Exhibit 10.25

Dated November 27, 2006

BBA Holding Deutschland GmbH

and

Westinghouse Air Brake Technologies Corporation

SHARE PURCHASE AGREEMENT

relating to BECORIT GmbH

LOGO [g46790logo.jpg]

Mainzer Landstraße 16

60325 Frankfurt am Main

Postfach 17 01 11

60075 Frankfurt am Main

Telephone (49-69) 71003-0

Facsimile (49-69) 71003-333

Ref

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Table of Content

 

1    Interpretation    1 1.1    Definitions    1 1.2    Schedules etc.    1 1.3
   Headings    1 1.4    German Terms    2 1.5    Interpretation    2 2    Sale
and Assignment of the Shares    2 2.1    Sale of the Shares    2 2.2   
Assignment of the Shares    2 3    Purchase Price    2 3.1    Purchase Price   
2 3.2    Purchase Price Estimates    2 3.3    Due Date for Payment    3 3.4   
Value Added Tax    3 3.5    Adjustment of the Purchase Price    3 3.6    No
Netting against Purchase Price    3 4    Conditions to Closing    4 4.1   
Merger Control Matters    4 4.2    Closing Deliveries    4 4.3    MAC Clause   
5 5    Period until the Closing Date    6 5.1    Change of Business Year and
Termination of Profit Transfer Agreement    6 5.2    Permitted Transactions    6
5.3    UK Pension and Employee Matters    7

 

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5.4    Access    7 6    Closing Statements    7 6.1    Form and Content    7 6.2
   Accounting Policies    7 6.3    Preparation of the Closing Statements    8
6.4    Co operation    9 6.5    Finalisation    9 7    Seller’s Guarantees    9
7.1    Seller’s Capacity    9 7.2    Legal Situation of the Company    9 7.3   
Legal Situation of the Shares    10 7.4    Annual Accounts    10 7.5    Assets
   11 7.6    Real Estate    11 7.7    Intellectual Property Rights and
Proprietary Information    11 7.8    Permits    12 7.9    Employees    12 7.10
   Litigation    13 7.11    Environmental    13 7.12    Product Liability    14
7.13    Contracts    14 7.14    Data Room Disclosure    14 8    Purchaser’s
Guarantees    15 8.1    Purchaser’s Capacity    15 8.2    No Insolvency    15

 

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8.3    Consequences of a Breach    15 9    Legal Consequences    15 9.1   
Exhaustive Provisions    15 9.2    Seller’s Knowledge    15 9.3    Seller’s
Liability    16 9.4    Disclosure    17 9.5    Limitation of Liability    18 9.6
   Time Limitation    18 9.7    Third Party Claims    19 9.8    Guarantee by BBA
Aviation plc    20 10    Tax Indemnities and Tax Refunds    20 10.1    Tax
Indemnity    20 10.2    Tax Refunds    21 10.3    [Intentionally omitted.]    21
10.4    Seller’s Rights of Participation    21 10.5    Tax Filings after the
Closing Date    22 11    Period after Closing    22 11.1    Information and
Documents    22 11.2    Competition Restriction    22 12    Public Announcements
and Confidentiality    23 12.1    Announcements    23 12.2    Confidentiality   
23 13    Miscellaneous Provisions    24 13.1    Interest and Account Details   
24 13.2    Costs    25

 

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13.3    Notices to the Parties    25 13.4    Agents    26 13.5    Assignments   
26 13.6    Disputes    26 13.7    Form of Amendments    27 13.8    Invalid
Provisions    27 13.9    Entire Agreement    27 13.10    Governing Law    27
13.11    Additional Information and Documents    27

 

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Share Purchase Agreement

between:

 

(1) BBA Holding Deutschland GmbH, a company incorporated in Germany whose
registered office is at Rathenaustr. 12, 30175 Hannover (the “Seller”); and

 

(2) Westinghouse Air Brake Technologies Corporation, a Delaware corporation,
whose principal office is at 1001 Air Brake Avenue, Wilmerding, Pennsylvania,
USA, 15148 (the “Purchaser”).

Whereas:

 

(A) BECORIT GmbH (the “Company”) is a limited liability company incorporated
under German law. The Company is registered in the commercial register at the
local court of Recklinghausen under HRB 4250.

 

(B) The Seller is the sole legal and economic owner of all of the shares of the
Company, which include a registered share capital of seven shares of nominal DEM
19,000, DEM 1,000, DEM 30,000, DEM 771,900, DEM 778,100 (the two latter shares
resulting from the split of the former share of nominal DEM 1,550,000), DEM
1,500,000, DEM 400,000, DEM 2,500,000 (collectively, the “Shares”).

 

(C) The Company is active in the production of friction products on its premises
in Recklinghausen, and in the distribution of such products. The Company’s
product portfolio comprises both organic and sintered brake pads and organic
brake blocks which are used on high speed, passenger, freight locomotives and
other railway vehicles. Furthermore, the Company develops and manufactures
special friction materials for the mining industry, cable railways, wind power
turbines and other industrial applications (the “Business”).

 

(D) The Seller wishes to sell the Shares and the Purchaser wishes to purchase
the Shares.

It is agreed as follows:

 

1 Interpretation

In this Agreement including the Preamble, unless the context otherwise requires,
the provisions in this Clause 1 apply:

 

1.1 Definitions

Defined terms shall have the meaning ascribed or referenced to them in
Schedule 1.1.

 

1.2 Schedules etc.

References to this Agreement shall include any Schedules and Exhibits to it and
references to Clauses and Schedules are to Clauses of, and Schedules to, this
Agreement. References to Paragraphs and Parts are to Paragraphs and Parts of the
Schedules. References to this Agreement shall also include any agreements
entered into or to be entered into pursuant to this Agreement.

 

1.3 Headings

The headings in this Agreement shall not affect its interpretation.

 

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1.4 German Terms

Where a German term has been added in parenthesis after an English term, only
such German term shall be decisive for the interpretation of the relevant
English term whenever such English term is used in this Agreement.

 

1.5 Interpretation

All terms used in this Agreement will be construed to be of such gender or
number as the circumstances require. The word “including” shall not limit the
preceding words or terms.

 

2 Sale and Assignment of the Shares

 

2.1 Sale of the Shares

 

  2.1.1 Subject to the terms of this Agreement, the Seller hereby sells the
Shares to Purchaser free and clear of any pledge, collateral, security interest,
special restriction or any other form of security or promise or encumbrances,
and the Purchaser accepts such sale.

 

  2.1.2 The Parties acknowledge that the transfer includes all ancillary rights
out of the Shares other than as described in the following sentence. Subject to
the terms of this Agreement, the Purchaser acknowledges that pursuant to the
Profit Transfer Agreement between the Company and the Seller, all profits or
losses of the Company for the short business year ended 30 November, 2006 will
be transferred to the Seller.

 

2.2 Assignment of the Shares

 

  2.2.1 The Seller hereby assigns (abtreten) the Shares to the Purchaser and the
Purchaser accepts such assignment.

 

  2.2.2 The assignment pursuant to Clause 2.2.1 shall become effective upon the
Closing Date or, if that is later, upon receipt of the Preliminary Purchase
Price on the Seller’s bank account specified in accordance with Clause 13.1.2.

 

3 Purchase Price

 

3.1 Purchase Price

The consideration for the Shares (the “Purchase Price”) shall be an amount equal
to:

 

  3.1.1 EUR 42,500,000 (the “Enterprise Value”),

 

  3.1.2 plus the Cash,

 

  3.1.3 less the Financial Debt,

 

  3.1.4 plus the Working Capital Adjustment,

 

  3.1.5 less the Agreed Pension Deductible.

 

3.2 Purchase Price Estimates

Prior to the date hereof, Seller has provided to Purchaser preliminary versions
of the Cash Statement and the Financial Debt Statement of the Company using
estimated amounts as of November 30, 2006 for the relevant items to be reflected
in such statements. Seller has

 

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calculated such amounts in good faith and provided to Purchaser a summary of the
relevant information underlying the estimates together with such supporting
information as requested by Purchaser, (the amounts reflected as Cash and
Financial Debt, respectively, in such preliminary statements being the
“Estimated Cash” and the “Estimated Financial Debt”).

 

3.3 Due Date for Payment

The Purchase Price shall be due for payment (fällig) as follows:

 

  3.3.1 An amount equal to

 

  (i) the Enterprise Value,

 

  (ii) plus the Estimated Cash,

 

  (iii) less the Estimated Financial Debt,

 

  (iv) less the Agreed Pension Deductible.

(the “Preliminary Purchase Price”) shall be paid by the Purchaser and received
on the bank account of the Seller specified in accordance with Clause 13.1.2 on
the Closing Date after the delivery of the documents referenced in Clause 4.2.

 

  3.3.2 The difference between the Purchase Price and the Preliminary Purchase
Price shall be paid by the Purchaser to the Seller or by the Seller to the
Purchaser, as the case may be, within five Business Days after the Closing
Statements have become final and binding in accordance with Clause 6.5.

 

3.4 Value Added Tax

If and to the extent the transactions contemplated in this Agreement are subject
to VAT, the Purchaser shall pay such VAT in addition to the Purchase Price. The
Seller shall not opt for VAT in respect of the sale of the Shares.

 

3.5 Adjustment of the Purchase Price

If any payment is made by the Seller to the Purchaser or by the Purchaser to the
Seller in respect of any claim for any breach of a Seller’s Guarantee or a
Purchaser’s Guarantee or pursuant to an indemnity obligation or otherwise under
this Agreement, the payment shall be made by way of adjustment of the Purchase
Price paid by the Purchaser for the Shares under this Agreement and the Purchase
Price shall be deemed to have been reduced or increased, as the case may be, by
the amount of such payment.

 

3.6 No Netting against Purchase Price

 

  3.6.1 The Purchaser shall not be entitled to (i) set off any rights and claims
it may have against the Seller’s claim for payment of the Preliminary Purchase
Price or any claims the Seller may have under Clause 3.3.2, or (ii) refuse to
perform its obligation to pay the Preliminary Purchase Price or any obligation
it may have under Clause 3.3.2 on the grounds that it has a right of retention
(Zurückbehaltungsrecht) unless the rights or claims of the Purchaser have been
acknowledged in writing by the Seller or have been confirmed by final decision
of a competent court (Gericht) or arbitration panel (Schiedsgericht) pursuant to
Clause 13.6.

 

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  3.6.2 The Seller shall not be entitled to (i) set off any rights and claims it
may have against any claims the Purchaser may have under Clause 3.3.2, or
(ii) refuse to perform any obligation it may have under Clause 3.3.2 on the
grounds that it has a right of retention (Zurückbehaltungsrecht) unless the
rights or claims of the Seller have been acknowledged in writing by the
Purchaser or have been confirmed by final decision of a competent court
(Gericht) or arbitration panel (Schiedsgericht) pursuant to Clause 13.6.

 

4 Conditions to Closing

 

4.1 Merger Control Matters

 

  4.1.1 The Seller guarantees to the Purchaser that the turnover in Germany of
the Company for each of the fiscal year ended December 31, 2005 and the short
fiscal year ending November 30, 2006 does not reach the threshold pursuant to
sec. 35 para.1 no.2 of the German Act against Constraints of Competition.

 

  4.1.2 The Purchaser guarantees to the Seller that the combined turnover in
Germany of the Purchaser and all entities affiliated with the Purchaser for the
fiscal year ended December 31, 2005 does not reach the threshold pursuant to
sec. 35 para.1 no.2 of the German Act against Constraints of Competition.

 

  4.1.3 Relying on the guarantee from the respective other Party pursuant to
Clause 4.1.1 and 4.1.2 above, each Party acknowledges that notice of the sale
and transfer of the Shares under this Agreement does not have to be filed with
the Federal Cartel Office pursuant to the German Act against Constraints of
Competition.

 

4.2 Closing Deliveries

Purchaser’s obligations to pay the Preliminary Purchase Price in exchange for
the transfer of the Shares under Clause 2.1 and the assignment under Clause 2.2
is subject to the satisfaction of each of the following conditions precedent
(aufschiebende Bedingungen) (the “Closing Conditions”):

 

  4.2.1 The transactions relating to the Profit Transfer Agreement contemplated
under Clause 5.1.1 shall have been completed.

 

  4.2.2 The Permitted Transactions pursuant Clause 5.2.1 to 5.2.2shall have been
completed.

 

  4.2.3 The Seller shall have caused the Company to have completed the
transactions relating to the UK plans as further described in Clause 5.3.

 

  4.2.4 The Seller’s shareholders meeting shall have approved the sale of the
Shares, resolution pursuant to Section 179a German Stock Corporation Act/AktG.

 

  4.2.5 The Seller shall procure that the Company sends a letter to Dr. Y
Badakhsanian stating that the Company fully and finally ceases the business
relationship with immediate effect and that the Agency Agreement dated July 1,
2005 between the Company and Dr. Y Badakhsanian be terminated effective
immediately prior to the Closing Date provided that all cost and consequences
whatsoever relating to the termination shall be borne by Purchaser. Seller shall
procure that the Company sends a letter to the other parties of the Mix
Technology Agreement between the Company, Pars Lent Industrial & Manufacturing
Company dated August 16, 2006 with the aim to terminate such agreement with
effect immediately prior to the Closing Date provided that all cost and
consequences whatsoever shall be borne by Purchaser.

 

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  4.2.6 Seller shall procure that BBA Aviation plc executes and delivers a
guaranty in favour of Purchaser in the form attached as Exhibit A pursuant to
which BBA Aviation plc agrees to guarantee the Seller’s obligations under this
Agreement.

 

  4.2.7 Precautionary ratification (höchst vorsorgliche Genehmigung) by BBA
Overseas Holdings Ltd. of the declarations made by Mr. Rolf Weißenfeld on behalf
and in the former’s name on April 28, 1995 with regard to the subscription of a
new share of nominal DEM 2.5 million in the Company by BBA Overseas Holdings
Ltd., the creation of such share having been resolved as part of the share
capital increase resolved on April 28, 1995 and confirmation by BBA Overseas
Holding Ltd. that such declarations were covered by the relevant power of
attorney dated April 20, 1995.

 

  4.2.8 Precautionary ratification (höchst vorsorgliche Genehmigung) by BBA
Overseas Holdings Ltd. of the declarations made by Mr. Georg Renner on
November 5, 1997 in the name and on behalf of BBA Overseas Holdings Ltd. as to
the transfer and assignment by way of contribution in kind by BBA Overseas
Holdings Ltd. to the Seller of two shares in the Company with nominal amounts of
DEM 2.5 million and DEM 778,100, and as to the transfer and assignment by way of
sale to the Seller of the remaining shares in the Company with the nominal
amounts of DEM 19,000, DEM 1,000, DEM 30,000, DEM 771,900, DEM 1,500,000 and DEM
400,000 (deeds no. Z 835/1997 and Z 836/1997 of the notary public Roger Zätzsch,
in Frankfurt/Main) and confirmation by BBA Overseas Holding Ltd. that such
declarations were covered by the relevant power of attorney dated September 19,
1997.

 

  4.2.9 Precautionary ratification (höchst vorsorgliche Genehmigung) the
declarations made by Mr. Thomas Arntz on November 5, 1997 in the name and on
behalf of Seller as to the transfer and assignment by way of contribution in
kind by BBA Overseas Holdings Ltd. to the Seller of two shares in the Company
with nominal amounts of DEM 2.5 million and DEM 778,100, and as to the transfer
and assignment by way of sale to the Seller of the remaining shares in the
Company with the nominal amounts of DEM 19,000, DEM 1,000, DEM 30,000, DEM
771,900, DEM 1,500,000 and DEM 400,000 (deeds no. Z 835/1997 and Z 836/1997 of
the notary public Roger Zätzsch, in Frankfurt/Main) and confirmation by the
Seller that such declarations were covered by the relevant power of attorney
dated November 5, 1997.

 

4.3 MAC Clause

During the period from the date of this Agreement through to the Closing Date,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the operations of the Company excluding, in any such case, any
event, circumstance or change resulting from:

 

  4.3.1 changes in stock markets, interest rates, exchange rates, commodity
prices or other general economic conditions; or

 

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  4.3.2 changes in conditions generally affecting the industry in which the
Company operates; or

 

  4.3.3 changes in laws, regulations or accounting practices; or

 

  4.3.4 matters previously disclosed to the Purchaser; or

 

  4.3.5 this transaction or the change in control resulting from this
transaction.

 

5 Period until the Closing Date

 

5.1 Change of Business Year and Termination of Profit Transfer Agreement

 

  5.1.1 The Seller shall procure that the Profit Transfer Agreement will be
terminated with effect as of 30 November 2006.

 

  5.1.2 On 24 November 2006, the Company has made a preliminary payment of EUR
2,500,000 to the Seller on the expected profit transfer claim under the Profit
Transfer Agreement for the short fiscal year ending on 30 November 2006.

 

  5.1.3 The Seller shall forward to the Purchaser any payments under the Profit
Transfer Agreement made by the Company to Seller after the Closing Date within
ten Business Days upon receipt thereof. The Purchaser shall pay to the Seller an
amount corresponding to any payments received by the Company from the Seller
under the Profit Transfer Agreement after the Closing Date within ten Business
Days upon receipt thereof by the Company.

 

5.2 Permitted Transactions

The Seller shall procure that the following actions (the “Permitted
Transactions”) will be taken prior to the Closing Date:

 

  5.2.1 the withdrawal from the capital reserves of the Company in the amount of
approximately EUR 56.981.723,08 by way of assignment by the Company to the
Seller of (i) the repayment claim (plus accrued interest) under an inter-company
loan agreement made to the Seller on 13 October 2006 (amounting to EUR 7,247,207
plus accrued interest, ie 7,289,774.93) and (ii) the repayment claim under an
inter-company loan made to the Seller in a total amount of EUR 49,691,948.15
(incl accrued interest);

 

  5.2.2 termination of the cash pool agreement between the Company, the Seller
and Deutsche Bank and of all intra-group agreements, all of which are listed in
Schedule 5.2.2.

The Seller shall ensure that all applicable withholding Tax payments on any
distributions made under Clause 5.2 have been calculated and properly declared
with and paid to the applicable Tax authorities prior to the Closing Date. For
the avoidance of doubt, nothing in this Agreement shall restrict the settlement
of any payment in accordance with this Clause 5.2 by way of set-off or netting
arrangements. Should any of the transactions pursuant to Clauses 5.1 and 5.2
prove not to be in compliance with applicable law, in particular not in line
with Section 30, 31 GmbHG, the Seller undertakes to hold the Company and the
Purchaser free, and indemnify the Company and the Purchaser against any losses
or liability incurred in the context of such transaction.

 

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5.3 UK Pension and Employee Matters

 

  5.3.1 Prior to the Closing Date, the Seller shall procure that the Company
terminates its UK pension plan for all employees of the Company prior to Closing
Date with effect as of 31 December 2006 in full compliance with all applicable
laws including any obligation to consult with the employees concerned. The
Purchaser undertakes with the Seller that all relevant employees who are
currently members of this scheme shall be invited to become members of an
alternative stakeholder pension scheme in the UK with effect on and from
31 December 2006. The Seller shall indemnify the Company and the Purchaser
against: (i) any debt which may be treated as due from the Company to the
trustees of the UK pension plan under section 75 of the Pensions Act 1995; and
(ii) against any contribution notice or financial support direction that may be
issued pursuant to the Pensions Act 2004 in relation to the UK pension plan.

 

  5.3.2 The Parties acknowledge that the salaries of two employees of the
Company are currently paid in GBP currency through a GBP account of an affiliate
of the Seller. The Purchaser is aware that the Seller’s affiliate will not
continue to make such payments after the Closing Date and undertakes with the
Seller that it will procure that these employees continue to be paid in GBP
currency in the UK with immediate effect from Closing.

 

5.4 Access

Between the date of this Agreement and Closing Date Seller shall procure that
the Company affords Purchaser and its employees access upon reasonable notice to
the Company’s management and the Company shall furnish any information regarding
the Company or the Business as the Purchaser may reasonably request.

 

6 Closing Statements

 

6.1 Form and Content

The Purchase Price shall be determined on the basis of the Cash Statement, the
Financial Debt Statement and the Working Capital Statement (collectively the
“Closing Statements”) which shall be prepared in accordance with this Clause 6.

 

6.2 Accounting Policies

 

  6.2.1 The Closing Statements shall be prepared in accordance with

 

  (i) the policies, procedures and practices set forth in this Clause 6.2 and in
Schedule 6.2;

 

  (ii) to the extent not inconsistent with (i), the accounting policies,
procedures and practices adopted in the audited annual accounts of the Company
as of 31 December 2005, applied consistently with past practice and in
accordance with German GAAP; and

 

  (iii) to the extent not inconsistent with (i) and (ii), German GAAP.

 

  6.2.2 The Closing Statements shall be prepared on a going-concern basis
disregarding the transactions contemplated in this Agreement.

 

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6.3 Preparation of the Closing Statements

 

  6.3.1 The Purchaser shall prepare a draft of the Closing Statements (the
“Draft Closing Statements”) and deliver such draft to Seller as promptly as
practicable but no later than 45 Business Days after the Closing Date.

 

  6.3.2 Within 20 Business Days after receipt of the Draft Closing Statements
(“Dispute Period”), the Seller may raise in reasonable detail any objections
against specified items of the Draft Closing Statements which may have an impact
on the Closing Statements, indicating the higher or lower value which in the
Seller’s opinion should be allocated to each item in dispute and to which extent
such higher or lower value affects the Purchase Price (the “Dispute Report”).
The Seller shall be deemed to have agreed with all items and amounts contained
in Draft Closing Statements which are not raised in the Dispute Report. Any item
objected to by the Seller in accordance with the preceding sentences shall
hereinafter be referred to as “Disputed Item”.

 

  6.3.3 The Parties shall use their best efforts to resolve the Disputed Items
within 15 Business Days following the receipt by Purchaser of the Dispute
Report. Any Disputed Items not resolved within such period shall be submitted by
the Parties to an expert arbitrator (Schiedsgutachter, the “Expert”). The
Parties agree that PwC, Frankfurt am Main, should be appointed as Expert. Should
PwC become unavailable, the Parties shall agree on another accounting firm of
international standing to be appointed as Expert. If they cannot reach such
agreement within further 15 Business Days from the expiration of the period set
out in the first sentence of this Clause 6.3.3, either Party shall have the
right to request that an accounting firm of international standing determined by
the Institut der Wirtschaftsprüfer e.V. Düsseldorf, Germany, shall be appointed
as Expert.

 

  6.3.4 The Expert shall determine the Disputed Items and the Purchase Price by
way of a binding expert opinion pursuant to sec. 317 para.1 BGB. In rendering
its decision, the Expert shall, with respect to each Disputed Item, shall stay
within the range of the values allocated to it by the Parties. The Seller and
the Purchaser shall co-operate with the Expert and comply with their reasonable
requests made in connection with the carrying out of their duties under this
Agreement. The Expert shall deliver to Seller and Purchaser as promptly as
practicable its determination of the Disputed Items stating the reasons of its
decision. The reasons shall specifically address the controversial arguments
brought forward by the Parties. Such determination of the accounting firm shall
be final and binding upon the Parties absent manifest mathematical errors; sec.
319 BGB shall apply; however, the Parties shall comply with the Expert’s
determination so long as no deviating court decision is rendered.

 

  6.3.5 The Expert shall decide on the allocation of its fees between the
Parties in accordance with the principles set out in sec. 91 et seq. German
Civil Process Code (Zivilprozessordnung).

 

6.4 Co operation

The Seller and the Purchaser shall co-operate with each other and, if
applicable, with the Expert, as the case may be, with regard to the preparation,
review, agreement or determination of the Closing Statements, subject to
reasonable notice, make available free of charge during normal office hours to
the other Party and its representatives and

 

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accountants and to the Expert all books and records as the other Party or the
Expert may reasonably require. The Purchaser shall procure that the Company
co-operates with the Seller and the Expert as set out in the preceding sentence,
in particular, that the Company assists the Seller in the review of the Draft
Closing Statements as is required to assess and comment the Draft Closing
Statements to the Purchaser within the period set out in Clause 6.3.2.

 

6.5 Finalisation

The Draft Closing Statements shall become final and binding between the Parties
for the purpose of determining the Purchase Price and shall be the Closing
Statements,

 

  6.5.1 if no Dispute Report is issued: upon the expiration of the Dispute
Period or upon earlier confirmation of the Seller of its agreement with the
Draft Closing Statements as submitted by the Seller;

 

  6.5.2 if a Dispute Report is issued but the Parties have resolved all Disputed
Items without involving an Expert: upon such resolution in the form as amended
by such resolution;

 

  6.5.3 if an Expert has been involved: upon determination of all items in
dispute by such Expert in the form of such determination.

 

7 Seller’s Guarantees

The Seller guarantees by way of an independent promise of guarantee
(selbständiges Garantieversprechen) pursuant to § 311 BGB and exclusively with
the remedies pursuant to Clause 9, that the statements set forth in this Clause
7 are true and correct as of the date of this Agreement and as of the Closing
Date.

 

7.1 Seller’s Capacity

The Seller is a duly existing company with limited liability and is entitled to
enter into this Agreement and to perform all of the transactions contemplated by
this Agreement. This Agreement constitutes the legal, valid and binding
obligations of Seller and is enforceable against Seller in accordance with its
terms. Except as set forth on Schedule 7.1, the execution, delivery and
performance of this Agreement will not (with notice or lapse of time or both)
violate, conflict with or result in a breach of (a) the organizational documents
of the Company or (b) any law applicable to the Company or its Business. Except
as set forth on Schedule 7.1, none of the Seller or the Company is required to
give any notice to, make any filing with or obtain any authorization, consent or
approval from any third party or governmental authority to enter into this
Agreement or perform the transactions contemplated by this Agreement.

 

7.2 Legal Situation of the Company

 

  7.2.1 The statements in Recital (A) are correct. The extract from the
commercial register as attached as Schedule 7.2.1 A is complete and correct and
there are no events subject to registration not registered yet. The articles of
association attached as Schedule 7.2.1 B are the actual binding version. The
Company does not hold any interests, stakes, shares or similar participations in
any third parties.

 

  7.2.2 No insolvency or similar proceedings have been opened or applied for by
the Company or, to the Seller’s Knowledge, by any third party in respect of the
Company and the Company is not over-indebted (überschuldet) nor unable to pay
its due debts (zahlungsunfähig).

 

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  7.2.3 Except for the Profit Transfer Agreement which is to take an end as of
30 November 2006, there are no contracts under company law including affiliation
agreements (Unternehmensvertrag) mutatis mutandis sec. 291, 292 AktG between the
Company and third parties including the Seller. The Company has not issued
comfort letters in the favour of any third party including the Seller.

 

  7.2.4 The Company has not granted any guarantees for third parties nor has it
granted securities of any other kind in the favour of third parties.

 

7.3 Legal Situation of the Shares

 

  7.3.1 The statements in Recital (B) in relation to the ownership of the Shares
are correct and the Seller is not subject to any restrictions in respect of the
sale or transfer of the Shares.

 

  7.3.2 The Shares are free of third party rights and no third party has a claim
for granting of such rights or the transfer of the Shares.

 

  7.3.3 The Shares are fully paid up and free of additional payment obligations
(Nachschusspflicht).

 

  7.3.4 The Company has not issued any pre-emption rights or options on the
purchase of shares nor has it assigned, excluded or promised a purchase right
for the purchase of the Shares (Bezugsrecht) or for the entitlement to profit
(Gewinnbezugsrecht).

 

  7.3.5 The Company has not made any payment or has rendered any other benefit
having a monetary value (geldwerter Vorteil) to the Seller or its affiliated
companies (including for the avoidance of doubt as a result of the execution of
the Permitted Transactions), which is necessary for the preservation of the
registered capital pursuant to sec. 30 para 1 GmbHG.

 

7.4 Annual Accounts

 

  7.4.1 The Seller has delivered to the Purchaser the audited annual accounts of
the Company including the audit reports for the financial year ending on
31 December 2005 (the “Annual Accounts”).

 

  7.4.2 The Annual Accounts present a true and fair view of the financial
condition and results of operations in accordance with German GAAP and present a
true and fair view of the assets position (Finanz- und Vermögenslage) and the
profitability (Ertragslage) of the Company in accordance with German GAAP. The
Annual Accounts have been set up with the diligence of a prudent business man
(Sorgfalt eines ordentlichen Kaufmanns) in accordance with German GAAP and the
German Commercial Code.

 

  7.4.3 The Seller has delivered to the Purchaser the unaudited accounts of the
management of the Company for the nine-month-period ending September 30, 2006
(the “Management Interim Accounts”). The Management Interim Accounts have been
prepared consistent in all material respects with the principles and procedures
in accordance with the Company’s past and present practices.

 

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  7.4.4 Since the date of the Annual Accounts, the Business has been conducted
in all material respects only in the ordinary course of business consistent with
past practice. Since the date of the Management Interim Accounts, no event has
occurred or circumstance exists that has resulted in a Material Adverse Effect.

 

7.5 Assets

 

  7.5.1 The Company has ownership of or a right to use all of its material
tangible and intangible assets, which serve its business, with the exception of
assets specified in Schedule 7.5 (together or individually “Assets”). The Assets
owned by the Company are free and clear of any third party charge, claim or
encumbrance subject to customary retention of title or similar rights granted in
the ordinary course of business.

 

  7.5.2 The material tangible Assets which serve the Company’s business are
functioning (subject to normal wear and tear) and are the only tangible assets
necessary to carry on the Business.

 

7.6 Real Estate

 

  7.6.1 Schedule 7.6 contains a complete and correct list of all real estate
owned by the Company (“Real Estate”). The Company has full and unrestricted
ownership and possession of the Real Estate except for those restrictions which
are shown in the excerpts of the land register attached as Schedule 7.6 or any
statutory pre-emption rights or similar restrictions, which are described on
Schedule 7.6. There are no pending applications for registration with the land
register. Except as disclosed under Schedule 7.6, the Real Estate is free and
clear of any mortgage, pledge, lien, encumbrances, easements, pre-emption rights
and other registerable third parties’ rights.

 

  7.6.2 The Company currently holds all necessary building permits for the
existing buildings, and the buildings on the Real Estate were built and are
currently maintained in all material respects, in compliance with any such
building permits. As of the date hereof, the Company has not been notified that
any such building permits have been challenged and/or that any procedure has
been commenced with the purpose to repeal any building permit.

 

  7.6.3 Since the acquisition of the Company’s Business by the Seller in 1997
the Company has not waived any rights that it may have with respect to mining
activities conducted near or under the Real Estate.

 

7.7 Intellectual Property Rights and Proprietary Information

 

  7.7.1 Schedule 7.7.1 lists all patents, patent applications, trademarks,
trademark applications, trade names and trade name applications owned by the
Company, and Schedule 7.7.1 lists each license agreement relating to any IP
Right that is owned by a third party and licensed to Seller (the “IP Rights”).
The IP Rights are in full force and effect and constitute all of the IP Rights
necessary to conduct the Business as it is currently being conducted. Each
license agreement listed on Schedule 7.7.1 is in full force and effect, and the
Company is not in default of any material provision of any such license
agreement. To Seller’s knowledge, no person or entity is interfering with or
infringing any of the IP Rights owned by the Company nor has any person or
entity misappropriated any IP Rights owned by the Company. The Company has
implemented reasonable systems and precautions to protect its know-how and
proprietary information.

 

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  7.7.2 Except as disclosed in Schedule 7.7.2, none of the IP Rights owned by
the Company infringes upon, is in misappropriation of or otherwise conflicts
with any patent, patent application, trademark, trademark application,
copyright, trade secret or other intellectual property right of any third party,
other than infringements, misappropriations or other conflicts which would not
have a material adverse effect on the business or operations of the Company.
Except as disclosed in Schedule 7.7.2 and to the Seller’s knowledge, none of the
IP Rights licensed by the Company infringes upon, is in misappropriation of or
otherwise conflicts with any patent, patent application, trademark, trademark
application, copyright, trade secret or other intellectual property right of any
third party.

 

7.8 Permits

Provided that environmental issues shall be exclusively governed by Clause 7.11,
the Company has all material regulatory permits and concessions necessary for
the operation of its current Business. Except as set forth in Schedule 7.8, the
Company has all material homologations contractually required by its customers
from the Company and which are necessary for the sale and distribution of the
Company’s products as of the date hereof for the products currently sold by the
Company to such customers, in particular Deutsche Bahn AG. All such permits and
homologations are in full force and effect.

 

7.9 Employees

 

  7.9.1 Schedule 7.9.1 contains a true and correct list of all employees,
managing directors and executives of the Company (“Employees”), their salary,
period of notice, additional benefits, special dismissal protection and date of
entry into the Company, weekly working hours and indication of the respective
department for which each of the listed employees is working as of the date of
this Agreement.

 

  7.9.2 Schedule 7.9.2 contains a complete and correct list of all memberships
of the Company in employers’ associations, which enter into collective
bargaining agreements.

 

  7.9.3 Schedule 7.9.3 contains to the Seller’s Knowledge a complete and correct
list of all applicable collective bargaining agreements (Tarifverträge) and
company bargaining agreements (Firmentarifverträge) and all applicable shop
agreements and other agreements with works councils (Betriebsräte).

 

  7.9.4 The Company has paid and discharged to date all salaries, remuneration,
bonuses, and other allowances and compensation due under the Employee Invention
Act (Arbeitnehmererfindungsgesetz), in cash or otherwise, that were due and
payable to its current and past employees.

 

  7.9.5 The Company has complied with any laws and regulations for health and
safety of employees and of plant and equipment, and has complied with any orders
or conditions imposed, or guidelines published, by the Berufsgenossenschaft upon
the Company.

 

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7.10 Litigation

 

  7.10.1 The Company and the Business have been conducted and are currently
being conducted in full compliance with all material laws and other material
administrative decrees and regulatory permits (other than Environmental Permits
which shall be exclusively governed by Clause 7.11) that are applicable to the
Company, the conduct or operation of the Business, the ownership of the assets
and properties of the Company and employment related matters. Neither the Seller
nor the Company has received any notice from any governmental authority
regarding any failure to comply with any applicable law or other material
administrative decrees and regulatory permits applicable to the Company or any
liability on the part of the Company to undertake or bear all or any portion of
any remedial action with respect to any non-compliance.

 

  7.10.2 There are no actions or omissions of the Company that will result in a
third party claim for damages or specific performance (excluding, for the
avoidance of doubt, claims for performance of a contract (Erfüllungsansprüche))
against the Company; provided that the foregoing shall not include any such
claim to the extent it is caused by the announcement or consummation of the
transactions contemplated by this Agreement or any actions or omissions taken by
the Purchaser.

 

  7.10.3 With the exception of the proceedings listed in Schedule 7.10.3 the
Company is not involved in any litigation, arbitration, administrative
proceedings or administrative enquiries, including proceedings initiated by Tax
Authorities. The Company has not received any written notice that any such
proceedings are imminent.

 

  7.10.4 Except as listed in Schedule 7.10.4, neither the Company nor the
Business is subject to or bound by any order, judgment, decree or ruling issued
by any court, arbitrator or other governmental authority which materially
restricts the Company in the operation of the Business.

 

7.11 Environmental

 

  7.11.1 The Company holds in full force and effect all Environmental Permits
required for the operation of its current Business and there are no events or
circumstances which may lead to a revocation, suspension or amendment, in full
or in part, of any Environmental Permit.

 

  7.11.2 The Company has not violated nor is in violation of any requirements of
any Environmental Laws in connection with the conduct of its business or in
connection with the use, maintenance or operation of any real property now or
previously owned, used, leased or operated by it or any appurtenances thereto or
improvements thereon, other than violations which would not have a material
adverse effect on the business, operations, properties, prospects, assets or
condition of the Company. There are no present or past conditions relating to
the Company or relating to any real property now or previously owned, used or
operated by it or improvements thereon or real property previously owned, used
or operated by the Company or its predecessors in title that could lead to any
liability of the Company for violation of any Environmental Laws, other than
liabilities which would not have a material adverse effect on the business,
operations, properties, prospects, assets or condition of the Company. The
Company has not received notice from any authority charged with the enforcement
of Environmental Laws of a violation of any requirements of any Environmental
Laws.

 

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  7.11.3 The Company has not received any notice that any property now or
previously owned, operated or leased by the Company is listed on any list of
sites requiring investigation or cleanup; and no lien has been filed against
either the personal or real property of the Company under any Environmental Law,
or order issued with respect thereto.

 

  7.11.4 Except as disclosed in Schedule 7.11.4, since the Company has been
acquired by the Seller in 1997, it has not produced, distributed or sold any
asbestos containing materials nor has it assumed, voluntarily or otherwise, any
liability for asbestos containing materials from any predecessor company or
other third party.

 

7.12 Product Liability

Except as disclosed under Schedule 7.12, as of the date hereof, (i) no product
liability claims relating to any products of the Company or the Business
exceeding Euro 100,000 in the aggregate are pending, or to the Seller’s
Knowledge, threatened, against the Company, and (ii) the Company has not
received any order from any governmental authority to recall any of the products
manufactured and delivered by the Company in the last 36 months and there is no
pending or to Seller’s knowledge, threatened, investigation by any governmental
authority relating to any of the products manufactured by the Company. By way of
clarification, the claims referred to in this Clause 7.12 would include claims
under the German Produkthaftungsgesetz.

 

7.13 Contracts

 

  7.13.1 The Seller has included in the Data Room all of the material written
contracts and agreements to which the Company is a party and which are material
to the Business (the “Contracts”).

 

  7.13.2 Each Contract is in full force and effect and is enforceable by the
Company in accordance with its terms. The Company has performed in all material
respects the obligations required to be performed by it under each Contract to
which it is a party, except for such failure or failures to perform which would
not have a material adverse effect. To the Seller’s Knowledge, the Company has
not received any notice or default under any Contract to which it is a party,
and the Company has not received any notice that any other party to a Contract
intends to terminate such Contract with or without cause.

 

  7.13.3 As of the Closing Date, the Company does not have any contracts or
agreements in effect which relate to sales or other contracts with Iran, Sudan,
North Korea, Cuba or Syria.

 

7.14 Data Room Disclosure

To the Seller’s Knowledge, the Seller has not failed to disclose to the
Purchaser any fact material to the Company in the Data Room.

 

8 Purchaser’s Guarantees

The Purchaser guarantees by way of an independent promise of guarantee
(selbständiges Garantieversprechen) pursuant to § 311 BGB that the statements
set forth in this Clause 8 are true and correct as of the Closing Date.

 

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8.1 Purchaser’s Capacity

The Purchaser is a duly existing Delaware corporation and is entitled to enter
into the transactions contemplated by this Agreement and to perform all of the
transactions contemplated by this Agreement. All necessary corporate consents
for these transactions have been given. This Agreement constitutes the legal,
valid and binding obligations of Purchaser and is enforceable against Purchaser
in accordance with its terms. Except as set forth on Schedule 8.1, the
execution, delivery and performance of this Agreement will not (with notice or
lapse of time or both) violate, conflict with or result in a breach of (a) the
organizational documents of Purchaser or (b) any law applicable to the Purchaser
or its business. Except as set forth on Schedule 8.1, the Purchaser is not
required to give any notice to, make any filing with or obtain any
authorization, consent or approval from any third party or governmental
authority to enter into this Agreement or perform the transactions contemplated
by this Agreement.

 

8.2 No Insolvency

No insolvency or similar proceedings have been opened or applied for in respect
of the Purchaser and the Purchaser is not over-indebted or unable to pay its due
debts.

 

8.3 Consequences of a Breach

In the event of a breach of any of the Purchaser’s guarantees the statutory
provisions shall apply.

 

9 Legal Consequences

 

9.1 Exhaustive Provisions

Subject to mandatory law, in particular sec. 123 or sec. 276 para. 3 BGB, and
except as set forth in this Clause 9.1, the provisions set forth in Clauses 9.2
to 9.7 shall be exhaustive and shall apply instead and to the exclusion of any
and all remedies available to Purchaser under the law in the event of defects in
quality or title (Sach- oder Rechtsmängel) of the Company. Any further liability
of the Seller and any differing or further rights or claims of the Purchaser –
including without limitation, the right of rescission (Anfechtung) or withdrawal
(Rücktritt) – arising from or in connection with defects in quality or title,
from incorrectness and violation of any of the Seller’s Guarantees, guarantees
or from the breach of any contractual or pre-contractual obligation shall be
excluded. This Clause 9.1 shall not, however, apply to any breaches of Clause
11.2 or to claims under any indemnity pursuant to Clause 4.1, and in the event
of a breach of Clause 11.2, Purchaser or the Company shall have any remedies
available under applicable law.

 

9.2 Seller’s Knowledge

To the extent that the Seller’s Guarantees are restricted to “Seller’s
Knowledge”, this shall mean that none of the persons listed in Schedule 9.2 has
positive knowledge or cogent reasons to believe (Kennen oder Kennenmüssen) that
the statement concerned was incorrect, had it been made without the restriction.

 

9.3 Seller’s Liability

 

  9.3.1

Seller shall indemnify and hold harmless Purchaser against and from any and all
costs, losses, penalties, fines, damages, liabilities and expenses (including
reasonable accountant’s and attorney’s fees and expenses) (“Losses”) incurred or

 

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suffered by Purchaser arising out of or relating to (i) any third party claims
arising out of or related to any use, on or prior to the Closing Date, of
asbestos by the Company or the Business or of any entity that was an affiliate
or predecessor of the Company prior to the Closing Date (including without
limitation, products liability claims and premises liability claims made by any
persons), and (ii) any Losses arising out or related to the TMD Agreement. By
way of clarification, any Losses relating to Taxes shall be addressed solely
under Clause 10.

 

  9.3.2 The Purchaser shall notify the Seller without undue delay and in any
event within 20 Business Days after having positive knowledge (positive
Kenntnis) of any claim for breach of a Seller’s Guarantee or of a Seller’s
covenant (ie claims under Clause 9.3.3) or for indemnity pursuant to Clauses
9.3.1 or 10 (the “Claim Notice”). The Claim Notice shall describe the claim and
the underlying facts in reasonable detail and shall, to the extent possible,
specify the amount of the estimated damage.

 

  9.3.3 If (i) a Seller’s Guarantee is incorrect in whole or in part or (ii) the
Seller is in breach of any covenant (in whole or in part) contained in this
Agreement, the Seller shall be liable to put the Company in the position which
would have existed had the Seller’s Guarantee been correct or the covenant had
not been breached (Naturalrestitution). If the Seller has not remedied the
breach of the Seller’s Guarantee or of the Seller’s covenant within a reasonable
period of time (which shall be in any event, no more than 40 Business Days after
receipt of the Claim Notice), the Seller shall be obliged to pay to the
Purchaser the amount of any Losses that would be necessary to put the Company,
or at the election of the Purchaser, the Purchaser in the position in which the
Company or the Purchaser, respectively, would be in had the Seller’s Guarantee
been correct or the Seller’s covenant not been breached.

 

  9.3.4 In respect of the scope of Seller’s liability the following shall apply:

 

  (i) Seller shall not be liable for indirect damages or consequential losses
(including loss of profits) provided, however, that Seller shall be liable for
all Losses arising out or relating to third party claims subject to Clauses
7.7.2, 7.10.2, 7.12, 9.3.1 (i) and 9.3.1 (ii) including any indirect damages or
consequential losses related to any third party claims covered by that Clause.

 

  (ii) Seller shall only be liable to the extent the event causing the damage
has not been taken into account in the Annual Accounts or the Closing
Statements.

 

  (iii) Seller shall not be liable to the extent:

 

  (a) the Purchaser’s claim results from or is increased as a consequence of the
passing or change of any law, statute, ordinance, rule, regulation, or
administrative practice of any government, governmental department, agency or
regulatory body after the Closing Date including (without prejudice to the
generality of the foregoing) any increase in the rates of taxation or any
imposition of taxation or any withdrawal of relief from taxation not actually
(or prospectively) in effect at the Closing Date;

 

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  (b) the damage is paid by an insurance held by the Company or the Purchaser in
which event the Seller shall be liable for increases in insurance premiums;
provided that the Purchaser shall procure that unpaid insurance claims are
assigned to the Seller (subject in all respects to Clause 9.7);

 

  (c) the damage is paid from a third party; or

 

  (d) the damage or liability occurs or is increased due to the fact that the
Purchaser has not timely sent a Claim Notice in accordance with Clause 9.3.2,
but only to the extent of such increase.

 

  9.3.5 For the avoidance of doubt, sec. 254 BGB (mitigation of damages) shall
apply.

 

  9.3.6 Where one and the same set of facts (Sachverhalt) qualifies under more
than one provision entitling Purchaser to a claim or remedy under this
Agreement, there shall be only one claim or remedy. In particular, the foregoing
shall apply if one and the same set of facts (Sachverhalt) qualifies under more
than one of the Seller’s Guarantees. If however the same set of facts entails
several damages or losses, each of such losses can be claimed (but in not event
one and the same damage can be claimed twice).

 

9.4 Disclosure

 

  9.4.1 The Purchaser has conducted its due diligence review of the Company
through the disclosure of information included in the Data Room.

 

  9.4.2 The Purchaser’s right to indemnification or other remedy based on a
claim that any of Seller’s Guarantees under Clauses 7.1, 7.2, 7.3, 7.6, 7.7.2,
7.10 and 7.12 (the “Scheduled Seller’s Guarantees”) are incorrect shall not be
excluded or otherwise limited by Seller’s disclosure of any facts outside this
Agreement (including disclosure through the Data Room). The Purchaser’s right to
indemnification or other remedy based on a claim relating to any of Seller’s
Guarantees under any of the Scheduled Seller’s Guarantees listed above will only
be excluded or limited to the extent that the Seller expressly included specific
disclosures which limit or otherwise qualify any of Seller’s Guarantees under
any of the Scheduled Seller’s Guarantees or in a schedule to which a Scheduled
Seller’s Guarantee expressly refers.

 

  9.4.3 Any liability of the Seller in relation to the Seller’s Guarantees under
Clauses 7.4, 7.5, 7.7.1, 7.8, 7.9, 7.11 and 7.13 shall be excluded if the
information or facts giving rise to the relevant claim were known or could have
been known by the Purchaser or by any of the respective employees or agents or
financial, accounting, legal or other advisers involved in the acquisition of
the Shares. The Purchaser acknowledges that the information and facts that
Seller has made available to the Purchaser and its advisers in the Data Room are
known or could be known by the Purchaser.

 

  9.4.4 The Purchaser has no actual knowledge of any breach by the Seller of any
Seller Guarantee in this Agreement based on the actual knowledge of Tony
Carpani, Mark Cox, Keith Hildum and David Seitz after reasonable due inquiry
with the Purchaser’s advisors.

 

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9.5 Limitation of Liability

 

  9.5.1 The Seller shall only be liable for claims for breach of a Seller’s
Guarantee if:

 

  (i) the individual claim exceeds an amount of EUR 50,000; and

 

  (ii) the aggregate amount of the claims exceeding the threshold in (i) above
exceeds EUR 500,000 in which event, the Purchaser shall have the right to seek
recovery of all such claims in excess of the first EUR 500,000.

 

  9.5.2 Except as provided in this Clause 9.5.2, the Seller’s liability under
this Agreement shall be limited to a maximum amount of 30% of the Purchase
Price. With respect to any Losses under Clause 9.3.1(i), the Seller’s liability
shall be limited to EUR 60,000,000 (in words: Euro sixty million). With respect
to any Losses arising out of a breach of any Seller’s Guarantee relating to
title or ownership of the Shares set forth in Clause 7.1, 7.2 or 7.3 or any
Losses under Clause 9.3.1(ii) or any Losses or other amounts payable under
Clauses 10 or 4.3 or any Losses arising out of fraud or wilful misconduct or any
payments in relation to the Profit Transfer Agreement, the Seller’s liability
shall not be limited in any respect.

 

9.6 Time Limitation

 

  The claims of the Parties under this Agreement shall become time-barred as
follows:

 

  9.6.1 Claims arising from a breach of a Seller’s Guarantee pursuant to Clauses
7.1, 7.2 or 7.3 shall become time-barred fifteen (15) years after the Closing
Date.

 

  9.6.2 Claims arising under Clause 9.3.1 (ii) shall not be time-barred.

 

  9.6.3 Claims of the Purchaser arising from indemnities in connection with
Clauses 5.1, 5.2 or 10 shall become time-barred after the later of the
expiration of the applicable statute of limitations relating to such matters or
six months after the final and binding Tax assessment for the respective Tax.

 

  9.6.4 Claims of the Purchaser arising from a breach of Seller’s Guarantee
pursuant to Clause 7.10.2 shall become time-barred after 14 months from the
Closing Date.

 

  9.6.5 Claims of the Purchaser arising from a breach of a Seller’s Guarantee
pursuant to Clause 7.11 shall become time-barred after 6 years from the Closing
Date.

 

  9.6.6 Claims of the Purchaser pursuant to Clause 9.3.1(i) in relation to the
use of asbestos shall become time-barred after 30 years from the Closing Date.

 

  9.6.7 All other claims of the Purchaser arising from this Agreement shall
become time-barred after 24 months from the Closing Date. Sec. 203 BGB shall not
apply.

 

  9.6.8 Claims of the Seller pursuant to Clause 10.2 shall become time-barred
six months after the Seller has received a written notice from the Purchaser in
respect of the receipt of the Tax refund, Tax allowance or the final and binding
assessment for the respective Tax.

 

9.7 Third Party Claims

In the event a third party asserts a claim or files a law suit against the
Purchaser and/or Company (“Defendant”) in connection with a situation, for which
the Seller could be liable under this Agreement (“Third Party Claim”), the
Purchaser shall make available to the Seller without undue delay and in no event
later than ten Business Days after the assertion or filing of the Third Party
Claim a copy of the Third Party Claim and of all time-sensitive documents, and
the following shall apply:

 

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  9.7.1 Seller shall have the right to participate in the defence against the
Third Party Claim at its own costs if and to the extent the Seller notifies the
Purchaser that the Seller wishes to participate in the defence of the claim. In
such event, Purchaser shall procure that the Seller gets the opportunity to
participate in such defence and defend the Defendant against the Third Party
Claim. Save for Third Party Claims relating to IP Rights, as an alternative to a
mere participation, the Seller shall have the right to control the defence of
any Third Party Claim at its own costs so long as Purchaser shall have the right
to participate at Purchaser’s own cost. In the event that Seller assumes control
over the defence of a Third Party Claim, the Purchaser shall procure that the
Defendant gives to the Seller all such assistance as the Seller may reasonably
require and shall appoint such legal and other professional advisors as the
Seller may nominate to act on behalf of the Defendant in accordance with
Seller’s instructions.

 

  9.7.2 Purchaser shall procure that the Defendant will fully co-operate with
the Seller in view of the defence of the Third Party Claim, provide the Seller
and its representatives (including, for the avoidance of doubt, its advisors)
access to all relevant business records and documents upon reasonable advance
notice and permit the Seller and its representatives to consult and meet with
the employees and advisors of the Purchaser and the directors, employees and
advisors of the Company as may be reasonably requested with advance notice. On
the written request of the Seller, the Purchaser shall procure that the
employees of the Purchaser and/or the directors and employees of the Company are
made available to the Seller and its advisors as may be reasonably requested
with advance notice and will cooperate with the Seller in order to participate
in any actions or proceedings relating to the Third Party Claim including,
without limitation, attending in person any court hearing as a witness in such
proceedings. Seller shall not settle or otherwise compromise a Third Party Claim
without Purchaser’s prior written consent if such settlement or compromise would
reasonably be expected to adversely affect the Purchaser, the Company or the
Business, such consent not to be unreasonably withheld or delayed.

 

  9.7.3 If and for as long as the Seller fails to notify the Purchaser after
receipt of the Claim Notice in relation to the Third Party Claim that the Seller
wishes to participate in or control the defence of the claim, the Purchaser
shall duly defend the Third Party Claim to the best of its ability, shall keep
the Seller regularly informed about the status of the claim and duly take into
account any requests of the Seller regarding the defence of the Third Party
Claim. Any acknowledgement or settlement of any Third Party Claim shall require
the Seller’s prior written consent, which shall not be unreasonably withheld or
delayed. The Seller shall only be liable to reimburse the Purchaser to the
extent that costs are reasonably and properly incurred by the Purchaser in
relation to the defence of a Third Party Claim.

 

  9.7.4 To the extent the Purchaser does not comply in all material respects
with its co-operation obligations pursuant to this Clause 9.7, the Seller shall
not be liable in relation to the Third Party Claim, unless such failure by the
Purchaser did not have any impact on the amount claimed by the Purchaser under
this Agreement.

 

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9.8 Guarantee by BBA Aviation plc

At the Closing, Seller shall procure BBA Aviation plc, its ultimate parent, to
execute and deliver to Purchaser a guarantee in favour of Purchaser in the form
attached hereto as Exhibit A.

 

10 Tax Indemnities and Tax Refunds

 

10.1 Tax Indemnity

 

  10.1.1 The Seller shall pay to the Purchaser the amount which is necessary to
hold the Company harmless of any and all due and payable Taxes (together with
any related interest or penalties related to such Taxes), which are finally and
bindingly assessed (bestandskräftig festgesetzt) at the level of the Company and
relate to periods ending on or before the Closing Date. Payments according to
this Clause shall be due fifteen Business Days after the final and binding
assessment of the Taxes. Seller shall also indemnify and hold the Company and
the Purchaser harmless for any secondary liability under the German Tax Code
(Abgabenordnung) of the Company or the Purchaser incurred after the Closing Date
that relates to any group fiscal unity plans or arrangements (including the
Profit Transfer Agreement or similar agreements) adopted by Seller and its
Affiliates in which the Company participated prior to the Closing Date.

 

  10.1.2 Seller is under no obligation to indemnify Purchaser for the amount of
any Taxes (together with any related interest or penalties related to such
Taxes) which:

 

  (i) are shown or provided for in the Closing Statements (i) as Tax liabilities
(Steuerverbindlichkeiten), (ii) as Tax accruals (Steuerrückstellungen) or
(iii) as part of the other accruals (sonstige Rückstellungen) for potential Tax
liabilities, if any, to the extent that such Taxes (together with any related
interest or penalties related to such Taxes) are covered by such liabilities or
accruals shown or provided for the in the Closing Statement;

 

  (ii) are the result of a retroactive reorganisation of the Company, of a late
finalisation of the statutory accounts of the Company, or of not paying any
amounts owed under the Profit Transfer Agreement when due, initiated or omitted
by or under the ownership of the Purchaser;

 

  (iii) relate to income that can be offset by Purchaser or the Company against
Tax loss carry-backs or Tax loss carry-forwards that are available directly as a
result of subsequent Tax audits with respect to periods ending on or before the
Closing Date); or

 

  (iv) arise or are increased as a result of the failure or omission of (i) the
Company or (ii) the Purchaser or (iii) any of the Affiliates of Purchaser to
make any valid claim, election, surrender, disclaimer, to give any valid notice,
consent or to do anything else under the provisions of any enactment or
regulation relating to Tax after the Closing Date.

 

10.2 Tax Refunds

 

  10.2.1

The Purchaser shall be obliged to reimburse the Seller for any Tax refunds or
Tax allowances received by the Company and relate to periods ending on or before
the Closing Date. This shall apply irrespective of whether the Tax refunds or
Tax

 

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allowances are settled by actual payment or by set-off with Tax liabilities
relating to periods beginning after the Closing Date. The Purchaser has no
obligation to reimburse any Tax Refund received by the Purchaser for which Tax
receivables (Steuerforderungen) have been recorded in the Closing Statements. By
way of clarification, the Purchaser shall not be required to reimburse Seller
any Tax refunds or allowances that are set-off against Tax liabilities relating
to periods ending on or before the Closing Date that are not shown or provided
for as liabilities or complete and accurate accruals in the Closing Statements.

 

  10.2.2 Payments pursuant to Clause 10.2.1 shall be due fifteen Business Days
after the actual payment of the Tax refund to the Company and/or in case of a
set-off with Tax liabilities relating to periods ending on or before the Closing
Date fifteen Business Days after the declaration of the set-off.

 

10.3 [Intentionally omitted.]

 

10.4 Seller’s Rights of Participation

 

  10.4.1 The Purchaser will ensure, that the Seller or a representative of the
Seller, who is bound to secrecy by professional code (“Seller’s
Representative”), will be informed without undue delay (and in no event later
than within 10 Business Days) by the Company of any notices in respect of the
execution of a Tax audit and similar audits of Tax Authorities as well as on the
issue of a Tax assessment or a similar measure of Tax Authorities for periods
ending on or before the Termination Date. Such Tax audits and similar audits of
Tax Authorities are hereinafter referred to as “Tax Audits”; such tax
assessments and such measures of Tax Authorities are hereinafter referred to as
“Tax Measures”.

 

  10.4.2 The Seller and/or the Seller’s Representatives are entitled to
participate at the Seller’s costs in Tax Audits including final meetings – to
the extent legally permissible—and/or proceedings in respect of Tax Measures. If
and to the extent the Seller or the Seller’s Representatives do not participate
in Tax Audits and/or proceedings in respect of Tax Measures, the Purchaser will
ensure that the Seller or the Seller’s Representative will be informed of the
ongoing process of the Tax Audits and/or Tax Measures and that they will be
given the opportunity to discuss all material measures of the Company in
connection with the Tax Audits and/or Tax Measures with the Company. Any
acknowledgement or settlement during or at the end of a Tax Audit or Tax Measure
require the prior written consent of the Seller, which shall not be unreasonably
withheld.

 

  10.4.3 Upon the Seller’s request the Purchaser will procure that the Company
will pursuant to the Seller’s instruction file, withdraw or amend legal remedies
in respect of Tax assessments relating to periods ending on or before the
Closing Date, which have been amended due to Tax Audits, and/or in respect of
Tax Measures, subject to the review and approval of the Purchaser (which may not
be unreasonably withheld). Seller shall bear all reasonable costs of the Company
and/or of the Purchaser in connection with the filing, withdrawal or amendments
of legal remedies upon the Seller’s request.

 

  10.4.4 In the event the Purchaser does not or not in due time fulfil its
material obligations pursuant to Clauses 10.4.1 to 10.4.3 the Seller shall not
be obliged to indemnify the Purchaser.

 

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10.5 Tax Filings after the Closing Date

Seller shall prepare and make, or request the Company to prepare and make any
Tax filings for periods ending on or prior to the Closing Date, subject to the
review and approval of the Purchaser (which may not be unreasonably withheld).
Tax filings for periods including the period ending on Closing Date shall be
prepared on a basis consistent with those prepared for prior tax assessment
periods, provided that such basis is in accordance with the applicable Tax laws
as well as the published views of the Tax Authorities. The Seller shall ensure
that any Tax filing to be made by the Seller and to be reviewed and approved by
the Purchaser will be furnished to the Purchaser no later than 30 days prior to
the due date of such Tax filing. If the due date of any Tax filing is earlier
than 30 days after the Closing Date, such Tax filing shall be furnished to the
Purchaser as soon as practicable.

 

11 Period after Closing

 

11.1 Information and Documents

For a period of seven years after the Closing Date, the Seller and their
representatives shall have reasonable access at the Seller’s expense to the
books and records of the Company with respect to periods prior to the Closing
Date to the extent that such access may reasonably be required by the Seller in
connection with matters relating to the operations of the Business prior to the
Closing Date. The Purchaser shall afford such access upon receipt of reasonable
advance notice and during normal business hours. If the Purchaser or the Company
desires to dispose of any of such books and records prior to the expiration of
the aforementioned period or in the event that Purchaser intends to sell the
stock of the Company, the Purchaser shall prior to such disposition give the
Seller reasonable opportunity to, at the Seller’s expense, make a copy of such
books and records as the Seller may elect.

 

11.2 Competition Restriction

During a period of three years after the Closing Date, none of the Seller or its
affiliates shall (i) in any country listed on Schedule 11.2 directly or
indirectly carry on, be or become engaged in or be or become commercially
interested in any business which is in competition with the current business
activities of the Company, (ii) solicit the employment or services of
individuals who have been manager or employees of the Company prior to the
Closing Date unless the employment of such manager or employee has been
terminated by the Company or (iii) solicit the business of any person or entity
that is a customer or a supplier of the Company (if such solicitation is in
competition with the Business) or cause any customer or supplier to cease doing
business with the Company. Notwithstanding the foregoing, Seller and its
Affiliates shall be permitted to acquire (directly or indirectly) any entity
that is not primarily engaged in a business that is in competition with the
current business activities of the Company but that is engaged in part in a
business in competition with the current business activities of the Company so
long as no more than Euro 10 million in annual sales of such entity are
attributable to that competing business. In such event, Seller shall give
Purchaser written notice of any such transaction, which notice shall describe in
reasonable detail the overall transaction and the competitive business being
purchased by Seller or its Affiliates. If Seller intends to acquire (directly or
indirectly) any entity that is not primarily engaged in a business that is in
competition with the current business activities of the Company but that has
more than Euro 10 million in annual sales which are attributable to a competing
business, Seller and Purchaser shall

 

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discuss in good faith whether Purchaser shall grant consent to such acquisition
and whether such consent shall only be granted subject to any special
restrictions or obligations imposed on the Seller or its Affiliates in relation
to the competing business.

 

12 Public Announcements and Confidentiality

 

12.1 Announcements

No press or similar announcement in connection with the existence or the subject
matter of this Agreement shall be made or issued by or on behalf of Seller,
Purchaser, any of their Affiliates or the Company without the prior approval of
the Seller and the Purchaser. This shall not affect any announcement required by
law or any regulatory body or the rules of any recognised stock exchange on
which the shares of either Party are listed but the Party with an obligation to
make an announcement (or the Party whose Affiliate is under such obligation)
shall consult with the other Party or its Affiliates as soon as reasonably
practicable. The restrictions set forth in this Clause 12.1 shall terminate six
months after the Closing Date.

 

12.2 Confidentiality

 

  12.2.1 The confidentiality agreement between the Seller and the Purchaser
dated 6 July 2006 shall cease to have effect from the Closing Date.

 

  12.2.2 Each of the Seller and the Purchaser shall treat as strictly
confidential and not disclose or use any information received or obtained as a
result of or in connection with the entering into this Agreement which relates
to the existence and the provisions of this Agreement or to the negotiations
relating to this Agreement, including any information about the Seller, the
Purchaser or any of its Affiliates including the Company.

 

  12.2.3 This Agreement shall not prohibit disclosure or use of any information
if and to the extent:

 

  (i) the disclosure or use is required by law, any regulatory body or any
recognised stock exchange on which the shares of the Seller or the Purchaser or
any of their Affiliates are listed;

 

  (ii) the disclosure or use is required for the purpose of any judicial
proceedings arising out of this Agreement or any other agreement entered into
under or pursuant to this Agreement or the disclosure is made to a Tax Authority
in connection with the Tax affairs of the disclosing Party;

 

  (iii) the disclosure is made to professional advisers or actual or potential
financiers of any Party on a need to know basis and on terms that such
professional advisers or actual or potential financiers undertake to comply with
the confidentiality obligations set out in this Agreement in respect of such
information as if they were a party to this Agreement or are subject to a
confidentiality obligation by law;

 

  (iv) the disclosure is made to an Affiliate of any party provided that the
disclosing Party shall procure that the respective Affiliate complies with the
confidentiality obligations set out in this Agreement in respect of such
information as if they were a party to this Agreement;

 

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  (v) the information is or becomes publicly available (other than by breach of
this Agreement or any other confidentiality agreement between the Parties);

 

  (vi) the other Party has given prior approval to the disclosure or use; or

 

  (vii) the information can be shown by a Party through written documentation to
have been independently developed by such Party;

provided that prior to disclosure or use of any information pursuant to
Clause 12.2.3 (i) or (ii), the Party concerned shall notify the other Party in
advance of such requirement with a view, if possible, to providing that other
Party with the opportunity to contest such disclosure or use or otherwise to
agree the timing and content of such disclosure or use.

 

13 Miscellaneous Provisions

 

13.1 Interest and Account Details

 

  13.1.1 Except as explicitly provided otherwise in this Agreement, to the
extent any payment claims which are due for payment (fällig) under this
Agreement are not paid on the respective due date, the outstanding amounts shall
bear interest of 8% (including the due date and the date of actual payment). The
interest shall be paid together with the outstanding amount to which it relates.

 

  13.1.2 All payments to be made under this Agreement shall be made,

 

  (i) if to the Seller, to the following bank account or to any account notified
in writing by the Seller to the Purchaser not later than 10 Business Days prior
to the respective payment:

 

Correspondent Bank:

   Barclays Bank , London

SWIFT:

   BARCGB22

Bank:

   Barclays Bank, London

Beneficiary:

   BBA Aviation plc

Account No:

   64752644

Currency of Account:

   Euros

IBAN:

   GB74BARC20000064752644

 

  (ii) if to the Purchaser, to the following bank account or to any account
notified in writing by the Purchaser to the Seller not later than 10 Business
Days prior to the respective payment:

 

Account owner:

  

Bank:

  

Bank code:

  

SORT/ABA/SWIFT:

  

Account Name:

  

Account Number:

  

 

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13.2 Costs

Each Party shall bear all costs incurred by it in connection with the
preparation, negotiation and execution of this Agreement by itself. Unless
explicitly set forth otherwise in this Agreement, the notarial fees and all
registration and transfer taxes (including real estate transfer tax
(Grunderwerbsteuer)) and duties that are payable as a result of the transactions
contemplated in this Agreement shall be borne by the Purchaser.

 

13.3 Notices to the Parties

 

  13.3.1 Any notice or other communication in connection with this Agreement
(each, a “Notice”) shall be:

 

  (i) in English language;

 

  (ii) in writing delivered by hand, registered post or by courier using an
internationally recognised courier company or by fax.

 

  13.3.2 A Notice to the Seller shall be sent to the following address, or such
other person or address as the Seller may notify to the Purchaser from time to
time:

Company Secretary

BBA Aviation plc

7th Floor, 20 Balderton St

London W1K 6TL United Kingdom

Facsimile: +44 20 7408 2318

with a courtesy copy to

Linklaters

FAO Andreas Kurtze

Mainzer Landstr. 16

60325 Frankfurt am Main

Germany

Facsimile: +49 69 71003 333.

 

  13.3.3 A Notice to the Purchaser shall be sent to the following address, or
such other person or address as the Purchaser may notify to the Seller from time
to time:

Westinghouse Air Brake Technologies Corporation

Attention Legal Department

1001 Air Brake Avenue

Wilmerding, Pennsylvania USA 15148

Facsimile: (412) 825-1305

with a courtesy copy to

Reed Smith LLP

Attention David L. DeNinno

435 Sixth Avenue

Pittsburgh, Pennsylvania USA 15219

Facsimile: (412) 288-3063

 

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  13.3.4 A Notice shall be effective upon receipt (Zugang). Receipt shall be
deemed to have occurred:

 

  (i) at delivery, if delivered by hand, registered post or courier;

 

  (ii) at transmission, if delivered by fax, provided that the person sending
the facsimile shall have received a transmission receipt confirming a successful
transmission thereof.

 

13.4 Agents

Each party is solely responsible for its obligations towards agents under
contracts entered into by such party because of transactions contemplated in
this Agreement.

 

13.5 Assignments

The Seller shall be free to assign and transfer, in whole or in part, this
Agreement and any rights and obligations hereunder to any of its Affiliates
without the consent of the Purchaser or the Company. Otherwise, this Agreement
and any rights and obligations hereunder may not be assigned and transferred, in
whole or in part, without the prior written consent of the other Parties hereto
such consent not to be unreasonably withheld. The Seller hereby consents to the
assignment of the Purchaser’s expectancy right (Anwartschaftsrecht) in relation
to the assignment of the Shares to a direct or indirect wholly-owned subsidiary
of the Purchaser. All assignments and transfers of rights and obligations
hereunder shall be notified to the other Party without undue delay.

 

13.6 Disputes

 

  13.6.1 Any dispute arising from or in connection with this Agreement and its
consummation shall be finally settled by three arbitrators in accordance with
the arbitration rules of the German Institution of Arbitration (Deutsche
Institution für Schiedsgerichtsbarkeit e.V.) without recourse to the courts of
law. The current version of the arbitration rules of the German Institution of
Arbitration shall be stipulated in accordance with sec. 317 para. 1 BGB by the
German Institution of Arbitration upon request of either of the Parties. The
venue of the arbitration shall be Frankfurt am Main, Germany. The language of
the arbitral proceedings shall be English, provided however, that the Parties
shall be entitled to submit written evidence in the German language.

 

  13.6.2 In the event mandatory applicable law requires any matter arising from
or in connection with this Agreement and its consummation to be decided upon by
a court of law, the competent courts in and for Frankfurt am Main, Germany,
shall have the jurisdiction thereupon.

 

13.7 Form of Amendments

Any amendment or supplement to or modification or termination of this Agreement,
including this provision, shall be valid only if made in writing (Schriftform),
except where a stricter form (e.g. notarisation) is required under applicable
law. Any waiver, permit, consent and approval under this Agreement must be made
expressly and in writing (Schriftform).

 

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13.8 Invalid Provisions

Should any provision of this Agreement be deemed or held to be wholly or partly
invalid, ineffective or unenforceable, this shall not affect the validity,
effectiveness or enforceability of the remainder hereof. Any such invalid,
ineffective or unenforceable provision shall, to the extent permitted by law, be
deemed replaced by such valid, effective and enforceable provision as comes
closest to the economic intent and purpose of such invalid, ineffective or
unenforceable provision. The aforesaid shall apply mutatis mutandis to any gap
in this Agreement.

 

13.9 Entire Agreement

This Agreement constitutes the entire agreement among and between the Parties
with respect to the subject matter hereof and shall substitute and supersede any
negotiations and understandings, oral or written, heretofore made between the
Parties with respect to the subject matter hereof (unless otherwise explicitly
set out in this Agreement). Side agreements to this Agreement do not exist.

 

13.10 Governing Law

This Agreement shall be governed by and construed in accordance with German law.

 

13.11 Additional Information and Documents

Seller and Purchaser shall, on request, on and after the Closing Date, cooperate
with one another by providing any additional information, executing and
delivering any additional documents and/or instruments and doing any and all
such other things as may be necessary for the Parties or their counsels to
consummate or otherwise implement the transactions contemplated in this
Agreement.

 

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Schedule 1.1

Definitions

“Affiliate” shall mean any affiliated company (verbundene Unternehmen) in the
meaning of sec. 15 et seq. German Stock Corporation Act (Aktiengesetz), provided
that for the purposes of this Agreement, the Company shall neither be deemed to
be a Seller’s Affiliate nor a Purchaser’s Affiliate.

“Agreed Pension Deductible” shall be an amount of EUR 2,783,000.

“Agreement” shall mean this agreement.

“Annual Accounts” shall have the meaning set out in Clause 7.4.1.

“BGB” shall mean the German Civil Code (Bürgerliches Gesetzbuch).

“Business” shall have the meaning set out in Recital (C).

“Business Day” shall mean a day on which banks are generally open for business
in Frankfurt am Main, Germany.

“Cash” shall mean the aggregated nominal amount of the items of cash and cash
equivalents of the Company reflected in the Cash Statement.

“Cash Statement” shall mean a statement substantially in the format as
Schedule 6.1 Part A (but applying actual figures as of the Closing Date) showing
the following items of cash and cash equivalents existing at the Company as of
the Closing Date (after taking into account transactions contemplated in Clause
5.1.1 and 5.1.2 and the Permitted Transactions under Clause 5.2):

 

(i) cash at hand (Kassenbestand);

 

(ii) cash at national banks (Guthaben bei Staatsbanken) and cash at banks
(Guthaben bei Kreditinstituten);

 

(iii) cheques (Schecks); and

 

(iv) bills of exchange (Wechsel).

“Claim Notice” shall have the meaning set out in Clause 9.3.1.

“Closing Date” shall be 30 November 2006, 24.00 hrs CET/1 December 2006, 0.00
hrs CET.

“Closing Statements” shall have the meaning set out in Clause 6.1.

“Company” shall have the meaning set out in Recital (A).

“Data Room” means an “electronic data room” provided by Merrill Corporation and
accessible for the Purchaser from 10 August until 22 November 2006 a copy of
which has been given to each of the Seller and the Purchaser on non-rewritable
DVD including, for the avoidance of doubt, the answers and information provided
in response to the questions raised by the Purchaser as attached as
Schedule 1.1DR.

“Defendant” shall have the meaning set out in Clause 9.7.

“Dispute Period” shall have the meaning set out in Clause 6.3.2.

“Dispute Report” shall have the meaning set out in Clause 6.3.2.

“Disputed Item” shall have the meaning set out in Clause 6.3.2.

“Employees” shall have the meaning set out in Clause 7.9.1.

 

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“Enterprise Value” shall have the meaning set out in Clause 3.1.1.

“Environmental Law” shall mean the legal provisions or other governmental
regulations for the protection of the environment applicable from time to time
up to the Closing Date in the form as applied by the respective competent
authority.

“Environmental Permit” means any licence, approval, authorisation, permission,
agreement or exemption granted under Environmental Law.

“Estimated Cash” shall have the meaning set out in Clause 3.2.

“Estimated Financial Debt” shall have the meaning set out in Clause 3.2.

“Expert” shall have the meaning set out in Clause 6.3.3.

“Financial Debt” shall mean the aggregated nominal amount of interest bearing
financing debt obligations (Finanzverbindlichkeiten) of the Company reflected in
the Financial Debt Statement.

“Financial Debt Statement” shall mean a statement substantially in the format as
attached as Schedule 6.1 Part B (but applying actual figures as of the Closing
Date) showing the following items of interest bearing financing debt obligations
(Finanzverbindlichkeiten) of the Company as of the Closing Date (after taking
into account transactions contemplated in Clause 5.1.1 and 5.1.2 and the
Permitted Transactions under Clause 5.2):

 

(i) bank loans (Verbindlichkeiten gegenüber Kreditinstituten), bonds and
debenture loans; and

 

(ii) promissory notes (Verbindlichkeiten aus Schuldscheinen und Eigenwechseln),
commercial papers, loans from third parties other than banks, the Seller or
Affiliates of the Seller.

“German GAAP” shall mean the accounting principles generally accepted in
Germany.

“HGB” shall mean the German Commercial Code (Handelsgesetzbuch).

“IP-Rights” shall have the meaning set out in Clause 7.7.1.

“Losses” shall have the meaning set out in Clause 9.3.1.

“Material Adverse Effect” shall mean an effect that either individually or in
the aggregate is materially adverse to the Company as a whole and that shall
have a negative effect of at least EUR 8,000,000 except to the extent
(y) resulting from or arising by virtue of the announcement or consummation of
the transactions contemplated by this Agreement or (z) any actions taken by the
Purchaser caused the effect.

“Notice” shall have the meaning set out in Clause 13.3.1.

“Parties” shall mean the Seller and the Purchaser.

“Permitted Transactions” shall have the meaning set out in Clause 5.2.

“Preliminary Purchase Price” shall have the meaning set out in Clause 3.3.1.

“Profit Transfer Agreement” shall mean the domination and profit and loss
transfer agreement (Beherrschungs- und Gewinnabführungsvertrag) between the
Company and the Seller dated 23 November 1999, as amended.

“Purchase Price” shall have the meaning set out in Clause 3.1.

“Purchaser” shall have the meaning set out in the parties section (2).

 

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“Purchaser’s Guarantees” shall mean all of Purchaser’s guarantees under Clause
4.1 and Clause 8.

“Real Estate” shall have the meaning set out in Clause 7.6.

“Reference Working Capital” shall be an amount of EUR 964,000.

“Shares” shall have the meaning set out in Recital (B).

“Seller” shall have the meaning set out in the parties section (1).

“Seller’s Knowledge” shall have the meaning set out in Clause 9.2.

“Seller’s Representative” shall have the meaning set out in Clause 10.4.1.

“Seller’s Guarantees” shall mean Seller’s guarantees set out in Clause 4.1 and
Clause 7 and “Seller’s Guarantee” means any of the Seller’s Guarantees.

“Tax Audits” shall have the meaning set out in Clause 10.4.1.

“Tax Authorities” shall mean any taxing or other authority competent to impose
any liability in respect of Tax or responsible for the administration and/or
collection of Tax or enforcement of any law in relation to Tax.

“Tax or Taxes” shall mean all forms of taxation within the meaning of Sec. 3
German Fiscal Code (Abgabenordnung or AO) including for the avoidance of doubt
any taxes related to a secondary liability and supplementary charges
(steuerliche Nebenleistungen) according to Sec. 3 para. 4 AO.

“Tax Measures” shall have the meaning set out in Clause 10.4.1.

“Termination Date” shall mean 30 November, 2006.

“Third Party Claim” shall have the meaning set out in Clause 9.7.

“TMD Agreement” shall mean the agreement dated July 2000 between inter alia BBA
Group plc, the Company and HSBC Private Equity Limited relating to the sale of
BBA Group’s automotive friction materials division.

“VAT” shall mean within the European Union such Tax as may be levied in
accordance with (but subject to derogations from) the Directive 77/338/EEC and
outside the European Union any taxation levied by reference to added value or
sales.

“Working Capital” shall mean the aggregated amount of the assets and liabilities
of the Company reflected in the Working Capital Statement.

“Working Capital Adjustment” shall mean the amount, if any, by which the Working
Capital exceeds the Reference Working Capital by more than EUR 100,000 (such
amount being expressed as a positive figure) or the amount, if any, by which the
Working Capital is more than EUR 100,000 less than the Reference Working Capital
(such amount being expressed as a negative figure).

“Working Capital Statement” shall mean a statement substantially in the format
as attached as Schedule 6.1 Part C (but applying actual figures as of the
Closing Date) showing the following assets and liabilities of the Company as of
the Closing Date (after taking into account any transactions contemplated in
Clause 5.1.1 and 5.1.2 and the Permitted Transactions under Clause 5.2):

 

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(i) the aggregate of (a) all accounts receivable from trading (Forderungen aus
Lieferungen und Leistungen) and (b) other assets (sonstige Vermögensgegenstände)
in the meaning of sec. 266 para.2 B II nos 1 and 4 of the German Commercial
Code;

 

(ii) plus prepaid expenses (aktive Rechnungsabgrenzungsposten) in the meaning of
sec. 266 para.2 C of the German Commercial Code;

 

(iii) less the aggregate of (a) trade accounts payable (Verbindlichkeiten aus
Lieferungen und Leistungen) and (b) prepayments received (erhaltene Anzahlungen)
in the meaning of sec. 266 para.3 C nos 4 and 3 of the German Commercial Code;

 

(iv) less the aggregate of (a) other liabilities (sonstige Verbindlichkeiten)
and (b) other provisions (sonstige Rückstellungen) in the meaning of sec. 266
para.3 B no 3 and sec. 266 para.3 C no 8 of the German Commercial Code;

 

(v) less deferred charges (passive Rechnungsabgrenzungsposten) in the meaning of
sec. 266 para.3 D of the German Commercial Code.

 

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Schedules 7.2.1 A, 7.2.1 B, 7.6, 7.7.1, 7.9.1 and 7.9.3 are referred to pursuant
to sec. 14 Beurkundungsgesetz (German Law concerning Notarization)—Verweisung
gemäß § 14 BeurkG. The persons appearing waive their right to have these
Schedules read to them. They have taken note of these Schedules which were
presented to them and have signed by them.

The above Agreement including Exhibit A and including Schedules 1.1, 1.1 DR,
5.2.2, 6.1 (Part A), 6.1 (Part B), 6.1 (Part C), 6.2, 7.1, 7.5, 7.7.2, 7.8,
7.9.2, 7.10.3, 7.10.4, 7.11.4, 7.12, 8.1, 9.2 and 11.2 was read aloud in the
presence of the acting Notary to the persons appearing, approved by them and
signed by the persons appearing and by the acting Notary in their own hand as
follows:

 

/S/ TORSTEN ROSENBOOM Torsten Rosenboom /S/ DR. CHRISTIAN FRANZ Dr. Christian
Franz /S/ DR. HENRYK HAIBT Dr. Henryk Haibt

 

32