Document 6RYOynoDwG77jZL8DBKne6ZN9

lorg-Warner Corporation OZ South Michigan Avenue nicago- Illinois 60604 ,,)e3hone' 312/322-8530 U; J. Parsons nio' vice President. General Counsel vj Secretary July 14, 1981 The Echlin Manufacturing Company 175 North Branford Road Branford, Connecticut Gentlemen: As Tenior Vice President and General Counsel of BorgWarner Corporation ("Borg-Warner"), I have acted as counsel in connection with the preparation, execution and delivery of the Agreement for Sale of Assets between The Echlin Manufacturing Company ("Echlin") and Borg-Warner made as of February 28, 1981 providing for the exchange by Borg-Warner of all of the assets and certain of the liabilities of its Automotive Aftermarket Operations, which are defined in Section 1.1 of the Agreement as Ottawa Division, Automotive Parts Division, Automotive Parts Division International, llwin/Washington Division and Automotive Parts Division Borg-Warner (Canada) Limited; and the preparation of the material appearing under the heading "Business and Property of Borg-Warner's Automotive Aftermarket Operations" in the Echlin Proxy Statement dated June 5, 1981 (the "Proxy Statement"), filed with the Securities and Exchange Commission pursuant to its rules promulgated under the Securities Exchange Act of 1934. I have supervised the corporate proceedings authorizing Borg-Warner's execution and delivery of the Agreement, the transfer, assignment and delivery to Echlin of the Automotive Aftermarket Operations pursuant to the "Agreement and BorgWarner 's execution and delivery of the Restricted Securities Agreement. In addition, I have examined the Certificate of Incorporation and bylaws of Borg-Warner. I am familiar with Borg-Warner1s ownership of the Automotive Aftermarket Operations. I am also familiar with the nature of the business conducted by the Automotive Aftermarket Operations and the jurisdictions in which the Automotive Aftermarket Operations owns, leases, or operates its properties or conducts its business. E00260 'T'he Echlin Manufacturing Company ly 14, 1981 Page 2 I have examined the Proxy Statement, and in addition, I have examined, such corporate documents, certificates, records and other papers, including the Schedules delivered to Echlin pursuant to the provisions of the Agreement, and made such investigations and inquiries as I have deemed necessary or desirable in order to enable me to render this opinion, which is given pursuant to Section 11.1(c) of the Agreement. This opinion and all statements herein are rendered only insofar as they relate to Borg-Warner'- Automotive Aftermarket Operations (as defined in Section 1.1 of the Agreement), and do not extend or include the Additional Assets (as defined in Section 1.1 of the Agreement) to be conveyed pursuant to Section 1.1 of the Agreement. Based on the foregoing and in reliance upon the opinion of Messrs. McMillan, Binch, Barristers & Solicitors, Toronto, Ontario, Canada as to matters referred to in paragraphs (1), (4), (5), (8) and (10) below insofar as they late to APD Automotive Inc., a Subsidiary, which opinion attached hereto, I am of the opinion that:1 (1) Borg-Warner has good and marketable title to the assets, property and business of the Automotive Aftermarket Operations, has the right and power to sell, assign and transfer the Automotive Aftermarket Operations assets and the transfer, assignment and delivery to Echlin of the Automo tive Aftermarket Operations assets will vest in Echlin good, valid, marketable and indefeasible title to the Automotive Aftermarket Operations assets, free of any mortgage, lien, claim, charge, pledge or encumbrance whatever other than those created by or in Echlin or except as disclosed in the Agreement or any Exhibit thereto, or liens, security interests, encumbrances which are not substantial in amount and which do not materially affect the value of the assets subject thereto or impair their usefulness in the conduct of the Automotive Aftermarket Operations and liens for taxes not yet due and payable; E00261 The Echlin Manufacturing Company j-iy 14, 1981 1 e3 (2) Borg-Warner is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite power to own, lease and operate its properties and to conduct the business presently being conducted by the Automotive Aftermarket Operations, as described in the Proxy Statement; (3) Borg-Warner has full corporate power to carry out the transactions provided for in the Agreement; all corporate and other proceedings required to be taken by or on the part of Borg-Warner to authorize it to execute and.deliver the Agreement and to consummate the. transactions contemplated therein have been duly and validly taken; and the Agreement has been duly and validly authorized, executed and delivered by Borg-Warner and consti tutes a valid and binding obligation of BorgWarner enforceable against it and its successors and assigns in accordance with its terms; (4) Borg-Warner is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the operations of the Automotive Aftermarket Operations are doing business which would require such qualification; (5) APD Automotive Inc., is a corporation duly organ ized and existing and in good standing under the laws of the Dominion of Canada, has all requisite corporate power to own, lease and operate its properties and to conduct its business as presently being conducted and as proposed to be conducted, except that it has not obtained a license under the Mortmain and Charitable Uses Act of Ontario. All shares of the capital stock of APD Automotive Inc. are validly issued, fully paid and non-asses sable, and are owned of record by Borg-Warner, free and clear of any liens .or encumbrances; (6) The execution and delivery of the Agreement, the consummation by Borg-Warner of the transactions contemplated thereby and the fulfillment of the terms and compliance with the provisions thereof will not conflict with or result in a breach of E00262 The Echlin Manufacturing Company July 14, 1981 l 24 any provision of its Certificate of Incorporation or bylaws or conflict with or result in a breach of or default under (or in an occurrence which with the lapse of time or action by a third party could result in a default under), or give rise to a right of termination, cancellation or accelera tion with respect to, the terms, conditions, or provisions of, any note, bond, mortgage, inden ture, license, agreement or any other instrument or obligation to which Borg-Warner is a party or is subject or by which the Automotive Aftermarket Operations or any of its properties or assets are bound, of which I have knowledge after making inquiry with respect thereto, or violate any court order, writ, injunction or decree applicable to Borg-Wamer, or any of its Automotive Aftermarket Operations properties or assets, of which I have knowledge; (7) Borg-Warner has full corporate power to carry out the transactions as provided in the Restricted Securities Agreement; all corporate and other proceedings required to be taken by or on the part of Borg-Warner to authorize it to execute, deliver and perform the Restricted Securities Agreement have been duly and validly taken; and the Re stricted Securities Agreement has been duly and validly authorized, executed and delivered by Borg-Warner and constitutes a valid and binding obligation of Borg-Warner enforceable against Borg-Warner and its successor-s and assigns in accordance with its terms; (8) Any consent or approval by-any governmental authority which is required in connection with the consummation by Borg-Warner of the transactions contemplated by the Agreement has been obtained, except that the approval of the Department of Industry, Trade and Commerce of Canada has not been obtained. Borg-Warner has obtained or requested all consents, approvals, waivers and notifications of creditors, lessors, and other non-governmental persons, in connection with the execution and delivery of the Agreement and transactions contemplated thereby; E00263 The Echlin Manufacturing Company ,T<ily 14, 1981 je 5 (9) I do not know of any litigation, proceeding or investigation that is pending or threatened against Borg-Warner except as set forth in Exhibit H and the amendment thereto in which an adverse determination would have a material adverse affect the properties, business, operations or condition (financial or otherwise) of the Automotive Aftermarket Operations, taken as a whole, or which might jeopardize or have a material adverse affect on any of the transactions contemplated by the Agreement; (10) I do not know of any item called for by the Exhibits to the Agreement which is not disclosed therein or in an amendment thereto, or any material default under any outstanding lease, contract, promissory note, license or other agreement listed in any such Exhibit; (11) Except as to financial statements and other financial data or as to material relating to or supplied by Echlin for inclusion in the Proxy Statement, as to which no opinion is expressed, I have no reason to believe that at the time of the Echlin Stockholders Meeting held on July 7, 1981, the "Business and Property of Borg-Warner's Aftermarket Operations" section of the Proxy Statement was false or misleading with respect to any material fact contained any untrue state ment of a material fact or omitted to state any material fact required to be-stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading as -of the date of such meeting. The opinions expressed in paragraphs (3) and (7) above with respect to the enforceability of the Agreement and the Restated Restrictions Agreement are limited to the extent that general equitable principles may limit the availability of the remedies of specific performance and injunctive relief and are subject to the effect of bankruptcy, insol vency, reorganization, moratorium or other similar laws affecting the rights of creditors generally. Enforcement of E00264 i The Echlin Manufacturing Company 'uly 14, 1981 age 6 the indemnification provisions of the Agreement and the Restated Restrictions Agreement may also be limited by the applicability of any Federal or state securities laws, rules or regulations. } Very truly yours RJP/st and General Counsel **c r jQj-g-Warner Corporation ,qq south Michigan Avenue ^-ago, Illinois 60604 July 14, 1981 'he Echlin Manufacturing Company 75 North Branford Road jranford, Connecticut 06405 '.entlemen: This letter will constitute a supplement to an opinion letter )f July 14, 1981 from Russell J. Parsons, Senior Vice President md General Counsel of Borg-Warner Corporation to yourselves, jpining as to certain matters in connection with the closing of :he sale of certain assets of Borg-Warner Corporation to The Echlin lanufacturing Company. This letter specifically supplements and lodifies paragraph 8 of the aforedescribed letter of Mr. Parsons, it the time such letter was written there was not actually pending >r threatened litigation which might adversely affect the assets )r which might jeopardize any of the transactions contemplated by :he Agreement. Borg-Warner has been advised today by telephone :all from the Federal Trade Commission to the undersigned of the ntion on the part of the Federal Trade Commission to file an icu..j.nistrative complaint challenging the legality of the trans ition under Section 7 of the Clayton Act. This letter is, there fore, to specifically advise you of that fact and to except from paragraph 8 the above described threatened litigation. Very truly yours, BORG-WARNER CORPORATION ^ :WH:dc Associate General Counsel 1% ASSIGNMENT WHEREAS, BORG-WARNER CORPORATION C'Assignor"), a Delaware corporation, having its principal place of business at 200 South Michigan Avenue, Chicago, Illinois 60604, is the cwner of the entire rigjit, title, and interest in and to the trademarks, applications for registration and registrations of said narks listed in Exhibit "A" annexed hereto; and WHEREAS, THE ECHLIN MANUFACTURING COMPANY ("Assignee") a Connecticut corporation, having its principal place of business at 175 North Branford Road, Branford, Connecticut, is desirous of acquiring all rights, title and interest in and to said trademarks, applications for registration and registrations listed in Exhibit "A" annexed hereto; NOT, THEREFORE, in consideration of the sun of Che Dollar ($1.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged. Assignor does hereby assign unto Assignee, all rights, title and interest in and to the trademarks listed in Exhibit "A" annexed hereto, together with the applications and registrations thereof and the good will of the business synbolized by the marks. . BORG-WARNER CORPORATION Senior Vic^/President STATE OF ILLINOIS ) ) ss COUNTY OF COCK ) ^ (h this ID ~ day of f, V. --1981, before me appearedy,.. r S cl1 ' 5~ _______ , the person "who signed this instrunent on his own behalf, or who was authorized to sign this instrunent on behalf of the identified corporation or other juristic entity, who being sworn, acknowledged that he si^ied this instrunent as a free act. E00267 EXHIBIT "A" TRADEMARK REGISTRATIONS AND APPLICATIONS Trademark AUTO MECH AUTO-MECH AUTO-MECH CAPSUL-PAC CAPSUL-PAC & Design POWER BRUTE TRU-POWER & Design TRU-POWER & Design TRU-POWER & Design TRU-POWER & Design TRU-POWER & Design TRU-POWER & Design TRU-POWER & Design Country Benelux Canada China(People's Rep.) Benelux Canada Canada Benelux Canada China(People's Rep.) Colombia Ecuador Puerto Rico Venezuela- Number 98,411 152,940 (Appln) 96,900 143,887 198,006 328,627 205,518 (Appln) 85,690 251 18,962 85,057 E00268 ASSUMPTION OF LIABILITIES The Echlin Manufacturing Company ("Echlin") pursuant to .he provisions of the Agreement for Sale of Assets between Borgfarner Corporation ("Borg-Warner") and Echlin, effective as of 'ebruary 28 , 1981, hereby assumes and agrees to pay, perform ind discharge the following, and only the following, liabilities md obligations of Borg-Warner pertinent to the assets and busiless of the Automotive Aftermarket Operations: (a) Liabilities of the Automotive Aftermarket Opera tions as of the Balance Sheet-Date, whether accrued, absolute, contingent or otherwise, which are reflected or reserved against in the Balance Sheet (but only to the extent so reflected or reserved against) plus such liabilities as may have been incurred in the ordinary course of business between the Balance Sheet Date and the Effective Date. In addition, Echlin assumes other liabilities of the Auto motive Aftermarket Operations not reflected on the Balance Sheet or reserved against but which were incurred prior to the Balance Sheet Date in the ordinary course of business, provided, however, that Echlin's assumption of such liabil ities under this paragraph shall not exceed $50,000. (b) Obligations of the Automotive Aftermarket Operations in respect of the leases, contracts and other commitments of Borg-Warner and Borg-Warner (Canada) Limited (or the new Canadian subsidiary), related to the Automotive Aftermarket Operations, including but not limited to, obligations ' under purchase orders, sales orders and leases of real or I E00269 personal property; provided, however, that Echlin shall not assume liability for, or be in any way obligated in any respect for any breach or of any failure of performance in respect of any such leases, contracts or commitments of Borg-Warner or Borg-Warner (Canada) Limited on or prior to Effective Date. (c) The obligations of the Automotive Aftermarket Oper ations for (i) claims for injuries or damages occurring after the Effective Date involving products manufactured by the Ottawa Division and the Ballwin/Washington Division of the Automotive Aftermarket-Operations; (ii) damaged or defective goods within the warranty policy and practices of the Automotive Aftermarket Operations; and (iii) returned goods in accordance with the prior practices of the Auto motive Aftermarket Operations. Notwithstanding anything herein contained, the liabilities and obligations which are to be assumed and which Echlin has agreed to perform and discharge shall not include (i) any tax liabilities attributable to the operations of the Automotive Aftermarket Operations which were due and payable, or accrued prior to the Effective Date or (ii) claims for injuries or damages involving products manufactured by Borg-Warner Divisions other than the Ottawa and Ballwin/Washington Divisions. IN WITNESS WHEREOF, Echlin has caused this Assumption of Liabilities to be signed and sealed this 14th day of July, 1981. THE ECHLIN MANUFACTURING COMPANY By (Seal) E00270 Purchase Order Vendor Amount Open* Automotive Parts Division International (cont'd.) 71--2131. Rockford Division (Mechanics items) 1200 Windsor Road Rockford, IL 61101 $ 93,310 T1-2237 T1-2239 Ballwin/Washington Division P.0. Box 230 -'Ballwin, MO 63011 n .... n 56,000 66,000 55,850 T1 -2263 T1-2285 T1-2319 Krizman, Inc. 1141 East 12th Street Mishawaka, 'IN 46544 1 tl 51,500 134,000 61,000 Automotive Parts Division 55165 American Rubber Products 692 Alpha Drive Cleveland, Ohio 44143 68,386 54960 55164 r 55287 55353 Anchor Industries 1725 London Road_ Cleveland, Ohio 44112 n i it 51,532 154,061 91,415 83,758 55166 - Cleveland Motive Products 30505 Clemens Road Westlake, Ohio 44145 - Amount Open as of 4/1/81 51,267 E00271 Purchase Order Vendor Automotive Parts Division (cont'd.) 54768 . New Bedford Gear Brailey Road Ind. Park New Bedford, Mass. 02746 54870 tf 55033 fl 55225 ft 55307 It Amount Open $177,972 58,888 263,640 260,472 232,663 55224 Timing Gear Corporation 2425 American Lane Elk Grove Village, IL 60007 50,997 55319 55346 54881 55220 55237 European Parts Exchange Irvine Ind. Park Irvine, CA 92713 M It II 93,672 53,417 84,481 259,729 139,771 54810 55125 PACC0 Products 235 N. Sherman Corona, CA 91720 It 70,489 54,405 55040 55233 55315 Carter Carburetor 9666 Olive Street St. Louis, M0 63132 t fl 144,720 56,.076 106,36`6 *Amount Open as of 4/1/81 E00272 purchase Order Vendor Automotive Parts Division (cont'd.) 54874 Alloy Automotive 3205 S. Shields Chicago, IL 60616 55037 II 55230 ft Amount Open $ 52,065 59,613 97,309 55141 55056 54828 55118 55180 55077 Automotive Controls (Echlin) Echlin Road 4 U.S. 1 Branford, Conn. 06405 146,422 ft 176,139 II 57,582 tl .... . . . . ------------ 91,897 II 55,117 ft 84,417 55119 55188 55146 Automotive Controls . 13 W. Oak Street Independence,-KA 67301 n ii 278,073 50,439 92,496 60000 ,* 60022 ' Borg 4 Beck Division 6558 South Menard Avenue Chicago, IL 6063B ft 1,011,152 239,144 50000 Borg 4 Beck Division 6700 18 1/2 Mile Road Sterling Heights, MI 48078 498,735 Amount Open as of 4/1/81 E00273 Purchase Order Vendor Automotive 55205 Parts Division (cont'd.) B.L.D. Products 534 E. 48th Street Holland, MI 49423 55093 55103 55148 Essex International 5200 Auto Club Drive Dearborn, MI 48126 tl tl 55019 55189 55303 F 4 E Mfg. 32031 Town-ley R-oad Madison Heights, MI 48817 Vt ft 54777 54879 55042 55159 55317 , Federal Mogul P.0. Box 1966 . Detroit, MI 48235 ft ft ft _ If 00001 00002 00003 00004 00005 00006 ' 00007 Ottawa Division P.0. Box 788 Ottawa, IL 61350 u it it it it Amount Open as of. 4/1/81 Amount Open $115,243 88,089 80,994 82,782 50,077 280,149 72,009 54,268 91,503 139,422 171 ,052 72,779 289,567 417,858 799,492 1,049,414 1,592,767 1,433,403 1,357,768 E00274 j.irchsse Order Vendor lutomotive Parts Division (cont1d .) 3' 'Bal1win/Washington Division P.0. Box 230 Ballwin, HO 63011 54876 55039 35232 55314 tl 11 tl tl 70000 tl If tl Mechanics Division 1200 Windsor Road Rockford, IL 61101 tf It n. 54871 55034 5^z26 55308 54771 54873 j 55036 55229 5531 1 Horse Chain Div.ision South Aurora Street Ithaca, New York 14850 n It - u ii Zeller Corporation P.0. Box 278 Defiance, Ohio 4351-2 tl tl n tt 'unt Open as of 4/1/81 Amount Open $302,714 386,499 82D,152 616,993 219,115 56,382 87,841 103,290 53,027 119,894 262,349 99,746 173,457 74,375 112,489 111,003 175,660 . 64,458 E00275 \P Purchase Order y nfhawa Division . 1500 Vendor Rockford-Division 1200 Windsor Road Rockford, IL 61101 Amount Open $304,458 . 5500 Borg 4 Beck Division 6558 South Menard Avenue Chicago, IL 60638 224,966 4400 Borg & Beck Division. 6700 18 1/2 Mile Road Sterling Heights, MI 48078 173,315 5152 Spring Division 700 South 25th Avenue Bellwood, IL 60104 78,600 1567 Aisin USA Torence, CA 108,136 1566 H.K. Porter Hunnington, IN 98,171 5210 50601 Raybestos Manhattan Manheim, PA - 271,851 Ballwin/Washinoton Division None Automotive Parts Division, Borg-Warner (Canada) Limited 80247 Zeller Corporation P.0. Box 278 Defiance, Ohio 43512 87-,000 (to be shipped in three monthly .installments) `'Amount Open as of 4/1/81 E00276 ...li The Automotive Aftermarket Operations have unfilled customer orders in excess of $50,000, as follows: Order No. Customer Amount Qper Automotive Parts Division International T9-6547 Ets. Boon * Chaussee de Haecht 1634 1130 Brussels, Belgium T0-749B Ets. Boon Chaussee de'Haecht 1634 1130 Brussels, Belgium T0-80O4 Repuestos ElParaiso C.A. Apartado No. 75335 Caracas 1070-A, Venezuela T0-8329 Teriak Eid 7, El Matbaa El Amiria Boulack, Cairo,' Egypt. T1-2025 Sager Sulaiman-Alghanaman P.0. Box 295 Kuwait 1 2058 Landa Motor Avenida Paez, Edif.; MI, Local 3, Puente Hierro Caracas 1010, Venezuela Rancho 11 T1-206 0 Repuestos Boleita Avenida Francisco DeMiranda Boleita, Estado Miranda Venezuela T1-20S6 IBEA P.0. Box 6970 Guayaquil, Ecuador - T1-207 6 Samuel Wolfensen Or. Garcia Naranjo #250-252 Lima 13, Peru .$96,100 156,000 100,000 111,300 76,000 84,700 208,000 60,000 53,000 unt Open as of 4/1/81 E00277 Customer HRmotive Parts Division International (cont'd.) ^2082 K-2089 A 11-2096 11-2112 T1-2113 T1-2131 T1-2136 T1-2210 T1 -- 22 31 T1 -2237 Sadaga & Siraj Kaki P.0. Box 1 Mecca, Saudi Arabia Motores Valencia C.A. Calle Michelena #110-60 Edif. Negro Primero Valencia Estado C'arabobo Venezuela I A M Ludmir S.C. Av. Iquitos No. 114 Lima 13, Peru Rota Agro Apartado 179 Maracay Edo. Venezuela Aragua Rota Agro Apartado 179 Maracay Edo. Aragua Venezuela Transvaal Motor Industries P.0. Box 6931 Oohannesburg 2000, South Africa Rovandi S.A. P.0. Box 105 Guarenas, Estado Venezuela Miranda B-W Automotive of Puerto Rico, Inc. G.P.0. Bo*x BD San Ouan, Puerto Rico 00936 Rung Chai Alai Tractor 256-258 Boripatra Road Bangkok, Thailand Distribuidora Vezga Urb. La Trinidad Calle 55-B-No. 15-0-106 Maracaibo, Venezuela ' int Open as of A/1/81 Amount Open $ 92,400 55,000 80,000 76,000 76,000 133,300 116,800 130,000 _ 51,000 72,000 E00278 uus comer Amount Open* jl-2263 T1-2266 T1-2285 T1-2319 Parts Division International (cont'd.) Soler Motors P.0. Box 1268 Miami, Florida M. Andraos 4 Co. P.Q. Box 447 Beirut, Lebanon Rovandi S.A. P.0. Box 105 Guarenas, Estado.Miranda Venezuela Repuestos Calamon C. Calle Bolivar 58 Catia, Caracas 1030 Venezuela A. Orimpex C. A. Calle Sur Con Cine Artigas Avenida San Martin Edif. Palaez Hermanas Caracas 1020, Venezuela Repuestos El Paraiso C. A. Apartado No. 75335 Caracas 1070-A, Venezuela $ 86,000 360,000 69,000 72,000 700,000 82,000 Automotive Parts Division 27605-1 Motors, Inc. 83,829 Ottawa Division t - R-26044 International Harvester Ballwin/Washington Division None Automotive Parts Division, Boro-Warner (Canada) Limited None 85,979 ;nt' Open as of 4/1/81 E00279