NCGNE0708_Name-Owner Change Supporting Info_20210902

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ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT (THIS "AGREEMENT") IS ENTERED INTO AS OF
JULY 13, 2021
BETWEEN:
1. Eaton Aeroquip LLC, a limited liability company duly organized and existing under the
laws of the State of Ohio (the "Seller"); and
2. Danfoss Power Solutions II, LLC, a limited liability company duly organized and
existing under the laws of the State of Delaware (the `Buyer').
The Seller and the Buyer are hereinafter individually referred to as a "Par " and jointly referred
to as the "Parties".
WHEREAS:
(A) The Seller and the Buyer are direct or indirect wholly owned subsidiaries of Eaton
Corporation plc, an Irish public limited company ("Eaton"), and Danfoss A/S, a public
limited liability company incorporated under the laws of the Kingdom of Denmark
("Danfoss"), respectively.
(B) The Seller wishes to sell, assign, transfer, convey and deliver to the Buyer, and the
Buyer wishes to purchase from the Seller, certain assets related to the Business (as
hereinafter defined), and in connection therewith the Buyer is willing to assume certain
liabilities and obligations of the Seller relating thereto, all upon the terms and subject to
the conditions set out below.
NOW, THEREFORE THE PARTIES AGREE AS FOLLOWS:
Section 1 Definitions
For the purposes of this Agreement, the following terms shall have the following
meanings:
"Action" means any claim, action, suit, arbitration or proceeding by or before any
Governmental Authority.
"Affiliate" means, with respect to any Person, any other Person that directly, or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under Common Control
with, such first Person.
"A reed by the Principals" means as previously agreed by Eaton and Danfoss.
"Anti-Bribery/Anti-Corruption Laws" means (a) the United States Foreign Corrupt
Practices Act of 1977, as amended, (b) the United States Travel Act, 18 U.S.C. § 1952; (c) the
United Kingdom Bribery Act of 2010 when applicable; (d) any Law enacted in connection with,
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or arising under, the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions; or (e) any other Law of any foreign or domestic jurisdiction
of similar effect or that relates to bribery or corruption.
"Applicable Accounting Principles" means the accounting principles, practices,
assumptions, conventions and policies previously Agreed by the Principals and to the extent not
inconsistent therewith, consistent with GAAP.
"Assumed Liabilities has the meaning set forth in Section 2.3.
"Books and Records" means the information and records owned by the Seller to the
extent relating to the Business, the Transferred Assets or the Assumed Liabilities, including
specifications, accounting records, depletion records, employee records (other than individual
personnel records), sales records, service records, and supplier lists and files, correspondence
files, maintenance records, any copies of all written contracts, and records required thereunder,
including applications, plans and designs of fixtures and equipment, product research and
development records, and monitoring and test records.
"Business" means the following activities conducted by Eaton's Hydraulics Segment:
designing, engineering, developing, testing, manufacturing, assembling, marketing, selling and
servicing the following product lines, as such business is conducted as of the Effective Date, but
excluding the Excluded Business:
(a) hydraulic pumps, hydraulic motors, hydraulic power units, hydraulic
valves, hydraulic integrated circuits, hydrostatic transmissions, hydraulic steering units,
hydraulic accumulators, hydraulic cylinders, and HFX programmable controllers, VFX
programmable displays, Pro-FX® software and TFX remote monitoring systems for controlling
and monitoring hydraulic systems and components, in each case serving the Mobile Off -
Highway End Market, the Industrial End Market, and the On -Highway End Market;
(b) hydraulic hoses and fittings, industrial and specialty hoses, fuel, air
conditioning and refrigeration hoses and assemblies, and connectors, in each case serving the
Mobile Off -Highway End Market and Industrial End Market;
(c) aerial refueling hoses; and
(d) Airflex® brand industrial drum brakes, industrial disc brakes, constricting
and expanding industrial clutches, and associated torque limiting couplings, quick release valves,
and rotorseals.
"Business Day" means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in the City of New York or in Copenhagen,
Denmark.
"Business Employ" means all individuals employed by the Seller as of immediately
prior to the Effective Date and who (a) spend greater than 50% of their work time in support of
the Business or (b) are Agreed by the Principals to qualify as Business Employees, in each case,
including any such individual (i) who is on military leave and family and medical leave, (ii) who
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is on an approved leave of absence, but only to the extent he or she has reemployment rights
guaranteed under Law, under any applicable collective bargaining agreement or under any leave
of absence policy of the individual's employing entity and (iii) who is on disability under the
applicable employing entity's disability program.
"Business Intellectual Property" has the meaning set forth in Section 2.1(d).
"Business Permits" has the meaning set forth in Section 2.1(h).
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Commercial Data" means any and all data collected or otherwise processed by the
Business relating to a customer of the Business or a consumer of a product of the Business.
"Contracts" has the meaning set forth in Section 2.1(a).
"Control" including the terms "Controlled by" and "under Common Control with,"
means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, as
trustee or executor, as general partner or managing member, by contract or otherwise.
"Employee Plans" means all "employee benefit plans" within the meaning of Section
3(3) of the United States Employee Retirement Income Security Act of 1974, all written and
unwritten plans and all other compensation and benefit plans, contracts, policies, programs and
arrangements of the Seller, including all pension, profit sharing, savings and thrift, bonus, stock
bonus, stock option or other cash or equity -based incentive or deferred compensation, severance
pay and medical, dental, vision, welfare, disability, retention, change in control, retirement,
supplemental insurance, vacation, paid time off and life insurance plans, that in each case are
either sponsored, maintained, or contributed to by the Seller or an Affiliate of the Seller for the
benefit of any Business Employees or dependents thereof (regardless of whether such plan,
contract, policy, program or arrangement is governed by the Laws of the United States or the
Laws of a foreign jurisdiction).
"Employment Laws" means all Laws respecting labor, employment, employee safety,
occupational health, fair employment practices, employee classification, subcontracting, and
terms and conditions of employment, including those relating to labor management relations,
wages, hours, overtime, vacation pay, discrimination, sexual harassment, human rights, pay
equity, civil rights, affirmative action, work authorization, immigration, safety and health and
continuation coverage under group health plans.
"Environmental Laws" means any Laws of any Governmental Authority in effect as of
January 21, 2020 relating to protection of the environment, or worker health and safety
pertaining to Hazardous Substances.
"Environmental Permits" means all Permits required under any Environmental Law to
operate the Business, or to own or use the Transferred Assets.
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"Excluded Business" means the business of designing, engineering, developing, testing,
manufacturing, assembling, marketing, selling and servicing:
(a) all products manufactured at the Middlesex, North Carolina facility as of
January 21, 2020;
(b) the Eaton filtration business; and
(c) the Eaton golf grip business.
"Excluded Liabilities has the meaning set forth in Section 2.4.
"Existing Business Activities" means any type of business conducted or investment held
by the Seller or its Affiliates on January 21, 2020, other than the Business.
"Funded Debt" means, with respect to any Person and as of any time, the aggregate
amount of the following, without duplication: (a) the outstanding principal amount or amortized
cost price, if there is no principal amount, of any indebtedness for borrowed money (other than
trade payables arising in the ordinary course of business), including all accrued but unpaid
interest thereon and (b) all other obligations evidenced by bonds, debentures, notes or similar
instruments of indebtedness, including all accrued but unpaid interest thereon.
"GAAP" means United States generally accepted accounting principles as in effect on
January 21, 2020.
"Governmental Authority" means any national, federal, state or local governmental,
regulatory or administrative authority, agency or commission or any judicial or arbitral body.
"Hazardous Substances" means any pollutants, contaminants, harmful micro-organisms
or hazardous material including any which is (a) defined as a hazardous substance, hazardous
material, hazardous waste, pollutant or contaminant under any Environmental Laws, (b)
petroleum including oil or any fraction or derivative thereof, (c) hazardous, toxic, corrosive,
flammable, explosive, infectious, radioactive or carcinogenic (d) poly -and -per -fluorinated
chemicals, bisphenol A, phthalates, polychlorinated biphenyls, or radiation, or (e) regulated
pursuant to any Environmental Laws.
"Indebtedness" means, with respect to any Person and as of any time, any of the
following:
(a) all Funded Debt of such Person;
(b) all lease obligations of such Person that are classified as a finance lease
pursuant to the Applicable Accounting Principles and in accordance with GAAP;
(c) all direct obligations of such Person under letters of credit and guarantees,
in each case solely to the extent drawn;
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(d) all performance bonds issued for the account of such Person, only to the
extent drawn;
(e) all keepwell arrangements issued by such Person, in each case, as of such
time;
(f) all non -ordinary course obligations (including any earn -outs, contingent
payments, indemnities, "seller notes" payable, post -closing true -up obligations, or other purchase
price liabilities related to past acquisitions, and any Taxes related thereto) for the deferred
payment of the purchase price of property, assets, securities or any business (and any services to
be performed in connection therewith) that has been received or delivered, and with respect to
which such Person is liable, contingently or otherwise, at the maximum value, as obligor or
otherwise;
(g) all obligations arising out of interest rate and currency swap, cap, forward
or other arrangements designed to provide protection against fluctuations in interest, currency
rates, or commodity prices, in each case including any amounts payable to terminate such
arrangements;
(h) all liabilities relating to securitization or factoring programs or
arrangements;
(i) with respect to any Employee Plan, including any Non -US Employee
Plan, under which any liabilities associated with such Employee Plan or Non -US Employee Plan
are transferred to the Buyer or any Affiliate of the Buyer by operation of Law, any unfunded
benefit liability with respect to such Employee Plan or Non -US Employee Plan only to the extent
such Employee Plan or Non -US Employee Plan is a: (i) defined benefit pension plan or scheme,
provided, that such unfunded benefit liability is determined using the actuarial valuation methods
used in the Applicable Accounting Principles, (ii) defined contribution plan, provided, that this
shall not include defined contribution plans under Section 401(k) of the Code, (iii) deferred
compensation plans, (iv) retiree medical plan, provided, that such unfunded benefit liability is
determined using the actuarial valuation methods used in the Applicable Accounting Principles,
and/or (v) retiree life insurance plan, provided, that such unfunded benefit liability is determined
using the actuarial valuation methods used in the Applicable Accounting Principles;
0) with respect to the non -US Transferred Seller Entity Employees, any
termination pay or similar indemnity that would be payable upon the termination of such
employees related to the period prior to the Effective Date, and the employer portion of any
Taxes related thereto;
(k) any accrued but unpaid interest, fees, and other expenses owed with
respect to (a) through 0) including prepayment penalties, premiums, consent or other fees,
breakage costs on interest rate swaps and any other hedging obligations or other costs incurred in
connection with the repayment or assumption of such indebtedness; and
(1) all indebtedness of others referred to in clauses (a) through (k) above
guaranteed directly or indirectly in any manner by such Person;
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provided, that, for the avoidance of doubt, Indebtedness shall also include any intercompany
obligations, other than trade payables for products sold in the ordinary course as Agreed by the
Principals.
"Industrial End Market" means the machine tool equipment, hydraulic press, plastics,
water and wastewater, food and beverage, renewable energy, oil and gas, ball mills, pulp and
paper, can making equipment, entertainment and simulators, power generation and other
stationary industrial equipment markets.
"Information Technology" means any and all computer systems (including computers,
screens, servers, middleware, workstations, routers, hubs, switches, networks, data
communications lines and hardware) and telecommunications systems hardware and other
information technology equipment owned (and, for the avoidance of doubt, excluding any of the
foregoing that is leased) by the Seller, but excluding any software.
"Intellectual Property" means all intellectual property rights arising under the Laws of the
United States or any other jurisdiction, including the following: (a) trade names, trademarks and
service marks (registered and unregistered), Internet domain names, trade dress and similar
rights, and applications to register any of the foregoing and all goodwill associated with any of
the foregoing; (b) patents and patent applications and rights in respect of utility models or
industrial designs, including all provisionals, continuations, continuations -in -part, divisionals,
reissues, reexaminations, renewals and extensions; (c) copyrights and mask works and
registrations and applications therefor and all moral rights associated therewith; and (d) trade
secrets, know-how, inventions (whether or not patentable), invention disclosures, discoveries,
methods, processes, technical data, specifications, research and development information,
technology, algorithms, software (in source code and object code form), databases, data
collections, data analytics and other proprietary or confidential information, including customer
and supplier lists.
"International Trade Laws" means any law, statute, code, regulations, or order relating to
international trade, including: (a) all import laws and regulations, including those administered
by United States Customs and Border Protection; (b) Sanctions and Export Control Laws; (c)
United States anti -boycott laws and requirements (Section 999 of the Code, or related provisions,
or under the United States Export Administration Act, as amended, 50 U.S.C. App. Section 2407
et. seq.); (d) any other similar law, directive, or regulation (including those of the European
Union or any of its member states) related to similar subject matter; or (e) applicable anti -money
laundering laws, regulations, rules and guidelines in United States and in the jurisdiction of
incorporation.
"Inventory" has the meaning set forth in Section 2.1(g).
"Law" means any applicable statute, law, ordinance, regulation, rule, code, injunction,
judgment, decree or order of any Governmental Authority, including Employment Laws, Anti-
Bribery/Anti-Corruption Laws, International Trade Laws and Laws governing the importation of
products into the United States.
"Leased Real Property" has the meaning set forth in Section 2.1(c).
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"Losses" means losses, liabilities, claims, fines, deficiencies, damages, payments
(including those arising out of any settlement or judgment), interest, obligations, penalties, fees,
Taxes and out-of-pocket costs and expenses of any kind (including reasonable attorneys' and
accountants' fees and disbursements).
"Mobile Off -Highway End Market" means the construction, mining, agriculture,
material handling, forestry, specialty, marine, and land -based military markets, but excluding the
aerospace, ground fueling and other defense -related markets.
"Non -US Employee Plans" means all Employee Plans that are sponsored, maintained, or
contributed to for the benefit of Business Employees who are located outside of the United
States.
"On -Highway End Market" means the commercial vehicle, passenger vehicle and
specialty vehicle markets.
"Owned Real Property" has the meaning set forth in Section 2.1(b).
"Permits" means all material permits, licenses, franchises, approvals, certificates,
consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations
of any Governmental Authority necessary for the Seller to own, lease and operate the
Transferred Assets and to carry on the Business as currently conducted.
"Person" means an individual, corporation, partnership, limited liability company,
limited liability partnership, syndicate, person, trust, association, organization or other entity,
including any Governmental Authority, and including any successor, by merger or otherwise, of
any of the foregoing.
"Real Property" has the meaning set forth in Section 2.1(c).
"Related to the Business" means (a) used or held for use primarily in, or (b) arising,
directly or indirectly, primarily out of, in each case, the operation or conduct of the Business.
"Sanctions and Export Control Laws" means all United States or non -United States
Laws, relating to (a) economic or trade sanctions administered or enforced by the United States
(including by the United States Department of Treasury Office of Foreign Assets Control
(OFAC), the United States Department of State, and the United States Department of
Commerce), or any other relevant Governmental Authority; and (b) export, import, deemed
export, transfer, and retransfer controls, including the United States Export Administration
Regulations, United States Export Control Reform Act of 2018, the European Union Dual -Use
Regulation (428/2009), and the United Kingdom's Export Control Order 2008.
"Seller Environmental Liabilities" means any Losses arising out of or related to (a) any
Hazardous Substance that was present or released into the environment prior to or as of the
Effective Date at (i) any of the Real Properties listed on Schedule 2.1(b) and Schedule 2.1(c), or
(ii) any properties formerly owned, leased, used or operated by the Seller that would have been
listed on Schedule 2.1(b) and Schedule 2.1(c) if such properties had been owned, leased, used or
operated as of the Effective Date, in each case in which the Buyer is or may be held liable
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pursuant to Environmental Law which now or after the Effective Date require a response action,
investigation, remediation, monitoring or compensation under, any Environmental Law and (b)
any violation of Environmental Law or an Environmental Permit prior to or continuing as of the
Effective Date at any Real Property.
"Tangible Personal Property" has the meaning set forth in Section 2.1(f).
"Taxes" means any and all taxes of any kind including, for the avoidance of doubt, social
security, net or gross income, net or gross receipts, net or gross proceeds, capital gains, capital
stock, sales, use, user, leasing, lease, transfer, natural resources, premium, ad valorem, value
added, franchise, profits, gaming, license, capital, withholding, payroll or other employment,
estimated, goods and services, severance, excise, stamp, fuel, interest equalization, registration,
recording, occupation, turnover, personal property (tangible and intangible), real property,
unclaimed or abandoned property, alternative or add -on, windfall or excess profits,
environmental, disability, unemployment, fringe benefit or other taxes or similar compulsory
contributions, and customs duties (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any Governmental Authority.
"Transferred Assets" has the meaning set forth in Section 2.1.
"Transaction Expenses" means, to the extent not paid by the Seller or otherwise prior to
the Effective Date, all third party service provider expenses payable by the Seller incurred or to
be incurred on or before the Effective Date in connection with the preparation, negotiation,
execution and delivery of this Agreement, the transactions contemplated hereby to be
consummated on or before the Effective Date, in each case including fees and disbursements of
attorneys, investment bankers, accountants and other advisors and service providers and that, in
each case, remain outstanding at the Effective Date, and any transaction bonuses, any change of
control payments and any other amounts payable to any Person by the Seller in connection with
the consummation of the transactions contemplated by this Agreement (and the employer portion
of any Taxes related thereto).
"Transferred Seller Entity Employees' means such Business Employees who accept an
offer of employment from the Buyer or one of its Affiliates.
Section 2 Sale and Transfer
2.1 Sale and Transfer. On the Effective Date, for good and valuable consideration as
Agreed by the Principals, the Seller shall sell, assign, transfer, convey and deliver to the Buyer
all of the Seller's right, title and interest as of the Effective Date in and to the Transferred Assets,
and the Buyer shall purchase, acquire, accept and pay (or be deemed to have paid) for the
Transferred Assets and assume the Assumed Liabilities. "Transferred Assets" shall mean all of
the Seller's right, title and interest in and to the following enumerated assets (other than the
Excluded Assets) as they exist as of the effective time of the transactions contemplated by this
Agreement as set forth in Section 4.1, including as may be set forth in the schedules referenced
below:
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(a) each contract or agreement to the extent such contract or agreement is
related to the Business (collectively, such contracts and agreements, or portions of such
contracts and agreements, the "Contracts");
(b) the owned real property listed in Schedule 2.1(b) (together with all
buildings, fixtures, structures, facilities and other improvements erected thereon and all
easements and other rights and interests appurtenant thereto, the "Owned Real
Pro e "), together in each case with all of the Seller's right, title and interest in and to
all buildings, fixtures, structures, facilities and other improvements located thereon and
all easements, licenses, rights and appurtenances relating thereto;
(c) the interests in real property listed in Schedule 2.1(c) ("Leased Real
Pro e " and, together with the Owned Real Property, the "Real Property");
(d) all Intellectual Property used or held for use exclusively in the Business,
or under development for use exclusively in the Business (the "Business Intellectual
Pro e "), including the right to seek damages for the past, present and future
infringement or other violation of any such Business Intellectual Property and the
goodwill appurtenant to any such Business Intellectual Property;
(e) all accounts receivable, notes receivable and other receivables to the
extent related to the Business, together with any unpaid interest or fees accrued thereon
or other amounts due with respect thereto;
(f) all machinery, equipment, furniture, furnishings, parts, spare parts,
vehicles and other tangible personal property, wherever located, Related to the Business
(the "Tangible Personal Property"), except for the Tangible Personal Property (i) located
at shared service centers or corporate offices or (ii) other Tangible Personal Property
listed on Schedule 2.1(f)(ii);
(g) all raw materials, work -in -progress, finished goods, supplies, packaging
materials, models, prototypes and other inventories, wherever located, Related to the
Business, including any such raw materials, work -in -progress, finished goods, supplies,
packaging materials, models, prototypes and other inventories being held by customers of
the Business pursuant to consignment arrangements (collectively, the "Inventory ');
(h) all Permits and Environmental Permits Related to the Business, but only to
the extent such Permits may be transferred under Law (the "Business Permits");
(i) all Commercial Data to the extent related to the Business, solely (i) to the
extent and in the form such copies can be provided in compliance with Law, any privacy
policies of the Seller and any applicable contractual restrictions and (ii) to the extent that
such Commercial Data can be readily segregated from any other Commercial Data of the
Seller; provided, that the Seller (x) may retain copies of Commercial Data related to the
Business that is used or held for use in, or that arises, directly or indirectly, out of, in each
case, the operation or conduct of the Existing Business Activities and (y) shall have the
non-exclusive, perpetual, irrevocable, royalty -free and worldwide right to, subject to any
limitations on such use as Agreed by the Principals, use, reproduce and commercially
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exploit such Commercial Data in connection with the operation or conduct of the
Existing Business Activities;
0) any and all Information Technology Related to the Business and located at
the Real Property;
(k) all credits, prepaid expenses and security or customer deposits to the
extent such credits, prepaid expenses and security or customer deposits are related to the
Business;
(1) any and all rights, claims, credits, causes of action, defenses and rights of
offset or counterclaim (in each case, in any manner arising or existing, whether known or
unknown, contingent or non -contingent), in each case, to the extent related to the
Business, including all such rights and claims under any and all warranties, indemnities,
further assurance and other similar covenants extended by suppliers, vendors, lessors,
contractors, manufacturers and licensors in favor of the Seller, in each case to the extent
related to the Business;
(m) all of the Seller's rights to receive the proceeds, recoveries or refunds of
claims made prior to the Effective Date under any insurance policy for any Loss that is an
Assumed Liability or negatively impacting the value of a Transferred Asset occurring or
arising prior to the Effective Date that is covered by such policies and is not repaired or
replaced prior to the Effective Date, where such proceeds, recoveries or refunds are paid
on or following the Effective Date;
(n) any and all goodwill, if any, of the Business;
(o) the Books and Records; and
(p) all assets (other than the Excluded Assets) of any type not described in
sub -sections (a) through (o) above that are Related to the Business.
2.2 Excluded Assets. Notwithstanding anything contained in Section 2.1 to the
contrary, the Seller is not selling, and the Buyer is not purchasing, any assets other than those
specifically listed or described in Section 2.1, and without limiting the generality of the
foregoing, the term "Transferred Assets" shall expressly exclude the following assets of the
Seller, all of which shall be retained by the Seller (collectively, the "Excluded Assets"):
(a) all cash, cash equivalents and marketable securities;
(b) books and records that are not Transferred Assets;
(c) all Intellectual Property that is not Business Intellectual Property,
including all Intellectual Property that is not used or held for use, or under development
for use, exclusively in the Business and all Intellectual Property used or held for use, or
under development for use, in the Excluded Business, including the right to seek damages
for the past, present and future infringement or other violation of any such Intellectual
Property and the goodwill appurtenant to any such Intellectual Property;
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(d) all bank accounts;
(e) all accounting records (including records relating to Taxes) and internal
reports that are not Transferred Assets;
(f) any interest in or right to any refund of Taxes relating to the Business, the
Transferred Assets or the Assumed Liabilities for, or applicable to, any taxable period (or
portion thereof) ending on or prior to the Effective Date;
(g) any insurance policies and all rights, claims or causes of action thereunder;
(h) except as Agreed by the Principals, any assets relating to any Employee
Plan;
(i) all rights, claims and causes of action relating to any Excluded Asset or
any Excluded Liability, together with all books and records related thereto;
0) all rights under this Agreement and any other agreements entered into
between the Parties in connection with the transactions contemplated by this Agreement;
(k) all confidential communications between the Seller and its Affiliates, on
the one hand, and their respective legal counsel and other advisors, on the other hand, to
the extent relating to the Business or the Transferred Assets or arising out of or relating to
the negotiation, execution or delivery of this Agreement or the transactions contemplated
hereby, including any attendant attorney -client privilege, attorney work product
protection, and expectation of client confidentiality applicable thereto, in each case
including information or files in any format in connection therewith;
(1) any Contract, other than as Agreed by the Principals, to which the Seller is
a party that relates to the operations of Eaton and its consolidated group of companies as
a whole; and
(m) the assets listed in Schedule 2.2(m) and any and all assets, business lines,
properties, rights and claims that do not constitute the Transferred Assets.
2.3 Assumed Liabilities. In connection with the purchase and sale of the Transferred
Assets pursuant to this Agreement, as of the Effective Date, the Buyer shall assume and, when
due, shall pay, discharge, perform or otherwise satisfy all liabilities and obligations of any kind
and nature, whether known or unknown, express or implied, direct or indirect, absolute, accrued,
contingent or otherwise and whether due or to become due, of the Seller to the extent relating to
the Business or the ownership or use of the Transferred Assets (the "Assumed Liabilities"),
including, without limitation, the following:
(a) any Taxes to be paid by the Buyer, as Agreed by the Principals;
(b) all liabilities relating to or arising out of the Contracts and the Business
Permits to be performed on, prior to or after, or in respect of periods prior to, on or
following, the Effective Date;
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(c) all liabilities with respect to any return, repair or similar liabilities related
to products and services of the Business that were manufactured, serviced or sold on,
prior to or after the Effective Date;
(d) all liabilities with respect to any product recall or similar liabilities related
to products and services of the Business that were manufactured, serviced or sold on,
prior to or after the Effective Date or that were held in the Inventory as of the Effective
Date;
(e) all liabilities for death, personal injury, other injury to persons or property
damage with respect to any products and services of the Business that were
manufactured, serviced or sold on, or prior to or after the Effective Date or that were held
in Inventory as of the Effective Date;
(f) all liabilities (i) relating to the employment or termination of employment
of any Transferred Seller Entity Employee arising (A) following the Effective Date and
(B) for payroll periods ending on or prior to the Effective Date, for vacation, holiday, sick
time and other leave, and in each case, the employer portion of the payroll Taxes related
thereto, to the extent Agreed by the Principals, and (ii) assumed by the Buyer (A) as
required by Law with respect to any Transferred Seller Entity Employee, (B) as Agreed
by the Principals and/or (C) taken into account as Indebtedness as Agreed by the
Principals; and
(g) all liabilities in respect of any Action, whether class, individual or
otherwise in nature, in law or in equity, whether or not presently threatened, asserted or
pending, to the extent arising out of, or to the extent related to, the Business or the
operation or conduct of the Business on, prior to or after the Effective Date, including,
without duplication, Actions in respect of those liabilities set forth in Section 2.3(a)
through Section 2.3(f).
The Buyer's obligations under this Section 2.3 shall not be subject to offset or reduction for any
reason, including by reason of any actual or alleged breach of any representation, warranty or
covenant contained in this Agreement or any other agreements entered into between the Parties
in connection with the transactions contemplated by this Agreement, or any document delivered
in connection herewith or therewith.
2.4 Excluded Liabilities. Notwithstanding any other provision of this Agreement to
the contrary, the Buyer is not assuming, and the Seller shall pay, perform or otherwise satisfy all
liabilities other than the Assumed Liabilities (the "Excluded Liabilities"), including the
following:
(a) any liability (i) as Agreed by the Principals that the Seller and its Affiliates
would retain arising in respect of or relating to Business Employees or (ii) arising under
any Employee Plan irrespective of whether such liability arises prior to, on, or after the
Effective Date, except to the extent Agreed by the Principals;
(b) any Indebtedness outstanding as of the Effective Date to the extent it is not
related to the Business;
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(c) any Transaction Expenses;
(d) any Seller Environmental Liabilities;
(e) any liability with respect to:
(i) any former Business Employee irrespective of whether such
liability arises prior to, on, or after the Effective Date;
(ii) any current Business Employee who is not employed by the Buyer
or an Affiliate of the Buyer immediately following the Effective Date, irrespective of
whether the liability arises prior to, on, or after the Effective Date;
(iii) any current or former employee or service provider of the Seller or
an Affiliate of the Seller who is not a Business Employee, irrespective of whether the
liability arises prior to, on, or after the Effective Date;
(iv) the Transferred Seller Entity Employees arising prior to or on the
Effective Date, other than liabilities (A) arising for those payroll periods ended prior to
the Effective Date for vacation, holiday, sick time and other leave, and in each case, the
employer portion of the payroll Taxes related thereto, to the extent Agreed by the
Principals, or (B) assumed by the Buyer (x) as required by Law with respect to any
Transferred Seller Entity Employee, (y) as Agreed by the Principals and/or (z) taken into
account as Indebtedness as Agreed by the Principals; and
(v) any failure to comply with the obligation to notify, consult with or
obtain the consent of any union, works council, employee representatives, or similar
labor association or organization (A) required of the Seller or any Affiliate of the Seller
prior to the Effective Date and (B) required of the Seller or any Affiliate of the Seller
after the Effective Date;
(f) all liabilities relating to or arising under any Contract, to the extent not
related to the Business;
(g) any Taxes to be paid by the Seller, as Agreed by the Principals; and
(h) any liability or obligation relating to an Excluded Asset.
Section 3 Representations and Warranties
3.1 Disclaimer of Representations and Warranties. EACH PARTY
UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN
OR AS AGREED BY THE PARTIES, NO PARTY TO THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED BY THIS AGREEMENT, IS REPRESENTING OR
WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES
TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO
ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH, AS TO
THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER
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MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF
ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH
RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS
RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY
ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO
CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION,
DELIVERY AND FILING HEREOF OR THEREOF.
Section 4 Effective Date; Termination
4.1 Effective Date. The sale and purchase of the Transferred Assets and the
assumption of the Assumed Liabilities contemplated by this Agreement shall take place at a
closing to be held at the place and time as Agreed by the Principals. The day on which the
closing takes place is referred to as the "Effective Date". The closing of the transactions
contemplated by this Agreement shall be effective as of the time as Agreed by the Principals.
4.2 Termination. This Agreement shall terminate at any time prior to the Effective
Date as Agreed by the Principals in writing. Upon termination of this Agreement, this Agreement
shall forthwith become void and there shall be no liability on the part of either Party with respect
to this Agreement.
Section 5 Miscellaneous
5.1 Additional Action. The Parties agree to take any and all necessary actions, to
make any and all notifications and registrations and to sign, execute and deliver any and all
documents, which may be required and/or appropriate in order to effectuate the sale and transfer
of the Transferred Assets to the Buyer and agree to perform all acts that may be deemed
necessary or useful in connection with the aforesaid.
5.2 Other Deliveries. The Seller shall deliver or cause to be delivered to the Buyer
such other documents in customary form as may be reasonably required to vest in the Buyer all
rights, title and interest in and to the Transferred Assets.
5.3 Waiver. No failure or delay of either Party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such right or power, or
any course of conduct, preclude any other or further exercise thereof or the exercise of any other
right or power. Any agreement on the part of either Party to any such waiver shall be valid only
if set forth in a written instrument executed and delivered by a duly authorized officer on behalf
of such Party.
5.4 Assi ng ment. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned or delegated, in whole or in part, by operation of law or
otherwise, by either Party without the prior written consent of the other Party, and any such
assignment without such prior written consent shall be null and void; provided, however, that the
Buyer may assign any of its right or obligations pursuant to this Agreement to any Affiliate of
the Buyer without the prior consent of the Seller; provided, further, that the Seller may assign
any of its rights or obligations under this Agreement to one or more Affiliates of the Seller
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without the consent of the Buyer; provided, still further, that no assignment shall limit the
assignor's obligations hereunder and that the assignor shall remain fully liable for the fulfillment
of all such obligations. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the Parties and their respective successors and
assigns.
5.5 Counterparts; Electronic Delivery. This Agreement may be executed in
counterparts, which, taken together, shall be as effective as if all signatures on the counterparts
were on a single copy of this Agreement. Delivery of an executed counterpart of a signature
page of this Agreement in an electronic format (e.g., "pdf ') shall be effective as delivery of a
manually executed counterpart of this Agreement.
5.6 Severability. Whenever possible, each provision or portion of any provision of
this Agreement shall be interpreted in such manner as to be effective and valid under Law, but if
any provision or portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any Law or rule in any jurisdiction, so long as the economic
and legal substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any Party, such holding or action shall be strictly construed and shall not
affect the validity or effect of any other provision hereof, as long as the remaining provisions,
taken together, are sufficient to carry out the overall intentions of the Parties as evidenced
hereby.
5.7 Amendment. This Agreement may not be amended, modified or supplemented in
any manner, whether by course of conduct or otherwise, except by an instrument in writing
specifically designated as an amendment hereto, signed on behalf of each Party.
5.8 Entire Agreement. This Agreement contains the entire agreement and
understanding between the Parties with respect to the subject matter hereof.
5.9 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed duly given (a) on the date of delivery if delivered personally, or if by email,
upon written confirmation of receipt by e-mail or otherwise, (b) on the first Business Day
following the date of dispatch if delivered utilizing a next -day service by a recognized next -day
courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All
notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such notice:
(a) if to the Seller, to:
30 Pembroke Road
Dublin, Ireland
Attention: The Office of the Secretary/MEH
E-mail: [e-mail]
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
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1050 Connecticut Avenue, NW
Washington, D.C. 20036
USA
Attention: Stephen Glover
E-mail: [e-mail]
(b) if to the Buyer, to:
c/o Danfoss A/S
Nordborgvej 81
DK-6430 Nordborg
Denmark
Attention: General Counsel
E-mail: [e-mail]
with a copy (which shall not constitute notice) to:
Winston & Strawn LLP
200 Park Avenue
New York, NY 10166
USA
Attention: Uri Doron
E-mail: [e-mail]
5.10 Headings. The headings contained in this Agreement or in any Schedule are for
convenience of reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. When a reference is made in this Agreement to a Section or
Schedule, such reference will be to a Section of, or Schedule to, this Agreement unless otherwise
indicated.
Section 6 Governing Law and Submission to Jurisdiction
6.1 Governing Law. This Agreement and all disputes or controversies arising out of
or relating to this Agreement or the transactions contemplated hereby shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware, without regard to the
laws of any other jurisdiction that might be applied because of the conflicts of laws principles of
the State of Delaware.
6.2 Submission to Jurisdiction. Each of the Parties irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement brought by any Party or its
successors or assigns against the other Party shall be brought and determined in the Court of
Chancery of the State of Delaware, provided, that if jurisdiction is not then available in the Court
of Chancery of the State of Delaware, then any such legal action or proceeding may be brought
in any federal court located in the State of Delaware or any other Delaware state court, and each
of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for
itself and with respect to its property, generally and unconditionally, with regard to any such
action or proceeding arising out of or relating to this Agreement and the transactions
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contemplated hereby. Each of the Parties agrees not to commence any action, suit or proceeding
relating thereto except in the courts described above in Delaware, other than actions in any court
of competent jurisdiction to enforce any judgment, decree or award rendered by any such court
in Delaware as described herein. Each of the Parties further agrees that notice as provided herein
shall constitute sufficient service of process and the Parties further waive any argument that such
service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and
agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action
or proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware
as described herein for any reason, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in
any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced
in or by such courts.
[Signature Pages Follow]
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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED AND DELIVERED THIS ASSET SALE AND
PURCHASE AGREEMENT AS OF THE EFFECTIVE DATE AS FOLLOWS:
Signature page to Asset Sale and Purchase Agreement (USA — Eaton Aeroquip LLC)

Execution Version
ffN WETNESS ESS WHEREOF, THE PARTIES HAVE EXECUTED AUD DELIVERED 'Il'I us ASSET SALE AND
PURCHASE AGREEMENT AS OF THE ]EFFECTIVE DATE AS IF®LL3WSo
DANIF®SS POWER S®ILUZ RONS H, L L(C
I P Z/ /-- - 1
By* /eXAP ��v
Name: Rodney uurrn m
Title: Treasurer and Secretary
Signature page to Asset Sale and Purchase Agreement (USA — Eaton Aeroquip LLC)

Schedule 2.1(b)
Owned Real Property
1. 1225 West Maui Street, Van Wert, Ohio, United States (title in predecessor entity,
Aeroquip Corporation)
2. 2425 W. Michigan Ave., Blackman Township, Michigan, United States (title in
predecessor entity, The Toi kurs-Johnson Co.)
3. 240 Daniel Road, Forest City, North Carolina, United States (title in predecessor
entity, Aeroquip Corporation)
4. 1830 South College Spur, Mountaur Horne, Arkansas, United States (title recently
reconveyed by Baxter County to Eaton Aeroquip LLC, successor to Aeroquip
Corporation)
5. 860 Blankenship Street, Newbern, Terumssee, United States (title in predecessor
entity, Eaton Aeroquip, Inc.)
6. 7638 Pacific Avenue, White City, Oregon, United States (title is predecessor entity,
The Toi kins-Johnson Co.)
Disclosure Schedules to Asset Sale and Purchase Agreement (EatmAeroquip LLC)

Schedule 2.1(c)
Leased Real Property
1. 1650 Indian Wood Circle, Maumee, Ohio (successor in interest to Eaton Aeroquip, Inc.)
Lessor: 1650 Indian Wood Circle, LTD.
2. 1660 Indian Wood Circle, Maumee, Ohio, United States
Lessor: Kenwood Properties, Ltd.
3. 241 Vance Street, Forest City, North Carolina, United States
Lessor: Bennett Holdings, LLC
4. 1500 & 1750 Hardeman Lane, Cleveland, Tennessee, United States
Lessor: Amy M. Rodgers
Disclosure Schedules to Asset Sale and Purchase Agreement (EatmAeroquip LLC)

Schedule 2.1(0(11)
Other Tangible Personal Property Excluded
Any Tangible Personal Property located at the below sites..
a. 8171 Planer Mill Road, Middlesex, North Carolina, US
b. 1420 N. Grundy Quarles HWY, Gai nesboro, TN, US
c. 3401 East 4th Avenue, Hutchinson, Kansas, US
d. Ultronics House Cheltenham, Gloucestershire UK
Disclosure Schedules to Asset Sale and Purchase Agreement (EatmAeroquip LLC)

Schedule 2.2(m)
Other Excluded Assets
Owned Real Property located at:
a. 795 Alexander Avenue, Greenwood, South Carolina, US
b. 1420 N. Grundy Quarles HWY, Gainesboro, TN, US
c. 3401 East 4th Avenue, Hutchinson, Kansas, US
d. 8171 Planer Mill Road, Middlesex, North Carolina, US
2. Real Property Lease:
• Ultronics House Cheltenham, Gloucestershire UK Lease
3. Assets set forth under Schedule 2.1(f)(ii).
Disclosure Schedules to Asset Sale and Purchase Agreement (EatmAeroquip LLC)