Exhibit 2.01
DISTRIBUTION AGREEMENT
DATED AS OF APRIL 30, 1997
BY AND BETWEEN
XXXXXX INTERNATIONAL, INC.,
AN INDIANA CORPORATION
(TO BE RENAMED "AUTOLIV ASP, INC.")
AND
NEW XXXXXX INTERNATIONAL, INC.,
AN INDIANA CORPORATION
(TO BE RENAMED "XXXXXX INTERNATIONAL, INC.")
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 General.................................. 2
Section 1.02 Exhibits, Etc............................ 12
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION DATE
Section 2.01 Financing................................ 12
Section 2.02 Transfer of New Xxxxxx Assets............ 16
Section 2.03 Transfers Not Effected Prior to
the Distribution; Transfers Deemed
Effective as of the Distribution Date.. 16
Section 2.04 No Representations or Warranties;
Consents............................... 17
Section 2.05 Assumption and Satisfaction of New
Xxxxxx Liabilities; Retention of
Safety Liabilities..................... 17
Section 2.06 Financial Representations and Warranties. 17
Section 2.07 Conveyancing and Assumption Instruments.. 18
Section 2.08 Certificate of Incorporation; By-laws;
Share Purchase Rights Plan............. 18
Section 2.09 New Xxxxxx Capitalization................ 18
Section 2.10 Certain Pre-Distribution Transactions.... 19
ARTICLE III
THE DISTRIBUTION
Section 3.01 Cooperation Prior to the Distribution.... 19
Section 3.02 Company Board Action; Distribution
Procedures............................. 20
Section 3.03 Conditions Precedent to the
Distribution........................... 20
Section 3.04 The Distribution......................... 22
ARTICLE IV
SERVICES
Section 4.01 Provision of Management Services......... 22
Section 4.02 Fee for Services; Expenses............... 23
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Page
Section 4.03 Independent Contractor Status............ 23
Section 4.04 Disclaimer; Limited Liability............ 23
ARTICLE V
INDEMNIFICATION
Section 5.01 Indemnification by Safety................ 24
Section 5.02 Indemnification by New Xxxxxx............ 25
Section 5.03 Limitations on Indemnification
Obligations............................ 25
Section 5.04 Procedure for Indemnification............ 26
Section 5.05 Remedies Cumulative...................... 29
Section 5.06 Survival of Indemnities.................. 29
Section 5.07 Right of Inquiry......................... 30
ARTICLE VI
CERTAIN ADDITIONAL MATTERS AND COVENANTS
Section 6.01 The New Xxxxxx Board..................... 31
Section 6.02 Resignations; Safety Board............... 31
Section 6.03 Certain Post-Distribution Transactions... 32
Section 6.04 Use of Names............................. 33
Section 6.05 Restrictions on Hiring of Other Party's
Employees.............................. 34
Section 6.06 Further Assurances; Cooperation.......... 34
Section 6.07 Guarantees............................... 34
Section 6.08 Shared Facilities........................ 35
Section 6.09 Thiokol-Xxxxxx Spinoff................... 36
Section 6.10 Non-Competition.......................... 36
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
Section 7.01 Provision of Corporate Records........... 37
Section 7.02 Access to Information.................... 38
Section 7.03 Production of Witnesses.................. 40
Section 7.04 Reimbursement............................ 41
Section 7.05 Retention of Records..................... 41
Section 7.06 Confidentiality.......................... 41
ARTICLE VIII
INSURANCE
Section 8.01 Policies and Rights...................... 42
Section 8.02 Post-Distribution Date Claims............ 42
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Page
Section 8.03 Administration and Reserves.............. 43
Section 8.04 Agreement for Waiver of Conflict and
Shared Defense......................... 44
Section 8.05 Cooperation with Respect
to Insurance........................... 44
ARTICLE IX
MISCELLANEOUS
Section 9.01 Complete Agreement; Construction......... 45
Section 9.02 Survival of Agreements................... 45
Section 9.03 Expenses................................. 45
Section 9.04 Governing Law............................ 45
Section 9.05 Notices.................................. 46
Section 9.06 Amendments............................... 46
Section 9.07 Successors and Assigns................... 47
Section 9.08 Counterparts............................. 47
Section 9.09 Subsidiaries............................. 47
Section 9.10 Third Party Beneficiaries................ 47
Section 9.11 Titles and Headings...................... 47
Section 9.12 Exhibits and Schedules................... 47
Section 9.13 Legal Enforceability..................... 47
Section 9.14 Consent to Jurisdiction.................. 48
Schedules and Exhibits
Schedule 1.01(a) Safety Business, Retained Subsidiary
and Other Safety Interests and In-
vestments
Schedule 1.01(b) Safety Liabilities
Schedule 1.01(c)(1) Company Policies
Schedule 1.01(c)(2) New Xxxxxx Policies
Schedule 1.01(c)(3) Safety Policies
Schedule 1.01(d)(1) New Xxxxxx Real Property
Schedule 1.01(d)(2) Safety Real Property
Schedule 1.01(e) New Xxxxxx Businesses, New Xxxxxx
Subsidiaries and Other New Xxxxxx
Interests and Investments
Schedule 1.01(f) New Xxxxxx Liabilities
Schedule 1.01(g)(1) New Xxxxxx Intellectual Property
Schedule 1.01(g)(2) Safety Intellectual Property
Schedule 4.02 Rates for Services - Formula Format
Schedule 6.08 Terms of Rochester Hills Shared Usage
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Exhibit A Form of Employee Benefits Allocation
Agreement
Exhibit B New Xxxxxx By-Laws
Exhibit C New Xxxxxx Articles of Incorporation
Exhibit D Form of Tax Sharing Agreement
Exhibit E Form of New Xxxxxx Share Purchase
Rights Plan
Exhibit F Records Retention Policy
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this "Agreement"), dated as
of April 30, 1997, by and between XXXXXX INTERNATIONAL, INC.,
an Indiana corporation (the "Company") and NEW XXXXXX INTERNA-
TIONAL, INC., an Indiana corporation and a wholly owned subsid-
iary of the Company ("New Xxxxxx").
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to separate the Com-
pany and its subsidiaries into two companies by consolidating
its Specialty Chemicals and Salt businesses in New Xxxxxx and
distributing to the holders of shares of common stock, $1 par
value per share, of the Company ("Company Common Stock"), all
outstanding shares of common stock $1 par value per share, of
New Xxxxxx ("New Xxxxxx Common Stock"), together with the as-
sociated preferred share purchase rights ("New Xxxxxx Rights");
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to enter into the
Combination Agreement, dated as of November 25, 1996 (the "Com-
bination Agreement"), by and among the Company, Autoliv AB, a
corporation organized under the laws of the Kingdom of Sweden
("Autoliv"), Autoliv, Inc., a Delaware corporation ("Newco"),
and ASP Merger Sub Inc., a Delaware corporation and a wholly
owned subsidiary of Newco ("Newco Sub"), pursuant to which,
among other things, Newco Sub will be merged with and into the
Company (the "Merger") and Newco will offer to acquire all of
the outstanding capital stock of Autoliv pursuant to the Ex-
change Offer (as defined in the Combination Agreement, and,
together with the other transactions contemplated thereby, the
"Transactions");
WHEREAS, immediately prior to the Effective Time (as
defined in Section 1.2 of the Combination Agreement) of the
Merger, the Company's Board of Directors (the "Company Board"),
subject to the approval of the Company's stockholders and the
other conditions set forth in Section 3.03 of this Agreement,
expects to distribute to the holders of Company Common Stock,
other than shares held in the treasury of the Company, on a pro
rata basis, all of the issued and outstanding shares of New
Xxxxxx Common Stock (the "Distribution");
WHEREAS, immediately prior to the Distribution, the
Company Board, subject to the approval of the Company's stock-
holders and the other conditions set forth in Section 3.03 of
this Agreement, expects to cause (i) the Company to contribute
the New Xxxxxx Assets (as defined below) to New Xxxxxx or an-
other wholly-owned subsidiary of the Company as a capital con-
tribution or in exchange for shares of such subsidiary's stock,
(ii) the Company to contribute to New Xxxxxx the New Xxxxxx
Capital Contribution (as defined herein), the Safety Supplemen-
tal Distribution (as defined herein) as well as the stock of
the New Xxxxxx Subsidiaries (as defined herein) and certain
other assets to New Xxxxxx as a capital contribution and (iii)
New Xxxxxx to assume the New Xxxxxx Liabilities (as defined
below), all as more specifically provided herein (the transac-
tions described in clauses (i), (ii) and (iii) are referred to
collectively as the "Contribution");
WHEREAS, the purpose of the Distribution is to make
possible the Merger by divesting the Company of the businesses
and operations to be conducted by New Xxxxxx and its subsidiar-
ies, which Newco and Autoliv have required as a condition to
their willingness to consummate the Transactions;
WHEREAS, it is the intention of the parties to this
Agreement that the Contribution and the Distribution will
qualify as transactions described in Sections 351 and Section
355 of the Internal Revenue Code of 1986, as amended (the
"Code") and/or a "reorganization" within the meaning of Section
368(a)(1)(D) of the Code; and
WHEREAS, this Agreement sets forth or provides for
certain agreements by and among the Company and New Xxxxxx in
consideration of the separation of the ownership of the Company
and New Xxxxxx.
NOW, THEREFORE, in consideration of the mutual agree-
ments, provisions and covenants contained in this Agreement,
the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plu-
ral forms of the terms defined):
Action: any action, suit, arbitration, inquiry, pro-
ceeding or investigation by or before any court, any governmen-
tal or other regulatory or administrative agency or commission
or any arbitration tribunal.
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Affiliate: as defined in Rule 12b-2 promulgated by
the Commission under the Exchange Act, as such Regulation is in
effect on the date hereof.
Agent: the distribution agent appointed by the Com-
pany to distribute shares of New Xxxxxx Common Stock pursuant
to the Distribution.
Ancillary Agreements: all of the written agreements,
instruments, understandings, assignments or other arrangements
entered into in connection with the Transactions contemplated
hereby, including, without limitation, the Combination Agree-
ment, the Conveyancing and Assumption Instruments, the Benefits
Agreement, the Safety Credit Agreement and the Tax Sharing
Agreement.
Assets: any and all assets, properties and rights,
whether tangible or intangible, whether real, personal or
mixed, whether fixed, contingent or otherwise, and wherever
located, including, without limitation, the following:
(a) real property interests (including leases),
land, plants, buildings and improvements;
(b) machinery, equipment, tooling, vehicles, furni-
ture and fixtures, leasehold improvements, repair parts,
tools, plant, laboratory and office equipment and other
tangible personal property, together with any rights or
claims arising out of the breach of any express or implied
warranty by the manufacturers or sellers of any of such
assets or any component part thereof;
(c) inventories, including raw materials, work-in-
process, finished goods, parts, accessories and supplies;
(d) cash, bank accounts, notes, loans and accounts
receivable (whether current or not current), interests as
beneficiary under letters of credit, advances and perfor-
xxxxx and surety bonds;
(e) certificates of deposit, banker's acceptances,
shares of stock, bonds, debentures, evidences of indebted-
ness, certificates of interest or participation in profit-
sharing agreements, collateral trust certificates, pre-
organization certificates or subscriptions, transferable
shares, investment contracts, voting-trust certificates,
interests in partnerships and other entities (including
joint ventures), puts, calls, straddles, options, swaps,
collars, caps and other securities or hedging arrangements
of any kind;
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(f) financial, accounting and operating data and
records including, without limitation, books, records,
notes, sales and sales promotional data, advertising mate-
rials, credit information, cost and pricing information,
customer and supplier lists, reference catalogs, payroll
and personnel records, minute books, stock ledgers, stock
transfer records and other similar property, rights and
information;
(g) patents, patent applications, trademarks, trade-
xxxx applications and registrations, trade names, service
marks, service names, copyrights and copyright applica-
tions and registrations, commercial and technical informa-
tion including engineering, production and other designs,
drawings, specifications, formulae, technology, computer
and electronic data processing programs and software, in-
ventions, processes, trade secrets, know-how, confidential
information and other proprietary property, rights and
interests;
(h) agreements, leases, contracts, sale orders, pur-
chase orders, open bids and other commitments and all
rights therein;
(i) prepaid expenses, deposits and retentions held
by third parties;
(j) claims, causes of action, choses in action,
rights under insurance policies, rights under express or
implied warranties, rights of recovery, rights of set-off,
rights of subrogation and all other rights of any kind;
(k) licenses, franchises, permits, authorizations
and approvals; and
(l) goodwill and going concern value.
Benefits Agreement: the Employee Benefits Allocation
Agreement, dated as of the date of this Agreement, between the
Company and New Xxxxxx, the form of which is attached hereto as
Exhibit A.
Claims Administration: the processing of claims made
under the Policies, including the reporting of claims to the
insurance carrier, management and defense of claims and provid-
ing for appropriate releases upon settlement of claims.
Code: the Internal Revenue Code of 1986, as amended,
or any successor legislation.
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Commission: the Securities and Exchange Commission.
Company Policies: all Policies, current or past,
which are owned or maintained by or on behalf of the Company or
any of its predecessors which relate to both the Safety Busi-
ness and the New Xxxxxx Businesses, including without limita-
tion the Policies identified on Schedule 1.01(c)(1).
Conveyancing and Assumption Instruments: col-
lectively, the various agreements, instruments and other docu-
ments to be entered into to effect the transfer of assets and
the assumption of Liabilities in the manner contemplated by
this Agreement and the Ancillary Agreements.
Corporate Assets: the Assets of the Company relating
to the Corporate Operations.
Corporate Operations: the activities and operations
of the Company's corporate administrative group and the senior
executive management of the Company, which activities and op-
erations do not primarily relate to or primarily arise from the
Safety Business.
Distribution Date: the date determined by the Com-
pany Board as of which the Distribution shall be effected,
which is presently contemplated to be April 30, 1997.
Distribution Record Date: the date to be determined
by the Company Board as the record date for the Distribution.
Exchange Act: the Securities Exchange Act of 1934,
as amended.
Foreign Exchange Rate: with respect to any currency
other than United States dollars as of any date of determina-
tion, the average of the opening bid and asked rates on such
date at which such currency may be exchanged for United States
dollars as quoted by Bank of America Illinois except that, with
respect to any Indemnifiable Loss (as defined in Section 5.01)
covered by insurance, the Foreign Exchange Rate for such cur-
rency shall be as set forth in Section 5.03(b)(ii).
Form S-4: The registration statement on Form S-4 to
be filed by New Xxxxxx with the Commission to effect the regis-
tration of the New Xxxxxx Common Stock and the New Xxxxxx
Rights pursuant to the Securities Act, provided that in the
event such form is not required to be filed, "Form S-4" shall
refer to the registration statement on Form 10 filed by New
Xxxxxx with respect to such securities.
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Insurance Administration: with respect to each
Policy, the accounting for premiums, retrospectively-rated pre-
miums, defense costs, indemnity payments, deductibles and re-
tentions as appropriate under the terms and conditions of each
of the Policies; and the reporting to excess insurance carriers
of any losses or claims which may cause the per-occurrence or
aggregate limits of any policy to be exceeded, and the distri-
bution of Insurance Proceeds as contemplated by this Agreement.
Insurance Proceeds: those monies (a) received by an
insured from an insurance carrier or (b) paid by an insurance
carrier on behalf of the insured, in either case net of any
applicable premium adjustment, co-insurance, retrospectively-
rated premium, deductible, retention, cost or reserve paid or
held by or for the benefit of such insured.
Insured Claims: those Liabilities that, individually
or in the aggregate, are covered within the terms and condi-
tions of any of the Policies, whether or not subject to deduct-
ibles, co-insurance, uncollectability or retrospectively-rated
premium adjustments, but only to the extent that such Liabili-
ties are within applicable Policy limits, including aggregates.
IRS: the Internal Revenue Service.
Liabilities: any and all debts, liabilities, commit-
ments and obligations, absolute or contingent, matured or unma-
tured, liquidated or unliquidated, accrued or unaccrued, known
or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under any law, rule,
regulation, Action, threatened Action, order or consent decree
of any governmental entity or any award of any arbitrator of
any kind, and those arising under any contract, commitment or
undertaking.
New Xxxxxx Assets: collectively, all of the rights
and Assets of the Company and its subsidiaries other than the
Safety Assets, including without limitation: (a) the assets
included on the consolidated balance sheet of New Xxxxxx as of
June 30, 1996 and any assets acquired by the Company or New
Xxxxxx other than Safety Assets from July 1, 1996 to the Dis-
tribution Date (other than, in each case, assets sold or other-
wise disposed of on or prior to the Distribution Date); (b) the
real property, owned or leased, listed on Schedule 1.01(d)(1);
(c) any recoveries under the liabilities listed on Schedule
1.01(f) or the litigation not included in the Safety Liabili-
ties; (d) subject to Section 6.04 hereof, the patents, trade-
marks, trade names, copyrights (including applications for any
of the foregoing), and invention records of the Company other
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than the Safety Assets, including without limitation the xxx-
ents, trademarks and copyrights listed on Schedule 1.01(g)(1);
(e) the Company's books and records to the extent set forth in
Section 7.01(a); (f) all of the outstanding capital stock or
other interests of the Company in the New Xxxxxx Subsidiaries
and in the partnerships, joint ventures and investments listed
on Schedule 1.01(e); (g) the New Xxxxxx Capital Contribution,
the Safety Supplemental Distribution and all domestic and for-
eign cash bank balances and short-term investments other than
(i) cash generated from the operations of the Safety Business
from July 1, 1996 through the Distribution Date in excess of
the sum of (x) the cash used by the Safety Business from July
1, 1996 through the Distribution Date, (y) the Safety Supple-
mental Distribution and (z) $15 million of expenses incurred by
the Company in connection with the transactions contemplated by
the Combination Agreement and (ii) xxxxx checking and cash ac-
counts with respect to the Safety Business not maintained, in
the ordinary course of business, on the central company cash
management system, including without limitation to the extent
set forth in Section 2.01(f) of this Agreement; (h) the New
Xxxxxx Policies and the rights under the Company Policies to
the extent set forth in Article VIII of this Agreement; and (i)
the Company's rights under Sections 8.3(b), 8.6, 8.13(c) and
8.22 of the Combination Agreement that survive the Effective
Time (as defined in the Combination Agreement), and New
Xxxxxx'x rights and Assets under the other Ancillary Agree-
ments.
New Xxxxxx Board: the Board of Directors of New Mor-
ton.
New Xxxxxx Businesses: all assets, businesses and
operations of the Company other than those included in the
Safety Business, including without limitation the New Xxxxxx
Assets and the businesses and operations of the Adhesives &
Chemical Specialties Group, the Coatings Group, the Electronic
Materials Group, the Salt Group and the Corporate Operations,
as heretofore, currently or hereafter conducted, including
without limitation the businesses listed on Schedule 1.01(e)
and all assets, businesses or operations managed or operated
by, or otherwise operationally related to, any of such busi-
nesses, which have been sold or otherwise disposed of or dis-
continued prior to the Distribution Date but which shall not
include the Safety Business.
New Xxxxxx By-Laws: the By-Laws of New Xxxxxx, sub-
stantially in the form of Exhibit B, to be in effect on the
Distribution Date.
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New Xxxxxx Capital Contribution: the capital contri-
bution or repayment in cash of intercompany indebtedness (in-
cluding as provided in Section 2.10(b) of this Agreement) in
the aggregate amount of $750,000,000 to be contributed by the
Company to New Xxxxxx on or immediately prior to the Distribu-
tion Date.
New Xxxxxx Charter: the Articles of Incorporation of
New Xxxxxx, substantially in the form of Exhibit C, to be in
effect on the Distribution Date.
New Xxxxxx Employee: any individual who, on or prior
to the Distribution Date, was employed by the Company or any of
its subsidiaries and who, on or after the Distribution Date, or
otherwise in connection with the Distribution, is intended by
the parties hereto to be employed by New Xxxxxx or a New Xxxxxx
Subsidiary or in a New Xxxxxx Business on an on-going basis.
New Xxxxxx Liabilities: collectively, all of the
Liabilities of the Company and its subsidiaries incurred on or
prior to the Distribution Date (other than Safety Liabilities)
including without limitation: all of (i) the Liabilities of
New Xxxxxx under this Agreement or any of the Ancillary Agree-
ments, (ii) the Liabilities arising out of or relating to any
of the New Xxxxxx Businesses or the New Xxxxxx Assets; (iii)
the Liabilities referred to in the proviso contained in clause
(v) of the definition of Safety Liabilities contained herein,
and (iv) the Liabilities specified on Schedule 1.01(f).
New Xxxxxx Policies: all Policies, current or past,
which are owned or maintained by or on behalf of the Company or
any of its predecessors which relate to the New Xxxxxx Xxxx-
nesses but do not relate to the Safety Business, including
without limitation the Policies identified on Schedule
1.01(c)(2).
New Xxxxxx Subsidiaries: all of the subsidiaries of
the Company other than the Retained Subsidiaries, including
without limitation those listed on Schedule 1.01(e), and any
other subsidiary of New Xxxxxx which hereafter may be organized
or acquired, all of which subsidiaries will become subsidiaries
of New Xxxxxx.
NYSE: New York Stock Exchange, Inc.
Policies: insurance policies and insurance contracts
of any kind, including without limitation primary and excess
policies, comprehensive general liability policies, automobile,
aircraft and workers' compensation insurance policies, life
insurance and other employee benefit insurance policies, and
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self-insurance and captive insurance company arrangements, to-
gether with the rights, benefits and privileges thereunder.
Proxy Statement: the proxy statement/prospectus/
offer to purchase sent to the holders of shares of Company Com-
mon Stock in connection with the Special Meeting and to the
holders of Autoliv common stock in connection with the Exchange
Offer.
Retained Subsidiaries: the subsidiaries of the Com-
pany listed on Schedule 1.01(a).
Rights Agreement: the Rights Agreement, dated as of
April 24, 1997, by and between New Xxxxxx and First Chicago
Trust Company of New York, as Rights Agent, substantially in
the form of Exhibit E hereto.
Ruling Request: the private letter ruling request to
be filed by the Company with the IRS, as supplemented and
amended from time to time, with respect to certain tax aspects
of the Distribution and the Merger.
Safety: Autoliv ASP, Inc., the surviving corporation
of the Merger (as defined in the Combination Agreement), which
shall occur pursuant to the Combination Agreement immediately
subsequent to the Distribution.
Safety Assets: collectively, the following rights
and Assets of the Company and its subsidiaries: (a) the assets
included on the consolidated balance sheet of the Safety Busi-
ness as of June 30, 1996 and any assets acquired by the Company
exclusively relating to the Safety Business from July 1, 1996
to the Distribution Date (other than, in each case, assets sold
or otherwise disposed of on or prior to the Distribution Date);
(b) the real property owned or leased listed on Schedule
1.01(d)(2); (c) any recoveries under the litigation listed on
Schedule 1.01(b); (d) other than with respect to the "Xxxxxx"
and "Xxxxxx International" names and related trademarks and
trade names (but subject to Section 6.04 hereof), the patents,
trademarks, trade names, copyrights (including applications for
any of the foregoing), and invention records of the Company
relating primarily to the Safety Business, including without
limitation the patents, trademarks and copyrights listed on
Schedule 1.01(g)(2); (e) the Company's books and records to the
extent set forth in Section 7.01(b); (f) all of the outstanding
capital stock or other interests of the Company in the Retained
Subsidiaries and in the partnerships, joint ventures and in-
vestments listed on Schedule 1.01(a); (g) xxxxx checking and
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cash accounts with respect to the Safety Business not main-
tained, in the ordinary course of business, on the central com-
pany cash management system; (h) cash generated from the opera-
tions of the Safety Business from July 1, 1996 through the Dis-
tribution Date in excess of the sum of (x) cash used by the
Safety Business, (y) the Safety Supplemental Distribution and
(z) $15 million of expenses incurred by the Company in connec-
tion with the transactions contemplated by the Combination
Agreement; (i) the Safety Policies and the rights under the
Company Policies to the extent set forth in Article VIII of
this Agreement; (j) the rights and Assets of Safety under the
Ancillary Agreements; and (k) any other rights and Assets of
the Company and its subsidiaries exclusively relating to the
Safety Business, provided that the Safety Assets shall not in-
clude (1) cash and cash equivalents, except as set forth in
clause (g) or (h) above, and (2) assets associated with the
Corporate Operations.
Safety Business: the Safety Assets and the assets,
business and operations of the Company's Automotive Safety
Products Group, as heretofore, currently or hereafter con-
ducted, including without limitation the businesses listed on
Schedule 1.01(a) and all businesses or operations predominantly
managed or operated by, or otherwise operationally related to,
the Company's Automotive Safety Products Group which have been
sold or otherwise disposed of or discontinued prior to the Dis-
tribution Date but shall not include any of the New Xxxxxx
Businesses.
Safety Credit Agreement: the credit agreement or
other financing agreements or arrangements to be entered into
by the Company prior to the Distribution Date to provide Safety
with working capital, to fund the New Xxxxxx Capital Contri-
bution and, if necessary, to repay certain intercompany indebt-
edness pursuant to Section 2.10(b) hereof.
Safety Employee: any individual who, on or prior to
the Distribution Date, was employed by the Company or any of
its subsidiaries and who, on or after the Distribution Date, or
otherwise in connection with the Distribution, is intended by
the parties hereto to be employed by Safety or a Safety subsid-
iary or parent company or in the Safety Business (including the
business of Newco and its subsidiaries) on an on-going basis.
Safety Liabilities: collectively, all of (i) the
Liabilities assigned to or assumed by the Company under this
Agreement or any of the Ancillary Agreements, except as other-
wise expressly provided herein or therein; (ii) all of the Li-
abilities (or portion thereof) relating exclusively to or aris-
ing exclusively from the Safety Business or the Safety Assets;
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(iii) the Liabilities listed on Schedule 1.01(b); (iv) Liabili-
ties on the balance sheet of the Safety Business as of June 30,
1996 (or reflected in the notes thereto), and Liabilities in-
curred by the Safety Business on or after July 1, 1996, exclud-
ing, in each case, Liabilities paid or otherwise satisfied on
or prior to the Distribution Date; and (v) the liabilities of
the Company under the Safety Credit Agreement, provided that
Liabilities under the Safety Credit Agreement relating to the
representations and warranties of the Company, to the extent
such Liabilities relate to a representation or warranty with
respect to the New Xxxxxx Businesses or the New Xxxxxx Assets
on or prior to the Distribution Date, shall not be a Safety
Liability and shall be a New Xxxxxx Liability.
Safety Policies: all Policies, current or past,
which are owned or maintained by or on behalf of the Company or
any of its predecessors which relate to the Safety Business but
do not relate to the New Xxxxxx Businesses, including without
limitation the Policies identified on Schedule 1.01(c)(3).
Safety Supplemental Distribution: an amount in cash
equal to $50,000,000 (subject to adjustment pursuant to Sec-
tions 2.01(a) and 2.10(a)) plus, if the Distribution Date oc-
curs after March 31, 1997, an additional amount in cash equal
to the product of $7,200,000 times the number of months (or
fraction thereof) between March 31, 1997 and the Distribution
Date, such amounts to be contributed by the Company to New Mor-
ton on or prior to the Distribution Date.
Securities Act: the Securities Act of 1933, as
amended.
Special Meeting: the Special Meeting of Stockholders
of the Company to consider the Distribution, the Merger and
certain related matters.
Special Meeting Record Date: the record date for
stockholders of the Company entitled to vote at the Special
Meeting.
Subsidiaries: the term "subsidiaries" as used herein
with respect to any entity shall, unless otherwise indicated,
be deemed to refer to both direct and indirect subsidiaries of
such entity and any other entity at least 45% of the stock or
other voting interests of which are owned by such entity.
Tax Sharing Agreement: the Tax Sharing Agreement,
dated as of the date hereof, between New Xxxxxx and the Com-
pany, the form of which is attached hereto as Exhibit D.
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Section 1.01 Exhibits, Etc. References to an "Ex-
hibit" or to a "Schedule" are, unless otherwise specified, to
one of the Exhibits or Schedules attached to this Agreement,
and references to a "Section" are, unless otherwise specified,
to one of the Sections of this Agreement.
ARTICLE II
CERTAIN TRANSACTIONS PRIOR TO THE DISTRIBUTION DATE
Section 2.01 Financing.
(a) Safety Credit Agreement; New Xxxxxx Capital Con-
tribution; Safety Supplemental Distribution. On or shortly
prior to the Distribution Date, the Company shall enter into
the Safety Credit Agreement, on terms reasonably acceptable to
Autoliv and the Company, and shall contribute the New Xxxxxx
Capital Contribution to New Xxxxxx. New Xxxxxx shall have no
obligations or Liabilities with respect to the Safety Credit
Agreement. On or prior to the Distribution Date, the Company
shall contribute the Safety Supplemental Distribution to New
Xxxxxx to the extent not previously paid under Section 2.01(c)
of this Agreement; provided that if the estimated retained
earnings (exclusive of any costs and expenses to be paid by
Safety pursuant to Section 9.03 of this Agreement relating to
the transactions contemplated by this Agreement and the Combi-
nation Agreement and prior to giving effect to the Safety
Supplemental Distribution) of the Safety Business from July 1,
1996 through the Distribution Date (or through the most recent
date prior to the Distribution Date for which such estimate can
reasonably be made), based solely upon the Company's accounting
principles, practices, policies and procedures consistently ap-
plied, as set forth in a certificate of the Chief Financial Of-
ficer of the Company dated the Distribution Date (the "CFO Cer-
tificate"), are less than the amount of the Safety Supplemental
Distribution as otherwise determined, the amount of the Safety
Supplemental Distribution shall be adjusted (without interest)
to equal such lesser amount as set forth in such certificate.
The CFO Certificate shall be prepared in good faith, shall be
final and binding upon the parties, and each party hereby
waives and releases any claim or remedy it might otherwise have
with respect thereto.
(b) Credit Sensitive Debentures. Prior to the
Distribution Date, New Xxxxxx shall enter into a supplemental
indenture or other instrument to the extent required by the
indenture pursuant to which the Company's Credit Sensitive De-
bentures due June 1, 2020 have been issued, which supplemental
-12-
indenture or instrument will provide that, as of the Distribu-
tion Date and pursuant to Sections 801 and 802 of such inden-
ture, the obligations of the Company thereunder shall become
obligations of New Xxxxxx, and the Company shall have no re-
maining obligations thereunder.
(c) Operation of the Safety Business Prior to the
Distribution Date. The Company and New Xxxxxx shall, to the
fullest extent reasonably practicable, treat, solely for the
purposes of this Agreement, the Safety Business as if it were a
stand-alone, self-financed entity from July 1, 1996 through the
Distribution Date. Accordingly, for the period from July 1,
1996 through the Distribution Date (i) the Safety Business
shall be treated as retaining all cash generated from the op-
erations of the Safety Business in excess of the sum of (x) the
cash used by the Safety Business, (y) the Safety Supplemental
Distribution, which shall be deemed to be made on the last day
of each month on a prorated basis and (z) $15 million of ex-
penses incurred by the Company in connection with the transac-
tions contemplated by the Combination Agreement, which shall be
the responsibility of the Safety Business, to the extent not
theretofore charged to the Safety Business; (ii) the Safety
Business shall be credited with interest on its positive cash
balances and charged for interest on any negative cash balances
funded by the New Xxxxxx Businesses at a per annum interest
rate equal to the average interest rate earned on the Company's
cash balances during such period, with any intercompany borrow-
ings to fund the operations of the Safety Business in excess of
the amount reflected on the audited balance sheet of the Safety
Business as of June 30, 1996 treated as a payable to New Xxxxxx
from the Company; (iii) any payments by the Safety Business in
connection with the New Xxxxxx Businesses or the New Xxxxxx
Employees (including, without limitation, any such payments in
respect of New Xxxxxx Liabilities) shall be treated as a pay-
able to the Safety Business from New Xxxxxx, and any payments
by the New Xxxxxx Businesses in connection with the Safety
Business or the Safety Employees (including, without limita-
tion, any such payments in respect of Safety Liabilities) shall
be treated as a payable to New Xxxxxx from the Safety Business;
(iv) the Safety Business and the New Xxxxxx Businesses shall
make adjustments for late deposits, checks returned for insuf-
ficient funds and other similar transactions occurring on or
after July 1, 1996 as shall be reasonable under the circum-
stances consistent with the purpose and intent of this Agree-
ment; and (v) the net balance due to the Safety Business or the
New Xxxxxx Businesses, as the case may be, in respect of the
aggregate amounts of clauses (i) through (iv) shall be paid by
New Xxxxxx or Safety, as appropriate, as promptly as practi-
cable following each month end. For purposes of this Section
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2.01(c), the parties contemplate that the Safety Business, in-
cluding but not limited to the administration of accounts pay-
able and accounts receivable, will be conducted in the normal
course consistent with the covenants contained in Section 7.1
of the Combination Agreement and that the Safety Business will
not be charged for general administrative services provided by
the Corporate Operations, including legal, tax compliance, risk
management and other similar corporate services, in a manner
consistent with the Company's practice in preparing the audited
balance sheet of the Safety Business dated as of June 30, 1996.
All transactions contemplated by this Section 2.01(c) shall be
subject to review by the parties, and any dispute thereunder
shall be resolved by Ernst & Young LLP (or another "Big Six"
accounting firm acceptable to the parties), whose decision
shall be final and unappealable.
(d) Consents. Each of the Company and New Xxxxxx
agrees that it shall use reasonable efforts to obtain, prior to
the Distribution Date, all necessary consents, waivers or
amendments to each bank credit agreement, debt security or
other financing facility to which it or its respective subsid-
iaries is a party or by which it or any of its respective sub-
sidiaries is bound, or to refinance such agreement, security or
facility, in each case on terms satisfactory to the Company and
New Xxxxxx and to the extent necessary to permit the Distribu-
tion to be consummated without any material breach of the terms
of such agreement, security or facility. To the extent Safety
determines, in its reasonable judgment, that such consents,
waivers or amendments would reasonably be expected to create
Safety Liabilities, such terms shall also be reasonably satis-
factory to Safety. From the date hereof until there no longer
remain any such material consents, waivers or amendments to be
obtained in connection with the Distribution pursuant to the
terms of this Agreement and the Ancillary Agreements, New Mor-
ton shall inform Safety regularly, but not less than on a
monthly basis, of its progress in obtaining such consents,
waivers and amendments.
(e) Intercompany Accounts. All agreements, con-
tracts, arrangements and commitments between the New Xxxxxx
Businesses, on the one hand, and the Safety Business, on the
other hand, entered into prior to the Distribution Date for the
purchase or sale of goods or services ("Intercompany Arrange-
ments"), which intercompany arrangements shall be subject to
the reasonable approval of a senior executive of the Safety
Business, shall remain in effect on and after the Closing Date.
All amounts under such Intercompany Arrangements which are un-
billed as of the Distribution Date shall be billed and payable
on and after the Distribution Date in accordance with the terms
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thereof. Subject to Sections 2.01(c) and 2.10 of this Agree-
ment, on or before the Distribution Date, the Company shall
cause all intercompany indebtedness (which shall include pay-
xxxxx and receivables but which shall not include unbilled
amounts under Intercompany Arrangements) between the New Xxxxxx
Businesses, on the one hand, and the Safety Business, on the
other hand, to be settled or otherwise eliminated.
(f) Cash Management and Intercompany Accounts After
the Distribution Date. The Company and New Xxxxxx shall estab-
lish and maintain a separate cash management system and ac-
counting records with respect to the New Xxxxxx Businesses ef-
fective as of immediately prior to the Distribution Date;
thereafter, (i) any payments by the Company or a Remaining Sub-
sidiary to or on behalf of New Xxxxxx or a New Xxxxxx Subsid-
iary or otherwise, in connection with the New Xxxxxx Businesses
or the New Xxxxxx Employees (including, without limitation, any
such payments in respect of New Xxxxxx Liabilities) shall be
recorded in the accounts of New Xxxxxx as a payable to the Com-
pany from New Xxxxxx; any payments by New Xxxxxx or a New Mor-
ton Subsidiary to or on behalf of the Company or a Remaining
Subsidiary or otherwise, in connection with the Safety Business
or in connection with Safety Employees (including, without
limitation, any such payments in respect of Safety Liabilities)
shall be recorded in the accounts of the Company as a payable
to New Xxxxxx from the Company; (ii) other than xxxxx checking
and cash accounts with respect to the Safety Business not main-
tained, in the ordinary course of business, on the central Com-
pany cash management system, and the accounts listed on Sched-
ule 1.01(a), which xxxxx cash, checking and other accounts
(but not the balances therein, except as provided by Section
2.01(c) and the definition of Safety Assets) the Company shall
retain, New Xxxxxx shall be entitled to all domestic and inter-
national cash bank balances and short-term investments as of
the Distribution Date per the books of the Company (other than
cash which constitutes a Safety Asset) including, without limi-
tation, such cash balances (other than cash which constitutes a
Safety Asset) representing deposited checks or drafts for which
only a provisional credit has been allowed, in the depository
accounts of the Company or any of its subsidiaries; any such
cash balances as of the Distribution Date which have not been
transferred to New Xxxxxx shall be recorded as a payable to New
Xxxxxx from Safety in the accounts of Safety; (iii) New Xxxxxx
and the Company shall make adjustments for late deposits,
checks returned for not sufficient funds and other post-
Distribution Date transactions as shall be reasonable under the
circumstances consistent with the purpose and intent of this
Agreement; and (iv) the net balance due to the Company or New
Xxxxxx, as the case may be, in respect of the aggregate amounts
of clauses (i), (ii) and (iii) shall be paid by New Xxxxxx or
-15-
Safety, as appropriate, as promptly as practicable. For pur-
poses of this Section 2.01(f), the parties contemplate that the
Safety Business and the New Xxxxxx Businesses, including but
not limited to the administration of accounts payable and ac-
counts receivable, will be conducted in the normal course. All
transactions contemplated in this Section 2.01(f) shall be sub-
ject to review by the parties, and any dispute thereunder shall
be resolved by Ernst & Young LLP (or another "Big Six" account-
ing firm acceptable to the parties), whose decision shall be
final and unappealable.
Section 2.02 Transfer of New Xxxxxx Assets. The
Company shall transfer to New Xxxxxx or, at New Xxxxxx'x op-
tion, to a New Xxxxxx Subsidiary effective as of the Distribu-
tion Date all of the Company's right, title and interest in the
New Xxxxxx Assets.
Section 2.03 Transfers Not Effected Prior to the
Distribution; Transfers Deemed Effective as of the Distribution
Date. To the extent that any transfers contemplated by this
Article II shall not have been consummated on the Distribution
Date, the parties shall cooperate to effect such transfers as
promptly following the Distribution Date as shall be practi-
cable. Nothing herein shall be deemed to require the transfer
of any Assets or the assumption of any Liabilities which by
their terms or operation of law cannot be transferred or as-
sumed; provided, however, that the Company and New Xxxxxx and
their respective subsidiaries shall cooperate to seek to obtain
any necessary consents or approvals for the transfer of all
Assets and Liabilities contemplated to be transferred pursuant
to this Article II. In the event that any such transfer of
Assets or Liabilities has not been consummated, effective as of
and after the Distribution Date, the party retaining such Asset
or Liability shall thereafter hold such Asset in trust for the
use and benefit of the party entitled thereto (at the expense
of the party entitled thereto) and retain such Liability for
the account of the party by whom such Liability is to be as-
sumed pursuant hereto, and take such other action as may be
reasonably requested by the party to which such Asset is to be
transferred, or by whom such Liability is to be assumed, as the
case may be, in order to place such party, insofar as reason-
ably possible, in the same position as would have existed had
such Asset or Liability been transferred as contemplated here-
by. As and when any such Asset or Liability becomes trans-
ferable, such transfer shall be effected forthwith. The par-
ties agree that, as of the Distribution Date, each party hereto
shall be deemed to have acquired complete and sole beneficial
ownership over all of the Assets, together with all rights,
powers and privileges incident thereto, and shall be deemed to
have assumed in accordance with the terms of this Agreement all
-16-
of the Liabilities, and all duties, obligations and responsi-
bilities incident thereto, which such party is entitled to ac-
quire or required to assume pursuant to the terms of this
Agreement.
Section 2.04 No Representations or Warranties; Con-
sents. Except as otherwise contemplated in Section 2.06 or in
connection with any Conveyancing and Assumption Instruments
related to real estate, as to which the Company shall transfer
to New Xxxxxx with "special warranty" or equivalent deeds, each
of the parties hereto understands and agrees that no party
hereto is, in this Agreement or in any other agreement or docu-
ment contemplated by this Agreement or otherwise, representing
or warranting in any way (i) as to the value or freedom from
encumbrance of, or any other matter concerning, any Assets of
such party or (ii) as to the legal sufficiency to convey title
to any Asset of the execution, delivery and filing of this
Agreement or any Ancillary Agreement, including, without limi-
tation, any Conveyancing and Assumption Instruments. It is
also agreed and understood that all Assets either transferred
to or retained by the parties, as the case may be, shall be "as
is, where is" and that the party to which such Assets are to be
transferred hereunder shall bear the economic and legal risk
that any conveyances of such Assets shall prove to be insuf-
ficient or that such party's or any of its subsidiaries' title
to any such Assets shall be other than good and marketable and
free from encumbrances. The parties shall use their best ef-
forts to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications
which may be required for the consummation of the transactions
contemplated by this Agreement, including, without limitation,
all applicable regulatory filings or consents under federal,
state or foreign environmental laws.
Section 2.05 Assumption and Satisfaction of New Mor-
ton Liabilities; Retention of Safety Liabilities. Except as
set forth in the Benefits Agreement or the Tax Sharing Agree-
ment, effective as of and after the Distribution Date, (a) New
Xxxxxx shall, or shall cause its subsidiaries to, assume, pay,
perform, and discharge in due course all of the New Xxxxxx Xx-
abilities and (b) Safety shall, or shall cause its subsidiaries
to, pay, perform and discharge in due course all of the Safety
Liabilities.
Section 2.06 Financial Representations and Warran-
ties. New Xxxxxx hereby represents and warrants to the Company
that:
(a) Safety Assets. The Safety Assets as of the Dis-
tribution Date shall include all Assets then owned or held by
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the Company and its subsidiaries which are exclusively used in
the operation of the Safety Business as such business is con-
ducted as of such date, including cash and cash equivalents as
provided in clauses (g) and (h) of the definition of Safety
Assets.
(b) Financial Liabilities. The interest-bearing
indebtedness (excluding hedging or similar contracts and let-
ters or lines of credit in the ordinary course) of the Safety
Business as of the Distribution Date will not exceed
$750,000,000 plus the outstanding amount of the municipal fi-
nancing, not to exceed $1,100,000.
The representations contained in this Section 2.06 shall sur-
vive the Distribution Date until March 31, 1998.
Section 2.07 Conveyancing and Assumption Instru-
ments. In connection with the transfers of Assets other than
capital stock and the assumptions of Liabilities contemplated
by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and As-
sumption Instruments in such forms as the parties shall reason-
ably agree, including the transfer of real property with spe-
cial warranty or equivalent deeds. The transfer of capital
stock shall be effected by means of delivery of stock certifi-
xxxxx and executed stock powers and notation in the stock
record books of the corporation or other legal entities in-
volved and, to the extent required by applicable law, by nota-
tion on public registries.
Section 2.08 Certificate of Incorporation; By-laws;
Share Purchase Rights Plan. Prior to the Distribution Date,
the Company and New Xxxxxx shall take all action necessary so
that, at the Distribution Date, the New Xxxxxx Charter, the New
Xxxxxx By-laws and the Rights Agreement shall be in effect,
with such changes as New Xxxxxx may approve.
Section 2.09 New Xxxxxx Capitalization. Prior to
the Distribution Date, the Company and New Xxxxxx shall take
all steps necessary to increase the outstanding shares of New
Xxxxxx Common Stock so that, except as otherwise contemplated
by this Agreement or the Benefits Agreement, immediately prior
to the Distribution Date the number of shares of New Xxxxxx
Common Stock outstanding and held by the Company shall equal
the number of shares of Company Common Stock outstanding on the
Distribution Record Date.
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Section 2.10 Certain Pre-Distribution Transactions.
(a) Prior to the Distribution, the Company shall use its rea-
sonable best efforts to form a registered German limited li-
ability corporation (GmbH) ("Safety GmbH"). Prior to the Dis-
tribution, Safety GmbH shall purchase or assume, and the Com-
pany shall cause Xxxxxx International GmbH ("Xxxxxx GmbH"), a
limited liability corporation under the laws of Germany, to
sell or assign, the Safety Assets and Safety Liabilities owned
or held by Xxxxxx GmbH for the fair market value thereof, which
amount shall be determined by mutual agreement of the Company
and New Xxxxxx. The Safety Supplemental Distribution shall be
reduced by the amount of any such cash payment, with any such
cash payment in excess of such amount to be credited against
the New Xxxxxx Capital Contribution.
(b) Prior to the Distribution Date, Xxxxxx Manufac-
turing B.V., a limited liability corporation under the laws of
the Netherlands ("Safety B.V."), shall repay in cash intercom-
pany indebtedness owed by Safety B.V. to each of Xxxxxx Inter-
national B.V. and Xxxxxx Service B.V. ("Xxxxxx B.V."), each a
limited liability corporation under the laws of the Nether-
lands, with such repayment funded by an intercompany loan from
the Safety Business pursuant to its borrowing under the Safety
Credit Agreement. After such repayment and prior to the Dis-
tribution, Xxxxxx B.V. shall transfer to the Company all of the
outstanding capital stock of Safety B.V. as a distribution in
respect of the shares of Xxxxxx B.V. held by the Company. Any
such cash payments by Safety B.V. to repay such intercompany
indebtedness, up to $51,648,000 (representing the amount of
such intercompany indebtedness as of June 30, 1996), shall be
credited against the New Xxxxxx Capital Contribution.
ARTICLE III
THE DISTRIBUTION
Section 3.01 Cooperation Prior to the Distribution.
Subject to the terms of the Combination Agreement, the Company
and New Xxxxxx shall take the following actions:
(a) the Company and New Xxxxxx shall prepare, and
the Company shall mail to the holders of shares of Company
Common Stock as of the Special Meeting Record Date, the
Proxy Statement, which shall set forth appropriate disclo-
sure concerning Newco, Autoliv, the Company, New Xxxxxx,
Safety, the Merger, the Distribution, the Transactions and
other matters. The Company and New Xxxxxx shall also pre-
pare, and New Xxxxxx shall file with the Commission, the
-19-
Form S-4, which shall include the Proxy Statement. The
Company and New Xxxxxx shall use their best efforts to
cause the Form S-4 to become effective under the Securi-
ties Act;
(b) the Company and New Xxxxxx shall cooperate in
preparing, filing with the Commission and causing to be-
come effective any registration statements or amendments
thereof which are appropriate to reflect the establishment
of, or amendments to, any employee benefit and other plans
contemplated by the Combination Agreement, the Benefits
Agreement or this Agreement;
(c) the Company and New Xxxxxx shall take all such
action as may be necessary or appropriate under the secu-
rities or blue sky laws of states or other political sub-
divisions of the United States in connection with the
transactions contemplated by this Agreement and the Xxxxx-
xxxx Agreements;
(d) the Company and New Xxxxxx shall prepare, and
New Xxxxxx shall file and seek to make effective, subject
to official notice of issuance, an application to permit
the listing of New Xxxxxx Common Stock on the NYSE; and
(e) the Company and New Xxxxxx shall use their best
efforts to obtain the rulings contemplated by the Ruling
Request in form and substance satisfactory to the Company
Board as advised by counsel.
Section 3.02 Company Board Action; Distribution Pro-
cedures. Subject to the terms of the Combination Agreement,
and the satisfaction or waiver of the conditions set forth in
Section 3.03 hereof, the Company Board shall, in its discre-
tion, establish the Distribution Record Date and the Distribu-
tion Date and any appropriate procedures in connection with the
Distribution. Prior to the Distribution Date, the Company
shall enter into an agreement with the Agent providing for,
among other things, the payment of the Distribution to the
holders of Company Common Stock in accordance with this Article
III.
Section 3.03 Conditions Precedent to the Distribu-
tion. In no event shall the Distribution occur (a) if at the
Distribution Date the Ruling Request shall not have been
granted in form and substance satisfactory to the Company in
its sole discretion and be in full force and effect, or (b)
prior to such time as the following conditions shall have been
satisfied or, to the extent permitted, waived:
-20-
(i) all third party consents and governmental
approvals required in connection with the transactions
contemplated hereby shall have been received, except where
the failure to obtain such consents or approvals would not
have a material adverse effect on either (i) the ability
of the parties to consummate the transactions contemplated
by this Agreement or (ii) the business, financial condi-
tion or results of operations of Safety or New Xxxxxx;
(ii) the Distribution, the Combination Agreement and
the related transactions (including the Merger) shall have
been approved by the holders of a majority of the out-
standing shares of Company Common Stock at the Special
Meeting;
(iii) the transactions contemplated by Sections 2.01,
2.02, 2.05, 2.08, 2.09 and 2.10 shall have been consum-
mated in all material respects, to the extent required to
be consummated prior to the Distribution;
(iv) the New Xxxxxx Common Stock shall have been au-
thorized for listing on the NYSE, subject to official no-
xxxx of issuance;
(v) the New Xxxxxx Board, composed as contemplated
by Section 6.01, shall have been elected by the Company,
as sole stockholder of New Xxxxxx;
(vi) the Form S-4 (to the extent required) shall have
been declared effective under the Securities Act (or the
Form 10 shall have been declared effective under the Ex-
change Act) by the Commission and no stop order suspending
the effectiveness of the Form S-4 (or the Form 10) shall
have been issued by the Commission and, to the knowledge
of the Company and New Xxxxxx, no proceeding for that pur-
pose shall have been instituted by the Commission;
(vii) the applicable parties shall have entered into
each of the Ancillary Agreements;
(viii) each condition to the Closing of the Merger and
the Exchange Offer set forth in Article IX of the Combina-
tion Agreement, other than with respect to consummation of
the Distribution and the transactions set forth in Article
II hereof, shall have been fulfilled or waived by the
party for whose benefit such condition exists;
(ix) the Company Board shall be reasonably satisfied
that, after giving effect to the transactions set forth in
Article II hereof, (A) the Company will not be insolvent
-21-
and will not have unreasonably small capital with which to
engage in its businesses and (B) the Company's surplus
would be sufficient to permit the Distribution without
violation of Section 23-1-28-3 of the Indiana Business
Corporation Law; and
(x) the representations and warranties contained in
Section 2.06 shall be true and correct.
Neither the Company nor New Xxxxxx shall waive any condition
contained in this Section 3.03 without the consent of Autoliv,
which consent shall not be unreasonably withheld.
Section 3.04 The Distribution. On the Distribution
Date, subject to the conditions and rights of termination set
forth in this Agreement, the Company shall deliver to the Agent
a share certificate representing all of the then outstanding
shares of New Xxxxxx Common Stock owned by the Company and
shall instruct the Agent to distribute, on or as soon as prac-
ticable following the Distribution Date, such New Xxxxxx Common
Stock to holders of record of shares of Company Common Stock on
the Distribution Record Date. New Xxxxxx agrees to provide all
share certificates and any information that the Agent shall
require in order to effect the Distribution. All shares of New
Xxxxxx Common Stock issued in the Distribution shall be duly
authorized, validly issued, fully paid and nonassessable.
ARTICLE IV
SERVICES
Section 4.01 Provision of Management Services. From
the Distribution Date through not later than the first an-
niversary thereof (the "Services Period"), New Xxxxxx shall
make available to Safety the following services (collectively,
the "Services"):
(a) Legal, tax, accounting, patent and other intel-
lectual property, payroll and payroll tax, real estate,
human resources (including pension administration), envi-
ronmental, corporate secretarial, insurance, treasury and
management information services, in each case including
reasonable access to New Xxxxxx'x systems and resources;
and
(b) Such other personnel of New Xxxxxx whose ser-
vices the parties agree would be necessary and desirable
to permit Safety and its subsidiaries to operate its busi-
ness in the ordinary course and to facilitate the orderly
-22-
transition of Safety and Newco to an independent and self-
sufficient company in a reasonable and timely manner.
It is understood that Services provided to Safety and
its subsidiaries hereunder will be performed by those employees
of New Xxxxxx who perform equivalent services for New Xxxxxx in
the normal course of their employment. Accordingly, New Xxxxxx
shall not be obligated to make available any services to the
extent that doing so would unreasonably interfere with the per-
formance by any New Xxxxxx Employee of services for New Xxxxxx
or otherwise cause unreasonable burden to New Xxxxxx, in light
of the purposes of this Agreement. Notwithstanding the other
provisions of this Article IV to the contrary, Safety shall be
obligated to obtain from New Xxxxxx, and New Xxxxxx shall agree
to provide to Safety, Services related to the preparation, fil-
ing and auditing of tax returns for periods ended on or before
the Distribution Date, subject to the provisions of the Tax
Sharing Agreement.
Section 4.02 Fee for Services; Expenses. Subject to
applicable law, Safety shall pay for all Services provided un-
der Section 4.01 of this Agreement (including tax, audit, em-
ployee benefits and other Services contemplated to be provided
by the Tax Sharing Agreement or the Benefits Agreement) pursu-
ant to the formula set forth on Schedule 4.02 or as otherwise
agreed by the parties, together with reimbursement of out-of-
pocket expenses. Such payments shall be due and payable by
Safety 30 days after receipt of invoices therefor.
Section 4.03 Independent Contractor Status. New
Xxxxxx shall render and perform the Services as an independent
contractor in accordance with its own standards, subject to its
compliance with the provisions of this Agreement and with all
applicable laws, ordinances and regulations.
Section 4.04 Disclaimer; Limited Liability.
(a) New Xxxxxx makes no express or implied represen-
tations, warranties, or guarantees relating to the Services or
the quality or results of Services to be performed under this
Agreement; provided, however, that New Xxxxxx shall use reason-
able efforts to provide the Services in a manner at least com-
parable to the quality of such services provided to the Safety
Business as of and prior to the date hereof in all material
respects.
(b) New Xxxxxx shall not be liable to Safety for any
expense, claim (for malpractice or otherwise), loss or damage,
including, without limitation, indirect, special, consequential
or exemplary damages in performing the Services pursuant to
-23-
this Article IV; provided, however, that this Section 4.04(b)
shall not apply to any expense, claim (for malpractice or oth-
erwise), loss or damage resulting from the failure of New Mor-
ton to comply with the covenant contained in the proviso in
paragraph (a) above.
(c) New Xxxxxx shall not be liable to Safety for the
consequences of any failure or delay to perform any of its ob-
ligations under this Agreement other than for damages arising
from New Xxxxxx'x willful or reckless misconduct; provided,
that it shall provide reasonably prompt notice to Safety of
such inability and the reasons therefor.
ARTICLE V
INDEMNIFICATION
Section 5.01 Indemnification by Safety.
(a) Except with respect to the matters governed by
the indemnification provisions set forth in the Tax Sharing
Agreement (which shall be governed by those provisions), Safety
shall indemnify, defend and hold harmless New Xxxxxx, each of
its directors, officers, employees and agents and each Affili-
ate of New Xxxxxx and each of the heirs, executors, successors
and assigns of any of the foregoing (the "New Xxxxxx Indemni-
tees") from and against the Safety Liabilities and any and all
losses, claims and Liabilities (including, without limitation,
the costs and expenses of any and all Actions, threatened Ac-
tions, demands, assessments, judgments, settlements and compro-
mises relating thereto and attorneys' fees and any and all ex-
penses whatsoever reasonably incurred in investigating, prepar-
ing or defending against any such Actions or threatened Ac-
tions) (collectively, "Indemnifiable Losses" and, individually,
an "Indemnifiable Loss") of the New Xxxxxx Indemnitees arising
out of or due to the failure or alleged failure of Safety or
any of its Affiliates to pay, perform or otherwise discharge in
due course any of the Safety Liabilities.
(b) Safety shall indemnify, defend and hold harmless
each of the New Xxxxxx Indemnitees from and against any and all
Indemnifiable Losses of the New Xxxxxx Indemnitees arising out
of or based upon any untrue statement or alleged untrue state-
ment of a material fact contained in any portion of the Proxy
Statement (including any preliminary filings related thereto or
any amendments thereof) to be supplied by, or containing infor-
mation relating to, Autoliv or its subsidiaries, or the omis-
sion or alleged omission to state in any such portion a mate-
rial fact required to be stated therein or necessary to make
-24-
the statements made therein, in light of the circumstances un-
der which they were made, not misleading.
Section 5.02 Indemnification by New Xxxxxx.
(a) Except with respect to the matters governed by
the indemnification provisions set forth in the Tax Sharing
Agreement (which shall be governed by those provisions), New
Xxxxxx shall indemnify, defend and hold harmless each of the
Company and Newco, each of the directors, officers, employees
and agents of each of the Company and Newco and each Affiliate
of each of the Company and Newco and each of the heirs, execu-
tors, successors and assigns of any of the foregoing (the
"Safety Indemnitees") from and against the New Xxxxxx Xx-
abilities and any and all Indemnifiable Losses of the Safety
Indemnitees arising out of or due to the failure or alleged
failure of New Xxxxxx or any of its Affiliates to pay, perform
or otherwise discharge in due course any of the New Xxxxxx Xx-
abilities.
(b) New Xxxxxx shall indemnify, defend and hold
harmless each of the Safety Indemnitees from and against any
and all Indemnifiable Losses of the Safety Indemnitees arising
out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any portion of the
Proxy Statement (including any preliminary filing related
thereto or any amendments thereof) to be supplied by, or con-
taining information relating to, any of New Xxxxxx, the New
Xxxxxx Subsidiaries or Safety, or the omission or alleged omis-
sion to state in any such portion a material fact required to
be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were
made, not misleading.
Section 5.03 Limitations on Indemnification Obliga-
tions.
(a) Insurance Proceeds. The amount which any party
(an "Indemnifying Party") is or may be required to pay to any
other party (an "Indemnitee") pursuant to Section 5.01 or Sec-
tion 5.02 shall be reduced (including, without limitation, ret-
roactively) by any Insurance Proceeds or other amounts actually
recovered by or on behalf of such Indemnitee, in reduction of
the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indem-
nifying Party in respect of an Indemnifiable Loss and shall
subsequently actually receive Insurance Proceeds or other
amounts in respect of such Indemnifiable Loss, then such Indem-
xxxxx shall pay to such Indemnifying Party a sum equal to the
-25-
amount of such Insurance Proceeds or other amounts actually
received.
(b) Foreign Currency Adjustments. In the event that
any indemnification payment required to be made hereunder or
under any Ancillary Agreement shall be denominated in a cur-
rency other than United States dollars, the amount of such pay-
ment shall be translated into United States dollars using the
Foreign Exchange Rate for such currency determined in ac-
cordance with the following rules:
(i) with respect to an Indemnifiable Loss arising
from payment by a financial institution under a guarantee,
comfort letter, letter of credit, foreign exchange con-
tract or similar instrument, the Foreign Exchange Rate for
such currency shall be determined as of the date on which
such financial institution shall have been reimbursed;
(ii) with respect to an Indemnifiable Loss covered by
insurance, the Foreign Exchange Rate for such currency
shall be the Foreign Exchange Rate employed by the insur-
ance company providing such insurance in settling such
Indemnifiable Loss with the Indemnifying Party; and
(iii) with respect to an Indemnifiable Loss not cov-
ered by clause (i) or (ii) above, the indemnification pay-
ment shall be paid in the applicable local currency with-
out any translation into United States dollars.
Section 5.04 Procedure for Indemnification.
(a) If an Indemnitee shall receive notice or other-
wise learn of the assertion by a person (including, without
limitation, any governmental entity) who is not a party to this
Agreement or to any of the Ancillary Agreements of any claim or
of the commencement by any such person of any Action (a "Third
Party Claim") with respect to which an Indemnifying Party may
be obligated to provide indemnification pursuant to this Agree-
ment, such Indemnitee shall give such Indemnifying Party writ-
ten notice thereof promptly after becoming aware of such Third
Party Claim; provided, that the failure of any Indemnitee to
give notice as provided in this Section 5.04 (the "Notice")
shall not relieve the related Indemnifying Party of its obliga-
tions under this Article V, except to the extent that such In-
demnifying Party is prejudiced by such failure to give Notice.
Such Notice shall describe the Third Party Claim in reasonable
detail, and shall indicate the amount (to the extent practi-
cable) of the Indemnifiable Loss that has been or may be sus-
tained by such Indemnitee.
-26-
(b) An Indemnifying Party may elect to defend or to
seek to settle or compromise, at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel, any Third
Party Claim by delivering to the Indemnitee, within 30 days of
receipt of Notice (or sooner (but in no event less than 10 days
after the receipt of Notice), if the nature of such Third Party
Claim so requires), the written acknowledgment (the "Acknowl-
edgment") of its indemnification obligation under this Agree-
ment with respect to the Third Party Claim. The Acknowledgment
may specify reservations and exceptions to the extent reason-
ably acceptable to the Indemnitee or consistent with the terms
of this Agreement and the Ancillary Agreements, and such Indem-
xxxxx shall cooperate in the defense or settlement or compro-
mise of such Third Party Claim. If the Indemnifying Party
elects to assume responsibility for defending such Third Party
Claim, the Indemnifying Party shall also notify the claimant or
plaintiff asserting such Third Party Claim of such election and
request that all communications in relation to the Third Party
Claim be made, delivered or addressed to the Indemnifying
Party, instead of the Indemnitee. If it is later determined
that the defendants to the Third Party Claim include both the
Indemnifying Party and the Indemnitee, the Indemnitee shall
thereupon notify the claimant or plaintiff asserting such Third
Party Claim that all communications in relation to the Third
Party Claim should also be made, delivered or addressed to the
Indemnitee. After notice from an Indemnifying Party to an In-
demnitee of its election to assume the defense of a Third Party
Claim, such Indemnifying Party shall not be liable to such In-
demnitee under this Article V for any legal or other expenses
(except expenses approved in advance by the Indemnifying Party)
subsequently incurred by such Indemnitee in connection with the
defense thereof; provided, that, if the defendants in any such
claim include both the Indemnifying Party and one or more In-
demnitees and in such Indemnitees' reasonable judgment a con-
flict of interest between such Indemnitees and such Indemnify-
ing Party exists in respect of such claim or if the Indemnify-
ing Party shall assume responsibility for such claim with such
reservations or exceptions to the extent reasonably acceptable
to the Indemnitee or consistent with the terms of this Agree-
ment and the Ancillary Agreements, such Indemnitees shall have
the right to employ separate counsel to represent such Indemni-
tees and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel rea-
sonably satisfactory to the Indemnifying Party) shall be paid
by such Indemnifying Party.
If an Indemnifying Party elects not to assume respon-
sibility for defending a Third Party Claim (which election may
be made only in the event of a good faith dispute that a claim
was inappropriately tendered under Section 5.01 or 5.02, as the
-27-
case may be) such Indemnitee may defend or (subject to the fol-
lowing sentence) seek to compromise or settle such Third Party
Claim. Notwithstanding the foregoing, an Indemnitee may not
settle or compromise any claim without prior written notice to
the Indemnifying Party, which shall have the option within ten
days following the receipt of such notice (i) to disapprove the
settlement and assume all past and future responsibility for
the claim, including reimbursing the Indemnitee for prior ex-
penditures in connection with the claim, or (ii) to disapprove
the settlement and continue to refrain from participation in
the defense of the claim, in which event the Indemnifying Party
shall have no further right to contest the amount or reason-
ableness of the settlement if the Indemnitee elects to proceed
therewith, or (iii) to approve the amount of the settlement,
reserving the Indemnifying Party's right to contest the Indemn-
itee's right to indemnity, or (iv) to approve and agree to pay
the settlement. In the event the Indemnifying Party makes no
response to such written notice from the Indemnitee, the Indem-
nifying Party shall be deemed to have elected option (ii).
(c) If an Indemnifying Party chooses to defend or to
seek to compromise any Third Party Claim, the related Indemni-
tee shall make available to such Indemnifying Party any person-
nel or any books, records or other documents within its control
or which it otherwise has the ability to make available that
are necessary or appropriate for such defense.
(d) Notwithstanding anything else in this Section
5.04 to the contrary, an Indemnifying Party shall not settle or
compromise any Third Party Claim unless such settlement or com-
promise contemplates as an unconditional term thereof the giv-
ing by the claimant or plaintiff asserting such Third Party
Claim to the Indemnitee of a written release from all liability
in respect of such Third Party Claim. In the event the Indem-
xxxxx shall notify the Indemnifying Party in writing that such
Indemnitee declines to accept any such settlement or compro-
mise, such Indemnitee may continue to contest such Third Party
Claim, free of any participation by such Indemnifying Party, at
such Indemnitee's sole expense. In such event, the obligation
of such Indemnifying Party to such Indemnitee with respect to
such Third Party Claim shall be equal to (i) the costs and ex-
penses of such Indemnitee prior to the date such Indemnifying
Party notifies such Indemnitee of the offer to settle or com-
promise (to the extent such costs and expenses are otherwise
indemnifiable hereunder) plus (ii) the lesser of (A) the amount
of any offer of settlement or compromise which such Indemnitee
declined to accept and (B) the actual out-of-pocket amount such
Indemnitee is obligated to pay subsequent to such date as a
result of such Indemnitee's continuing to pursue such Third
Party Claim.
-28-
(e) Any claim on account of an Indemnifiable Loss
which does not result from a Third Party Claim shall be as-
serted by written notice given by the Indemnitee to the related
Indemnifying Party. Such Indemnifying Party shall have a pe-
riod of 30 days after the receipt of such notice within which
to respond thereto. If such Indemnifying Party does not re-
spond within such 30-day period, such Indemnifying Party shall
be deemed to have refused to accept responsibility to make pay-
ment. If such Indemnifying Party does not respond within such
30-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be
available to such party, under applicable law or under this
Agreement.
(f) In addition to any adjustments required pursuant
to Section 5.03, if the amount of any Indemnifiable Loss shall,
at any time subsequent to the payment required by this Agree-
ment, be reduced by recovery, settlement or otherwise, the
amount of such reduction, less any expenses incurred in connec-
tion therewith, shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party
to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand
in the place of such Indemnitee as to any events or circum-
stances in respect of which such Indemnitee may have any right
or claim relating to such Third Party Claim against any claim-
ant or plaintiff asserting such Third Party Claim. Such Indem-
xxxxx shall cooperate with such Indemnifying Party in a reason-
able manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
(h) In the event Safety shall determine in its rea-
sonable judgment that it is likely that it will be named as a
potentially responsible party in any Superfund or other envi-
ronmental litigation or investigation with respect to a New
Xxxxxx Liability, if requested to do so by Safety, New Xxxxxx
shall notify the potential claimant(s) in such potential liti-
gation of its indemnification obligation in favor of Safety
under this Agreement.
Section 5.05 Remedies Cumulative. The remedies pro-
vided in this Article V shall be cumulative and shall not pre-
clude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying
Party.
Section 5.06 Survival of Indemnities. The obliga-
tions of New Xxxxxx and the Company under this Article V, shall
-29-
survive the Distribution Date and the sale or other transfer by
it of any Assets or businesses or the assignment by it of any
Liabilities, with respect to any Indemnifiable Loss of the
other related to such Assets, businesses or Liabilities. Such
obligations shall be binding upon the successors and assigns of
the Safety Business or the New Xxxxxx Businesses, as the case
may be, and upon any transferee of all or substantially all of
the assets (in one transaction or a series of related transac-
tions) of the Safety Business or the New Xxxxxx Businesses,
which transferee shall assume in writing such obligations. If
25% or more of the Assets of the Safety Business or the New
Xxxxxx Businesses, as the case may be, are spun off to the re-
spective stockholders of Safety or New Xxxxxx, such spun-off
entity shall assume in writing a proportionate share of the
indemnity obligation contained herein of Safety or New Xxxxxx,
as the case may be, based upon the relative assets of such
spun-off entity and the remaining assets in its parent, and
thereafter Safety or New Xxxxxx, as the case may be, shall be
released from the proportionate share so assumed. The assump-
tion of obligations of a transferee or spun-off entity shall
not apply with respect to any transaction consummated after the
twentieth anniversary of this Agreement.
Section 5.07 Right of Inquiry.
(a) In the event of a material adverse change after
the Distribution Date in the financial condition of New Xxxxxx
or Safety, which change creates a substantial likelihood that
New Xxxxxx or Safety, as the case may be, will not be able to
satisfy or otherwise settle, when due, its indemnification ob-
ligations to Safety or New Xxxxxx, respectively, under this
Article V, Safety or New Xxxxxx, as the case may be, shall have
the right, subject to entering into an agreement with the other
party to preserve confidentiality and any applicable privilege
for the benefit of such other party, upon consultation with
such party, to have limited access on reasonable prior notice
to such party's personnel in order to monitor the status of
pending and anticipated litigation and governmental investiga-
tions or proceedings for which Safety or New Xxxxxx, as the
case may be, could be contingently liable. Such right of in-
quiry shall terminate at such time as there is no longer a sub-
stantial likelihood that the applicable party will not be able
to satisfy its indemnification obligations under this Agreement
and the Ancillary Agreements. The reasonable attorneys' fees
and out-of-pocket costs incurred in connection with a party's
inquiry pursuant to this Section 5.07 shall be treated as In-
demnifiable Losses pursuant to this Article V.
(b) In addition to the provisions of paragraph (a)
above, each of Safety and New Xxxxxx shall have the right on an
-30-
annual basis and subject to reasonable prior notice to meet
with the General Counsel of the other party (or such corporate
officer or employee designated by such General Counsel) and
receive an oral report, in a forum in which the requesting
party may ask reasonable questions regarding the status of ma-
terial pending and threatened litigation and material govern-
mental investigations or proceedings for which the requesting
party may be contingently liable. For the avoidance of doubt,
no such right shall require Safety or New Xxxxxx, as the case
may be, to (i) provide non-public written information, (ii)
provide confidential information, (iii) jeopardize the benefit
of any applicable privilege or (iv) engage in lengthy or bur-
densome meetings or discussions. In addition, each of Safety
and New Xxxxxx shall have the further right to request one ad-
ditional meeting per year in connection with the public disclo-
sure by the other party during such year of a material adverse
development in any pending or threatened litigation or govern-
mental investigation or proceeding for which the requesting
party may be contingently liable, such meeting otherwise to be
on the same terms as set forth in this Section 5.07(b). Each
of Safety and New Xxxxxx shall bear its own cost of attendance
at such meetings, which shall be held at the corporate offices
of the non-requesting party.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS AND COVENANTS
Section 6.01 The New Xxxxxx Board. New Xxxxxx and
the Company shall take all actions which may be required to
elect or otherwise appoint, as of the Distribution Date, each
of the directors of the Company Board as a director of New Mor-
ton.
Section 6.02 Resignations; Safety Board.
(a) The Company shall cause all of its directors and
New Xxxxxx Employees to resign, effective as of the Distribu-
tion Date, from all boards of directors or similar governing
bodies of Safety or the Retained Subsidiaries on which they
serve, and from all positions as officers of Safety or the Re-
tained Subsidiaries in which they serve. The Company shall
cause all of the Safety Employees to resign from all boards of
directors or similar governing bodies of New Xxxxxx or any New
Xxxxxx Subsidiary on which they serve, and from all positions
as officers of New Xxxxxx or any New Xxxxxx Subsidiary in which
they serve.
-31-
(b) The Company shall take all actions which may be
required to elect or otherwise appoint to the Company Board and
the board of directors of each Remaining Subsidiary, as of the
Effective Time, such officers of Newco or the Company as the
Company may designate prior to the Effective Time.
Section 6.03 Certain Post-Distribution Transactions.
(a) New Xxxxxx. (i) New Xxxxxx shall, and shall
cause each New Xxxxxx Subsidiary to, comply with each represen-
tation and statement made, or to be made, to any taxing author-
ity in connection with any ruling obtained, or to be obtained,
by the Company and New Xxxxxx acting together, from any such
taxing authority with respect to any transaction contemplated
by this Agreement.
(ii) Neither New Xxxxxx nor any New Xxxxxx Subsidiary
shall for a period of one year following the Distribution Date
engage or agree to engage in any of the following transactions,
unless (X) an opinion in form and substance reasonably satis-
factory to Safety is obtained from nationally recognized tax
counsel to New Xxxxxx and/or (Y) a supplemental ruling is ob-
tained from the IRS, in either case to the effect that such
transaction(s) would not adversely affect the tax consequences
of the contributions, transfers, assumptions, Merger and Dis-
tribution described in Articles II and III of this Agreement to
the Company, any Retained Subsidiary, or any shareholder or
former shareholder of the Company. The transactions subject to
this provision are: (A) ceasing to engage in an active trade
or business within the meaning of Section 355(b) of the Code,
whether by means of a disposition or distribution of stock or
assets, or otherwise; (B) repurchasing more than 20% of the New
Xxxxxx Common Stock outstanding immediately after the Distribu-
tion; (C) issuing an amount of New Xxxxxx capital stock that
would cause the Distribution to fail to satisfy the requirement
that the Company have been in control of New Xxxxxx within the
meaning of Section 368(c) of the Code immediately prior to the
Distribution or that the New Xxxxxx shareholders be in control
of New Xxxxxx immediately after the Distribution within the
meaning of Section 368(a)(1)(D) of the Code; or (D) liquidating
or merging with or into any other entity (including a New Mor-
ton Subsidiary). New Xxxxxx hereby represents and warrants
that neither New Xxxxxx nor any New Xxxxxx Subsidiary has any
plan or intention to undertake any of the transactions set
forth in (A), (B), (C), or (D) above. Notwithstanding the
foregoing, any act or transaction that is consistent with the
representations contained in (x) the request for rulings and
any supplement thereto filed with the IRS in connection with
the Distribution or (y) the tax certificates described in Sec-
tion 9.1(g)(ii) of the Combination Agreement relating to the
-32-
opinions of counsel to be rendered in connection with the Dis-
tribution and the Merger, shall not be subject to the provi-
sions of this Section 6.03(a)(ii).
(b) The Company. The Company shall, and shall cause
each Remaining Subsidiary to, comply with each representation
and statement made, or to be made, to any taxing authority in
connection with any ruling obtained, or to be obtained, by the
Company and New Xxxxxx acting together, from any such taxing
authority with respect to any transaction contemplated by this
Agreement.
Section 6.04 Use of Names.
(a) Any existing printed material showing any af-
filiation or connection of Safety or the Retained Subsidiaries
with New Xxxxxx, including any names using "Xxxxxx" or a de-
rivative thereof, may be used by Safety or the Retained Subsid-
iaries only for a period ending eight months after the Distri-
bution Date. On and after the Distribution Date, Safety shall
not otherwise represent to third parties that it is presently
affiliated with New Xxxxxx.
(b) From and after the Effective Time, New Xxxxxx
shall have all rights in and use of the names "Xxxxxx" and
"Xxxxxx International" and all other names, marks, scripts,
type fonts, forms, styles, logos, designs, devices, trade
dress, symbols and other forms of trade identity constituting
New Xxxxxx Assets (collectively, the "Xxxxxx Name Rights"), and
all derivatives thereof. The Company acknowledges that New
Xxxxxx has all such rights and that the Company will not use
the New Xxxxxx Rights, or names, marks or other material con-
fusingly similar therewith except as permitted by this Agree-
ment. Prior to or promptly after the Effective Time, the Com-
pany shall change its name and the name of any Subsidiary or
other person under its control to eliminate therefrom the names
"Xxxxxx" and "Xxxxxx International" and all derivatives
thereof. For a period of eight months after the Distribution
Date, the Company may use the names "Xxxxxx" and "Xxxxxx Inter-
national" only to the extent that it is not practical to change
such names or as permitted by Section 6.04(a), including in
connection with any signs, letterhead, business cards, invoices
or other printed forms, telephone directory listings or promo-
tional material, and products in inventory as of the Distribu-
tion Date and shall cause the Company and its subsidiaries to
maintain the same standards of quality with respect to such
names, logos and marks as previously exercised.
(c) Nothing in this Section 6.04 shall obligate
Safety to replace any tooling or other equipment used in the
-33-
manufacturing process, provided that Safety uses all reasonable
efforts to comply with the requirements of paragraphs (a) and
(b) with respect to such tooling and equipment by, for example,
affixing labels thereto or providing other appropriate signage.
(d) As of the date of this Agreement, New Xxxxxx
intends to use "Xxxxxx International, Inc." as its corporate
name following the Effective Time, although nothing herein
shall preclude New Xxxxxx from changing such name in the fu-
ture.
Section 6.05 Restrictions on Hiring of Other Party's
Employees. For a period of two years after the Distribution
Date, each of Safety and New Xxxxxx agrees that, without the
prior written consent of the other, it will not, and it will
cause its Affiliates not to, solicit the employment of or em-
ploy any New Xxxxxx Employee or Safety Employee, respectively.
Section 6.06 Further Assurances; Cooperation. Each
of the parties hereto promptly shall execute such documents and
other instruments and take such further actions as may be rea-
sonably required or desirable to carry out the provisions
hereof and to consummate the transactions contemplated hereby.
The parties shall cooperate with each other in all reasonable
respects to ensure the transfer to New Xxxxxx or a New Xxxxxx
Subsidiary of the New Xxxxxx Assets, New Xxxxxx Liabilities and
the businesses related thereto, and the retention by the Com-
pany of the Safety Business, including, without limitation, (i)
allocating rights and obligations under contracts, agreements
and other arrangements, if any, of the Company that relate to
both the Safety Business and the New Xxxxxx Businesses, (ii)
determining whether to enter into any service or other sharing
agreements on a mutually acceptable arm's-length basis that may
be necessary to assure a smooth and orderly transition, and
(iii) obtaining any reasonably necessary or appropriate third-
party consents, licenses and permits in connection with the
Distribution. In case at any time after the Distribution Date
any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors
of each party to this Agreement shall take all such necessary
or desirable action.
Section 6.07 Guarantees.
(a) Safety and New Xxxxxx shall cooperate, and shall
cause their respective Affiliates to cooperate, to terminate,
or to cause Safety or one of its Affiliates to be substituted
in all respects for New Xxxxxx or its Affiliates in respect of,
all obligations of New Xxxxxx and its Affiliates under any
-34-
loan, financing, lease, contract, or other obligation in exist-
ence as of the Distribution Date pertaining to the Safety Busi-
ness for which New Xxxxxx or an Affiliate of New Xxxxxx may be
liable, as guarantor, original tenant, primary obligor or oth-
erwise. If such a termination or substitution is not effected
by the Distribution Date, (i) Safety shall indemnify and hold
harmless the New Xxxxxx Indemnitees for any Indemnifiable Loss
arising from or relating thereto, and (ii) without the prior
written consent of the Chief Financial Officer of New Xxxxxx,
from and after the Distribution Date, Safety shall not, and
shall not permit any of its Affiliates to, renew or extend the
term of, increase its obligations under, or transfer to a third
party, any loan, lease, contract or other obligation for which
New Xxxxxx or any of its Affiliates is or may be liable unless
all obligations of New Xxxxxx and its Affiliates with respect
thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to the Chief Financial Of-
ficer of New Xxxxxx.
(b) Safety and New Xxxxxx shall cooperate, and shall
cause their respective Affiliates to cooperate, to terminate,
or to cause New Xxxxxx or one of its Affiliates to be substi-
tuted in all respects for Safety and its Affiliates in respect
of, all obligations of Safety and its Affiliates under any
loan, financing, lease, contract or other obligation in exist-
ence as of the Distribution Date pertaining to the New Xxxxxx
Businesses for which Safety or its Affiliates may be liable, as
guarantor, original tenant, primary obligor or otherwise. If
such a termination or substitution is not effected by the Dis-
tribution Date, (i) New Xxxxxx shall indemnify and hold harm-
less the Company Indemnitees for any Indemnifiable Loss arising
from or relating thereto, and (ii) without the prior written
consent of the Chief Financial Officer of Safety or Newco, from
and after the Distribution Date, New Xxxxxx shall not, and
shall not permit any of its Affiliates to, renew or extend the
term of, increase its obligations under, or transfer to a third
party, any loan, lease, contract or other obligation for which
Safety or its Affiliates is or may be liable unless all obliga-
tions of Safety and its Affiliates with respect thereto are
thereupon terminated by documentation reasonably satisfactory
in form and substance to the Chief Financial Officer of Safety
or Newco.
(c) Safety and New Xxxxxx shall provide Newco with
information and documentation relating to the actions to be
taken pursuant to this Section 6.07.
Section 6.08 Shared Facilities. From and after the
Distribution Date, New Xxxxxx shall have access to the facili-
ties specified in Schedule 6.08 on the terms set forth thereon.
-35-
Section 6.09 Thiokol-Xxxxxx Spinoff. Safety agrees
that, at New Xxxxxx'x request and expense and subject to New
Xxxxxx'x obligation to indemnify Safety for such actions,
Safety shall act as agent for New Xxxxxx in making any claim
against Xxxxxx Thiokol, Inc. (now named Thiokol Corporation) in
connection with New Xxxxxx'x indemnification and similar rights
pursuant to the agreements entered into between Thiokol and
Xxxxxx International, Inc. in connection with the 1989 distri-
bution of the capital stock of Xxxxxx International, Inc.
Safety shall not knowingly waive any such rights of New Xxxxxx
without New Xxxxxx'x consent. Notwithstanding the foregoing,
Safety shall not be obligated to take any actions in further-
ance of its obligations under this Section 6.09 if Safety de-
termines, in its reasonable judgment, that taking such actions
would entail an undue level of risk to Safety or involve Safety
in a substantial controversy or dispute.
Section 6.10 Non-Competition. (a) For a period of
four years from and after the Distribution Date, New Xxxxxx
will not engage, directly or through any subsidiary or other
entity controlled by New Xxxxxx, in the automotive safety re-
straint business (as such business is conducted by Newco and
its subsidiaries immediately following the Effective Time (as
defined in the Contribution Agreement)); provided, however,
that this Section 6.10 shall not prevent New Xxxxxx from:
(i) acquiring no more than 10% of the outstanding
stock, partnership or other equity interests in
any corporation, partnership, limited liability
company or other person or entity ("Person");
(ii) acquiring more than 10% of the outstanding capi-
tal stock, partnership or other equity interests
in any Person for which the annual revenues de-
rived from the business of such Person that com-
petes with the automotive safety restraint busi-
ness (as such business is conducted by Newco and
its subsidiaries immediately following the Ef-
fective Time) are not more than 10% of such
Person's total annual revenues;
(iii) acquiring more than 50% of the outstanding capi-
tal stock, partnership or other equity interests
in any Person (or any lesser percentage if, pur-
suant to contractual or other arrangements, New
Xxxxxx has the right to cause such Person to
take the actions specified in the following pro-
viso) for which the annual revenues derived from
the business of such Person that competes with
the automotive safety restraint business (as
-36-
such business is conducted by Newco and its sub-
sidiaries immediately following the Effective
Time) are more than 10% (or, in the event such
revenues represent less than 10% of such
Person's total annual revenues, constitute a
stand-alone business that can be divested with-
out materially affecting the remaining busi-
nesses or operations of such Person) but less
than 40% of such Person's total annual revenues;
provided, however, that New Xxxxxx shall use all
commercially reasonable efforts to divest that
portion of such Person that competes with the
automotive safety restraint business (as such
business is conducted by Newco and its subsid-
iaries immediately following the Effective Time)
on commercially reasonable terms as soon as
practicable after acquisition of such ownership
or interest; or
(iv) engaging in any investment activities with re-
spect to any pension plan, trust for the benefit
of employees or retirees, employee savings or
stock ownership plan or other employee benefit,
retirement or welfare plan or program.
(b) Notwithstanding anything to the contrary in Sec-
tion 6.10(a), for a period of ten years from and after the Dis-
tribution Date, New Xxxxxx will not engage, directly or through
any subsidiary or other entity controlled by New Xxxxxx, in the
automotive safety restraint business using as its trade name
any name containing the words "Xxxxxx" or "MI".
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
Section 7.01 Provision of Corporate Records.
(a) New Xxxxxx Assets shall include the original
corporate minute books, stock ledgers and certificates and cor-
porate seals of each New Xxxxxx Subsidiary, all licenses,
leases, agreements, litigation files and filings with foreign
governments primarily relating to the New Xxxxxx Businesses and
all other such material that does not relate exclusively to the
Safety Business. Safety shall arrange as soon as practicable
following the Distribution Date for the transportation to New
Xxxxxx of existing corporate records in its possession prima-
rily relating to the New Xxxxxx Businesses, except to the ex-
tent such items are already in the possession of New Xxxxxx or
-37-
a New Xxxxxx Subsidiary or located at the Company's present
principal executive offices or on premises included in the New
Xxxxxx Assets. Such records shall be the property of New Mor-
ton, but shall be available to Safety for review and duplica-
tion and shall otherwise be subject to Section 7.05 of this
Agreement.
(b) Safety Assets shall include the original corpo-
rate minute books, stock ledgers and certificates and corporate
seals of the Company and the Retained Subsidiaries and all li-
censes, leases, agreements, litigation files and filings exclu-
sively relating to the Safety Business. New Xxxxxx shall ar-
range as soon as practicable following the Distribution Date,
to the extent not previously delivered in connection with the
transactions contemplated in Article II, for the transportation
to Safety of existing corporate records (excluding accounting,
tax, and financial records and original Policies except as oth-
erwise agreed by the parties) in its possession or located at
the Company's principal executive offices exclusively relating
to Safety and the Retained Subsidiaries, except to the extent
such items are already in the possession of Safety. Such
records shall be the property of Safety, but shall be available
to New Xxxxxx for review and duplication and shall otherwise be
subject to Section 7.05 of this Agreement.
Section 7.02 Access to Information.
(a) From and after the Distribution Date, Safety
shall afford to New Xxxxxx and its authorized accountants,
counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to persons
or firms possessing information) and duplicating rights during
normal business hours to all records, books, contracts, instru-
ments, computer data and other data and information (col-
lectively, "Information") within Safety's possession insofar as
such access is reasonably required by New Xxxxxx, subject to
appropriate restrictions for classified information. Simi-
larly, New Xxxxxx shall afford to Safety and its authorized
accountants, counsel and other designated representatives rea-
sonable access (including using reasonable efforts to give ac-
cess to persons or firms possessing information) and duplicat-
ing rights during normal business hours to Information within
New Xxxxxx'x possession, insofar as such access is reasonably
required by Safety. Information may be requested under this
Article VII for, without limitation, audit, accounting, claims,
litigation and tax purposes, as well as for purposes of ful-
filling disclosure and reporting obligations and for performing
this Agreement and the transactions contemplated hereby.
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(b) For a period of five years following the Distri-
bution Date, each of New Xxxxxx and Safety shall provide to the
other, promptly following such time at which such documents
shall be filed with the Commission, all documents which shall
be filed by it or any of its subsidiaries with the Commission
pursuant to the periodic and interim reporting requirements of
the Exchange Act and the rules and regulations of the Commis-
sion promulgated thereunder.
(c) In furtherance of the rights and obligations of
the parties set forth in subsections (a) and (b) of this Sec-
tion 7.02:
(i) Each party hereto acknowledges that (A) each of
Safety and the Retained Subsidiaries (the "Safety Group")
on the one hand, and New Xxxxxx and the New Xxxxxx Subsid-
iaries (the "New Xxxxxx Group") on the other hand, has or
may obtain Information regarding a member of the other
Group, or any of its operations, employees, Assets or Li-
abilities (whether in documents or stored in any other
form or known to its employees or agents) that is or may
be protected from disclosure pursuant to the attorney-
client privilege, the work product doctrine or other ap-
plicable privileges ("Privileged Information"); (B) there
are a number of actual, threatened or future litigations,
investigations, proceedings (including arbitration pro-
ceedings), claims or other legal matters that have been or
may be asserted by or against, or otherwise affect, each
or both of Safety and New Xxxxxx (or members of either
Group) ("Litigation Matters"); (C) Safety and New Xxxxxx
have a common legal interest in Litigation Matters, in the
Privileged Information, and in the preservation of the
confidential status of the Privileged Information, in each
case relating to the Safety Business or the New Xxxxxx
Businesses as it or they existed prior to the Distribution
Date or relating to or arising in connection with the re-
lationship between the constituent elements of the Groups
on or prior to the Distribution Date; and (D) the Company,
Safety and New Xxxxxx intend that the transactions contem-
plated by this Agreement and the Ancillary Agreements and
any transfer of Privileged Information in connection here-
with or therewith shall not operate as a waiver of any
potentially applicable privilege.
(ii) Each of the Company, Safety and New Xxxxxx
agrees, on behalf of itself and each member of the Group
of which it is a member, not to disclose or otherwise
waive any privilege attaching to any Privileged Informa-
tion relating to the New Xxxxxx Businesses or the Safety
Business as they or it existed prior to the Distribution
-39-
Date, respectively, or relating to or arising in connec-
tion with the relationship between the Groups on or prior
to the Distribution Date, without providing prompt written
notice to and obtaining the prior written consent of the
other, which consent shall not be unreasonably withheld
and shall not be withheld if the other party certifies
that such disclosure is to be made in response to a likely
threat of suspension or debarment or similar action; pro-
vided, however, that Safety and New Xxxxxx may make such
disclosure or waiver with respect to Privileged Informa-
tion if such Privileged Information relates, in the case
of Safety, solely to the Safety Business as it existed
prior to the Distribution Date or, in the case of New Mor-
ton, solely to the New Xxxxxx Businesses as they existed
prior to the Distribution Date. In the event of a dis-
agreement between any member of the Safety Group and any
member of the New Xxxxxx Group concerning the reasonable-
ness of withholding such consent, no disclosure shall be
made prior to a final, nonappealable resolution of such
disagreement by a court of competent jurisdiction.
(iii) Upon any member of the Safety Group or any mem-
ber of the New Xxxxxx Group receiving any subpoena or
other compulsory disclosure notice from a court, other
governmental agency or otherwise which requests disclosure
of Privileged Information, in each case relating to the
New Xxxxxx Businesses or the Safety Business, respec-
tively, as they or it existed prior to the Distribution
Date or relating to or arising in connection with the re-
lationship between the constituent elements of the Groups
on or prior to the Distribution Date, the recipient of the
notice shall promptly provide to Safety, in the case of
receipt by a member of the New Xxxxxx Group, or New Mor-
ton, in the case of receipt by a member of the Safety
Group, a copy of such notice, the intended response, and
all materials or information relating to the other Group
that might be disclosed. In the event of a disagreement
as to the intended response or disclosure, unless and un-
til the disagreement is resolved as provided in paragraph
(ii) above, Safety and New Xxxxxx shall cooperate to as-
sert all defenses to disclosure claimed by either Group,
at the cost and expense of the Group claiming such defense
to disclosure, and shall not disclose any disputed docu-
ments or information until all legal defenses and claims
of privilege have been finally determined.
Section 7.03 Production of Witnesses. At all times
from and after the Distribution Date, each of New Xxxxxx and
Safety shall use reasonable efforts to make available to the
other upon written request, its and its subsidiaries' officers,
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directors, employees and agents as witnesses to the extent that
such persons may reasonably be required in connection with any
legal, administrative or other proceedings in which the re-
questing party may from time to time be involved.
Section 7.04 Reimbursement. Except to the extent
otherwise contemplated by Article IV hereof or any Ancillary
Agreement, a party providing Information or witness services to
the other party under this Article VII shall be entitled to
receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, dis-
bursements and other out-of-pocket expenses and direct and in-
direct costs of employees who are witnesses, as may be reason-
ably incurred in providing such Information or witness ser-
vices.
Section 7.05 Retention of Records. Except as other-
wise required by law or agreed to in writing, each of Safety
and New Xxxxxx may destroy or otherwise dispose of any of the
Information in accordance with the records retention policy of
the Company at the date of this Agreement as set forth on Ex-
hibit F, provided that, prior to destruction or disposal of
Information relating in any material respect to the New Xxxxxx
Business or the Safety Business, respectively, (a) it shall
provide no less than 90 or more than 120 days prior written
notice to the other, specifying in reasonable detail the Infor-
mation proposed to be destroyed or disposed of and (b) if a
recipient of such notice shall request in writing prior to the
scheduled date for such destruction or disposal that any of the
Information proposed to be destroyed or disposed of be deliv-
ered to such requesting party, the party proposing the destruc-
tion or disposal shall promptly arrange for the delivery of
such of the Information as was requested at the expense of the
party requesting such Information.
Section 7.06 Confidentiality. Each of Safety and
the Retained Subsidiaries on the one hand, and New Xxxxxx and
the New Xxxxxx Subsidiaries on the other hand, shall hold, and
shall cause its consultants and advisors to hold, in strict
confidence, all Information concerning the other in its posses-
sion or furnished by the other or the other's representatives
pursuant to this Agreement (except to the extent that such In-
formation has been (a) in the public domain through no fault of
such party or (b) later lawfully acquired from other sources by
such party), and each party shall not release or disclose such
Information to any other person, except its auditors, attor-
neys, financial advisors, bankers and other consultants and
advisors, unless compelled to disclose by judicial or adminis-
trative process or, as advised by its counsel, by other re-
quirements of law.
-41-
ARTICLE VIII
INSURANCE
Section 8.01 Policies and Rights.
(a) New Xxxxxx Assets. Without limiting the gener-
ality of the definition of New Xxxxxx Assets set forth in Sec-
tion 1.01 or the effect of Section 2.02, the New Xxxxxx Assets
shall include (i) any and all rights of an insured party under
each of the Company Policies, specifically including rights of
indemnity and the right to be defended by or at the expense of
the insurer, with respect to all injuries, losses, Liabilities,
damages and expenses incurred or claimed to have been incurred
prior to the Distribution Date by any party in or in connection
with the conduct of the New Xxxxxx Businesses or, to the extent
any claim is made against New Xxxxxx or any of its subsidiar-
ies, the Safety Business and which injuries, losses, Liabili-
ties, damages and expenses may arise out of insured or insur-
able occurrences or events under one or more of the Company
Policies; provided, however, that nothing in this clause shall
be deemed to constitute (or to reflect) the assignment of the
Company Policies, or any of them, to New Xxxxxx; and (ii) the
New Xxxxxx Policies.
(b) Safety Assets. Without limiting the generality
of the definition of Safety Assets set forth in Section 1.01,
the Safety Assets shall include (i) any and all rights of an
insured party under each of the Company Policies, specifically
including rights of indemnity and the right to be defended by
or at the expense of the insurer, other than the rights under
the Company Policies included in New Xxxxxx Assets pursuant to
Section 8.01(a); and (ii) the Safety Policies.
(c) No Further Indemnity. Nothing in this Article
VIII shall be deemed to constitute an indemnity of New Xxxxxx
by Safety or an indemnity of Safety by New Xxxxxx.
Section 8.02 Post-Distribution Date Claims. If,
subsequent to the Distribution Date, any person, corporation,
firm or entity shall assert a claim against New Xxxxxx or any
New Xxxxxx Subsidiary with respect to any injury, loss, li-
ability, damage or expense incurred or claimed to have been
incurred prior to the Distribution Date in or in connection
with the conduct of the New Xxxxxx Businesses or, to the extent
any claim is made against New Xxxxxx or any of its subsidiar-
ies, the Safety Business, or any of them, and which injury,
loss, liability, damage or expense may arise out of insured or
-42-
insurable occurrences or events under one or more of the Com-
pany Policies, the Company shall at the time such claim is as-
serted be deemed to assign, without need of further documenta-
tion, to New Xxxxxx any and all rights of an insured party un-
der the applicable Company Policy with respect to such asserted
claim, specifically including rights of indemnity and the right
to be defended by or at the expense of the insurer; provided,
however, that nothing in this sentence shall be deemed to con-
stitute (or to reflect) the assignment of the Company Policies,
or any of them, to New Xxxxxx.
Section 8.03 Administration and Reserves.
(a) Notwithstanding the provisions of Article III,
from and after the Distribution Date:
(i) New Xxxxxx shall be responsible for the (A) In-
surance Administration of the Company Policies and the New
Xxxxxx Policies, and (B) Claims Administration with re-
spect to the New Xxxxxx Liabilities; provided, that the
retention of the Company Policies and the New Xxxxxx Xxxx-
cies by New Xxxxxx is in no way intended to limit, in-
hibit, or preclude any right to insurance coverage for any
Insured Claim of a named insured under the Company Poli-
cies and the New Xxxxxx Policies, including but not lim-
ited to Safety and any of its operations, subsidiaries and
Affiliates;
(ii) Unless otherwise agreed pursuant to Article IV
hereof, Safety shall be responsible for the (A) Insurance
Administration of the Safety Policies and (B) Claims Ad-
ministration with respect to the Safety Liabilities; pro-
vided that the retention of the Safety Policies by Safety
is in no way intended to limit, inhibit, or preclude any
right to insurance coverage for any Insured Claim of a
named insured under the Safety Policies;
(iii) New Xxxxxx shall be entitled to reserves estab-
lished by the Company or any of its subsidiaries, or the
benefit of reserves held by any insurance carrier, with
respect to the New Xxxxxx Liabilities; and
(iv) Safety shall be entitled to reserves established
by the Company or any of its subsidiaries, or the benefit
of reserves held by any insurance carrier, with respect to
the Safety Liabilities.
(b) Insurance Premiums. New Xxxxxx shall have the
right but not the obligation to pay the premiums, to the extent
-43-
that Safety does not pay premiums with respect to Safety Li-
abilities (retrospectively-rated or otherwise), with respect to
the Company Policies and the New Xxxxxx Policies, as required
under the terms and conditions of the respective Policies,
whereupon Safety shall forthwith reimburse New Xxxxxx for that
portion of such premiums paid by New Xxxxxx as are attributable
to the Safety Liabilities. Unless otherwise agreed by the par-
ties hereto, Safety shall purchase (subject to a 50% reimburse-
ment by New Xxxxxx within 15 days of notice of such purchase)
continued coverage under its director and officer liability
insurance policy for claims made prior to the sixth anniversary
of the Distribution Date based upon acts or omissions occurring
on or prior to the Distribution Date.
(c) Allocation of Insurance Proceeds. Insurance
Proceeds received with respect to claims, costs and expenses
under the Policies shall be paid to New Xxxxxx with respect to
the New Xxxxxx Liabilities and to Safety with respect to the
Safety Liabilities. Payment of the allocable portions of in-
demnity costs of Insurance Proceeds resulting from the Policies
will be made to the appropriate party upon receipt from the
insurance carrier. In the event that the aggregate limits on
any Company Policies are exceeded, the parties agree to provide
an equitable allocation of Insurance Proceeds based upon their
respective bona fide claims. The parties agree to use their
best efforts to cooperate with respect to insurance matters.
Section 8.04 Agreement for Waiver of Conflict and
Shared Defense. In the event that Insured Claims of both New
Xxxxxx and Safety exist relating to the same occurrence, New
Xxxxxx and Safety agree to jointly defend and to waive any con-
flict of interest necessary to the conduct of that joint de-
fense. Nothing in this paragraph shall be construed to limit
or otherwise alter in any way the indemnity obligations of the
parties to this Agreement, including those created by this
Agreement, by operation of law or otherwise.
Section 8.05 Cooperation with Respect to Insurance.
New Xxxxxx shall provide all reasonable cooperation in order to
assist Safety during the transition period in obtaining such
continuous insurance coverage as Safety shall request, pro-
vided, that New Xxxxxx shall not be obligated to pay any premi-
ums or other costs in connection therewith.
-44-
ARTICLE IX
MISCELLANEOUS
Section 9.01 Complete Agreement; Construction. This
Agreement, including the Schedules and Exhibits and the Xxxxx-
xxxx Agreements and other agreements and documents referred to
herein, shall (to the extent each party hereto is a party
thereto) constitute the entire agreement between the parties
with respect to the subject matter hereof and shall supersede
all previous negotiations, commitments and writings with re-
spect to such subject matter. Notwithstanding any other provi-
sions in this Agreement to the contrary, in the event and to
the extent that there shall be a conflict between the provi-
sions of this Agreement (or any Conveyancing and Assumption
Instrument or other instrument of assumption) and the provi-
sions of the Benefits Agreement or the Tax Sharing Agreement,
the provisions of the Benefits Agreement or the Tax Sharing
Agreement, as the case may be, shall control.
Section 9.02 Survival of Agreements. Except as oth-
erwise contemplated by this Agreement, all covenants and agree-
ments of the parties contained in this Agreement shall survive
the Distribution Date.
Section 9.03 Expenses. Safety Liabilities shall
include $15 million of expenses incurred by the Company in con-
nection with the transactions contemplated by the Combination
Agreement to the extent not previously paid by Safety prior to
the Distribution Date, together with all costs, including fi-
nancing costs, and expenses (except as provided in the next
succeeding sentence) in connection with the Safety Credit
Agreement, with New Xxxxxx responsible for any additional ex-
penses incurred by the Company on or prior to the Distribution
Date in connection therewith, including the costs and expenses
incurred by the Company or New Xxxxxx on or prior to the Dis-
tribution Date in connection with the preparation, execution,
delivery and implementation of this Agreement. New Xxxxxx
shall be responsible, up to a maximum of $500,000, for fifty
percent of the costs, including financing costs, and expenses
incurred in connection with the Safety Credit Agreement.
Section 9.04 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware, without regard to the principles of con-
flicts of laws thereof.
-45-
Section 9.05 Notices. All notices and other com-
munications hereunder shall be in writing and shall be deliv-
ered by hand or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses
(or at such other addresses for a party as shall be specified
by like notice) and shall be deemed given on the date on which
such notice is received:
To the Company or Safety:
Autoliv ASP, Inc.
0000 Xxxxxxx Xxxx
Xxxxx, Xxxx 00000
Attention: Corporate Secretary
with a copy to:
Autoliv, Inc.
c/o Autoliv AB
Xxx 000 00
X-000 00 Xxxxxxxxx
Xxxxxx
Attention: Corporate Secretary
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx
One Canada Square
Xxxxxx Xxxxx
Xxxxxx X00 0XX, Xxxxxxx
Attention: Xxxxx X. Xxxxxxx, Xx., Esq.
To New Xxxxxx:
Xxxxxx International, Inc.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Section 9.06 Amendments. This Agreement may not be
modified or amended except by an agreement in writing signed by
the respective duly authorized representatives of the parties.
-46-
Section 9.07 Successors and Assigns. This Agreement
and all of the provisions hereof shall be binding upon and in-
ure to the benefit of the parties and their respective succes-
sors and permitted assigns.
Section 9.08 Counterparts. This Agreement may be
executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all
such counterparts shall together constitute the same agreement.
Section 9.09 Subsidiaries. Each of the parties
hereto shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set
forth herein to be performed by any subsidiary of such party
which is contemplated to be a subsidiary of such party on and
after the Distribution Date.
Section 9.10 Third Party Beneficiaries. Except for
the provisions of Article V relating to Indemnitees, which
shall be for the benefit of such Indemnitees, and for Newco,
which shall be a third-party beneficiary of the Company's
rights under this Agreement, this Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries
and Affiliates and should not be deemed to confer upon third
parties any remedy, claim, Liability, reimbursement, claim of
action or other right in excess of those existing without ref-
erence to this Agreement.
Section 9.11 Titles and Headings. Titles and head-
ings to sections herein are inserted for the convenience of
reference only and are not intended to be a part of or to af-
fect the meaning or interpretation of this Agreement.
Section 9.12 Exhibits and Schedules. The Exhibits
and Schedules shall be construed with and as an integral part
of this Agreement to the same extent as if the same had been
set forth verbatim herein.
Section 9.13 Legal Enforceability. Any provision of
this Agreement which is prohibited or unenforceable in any ju-
risdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without in-
validating the remaining provisions hereof. Any such prohibi-
tion or unenforceability in any jurisdiction shall not invali-
date or render unenforceable such provision in any other juris-
diction. Without prejudice to any rights or remedies otherwise
available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of
-47-
the provisions of this Agreement and agrees that the obliga-
tions of the parties hereunder shall be specifically enforce-
able.
Section 9.14 Consent to Jurisdiction. Each of the
parties hereto irrevocably submits to the exclusive jurisdic-
tion of any state or federal court in the State of Delaware for
the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby
(and agrees not to commence any action, suit or proceeding re-
lating hereto except in such courts). Each of the parties
hereto further agrees that service of any process, summons,
notice or document hand delivered or sent by registered mail to
such party's respective address set forth in Section 9.05 will
be effective service of process for any action, suit or pro-
ceeding in Delaware with respect to any matters to which it has
submitted to jurisdiction as set forth in the immediately pre-
ceding sentence. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby in any state or federal
court in the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in
any such court that any such action, suit or proceeding brought
in any such court has been brought in an inconvenient forum.
-48-
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the day and year first
above written.
XXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxx X. XxXxxxxx
Xxxxxx X. XxXxxxxx
Vice President Finance and Chief
Financial Officer
NEW XXXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Vice President for Legal
Affairs and General Counsel
