Exhibit 10.1

EXECUTION COPY

ASSET AND STOCK PURCHASE AGREEMENT

BY AND AMONG

SENSATA TECHNOLOGIES, INC.,

HONEYWELL CO. LTD.,

HONEYWELL SPOL S.R.O.,

HONEYWELL AEROSPACE S.R.O.,

HONEYWELL (CHINA) CO. LTD.,

HONEYWELL AUTOMATION INDIA LIMITED,

HONEYWELL JAPAN INC.

HONEYWELL CONTROL SYSTEMS LIMITED

HONEYWELL GMBH

AND

HONEYWELL INTERNATIONAL INC.

October 28, 2010

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Table of Contents

 

          Page  

ARTICLE I CERTAIN DEFINITIONS

     2   

      1.1

   Certain Definitions      2   

ARTICLE II PURCHASE AND SALE OF SHARES AND ASSETS AND ASSUMPTION OF LIABILITIES

     12   

      2.1

   Purchase and Sale of Shares and Assets      12   

      2.2

   Assets of the Purchased Entities      14   

      2.3

   Excluded Assets      15   

      2.4

   Assumption of Liabilities      16   

      2.5

   Excluded Liabilities      18   

      2.6

   Liabilities of the Purchased Entities      21   

ARTICLE III CLOSING; CLOSING DELIVERIES

     21   

      3.1

   Purchase Price      21   

      3.2

   Closing Date      22   

      3.3

   Closing Deliveries      22   

      3.4

   Working Capital      25   

      3.5

   Purchase Price Allocation      27   

      3.6

   Withholding      28   

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     28   

      4.1

   Corporate Status      29   

      4.2

   Authority      29   

      4.3

   No Conflict; Government Authorizations      29   

      4.4

   Capitalization      30   

      4.5

   Financial Statements      31   

      4.6

   Absence of Certain Changes; Undisclosed Liabilities      31   

      4.7

   Taxes      34   

      4.8

   Intellectual Property      36   

      4.9

   Legal Proceedings      37   

      4.10

   Compliance with Laws; Permits      38   

      4.11

   Environmental Matters      38   

      4.12

   Employee Matters and Benefit Plans      39   

      4.13

   Material Contracts      42   

      4.14

   Material Customers and Suppliers      43   

      4.15

   Real Properties      43   

      4.16

   Personal Properties      43   

      4.17

   Sufficiency of Assets      44   

      4.18

   Labor      44   

      4.19

   Insurance      45   

      4.20

   Products Liability; Warranty      45   

      4.21

   Finder’s Fee      46   

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      4.22

   Bank Accounts; Directors and Officers      46   

      4.23

   DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES      46   

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER

     46   

      5.1

   Corporate Status      46   

      5.2

   Authority      46   

      5.3

   No Conflict; Required Filings      47   

      5.4

   Legal Proceedings      47   

      5.5

   Sufficient Funds      47   

      5.6

   Investment Intent      48   

      5.7

   No Reliance      48   

      5.8

   Finder’s Fee      49   

      5.9

   DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES      49   

ARTICLE VI COVENANTS

     50   

      6.1

   Interim Operations of the Business      50   

      6.2

   Filings with Governmental Authorities      52   

      6.3

   Consents; Shared Agreements      55   

      6.4

   Confidentiality; Access to Information      57   

      6.5

   Publicity      61   

      6.6

   Books and Records      61   

      6.7

   Further Action      62   

      6.8

   Expenses      63   

      6.9

   Notification of Certain Matters      63   

      6.10

   Employees and Employee Benefit Plans      63   

      6.11

   Indebtedness; Intercompany Accounts      70   

      6.12

   Insurance Matters      72   

      6.13

   Non-Solicitation of Employees      72   

      6.14

   Non-Competition      73   

      6.15

   Business Confidential Information      75   

      6.16

   Waiver of Conflicts and Attorney-Client Privilege      76   

      6.17

   Closing Cash Balance      76   

      6.18

   Sellers’ Marks      76   

      6.19

   Exclusivity      77   

      6.20

   Certain Payments      78   

      6.21

   Compliance with Letter Agreements      78   

      6.22

   HTT Supply Agreement      78   

      6.23

   HTT Support Obligation      78   

ARTICLE VII CLOSING CONDITIONS

     78   

      7.1

   Conditions to Obligations of the Sellers and Purchaser      78   

      7.2

   Additional Conditions to Obligations of Purchaser      79   

      7.3

   Additional Conditions to Obligations of the Sellers      79   

ARTICLE VIII CERTAIN TAX MATTERS

     80   

      8.1

   Tax Returns      80   

      8.2

   Cooperation on Tax Matters; Contests      81   

 

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      8.3

   Tax Sharing Agreements      82   

      8.4

   Tax Indemnifications      82   

      8.5

   Certain Taxes      84   

      8.6

   VAT.      84   

      8.7

   Check the Box Elections      85   

      8.8

   Wage Reporting      85   

ARTICLE IX TERMINATION

     85   

      9.1

   Termination      85   

      9.2

   Effect of Termination and Abandonment      85   

ARTICLE X SURVIVAL; INDEMNIFICATION

     86   

      10.1

   Survival of Representations, Warranties and Agreements      86   

      10.2

   Indemnification      86   

      10.3

   Indemnification Procedures      87   

      10.4

   Indemnification Limitations      89   

ARTICLE XI MISCELLANEOUS

     92   

      11.1

   Notices      92   

      11.2

   Severability      93   

      11.3

   Entire Agreement; No Third-Party Beneficiaries      93   

      11.4

   Amendment; Waiver      94   

      11.5

   Binding Effect; Assignment      94   

      11.6

   Disclosure Schedule      94   

      11.7

   Governing Law      94   

      11.8

   Dispute Resolution; Mediation; Jurisdiction      94   

      11.9

   Construction; Interpretation      95   

      11.10

   Counterparts      96   

 

iv

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Index of Defined Terms

 

Term

   Page  

Acceptable Product Derivations

     2   

Acquired Intellectual Property

     2   

Acquired Patents

     2   

Action

     37   

Actual GME Capital Expenditure Amount

     3   

Affiliate

     3   

Agreement

     1   

Ancillary Agreements

     3   

Applicable Requirements

     59   

Application-Specific Packaging

     3   

ASIC

     3   

Asset Sellers

     3   

Assumed Environmental Liabilities

     18   

Assumed Liabilities

     16   

Audit Assistance Request

     60   

Automotive Field

     3   

Balance Sheets

     31   

Bill of Sale

     22   

Budgeted GME Capital Expenditure Amount

     3   

Business

     1   

Business Confidential Information

     75   

business day

     3   

Business Material Adverse Effect

     4   

Business Related Excluded Liabilities Claim

     91   

Carve-Out Financial Information

     59   

Carve-Out Financial Statements

     59   

China Consent

     4   

China Employees

     69   

China Transfer Agreement

     4   

Chinese Approval Authority

     4   

Chinese Registration Authority

     4   

Chip-on Lead Frame Patents

     4   

Chonan Manufacturing Agreement

     23   

Closing

     22   

Closing Date

     22   

COBRA

     65   

Code

     4   

Collateral Source

     90   

Company Plan

     40   

Company Plans

     40   

Competing Business

     73   

Confidential ASIC Technology Agreement

     23   

Confidentiality Agreement

     57   

 

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Confidentiality Obligations

     59   

Contract

     4   

control

     5   

Current Representation

     76   

Current-Sensing Products

     5   

Czech Republic Employees

     66   

De Minimis Loss

     90   

Disclosure Schedule

     28   

Dispute

     94   

Disputed Amount

     25   

DOJ

     5   

Employees

     63   

Encumbrances

     43   

Environmental Claims

     39   

Environmental Laws

     39   

Environmental Reports

     39   

Equity Interests

     1   

ERISA

     5   

ERISA Affiliate

     5   

Exacerbation of Pre Existing Conditions

     5   

Excluded Assets

     15   

Excluded Liabilities

     19   

Excluded Names

     15   

Excluded Products

     74   

Excluded Representations

     90   

Existing Customers

     5   

Existing Products

     5   

Final Net Working Capital

     25   

Financial Statements

     31   

Flow Sensor Products

     6   

Foreign Plan

     41   

Foreign Transfer Agreements

     23   

Freeport Lease

     23   

FTC

     6   

GAAP

     6   

GME Capital Expenditure

     6   

Governmental Authority

     6   

Governmental Order

     6   

Gross Foreign Purchase Price

     28   

Gross US Purchase Price

     27   

Guarantee

     1   

HON Audit Manager

     59   

HON China

     1   

HON Czech

     1   

HON Czech Aero

     1   

HON Czech Controls

     1   

 

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HON England

     1   

HON Germany

     1   

HON India

     1   

HON Japan

     1   

HON Korea

     1   

HON Shanghai

     1   

HON Shanghai Determination Event

     54   

HON Shanghai Purchase Price

     6   

HON Shanghai Re-Acquisition Date

     54   

HON Shanghai Registration Date

     53   

Honeywell

     1   

Honeywell L/Cs

     71   

Honeywell Personnel

     59   

HSR Act

     30   

HTT

     12   

HTT Supply Agreement

     23   

IFRS

     6   

Indebtedness

     6   

Indemnification Cap

     90   

Indemnified Party

     87   

Indemnifying Party

     87   

Independent Accounting Firm

     7   

Initial Purchase Price

     21   

Intellectual Property

     37   

Intellectual Property Assignments

     23   

Intellectual Property License Agreement

     23   

Joint Venture Agreement

     31   

Juarez

     16   

Key Customers

     43   

Key Suppliers

     43   

Knowledge

     7   

Korea Employees

     67   

Labor Laws

     45   

Law

     7   

Leased Real Property

     13   

Level 1 Products

     7   

Level 1 Technology

     7   

Level 1.5 Module

     7   

Level 1.5 Module Patents

     7   

Liability

     7   

Liens

     44   

Losses

     7   

Made Available

     8   

Material Contract

     43   

Materials of Environmental Concern

     39   

Mediation Request

     95   

 

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MIP

     65   

Most Recent Balance Sheet

     8   

Net Working Capital

     8   

New Agreement

     56   

New Conditions

     8   

NW Illinois

     16   

Occurrence Policies

     72   

Operator Controls

     8   

Optical Products

     8   

Ordinary Course Warranty Obligations

     8   

Other Competition Authorities

     52   

Other Competition Filings

     52   

Other Competition Law

     52   

Packaging

     9   

Patents

     37   

Permit

     9   

Permitted Encumbrances

     9   

Person

     9   

Post-Closing Representation

     76   

Post-Signing Assumed Contract

     17   

Post-Signing Assumed Product

     17   

Preliminary Net Working Capital

     25   

Preliminary Working Capital Statement

     25   

Procedure

     95   

Product Recall

     9   

Products Liability Claims

     9   

Prohibited Acquired Entity Activities

     74   

Prohibited Portion

     74   

Property

     39   

Purchase Price

     21   

Purchased Assets

     12   

Purchased Contracts

     12   

Purchased Entities

     1   

Purchased Entities Excluded Assets

     14   

Purchased Entity L/Cs

     71   

Purchaser

     1   

Purchaser Indemnified Parties

     86   

Purchaser Material Adverse Effect

     10   

Purchaser Personnel

     59   

PwC

     59   

Reimbursable Participation

     88   

Release

     10   

Reorganization Actions

     15   

Retained Products

     10   

Richardson

     16   

SAFE Special Bank Account

     10   

 

viii

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SCEC

     53   

Seller Indemnified Parties

     87   

Sellers

     1   

Sellers’ Marks

     77   

Sensata NV

     10   

Shanghai Employees

     68   

Shared Contracts

     56   

Shared Product

     56   

SIP

     65   

Sleipnir ASIC

     10   

Sleipnir ASIC Support Agreement

     23   

Sleipnir Intellectual Property

     10   

Software

     37   

Solvent

     48   

Specified Accounting Policies

     10   

Specified Consent

     55   

Straddle Period

     82   

Subsidiary

     10   

Supply Agreement

     23   

Survival Period

     86   

Targeted Net Working Capital

     10   

Tax Benefit

     10   

Tax Return

     11   

Taxes

     11   

Taxing Authority

     11   

Thermal Products

     11   

Third-Party Claim

     87   

Threshold Amount

     90   

Transaction Matters

     94   

Transfer Taxes

     84   

Transferred China Employees

     69   

Transferred Employees

     64   

Transferred Korea Employees

     67   

Transferred US Employees

     64   

Transition Services Agreement

     22   

Transportation Field

     11   

Turbo Field

     11   

Underlying Technology

     11   

US Employees

     64   

VAT

     84   

Voluntary Environmental Investigation

     12   

WARN Act

     33   

ZMD

     10   

ZMD Agreement

     56   

 

ix

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Index of Exhibits

 

Exhibit A-1

   Purchase Price Allocation Schedule

Exhibit A-2

   US Allocation Schedule Template

Exhibit A-3

   Foreign Allocation Schedule Template

Exhibit B

   Form of Bill of Sale and Assignment and Assumption Agreement

Exhibit C

   Form of Transition Services Agreement

Exhibit D

   Form of Intellectual Property Assignment

Exhibit E

   Form of Intellectual Property License Agreement

Exhibit F

   Form of Freeport Lease

Exhibit G

   Form of FIRPTA Certification

Exhibit H

   Form of Supply Agreement

Exhibit I

   Form of Sensata Technologies B.V. Guarantee

Exhibit J

   Form of China Consent

Exhibit K

   Form of China Transfer Agreement

Exhibit L

   Form of Chonan Manufacturing Agreement

Exhibit M

   Form of Sleipnir ASIC Support Agreement

Exhibit N

   Form of Confidential ASIC Technology Agreement

Index of Disclosure Schedules

 

Section 1.1(bb)

     Late Stage Development and Non-Commercialized Products

Section 1.1(mm)(i)

     Sellers’ Knowledge

Section 1.1(mm)(ii)

     Purchaser’s Knowledge

Section 1.1(ddd)

     Permitted Encumbrances

Section 1.1(ooo)

     Specified Accounting Policies

Section 2.2(b)

     Excluded Purchased Entities Assets

Section 2.3(h)

     Excluded Intellectual Property

Section 2.3(i)

     Excluded Information Technology Assets

Section 2.3(k)

     Other Excluded Assets

Section 2.4(b)

     Scheduled Material Contracts

Section 2.4(c)

     Existing Products

Section 2.5(a)(vii)

     Certain Purchased Contracts

Section 2.5(a)(ix)

     Excluded Liabilities

Section 3.3(a)(vii)

     Certain HTT Sensor Products

Section 3.3

     Closing Deliveries

Section 4.3(a)

     No Conflict

Section 4.3(b)

     Government Authorizations

Section 4.4

     Capitalization

Section 4.5

     Financial Statements

Section 4.6(a)

     Absence of Certain Changes

Section 4.6(c)

     Undisclosed Liabilities

Section 4.7

     Taxes

Section 4.8(a)

     Intellectual Property

Section 4.8(b)

     Certain Intellectual Property

Section 4.8(c)

     Level 1.5 Module Patents

 

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Section 4.8(d)

     Infringed Intellectual Property

Section 4.9

     Legal Proceedings

Section 4.10

     Compliance with Laws; Permits

Section 4.11

     Environmental Matters

Section 4.12(a)

     Employee Matters and Benefit Plans

Section 4.12(b)

     Benefit Plan Compliance and Funding

Section 4.12(c)

     Employee Pension Benefit Plans

Section 4.12(d)

     Retiree or Post-Termination Benefits

Section 4.12(e)

     Change in Control Benefits

Section 4.12(g)

     Foreign Plans

Section 4.13(a)

     Material Contracts

Section 4.13(b)

     Material Breach or Default

Section 4.14

     Material Customers and Suppliers

Section 4.15

     Real Properties

Section 4.16

     Personal Properties

Section 4.17

     Sufficiency of Assets

Section 4.18(a)

     Labor

Section 4.18(b)

     Labor Notices

Section 4.20

     Products Liability; Warranty

Section 4.22

     Bank Accounts; Directors and Officers

Section 5.3(b)

     No Conflict; Required Filings

Section 6.1

     Interim Operations of the Business

Section 6.3

     Shared Contracts

Section 6.10

     Employees

Section 6.10(b)

     U.S. Employees

Section 6.10(b)(iii)

     U.S. Employee Severance Plan

Section 6.10(c)

     Czech Republic Employees

Section 6.10(d)

     Korea Employees

Section 6.10(e)

     Shanghai Employees

Section 6.10(f)

     China Employees

Section 6.11(a)

     Intercompany Accounts and Contracts

Section 6.23

     HTT Projected Volumes and Pricing Schedule

 

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ASSET AND STOCK PURCHASE AGREEMENT

THIS ASSET AND STOCK PURCHASE AGREEMENT (this “Agreement”) is made this 28th day
of October, 2010, by and among Sensata Technologies, Inc., a Delaware
corporation (“Purchaser”), Honeywell International Inc., a Delaware corporation
(“Honeywell”), Honeywell Co. Ltd., a Korea company (“HON Korea”), Honeywell spol
s.r.o., a Czech Republic company (“HON Czech”), Honeywell Aerospace s.r.o., a
Czech Republic company (“HON Czech Aero”), Honeywell (China) Co. Ltd., a China
company (“HON China”), Honeywell Automation India Limited, an India company
(“HON India”), Honeywell Control Systems Limited, an England company (“HON
England”), Honeywell GmbH, a Germany company (“HON Germany”), Honeywell Japan
Inc., a Japan company (“HON Japan”) and collectively with Honeywell, HON Korea,
HON Czech, HON Czech Aero, HON China, HON India, HON England and HON Germany,
but excluding the Purchased Entities (as defined below), the “Sellers”).

WHEREAS, the Sellers and the Purchased Entities, through Honeywell’s and the
other Sellers’ Sensing and Control business unit, operate the S&C
Automotive-On-Board business which manufactures, develops, calibrates, tests,
sells, and/or currently supports (i.e., maintains) the following products:
(i) Hall sensors in Application-Specific Packaging (defined below) for use in
the Automotive Field (defined below); (ii) magneto resistive (MR) sensors in
Application-Specific Packaging for use in the Automotive Field; (iii) variable
reluctance sensors in Application-Specific Packaging for use in the Automotive
Field; (iv) Level 1.5 Modules (defined below); (v) vane and linear position
sensors in Application-Specific Packaging for use in the Automotive Field or the
Turbo Field (defined below); and/or (vi) pressure sensors (A) in
Application-Specific Packaging for use in the Automotive Field and/or
(B) configured for exhaust applications in the Transportation Field (defined
below), in each case including the specific products set forth on Section 2.4(c)
and Section 1.1(bb) of the Disclosure Schedule (collectively, the “Business”);

WHEREAS, the Sellers conduct the Business through Honeywell Controls s.r.o., a
Czech Republic company (“HON Czech Controls”), and Honeywell-Xin Yao Automotive
Sensors (Shanghai) Co., Ltd., a Chinese company (“HON Shanghai” and together
with HON Czech Controls, the “Purchased Entities”), and through the use of
certain assets owned, leased and licensed directly by the Sellers;

WHEREAS, this Agreement contemplates a transaction in which Purchaser will
acquire from the Sellers all of the Sellers’ ownership interest in the Purchased
Entities (the “Equity Interests”) and certain of the assets of the Business, and
will assume certain of the Liabilities of the Business, upon the terms and
subject to the conditions contained in this Agreement; and

WHEREAS, in furtherance of the transaction contemplated hereby, as of the date
hereof Sensata Technologies B.V. has executed the guarantee attached hereto as
Exhibit I (the “Guarantee”).

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NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

ARTICLE I

CERTAIN DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:

(a) “Acceptable Product Derivations” are modifications to or derivations of
Existing Products (in the case of Purchaser or its Affiliates) or Retained
Products (in the case of Honeywell or its Affiliates) which, (i) if covered by
Intellectual Property, do not change the manner in which the Intellectual
Property is used in the product and (ii) do not intentionally modify a product
that is for use in the Automotive Field to become a product that is for use
outside the Automotive Field (in the case of Purchaser), or intentionally modify
a product that is for use outside the Automotive Field to become a product that
is for use inside the Automotive Field (in the case of Honeywell).

(b) “Acquired Intellectual Property” means: (i) all Acquired Patents; (ii) all
registered or unregistered Intellectual Property (other than Patents) owned or
held for use by any of the Sellers and their Affiliates, that solely relates to
the Existing Products, including (A) any tangible embodiments of such
Intellectual Property, (B) books, records, ledgers, files, documents,
correspondence, lists, specifications, drawings, advertising, marketing and
promotional materials, studies, business and accounting records of every kind,
reports and all other materials (in whatever form or medium) relating to such
Intellectual Property and (C) such items in the form of specifications, product
designs, embedded software, firmware, programmable logic, mask works,
specialized tooling, specialized design tools, or prototypes (but for the sake
of clarity, excluding the Sleipnir Intellectual Property); and (iii) the
Intellectual Property (other than Patents) in the items set forth on
Section 4.8(a) of the Disclosure Schedule; provided, however, that with respect
to each of the foregoing subsections (i), (ii) and (iii), such Intellectual
Property shall include all rights and remedies thereunder against infringement
and misappropriation with respect thereto; and, provided further, with respect
to each of the foregoing subsections (ii) and (iii), such Intellectual Property
shall not include the Intellectual Property to the extent comprising Level 1
Technology.

(c) “Acquired Patents” means (i) the Chip-on Lead Frame Patents; (ii) the
Patents set forth on Section 4.8(a) of the Disclosure Schedule including the
Level 1.5 Module Patents; (iii) all Patents developed by Sellers’ or their
Affiliates’ Korea development group located at Chonan, South Korea, Sellers’ or
their Affiliates’ China development group located at Shanghai, or by any of the
Sellers’ or their Affiliates’ Nanjing employees for the joint venture governed
by the Joint Venture Agreement, in each case, which are related to the Business;
and (iv) all foreign equivalents and all divisionals, reissues, revisions,
re-examinations, extensions, continuations and continuations-in-parts of any of
the foregoing.

 

2

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(d) “Actual GME Capital Expenditure Amount” means the amount of expenditures
related to the GME Capital Expenditure as of the close of business on the day
prior to the Closing Date.

(e) “Affiliate” of a Person means a Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person.

(f) “Ancillary Agreements” means the Bill of Sale, the Transition Services
Agreement, the Intellectual Property Assignments, the Intellectual Property
License Agreement, the Supply Agreement, the HTT Supply Agreement (if
applicable), the Sleipnir ASIC Support Agreement, the Confidential ASIC
Technology Agreement, the Guarantee, the Chonan Manufacturing Agreement, the
Foreign Transfer Agreements and the Freeport Lease.

(g) “Application-Specific Packaging” means Packaging: (i) having a shape and
mechanical and/or electrical interfaces that are designed for one or more
specific applications or programs within a particular field, rather than having
a shape and mechanical and/or electrical interfaces that are generic and
suitable for multiple applications in multiple fields; or (ii) that is or
embodies a standard within the Automotive Field as defined by associations,
trade groups, and Governmental Authorities that provide or maintain standards
within the automotive industry, including standards provided or maintained by
the Society of Automotive Engineers, the Automotive Electronics Council, the
Automotive Open System Architecture Group, the U.S. Department of
Transportation, or any foreign equivalent of the foregoing.

(h) “ASIC” means an application-specific integrated circuit; that is, an
integrated circuit customized for a specific use in contrast to a general
purpose integrated circuit; including without limitation integrated circuits
using programmable logic and human readable or any intermediate hardware logic
description language (including HDL and VHDL) that are used to program or
configure such integrated circuit.

(i) “Asset Sellers” means Honeywell, HON Korea, HON Czech, HON Czech Aero, HON
China, HON India, HON England, HON Germany and HON Japan.

(j) “Automotive Field” means the field of four-wheel passenger cars (i.e., cars,
minivans, sport utility vehicles, multi-purpose vehicles or vans designed
primarily for transporting approximately 1-8 people (or approximately 1-15
people in the case of vans)), and light trucks classified by the U.S. Department
of Transportation (or equivalent foreign regulatory agency) up through Class 6
(i.e., a truck having a gross vehicle weight rating of up to 26,000 pounds in
the U.S.).

(k) “Budgeted GME Capital Expenditure Amount” means the One Million Forty One
Thousand Dollars ($1,041,000.00) related to 2010 GME Capital Expenditure.

(l) “business day” means any day other than a Saturday, Sunday or a day on which
the banks in New York are authorized by Law or executive order to be closed.

 

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(m) “Business Material Adverse Effect” means any event, change, effect or
circumstance that, individually or in the aggregate, has had, or would
reasonably be expected to have, a material adverse effect on the business,
assets, results of operations or financial condition of the Business; provided,
however, that changes, effects or circumstances, alone or in combination, that
arise out of or result from (i) changes in economic conditions, financial or
securities markets in general, or the industries and markets (including with
respect to commodity prices) in which the Business is operated, except to the
extent disproportionately affecting the Business, (ii) the execution and
performance (other than as set forth in the first sentence of Section 6.1
hereof) of this Agreement and the announcement of this Agreement and the
transactions contemplated hereby, (provided, however, that the foregoing shall
not affect or otherwise limit the representations set forth in Sections 4.3 and
5.3) (iii) acts of God, calamities, national or international political or
social conditions, including the engagement by the United States, Korea, China,
the Czech Republic, Germany, India or Japan in hostilities, whether commenced
before or after the date hereof, or the occurrence of any military attack or
terrorist act upon the United States, Korea, China, the Czech Republic, Germany,
India or Japan except to the extent disproportionately affecting the Business,
or (iv) any actions taken, or failures to take action, or such other changes or
events, in each case, to which Purchaser has specifically consented in writing,
shall not be considered in determining whether a Business Material Adverse
Effect has occurred.

(n) “China Consent” means that written consent with respect to the transfer of
the Equity Interests of HON Shanghai to Purchaser and that certain board of
directors consent of HON Shanghai, in substantially the forms attached hereto as
Exhibit J.

(o) “China Transfer Agreement” means that stock transfer agreement with respect
to the transfer of the Equity Interests of HON Shanghai, in substantially the
form attached hereto as Exhibit K, which will be executed and delivered by the
applicable parties as of the date hereof.

(p) “Chinese Approval Authority” means the Ministry of Commerce of The People’s
Republic of China or its local counterpart which is competent to approve the
equity transfer of HON Shanghai.

(q) “Chinese Registration Authority” means the State Administration of Industry
and Commerce or its local counterpart which is competent to register the equity
transfer of HON Shanghai.

(r) “Chip-on Lead Frame Patents” means USPNs 7,269,992, 7,375,406 and 7,378,721.

(s) “Code” means the Internal Revenue Code of 1986, as amended.

(t) “Contract” shall mean any contract, agreement, personal property lease,
license, sales order, purchase order, invoice, indenture, note, bond, loan,
instrument, commitment or other arrangement or agreement that is binding on any
Person or any part of its property under applicable Law, other than any Company
Plan.

 

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(u) “control” (including the terms “controlled”, “controlled by” and “under
common control with”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by Contract or
credit arrangement or otherwise.

(v) “Current-Sensing Products” means sensor products for which electric current
is the primary parameter measured by such product, in contrast to sensors where
electric current is used incidentally to measure another parameter such as
pressure, position, a magnetic field, or temperature.

(w) “DOJ” means the United States Department of Justice.

(x) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, including the rules and regulations promulgated thereunder.

(y) “ERISA Affiliate” means any Person at any relevant time considered a single
employer with any Seller under Section 414 of the Code.

(z) “Exacerbation of Pre Existing Conditions” shall mean (i) any negligent or
intentional action taken by or on behalf of Purchaser outside the ordinary
course of business at any Leased Real Property, and (ii) any Voluntary
Environmental Investigation, in each case in clauses (i) and (ii), to the extent
such action or investigation exacerbates any environmental condition or
noncompliance with any Environmental Law (including any noncompliance resulting
from mismanagement of any Materials of Environmental Concern) or increases the
remedial cost associated therewith, in each case, occurring or in existence at
such Leased Real Property prior to the Closing Date (including the environmental
conditions and noncompliance identified in the Environmental Reports); provided
however, that with respect to any known pre-existing conditions or noncompliance
for which remediation, investigation or other response action is required under
Environmental Laws, Purchaser’s failure to remediate, investigate or respond to
any such known pre-existing environmental condition or noncompliance after
having notified Sellers of the same shall not be deemed to constitute an
Exacerbation of Pre-Existing Conditions.

(aa) “Existing Customers” means Persons to whom the Sellers or their Affiliates
have sold Existing Products of the types described in clauses (i)(A) and (ii) of
the definition of Existing Products.

(bb) “Existing Products” means: (i) those products set forth on Section 2.4(c)
of the Disclosure Schedule, which lists all products: (A) that have been sold by
the Business in commercial quantities at any time since January 1, 2008; and
(B) other historical products of the Business for which Purchaser is assuming
certain Assumed Liabilities as set forth in Section 2.4(c); and (ii) those other
products set forth on Section 1.1(bb) of the Disclosure Schedule either actively
in late-stage development by, or sold in less than commercial quantities by, the
Business at any time since January 1, 2008. Purchaser acknowledges and agrees
that prior to the Closing, Sellers shall update Section 1.1(bb) of the
Disclosure Schedule to include any other products that become late-stage
development products of the Business after the date hereof and prior to the
Closing.

 

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(cc) “Flow Sensor Products” means sensor products that measure the flow rate of
a gas or fluid medium using sensing principles (e.g., ultrasonic, hot film
anemometry, hot wire anemometry, impeller driven, Coriolis effect, etc.) other
than inferring flow based on differential pressure measurement.

(dd) “FTC” means the United States Federal Trade Commission.

(ee) “GAAP” means United States generally accepted accounting principles.

(ff) “GME Capital Expenditure” means those capital expenditures related to the
General Motors Europe capital expansion as set forth in Section 4.13(a)(ix) of
the Disclosure Schedule.

(gg) “Governmental Authority” means any foreign, transnational, or United States
federal, state, national, provincial, municipal or local governmental,
regulatory or administrative agency or any court or arbitral body.

(hh) “Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

(ii) “HON Shanghai Purchase Price” means the purchase price to be paid for the
purchase of the HON Shanghai Equity Interests as set forth in the China Transfer
Agreement.

(jj) “IFRS” means the International Financial Reporting Standards.

(kk) “Indebtedness” of any Person at any date shall include (i) all indebtedness
of such Person for borrowed money, (ii) any other indebtedness of such Person
which is evidenced by any note, bond, debenture or similar instrument, (iii) all
obligations under any hedging, derivative or swap obligations or similar
arrangements, (iv) all outstanding amounts owed under guaranties in which the
underlying payment or performance obligation is in default or a valid demand for
payment has been made, (v) all obligations secured by a Lien (other than a
Permitted Encumbrance) on any assets of such Person, (vi) all obligations for
the deferred purchase price of property or services (other than current
Liabilities incurred in the ordinary course of business), (vii) any amounts
outstanding and owing under any commitments by which a Person assures a creditor
against loss (including reimbursement obligations and including, in the case of
bank guarantees, any amounts advanced by the guarantor bank that have not yet
been reimbursed), (viii) all obligations under capitalized leases (it being
understood that for purposes of this definition the leases set forth in the
Disclosure Schedule are not and shall not be treated as capitalized leases),
(ix) all change of control, assignment related, or similar payments which
pursuant to a Contract or applicable Law are triggered by, or come due as a
result of, the transactions contemplated hereby, (x) all prepayment premiums,
(xi) the amount (if any) by which the Actual GME Capital Expenditure Amount is
less than the Budgeted GME Capital Expenditure Amount, and (xii) any accrued
interest, fees and expenses related to the foregoing.

 

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(ll) “Independent Accounting Firm” means any one of (i) PricewaterhouseCoopers
or (ii) Deloitte & Touche, as mutually agreed upon by the parties.

(mm) “Knowledge” (i) with respect to any Seller shall mean the actual knowledge,
after due inquiry of appropriate personnel, of the individuals identified on
Section 1.1(mm)(i) of the Disclosure Schedule and (ii) with respect to Purchaser
shall mean the actual knowledge, after due inquiry of appropriate personnel, of
the individuals identified on Section 1.1(mm)(ii) of the Disclosure Schedule.

(nn) “Law” means any law, statute, ordinance, order, decree, decision, rule or
regulation of any Governmental Authority, or any binding agreement with any
Governmental Authority binding upon a Person or its assets.

(oo) “Level 1 Products” means integrated circuits that include Level 1
Technology, which are packaged in form factors that are standard within the
semiconductor or electronic component industries (e.g., form factors such as
SO-8, SOT-23, SOT-89, SOT-89B, plastic radial lead, ceramic SIP, etc.).

(pp) “Level 1 Technology” means Intellectual Property that covers (i) die-level
structures (i.e., particular arrangements of materials or layers on the
substrate of a semiconductor wafer that form circuits or sensor structures, such
as are captured by USPN 7,279,891) or (ii) circuit elements or arrangements that
are claimed without reference to specific die components but that nevertheless
are or typically would be implemented at the die level (e.g., such as are
captured by USPN 6,597,553), and are not located above the die level in Existing
Products.

(qq) “Level 1.5 Module” means a magnetic sensor within an intermediate level
package, which any of the Sellers or their Affiliates has marketed and sold as a
p-module, q-module, m-module, or under another similar designation.

(rr) “Level 1.5 Module Patents” means the Patents set forth in Section 4.8(c) of
the Disclosure Schedule that specifically cover Level 1.5 Modules, but not
Underlying Technology.

(ss) “Liability” means any direct or indirect liability, Indebtedness, claim,
loss, damage, deficiency, obligation or responsibility, whether fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, asserted or unasserted, known or unknown, contingent, due or
to become due or otherwise.

(tt) “Losses” means, subject to Section 10.4, any losses, costs or expenses
(including reasonable attorneys’ fees and expenses incurred in connection with
the investigation, defense and/or settlement of any claim), judgments, fines,
claims, damages liabilities, royalties and assessments. In the event that
Purchaser transfers less than all or substantially all of the Business to a
third party, any losses, costs, expenses, damages or liabilities actually
incurred by a Purchaser Indemnified Party (including any amounts paid by the
Indemnified Party to such third party) in connection with Losses suffered by
such third party that would constitute indemnifiable Losses under this Agreement
had they been directly incurred by such Purchaser Indemnified Party absent the
transfer to such third party, will constitute Losses

 

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under this definition and will be subject to the terms and conditions of the
indemnification provisions in Article X; provided, however, that in no event
shall the Sellers be responsible for attorneys’ fees and expenses or any other
costs and expenses incurred in connection with the investigation, defense or
settlement of a claim of such third party, but only those of the Purchaser
Indemnified Party.

(uu) “Made Available” means that the information referred to (i) has been
actually delivered (whether by email transmission or hand delivery) to Purchaser
or to its outside legal counsel or (ii) was posted on the electronic datasite
located at http://datasite.merrillcorp.com on or prior to the close of business
on the second business day prior to the date of this Agreement (the contents of
which are, for the avoidance of doubt, memorialized in a DVD or similar
electronic format and delivered to Purchaser within three (3) business days
after the date of this Agreement).

(vv) “Most Recent Balance Sheet” means the unaudited historical pro forma
balance sheet of the Business as of May 29, 2010.

(ww) “Net Working Capital” means the excess of the sum of the total current
assets that are then assets of the Purchased Entities (but excluding any
Purchased Entity Excluded Assets) or are Purchased Assets over the sum of the
total current liabilities that are then liabilities of the Purchased Entities
(but excluding any Purchased Entity Excluded Liabilities) or are Assumed
Liabilities, calculated in accordance with the Specified Accounting Policies;
provided that no current or deferred income Tax assets or Liabilities will be
included in the Net Working Capital.

(xx) “New Conditions” shall mean environmental conditions occurring at any
Leased Real Property, including without limitation environmental conditions
arising in connection with the generation, use, handling, presence, treatment,
storage, transportation, disposal or Release of any Materials of Environmental
Concern or Third-Party Claims for personal injury or property damage resulting
from the Release of Materials of Environmental Concern, in each case to the
extent such conditions are first caused or first created by Purchaser’s
operation of the Business or the Purchased Assets after the Closing Date.

(yy) “Operator Controls” means products with a human interface, which provide a
signal in response to manipulation of the human interface by a human operator
(e.g., shifters, turn signal switches, throttle controllers, each of which may
itself include one or more electromechanical switches, MR sensors or Hall
sensors).

(zz) “Optical Products” means sensor products that detect a change in an optical
property of a device, material or region, and use the detected change to infer a
change in an aspect of the physical environment in the region or proximate the
device or material.

(aaa) “Ordinary Course Warranty Obligations” means claims by customers of the
Business for product return, replacement, rebate, credit, or similar warranty
obligations incurred in the ordinary course of business, but not including any
Products Liability Claims.

 

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(bbb) “Packaging” means a packaging, housing, board, circuit, or substrate in or
on which a sensor is mounted, attached, or otherwise affixed for purposes of
allowing use of such sensor in combination with such packaging, housing, board,
circuit, or substrate within a larger assembly or system.

(ccc) “Permit” means any permit, franchise, authorization, license,
accreditation, certificate, exemption, classification, registration, or other
approval issued or granted by any Governmental Authority.

(ddd) “Permitted Encumbrances” means (i) mechanics’, carriers’, workmen’s,
repairmen’s or other like Encumbrances arising or incurred in the ordinary
course of business for amounts not yet delinquent or which are being contested
in good faith by appropriate legal proceedings, (ii) Encumbrances arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business,
(iii) Encumbrances for Taxes and other governmental charges that are not due and
payable, are being contested in good faith by appropriate proceedings, or may
thereafter be paid without penalty, (iv) imperfections of title, restrictions or
encumbrances, if any, which imperfections of title, restrictions or other
encumbrances do not, individually or in the aggregate, materially impair the
continued use and operation of the specific assets to which they relate
(excluding assets that are Intellectual Property), (v) Encumbrances on accounts
receivable under Honeywell’s Trade Accounts Receivable program, which shall be
removed as of the Closing Date, and (vi) any other Encumbrances existing on the
date of this Agreement that are set forth in Section 1.1(ddd) of the Disclosure
Schedule.

(eee) “Person” means an individual, corporation, partnership, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization, Governmental Authority or other entity or group.

(fff) “Product Recall” means any (i) directive, order or other action by any
Governmental Authority requiring or having the effect of requiring that any
product manufactured or sold by the Sellers or the Sellers’ Affiliates in
connection with the Business be recalled or (ii) voluntary recall of any product
manufactured or sold by the Sellers or the Sellers’ Affiliates in connection
with the Business.

(ggg) “Products Liability Claims” means any (i)(A) lawsuit, class action, or
other claim by a third party or third parties (other than a Governmental
Authority) (whether based on negligence, fraud, failure to warn, strict products
liability, violation of applicable Law, or other theory, and whether seeking
injunctive relief, money damages, or other remedy), related to or arising out of
personal injury or death, or damage, destruction or diminished value of property
or (i)(B) investigation, action or other claim by any Governmental Authority
concerning compliance or non-compliance with applicable Laws (whether seeking
fines, injunctive relief, Product Recall, field action, or other penalties), or
(ii) claim by a customer of the Business seeking damages, costs, reimbursement,
contribution, indemnification, injunctive relief, repair, replacement, or other
responsibility for Losses or other Liabilities related to or arising out of the
matters described in clauses (i)(A) or (i)(B), or any systemic design defect or
systemic manufacturing defect, any voluntary or involuntary Product Recall,
field action or violation of applicable Laws, in each case of sub-sections
(i) and (ii) related to or arising out of a product or products sold by the
Sellers or the Sellers’ Affiliates in connection with the Business.

 

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(hhh) “Purchaser Material Adverse Effect” means any material adverse change in
or material adverse effect on the ability of Purchaser to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby.

(iii) “Release” means spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, storing, escaping, leaching, dumping, discarding,
burying, abandoning or disposing into the environment.

(jjj) “Retained Products” means products of Honeywell or its Affiliates, which
are not Existing Products.

(kkk) “SAFE Special Bank Account” means the special foreign exchange bank
account for asset realization to be established by HON China in accordance with
applicable Chinese Law, which is required for receiving the HON Shanghai
Purchase Price by HON China.

(lll) “Sensata NV” means Sensata Technologies Holding N.V., a public limited
liability company incorporated under the laws of The Netherlands.

(mmm) “Sleipnir ASIC” means those certain ASIC products identified as “Sleipnir”
in the table set forth in Amendment 2 to the Supply Agreement between Honeywell
and ZMD America, Inc. (“ZMD”) dated January 14, 2004.

(nnn) “Sleipnir Intellectual Property” means Intellectual Property (other than
Patents) that is embodied in the Sleipnir ASIC or the related design materials.

(ooo) “Specified Accounting Policies” has the meaning set forth in
Section 1.1(ooo) of the Disclosure Schedule.

(ppp) “Subsidiary” of a Person means any corporation or other legal entity of
which such Person (either alone or through or together with any other Subsidiary
or Subsidiaries) is the general partner or managing entity or of which at least
a majority of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or others
performing similar functions of such corporation or other legal entity is
directly or indirectly owned or controlled by such Person (either alone or
through or together with any other Subsidiary or Subsidiaries).

(qqq) “Targeted Net Working Capital” means Twenty One Million Five Hundred
Thousand Dollars ($21,500,000.00).

(rrr) “Tax Benefit” means, with respect to a Loss subject to indemnity under
this Agreement, an amount by which the actual cash Tax liability of a party (or
group of corporations filing a Tax Return that includes the party), with respect
to a taxable period, is reduced solely as a result of such Loss (treating any
Tax item attributable to such Loss as the last item claimed for any taxable
period).

 

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(sss) “Tax Return” shall mean any report, return or similar filing (including
the attached schedules) filed or required to be filed with respect to Taxes,
including any information return, claim for refund, amended return, or
declaration of estimated Taxes.

(ttt) “Taxes” shall mean any and all domestic or foreign, federal, state, local
or other taxes of any kind (together with any and all interest, penalties and
additional amounts imposed with respect thereto) imposed by any Governmental
Authority, including taxes with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, estimated,
unclaimed property or escheatment, alternative or add-on minimum, employment,
unemployment, social security, unclaimed property, payroll, customs duties,
transfer, license, workers’ compensation or net worth, and taxes in the nature
of excise, withholding, ad valorem or value added, whether disputed or not, and
including any obligations to indemnify or otherwise assume or succeed to the Tax
liability of any other Person.

(uuu) “Taxing Authority” shall mean the Internal Revenue Service and any other
domestic or foreign Governmental Authority responsible for the administration or
collection of any Taxes.

(vvv) “Thermal Products” means sensor products for which temperature is the
primary parameter measured by such products, in contrast to sensors that
primarily measure another non-temperature parameter but employ a temperature
sensor to compensate for temperature-induced variations in the other parameter
being measured. Specifically excluded from the Thermal Products definition is
the PTT product line—i.e., that line of sensors that provides temperature and
pressure information, which is included in the Business. For the avoidance of
doubt, other such “combi” sensors, which provide temperature and pressure
information, but which are not included in the Business, are not excluded from
the Thermal Products definition and are accordingly Excluded Products (as
defined in Section 6.14).

(www) “Transportation Field” means the field of on-road and off-road heavy duty
vehicles (U.S. Department of Transportation’s Classes 7 and 8 (or the foreign
equivalent of such weight classes)), agriculture vehicles, construction vehicles
(including cranes and forklifts), off-road light duty vehicles,
recreational/sport vehicles and motorcycles. Notwithstanding the foregoing, the
term “Transportation Field” does not include the fields of aerospace vehicles,
watercraft, or military vehicles (whether air or ground, manned or unmanned).

(xxx) “Turbo Field” means the field of turbocharger systems (i.e., gas
compressors that are powered by the exhaust of an internal combustion engine and
used to increase density of intake air provided to said engine) and their
components.

(yyy) “Underlying Technology” means a level of technology that underlies
multiple applications, at least one application of which is outside of the
Business, as of the Closing Date, rather than being directed to only a specific
application, but only to the extent such technology is common to such
applications. Notwithstanding the foregoing, the term “Underlying Technology”
does not include modifications, enhancements, derivations, and the like that are
not common to such applications.

 

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(zzz) “Voluntary Environmental Investigation” means any environmental sampling
or testing of air, soil, water or groundwater conducted by or on behalf of
Purchaser at any Leased Real Property, except to the extent Purchaser reasonably
believes such sampling or testing is (i) required by any Environmental Law or
Governmental Authority, (ii) reasonably conducted in response to a Third-Party
Claim asserting Liability for any environmental condition at any Leased Real
Property, (iii) conducted by the Sellers in performance of their respective
obligations herein, (iv) necessary in connection with a due diligence review for
any sale, conveyance or financing transaction involving any Leased Real Property
based upon findings from a Phase I environmental site assessment, (v) required
for the bona fide construction, expansion, demolition, repair, maintenance, or
closure by or on behalf of the Purchaser Indemnified Parties of any structures
or operations at any Leased Real Property in the ordinary course of business and
to the extent such sampling or testing is consistent with industry practice, or
(vi) required to respond to material facts indicating a potentially significant
risk to human health or the environment.

ARTICLE II

PURCHASE AND SALE OF SHARES AND ASSETS AND ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Shares and Assets. Subject to the terms and conditions
of this Agreement, at the Closing (as defined below), the Sellers shall sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase
and accept from the Sellers, all of the Sellers’ right, title and interest in
and to all of the assets, used or held for use by the Sellers primarily in the
Business as it is currently operated (other than the Excluded Assets), as the
same may exist as of the Closing (collectively, the “Purchased Assets”),
including all of the Sellers’ right, title and interest in the following:

(a) the Equity Interests;

(b) all accounts receivable and notes receivable and other such claims for money
due to the Sellers arising from the arm’s length rendering of services or the
sale of the Existing Products or other goods or materials by the Business
(including trade account receivables from Honeywell acting through its Honeywell
Turbocharger Technologies strategic business unit (“HTT”) solely to the extent
reflected in the Final Net Working Capital);

(c) all raw materials, packaging materials, manufactured or purchased parts,
goods in transit, consigned goods, returned goods, work in process, spare parts
and finished goods inventories for the Existing Products or otherwise used or
held for use primarily in the Business;

(d) all rights and interests in all Contracts to which a Seller or Purchased
Entity is a party that relate primarily to the Business (the “Purchased
Contracts”);

(e) all machinery, equipment, tools, dies, test equipment, furniture, fixtures
(trade or otherwise), vehicles, leasehold improvements, office supplies,
production supplies, spare and replacement parts, computers, jigs, molds,
miscellaneous supplies and other tangible personal properties that are used or
held for use primarily in the Business (including the

 

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transfer of a Seller’s or Purchased Entity’s rights of possession and custody of
such tooling, molds, jigs and other equipment that is owned by certain customers
of the Business and that is located on the Property or on the premises of
suppliers (including Plant 1 in Freeport, Illinois) of the Business);

(f) the Acquired Intellectual Property;

(g) other than to the extent not legally assignable even with the consent,
authorization, acknowledgement of filing, certification or other approval of the
applicable Governmental Authority, all Permits primarily with respect to the
conduct of the Business and held by the Sellers;

(h) all rights under or pursuant to warranties and guarantees made by suppliers,
manufacturers or contractors in connection with products or services provided to
the Sellers primarily in connection with the Business;

(i) the leasehold interests in the real property described in Section 4.15 of
the Disclosure Schedule (the “Leased Real Property”), including all rights and
interests of the Sellers in the leases, subleases, licenses, concessions and
other agreements therefor;

(j) all claims, deposits, prepayments, prepaid assets, refunds (excluding Tax
refunds or credits to the extent such refunds or credits are specified as
property of the Seller pursuant to Section 8.4(d) hereof), causes of action,
credits, choses in action, rights of recovery, rights of set off and rights of
recoupment relating primarily to any of the other Purchased Assets, including
all rights of the Sellers under any property, casualty, workers’ compensation or
other insurance policy or related insurance services contract to the extent such
rights relate to any Assumed Liability or any casualty affecting any of the
Purchased Assets, but excluding any claims or counterclaims raised in connection
with the Excluded Liabilities set forth on Section 4.9 or 4.20 of the Disclosure
Schedule;

(k) all goodwill associated primarily with the Business or the Purchased Assets,
together with the right to represent to third parties that Purchaser is the
successor to the Business;

(l) all books, records, ledgers, files, documents, correspondence, lists,
specifications, drawings, advertising, marketing and promotional materials,
studies, business and accounting records of every kind, reports and all other
materials (in whatever form or medium) that pertain primarily to the Business;
provided, however, that (i) the Sellers shall be entitled to retain copies of
any such materials it deems reasonably necessary for human resources,
accounting, tax, legal or other business purposes (including with respect to any
Excluded Asset or Excluded Liability), (ii) Sellers shall deliver to Purchaser
copies of any documents removed from the Purchased Entities’ premises prior to
Closing which relate to the Business (subject to Purchaser’s confidentiality
obligations and Seller’s right to redact information not related to the
Business), and (iii) Seller shall, as promptly as reasonably practicable after
receipt of Purchaser’s reasonable advanced written request and provided such
request will not unreasonably disrupt any of Sellers’ businesses, make available
to Purchaser for inspection at reasonable times (subject to

 

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Purchaser’s confidentiality obligations and Seller’s right to redact information
not related to the Business), and Purchaser shall, upon reasonable request, have
the right to receive copies of, documents to the extent relating (but not
primarily) to the Business that are not included in the Purchased Assets, in
each case, to the extent reasonably required in connection with the operation
of, or for human resources, accounting, tax, legal or other business purposes
related to, the Business following the Closing (excluding any of the foregoing
that relate to Intellectual Property which shall be governed by the Intellectual
Property License Agreement, Section 6.6 and the definition of “Acquired
Intellectual Property”);

(m) rights to receive and retain mail, payments of receivables and other
communications (other than to the extent related to Excluded Assets or Excluded
Liabilities);

(n) the right to bill and receive payment for products shipped or delivered
and/or services performed but unbilled or unpaid as of Closing; and

(o) any of the foregoing to the extent held by any Honeywell Subsidiary other
than the Sellers, and all other properties, assets, rights and interests owned
by Sellers or their Affiliates as of the Closing, or in which Sellers or their
Affiliates have an interest, in all cases, which are primarily related to the
Business and not otherwise Excluded Assets (it being understood that with
respect to any such assets described in this clause (o) that may be held by
Honeywell Subsidiaries or Affiliates other than the Sellers, the references to
“Sellers” in the lead-in sentence to this Section 2.1 shall be deemed to refer
to the Sellers and such Subsidiaries and Affiliates that hold such assets);

provided, that for the avoidance of doubt, “Purchased Assets” shall include all
assets of the Business which would be required by the Specified Accounting
Policies to be reflected on the pro forma balance sheet of the Business as of
the Closing Date.

2.2 Assets of the Purchased Entities. The parties agree that none of the assets,
properties or rights of the Purchased Entities shall be transferred pursuant to
Section 2.1 or shall be considered Purchased Assets for purposes of Section 2.1
hereof and that such assets, properties and rights shall be held by the
Purchased Entities, as the case may be, in the same manner before and after the
Closing Date without any change therein as a result of the transactions
contemplated hereunder, except that Purchaser (or its designee) shall be the
holder of the Equity Interests. The following assets, properties and rights
shall, at the sole cost and expense of Sellers, be transferred or assigned (or
deemed to be transferred or assigned) from each Purchased Entity to a Seller (or
an Affiliate) prior to the Closing (the “Purchased Entities Excluded Assets”):

(a) all cash on hand in HON Czech Controls’ bank and lock box accounts, plus all
marketable securities owned by such Purchased Entity, in each case, as of the
opening of business on the Closing Date;

(b) the assets of the Purchased Entities not related to the Business to the
extent set forth on Section 2.2(b) of the Disclosure Schedule;

(c) all refunds or credits for Taxes arising out of the Business to the extent
such refunds or credits are specified as property of the Seller pursuant to
Section 8.4(d);

 

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(d) any insurance proceeds from any property, casualty or other insurance policy
or related insurance services contract held by a Purchased Entity or any of its
Affiliates to the extent covering Excluded Liabilities;

(e) except for the Intellectual Property rights granted by Sellers under the
Intellectual Property License Agreement, all Intellectual Property other than
the Acquired Intellectual Property;

(f) subject to Section 6.18, any rights in, relating to, or for use or
exploitation of, any trademark, service mark, brand name, certification mark,
trade name, corporate name, domain name or other indication of source or origin
that includes, is based on, relates to or is likely to be confused with the term
“Honeywell”, “Honeywell Sensing and Control” or “Micro Switch” or any other
similar term or derivative thereof (collectively, the “Excluded Names”);

(g) except as otherwise provided in Section 6.10 or as required by Law, all
assets in or related to a Purchased Entity’s participation in or sponsorship of
any Foreign Plan; and

(h) any rights of such Purchased Entity to reimbursements, indemnification,
hold-harmless or similar rights to the extent relating to any Excluded
Liabilities (the transfer and assignment of (a) through (h) (inclusive), the
“Reorganization Actions”).

2.3 Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1, the Sellers will retain all of their respective right, title and
interest in and to, and shall not, and shall not be deemed to, sell, assign,
transfer, convey or deliver to Purchaser, and the Purchased Assets shall not,
and shall not be deemed to, include any of the following assets (all such
retained assets, the “Excluded Assets”):

(a) any cash or cash equivalents, including any marketable securities, bonds,
investments, or certificates of deposit, or any collected funds or items in the
process of collection at the financial institutions of any Seller and its
Affiliates through and including the Closing Date, in each case whether related
to the Business, the Purchased Entities or otherwise;

(b) all refunds or credits for Taxes arising out of the Business to the extent
such refunds or credits are specified as property of the Seller pursuant to
Section 8.4(d);

(c) any property, casualty or other insurance policy or related insurance
services contract, held by any Seller or any of its Affiliates, including the
benefit of any deposits or prepayments and any insurance proceeds to the extent
covering any Excluded Liabilities, other than proceeds of third party insurance
policies in respect of claims made against such policies prior to the Closing
Date (in the case of “claims made” policies), or for claims in respect of Losses
occurring prior to the Closing Date (in the case of “occurrence based”
policies);

(d) except as provided in Section 6.10, any Company Plan, including the
underlying assets and rights of any Seller or any of its Affiliates;

 

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(e) any rights of any Seller or the other Seller Indemnified Parties under this
Agreement, any Ancillary Agreement or any other agreement between any of the
Sellers or any of their respective Affiliates and Purchaser;

(f) subject to Section 6.18, any rights in, relating to, or for use or
exploitation of, any trademark, service mark, brand name, certification mark,
trade name, corporate name, domain name or other indication of source or origin
that includes, is based on, relates to or is likely to be confused with the
Excluded Names;

(g) the corporate charter, qualification to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, corporate seal,
minute books, stock transfer books, blank stock certificates, Tax books and
records, and any other documents relating to the governance, organization,
maintenance and existence of each Seller;

(h) all Intellectual Property (including the Intellectual Property set forth on
Section 2.3(h) of the Disclosure Schedule), other than the Acquired Intellectual
Property (it being understood that Sellers are also granting Purchaser certain
Intellectual Property rights under the Intellectual Property License Agreement);

(i) any licenses with respect to unmodified commercially available
“off-the-shelf” computer Software, and those software agreements and information
technology licenses and assets listed on Section 2.3(i) of the Disclosure
Schedule;

(j) all checkbooks, canceled checks and bank accounts of each Seller; and

(k) any other assets, rights and properties set forth on Section 2.3(k) of the
Disclosure Schedule.

2.4 Assumption of Liabilities. The “Assumed Liabilities” are solely the
following Liabilities relating to or arising out of the Business or the
Purchased Assets:

(a) all Liabilities to the extent reflected or reserved for (and solely to the
extent of the amount so reflected or reserved) on the Most Recent Balance Sheet
and any Liabilities incurred in the ordinary course of business consistent with
past practice since the date of the Most Recent Balance Sheet (including, in
each case, trade payables arising out of any purchases by the Business from
Sellers’ semiconductor fabrication plant in Richardson, Texas (“Richardson”),
Sellers’ fabrication operations in Plant 1 and Plant 4 in Freeport, Illinois
which provide stamped parts, machined parts and plating parts (“NW Illinois”),
or Sellers’ assembly plant operating as “Honeywell Optoelectronica S. de R.L. de
C.V.” in Juarez, Mexico (“Juarez”) solely to the extent reflected in the Final
Net Working Capital), none of which Liabilities since the date of the Most
Recent Balance Sheet is a Liability for a breach of contract, breach of
warranty, tort, infringement, claim, lawsuit or any of the Excluded Liabilities
of the type described in Sections 2.5(a)(i) - (xv) (inclusive), except to the
extent paid or discharged in the ordinary course of business since the date of
the Most Recent Balance Sheet;

 

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(b) all Liabilities constituting obligations to perform under, or related to
breaches or defaults arising under or relating to, any (i) Material Contract set
forth on Section 2.4(b) of the Disclosure Schedule, (ii) Purchased Contract
which is not a Material Contract, (iii) Purchased Contract which is a Material
Contract, to the extent such Contract was Made Available in sections III.F,
VI.B.2.b, VI.B.2.c, VI.B.2.f, VI.B.2.l, VI.B.2.o or VIII.A.2 of the datasite to
Purchaser prior to the date hereof, but reference to which was omitted from the
Section 4.13(a) of the Disclosure Schedule, (iv) Purchased Contracts that are
entered into by any Seller during the period commencing on the date hereof and
ending on the Closing Date in compliance with Section 6.1 and (v) other
Purchased Contract which is a Material Contract as to which Purchaser has agreed
in writing to specifically assume the benefits and obligations of such Contract
after the Sellers provide Purchaser with written notice of the existence of, and
a complete and accurate copy of, such Purchased Contract (each such Contract in
clauses (iv) and (v) above, a “Post-Signing Assumed Contract”), and in the case
of clause (v) above, in the event (A) Purchaser does not agree in writing within
ten (10) business days following such written notice to specifically assume the
Liabilities relating to any such Contract or (B) a Purchaser Indemnified Party
asserts any Liability, including any indemnification claim, against any Seller
in respect of such Contract prior to the expiration of such ten (10) business
day period, the Seller shall be fully entitled to terminate such Contract on
whatever terms it deems appropriate at its sole expense; provided that if the
Seller (x) does not have the right to terminate such Contract or (y) determines
that it cannot terminate such Contract on commercially reasonable terms, then to
the extent that and for so long as there are obligations required under such
Contract that can, using commercially reasonable efforts, be performed by
Purchaser and cannot, using commercially reasonable efforts, be performed by
Seller, Purchaser shall use commercially reasonable efforts to perform such
obligations for the benefit of the Seller (at Purchaser’s fully loaded actual
cost which will be fully reimbursed by Seller);

(c) all Products Liability Claims and Ordinary Course Warranty Obligations
arising out of or relating to (i) the products of the Business set forth on
Section 2.4(c) of the Disclosure Schedule (other than Liabilities arising out of
any matters set forth on Sections 4.9 and 4.20 of the Disclosure Schedule) and
(ii) the products of the Business that were not set forth on Section 2.4(c) of
the Disclosure Schedule as to which Purchaser has agreed in writing to
specifically assume the benefits and obligations relating to such product after
the Sellers provide Purchaser with written notice of the existence of such
product (each such product a “Post-Signing Assumed Product”), and in the case of
clause (ii), in the event (A) Purchaser does not agree in writing within ten
(10) business days following such written notice to specifically assume the
benefits and obligations relating to any such product of the Business that was
not set forth on Section 2.4(c) of the Disclosure Schedule or (B) a Purchaser
Indemnified Party asserts any Liability, including any indemnification claim,
against any Seller in respect of such product prior to the expiration of such
ten (10) business-day period, Purchaser shall (x) promptly cease manufacture and
sale of such product and (y) transfer such product, together with all rights
solely related to such product (including by (1) the transfer of all
Intellectual Property rights solely related to such product to Sellers and
(2) the delivery of a non-exclusive license to Sellers of all Intellectual
Property rights related (but not solely related) to such product for use in the
manufacture and sale thereof) in accordance with Section 6.7 hereof;

(d) all Liabilities arising out of or relating to any claims made by any
Transferred Employees (including claims relating to service or employment or
termination) to

 

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the extent such Liabilities (i) are expressly assumed by Purchaser under
Section 6.10, (ii) arise from pre-Closing actions taken (or any failure to act)
by other Transferred Employees where such actions (or failures to act) were in
conflict with or derogation of policies or practices of the Sellers, or
(iii) arise from the Sellers’ policies or practices (A) applicable solely to
employees of the Business, or (B) which the Sellers at the time of execution of
this Agreement had no reason to know are unlawful;

(e) all Liabilities arising under or relating to Environmental Laws with respect
to New Conditions or the Exacerbation of Pre Existing Conditions (collectively,
the “Assumed Environmental Liabilities”);

(f) all Liabilities arising out of or relating to any Acquired Intellectual
Property, including with respect to any infringement thereby or misappropriation
relating thereto;

(g) all Liabilities with respect to Taxes for which the Sellers are not
responsible pursuant to Section 8.4; and

(h) all Liabilities of the Sellers arising out of or relating to any
non-compliance or alleged non-compliance of the Business with applicable Laws;
provided that such non-compliance or alleged non-compliance (i) relates solely
to the operations of the Business and not also to any other operations or
businesses of the Sellers (it being understood that (X) the fact that a
particular non-compliance or alleged non-compliance of the Business occurs in
connection with sales, purchases or other business interaction between the
Business, on the one hand, and HTT, Richardson, NW Illinois and/or Juarez, on
the other hand, or (Y) if the Business has not complied with a particular
applicable Law, the fact that another operation or business of the Sellers has
at some point failed or was alleged to have failed to comply with the same Law
(where such other non-compliance or alleged non-compliance is not otherwise
related to, connected with, or otherwise based on the same facts or
circumstances as the non-compliance by the Business), in either case will not in
and of itself mean that such non-compliance of the Business “relates also” to
any other operations or businesses of the Sellers), (ii) is not (A) committed,
implemented or directed by any current or former directors, officers, or
employees of the Sellers (other than Transferred Employees) or (B) affirmatively
approved or condoned by any of the foregoing persons (other than Transferred
Employees) where such non-compliance or alleged non-compliance occurred or
continued after such person had actual knowledge of such non-compliance or
alleged non-compliance, and (iii) does not relate to Laws which are applicable
to the Sellers’ ownership and control of the Business rather than the operations
of the Business itself (such as applicable securities laws and Foreign Corrupt
Practices Act of 1977, as amended, or any other similar applicable U.S. federal
or state or non-U.S. Laws); it being understood that this subsection (h) shall
not be deemed to limit or expand the scope of any of the Assumed Liabilities
contained in subsections (c) through (g) (inclusive) of this Section 2.4.

 

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2.5 Excluded Liabilities.

(a) Purchaser shall not assume or become responsible for, and shall not be
deemed to have assumed or to have become responsible for, any Liabilities of
Sellers or any of Sellers’ Affiliates that are not Assumed Liabilities,
including the following Liabilities of or relating to any Seller or any of
Sellers’ Affiliates (excluding the Purchased Entities, subject to
Section 2.5(b)) (together with the Liabilities described in Section 2.5(b), the
“Excluded Liabilities”):

(i) any Liability to the extent arising out of or relating to any Excluded Asset
or the operation or conduct by Sellers or any of their Affiliates of any
business (other than the Business), (it being understood that the fact that a
particular Liability of the Business relates to sales, purchases or other
business interaction among the Business and HTT, Richardson, NW Illinois and/or
Juarez will not in and of itself mean that such a Liability is an Excluded
Liability unless it would be otherwise excluded pursuant to this Section 2.5);

(ii) any Liability of any Seller for (A) any Indebtedness, including any
guarantee of Indebtedness or (B) restructuring, severance or similar costs and
expenses related to reduction in force initiatives of the Sellers or the
Purchased Entities occurring or initiated on or prior to Closing;

(iii) any Liability with respect to Taxes relating to or arising out of the
Business or the Purchased Assets for which the Sellers are responsible for
pursuant to Section 8.4;

(iv) any Liability other than the Purchaser’s Assumed Environmental Liabilities
arising under or relating to Environmental Laws, including any such Liability
not constituting an Assumed Environmental Liability arising in connection with
environmental conditions identified in the Environmental Reports or the
generation, use, handling, presence, treatment, storage, transportation,
disposal or Release of any Materials of Environmental Concern or any Third-Party
Claims for personal injury or property damage resulting from the Release of
Materials of Environmental Concern;

(v) any Liability (A) relating to the service or employment with the Business or
termination of service or employment from the Business of any Person (other than
Assumed Liabilities), or (B) relating to or at any time arising under any
Company Plan (including any Foreign Plan), or any other benefit or compensation
plan, program, agreement or arrangement at any time maintained, sponsored,
contributed to or required to be contributed to by any Seller, any of its
Subsidiaries, or any ERISA Affiliate (other than those Liabilities expressly
assumed by Purchaser under Section 6.10);

(vi) any Liability pursuant to this Agreement, any Ancillary Agreement or any
other agreement between a Seller and Purchaser;

(vii) any Liability, obligations or covenants with respect to (A) any assets,
properties, entities or business operations divested by any Seller in connection
with the Business prior to the Closing Date (other than, for the avoidance of
doubt, (x) products or services sold or delivered by the Business in the
ordinary course of its business or (y) Liabilities, obligations or covenants
arising from or related to a Purchased Contract set forth on Section 2.5(a)(vii)
of the Disclosure Schedule), or (B) the real property located in Freeport,
Illinois and Chonan, South Korea (other than Assumed Liabilities set forth in
Section 2.4(e) or as set forth in any Ancillary Agreement);

 

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(viii) any Liability for or obligation related to any costs, fees, Taxes and
expenses in connection with the investigation, preparation, diligence,
negotiation, approval, authorization, execution and delivery of this Agreement
and the consummation (or the preparation for the consummation) of the
transactions contemplated hereby, including fees of legal counsel, brokers,
advisors and accountants;

(ix) those Liabilities arising out of or relating to the Business that are
expressly set forth on Section 2.5(a)(ix) of the Disclosure Schedule;

(x) Liabilities arising out of or relating to any matters set forth on
Sections 4.9 and 4.20 of the Disclosure Schedule;

(xi) all Liabilities arising under or relating to any Contract that is (A) not a
Purchased Contract, or (B) a Material Contract that (1) is not set forth on
Section 2.4(b) of the Disclosure Schedule, (2) is not Made Available in sections
III.F, VI.B.2.b, VI.B.2.c, VI.B.2.f, VI.B.2.l, VI.B.2.o or VIII.A.2 of the
datasite to Purchaser prior to the date hereof and (3) is not a Post-Signing
Assumed Contract;

(xii) all Liabilities of the Sellers arising out of or relating to any
non-compliance or alleged non-compliance with applicable Laws not assumed in
Section 2.4(h);

(xiii) any intercompany accounts, notes or other payables of Sellers, other than
trade payables arising out of any purchases from Richardson or Juarez solely to
the extent reflected in Final Net Working Capital;

(xiv) all Liabilities arising out of or relating to any product of the Business
that is not set forth on Section 2.4(c) of the Disclosure Schedule and is not a
Post-Signing Assumed Product, designed, manufactured, sold, serviced or repaired
in connection with the Business prior to the Closing, including all product
return, replacement, rebate, credit and warranty obligations (including Ordinary
Course Warranty Obligations) relating thereto, and all products liabilities
(including Products Liability Claims) relating thereto; and

(xv) those Liabilities arising out of and relating to the Reorganization Actions
(including any Transfer Taxes and any costs related to obtaining any required
third party consents related thereto).

(b) Purchaser shall not assume or become responsible for, and shall not be
deemed to have assumed or to have become responsible for, the following
Liabilities of any Purchased Entity:

(i) any Liability to the extent arising out of relating to any Purchased Entity
Excluded Asset;

 

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(ii) any Liability of any Purchased Entity for any Indebtedness, including any
guarantee of Indebtedness;

(iii) any Liability with respect to Taxes of the Purchased Entities for which
the Sellers are responsible pursuant to Section 8.4;

(iv) any Liabilities of the Purchased Entities to the extent not related to the
Business;

(v) any Liability of a Purchased Entity arising because it is or has been
treated as a single employer with any other Person (other than the Purchaser or
any of its Affiliates) pursuant to Section 414 of the Code or Section 4001(b) of
ERISA;

(vi) any Liabilities of the types described in Sections 2.5(a)(iv), (v)(A),
(ix), (x), (xi), (xii) and (xiv);

(vii) any Liabilities of the types described in Sections 2.5(a)(v)(B), (viii),
(xiii), and (xv); and

(viii) any Liability, obligations or covenants to the extent arising out of or
relating to any assets, properties, entities or business operations divested by
any Purchased Entity prior to the Closing Date (other than, for the avoidance of
doubt, products or services sold or delivered by the Purchased Entities in the
ordinary course of their respective businesses);

provided, that for purposes of the determinations in Section 3.4, the Final Net
Working Capital shall not include any Excluded Liabilities as set forth in
subsections (a) and (b) above.

2.6 Liabilities of the Purchased Entities. The parties agree that none of the
Liabilities of the Purchased Entities shall be assumed by Purchaser pursuant to
Section 2.4 and that, except to the extent specifically referenced in
Section 2.5(b), none of the Liabilities of the Purchased Entities shall be
allocated to the Sellers pursuant to Section 2.5, but, subject to
Section 2.5(b), that all such Liabilities shall be retained by the respective
Purchased Entity in the same manner before and after the Closing Date without
any change therein as a result of the transactions contemplated hereunder,
except as otherwise set forth herein.

ARTICLE III

CLOSING; CLOSING DELIVERIES

3.1 Purchase Price. The aggregate purchase price to be paid for the Purchased
Assets pursuant to this Agreement shall be One Hundred and Forty Million Dollars
($140,000,000.00) in cash (the “Initial Purchase Price”), subject to adjustment
pursuant to Section 3.4, plus the assumption of the Assumed Liabilities (the
“Purchase Price”). The Purchase Price shall be allocated in accordance with
Section 3.5. Except as may otherwise be required under Section 6.2(f) with
respect to the payment of the HON Shanghai Purchase Price, at the Closing,
Purchaser shall deliver the Initial Purchase Price to Honeywell, as agent for
the Sellers, by wire transfer of immediately available funds pursuant to the
wire transfer instructions

 

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provided by Honeywell in writing no later than three (3) days prior to the
Closing Date. In the event that the SAFE Special Bank Account has not been
obtained as of or prior to the Closing and the HON Shanghai Purchase Price is
paid directly to Honeywell at the Closing, within one (1) business day after the
date on which Purchaser receives an amount equal to the HON Shanghai Purchase
Price from Honeywell, Purchaser shall wire an amount equal to the HON Shanghai
Purchase Price to the SAFE Special Bank Account pursuant to the wire transfer
instructions therefor provided by Honeywell to Purchaser in writing prior to
such payment.

3.2 Closing Date. The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Jenner & Block LLP, 353 N.
Clark St., Chicago, Illinois, on (i) the first business day that is at least two
(2) business days following satisfaction or waiver of all of the conditions to
Closing set forth in Article VII (other than those conditions that by their
nature have to be satisfied at Closing (but subject to the satisfaction or
waiver of those conditions)), or (ii) if the date determined under clause
(i) would be earlier than December 30, 2010 or thereafter is not the last
business day of the month, Purchaser may elect to have the Closing take place on
December 30, 2010 (or at Purchaser’s election, on any business day in January
2011) or on the last business day of the month, as applicable, so long as
Purchaser agrees to waive the satisfaction of the conditions set forth in
Sections 7.2(a) through 7.2(c) to the extent such conditions were actually
satisfied as of the date determined under clause (i), or at such other place and
time as the parties may mutually agree; provided further, that if, upon the date
determined under clause (i) (as further extended by Purchaser under clause
(ii)), Honeywell and Purchaser have not agreed upon a mutually acceptable HTT
Supply Agreement, the Sellers may elect to defer the Closing up to thirty
(30) days, during which time, Honeywell and Purchaser shall continue to
negotiate in good faith the terms and conditions of the HTT Supply Agreement in
accordance with Section 6.22, so long as Honeywell agrees to waive the
satisfaction of the conditions set forth in Sections 7.3(a) through 7.3(c) to
the extent such conditions were actually satisfied as of the date determined
under clause (i) (or as further extended by Purchaser under clause (ii)). The
date on which the Closing occurs is referred to herein as the “Closing Date” and
the Closing shall be deemed effective as of 12:01 a.m. (Eastern time) on the
Closing Date.

3.3 Closing Deliveries. At the Closing,

(a) Purchaser shall deliver to Honeywell:

(i) the Initial Purchase Price pursuant to Section 3.1;

(ii) a duly executed counterpart of a bill of sale and assignment and assumption
agreement in substantially the form attached hereto as Exhibit B (the “Bill of
Sale”);

(iii) a duly executed counterpart of a transition services agreement in
substantially the form attached hereto as Exhibit C (the “Transition Services
Agreement”);

(iv) duly executed counterparts of instruments of assignment to Purchaser of all
patents, patent applications and other Intellectual Property rights included in
the Purchased Assets in substantially the form attached hereto as Exhibit D (the
“Intellectual Property Assignments”);

 

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(v) a duly executed counterpart of an Intellectual Property license agreement in
substantially the form attached hereto as Exhibit E (the “Intellectual Property
License Agreement”);

(vi) a duly executed counterpart of the supply agreement in substantially the
form attached hereto as Exhibit H (the “Supply Agreement”);

(vii) a duly executed counterpart of a supply agreement between HTT and
Purchaser or an Affiliate of Purchaser relating to the supply of certain sensor
products (including the items set forth in Section 3.3(a)(vii) of the Disclosure
Schedule) to HTT, if mutually agreed to between Honeywell and Purchaser (the
“HTT Supply Agreement”);

(viii) a duly executed counterpart of the Sleipnir ASIC Support Agreement in
substantially the form attached hereto as Exhibit M (the “Sleipnir ASIC Support
Agreement”);

(ix) a duly executed counterparty of the Confidential ASIC Technology Agreement
in substantially the form attached hereto as Exhibit N (the “Confidential ASIC
Technology Agreement”);

(x) duly executed counterparts of any stock transfer agreements, asset transfer
agreements and/or other instruments of conveyance with respect to the transfer
of any portion of the Purchased Assets outside the United States (but including
Equity Interests in entities organized in jurisdictions outside the United
States), in forms reasonably acceptable to Purchaser; it being understood that
such agreements and/or other instruments of conveyance are intended solely to
formalize such foreign transfers in order to comply with any local Laws
pertaining thereto (“Foreign Transfer Agreements”);

(xi) a duly executed counterpart of the lease for the real property located in
Freeport, Illinois in substantially the form attached hereto as Exhibit F (the
“Freeport Lease”);

(xii) a duly executed counterpart of the Chonan contract manufacturing agreement
in substantially the form attached hereto as Exhibit L (the “Chonan
Manufacturing Agreement”); and

(xiii) the certificate required to be delivered pursuant to Section 7.3(c).

 

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(b) The Sellers shall deliver to Purchaser:

(i) certificates representing the Equity Interests, which certificates shall be
duly endorsed to Purchaser or accompanied by duly executed stock powers, stock
transfer forms or other appropriate instruments of transfer;

(ii) a duly executed counterpart of the Bill of Sale;

(iii) a duly executed counterpart of the Transition Services Agreement;

(iv) duly executed counterparts of the Intellectual Property Assignments;

(v) a duly executed counterpart of the Intellectual Property License Agreement;

(vi) a duly executed counterpart of the Freeport Lease;

(vii) a duly executed counterpart of the Supply Agreement;

(viii) a duly executed counterpart of the HTT Supply Agreement, if mutually
agreed to between Honeywell and Purchaser;

(ix) a duly executed counterpart to the Sleipnir ASIC Support Agreement;

(x) a duly executed counterpart to the Confidential ASIC Technology Agreement;

(xi) duly executed Foreign Transfer Agreements;

(xii) a duly executed counterpart of the Chonan Manufacturing Agreement;

(xiii) the certificate required to be delivered pursuant to Section 7.2(c);

(xiv) subject to Section 6.6(a) hereof, all of the minute books, stock ledgers
and similar corporate records, and corporate seals of each of the Purchased
Entities;

(xv) written resignations, in form and substance reasonably satisfactory to
Purchaser, of those officers and directors of the Purchased Entities set forth
on Section 3.3 of the Disclosure Schedule;

(xvi) a certification as to Honeywell’s non-foreign status which complies with
the provisions of Section 1445(b)(2) of the Code, in substantially the form
attached hereto as Exhibit G; and

 

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(xvii) such other instruments of sale, assignment, conveyance and transfer as
Purchaser reasonably requests with reasonable advance notice prior to the
Closing Date to effectively convey to Purchaser good title, right and interest
in and to the Purchased Assets.

3.4 Working Capital.

(a) Within 90 days following the Closing Date, Purchaser shall prepare and
deliver to Honeywell (i) a statement (the “Preliminary Working Capital
Statement”), setting forth a calculation of the Net Working Capital (the
“Preliminary Net Working Capital”) as of the close of business on the day
immediately prior to the Closing Date and (ii) a calculation of the amount due
and owing and a statement setting forth the responsible party therefor in
accordance with Section 3.4(f), in each case, prepared in accordance with the
Specified Accounting Policies and GAAP. The “Final Net Working Capital” shall be
the Preliminary Net Working Capital shown on the Preliminary Working Capital
Statement, as modified pursuant to this Section 3.4. Notwithstanding anything to
the contrary set forth in this Agreement, in no event shall the calculation of
the Final Net Working Capital be affected by any Purchaser purchase accounting
adjustments for the transactions taking place on or after the Closing.

(b) Unless Honeywell notifies Purchaser in writing that Honeywell disagrees with
any aspect of the Preliminary Working Capital Statement (such notice to include
Honeywell’s objections, a reasonable description of the basis therefor and
reasonably detailed proposed revisions to said documents), within sixty (60)
days after receipt thereof, the Preliminary Working Capital Statement shall be
conclusive and binding on the parties and shall be the Final Net Working
Capital. If Honeywell so notifies Purchaser in writing within such sixty (60)
day period, then Honeywell and Purchaser shall attempt to resolve their
differences with respect thereto in good faith within fifteen (15) days after
Purchaser’s receipt of Honeywell’s written notice of disagreement. If Honeywell
and Purchaser resolve their differences with respect to the Preliminary Working
Capital Statement within such fifteen (15) day period, then the Preliminary
Working Capital Statement, with such modifications necessary to reflect such
agreement of Honeywell and Purchaser, shall be conclusive and binding on the
parties and shall be the Final Net Working Capital. Any disputes not resolved by
Honeywell and Purchaser within such fifteen (15) day period regarding the
Preliminary Working Capital Statement (the “Disputed Amount”) will be resolved
by an Independent Accounting Firm jointly retained by Honeywell and Purchaser.
The Independent Accounting Firm shall make a determination only on the Disputed
Amount as well as such modifications, if any, to the Preliminary Working Capital
Statement necessary to reflect such determination, and the same shall be
conclusive and binding upon the parties, except as provided by applicable Law.
The determination of the Independent Accounting Firm for any item in dispute
cannot, however, be in excess of, nor less than, the greatest or lowest value,
respectively, claimed for that particular item in the Preliminary Working
Capital Statement, in the case of Purchaser, or in the notice described in the
first sentence of this paragraph, in the case of Honeywell. The fees and
expenses of the Independent Accounting Firm shall be paid by the parties as
follows: Honeywell shall pay a percentage of the fees and expenses of the
Independent Accounting Firm equal to: (i) the difference, if any, between
Honeywell’s estimated value of the Final Net Working Capital as submitted to the
Independent Accounting Firm and the Independent Accounting Firm’s final
determination of Final Net Working Capital divided by (ii) the Disputed Amount.
Purchaser

 

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shall pay the remaining percentage, if any, of the fees and expenses of the
Independent Accounting Firm (it being understood that in the event the Final Net
Working Capital is equal to the Preliminary Net Working Capital determined by a
party (as submitted to arbitration by such party), the other party shall pay all
fees and expenses of the Independent Accounting Firm). The Independent
Accounting Firm shall be instructed to render its decision in accordance with
the terms hereof, including the Specified Accounting Policies.

(c) In connection with Honeywell’s review of the Preliminary Working Capital
Statement and preparation of any notice of objection, Honeywell and its
representatives shall have reasonable access, during normal business hours and
upon reasonable advance written notice, to the books and records, the financial
systems and finance personnel and any other information of Purchaser and the
Purchased Entities that Honeywell reasonably requests, including all relevant
work papers, schedules, memoranda and other documents prepared by Purchaser’s
accountants and other advisors (subject to customary indemnification and other
agreements that may be requested by Purchaser’s accountants and other advisors)
in connection with Purchaser’s preparation of the Preliminary Working Capital
Statement, and Purchaser shall, and shall cause its Subsidiaries (including the
Purchased Entities), and shall use reasonable efforts to cause its accountants
and other advisors, to cooperate reasonably with Honeywell and its
representatives in connection therewith.

(d) In connection with Purchaser’s review of any notice of objection, Purchaser
and its representatives shall have reasonable access, during normal business
hours and upon reasonable advance written notice, to all relevant work papers,
schedules, memoranda and other documents prepared by Honeywell or its
accountants and other advisors (subject to customary indemnification and other
agreements that may be requested by Honeywell’s accountants and other advisors)
and to finance personnel of Honeywell and its representatives and any other
information which Purchaser reasonably requests, and Honeywell shall, and shall
use reasonable efforts to cause its accountants and other advisors to, cooperate
reasonably with Purchaser and its representatives in connection therewith.

(e) No later than thirty (30) days after the engagement of the Independent
Accounting Firm, as evidenced by its written acceptance by facsimile or
otherwise to the parties, each of Honeywell and Purchaser shall submit a brief
to the Independent Accounting Firm (with a copy to the other party) setting
forth its respective positions regarding the issues in dispute. No later than
thirty (30) days after submission of the initial brief, each of Honeywell and
Purchaser shall submit a reply brief (with a copy to the other party). The
Independent Accounting Firm shall render its decision resolving the dispute
within thirty (30) days after submission of the last reply brief. If additional
briefing, a hearing, or other information is required by the Independent
Accounting Firm, the Independent Accounting Firm shall give notice thereof to
the parties as soon as practicable before the expiration of such thirty (30) day
period, and the parties shall promptly respond with a view to minimizing any
delay in the decision date.

(f) In accordance with the procedure described above in this Section 3.4, the
Initial Purchase Price shall be (i) increased on a dollar for dollar basis by
the amount by which the Final Net Working Capital is greater than the Targeted
Net Working Capital, or (ii) decreased on a dollar for dollar basis by the
amount by which the Final Net Working Capital is less than the Targeted Net
Working Capital.

 

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(g) Honeywell or Purchaser, as the case may be, shall deposit the amounts, if
any, owed by it, as the case may be, under subsection (f) above, together with
interest thereon from the Closing Date to the date of payment at a floating rate
equal to the U.S. dollar prime rate per annum, as quoted by JPMorgan Chase &
Co., from time to time during such period, in immediately available funds, to a
bank account designated by the other party no later than five (5) business days
after the Final Net Working Capital has been agreed to or deemed to be agreed to
by, or has been delivered by the Independent Accounting Firm.

(h) For the avoidance of doubt, notwithstanding anything herein to the contrary,
the parties agree that any matter specifically resolved and reflected as part of
the Final Net Working Capital under this Section 3.4 shall not also be
recoverable as a Loss pursuant to Article VIII or Article X solely to the extent
that the amount of such Loss is reflected as a current liability in the Final
Net Working Capital and actually resulted in an adjustment to the Purchase Price
pursuant to Section 3.4(f).

3.5 Purchase Price Allocation.

(a) The Purchase Price allocated to the Equity Interests in each of the
Purchased Entities and to the Purchased Assets (net of Assumed Liabilities) of
each Asset Seller shall be in accordance with the Purchase Price Allocation
Schedule attached hereto as Exhibit A-1, subject to adjustment pursuant to
Section 3.4, and no party shall take a position inconsistent with such
allocation on any Tax Return (unless otherwise required by a final,
nonappealable determination of a court of competent jurisdiction or a binding
closing agreement entered into with a Taxing Authority). The parties shall
promptly inform one another in writing of any challenge by any Taxing Authority
to any Purchase Price allocation made pursuant to this Agreement and agree to
consult with and keep one another informed with respect to the status of, and
any discussion, proposal or submission with respect to, any such challenge.
Within thirty (30) days following (i) the determination of any excess or deficit
in accordance with Section 3.4(f), (ii) an indemnification payment pursuant to
Section 8.4 or (iii) an indemnification payment pursuant to Article X, in each
case, the Sellers and Purchaser shall revise the purchase price allocation to
reflect such excess, deficit or payment in accordance with the nature of each
relevant excess, deficit or payment (or if the nature of each relevant excess,
deficit or payment cannot be reasonably determined, consistent with the
proportional allocation of value described in Exhibit A-1).

(b) The portion of the Purchase Price allocated to the Purchased Assets (net of
Assumed Liabilities) of Honeywell as set forth on Exhibit A-1 plus those Assumed
Liabilities of Honeywell that constitute Liabilities for federal income tax
purposes (the “Gross US Purchase Price”) shall be allocated among the Purchased
Assets of Honeywell in the manner required by Section 1060 of the Code as shown
on an allocation schedule to be prepared by Purchaser as soon as practicable
after the Closing Date. The template of the allocation schedule is attached
hereto as Exhibit A-2. Purchaser shall provide Honeywell with such allocation
schedule and Purchaser shall make such revisions or changes to such schedule as
shall be reasonably requested by Honeywell and approved by Purchaser, each
acting in good faith. In the

 

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event Purchaser and Honeywell are unable to agree on the allocation of the Gross
US Purchase Price in such manner, then each (acting reasonably and in good
faith) shall be free to do its own allocation of the Gross US Purchase Price. In
the event Purchaser and Honeywell do agree on the allocation of the Gross US
Purchase Price, then such allocation shall be binding on them for federal,
state, local and other Tax reporting purposes, including filings on Internal
Revenue Service Form 8594, and neither of them will assert or maintain a
position inconsistent with such allocation.

(c) The portion of the Purchase Price allocated on Exhibit A-1 to the Purchased
Assets (net of Assumed Liabilities) of each of HON Korea and HON Czech plus the
Assumed Liabilities of each of HON Korea and HON Czech (in each case, the “Gross
Foreign Purchase Price”) shall be allocated among the Purchased Assets of each
of HON Korea and HON Czech as shown on an allocation schedule to be prepared by
Purchaser as soon as practicable after the Closing Date. The template of the
allocation schedule is attached hereto as Exhibit A-3. Purchaser shall provide
the Sellers with such allocation schedule and Purchaser shall make such
revisions or changes to such schedule as shall be reasonably requested by the
Sellers and approved by Purchaser, each acting in good faith. In the event
Purchaser and any of the Sellers are unable to agree on the allocation of the
Gross Foreign Purchase Price in such manner, then each (acting reasonably and in
good faith) shall be free to do its own allocation of the Gross Foreign Purchase
Price. In the event Purchaser and the Sellers do agree on the allocation of the
Gross Foreign Purchase Price, then such allocation shall be binding on them for
all Tax reporting purposes, and none of them will assert or maintain a position
inconsistent with such allocation.

3.6 Withholding. Notwithstanding any other provision in this Agreement,
Purchaser (and any other Person that has any withholding obligation with respect
to any payment made pursuant to this Agreement) shall be entitled to deduct and
withhold from the payments to be made pursuant to this Agreement any Taxes
required to be deducted and withheld with respect to the making of such payments
under the Code, the Treasury Regulations issued thereunder, or any other
applicable provision of Law. To the extent that amounts are so withheld and
deducted pursuant to this Section 3.6, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to such Person in respect
of which such deduction and withholding was made. If Purchaser intends to
withhold pursuant to this Section 3.6, it shall provide notice to Honeywell at
least five (5) days prior to Closing.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers, jointly and severally, hereby represent and warrant to Purchaser
that, as of the date hereof and as of the Closing Date (except in each case to
the extent any representation or warranty speaks expressly as of an earlier
date), except as set forth on the disclosure schedule delivered by Honeywell to
Purchaser concurrently herewith (the “Disclosure Schedule”) (it being understood
that (x) any matter set forth in the Disclosure Schedule shall be deemed
disclosed with respect to all sections of this Article IV to which such matter
relates so long as the description of such matter in the Disclosure Schedule
makes its relevance to such other sections reasonably apparent, whether or not a
specific cross reference appears and (y) any action to the extent described in
Section 6.1 of the Disclosure Schedule shall be deemed disclosed as an exception
to all representations and warranties made as of the Closing Date):

4.1 Corporate Status. Each of the Sellers and Purchased Entities is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (to the extent such concept of
good standing is recognized under such laws of incorporation) and each (a) has
all requisite power and authority to carry on the Business as it is now being
conducted, and (b) is duly qualified or otherwise authorized to do business and
is in good standing (to the extent such concept of good standing is recognized
under such laws of incorporation) in each of the jurisdictions in which the
ownership, operation or leasing of the Purchased Assets or the properties or
assets of the Purchased Entities (other than Excluded Assets) and the conduct of
the Business requires it to be so qualified or otherwise authorized, except
where the failure to be so qualified or otherwise authorized would not result in
a material Loss to the Business taken as a whole. Honeywell has Made Available
to Purchaser a true and correct copy of the certificate of incorporation,
articles of association, by-laws, regulations or other organizational or
governing documents of each of the Purchased Entities, each as in effect on the
date hereof, together with all amendments thereto.

 

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4.2 Authority. Each of the Sellers has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and under the
Ancillary Agreements to which it is a party, and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
of the Sellers of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate or other entity action
(including any stockholder or board approvals) on the part of the applicable
Seller, and no other corporate or other entity proceedings on the part of the
Sellers are necessary to authorize the execution, delivery and performance by
any Seller of this Agreement and the Ancillary Agreements to which it is a party
or to consummate the transactions contemplated hereby and thereby. This
Agreement has been, and upon execution, the Ancillary Agreements will be duly
executed and delivered by each Seller that is a party thereto, and, assuming due
authorization and delivery by Purchaser, this Agreement constitutes, and upon
execution the Ancillary Agreements will constitute, valid and binding
obligations of each Seller that is a party thereto enforceable against each such
Seller in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, and other
similar Laws now or hereafter in effect relating to or affecting creditors’
rights generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

4.3 No Conflict; Government Authorizations.

(a) Except as set forth in Section 4.3(a) of the Disclosure Schedule, the
execution and delivery of this Agreement and the Ancillary Agreements do not,
and the consummation of the transactions contemplated hereby and thereby will
not (with or without notice or lapse of time, or both), conflict with, or result
in any violation of or default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Encumbrance (except for Permitted Encumbrances)
upon any of the Purchased Assets or properties or assets of the Purchased
Entities under, any

 

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provision of (i) the certificate of incorporation, articles of association,
joint venture contract or agreement, by-laws or other organizational or
governing documents of any Seller or any Purchased Entity, (ii) any Material
Contract, or any Contract (other than a Purchased Contract) that relates to any
Seller’s ownership of or ability to transfer any Purchased Assets, or (iii) any
Permit, Governmental Order or, subject to the matters described in clauses
(i) and (ii) of Section 4.3(b), Law applicable to the Purchased Assets, the
Purchased Entities or the property or assets of the Purchased Entities, other
than, in the case of clauses (ii) and (iii) above, any such conflicts,
violations, defaults, rights or Encumbrances that would not interfere in any
material respect with the conduct of the Business as presently conducted by the
Sellers and the Purchased Entities or result in any material (A) fine,
(B) penalty or (C) other Loss to the Business or the Purchased Entities.

(b) Except as set forth in Section 4.3(b) of the Disclosure Schedule, no
material consent, authorization, approval, or exemption of, or registration,
declaration, notice or filing with, any Governmental Authority is required to be
obtained or made by any Seller or Purchased Entity in connection with the
execution, delivery and performance of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby and
thereby, other than (i) compliance with and filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the “HSR Act”), and (ii) to the extent applicable,
compliance with and filings under similar Laws of foreign jurisdictions other
than the United States.

4.4 Capitalization.

(a) Section 4.4(a) of the Disclosure Schedule sets forth a true and complete
list of the authorized and outstanding capital stock, name, jurisdiction of
organization, and record owner of the Equity Interests of each Purchased Entity.
All of the outstanding Equity Interests are duly authorized, validly issued,
fully paid and nonassessable and free and clear of any and all Encumbrances. The
Equity Interests constitute all of the issued and outstanding equity interests
of HON Czech Controls and all of the issued and outstanding equity interests of
HON Shanghai owned by the Sellers which equals ninety (90%) of all such equity
interests of HON Shanghai. None of the Equity Interests were issued in violation
of any shareholder preemptive or similar rights or of any applicable federal,
state, foreign or transnational securities laws.

(b) There are no existing options, warrants, calls, rights, subscriptions,
arrangements, claims, commitments (contingent or otherwise) or other agreements
of any character to which any of the Purchased Entities is a party, or is
otherwise subject, requiring, and there are no securities of any of the
Purchased Entities outstanding which, upon conversion or exchange would require,
the issuance, sale or transfer of any additional shares of capital stock or
other securities of any of the Purchased Entities convertible into, exchangeable
for or evidencing the right to subscribe for or purchase capital stock or any
other securities of any of the Purchased Entities. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or similar
rights with respect to the Purchased Entities. None of the Sellers or the
Purchased Entities is a party, or is otherwise subject, to any voting trust or
other voting agreement with respect to the Equity Interests or to any agreement
relating to the issuance, sale, redemption, transfer, acquisition or other
disposition or the registration of the Equity Interests.

 

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(c) There are no Subsidiaries, joint ventures or other Persons in which the
Purchased Entities own, of record or beneficially, any direct or indirect equity
or other similar interest or any right (contingent or otherwise) to acquire any
direct or indirect equity or other similar interest.

(d) Solely for purposes of the conditions set forth in section 5.9 of the HON
Shanghai joint venture contract, dated as of March 16, 2005, between Shanghai
Creation Electronics Co., Ltd. and HON China (the “Joint Venture Agreement”) and
as set forth in section 3.9(b) of the Articles of Association referenced in the
Joint Venture Agreement, the Purchased Assets constitute substantially all of
the assets of the “Automotive-On-Board business” (as referenced in the Joint
Venture Agreement).

4.5 Financial Statements.

(a) Attached to Section 4.5(a) of the Disclosure Schedule are copies of the
unaudited historical pro forma balance sheets of the Business as of December 31,
2008, December 31, 2009 and May 29, 2010 (the “Balance Sheets”) and the
unaudited pro forma statements of income of the Business for June 30, 2010 and
the fiscal years ended December 31, 2009 and December 31, 2008 (collectively
with the Balance Sheets, the “Financial Statements”).

(b) The Financial Statements were derived from the books and records of the
Sellers and the Purchased Entities, and present fairly, in all material
respects, the financial position and operating results of the Business as of the
dates thereof and for the periods covered thereby, in accordance with the
Specified Accounting Policies, consistently applied, subject to year-end
adjustments (none of which are or will be inconsistent with past practice nor,
individually or in the aggregate, material) and the absence of footnotes and
other presentation items.

4.6 Absence of Certain Changes; Undisclosed Liabilities.

(a) Except as expressly required by this Agreement or as set forth in
Section 4.6(a) of the Disclosure Schedule, since December 31, 2009, the Sellers
have, including through the Purchased Entities, operated the Business in the
ordinary course of business consistent with past practice in all material
respects, and the Purchased Entities have not, and none of the Sellers in
connection with the Business have, taken any of the following actions:

(i) adopted any change in the respective certificates of incorporation, articles
of association or bylaws or other similar organization or governing documents of
the Purchased Entities;

(ii) adopted a plan or agreement of complete or partial liquidation,
dissolution, restructuring, merger, consolidation, restructuring,
recapitalization or other reorganization of any of the Purchased Entities;

(iii) (A) issued, sold, transferred, pledged, disposed of or encumbered any
shares of capital stock of the Purchased Entities or any securities or rights
convertible, exchangeable or exercisable into any shares of capital stock of the
Purchased Entities, (B) split, combined, subdivided or reclassified any shares
of capital

 

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stock of the Purchased Entities, (C) granted any options, warrants, or other
rights to purchase or obtain any equity securities or any shares of capital
stock of the Purchased Entities, (D) declared, set aside or paid any dividend or
other distribution other than in each case for cash, or (E) redeemed, purchased
or otherwise acquired, directly or indirectly, any shares of capital stock of
the Purchased Entities;

(iv) entered into any Material Contract or materially amended or modified or
terminated any Material Contract;

(v) entered into or consummated any transaction involving the acquisition of the
business or stock (or, to the extent constituting a going-concern business,
assets or other properties) of any other Person (other than purchases of
inventory and, subject clause (vi) below, capital equipment in the ordinary
course of business consistent with past practice);

(vi) made any capital expenditure materially in excess of the capital
expenditure budget Made Available to Purchaser prior to the date of this
Agreement;

(vii) sold, transferred, leased, licensed, or otherwise disposed of material
assets or properties of the Purchased Entities or assets or properties that
would otherwise constitute Purchased Assets, other than as expressly required
pursuant to existing Material Contracts and sales of inventory in the ordinary
course of business consistent with past practice;

(viii) sold, assigned, transferred, leased, licensed or encumbered any material
Intellectual Property, or disclosed any material trade secret, or abandoned any
material Intellectual Property, in each case, other than pursuant to sales of
inventory in the ordinary course of business consistent with past practice;

(ix) mortgaged or pledged any of the material Purchased Assets or any of the
material assets or properties of the Purchased Entities, tangible or intangible,
or created or suffered to exist any Encumbrance thereon (other than Permitted
Encumbrances);

(x) (A) made or rescinded any material tax election with respect to any of the
Purchased Entities, (B) changed any of the material methods of reporting income
or deductions for Tax purposes of any of the Purchased Entities, (C) compromised
any Tax Liability of any of the Purchased Entities that is material to the
Purchased Entities or (D) issued a waiver to extend the period of limitations
for the payment or assessment of any Tax;

(xi) changed any of the accounting principles or practices used by the Purchased
Entities;

(xii) entered into any new lease or sublease of real property or amended or
terminated or waived any rights under any lease or sublease with respect to any
Leased Real Property;

 

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(xiii) settled, conciliated or compromised any material claims, actions, suits,
investigations or proceedings involving more than $100,000;

(xiv) implemented any layoff of employees that could implicate the Worker
Adjustment and Retraining Notification Act of 1988, as amended, (the “WARN Act”)
or any similar foreign, transnational, state or local Law;

(xv) had physical damage, destruction, theft or casualty loss affecting any of
the assets of the Business or the Purchased Entities in an amount exceeding
$50,000 per incident, whether or not covered by insurance;

(xvi) terminated or closed any facility, other than periodic shutdowns in the
ordinary course of business;

(xvii) entered into any new benefit or compensation plan, program, agreement or
arrangement or terminated any Company Plan or increased the benefits under any
Company Plan or amended or modified any Company Plan where such amendment or
modification has a material cost impact on the Business taken as a whole, or
granted or made a legally binding promise for any material increase in
compensation or benefits to any director, officer, or Employee, or any material
bonus, severance, incentive, or profit sharing payments, in each case, except as
required under existing agreements or arrangements that have been Made Available
to Purchaser prior to the date of this Agreement or by applicable Law; provided,
however, that nothing in this Agreement shall prevent the Sellers or the
Purchased Entities from entering into statutory employment agreements with new
employees outside the United States, to the extent required by applicable Laws,
in the ordinary course of business;

(xviii) (A) other than in the ordinary course of business, incurred or
guaranteed any Indebtedness or issued any note, bond, or other debt security,
(B) assumed, guaranteed, endorsed or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person; (C) made loans, advances or capital contributions to or investments in
any other Person (other than advances to employees in the ordinary course of
business) or (D) mortgaged or pledged any of its material assets, tangible or
intangible, or created or suffered to exist any Encumbrance thereon (other than
Permitted Encumbrances), it being understood that this Section 4.6(a)(xviii)
shall be limited to actions of the Purchased Entities; or

(xix) entered into an agreement or commitment to do any of the foregoing.

(b) Since March 31, 2010, there has not been a Business Material Adverse Effect.

(c) Other than (i) as and to the extent reflected or reserved for on the Most
Recent Balance Sheet, (ii) Liabilities incurred in the ordinary course of
business consistent with past practice since May 29, 2010, none of which is a
Liability for a breach of contract, breach of warranty, tort, infringement,
claim or lawsuit, (iii) Excluded Liabilities, and (iv) Liabilities disclosed in
the Disclosure Schedule or of the Business to perform its obligations

 

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under this Agreement or any Ancillary Agreement, and (v) Liabilities under
Contracts (other than Liabilities arising out of any default by the Sellers or
the Purchased Entities thereunder), as of the Closing Date the Business will not
have any Liabilities arising out of any event, condition, or state of facts on
or prior to the Closing Date that would be Assumed Liabilities and that
individually or together with all Liabilities arising out of the same facts and
circumstances exceed $1,500,000.

4.7 Taxes.

(a) Each of the Sellers and the Purchased Entities has (i) duly and timely filed
(or there have been filed on its behalf) all Tax Returns required to be filed by
it (taking into account all applicable extensions) with the appropriate Taxing
Authority with respect to the Purchased Entities, the Purchased Assets, and the
Business, and (ii) paid all Taxes shown as due on such Tax Returns when payable.
To the Knowledge of the Sellers, all such Tax Returns are true and correct in
all material respects, and were prepared in substantial compliance with all
applicable Laws and regulations. To the Knowledge of the Sellers, since
January 1, 2007, no claim has been made by a Taxing Authority in a jurisdiction
where a Seller or a Purchased Entity does not file Tax Returns that any such
entity is or may be subject to taxation by that jurisdiction with respect to the
Business, the Purchased Entities, or the Purchased Assets. Neither the Seller
(specifically with respect to the Business or the Purchased Assets) nor the
Purchased Entities is currently the beneficiary of any extension of time within
which to file any Tax Return.

(b) To the Knowledge of the Sellers, there are no material Encumbrances for
Taxes upon the Purchased Assets or any personal property or assets of the
Purchased Entities, except for Permitted Encumbrances or Encumbrances for which
adequate reserves have been provided in the Financial Statements.

(c) Except as set forth in Section 4.7(c) of the Disclosure Schedule, to the
Knowledge of the Sellers, there is no audit, examination, deficiency, refund
litigation or proposed adjustment with respect to any material amount of Taxes
pending or in progress or threatened with respect to any Taxes of the Sellers
(specifically with respect to the Business or the Purchased Assets) or of the
Purchased Entities.

(d) To the Knowledge of the Sellers, there are no outstanding written requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any income Taxes or material income Tax
deficiencies against the Sellers (specifically with respect to the Business or
the Purchased Assets) or the Purchased Entities.

(e) To the Knowledge of the Sellers, the Sellers (specifically with respect to
the Business or the Purchased Assets) and the Purchased Entities are in material
compliance with all applicable information reporting and Tax withholding
requirements under U.S. federal, state and local, and non-US Tax Laws.

(f) To the Knowledge of the Sellers, no Seller (specifically with respect to the
Business or the Purchased Assets) or Purchased Entity is a party to, is bound by
or has any obligation under any Tax sharing, Tax allocation or Tax indemnity
agreement or similar contract or arrangement.

 

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(g) To the Knowledge of the Sellers, no Seller (specifically with respect to the
Business or the Purchased Assets) or Purchased Entity has engaged in a
transaction that the Internal Revenue Service has identified by regulation or
other form of published guidance as a listed transaction, as set forth in Treas.
Reg. § 1.6011-4(b)(2).

(h) Except as set forth in Section 4.7(h) of the Disclosure Schedule, to the
Knowledge of the Sellers, since January 1, 2007, there are no Liabilities for
Taxes of any Person (other than for the Purchased Entities) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law) or as a transferee or successor, by contract, or otherwise with
respect to the Purchased Entities, the Purchased Assets, or the Business.

(i) No Purchased Entity will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of (i) a change in
method of accounting for a taxable period ending on or prior to the Closing
Date, (ii) “closing agreements” as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign Tax law) executed on or prior
to the Closing Date, (iii) an installment sale or open transaction disposition
made on or prior to the Closing Date, (iv) a prepaid amount received on or prior
to the Closing Date not in the ordinary course of business, or (v) intercompany
transaction or excess loss account described in Treasury Regulations under Code
Section 1502 (or any corresponding or similar provision of state, local, or
non-U.S. income Tax law) or (vi) election pursuant to Code Section 108(i) made
effective on or prior to the Closing Date.

(j) To the Knowledge of the Sellers, no Purchased Entity has distributed stock
of another Person, or has had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Section 355 or Section 361 of the Code.

(k) Section 4.7(k) of the Disclosure Schedule correctly sets forth each entity
classification election that has been made pursuant to Section 301.7701-3 of the
U.S. Treasury Regulations with respect to the Purchased Entities, and with
respect to each such election, the effective date thereof and the classification
elections pursuant thereto.

(l) Each Purchased Entity has complied with all statutory provisions, rules,
regulations, orders and directions in respect of any value added or similar tax
on consumption, has promptly submitted accurate returns, maintains full and
accurate records, and is not a member of a group or consolidation with any other
company for the purposes of VAT.

(m) None of the Purchased Entities is currently a “passive foreign investment
company” as that term is defined in Code Section 1297(a).

(n) No withholding is required under Code Section 1445 in respect of the
consideration payable under this Agreement.

 

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4.8 Intellectual Property.

(a) Section 4.8(a) of the Disclosure Schedule sets forth a true and complete
list (in all material respects) of all registrations, patents and applications
of the foregoing for Acquired Intellectual Property. Except as set forth in
Section 4.8(a) of the Disclosure Schedule or otherwise excluded by
Section 2.3(h), the Sellers do not own (with respect to the Business) any
material unregistered trademarks or material Software.

(b) The Sellers or the Purchased Entities solely own or have the right to use
pursuant to license, sublicense, agreement or permission listed in
Section 4.13(a)(x) of the Disclosure Schedule, free and clear of all
Encumbrances (other than Permitted Encumbrances), all of the Intellectual
Property listed on Section 4.8(a) of the Disclosure Schedule. Honeywell has the
right to grant the rights with respect to the Intellectual Property set forth in
Article 2 of the Intellectual Property License Agreement.

(c) All of the Intellectual Property listed on Section 4.8(a) of the Disclosure
Schedule is valid and subsisting. Since January 1, 2008, neither the Sellers nor
the Purchased Entities have received any claim threatened in writing that
challenges the validity or enforceability of their ownership or right to use any
Intellectual Property listed on Section 4.8(a) of the Disclosure Schedule, and
to the Knowledge of the Sellers, no such claim has been made since January 1,
2008.

(d) The operation of the Business as presently conducted by the Sellers and the
Purchased Entities does not infringe or misappropriate, and the operation of the
Business has not at any time since January 1, 2008 infringed or misappropriated,
in either case in any material respect, the Intellectual Property of any third
Person; it being understood that if any instance of such an infringement or
misappropriation occurred or existed at any time on or after January 1, 2008,
then for purposes of determining the extent of any Losses related to a breach of
this provision, the calculation of such Losses for purposes of Article X shall
be based on all instances of such infringement or misappropriation without
giving effect to such January 1, 2008 time qualifier. Since January 1, 2008,
neither the Sellers nor the Purchased Entities have received any claim
threatened in writing alleging such infringement or misappropriation with
respect to the Business (including any offers to license any patents from any
third Person), and, to the Knowledge of the Sellers, no such claim has been made
since January 1, 2008.

(e) To the Knowledge of the Sellers, no third Person is currently infringing or
misappropriating in any material respect the Intellectual Property listed on
Section 4.8(a) of the Disclosure Schedule.

(f) The Sellers and the Purchased Entities have taken commercially reasonable
efforts to protect the confidentiality of the trade secrets of the Business.

(g) Since January 1, 2008, all employees, consultants, or contractors who have
been engaged to create or develop Intellectual Property for the Business, which
Intellectual Property is material to the conduct of the Business as currently
conducted, have executed and delivered to the Sellers or the Purchased Entities
a valid and enforceable agreement: (i) providing for the non-disclosure by such
current or former employee, consultant,

 

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or contractor of any confidential information of the Sellers (with respect to
the Business) or the Purchased Entities; and (ii) providing for the assignment
or a license by such current or former employee, consultant, or contractor to
the Sellers or the Purchased Entities of any such Intellectual Property arising
out of such employee’s, consultant’s, or contractor’s employment by, engagement
by or contract with the Sellers or the Purchased Entities.

(h) For purposes of this Agreement, “Intellectual Property” means all of the
following in any jurisdiction throughout the world: (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto reduced to practice prior to the Closing Date, (ii) all
patents, patent applications, and patent disclosures therefor, and all
divisionals, reissues, revisions, re-examinations, extensions, continuations and
continuations-in-part thereof (“Patents”), in each case filed or claiming prior
to an application filed, prior the Closing Date (iii) all trademarks, trade
dress, service marks, trade names, domain names, whether registered or
unregistered, and pending applications to register the same, including all
renewals thereof and all goodwill associated therewith, (iv) all copyrights,
whether registered or unregistered, and pending applications to register the
same, (v) all know-how and trade secrets, and (vi) computer software embodied in
any sensor product or used in the design, test, and manufacture of any sensor
product, in each case in both object code and source code form, including
programmable logic and human readable or any intermediate hardware logic
description language (including HDL and VHDL) that are used to program or
configure a device such as an FPGA, a CPLD, or an ASIC (“Software”).

(i) Immediately subsequent to the Closing, the Acquired Intellectual Property
will be owned by or available for use by Purchaser on terms and conditions
identical to those under which the Sellers and the Purchased Entities owned or
used the Acquired Intellectual Property immediately prior to the Closing,
subject to the non-exclusive license to Honeywell provided for in the
Intellectual Property License Agreement.

(j) Except for Sleipnir Intellectual Property, the Sellers and the Purchased
Entities are in possession of the source code and object code for all Software
that is used in, or incorporated into, the products sold or licensed by the
Sellers or any of the Purchased Entities and all materials related thereto,
including without limitation, build tools, compilers, scripts, libraries,
installation and user documentation, engineering specifications, flow charts,
and know-how reasonably necessary for the use, maintenance, enhancement,
development and other exploitation of such Software as currently used in, or
currently under development for, the Business.

4.9 Legal Proceedings. Except as set forth in Section 4.9 of the Disclosure
Schedule, there are no material claims, charges, arbitrations, formal
grievances, complaints, actions, suits, investigations or proceedings by or
before any Governmental Authority (each, an “Action”) pending by or against or,
to the Knowledge of the Sellers, threatened by or against, any Seller relating
to the Business, any of the Purchased Entities, any properties or assets of the
Purchased Entities, or the Purchased Assets. None of the Purchased Assets or
Purchased Entities are subject to any material Governmental Order, and to the
Knowledge of the Sellers, there are no such Governmental Orders threatened to be
imposed. To the Knowledge of the Sellers, there are no formal or informal
material governmental inquiries or investigations or internal investigations or
whistle blower complaints pending or threatened relating to, affecting or

 

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involving the Business. This representation and warranty does not apply to
environmental matters, which are the subject of Section 4.11, or Intellectual
Property matters, which are the subject of Section 4.8.

4.10 Compliance with Laws; Permits.

(a) Since January 1, 2008, the conduct of the Business and the operation of the
Purchased Assets by the Sellers and the Purchased Entities have been and are in
compliance with all applicable Laws except where the failure to be in compliance
would not interfere in any material respect with the conduct of the Business as
presently conducted by the Sellers and the Purchased Entities. Since January 1,
2008, no Seller or Purchased Entity has received any notice or other
communication in writing from any Governmental Authority or any other Person
regarding any alleged failure to comply with any Law, except where the failure
to comply would not interfere in any material respect with the conduct of the
Business as presently conducted by the Sellers and the Purchased Entities or
result in a material (i) fine, (ii) penalty, or (iii) other Loss to the Business
(which is an Assumed Liability) or to the Purchased Entities.

(b) The Sellers and the Purchased Entities have obtained all Permits that are
necessary to the conduct in all material respects of the Business as presently
being conducted. All material Permits are in full force and effect and will not
be subject to termination or otherwise impaired solely as a result of the sale
of the Equity Interests by the Sellers pursuant to this Agreement. To the
Knowledge of the Sellers, no Seller or Purchased Entity is in material violation
or material default of such Permits, and no Seller or Purchased Entity has
received any written notification from any Governmental Authority threatening to
revoke any material Permit.

(c) Notwithstanding the foregoing, the representations and warranties contained
in this Section 4.10 do not apply to Taxes, Intellectual Property, Environmental
Laws, and employee matters and Company Plans, all representations and warranties
related thereto being covered in their entirety and exclusively under
Sections 4.7, 4.8, 4.11, 4.12 and 4.18, respectively.

4.11 Environmental Matters. Except as set forth in Section 4.11 of the
Disclosure Schedule:

(a) With respect to the Leased Real Property and otherwise with respect to the
Business, the Sellers and the Purchased Entities have at all times within the
past five years complied, and are in compliance, with applicable Environmental
Laws, in either case, in all material respects;

(b) without limiting the generality of the foregoing, the Sellers and the
Purchased Entities have obtained, and have at all times within the past five
years complied, and are in compliance, in either case, in all material respects,
with, all material Permits that are required pursuant to Environmental Laws for
the occupation of the Leased Real Property and the operation of the Business;

(c) there are no material Environmental Claims pending or, to the Knowledge of
the Sellers, threatened against any Seller or Purchased Entity;

 

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(d) there is no condition on any Leased Real Property, any currently owned
property or facility used in connection with the Business (together with the
Leased Real Property, the “Property”), formerly owned or operated property or
facility, for which any Seller or Purchased Entity has any obligation to
undertake any investigation, cleanup or remedial action pursuant to
Environmental Laws. There are no Materials of Environmental Concern present on,
in, under or migrating from any Property, or any formerly owned or operated
property or facility (with respect to the Business), and no disposal,
arrangement for disposal, generation, Release, discharge, spill, storage,
transportation, handling or treatment of, or exposure of any Person to,
Materials of Environmental Concern has occurred on, in or under the Property, or
any formerly owned or operated property or facility (with respect to the
Business), or elsewhere by or on behalf of any Purchased Entity (or any Seller
with respect to the Business), so as to give rise to any material current or
future Liabilities under any Environmental Law;

(e) none of the Sellers (with respect to the Business) or the Purchased Entities
is subject to any material Liability, including any obligation for corrective or
remedial action, of any other Person relating to Environmental Laws;

(f) Honeywell has Made Available to Purchaser all environmental audits, reports
and other material environmental documents relating to the past or current
properties, facilities or operations of the Purchased Entities, their respective
Affiliates or predecessors or the Business (including the Property) that are in
its possession or under its reasonable control (the “Environmental Reports”);
and

(g) for purposes of this Agreement, (i) “Environmental Claims” means any claim,
cause of action, suit, investigation, proceeding, or notice by any Person or
entity (including any Governmental Order) alleging potential Liability arising
out of, based on or resulting from (A) the presence, or Release into the
environment, of any Material of Environmental Concern at any location, or
(B) circumstances forming the basis of any violation, or alleged violation of,
or any Liability or potential Liability under, any Environmental Law,
(ii) “Environmental Laws” means all federal, interstate, state, national,
provincial, municipal, local and foreign Laws and all Governmental Orders and
all common law, in each case, in effect on or prior to the Closing Date relating
to pollution or protection of human health, safety, or the environment,
including Laws relating to emissions, discharges, Releases or threatened
Releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of, or exposure of Persons to, Materials of Environmental
Concern, and (iii) “Materials of Environmental Concern” means chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances and
materials, radioactive materials, asbestos, petroleum and petroleum products.

4.12 Employee Matters and Benefit Plans.

(a) Each employment, deferred compensation, pension, stock option, stock
purchase, stock appreciation right, equity-based compensation, incentive,
profit-sharing or retirement plan, arrangement or agreement, each medical,
vacation, retiree medical, severance pay plan, and each other agreement
(including any severance, change in control or similar agreement) or fringe or
other material benefit or compensation plan, program, agreement or arrangement,
(x) in each case that is sponsored or maintained by a Seller in connection with
the

 

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Business or any Purchased Entity, that affects or covers any current or former
employee, officer, director, contractor or agent of the applicable Seller in
connection with the Business or any Purchased Entity and under which the
applicable Seller or Purchased Entity has any Liability in connection with the
Business or (y) with respect to which the applicable Seller contributes with
respect to the Business or any Purchased Entity has any Liability (including,
“employee benefit plans” within the meaning of Sections 3(1), 3(2) and 3(3) of
ERISA) (each a “Company Plan” and collectively, the “Company Plans”) has been
listed on Section 4.12(a) of the Disclosure Schedule. True and complete copies
of the following have been Made Available to Purchaser by Honeywell: (i) the
most recent copy of the Company Plans, including any trust instruments and all
amendments thereto, (ii) the most recent annual reports filed on Form 5500,
including all required schedules for each Company Plan required to file an
annual report, (iii) the most recent determination letter issued by the Internal
Revenue Service for each Company Plan that is intended to be “qualified” under
Section 401(a) of the Code, (iv) the most recent summary plan description and
any summary of material modifications, as required, for each Company Plan,
(v) the most recent actuarial reports, if any, relating to each Company Plan,
and (vi) the most recent actuarial valuation, study or estimate of any Company
Plan that is a retiree medical and life insurance benefits plan or supplemental
retirement benefits plan.

(b) Each Company Plan that is intended to qualify under Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service
stating that it so qualifies and that its trust is exempt from taxation under
Section 501(a) of the Code and nothing has occurred that would adversely affect
such qualification or exempt status. Except as set forth in Section 4.12(b) of
the Disclosure Schedule, and except as would not give rise to a Liability of the
Business that would be an Assumed Liability or a Liability of a Purchased
Entity, with respect to each Company Plan: (i) such Company Plan has been
maintained, funded and administered in all material respects in accordance with
its terms and applicable Law, including (if applicable) ERISA and the Code;
(ii) except for routine claims for benefits, no disputes are pending or, to the
Knowledge of the Sellers, threatened; (iii) neither the Sellers or the Purchased
Entities nor any trustee nor any fiduciary of a Company Plan that is subject to
ERISA or the Code has engaged in any prohibited transaction within the meaning
of Sections 406 or 407 of ERISA or Section 4975 of the Code or any breach of
fiduciary duty with respect to any such Company Plan; (iv) all contributions,
distributions and premium payments required under ERISA and the Code to be made
with respect to any Company Plan as of the Closing Date have been made or shall
have been made or are accrued on the Final Net Working Capital in full; (v) no
Company Plan that is subject to ERISA or the Code is a “multiemployer plan”
within the meaning of Section 3(37) of ERISA or a “multiple employer plan”
within the meaning of Section 413(c) of the Code; and (vi) there are no Actions
pending before the Internal Revenue Service, Department of Labor or other
Governmental Authority with respect to any Company Plan, nor to the Knowledge of
the Sellers is any such Action threatened. Each contract, arrangement, or plan
with respect to the Purchased Entities, the Purchased Assets, and the Business
that is a “nonqualified deferred compensation plan” (as defined for purposes of
Code Section 409A(d)(1)) is in documentary and operational compliance with Code
Section 409A and the applicable guidance issued thereunder in all material
respects. None of the Purchased Entities has any indemnity obligation for any
Taxes imposed under Section 4999 or 409A of the Code.

 

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(c) Except as set forth in Section 4.12(c) of the Disclosure Schedule, no
Company Plan is a “defined benefit plan” subject to Title IV of ERISA or
Section 412 of the Code. The Sellers have no Liability that could otherwise
become a Liability of Purchaser or any of its Affiliates, and the Purchased
Entities have no Liability: (i) under or with respect to (A) any “employee
pension benefit plan” (as defined in Section 3(2) of ERISA) that is subject to
Title IV of ERISA or Code Section 412, (B) any “multiemployer plan” as defined
in Section 3(37) or 4001(a)(3) of ERISA, (C) any “multiple employer welfare
arrangement” as defined in Section 3(40) of ERISA, or (D) any “multiple employer
plan” within the meaning of Section 210 of ERISA or Section 413(c) of the Code;
or (ii) on account of being at any time considered a single employer under
Section 414 of the Code with any Person other than the Sellers and the Purchased
Entities.

(d) Except as set forth in Section 4.12(d) of the Disclosure Schedule, none of
the Sellers (solely with respect to the Business) or the Purchased Entities have
any Liability for retiree or post-termination health or life or other welfare
type benefits under any Company Plan, other than coverage as may be required
under Section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA, or
under the continuation of coverage provisions of the Laws of any state or
locality.

(e) Except as set forth in Section 4.12(e) of the Disclosure Schedule, the
consummation of the transactions contemplated by this Agreement by the Sellers
will not, either alone or in combination with another event, (i) entitle any
current or former employee, officer, director, contractor or agent of the
Business or the Purchased Entities to severance pay, unemployment compensation
or any other payment, in each case, under any Company Plan, (ii) accelerate the
time of payment or vesting, or trigger any payment or funding, through a grantor
trust or otherwise, or increase the amount of, compensation or benefits due any
such current or former employee, officer, director, contractor or agent or
trigger any other obligation pursuant to, any of the Company Plans, (iii) result
in any breach or violation of, or a default under, any of the Company Plans, or
(iv) in respect of any Company Plan that is subject to the Code, result in any
payment that would be a “parachute payment” to a “disqualified individual” as
those terms are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services performed or to be
performed in the future.

(f) The Sellers and the Purchased Entities have, for purposes of each Company
Plan, correctly classified those individuals performing services for the
Business as listed in Section 6.10 of the Disclosure Schedule as common law
employees, leased employees, independent contractors or agents, as and where
applicable.

(g) Except as required by applicable Law or as set forth in Section 4.12(g) of
the Disclosure Schedule, no benefit or compensation plan, program, agreement or
arrangement is maintained outside the jurisdiction of the United States, or
covers any individual residing or working outside the United States (each a
“Foreign Plan”). Each Foreign Plan complies with applicable Laws in all material
respects. All contributions, distributions and premium payments required to be
made with respect to each Foreign Plan have been timely made or properly
accrued. No Liability in connection with the termination of, or withdrawal from,
any Foreign Plan has been incurred or will be incurred as a result of the
transactions contemplated by this Agreement. No Foreign Plan has any unfunded
Liabilities that

 

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have not been properly accrued. No benefits payable under any Foreign Plan will
be increased as a result of the consummation of the transactions contemplated by
this Agreement, either alone or in combination with another event.

4.13 Material Contracts.

(a) Except as set forth in Section 4.13(a) of the Disclosure Schedule or
specifically approved by Purchaser under Section 6.1, no Seller (in connection
with the Business) and no Purchased Entity is a party to or bound by any:
(i) Contract that would be required to be filed by Honeywell as a material
contract pursuant to Item 601(b)(10) of Regulation S-K of the Securities and
Exchange Commission (including Contracts relating to compensation of executive
officers); (ii) Contract containing covenants not to compete in any line of
business, industry or geographical area restricting the Business; (iii) Contract
which creates a partnership or joint venture or similar arrangement between any
Seller or Purchased Entity and another Person or any options, rights (preemptive
or otherwise), warrants, calls, convertible securities or commitments or any
other agreements or arrangements with respect to any equity securities of the
Purchased Entities; (iv) indenture, letters of credit, credit agreement, loan
agreement, security agreement, guarantee, note, mortgage or other evidence of
Indebtedness or agreement providing for Indebtedness or any Encumbrance (other
than a Permitted Encumbrance) on any assets of the Purchased Entities in an
amount exceeding $100,000; (v) Contract for the sale of any material Purchased
Assets or material assets of the Purchased Entities, including any real
property, after the date hereof (other than inventory in the ordinary course of
business consistent with past practice); (vi) collective bargaining agreement,
employee association agreement or other agreement with any labor union, employee
representative group, works council or similar collection of employees;
(vii) consulting agreement, management agreement, advisory agreement, employment
agreement, severance agreement, retention agreement or change-of-control
agreement, in each case providing for payments in excess of $100,000 in any
fiscal year; (viii) Contract between any Seller or Purchased Entity, on the one
hand, and any of Honeywell or its Affiliates or Subsidiaries or any of its or
their officers or directors or entities in which they have a controlling
interest (other than Contracts solely between the Purchased Entities or between
any Purchased Entity and its Subsidiaries), on the other hand (other than
ordinary course trade payables and trade receivables negotiated on an arms’
length basis); (ix) Contract under which any Seller or Purchased Entity has made
payments in excess of $250,000 in the last fiscal year or anticipates making
payments in excess of $250,000 in the current fiscal year or of more than
$500,000 over the life of the Contract (other than purchase orders or invoices
entered into in the ordinary course of business consistent with past practice);
(x) Contract containing any material license of, or any option to assign or
purchase, any material Intellectual Property (excluding, however, licenses of
commercially available Software); (xi) Contract under which any Seller or
Purchased Entity received payments in excess of $250,000 in the last fiscal year
or anticipates receiving payments in excess of $250,000 in the current fiscal
year or of more than $500,000 over the life of the Contract (other than sales
orders or invoices entered into in the ordinary course of business consistent
with past practice); (xii) Contract involving any Key Customers or Key
Suppliers, other than purchase orders and sales orders in the ordinary course of
business; (xiii) lease, sublease, or license of any Leased Real Property,
material personal property or other material tangible assets; or (xiv) Contract
involving the acquisition of the business or stock (or, to the extent
constituting a going-concern business, assets or other properties) of any other
Person since December 31, 2007. Each such contract described in clauses
(i)-(xiv) is referred to herein as a “Material Contract.”

 

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(b) Except as set forth in Section 4.13(b) of the Disclosure Schedule (i) no
Seller or Purchased Entity is (and, to the Knowledge of the Sellers, no other
party is) in material breach of or default under any Material Contract, (ii) no
Seller or Purchased Entity has received (A) any written or, to the Knowledge of
the Sellers, oral notice or claim of material default under any Material
Contract, or (B) any written or, to the Knowledge of the Sellers, oral notice of
an intention to terminate, not renew or challenge the validity or enforceability
of any Material Contract (other than Contracts with Key Customers or Key
Suppliers, as to which this notice shall be governed by Section 4.14), (iii) to
the Knowledge of the Sellers, no event has occurred that, with or without notice
or lapse of time or both, would result in a material breach or default under any
Material Contract, and (iv) each of the Material Contracts is in full force and
effect, is the valid, binding and enforceable obligation of the Sellers or
Purchased Entities, and will not be subject to termination solely as a result of
the sale of the Business pursuant to this Agreement, and to the Knowledge of the
Sellers, of the other parties thereto. Honeywell has Made Available to Purchaser
true and complete copies of each Material Contract, including all material
amendments, waivers, exhibits, schedules or attachments thereto.

4.14 Material Customers and Suppliers. Section 4.14 of the Disclosure Schedule
sets forth a true and complete list of (a) the top 10 customers of the Business
(by revenue) during each of the last two (2) fiscal years and for the current
fiscal year to June 30, 2010 (the “Key Customers”), and (b) the top 10 suppliers
of the Business (by expense) during each of the last two (2) fiscal years and
for the current fiscal year to June 30, 2010 (the “Key Suppliers”). Since
January 1, 2009, no Key Customer or Key Supplier has canceled or otherwise
terminated its relationship with the Business, and, to the Knowledge of the
Sellers, no Seller or Purchased Entity has received any written notice from any
Key Customer or Key Supplier to the effect that any such Key Customer or Key
Supplier intends to cancel or otherwise terminate its relationship with the
Business. Since January 1, 2009, to the Knowledge of the Sellers, no Seller or
Purchased Entity has received a written notice from a Key Customer or Key
Supplier to the effect that any such Key Customer or Key Supplier intends to
materially diminish or materially adversely modify its relationship with the
Business.

4.15 Real Properties. A true and complete list of all of the Leased Real
Property (and a list of the leases associated thereto) is set forth in
Section 4.15 of the Disclosure Schedule. To the Knowledge of the Sellers, the
Sellers or the Purchased Entities have valid leasehold interests in the Leased
Real Property, free and clear of any Liens (as hereafter described), tenancies,
sub-tenancies, licenses, defects, exceptions, rights of way, restrictions,
covenants, claims, similar matters, or other encumbrances of any nature
whatsoever in respect of such property or asset (collectively, “Encumbrances”),
except for Permitted Encumbrances and those Encumbrances set forth on
Section 4.15 of the Disclosure Schedule. Except as set forth in Section 4.15 of
the Disclosure Schedule, with respect to each of the foregoing leases, no Seller
or Purchased Entity has subleased, licensed, or otherwise granted any Person the
right to use or occupy such Leased Real Property or any portion thereof.

4.16 Personal Properties. Section 4.16 of the Disclosure Schedule sets forth a
list, complete and accurate in all material respects, which describes in
reasonable detail, all

 

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machinery, equipment and other tangible assets included in the Purchased Assets
(except for stamping dies, failure analysis equipment, production maintenance
equipment and tool room equipment, and certain equipment that is located at the
facilities of certain suppliers of the Business) and the location of such
machinery, equipment and other tangible assets (for the avoidance of doubt, such
Section of the Disclosure Schedule shall not include any tooling not owned by
Sellers or any Purchased Entity). Purchaser acknowledges and agrees that
(a) within two (2) business days after the date hereof, Sellers may update
Section 4.16 of the Disclosure Schedule to include a list, complete and accurate
in all material respects, which describes in reasonable detail, certain
equipment that is located at the facilities of certain suppliers, and (b) prior
to the Closing, Sellers shall update Section 4.16 of the Disclosure Schedule to
include a list, complete and accurate in all material respects, which describes
in reasonable detail, all stamping dies, failure analysis equipment, production
maintenance equipment and tool room equipment included in the Purchased Assets,
including the location of such items.

4.17 Sufficiency of Assets. The Sellers and Purchased Entities have, and (except
for assets sold or otherwise disposed of in the ordinary course of business
after the date hereof in compliance with Section 6.1 hereof) on the Closing Date
will have, all of the rights, title and interest to all tangible Purchased
Assets and all tangible assets of the Purchased Entities, free and clear of any
mortgage, lien, pledge, security interest, option, right of first refusal, right
of first offer, or similar charges (“Liens”), other than Permitted Encumbrances.
Subject to the last sentence of this Section 4.17, except as set forth in
Section 4.17 of the Disclosure Schedule (but including the goods and services
provided by the Sellers and their Affiliates under the Ancillary Agreements and
Section 6.3 of this Agreement), the Purchased Assets and the assets of the
Purchased Entities constitute all of the material assets (real, personal,
tangible, intangible or otherwise) used or held for use in the Business as it is
currently operated and are sufficient in all material respects to conduct and
operate the Business from and after the Closing Date in the same manner as
currently conducted. Notwithstanding the foregoing, the immediately preceding
sentence does not apply to Intellectual Property. With respect to Intellectual
Property, the Sellers represent and warrant only that the Acquired Intellectual
Property together with the Intellectual Property licensed to Purchaser under the
Intellectual Property License Agreement constitutes all the Intellectual
Property necessary to make, use and sell the Existing Products; provided that
the Sellers make no representation or warranty with respect to any Intellectual
Property to the extent associated with Excluded Products. Except as set forth in
Section 4.17 of the Disclosure Schedule, none of the Sellers’ Affiliates own,
utilize or have an interest in any material assets of, perform any material
services for, or on behalf of, or provide any material group purchasing benefits
to, or with respect to, the Business. Notwithstanding the foregoing, the
representations and warranties contained in this Section 4.17 do not apply to
infringement or misappropriation of any Intellectual Property arising in
connection with the conduct or operation of the Business, all representations
and warranties related thereto being covered in their entirety and exclusively
under Section 4.8.

4.18 Labor.

(a) Except as set forth in Section 4.18(a) of the Disclosure Schedule: (i) the
Sellers and Purchased Entities are not parties to any collective bargaining
agreement or any other labor-related agreements with any labor union or labor
organization applicable to Employees, nor is any such agreement currently being
negotiated with any Seller or Purchased

 

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Entity; (ii) no material work stoppage or other material labor action or dispute
involving any Seller or Purchased Entity is pending or, to the Knowledge of the
Sellers, threatened by any such labor dispute; and (iii) the Sellers and
Purchased Entities are operating the Business in compliance with all applicable
Labor Laws, except where the failure to comply would not interfere in any
material respect with the conduct of the Business as presently conducted by the
Sellers and the Purchased Entities or result in a material (A) fine, (B) penalty
or (C) other Loss to a Purchased Entity or other Loss to the Business that would
be an Assumed Liability. “Labor Laws” means any applicable Law relating to the
employment of labor, including (without limitation) provisions thereof relating
to employment standards, human rights, health and safety, labor relations, wage
and hour statutes, immigration, layoffs, workplace safety and insurance and/or
pay equity.

(b) With respect to this transaction, any notice that the Sellers are required
to give under any Labor Law or collective bargaining agreement (including any
works council) has been (or will be) given, and all bargaining obligations with
any employee(s) and/or employee representative have been, or prior to the
Closing will be, satisfied. Except as set forth on Section 4.18(b) of the
Disclosure Schedule, within the past three years, neither the Sellers nor the
Purchased Entities have implemented any plant closing or layoff of employees of
the Business that could implicate the WARN Act, and no such action will be
implemented without advance notification to Purchaser.

4.19 Insurance. Honeywell has Made Available to Purchaser complete copies of all
policies of insurance maintained solely by the Purchased Entities with respect
to their properties and assets or by the Sellers with respect to the Business,
or true and complete summaries of the material terms of such insurance policies.
All insurance policies relating to the Business are in full force and effect,
all premiums due and payable with respect to such policies have been paid and
the applicable insured parties have complied in all material respects with the
provisions of such policies. Neither the Sellers nor the Purchased Entities have
received any written notice (a) regarding the cancellation or invalidation of
any of the existing insurance policies relating to the Business or regarding any
actual or possible adjustment in the amount of the premiums payable with respect
to any of said policies, or (b) any written notice regarding any refusal of
coverage under, or any rejection of any claim under, any such policies.

4.20 Products Liability; Warranty.

(a) (i) Since January 1, 2009, the products made, assembled, or sold by the
Business have conformed in all material respects with all applicable contractual
commitments, express and implied warranties and Laws, in each case that would
give rise to any Ordinary Course Warranty Obligations; and (ii) the Financial
Statements reflect reserves for Ordinary Course Warranty Obligations that are
consistent with the Specified Accounting Policies.

(b) Other than in respect of Ordinary Course Warranty Obligations, which are
addressed in paragraph (a) above, at all times prior to the Closing: (i) the
products made, assembled, or sold by the Business have conformed in all material
respects with all applicable contractual commitments, express and implied
warranties and Laws, and neither the Sellers nor any of the Purchased Entities
has any Liabilities arising out of or related to such

 

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products, other than Excluded Liabilities; and (ii) neither the Sellers nor any
of the Purchased Entities have received notice of any claims for, and to the
Knowledge of Sellers any threats of, any material Products Liability Claim.

4.21 Finder’s Fee. Neither the Sellers nor the Purchased Entities have incurred
any Liability to any party for any brokerage or finder’s fee or agent’s
commission, or the like, in connection with the transactions contemplated by
this Agreement.

4.22 Bank Accounts; Directors and Officers. Section 4.22 of the Disclosure
Schedule includes a list of each bank in which any of the Purchased Entities has
an account, safe deposit box or lock box as of the date hereof, the number of
each such account or box and each authorized signatory. Section 4.22 of the
Disclosure Schedule also sets forth a list of the officers and directors of the
Purchased Entities.

4.23 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. EXCEPT AS EXPRESSLY SET
FORTH IN THIS ARTICLE IV, NEITHER THE SELLERS NOR ANY OF THE PURCHASED ENTITIES
MAKE ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED,
AT LAW OR IN EQUITY, WITH RESPECT TO THE SELLERS OR THE PURCHASED ENTITIES,
THEIR RESPECTIVE BUSINESSES OR FINANCIAL CONDITION OR ANY OF THEIR RESPECTIVE
ASSETS, LIABILITIES OR OPERATIONS, OR THE PAST, CURRENT OR FUTURE PROFITABILITY
OR PERFORMANCE OF THE BUSINESS OR THE PURCHASED ENTITIES OR ANY OTHER MATTER, OR
WITH RESPECT TO ANY INFORMATION PROVIDED TO PURCHASER, INCLUDING WITH RESPECT TO
ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE OR USE, TITLE OR INFRINGEMENT, IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY, AND THE SELLERS SPECIFICALLY DISCLAIM ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to the Sellers that, as of the date
hereof and as of the Closing Date:

5.1 Corporate Status. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and
Purchaser (a) has all requisite power and authority to carry on its business as
it is now being conducted, and (b) is duly qualified or otherwise authorized to
do business and is in good standing in each of the jurisdictions in which the
ownership, operation or leasing of its properties and assets and the conduct of
its business requires it to be so qualified or otherwise authorized, except
where the failure to be so qualified or otherwise authorized would not have a
Purchaser Material Adverse Effect.

5.2 Authority. Purchaser has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and under the
Ancillary Agreements, and to consummate the transactions contemplated hereby and
thereby. The

 

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execution, delivery and performance by Purchaser of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Purchaser, and no other corporate proceeding on
the part of Purchaser is necessary to authorize the execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement has
been, and upon execution, the Ancillary Agreements will be, duly executed and
delivered by Purchaser, and, assuming due authorization and delivery by the
Sellers, this Agreement constitutes, and upon execution the Ancillary Agreements
will constitute, a valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
Laws now or hereinafter in effect relating to or affecting creditors’ rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

5.3 No Conflict; Required Filings.

(a) The execution and delivery of this Agreement and the Ancillary Agreements do
not, and the consummation of the transactions contemplated hereby will not (with
or without notice or lapse of time, or both), conflict with, or result in any
violation of or default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any material Encumbrance upon any of the properties or
assets of Purchaser under, any provision of (i) the certificate of incorporation
or by-laws of Purchaser, (ii) any material Contract to which Purchaser is party
or by which it is bound or (iii) any Governmental Order or, subject to the
matters described in clauses (i) and (ii) of Section 5.3(b), Law applicable to
Purchaser or its property or assets, other than, in the case of clauses (ii) and
(iii) above, any such conflicts, violations, defaults, rights or Encumbrances
that would not have a Purchaser Material Adverse Effect.

(b) Except as set forth in Section 5.3(b) of the Disclosure Schedule, no
material consent authorization, approval, or exemption of, or registration,
declaration, notice or filing with, any Governmental Authority is required to be
obtained or made by Purchaser in connection with the execution, delivery and
performance of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby, other than (i) compliance with
and filings under the HSR Act, and (ii) to the extent applicable, compliance
with and filings under similar Laws of foreign jurisdictions other than the
United States.

5.4 Legal Proceedings. There are no Actions pending or, to the Knowledge of
Purchaser, threatened against Purchaser or any of its Affiliates or any of their
respective properties before any Governmental Authority, except as would not
have a Purchaser Material Adverse Effect.

5.5 Sufficient Funds.

(a) As of the date of this Agreement, Purchaser, together with Sensata
Technologies B.V., has cash in an amount sufficient to pay the Purchase Price in
full and any related fees or expenses. At the Closing Date, Purchaser will
have cash in an amount sufficient to pay the Purchase Price in full and any
related fees or expenses.

 

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(b) Immediately following the Closing after giving effect to the transactions
contemplated hereby, Purchaser will be Solvent. As used herein, “Solvent” means
with respect to any Person on a particular date, that on such date (i) the fair
value of the property of such Person is greater than the total amount of
Liabilities, including contingent Liabilities, of such Person, (ii) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable Liability of such Person on its debts as
they become absolute and matured, (iii) such Person does not intend to, and does
not believe that it will, incur debts or Liabilities beyond such Person’s
ability to pay such debts and Liabilities as they mature and (iv) such Person is
not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person’s property would constitute an
unreasonably small capital. The amount of contingent Liabilities at any time
shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured Liability.

5.6 Investment Intent. Purchaser has such Knowledge and experience in financial
and business matters that it is capable of evaluating the risks and merits
associated with the acquisition of the Equity Interests and is acquiring the
Equity Interests for its own account for investment, with no present intention
of making a public distribution thereof. Purchaser will not sell or otherwise
dispose of the Equity Interests in violation of the Securities Act of 1933, as
amended, or any state securities laws.

5.7 No Reliance.

(a) Purchaser is an informed and sophisticated purchaser and has engaged expert
advisors who are experienced in the evaluation and purchase of businesses such
as the Business (including the Purchased Entities) as contemplated hereunder,
and has had such access to the personnel and properties of the Purchased
Entities, the Sellers and their Affiliates as it deems necessary and appropriate
to make such evaluation and purchase.

(b) Purchaser has agreed to purchase the Purchased Assets and assume the Assumed
Liabilities based on its own inspection, examination and determination with
respect to all matters and without reliance upon any representations,
warranties, communications or disclosures of any nature other than those
expressly set forth in this Agreement.

(c) Purchaser does not have any special relationship with any Seller, or any
employee, officer, director, agent, advisor, representative or Affiliate of any
Seller, that would justify any expectation beyond that of any ordinary buyer and
any ordinary seller in an arms’ length transaction and Purchaser is not owed any
duty or entitled to any remedies not expressly set forth in this Agreement.

(d) Without limiting the generality of the foregoing, Purchaser, in entering
into this Agreement, acknowledges and agrees that (i) no officer, agent,
advisor, employee or representative of the Sellers or any of their respective
Affiliates has any authority, express or implied, to make any representations,
warranties or agreements not specifically set

 

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forth in this Agreement and subject to the limited remedies provided herein,
(ii) Purchaser is relying solely on the representations and warranties set forth
in this Agreement and, except as expressly set forth in Article IV of this
Agreement (as qualified by the disclosure in the Disclosure Schedules), and
(iii) neither the Sellers nor any other Person makes any representation or
warranty, express or implied, with respect to, and Purchaser expressly disclaims
any reliance on, (A) any information included in the Information Package dated
November 12, 2009 related to the Business (including the Purchased Entities) or
other matters; (B) any information, written or oral and in any form provided,
Made Available to it or any of its agents, advisors, employees or
representatives; (C) any projections, estimates or budgets delivered to or Made
Available to it or any of its agents, advisors, employees or representatives, or
which is Made Available to it or any of its agents, advisors, employees or
representatives after the date hereof, or future revenues, expenses or
expenditures, future results of operations (or any component thereof), future
cash flows or future financial condition (or any component thereof) of the
Sellers or the Purchased Entities or the future business and operations of the
Sellers or the Purchased Entities; (D) the condition of any of the Property
being transferred hereunder, which Purchaser is purchasing on an “AS IS, WITH
ALL FAULTS” basis without any warranties or guarantees of any kind from the
Sellers or the Purchased Entities; (E) the operation of the Business by
Purchaser after Closing in any manner; (F) the probable success or profitability
of the ownership, use or operation of the Business (including the Purchased
Entities) by Purchaser after the Closing; or (G) the accuracy or completeness of
any other information, written or oral and in any form provided, or documents
previously Made Available or which is made available after the date hereof to it
or any of its agents, advisors, employees or representatives with respect to the
Sellers, the Purchased Entities or their respective businesses and operations or
other related matters, whether in expectation of the transactions contemplated
by this Agreement or otherwise.

(e) Notwithstanding anything to the contrary herein, nothing in the foregoing
shall limit the right of the Purchaser Indemnified Parties to rely on the
representations and warranties expressly set forth in this Agreement and to
their rights to indemnification under Articles VIII and X, or shall limit a
claim by a Purchaser Indemnified Party alleging that Sellers defrauded such
Person by intentionally omitting or misstating any disclosure in the Disclosure
Schedule where such omission or misstatement constitutes a breach in any
material respect of any such express representation or warranty, which rights
and claims shall, in any case, be subject to the provisions of Sections 4.23,
5.7(a)-(d), 11.7 and 11.8.

5.8 Finder’s Fee. Purchaser has not incurred any Liability to any party for any
brokerage or finder’s fee or agent’s commission, or the like, in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Purchaser for which the Sellers or their respective
stockholders, option holders, directors, officers or Affiliates will be liable
based upon arrangements made by or on behalf of Purchaser or any of its
Affiliates.

5.9 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. EXCEPT AS EXPRESSLY SET
FORTH IN THIS ARTICLE V, PURCHASER MAKES NO REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, WITH RESPECT TO
PURCHASER, ITS BUSINESSES OR FINANCIAL CONDITION OR ANY OF ITS ASSETS,
LIABILITIES OR OPERATIONS OR ANY OTHER MATTER, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

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ARTICLE VI

COVENANTS

6.1 Interim Operations of the Business. From and after the date hereof, the
Sellers shall conduct the Business and shall cause the Purchased Entities to
conduct their respective businesses only in the ordinary course consistent with
past practice and use their commercially reasonable efforts to preserve intact
the Purchased Assets and the assets of the Purchased Entities (in each case,
tangible and intangible), ordinary wear and tear excepted, including by applying
any available insurance proceeds received directly and specifically with respect
to such assets to replace or repair any such assets, business organizations and
relationships with employees and third parties having material business dealings
with the Business or the Purchased Entities. Without limiting the generality of
the foregoing, except (w) as otherwise expressly required by this Agreement or
the Ancillary Agreements (including transfers from the Purchased Entities to
Honeywell or its Affiliates as contemplated by Section 2.2), (x) for actions
approved in advance by Purchaser in writing (which approval shall not be
unreasonably withheld, conditioned or delayed), (y) to the extent required to
comply with applicable Law (in which case Purchaser shall nonetheless be
notified in writing) and (z) as set forth on Section 6.1 of the Disclosure
Schedule, from and after the date hereof, the Sellers shall not take any of the
following actions with respect to the Business, and shall cause the Purchased
Entities not to take any of the following actions:

(a) adopt any change in the respective certificates of incorporation or bylaws
or other similar organization or governing documents of the Purchased Entities;

(b) adopt a plan or agreement of complete or partial liquidation, dissolution,
restructuring, merger, consolidation, recapitalization or other reorganization
of any of the Purchased Entities;

(c) (i) issue, sell, transfer, pledge, dispose of or encumber the Equity
Interests or any shares of capital stock of the Purchased Entities, or
(ii) grant any option, warrant or other right to purchase or obtain, or
otherwise dispose of or encumber, any of the equity securities of the Purchased
Entities;

(d) declare, set aside or pay any dividend or other distribution other than in
each case for cash;

(e) enter into or consummate any transaction involving the acquisition of the
business or stock (or, to the extent constituting a going concern business,
assets or other properties) of any other Person (other than purchases of
inventory and capital equipment in the ordinary course of business consistent
with past practice, subject to clause (n) below);

(f) sell, assign, lease, license, transfer or otherwise dispose of any material
amount of the Purchased Assets or assets or property of the Purchased Entities,
except as expressly required pursuant to existing Contracts and sales of
inventory in the ordinary course of business consistent with past practice;

 

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(g) mortgage or pledge any of the material assets of the Purchased Entities,
tangible or intangible, or create or suffer to exist any material Encumbrance
thereupon (other than Permitted Encumbrances);

(h) other than in the ordinary course of business, incur or guarantee any
Indebtedness, or issue any note, bond or debt security;

(i) enter into any Material Contract or materially amend or modify or terminate
any Material Contract;

(j) enter into any new benefit or compensation plan, program, agreement or
arrangement or terminate any Company Plan or increase the benefits under any
Company Plan or amend or modify any Company Plan where such amendment or
modification has a material cost impact on the Business taken as a whole, or
grant or make a legally binding promise for, any material increase in
compensation or benefits to any director, officer, or employee, or any material
bonus, severance, incentive, or profit sharing payments, or (subject to
Section 6.10(f)(i)) cause any employee of a Seller or any of its Affiliates
(other than the Purchased Entities) to be employed by a Purchased Entity, except
as required under existing agreements or arrangements that have been Made
Available to Purchaser prior to the date of this Agreement or by applicable Law;
provided, however, that nothing in this Agreement shall prevent the Sellers or
the Purchased Entities from entering into statutory employment agreements with
new employees outside the United States, to the extent required by applicable
Laws, in the ordinary course of business consistent with past practice;

(k) change the material terms and conditions of their business relationships
with Key Customers or Key Suppliers other than in the ordinary course of
business;

(l) terminate or close any facility, other than periodic shutdowns in the
ordinary course of business, or implement any layoff of employees that would
implicate the WARN Act;

(m) incur or commit to any capital expenditures materially in excess of the
capital expenditure budget Made Available to Purchaser prior to the date of this
Agreement, or enter into any new line of business;

(n) take any action or omit to take any action that would require disclosure
pursuant to Section 4.6 if each representation and warranty contained therein
were remade as of the time of such action or omission; or

(o) authorize, or agree or commit to do, whether in writing or otherwise, any of
the foregoing.

Notwithstanding anything herein to the contrary, nothing herein shall or shall
be deemed to preclude or otherwise limit the Sellers (including the Purchased
Entities) from declaring, setting aside or paying any dividends or other
distribution in cash with respect to any of the shares of capital stock of the
Purchased Entities, or redeeming or repurchasing for cash any of the shares of
capital stock of the Purchased Entities.

 

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6.2 Filings with Governmental Authorities. Subject to Section 6.8:

(a) Honeywell and Purchaser shall as promptly as practicable, but in no event
later than ten (10) business days after the date hereof, cause to be filed with
the FTC and the DOJ the notification and report form pursuant to the HSR Act
required for the transactions contemplated hereby and cause to be filed with the
relevant Governmental Authorities (“Other Competition Authorities”) the other
filings contemplated by Section 4.3(b)(ii) and Section 5.3(b)(ii) (“Other
Competition Filings”), and shall use commercially reasonable efforts to obtain
early termination of the applicable waiting period or expedited review, as
applicable, of such notifications and related materials. The Sellers and
Purchaser shall, as promptly as practicable, comply with any request for
additional information and documents pursuant to the HSR Act and applicable Laws
governing the Other Competition Filings (“Other Competition Law”). The Sellers,
on the one hand, and Purchaser, on the other hand, shall inform the other
promptly of any communication made by or on behalf of such party to (including
permitting the other party to review such communication in advance), or received
from, the FTC, the DOJ or the Other Competition Authorities and shall furnish to
the other such information and assistance as the other may reasonably request in
connection with its preparation of any filing, submission or other act that is
necessary or advisable under the HSR Act or the Other Competition Laws. The
Sellers, on the one hand, and Purchaser, on the other hand, shall keep each
other timely appraised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC or the DOJ or the
Other Competition Authorities, and shall comply promptly with any such inquiry
or request. No party shall agree to participate in any meeting with any
Governmental Authority in respect of any such filings, investigation or other
inquiries unless it consults with the other party in advance, and to the extent
permitted by such Governmental Authority, gives the other party the opportunity
to attend and participate thereat.

(b) Purchaser shall take as promptly as reasonably practicable any and all steps
necessary to avoid or eliminate each and every impediment under any antitrust or
competition Law that may be asserted by any U.S. federal, state, provincial,
local or foreign antitrust or competition authority so as to enable the parties
to expeditiously close the transactions contemplated by this Agreement and the
Ancillary Agreements; provided that Purchaser need not divest or hold separate
assets, terminate or modify existing business relationships, or take any other
such steps to the extent that such actions would have a material adverse effect
on the Business or an equivalent (rather than proportionate) level of impact on
the business of Purchaser. In addition, without limiting the generality of the
foregoing regarding Governmental Authorities but subject to the immediately
preceding proviso, Purchaser agrees to take promptly any and all steps necessary
to attempt to vacate or lift any order or other restraint relating to antitrust
matters that would have the effect of making the transaction contemplated by
this Agreement illegal or otherwise prohibiting its consummation.

(c) The parties hereto shall cooperate with one another in determining whether
any action by or in respect of, or filing with, any Governmental Authority
(excluding the actions and filings described in clause (a) above), is required
or reasonably appropriate, or any action, consent, approval or waiver from any
party to any material Contract is required or reasonably appropriate, in
connection with the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements and Honeywell shall cooperate as
reasonably

 

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requested by Purchaser in connection with any action by Purchaser pursuant to
Section 6.2(b). Subject to the terms and conditions of this Agreement (including
Section 6.8) and the Confidentiality Agreement, in taking such actions or making
any such filings, the parties hereto shall furnish information required in
connection therewith and timely seek to obtain any such actions, consents,
approvals or waivers.

(d) Concurrent with the execution of this Agreement, Honeywell and Purchaser
shall execute or cause their applicable Affiliates to execute the China Transfer
Agreement and the unanimous board resolutions of HON Shanghai and the amendments
to each of the Joint Venture Agreement and Articles of Association of HON
Shanghai contemplated by the China Transfer Agreement. Honeywell and Purchaser
acknowledge and agree that, subject to the terms and conditions of this
Agreement, the China Transfer Agreement and applicable Laws, the consummation of
the transactions contemplated by the China Transfer Agreement will occur
simultaneously with the Closing. For the avoidance of doubt, in the event of any
conflict or discrepancy between this Agreement and the China Transfer Agreement,
this Agreement shall control. Honeywell and Purchaser shall, as promptly as
practicable, but in no event later than ten (10) business days after the later
of the date hereof and the date on which the China Consent has been executed and
delivered by Shanghai Creation Electronics Co., Ltd. (“SCEC”), cause to be filed
with the Chinese Governmental Authorities the China Transfer Agreement (and
applications related thereto); it being understood and agreed by the parties
hereto that, to the extent SCEC requires any revisions to the China Transfer
Agreement, the parties thereto shall re-execute the China Transfer Agreement
with such revisions as are necessary and reasonably acceptable to Honeywell and
Purchaser. The Sellers and Purchaser shall, as promptly as practicable, comply
with any reasonable request for additional information and documents requested
by the Chinese Governmental Authorities. The Sellers, on the one hand, and
Purchaser, on the other hand, shall inform the other promptly of any
communication made by or on behalf of such party to (including permitting the
other party to review such communication in advance), or received from, the
Chinese Governmental Authorities and shall furnish to the other such information
and assistance as the other may reasonably request in connection with its
preparation of any filing, submission or other act that is necessary or
advisable to be delivered to the Chinese Governmental Authorities. The Sellers,
on the one hand, and Purchaser, on the other hand, shall keep each other timely
appraised of the status of any communications with, and any inquiries or
requests for additional information from, the Chinese Governmental Authorities,
and shall comply promptly with any such inquiry or request. No party shall agree
to participate in any meeting with the Chinese Governmental Authorities in
respect of any such filings, investigation or other inquiries unless it consults
with the other party in advance, and to the extent permitted by the Chinese
Governmental Authorities, gives the other party the opportunity to attend and
participate thereat.

(e) The parties shall work together and use commercially reasonable efforts to
take all necessary actions to submit the equity transfer documents (including
the China Transfer Agreement) in their approved form to the competent Chinese
Registration Authority as soon as practicable, but in no event more than thirty
(30) days following the approval of the equity transfer of HON Shanghai by the
competent Chinese Approval Authority, in order to have it issue a new business
license to HON Shanghai reflecting the equity transfer (the date on which such
new business license is granted, the “HON Shanghai Registration Date”). In the
event that, after the parties have complied with the foregoing (including by
amending the equity transfer

 

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documents as may be requested by the Chinese Registration Authority, which
amendments must also be reasonably acceptable to Purchaser), (i) the Chinese
Registration Authority finally determines that it will not issue a new business
license to HON Shanghai that reflects the equity transfer contemplated by this
Agreement, (ii) HON Shanghai fails to obtain such new business license due to
the proposed amendments to the equity transfer documents requested by the
Chinese Registration Authority not being reasonably acceptable to Purchaser or
(iii)(A) the Chinese Approval Authority has approved the transfer of the HON
Shanghai Equity Interests from HON China to Purchaser or (B) the Chinese
Registration Authority has registered Purchaser as a shareholder of HON
Shanghai, but in the case of either subclause (A) or (B), this Agreement is
terminated in accordance with its terms prior to the Closing Date (the
occurrence of any event in clause (i), (ii) or (iii) above is hereinafter
referred to as a “HON Shanghai Determination Event”), Honeywell shall
re-acquire, or shall cause its designated Affiliate to re-acquire, from
Purchaser all of the transferred Equity Interest in HON Shanghai for an amount
equal to the HON Shanghai Purchase Price (where the HON Shanghai Purchase Price
has been previously paid in accordance with Section 3.1 of the Purchase
Agreement) or in the event of a HON Shanghai Determination Event pursuant to
clause (i) or (ii) agree to reduce the Purchase Price under the Purchase
Agreement by such amount (in the event the applicable HON Shanghai Determination
Event occurs prior to the Closing). Further, Purchaser acknowledges and agrees
that from and after the HON Shanghai Registration Date (in the event the HON
Shanghai Registration Date occurs prior to the Closing Date) through the
Closing, Sellers shall, for all purposes under this Agreement and otherwise,
continue to operate HON Shanghai for their own risk (and shall hold Purchaser
harmless from such risk due to Purchaser being a registered shareholder during
such period) and account, and Sellers acknowledge and agree that Purchaser shall
not be obligated to pay the HON Shanghai Purchase Price until the Closing. From
and after the Closing Date until either the HON Shanghai Registration Date (in
the event the HON Shanghai Registration Date occurs after the Closing Date) or,
in the event of the occurrence of a HON Shanghai Determination Event, the date
on which the applicable parties consummate the re-acquisition of the HON
Shanghai Equity Interest in accordance with the terms of this Section 6.2(e)
(such date, the “HON Shanghai Re-Acquisition Date”), Purchaser shall cause HON
Shanghai to conduct its business only in the ordinary course consistent with
past practice and use its commercially reasonable efforts to preserve intact the
assets of HON Shanghai (in each case, tangible and intangible), ordinary wear
and tear excepted, and relationships with employees and third parties having
material business dealings with HON Shanghai (it being understood that in
connection with any dispute regarding whether Purchaser complied with its
obligations under this sentence of this Section 6.2(e), any decline in revenues
or profits of the business of HON Shanghai shall not in and of itself be a
breach of Purchaser’s obligation hereunder). Without limiting the generality of
the foregoing, except to the extent required to comply with applicable Law, from
and after the Closing Date until either the HON Shanghai Registration Date (in
the event the HON Shanghai Registration Date occurs after the Closing Date) or,
in the event of the occurrence of a HON Shanghai Determination Event, the HON
Shanghai Re-Acquisition Date, Purchaser shall cause HON Shanghai to not
terminate any HON Shanghai Employee or Transferred China Employee without cause
or take any of the actions with respect to the business of HON Shanghai that are
set forth in Section 6.1(b), 6.1(f), 6.1(g), 6.1(h), or 6.1(l), without
Honeywell’s prior consent, which will not be unreasonably withheld.
Notwithstanding anything in this Agreement to the contrary, in the event
Honeywell or its designated Affiliate re-acquire the HON Shanghai Equity
Interests pursuant to this Section 6.2(e), nothing in Section 6.14 of

 

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this Agreement shall be deemed to limit in any way the activities of
(1) Honeywell or its designated Affiliate with respect to the ownership of HON
Shanghai, or (2) the operation of the business of HON Shanghai (including the
manufacture, calibration, testing or sale of any products manufactured or sold
by or on behalf of HON Shanghai as of the Closing Date) in the same manner as
conducted prior to the Closing Date and in compliance with the terms of the
Joint Venture Agreement as in effect on the date of this Agreement.

(f) (i) To the extent HON China does not open the SAFE Special Bank Account as
of or prior to Closing: (A) HON China shall use commercially reasonable efforts
to open as promptly as practicable after Closing the SAFE Special Bank Account
to receive the HON Shanghai Purchase Price, (B) at Closing, Purchaser shall wire
the HON Shanghai Purchase Price to Honeywell, (C) within ten (10) business days
after the SAFE Special Bank Account has been opened, Honeywell shall transfer an
amount equal to the HON Shanghai Purchase Price to Purchaser by wire transfer of
immediately available funds pursuant to the wire transfer instructions provided
by Purchaser to Honeywell in writing prior to such date, and Honeywell shall, on
or prior to such date, provide wire transfer instructions in writing to
Purchaser in respect of the SAFE Special Bank Account, and (D) within one
(1) business day after the date on which Purchaser receives the above-described
amount equal to the HON Shanghai Purchase Price from Honeywell, Purchaser shall
wire an amount equal to the HON Shanghai Purchase Price to the SAFE Special Bank
Account pursuant to the wire transfer instructions therefor provided by
Honeywell to Purchaser in writing prior to such payment, and (ii) to the extent
HON China opens the SAFE Special Bank Account as of or prior to Closing,
Purchaser shall wire the HON Shanghai Purchase Price to the SAFE Special Bank
Account at the Closing pursuant to the wire transfer instructions provided by
Honeywell to Purchaser in writing prior to such date.

6.3 Consents; Shared Agreements.

(a) Subject to Section 6.8 and except as contemplated in Section 6.2, Purchaser,
on the one hand, and the Sellers, on the other hand, shall each use commercially
reasonable efforts to obtain all consents and authorizations required to
consummate the transactions contemplated by this Agreement, including obtaining
the consents and authorizations and making the filings referred to in
Sections 5.3 and 4.3, respectively.

(b) Notwithstanding anything to the contrary, to the extent that any Contract
and/or Purchased Asset is not capable of being transferred by the Sellers to
Purchaser pursuant to this Agreement without the consent of a third party, and
such consent is not obtained prior to Closing, or if such transfer or attempted
transfer would constitute a breach or a violation of the Contract or any Law
(each a “Specified Consent”), nothing in this Agreement shall constitute a
transfer or an attempted transfer thereof. Sellers shall advise Purchaser
promptly and in writing with respect to any such Specified Consent which Sellers
know or have substantial reason to believe will not be assigned to Purchaser
hereunder.

(c) In the event that any such Specified Consent is not obtained on or prior to
the Closing Date, without limiting Sellers’ representations and warranties or
its obligations under this Agreement (including Sections 6.2, 6.3(a), 6.7 and
6.8), until such Specified Consent is obtained, the Sellers shall use
commercially reasonable efforts (including after the Closing Date) to
(i) provide to Purchaser the benefits of the applicable Contract and/or

 

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Purchased Asset, (ii) cooperate in any reasonable and lawful arrangement
designed to provide such benefits to Purchaser, and (iii) enforce at the request
and expense of Purchaser and for the account of Purchaser, any rights of the
Sellers arising from any such Contract and/or Purchased Asset (with any
out-of-pocket costs or expenses associated with such arrangements, to the extent
incremental to what Purchaser would be reasonably likely to bear if such
applicable Contract or Purchased Asset were assigned, to be borne by the
Sellers).

(d) To the extent that Purchaser is provided the benefits of any Contract and/or
Purchased Asset referred to in Section 6.3(c), Purchaser shall perform the
obligations arising under such Contract for the benefit of the Sellers and the
other party or parties thereto, except for any obligation under such Contract
that constitutes an Excluded Liability.

(e) Once a Specified Consent is obtained, the applicable Contract and/or
Purchased Asset shall be deemed to have been automatically transferred to
Purchaser on the terms set forth in this Agreement with respect to the other
Contracts and Purchased Assets transferred and assumed at the Closing, and
consistent with the foregoing, the obligations pursuant to the applicable
Contract shall be deemed to be Assumed Liabilities, and the rights pursuant to
the applicable Contract shall be deemed to be Purchased Assets.

(f) Without limiting the generality of Section 6.3(c), Honeywell agrees that it
shall use commercially reasonable efforts in assisting Purchaser to enter into
customer or supplier agreements (each, a “New Agreement”), as applicable, with
each counterparty (or an Affiliate thereof) to the Contracts listed on
Section 6.3(f) of the Disclosure Schedule (the “Shared Contracts”), for the
products historically supplied to or from the Business under such Shared
Contracts (each product purchased or supplied thereunder, a “Shared Product”);
provided that the Sellers shall not be required to make any expenditures or
incur any Liability in connection with assisting Purchaser to obtain New
Agreements. Until the earlier of (i) the date on which Purchaser enters into a
New Agreement with respect to any Shared Products and (ii) (1) the eight
(8) month anniversary of the Closing Date for all Shared Contracts (other than
the agreement(s) with ZMD currently in effect with Honeywell relating to the
purchase of Sleipnir, PTG7 and Gemini ASICs (the “ZMD Agreement”)) and (2) with
regard to the ZMD Agreement, the termination date of the ZMD Agreement
(including with respect to renewals thereof), provided that Sellers shall not
take any affirmative action to terminate and/or not renew or, subject to the
last sentence of this Section 6.3(f), modify, those portions of such ZMD
Agreement that cover any ASICs or related products that are used in Existing
Products and have historically been sourced through ZMD (including, without
limitation, the Gemini, PTG7 and Sleipnir ASICs) without Purchaser’s consent,
Honeywell shall, to the extent permitted under the relevant Shared Contract and
in accordance with the terms thereof (and, additionally, with respect to the ZMD
Agreement, according to the terms of the Confidential ASIC Technology Agreement
and the Sleipnir Support Agreement), source or distribute such Shared Products
on behalf of Purchaser in accordance with the terms of the applicable Shared
Contract (provided that Honeywell shall not be obligated to source or distribute
any product under the ZMD Agreement other than any ASICs or related products
that are used in Existing Products and have historically been sourced through
ZMD (including, without limitation, Sleipnir, PTG7 or Gemini ASICs)) and to
otherwise cooperate in any reasonable and lawful arrangement designed to provide
such benefits to Purchaser, and enforce at the request and expense of Purchaser
and for the account of Purchaser, any rights of the Sellers arising from any
Shared Contract and/or the

 

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ZMD Agreement (with any out-of-pocket costs or expenses associated with such
arrangements, to the extent incremental to what Purchaser would be reasonably
likely to bear if such Shared Contract or ZMD Agreement were assigned, to be
borne by the Sellers), it being understood that Honeywell shall have no
Liability whatsoever for (A) any failure or delay in delivery of any Shared
Product to Purchaser or to the relevant customer (as the case may be), (B) any
failure of any Shared Product to comply with any product specification provided
by Purchaser or any customer of Purchaser (as the case may be), (C) the
condition of or defect in any Shared Product or any infringement of any
Intellectual Property right of any party by any Shared Product, in each case,
sourced, distributed or purchased by or for the Business, or (D) any other
Liability or Loss arising out of or in connection with any Shared Product
sourced, distributed or purchased by or for the Business, except, in each case,
for damages arising out of Honeywell’s gross negligence, wanton disregard for
its obligations under this Section 6.3(f) or willful misconduct; provided that
Purchaser shall use commercially reasonable efforts to provide Shared Products
to be distributed by Honeywell under any Shared Contract with a customer in a
timely manner that enables Honeywell to fulfill its obligations under such
Shared Contract and, provided further, that Purchaser shall indemnify Honeywell
for any direct damages arising out of such Shared Contract relating to Shared
Products sourced, distributed or purchased by or for the Business, except for
direct damages arising out of Honeywell’s gross negligence or willful
misconduct. Each of Purchaser and Honeywell shall provide the other with
reasonable access to the other’s personnel, premises and documents as are
necessary to fulfill its respective obligations under this Section 6.3(f), and
shall promptly provide the other with notice of any communications from the
relevant counterparty to each Shared Contract with respect to any Shared
Product. Purchaser further agrees to provide Honeywell written notice within
five (5) business days after it has entered into any New Agreement. For the
avoidance of doubt, nothing herein shall limit or otherwise affect the Sellers
rights and ability to modify, amend, supplement or otherwise restructure the ZMD
Agreement in a manner that does not adversely alter the substantive terms,
including economic terms, under which ZMD supplies any ASICs or related products
that are used in Existing Products and have historically been sourced through
ZMD (including, without limitation, Gemini, PTG7 or Sleipnir ASICs); provided
that all such amendments, modifications or supplements shall be consistent and
not conflict with the terms of the Confidential ASIC Technology Agreement and
the Sleipnir ASIC Support Agreement.

(g) Subject to Sellers’ compliance with the covenants contained in this
Agreement (including in this Section 6.3 and in Sections 6.2, 6.7 and 6.8),
Purchaser agrees that the failure to obtain any consent set forth on, or not
required to be set forth on, the Disclosure Schedules, or the failure to enter
into any New Agreement, shall not in and of itself (i) create any Liability of
the Sellers or (ii) constitute a breach of any representation, warranty,
covenant, or agreement of the Sellers contained herein, or the non-satisfaction
of any condition of Purchaser.

6.4 Confidentiality; Access to Information.

(a) Purchaser acknowledges that the information being Made Available to it by
the Sellers and their Affiliates (or their respective agents or representatives)
is subject to the terms of a confidentiality agreement dated November 12, 2009
between Purchaser and Honeywell (the “Confidentiality Agreement”), the terms of
which are incorporated herein by reference. Effective upon, and only upon, the
Closing, the confidentiality obligations of Purchaser under the Confidentiality
Agreement will terminate only with respect to information

 

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relating to the Business; and Purchaser acknowledges that any and all other
information provided or Made Available to it by the Sellers and their Affiliates
(or their respective agents or representatives) concerning the Sellers and their
Affiliates (other than the Business) will remain subject to the terms and
conditions of the Confidentiality Agreement after the Closing and that any
information provided by or on behalf of the Sellers and their Affiliates
pursuant to Section 6.4(d) below will be subject to the terms and conditions of
the Confidentiality Agreement.

(b) Between the date hereof and the Closing Date, each Seller shall, subject to
compliance with applicable Laws and any Contracts to which such Seller or any of
its Affiliates (including the Purchased Entities) is a party, provide Purchaser
access and the opportunity to make such investigation of the management,
employees, representatives (including outside attorneys and accountants),
properties, businesses and operations of the Purchased Assets and Purchased
Entities, and such examination of the books, records and other documents and the
financial condition of the Business (including the Purchased Entities), as it
reasonably requests; provided, however, that no Seller nor any of their
Affiliates shall be required to disclose to Purchaser or any agent or
representative of Purchaser any information to the extent it is advised by
counsel that doing so would reasonably be expected to result in a loss of the
ability to successfully assert a claim of privilege (including without
limitation, the attorney-client and work product privileges), unless Purchaser
agrees to enter into a valid joint defense agreement or similar arrangement to
preserve such privilege, or to the extent such disclosure would violate any
applicable Law or contractual requirement (provided that the Sellers shall use
commercially reasonable efforts to obtain consents or approvals in order to
disclose such information). Any confidential information provided pursuant to
this Section 6.4(b) shall be kept confidential by Purchaser and will be subject
to applicable Law, the terms of the Confidentiality Agreement and
Section 6.4(a). Any such investigation and examination will be conducted under
reasonable circumstances after appropriate advance notice and in a manner so as
not to unreasonably interfere with the conduct of the Business. No investigation
pursuant to this Section 6.4(b) shall affect any representation or warranty by
the Sellers in this Agreement or any condition to the obligations of Purchaser
hereunder.

(c) As reasonably requested by Purchaser, from the date hereof until the
Closing, the Sellers shall provide Purchaser with such financial and other
information with respect to the Business and the Purchased Entities, to the
extent such information is reasonably available to Sellers, and access to
personnel of Sellers or any of their Affiliates and will use commercially
reasonable efforts to provide access to Sellers’ outside accountants and other
advisors, subject to customary indemnification agreements and other customary
requirements imposed by such accountants and other advisors, for Purchaser to:

(i) identify the Purchased Assets with a view towards granting security
interests in such collateral after the Closing; and

(ii) consider whether Purchaser will need to prepare audited financial
statements of the Business in connection with any future offering memoranda,
registration statement, or periodic report prepared by Purchaser or its
Affiliates.

(d) Subject to Purchaser’s existing confidentiality obligations, and Honeywell’s
right to have Purchaser enter into a new confidentiality agreement in respect of

 

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Seller information not related to the Business on terms reasonably acceptable to
Honeywell (which in any event will include customary carve-outs for disclosure
of confidential information as required by applicable Laws) prior to complying
with any terms of this Section 6.4(d) (collectively, the “Confidentiality
Obligations”), upon reasonable advanced written notice, the Sellers shall use
commercially reasonable efforts to provide Purchaser and its representatives
with such financial and other information relating to the Business (including
information of the Sellers or any of their Affiliates to the extent required by
Regulation S-X (including Rules 3-05 and 3-10), GAAP, IFRS or other applicable
accounting standards (the “Applicable Requirements”)), to the extent such
information is reasonably available to Sellers or their Subsidiaries (the
“Carve-Out Financial Information”), and shall otherwise reasonably cooperate
with Purchaser, in each case as reasonably requested by Purchaser and its
Affiliates in order for Sensata NV and its Subsidiaries to prepare and audit any
financial statements with respect to the Business, including in accordance with
the Applicable Requirements (the “Carve-Out Financial Statements”). In
furtherance of and without limiting the foregoing, the parties agree as follows:

(i) Not more than thirty (30) days after the date of this Agreement, the Sellers
shall appoint an individual with an appropriate level of financial expertise
(the “HON Audit Manager”), to serve as the principal point of contact for
Purchaser, its Affiliates, and its and their employees and other representatives
(including outside accountants and legal counsel) (“Purchaser Personnel”) with
respect to the matters set forth in this Section 6.4(d). The HON Audit Manager
will be fully dedicated to the tasks required pursuant to this Section 6.4(d) in
order to coordinate and respond to the requests of Purchaser Personnel which are
made pursuant to this Section 6.4(d) and otherwise facilitate the Sellers’
compliance with their obligations under this Section 6.4(d). The HON Audit
Manager will liaise and coordinate as necessary and appropriate with chief
financial officers, site controllers, and other appropriate personnel or
advisors (including outside accountants and legal counsel) of Honeywell and its
Subsidiaries (“Honeywell Personnel”) in response to the reasonable requests of
Purchaser Personnel under this Section 6.4(d). To the extent the HON Audit
Manager is reasonably available, responsive, and cooperative, Purchaser and its
representatives shall address all requests for information, inquiries, and other
contact regarding the matters described in this Section 6.4(d) to the HON Audit
Manager; provided that to the extent reasonably necessary or appropriate in
connection with the matters described in this Section 6.4(d), the HON Audit
Manager will arrange for, and the Purchaser Personnel shall have, at reasonable
times and upon reasonable notice, access to appropriate Honeywell Personnel,
subject to the Confidentiality Obligations and, in the case of outside advisors,
subject to customary indemnification and confidentiality agreements and other
customary requirements imposed by such accountants or other advisors.

(ii) At Purchaser’s reasonable request, Seller and Purchaser will cooperate and
use their commercially reasonable efforts to enable Purchaser to engage audit
personnel of PricewaterhouseCoopers LLP (“PwC”) who have a history of performing
audit reviews for Honeywell (subject to Purchaser executing any customary
indemnification and confidentiality agreements and other customary requirements
imposed by PwC and reasonably acceptable to Purchaser) to assist Purchaser with
the review of the Carve-Out Financial Information, to conduct an audit of the
Carve-Out Financial Statements, and to perform any other services otherwise
required by Sensata NV or any of its Subsidiaries in connection with this
Section 6.4(d).

 

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(iii) From the date of appointment of the HON Audit Manager through the date of
the Closing, the Sellers shall use commercially reasonable efforts to provide
Carve-Out Financial Information, including pro forma financial information of
the type previously Made Available to Purchaser in respect of the year ended
December 31, 2009 (subject to the Confidentiality Obligations), and shall
otherwise reasonably cooperate with Purchaser Personnel as reasonably requested
by Purchaser and its Affiliates in order to analyze and evaluate whether Sensata
NV and its Subsidiaries will have a requirement to prepare and audit any
Carve-Out Financial Statements, and in order to enable PwC to perform such audit
procedures (including, if requested by PwC, a physical inventory count at
year-end) as would be required or requested by PwC in connection with any audit
of Carve-Out Financial Statements.

(iv) Upon Purchaser’s reasonable advanced written notice (at any time prior to
or after Closing) that it, as determined in its sole discretion, expects to
require Carve-Out Financial Statements (the “Audit Assistance Request”), the
Sellers shall use commercially reasonable efforts to provide Carve-Out Financial
Information (subject to the Confidentiality Obligations), and shall otherwise
reasonably cooperate with Purchaser Personnel as reasonably requested by
Purchaser and its Affiliates in order to prepare and audit the Carve-Out
Financial Statements, and in order to complete such preparation and audit within
applicable time frames under the Applicable Requirements. In connection with the
preparation of the Carve-Out Financial Statements, to the extent that both
Seller Personnel and Purchaser Personnel can, through the exercise of their
commercially reasonable efforts, accomplish the same requirement or task,
Purchaser shall cause Purchaser Personnel to perform such requirement or task in
order to avoid undue burden on Seller Personnel.

(v) Notwithstanding anything herein to the contrary, Sellers shall use
commercially reasonable efforts to obtain representation letters and similar
documents from the applicable Seller Personnel as may be required in connection
with the preparation and audit of Carve-Out Financial Statements; provided that
such obligation shall be inapplicable to the extent that, in the reasonable
judgment of such personnel, the representations in such letter or document are
not factually accurate in all material respects. Subject to Sellers’ compliance
with the covenants of this Section 6.4(d), Purchaser agrees that the inability
or failure, in whole or in part, of Sensata NV or any of its Subsidiaries to
obtain any such representation letters or similar documents shall not in and of
itself create any Liability on the part of the Sellers or constitute a breach of
any representation, warranty, covenant or agreement of the Sellers contained in
this Agreement.

(vi) For the avoidance of doubt, the parties acknowledge and agree that the
costs and expenses incurred by Sellers or their Subsidiaries, and personnel of
Sellers or any of their Affiliates in providing Carve-Out Financial Information
and cooperating in the preparation of the Carve-Out Financial Information shall
be fully reimbursed by Purchaser at Seller’s actual cost.

 

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(vii) The Sellers’ obligations under this Section 6.4(d) shall terminate upon
the filing of a form 10-K by Sensata NV that includes its audited financial
statements for the calendar year after the calendar year in which the Closing
occurs, so long as the Sellers have complied with their obligations set forth in
this Section 6.4(d) through such date.

(e) From and after the date hereof until the Closing, Honeywell shall deliver to
Purchaser as soon as practicable after they become available a profit and loss
statement and statement of net assets for each month ending after the date of
the May 29, 2010 Balance Sheet, prepared from the books and records of the
Sellers (as it relates to the Business) and the Purchased Entities, as and only
to the extent customarily prepared in the ordinary course of business consistent
with Honeywell’s past practice.

6.5 Publicity. Honeywell shall not, and shall not permit the Sellers, the
Purchased Entities nor any of its or their Affiliates or representatives to, and
Purchaser shall not, and shall not permit any of its Affiliates nor their
respective representatives to, issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other parties hereto, which approval
will not be unreasonably withheld, conditioned or delayed, unless, in the
reasonable judgment of Honeywell or Purchaser, disclosure is otherwise required
by applicable Law or by the applicable rules of any stock exchange on which any
Seller or Purchaser lists its securities; provided that, to the extent required
by applicable Law or by the rules of any stock exchange, the party intending to
make such release or announcement shall use its commercially reasonable efforts
consistent with such applicable Law to consult with the other party with respect
to the text thereof and, provided further, that no party shall be required to
obtain consent pursuant to this Section 6.5 to the extent any proposed release
or announcement contains information that has previously been made public
without breach of the obligations under this Section 6.5.

6.6 Books and Records.

(a) Honeywell will use commercially reasonable efforts to deliver or cause to be
delivered to Purchaser at Closing all properties, books, records, copies of
checkbooks and cancelled checks, copies of Contracts, information and documents
relating primarily to the Business that are not then in the possession or
control of the Sellers or the Purchased Entities. As soon as is reasonably
practicable after the Closing, Honeywell will deliver or cause to be delivered
to Purchaser any remaining properties, books, records, copies of Contracts,
information and documents relating primarily to the Business that are not
already in the possession or control of the Sellers and the Purchased Entities.

(b) Subject to Section 8.2(a) (relating to the preservation of Tax records),
each of Honeywell and Purchaser agrees that it will preserve and keep the books
of accounts, financial and other records held by it relating to the Business
(including the Purchased Entities) (including accountants’ work papers) for a
period of seven (7) years from the Closing Date in accordance with its
respective corporate records retention policies; provided, however, that prior
to disposing of any such records in accordance with such policies (if such
records would be disposed of prior to the tenth anniversary of the Closing
Date), the applicable party shall provide written notice to the other party of
its intent to dispose of such records and shall

 

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provide such other party the opportunity to take ownership and possession of
such records (at such other party’s sole expense) to the extent they relate to
such other party’s business or obligations within 30 days after such notice is
delivered. If such other party does not confirm its intention in writing to take
ownership and possession of such records within such 30-day period, the party
who possesses the records may proceed with the disposition of such records. Each
of Honeywell and Purchaser shall make such records and other information
relating to the Business (including the Purchased Entities), employees and
auditors available to the other as may be reasonably required by such party
(i) in connection with, among other things, any audit or investigation of,
insurance claims by, legal proceedings against, dispute involving or
governmental investigations of any Seller or Purchaser or any of their
respective Affiliates, or (ii) in order to enable any Seller or Purchaser to
comply with its respective financial reporting obligations or obligations under
this Agreement and the Ancillary Agreements and each other agreement, document
or instrument contemplated hereby or thereby, in either case under reasonable
circumstances after appropriate advance notice and in a manner so as not to
unreasonably interfere with the providing party’s business, and subject to the
confidentiality obligations set forth in Sections 6.4 and 6.15. Without limiting
the generality of the foregoing, (1) Purchaser shall reasonably cooperate with
the Sellers and its counsel and other representatives, make reasonably available
its personnel, including the Transferred Employees, and provide reasonable
access to the books and records, facilities, testing equipment and other assets
relating to the Business (including the Purchased Entities) as may be reasonably
requested by Sellers in connection with the defense, negotiation or settlement
of any matters set forth on Sections 4.9 and 4.20 of the Disclosure Schedule or
other Third-Party Claims, including a Third-Party Claim seeking a Product
Recall, as to which the Sellers have assumed the defense pursuant to
Section 10.3(b), and (2) the Sellers shall reasonably cooperate with Purchaser
and its counsel and other representatives, make reasonably available its
personnel, including the non-Transferred Employees, and provide reasonable
access to the books and records, facilities, testing equipment and other
Excluded Assets or Purchased Entity Excluded Assets as may be reasonably
requested by Purchaser in connection with its defense, negotiation or settlement
of any Third-Party Claims, including a Third-Party Claim seeking a Product
Recall (to the extent not assumed by the Sellers pursuant to Section 10.3(b)).

6.7 Further Action. Except as set forth in Section 6.2(b), the Sellers, on the
one hand, and Purchaser, on the other hand, shall each use commercially
reasonable efforts to (a) take, or cause to be taken, all actions (within its
control) necessary or appropriate to consummate the transactions contemplated by
this Agreement and the Ancillary Agreements, and (b) cause the fulfillment at
the earliest practicable date of all of the conditions to the Purchaser’s (in
the case of the Sellers) and to the Sellers’ (in the case of Purchaser)
respective obligations to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements. Without limiting the generality of the
foregoing, from time to time after the Closing Date, and for no further
consideration, each of the Sellers and Purchaser shall, and shall cause its
Affiliates to, execute, acknowledge and deliver such assignments, transfers,
consents, assumptions and other documents and instruments and take such other
actions as may reasonably be necessary to appropriately consummate the
transactions contemplated hereby and thereby, including (i) transferring back to
Honeywell or any Seller or its designated Affiliates any asset or Liability
which was inadvertently transferred to, or held by, Purchaser at the Closing,
(ii) transferring to Purchaser any asset or Liability contemplated by this
Agreement to be transferred to Purchaser and which was not so transferred at
Closing, and (iii) remitting promptly

 

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to Purchaser any cash amounts actually received for accounts receivable of the
Business generated at any time prior to or on or after the Closing Date. The
allocation of all Intellectual Property in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements shall be governed by
the principles embodied in Sections 2.1(d) (with respect to Intellectual
Property licenses), 2.1(f), 2.2(e), 2.2(f), 2.3(h), 2.3(i) and 2.4(c) of this
Agreement and by principles embodied in the Intellectual Property License
Agreement.

6.8 Expenses. Whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party hereto
incurring such expenses, except as expressly provided herein; provided, however,
that (a) Purchaser and the Sellers shall each pay one-half of any and all fees
and required to be paid under the HSR Act or any other foreign merger control or
foreign investment clearances required by Law to be obtained in connection with
the Closing and (b) Purchaser and the Sellers shall each pay one-half of any and
all out-of-pocket fees, expenses or other amounts payable to third parties in
connection with the matters and obligations set forth in Sections 6.2, 6.3(a)
and 6.7.

6.9 Notification of Certain Matters. Each party shall give prompt written notice
to the other of the following:

(a) the occurrence or nonoccurrence of any event (including any breach of any of
its representations or warranties or a breach of any covenant or agreement of
such party) whose occurrence or nonoccurrence could reasonably be expected to
cause any of the conditions precedent set forth in Article VII not to be
satisfied; and

(b) the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by any party or any of its Affiliates
from any Governmental Authority or other third party with respect to this
Agreement or the transactions contemplated hereby.

6.10 Employees and Employee Benefit Plans.

(a) Scope of Section. This Section 6.10 contains the covenants and agreements of
the parties hereto with respect to the employment status of and provision of
employee benefits to the employees of the Sellers and their Affiliates who are
employed primarily in connection with the Business and to the employees of the
Purchased Entities, in each case, on the Closing Date, including those
individuals listed in Section 6.10 of the Disclosure Schedule (the “Employees”)
and the provision of employee benefits under the Company Plans to employees of
the Purchased Entities and the Sellers who terminate employment on the Closing
Date with residual benefits under such Company Plans. Nothing herein expressed
or implied confers upon any current or former employee, officer, director,
contractor or agent of the Business (including the Purchased Entities) any
rights or remedies of any nature or kind whatsoever under or by reason of this
Section 6.10. Employees who accept Purchaser’s offer of employment and commence
employment with Purchaser as of the Closing, Employees whose rights and
obligations arising from their employment relationships shall pass over to
Purchaser in connection with the transfer of the Business by operation of Law
and Employees of the Purchased Entities who continue their employment with a
Purchased Entity as of the Closing, will (except as expressly provided in this
Section 6.10) be referred to as “Transferred Employees.”

 

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(b) US Employees. This Section 6.10(b) applies only to Employees employed in the
United States (collectively, the “US Employees”).

(i) Purchaser shall, by written offer of employment, offer to hire, effective as
of the Closing, the US Employees who are employed by the Sellers or their
Affiliates as of the Closing Date, who are listed in Section 6.10(b) of the
Disclosure Schedule. Purchaser shall hire each US Employee who accepts such
offer. Sellers hereby agree that any current or former employee of the Business
(including any US Employee) who (A) as of the Closing Date is receiving or
entitled to receive short-term disability benefits and who subsequently becomes
eligible to receive long-term disability benefits, or (B) as of the Closing Date
is receiving or entitled to receive long-term disability benefits shall become
eligible or continue to be eligible, as applicable, to receive such benefits
under a disability benefit plan of Sellers until such employee is no longer
disabled. Upon written notice to Purchaser that such employee has been released
to return to active employment, Purchaser shall, by written offer of employment,
offer to hire such employee effective on the date such employee is released to
return to work, provided that such release date occurs within six (6) months
after the Closing Date, and shall hire each such US Employee who accepts such
offer. All US Employees who accept Purchaser’s offer of employment and actually
commence employment with Purchaser on or after the Closing are referred to
herein as “Transferred US Employees.” Terms of employment continuation for each
Transferred US Employee shall (1) initially be at the same work location,
(2) initially pay a base wage rate and provide cash incentive opportunities no
less than each such Transferred US Employee’s base wage rate and cash incentive
opportunities in effect as of the Closing Date, (3) initially provide employee
benefit plans (other than any equity-based compensation, non-qualified deferred
compensation, defined benefit pension plans and retiree health benefits) that
are not materially different than those provided to similarly situated United
States employees of Purchaser, except that Purchaser shall provide severance
benefits to Transferred US Employees as described in Section 6.10(b)(iii), and
(4) initially provide other terms and conditions of employment that are not
materially different than those provided to similarly situated United States
employees of Purchaser. Purchaser shall credit each Transferred US Employee’s
service with the Sellers and their respective Affiliates for purposes of
eligibility to participate and vesting (but not for purposes of benefit accrual,
except that service requirements for vacation or severance entitlements shall be
credited) to the extent credited under an analogous Company Plan as of the
Closing Date, except to the extent any duplication of benefits would result.

(ii) Nothing in this Agreement shall, or shall be construed to, limit the
ability of Purchaser or any of its Affiliates to terminate the employment of any
Transferred US Employee at any time and for any or no reason after the Closing.

(iii) With respect to any Transferred US Employee whose employment is
involuntarily terminated other than for cause, as the term “cause” is defined in
Sellers’ severance plan set forth in Section 6.10(b)(iii) of the Disclosure

 

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Schedule, by Purchaser during the twenty-four (24)-month period beginning on the
Closing Date (including, but not limited to, the termination of a Transferred US
Employee because he refuses to accept a work relocation that exceeds fifty
(50) miles), Purchaser shall provide a severance benefit (consisting of notice
pay (if applicable), a lump sum severance payment and subsidized COBRA
continuation coverage (it being understood that with respect to the subsidized
COBRA continuation portion of the severance benefit, Purchaser will provide
subsidized COBRA continuation coverage as though severance benefits paid to such
Transferred US Employee had been paid over time rather than in a lump sum)) that
shall be substantially similar in value to the severance benefit that such
Transferred US Employee would have received under the terms of the severance
plan set forth in Section 6.10(b)(iii) of the Disclosure Schedule, calculated as
though the Transferred US Employee worked continuously for the Sellers or their
respective Affiliates, as applicable, until his termination date with Purchaser.

(iv) Each health benefit plan sponsored by Purchaser for the benefit of the
Transferred US Employees shall, where applicable, (A) in the plan year in which
the Closing Date occurs waive any pre-existing condition limitation or exclusion
or any actively-at-work requirement that was waived or satisfied under an
analogous Company Plan as of the Closing Date, and (B) in the plan year in which
the Closing Date occurs credit all payments made by Transferred US Employees for
healthcare expenses under similar Company Plans during the current plan year for
purposes of deductibles, co-payments and maximum out-of-pocket limits.

(v) On and after the Closing Date, Purchaser shall assume and pay when due all
Liabilities of the Sellers relating to accrued wages, accrued cash bonuses
payable pursuant to the applicable management incentive plan (“MIP”) of the
Sellers for the period from January 1, 2011 through the Closing (in the event
the Closing occurs after January 1, 2011), accrued cash bonuses payable pursuant
to the applicable sales incentive plan (“SIP’) of the Sellers, earned but unused
vacation, and accrued leave, in each case, as of the Closing Date with respect
to Transferred US Employees, and in each case (other than Liabilities in the
nature of wages that would constitute Assumed Liabilities pursuant to
Section 2.4(d)(ii) or (iii)), solely to the extent reflected as a Liability in
Final Net Working Capital. For the avoidance of doubt, regardless of the date on
which the Closing occurs, the Sellers shall retain and pay when due the cash
bonuses payable pursuant to the MIP for calendar year 2010 to the Transferred US
Employees who earned such bonuses.

(vi) Purchaser shall provide the Transferred US Employees and their covered
beneficiaries with continuation coverage in accordance with Section 4980B of the
Code and/or Sections 601 through 608 of ERISA (“COBRA”) as a result of any
“qualifying events” (as defined in Section 4980B of the Code) that occur after
the Closing Date.

(vii) Effective as of the Closing Date, the Transferred US Employees shall no
longer be eligible to (A) contribute to the health care flexible spending
account or accounts sponsored by the Sellers, except to the extent otherwise
provided by and in accordance with COBRA, or (B) contribute to the dependent
care

 

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flexible spending accounts sponsored by the Sellers. As soon as practicable
following the Closing Date, Sellers shall cause the account balances of all
Transferred US Employees under any defined contribution plan to become fully
vested in accordance with relevant plan provisions, and Sellers shall make to
any defined contribution plan maintained by any Seller all employee and matching
and any other employer contributions with respect to the Transferred US
Employees’ employment service rendered prior to the Closing. Following the
Closing Date, Sellers shall take all actions as are necessary or appropriate to
ensure that, under the terms of any 401(k) plan maintained by any Seller in
which Transferred US Employees participate, each Transferred US Employee may
elect to continue repayment of any outstanding loans for the duration of the
loan term.

(c) Czech Republic Employees. This Section 6.10(c) applies only to Employees
employed in the Czech Republic by HON Czech Controls (“Czech Republic
Employees”).

(i) The parties understand and agree that after the Closing, contracts of
employment for Czech Republic Employees, including the individuals listed in
Section 6.10(c) of the Disclosure Schedule, will, to the extent required by
applicable Law, remain in effect, and the Czech Republic Employees’ rights and
obligations arising from their employment relationships (i.e., the terms and
conditions of employment) will remain unchanged and unaffected by and after the
Closing unless changes are permitted by applicable Law or unless Czech Republic
Employees and HON Czech Controls mutually agree to amend or terminate any of the
contracts of employment for such Czech Republic Employees.

(ii) Sellers represent that, to the Knowledge of the Sellers, Section 6.10(c) of
the Disclosure Schedule lists all Czech Republic Employees; however, for the
avoidance of doubt, Purchaser agrees to continue to employ all Czech Republic
Employees, regardless of whether they are listed in Section 6.10(c) of the
Disclosure Schedule.

(iii) Purchaser or HON Czech Controls shall be solely responsible for any
amounts becoming payable to Czech Republic Employees under the statutory
severance plan or other applicable Laws as a result of their separation from
employment with Purchaser or HON Czech Controls at any time on or after the
Closing Date, notwithstanding that such amount must be calculated by reference
to periods of employment with HON Czech Controls and the Sellers and their
Affiliates prior to Closing as well as periods of employment with Purchaser and
HON Czech Controls after the Closing.

(iv) On and after the Closing Date, HON Czech Controls shall be obliged to pay
when due all Liabilities of the Sellers or HON Czech Controls relating to
accrued wages, accrued cash bonuses payable pursuant to the MIP for the period
from January 1, 2011 through the Closing (in the event the Closing occurs after
January 1, 2011), accrued cash bonuses payable pursuant to the SIP, earned but
unused vacation, and accrued leave as of the Closing Date with respect to Czech
Republic Employees, in each case (other than Liabilities in the nature of wages
that would constitute Assumed

 

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Liabilities pursuant to Section 2.4(d)(ii) or (iii)), solely to the extent
reflected as a Liability in Final Net Working Capital. For the avoidance of
doubt, regardless of the date on which the Closing occurs, the Sellers shall
retain and pay when due the cash bonuses payable pursuant to the MIP for
calendar year 2010 to the Czech Republic Employees who earned such bonuses.

(d) Korea Employees. This Section 6.10(d) applies only to Employees employed in
Korea (“Korea Employees”).

(i) Purchaser shall, by written offer of employment, offer to hire, effective as
of the Closing, the Korea Employees who are employed by the Sellers or their
Affiliates as of the Closing Date, who are listed in Section 6.10(d) of the
Disclosure Schedule. Purchaser shall hire each Korea Employee, effective on the
Closing Date, who accepts such offer. All Korea Employees who accept Purchaser’s
offer of employment and actually commence employment with Purchaser on or after
the Closing are referred to herein as “Transferred Korea Employees.” Terms of
employment continuation for each Transferred Korea Employee shall (1) initially
be at the same work location, (2) initially pay a base wage rate and cash
incentive compensation no less than each such Transferred Korea Employee’s base
wage rate and cash incentive compensation in effect as of the Closing Date, and
(3) initially provide employee benefit plans (other than any equity-based
compensation, non-qualified deferred compensation, and defined benefit pension
plans) and other terms and conditions of employment that are no less favorable
in the aggregate than those provided to the Korea Employees as of the Closing
Date. Purchaser shall credit each Transferred Korea Employee’s service with the
Sellers and their respective Affiliates for purposes of severance calculation
described in subsection A below, eligibility to participate, and vesting (but
not for purposes of benefit accrual or any other purpose under any defined
benefit plan, and not for any purpose under any equity-based or nonqualified
deferred compensation plan or arrangement) to the extent credited under an
analogous Foreign Plan as of the Closing Date, except to the extent any
duplication of benefits would result.

A. Purchaser shall be responsible for any amounts becoming payable to
Transferred Korea Employees under the statutory severance plan or Laws as a
result of their separation from employment at any time after the Closing,
notwithstanding that such amount must be calculated by reference to periods of
employment with HON Korea prior to Closing as well as periods of employment with
Purchaser after the Closing.

B. For the avoidance of doubt, Seller shall be responsible for any severance
amounts becoming payable to Korea Employees who are offered employment by
Purchaser, but who decline Purchaser’s offer of employment.

C. On and after the Closing Date, Purchaser shall assume and pay when due all
Liabilities of the Sellers relating to accrued wages, accrued cash bonuses
payable pursuant to the MIP for the period from January 1, 2011 through the
Closing (in the event the Closing occurs after January 1, 2011),

 

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accrued cash bonuses payable pursuant to the SIP, earned but unused vacation and
accrued leave, in each case, as of the Closing Date with respect to Transferred
Korea Employees, and in each case (other than Liabilities in the nature of wages
that would constitute Assumed Liabilities pursuant to Section 2.4(d)(ii) or
(iii)), solely to the extent reflected as a Liability in Final Net Working
Capital. For the avoidance of doubt, regardless of the date on which the Closing
occurs, the Sellers shall retain and pay when due the cash bonuses payable
pursuant to the MIP for calendar year 2010 to the Transferred Korea Employees
who earned such bonuses.

(e) HON Shanghai Employees. This Section 6.10(e) applies only to Employees
employed in China by HON Shanghai (“Shanghai Employees”).

(i) The parties understand and agree that, after the Closing, contracts of
employment for Shanghai Employees, including the individuals listed in
Section 6.10(e) of the Disclosure Schedule will to the extent required by
applicable Law remain in effect, and the Shanghai Employees’ rights and
obligations arising from their employment relationships (i.e., the terms and
conditions of employment) will remain unchanged and unaffected after the Closing
unless changes are permitted by applicable Law or unless Shanghai Employees and
HON Shanghai mutually agree to amend or terminate any of the contracts of
employment for such Shanghai Employees.

(ii) Sellers represent that, to the Knowledge of the Sellers, Section 6.10(e) of
the Disclosure Schedule lists all Shanghai Employees; however, for the avoidance
of doubt, Purchaser agrees to continue to employ all Shanghai Employees,
regardless of whether they are listed in Section 6.10(e) of the Disclosure
Schedule, unless such Shanghai Employees’ employment relationships are changed
to the extent permitted by applicable Law or unless Shanghai Employees and HON
Shanghai mutually agree to amend or terminate any of the contracts of employment
for such Shanghai Employees.

(iii) Purchaser or HON Shanghai shall be solely responsible for any amounts
becoming payable to Shanghai Employees under the statutory severance plan or
other applicable Laws as a result of their separation from employment with HON
Shanghai at any time on or after the Closing Date, notwithstanding that such
amount must be calculated by reference to periods of employment with HON
Shanghai prior to Closing as well as periods of employment with HON Shanghai
after the Closing.

(iv) On and after the Closing Date, Purchaser shall assume and pay when due all
Liabilities of the Sellers relating to accrued wages, accrued cash bonuses
payable pursuant to the MIP for the period from January 1, 2011 through the
Closing (in the event the Closing occurs after January 1, 2011), accrued cash
bonuses payable pursuant to the SIP, earned but unused vacation, and accrued
leave, in each case, as of the Closing Date with respect to Shanghai Employees,
and in each case (other than Liabilities in the nature of wages that would
constitute Assumed Liabilities pursuant to Section 2.4(d)(ii) or (iii)), solely
to the extent reflected as a Liability in Final Net Working Capital. For the
avoidance of doubt, regardless of the date on which the Closing occurs, the
Sellers shall retain and pay when due the cash bonuses payable pursuant to the
MIP for calendar year 2010 to the Shanghai Employees who earned such bonuses.

 

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(f) HON China Employees. This Section 6.10(f) applies only to Employees employed
in China by HON China (“China Employees”).

(i) Prior to Closing, the Sellers shall cause HON Shanghai, to offer, in a
manner and method that Sellers determine are appropriate, to the China Employees
positions that would allow such China Employees to transfer their current
employment relationships from HON China to HON Shanghai. Such offered employment
shall initially be at the same work location (Shanghai), initially pay a base
wage rate and cash incentive compensation no less than each such China
Employee’s base wage rate and cash incentive compensation in effect as of the
date immediately prior to such transfer, and initially provide employee benefit
plans and other terms and conditions of employment that are no less than those
provided to each such China Employee as of the date immediately prior to such
transfer.

(ii) If prior to Closing, the China Employees do not transfer to HON Shanghai
prior to Closing pursuant to Section 6.10(f)(i), then the following provisions
will become applicable:

A. Purchaser shall cause HON Shanghai, by written offer of employment, to offer
to hire, effective as of the Closing, the China Employees who are employed by
HON China as of the Closing Date, who are listed in Section 6.10(f) of the
Disclosure Schedule. Purchaser shall cause HON Shanghai to hire each China
Employee, effective as of the Closing Date, who accepts such offer. All China
Employees who accept HON Shanghai’s offer of employment and actually commence
employment with HON Shanghai on or after the Closing are referred to herein as
“Transferred China Employees.” Terms of employment continuation for each
Transferred China Employee shall (1) initially be at the same work location
(Shanghai), (2) initially pay a base wage rate and cash incentive compensation
no less than each such Transferred China Employee’s base wage rate and cash
incentive compensation in effect as of the Closing Date, and (3) initially
provide employee benefit plans (other than any equity-based compensation,
non-qualified deferred compensation, and defined benefit pension plans) and
other terms and conditions of employment that are not materially different than
those provided to similarly situated HON Shanghai Employees as of the Closing
Date. HON Shanghai shall credit each Transferred China Employee’s service with
HON China and its respective Affiliates for purposes of severance calculation
described in subsection (B) below, eligibility to participate, and vesting (but
not for purposes of benefit accrual or any other purpose under any defined
benefit plan, and not for any purpose under any equity-based or nonqualified
deferred compensation plan or arrangement) to the extent credited under an
analogous Foreign Plan as of the Closing Date, except to the extent any
duplication of benefits would result.

 

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B. HON Shanghai shall be responsible for any amounts becoming payable to
Transferred China Employees under the statutory severance plan or Laws as a
result of their separation from employment at any time after the Closing,
notwithstanding that such amount must be calculated by reference to periods of
employment with HON China prior to Closing as well as periods of employment with
HON Shanghai after the Closing.

C. For the avoidance of doubt, HON China shall be responsible for any severance
amounts becoming payable to China Employees who are offered employment by HON
Shanghai, but who decline HON Shanghai’s offer of employment. With respect to
any China Employee who does not consent to the transfer of his/her employment to
HON Shanghai, and instead elects to be terminated with severance (paid or to be
paid by Sellers) and rehired by Purchaser, Purchaser shall still cause HON
Shanghai or one of its Affiliates to offer to hire such employee per subsection
(A) above. However, such China Employee will not be credited with his/her
service with HON China.

D. On and after the Closing Date, HON Shanghai shall assume and pay when due all
Liabilities of the Sellers relating to accrued wages, accrued cash bonuses for
the period from January 1, 2011 through the Closing (in the event the Closing
occurs after January 1, 2011), accrued cash bonuses payable pursuant to the SIP,
earned but unused vacation and accrued leave, in each case, as of the Closing
Date with respect to Transferred China Employees, and in each case (other than
Liabilities in the nature of wages that would constitute Assumed Liabilities
pursuant to Section 2.4(d)(ii) or (iii)), solely to the extent reflected as a
Liability in Final Net Working Capital. For the avoidance of doubt, regardless
of the date on which the Closing occurs, the Sellers shall retain and pay when
due the cash bonuses payable pursuant to the MIP for calendar year 2010 to the
Transferred China Employees who earned such bonuses.

(g) Nothing contained in this Section 6.10 or any other provision of this
Agreement, (i) shall be construed to establish, amend, or modify any benefit or
compensation plan, program, agreement or arrangement, or (ii) create any
third-party beneficiary rights or obligations in any Person (including any
Transferred Employee) other than the parties to this Agreement, including with
respect to (x) any right to employment or continued employment or to a
particular term or condition of employment with Purchaser, the Purchased
Entities or any of their respective Affiliates and (y) the ability of Purchaser
or any of its Affiliates (including, following the Closing Date, the Purchased
Entities) to amend, modify, or terminate any benefit or compensation plan,
program, agreement or arrangement at any time established, sponsored or
maintained by any of them.

6.11 Indebtedness; Intercompany Accounts.

(a) No later than the Closing Date, (i) Honeywell shall discharge (or otherwise
cause to be extinguished), or shall cause Sellers or their applicable
Subsidiaries (other than any of the Purchased Entities) to discharge (or
otherwise cause to be extinguished), to the extent practicable, any and all
Indebtedness outstanding immediately prior to the Closing of the

 

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Purchased Entities owed to any Person other than another Purchased Entity, and
(ii) Honeywell shall, or shall cause Sellers or their applicable Subsidiaries
to, terminate or cancel any and all intercompany accounts and Contracts
(excluding ordinary course arms’ length trade payables and receivables and the
agreements set forth on Section 6.11(a) of the Disclosure Schedule) between any
of Honeywell or its Subsidiaries (other than any of the Purchased Entities), on
the one hand, and any of the Purchased Entities, on the other hand.

(b) To the extent that (i) any obligations of the Business (including the
Purchased Entities) are secured by a letter of credit/bank guarantee or
guarantee by Honeywell or any of its Affiliates (other than the Purchased
Entities), Purchaser shall use commercially reasonable efforts to (A) cause
Purchaser or one of its Affiliates on or prior to the Closing Date to be
substituted for Honeywell or any of its Affiliates (other than the Purchased
Entities), as applicable, with respect to (and cause Honeywell or such Affiliate
to be released from) the financial and performance guarantees provided by
Honeywell or any of its Affiliates relating to such obligation, and (B) cause to
be issued letters of credit/bank guarantees as replacement letters of
credit/bank guarantees for ones issued by Honeywell or its Affiliates
(collectively, “Honeywell L/Cs”) on or prior to the Closing Date and to use
commercially reasonable efforts to have the Honeywell L/Cs cancelled or
terminated and (ii) any obligations of Honeywell or its Affiliates (other than
the Purchased Entities) are secured by a letter of credit/bank guarantee or
guarantee by the Purchased Entities, Honeywell shall use commercially reasonable
efforts to (A) cause Honeywell or one of its Affiliates (other than the
Purchased Entities) on or prior to the Closing Date to be substituted for the
Purchased Entities, as applicable, with respect to (and cause the Purchased
Entities to be released from) the financial and performance guarantees provided
by any Purchased Entity relating to such obligation, and (B) cause to be issued
letters of credit/bank guarantees as replacement letters of credit/bank
guarantees for ones issued by any Purchased Entity (collectively, “Purchased
Entity L/Cs”) on or prior to the Closing Date and to use commercially reasonable
efforts to have Purchased Entity L/Cs cancelled or terminated; provided,
however, that to the extent such guarantees cannot be extinguished or such
letters of credit/bank guarantees cannot be replaced or terminated on or prior
to the Closing, (x) Purchaser shall use commercially reasonable efforts to do so
as promptly as practicable following the Closing and shall indemnify and hold
Honeywell and its Affiliates (other than the Purchased Entities) harmless from
and against any and all Losses resulting from any payment after the Closing Date
by any of Honeywell or its Affiliates (other than the Purchased Entities) under
the guarantees or letters of credit/bank guarantees referenced in clause (b)(i)
of this Section 6.11 and (y) Honeywell shall use its commercially reasonable
efforts to do so as promptly as practicable following the Closing and shall
indemnify and hold Purchaser harmless from and against any and all Losses
resulting from any payment after the Closing Date by Purchaser or the Purchased
Entities under the guarantees or letters of credit/bank guarantees referenced in
clause (b)(ii) of this Section 6.11. Prior to the Closing, Honeywell will
cooperate with Purchaser in connection with the actions described in
Section 6.11(b)(i)(A). For purposes of this Section 6.11, “commercially
reasonable efforts” shall include Honeywell or Purchaser, as the case may be,
obtaining a letter of credit for which Purchaser or Honeywell, as the case may
be, is a beneficiary (on terms identical to the corresponding letter of credit)
if the beneficiaries of such letter of credit do not agree to a substitution or
replacement.

 

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6.12 Insurance Matters.

(a) The Sellers shall use commercially reasonable efforts to keep, or cause to
be kept, all insurance policies presently maintained that are for the benefit of
the Business, or substantially comparable replacements therefor, in full force
and effect through the Closing. Coverage for the Business shall terminate as of
the Closing Date under all such policies other than any such policies solely and
directly held by the Purchased Entities; provided that subject to the terms of
the applicable Occurrence Policies and to Section 6.12(b), Occurrence Policies
will remain in effect after the Closing Date in respect of claims arising under
such policies prior to the Closing Date.

(b) Prior to the Closing Date, Honeywell shall use its reasonable efforts to
cause any carriers who have underwritten any global and excess liability
insurance policies and any other policies which provides insurance coverage to
the Business on an “occurrence” basis or otherwise covers any Purchased Assets
(the “Occurrence Policies”) to continue to make coverage available to the
Business for claims arising prior to the Closing Date, subject to the insurance
policy’s or policies’ terms and conditions. With respect to the Occurrence
Policies, the Sellers shall, and shall cause their Affiliates to, use
commercially reasonable efforts to assist Purchaser or the Purchased Entities,
as applicable, subject to the terms of the applicable Occurrence Policies, to
pursue existing claims and assert new claims under such policies, and the
Sellers will, and prior to the Closing Date will cause the Purchased Entities
to, cooperate in such pursuit as reasonably requested by Purchaser (including by
giving Purchaser access to historical claim information relating to such
policies as they relate to the Business) and Honeywell shall use commercially
reasonable efforts to notify Purchaser where the limits of any applicable
Occurrence Policy may be exhausted.

6.13 Non-Solicitation of Employees.

(a) Each of the Sellers agrees that from the Closing Date through the second
anniversary of the Closing Date, without the prior written consent of Purchaser,
it will not, directly or indirectly, solicit or hire any Transferred Employee
(other than clerical or non salaried employees); provided, however, the
foregoing shall not prohibit any Seller from (i) engaging in the general
solicitation (whether by newspaper, trade publication or other periodical) of
employees, so long as such solicitation is not directed specifically at
Transferred Employees, or (ii) soliciting or hiring any such Transferred
Employee who has not been employed by Purchaser or Sensata Technologies, B.V. or
any of its Subsidiaries within the three (3) month period prior to their
solicitation or hiring.

(b) Except for the Transferred Employees, Purchaser, on behalf of itself and its
Affiliates, agrees that from the Closing Date through the second anniversary of
the Closing Date, without the prior written consent of Honeywell, it will not,
directly or indirectly, solicit or hire any member of the pressure sensor
engineering team or any engineer that develops Level 1 Technology, in each case,
that is employed by Honeywell’s Sensing and Control division at its Columbus,
Ohio facility, its Freeport, Illinois Plant 4, or Richardson; provided, however,
that if Purchaser or its Affiliates inquire of any person whether he/she falls
within the foregoing classification, Purchaser or such Affiliate will be
entitled to rely on such person’s response without Liability under this
Section 6.13(b) in connection with any untrue statements made by

 

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such person; provided, further, that (i) Purchaser or such Affiliate has no
Knowledge that such person’s response is false or untrue and (ii) in the event
that at any time Purchaser obtains Knowledge that such person’s response was
false or untrue, then Purchaser or such Affiliate shall promptly take all
necessary steps to terminate the employment of such person; provided, further,
that none of the foregoing shall prohibit Purchaser or its Affiliates from
(A) engaging in the general solicitation (whether by newspaper, trade
publication or other periodical) of such employees, so long as such solicitation
is not directed specifically at such employees, or (B) soliciting or hiring any
such employee who has not been employed by any Seller or any of their
Subsidiaries within the three-month period prior to their solicitation or
hiring.

6.14 Non-Competition.

(a) For a period of three (3) years from the Closing Date, Honeywell will not,
and Honeywell will cause its Subsidiaries not to, directly or indirectly,
whether as principal, agent, partner, officer, director, stockholder, employee,
consultant or otherwise, alone or in association with any other Person, own,
manage, operate, control, participate in, acquire more than 5% of (or the right
to acquire more than 5% of) any class of voting securities of (subject to the
other provisions of this Section 6.14(a)), perform services for, or otherwise
carry on, a business which manufactures, calibrates, tests, or sells any
(i) pressure-based, Hall, magneto resistive, variable reluctance based, vane and
linear position or other sensors in Application-Specific Packaging for use in
the Automotive Field; (ii) pressure sensors configured for exhaust applications
in the Transportation Field; (iii) vane and linear position sensors in
Application-Specific Packaging for use in the Turbo Field; or (iv) Level 1.5
Modules for use within the Automotive Field or that are market competitive with
Existing Products (a “Competing Business”); provided that nothing in this
Section 6.14 shall be deemed to limit in any way the activities of the Honeywell
and its Affiliates with respect to (including the manufacture, calibration,
testing, or sale of) (1) Optical Products, (2) Thermal Products,
(3) Current-Sensing Products, (4) surface and bulk acoustic wave-based products,
(5) switches (basic electromechanical switches, pressure switches, Operator
Controls), (6) test-and-measurement products sold for use in laboratory and R&D
applications, (7) compass sensor products, (8) sensor products developed
independently by any division of Honeywell other than its Sensing and Control
division (without use of any Intellectual Property of Honeywell’s Sensing and
Control division), or by any third party for use or sale by any division of
Honeywell other than its Sensing and Control division, in either case which are
any of the following: (A) Retained Products as of the Closing Date and
Acceptable Product Derivations thereof that are not products of the Sensing and
Control division, or (B) any product that incorporates a sensor as a component
thereof, and that provides material functionality other than sensing (including,
e.g., software used for engine and engine-component (including sensor)
calibration and control (which may include components that contain sensors)), or
(C) any sensor that was developed for use outside the Automotive Field and which
has not been intentionally modified to become a product for use in the
Automotive Field); provided that Honeywell and its Affiliates shall not be
limited in any respect with respect to the sale of sensors, either individually
or as included in turbochargers, turbocharger components or brakes or brake
products (whether made by a Honeywell division other than its Sensing and
Control division or by any third party), by Honeywell’s Turbocharger Technology
division to actuator suppliers or final customers for use in turbochargers or
components or by Honeywell’s Friction Materials division to customers for use in
brake products, (9) any non-sensor products (i.e., a product that has no
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functionality) made by any Honeywell division, (10) Flow Sensor Products,
(11) electrostatic charge sensors, (12) humidity sensors, (13) fluid quality
sensors, (14) gas sensors and gas detection products (e.g., O2, NOx),
(15) sensors that are not Level 1.5 Modules, and are not in Application-Specific
Packaging for use in the Automotive Field, which appear in Honeywell’s Sensing
and Control division standard line guides and which are sold through
distributors (regardless of whether such distributors are Existing Customers);
provided, however, that in connection with such sensor products, upon the
request of a customer, Honeywell may provide to such customer custom calibration
services (but without modification of such sensor or the Packaging containing
such sensor), (16) Level 1 Products or the Sleipnir ASIC, and (17) resistive
film-based rotary position sensors that are assembled in and sold through
Honeywell Automation India Limited for throttle position sensing applications
that do not embody or use any Intellectual Property used in the Business or
otherwise licensed to Purchaser pursuant to the transactions contemplated
herein, (products that are included within the categories of products set forth
in subsections (1) through (17) above are referred to in this Agreement as
“Excluded Products”); provided further however, that if a specific Existing
Product that is listed on Section 2.4(c) of the Disclosure Schedule pursuant to
clause (i) of the definition of “Existing Product” is included in one of the
above categories of Excluded Products, that specific Existing Product and
Acceptable Product Derivations of that specific Existing Product shall not be
considered an Excluded Product. The restrictions set forth in this
Section 6.14(a) shall not be construed to prohibit or restrict the Sellers or
any of their respective Affiliates from acquiring any Person or business that
engages in any Competing Business except to the extent that the Competing
Business involves the manufacture, calibration, testing, or sale of products
that are market competitive with Existing Products and Acceptable Product
Derivations as of the date of such acquisition (“Prohibited Acquired Entity
Activities”) and such Prohibited Acquired Entity Activities (A) constitutes at
the time of acquisition or at any time until three (3) years from the Closing
Date in excess of five percent (5%) of the revenues of the Person or business
acquired, or (B) has at the time of acquisition or at any time until three
(3) years from the Closing Date more than Twenty Five Million Dollars
($25,000,000) per fiscal year in revenue, in which case the applicable Seller or
Affiliate may acquire such Person or business but will use commercially
reasonable efforts to divest that portion of such Person or business that
engages in the Prohibited Acquired Entity Activities (the “Prohibited Portion”)
within nine (9) months after its acquisition of the Prohibited Portion, and, if
not possible within such period, as soon as practicable thereafter. Honeywell
shall provide Purchaser with the exclusive opportunity to negotiate for a period
of sixty (60) days with Honeywell with respect to the possible acquisition by
Purchaser of all or substantially all of the Prohibited Portion prior to
entering into any negotiations or discussions with another Person with respect
to such divestiture, such sixty (60) day period to commence on the date
Purchaser receives written notice of the closing of any such acquisition by
Honeywell of such Prohibited Portion. If no definitive agreement for the sale of
all or substantially all of the Prohibited Portion has been executed by
Purchaser and Honeywell within such sixty (60) day period, Honeywell shall have
the right to take any and all actions necessary or appropriate to seek to
consummate a sale of the Prohibited Portion.

(b) Notwithstanding anything to the contrary in this Agreement, the prohibitions
in Section 6.14(a) shall not apply to (i) any businesses or operations of the
Sellers or any of their respective Subsidiaries which are transferred to any
third party (other than to a Subsidiary of any Seller) after the date hereof, or
(ii) any Subsidiaries of any Sellers control of which is transferred to any
third party (other than to a Subsidiary of any Seller) after the date hereof.

 

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(c) The Sellers acknowledge and agree that the covenants contained in this
Section 6.14 are a material and substantial part of the transactions
contemplated hereby and are entered into in connection with, and as an
inducement to, the acquisition by Purchaser of the Purchased Assets.

(d) The Sellers acknowledge and agree that the remedy at law for any breach, or
threatened breach, of any of the provisions of this Section 6.14 will be
inadequate and, accordingly, the Sellers covenant and agree that Purchaser
shall, in addition to any other rights and remedies which Purchaser may have at
Law, be entitled to equitable relief, including injunctive relief, and to the
remedy of specific performance with respect to any breach or threatened breach
of such covenant, as may be available from any court of competent jurisdiction.
In addition, the Sellers and Purchaser agree that the terms of the covenant in
this Section 6.14 are fair and reasonable in light of Purchaser’s plans for the
Business and are necessary to accomplish the full transfer of the goodwill and
other intangible assets contemplated hereby. In the event that any of the
covenants contained in this Section 6.14 shall be determined by any court of
competent jurisdiction to be unenforceable for any reason whatsoever, then any
such provision or provisions shall not be deemed void, and the parties hereto
agree that said limits may be modified by the court and that said covenant
contained in this Section 6.14 shall be amended in accordance with said
modification, it being specifically agreed by the parties that it is their
continuing desire that this covenant be enforced to the full extent of its terms
and conditions or if a court finds the scope of the covenant unenforceable, the
court should redefine the covenant so as to comply with applicable Law.

6.15 Business Confidential Information.

(a) The Sellers acknowledge and agree that the books, records, data and other
documents and confidential information concerning the Business and/or the
products, services, customer development information (including customer and
prospect lists), sales activities and procedures, promotional and marketing
techniques, pricing, plans and strategies, financing, development and expansion
plans and credit and financial data concerning customers and suppliers and other
information of or to the extent relating primarily to the Business are
considered by Purchaser to be confidential, and in some cases are in the nature
of trade secrets, and are valuable assets of the Business, access to and
knowledge of which are essential to preserve the goodwill, customer
relationships and ongoing business relationships of the Business for the benefit
of Purchaser. The Sellers further agree that all knowledge and information
described in the preceding sentence that is not in the public domain (unless
such knowledge and information is in the public domain as a result of a breach
of this or any other confidentiality agreement by the Sellers or any of their
Affiliates) shall be considered confidential information (collectively, the
“Business Confidential Information”). For the avoidance of doubt, the term
Business Confidential Information shall not include information to the extent it
(i) does not relate to the Business, (ii) becomes available to the Sellers or
any of their Affiliates on a non-confidential basis from a source other than
Purchaser or, after the Closing, the Purchased Entities; provided that to the
Sellers’ or any of their Affiliates’ knowledge such source is not bound by a
confidentiality agreement with or similar obligation to Purchaser or the
Purchased

 

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Entities with respect to such information, (iii) is independently developed by
the Sellers or any of their Affiliates under circumstances not involving a
breach of this Section 6.15, or (iv) is publicly disclosed pursuant to a lawful
requirement or request from a Governmental Authority acting within its
jurisdiction, or non-confidential disclosure is otherwise required by Law.

(b) The Sellers hereby agree that following the Closing Date they shall hold the
Business Confidential Information in confidence and not use or disclose or cause
or permit to be used or disclosed any of the Business Confidential Information
for any reason or purpose whatsoever, except and to the extent any disclosure of
Business Confidential Information is required by Law or appropriate court order
and sufficient advance written notice thereof, if legally permitted, is provided
to Purchaser to permit Purchaser to seek a protective order or other appropriate
remedy. The provisions of this Section 6.15 shall expire on the fifth
anniversary of the Closing.

6.16 Waiver of Conflicts and Attorney-Client Privilege. Purchaser hereby waives,
on its own behalf, and agrees to cause the Purchased Entities, after the
Closing, to waive, (a) any conflicts that may arise in connection with any legal
counsel that represents any of the Business (including the Purchased Entities)
in connection with this Agreement (the “Current Representation”) undertaking
after the Closing the representation of any current stockholder, officer,
employee or director of the Business (including the Purchased Entities) (a
“Post-Closing Representation”) and (b) their rights of attorney-client privilege
with respect to any communication between such counsel and any such stockholder,
officer, employee or director, occurring during the Current Representation in
connection with any Post-Closing Representation, including in connection with a
dispute with Purchaser on or following the Closing. The Sellers hereby
acknowledge that nothing in the foregoing shall be construed to restrict certain
advisors, including accountants and attorneys, that have represented and
continue to represent the Sellers and their Subsidiaries from continuing to
represent Purchaser and its Affiliates, including in connection with the
transactions contemplated by this Agreement, in accordance with the terms and
conditions of any conflict waiver or similar documents entered into between the
Sellers and such advisors.

6.17 Closing Cash Balance. Honeywell shall use its reasonable best efforts to
cause all cash and cash equivalents held by HON Czech Controls as of the Closing
to be transferred to Honeywell or one or more of its Subsidiaries (other than
the Purchased Entities) prior to the Closing; provided, however, that to the
extent any cash or cash equivalents held by HON Czech Controls as of the Closing
is not so transferred prior to the Closing, the amount of such cash and cash
equivalents not so transferred shall be included as a current asset in Final Net
Working Capital.

6.18 Sellers’ Marks. Purchaser, each of its Affiliates and its and their
respective directors, officers, successors, assigns, agents, or representatives
shall not register, or attempt to register, and shall not directly or indirectly
use, in any fashion, including in signage, corporate letterhead, business cards,
internet websites, marketing material and the like, or seek to register, in
connection with any products or services anywhere in the world in any medium,
any Intellectual Property that includes, is identical to or is confusingly
similar to, any of the trademarks, service marks, domain names, trade names or
other indicia of origin owned by the Sellers, including, but not limited to, the
HONEYWELL mark and the Excluded Names

 

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(collectively, “Sellers’ Marks”), nor shall any of them challenge or assist any
third party in opposing the rights of the Sellers anywhere in the world in any
such Intellectual Property. Subject to the restrictions set forth herein, the
Sellers hereby grant to Purchaser effective as of the Closing Date, a personal,
nonexclusive, nontransferable (other than in the case of Purchaser assigning its
rights hereunder to one or more of its Affiliates or a third party in connection
with a sale of all or substantially all of the Business), royalty-free license
for six (6) months after the Closing Date, (a) to continue use of the Sellers’
Marks on signage, marketing materials and other materials, in each case,
existing, in use and contained in the Purchased Assets or owned by the Purchased
Entities as of the Closing Date, and (b) to continue use of the Sellers’ Marks
in inventory existing as of the Closing Date and in tools, dies and molds
acquired by Purchaser hereunder which carry one or more of the Sellers’ Marks to
be cast, struck or molded into inventory (and the inventory resulting from such
use), in each case, solely in a substantially similar manner as used by the
Sellers in connection with the Business as of the Closing; provided, however,
that (i) the term of the license in clause (b) shall be extended, for a period
reasonably necessary, but in no event longer than eighteen (18) months after the
Closing Date, for Purchaser to dispose of, consume, or complete manufacture of
all inventory included in the Purchased Assets or owned by the Purchased
Entities as of the Closing Date or created after the Closing Date in compliance
with clause (b) above (which may include continuing a production run during such
period; provided that such use is solely permitted: (A) where Purchaser in no
way deviates from the manner and placement of historical use of such Seller’s
Marks; and (B) Purchaser cannot feasibly discontinue such usage without
replacement of tool, die, or mold components during such production run), and
(ii) Purchaser shall not take any action or omit to take any action which may
reasonably be expected to derogate, erode or tarnish the Sellers’ Marks, or
otherwise diminish the value of the Sellers’ Marks or impair the goodwill
associated with the Sellers’ Marks. Purchaser shall in any event phase out such
use of such tools, dies and molds as soon as is reasonably practicable, and, in
particular, shall if practicable remove the cast for such marks from each such
tool, die or mold on the first occasion after the Closing Date when such tool,
die or mold is refurbished. Except as expressly provided in this Section 6.18,
such limited license shall terminate six (6) months after the Closing Date
regardless of whether any tool, die or mold has been refurbished; and all use by
Purchaser of Seller’s marks in any manner shall cease. Notwithstanding the
foregoing, promptly following the Closing Date, Purchaser shall take all steps
within Purchaser’s control or ability to change the names of the Purchased
Entities to names not containing the word “Honeywell”; provided, however, that
with respect to use of the name “Honeywell-Xin Yao Automotive Sensors (Shanghai)
Co., Ltd.”, Purchaser shall have a limited license until the effective time of
the name change, so long as until the effective time of the name change, it
restricts use of such name to those uses that cannot be substituted for an
alternative name due to applicable Chinese Law. All use of Sellers’ Marks as
permitted hereunder shall inure to the benefit of the Sellers.

6.19 Exclusivity. During the period from the date of this Agreement through the
Closing or the earlier termination of this Agreement pursuant to Article IX
hereof, the Sellers shall not take, and shall cause the Purchased Entities not
to take, or permit any other Person on their behalf to, initiate or engage in
discussions or negotiations with, or provide any information to, any Person
(other than Purchaser and its representatives) concerning any merger or
recapitalization involving the Purchased Entities, sale of Equity Interests, any
sale of all or substantially all of the assets of the Business or similar
transaction involving the Business or any of the Purchased Entities (other than
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Sellers shall, and shall cause the Purchased Entities and their officers,
directors, agents and representatives to, terminate any and all negotiations or
discussions with any third party regarding any proposal concerning any merger or
recapitalization involving the Purchased Entities, sale of Equity Interests, any
sale of all or substantially all the assets of the Business or other similar
transaction. Honeywell shall, subject to any contractual limitations, notify
Purchaser if any formal written offer for the purchase of all or substantially
all of the Business is received by Honeywell from a third party.

6.20 Certain Payments. The Sellers shall, within any contractually required
period and, if no such period exists, within thirty (30) days from the Closing
Date, pay all of Sellers’ and the Purchased Entities’ obligations under employee
benefit arrangements, employment agreements, retention agreements, or other
similar arrangements, in each case as in effect immediately prior to the Closing
Date, which come due as a result of the transactions contemplated hereby,
including any stay or transaction bonuses.

6.21 Compliance with Letter Agreements. Purchaser and the Sellers shall comply
in all respects with the terms and conditions of the letter agreements, as may
be amended from time to time in accordance with their respective terms, which
are entered into on the date hereof or on the Closing Date by and between one or
more of the Sellers and Purchaser.

6.22 HTT Supply Agreement. From the date hereof through the Closing, Honeywell
and Purchaser shall make available such resources as are reasonably necessary or
appropriate to the completion of, and shall negotiate in good faith the terms
and conditions of, the HTT Supply Agreement.

6.23 HTT Support Obligation. If Honeywell and Purchaser do not agree to, and
deliver duly executed counterparts of, a mutually acceptable HTT Supply
Agreement at Closing, then for a period of five (5) years following the Closing
(which period may be extended if mutually agreed to by the parties), Purchaser
shall, or shall cause its Affiliates to, fulfill all purchase orders received
from HTT (up to the top projected volumes and pursuant to the sensor pricing
Schedule included in Section 6.23 of the Disclosure Schedule) with respect to
the sensor products set forth in Section 3.3(a)(vii) of the Disclosure Schedule.
For the avoidance of doubt, mutual agreement on an HTT Supply Agreement shall
not be a condition to either Sellers’ or Purchaser’s respective obligations to
consummate the Closing.

ARTICLE VII

CLOSING CONDITIONS

7.1 Conditions to Obligations of the Sellers and Purchaser. The respective
obligations of each Seller, on the one hand, and Purchaser, on the other hand,
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment, on the Closing Date, of each of the following conditions:

(a) there shall not be in effect any Governmental Order restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby and no suit, action or other proceeding shall be pending before any court
or Governmental Authority that would reasonably be expected to result in any
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(b) any required waiting periods (including any extension thereof) applicable to
the consummation of the transactions contemplated by this Agreement under the
HSR Act shall have terminated or expired and any required clearances, approvals
or confirmations of the transactions contemplated by this Agreement pursuant to
any other foreign merger control or foreign investment clearances required by
Law to be obtained before Closing shall have been received.

7.2 Additional Conditions to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on the Closing Date, of each of the following
conditions (any or all of which may be waived by Purchaser in whole or in part
in its sole discretion):

(a) the representations and warranties of the Sellers contained in Article IV of
this Agreement (without giving effect to any Business Material Adverse Effect,
or materiality qualifiers therein) shall be true and correct on and as of the
Closing Date (except to the extent such representations and warranties shall
have been expressly made as of an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date) with the same force and effect as if made on and as of the Closing
Date, except to the extent that any failures of such representations and
warranties to be so true and correct would not individually or in the aggregate
result in a Business Material Adverse Effect, and the representation in
Section 4.6(b) shall be true and correct as of the Closing Date;

(b) the Sellers shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Closing Date;

(c) the Sellers shall have delivered to Purchaser a certificate executed by an
officer of Honeywell that the conditions set forth in paragraphs (a) and
(b) above have been satisfied;

(d) receipt of any and all Chinese Governmental Authority approvals of the
transfer of HON China’s Equity Interest in HON Shanghai to Purchaser and the
consent of any other third parties (including the China Consent) required in
connection with the transfer and assignment of HON China’s Equity Interest in
HON Shanghai to Purchaser; and

(e) the Sellers shall have delivered to Purchaser those items set forth in
Section 3.3(b), except for the item set forth in Section 3.3(b)(viii) (it being
understood that such item shall not be a condition to Purchaser’s obligation to
consummate the transactions contemplated by this Agreement).

7.3 Additional Conditions to Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, on the Closing Date, of each of the following
conditions (any or all of which may be waived by the Sellers in whole or in part
in their sole discretion):

(a) the representations and warranties of Purchaser contained in Article V of
this Agreement shall be true and correct on the date hereof and on and as of the
Closing Date (except to the extent such representations and warranties shall
have been expressly made as of an earlier date, in which case such
representations and warranties shall have been true and correct as of such
earlier date) with the same force and effect as if made on and as of the Closing
Date, except to the extent that any failures of such representations and
warranties to be so true and correct would not result in a Purchaser Material
Adverse Effect;

 

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(b) Purchaser shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Closing Date;

(c) Purchaser shall have delivered to the Sellers a certificate executed by an
officer of Purchaser that the conditions set forth in paragraphs (a) and
(b) above have been satisfied; and

(d) Purchaser shall have delivered to the Sellers those items set forth in
Section 3.3(a), except for the item set forth in Section 3.3(a)(vii) (it being
understood that such item shall not be a condition to Sellers’ obligation to
consummate the transactions contemplated by this Agreement).

ARTICLE VIII

CERTAIN TAX MATTERS

8.1 Tax Returns. Except as otherwise provided in Section 8.5:

(a) The Sellers shall prepare and file or cause to be prepared and filed when
due all Tax Returns that are required to be filed by or with respect to the
Business (including the Purchased Entities) for Tax periods ending before the
Closing Date and, except as otherwise required by applicable Law, the Sellers
shall prepare such Tax Returns in a manner consistent with past practice and
shall remit or cause to be remitted all Taxes shown as due on such Tax Returns
(subject to the Sellers’ right to reimbursement from Purchaser for any such
Taxes with respect to the Business for which the Sellers do not indemnify
Purchaser under Section 8.4).

(b) Purchaser shall prepare and file or cause to be prepared and filed when due
all Tax Returns that are required to be filed by or with respect to the Business
(including the Purchased Entities) for Tax periods ending on or after the
Closing Date (other than Tax Returns of the Sellers for Tax periods ending on or
after the Closing Date that include the Business (including the Purchased
Entities) for periods ending prior to the Closing Date), and except as otherwise
required by applicable Law, Purchaser shall prepare such Tax Returns that relate
to a period beginning before the Closing Date in a manner consistent with past
practices and shall remit or cause to be remitted any Taxes due in respect of
such Tax Returns (subject to Purchaser’s right to reimbursement from the Sellers
for any such Taxes for which the Sellers indemnify Purchaser under Section 8.4).

(c) Following the Closing Date, no party shall file any amended Tax Return
(unless required by any Governmental Authority) relating to the Purchased
Entities for Tax periods ending before the Closing Date, without the prior
written consent of the other party (which consent shall not be unreasonably
withheld).

 

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(d) The parties acknowledge and agree that no election pursuant to Code
Section 108(i) shall be made on any Tax Return of the Purchased Entities for any
Tax period that begins prior to the Closing Date.

8.2 Cooperation on Tax Matters; Contests.

(a) Purchaser and the Sellers shall cooperate in good faith, as and to the
extent reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Article VIII and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party’s request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Purchaser and the Sellers each agree (i) to retain all books and records in its
possession with respect to Tax matters pertinent to the Business and the
Purchased Assets (including the Purchased Entities) relating to any taxable
period beginning prior to the Closing Date until the expiration of the statute
of limitations (and, to the extent notified by the other party, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any Taxing Authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, to allow the
other party to take possession of such books and records.

(b) Purchaser and the Sellers further agree, upon request, to use commercially
reasonable efforts to obtain any certificate or other document from any
Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including with respect to the
transactions contemplated hereby).

(c) With respect to any Tax Return described in Section 8.1(b) as to which an
amount of Tax is allocable to, or would otherwise be borne by, the Sellers or
any of their Subsidiaries (other than the Purchased Entities), Purchaser shall
provide the Sellers with a pro forma draft of the portion of such Tax Return
(including all necessary supporting schedules and information) reflecting only
the tax items of the Business (including the Purchased Entities) at least 30
days prior to the due date (including any extension thereof) for the filing of
such Tax Return, and the Sellers and their authorized representatives shall have
the right to review and comment on such Tax Return (including any supporting
schedules or information) prior to the filing of such Tax Return. Any such
comments shall be provided to Purchaser at least 10 days prior to such due date.

(d) With respect to any Tax Return described in Section 8.1(a) that relate to
the Purchased Entities and are filed after the Closing Date, the Sellers shall
provide Purchaser with a pro forma draft of such Tax Return (including all
necessary supporting schedules and information) reflecting only the tax items of
the Business (including the Purchased Entities) at least 30 days prior to the
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such Tax Return, and Purchaser and its authorized representatives shall have the
right to review and comment on such Tax Return (including any supporting
schedules or information) prior to the filing of such Tax Return. Any such
comments shall be provided to the Sellers at least 10 days prior to such due
date. Purchaser shall at its own cost and expense fully and accurately complete
and submit any Tax data packages required by the Sellers within the time periods
established by the Tax Department of Honeywell reasonably consistent with past
practices.

(e) Each party shall have the right to conduct and control in its sole and
absolute discretion any audit or dispute with any Taxing Authority relating to
any Tax Returns it has the responsibility to file pursuant to this Article VIII;
provided that (i) the Sellers shall consult with, and give reasonably
participation rights to, Purchaser with respect to the handling of any audit or
dispute involving a Tax Return the Sellers have the responsibility to file
pursuant to Section 8.1(a) if such audit or dispute would be reasonably expected
to result in an increase in Tax Liability of Purchaser or a Purchased Entity,
and the Sellers shall not settle any such audit or dispute without the consent
of Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed, and (ii) Purchaser shall consult with, and give reasonably
participation rights to, the Sellers with respect to the handling of any audit
or dispute involving a Tax Return that Purchaser has the responsibility to file
pursuant to Section 8.1(b) if such audit or dispute would be reasonably expected
to result in an increase in Tax Liability of any Seller or any Person that files
a consolidated federal income Tax Return together with any Seller (and any
state, local or foreign consolidated, unitary or combined Tax Return), or in any
Liability for which the Sellers have agreed to indemnify Purchaser pursuant to
Section 8.4, and Purchaser shall not settle any such audit or dispute without
the consent of the Sellers, which consent shall not be unreasonably withheld,
conditioned or delayed. If either party receives a notice of audit or claim for
Taxes relating to any Tax Return that the other party has the responsibility to
file pursuant to this Article VIII, the party receiving the notice or claim
shall promptly forward a copy thereof to the other party.

8.3 Tax Sharing Agreements. All Tax sharing agreements or similar agreements
relating to the sharing, allocation or indemnification of Taxes, or surrender of
reliefs, with respect to or involving the Business, the Purchased Assets, or
Purchased Entities shall be terminated as of the Closing Date and, after the
Closing Date, Purchaser, any of its Affiliates, and the Purchased Entities shall
not be bound thereby or have any Liability thereunder.

8.4 Tax Indemnifications.

(a) The Sellers shall be liable for, and shall indemnify and hold Purchaser and
the Purchased Entities harmless against, Losses related to the following Taxes
(except to the extent specifically reflected as a Liability in the computation
of the Final Net Working Capital): (i) Taxes imposed (A) on the Purchased
Entities or (B) with respect to the Business or on the ownership or operation of
the Purchased Assets, in each case, with respect to taxable periods ending
before the Closing Date; (ii) with respect to taxable periods beginning before
the Closing Date and ending on or after the Closing Date (the “Straddle
Period”), Taxes imposed (A) on the Purchased Entities, or (B) with respect to
the Business or on the ownership or operation of the Purchased Assets, in either
case which are allocable, pursuant to Section 8.4(c), to the portion of such
period ending on the day immediately prior to the Closing Date, and (iii) Taxes
of the Sellers or any of their Affiliates (other than the Purchased Entities),

 

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but excluding any Taxes imposed on the ownership of the Purchased Assets,
whether arising out of the transactions contemplated by this Agreement or
otherwise, for any and all Tax periods. Notwithstanding anything to the contrary
above, with respect to any Straddle Period, any actions taken by the Purchased
Entities outside the ordinary course of business on the Closing Date but on or
before the Closing shall be deemed to occur in the portion of such period ending
on the day immediately prior to the Closing Date for purposes of this
Section 8.4(a).

(b) The Sellers shall be liable for, and shall indemnify and hold Purchaser and
the Purchased Entities harmless against, any successor or transferee Liability
or other secondary or other non-primary Liability imposed on Purchaser, any of
its Affiliates, and, following the Closing, any of the Purchased Entities or
Purchased Assets as a result of transactions or events occurring (including
those contemplated by this Agreement), or contracts or agreements entered into,
prior to the Closing Date, or as a result of any Purchased Entity or Purchased
Asset being part of or owned by, or ceasing to be part of or owned by, an
affiliated, combined, consolidated, unitary, or other similar group prior to the
Closing (including any Liability for the unpaid Taxes of any Person under
Treasury Regulation Section 1.1502-6, or any similar provision of state, local,
or non-U.S. law).

(c) In the case of Taxes that are payable with respect to the Straddle Period,
the portion of any such Tax that is allocable to the portion of the Straddle
Period ending on the day immediately prior to the Closing Date shall be:

(i) in the case of Taxes that are either (A) based upon or related to income or
receipts, or (B) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible, including
wages or payments to other person) (other than conveyances pursuant to this
Agreement), deemed equal to the amount which would be payable if the taxable
year ended on day immediately prior to the Closing Date; provided, however any
items determined on an annual or periodic basis (including amortization and
depreciation deductions) shall be allocated to the portion of the Straddle
Period ending on the day immediately prior to the Closing Date by multiplying
such amounts by a fraction, the numerator of which is the number of days in the
portion of the Straddle Period ending on the day immediately prior to the
Closing Date and the denominator of which is the number of days in the entire
Straddle Period; and

(ii) in the case of Taxes other than those described in paragraph (i), deemed to
be the amount of such Taxes for the entire period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the immediately
preceding period), multiplied by a fraction the numerator of which is the number
of calendar days in the period ending on the day immediately prior to the
Closing Date and the denominator of which is the number of calendar days in the
entire Straddle Period.

Any credit or refund resulting from an overpayment of Taxes for a Straddle
Period shall be prorated based upon the method employed in this Section 8.4(c)
taking into account the type of the Tax to which the refund relates. In the case
of any Tax based upon or measured by capital (including net worth or long term
debt) or intangibles, any amount thereof required to be

 

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allocated under this Section 8.4(c) shall be computed by reference to the level
of such items on the day immediately prior to the Closing Date. All
determinations necessary to effect the foregoing allocations shall be made in a
manner consistent with past practice of the Sellers.

(d) If Purchaser or a Purchased Entity receives any credit or a refund of Taxes
(excluding VAT imposed with respect to the transfer of the Purchased Assets)
imposed with respect to the Business (including the Purchased Entities) (i) for
any taxable period ending prior to the Closing Date, or (ii) which are
allocable, pursuant to Section 8.4(c), the portion of a Straddle Period ending
prior the Closing Date, except to the extent any such credit or refund of Taxes
(A) is specifically reflected as an asset in the computation of Final Net
Working Capital, (B) solely with respect to the Purchased Entities, results in
any amount of Tax that the Sellers are not required to indemnify Purchaser for
under this Agreement, or (C) solely with respect to the Purchased Entities,
arises as a result of the carryback of a loss or credit from a loss from a Tax
period (or portion thereof) beginning on or after the Closing Date, then
Purchaser shall promptly pay or cause to be paid such amount (net of reasonable
out-of-pocket costs incurred to obtain the refund) to the relevant Seller. For
the avoidance of doubt, Purchaser and the Purchased Entities shall be entitled
to waive any carryback of a loss or credit from a Tax period beginning on or
after the Closing Date to the extent permitted by Tax Law. Notwithstanding
anything to the contrary contained in this Agreement, the Sellers make no
representation, warranty or guaranty that any of the Purchased Entities have or
will have any Tax losses or Tax credits for any Tax period (or portion thereof)
ending before the Closing Date that will carry forward to any Tax period (or
portion thereof) beginning on or after the Closing Date.

8.5 Certain Taxes. All transfer, documentary, sales, use, stamp, registration
and other similar Taxes and fees (including any penalties and interest, but
excluding any value added Tax) (collectively, “Transfer Taxes”) incurred in
connection with this Agreement and the Ancillary Agreements shall be borne 50%
by Purchaser and 50% by the Sellers. Notwithstanding anything in Section 8.1 to
the contrary, any Tax Returns that must be filed in connection with Transfer
Taxes shall be prepared by the party primarily or customarily responsible under
applicable local Law for filing such Tax Returns, and such party will provide
such Tax Returns to the other party for such other party’s review and approval
at least ten (10) days prior to the date such Tax Returns are due to be filed.
Each party shall promptly pay all Transfer Taxes to which it is responsible
pursuant to this Section 8.5.

8.6 VAT.

(a) The Sellers and Purchaser intend that and agree to use all reasonable
endeavors to secure that the transfer of Purchased Assets pursuant to this
Agreement is treated as neither a supply of goods nor a supply of services for
the purposes of any value added tax (“VAT”).

(b) If nevertheless any VAT is payable on the transfer of the Purchased Assets
under this Agreement then Purchaser shall pay to the applicable Seller the
amount of that VAT (excluding any interest and penalties imposed) within five
(5) business days of demand by the Sellers provided that the applicable Seller
shall issue to the Purchaser a valid VAT invoice in respect of that VAT.

 

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(c) If and to the extent Purchaser is unable to recover the VAT paid under
Section 8.6(b) above from the Taxing Authorities within the later of (i) the
customary recovery period or (ii) three (3) months from the date of payment
under Section 8.6(b), such non-recovered VAT shall be treated as a Transfer Tax
for purposes of this Agreement and borne by the parties in a manner consistent
with Section 8.5. If the claim to recover such VAT results in a VAT audit by any
Taxing Authority, the customary recovery period shall include, for the avoidance
of doubt, the time necessary for such audit to conclude. To the extent any such
non-recovered VAT is treated as a Transfer Tax and the VAT is subsequently
recovered by Purchaser after the Sellers have borne their share of such VAT,
Purchaser shall pay over to the Seller 50% of any such recovered VAT, but in no
event shall such payment exceed the amount paid by the Sellers to Purchaser with
respect to such VAT.

8.7 Check the Box Elections. The Sellers shall have the right to make an
election under Treas. Reg. Sec. 301.7701-3, effective prior to the Closing, for
each Purchased Entity to be disregarded as an entity separate from its owner for
U.S. federal income tax purposes. Such elections shall be filed on or before the
Closing Date and Honeywell shall provide Purchaser with true and accurate copies
of all such elections on or before the Closing Date.

8.8 Wage Reporting. The Purchaser and the Sellers agree to utilize, or cause
their respective Affiliates to utilize, the standard procedure set forth in
Revenue Procedure 2004-53 with respect to wage reporting.

ARTICLE IX

TERMINATION

9.1 Termination. This Agreement may be terminated at any time before the Closing
Date as follows:

(a) by mutual written consent of the Sellers and Purchaser;

(b) by the Sellers or Purchaser on or after April 30, 2011, if the Closing shall
not have occurred by the close of business on such date, provided that the
breach by the terminating party in any material respect of any of its covenants
or other obligations hereunder shall not be the principal cause of the failure
of the Closing to occur by such date; and

(c) by the Sellers or Purchaser if there shall be in effect a final
nonappealable Governmental Order restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby.

9.2 Effect of Termination and Abandonment. In the event of termination of this
Agreement pursuant to this Article IX, this Agreement (other than as set forth
in Article I, the first sentence of Section 6.4(a), Section 6.5, Section 6.8,
Section 9.2 and Article XI) shall become void and of no effect with no Liability
on the part of any party hereto (or any of its Affiliates or representatives);
provided, however, that (a) no such termination shall relieve any party hereto
from any Liability for damages resulting from any willful and intentional breach
of this Agreement and (b) the Confidentiality Agreement shall remain in full
force and effect and survive any termination of this Agreement.

 

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ARTICLE X

SURVIVAL; INDEMNIFICATION

10.1 Survival of Representations, Warranties and Agreements. The representations
and warranties of the parties contained in this Agreement shall, subject to the
last sentence of this Section 10.1, terminate on the date that is one (1) year
after the Closing Date, except that the representations and warranties contained
in Section 4.1 (Corporate Status), Section 4.2 (Authority), the first two
sentences of each of Sections 4.4(a) and 4.4(b) (Capitalization), Section 4.21
(Finder’s Fee), Section 4.23 (Disclaimer of Other Representations and
Warranties), Section 5.1 (Corporate Status), Section 5.2 (Authority),
Section 5.6 (Investment Intent), Section 5.7 (No Reliance), Section 5.8
(Finder’s Fee), and Section 5.9 (Disclaimer of Other Representations and
Warranties) shall survive indefinitely following the Closing, the
representations and warranties in Section 4.l7 (Sufficiency of Assets) shall
survive for eighteen (18) months after the Closing, the representations and
warranties in Section 4.11 (Environmental Matters) shall survive for three
(3) years after the Closing, the representations and warranties in Section 4.8
(Intellectual Property) shall survive for two (2) years after the Closing, the
representations and warranties contained in Section 4.7 (Taxes) shall survive
the Closing until 60 days following the expiration of the applicable statute of
limitations (including any extensions) and the representations and warranties in
Section 4.20(b) (Products Liability; Warranty) shall survive for four (4) years
after the Closing. All covenants and agreements contained herein which by their
terms contemplate actions or impose obligations following the Closing shall
survive the Closing and remain in full force and effect in accordance with their
terms. All covenants and agreements contained herein which by their terms
contemplate full performance at or prior to the Closing shall terminate upon the
Closing, except that claims for indemnification in respect of any breach thereof
shall survive until the date that is one (1) year after the Closing Date. The
period of time a representation or warranty or covenant or agreement survives
the Closing pursuant to this Section 10.1 shall be the “Survival Period” with
respect to such representation or warranty or covenant or agreement. In the
event notice of any claim for indemnification under this Article X shall have
been given within the applicable Survival Period and such claim has not been
finally resolved by the expiration of such Survival Period, the representations
or warranties or covenants or agreements that are the subject of such claim
shall survive, but only to the extent of and in the amount of the claim as made
prior to the expiration of the Survival Period, until such claim is finally
resolved.

10.2 Indemnification. Subject to the terms, conditions and limitations set forth
in this Article X, from and after the Closing Date:

(a) The Sellers shall indemnify and hold harmless Purchaser and its Affiliates
(including after the Closing, the Purchased Entities) and each of their
respective officers, directors, members, managers and employees (collectively,
the “Purchaser Indemnified Parties”) from and against any Losses that are
imposed on or incurred by the Purchaser Indemnified Parties arising out of
(i) any breach of any representation or warranty made by the Sellers in
Article IV, (ii) any failure to perform any covenant or agreement of the Sellers
set forth in this Agreement, or (iii) the Excluded Liabilities.

(b) Purchaser shall indemnify and hold harmless the Sellers and their Affiliates
(other than the Purchased Entities) and each of their respective officers,
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members, managers and employees (collectively, the “Seller Indemnified Parties”)
from and against any Losses that are imposed on or incurred by Seller
Indemnified Parties arising out of (i) any breach of any representation or
warranty made by Purchaser in Article V, (ii) any failure to perform any
covenant or agreement of Purchaser set forth in this Agreement, (iii) the
conduct and operation of the Business (including the Purchased Entities) from
and after the Closing, or (iv) the Assumed Liabilities.

(c) For purposes of determining whether a breach or a violation of any
representation or warranty in this Agreement has occurred, each representation
or warranty in this Agreement will be read and construed to include all
materiality, “in all material respects,” Material Adverse Effect and other
qualifiers expressly set forth in the applicable representation or warranty.
However, the determination of the amount of a Loss resulting from a breach of
any representation or warranty of the Sellers contained in this Agreement shall
be made by disregarding and not giving effect to any qualifiers as to “Business
Material Adverse Effect,” “materiality,” “material Loss” or “in all material
respects,” or words of similar import, or, in the case of Section 4.6(c), the
dollar threshold used in such representation or warranty, and instead
interpreting such representation or warranty as if such terms were deleted.

10.3 Indemnification Procedures.

(a) In order for a party (the “Indemnified Party”) to be entitled to any
indemnification provided for under this Article X in respect of a claim made
against the Indemnified Party by any Person who is not a party to this Agreement
(such claim, excluding any claims related to Taxes the procedures for which are
covered in Section 8.2(d), a “Third-Party Claim”), such Indemnified Party must
notify the indemnifying party hereunder (the “Indemnifying Party”) in writing of
the Third-Party Claim promptly following receipt by such Indemnified Party of
notice of the Third-Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, promptly following the Indemnified Party’s receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third-Party Claim, other than those notices
and documents separately addressed to the Indemnifying Party.

(b) The Indemnifying Party will have the right to defend against, negotiate,
settle or otherwise deal with any Third-Party Claim which relates to any Losses,
including a Product Recall, indemnifiable hereunder and to select counsel of its
choice; provided that, unless otherwise expressly agreed in writing by the
Indemnified Party, the Indemnifying Party shall only be entitled to control the
defense of the Third-Party Claim if (i) the Indemnifying Party shall acknowledge
in writing its obligation to indemnify the Indemnified Party for any and all
Losses thereto (subject to the provisions set forth in this Agreement), (ii) the
Third-Party Claim does not seek to impose on the Indemnified Party injunctive or
other non-monetary relief, (iii) the Third-Party Claim does not involve any
material customer or material supplier of the Indemnified Party (except to the
extent Losses arising from such Third-Party Claim constitute Excluded
Liabilities, in which case the Indemnifying Party shall (subject to satisfaction
of clauses (i) and (ii) above) be entitled to control the defense of a
Third-Party Claim that involves such a material customer or material supplier),
(iv) the Third-Party Claim does not involve any

 

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executive officer or key employee of the Indemnified Party, and (v) at the time
the Indemnifying Party receives notice of the Third-Party Claim, as a result of
the application of the applicable cap amount set forth in Section 10.4(a), the
indemnification payments reasonably expected to be made by the Indemnifying
Party in respect of such Third-Party Claim are less than the reasonably expected
indemnifiable Loss of the Indemnified Party as a result of such Third-Party
Claim; provided that it is specifically agreed and acknowledged amongst the
Parties that the Sellers shall control, defend against, negotiate, settle or
otherwise deal with each of the Third-Party Claims relating to the matters
reflected on Sections 4.9 and 4.20 of the Disclosure Schedule. If the
Indemnifying Party is not entitled to as a result of clauses (i), (ii), (iii),
(iv) or (v) of the previous sentence, or does not within 30 days of its receipt
of notice of a Third-Party Claim pursuant to Section 10.3(a) elect to or
otherwise fails to defend against or negotiate any Third-Party Claim which
relates to any Losses indemnifiable hereunder, the applicable Indemnified Party
may defend against, negotiate, settle or otherwise deal with such Third-Party
Claim except that, in the event the Indemnifying Party is not entitled to defend
against, negotiate, settle or otherwise deal with such a Third-Party Claim as a
result of the application of clauses (i), (ii), (iii), (iv) or (v) of the
previous sentence, the Indemnifying Party shall have the right to participate in
the defense of any such Third-Party Claim, including with respect to a Product
Recall, upon reasonable request, to meet with the Indemnified Party or their
representatives to discuss such Product Recall, and to have the reasonable
opportunity to participate in any negotiation, settlement or other discussions
that the Indemnifying Party has with the party bringing such Third-Party Claim,
any other party related to such Third-Party Claim, or any of their respective
representatives, at its own cost and expense, and in no event will the
Indemnified Party have the right to settle any such Third-Party Claim without
the consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. Without limiting the generality of the foregoing, Purchaser shall
cooperate with Sellers in connection with any testing, analyses and other
support services that are conducted in connection with or in relation to any
actual or proposed Product Recall pursuant to which Purchaser may seek
indemnification under Section 10.2(a)(i). If the applicable Indemnified Party
defends any Third-Party Claim, then the Indemnifying Party shall promptly
reimburse the applicable Indemnified Party for the out-of-pocket costs
(including reasonable attorneys’ fees and expenses) incurred in connection with
the investigation, defense and/or settlement of any such Third-Party Claim upon
submission of periodic bills. If the Indemnifying Party assumes the defense of
any Third-Party Claim, the applicable Indemnified Party may participate, at its
own expense, in the defense of such Third-Party Claim; provided, however, that
such applicable Indemnified Party will be entitled to participate in any such
defense with separate counsel at the expense of the Indemnifying Party if (i) so
requested by the Indemnifying Party to participate or (ii) in the reasonable
opinion of counsel to the applicable Indemnified Party, a conflict or potential
conflict exists between the applicable Indemnified Party and the Indemnifying
Party that would make such separate representation advisable (each of clause
(i) and (ii), a “Reimbursable Participation”); provided, further, that
Indemnifying Party will not be required to pay for more than one (1) such
counsel for all Indemnified Parties in connection with any Third-Party Claim;
and provided, further, that in any Third-Party Claim where an Indemnified Party
is not controlling the defense and which involves any customer or supplier of
the Business, such participation shall include the right of the Indemnified
Party to engage in direct discussions with the other parties to the Third-Party
Claim, including discussions concerning the claim and potential resolution
thereof, subject to paragraph (c) below and subject to the following two
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herein to the contrary, the participation of the Indemnified Party in any
discussion relating to the Third-Party Claim shall not alter any of the rights
of the controlling party to control and direct the defense of such Third-Party
Claim, including the right to accept or reject any resolution proposed by the
non-controlling party in such controlling party’s sole discretion. In connection
with any discussions by an Indemnified Party with any parties to a Third-Party
Claim, such Indemnified Party shall, and in the case of a Purchaser Indemnified
Party the Purchaser hereby agrees to cause such Indemnified Party to (i) fully
disclose to all other parties that (A) the non-controlling party is acting on
its own behalf and not as a representative of the controlling party, and (B) the
non-controlling party is not authorized to agree to any settlement with respect
to such Third-Party Claim; and (ii) keep confidential any non-public information
relating to the Sellers or the Third-Party Claim.

(c) If the Indemnifying Party chooses to defend or prosecute a Third-Party
Claim, the Indemnified Party shall (and shall cause the other applicable
Indemnified Parties to) cooperate in the defense or prosecution thereof at
reasonable times upon reasonable notice and without undue disruption of the
Indemnified Party’s business, and the Indemnified Party’s actual out-of-pocket
costs in such cooperation shall be indemnifiable Losses hereunder, except that
the Indemnifying Party shall not be obligated to make any payments with respect
to fees and expenses of counsel retained by the Indemnified Party so long as the
Indemnifying Party continues to defend such Third-Party Claim (other than as set
forth in Section 10.3(b) in respect of a Reimbursable Participation). If the
Indemnifying Party assumes the defense of a Third-Party Claim, the Indemnified
Party shall (and shall cause the other applicable Indemnified Parties to) agree
to any settlement, compromise or discharge of a Third-Party Claim that the
Indemnifying Party may recommend and that (i) by its terms unconditionally
obligates the Indemnifying Party (or its Affiliates) to pay the full amount of
the Liability in connection with such Third-Party Claim, (ii) does not require
any payment or other action by any Indemnified Party, and (iii) unconditionally
releases all Indemnified Parties in connection with such Third-Party Claim; it
being understood that in no other event will the Indemnifying Party have the
right to settle any Third-Party Claim, regardless of whether the defense thereof
has been assumed by the Indemnifying Party. If the Indemnifying Party elects not
to assume the defense of a Third-Party Claim, the applicable Indemnified Parties
shall not admit any Liability with respect to, or settle, compromise or
discharge, such Third-Party Claim without the Indemnifying Party’s prior written
consent (which shall not be unreasonably withheld, conditioned or delayed).

(d) In the event any Indemnified Party has a claim against any Indemnifying
Party under this Article X that does not involve a Third-Party Claim, the
Indemnified Party shall deliver written notice of such claim to the Indemnifying
Party promptly following the Indemnified Party becoming aware of the same. The
failure by any Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party from any Liability that it may have to such
Indemnified Party under this Article X, except to the extent that the
Indemnifying Party has been actually prejudiced by such failure.

10.4 Indemnification Limitations.

(a) In no event shall the Sellers be liable for indemnification pursuant to
Section 10.2(a)(i) (other than in respect of the representations and warranties
in Section 4.1 (Corporate Status), Section 4.2 (Authority), the first two
sentences of each of Section 4.4(a) and

 

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4.4(b) (Capitalization), Section 4.7 (Taxes), and Section 4.21 (Finder’s Fee)
(collectively, the “Excluded Representations”) and Section 4.17 (Sufficiency of
Assets)) unless and until the aggregate amount of all Losses with respect to
Section 10.2(a)(i) that are imposed on or incurred by the Purchaser Indemnified
Parties exceeds $1,400,000 (the “Threshold Amount”), in which case the Purchaser
Indemnified Parties shall be entitled to indemnification for all Losses from the
first dollar, including both the Threshold Amount and any amounts in excess
thereof. Notwithstanding anything herein to the contrary, the Sellers shall not
(i) be required to make payments for indemnification pursuant to
Section 10.2(a)(i) (other than in respect of the Excluded Representations) in an
aggregate amount in excess of $18,000,000 (the “Indemnification Cap”), or
(ii) be liable for indemnification with respect to any Loss by the Purchaser
Indemnified Parties pursuant to Section 10.2(a)(i) (other than in respect of the
Excluded Representations) to the extent such Loss and all Losses arising out of
the same facts and circumstances are, in the aggregate, less than $15,000 (each,
a “De Minimis Loss”) (and such Losses shall be disregarded and shall not be
aggregated for purposes of the Threshold Amount unless and until such Losses
arising out of the same facts or circumstances exceed the De Minimis Loss
amount). Notwithstanding anything to the contrary herein, Sellers shall have
ninety (90) days after the receipt of an indemnification claim for any Loss by
the Purchaser Indemnified Parties in respect of Section 4.20(b) (Products
Liability; Warranty) in which to propose a commercially reasonable alternative
to satisfy such claim, including the repair, replacement or redelivery of any
products that are the subject of such claim, which such commercially reasonable
alternative is subject to the prior written approval of the Purchaser
Indemnified Party, not to be unreasonably withheld, conditioned or delayed (it
being understood that any and all costs or other Losses imposed on or incurred
by the Purchaser Indemnified Parties arising out of such alternative shall,
subject to the terms, conditions and limitations contained herein, be considered
indemnifable Losses). Purchaser shall not be required to make payments for
indemnification pursuant to Section 10.2(b)(i) in an aggregate amount in excess
of the Indemnification Cap.

(b) In calculating amounts payable to an Indemnified Party hereunder, the amount
of any indemnified Losses shall be determined without duplication of any other
Loss for which an indemnification claim has been made or could be made under any
other representation, warranty, covenant, or agreement and shall be computed net
of (i) payments recovered by the Indemnified Party under indemnification
agreements or arrangements with third parties or under any insurance policy with
respect to such Losses (after deduction for any cost of collection, deductible,
retroactive premium adjustment, reimbursement obligation or other cost or
expense directly related thereto) (each, a “Collateral Source”), (ii) any prior
recovery by the Indemnified Party from any Person with respect to such Losses,
including by such Loss being included as a Liability in Final Net Working
Capital and actually resulting in an adjustment to the Purchase Price pursuant
to Section 3.4(f), or (iii) any Tax Benefit actually received by a Purchased
Entity with respect to such Losses in the year of the indemnity payment or a
prior year, but increased by the amount of any Tax detriment actually paid by
any Indemnified Party as a result of such party’s receipt of the indemnification
payment with respect to such Loss. In the event of any indemnification claim
paid, Honeywell may, in its sole discretion, require the Indemnified Party to
grant to Honeywell an assignment of the right of such Indemnified Party to
assert a claim against any Collateral Source. If the amount to be netted
hereunder from any payment required under this Article X or Article VIII is
determined after payment of any amount otherwise required to be paid to an
Indemnified Party under this Article X or Article VIII, the

 

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Indemnified Party shall repay to the Indemnifying Party, promptly after such
determination, any amount that the Indemnifying Party would not have had to pay
pursuant to this Article X or Article VIII had such determination been made at
the time of such payment.

(c) Subject to the other provisions of this Article X, but notwithstanding any
other provision of this Agreement, (i) in no event shall the Sellers or
Purchaser be liable for any punitive damages, except to the extent such damages
are payable to an unaffiliated third party and (ii) in no event shall the
Sellers be liable for any consequential damages (it being understood and agreed
that the term “consequential damages” used herein shall not include damages
related to lost profits, diminution in value (including multiple of earnings or
similar metrics for measuring damages), nor damages payable to an unaffiliated
third party) arising out of indemnification claims for Excluded Liabilities
described in Sections 2.5(a)(iv), (v)(A), (vii)(B), (ix), (x), (xi), (xii), and
(xiv) and Section 2.5(b)(vi) (each such indemnification claim, a “Business
Related Excluded Liabilities Claim”) in excess of $28,000,000; provided that the
foregoing limitation on consequential damages shall not apply to the extent any
such Excluded Liability relates to the Excluded Assets, the Purchased Entities’
Excluded Assets, or operation or conduct by the Sellers or any of their
Affiliates of any business (other than the Business). Purchaser and the Sellers
shall, and Purchaser shall cause the Purchaser Indemnified Parties to, in good
faith, (x) agree upon what portion of damages (if any) constitute consequential
damages in connection with the settlement of a Business Related Excluded
Liabilities Claim and (y) use their respective commercially reasonable efforts
to cause the applicable Governmental Authority to determine what portion of
damages (if any) constitute consequential damages as part of any Governmental
Order that is entered by such Governmental Authority in connection with a
Business Related Excluded Liabilities Claim.

(d) Notwithstanding anything else contained in this Agreement to the contrary,
after the Closing, indemnification and specific performance pursuant to the
provisions of this Article X, Section 6.14 and Article VIII shall be the sole
and exclusive remedy of the parties with respect to any and all claims (whether
in contract or in tort) arising out of or in connection with this Agreement, the
Ancillary Agreements and the transactions contemplated hereby and thereby (other
than remedies set forth in the Ancillary Agreements with regard to the
transactions contemplated thereby), including in respect of any
misrepresentation or breach of any warranty, covenant or other provision
contained in this Agreement or in any certificate delivered pursuant hereto.
Without limiting the generality or effect of the foregoing, as a material
inducement to the Sellers entering into this Agreement, Purchaser hereby waives,
from and after the Closing, any claim or cause of action, known and unknown,
foreseen and unforeseen, which it or any of the other Purchaser Indemnified
Parties may have against any Seller or any of its Affiliates, including without
limitation under the common law or federal or state securities Laws, trade
regulation Laws or other Laws (including any relating to Intellectual Property,
products liability (including Products Liability Claims), Tax, environmental,
real estate or employee matters), by reason of this Agreement and the
transactions provided for herein, except for claims or causes of action brought
under and subject to the terms and conditions of the provisions contained in
this Article X and Article VIII. All payments made pursuant to this Article X
and Article VIII shall be made by the Sellers to Purchaser or by Purchaser to
the Sellers, as the case may be, and shall be deemed to be adjustments to the
Purchase Price. Notwithstanding anything to the contrary herein, nothing in this
Article X shall limit any claim by a Purchaser Indemnified Party alleging that
Sellers defrauded such Person by intentionally

 

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omitting or misstating any disclosure in the Disclosure Schedule where such
omission or misstatement constitutes a breach in any material respect of any
express representation or warranty, which claims shall, in any case, be subject
to the provisions of Sections 4.23, 5.7(a)-(d), 11.7 and 11.8.

(e) The Sellers and Purchaser acknowledge and agree that the other parties would
be damaged irreparably in the event any provision of this Agreement is not
performed in accordance with its specific terms or otherwise is breached, so
that a party shall be entitled to injunctive relief to prevent breaches of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof. In particular, the parties acknowledge that the Business is
unique and recognize and affirm that in the event that the Sellers breach this
Agreement, money damages would be inadequate and Purchaser would have no
adequate remedy at law, so that Purchaser shall have the right, in addition to
any other rights and remedies existing in its favor, to enforce its rights and
the Sellers’ obligations hereunder not only by action for damages but also by
action for specific performance, injunctive, and/or other equitable relief.

ARTICLE XI

MISCELLANEOUS

11.1 Notices. All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made (a) on
the date of delivery if delivered personally, or by facsimile, upon confirmation
of receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the fifth business
day following the date of mailing if delivered by registered or certified mail
return receipt requested, postage prepaid, and shall be delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), sent by overnight courier or sent by facsimile to the applicable
party at the following addresses or facsimile numbers (or at such other address
or facsimile number for a party as shall be specified by like notice):

 

  (a) if to any Seller:

Honeywell International Inc.

101 Columbia Road

P.O. Box 4000

Morristown, New Jersey 07962

Attention:        Senior Vice President and General Counsel

Facsimile No.: (973) 455-4217

 

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with a copy (which will not constitute notice) to:

Jenner & Block LLP

353 N. Clark Street

Chicago, Illinois 60654

Attention:        John F. Cox

Facsimile No.: (312) 840-7396

 

  (b) if to Purchaser:

Sensata Technologies, Inc.

529 Pleasant Street

Attleboro, Massachusetts 02703

Attention:        General Counsel

Facsimile No.: (508) 236-1960

with a copy (which will not constitute notice) to:

Kirkland & Ellis LLP

300 N. LaSalle Street

Chicago, Illinois 60654

Attention:        Jeffrey W. Richards, P.C.

Facsimile No.: (312) 862-2200

11.2 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Sellers and Purchaser shall
negotiate in good faith to modify this Agreement so as to affect their original
intent as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.

11.3 Entire Agreement; No Third-Party Beneficiaries. This Agreement, including
all exhibits hereto, the Disclosure Schedule, the Ancillary Agreements, the
Confidentiality Agreement and those certain letter agreements contemplated to be
entered into by certain parties hereto pursuant to Section 6.21 hereof
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties hereto, or any of
them, with respect to the subject matter hereof and thereof and do not,

 

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and are not intended to, confer upon any other Person (other than Sensata NV and
its direct and indirect Subsidiaries as Purchaser Indemnified Parties pursuant
to Sections 10.2(a) and 8.4) any rights or remedies hereunder.

11.4 Amendment; Waiver. This Agreement may be amended only in a writing signed
by all parties hereto. Any waiver of rights hereunder must be set forth in
writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive any
party’s rights at any time to enforce strict compliance thereafter with every
term or condition of this Agreement.

11.5 Binding Effect; Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective legal
representatives and successors and permitted assigns. Notwithstanding the
foregoing, this Agreement shall not be assigned by any party hereto by operation
of Law or otherwise without the express written consent of each of the other
parties; provided, however, that without the consent of the other parties hereto
Purchaser may (i) assign its right to purchase the Purchased Assets or the
Purchased Entities, in whole or in part, to one or more of its Affiliates,
(ii) assign its rights hereunder to the lenders under the Credit Agreement,
dated April 27, 2006 (as amended), among Sensata Technologies, B.V., Sensata
Technologies Finance Company, LLC, Sensata Technologies Intermediate Holding
B.V., each lender from time to time party thereto and Morgan Stanley Senior
Funding, Inc. as collateral security, and (iii) assign its rights hereunder to a
third party in connection with a sale of all or substantially all of the
Business; provided, however, that no such assignment shall relieve Purchaser of
any of its obligations hereunder.

11.6 Disclosure Schedule. The Disclosure Schedule shall be construed with and as
an integral part of this Agreement to the same extent as if the same had been
set forth verbatim herein. Any matter disclosed pursuant to the Disclosure
Schedule shall not be deemed to be an admission or representation as to the
materiality of the item so disclosed.

11.7 Governing Law. Any and all claims, disputes or controversies in any way
arising out of or relating to (a) this Agreement, (b) any breach, termination or
validity of this Agreement, (c) the transactions contemplated hereby or (d) any
discussions or communications relating in any way to this Agreement or
transactions contemplated hereby (the “Transaction Matters”), and the existence
or validity of any and all defenses to such claims, disputes or controversies,
shall be governed and resolved exclusively by the Laws of the State of New York,
notwithstanding the existence of any conflict of laws principles that otherwise
would dictate the application of any other state’s Law. Each party irrevocably
and unconditionally waives any right to object to the application of New York
Law or argue against its applicability to any of the matters referenced in the
immediately preceding sentence.

11.8 Dispute Resolution; Mediation; Jurisdiction.

(a) In the event of any dispute, controversy or claim in any way arising out of
or relating to the Transaction Matters (a “Dispute”), upon the written notice of
any party hereto, the parties hereto shall attempt to negotiate a resolution of
the Dispute. If the parties hereto are unable for any reason to resolve a
Dispute within 30 days after the receipt of such notice, the Dispute shall be
submitted to mediation in accordance with Section 11.8(b).

 

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(b) Any Dispute not resolved pursuant to Section 11.8(a) shall, at the request
of any party hereto (a “Mediation Request”), be submitted to non-binding
mediation in accordance with the then current CPR Mediation Procedure (the
“Procedure”), except as modified herein. The mediation shall be held in
New York, New York. The parties shall have 20 days from receipt by a party (or
parties) of a Mediation Request to agree on a mediator. If no mediator has been
agreed upon by the parties within 20 days of receipt by a party (or parties) of
a Mediation Request, then any party may request (on written notice to the other
parties), that the CPR appoint a mediator in accordance with the Procedure. All
mediation pursuant to this clause shall be confidential and shall be treated as
compromise and settlement negotiations, and no oral or documentary
representations made by the parties during such mediation shall be admissible
for any purpose in any subsequent proceedings. No party hereto shall disclose or
permit the disclosure of any information about the evidence adduced or the
documents produced by the other parties in the mediation proceedings or about
the existence, contents or results of the mediation without the prior written
consent of such other parties except in the course of a judicial or regulatory
proceeding or as may be required by Law or requested by a Governmental Authority
or securities exchange. Before making any disclosure permitted by the preceding
sentence, the party intending to make such disclosure shall give the other
parties reasonable written notice of the intended disclosure and afford the
other party a reasonable opportunity to protect its interests. If the Dispute
has not been resolved within 60 days of the appointment of a mediator, or within
90 days of receipt by a party (or parties) of a Mediation Request (whichever
occurs sooner), or within such longer period as the parties may agree to in
writing, then any party may file an action on the Dispute in any court having
jurisdiction in accordance with Section 11.8(c).

(c) Each of the parties hereby irrevocably and unconditionally submits to the
exclusive jurisdiction of the courts of the State of New York located in
New York City and the courts of the United States of America located in New York
City for any litigation arising out of or relating to the Transaction Matters
(and agrees not to commence any litigation relating to the Transaction Matters
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 11.1 shall be effective service of process for any litigation brought
against it in any such court. Each of the parties hereby irrevocably and
unconditionally waives any objection to the laying of venue of any litigation
arising out of the Transaction Matters in the courts of the State of New York
located in New York City or the courts of the United States of America located
in New York City and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such litigation brought
in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING IN
ANY WAY TO THE TRANSACTION MATTERS.

11.9 Construction; Interpretation. When a reference is made in this Agreement to
Articles, Sections, or Disclosure Schedule, such reference is to an Article or a
Section of, or the Disclosure Schedule to, this Agreement, unless otherwise
indicated. The table of contents and headings contained in this Agreement are
provided for convenience of reference purposes only and shall not affect any
meaning, construction or interpretation of this Agreement. When a reference is
made in this Agreement to a party or parties, such reference is to parties to
this

 

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Agreement, unless otherwise indicated. The language used in this Agreement is
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against any party. Each of the parties
hereto has participated in the drafting and negotiation of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement must be
construed as if drafted by all of the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of authorship of
any of the provisions of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.” The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The phrase “ordinary course of business” when used in this Agreement
shall be deemed to be followed by the words “consistent with past practice.” All
terms defined in this Agreement shall have the defined meanings when used in the
Disclosure Schedule, the Ancillary Agreements, and any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term.

11.10 Counterparts. This Agreement may be executed simultaneously in one or more
counterparts (including by facsimile or electronic .pdf submission), and by the
different parties in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which shall constitute one and the same
agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Asset and Stock Purchase
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

 

SENSATA TECHNOLOGIES, INC.     HONEYWELL INTERNATIONAL INC. By:  

/s/ Jeffrey J. Cote

    By:  

/s/ Brian S. Cook

Name:  

Jeffrey J. Cote

    Name:  

Brian S. Cook

Title:  

Executive VP & Chief Financial Officer

    Title:  

VP Corporate Development

HONEYWELL CO., LTD. (KOREA)     HONEYWELL SPOL S.R.O. (CZECH REPUBLIC) By:  

/s/ Brian S. Cook

    By:  

/s/ Brian S. Cook

Name:  

Brian S. Cook

    Name:  

Brian S. Cook

Title:  

VP Corporate Development

    Title:  

VP Corporate Development

HONEYWELL AEROSPACE S.R.O.     HONEYWELL (CHINA) CO., LTD. By:  

/s/ Brian S. Cook

    By:  

/s/ Brian S. Cook

Name:  

Brian S. Cook

    Name:  

Brian S. Cook

Title:  

VP Corporate Development

    Title:  

VP Corporate Development

HONEYWELL AUTOMATION INDIA LIMITED     HONEYWELL CONTROL SYSTEMS LIMITED By:  

/s/ Brian S. Cook

    By:  

/s/ Brian S. Cook

Name:  

Brian S. Cook

    Name:  

Brian S. Cook

Title:  

VP Corporate Development

    Title:  

VP Corporate Development

HONEYWELL GMBH     HONEYWELL JAPAN INC. By:  

/s/ Brian S. Cook

    By:  

/s/ Brian S. Cook

Name:  

Brian S. Cook

    Name:  

Brian S. Cook

Title:  

VP Corporate Development

    Title:  

VP Corporate Development