UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of
FEDERAL-MOGUL CORPORATION, a corporation, and T&N PLC, a
corporation.
File No. 981 0011
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an
investigation of the proposed acquisition by Federal-Mogul Corporation of T&N plc, and
it now appearing that Federal-Mogul and T&N, hereinafter sometimes referred to as
"proposed respondents," are willing to enter into an agreement containing an
order to divest certain assets and providing for other relief;
IT IS HEREBY AGREED by and between proposed respondents, by their duly
authorized officers and attorneys, and counsel for the Commission, that:
1. Proposed respondent Federal-Mogul Corporation (“Federal-Mogul”) is a
corporation organized, existing and doing business under and by virtue of the laws of
Michigan, with its office and principal place of business located at 26555 Northwestern
Highway, Southfield, Michigan 48034.
2. Proposed respondent T&N plc (“T&N) is a public limited company
organized, existing and doing business under and by virtue of the laws of the United
Kingdom, with its office and principal place of business located at Manchester
International Office Centre, Styal Road, Manchester M22 5TN, England.
3. Proposed respondents admit all the jurisdictional facts set forth in the draft
complaint here attached.
4. Proposed respondents waive:
a. any further procedural steps;
b. the requirement that the Commission’s decision contain a statement of findings
of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or contest the validity
of the Order entered pursuant to this Agreement; and
d. any claim under the Equal Access to Justice Act.
5. This Agreement shall not become part of the public record of the proceeding unless
and until it is accepted by the Commission. If this Agreement is accepted by the
Commission it, together with the draft of complaint contemplated thereby, will be placed
on the public record for a period of sixty (60) days and information in respect thereto
publicly released. The Commission thereafter may either withdraw its acceptance of this
Agreement and so notify the proposed respondents, in which event it will take such action
as it may consider appropriate, or issue and serve its complaint (in such form as the
circumstances may require) and decision, in disposition of the proceeding.
6. Proposed respondents shall submit within thirty (30) days of the date that proposed
respondents sign this Agreement, and every thirty (30) days thereafter until the Order
becomes final, a report, pursuant to § 2.33 of the Commission’s Rules, signed by the
proposed respondents setting forth in detail the manner in which the proposed respondents
will comply with Paragraphs II. and III. of the Order when and if entered. Such reports
will not become part of the public record unless and until the accompanying Agreement and
Order are accepted by the Commission for public comment.
7. This Agreement is for settlement purposes only and does not constitute an admission
by proposed respondents that the law has been violated as alleged in the Commission’s
draft of complaint here attached, or that the facts as alleged in the Commission’s
draft complaint, other than jurisdictional facts, are true.
8. This Agreement contemplates that, if it is accepted by the Commission, and if such
acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of
§ 2.34 of the Commission's Rules, the Commission may, without further notice to the
proposed respondents, (1) issue its complaint corresponding in form and substance with the
draft of complaint here attached and its decision containing the following Order to divest
in disposition of the proceeding and (2) make information public with respect thereto.
When so entered, the Order shall have the same force and effect and may be altered,
modified or set aside in the same manner and within the same time provided by statute for
other orders. The Order shall become final upon service. Delivery by the U.S. Postal
Service of the complaint and decision containing the agreed-to order to the addresses of
counsel for Federal-Mogul (Mark Leddy, Esq., Cleary, Gottlieb, Steen & Hamilton, 2000
Pennsylvania Avenue, N.W., Washington, D.C. 20006) and counsel for T&N (Deborah L.
Feinstein, Esq., Arnold & Porter, 555 Twelfth Street, N.W., Washington, D.C. 20004)
shall constitute service. Proposed respondents waive any right they may have to any other
manner of service. The complaint may be used in construing the terms of the Order, and no
agreement, understanding, representation, or interpretation not contained in the Order or
the Agreement may be used to vary or contradict the terms of the Order.
9. By signing this Agreement, proposed respondents represent that they can accomplish
the full relief contemplated by this Agreement.
10. Proposed respondents have read the proposed complaint and Order contemplated
hereby. Proposed respondents understand that once the Order has been issued, they will be
required to file one or more compliance reports showing that they have fully complied with
the Order. Proposed respondents further understand that they may be liable for civil
penalties in the amount provided by law for each violation of the Order after it becomes
final. Proposed respondents agree to comply with Paragraphs II. and III. of the proposed
Order from the date they sign this Agreement.
ORDER
I.
IT IS ORDERED that, as used in this Order, the following definitions shall
apply:
A. “Federal-Mogul” means Federal-Mogul Corporation, its directors, officers,
employees, agents, representatives, predecessors, successors, and assigns; its
subsidiaries, divisions, groups and affiliates controlled by Federal-Mogul, and the
respective directors, officers, employees, agents, representatives, successors, and
assigns of each.
B. “T&N” means T&N plc, its directors, officers, employees, agents,
representatives, predecessors, successors, and assigns; its subsidiaries, divisions,
groups and affiliates controlled by T&N, and the respective directors, officers,
employees, agents, representatives, successors, and assigns of each.
C. “Respondents” means Federal-Mogul and T&N, individually and
collectively.
D. “Commission” means the Federal Trade Commission.
E. “Thinwall Bearings” means lubricated friction bearings, commonly
known as thinwall bearings, with a thickness of three-eighths inch or less, including, but
not limited to, half-shell engine bearings, full round bushings, flange bearings, and half
and full round thrust washers for use in engine and non-engine applications in passenger
cars and trucks and in industrial applications.
F. “Polymer Bearings” means metal-backed polymer dry bearings for use in
industrial applications and non-engine automotive components and manufactured at
T&N’s manufacturing facilities located at Kilmarnock, Scotland; Annecy, France;
and Heilbronn, Germany.
G. “The Assets To Be Divested” means
- Glacier Vandervell, Inc., Glacier Vandervell Europe, and T&N Bearings Group Research
and Development; all of the subsidiaries, divisions, groups and affiliates they control;
all of their businesses and assets, tangible and intangible, including but not limited to
facilities, technology, patent rights, and goodwill;
- all businesses and assets of T&N in the following locations: Caldwell, Ohio;
Atlantic, Iowa; Bellefontaine, Ohio; Plymouth, Michigan; Middlesex, England; Cawston,
England; Kilmarnock, Scotland; Whitehill, Scotland; Annecy, France; Paris, France; Trento,
Italy; and Heilbronn, Germany.
- the McConnellsville Strip Facility;
- all rights, title, and interest of T&N in the trademarks “Clevite” and
“Clevite 77"; provided that the acquirer shall grant a perpetual royalty-free,
exclusive license to Federal-Mogul for the trademark “Clevite” for all products
other than Thinwall Bearings; and provided further that Federal-Mogul shall not use the
trademark “Clevite” for any purpose beginning two years after the execution of
this Agreement Containing Consent Order; and
- all other businesses and assets, tangible and intangible, relating to the research,
development, manufacture, or sale of Thinwall Bearings and Polymer Bearings by T&N,
regardless of where the business or assets are located in the world and regardless of
whether used exclusively for such purposes, including, without limitation, the following:
a. all machinery, fixtures, equipment, vehicles, transportation facilities, furniture,
tools and other tangible personal property;
b. all copies of customer lists, vendor lists, catalogs, sales promotion literature,
advertising materials, research materials, technical information, management information
systems, software, inventions, trade secrets, intellectual property, patents, technology,
know-how, specifications, designs, drawings, processes and quality control data;
c. all rights, titles, and interests in and to research and development, whether
performed by T&N or by a third party;
d. inventory and storage capacity;
e. all rights, titles and interests in and to owned or leased real property, together
with appurtenances, licenses and permits;
f. all rights, titles and interests in and to the contracts entered into in the
ordinary course of business with customers (together with associated bid and performance
bonds), suppliers, sales representatives, distributors, agents, personal property lessors,
personal property lessees, licensors, licensees, consignors and consignees;
g. all rights under warranties and guarantees, express or implied;
h. all books, record, and files;
i. all items of prepaid expense;
j. goodwill; and
k. all stock and other rights, titles, and interests held in joint ventures or other
entities.
Provided that the definition of The Assets To Be Divested shall not include (i)
T&N’s ownership interest in Glacier Vandervell Pty. in South Africa, (ii) any
assets related exclusively to the sale of automotive replacement parts to customers
outside North and South America, or (iii) any assets (other than the real estate and
buildings) at Cawston, England, and Plymouth, Michigan, that are not related to Thinwall
Bearings.
H. “Key Employees” means the individuals employed by T&N listed in
Appendix II.
I. “Thinwall Research Personnel” means the individuals employed by T&N
listed in Appendix III.
J. “McConnellsville Strip Facility” means the facility for the manufacture of
cast copper-lead strip operated by T&N in McConnellsville, Ohio.
K. “Daido” means Daido Metal Co. Ltd. of Nagoya, Japan, and all its
subsidiaries, divisions, groups and affiliates.
II.
IT IS FURTHER ORDERED that:
A. Respondents shall divest absolutely and in good faith, no later than six (6) months
after the Order becomes final, The Assets To Be Divested, as a fully viable and
competitive ongoing business, and shall also divest such additional assets and businesses
and effect such arrangements as are necessary to assure the viability, marketability, and
competitiveness of The Assets To Be Divested.
Provided that, if the Commission-approved acquirer or acquirers of The Assets To Be
Divested all express through affidavit a preference not to acquire any portion of (1) the
McConnellsville Strip Facility, (2) the real estate and buildings of the facility operated
by T&N Technology in Cawston, England, (3) the real estate and buildings of the
facility located at Northwood Hills, Middlesex, England, (4) the real estate and buildings
of the facility located at Paris, France, or (5) the real estate and buildings of the
facility located at Plymouth, Michigan, then, subject to the approval of the Commission,
Respondents shall not be required to divest that portion of such assets.
Further provided that, if the Commission-approved acquirer or acquirers of The Assets
To Be Divested all express through affidavit a preference not to acquire any portion of
the packaging facilities and warehouses of A.E. Clevite, then, subject to the approval of
the Commission, Respondents shall not be required to divest that portion of such assets.
B. Within ten (10) days after signing the Agreement Containing Consent Order,
Respondents shall transfer to The Assets To Be Divested the employment of all Key
Employees (who are not already employees of Glacier Vandervell Europe) and all Thinwall
Research Personnel, to the extent permissible by law.
C. Respondents shall divest The Assets To Be Divested only to an acquirer or acquirers
that receive the prior approval of the Commission and only in a manner that receives the
prior approval of the Commission. The purpose of the divestiture of The Assets To Be
Divested is to ensure the continuation of The Assets To Be Divested as an ongoing, viable,
and competitive business engaged in the research, development, manufacture, and sale of
Thinwall Bearings and to remedy the lessening of competition resulting from the
acquisition by Federal-Mogul of T&N as alleged in the Commission’s complaint.
D. If any person who is not party to this Order withholds its consent to the transfer
or assignment of any agreement, contract, or license to which T&N is a party and that
is related in any way to The Assets To Be Divested, then Respondents shall use their best
efforts to obtain the necessary consents. If such person continues to withhold its
consent, then Respondents shall to the extent possible enter into such agreements,
contracts, licenses as are necessary to realize the same effect as such transfer or
assignment. (Respondents shall submit a copy of each such agreement, contract, or license
with their compliance reports to the Commission pursuant to Paragraphs IV. and V. of this
Order.) For a period of five (5) years after executing the Agreement Containing Consent
Order, Respondents shall not do any business with Daido relating to Thinwall Bearings,
whether through agreement, contract, license, exchange of technology, joint venture, or
other means.
E. Pending divestiture of The Assets To Be Divested, Respondents shall take such
actions as are necessary to maintain the viability, competitiveness, and marketability of
The Assets To Be Divested and to prevent the destruction, removal, wasting, deterioration,
or impairment of any assets or business of The Assets To Be Divested except for ordinary
wear and tear.
F. Respondents shall comply with all terms of the Agreement to Hold Separate, attached
to this Order and made a part hereof as Appendix I. The Agreement to Hold Separate shall
continue in effect until such time as Respondents have divested all The Assets To Be
Divested as required by this Order or until such other time as the Agreement to Hold
Separate provides.
G. Respondents shall provide the Key Employees with financial incentives to continue in
their employment positions during the period covered by the Agreement to Hold Separate,
and to accept employment with a Commission-approved acquirer at the time of the
divestiture. Such incentives shall include:
- vesting of all pension benefits;
- continuation of all employee benefits offered by T&N until the date of the
divestiture; and
- a bonus equal to thirty (30) percent of the employee's annual salary (including any
other bonuses) as of the date this order becomes final for any individual who agrees to
employment with a Commission-approved acquirer, payable upon the beginning of their
employment by the Commission-approved acquirer.
H. For a period of one (1) year from the date The Assets To Be Divested are divested,
Respondents shall not make offers of employment to any employees of The Assets To Be
Divested (including employees who are not Key Employees) who have accepted offers of
employment with the Commission-approved acquirer or acquirers of The Assets To Be
Divested.
III.
IT IS FURTHER ORDERED that:
A. If Respondents have not divested, absolutely and in good faith and with the
Commission’s prior approval, The Assets To Be Divested within the time required by
Paragraph II.A. of this Order, then the Commission may appoint a trustee to divest The
Assets To Be Divested. The trustee shall have all rights and powers necessary to permit
the trustee to effect the divestiture of The Assets To Be Divested and to divest such
additional assets and to effect such arrangements as are necessary to assure the
viability, competitiveness, and marketability of The Assets To Be Divested so as to
expeditiously accomplish the remedial purposes of this Order. In the event the Commission
or the Attorney General brings an action pursuant to Section 5(l) of the Federal Trade
Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission,
Respondents shall consent to the appointment of a trustee in such action. Neither the
appointment of a trustee nor a decision not to appoint a trustee under this Paragraph
shall preclude the Commission or the Attorney General from seeking civil penalties or any
other relief (including, but not limited to, a court-appointed trustee) pursuant to the
Federal Trade Commission Act or any other statute enforced by the Commission, for any
failure by either of the Respondents to comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A.
of this Order, Respondents shall consent to the following terms and conditions regarding
the trustee’s powers, duties, authority, and responsibilities:
- The Commission shall select the trustee, subject to the consent of Federal-Mogul, which
consent shall not be unreasonably withheld. The trustee shall be a person with experience
and expertise in acquisitions and divestitures. If Federal-Mogul has not opposed, in
writing, including the reasons for opposing, the selection of any proposed trustee within
ten (10) days after notice by the staff of the Commission to Federal- Mogul of the
identity of any proposed trustee, Federal-Mogul shall be deemed to have consented to the
selection of the proposed trustee.
- Subject to the prior approval of the Commission, the trustee shall have the exclusive
power and authority to divest The Assets To Be Divested, and shall have the power to
divest such additional assets and to effect such arrangements as are necessary to assure
the viability, competitiveness, and marketability of The Assets To Be Divested so as to
expeditiously accomplish the divestiture required by this Order.
- Within ten (10) days after appointment of the trustee, Respondents shall execute a trust
agreement that, subject to the prior approval of the Commission (and, in the case of a
court-appointed trustee, of the court), transfers to the trustee all rights and powers
necessary to permit the trustee to effect the divestiture required by this Order.
- The trustee shall have twelve (12) months from the date the Commission approves the
trust agreement described in Paragraph III.B.3 to accomplish the divestiture, which shall
be subject to the prior approval of the Commission. If, however, at the end of the twelve
(12) month period, the trustee has submitted a plan of divestiture or believes that
divestiture can be achieved within a reasonable time, the divestiture period may be
extended by the Commission (or, in the case of a court-appointed trustee, by the court);
provided, however, the Commission may extend this period for no more than two (2)
additional terms.
- The trustee shall have full and complete access to the personnel, books, records, and
facilities related to The Assets To Be Divested, or to any other relevant information, as
the trustee may request. Respondents shall develop such financial or other information as
such trustee may request and shall cooperate with the trustee. Respondents shall take no
action to interfere with or impede the trustee’s accomplishment of the divestiture.
Any delays in divestiture caused by Respondents shall extend the time for divestiture
under this Paragraph III. in an amount equal to the delay, as determined by the Commission
(or, in the case of a court-appointed trustee, by the court).
- The trustee shall use his or her best efforts to negotiate the most favorable price and
terms available in each contract that is submitted to the Commission, subject to
Respondents’ absolute and unconditional obligation to divest expeditiously at no
minimum price. The divestiture shall be made in the manner, and to the acquirer or
acquirers, as set out in Paragraph II. of this Order; provided, however, if the trustee
receives bona fide offers from more than one acquiring entity, and if the Commission
approves more than one such acquiring entity, then the trustee shall divest to the
acquiring entity or entities selected by Federal-Mogul from among those approved by the
Commission.
- The trustee shall serve, without bond or other security, at the cost and expense of
Respondents, on such reasonable and customary terms and conditions as the Commission or a
court may set. The trustee shall have the authority to employ, at the cost and expense of
Respondents, such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are necessary to carry
out the trustee’s duties and responsibilities. The trustee shall account for all
monies derived from the divestiture and all expenses incurred. After approval by the
Commission (and, in the case of a court-appointed trustee, by the court) of the account of
the trustee, including fees for his or her services, all remaining monies shall be paid at
the direction of Federal-Mogul and the trustee’s power shall be terminated. The
trustee’s compensation shall be based at least in significant part on a commission
arrangement contingent on the trustee’s accomplishing the divestiture required by
this Order.
- Respondents shall indemnify the trustee and hold the trustee harmless against any
losses, claims, damages, liabilities, or expenses arising out of, or in connection with,
the performance of the trustee’s duties, including all reasonable fees of counsel and
other expenses incurred in connection with the preparation for, or defense of any claim,
whether or not resulting in any liability, except to the extent that such liabilities,
losses, damages, claims, or expenses result from misfeasance, gross negligence,
recklessness, willful or wanton acts, or bad faith by the trustee.
- If the trustee ceases to act or fails to act diligently, a substitute trustee shall be
appointed in the same manner as provided in Paragraph III. of this Order.
- The Commission (or, in the case of a court-appointed trustee, the court) may on its own
initiative or at the request of the trustee issue such additional orders or directions as
may be necessary or appropriate to accomplish the divestiture required by this Order.
- In the event that the trustee determines that he or she is unable to divest The Assets
To Be Divested in a manner consistent with the Commission's purpose as described in
Paragraph II, the trustee may divest additional assets of Respondents and effect such
arrangements as are necessary to satisfy the requirements of this Order.
- The trustee shall have no obligation or authority to operate or maintain The Assets To
Be Divested.
- The trustee shall report in writing to Federal-Mogul and the Commission every thirty
(30) days concerning the trustee’s efforts to accomplish the divestiture.
IV.
IT IS FURTHER ORDERED that within thirty (30) days after the date this Order
becomes final, and every thirty (30) days thereafter until Respondents have fully complied
with the provisions of Paragraphs II. and III. of this Order, Respondents shall submit to
the Commission verified written reports setting forth in detail the manner and form in
which Respondents intend to comply, are complying, and have complied with Paragraphs II.
and III. of this Order. Respondents shall include in their compliance reports, among other
things that are required from time to time, a full description of the efforts being made
to comply with Paragraphs II. and III. of the Order, including a description of all
substantive contacts or negotiations for the divestiture and the identity of all parties
that have contacted Respondents or that have been contacted by Respondents. Respondents
shall include in their compliance reports copies of all written communications to and from
such parties, all internal memoranda, and all reports and recommendations concerning
divestiture.
V.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at least
thirty (30) days prior to any proposed change in the corporate Respondents, such as
dissolution, assignment, sale resulting in the emergence of a successor corporation, or
the creation or dissolution of subsidiaries, or any other change in Respondents that may
affect compliance obligations arising out of the Order.
VI.
IT IS FURTHER ORDERED that, for the purpose of determining or securing
compliance with this Order, Respondents shall permit any duly authorized representatives
of the Commission:
A. During office hours and in the presence of counsel, access to all facilities and
access to inspect and copy all books, ledgers, accounts, correspondence, memoranda and
other records and documents in the possession or under the control of Respondents relating
to any matters contained in this Order; and
B. Upon five (5) days’ notice to Respondents, and without restraint or
interference, to interview officers, employees, or agents of Respondents, who may have
counsel present.
Signed this day of February, 1998.
FEDERAL-MOGUL CORPORATION
By:
Mark Leddy
Counsel for Federal-Mogul Corporation
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
T&N PLC
By:
Deborah L. Feinstein
Counsel for T&N plc
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20024
FEDERAL TRADE COMMISSION
By:
Philip Eisenstat
Attorney
Joseph G. Krauss
Assistant Director
William J. Baer
Director
Bureau of Competition
APPENDIX I
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of
FEDERAL-MOGUL CORPORATION, a corporation, and T&N PLC, a
corporation.
File No. 981 0011
AGREEMENT TO HOLD SEPARATE
This Agreement to Hold Separate (“Hold Separate Agreement”) is by and
among Federal- Mogul Corporation (“Federal-Mogul”), a corporation organized,
existing, and doing business under and by virtue of the laws of Michigan, with its office
and principal place of business located at 26555 Northwestern Highway, Southfield,
Michigan 48034; T&N plc (“T&N”), a public limited company organized,
existing and doing business under and by virtue of the laws of the United Kingdom, with
its office and principal place of business located at Manchester International Office
Centre, Styal Road, Manchester M22 5TN, England; and the Federal Trade Commission (the
“Commission”), an independent agency of the United States Government,
established under the Federal Trade Commission Act of 1914, 15 U.S.C. § 41, et seq.
(collectively, the “Parties”).
PREMISES
WHEREAS, on October 16, 1997, Federal-Mogul announced a tender offer to acquire
all of the outstanding shares of T&N (the “Acquisition”); and
WHEREAS, the Commission is now investigating the Acquisition to determine
whether it would violate any of the statutes enforced by the Commission; and
WHEREAS, if the Commission accepts the attached Agreement Containing Consent
Order (“Consent Order”), which would require the divestiture of The Assets To Be
Divested, the Commission must place the Consent Order on the public record for a period of
at least sixty (60) days and may subsequently withdraw such acceptance pursuant to the
provisions of Section 2.34 of the Commission's Rules; and
WHEREAS, the Commission is concerned that if an understanding is not reached
preserving the status quo ante of The Assets To Be Divested as defined in Paragraph
I.G. of the Consent Order during the period prior to the divestiture of The Assets To Be
Divested as required by the Consent Order, the divestiture required by the Consent Order
or resulting from any proceeding challenging the legality of the Acquisition might not be
possible, or might be less than an effective remedy; and
WHEREAS, the Commission is concerned that if the Acquisition is consummated, it
will be necessary to preserve the Commission’s ability to require the divestiture of
The Assets To Be Divested, as described in Paragraph I.G. of the Consent Order, and the
Commission's right to have The Assets To Be Divested continue as a viable competitor
independent of Federal-Mogul and T&N (collectively, the “Respondents”); and
WHEREAS, if the Commission determines to finally issue the Consent Order, it is
necessary to hold separate The Assets To Be Divested to protect interim competition
pending divestiture or other relief; and
WHEREAS, the purpose of the Hold Separate Agreement and the Consent Order is to:
- preserve, pending the divestiture required by the Consent Order, The Assets To Be
Divested as an ongoing, viable, competitive, and independent entity engaged in the same
business in which they are presently engaged;
- prevent interim harm to competition pending divestiture and other relief; and
- remedy any anticompetitive effects of the Acquisition; and
WHEREAS, Respondents’ entering into this Hold Separate Agreement shall in
no way be construed as an admission by Respondents that the Acquisition is illegal; and
WHEREAS, Respondents understand that no act or transaction contemplated by this
Hold Separate Agreement shall be deemed immune or exempt from the provisions of the
antitrust laws or the Federal Trade Commission Act by reason of anything contained in this
Hold Separate Agreement.
NOW, THEREFORE, upon the understanding that the Commission has not yet
determined whether it will challenge the Acquisition, and in consideration of the
Commission’s agreement that the Commission will accept the Consent Order for public
comment, the Parties agree as follows:
1. Respondents agree to execute the attached Agreement Containing Consent Order and,
from the date of execution, to comply with the provisions of the Consent Order as if it
were final.
2. Respondents agree that from the date they execute the Agreement Containing Consent
Order, they will comply with the provisions of this Hold Separate Agreement until:
a. ten (10) business days after the Commission withdraws its acceptance of the Consent
Order pursuant to the provisions of Section 2.34 of the Commission's Rules; or
b. the day after the divestiture required by the Consent Order has been completed.
3. The terms capitalized herein shall have the same definitions as in the Consent
Order.
4. ("Material Confidential Information," as used herein, means competitively
sensitive or proprietary information not independently known to an entity from sources
other than the entity to which the information pertains, and includes, but is not limited
to, customer lists, price lists, marketing methods, patents, technologies, processes, or
other trade secrets.) To assure the complete independence and viability of The Assets To
Be Divested, and to assure that no Material Confidential Information is exchanged between
Federal-Mogul (meaning here and hereinafter, Federal-Mogul and T&N excluding The
Assets To Be Divested and excluding all personnel connected with The Assets To Be Divested
as of the date this Hold Separate Agreement was signed) and The Assets To Be Divested,
Federal- Mogul shall hold The Assets To Be Divested separate and apart on the following
terms and conditions:
a. The Assets To Be Divested shall be held separate and apart and shall be managed and
operated independently of Federal-Mogul, except to the extent that Federal- Mogul must
exercise direction and control over such assets to assure compliance with this Hold
Separate Agreement or the Consent Order, and except as otherwise provided in this Hold
Separate Agreement.
b. Within three (3) days after complete execution of this Hold Separate Agreement,
Federal-Mogul shall appoint, subject to the approval of the Commission, an individual to
be the Independent Auditor. Federal-Mogul shall give the Independent Auditor all powers
and authority necessary to effectuate his/her responsibilities pursuant to this Hold
Separate Agreement.
c. Within five (5) business days of the Commission's acceptance of the Consent Order
for public comment, Federal-Mogul shall organize a distinct and separate entity ("The
New Group") to be composed of: (1) The Assets To Be Divested and (2) A.E. Clevite
Inc., excluding the following (a) the stock of McCord Payen Technical Services Inc.,
McCord Payen Inc., McCord Sealing Inc., and McCord Leakless Sealing Co., and (b) the
assets of A.E. Goetze - Lake City Division and Glacier Clevite Heavywall Bearings Division
(except the McConnellsville Strip Facility).
d. The New Group shall be staffed with sufficient employees to maintain the viability
and competitiveness of The Assets To Be Divested. The Management Team, as defined below,
with the approval of the Independent Auditor, shall have the authority to replace
employees who left their positions with The Assets To Be Divested since January 1, 1998.
To the extent that The New Group employees leave The New Group prior to the divestiture of
The Assets To Be Divested, the Management Team may replace the departing employees of The
New Group, subject to the approval of the Independent Auditor, with persons who have
similar experience and expertise.
e. The Independent Auditor shall monitor the organization of The New Group and shall
have responsibility for managing The New Group consistent with the terms of Hold Separate
Agreement; for maintaining the independence of The New Group consistent with the terms of
this Hold Separate Agreement and this Consent Order; and for assuring Respondents’
compliance with their obligations pursuant to the Hold Separate Agreement.
f. Simultaneously with the organization of The New Group, Federal-Mogul shall appoint,
subject to the approval of the Independent Auditor, four individuals from among the
current employees of The Assets To Be Divested to manage and maintain The Assets To Be
Divested (the “Management Team”). The Management Team, in its capacity as such,
shall report directly and exclusively to the Independent Auditor and shall manage The New
Group independently of the management of Federal-Mogul. The Management Team shall not be
involved, in any way, in the operations of the businesses of Federal-Mogul during the term
of the Hold Separate Agreement.
g. Federal-Mogul shall not change the composition of the Management Team unless the
Independent Auditor consents. Federal-Mogul shall not change the composition of the
management of The New Group, except that the Management Team shall be permitted to remove
management employees for cause subject to approval of the Independent Auditor. The
Independent Auditor shall have the power to remove members of the Management Team for
cause and to require Federal-Mogul to appoint replacement members to the Management Team
in the same manner as provided in subparagraph 4.f. of this Hold Separate Agreement.
h. The Independent Auditor, each member of the Management Team, and each employee of
The New Group who has access to Material Confidential Information shall enter into a
confidentiality agreement agreeing to be bound by the terms and conditions of this Hold
Separate Agreement. These individuals must retain and maintain all confidential
information relating to the held separate business on a confidential basis and, except as
is permitted by this Hold Separate Agreement, such persons shall be prohibited from
providing, discussing, exchanging, circulating, or otherwise furnishing any such
information to or with any other person whose employment involves any of
Federal-Mogul’s business. These persons shall not be involved in any way in the
Thinwall Bearings operations of Federal-Mogul.
i. Within ten (10) business days of the Commission's acceptance of the Consent Order
for public comment, Federal-Mogul shall establish written procedures to be approved by the
Independent Auditor, covering the management, maintenance, and independence of The Assets
To Be Divested consistent with the provisions of the Hold Separate Agreement.
j. Within ten (10) business days of the Commission's acceptance of the Consent Order
for public comment, Federal-Mogul shall circulate, to employees of The New Group and to
Federal-Mogul employees who are involved in operations relating to the Thinwall Bearings
of Federal-Mogul, a notice of this Hold Separate Agreement and Consent Order in the form
attached as Attachment A.
k. The Independent Auditor shall have full and complete access to all personnel, books,
records, documents and facilities of The New Group or to any other relevant information,
as the Independent Auditor may reasonably request, including but not limited to all
documents and records kept in the normal course of business that relate to The Assets To
Be Divested. Federal-Mogul shall develop such financial or other information as such
Independent Auditor may request and shall cooperate with the Independent Auditor.
Federal-Mogul shall take no action to interfere with or impede the Independent Auditor's
ability to perform his/her responsibilities consistent with the terms of the Hold Separate
Agreement or to monitor Federal-Mogul's compliance with the Hold Separate Agreement and
the Consent Order.
l. Federal-Mogul may require the Independent Auditor to sign a confidentiality
agreement prohibiting the disclosure of any material information gained as a result of his
or her role as Independent Auditor to anyone other than the Commission.
m. The Independent Auditor shall have the authority to employ, at the cost and expense
of Federal-Mogul, such consultants, accountants, attorneys, and other representatives and
assistants as are necessary to carry out the Independent Auditor's duties and
responsibilities.
n. The Independent Auditor and the Management Team shall serve, without bond or other
security, at the cost and expense of Federal-Mogul, on reasonable and customary terms
commensurate with the person's experience and responsibilities. Federal-Mogul shall
indemnify the Independent Auditor and the Management Team and hold the Independent Auditor
and the Management Team harmless against any losses, claims, damages, liabilities, or
expenses arising out of, or in connection with, the performance of the Independent
Auditor's or the Management Team's duties, including all reasonable fees of counsel and
other expenses incurred in connection with the preparation for, or defense of any claim,
whether or not resulting in any liability, except to the extent that such liabilities,
losses, damages, claims, or expenses result from misfeasance, gross negligence, willful or
wanton acts, or bad faith by the Independent Auditor or the Management Team.
o. Federal-Mogul shall provide The New Group with sufficient working capital to operate
The Assets To Be Divested at least at current rates of operation, to meet all capital
calls in respect of The Assets To Be Divested, and to carry on, at least at their
scheduled pace, all capital and research and development projects for The Assets To Be
Divested ongoing, planned, or approved as of or after February 20, 1998. During the period
this Hold Separate Agreement is effective, Federal- Mogul shall make available for use by
The New Group funds sufficient to perform all necessary routine maintenance to, and
replacements of, The Assets To Be Divested. Federal-Mogul shall provide The New Group with
such funds as are necessary to maintain the viability, competitiveness, and marketability
of The Assets To Be Divested until the date the divestiture is completed. At a minimum,
Federal-Mogul shall ensure that The Assets To Be Divested have available average working
capital of not less than one hundred twenty percent (120%) of the average working capital
of The Assets To Be Divested during the twelve (12) months preceding the date of this Hold
Separate Agreement.
p. Federal-Mogul shall continue to provide the same support services to The Assets To
Be Divested as are being provided to such assets by Federal-Mogul as of the date this Hold
Separate Agreement is signed by Federal-Mogul. Federal-Mogul may charge The New Group the
same fees, if any, charged by Federal-Mogul for such support services as of the date this
Hold Separate Agreement is signed by Federal-Mogul. Federal-Mogul’s personnel
providing such support services must retain and maintain all Material Confidential
Information of The Assets To Be Divested on a confidential basis, and, except as is
permitted by this Hold Separate Agreement, such persons shall be prohibited from
providing, discussing, exchanging, circulating, or otherwise furnishing any such
information to or with any person whose employment involves any of Federal-Mogul’s
businesses. Such personnel shall also execute confidentiality agreements prohibiting the
disclosure of any Material Confidential Information of The Assets To Be Divested.
q. Except as provided in this Hold Separate Agreement, Federal-Mogul shall not employ
or make offers of employment to employees of The New Group, during the term of the Hold
Separate Agreement. The acquirer or acquirers of The Assets To Be Divested shall have the
option of offering employment to the employees of The New Group. After the term of the
Hold Separate Agreement, Federal-Mogul may offer employment to employees of The New Group
who have not accepted employment with the acquirer or acquirers of The Assets To Be
Divested. Federal-Mogul shall not interfere with the employment of such employees of The
New Group by the acquirer or acquirers of The Assets To Be Divested; shall not offer any
incentive to such employees of The New Group to decline employment with the acquirer or
acquirers of The Assets To Be Divested or accept other employment with Federal-Mogul; and
shall remove any impediments that may deter such employees of The New Group from accepting
employment with the acquirer or acquirers of The Assets To Be Divested, including but not
limited to the payment, or the transfer for the account of the employee, of all accrued
bonuses, pensions and other accrued benefits to which such employees would otherwise have
been entitled had they remained in the employment of Federal- Mogul.
r. Federal-Mogul shall not exercise direction or control over, or influence directly or
indirectly, The Assets To Be Divested, the Independent Auditor, the Management Team, or
The New Group or any of its operations; provided, however, that Federal-Mogul may exercise
only such direction and control over The New Group as is necessary to assure compliance
with this Hold Separate Agreement or the Consent Order, or with all applicable laws.
s. Except for the Management Team and except to the extent provided in subparagraph
4.p., Federal-Mogul shall not permit any other of its employees, officers, or directors to
be involved in the operations of The New Group.
t. Federal-Mogul shall maintain the viability, competitiveness, and marketability of
The Assets To Be Divested; shall not sell, transfer, or encumber The Assets To Be Divested
(other than in the normal course of business); and shall not cause or permit the
destruction, removal, wasting, or deterioration, or otherwise impair the viability,
competitiveness, or marketability of The Assets To Be Divested.
u. If the Independent Auditor ceases to act or fails to act diligently and consistently
with the purposes of this Hold Separate Agreement, Federal-Mogul shall appoint a
substitute Independent Auditor, subject to Commission approval.
v. Except as required by law, and except to the extent that necessary information is
exchanged in the course of consummating the Acquisition, defending investigations,
defending or prosecuting litigation, obtaining legal advice, negotiating agreements to
divest assets pursuant to the Consent Order, or complying with this Hold Separate
Agreement or the Consent Order, Federal- Mogul shall not receive or have access to, or use
or continue to use, any Material Confidential Information, not in the public domain,
relating to The New Group or The Assets To Be Divested. Nor shall The New Group or the
Management Team receive or have access to, or use or continue to use, any Material
Confidential Information not in the public domain about Federal-Mogul and relating to
Federal-Mogul’s business. Federal-Mogul may receive aggregate financial information
relating to The New Group to the extent necessary to allow Federal- Mogul to prepare
United States consolidated financial reports, tax returns, and personnel reports. Any such
information that is obtained pursuant to this subparagraph shall be used only for the
purposes set forth in this subparagraph.
w. Within thirty (30) days after the date this Hold Separate Agreement is accepted by
the Commission and every thirty (30) days thereafter until this Hold Separate Agreement
terminates, the Independent Auditor shall report in writing to the Commission concerning
the efforts to accomplish the purposes of this Hold Separate Agreement. Included within
that report shall be the Independent Auditor's assessment of the extent to which The New
Group is meeting (or exceeding) its projected goals as are reflected in operating plans,
budgets, projections or any other regularly prepared financial statements.
5. Should the Commission seek in any proceeding to compel Respondents to divest any of
The Assets To Be Divested, as provided in the Consent Order, or to seek any other
injunctive or equitable relief for any failure to comply with the Consent Order or this
Hold Separate Agreement, or in any way relating to the Acquisition, as defined in the
draft complaint, Respondents shall not raise any objection based upon the fact that the
Commission has permitted the Acquisition. Respondents also waive all rights to contest the
validity of this Hold Separate Agreement.
6. To the extent that this Hold Separate Agreement requires Respondents to take, or
prohibits Respondents from taking, certain actions that otherwise may be required or
prohibited by contract, Respondents shall abide by the terms of this Hold Separate
Agreement or the Consent Order and shall not assert as a defense such contract
requirements in a civil action brought by the Commission to enforce the terms of this Hold
Separate Agreement or this Consent Order.
7. For the purposes of determining or securing compliance with this Hold Separate
Agreement, and upon written request with reasonable notice to Respondents made to their
counsel, Respondents shall permit any duly authorized representatives of the Commission:
a. During the office hours of Respondents, and in the presence of counsel, access to
all facilities and access to inspect and copy all books, ledgers, accounts,
correspondence, memoranda, and other records and documents in the possession or under the
control of Respondents relating to compliance with this Agreement; and
b. Upon five (5) days’ notice to Respondents and without restraint or interference
from them, to interview officers or employees of Respondents, who may have counsel
present, regarding any such matters.
8. This Hold Separate Agreement shall not be binding on the Commission until it is
approved by the Commission.
Dated: February __, 1998
FEDERAL-MOGUL CORPORATION
By:
T&N PLC
By:
FEDERAL TRADE COMMISSION
By:
Debra A. Valentine
General Counsel
ATTACHMENT A
NOTICE OF DIVESTITURE AND REQUIREMENT FOR CONFIDENTIALITY
Federal-Mogul Corporation (“Federal-Mogul”) and T&N plc
("T&N") have entered into a Consent Agreement and Agreement to Hold Separate
with the Federal Trade Commission ("Commission") relating to the divestiture of
the T&N worldwide thinwall bearing business. Until after the Commission's Order
becomes final and the T&N worldwide thinwall bearing business is divested, the T&N
worldwide thinwall bearing business must be managed and maintained as a separate, ongoing
business, independent of all other T&N businesses. All competitive information
relating to the T&N worldwide thinwall bearing business must be retained and
maintained by the persons involved in the T&N worldwide thinwall bearing business on a
confidential basis and such persons shall be prohibited from providing, discussing,
exchanging, circulating, or otherwise furnishing any such information to or with any other
person whose employment or agency involves any other Federal-Mogul or T&N business.
Similarly, all such persons involved in any other Federal-Mogul or T&N business shall
be prohibited from providing, discussing, exchanging, circulating or otherwise furnishing
competitive information about such business to or with any person whose employment or
agency involves the T&N worldwide thinwall bearing business.
Any violation of the Consent Agreement or the Agreement to Hold Separate, incorporated
by reference as part of the Consent Order, may subject Federal-Mogul and T&N to civil
penalties and other relief as provided by law.
APPENDIX II
John E. Wheatley
Derrick Parker
Jeffrey Senior
Graham Jones
Paulo Detasis
Dr. Peter Brown
T. Allan Welsh
Clive Kellett
Ian Massey
Tony Dolton
Brian Campbell
Ken McMeekin
APPENDIX III
Suki Singh
Phil Read
Neil Wardrop
Arvind Patel
Jason Clarke
Hao Xu
Ducal Wang
Nick Butler
Graham Martin
Carl Perrin
Paul Shenton
Kevin Jupe
Melissa Gartside
Barbara Carroll
Trevor Wright
Julia Hood
Steve Kennedy
Ian Laing
John Woodthorpe
Julie MacDonald
Geraldine Mulet
Adrian Hardgrave
Carol Pindar
Richard Williams
Chas Johal
Carolyn Mayston
Nicola Seymour
Devji Lad
John Carey
Tim Partridge
Alan Pope
Graeme Topping
Kate Leeper
Alistair Brydon
Navjot Grewal
Martin Shellard
Nigel Felgate
Bill Hall
Tony Smith
Ha Tran
Mike Silvester
Jeff Stevens
Mike Kirk
Paul Harrison
Dean Murden
Jonathan McGivan
Craig Hobson
Omar Mian
Brian Fitzsimons
Bob Williams
Bob Mee
Ian Williams
Martin Ashmore |