CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Prior to the completion of this offering, our
board of directors will adopt a statement of policy regarding transactions with related persons, which we refer to as our related person policy. Upon completion of this offering, our related person policy will require that a
related person (as defined as in paragraph (a) of Item 404 of Regulation S-K) must promptly disclose to our general counsel any related person transaction (defined as any transaction that is reportable by us
under Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material interest) and all material facts with
respect thereto. Our general counsel will then promptly communicate that information to our board of directors. No related person transaction will be consummated or will continue without the approval or ratification of our board of directors. In
determining whether to approve or ratify a related party transaction, our board of directors will take into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally
available to an unaffiliated third party under the same or similar circumstances and the extent of the related persons interest in the transaction. It is our policy that directors interested in a related person transaction will recuse
themselves from any vote of a related person transaction in which they have an interest.
On April 27, 2006, Sensata Technologies B.V. completed the acquisition of the S&C business from Texas Instruments for an aggregate purchase price of approximately $3.0 billion plus fees and expenses.
The following chart reflects our corporate structure following the 2006 Acquisition and after giving effect to a restructuring that will be implemented prior to the completion of this offering. Specifically, prior to the completion of this offering,
we intend to create two entities, Sensata Technologies Coop Holding B.V. and Sensata Technologies Holding Coöperatief U.A., or ST Coop, between Sensata Technologies Intermediate Holding B.V. and the issuer in our corporate
structure. Since Dutch law requires that a co-operative have at least two members, the issuer will incorporate Sensata Technologies Coop Holding B.V., a Dutch private limited liability company (vennootschap met beperkte aansprakelijkheid), to
act as the second member of ST Coop. Sensata Technologies Coop Holding B.V. will hold a nominal interest in ST Coop.
ST Coop will be interposed in the corporate structure to facilitate tax efficient dividend distributions to us. As described in the section
of this prospectus entitled Tax Considerations Netherlands Tax Considerations Withholding Tax, certain dividends by corporate legal entities may in certain circumstances be subject to a 15% dividend withholding tax. We
believe, based on our interpretation of such tax laws after consultation with counsel, that dividends from Sensata Technologies Intermediate Holding B.V. to ST Coop, and that dividends from ST Coop to us should not be subject to the dividend
withholding tax. We further believe, based on our interpretation of such tax laws, that even if such dividends were to be subjected to the dividend withholding tax, we would be entitled to a credit or refund of such tax (together with statutory
interest thereon). However, there can be no assurance that a Netherlands tax authority will not have a different interpretation of applicable law. If that were to occur, dividends from our subsidiaries to us might be subject to a 15% dividend
withholding tax, and we might not be able to obtain a credit or refund of such taxes paid. We presently have no plans for our subsidiaries to pay dividends to us in the foreseeable future, and the payment of such dividends may be limited by
restrictions under the terms of the agreements governing our subsidiaries indebtedness and by limitations under applicable laws. See Dividend Policy.
As a result of the 2006 Acquisition, prior to the completion of this offering, the Sponsors indirectly own 99% of our issued
and outstanding ordinary shares.