to the development, trade, manufacture and sale of the Restricted Products (including the aftermarket sales of such Restricted Products) but shall not include the development, trade, manufacture or sale of products by, involving, related to, in connection with or comprising all or part of, the Excluded Business or the Excluded Assets or the exploitation or development of the Excluded Assets in any manner whatsoever;

Restricted Period means the period of two years commencing on the Completion Date;

Restricted Products comprise and are limited to brakes, clutches, high flexible couplings, friction discs for clutches and brakes, disc brakes for non-wheel applications, limit switches and wind brakes, each for the agriculture, construction and/or industrial markets, but excludes, fan clutches and clutches for power take off drive shafts;

Retained Employees means the 18 individuals employed within GKN Stromag AG and GKN Stromag France SAS who do not work exclusively for the Worldwide Business, in each case listed in Part C of the Employee List;

Retained Interests means those interests set out in Schedule 18 (Retained Interests);

Rules has the meaning given in Clause 39.2;

Sanctions means any Applicable Laws relating to economic or financial sanctions or trade embargoes or related restrictive measures imposed, administered or enforced from time to time by a Sanctions Authority;

Sanctions Authority means (i) the United Nations Security Council; (ii) the United States government; (iii) the European Union; (iv) the United Kingdom government; (v) the respective governmental institutions and agencies of any of the foregoing, including without limitation, the Office of Foreign Assets Control of the US Department of Treasury (OFAC), the United States Department of State and Department of Commerce, and Her Majesty’s Treasury; and (vi) any other governmental institution or agency with responsibility for imposing, administering or

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enforcing Sanctions with jurisdiction over any Target Group Member or any Business Seller (together, Sanctions Authorities);

SEC means the United States Securities and Exchange Commission;

Secondary Books and Records means, to the extent such items relate to the Businesses, a copy of all items which would constitute Primary Books and Records if they did not also relate to other activities of the GKN Group as well as the Businesses (but only the sections of such items which relate to the Businesses);

Sellers means the Business Sellers and the Company Sellers (each a Seller);

Share Consideration means the sum specified in the second column of Part C of Schedule 6 (Allocation of Consideration) representing the aggregate unadjusted consideration for the sale of the Shares;

Shared Assets means all assets owned by GKN or any other member of the GKN Group (not being Shared Contracts) which relate both to any part of the Worldwide Business and to any other activities and operations of GKN or any other member of the GKN Group or which for the avoidance of doubt do not exclusively or primarily relate to the Worldwide Business;

Shared Contracts means all contracts (except for the agreements, licences, leases or other documents relating to the ownership or occupation of or interests in the Business Property, the Business Contracts and any contracts exclusively between members of the GKN Group) which relate to the Worldwide Business (but not exclusively) and which also relate to any other activities and operations of GKN or any other member of the GKN Group or a Target Group Member including those listed in Division 2 of the List of Contracts;

Shares means all of the issued shares in the share capital of each of the Companies details of which are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

Shrinkwrap Software means third party software sold in a standard configuration and readily available to the public on standard terms and conditions;

Software means software including Shrinkwrap Software and firmware that relates to or is comprised in hardware, together with all supporting documentation and materials necessary to enable a user to make full use of the functionality of, or to administer effectively, such software and firmware;

Spanish Business means the business carried on by GKN Ayra Servicio SA to the extent that it forms part of the Worldwide Business;

Spanish Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Spanish Business by GKN Ayra Servicio SA in a form substantially similar to the Local Business Transfer Agreement;

Special Purpose Accounts means the unaudited combined non‑statutory pro-forma profit and loss statements of the Worldwide Business for each of the years ended on

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31 December 2014, 31 December 2015 and the six months ended 30 June 2016, which is contained in the Data Room;

Statutory Accounts means the French Accounts, the German Accounts and the UK Accounts;

Stock means all stocks of finished and partly finished goods and raw materials and consumables, engineering spares, work‑in‑progress and other similar stock in trade wherever located, produced or acquired for the purpose of sale or use in the manufacture of finished products, which is owned by or in the possession of any of the Business Sellers or the Target Group for the purposes of and relating to the Worldwide Business as at the Transfer Time, calculated on a basis consistent with the Year End Working Capital Statement being the categories of stock referred to under the heading "Stock" in the table set out at Part B (Pro-Forma Working Capital Statement) of Schedule 8 (Determination and Certification of Working Capital) (and with the HFM Account Code stated therein);

Stock Transfer Form means the stock transfer form to be executed by GKN in order to give effect to the transfer of all of the issued shares in the share capital of the UK Company to The Hay Hall Group Limited;

Straddle Period has the meaning given to it in Paragraph 1.1 of Schedule 14 (Tax Covenant);

Subsidiaries means the subsidiaries of the Companies specified in Part B of Schedule 10 (The Companies, Subsidiaries and Purchasers);

Supplementary Disclosure Letter shall have the meaning given to it in Clause 9.2;

Supply Agreement 1 means the goods supply agreement in the Agreed Terms between GKN Stromag AG and GKN Walterscheid Getriebe GmbH  relating to clutches and couplings;

Supply Agreement 2 means the goods supply agreement in the Agreed Terms between GKN Stromag AG and GKN Service International GmbH  relating to couplings, clutches, brakes and other components;

Supply Agreement 3 means the goods supply agreement in the Agreed Terms between GKN Walterscheid Getriebe GmbH and GKN Stromag AG  relating to gear boxes;

Supply Agreements means, together, Supply Agreement 1, Supply Agreement 2 and Supply Agreement 3;

Swedish Business means the business carried on by GKN Stromag Scandinavia AB in Sweden to the extent that it forms part of the Worldwide Business;

Swedish Business Transfer Agreement means the business transfer agreement to be entered into to give effect to the sale and transfer of the Swedish Business by GKN Stromag Scandinavia AB in a form substantially similar to the Local Business Transfer Agreement;

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Target Group means the Companies and the Subsidiaries and Target Group Member shall be construed accordingly;

Tax or Taxation means (a) taxes on income, profits and gains and (b) all other taxes, impositions, duties, charges, withholdings, contributions and levies in the nature of taxation including any excise, property, value added, sales, transfer, franchise and payroll taxes and any national insurance or social security contributions, together with all penalties, charges, costs and interest relating to any of the foregoing or to any late or incorrect return in respect of any of these;

Tax Authority means any taxing or other authority (anywhere in the world) competent to impose any Tax;

Tax Claim means any claim by the Purchaser under the Tax Covenant;

Tax Covenant means the covenant relating to tax set out in Schedule 14 (Tax Covenant);

Tax Matter means any matter relating to Tax;

Tax Warranties means those Warranties (and only those Warranties) in Paragraph 19 (Business Tax Warranties) of Part A and in Paragraph 4 (Tax Matters) of Part B (Company Specific Warranties) of Schedule 4 (Warranties);

Termination Event has the meaning given in Clause 9.3;

Territory means any country listed in Schedule 15 (Territory);

Third Party Claim has the meaning given in Paragraph 1.2 of Schedule 5 (Provisions relating to Purchaser’s Claims);

Third Party Consent means any consent or agreement, including the novation of any Business Contract, required from a third party for the transfer of the benefit of any of the Business Assets to the Purchaser or the transfer of any rights to or assumption of obligations by the Purchaser or any member of the Purchaser's Group under any of the Business Contracts;

Third Party GKN Claim has the meaning given in Clause 24.2;

Title and Capacity Warranties means the Warranties at Paragraph 17 (Due Incorporation and Capacity) of Part A of Schedule 4, Paragraphs 2.1, 2.5 and 2.6 of Part B of Schedule 4, Paragraph 3 (Subsidiaries, Partnerships Etc) of Part B of Schedule 4;

Total Consideration has the meaning given to it in Clause 4.1 (Calculation of consideration);

TOGC has the meaning given in Schedule 13 (Value Added Tax);

Transaction means the sale and purchase contemplated by this Agreement;

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Transaction Documents means this Agreement and each of the other agreements, deeds and documents listed in Schedule 11 (The Transaction Documents);

Transfer Regulations shall mean any Applicable Law which provides for the automatic transfer of employees to a buyer of business assets;

Transfer Time means 23:59 p.m. Greenwich Mean Time on the Completion Date;

Transitional Services Agreement means the agreement in the Agreed Terms as listed in Schedule 11 (The Transaction Documents);

UK Accounts means the audited accounts of the UK Company for the financial year ended on 31 December 2015, the auditor's report on those accounts, the directors' report for that year and the notes to those accounts;

UK Company means GKN Stromag UK Limited, a company incorporated in England and Wales, details of which are set out in Part A of Schedule 10 (The Companies, Subsidiaries and Purchasers);

UKLA means the Financial Conduct Authority acting in its capacity as the competent authority for listing in the United Kingdom under Part VI of the Financial Services and Markets Act 2000;

US Business means the business carried on by GKN Rockford Inc. and GKN Walterscheid Inc. to the extent that it forms part of the Worldwide Business;

US Business Consideration means the US dollar equivalent of €14,500,000 calculated on the basis of the Exchange Rate;

US Business Transfer Agreement means the English-law business transfer agreement entered into to give effect to the sale and transfer of the US Business by GKN Rockford Inc. and GKN Walterscheid Inc. in a form substantially similar to the Local Business Transfer Agreement;

Unconditional Date means the date (not being later than the Longstop Date) on which the Condition is satisfied or waived;

VAT means the tax imposed by the VAT Directive and any national legislation implementing that directive together with legislation supplemental thereto or any similar sales or turnover tax whether of the United Kingdom, another Member State, the European Union or elsewhere. For the avoidance of doubt, VAT includes, without limitation, any sales or similar tax imposed by any state or local Tax Authority of the United States of America;

VAT Directive means the council directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112);

Warranties means the warranties set out in Schedule 4 (Warranties) given and made by GKN (for itself and on behalf of each relevant Seller) in favour of the Purchaser (for itself and on behalf of each relevant Purchasing Entity);

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Working Capital means the aggregate amount of working capital in relation to each Business and each Target Group Member calculated as at the Transfer Time in accordance with Schedule 8 (Determination and Certification of Working Capital) and comprises those line items contained in Part B of Schedule 8;

Working Capital Adjustment means the amount by which the Working Capital Value is greater or less than the Normal Working Capital;

Working Capital Statement means the statement as at the Transfer Time in the same form set out in Part B (Pro-Forma Working Capital Statement) of Schedule 8 (Determination and Certification of Working Capital) prepared in accordance with Schedule 8 (Determination and Certification of Working Capital);

Working Capital Value shall have the meaning given to it in Paragraph 3 of Schedule 8 (Determination and Certification of Working Capital);

Worldwide Business means that part of the business of the Land Systems Division of the GKN Group trading under the name of Stromag (excluding that part of the business of the Land Systems Division of the GKN Group trading under names other than Stromag) and carried on by the Land Systems Division of the GKN Group as at the date of the French Agreement which relates to the development, trade, manufacture and sale of the Products (and all related activities including testing, design and the aftermarket sales of such Products) but for the avoidance of doubt excludes:

Year End Working Capital Statement means the working capital statement contained in Part C of Schedule 8 (Determination and Certification of Working Capital).

In this Agreement, the contents page and headings are included for convenience only and shall not affect the interpretation or construction of this Agreement.

1.2Meaning of References

In this Agreement, unless the context requires otherwise:

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1.3Inconsistency

Where there is any inconsistency between the definitions set out in Clause 1.1 (Defined terms) and the definitions set out in any Clause or any Schedule, then for the purposes of construing such Clause or Schedule, the definitions set out in Clause 1.1 (Defined terms) shall prevail.

1.4Words defined in Local Agreements

All words and expressions defined in the Local Agreements shall, unless the context otherwise requires, bear the same meaning in this Agreement.

1.5English language text to prevail

Where the text of any Transaction Document is written in, or translated into, a language other than English, the English text shall prevail if there are inconsistencies between the two versions and the parties agree that they will, and they will procure that their relevant Group members will, draw the provision of this Clause to the attention of any relevant court, tribunal, arbitrator or expert.

1.6In this Agreement, any reference to:

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1.7GKN undertakes to the Purchaser (for itself and on behalf of each member of the Purchaser’s Group) that it will procure the compliance of all Business Sellers and Company Sellers with any obligation referred to in this Agreement or any other Transaction Document as the obligation of a Business Seller or Company Seller, as the case may be, or the obligation of GKN imposed upon GKN on behalf of or as agent for a Business Seller or Company Seller, as the case may be. GKN further undertakes to the Purchaser that it shall procure that the relevant Business Seller or Company Seller, as the case may be, enters into any relevant Transaction Document or Local Agreement referred to in this Agreement at Completion.

1.8The Purchaser undertakes to GKN (for itself on behalf of each member of the GKN Group) that it will procure the compliance of all Business Purchasers and Company Purchasers with any obligation referred to in this Agreement or any other Transaction Document as the obligation of a Business Purchaser or Company Purchaser as the case may be, or the obligation of the Purchaser imposed upon the Purchaser as agent for the Business Purchaser or Company Purchaser, as the case may be. The Purchaser further undertakes to GKN that it shall procure that the relevant Business Purchaser or Company Purchaser, as the case may be, enters into any relevant Transaction Document or Local Agreement referred to in this Agreement at Completion.

1.9Claims made by the Purchaser’s Group

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1.10Claims made by the GKN Group

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2.Sale and Purchase

2.1Sale and purchase of the Businesses

Subject to the provisions of this Agreement, GKN shall sell (or procure the sale by the other Business Sellers of) and the Purchaser shall purchase (or procure the purchase by the other Business Purchasers of), as at and from the Transfer Time, free from all Encumbrances (other than Permitted Encumbrances), the Businesses in each case as a going concern comprising the following properties, rights, other assets and with Full Title Guarantee, namely:

which consideration shall be allocated in accordance with Schedule 6 (Allocation of Consideration) and which, in the case of the Business Assets, shall be sold on and subject to the terms of any relevant Local Agreement (provided always that the provisions of this Agreement shall prevail over any Local Agreement in the event of a conflict, unless expressly stated otherwise in the relevant Local Agreement). GKN and the Purchaser (as applicable) shall procure that each of the parties to the Local Agreements shall not assert, or seek to assert, against any other party to them, any provision(s) of a Local Agreement if and to the extent that any such provision(s) shall be in conflict with the provisions of this Agreement, subject to the application of any Applicable Law relevant to a Local Agreement.

2.2Assets excluded from sale of the Businesses

The Excluded Assets shall be excluded from the sale and purchase of the Businesses and retained by the relevant Business Seller.

2.3Sale of the Business Property

The Business Property is sold upon and subject to the terms and conditions set out or referred to in the Italian Deed of Transfer (provided always that the provisions of this Agreement shall prevail over the Italian Deed of Transfer in the event of a conflict). GKN and the Purchaser (as applicable) shall procure that each of the parties to the Italian Deed of Transfer shall not assert, nor seek to assert, against any other party to

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them, any provision(s) of the Italian Deed of Transfer if and to the extent that any such provision(s) shall be in conflict with the provisions of this Agreement, subject to the application of any Applicable Law to the Italian Deed of Transfer.

2.4Sale and purchase of the Shares

Subject to the provisions of this Agreement, GKN shall sell and transfer or procure that the Company Sellers shall sell and transfer the Shares to the Purchaser or the relevant Company Purchaser, as at and from the Transfer Time, free from all Encumbrances and with Full Title Guarantee together with all rights attached at such time or accruing to them at the Transfer Time on and subject to the terms of the relevant Local Agreements. GKN and the Purchaser (as applicable) shall procure that each of the parties to the Local Agreements relating to the sale of the Shares shall not assert, or seek to assert, against any other party to them, any provision(s) of a Local Agreement if and to the extent that any such provision(s) shall be in conflict with the provisions of this Agreement, subject to the application of any Applicable Law relevant to a Local Agreement.

2.5Waiver of pre‑emption rights

GKN hereby (i) waives, and shall procure that each of the Company Sellers shall waive, all rights of pre‑emption over or other rights to restrict, as the case may be; and (ii) consents to, and shall procure that each of the Company Sellers shall consent to, the sale and transfer of the Shares or any of them.

3.Condition Precedent

3.1Completion shall be conditional on the following Condition having been satisfied or waived in accordance with this Agreement:

3.2The Purchaser shall, no later than seven Business Days after the signing of the French Agreement file with the FCO a notification with respect to the Transaction pursuant to the GWB provided that GKN has delivered to the Purchaser the information reasonably requested by the Purchaser to prepare such filing.

3.3GKN and the Purchaser shall:

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3.4In relation to the Condition, each of GKN and the Purchaser shall notify the other promptly upon becoming aware that it has been satisfied.

3.5The Purchaser shall give GKN reasonable advance notice of any filing, application, submission or other communications which it proposes to make or submit to the FCO and provide GKN with copies of such draft filings, applications, submission or correspondence and any supporting documentation or information, provided that any confidential information or business secrets or any other information which GKN is restricted from obtaining under applicable regulatory rules or regulations shall be provided to GKN's legal advisers on a strictly outside counsel basis. The Purchaser shall take into account any reasonable comments of GKN in relation to any such filings, applications, submission or communication. The Purchaser further agrees to inform GKN as soon as is reasonably practicable of any material progress of any notification made in order to satisfy the Condition, subject to applicable regulatory restrictions.

3.6The Purchaser agrees that GKN shall be entitled, where permitted by the FCO, to participate in any negotiations or discussion with the FCO and will inform GKN prior to any contact being made, provided however that neither GKN nor the Purchaser and/or outside counsel, shall be required to permit the other to attend any part of such meetings during which information of a commercially sensitive nature is likely to be disclosed. The parties shall cooperate in any such discussions and negotiations with the objective of satisfying the Condition as soon as practicable and in any event prior to the Longstop Date.

3.7If, at any time, GKN or the Purchaser becomes aware of a fact or circumstances that might prevent the Condition being satisfied it shall promptly inform the Purchaser or GKN respectively with details of the relevant fact or circumstance.

3.8The Purchaser is required to do everything within its control to procure that the Condition is fulfilled on the following terms:

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3.9If the Purchaser and GKN agree that approval of the FCO will only be given following compliance with an unreasonable commitment as specified in Clauses 3.8(c)(i) or (ii), then they may by mutual consent terminate this Agreement.

3.10The terms of this Clause 3 may be waived and/or amended by the agreement in writing of the Purchaser and GKN.

3.11If the Condition has not been satisfied or waived by 5.00 p.m. on the Longstop Date either party shall be entitled to terminate this Agreement.

3.12If either party elects to terminate this Agreement pursuant to Clause 3.9, 3.11 or Clause 10.5, then except for this Clause and the Clauses stated in Clause 10.6 (Effect of Termination of this Agreement) all the provisions of this Agreement shall lapse and cease to have effect.

4.Consideration

4.1Calculation of consideration

The consideration for the sale and purchase of the Businesses (including the Business Assets) pursuant to Clause 2.1 (Sale and purchase of the Businesses) and the Shares pursuant to Clause 2.4 (Sale and purchase of the Shares) shall comprise:

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such sum being the Total Consideration.

4.2Payment of consideration

The Total Consideration shall be satisfied:

in each case in accordance with Clause 4.4 (Method of payment);

provided, in each case, that the amount to be paid to GKN by the Purchaser, or to the Purchaser by GKN, in respect of the Working Capital Adjustment shall take into account an amount equal to the Estimated Working Capital Adjustment by which the Initial Payment was adjusted; and

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provided, in each case, that the amount to be paid to GKN by the Purchaser, or to the Purchaser by GKN, in respect of the Net Debt Adjustment shall take into account an amount equal to the Estimated Net Debt by which the Initial Payment was adjusted.

4.3Notwithstanding any other provision of this Agreement, any payments due between GKN and the Purchaser in relation to the Working Capital Adjustment and Net Debt pursuant to Clauses 4.2 (b) and (c) may be netted against each other.

4.4Method of payment

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4.5Allocation of Business Cash Consideration

The Business Cash Consideration shall be allocated to each of the Businesses listed in Clause 2.1 (Sale and purchase of the Businesses) in accordance with Schedule 6 (Allocation of Consideration). GKN and the Purchaser shall, and shall procure that the Business Sellers and Business Purchasers shall, report on their respective tax returns the Tax consequences of the transactions contemplated by this Agreement in a manner consistent with such allocation (subject only to any further purchase price adjustments contemplated by this Agreement), and shall not, unless required to do so by law or to comply with any Tax reporting obligations of the relevant jurisdictions, take or permit the taking of any position inconsistent with that allocation in connection with any negotiations or any examination, investigation, litigation or proceedings concerning any Tax return or any Relief.

4.6Allocation of Share Consideration

The Share Consideration shall be allocated to the Shares in accordance with Schedule 6 (Allocation of Consideration). GKN and the Purchaser shall, and shall procure that the Company Sellers and Company Purchasers shall, report on their respective Tax returns the Tax consequences of the transactions contemplated by this Agreement in a manner consistent with such allocation (subject only to any further purchase price adjustment contemplated by this Agreement), and shall not, unless required to do so by law or to comply with any Tax reporting obligation of the relevant jurisdiction, take or permit the taking of any position inconsistent with that allocation in connection with any negotiations or any examination, investigation, litigation or proceedings concerning any Tax return or any Relief.

4.7Responsibility for Taxes and fees

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4.8No deductions

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5.Liabilities

5.1Discharge of Assumed Liabilities

The Purchaser for itself and on behalf of each Business Purchaser hereby agrees, covenants and undertakes with GKN (for itself and on behalf of each other member of the GKN Group) that it will (and will procure that each other Business Purchaser will) with effect from the time of Completion assume and thereafter duly and properly perform, pay and discharge when due any Assumed Liabilities and the Purchaser (for itself and on behalf of each Business Purchaser) agrees, covenants and undertakes to indemnify and hold harmless GKN (for itself and as trustee for each other member of the GKN Group) against all Losses suffered or incurred by GKN to the extent that they relate to or arise out of the Assumed Liabilities or from any failure by the Purchaser or any Business Purchaser to perform, pay or discharge when due all or any of the Assumed Liabilities.

5.2Purchaser’s undertakings

The Purchaser undertakes to GKN (for itself and as trustee for each other member of the GKN Group) to fulfil (or procure fulfilment by the relevant Purchasing Entity) as far as reasonably practicable all the unexpired or undischarged obligations of GKN (or the relevant member of the GKN Group excluding the Target Group) under all guarantees and indemnities which GKN (or the relevant member of the GKN Group excluding the Target Group) has given in respect of any goods or services sold and/or provided in connection with the Worldwide Business and which in turn require or may require repairs, replacement or remedial works to be carried out and the Purchaser shall indemnify GKN (for itself and as trustee for each other member of the GKN Group excluding the Target Group) against all Losses in connection with payments to be made or liabilities incurred under or pursuant to such guarantees or indemnities in respect of the period after the Transfer Time provided that, in relation to any such goods and services sold and/or provided by GKN or any other member of the GKN Group in connection with the Worldwide Business prior to the Transfer Time which require repair, replacement or remedial works to be carried out and in

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respect of such repair, replacement or remedial works GKN and/or the relevant member of the GKN Group, but excluding the Target Group or the Business Sellers in respect of the Worldwide Business, has received payment prior to the Transfer Time, GKN will pay or procure the payment to the Purchaser or the relevant member of the Purchaser’s Group an amount equal to such payment received by GKN or the relevant member of the GKN Group, but excluding the Target Group or the Business Sellers in respect of the Worldwide Business.

5.3Effecting release of Assumed Liabilities

The Purchaser, for itself and on behalf of its successors and assigns, agrees, covenants and undertakes that the Purchaser’s assumption of the Assumed Liabilities and the substitution of the Purchaser (or, as the case may be, one of the Business Purchasers) as the primary obligor in respect of the Assumed Liabilities both as a matter of contract inter se between the parties and pursuant to any documents, deeds or instruments entered into in order to effect the release and discharge in full of each member of the GKN Group of any Assumed Liability is, and will be, in each case, on a non-recourse basis to GKN or any other member of the GKN Group.

5.4Business Tax Liabilities

5.5Business Debtors and Business Creditors

GKN shall, and shall procure that each member of the GKN Group shall, on reasonable notice from the Purchaser, give such assistance to the Purchaser or the relevant member of the Purchaser's Group as the Purchaser or the relevant member of the Purchaser's Group may reasonably require in relation to collection of the Business Debtors and discharge of the Business Creditors, provided that (i) the Purchaser shall

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reimburse GKN for all external out-of-pocket expenses reasonably incurred in so doing; and (ii) GKN and each member of the GKN Group shall not be required to do or omit to do anything or to provide such assistance if in the reasonable opinion of GKN to do so would materially prejudice or have a material adverse effect on the goodwill, reputation, business, financial or tax position of GKN or the business of any other member of the GKN Group.

5.6Wrong pockets

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provided that neither party shall be obliged to transfer any asset or right which cannot by its terms or by Applicable Law be so transferred (in which event the parties shall cooperate and use all reasonable endeavours to obtain any consent or approval as may be necessary in order to complete such transfer as soon as reasonably practicable within the periods referred to above).

6.Assurances and Intra-Group Arrangements

6.1Assurances

Subject to Clause 6.2, the Purchaser, for itself and on behalf of its successors and assigns, covenants that, at any time and from time to time on or after Completion it will use all reasonable endeavours to effect the release and discharge in full of any Assurance in respect of any Assumed Liability and in respect of any obligations or liabilities of the Target Group, in each case if the same has been Disclosed to the Purchaser in the Disclosed Information. Pending release and discharge of any Assurance (whether or not Disclosed), the Purchaser hereby agrees with GKN (on its own behalf and on behalf of each other member of the GKN Group) that it will (and will procure that where relevant the applicable Business Purchasers or Company Purchasers (as the case may be) shall) assume and thereafter duly and properly perform, pay and discharge when due the Assurances, and the Purchaser will indemnify and hold harmless GKN (for itself and as trustee for each other member of the GKN Group) against all Losses or Liabilities arising from any failure to do so or otherwise in connection with each of the Assurances provided that this Clause 6.1 shall not apply to any Assurance contained in any lease or other document of title relating to the Properties.

6.2GKN's Undertaking

To the extent that GKN (or other relevant member of the GKN Group, excluding the Target Group or any Business Seller in respect of the Worldwide Business) has received a notice of claim or demand from a third party under any Assurance prior to the Transfer Time, GKN undertakes to:

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provided that this Clause 6.2 shall not apply to any Assurance contained in any lease or other document of title relating to the Properties.

6.3Indian Parent Guarantee

The Purchaser undertakes to use all reasonable endeavours to effect the release and discharge in full of the Indian Parent Guarantee on or prior to the date falling two months following Completion. Pending release and discharge of the Indian Parent Guarantee, the Purchaser hereby agrees with GKN that it will (and will procure that the applicable Business Purchaser or Company Purchaser (as the case may be) shall) assume and thereafter duly and properly perform and discharge when due the Indian Parent Guarantee, and the Purchaser will indemnify and hold harmless GKN (for itself and as trustee for each other member of the GKN Group) against all Losses or Liabilities arising from any failure to do so or otherwise in connection with the Indian Parent Guarantee.

6.4Intra-Group Arrangements

The Purchaser and GKN shall procure that (without prejudice to the operation of the Transitional Services Agreement) on the Completion Date all Intra-Group Arrangements shall, without prejudice to accrued rights or obligations (including amounts payable or accrued) under such arrangements in respect of the period up to the Transfer Time, be terminated with effect from the Transfer Time, and that no right of action shall accrue from the Transfer Time, notwithstanding that such termination may have been effected otherwise than in accordance with the terms of the relevant Intra-Group Arrangement.

7.VAT

The provisions of Schedule 13 (Value Added Tax) shall have effect as if set out in this Clause 7.

8.Conduct until Completion

8.1GKN shall and shall procure that each Target Group Member and each Business Seller shall, in relation to the Worldwide Business from the date of the French Agreement until Completion comply with those provisions set out in Schedule 1 (Conduct until Completion) which specifically relate to each Business Seller, Company or Subsidiary, respectively.

8.2The parties agree that GKN shall terminate, or procure the termination of, the GSA and shall ensure that all amounts payable thereunder shall be settled, in each case prior to Completion.

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8.3GKN (for itself and on behalf the members of its Group) undertakes to the Purchaser and the members of its Group that it will (or will procure that the relevant member of its Group will):

8.4GKN (for itself and on behalf of the members of its Group) undertakes to the Purchaser and the members of its Group that it will (or will procure that the relevant member of its Group will) procure the payment of one or more dividends by one or more of the German Companies in order to achieve an aggregate net debt position of the German Companies of approximately €10 million (positive) at Completion.

9.Termination Events

9.1Deemed repetition of Fundamental Warranties

GKN shall be deemed to repeat the Fundamental Warranties on the Repetition Date in respect of the facts, matters, events and circumstances then existing (and as if any express or implied reference in any Fundamental Warranty to the date of the French Agreement was replaced by a reference to the Completion Date) on the basis that the Fundamental Warranties are deemed to be given:

9.2Supplementary Disclosure Letter

If GKN becomes aware that it is unable to repeat any of the Fundamental Warranties on the Repetition Date, it shall deliver to the Purchaser on the Repetition Date a letter disclosing any relevant fact, circumstance or matter (the Supplementary Disclosure Letter).

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9.3Termination Events

9.3.1If, between the date of the French Agreement and the date falling two Business Days prior to the Completion Date:

(each a Termination Event),

then the Purchaser may at its option terminate this Agreement by notice in writing to GKN by no later than two Business Days prior to the Completion Date in which case the provisions of Clause 10.6 (Effect of Termination of this Agreement) shall apply.

9.3.2On the date which would otherwise be five Business Days prior to Completion, GKN shall notify the Purchaser (in writing) whether or not it is aware that any Termination Event has occurred since the date of the French Agreement and/or is continuing.

9.3.3The Purchaser shall be obliged to notify GKN promptly upon becoming aware that a Termination Event may have occurred, and any such notice shall contain reasonable details in relation to such matter as are available to the Purchaser. Upon receipt of any notice pursuant to this Clause 9.3.3 (and until the Purchaser shall have the right to terminate this Agreement pursuant to the remaining provisions of this Clause 9.3), GKN shall be afforded the opportunity to remedy any such breach (if it is capable of remedy) to the reasonable satisfaction of the Purchaser.

9.3.4From the date of the French Agreement until the date falling two Business Days prior to the Completion Date, GKN shall, and shall procure that each Business Seller and Target Group Member shall, so far as it is able by exercising its rights as a shareholder of the relevant member of the GKN Group (as applicable), promptly respond to any specific and reasonable enquiry of the Purchaser to allow the Purchaser to determine whether a Termination Event has occurred, providing to the Purchaser such information (or access to such information) as the Purchaser may reasonably request to determine the same. Any enquiry made by the Purchaser pursuant to this Clause 9.3.4 shall comply with the provisions of paragraph 1.4 of Schedule 1 (Conduct until Completion).

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10.Completion

10.1Completion Dates

Completion shall take place at the offices of GKN’s Lawyers in London on:

 

such date being the "Completion Date".

10.2Completion arrangements

10.3Completion deliverables held to order

All documents and funds delivered to any party pursuant to this Clause 10 shall be held by the recipient to the order of the person delivering them until such time as Completion shall take place. Following the delivery of all documents and receipt of all funds required to be delivered on the Completion Date (or the waiver of the delivery of any such document or funds by the person entitled to receive the same) for the purposes of enabling Completion to proceed, the documents delivered pursuant to this Clause 10 shall cease to be held to the order of the person delivering them, and Completion shall be deemed to have taken place.

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10.4Deferred Completion

If Completion does not take place on the Completion Date because a party (the Defaulting Party) fails to comply with any of its material obligations under this Clause 10 or Schedule 3 (Completion Arrangements) (whether such failure amounts to a repudiatory breach or not), the other party (the Non-Defaulting Party) may by notice to the Defaulting Party:

10.5Each party’s right to terminate

If Completion does not take place on the Extended Completion Date because a party fails to comply with its material obligations under Clause 10.2 (Completion Arrangements) or Schedule 3 (Completion Arrangements) (whether such failure amounts to a repudiatory breach or not), the Non-Defaulting Party may by notice to the Defaulting Party:

10.6Effect of Termination of this Agreement

The termination of this Agreement shall not affect:

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11.RESTRICTIVE COVENANT

11.1Non-compete

During the Restricted Period, GKN undertakes to the Purchaser that it will not and shall procure that no member of the GKN Group (for so long as it remains a member), in any Relevant Capacity carry on or be engaged, concerned or interested in carrying on the Restricted Business within the Territory, provided that nothing in this Clause shall prevent any member of the GKN Group:

11.2Non-solicit

During the Restricted Period, GKN undertakes to the Purchaser that it will not and shall procure that no member of the GKN Group (for so long as it remains a member) will, directly or indirectly solicit or contact or cause to be solicited or contacted, any person who is as at the Completion Date or was as at the date of the French Agreement a director, officer, employee or manager of the Worldwide Business:

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with a view to inducing that person to leave his engagement or employment, provided that nothing in this Clause shall prevent any member of the GKN Group undertaking a general solicitation or public advertisement for employment that is not specifically targeted at any particular person, nor prohibit the employment by any member of the GKN Group of any such person who approaches a member of the GKN Group without that member of the GKN Group having acted in breach of this Clause.

Other than in connection with the Retained Interests, during the Restricted Period, GKN undertakes to the Purchaser that it will not and shall procure that no member of the GKN Group (for so long as it remains a member) will directly or indirectly solicit, canvass or approach or endeavour to solicit, canvass or approach or cause to be solicited, canvassed or approached any person:

for the purpose of offering to that person Restricted Products.

Other than in connection with the Retained Interests, during the Restricted Period, GKN undertakes to the Purchaser that it will not and shall procure that no member of the GKN Group (for so long as it remains a member) will directly or indirectly solicit, canvass or approach or endeavour to solicit, canvass or approach or cause to be solicited, canvassed or approached any person who, to his knowledge, supplied the Worldwide Business with any such Restricted Products at any time during the 12 months up to and including the Completion Date for the purpose of obtaining the supply of Restricted Products for the purpose of offering to any person Restricted Products in competition with the Restricted Business.

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12.The Employees

The provisions of Schedule 12 (The Employees) shall have effect as if set out in this Clause 12.

13.The Business Contracts

13.1Performance of Business Contracts

The Purchaser shall, or shall procure that the relevant Business Purchaser shall, at its own cost, after and with effect from the Transfer Time (but subject to the provisions of this Clause 13) carry out and complete for its own account the Business Contracts to the extent that the same have not been performed prior to the Transfer Time and in accordance with the terms of the relevant Business Contract.

13.2Procurement of novation or assignment

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13.3Shared Contracts

Clauses 13.4 and 13.5 shall not apply to Shared Contracts or other agreements or arrangements for the supply of goods and services which, in each case, are the subject of the Transitional Services Agreement.

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13.4Shared Contracts held by the Target Group

In relation to the Shared Contracts to which any Target Group Member is a party including, without limitation, those listed in Part A of Division 2 of the List of Contracts, to the extent that such contracts relate to the Excluded Business following the Transfer Time, the parties agree that Clause 13.2(c) shall apply mutatis mutandis with the substitution of:

13.5Shared Contracts held by the GKN Group (other than the Target Group)

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13.6No assignment

Neither this Agreement nor any action carried out in pursuance of it or under any of the other Transaction Documents shall constitute an assignment or attempted assignment of any of the Business Contracts which are not assignable without the consent of another person if such assignment or attempted assignment would constitute a breach of such Business Contract, except to the extent that such consent is obtained. The provisions of Clauses 13.1 (Performance of Business Contracts) to 13.5 (Shared Contracts held by the GKN Group (other than the Target Group)) shall not apply to any lease or agreement for lease or licence of the Business Property which is the subject of the Italian Deed of Transfer, nor in relation to any contract of employment which is the subject of Clause 12 (The Employees).

14.Profit and Loss Transfer Agreement

The provisions of Schedule 16 (Profit and Loss Transfer Agreement) shall have effect as if set out in this Clause 14.

15.Working Capital and Repayment of Debt

The provisions of Schedule 8 (Determination and Certification of Working Capital) and Schedule 9 (Net Debt) shall have effect as if set out in this Clause 15.

16.Consents

16.1Consents

The Purchaser shall, at its own cost, be responsible for contacting or applying to (or procuring the contact or application by the relevant Purchasing Entity) the relevant governmental or other regulatory authorities to arrange for the issue or transfer or assignment to the Purchaser or other Purchasing Entity or the issue or re-issue in the name of the Purchaser or relevant Purchasing Entity of all Permits required by it to carry on the Worldwide Business from the Transfer Time and all or any other Permits required in connection with the transfer of the Business Assets and the Shares as

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required by all Applicable Laws, regulations and other legal obligations. Where a joint application is required to secure transfer of the relevant Permit, GKN shall (or shall procure that the relevant member of the GKN Group shall) join with the Purchaser or relevant Purchasing Entity in submitting and pursuing the transfer with the relevant governmental or other regulatory authority.

16.2The Purchaser shall use (and procure that the other Purchasing Entities use) reasonable endeavours to effect or procure each such transfer or issue or assignment as soon as possible following the date of this Agreement, conditional upon Completion, and within the statutory or other regulatory timeframe required by Applicable Law for obtaining the same.

16.3GKN shall co-operate with the Purchaser and provide such information and assistance to the Purchaser or relevant governmental or other regulatory authorities as the Purchaser or such authorities may reasonably request to obtain any such Permits.

16.4Purchaser to hold GKN harmless

The Purchaser acknowledges that provided GKN has complied with it is requirements in this Clause 16, neither GKN nor any other member of the GKN Group shall be liable for any failure or refusal by any relevant governmental or other regulatory authority to arrange or effect the transfer or assignment to the Purchaser or other Purchasing Entity or the issue or re-issue in the name of the Purchaser or such Purchasing Entity of any such Permit (including Environmental Permits). The Purchaser agrees, covenants and undertakes with GKN that it will indemnify GKN (for itself and as trustee for each other member of the GKN Group) against all Losses in connection with any actions, demands, notices or claims in respect of, arising out of or in connection with any breach or infringement by the Purchaser or any other member of the Purchaser’s Group after Completion of any Permits which remain in the name of a Business Seller or otherwise pending formal confirmation of the transfer, assignment, issuance or re-issuance thereof.

17.Purchaser Warranties

17.1Purchaser’s Warranties

The Purchaser (on behalf of itself and each Purchasing Entity) warrants to GKN (for itself and on behalf of each Seller) as of the date of the French Agreement that:

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and which, in each case, has or would be likely to have a material adverse effect on the ability of the Purchaser to execute and deliver, or perform its obligations under, this Agreement and/or on the ability of the Purchaser or any other Purchasing Entity to execute and deliver, or perform its obligations under, any other documents which are to be executed by the Purchaser or any other Purchasing Entity pursuant to this Agreement;

18.Seller Warranties

18.1Warranties given to Purchaser as agent for Purchasing Entities

GKN (for and on behalf of each of the Sellers) warrants to the Purchaser (for itself and on behalf of each Purchasing Entity) as of the date of the French Agreement in the terms of the Warranties set out in Schedule 4 (Warranties) in respect of the facts, matters, events and circumstances as at the date of the French Agreement, on the basis that the Warranties are given:

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18.2Claims under this Agreement

Each of the Warranties set out in the separate Paragraphs of Schedule 4 (Warranties) shall be construed as a separate and independent Warranty and no Warranty shall be limited by reference to any other Warranty. The Warranties are qualified by the facts and circumstances Disclosed in this Agreement, the Disclosure Letter, the Disclosed Information and the facts and circumstances Disclosed in any of the documents indexed in the schedule to the Disclosure Letter. Any claim by the Purchaser in connection with the Warranties shall be subject to the provisions of this Clause 18.2 and Schedule 5 (Provisions relating to Purchaser’s Claims).

18.3Business Property Excluded

The Purchaser shall not be able to claim under any of the Warranties to the extent that the claim relates to the Business Property.

18.4Claims by GKN

GKN shall not (and shall procure that no Seller shall) (if a claim is made against any of them in connection with the sale of the Shares or Businesses to the Purchaser) make any claim against any director, employee, agent or officer of any member of the Target Group, the Korean Company or any Business Seller on whom any of the Sellers may have relied before agreeing to any term of this Agreement or authorising any statement in the Disclosure Letter. GKN acknowledges (for itself and on behalf of each of the Sellers) that it and each Seller has no rights to make any such claim. This shall not prevent any Seller from claiming against any other Seller under any right of contribution or indemnity to which he may be entitled. The rights of any director, employee, agent or officer of any Target Group Member, the Korean Company or any Business Seller under this Clause are subject to the provisions of Clause 1.10 and Clause 37 (Contracts (Rights of Third Parties) Act 1999).

18.5Purchaser acknowledgment regarding Warranties

The Purchaser acknowledges and agrees that the Warranties (which, for the avoidance of any doubt are warranties and not representations) are the only warranties of any kind given by or on behalf of GKN or any other member of the GKN Group or any other person on which the Purchaser or any member of the Purchaser’s Group may rely in connection with the sale and purchase of the Worldwide Business.

18.6Purchaser’s rights and remedies

Save as provided in Clause 21 (No right to terminate or rescind), GKN agrees that the rights and remedies of the Purchaser in relation to any of the Warranties shall not be affected or limited by Completion.

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18.7Meaning of “so far as GKN is aware”

If any of the Warranties are expressed to be given “so far as GKN is aware” or words to that effect, such Warranty shall be given by reference to the actual knowledge of those persons listed in Schedule 19 (Persons of whom enquiry was made in relation to the Warranties).

18.8Certain Warranties specific

The only Warranties that shall apply in relation to:

18.9The Environmental Indemnity contains the entire agreement and understanding of the parties with respect to any Environmental Condition and supersedes all prior agreements, understandings or arrangements (both oral and written), relating to any Environmental Condition. Except as specifically set forth in the Environmental Indemnity, the Purchaser waives (for itself and on behalf of each other member of the Purchaser’s Group) any rights and claims the Purchaser or any other member of the Purchaser’s Group may have against GKN or any other member

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of the GKN Group, whether in contract, law or in equity (including under the Environmental Warranties) relating to or in connection with the Worldwide Business and/or the transactions contemplated in this Agreement and/or the other Transaction Documents and which relate to any Environmental Condition.  The rights and claims waived by the Purchaser (for itself and on behalf of each other member of the Purchaser’s Group) include, without limitation, claims for contribution or other rights of recovery arising out of or relating to any Environmental Law.

19.Asbestos Claims

19.1The parties acknowledge that:

19.2Warranty

GKN warrants that, as of the date hereof, the Indemnity Agreement and the Escrow Agreement constitute legal, valid and binding obligations of the relevant parties to such agreements enforceable against them in accordance with their respective terms, and none of the parties to such agreements have rescinded, withdrawn from or otherwise terminated any of those agreements and no reason whatsoever exists that would justify any such rescission, withdrawal or other termination of any of such agreements.

19.3Assignment of Indemnity Agreement

Prior to Completion, GKN shall procure that GKN and GKN Land Systems SAS agree, confirm and record the assignment by GKN to GKN Land Systems SAS as a Permitted Assignee of the rights and the obligations under the Indemnity Agreement pursuant to the assignment agreement substantially in the Agreed Terms (the Indemnity Assignment Agreement).

19.4Assignment of rights and claims under the Escrow Agreement

GKN herewith assigns, subject to and with effect from Completion, all its rights and claims under and in connection with the Escrow Agreement to GKN Land Systems SAS.

19.5GKN agrees to use its reasonable endeavours to obtain the consent of Equita and the notary to the assignment to GKN Land Systems of GKN's contractual position

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under the Escrow Agreement as a whole as soon as reasonably practicable after the date of this Agreement and on terms substantially in the form of the Escrow Assignment Agreement, and the Purchaser shall reasonably cooperate with GKN to achieve the same. It is acknowledged and agreed by GKN and the Purchaser that reasonable endeavours in this Clause 19.5 shall extend to agreeing to the payment from the escrow account to Equita (and resulting reduction in the Escrow Amount) of up to One Million Euros (€1,000,000) (but not more) in consideration of their consenting to such assignment, provided that such agreement shall be without prejudice to the rights under the Indemnity Agreement and shall in particular not reduce the maximum amount of Equita's liability thereunder).

19.6From Completion GKN will use its best efforts to procure that any payments to be made by the Escrow Agent (as defined in the Escrow Agreement) to GKN under the Escrow Agreement are made to GKN Land Systems or, at the election of GKN Land Systems, to Stromag France or another affiliate of GKN Land Systems. In the event that any such payments are made to GKN, any member of the GKN Group or any of its or their affiliates, GKN shall notify the Purchaser of the receipt of such amounts and procure that all such amounts are promptly remitted to GKN Land Systems or, at the election of the GKN Land Systems, to Stromag France or another affiliate of GKN Land Systems.

19.7For the avoidance of doubt, the Purchaser does not assume any Asbestos Liabilities (whether incurred before, on or after the Completion Date) from GKN, Stromag France or any other entity. However, the Purchaser shall, if and to the extent that GKN or any of its affiliates (excluding, however, the Target Group Members) is liable and has paid for any Losses (as defined in the Indemnity Agreement) arising out of or in relation to Current Asbestos Claims (as defined in the Indemnity Agreement) or Future Asbestos Claims (as defined in the Indemnity Agreement), make available to GKN any funds actually recovered by the Purchaser in compensation for such Losses under the Indemnity Agreement or the Escrow Agreement.

19.8The parties agree that none of the Warranties nor the Environmental Indemnity shall be deemed to apply to or be given in relation to all and any Asbestos Liabilities.

19.9Exercise of rights, obligations and duties under the Escrow Agreement pending assignment

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19.10GKN undertaking regarding ineffective assignment of Escrow Agreement

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20.Indemnities

Purchaser's Indemnity Claim shall mean a claim under the indemnities set out in this Clause 20 (Indemnities).

20.1GKN shall indemnify the Purchaser against:

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20.2GKN shall not be liable in respect of a Purchaser's Indemnity Claim in Clauses 20.1(b) or (c) if the matter giving rise to such Purchaser's Indemnity Claim would not have arisen but for any voluntary transaction, act or omission carried out by the Purchaser or any member of the Purchaser Group or their respective directors, employees or agents.

20.3The maximum aggregate liability of GKN in respect of a Purchaser's Indemnity Claim under Clause 20.1(b) shall not exceed in aggregate the Euro equivalent of RMB 850,000 calculated on the basis of the Exchange Rate.

20.4GKN shall not be liable for a Purchaser's Indemnity Claim unless the Purchaser has notified GKN of the Purchaser's Indemnity Claim stating in reasonable detail the nature of the Purchaser's Indemnity Claim and the amount claimed on or before

20.5The liability of GKN in connection with a Purchaser's Indemnity Claim shall be subject to paragraph 1 (Obligations of the Purchaser) and paragraph 3 (Other Provisions) of Schedule 5 (Provisions relating to Purchaser's Claims) (which for such purposes only a Purchaser's Indemnity Claim shall be deemed a Purchaser's Claim) but not to any of the other limitations in Schedule 5 (Provisions relating to Purchaser's Claims), provided that in respect of Clauses 20.1(a) and (b), only the Purchaser shall be entitled to conduct of the Third Party Claim and in respect of Clause 20.1(c), only the Seller shall be entitled to conduct of the Third Party Claim.

21.No right to terminate or rescind

Except for a termination of this Agreement in accordance with Clauses 3.11, 9.3 and 10.5 (Each parties' right to terminate), notwithstanding any breach of this Agreement or any other Transaction Document, and notwithstanding any provisions of any Applicable Laws, each of GKN and the Purchaser agrees on behalf of itself and, as the case may be, each of the Sellers and the Purchasing Entities that, both prior to and following Completion, it shall have no right of termination or rescission (including any right under common law) in respect of any claims arising under or in connection with this Agreement (other than in the case of fraud) and shall not be entitled to treat the other (or, as the case may be, any of the other Sellers or Purchasing Entities) as having repudiated this Agreement and, save in the case of fraud, the only remedy of GKN and the Purchaser (whether acting for itself or, as the case may be, on behalf of the other Sellers or Purchasing Entities) for breach of the Purchaser Warranties or, as the case may be, the Warranties shall be damages.

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22.Further Assurance

22.1Further assurance

Following the date hereof, GKN and the Purchaser shall (and shall respectively procure that each of the other Sellers and Purchasers shall) do, execute and perform all such acts, deeds, documents and things (or procure the doing, execution or performance thereof) as the others may from time to time reasonably require for the purpose of implementing the provisions of this Agreement and the Transaction Documents including giving full effect to the transactions contemplated by this Agreement and the Transaction Documents including vesting in the relevant Purchasing Entity the legal and beneficial title to the Shares or the Business Assets, as applicable, and the obligations of the parties hereunder shall (without limitation) extend to using their respective reasonable endeavours to agree, in good faith:

22.2Following Completion, subject to Clause 23 (Information, Records and Assistance), from time to time supply to the other such assistance as the other may reasonably require for the purpose of implementing the provisions of this Agreement and the Transaction Documents.

22.3Brazilian Transfer

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23.Information, Records and Assistance

23.1Provision of records

GKN shall, and shall procure that each Business Seller shall, and the Purchaser shall, and shall procure that the Target Group Members and each Purchasing Entity shall, each provide the other upon reasonable request and upon providing reasonable justification that the same is required (including, without limitation, for the purposes of compliance or good practice in relation to Tax Matters, responding to any request for information from any Tax Authority, governmental or regulatory authority) with full and free access (including the right to take copies) during usual business hours to the books, accounts, and records of the Target Group and Business Sellers which relate exclusively to the Worldwide Business to be held by each of them after Completion and which relate to the period up to Completion (the Financial Records).

23.2Preservation of records

For a period of 7 years following the Completion Date, no party shall dispose of or destroy, and shall procure that their respective Group members shall not dispose of or destroy, any of the Financial Records or Primary Books and Records without first giving the other at least 2 months’ notice of its intention to do so and giving the other the opportunity to remove and retain any of them (at that other party’s expense). With respect to any Financial Records relating to any pre-Completion Tax Matter, the parties shall procure that all relevant members of their respective Groups shall retain such Financial Records for the later of 10 years from the Completion Date or expiration of the statute of limitations relating to such Tax Matter.

23.3Litigation

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23.4Financial Reporting

Following Completion the Purchaser shall, and shall procure that each Target Group Member and each Purchasing Entity as appropriate shall:

 

 

24.Insurance and GKN Claims

24.1No cover under GKN’s insurance policies

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24.2Third Party GKN Claim

If, at any time after Completion, any claim is made in writing by a third party against GKN or any other member of the GKN Group or any liability (actual or contingent) is notified to GKN, or any other member of the GKN Group in each case in relation to the Worldwide Business (a Third Party GKN Claim), which causes or may reasonably be expected to cause the Purchaser, or any other member of the Purchaser’s Group, to be liable in respect of such Third Party GKN Claim then GKN shall as soon as reasonably practicable give written notice thereof to the Purchaser and shall at the written request and cost of the Purchaser, or any other relevant member of the Purchaser’s Group:

provided always that:

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24.3Duty to mitigate

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25.Announcements

The parties agree that (save as required by any Applicable Law or the rules of any stock market or regulator) no press or other public announcements shall be made or sent out (or, so far as is practicable, permitted to be made or sent out) by either of them or any other member of their respective Groups in respect of the sale and purchase under this Agreement without the text of such announcement receiving the prior written approval of the other, such approval not to be unreasonably withheld or delayed.

26.Confidentiality

26.1Confidentiality

Each party shall treat and shall procure that each member of its Group shall treat as strictly confidential all information received or obtained as a result of entering into or performing this Agreement and/or which relates to:

26.2Confidentiality exceptions

Notwithstanding Clause 26.1 (Confidentiality), any party may disclose information which would otherwise be confidential if and to the extent that:

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provided that, any such information disclosed pursuant to sub-clauses (a) to (c) of this Clause 26.2 shall be disclosed only after notice has been provided to GKN or the Purchaser, as the case may be, unless such prior disclosure to the other party is unlawful.

26.3No prejudice to Confidentiality Agreement

This Clause 26 shall be without prejudice to Clause 27.1 (No waiver of legal privilege) and the provisions of the Confidentiality Agreement, provided that the parties acknowledge that the Confidentiality Agreement shall terminate with effect from Completion.

27.Purchaser’s and GKN’s Undertakings

27.1No waiver of legal privilege

The Purchaser agrees and undertakes on behalf of itself and each other member of the Purchaser’s Group that it and they will not waive legal privilege in relation to any document which comes into the possession or control of any member of the Purchaser’s Group as a result of the transactions contemplated by this Agreement and will not take any steps which may lead to such legal privilege being lost where, in each such case, such document contains or refers to information in relation to the disposal by the GKN Group of the whole or any part of the Businesses, the Business Assets or the Shares or in relation to the negotiations in respect of the transactions contemplated by this Agreement.

GKN agrees and undertakes on behalf of itself and each other member of the GKN Group that it and they will not waive legal privilege in relation to any document which comes into the possession or control of any member of the GKN Group as a result of the transactions contemplated by this Agreement and will not take any steps which may lead to such legal privilege being lost where, in each such case, such document contains or refers to information in relation to the disposal by the GKN Group of the whole or any part of the Businesses, the Business Assets or the Shares or in relation to the negotiations in respect of the transactions contemplated by this Agreement.

27.2Use of the Excluded Trade Marks

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28.Default Interest, Costs and Exchange Rates

28.1Default Interest

If a party fails to pay any amount payable under this Agreement or any Transaction Document on the due date for payment, that party must pay interest on any amount unpaid at the Default Rate. Any interest payable under this Clause 28.1 shall accrue daily from the due date to and including the date of actual payment of such sum, and shall be compounded quarterly and shall be paid on the demand of the other party.

28.2Responsible for own costs

Subject always to Clause 4.7 (Responsibility for Taxes and fees) and any other express provision of this Agreement or any Transaction Document, each party shall be responsible for all the costs, charges and expenses incurred by it in connection with and incidental to the preparation and completion of this Agreement, each of the other Transaction Documents and the sale and purchase of the Businesses, the Business Assets and the Shares under the Transaction Documents.

28.3Responsibility for recordal costs

Save as otherwise provided in this Agreement, or any other Transaction Document the Purchaser shall be responsible for all costs, charges and expenses incurred in effecting any recordal of the transfer of title of the Business Assets including, without

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limitation, recordal of the transfer of title of registered Business IP at the relevant Intellectual Property registries.

28.4Exchange Rate for Foreign Currencies

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29.Entire Agreement

29.1This Agreement, the Confidentiality Agreement and the other Transaction Documents set out the entire agreement and understanding between the parties in respect of the sale and purchase of the Shares and the Businesses. This Agreement supersedes all prior agreements, undertakings or arrangements (whether oral or written) relating to the sale and purchase of the Shares and the Businesses which shall cease to have any further force or effect. It is agreed that:

The agreements and undertakings in this Clause 29 are given by each party on its own behalf and as agent for each of its Connected Persons. Each party acknowledges that the other party gives such agreements and undertakings as such agent with the full knowledge and authority of each of its respective Connected Persons. In this Clause 29, Connected Person means, in each case, to the extent that they are involved on behalf of a party, (i) a party’s officers, employees, group undertakings, agents and advisers, (ii) officers, employees, agents and advisers of a party’s group undertakings; and (iii) officers, employees and partners of any such agent or adviser or of any group undertaking of such an agent or adviser.

29.2Each of GKN and the Purchaser agrees that:

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30.No Set-Off

Save as expressly provided in this Agreement or any other Transaction Document, any payments to be made by any party under this Agreement or any other Transaction Document (including in respect of any Purchaser's Claim or Environmental Claim, Third Party GKN Claim or Tax Claim) shall be made in full without any set-off, restriction, condition or deduction for or on account of any counterclaim except for payments due between the Seller and the Purchaser in relation to the Working Capital Adjustment and Net Debt under Clause 4.2(b) and Clause 4.2(c) respectively.

31.Continuing Effect

Each provision of this Agreement shall continue in full force and effect after Completion, unless such provision has been fully performed on or before Completion.

32.Invalidity

If all or any part of any provision of this Agreement or any Transaction Document (the Relevant Provision) shall be or become illegal, invalid or unenforceable, then the remainder (if any) of the Relevant Provision and all other provisions of this Agreement or the relevant Transaction Documents shall remain valid and enforceable, and, in addition, the Relevant Provision shall be either: (i) amended by agreement between the parties to the extent necessary to render the Relevant Provision legal, valid and enforceable, such amendments to differ from the replaced provision as little as possible and the effect of such amendments to be as close to the intended effect of the illegal, invalid or unenforceable provision; or (ii) in the event that such amendment is not permitted under Applicable Law, severed in its entirety from this Agreement or the relevant Transaction Document, and the rights and obligations of the parties shall be construed accordingly.

33.Amendments, Variations, Releases and Waivers

33.1Amendments to be in writing

Subject only to any deemed amendment to, or severance of, any provision of this Agreement pursuant to Clause 32 (Invalidity), no amendment or variation of the terms of any Transaction Document shall be effective unless it is made in a written document signed by all of the parties to such document.

33.2Release of rights and liabilities

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Any liability of:

may, in whole or in part, be released, compounded or compromised or time or indulgence may be given in respect of it without in any way prejudicing or affecting its rights against the Purchaser or any other member of the Purchaser’s Group or GKN or any other member of the GKN Group (as the case may be) in respect of any other liability under this Agreement.

33.3Waivers

Any release, extension of time or waiver by a party in favour of the other of any (or any part of any), or in relation to, of its rights under this Agreement shall only be binding if it is given in writing. Any such release, extension of time or waiver shall:

34.Assignment

34.1Permitted assignments

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34.2No increase in liability

The parties hereby agree that where the Purchaser, or GKN, assigns the benefit of this Agreement under Clause 34.1 (Permitted assignments) in whole or in part to any other person, the liabilities of (in the case of an assignment by GKN) the Purchaser (and all other members of the Purchaser’s Group) to GKN or (in the case of an assignment by the Purchaser) GKN (and all other members of the GKN Group) to the Purchaser under this Agreement shall be no greater than such liabilities would have been had the assignment not occurred.

35.Notices

35.1Notice requirements

All notices and other communications relating to this Agreement:

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35.2Initial details of parties

The initial details for the purposes of Clause 35.1 (Notice requirements) are:

 

35.3Appointment of Process Agent

35.4The Purchaser irrevocably appoints The Hay Hall Group Limited, of Bibby Transmissions, Cannon Way, Dewsbury, West Yorks, WF13 1EH as its agent to accept service of process in relation to any legal actions or proceedings arising out of this Agreement and begun in England or Wales. Such service shall be deemed completed on delivery to such agent (whether or not it is forwarded to or received by the Purchaser) and shall be valid until such time as GKN has received prior written notice that such agent has ceased to act as agent for the Purchaser. If for any reason such agent ceases to act as agent or no longer has an address in England or Wales, the Purchaser irrevocably agrees to appoint a substitute reasonably acceptable to GKN

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within England and Wales and deliver to GKN within 10 Business Days of such appointment a copy of a written acceptance of appointment by the new process agent. Nothing in this Agreement shall affect the right to serve process in any other manner permitted by Applicable Law.

36.Dispute Resolution

36.1Dispute escalation

The parties shall negotiate in good faith and seek to settle amicably any dispute that may arise out of or in relation to this Agreement or any other Transaction Documents (excluding the Environmental Indemnity) (or their construction, existence, validity or termination) (a Dispute). If a Dispute cannot be settled through negotiations by appropriate representatives of each of the parties, either party may give to the other a notice in writing (a Dispute Notice). If the Dispute is not settled by agreement in writing between the parties within 10 Business Days of the Dispute Notice it shall be resolved in accordance with Clauses 36.3 (Confidential negotiations) and 39 (Law and Jurisdiction).

36.2Expert determination

Any Dispute with respect to any matter which is of a technical nature and related to the Shared Contracts or the Business Property shall at the instance of any party be referred to a person agreed between the parties, and, in default of agreement within five Business Days of a notice from any party to the other calling upon the other so to agree, to a person chosen on the application of any party by the President for the time being of the Institute of Chartered Accountants. For the purpose of Clause 36.1 (Dispute escalation) and this Clause 36.2, a matter shall be deemed to be of a “technical nature” if it relates to or arises in relation to a dispute concerning the meaning of any individual element forming part of the definition of the “Worldwide Business” or “Products”.

36.3Confidential negotiations

All negotiations undertaken between the parties in connection with a Dispute pursuant to Clause 36.3 (Confidential negotiations) or 36.2 (Expert determination) will be

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subject to Clause 26 (Confidentiality). All negotiations will be without prejudice to the rights of the parties in any future proceedings.

37.Contracts (Rights of Third Parties) Act 1999

37.1Subject to Clause 37.2:

37.2The rights of Connected Persons under Clause 37.1 and any director, employee, officer or agent of each member of the Purchaser Group under Clause 18.4 (Claims by GKN) are subject to the other terms and conditions of this Agreement and the Transaction Documents. The parties to this Agreement may by agreement rescind or vary any term of this Agreement without the consent of any such Persons.

37.3Save as provided in Clause 37.1 and Clause 18.4 (Claims by GKN) or the terms of any Transaction Document, a person who is not party to the Transaction Documents shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of their terms.

38.Counterparts

This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until all the parties have executed at least one counterpart but all the counterparts shall together constitute but one and the same instrument.

39.Law and Jurisdiction

39.1This Agreement and, unless otherwise stipulated in this Agreement or in the Transaction Documents, all agreements concluded hereunder (each an Ancillary Agreement) and any non-contractual obligation or other matter arising out of or in connection with this Agreement or an Ancillary Agreement shall be governed by and construed in accordance with English law.

39.2Subject to Clause 36.2 (Expert determination), the parties agree that any dispute, claim, controversy or difference arising out of or in connection with this Agreement or a Transaction Document (other than the Environmental Indemnity), unless otherwise stipulated in any Transaction Document, including any question regarding its existence, validity, interpretation or termination or any dispute regarding any non-contractual obligations arising out of or in connection with it (a Dispute), shall be referred to and finally resolved by arbitration under the LCIA Rules (the Rules), which Rules are deemed to be incorporated by reference into this Clause.

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39.3The seat or legal place, shall be London.

39.4The number of arbitrators shall be three.

39.5The claimant (or claimant parties jointly) shall nominate in the Request for Arbitration one arbitrator and the respondent (or respondent parties jointly) shall nominate in the Response one arbitrator. The two arbitrators nominated by the parties shall within 15 days of the appointment of the second arbitrator, agree upon a third arbitrator who shall act as Chairman of the Tribunal.  Notwithstanding anything to the contrary in the Rules, in agreeing upon a third arbitrator, the two arbitrators may communicate directly with each other and their respective appointing parties.  If no agreement is reached upon the third arbitrator within 15 days of the appointment of the second arbitrator, the LCIA Court shall expeditiously nominate and appoint a third arbitrator to act as Chairman of the Tribunal. If the claimant or claimant parties and/or the respondent or respondent parties fail to nominate an arbitrator, an arbitrator shall be appointed on their behalf by the LCIA Court in accordance with the Rules.  In such circumstances, any existing nomination or confirmation of an arbitrator shall be unaffected, and the remaining arbitrator(s) shall be appointed in accordance with this Clause 39.

39.6Each party expressly agrees and consents to this process for nominating and appointing the Arbitral Tribunal and, in the event that this Clause 39 operates to exclude a party's right to choose its own arbitrator, irrevocably and unconditionally waives any right to do so.

39.7The language to be used in the arbitration shall be English.

39.8The law of the arbitration agreement shall be the law of England.

39.9This agreement to arbitrate shall be binding upon the parties, their successors and assigns.

40.Execution

The parties have shown their acceptance of the terms of this Agreement by executing it at the end of the Schedules.

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Schedule 1

Conduct until Completion

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83

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84

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which the Purchaser reasonably requires for the purposes of:

85

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1.

86

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Schedule 2
List of Company Properties

87

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88

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Schedule 3

Completion Arrangements

Part A
The Businesses

At Completion GKN shall (or shall procure that the relevant Business Seller shall):

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90

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duly executed in each case by GKN or the relevant Business Seller; and

At Completion the Purchaser shall (for itself and on behalf of each of the other Purchasing Entities) or (in the case of sub-paragraph 2(b), 2(c) and 2(d) only) the Purchaser shall procure that Altra Industrial Motion do Brasil S.A. or Svenborg Brakes Shanghai Co. Ltd or the Business Purchaser of the US Business as applicable, shall:

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92

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duly executed in each case by the Purchaser or the relevant Business Purchaser.

Following Completion GKN shall, and shall procure that each of the Business Sellers shall, if so requested by the Purchaser, and jointly with the Purchaser (at the Purchaser’s expense) arrange for the despatch to all or any past or present customers of the Businesses specifically nominated by the Purchaser of a notice announcing the sale by the GKN Group of the Businesses and introducing the Purchaser as its successor.

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Part B
The Shares

At Completion GKN shall deliver to the Purchaser:

At Completion GKN shall deliver to the Purchaser:

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At Completion the Purchaser shall, in addition to paying the Initial Payment as required by Clause 4.2(a)of this Agreement, deliver to GKN:

95

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96

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Schedule 4
WARRANTIES

For the purpose of this Schedule, all references to Worldwide Business shall include the Businesses and the Target Group Members and, in each case, each of them.

Subject to Clause 18 (Seller Warranties) the Warranties are given in respect of the facts, matters, events and circumstances set out below as at the date of the French Agreement.

Part A
General Warranties (Businesses and Companies)

Since 5 September 2011, the books and records of the activities of the Worldwide Business required by Applicable Law to be maintained have, in all material respects, been so maintained and are, in all material respects, up-to-date, accurate in all material respects and contain all material matters required by Applicable Law to be entered in them. For the avoidance of doubt, no Warranty is given in relation to the accounting books and records and management accounts of the Worldwide Business.

Since 30 June 2016:

97

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98

---

There is not outstanding:

99

---

In the 12 months prior to the date of the French Agreement, neither GKN nor any of the Sellers nor any Company or Subsidiary, nor any employees or officers of any of GKN, the Sellers, the Companies or the Subsidiaries,

100

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received written notice that they have done or omitted to do any act or thing which is or could be in contravention or breach of or the subject of enquiry, investigation or proceedings under the provisions of any Applicable Law giving rise to a fine, penalty, default, proceedings or other such liability which is material in the context of the Worldwide Business and, so far as GKN is aware, there are no circumstances in existence which are expected to give rise to such notice being received.

101

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102

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Since 5 September 2011, each Target Group Member and Business Seller has, in relation to each of its Employees and Former Employees and to each individual who has formerly provided services directly or indirectly to such Target Group Member or Business Seller:

No Target Group Member or Business Seller with respect to the Worldwide Business has, within the 12 months prior to the date of the French Agreement, entered into which remains in effect any agreement, arrangement or practice

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for the provision, directly or indirectly, in return for remuneration  in excess of €75,000 per annum, of the services of any consultant which is material in the context of the Worldwide Business taken as a whole.

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Since 5 September 2011, no Target Group Member or Business Seller with respect to the Worldwide Business and, so far as GKN is aware, none of their officers or Employees or the Retained Employees, has by any act or omission committed any criminal or unlawful act which would reasonably be expected to have a material adverse effect on the businesses or affairs of the Worldwide Business and, so far as GKN is aware, there are no circumstances which are likely to give rise to any such investigation or inquiry.

105

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106

---

107

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The Business IP, Company IP and Company IP Contracts constitute all material Intellectual Property necessary for the Purchasers to carry on the Worldwide Business substantially in the manner currently carried on.

So far as GKN is aware, there is and there has been no unauthorised use of Confidential Information or Know-How by any third party in the 12 (twelve) months prior to the date of the French Agreement which use would have a material adverse effect on the Target Group Member or Business Seller.

 

(i) no major outage or degradation in the performance or functionality of, or security breaches in respect of, any of the Information Technology; and

(ii) no instances of unlawful destruction, loss or access to (whether physical or logical), the data stored or otherwise processed by any Target Group Member or Business Seller with respect to the Worldwide Business,

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which has had (or is having) a material adverse effect on the ability of a Target Group Member or Business Seller to meet the business requirements of the Worldwide Business.

109

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110

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Complete and accurate copies of each material Environmental audit, assessment, survey, report or investigation in the control of the Sellers in relation to the Properties prepared since 5 September 2011 have been Disclosed to the Purchaser in the Disclosed Information.

Other than as provided for in the Special Purpose Accounts or the Statutory Accounts (and for the avoidance of doubt, other than in respect of contamination and pollution relating to the Indemnified Sites) so far as GKN is aware, other than in the ordinary course of business, no expenditure of more than €250,000 per non-compliance or related series of non-compliances is required by the Worldwide Business so as to:

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For the avoidance of doubt, the warranties given this paragraph 16 (The Company Properties) shall not apply to the Business Property.

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There are no material outstanding disputes with any person relating to any of the Company Properties or their use and, so far as GKN is aware, no such disputes are pending, threatened or expected.

The existing use of each of the Company Properties as stated in Schedule 2 (List of Company Properties) is the actual use to which each of the Company Properties is put and is, in all material respects, in compliance with all Applicable Laws.

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114

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which, in each case, has or could have a material adverse effect on the ability of GKN to execute and deliver, or perform its obligations under, this Agreement and/or on the ability of GKN or any of the Business Sellers or the Company Sellers to execute and deliver, or perform their respective obligations under, any other documents which are to be executed by GKN or any of the Business Sellers or Company Sellers pursuant to this Agreement.

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in each case, where the Product (or component thereof) is an identical or substantially the same article.

Part B
Company Specific Warranties

For the purposes of this Part B of this Schedule 4 references to "Company" or to "Companies" shall be to any or all of the Companies, references to "Subsidiary" or to "Subsidiaries" shall be to any or all of the Subsidiaries and references to "Target Group Member" or "Target Group Members" shall be to any or all of the Target Group Members.

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117

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118

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Each Target Company has in the last 5 years duly and properly complied with all requirements to deduct or withhold Taxation from any payments it has made and has properly accounted to the relevant Taxation Authority for such Taxation.

Each Target Company has maintained all material records in relation to Tax as are sufficient to determine its liabilities to Tax, including liabilities which may arise on the future disposal or deemed disposal of any of its assets owned at the date on which the Special Purpose Accounts were drawn up.

No Target Company has entered into or agreed to enter into any arrangement or election with another company in respect of any liability to Tax incurred or treated as incurred by such other company; nor is any Target Company a member of a fiscal group or other consolidation with any company that is not a Target Company.

No Target Company is bound by any indemnity in connection with the sale of shares in any company under which the Target Company may be liable to pay a sum equivalent to or by reference to such company's liability to Tax, in respect of which claims against a Target Company would not be time barred.

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No transaction, act, omission or event has in the last 5 years occurred (including without limitation the execution or implementation of this Agreement) in consequence of which any Target Company is or may be held liable for any Tax which is primarily or directly chargeable against or attributable to any person other than another Target Company.

No transactions have taken place in the last 5 years between any member of the Target Group and any other person which will give rise to a charge to Tax or loss or clawback of any Relief from Tax which is primarily chargeable against a Target Company as a result of the execution of this Agreement (including but not limited to Completion).

have been duly stamped.

120

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121

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Schedule 5

Provisions relating to Purchaser's Claims

and any Purchaser’s Claim or Environmental Claim shall be limited to (in addition to the limitation on liability set out in this Schedule 5) the amount by which the loss or damage suffered by the Purchaser or member of the Purchaser’s Group as a result of such Purchaser’s Claim or Environmental Claim shall exceed the amount actually recovered and received by the Purchaser or member of the Purchaser's Group, provided, for the avoidance of doubt, that nothing herein shall require the Purchaser or any other relevant member of the Purchaser's Group to first go against, claim or otherwise pursue any person before making any Purchaser's Claim or Environmental Claim.

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Provided Always that:

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124

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125

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126

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127

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128

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Schedule 6

Allocation of Consideration

Part A
The Allocation

 

 

129

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Part B
The Business Sellers

 

130

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Part C
The Companies

 

131

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Part D
The Subsidiaries

 

132

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Schedule 7

The excluded assets and excluded contracts

Part A
The Excluded Assets

133

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Part B
The Excluded Contracts

 

134

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Schedule 8

Determination and Certification of Working Capital

In this Schedule:

Review Period means the period of 20 Business Days following the delivery to GKN of the Working Capital Statement pursuant to Paragraph 5.1 (Issue of the Working Capital Statement) of this Schedule 8.

Part A
The Working Capital Statement

The Working Capital Statement shall be prepared by the Purchaser in the same format as set out in Part B (Pro-Forma Working Capital Statement) of this Schedule 8.

The Working Capital Value shall be the amount, determined by reference to the Working Capital Statement, representing the sum of the Stock and the value of Debtors less the value of Creditors.

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Paragraphs (a), (b) and (f) above are intended to be applied as a hierarchy, with Paragraph (a) being applied first and with Paragraphs (b) and then (f) being applied only where ambiguity remains following application of Paragraphs higher in the hierarchy. Paragraphs (c), (d) and (e) shall be specifically applied in accordance with their terms notwithstanding any inconsistency with paragraphs (a), (b) and (f).

In arriving at the Final Certificate of the Working Capital Adjustment no account shall be taken of any event or change in circumstances which occurs after the end of the Review Period.

Promptly following preparation of the Working Capital Statement, and in any event within 60 calendar days of the Completion Date, the Purchaser shall issue the Working Capital Statement to GKN together with a schedule showing the calculation of the Working Capital Adjustment and schedules showing the detailed calculations supporting the figures in the Working Capital Statement.

To enable GKN to review the Working Capital Statement and present any objections referred to in Paragraph 5.3 (If GKN disagrees with calculation),

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the Purchaser shall, and shall procure that each member of the Purchaser’s Group shall, following the issue of the Working Capital Statement, give GKN and its advisers reasonable access at all reasonable times (until the Final Certificate of the Working Capital Adjustment has been issued) to employees and premises of the Purchaser or relevant member of the Purchaser's Group, all records, working papers and other information relating to the Working Capital Statement and generally shall provide GKN and its advisers with such other information and assistance as GKN and its advisers may reasonably request to determine whether the Working Capital Statement has been prepared in accordance with this Schedule 8.

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GKN and the Purchaser shall each use all reasonable endeavours to procure that all records, working papers and other information within their respective possession or control as may be reasonably required by the Independent Accountants for the purposes of this Schedule 8, shall be made available upon a request for them and each of GKN and the Purchaser shall generally render all reasonable assistance reasonably necessary for the determination of the Working Capital by the Independent Accountants.

For the purposes of this Agreement the Final Certificate of the Working Capital Adjustment shall mean:

 

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Part B
Pro-Forma Working Capital Statement

 

 

140

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Part C
Year End Working Capital Statement

 

Consolidated Year End Working Capital Statement

 

 

 

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Year End Working Capital Statement by Site

 

 

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Schedule 9

NET DEBT

In this Schedule:

Review Period means the period of 20 Business Days following the delivery to GKN of the Closing Net Debt Statement pursuant to Part B (Procedure for determining Closing Net Debt Statement) of this Schedule 9.

Part A
Net Debt

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The provisions of each of Paragraphs (a) to (e) shall be specifically applied in accordance with their terms and notwithstanding any inconsistency with Paragraphs (f), (g) and (h). Paragraphs (f), (g) and (h) above are intended to be applied as a hierarchy, with Paragraph (f) and (g) being applied first and with Paragraph (h) being applied only where ambiguity remains following application of Paragraph (f) and (g).

In arriving at the Final Certificate of the Net Debt Adjustment no account shall be taken of any event or change in circumstances which occurs after the end of the Review Period.

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Part B
Procedure for determining Closing Net Debt Statement

The provisions of each of Paragraphs 5.1 (Issue of the Working Capital Statement), 5.2 (Access to working papers), 5.3 (If GKN disagrees with calculation) and 5.4 (Records etc. to be made available) of Part A of Schedule 8 (Determination and Certification of Working Capital) shall apply to the preparation of the Closing Net Debt Statement as if each of those Paragraphs were set out in this Schedule 9 in full with the exception that each reference to Working Capital Statement shall be replaced with Closing Net Debt Statement, each reference to Final Certificate of the Working Capital Adjustment shall be replaced by the Final Certificate of the Net Debt Adjustment and references to the Working Capital Adjustment shall be replaced with the Net Debt.

The parties shall (and shall use their best endeavours to procure that any Independent Accountants shall) to the extent practicable determine any Final Certificate of the Net Debt Adjustment at the same time as determining any Final Certificate of the Working Capital Adjustment, and no payment contemplated by any such certificate shall be due hereunder until the other certificate is determined in accordance with the terms of this Agreement.

 

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Part C
Repayment of Intra-group Lendings and Borrowings

Where any payments are to be made pursuant to Paragraphs 1.2(a) or 1.2(b) on the same date by the Purchaser (on behalf the relevant member of the Purchaser’s Group) to GKN (on behalf of itself or the relevant member of the GKN Group) or by GKN (on behalf of itself or the relevant member of the GKN Group) to the Purchaser (on behalf of itself or the relevant member of the Purchaser’s Group) as the case may be, such payments may, at the parties' agreement, be aggregated or netted (unless applicable local regulations require the payment concerned to be made in the relevant jurisdiction between the relevant parties) in which case the net amount due from the Purchaser to GKN or GKN to the Purchaser (or to any other relevant member of their respective Groups) as the case may be shall be paid. Notwithstanding any aggregation or netting of payments against each other, each of GKN on the one hand and the Purchaser, on the other hand, undertakes to the other that they shall, after the making of such payments, formally record and allocate each payment as such separate transactions as are necessary to ensure that such member receives and

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pays all amounts which would have been received or paid on its behalf by the Purchaser or GKN (or any other relevant member of their respective Groups) had the payments envisaged by Paragraphs 1.2(a) or 1.2(b) been made individually.

Each payment to be made under Paragraph 1 of Part C of this Schedule shall be made in accordance with the provisions of Clause 4.4.

2.1Within two months following Completion:

2.2Payments may be aggregated

Where any payments are to be made pursuant to Paragraphs 2.1(a) or 2.1(b) on the same date by the Indian Company to GKN Sinter Metals Private Ltd or by GKN Sinter Metals Private Ltd to the Indian Company as the case may be, such payments may, at the parties' agreement, be aggregated or netted (unless applicable local regulations require the payment concerned to be made in the relevant jurisdiction between the relevant parties) in which case the net amount due from GKN Sinter Metals Private Ltd to the Indian Company or the Indian Company to GKN Sinter Metals Private Ltd as the case may be shall be paid. Notwithstanding any aggregation or netting of payments against each other, each of GKN on the one hand and the Purchaser, on the other hand, undertakes to the other that they shall procure that, after the making of such payments, they are formally recorded and allocated as such separate transactions as are necessary to ensure that such party receives and pays all amounts which would have been received or paid by it had the payments envisaged by Paragraphs 2.1(a) or 2.1(b) been made individually.

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2.3Method of payment

Each payment to be made under paragraph 2 of Part C of this Schedule shall be made in accordance with the following provisions: each payment shall be made by electronic transfer in immediately available funds to the account notified by the relevant party entitled to receive such payment to the party obliged to make such payment in writing not later than 5 Business Days before the Due Date for payment by the payer. Each such payment to be made shall (except as otherwise required by Applicable Law) be made by means of a single payment in Indian Rupees.

 

 

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Part D
30 June Net Debt Statement

 

149

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Schedule 10

The Companies, Subsidiaries and Purchasers

Part A
The Companies

A.

 

150

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151

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152

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Part B
The Subsidiaries

153

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154

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155

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156

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Part C
The Company and Purchasers

The Purchaser shall notify GKN of the entity that will be the relevant Company Purchaser or Business Purchaser (as appropriate) under each of the Local Agreements (which may be a different entity to any such provisional purchaser referenced in any definition of this Agreement) at least 15 Business Days prior to Completion and GKN shall accept such entity as the relevant Company Purchaser or Business Purchaser (as appropriate), provided that such Company Purchaser or Business Purchaser (as appropriate) is a direct or indirect wholly owned subsidiary of the Purchaser or a member of the Purchaser Group and the purchase of the Business Assets or the Shares by the proposed Purchaser will not:

 

 

 

 

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Part D
The Korean Company

 

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Schedule 11

The Transaction DocumentS

Part A
Agreements and deeds

159

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Part B
Other documents in the Agreed Terms

 

 

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Schedule 12

THE EMPLOYEES

In respect of the Offered Business Employees:

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Subject always to Paragraph 1.6 below, in respect of the Non-Offered Business Employees, the Purchaser shall not be required to make an offer of employment to any such Non-Offered Business Employee, and accordingly the relevant Business Seller shall be entitled to terminate the Non-Offered Business Employee's employment with effect from Completion, provided that GKN shall indemnify the Purchaser and/or the relevant member of the Purchaser's Group and keep it fully indemnified at all times against any cost or liability (including any mandatory severance or related cost)  associated with such termination(s).

All amounts payable under or in connection with the contract of employment of each of the Offered Business Employees in respect of any period prior to Completion shall be for the account of GKN and from Completion for the account of the Purchaser.

The Purchaser shall indemnify GKN and/or the relevant Business Seller and keep it fully indemnified at all times against each loss liability and cost arising in relation to any of the Offered Business Employees who fail to transfer to the Purchaser, pursuant to Paragraph 1.1 above (including any mandatory severance costs), other than in respect of any Offered Business Employee who is retained by any GKN Group Company following Completion and in respect of which the relevant GKN Group Company has not commenced any redundancy or any other employment termination process within three months of Completion.

As soon as reasonably practicable the parties shall send letters to the Offered Business Employees in the form to be provided by the Purchaser following the date of this Agreement (taking account of any reasonable comments of GKN).

GKN and the Purchaser agree and acknowledge that the contracts of employment of certain Business Employees (and any collective agreement made by or governing GKN in respect of them) may have the effect from Completion as if originally made between a Business Employee and the relevant member of the Purchaser’s Group, and the rights, powers, duties, liabilities and obligations of the relevant Business Seller to or in respect of that Business Employees shall be transferred to the relevant member of the Purchaser’s Group from Completion unless any such Business Employee objects to being transferred in accordance with the Applicable Law. The terms of Applicable Law in any jurisdiction shall prevail over any term of this Agreement, and in the event that any Business Employee transfers automatically to the Purchaser (or any member of the Purchaser's Group)

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nothing in this Agreement shall seek to restrict, restrain or otherwise prevent any such transfer, provided that if any Business Employee who transfers automatically to the Purchaser or any member of the Purchaser's Group is a Non-Offered Business Employee, GKN shall indemnify the Purchaser and/or the relevant member of the Purchaser's Group and keep it fully indemnified at all times against each loss liability and cost (including any mandatory severance or related cost) arising in relation to any such transfer.

The Purchaser confirms that it will promptly upon request provide to GKN in writing all such information as may be necessary to enable the relevant Business Seller to comply with its obligation to inform and/or consult with the Business Employees and/or any other affected employees and/or their representatives pursuant to the Transfer Regulations.

At any time between signing of this Agreement and (i) Completion (in respect of the Offered Business Employees and the Company Employees) and (ii) the date on which an offer of employment is to be made by the Purchaser pursuant to 1.1(a) above, GKN may update the Employee List to reflect any changes to the identity of the Employees employed by it in accordance with the provisions of Schedule 1. Where GKN becomes aware of any changes to the Employee List it will serve an updated list on the Purchaser as soon as reasonably practicable following the relevant change.

Following the signing of this Agreement, GKN shall (or shall procure that the relevant Target Group Member shall) take reasonable steps to ensure that that the Retained Employees are not employees of a Target Group Member (and do not become Business Employees) as at the Completion Date.

 

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Schedule 13

VALUE ADDED TAX

as a transaction which does not give rise to any supply for VAT purposes (a TOGC), or which is otherwise outside the scope of VAT, or in respect of which no VAT is otherwise payable, and agree to use all reasonable endeavours to secure that such treatment applies.

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Schedule 14

Tax Covenant

1.1In this Schedule the following definitions shall have the following meanings:

accounting period means any period by reference to which any income, profits or gains, or any other amounts relevant for the purposes of Tax, are measured or determined;

Accounts Relief means any Relief which was included as an asset in the Working Capital Statement or the Closing Net Debt Statement or has otherwise been taken into account in computing (and increasing) Working Capital or computing (and reducing) Net Debt;

Benefit has the meaning given in Paragraph 11.1(b);

Code means the United States Internal Revenue Code of 1986;

Company tax liability means:

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event means any act, transaction, omission or circumstance of whatever nature including any transfer of value, the receipt of assets, any breach of trust, the death of any person, the liquidation of any company, or a failure to make sufficient dividend payments to avoid an apportionment or deemed distribution of income;

Purchaser’s Group for the purposes only of this Schedule means the Purchaser and any other company or companies which either are or become after Completion, or have within the six years ending at Completion been treated as members of the same group as, or otherwise connected or associated in any way with, the Purchaser for any Tax purpose excluding the Target Group;

Purchaser's Relief means:

Retained Group means GKN and any other company or companies (other than the Target Group) which either are or become after Completion, or have within the six years ending at Completion been, treated as members of the same group as, or otherwise connected or associated in any way with, GKN for any Tax purpose;

Straddle Period means any accounting period of a Target Group Member commencing prior to Completion and ending after Completion;

Stromag Trademark Charge Enquiry means the enquiry by the German Tax Authority into GKN Stromag AG regarding the use of the Stromag trademark by other members of the GKN Group in respect of the 2012 financial year and any subsequent financial years up to and including any financial year in which Completion takes place relating to the same matter;

Tax Authority Claim means the issue of any notice, demand, assessment, letter or other document by or on behalf of any Tax Authority or the taking of any other action by or on behalf of any Tax Authority (including the imposition, or any document referring to the possible imposition, of any withholding of or on account of Tax), from which it appears that a liability to Tax may be incurred by or may be imposed on a Target Group Member, being a liability to Tax which could give rise to a liability for GKN under this Schedule or the Tax Warranties (whether alone or in conjunction with other claims); and

tax refund has the meaning given in Paragraph 6.1.

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1.2The headings in this Schedule shall not affect its interpretation.

1.3References in this Schedule to covenants given by GKN and obligations of GKN shall be treated as covenants and obligations for and on behalf of each of the Company Sellers and references in this Schedule to covenants given by the Purchaser and obligations of the Purchaser shall be treated as covenants and obligations for and on behalf of each of the Company Purchasers.

1.4All payments made by GKN (on behalf of any of the Company Sellers) to the Purchaser (on behalf of any of the Company Purchasers) or by the Purchaser (on behalf of any of the Company Purchasers) to GKN (on behalf of any of the Company Sellers) under this Schedule, other than payments of interest, shall so far as possible be made by way of adjustment to the consideration for the sale of the relevant Shares.

1.5References in this Schedule to GKN or to the Purchaser shall include references to the Company Sellers or the Company Purchasers as the case may be.

2.Covenant to pay

2.1GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Company tax liability which falls within limb (a) of the definition thereof arising in respect of, by reference to or in consequence of:

2.2GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Company tax liability where such liability is a primary liability of or is primarily attributable to:

2.3GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Company tax liability arising in connection with the execution or performance of the Agreement or in connection with any matter contemplated by the Agreement, including (without limitation) any Target Group Member ceasing, or being deemed for Tax purposes to cease, to be a member of a group (howsoever defined for any Tax purpose and whether or not on a consolidated or unified basis) or consortium or otherwise ceasing, or being deemed for Tax purposes to cease, to be

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connected, associated or related with any other company for the purposes of any Taxation.

2.4GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Company tax liability which falls within limb (b) or (c) of the definition thereof.

2.5GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Tax which is assessed on or otherwise payable or suffered by any member of the Purchaser's Group or any Target Group Member (or which would have been assessed or otherwise payable or suffered but for the use of a Purchaser's Relief, provided that it shall be assumed that Reliefs other than any Purchaser's Relief are, to the extent allowed by law, used in priority to any Purchaser's Relief)  which is levied by reference to or on account of the income, profits or gains recognised or deemed for Tax purposes to be recognised by any member of the GKN Group or any Target Group Member from the sale, disposal or transfer of the Shares or Businesses by GKN, a Company Seller or a Business Seller to the Purchaser, a Company Purchaser or a Business Purchaser, to the extent that the relevant Tax is required to be accounted for or paid by any member of the Purchaser's Group or any Target Group Member by way of withholding or deduction at source but has not been so withheld or deducted at source, or otherwise, but excluding, for the avoidance of doubt, any Tax which has been or should have been withheld or deducted by the Purchaser from the consideration paid or payable under the Agreement and accounted for to the relevant Tax Authority where such Tax arises by reference solely to the Purchaser's, relevant Company Purchaser's or relevant Business Purchaser's status, residence or place of business for the purposes of any Taxation and not that of any member of the GKN Group.

2.6GKN hereby covenants with the Purchaser to pay to the Purchaser an amount equal to any Company tax liability arising in connection with any Stromag Trademark Charge Enquiry in respect of any accounting period ending prior to Completion or the part of a Straddle Period beginning with the first day of the Straddle Period and ending on the Completion Date.

3.Exclusions

3.1Subject to Paragraphs 3.3 to 3.6, the covenants contained in Paragraph 2 shall not cover any liability to the extent that:

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3.2The provisions of Paragraph 3.1 shall also operate to limit or reduce the liability of GKN in respect of claims under the Tax Warranties.

3.3The exclusions contained in Paragraphs 3.1(c), (d), (e), (g), (i) and (j) shall not apply to the covenant contained in Paragraph 2.2.

3.4The exclusions contained in Paragraphs 3.1(c), (d), (e), (g) and (i) shall not apply to the covenant contained in Paragraph 2.3.

3.5The exclusions contained in Paragraphs 3.1(b), (c), (d), (e), (g), (i) and (j) shall not apply to the covenant contained in Paragraph 2.5.

3.6The exclusion contained in Paragraph 3.1(j) shall not apply to the covenant contained in Paragraph 2.6.

4.Costs and expenses

The covenants contained at Paragraph 2 of this Schedule shall extend to all reasonable out-of-pocket costs and expenses properly incurred by the Purchaser in connection

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with a valid claim made under this Schedule, or in satisfying or settling any Company tax liability in accordance with Paragraph 8 in respect of which a valid claim is made under this Schedule.

5.Double recovery

5.1The Purchaser shall not be entitled to recover any amount pursuant to this Schedule in respect of any claim to the extent that the Purchaser or the Target Group have already recovered any amount in respect of such claim under the Warranties or under any other provision of this Agreement or pursuant to any of the Transaction Documents, or to the extent that recovery has already been made under this Schedule in respect of the same amount.

5.2GKN shall not be entitled to take into account any Relief, tax refund or Benefit more than once to reduce or mitigate its liability under this Agreement or pursuant to any of the Transaction Documents.

6.Tax Refunds

6.1The Purchaser shall promptly notify GKN of any right to repayment or actual repayment of Tax to which any Target Group Member is or becomes entitled or receives in respect of an event occurring, or by reference to any period, prior to Completion, where or to the extent that such right or repayment was not included in the Working Capital Statement as an asset and is not a payment or Relief to which Paragraph 11 below applies (a tax refund).

6.2Any tax refund actually obtained after Completion, whether by repayment or set off (and less any reasonable costs of obtaining it but including any interest or repayment supplement) shall be dealt with as follows:

7.Secondary Liabilities

7.1The Purchaser covenants with GKN to pay to GKN an amount equal to any Tax which any member of the Retained Group is required to pay as a result of a failure by any Target Group Member or Business Purchaser in each case after Completion to discharge that Tax.

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7.2The covenant contained in Paragraph 7.1 shall:

7.3Paragraphs 8, 10 and 11 and Paragraphs 2.1(b)(iii) and 2.2(b) of Schedule 5 shall apply to the covenant contained in Paragraph 7.1 as they apply to the covenants contained in Paragraph 2, replacing references to GKN by the Purchaser (and vice versa), and making any other necessary modifications.

8.Notification of claims and conduct of disputes

8.1If the Purchaser or any Target Group Member becomes aware of any Tax Authority Claim, the Purchaser shall give notice to GKN of that Tax Authority Claim (including reasonable details of such Tax Authority Claim, the due date for any payment and the time limits for any appeal, and so far as practicable the amount of the claim under this Schedule or under the Tax Warranties in respect thereof) as soon as reasonably practicable (and in any event not more than 30 Business Days after the Purchaser or the relevant Target Group Member becomes aware of such claim, provided always that in a case involving a time limit for response or appeal such notice shall be given to GKN not less than 10 Business Days before the expiry of that time limit), provided further that giving notice in accordance with this Paragraph 8.1 shall not be a pre-condition to any claim under this Schedule or for breach of a Tax Warranty provided that the Purchaser will have been deemed to have given GKN notice on the date of Completion for the purpose of this Paragraph 8.1 of any Tax Authority Claim which is Disclosed.

8.2Subject to Paragraph 8.5 the Purchaser shall take (or procure that the relevant Target Group Member shall take) such action as GKN may reasonably request to avoid, dispute, resist, appeal, compromise or defend any Tax Authority Claim (whether notified by the Purchaser, or being a Tax Authority Claim of which GKN was already aware) and any adjudication in respect thereof.  In performing such obligations, the Purchaser shall:

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8.3Subject to Paragraph 8.5, GKN shall have the right (if it wishes) to control any proceedings taken in connection with a Tax Authority Claim (other than in respect of or in connection with a Stromag Trademark Charge Enquiry), provided that GKN shall make no settlement or compromise of any Tax Authority Claim or agree any matter in the conduct of the Tax Authority Claim without the prior written approval of the Target Group Member or the Purchaser (such written approval not to be unreasonably withheld or delayed), as the case may be and GKN shall (to the extent relevant while it is validly exercising its rights under this Paragraph 8.3) be kept fully and promptly informed of all matters known to the Purchaser (but not known to GKN) concerning the Tax Authority Claim and be promptly provided with copies of all documents, notes and correspondence relating to the Tax Authority Claim received by the Purchaser or a Target Group Member (but not received by GKN) or created by the Purchaser or a Target Group Member and such other information, assistance and access to records and personnel as it reasonably requires.

8.4Subject to Paragraph 8.5, GKN shall have the right (if it wishes) to jointly with the Purchaser, and to require the Purchaser to jointly with GKN, control any proceedings taken in connection with a Tax Authority Claim in respect of or in connection with a Stromag Trademark Charge Enquiry.  In jointly controlling such proceedings:

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8.5Without prejudice to the liability of GKN under this Schedule or for breach of any of the Tax Warranties, (i) neither the Purchaser nor the relevant Target Group Member shall be required to take or procure the taking of any action pursuant to Paragraph 8.2 in respect of any Tax Authority Claim, (ii) GKN shall not be permitted to take or retain conduct pursuant to Paragraph 8.3 in respect of any Tax Authority Claim and (iii) GKN shall not be permitted to take or retain joint conduct or to require the Purchaser to take or retain joint conduct pursuant to Paragraph 8.4 in respect of any Tax Authority Claim:

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in which case the Purchaser shall notify GKN that this Paragraph 8.5(c) applies;

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8.6In exercising its rights under Paragraph 8.3, GKN shall:

8.7Subject to GKN's compliance with Paragraphs 8.3 and 8.6 where GKN is controlling any proceedings or GKN's compliance with Paragraph 8.4 where GKN has joint conduct rights, the Purchaser shall ensure and shall procure that no Tax Authority Claim, action or issue in respect of which GKN could be required to make a payment under this Schedule or for breach of any Tax Warranty is settled or otherwise compromised without GKN's prior written consent, such consent not to be unreasonably withheld, unless Paragraph 8.5(a), (b), (d), (e) or (h) applies, or in circumstances where Paragraph 8.5(c), (f) or (g) apply and GKN does not take or notify the Purchaser that it will take or request an alternative reasonable action which would be permitted taking into account the provisions of Paragraph 8.5 within 10 Business Days of receiving a notice from the Purchaser in accordance with Paragraph 8.5(c), (f) or (g), as applicable, in which case the Purchaser or the Target Group Member concerned shall be free to satisfy or settle the relevant Tax Authority Claim on such terms as it may in its absolute discretion think fit.

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9.Reallocation elections

9.1The Purchaser shall, at the direction in writing of GKN, procure that the Target Group Members take all steps as GKN may reasonably require to make all claims and elections (and not later to amend or withdraw any such claim or election unless directed to do so by GKN) specified by GKN that have the effect of reducing or eliminating any liability to Tax in respect of which the Purchaser would have been able to make a claim under this Schedule, by way of reallocating such liability to Tax to the Retained Group or transferring or surrendering Relief from the Retained Group, provided that the Purchaser shall not be required to procure that the Target Group Members make such claims and elections in circumstances where the Target Group Members or Purchaser's Group would thereby be liable for Tax in respect of which the Purchaser would not be able to make a claim under this Schedule or would result in the utilisation of a Purchaser's Relief or which are not permissible or effective under Applicable Law or which would materially prejudice or have a material adverse effect on the goodwill, reputation, business, financial or Tax position of the Purchaser.

10.Due date of payment and interest

10.1Subject to Paragraphs 10.2 and 10.3 GKN shall pay to the Purchaser any amount payable under this Schedule on or before the date which is the later of the date five Business Days after demand is made therefor by the Purchaser and two Business Days before the first date on which the Tax in question becomes recoverable by the Tax Authority demanding the same.  Provided that:

GKN may, with the Purchaser's consent, not to be unreasonably withheld or delayed, make a direct payment in respect of the Company tax liability in question to the relevant Tax Authority (provided the Purchaser or Target Group Member has not already done so) and GKN’s liability to the Purchaser shall be treated as reduced or eliminated accordingly.

10.2Where a claim under this Schedule relates to a Company tax liability within limb (b) of the definition thereof, GKN shall pay to the Purchaser the amount due under this Schedule in respect thereof on the later of the date which is the first date on which Tax which would have been payable but for such use or set off would have become recoverable by the Tax Authority demanding the same, and 10 Business Days after demand is made therefor by the Purchaser.

10.3Where a claim under this Schedule relates to a Company tax liability within limb (c) of the definition thereof, GKN shall pay to the Purchaser the amount due

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under this Schedule in respect thereof on the later of the date which is two Business Days before the first date on which Tax becomes payable which would not have been payable but for such loss or non-availability (or, in the case of a repayment of tax, on the later of the date on which that repayment would have been received) and five Business Days after written demand therefor is received by GKN.

10.4Any sum not paid by GKN on the due date for payment specified in Paragraph 10.1 to 10.3 shall bear interest (which shall accrue from day to day after as well as before any judgment for the same) at the Default Rate from the due date to and including the day of actual payment of such sum, compounded quarterly, provided that such interest shall not accrue to the extent that GKN’s liability under Paragraph 2 or Paragraph 4 extends to interest or penalties arising after the due date.  Any interest due under this Paragraph shall be paid on the demand of the Purchaser.

11.Recovery from third parties/tax savings

11.1If any payment is made by GKN under this Schedule or for breach of any Tax Warranty in respect of a Company tax liability or other matter and the Purchaser, any Target Group Member or any other member of the Purchaser's Group either receives, or is entitled or may be entitled either immediately or at some future date to recover or obtain, from any person (including any Tax Authority) a payment or Relief which would not have arisen but for the Company tax liability or other matter in question or the circumstances giving rise thereto, then:

11.2GKN shall be entitled to require that the Target Group Member's or other person's auditors shall certify the amount and date of use of such Relief for the purposes of this Paragraph 11.

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12.Management of pre‑Completion tax affairs

Interpretation

12.1In this Paragraph 12 and in Paragraph 13:

corporation tax means any Tax on income, profits or gains of a Target Group Member but (for the avoidance of doubt) not VAT;

pre‑Completion tax affairs means the Tax affairs of the Target Group for which GKN is responsible under this Paragraph 12;

Tax Documents means the Tax Returns, claims and other documents which GKN is required to prepare on behalf of the Target Group under Paragraph 12.2(a) and 12.2(b);

Tax Return means any return required to be made to any Tax Authority of income, profits or gains or of any other amounts or information relevant for the purposes of Tax, including any related accounts, computations and attachments; and

time limit means the latest date on which a Tax Document can be executed or delivered to a relevant Tax Authority either without incurring interest or a penalty, or in order to ensure that such Tax Document is effective.

Rights and Obligations of GKN

12.2Subject to and in accordance with the provisions of this Paragraph GKN or its duly authorised agents shall, in respect of all accounting periods ending on or before Completion, and at its own cost:

in each case, in a manner consistent with past practice and without any change to accounting treatment, save to the extent necessary to comply with Applicable Law or generally accepted accounting principles.

12.3GKN or its duly authorised agents shall deliver all Tax Documents which are required to be signed by or on behalf of any Target Group Member or which it otherwise intends to submit to a Tax Authority to the Purchaser for authorisation, signing (if required) and submission to the relevant Tax Authority.  If a time limit applies in relation to any Tax Document, GKN shall ensure that the Purchaser

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receives the Tax Document no later than 15 Business Days before the expiry of the time limit.

12.4GKN shall ensure, and if relevant, procure that:

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Obligations of the Purchaser

12.5The Purchaser shall procure that:

12.6The Purchaser shall (subject to Paragraph 12.7 below) be obliged to procure that the relevant Target Group Member shall cause any Tax Document delivered to it under Paragraph 12.3 to be authorised and signed without delay and without amendment, and submitted to the appropriate Tax Authority without delay (and in any event within any relevant time limit).

Rights of the Purchaser

12.7The Purchaser shall be under no obligation to procure the authorisation or signing of any tax document delivered to it under Paragraph 12.3 which it considers in its reasonable opinion to be false or misleading in a material respect, but for the avoidance of doubt shall be under no obligation to make any enquiry as to the completeness or accuracy thereof and shall be entitled to rely entirely on GKN and its agents.

12.8Notwithstanding any other provision of this Schedule, nothing done by the Purchaser or any Target Group Member pursuant to the obligations specified in this Paragraph shall in any way restrict or reduce the rights that the Purchaser may have to make a claim against GKN under this Schedule.

12.9If it appears to the Purchaser (acting reasonably) that GKN is in breach of its obligations in Paragraph 12.4, it shall provide GKN with written notice that it wishes to take over the pre-Completion tax affairs and if GKN is in fact in breach of such obligations and does not rectify its non-compliance within 5 Business Days (or fails to demonstrate to the Purchaser's reasonable satisfaction that it is not in breach of such obligations), the Purchaser shall be entitled to take over conduct of the pre-Completion tax affairs.

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13.Conduct of other Tax Affairs

13.1Subject to Paragraph 8 and to the following Paragraphs, the Purchaser or its duly authorised agents shall have sole conduct of all Tax affairs of the Target Group which are not pre‑Completion tax affairs and shall be entitled to deal with such Tax affairs in any way in which it, in its absolute discretion, considers fit.

13.2In respect of or insofar as relevant to a Straddle Period in respect of corporation tax or any matter in relation to which GKN may be liable under this Schedule or for breach of the Tax Warranties, the Purchaser shall ensure, and if relevant, procure that:

13.3GKN shall provide such assistance as the Purchaser shall reasonably request in preparing all Tax Returns relating to the Straddle Period or any matter in relation to which GKN may be liable under this Schedule or for breach of the Tax Warranties.

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14.Illegality

If at any time any provision of this Schedule is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby.

 

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Schedule 15

Territory

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Schedule 16

Profit and Loss Transfer Agreement

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and such compensation shall be deemed to reduce or increase, as the case may be, the proportion of the Final Consideration allocated to the shares in GKN Stromag.

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Schedule 17

[Not Used]

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Schedule 18

Retained Interests

 

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Schedule 19

Persons of whom enquiry was made in relation to the Warranties

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ANNEX

WORKED EXAMPLE OF PRICE ADJUSTMENT AND PRICE ALLOCATION

 

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