SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 30, 1997
BREED Technologies, Inc.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-11474 22-2767118
(State or Other Jurisdiction (Commission File (IRS Employee
of Incorporation) Number) Identification No.)
5300 Old Tampa Highway, Lakeland, Florida 33811
(Address of Principal Executive Offices) (Zip Code)
941-668-6000
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On October 30, 1997, BREED Technologies, Inc., a Delaware corporation (the
"Company") consummated the acquisition of certain assets and the assumption of
certain liabilities of the "Safety Restraints Systems" business unit of
AlliedSignal, Inc. and 100% of the outstanding shares of capital stock of ICSRD
Rueckhaltesysteme Fahrzeugsicherheit GmbH, a German company, BSRD Limited, an
English company, AlliedSignal India, Inc., a Delaware company, Sistemas
AlliedSignal de Seguridad, S.A. de C.V., a Mexican company, and AlliedSignal
Cinturones de Seguridad, S.A. de C.V., a Mexican company. The acquisition was
made pursuant to the Asset Purchase Agreement dated August 27, 1997 among
AlliedSignal, Inc. (and certain subsidiaries identified in the Agreement) and
BREED Technologies, Inc. (and certain subsidiaries identified in the Agreement)
as amended to extend the closing date under certain conditions.
The purchase price cash consideration of $710 million has been financed
with borrowings under a revolving and term credit facility, the net proceeds
from the issuance and sale of convertible preferred securities, and the net
proceeds from the issuance and sale of Series A Preferred shares to Siemens AG.
Any difference between the closing date net working capital and interim net
working capital, as defined, will result in a post-closing purchase price
adjustment.
The acquired operations produce seatbelts and airbags with principal
locations in Knoxville, Tennessee; Maryville, Tennessee; Greenville, Alabama;
St. Clair Shores, Michigan; Sterling Heights, Michigan; Douglas, Arizona;
Brownsville, Texas; El Paso, Texas; Agua Prieta, Mexico; Juarez, Mexico; Valle
Hermoso, Mexico; Carlisle, England; Colleferro, Italy; Turin, Italy; Siena,
Italy; Arzano, Italy; and Barcelona, Spain. The acquired operations have annual
revenues of approximately $840 million.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Financial Statements of Businesses Acquired. It is impracticable for the
Company to provide the financial statements of the acquired entity required by
this Item 7(a) at the time of filing this report of Form 8-K, and none of such
financial statements are available at such time. The Company will file the
financial statements of the acquired entity as soon as practicable, but not
later than 60 days after November 14, 1997.
Pro Forma Financial Information. It is impracticable for the Company to
provide the pro forma financial information relative to the acquired entity
required by this Item 7(b) at the time of filing of this report on Form 8-K, and
none of such pro forma financial information is available at such time.
Accordingly, in accordance with Item 7(b)(2) of Form 8-K, the Company will file
the required pro forma financial information relative to the acquired entity in
an amendment to this report on Form 8-K as soon as is practicable, but not later
than 60 days after November 14, 1997.
Exhibits. Asset Purchase Agreement, dated as of August 27, 1997, among
AlliedSignal, Inc. (and certain subsidiaries identified in the Agreement) and
BREED Technologies, Inc. (and certain subsidiaries identified in the Agreement).
Amendment made as of October 3, 1997, to the Asset Purchase
Agreement made as of August 27, 1997 by and between AlliedSignal Inc., a
Delaware corporation, Breed Technologies, Inc., a Delaware corporation, and the
other parties thereto.
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 14, 1997 BREED Technologies, Inc.
By:/s/Frank J. Gnisci
Frank J. Gnisci
Executive Vice President and
Chief Financial Officer
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 14, 1997 BREED Technologies, Inc.
By:/s/Frank J. Gnisci
Frank J. Gnisci
Executive Vice President and
Chief Financial Officer
ASSET PURCHASE AGREEMENT
dated as of
August 27, 1997
among
AlliedSignal Inc.,
and
the other Sellers listed on Attachment A,
and
Breed Technologies, Inc.
and
the other Purchasers identified herein
TABLE OF CONTENTS
Page
1. CLOSING 1
1.1 Closing Date..................................................... 1
1.2 Effectiveness.................................................... 2
2. PURCHASE AND SALE 2
2.1 Purchase and Sale................................................ 2
2.2 Excluded Assets.................................................. 4
2.3 Assignment of Assets............................................. 5
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION 6
3.1 Initial Purchase Price........................................... 6
3.2 Post-Closing Adjustment.......................................... 6
3.3 Allocation of Purchase Price..................................... 8
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS................................ 9
4.1 Assumption of Certain Liabilities and Obligations by Purchasers.. 9
4.2 Excluded Liabilities............................................. 9
5. PENSION, EMPLOYEE AND UNION MATTERS 10
5.1 Scope of Section................................................. 10
5.2 US Employees..................................................... 11
5.3 European Employees............................................... 18
5.4 Mexican Employees................................................ 26
5.5 Other Employees.................................................. 26
6. REPRESENTATIONS AND WARRANTIES OF SELLERS 26
6.1 Due Organization................................................. 26
6.2 Authority........................................................ 27
6.3 Transferred Entities and Joint Venture Interests................. 27
6.4 No Conflict...................................................... 28
6.5 Approvals........................................................ 29
6.6 Financial Statements............................................. 29
6.7 Real Property.................................................... 29
6.8 Personal Property................................................ 31
6.9 Contracts........................................................ 31
6.10 Intellectual Property........................................... 32
6.11 Litigation, Claims and Proceedings.............................. 33
6.12 Environmental Conditions........................................ 34
6.13 Permits......................................................... 34
6.14 Compliance with Law............................................. 34
6.15 Labor and Employee Benefits..................................... 35
6.16 Insurance....................................................... 37
6.17 Intercompany Services........................................... 37
6.18 Taxes........................................................... 38
6.19 Sufficiency of Assets........................................... 38
6.20 Finder's Fee.................................................... 38
6.2 Powers of Attorney.............................................. 39
6.22 Accounts Receivable; Intercompany and Intracompany Accounts..... 39
6.23 Recalls and Service Actions..................................... 39
6.24 Product Warranties.............................................. 39
6.25 Undisclosed Liabilities......................................... 40
6.26 Absence of Certain Changes...................................... 40
6.27 Real Property Leases............................................ 40
6.28 Warranty Disclaimer............................................. 41
6.29 Inquiry......................................................... 41
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS 41
7.1 Due Organization................................................. 41
7.2 Authority........................................................ 41
7.3 No Conflict...................................................... 41
7.4 Approvals........................................................ 42
7.5 Litigation....................................................... 42
7.6 Funds............................................................ 42
7.7 Certain Acknowledgments and Other Matters........................ 42
7.8 Warranty Disclaimer.............................................. 43
8. PRE-CLOSING COVENANTS 43
8.1 Conduct of Business.............................................. 43
8.2 Access to Records and Properties................................. 45
8.3 Consents......................................................... 45
8.4 Public Announcements............................................. 46
8.5 Assurance of Title to Real Property; Survey...................... 46
8.6 Guarantees....................................................... 47
8.7 Covenant by Parents.............................................. 48
8.8 Notification of Certain Matters.................................. 48
8.9 Exclusivity...................................................... 48
8.10 Reasonable Efforts............................................... 48
8.11 Environmental Matters; Covenants................................. 48
8.12 Manufacturing Agreement.......................................... 49
8.13 BAICO Agreement.................................................. 49
9. CONDITIONS TO OBLIGATIONS OF PURCHASERS 50
9.1 Absence of Injunction............................................ 50
9.2 Certificates of Sellers.......................................... 50
9.3 Consents......................................................... 50
9.4 No Breach........................................................ 50
9.5 Competition Law Clearances....................................... 51
9.6 No Material Adverse Effect....................................... 51
10. CONDITIONS TO OBLIGATIONS OF SELLERS 51
10.1 Absence of Injunction........................................... 51
10.2 Certificates of Purchasers...................................... 51
10.3 Consents........................................................ 51
10.4 No Breach....................................................... 51
10.5 Competition Law Clearances...................................... 52
11. TERMINATION; SURVIVAL 52
11.1 Termination..................................................... 52
11.2 Effect of Termination........................................... 53
12. DOCUMENTS TO BE DELIVERED BY SELLERS AT THE CLOSING 53
13. PAYMENT BY PURCHASERS AT THE CLOSING; DOCUMENTS TO BE DELIVERED BY
PURCHASERS AT THE CLOSING 56
14. POST-CLOSING OBLIGATIONS 56
14.1 Covenant Not to Compete; No Raid................................ 56
14.2 Tax Matters..................................................... 58
14.3 Further Assurances.............................................. 63
14.4 Reports; Access to Books and Records............................ 63
14.5 Cooperation in Litigation....................................... 64
14.6 Names and Marks................................................. 64
14.7 Confidential Information........................................ 64
14.8 Foreign Country Offsets......................................... 64
14.9 Intercompany Trade Account...................................... 65
14.10 Performance of Obligations..................................... 65
14.11 Industrial Revenue Bonds....................................... 65
14.12 JV Cash Management Agreements.................................. 66
14.13 Italian Grants................................................. 66
14.14 Certain Financial Information.................................. 66
15. INDEMNIFICATION 67
15.1 Indemnification by Sellers...................................... 67
15.2 Indemnification by Purchasers................................... 67
15.3 Survival........................................................ 68
15.4 Limitations on Indemnity........................................ 68
15.5 Indemnification Procedure....................................... 70
15.6 Special Environmental Provisions................................ 71
15.7 Special Intellectual Property Provisions........................ 73
15.8 Special Provisions Regarding Recalls and Service Actions........ 76
15.9 Exclusive Remedy................................................ 80
16. MISCELLANEOUS 80
16.1 Expenses........................................................ 80
16.2 Bulk Sales...................................................... 80
16.3 Assignability................................................... 80
16.4 Binding Effect.................................................. 81
16.5 Notices......................................................... 81
16.6 Counterparts.................................................... 82
16.7 Attachments and Schedules....................................... 82
16.8 Governing Law................................................... 82
16.9 Arbitration..................................................... 82
16.10 Definitions.................................................... 83
16.11 Headings....................................................... 93
16.12 Amendment...................................................... 93
16.13 Entire Agreement............................................... 93
16.14 Waivers........................................................ 93
16.15 Third Party Rights............................................. 93
16.16 Severability................................................... 94
16.17 No Rights of Set Off........................................... 94
16.18 Agency......................................................... 94
16.19 Consent to Jurisdiction........................................ 94
16.20 Foreign Transfer Agreements.................................... 94
16.21 Agreement by Parents........................................... 94
ATTACHMENTS
Attachment A Sellers
Attachment B Joint Venture Entities
Attachment C Certain Products
Attachment D Transferred Entities
Attachment E Form of Sellers' Pension Plan Opinion
Attachment F Form of Purchasers' Pension Plan Opinion
Attachment G Form of Sellers' Savings Plan Opinion
Attachment H Form of Purchasers' Savings Plan Opinion
SCHEDULES
Schedule 2.1(a) Owned Real Property
Schedule 2.1(n) Real Property Leases
Schedule 2.2(j) Certain Excluded Assets
Schedule 3.2(b) Specified Accounting Principles
Schedule 5.2.1(b)(1) US Salaried Employees
Schedule 5.2.1(c) Retained Employees
Schedule 5.3.1(a) European Employees
Schedule 5.3.1(b) European Employee Benefit Plans
Schedule 5.3.2(g) European Retained Employees
Schedule 5.3.2(i) European Collective Bargaining Agreements
Schedule 6.1 Organization and Good Standing
Schedule 6.3.2 Equity Interests in Transferred Entities and Joint
Venture Interests
Schedule 6.4 No Conflicts
Schedule 6.6 Financial Statements
Schedule 6.8 Personal Property
Schedule 6.9 Material Contracts
Schedule 6.10(a) Proprietary Rights
Schedule 6.10(b) Claims of US and Foreign Patents
Schedule 6.10(c) IP Rights' Compliance
Schedule 6.10(d) Intellectual Property Agreements
Schedule 6.10(e) Intellectual Property Ownership Rights
Schedule 6.10(f) Patents
Schedule 6.10(g) Transferred Entities' Intellectual Property
Schedule 6.11 Litigation, Claims and Proceedings
Schedule 6.12 Environmental Conditions
Schedule 6.13 Permits
Schedule 6.15 Labor and Employee Matters
Schedule 6.16 Liability and Casualty Insurance Policies
Schedule 6.17 Intercompany Services
Schedule 6.18(b) Tax Matters - Transferred Entities
Schedule 6.21 Powers of Attorney
Schedule 6.22 Accounts Receivable
Schedule 6.23 Recalls and Service Actions
Schedule 6.24 Product Warranties
Schedule 6.25 Undisclosed Liabilities
Schedule 6.26 Absence of Changes
Schedule 6.27 Real Property Leases
Schedule 6.29 Knowledge of Sellers
Schedule 7.4 Approvals - Purchasers
Schedule 8.3(b) Consents - Purchaser and Seller
Schedule 8.6 Guarantees
Schedule 9.3 Consents Required - Sellers
Schedule 10.3 Consents Required - Purchasers
Schedule 16.10 Licenses; Liens and Encumbrances
EXHIBITS
Exhibit 5.3.3(b) BSRD Retirement Benefits Plan Deed
Exhibit 8.12 Manufacturing Agreement
Exhibit 12(i) Services Agreement
Exhibit 12(j) Trademark License
Exhibit 12(k) Foreign Transfer Agreements
Exhibit 12(r) Elongated Fiber Testing Agreement
Exhibit 12(s) Fiber Supply Agreement
Exhibit 12(t) Supplemental Transfer Agreement
Exhibit 14.11 Alabama Sublease
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") made as of August 27, 1997 among
AlliedSignal Inc., a Delaware corporation ("AlliedSignal"), and the entities
listed on Attachment A (AlliedSignal and each such entity is referred to
individually as a "Seller" and collectively as "Sellers"), and Breed
Technologies, Inc., a Delaware corporation ("Breed"), and the wholly-owned
subsidiaries of Breed identified by Breed prior to the Closing (as defined
below) (Breed and each such subsidiary is referred to individually as a
"Purchaser" and collectively as "Purchasers").
A. Sellers and the Transferred Entities (as defined below) are engaged in
the business of designing, developing, manufacturing, marketing and selling
automotive occupant restraint products and systems (including but not limited to
seat belt and air bag assemblies and components). The term "Business", for
purposes of this Agreement, shall mean the business described in the immediately
preceding sentence as conducted by Sellers and the Transferred Entities, but
shall not include (i) the rights and interests owned by Sellers or a Transferred
Entity (the "Joint Venture Interests") in the entities set forth on Attachment B
("Joint Venture Entities"), (ii) any business conducted by or within
AlliedSignal's polymers business unit and (iii) the business of designing,
developing, manufacturing, marketing and selling seat belt systems incorporating
the products set forth on Attachment C (the businesses described in the
foregoing clauses (ii) and (iii) are referred to herein collectively as the
"Excluded Businesses").
B. Sellers conduct the Business as unincorporated divisions or branches
and/or own equity interests in other entities devoted as of the Closing entirely
to the Business (such other entities are listed on Attachment D and are referred
to as "Transferred Entities").
C. Sellers desire to sell the Business and the Assets (as defined below)
and Purchasers desire to acquire the Business and the Assets, for the
consideration as stated hereunder and on the terms and conditions as set forth
in this Agreement.
D. When used in this Agreement, the defined terms, which are capitalized,
shall have the meaning as set forth in Section 16.10.
In consideration of the mutual covenants and agreements contained in this
Agreement, Sellers and Purchasers agree as follows:
1. CLOSING.
1.1 Closing Date. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place simultaneously at 10:00 a.m. Eastern
Time at the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New
York, New York and the offices of Lovell White Durrant, 65 Holborn Viaduct,
London EC1A 2DY, England, on the fifth Business Day after all conditions to the
obligations of Purchasers and Sellers under Articles 9 and 10 of this Agreement
shall have been satisfied or waived (other than those requiring a delivery of a
certificate or other document, or the taking of other action, at the Closing),
or at such other place and on such other date as the parties may mutually agree
in writing (such date on which the Closing occurs hereinafter is referred to as
the "Closing Date"). Notwithstanding the foregoing, to the extent that
consummation of the transactions contemplated hereby or by the Foreign Transfer
Agreements necessitates that any actions be taken in jurisdictions outside the
US and the United Kingdom, such actions shall be taken in the appropriate
jurisdictions and shall be effective as of the time set forth in Section 1.2.
The parties shall use their best efforts to cause the Closing to be consummated
on September 30, 1997.
1.2 Effectiveness. The consummation of the transactions contemplated by
this Agreement and the Closing shall be deemed to take place at 12:01 a.m.,
Eastern Time, on the Closing Date and no transaction shall be deemed to have
been completed and no document or certificate shall be deemed to have been
delivered until all transactions are completed and all documents are delivered.
2. PURCHASE AND SALE.
2.1 Purchase and Sale. Upon the terms and subject to the conditions
contained herein, except as otherwise provided in Sections 2.2 and 2.3 hereof,
at the Closing, Sellers shall sell, convey, transfer, and assign to Purchasers,
and Purchasers shall purchase, assume and acquire from Sellers, all of Sellers'
direct rights, titles and interests in and to (i) the Business and (ii) all of
the assets, properties and rights relating primarily to the Business or used
primarily in the conduct of the Business anywhere in the world, including,
without limitation, the following (the "Assets"):
(a) all real property listed in Schedule 2.1(a) (collectively, "Real
Property") and all buildings, fixtures, improvements and structures located
thereon and all appurtenances belonging thereto;
(b) all inventory, including raw materials, work-in-process and finished
goods, of the Business ("Inventory");
(c) all furnishings, furniture, computer equipment, office equipment and
supplies, vehicles, tooling (but for customer-owned tooling, only Sellers' right
to use such tooling), patterns, dies, jigs, machinery and equipment, and other
tangible personal property (other than Inventory) used primarily in the conduct
of the Business ("Personal Property");
(d) all Intellectual Property owned by or licensed to Sellers;
(e) all contracts, agreements, arrangements and/or commitments relating
primarily to the Business (other than employee benefit plans, licenses of
Intellectual Property, Real Property Leases, and Permits) ("Contracts");
(f) all customer and vendor lists relating primarily to the Business, all
files and documents (including credit information) to the extent relating to
customers and vendors of the Business and all production data, equipment
maintenance data, accounting records, inventory records, sales and sales
promotional data, advertising materials, cost and pricing information, business
plans, reference catalogs, legal files (subject to review by Sellers in
connection with the protection of privileged materials or other materials that,
in Sellers' reasonable judgment, are not necessary to the conduct of the
Business' legal function and would be inappropriate to transfer) and any other
such data and records, in each case to the extent relating primarily to the
Business; provided, however, that Sellers shall be entitled to retain copies of
any such materials which are necessary for their tax, accounting or legal
purposes;
(g) all Permits used in the conduct of the Business to the extent the same,
or a right to use the same, can under Law be transferred to Purchasers;
(h) all rights pursuant to any express or implied warranties,
representations or guarantees made by suppliers furnishing goods or services to
the extent furnished to the Business and, with respect to Real Property, all
warranties relating to any work done in respect thereto;
(i) all trade accounts receivable and trade notes receivable of the
Business, whether recorded or unrecorded, including without limitation all trade
receivables from other divisions or Affiliates of Sellers or the Transferred
Entities ("Accounts Receivable");
(j) prepaid expenses and deposits relating primarily to the Business to the
extent such prepaid expenses and deposits will accrue to the benefit of the
Purchasers in respect of the Business following the Closing Date;
(k) all the outstanding equity (and any interests and rights in such
equity) in the Transferred Entities;
(l) the Joint Venture Interests in the Joint Venture Entities listed as
items 1, 2 and 4 on Attachment B (the "Transferred Joint Venture Interests") and
the Joint Venture Agreements;
(m) Retained Cash Balances, if any;
(n) leases and occupancy agreements of real property listed in Schedule
2.1(n) (collectively, the "Real Property Leases"), and all of Sellers' rights in
all buildings, fixtures, improvements and structures located on such real
property and all appurtenances belonging thereto;
(o) the intercompany receivable (including any accrued interest) as of the
Closing of BSRD Ltd. with respect to accounts and/or notes payable (other than
trade payables) to such entity from AlliedSignal Ltd. (net of any accounts
and/or notes payable (other than trade payables) as of the Closing from BSRD
Ltd. to AlliedSignal Ltd.); and
(p) all assets, properties, interests and rights reflected in the Closing
Statement of Net Assets.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained in
this Agreement, the following assets, properties and rights ("Excluded Assets")
are not intended to and shall not be sold, assigned, transferred or conveyed to
Purchasers hereunder and such assets shall not be deemed Assets hereunder:
(a) all cash (including without limitation cash overdrafts), cash
equivalents and short-term investments of Sellers;
(b) except as otherwise licensed in the Trademark License, all of Sellers'
rights in and to all names, marks, trade names and trademarks incorporating
"AlliedSignal" or "Bendix" or any derivation therefrom and all corporate symbols
or logos incorporating "AlliedSignal" or "Bendix" either alone or in combination
and any and all goodwill represented thereby and pertaining thereto;
(c) contracts of insurance maintained by or on behalf of Sellers or on
behalf of the Transferred Entities by Sellers or their Affiliates (including any
return of charges or premiums under retrospective rating plans) and all rights
thereunder;
(d) each Seller's corporate seal, minute books and other corporate
organizational records;
(e) all refunds, rebates, abatements, or credits for Taxes expressly
allocated to Sellers in accordance with this Agreement;
(f) any employee data which relates to employees who are Former Employees
or who are not Employees or which Sellers are prohibited by Law or agreement
from disclosing or delivering to Purchasers;
(g) assets of employee benefit plans of Sellers except to the extent
provided by Article 5;
(h) all claims, rights, benefits and interests arising under or resulting
from any Excluded Liability;
(i) all intellectual property developed or held by an Excluded Business;
(j) all assets, properties, interests and rights listed on Schedule 2.2(j);
(k) all notes receivable and other intercompany receivables (other than
Accounts Receivable), including any accrued interest, of Sellers from (i)
divisions or Affiliates of Sellers or (ii) the Transferred Entities, other than
the net intercompany receivable as of the Closing referred to in Section 2.1(o);
and
(l) the Joint Venture Interest in the Joint Venture Entity listed as item 3
on Attachment B and any assets, properties, interests and rights of such
entities.
2.3 Assignment of Assets.
(a) Notwithstanding anything to the contrary in this Agreement (but subject
to Sections 9.3, 9.4 and 10.3), to the extent that any sale, conveyance,
transfer or assignment or attempted sale, conveyance, transfer or assignment of
any Contract, Permit, or other Asset described in Section 2.1 to be sold,
conveyed, transferred or assigned to Purchasers, or any claim, right or benefit
arising thereunder or resulting therefrom (collectively, the "Interests"), would
constitute a breach under such related Asset or a violation of any applicable
Laws, or such Interest is not capable of being sold, conveyed, transferred or
assigned without any Consent which has not been obtained by (or does not remain
in full force and effect at) the Closing, this Agreement shall not constitute a
sale, conveyance, transfer or assignment thereof, or an attempted sale,
conveyance, transfer or assignment thereof, unless and until such Interest (a
"Retained Interest") can be sold, conveyed, transferred and assigned in
accordance with Section 2.1 without such a breach or violation of Laws or such
Consent is obtained, at which time such Retained Interest shall be deemed to be
sold, conveyed, transferred and assigned in accordance with Section 2.1,
whereupon it shall cease to be a Retained Interest. Until such transfer, all
such Retained Interests shall be held in trust by Sellers for the sole benefit
of Purchasers (and, with respect to Real Property and Real Property Leases,
Purchasers shall bear all reasonable expenses incurred in the ordinary course of
business or necessary to make emergency repairs in connection with the ordinary
use and occupancy thereof, but no capital expenses or other expenses incurred
outside of the ordinary course of business, shall be made without the consent of
Purchasers). The foregoing is without limitation of Sellers' and Purchasers'
obligations under the provisions of Section 8.3.
(b) To the extent any of the approvals, consents or waivers necessary to
sell, assign, transfer or convey any Interest have not been obtained (or do not
remain in full force and effect) as of the Closing Date, Sellers shall promptly
notify Purchasers of each such occurrence, and Sellers and Purchasers shall,
until such Interest ceases to be a Retained Interest, use all reasonable efforts
to (i) cooperate in any reasonable and lawful arrangements designed to provide
the benefits of such Retained Interest to Purchasers, and Purchasers shall
promptly pay or satisfy the corresponding liabilities and obligations relating
to the enjoyment of such benefits to the extent Purchasers would have been
responsible therefor if such consent, waiver or approval had been obtained and
such Retained Interest had been transferred to Purchasers as of the Closing and
(ii) enforce, at the request of Purchasers, any rights of Sellers arising from
such Retained Interest against such issuer thereof or the other party or parties
thereto (including the right to elect to terminate any such Retained Interest in
accordance with the terms thereof with the consent of Purchasers). If any
Retained Interest that is an Equity Interest or Transferred Joint Venture
Interest (other than the Joint Venture Interest in the Joint Venture Entity
listed as item 1 on Attachment B) has not been sold, assigned, transferred or
conveyed to Purchasers pursuant to Section 2.1 prior to the one (1) year
anniversary of the Closing Date, then, unless the Purchasers shall otherwise
direct, Sellers shall thereafter retain such Equity Interest or Transferred
Joint Venture Interest, as the case may be, and shall pay to Breed, as an
adjustment to the purchase price hereunder, the greater of (A) the amount
reflected on the Closing Statement of Net Assets for such Equity Interest or
Transferred Joint Venture Interest, and (B) the fair market value of such
Retained Interest, as determined by an internationally recognized independent
investment banking firm satisfactory to Purchasers and Sellers, in each case
plus interest thereon from the Closing Date to the date of such payment at the
rate of LIBOR plus .25%. Purchasers and Sellers shall each be responsible for
payment of fifty percent (50%) of all fees and expenses of such investment
banking firm. If any other Retained Interest has not been sold, assigned,
transferred or conveyed to Purchasers pursuant to Section 2.1 prior to the one
(1) year anniversary of the Closing Date (other than the Joint Venture Interest
in the Joint Venture Entity listed as item 1 on Attachment B), the parties shall
negotiate in good faith an equitable solution designed to give the parties the
intended benefits under this Agreement with respect to such Retained Interests
or the value thereof.
3. PAYMENT AND ADJUSTMENT OF PURCHASE PRICE; ALLOCATION.
3.1 Initial Purchase Price.
(a) The initial purchase price to be paid by Purchasers for the Assets (the
"Initial Purchase Price") shall be Seven Hundred Ten Million Dollars
($710,000,000). The Initial Purchase Price shall be subject to adjustment as
hereinafter set forth in Section 3.2.
(b) At the Closing, Breed, for itself and as agent for the other
Purchasers, shall pay the Initial Purchase Price to AlliedSignal, for itself as
a Seller and as agent for the other Sellers, by a wire transfer of immediately
available funds in US currency to a bank account to be designated in writing by
AlliedSignal not less than two Business Days prior to the Closing Date.
3.2 Post-Closing Adjustment.
(a) The Initial Purchase Price shall be increased or decreased by the
amount, if any, by which the Final Investment is greater or less, respectively,
than $175,300,000 (the "Initial Investment"), which is the amount shown as the
"Net Book Value" on the Statement of Net Assets (excluding the Intercompany
Trade Account). "Final Investment" means the "Net Book Value" of the Business
shown on the Closing Statement of Net Assets, plus Retained Cash Balances (if
any) less any amounts paid pursuant to Section 14.9. The Initial Purchase Price
as adjusted pursuant to this Section 3.2 hereinafter shall be referred to as the
"Adjusted Purchase Price".
(b) Not later than ninety days (90) after the Closing Date, Sellers will
prepare and deliver to Purchasers a statement of the net assets of the Business
as of the close of business on the day prior to the Closing Date (the "Closing
Statement of Net Assets") prepared in accordance with Schedule 3.2(b) (the
"Specified Accounting Principles"). Purchasers agree to provide Sellers and
Sellers' accountants, at no cost to Sellers, access to the books and records of
the Business to the extent reasonably requested by Sellers for purposes of
preparing the Closing Statement of Net Assets and will cause appropriate
personnel of Purchasers to provide reasonable assistance to Sellers and their
representatives, at no cost to Sellers, in the preparation of the Closing
Statement of Net Assets. Sellers shall, at no cost to Purchasers, permit
Purchasers' accountants to review and make copies of all work papers used to
support account balances in the Closing Statement of Net Assets.
(c) Unless Purchasers notify Sellers in writing that they disagree with any
aspect of the Closing Statement of Net Assets (such notice to include
Purchasers' objections and reasonably detailed proposed revisions to said
documents and in reasonable detail the basis therefor along with any relevant
supporting data) within sixty (60) days after receipt thereof, the Closing
Statement of Net Assets shall be conclusive and binding on Sellers and
Purchasers. If Purchasers so notify Sellers in writing within such sixty (60)
day period, then Sellers and Purchasers shall attempt to resolve their
differences with respect thereto within fifteen (15) days after Sellers' receipt
of Purchasers' written notice of disagreement. Any disputes not resolved by
Sellers and Purchasers within such fifteen (15) day period regarding the Closing
Statement of Net Assets will be resolved by KPMG Peat Marwick (the "Firm"). The
Firm shall make a determination on the disputes so submitted as well as such
modifications, if any, to the Closing Statement of Net Assets and the Final
Investment as reflect such determination, and the same shall be conclusive and
binding upon the parties. The determination of the Firm for any item in dispute
cannot, however, be in excess of, nor less than, the greatest or lowest value,
respectively, claimed for that particular item in the Closing Statement of Net
Assets, in the case of Sellers, or in the notice described in the first sentence
of this paragraph, in the case of Purchasers. The fees and expenses of the Firm
shall be shared equally by Sellers and Purchasers.
(d) Not later than thirty (30) days after the engagement of the Firm (as
evidenced by its written acceptance by facsimile or otherwise to the parties),
the parties shall submit simultaneous briefs to the Firm (with a copy to the
other parties) setting forth their respective positions regarding the issues in
dispute, and not later than thirty (30) days after the submission of such briefs
the parties shall submit simultaneous reply briefs (with a copy to the other
parties). The Firm shall render its decision resolving the dispute within thirty
(30) days after submission of the reply briefs. If additional briefing, a
hearing, or other information is required by the Firm, the Firm shall give
notice thereof to the parties as soon as practicable before the expiration of
such thirty (30) day period, and the parties shall promptly respond with a view
to minimizing any delay in the decision date.
(e) Any adjustment required hereunder shall be payable as follows:
(i) If the Final Investment is less than the Initial Investment, within
five (5) Business Days of the final determination of the Final Investment,
Sellers shall pay to Purchasers the difference (less amounts previously paid
pursuant to clause (iii) below in respect of such difference) plus interest
thereon at the rate of LIBOR plus .25% per annum from (but excluding) the
Closing Date through and including the date of payment. Such payment shall be
made by a wire transfer of immediately available funds in US currency to a bank
account designated in writing by Purchasers.
(ii) If the Final Investment is more than the Initial Investment, within
five (5) Business Days of the final determination of the Final Investment,
Purchasers shall pay to Sellers the difference (less amounts previously paid
pursuant to clause (iii) below in respect of such difference) plus interest
thereon at the rate of LIBOR plus .25% per annum from (but excluding) the
Closing Date through and including the date of payment. Such payment shall be
made by a wire transfer of immediately available funds in US currency to a bank
account designated in writing by Sellers.
(iii) If at any time after the delivery of the Closing Statement of Net
Assets, any portion of any adjustment is not in dispute between Purchasers and
Sellers or, if following any such dispute, the parties resolve their difference
with respect to all or any portion thereof without a determination by the Firm,
Purchasers or Sellers, as the case may be, shall within five (5) Business Days
pay to the other the amount of the adjustment not previously paid by Purchasers
or Sellers and not in dispute, plus interest thereon at the rate of LIBOR plus
.25% per annum from (but excluding) the Closing Date through and including the
date of payment. Such payment shall be made by a wire transfer of immediately
available funds in US currency to a bank account designated in writing by
Purchasers or Sellers, as the case may be.
(f) The purpose of this Section 3.2 is to determine the purchase price to
be paid by Purchasers under this Agreement. Accordingly, any determination
pursuant to subsection (c) above made by the Firm selected thereunder shall not
be deemed to be an indemnification by either Seller or Purchasers, as the case
may be, pursuant to Article 15, nor subject to the limitation on indemnities set
forth in Section 15.4 hereof.
3.3 Allocation of Purchase Price.
(a) Sellers and Purchasers shall jointly allocate the Preliminary Purchase
Price (i) among the US Business, the non-US Business, the Transferred Entities
and Transferred Joint Venture Interests, and (ii) to the extent of the
allocation to the US Business, among the assets of the US Business in accordance
with Section 1060 of the Code and, to the extent of the allocation to the non-US
Business, among the assets of the non-US Business as agreed by the parties on
the basis of relative market values. Sellers and Purchasers shall agree on such
allocations as promptly as practicable and in any event no later than the
Closing. The "Preliminary Purchase Price" shall be an amount equal to the
Initial Purchase Price plus that portion of the Assumed Liabilities that are
considered assumed liabilities for federal income tax purposes. Any post-closing
adjustments made in accordance with Section 3.2 shall be allocated in accordance
with the character of each such adjustment, on a basis consistent with the
allocation of the Preliminary Purchase Price (such allocations together with the
allocation described in the first sentence of this Section 3.3(a), the "Final
Allocation"). Sellers and Purchasers shall prepare and file Form 8594 or such
other form or statement as may be required by Law, and any comparable state or
local income tax form in a manner consistent with the Final Allocation. Sellers
and Purchasers shall adhere to the Final Allocation for all tax-related purposes
including any federal, foreign, state, county or local income and franchise Tax
Return filed by them after the Closing Date, including the determination by
Sellers of taxable gain or loss on the sale of the Assets and the determination
by Purchaser of its tax basis with respect to the Assets.
(b) Sellers and Purchasers shall agree before the Closing Date as to the
allocation of the Initial Purchase Price to each Real Property (and real
property subject to any Real Property Lease if any transfer tax is due in
connection with the assignment of such lease), and such allocation shall be
utilized for purposes of (i) calculating all real property transfer taxes due in
connection with the direct or indirect transfer of the real property pursuant to
the provisions of this Agreement and (ii) determining the amount of title
insurance to be purchased for any Real Property for which title insurance is
purchased. In the event the parties are unable to agree on the values of any
such real property, an independent appraisal shall be obtained and completed
prior to the Closing with the costs of such appraisal split 50/50 between the
parties.
4. ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
4.1 Assumption of Certain Liabilities and Obligations by Purchasers. Except
as otherwise provided in Section 4.2 hereof or any other provision of this
Agreement which expressly provides for the retention of a liability by Sellers,
from and after the Closing Date, Purchasers shall, without any further
responsibility or liability of, or recourse to, Sellers, or any of their
respective directors, shareholders, officers, employees, agents, consultants,
representatives, affiliates, successors or assigns, absolutely and irrevocably
assume and be liable and solely responsible for any and all liabilities, claims,
obligations, costs and expenses of any kind or nature whatsoever, whether
arising before or after the Closing and whether known or unknown, fixed or
contingent, matured or unmatured ("Liabilities"), whether or not reflected on
the Schedules hereto, and without regard to the manner in which any Assets are
transferred in any jurisdiction, (a) arising out of or relating to (i) the
ownership, use or possession of the Assets on or prior to the Closing Date, (ii)
the condition of the Assets on or prior to the Closing Date, and/or (iii)
liabilities and obligations with respect to pension, employee and union matters
assumed by Purchasers under Article 5 and/or (b) primarily arising out of or
primarily relating to the Business or the conduct of the Business (the
Liabilities described in clauses (a)(i), (ii) and (iii) and clause (b) are
referred to collectively as the "Assumed Liabilities").
4.2 Excluded Liabilities. Assumed Liabilities shall not include the
following Liabilities (the "Excluded Liabilities"), which shall remain the
obligation of Sellers:
(a) any Taxes allocated to Sellers pursuant to Section 14.2;
(b) any accounts or notes payable (other than trade payables) to (i)
divisions or Affiliates of Sellers or (ii) the Transferred Entities, other than
the intercompany indebtedness (including any accrued interest) as of the Closing
referred to in Section 2.1(o) (which shall be an Assumed Liability) (it being
acknowledged that with respect to any such indebtedness from one Transferred
Entity to another Transferred Entity such amounts shall remain assets and
liabilities of the respective Transferred Entities);
(c) except as otherwise provided in Article 5, any liability, claim or
obligation relating to or arising out of employment of any Former Employee
(other than a Former Employee of a Transferred Entity);
(d) except as otherwise provided in Article 5, any liability, claim or
obligation relating to or arising out of the employment of any employee of
Sellers who does not become an employee of Purchasers;
(e) (i) any liability, claim or obligation relating to or arising out of
any Environmental Claim to the extent arising out of actions or omissions of
Sellers, the Transferred Entities or third parties prior to the Closing Date
relating, directly or indirectly, to real property not owned or leased by
Sellers or the Transferred Entities or real property previously owned or
operated by Sellers or the Transferred Entities (other than any Real Property or
any real property subject to a Real Property Lease transferred to Purchasers
pursuant to this Agreement or owned by or leased to a Transferred Entity as of
the Closing Date) and on which the Business (either directly or through third
parties acting on its behalf) disposed, stored or treated, or arranged for the
disposal, storage or treatment, of Hazardous Materials prior to the Closing
Date; provided, however, that the foregoing shall not apply to Environmental
Claims relating to the migration, discharge or release of Hazardous Materials
from the Real Property, or any real property subject to a Real Property Lease,
prior to the Closing Date; and
(ii) any fines or penalties to the extent arising out of noncompliance by
any Sellers or Transferred Entities with respect to the Business and Assets as
of or prior to the Closing with any requirements imposed by any Environmental
Law(s);
(f) any liability or obligation arising out of any claim of or for injury
(including death) to persons or property by reason of the improper performance
or malfunctioning, improper design or manufacture, or failure to adequately
package, label or provide warnings as to the hazards of, any product of the
Business, where the injury giving rise to such claim occurred prior to the
Closing Date; provided, however, that this clause (f) does not and shall not
apply to any liabilities or obligations (not involving injury or death) in
connection with a Service Action or Recall, the treatment of which is addressed
exclusively in Section 15.8;
(g) any liability or obligation under any agreement for indebtedness for
borrowed money to third parties (except as expressly provided in Section 8.6);
and
(h) any liability, claim or obligation relating to or arising out of the
Excluded Assets or the Excluded Businesses.
5. PENSION, EMPLOYEE AND UNION MATTERS.
5.1 Scope of Section. This Article 5 contains the covenants and agreements
of the parties with respect to (a) the status of employment of the employees of
Sellers and Transferred Entities employed in the Business ("Employees") upon the
sale of the Business to the Purchasers, and (b) the employee benefits and
employee benefit plans provided or covering such Employees and former employees
of Sellers and Transferred Entities who terminated employment with the Sellers
or the Transferred Entities while employed in the Business or who retired from
the Business ("Former Employees"). Nothing herein expressed or implied confers
upon any Employee or Former Employee of Sellers or the Transferred Entities any
rights or remedies of any nature or kind whatsoever under or by reason of this
Article 5.
5.2 US Employees. This Section 5.2 applies only to Employees employed by
the US Business.
5.2.1 Employment.
(a) Hourly Employees. Purchasers shall offer employment effective as of the
Closing Date to each hourly Employee covered by the Collective Bargaining
Agreements (the "Bargaining Agreements") between the US Business and
international and local unions as described in Schedule 6.15 and each other
hourly Employee located in the US (collectively, "Hourly Employees") provided
that such Hourly Employee is employed by Sellers immediately prior to the
Closing Date. An Hourly Employee who is absent on the Closing Date due to
vacation, holiday, union office leave, illness or short-term disability, or who
is subject to recall or seniority rights shall be considered to be employed on
the Closing Date. Purchasers agree to offer employment to any Hourly Employee
who is receiving long-term disability benefits as of the Closing and who is
medically certified to return to work and who requests to return to work within
twelve (12) months of the Closing Date (or at a time when such employee has
reemployment rights under applicable Law). Purchasers shall honor the seniority
rights of all Hourly Employees under the Bargaining Agreements and shall comply
at their expense with all employment laws with respect to all Hourly Employees,
including but not limited to the Family Medical Leave Act, the Americans with
Disabilities Act and federal or state Laws on military leave. For a period of no
less than twelve (12) months from the Closing Date, Purchasers shall provide
each Hourly Employee with a base rate of pay no less than that provided by
Sellers immediately prior to the Closing Date and with benefits not less
favorable than provided in this Article 5, except as otherwise required by an
applicable Bargaining Agreement. No provision of this Agreement shall be
construed to restrict Purchasers' ability to extend offers of employment on an
at will basis to Hourly Employees or terminate the employment of any Hourly
Employee with or without cause, except as otherwise required by any applicable
Bargaining Agreement.
(b) Salaried Employees.
(1) Purchasers shall offer employment effective as of the Closing Date to
all Employees located in the US who are paid on a salaried basis ("Salaried
Employees") and who are employed by Sellers immediately prior to the Closing
Date. Schedule 5.2.1(b)(1) sets forth a list of the Salaried Employees as of the
date of this Agreement. A Salaried Employee who is absent on the Closing Date
due to vacation, holiday, authorized leave of absence, illness, or short-term
disability shall be considered to be employed on the Closing Date. Purchasers
agree to offer employment to any Salaried Employee who is receiving long-term
disability benefits as of the Closing and who is medically certified to return
to work and who requests to return to work within twelve (12) months of the
Closing Date (or at a time when such employee has reemployment rights under
applicable Law). On and after the Closing Date, Purchasers shall comply at their
expense with all employment Laws with respect to Salaried Employees, including
but not limited to the Family Medical Leave Act, the Americans with Disabilities
Act and federal or state Laws on military leave. For a period of no less than
twelve (12) months from the Closing Date, each Salaried Employee shall receive
from Purchasers base compensation no less than that provided by Sellers
immediately prior to the Closing Date, and benefits not less favorable than
provided in this Article 5. Salaried Employees shall be eligible to participate
in Purchasers' long term incentive, short term incentive, and/or stock option
plans or programs, if such employees would have been eligible to participate in
a long term incentive, short term incentive or stock option plan or program,
respectively, of Sellers; provided, however, that Purchasers shall not be
required to establish any such plans. No provision of this Agreement shall be
construed to restrict Purchasers' ability to extend offers of employment on an
at will basis to Salaried Employees or terminate the employment of any Salaried
Employee with or without cause.
(2) (A) If Purchasers terminate the employment of any Salaried Employee
within one (1) year after the Closing Date, other than for "cause" (as defined
in Sellers' severance plans), Purchasers shall pay such Salaried Employee a
severance benefit, consisting of notice pay, salary continuation and continued
insurance coverage, that shall in no event be less than, nor paid later than,
the severance benefit, if any, to which such Salaried Employee would have been
entitled if Sellers' severance plans, as in effect as of the Closing Date,
applied to such termination of employment. For purposes of this Section
5.2.1(b)(2), service with both Sellers and Purchasers shall be taken into
account in computing the amount of such benefit.
(B) No terminated Employee shall have any rights against Sellers under or
pursuant to this Section 5.2.1(b)(2). No Employee or Former Employee shall have
any rights as a third-party beneficiary of this Agreement.
(c) The US Business agrees to use reasonable efforts to facilitate the
transition of Hourly Employees and Salaried Employees, except for the
Employee(s) identified on Schedule 5.2.1(c) ("US Retained Employees"), to
employment with Purchasers as of the Closing Date. Such reasonable efforts shall
include affording Purchasers reasonable opportunities to review employment and
personnel records of Employees, to discuss with Employees terms and conditions
of employment with Purchasers as of the Closing Date and to distribute to the
active Hourly Employees and Salaried Employees forms and documents relating to
employment with Purchasers.
(d) Except to the extent prohibited by Law, (i) the US Business shall
deliver to Purchasers originals or copies of all personnel files and records
relating to Hourly Employees and Salaried Employees, and the US Business shall
have reasonable continuing access to such files and records thereafter, and (ii)
Sellers shall promptly disclose to Purchasers the Employees who, after the
Closing, have requested early retirement under any of Sellers' Pension Plans.
(e) Purchasers shall be responsible for, and shall indemnify and hold
harmless, Sellers against any liability, claim or obligation (including
reasonable attorney's fees) relating to or arising out of the employment or
termination of employment after the Closing Date of Employees who accept
employment with Purchasers; provided, however, that this indemnity shall not
apply to any claims for benefits under Sellers' Pension Plans.
5.2.2 Pension Plans.
(a) Sellers shall amend the AlliedSignal Inc. Hourly Employees Pension
Plan, the AlliedSignal Inc. Retirement Program (provisions related to Allied
Salaried Employees), and the AlliedSignal Inc. Retirement Growth Plan for Hourly
Employees ("Sellers' Pension Plans") to fully vest all Employees who are
employed on the Closing Date in their accrued benefit in Sellers' Pension Plans
as of the Closing Date.
(b) (1) Purchasers shall have established as of the Closing Date, or shall
establish as soon as practicable after the Closing Date, a tax-qualified defined
benefit pension plan ("Purchasers' Union Pension Plan") that shall provide
participation, eligibility, vesting, benefit accrual and benefit payment
provisions that are the same as provided under Sellers' Pension Plans with
respect to Hourly Employees who are employed on the Closing Date and covered by
a Bargaining Agreement ("Union Employees"). Purchasers' Union Pension Plan
shall, as of the Closing Date, assume the liabilities and obligations of Sellers
for the accrued benefits of all Union Employees under Sellers' Pension Plans.
Purchasers' Union Pension Plan shall credit all service of Union Employees with
Sellers for purposes of the eligibility, participation, vesting and benefit
accrual requirements under Purchasers' Union Pension Plan. Purchasers' Union
Pension Plan shall contain such other provisions as are necessary to fully
discharge the obligations of Purchasers as set forth in this Section 5.2.2(b),
to meet the requirements of the Code, and to relieve Sellers and Sellers'
Pension Plans of all further responsibility for any benefit payments to Union
Employees under Sellers' Pension Plans. As soon as practicable after the Closing
Date, Sellers shall cause a transfer from Sellers' Pension Plans to Purchasers'
Union Pension Plan of the pension liabilities and obligations attributable to
Union Employees and assets as calculated pursuant to Section 5.2.2(b)(2) below.
(2) The assets to be transferred from Sellers' Pension Plans to Purchasers'
Union Pension Plan shall be an amount ("Transfer Amount"), equal to the sum of
(i) the "accumulated benefit obligation," within the meaning of Financial
Accounting Standard No. 87, as of the Closing Date attributable to the Union
Employees under Sellers' Pension Plans ("ABO") and (ii) 50% of the difference
between the ABO and the "projected benefit obligation," within the meaning of
Financial Accounting Standard No. 87, as of the Closing Date attributable to the
Union Employees under Sellers' Pension Plans ("PBO"), with adjustments described
below. Sellers' actuary shall calculate the Transfer Amount by applying the
assumptions used to calculate benefit obligations in the January 1, 1997
actuarial valuation , and other relevant actuarial assumptions, methods and
methodologies used in preparing such valuation; provided, however, that such
calculation shall be performed using an interest rate of 7.0% per annum and the
1983 GAM mortality table. Notwithstanding any provision herein to the contrary,
the Transfer Amount shall be subject to the applicable requirements of Sections
414(l) and 401(a)(12) of the Code. The Transfer Amount as so determined shall be
adjusted for investment earnings at the short term investment fund rate earned
by Sellers' Pension Plans for the period between the Closing Date and the actual
date of transfer and reduced by the amount of any benefit payments to Union
Employees and a proportional share of investment and administrative expenses
relative to asset values for such period. The amount of assets caused to be
transferred pursuant to this Section shall be calculated by Sellers' actuary,
and shall be subject to review by Purchasers' actuary for the sole purpose of
confirming that the calculation was made in accordance with this Section. In the
event that Purchasers' actuary does not agree that the calculation by Sellers'
actuary was made in accordance with this Section, the determination of the
amount to be transferred pursuant to this Section shall be made by a third,
nationally recognized actuary selected by Sellers' and Purchasers' actuaries,
and the determination of such third actuary as to the amount to be transferred
shall be binding and conclusive upon all parties hereto. The transfer of assets
from Sellers' Pension Plans to Purchasers' Union Pension Plan shall be made in
cash. The parties shall file any necessary IRS Forms 5310-A with respect to such
transfer. Prior to the date of such transfer, Sellers shall present to
Purchasers, in the form attached hereto as Attachment E, an opinion of their
counsel reasonably satisfactory to Purchasers to the effect that the terms of
Sellers' Pension Plans meet the requirements of Section 401(a) of the Code, and
Purchasers shall present to Sellers, in the form attached hereto as Attachment
F, an opinion of their counsel reasonably satisfactory to Sellers to the effect
that the terms of Purchasers' Union Pension Plan meets the requirements of
Sections 401(a) and 411(d)(6) of the Code.
5.2.3 Savings Plans. Sellers shall amend the AlliedSignal Savings and
AlliedSignal Thrift Plans ("Sellers' Savings Plans") immediately prior to the
Closing Date to provide that Employees who are employed on the Closing Date
shall fully vest in their respective Sellers' Savings Plans accounts (the
"Accounts") as of the Closing Date. As promptly as practicable following the
Closing Date, Sellers and Purchasers shall arrange for the transfer of the
Accounts and the corresponding liabilities and obligations with respect to the
Employees from Sellers' Savings Plans to one or more tax-qualified plans
established by Purchasers ("Purchasers' Savings Plans"). Purchasers' Savings
Plans shall (i) permit immediate participation and eligibility for employer
contributions for all Employees as of the Closing Date; (ii) credit all service
with Sellers for purposes of the eligibility, participation, vesting and benefit
accrual requirements of Purchasers' Savings Plans; (iii) provide for
tax-deferred contributions and (iv) meet all requirements for a qualified cash
or deferred arrangement under Section 401(k) of the Code. The transfer of assets
from Sellers' Savings Plans shall be made in cash, promissory notes representing
participant loans, and shares of AlliedSignal's common stock. Without limiting
the generality of the foregoing, Purchasers agree to accept the transfer of such
Accounts in AlliedSignal's common stock to the extent invested in AlliedSignal's
common stock, and, to the extent permitted by Law for such reasonable period of
time as Purchasers may determine, to provide Employees with an election to
retain AlliedSignal's common stock in their accounts under Purchasers' Savings
Plans or to dispose of such stock and have the proceeds reinvested in other
investment alternatives offered under each such plan. The parties shall file any
necessary IRS Forms 5310-A with respect to such transfer. Prior to the transfer
date, Sellers shall present to Purchasers, in the form attached hereto as
Attachment G, an opinion of their counsel reasonably satisfactory to Purchasers
to the effect that the terms of Sellers' Savings Plans meet the requirements of
Section 401(a) of the Code, and Purchasers shall present to Sellers, in the form
attached hereto as Attachment H, an opinion of their counsel reasonably
satisfactory to Sellers to the effect that the terms of Purchasers' Savings
Plans meet the requirements of Sections 401(a) and 411(d)(6) of the Code.
5.2.4 Employee Welfare Plans.
(a) Subject to the consent of any applicable insurance company or third
party administrator, Sellers shall continue to provide coverage from the Closing
until December 31, 1997 under Sellers' medical, dental, vision, medical care
flexible spending account and dependent care flexible spending account plans
(and such other welfare plans as Sellers and Purchasers may agree to in writing)
to all Employees and their dependents who are covered by such plans as of the
Closing. Purchasers agree to reimburse Sellers for the cost of providing such
coverage from the Closing Date until December 31, 1997, in accordance with the
terms of such plans and the Services Agreement.
(b) Except as otherwise provided in this Section 5.2, Purchasers shall
establish, as of the Closing Date, plans or programs to provide short-term
disability, life insurance, accidental death and dismemberment, long-term
disability, severance, vacation and other welfare benefits for the benefit of
Employees and their covered dependents, which plans or programs shall be no less
favorable than such benefits provided to similarly situated employees of
Purchasers.
(c) As of January 1, 1998, Purchasers shall establish or provide for
participation in, a medical, dental, vision, medical care flexible spending
account and a dependent care flexible spending account plans for the benefit of
current Employees and their covered dependents, provided that such plans shall
be no less favorable than those offered by Purchasers to similarly situated
employees of Purchasers.
(d) The plan or plans established by Purchasers in accordance with this
Section 5.2.4 shall (i) credit all service with Sellers for all purposes under
the new plans, including eligibility, participation and benefit entitlement,
(ii) waive any pre-existing condition limitation or exclusion, and (iii) credit
all payments made for healthcare expenses during the current plan year for
purposes of deductibles, co-payments and maximum out-of-pocket limits.
(e) Except as otherwise provided in this Section 5.2, Sellers shall be
responsible for all claims incurred prior to the Closing by Employees and their
covered dependents under Sellers' welfare plans in accordance with the terms of
such plans and Purchasers shall be responsible for all claims incurred on or
after the Closing by Employees and their covered dependents under Sellers'
welfare plans (in accordance with Section 5.2.4(a) above) or under Purchasers'
welfare plans, in each case, in accordance with the terms of such plans. For
purposes of this Section 5.2.4, a health care claim shall be deemed to be
incurred when the services giving rise to the claim are performed and not when
the Employee is billed for such services or submits a claim for benefits.
(f) Sellers shall be responsible for providing any short-term disability
benefits payable to any Employee with respect to any period prior to the Closing
Date, and Purchasers shall be responsible for providing any short-term
disability benefits payable to any Employee with respect to any period on or
after the Closing Date. Sellers shall be responsible for providing long-term
disability benefits payable to any Employee receiving long-term disability
benefits as of the Closing Date who has not become employed by Purchasers, and
Purchasers shall be responsible for providing any long-term disability benefits
payable to any other Employee, including any Employee on short-term disability
as of the Closing Date, and to any Employee receiving long-term disability
benefits as of the Closing Date who becomes employed by Purchasers after the
Closing Date.
5.2.5 Retiree Health and Life Insurance. Sellers shall retain all
liabilities and obligations of Sellers for the benefits payable or to become
payable to all Employees or Former Employees and their beneficiaries under
Sellers' medical benefit and life insurance programs covering retired employees,
except that Purchasers shall assume all liabilities and obligations of Sellers
for the benefits payable or to become payable under the medical benefit and life
insurance programs covering retired employees to all Hourly Employees covered by
a Bargaining Agreement who are employed on the Closing Date to the extent
required by such Bargaining Agreement.
5.2.6 Vacation. Purchasers shall assume all liabilities for unpaid, accrued
vacation of Employees as of the Closing and shall permit Employees to use their
vacation entitlement accrued as of the Closing until March 31, 1998 or such
later date as Purchasers may determine, in accordance with the terms of Sellers'
vacation policy. For calendar years beginning on or after January 1, 1998, the
annual vacation entitlement of each Employee shall be determined under
Purchasers' policy, provided, however, that the annual vacation entitlement of
each Employee shall be at least equal to the lesser of (i) the annual vacation
entitlement of such Employee as of the Closing under Sellers' vacation policy
and (ii) the greater of (A) maximum annual vacation entitlement permitted under
Purchasers' vacation policy applicable to all similarly situated employees of
Purchasers and (B) five (5) weeks' vacation. Service with both Sellers and
Purchasers shall be taken into account in determining Employees' vacation
entitlement under Purchasers' vacation policy.
5.2.7 Other Compensation Arrangements. Sellers shall retain the liabilities
and obligations for the benefits payable or to become payable to all Employees
and their beneficiaries under Sellers' Supplemental Pension Plan, Supplemental
Savings Plan, Incentive Compensation Plan and Salary Deferral Plan.
5.2.8 Severance and WARN Act Liability. Except as provided in Section
5.2.1(b)(2)(A), Purchasers agree to pay and be responsible for all liability,
cost or expense for severance, termination indemnity payments, salary
continuation, special bonuses and like costs under Purchasers' or Sellers'
severance pay plans, policies or arrangements, with respect to any of the
Employees that arise from the subsequent termination of employment of an
Employee by Purchaser after the Closing Date. Purchasers agree to pay and be
responsible for all liability, cost, expense and sanctions resulting from any
failure of Purchasers to comply with the WARN Act, and the regulations
thereunder, in connection with the consummation of the transactions described in
or contemplated by this Agreement.
5.2.9 Health Care Continuation Coverage. Purchasers agree to provide
continuation coverage required by Section 4980B of the Code or Sections 601
through 608 of ERISA ("COBRA") to all Employees and their covered beneficiaries
who are entitled to COBRA coverage by reason of a "qualifying event" (as defined
in Section 4980B of the Code) which occurs after the Closing Date and to pay and
be responsible for all taxes, penalties and other liabilities that arise by
reason of or relate to any failure to comply with the health care continuation
coverage requirements of COBRA with respect to such "qualifying events."
5.2.10 Bargaining Agreements.
(a) Purchasers shall assume the Bargaining Agreements as of the Closing
Date.
(b) Sellers' responsibility under the Bargaining Agreements with respect to
Hourly Employees shall expire on the Closing Date and Purchasers shall indemnify
and hold harmless Sellers from any EEOC charge or any grievance or other claim
made under the Bargaining Agreements with regard to Hourly Employees who accept
employment with Purchasers. Sellers shall retain all liabilities and obligations
relating to any EEOC charge or any grievance or other claim made under the
Bargaining Agreement with regard to Former Employees other than any obligation
to reinstate the employment of any Former Employee. Sellers agree to allow
Purchasers to participate in any proceedings in which any such Former Employee
seeks reinstatement of employment.
5.2.11 Workers Compensation.
(a) Sellers shall be liable for any workers compensation claim of an
Employee which relates to an accident which occurred prior to the Closing or
which relates to an illness which was reported prior to the Closing. Purchasers
shall be liable for all other workers compensation claims of Employees.
(b) Purchasers shall be responsible for the administration of any claims
for which they have financial responsibility hereunder, and Sellers shall be
responsible for the administration of any claims for which they have
responsibility hereunder.
5.3 European Employees. This Section 5.3 applies only to Employees and
certain Former Employees employed or previously employed by the European
Business.
5.3.1 Scope of Section. This Section 5.3 contains covenants and agreements
of the parties on and as of the Closing Date with respect to the following:
(a) the status of employment of the Employees employed in the European
Business ("European Employees") upon the sale of the Business to the Purchasers.
Schedule 5.3.1(a) identifies the European Employees as of the date of this
Agreement; and
(b) the employee benefits and employee benefit plans listed in Schedule
5.3.1(b) provided or covering such European Employees and certain former
employees of Sellers and Transferred Entities who terminated employment with the
Sellers while employed in the European Business or who retired from the European
Business (the "European Former Employees").
5.3.2 Employment and Other Employee Matters.
(a) The parties declare that for European Employees who are employed other
than by a Transferred Entity within the European Economic Area, they each
consider the transactions contemplated by this Agreement to constitute the
transfer of an undertaking for the purpose of the EU directive (77/187) on
Transfers of Undertakings of February 14, 1977 and the national laws and
regulations implementing said Directive in the European Member States (the
"Transfer Regulations").
The parties understand and agree that any liability of Sellers for European
Employees and European Former Employees employed or formerly employed by a
Transferred Entity will transfer to Purchasers by operation of the conveyance of
Sellers' interests in the Transferred Entities; provided, that such liabilities
have been booked by Sellers in accordance with the Specified Accounting
Principles. Sellers shall indemnify Purchasers to the extent Sellers have failed
to book such liabilities in accordance with the Specified Accounting Principles.
On the Closing Date, Purchasers shall also assume (i) liabilities if any, for
the European Employees which liabilities do not transfer to Purchasers by
operation of applicable law, and (ii) all liabilities (including but not limited
to the continuation by Purchasers of employment agreements in compliance with
applicable laws) with respect to the European Employees. Notwithstanding any
interpretation of the foregoing, or any other provision of this Article 5 or
this Agreement to the contrary, Purchasers shall only be obligated to establish
or maintain for the European Employees the minimum employment obligations
required by applicable Law; provided, that, to the extent that such obligations
are less than those maintained by Sellers as of the Closing, Purchasers shall
indemnify Sellers, and the other Seller Indemnified Parties, for any Losses
arising out of or relating to any decrease by Purchasers from the level of
obligations so maintained by Sellers to such minimum level.
(b) (i) The parties agree that the contracts of employment of the European
Employees (other than those employed by the Transferred Entities) and any
contractual rights of the European Employees or European Former Employees
employed by any Transferred Entity will have effect from the Closing Date as if
originally made between Purchasers and the European Employees with positions,
duties, responsibilities, European Employee Benefit Plans, European Remuneration
and other terms and conditions of employment, including those arising from
collective labor agreements, which are not less favorable in any respect than
those in effect with Sellers immediately before the Closing Date and for the
period as required by applicable national legislation. In computing the amount
of entitlement under all terms and conditions of employment as well as the
entitlement from European Employee Benefit Plans, service with both Sellers and
Purchasers shall be taken into account.
Save in relation to any plans which Purchasers are to take over under the
following provisions, each European Employee shall cease to be an active
participant in Sellers' European Employee Benefit Plans and European
Remuneration programs on the Closing Date.
"European Employee Benefits Plans" includes, but is not limited to, all
arrangements whether written or verbally agreed, on a group or individual basis,
whether funded or not, which grant a benefit to a European Employee (and
European Former Employee or director where the plan in question is to transfer
to Purchasers). Benefit means, in this context, an entitlement to normal
retirement, late retirement, early retirement, death, medical, disability,
long-term recognition benefits or termination indemnities.
"European Remuneration" includes, but is not limited to, base salary,
bonuses, incentive remuneration programs, vacation pay, profit sharing plans and
any form of plans maintained by Sellers or a Transferred Entity which provide
stock, phantom stock or stock appreciation rights or deferred remuneration
programs which are applicable to European Employees (and European Former
Employees and directors) and are in existence immediately prior to the Closing
Date.
(c) For the avoidance of doubt, Purchasers accept that they shall be solely
responsible for any amounts becoming payable to the European Employees under any
national laws, regulations or law applicable in the Member States (the "National
Laws") as a result of their being dismissed by Purchasers at any time after the
Closing Date, notwithstanding that such amount is calculated under the National
Laws by reference to periods of employment with Sellers as well as periods of
employment with Purchasers.
(d) Purchasers shall indemnify and keep indemnified Sellers against all
losses, costs, liabilities, expenses, actions, proceedings, claims and demands
arising out of or in connection with the following:
(i) any change in the working conditions of the European Employees
occurring on or after the Closing Date;
(ii) the change of employer occurring by virtue of the Transfer Regulations
and/or this Agreement being significant and detrimental to any of the European
Employees;
(iii) the employment by Purchasers on or after the Closing Date of the
European Employees other than on terms at least as favorable as those enjoyed
immediately prior to the Closing Date; or
(iv) any claim by a European Employee (whether in contract or in tort or
under statute (including the Treaty of Rome and any directives made under the
authority of the Treaty) for any remedy including, without limitation, for
breach of contract, unfair dismissal, redundancy, statutory redundancy, equal
pay, sex, race or disability discrimination, unlawful deductions from wages or
for breach of statutory duty or of any nature) as a result of anything done or
omitted to be done by Purchasers on or after the Closing Date.
(e) Sellers shall indemnify and keep indemnified Purchasers against all
losses, costs, liabilities, expenses, actions, proceedings, claims and demands
arising out of or in connection with any claim by a European Employee (whether
in contract or in tort or under statute (including the Treaty of Rome and any
directives made under the authority of such Treaty) for any remedy including,
without limitation, for breach of contract, unfair dismissal, redundancy,
statutory redundancy, equal pay, sex, race or disability discrimination,
unlawful deductions from wages or for breach of statutory duty or of any nature)
as a result of anything done or omitted to be done by Sellers prior to the
Closing Date.
(f) (i) If Purchasers terminate the employment of any European Employee
within one (1) year after the Closing Date and to the extent that the Transfer
Regulations are not more favorable to the European Employees, Purchasers shall
pay such European Employee a redundancy or severance benefit that shall in no
event be less than, nor paid later than, the benefit, if any, to which such
European Employee would have been entitled under Sellers' redundancy settlement
policy, as in effect as of the Closing Date, if such policy applied to such
termination of employment.
(ii) No such terminated European Employee shall have any rights against
Sellers under or pursuant to this Section 5.3. No European Employee or European
Former Employee shall have any rights as a third-party beneficiary of this
Agreement.
(g) Sellers agree to use reasonable efforts to facilitate the transition of
European Employees, except (i) for European Employees identified on Part A of
Schedule 5.3.2(g) ("European Retained Employees") and (ii) for the employees
identified on Part B of Schedule 5.3.2(g) (the "Section 12(t) Agreement
Management Employees"), to employment with Purchasers as of the Closing Date.
Such reasonable efforts shall include affording Purchasers reasonable
opportunities to review employment and personnel records of such European
Employees, to discuss with such European Employees terms and conditions of
employment with Purchasers as of the Closing Date and to distribute to such
active European Employees forms and documents relating to employment with
Purchasers.
(h) Except to the extent prohibited by Law, Sellers shall deliver to
Purchasers originals or copies of all personnel files and records relating to
European Employees, and Sellers shall have reasonable continuing access to such
files and records thereafter.
(i) Purchasers declare to the Sellers (for themselves and on behalf of the
European Employees) that they will accept the benefit and the burden of the
collective bargaining agreements listed in Schedule 5.3.2(i) as if such
agreements had been made by Purchasers and not by Sellers.
(j) Sellers will use their best efforts to secure that the administrators
or responsible persons under the Sellers' funded European Employee Benefit Plans
will (i) pay or transfer, or cause to be paid or transferred, the assets of the
Sellers' European Employee Benefit Plans to Purchasers' European Employee
Benefit Plans in respect of European Employees and, with respect to any
Transferred Entity, any European Former Employees of such Transferred Entity or
(ii) assign any insurance contract to the Purchasers' European Employee Benefit
Plan in respect of European Employees and, with respect to any Transferred
Entity, any European Former Employees of such Transferred Entity.
This payment or assignment will be made not later than six (6) months after
the Closing Date or as soon as statutorily approved carrier is permitted to
receive the payment or assignment if later.
Purchasers will accept the assignment of any insurance contract and will
use their best efforts to secure that the administrators or other responsible
persons of the Purchasers' European Employee Benefit Plan will accept the
payment or transfer.
Where the Sellers' European Employee Benefit Plans include assets in
respect of employees or former Employees who will remain with the Sellers,
Sellers' actuaries will determine a basis for fixing those assets which will be
transferred to Purchasers, which determination shall be subject to review and
approval by Purchasers' actuaries. In the event that Sellers' actuaries and
Purchasers' actuaries do not agree upon such determination within a reasonable
period after the Closing, such determination shall be made by a third actuary
mutually acceptable to Sellers and Purchasers.
Following the transfer, as described above, Sellers will be discharged from
any further liability towards either European Employees or, in the case of a
Transferred Entity, European Former Employees of such Transferred Entity, or
towards Purchasers.
Where the Sellers' European Employee Benefit Plan is unfunded, there will
consequently be no transfer of assets. Sellers will have no further liability
towards European Employees or, in the case of a Transferred Entity, European
Former Employees of such Transferred Entity, or towards Purchasers, as from the
Closing Date.
(k) Sellers shall take such action as is necessary and permissible with
respect to any outstanding stock option or similar stock awards in respect of
the European Employees to provide that such employees shall be fully vested in
such awards as of the Closing Date and shall be able to exercise such options
and awards under the Sellers' stock option or award plans for a period of six
(6) months following the Closing Date.
(l) The European Employees will cease to be affiliated to the stock option
plan, the Stock Purchase Plan, and any other stock plan of the Sellers as of the
Closing Date. Each European Employee who either was immediately prior to the
Closing Date a member of such plan or who, but for Closing, would have become
eligible to become a member after the Closing Date of such a plan will be
offered membership of the Purchasers' replacement plan with effect from the
Closing Date or such later date as the employee would have become eligible for
the AlliedSignal plan had Closing not occurred.
(m) Purchasers undertake not to terminate or adversely amend any European
Employee Benefit Plan or European Remuneration program within the period of one
year after the Closing Date, or such later time as required by applicable
national legislation.
(n) Awards to inventors shall be paid by Sellers pursuant to Sellers'
Inventor Awards Program for patents that issue on Intellectual Property prior to
the Closing Date. Awards to inventors shall be paid by Purchasers pursuant to
Purchasers' inventor awards program for patents that issue on Intellectual
Property after the Closing Date.
5.3.3 UK Employees. In addition to Sections 5.3.1 and 5.3.2, the following
provisions are applicable to Employees employed in the UK Business ("UK
Employees") and certain former employees of the UK Business ("UK Former
Employees") (in the case of any conflict with the provisions of Sections 5.3.1
and 5.3.2, the provisions of this Section 5.3.3 shall govern):
(a) Purchasers warrant to the Sellers that they have given sufficient
information to Sellers to enable them to comply with their obligations under
Regulation 10(2)(d) of the Transfer Regulations.
(b) BSRD Retirement Benefits Plan.
(i) Sellers and Purchasers shall effective as of the Closing execute a deed
in the form attached hereto as Exhibit 5.3.3(b) whereby Purchasers become the
principal employer under the BSRD Retirement Benefits Plan in substitution for
Sellers with effect from the Closing Date and Sellers shall thereupon be
discharged from liability under or in relation to the BSRD Retirement Benefits
Plan. Sellers shall use reasonable endeavors to procure execution of such deed
by the trustees of the BSRD Retirement Benefits Plan.
(ii) Purchasers acknowledge that the investments of the BSRD Retirement
Benefits Plan in the AlliedSignal Common Investment Fund (the "CIF") shall as
soon as practicable after the Closing Date be withdrawn from the CIF. Purchasers
agree that the assets to be transferred from the CIF to the trustees of the BSRD
Retirement Benefits Plan shall comprise such assets and/or cash as represents
the BSRD Retirement Benefits Plan's pro rata share of the CIF or, at Purchasers'
option, the cash liquidation of such amount (net of any liquidation costs).
(c) BSRD Executive Pension Plan and AlliedSignal Safety Restraints Death
Benefits Plan. Sellers and Purchasers shall effective as of Closing execute
documents in the form as may be supplied by the relevant insurance companies or
such other form as may be agreed whereby Purchasers become the principal
employer under the BSRD Executive Pension Plan and the AlliedSignal Safety
Restraints Death Benefits Plan in each case in substitution for Sellers with
effect from the Closing Date and Sellers shall thereupon be discharged from all
liability under or in relation to the BSRD Executive Pension Plan and the
AlliedSignal Safety Restraints Death Benefits Plan. Sellers shall use reasonable
endeavors to procure execution of such documents by the trustees of the BSRD
Executive Pension Plan and the AlliedSignal Safety Restraints Death Benefits
Plan.
(d) AlliedSignal UK Retirement Plan.
(i) Each UK Employee who is an active member of the AlliedSignal UK
Retirement Plan immediately prior to the Closing Date shall cease to accrue
pension benefits and to be covered for death benefits thereunder with effect
from the Closing Date.
(ii) Purchasers shall as soon as practicable after and with effect from the
Closing Date offer to each UK Employee referred to in Section 5.3.3(d)(i) above
membership of a pension plan (the "Purchasers' UK Plan") established by
Purchasers which shall be in all material respects (including rates of
contributions payable, benefits provided and the basis for approval by UK Inland
Revenue) not less favorable than the AlliedSignal UK Retirement Plan.
(iii) Sellers shall use reasonable endeavors to procure that as soon as
practicable after the Closing Date a transfer is made by the AlliedSignal UK
Retirement Plan and the BSRD Hourly Paid Pension Plan to Purchasers' UK Plan in
respect of the accrued rights of the UK Employees and UK Former Employees under
the AlliedSignal UK Retirement Plan and the BSRD Hourly Paid Pension Plan as at
the Closing Date in each case, subject to the consent of the member concerned.
Such transfer shall comprise the cash equivalent as defined in UK Pension
Schemes Act 1993 and calculated by the actuary to the AlliedSignal UK Retirement
Plan and the BSRD Hourly Paid Pension Plan of the relevant accrued rights (and
where applicable including an additional amount in respect of additional credits
referable to transfers from the BSRD Retirement Benefits Plan).
Purchasers shall procure that upon receipt by Purchasers' UK Plan of the
transfer referred to in this clause, the relevant UK Employees and UK Former
Employees of the UK Business shall be granted benefits in respect of service up
to the Closing Date which are not less favorable than those under the
AlliedSignal UK Retirement Plan and the BSRD Hourly Paid Pension Plan in respect
of which the transfer is made. Prior to the date of such transfer, Purchasers
shall, to the satisfaction of Sellers' counsel, present Sellers with such
evidence and information as is necessary to establish that the transfer to the
Purchasers' UK Plan will discharge the AlliedSignal UK Retirement Plan and the
BSRD Hourly Paid Pension Plan of the accrued rights in respect of which the
transfer is to be made.
(e) UK Share Ownership Plan. Each UK Employee who is a member of the
AlliedSignal UK Share Ownership Plan shall cease, in accordance with its terms,
to be a member thereof with effect from the Closing Date, but without prejudice
to any accrued entitlement thereunder as at the Closing Date. Purchasers shall
establish a plan which is in all material respects identical to the AlliedSignal
UK Share Ownership Plan save that it shall relate to the stock of Purchasers.
Each UK Employee who was immediately prior to the Closing Date either a member
of the AlliedSignal UK Share Ownership Plan or eligible to become a member shall
be offered membership of the Purchaser's replacement share ownership plan with
effect from the Closing Date. Purchasers shall reimburse Sellers on written
demand in respect of all expenses under the AlliedSignal UK Share Ownership Plan
in respect of UK Employees' entitlements thereunder.
(f) Carlisle Norfolk Facility.
(i) Notwithstanding the foregoing provisions, until the earlier of (A) the
Carlisle Norfolk Sale Date (as defined in the agreement referred to in Section
12(t)), or (B) six (6) months after the Closing Date (or such shorter period as
the UK Inland Revenue may require), Purchasers shall procure that Sellers be
permitted to remain as participating employers in the BSRD Retirement Benefit
Plan, the BSRD Executive Pension Plan, the AlliedSignal Safety Restraints Death
Benefits Plan and such other plans established or maintained by Purchasers as
Sellers and Purchasers may agree to in writing with respect to the employees of
the Carlisle Norfolk Facility (as defined in the agreement referred to in
Section 12(t)). The terms of such participation shall be the same as those
applicable immediately prior to the Closing Date. If, with respect to the
foregoing obligations of Purchasers, the exclusion from the Business of the
business described in clause (iii) of Recital A results in out-of-pocket costs
required to be paid by Purchasers that Purchasers would not have incurred if
such business had not been so excluded, then Sellers shall be responsible, and
shall reimburse Purchasers, for such additional costs promptly upon request
therefor by Purchasers accompanied by supporting documentation reasonably
satisfactory to Sellers.
(ii) In the event that the Carlisle Norfolk Sale Date does not occur within
six (6) months after the Closing Date, Sellers and Purchasers agree that, to the
extent permitted by Law, the assets and liabilities attributable to the
employees of the Carlisle Norfolk Facility under Purchasers' plans described in
clause (i) above shall be transferred as soon as practicable after the end of
such six-month period to plans established or maintained by Sellers. Purchasers'
actuaries will determine a basis for fixing those assets which will be
transferred to Sellers, which determination shall be subject to review and
approval by Sellers' actuaries. In the event that Sellers' actuaries and
Purchasers' actuaries do not agree upon such determination within a reasonable
period, such determination shall be made by a third actuary mutually acceptable
to Sellers and Purchasers.
5.3.4 French Employees. In addition to Sections 5.3.1 and 5.3.2, the
following provisions are applicable to Employees employed in the French Business
("French Employees") and former employees of the French Business ("French Former
Employees") (in the case of any conflict with the provisions of Sections 5.3.1
and 5.3.2, the provisions of this Section 5.3.4 shall govern):
(a) Retired or Former Employees Health and Life Insurance Benefits. Sellers
shall maintain and contribute to the French Death and Health Insurance Plan
subscribed to by Sellers or Transferred Entities relating to retired employees
or Former French Employees prior to the Closing Date. Sellers represent and
warrant that there are no other benefit plans providing medical or health
benefits or insurance, life insurance or death benefits for Former French
Employees or their dependents or beneficiaries.
(b) Purchasers will provide, administer and distribute all amounts of the
French AlliedSignal Group Profit Sharing Plan for the account of the French
Employees which have been reserved on the Closing Statement of Net Assets in
respect of the French Employees up to and including the Closing Date. The
AlliedSignal Group Profit Sharing Plan will cease to apply to these employees as
from the Closing Date.
Sellers shall indemnify and hold harmless the Purchasers for any and all
claims relating to operation of the French AlliedSignal Group Profit Sharing
Plan prior to the Closing Date.
The Purchasers shall indemnify and hold harmless the Sellers for any and
all claims of French Employees or any third parties relating to operation of the
French profit sharing scheme by Purchasers after the Closing Date.
5.3.5 German Employees. In addition to Sections 5.3.1 and 5.3.2, the
following provisions are applicable to Employees employed in the German Business
("German Employees") and former employees of the German Business ("German Former
Employees") (in the case of any conflict with the provisions of Sections 5.3.1
and 5.3.2, the provisions of this Section 5.3.5 shall govern):
(a) German Pension Plan. Purchasers shall be responsible for all
liabilities for benefits of German Employees and German Former Employees under
the AlliedSignal Deutschland Safety Restraint Systems pension plan which have
been reserved on the Closing Statement of Net Assets up to and including the
Closing Date.
(b) German Severance. For a period of no less than twelve (12) months from
the Closing Date, Purchasers shall provide each German Employee with
remuneration, employee benefits and other terms and conditions of employment
which are no less favorable than those provided to such employees immediately
prior to the Closing. Subject to the preceding sentence, Sellers agree that they
shall be responsible for any severance benefits which may be required of Sellers
by applicable Law as a result of any German Employee voluntarily terminating
employment from a Transferred Entity and exercising his or her legal right to
such severance benefits within forty (40) days after the Closing.
5.4 Mexican Employees. The parties understand that any liability of Sellers
for Employees employed in the Mexican Business or former employees who
terminated employment with Sellers while employed in the Mexican Business or who
retired from the Mexican Business will transfer to Purchasers by operation of
the conveyance of Sellers' interest in the Transferred Entities.
5.5 Other Employees. To the extent that Employees are employed outside of
the US, Europe, and Mexico, their employment shall be transferred to Purchasers
as of the Closing Date. Except as the parties may otherwise agree, Purchasers
shall assume all liabilities with respect to such Employees.
6. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Each of the Sellers hereby jointly and severally represent and warrant to
each of the Purchasers as follows:
6.1 Due Organization. Each of the Sellers and Transferred Entities is a
legal entity of the type described in Schedule 6.1, duly organized, validly
existing and, with respect to entities organized within the US and any other
jurisdiction outside the US in which the concept of good standing or its
functional equivalent is applicable, in good standing or its functional
equivalent under the Laws of the jurisdiction indicated in Schedule 6.1. Each of
the Sellers and the Transferred Entities is duly qualified to transact business
in any jurisdiction where the ownership or leasing of the Assets and the conduct
of the Business require it to be so qualified except where the failure to be so
qualified does not currently have and could not reasonably be expected to have a
material adverse effect on that entity. The Sellers and the Transferred Entities
have all requisite corporate power and authority to conduct the Business as it
is now being conducted by them and to enter into and perform their respective
obligations under this Agreement and the Ancillary Agreements to which they are
contemplated to be parties. None of the Sellers or the Transferred Entities is
currently insolvent, has suspended payments, is subject to any judicial
receivership or liquidation proceedings or is in bankruptcy, nor has any such
similar proceedings been commenced with respect to any of them. To Sellers'
Knowledge, none of the Transferred Joint Venture Entities is currently unable to
pay its debts as they become due, has suspended payments, is subject to any
judicial receivership or liquidation proceedings or is in bankruptcy, nor has
any such similar proceedings been commenced with respect to any of them.
6.2 Authority. The execution, delivery and performance of this Agreement
and each of the Ancillary Agreements contemplated to be executed and delivered
by each of the Sellers at the Closing have been duly and validly authorized by
all necessary corporate action on the part of Sellers. This Agreement has been
duly and validly executed and delivered by each of the Sellers and is
enforceable against each of the Sellers in accordance with its terms except to
the extent that (i) such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws relating to
creditors' rights generally and is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (ii) specific performance may not be available in certain
jurisdictions outside the US (the foregoing clauses (i) and (ii), collectively,
the "Enforceability Exceptions"). As of the Closing Date, each of the Ancillary
Agreements contemplated to be executed and delivered hereunder by Sellers at the
Closing will have been duly and validly executed and delivered by the applicable
Seller or Sellers and will be enforceable against the applicable Seller or
Sellers in accordance with its terms, except to the extent of the Enforceability
Exceptions.
6.3 Transferred Entities and Joint Venture Interests.
6.3.1 Corporate Status. The copies of all of the organizational documents
of the Transferred Entities have been delivered to Purchasers, and such copies
are true, accurate and complete. The copies of all of the material Joint Venture
Agreements have been delivered to Purchasers, and such copies are true, accurate
and complete in all material respects.
6.3.2 Equity Interests in the Transferred Entities and Joint Venture
Interests. For each Transferred Entity, Schedule 6.3.2 sets forth (a) the nature
of the equity interest held by Sellers or other Transferred Entities and, if
applicable, the par value thereof, (b) the holder of such equity interests,
(c) the number of such equity interests that are outstanding, and (d) the number
and percentage of the outstanding equity interests held by the Sellers or other
Transferred Entities (each such equity interest, an "Equity Interest"). For the
Transferred Joint Venture Entities, Schedule 6.3.2 sets forth (w) the nature of
the Transferred Joint Venture Interests so held and, if applicable (and to the
Sellers' Knowledge), the par value thereof, (x) the holders of the Transferred
Joint Venture Interests, (y) the number of such interests that are outstanding,
and (z) the number and percentage of Transferred Joint Venture Interests held by
Sellers or other Transferred Entities. Except as set forth on Schedule 6.3.2,
the Equity Interests constitute, and on the Closing Date will constitute, all of
the issued and outstanding equity of each Transferred Entity and there are no,
and on the Closing Date there will not be any, outstanding or authorized
options, warrants, rights, agreements or commitments to which a Seller or
Transferred Entity is a party or which are binding upon a Seller or Transferred
Entity providing for the issuance, disposition or acquisition of any Equity
Interest in a Transferred Entity. Each Seller or other Transferred Entity
holding Equity Interests and Transferred Joint Venture Interests holds good and
marketable title to all such interests, free and clear of all liens, charges and
other encumbrances, and such interests have been duly authorized and validly
issued, are fully paid and nonassessable, are free of all preemptive rights and
were issued in compliance with all applicable laws, except, with respect to the
Transferred Joint Venture Interests, as expressly set forth in the respective
Joint Venture Agreements. There are no agreements, voting trusts or proxies with
respect to the voting of the Equity Interests. None of the Transferred Entities
or, with respect to the Business, Sellers or, to Sellers' Knowledge, the
Transferred Joint Venture Entities, have subsidiaries or investments in the
equity capital of any business or entity other than as set forth on Schedule
6.3.2.
6.3.3 Purchase Obligations. The consummation of the transactions
contemplated by this Agreement, and all other agreements, instruments, and
documents to be delivered hereunder to the Purchasers at Closing, shall not
result in any obligation for the Purchasers to subscribe to, purchase or
acquire, in any form whatsoever, including by way of public tender offer,
recapitalization or any contribution or investment in equity, shares or other
equity interests, whether issued or to be issued, of the Transferred Entities or
the Transferred Joint Venture Interests.
6.4 No Conflict. Neither the execution and delivery of this Agreement or
Ancillary Agreements, nor the consummation of the transactions contemplated
hereby or thereby, will (a) conflict with or violate any provision of the
charter, By-laws or any other organizational document of any Seller or
Transferred Entity, (b) except for the need to obtain or make certain consents,
notices, or waivers referred to in clause (c) below and the need to deliver an
opinion of counsel in connection with the sublease referred to in Section 14.11,
conflict with, result in a breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, or create
in any party the right to accelerate, terminate, modify or cancel, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which a Seller or any Transferred Entity is a party or by
which a Seller or any Transferred Entity is bound or to which any of their
assets is subject, (c) except as set forth in Schedule 6.4, require any notice,
consent or waiver under any contract or other arrangement referred to in the
foregoing clause (b), or (d) except for Approval requirements referred to in
Section 6.5, certain notice requirements referred to on Schedule 6.4 and the
need to obtain consents under the Italian grant agreements referred to in
Section 14.13, violate any order, writ, injunction, decree, rule or Laws
applicable to a Seller, any Transferred Entity or any of their properties or
assets, except, in the case of clauses (b) or (c), where such violations or
other exceptions could not reasonably be expected to preclude Sellers in any
material respect from consummating the transactions contemplated by this
Agreement or the Ancillary Agreements. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of law), other than (i)
mechanic's, materialmen's, and similar liens, (ii) liens arising under worker's
compensation, unemployment insurance, social security, retirement, and similar
legislation, and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the ordinary course of
business consistent with past practice and not material to the relevant entity.
The failure to obtain any Consent set forth on Schedule 6.4 (other than those
Consents set forth on Schedule 9.3) could not reasonably be expected to have a
Material Adverse Effect.
6.5 Approvals. No Approval is necessary to make this Agreement or any of
the Ancillary Agreements contemplated to be executed and delivered by any Seller
or Transferred Entity at the Closing an enforceable obligation of such Seller or
Transferred Entity or to permit such Seller or Transferred Entity to consummate
the transactions contemplated hereunder without violating any Law, except for
(i) the filing under the H-S-R Act and the expiration or termination of all
applicable waiting periods, (ii) the approval, consent or clearance of the
relevant Governmental Authorities to the extent required by Law in the
jurisdictions where Assets and/or Transferred Entities are located ("Merger
Approvals") and (iii) any necessary filings under the Restrictive Trade
Practices Act 1976 of the United Kingdom.
6.6 Financial Statements. Schedule 6.6 sets forth an unaudited statement of
the net assets of the Business as at December 31, 1996 (the "Statement of Net
Assets") and related unaudited statement of income of the Business for the
fiscal year ended December 31, 1996 (the "Income Statement"). The Statement of
Net Assets presents fairly in all material respects the financial position of
the Business as of December 31, 1996 in conformity with the Specified Accounting
Principles. The Excluded Assets and Excluded Liabilities are excluded from the
Statement of Net Assets (except as may be expressly set forth in the Specified
Accounting Principles). The Income Statement presents fairly in all material
respects the results of the operations of the Business for the fiscal year ended
December 31, 1996 in conformity with the Specified Accounting Principles. Except
as disclosed on the Schedules hereto, since December 31, 1996, (x) the Business
has been conducted in all material respects in the ordinary course, except as
otherwise contemplated by this Agreement or consented to in writing by Breed,
and (y) there has been no change in the financial position or results of
operations of the Business that has had or could reasonably be expected to have
a Material Adverse Effect.
6.7 Real Property.
(a) Schedule 2.1(a) lists all real property owned by Sellers or a
Transferred Entity and used or held for use primarily in the conduct of the
Business as it is currently being conducted. As to each Real Property location
(other than Real Property located in the UK), subject to exceptions that do not
have a Material Adverse Impact:
(i) the identified owner has marketable title to such parcel, insurable by
a recognized national or international title insurance company at standard rates
(where title insurance is available), free and clear of any Encumbrance except
Permitted Liens;
(ii) there are no pending or, to the Knowledge of the Sellers, threatened
condemnation proceedings relating to the Real Property;
(iii) Schedule 2.1(a) describes each such Real Property location;
(iv) there are no outstanding options or rights of first refusal to
purchase such Real Property, or any portion thereof or interest therein;
(v) all facilities located on a Real Property are supplied with utilities
and other services necessary for the operation by Sellers or Transferred
Entities of such facilities on the date hereof, including gas, electricity,
water, telephone, sanitary sewer and storm sewer, and are provided via public
roads or via permanent, irrevocable easements benefiting such Real Property or
other lawful and permanent means;
(vi) such Real Property abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable easement
benefiting such Real Property;
(vii) there is no pending or, to the Knowledge of Sellers, proposed
proceeding to change or redefine the zoning classification of all or any portion
of a Real Property;
(viii) such Real Property is zoned to permit the use of the facilities
thereon for the same use as Sellers or the Transferred Entities are using the
same on the date hereof or such use is permitted due to prior non-conforming
use; and
(ix) no building or structure used in the operation of the Business by
Sellers or the Transferred Entities on the date hereof encroaches on property
owned by another Person and no building or structure on property owned by
another Person encroaches on the Real Property.
(b) As to each Real Property located in the UK, subject to exceptions that
do not have a Material Adverse Impact:
(i) the identified owner has title to such parcel free and clear of any
Encumbrance except Permitted Liens;
(ii) Schedule 2.1(a) describes such parcel;
(iii) there are no outstanding options or rights of first refusal to
purchase such Real Property, or any portion thereof or interest therein;
(iv) all facilities located on such Real Property are supplied with
utilities and other services necessary for the operation by Sellers or
Transferred Entities of such facilities on the date hereof, including gas,
electricity, water, telephone, sanitary sewer and storm sewer, and are provided
via public road or via permanent, irrevocable easements benefiting such Real
Property or other lawful and permanent means; and
(v) such Real Property abuts on and has direct vehicular access to public
road or access to a public road via permanent, irrevocable easement benefiting
such Real Property.
6.8 Personal Property. Except as set forth in Schedule 6.8, Sellers' and
the Transferred Entities' Personal Property has been maintained in all material
respects in accordance with normal industry practice and is suitable for the
purposes for which it is presently used.
6.9 Contracts. Schedule 6.9 lists as of the date of this Agreement each of
the following Contracts (or in the case of clause (ii) below suppliers under
certain such Contracts):
(i) any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of $500,000 per annum;
(ii) suppliers with whom any Seller or Transferred Entity has a written
arrangement (or group of related written arrangements) for the purchase of raw
materials, commodities, supplies, products or other personal property or for the
receipt of services from each vendor from whom more than $500,000 in the
aggregate was purchased by Sellers during the twelve (12) months ending June 30,
1997;
(iii) any purchase order from original equipment manufacturers ("OEMs");
(iv) any Joint Venture Agreement;
(v) any written arrangement (or group of related written arrangements)
involving more than $500,000 which creates, incurs, assumes, or guarantees (or
may create, incur, assume, or guarantee) indebtedness (including capitalized
lease obligations) or which imposes (or may impose) a Security Interest on any
of a Seller's or Transferred Entity's assets, tangible or intangible;
(vi) any material written arrangement concerning confidentiality or
noncompetition;
(vii) any written arrangement under which the consequences of a default or
termination prior to expiration of its term could reasonably be expected to have
a Material Adverse Effect; and
(viii) any other written arrangement (or group of related written
arrangements) involving more than $500,000 not entered into in the ordinary
course of business.
Sellers have delivered or made available (or in the case of the
arrangements described in clauses (ii) and (iii) above will make available
promptly after the date of this Agreement) to Breed a correct and complete copy
of each written arrangement (as amended to date) listed in Schedule 6.9. With
respect to written arrangements so listed, except as set forth in Schedule 6.9
and for such other exceptions, if any, that could not reasonably be expected to
have a Material Adverse Effect, (a) the written arrangements are legal, valid,
binding and enforceable and in full force and effect, except to the extent of
the Enforceability Exceptions, (b) Sellers and the Transferred Entities and, to
the Knowledge of Sellers, the other parties thereto are not in breach or default
thereunder, and (c) no event has occurred which with notice or lapse of time
would constitute, on the part of Sellers or, to the Knowledge of Sellers, on the
part of any other party, a breach or default or permit termination,
modification, or acceleration, under such written arrangements. Except as set
forth in Schedule 6.9, no Seller or Transferred Entity is a party to any oral
contract, agreement or other arrangement which, if reduced to written form,
would be required to be listed in Schedule 6.9 under the terms of this Section
6.9.
6.10 Intellectual Property.
(a) Schedule 6.10(a) contains a list of all patents, patent applications,
registered copyrights and trademarks and service marks of Sellers and the
Transferred Entities relating primarily to the Business (except for matters
referred to in Section 2.2(b)). To the Knowledge of Sellers, Part A of Schedule
16.10 lists, as of the date of this Agreement, all agreements that relate
primarily to Intellectual Property (other than those identified as Excluded
Assets) which agreements are used primarily in the conduct of the Business and
under which the Business has any obligations.
(b) To the Knowledge of Sellers, except as disclosed on Schedule 6.10(b),
there are no United States or foreign patents extant as of the date of this
Agreement, the claims of which prevent or could reasonably be expected to
prevent Purchasers from operating any aspect of the Business as currently being
conducted by Sellers and the Transferred Entities.
(c) To the Knowledge of Sellers, except as disclosed on Schedule 6.10(c),
during the period from July 30, 1992 to the present, Sellers and the Transferred
Entities conducted the Business (or such portions thereof as they have owned
since such date) in a manner which has not been in violation of any intellectual
property right of any third party as conducted as of the date hereof. To the
Knowledge of Sellers, except as disclosed in Schedule 6.10(c), since July 30,
1992, there have been no Intellectual Property Claims received by Sellers or the
Transferred Entities nor, to the Knowledge of Sellers, any instances in which an
Intellectual Property Claim has been alleged. The term "Intellectual Property
Claim" shall mean, as used herein, (i) any written claim challenging the scope,
validity or enforceability of any of the Intellectual Property, (ii) any written
claim that any of the products designed, manufactured or sold by the Business
infringes the intellectual property rights of any third party or (iii) any
written claim made by Sellers or the Transferred Entities that any activity of a
third party infringes upon any of the Intellectual Property of Sellers or the
Transferred Entities related to the conduct of the Business.
(d) Except for rights granted to or by Sellers or the Transferred Entities
under the Intellectual Property agreements listed in Part A of Schedule 16.10,
Sellers or the Transferred Entities are the sole and exclusive owners of the
Intellectual Property listed on Schedule 6.10(a) and any trade secrets relating
primarily to the Business, and no governmental registration of any of the rights
related to the Intellectual Property has lapsed, expired or been canceled,
abandoned, opposed or the subject of a reexamination request except as listed on
Schedule 6.10(d).
(e) Except as listed on Schedule 6.10(e), as of the date of this Agreement,
there are no written claims which have been received since July 30, 1992 and no
proceedings are pending, or have been instituted or, to the Knowledge of
Sellers, are threatened or impending which challenge any of the Sellers' or the
Transferred Entities' ownership rights in respect of any of the Intellectual
Property listed on Schedule 6.10(a). None of the Intellectual Property listed on
Schedule 6.10(a) is subject to any outstanding order, decree, judgment or
stipulation.
(f) Except as listed on Schedule 6.10(f), with respect to each US patent of
which the inventor is or was an employee of Sellers, such inventor executed a
written assignment document transferring such inventor's rights to Sellers or
such rights belong to Sellers under applicable Law.
(g) Except as disclosed on Schedule 6.10(g), the sale of the Transferred
Entities hereunder will not result in a default under or termination of any of
the rights of any Transferred Entities to any Intellectual Property.
(h) Sellers and the Transferred Entities have in place reasonable practices
to protect the confidentiality of their Intellectual Property.
(i) The Intellectual Property (when taken together with the Ancillary
Agreements) constitute all of the intellectual property materially necessary to
conduct the Business as currently conducted except for the Excluded Assets.
6.11 Litigation, Claims and Proceedings.
(a) Except as listed on Schedule 6.11, there is no written claim, suit,
action, arbitration, customs proceeding, administrative or other proceeding, or
governmental investigation pending, or to Sellers' Knowledge, threatened in
writing against any Seller or Transferred Entity which would materially and
adversely affect their ability to perform their obligations hereunder or under
any Ancillary Agreement.
(b) Except as listed on Schedule 6.11, Sellers and the Transferred Entities
are not parties to nor bound by any judgment, decree, injunction, ruling, award
or order of any Governmental Authority or arbitrator which has had or could
reasonably be expected to have a Material Adverse Effect nor have Sellers and
the Transferred Entities compromised, settled or lost any arbitration or
judicial proceeding the result of which currently has or could reasonably be
expected to have a Material Adverse Effect.
6.12 Environmental Conditions. To the Knowledge of Sellers, except as set
forth on Schedule 6.12:
(i) There is no evidence of soil or groundwater contamination in excess of
applicable environmental clean-up standards on or migrating from the Assets;
(ii) There are no reports in the Sellers' or the Transferred Entities'
possession or control of environmental audits conducted by Sellers since
January 1, 1991 or environmental site assessments since January 1, 1991 of
facilities currently owned or leased by the Business (plus, in certain cases,
facilities of the Joint Venture Entities);
(iii) There are no Environmental Claims currently pending in connection
with the Business or the Assets that could reasonably be expected to have a
Material Adverse Effect;
(iv) There are no CERCLA Section 104(e) requests pertaining to the Business
or the Assets since January 1, 1991 for information or requests under analogous
state statutes;
(v) As of the Closing Date, Sellers are in compliance with all applicable
Environmental Laws applicable to the Business and the Assets, except for such
non-compliance which does not currently have or could not reasonably be expected
to have a Material Adverse Effect and notwithstanding any statements in
Schedule 6.13 with respect to certain pending Permits; and
(vi) As of the Closing Date, there are no environmental conditions that (x)
pose a significant risk to human health or the environment or (y) are otherwise
required to be remediated under applicable requirements imposed by any
Environmental Law(s) in effect at such time (such requirements are referred to
herein as "Environmental Requirements").
6.13 Permits. Except as set forth in Schedule 6.13, (a) Sellers and the
Transferred Entities (i) have all Permits which are necessary to own and operate
the Assets and to conduct the Business as it is presently being conducted and
are in compliance with all such Permits, and (ii) have filed all applications,
notices and other documents necessary to effect the timely renewal or issuance
of all Permits required for the continued conduct of the Business as now
conducted, (b) there are no proceedings pending or threatened in respect of the
Business which are likely to result in the revocation, cancellation, or
suspension of any such Permits, (c) all such Permits are assignable to and at
the Closing will be assigned to Purchasers (except for Permits held by any
Transferred Entity) and no Approvals or Consents are required for such
assignment and (d) the sale of the Transferred Entities or the Assets hereunder
will not result in a default under or the termination of any such Permit.
6.14 Compliance with Law. Sellers, with regard to the Assets and Business,
and the Transferred Entities are conducting the Business in compliance with all
statutes, laws or regulations of any Governmental Authority (collectively,
"Laws") applicable to any of the Assets or to the conduct of the Business.
Sellers and the Transferred Entities have not received during the twelve (12)
months preceding the date of this Agreement any written notice from any
Governmental Authority claiming any material non-compliance by Sellers and the
Transferred Entities regarding the Assets or Business with any applicable Laws,
which matter has not been cured or corrected.
6.15 Labor and Employee Benefits.
(a) Schedule 6.15 lists the following as of the date of this Agreement:
(i) All written arrangements that compel the employment of any Employee at
a salary in excess of $100,000 per annum and are not terminable on less than 90
days' notice for other than US Retained Employees and European Retained
Employees;
(ii) All written agreements and letters of understanding currently in
effect with works councils, labor unions or associations representing the
Employees;
(iii) All written consulting agreements with the Business requiring payment
in excess of $100,000 per annum and not terminable on less than 90 days notice;
(iv) Strikes in which any of the Employees are participating or have
participated since January 1, 1995;
(v) All pending charges or complaints or petitions filed with or by the
N.L.R.B., the O.F.C.C.P. of the US Department of Labor, the Occupational Safety
and Health Administration, the E.E.O.C. or any similar agency or commission of
any unit of any government, including charges of race, sex, national origin,
religious, handicap or age discrimination or similar complaints against the US
Business, arbitration proceedings and litigation matters involving the US
Business including breach of employment contract/wrongful discharge, from
January 1, 1995 to the date hereof;
(vi) All written commitments or agreements to increase wages or, to modify
in any material respect, the conditions or terms of employment of the Employees;
(vii) For Employees (other than US Retained Employees and European Retained
Employees) who participate in any incentive compensation plan, the names and
current base salary of all such Employees, together with a summary of all bonus,
incentive compensation or other additional compensation or similar benefits paid
or granted to such persons for the 1996 calendar year;
(viii) Employee lease or secondment agreements relating to the Business;
and
(ix) Agreements which obligate Sellers or the Transferred Entities to make
any individual severance payments as a consequence of the execution of this
Agreement or the consummation of the transactions hereby contemplated.
(b) Schedule 6.15 lists all pending written grievances as of the date of
this Agreement.
(c) Schedule 6.15 lists, as of the date of this Agreement, with respect to
the US Business, (i) all employee benefit plans (as defined in Section 3(3) of
ERISA) and all written bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, covering any Employee or Former Employee or to which any Seller is
a party for Employees or Former Employees, with respect to which Sellers have
any obligation or which are maintained, contributed to or sponsored by Sellers
(collectively, the "Benefit Plans"), and (ii) a complete description of any
plan, arrangements, or understandings to provide benefits to Employees which is
not in written form which, in each case, involves annual costs to the Business
in excess of $500,000. Sellers have furnished the Purchasers with a complete and
accurate copy of each Benefit Plan that is in writing and a complete and
accurate copy of each material document prepared in connection with each such
Benefit Plan, including, where applicable, (A) a copy of each trust or other
funding arrangement relating to a Benefit Plan, (B) the most recently
distributed summary plan description and summary of material modifications
relating to a Benefit Plan, (C) the most recently filed IRS Form 5500, (D) the
most recently received IRS determination letter for each such Benefit Plan which
is an employee pension benefit plan as defined in Section 3(2) of ERISA, and
(E) the most recently prepared actuarial report and financial statements in
connection with each such Benefit Plan.
(d) Except as otherwise set forth in Schedule 6.15, with respect to the US
Business, Sellers have no express commitment, except as previously agreed with
the representatives of the collective bargaining unit which has bargained in
good faith for such commitment, (i) to create or incur any material liability
with respect to or cause to exist any other material employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual with a gross annual salary in excess
of $100,000, or (iii) to modify, or change in any material respect, or to
terminate any Benefit Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(e) Except as otherwise stated in Schedule 6.15, with respect to the US
Business:
(i) the Benefit Plans comply to the extent applicable, with the
requirements of ERISA and have been operated and administered, in all material
respects, in accordance with ERISA;
(ii) no liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any of the Benefit Plans subject to Title IV of ERISA,
other than premium payments pursuant to Sections 4006 and 4007 of ERISA;
(iii) Sellers have not incurred any material liability for any tax imposed
under Section 4975 of the Code or Part 5 Subtitle B of Title I of ERISA with
respect to any of the Benefit Plans;
(iv) none of the Benefit Plans is a multiemployer plan within the meaning
of Section 3(37)(A) of ERISA;
(v) each Benefit Plan which is a group health plan (as such term is defined
in Section 607 of ERISA) complies and has complied, in all material respects,
with the applicable requirements of Part 6 Subtitle B of Title I of ERISA;
(vi) no suit, action, litigation or written claim (excluding claims for
benefits incurred in the ordinary course of plan activities) has been brought
against or with respect to any of the Benefit Plans by or on behalf of any
Employee and is pending; and
(vii) each of the Benefit Plans which is intended to be "qualified" within
the meaning of Section 401 of the Code has received a favorable determination
letter from the IRS and no event has occurred and no condition exists which, to
the Knowledge of Sellers, would reasonably be expected to result in the
revocation of any such determination letter.
(f) Except as otherwise stated in Schedule 6.15, with respect to the
European Business:
(i) the European Benefit Plans comply, in all material respects, in
accordance with all applicable Laws; and
(ii) all contributions to European Benefit Plans that will have been
required to be made by Sellers or any Transferred Entity prior to the Closing
will have been made or accrued as of the Closing Date.
6.16 Insurance. Schedule 6.16 lists all material liability and casualty
insurance policies in force as of the date of this Agreement for the benefit of
Sellers or the Transferred Entities with respect to the Business or the Assets.
Except as set forth in Schedule 6.16, Sellers are not engaged in any disputes
relating to coverage with Sellers' insurers in excess of $500,000 in the
aggregate relating to the Business or the Assets.
6.17 Intercompany Services. Except for services, shared commodity purchases
and commodity transfers having an annualized fair market value of less than
$100,000, Schedule 6.17 sets forth all services, shared commodity purchases and
commodity transfers provided in 1996 by any other division or Affiliate of
Sellers to the Business or by the Business to any other division or Affiliate of
Sellers.
6.18 Taxes.
(a) (i) All material Tax Returns required to be filed prior to the Closing
Date in respect of the Business have been (or will have been by the Closing
Date) filed in a timely manner (taking into account all extensions of due
dates), (ii) to the Knowledge of Sellers such Tax Returns were or shall be
accurate and complete in all material respects as of the time of filing,
(iii) all Taxes shown on such Tax Returns have been paid when due, and (iv) all
other material Taxes of the Transferred Entities have been or shall be accrued
or reserved for on the books and records of the Transferred Entities in
accordance with accounting principles employed by such Transferred Entities in
keeping their books and records.
(b) With respect to the Transferred Entities, the statute of limitations in
respect of Taxes has expired as shown in Schedule 6.18(b).
(c) All Taxes required to have been accrued or withheld and paid prior to
the Closing Date in connection with amounts paid or owing to any Employee,
independent contractor, creditor, shareholder or other third party shall on the
Closing Date have been accrued or withheld and paid.
(d) Each Seller is not a party to any agreement, contract or arrangement
that would require as a result of the consummation of the transactions
contemplated hereby, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Section 280G of the Code.
6.19 Sufficiency of Assets. The Assets (when taken together with the
Ancillary Agreements) constitute all of the assets materially necessary to
conduct the Business as currently conducted except for the Excluded Assets.
Sellers and the Transferred Entities have good and marketable title to the
respective Assets (other than those Assets covered by Section 6.7) owned by
Sellers and the Transferred Entities, and (subject to Section 2.3) at the
Closing Sellers will transfer such assets to Purchasers, in each case free and
clear of all liens, mortgages, security interests, claims and other similar
encumbrances (other than Permitted Liens). With respect to Assets leased or
licensed to Sellers and the Transferred Entities, Sellers and the Transferred
Entities have, valid and enforceable rights to use their respective Assets. The
Assets, taken as a whole, are in good operating condition and repair (subject to
normal wear and tear), with such exceptions as could not reasonably be expected
to have a Material Adverse Effect and except for any latent defects.
6.20 Finder's Fee. Sellers and the Transferred Entities have done nothing
to cause Purchasers or Sellers to incur any liability to any party for any
brokerage or finder's fee or agent's commission, or the like, in connection with
this Agreement or any transaction provided for herein.
6.21 Powers of Attorney. Except as set forth in Schedule 6.21 and except as
needed to consummate the transactions contemplated hereby, there are no
outstanding powers of attorney executed by or on behalf of a Seller related to
the Business or by or on behalf of a Transferred Entity.
6.22 Accounts Receivable; Intercompany and Intracompany Accounts.
(a) The accounts receivable reflected in the Statement of Net Assets and
the accounts receivable arising thereafter and prior to the Closing Date being
assigned to Purchasers hereunder represent or will represent bona fide claims
for sales, royalties or other charges arising in the ordinary course of the
Business.
(b) All intercompany and intracompany receivables and payables reflected on
the Statement of Net Assets (except for the receivables and payables with
respect to BSRD Limited referred to in Section 2.1(o)) represent bona fide
receivables and payables incurred by the Business in the ordinary course of
business for value received and do not reflect any indebtedness for borrowed
money.
(c) Except as set forth on Schedule 6.22, there are no existing disputes in
writing with respect to the collectibility of any Accounts Receivable involving
more than $50,000.
6.23 Recalls and Service Actions. Part A of Schedule 6.23 lists all Recalls
and Service Actions since July 1, 1995 with respect to products of the Business.
As used herein, with respect to any product manufactured or sold by the
Business, (i) a "Recall" shall mean any mandatory recall instituted by the
National Highway Traffic Safety Administration or any similar governmental or
quasi-governmental entity in any jurisdiction other than the US or a voluntary
recall instituted pursuant to the terms of the National Traffic Motor Vehicle
Safety Act, as amended, in each case, or similar law or regulation in any
country other than the US, and (ii) a "Service Action" shall mean any voluntary
systematic campaign instituted by an OEM, including without limitation, a dealer
service bulletin, service alert campaign, silent warranty campaign or dealer
network swap-out, instituted to remedy a product defect found to exist in a
particular product application, but expressly excluding (x) a Recall or (y)
warranty work conducted by the dealer network of an OEM in the ordinary course
of business. To the Knowledge of Sellers, except as set forth in Part B of
Schedule 6.23, there are no circumstances currently existing that Sellers would
view in the ordinary course of business as reasonably likely to result in a
Recall or Service Action.
6.24 Product Warranties. Set forth on Schedule 6.24 are representative
forms of product warranties and guarantees granted or issued by Sellers and the
Transferred Entities in connection with the Business. None of the other product
warranties or guarantees granted or issued by Sellers and the Transferred
Entities in connection with the Business differs in any material respect from
such representative forms. Except as described in Schedule 6.11 and Schedule
6.23, since July 1, 1995, no product warranty or similar claims have been made
against Sellers or the Transferred Entities in connection with the Business the
cost to Sellers or the Transferred Entities of which exceeded $100,000 in the
aggregate annually as to any product.
6.25 Undisclosed Liabilities. To the Sellers' Knowledge, none of the
Transferred Entities and, with respect to the Business, none of the Sellers or
the Transferred Joint Venture Entities has any material liability or obligation
of any nature, fixed, contingent or otherwise, liquidated or unliquidated and
whether due or to become due, except for Excluded Liabilities and except for:
(a) liabilities and obligations reflected on the Statement of Net Assets,
other than those discharged since December 31, 1996;
(b) liabilities and obligations (i) disclosed in Schedules 3.2(b), 6.25,
8.6 and 16.10, the other Schedules referred to in Articles 5 and 6 and the
Ancillary Agreements or (ii) otherwise disclosed in writing to Purchasers prior
to the execution and delivery of this Agreement; and
(c) liabilities and obligations incurred in the ordinary course of business
since the date of the Statement of Net Assets (including without limitation
liabilities and obligations incurred pursuant to Contracts, licenses of
Intellectual Property, Real Property Leases and Permits existing as of such
date; provided, however, that if any such item is required to be disclosed on a
Schedule pursuant to Section 6.9, the second sentence of Section 6.10(a) or
Section 6.27, as the case may be, such item has been so disclosed).
6.26 Absence of Certain Changes. Except as set forth in Schedule 6.26 and
in the Statement of Net Assets and Income Statement, from December 31, 1996 to
the date of this Agreement, (i) there has not been any change in the financial
condition or results of operations of the Business or in the condition of the
Assets, and the Business has not suffered any damage, destruction or loss, in
each case which has had or could reasonably be expected to have a Material
Adverse Effect, and (ii) neither any Seller nor any Transferred Entity has taken
any action or engaged in any activity with respect to the Business which would
not have been expressly permitted by Section 8.1 had it been in effect on the
date of the Statement of Net Assets (except for capital expenditures reflected
in the Statement of Net Assets, such other expenditures budgeted in the 1997
Annual Operating Plan previously delivered to Purchasers or set forth in
Schedule 6.26, and actions which have not had or could reasonably be expected to
have a Material Adverse Effect).
6.27 Real Property Leases. Schedule 2.1(n) lists all real property leased
or subleased by Sellers or a Transferred Entity used or held for use primarily
in the conduct of the Business as it is currently being conducted (other than
real property listed on Schedule 2.2(j)). The Sellers have delivered to Breed
correct and complete copies of the Real Property Leases (as amended to date)
listed in Schedule 2.1(n). With respect to each Real Property Lease, subject to
exceptions that do not have a Material Adverse Impact:
(a) the Real Property Lease is in full force and effect;
(b) to the Knowledge of Sellers, except as set forth in Schedule 6.27,
there are no defaults, or events which, with notice or lapse of time, would
constitute a default thereunder;
(c) except for Permitted Liens or as set forth in Schedule 2.1(n), neither
a Seller nor any Transferred Entity has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any of their interests in a Real
Property Lease;
(d) all facilities located on real property demised to a Seller or a
Transferred Entity under a Real Property Lease is supplied with utilities and
other services necessary for the operation by Sellers or Transferred Entities of
said facilities on the date hereof; and
(e) there are no pending or, to the Knowledge of Sellers, threatened
condemnation proceedings relating to the Real Property Leases.
6.28 WARRANTY DISCLAIMER. SELLERS AND PURCHASERS AGREE THAT EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SCHEDULES HERETO AND THE ANCILLARY
AGREEMENTS, SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED.
6.29 Inquiry. The persons identified on Schedule 6.29 are the persons
currently employed by Sellers or the Transferred Entities (a) who have been
asked by Sellers to certify that, based on such person's actual knowledge, such
representations and warranties are accurate and complete and (b) who should
reasonably be expected to have or to have access to the relevant knowledge to
make such certification.
7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
7.1 Due Organization. Each of the Purchasers is a corporation duly
organized and validly existing and in good standing under the Laws of each of
their respective jurisdictions and has all requisite corporate power and
authority to enter into and perform its obligations under this Agreement and all
Ancillary Agreements to which they are contemplated to be parties.
7.2 Authority. The execution, delivery and performance of this Agreement
and each of the Ancillary Agreements contemplated to be executed and delivered
by Purchasers at the Closing have been duly and validly authorized by all
necessary corporate action on the part of the Purchasers. This Agreement has
been duly and validly executed and delivered by Purchasers and is enforceable
against Purchasers in accordance with its terms, except to the extent of the
Enforceability Exceptions. As of the Closing Date, each of the Ancillary
Agreements contemplated to be executed and delivered hereunder by Purchasers at
the Closing will have been duly and validly executed and delivered by the
applicable Purchaser or Purchasers and will be enforceable against the
applicable Purchaser or Purchasers in accordance with its terms, except to the
extent of the Enforceability Exceptions.
7.3 No Conflict. The consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements will not (a) conflict with or violate any
provision of the charter, By-laws or any other organizational document of any
Purchaser, (b) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which a Purchaser is a party or by which a Purchaser is bound or
to which any of its assets is subject, or (c) except for Approval requirements
referred to in Section 7.4, violate any order, writ, injunction, decree or Law
applicable to any Purchaser, except in each case for such conflicts, breaches or
violations, if any, which could not reasonably be expected to preclude
Purchasers in any material respect from consummating the transactions
contemplated by this Agreement.
7.4 Approvals. No Approval is necessary to make this Agreement or any of
the Ancillary Agreements contemplated to be executed and delivered by Purchasers
at the Closing an enforceable obligation of Purchasers or to permit Purchasers
to consummate the transactions contemplated hereunder without violating any Law,
except for (i) the filing under the H-S-R Act and the expiration or termination
of all applicable waiting periods, (ii) Merger Approvals, (iii) any necessary
filings under the Restrictive Trade Practices Act 1976 of the United Kingdom and
(iv) as set forth on Schedule 7.4.
7.5 Litigation.
(a) There is no written claim, suit, action, arbitration, customs
proceeding, administrative or other proceeding, or governmental investigation
pending or, to Purchasers' knowledge, threatened in writing against any
Purchaser which would materially adversely effect their ability to perform their
obligations hereunder or under any Ancillary Agreement.
(b) Purchasers are not parties to nor bound by any judgment, decree,
injunction, ruling, award or order of any Governmental Authority or arbitrator
which could reasonably be expected to preclude Purchasers in any material
respect from consummating the transactions contemplated by this Agreement nor
have Purchasers compromised, settled or lost any arbitration or judicial
proceeding the result of which could reasonably be expected to preclude
Purchasers in any material respect from consummating the transactions
contemplated by this Agreement.
7.6 Funds. As of the date of this Agreement, Purchasers have written
commitments for, and as of the Closing Purchasers shall have, sufficient funds
to enable them to make payment of the Initial Purchase Price at the Closing as
contemplated herein.
7.7 Certain Acknowledgments and Other Matters.
(a) Purchasers acknowledge and agree to the application of the Specified
Accounting Principles.
(b) Purchasers have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of purchasing
the Business, including the Equity Interests and the Transferred Joint Venture
Interests. Purchasers are buying the Equity Interests and the Transferred Joint
Venture Interests for their own account, for investment purposes only and not
with a view to the distribution or resale thereof. Purchasers will not sell or
transfer the Equity Interests or the Transferred Joint Venture Interests in
violation of applicable securities laws. Sellers acknowledge that the
representation and warranty set forth in this Section 7.7(b) is solely intended
as evidence of compliance with certain applicable US securities laws.
7.8 WARRANTY DISCLAIMER. SELLERS AND PURCHASERS AGREE THAT EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SCHEDULES HERETO AND THE ANCILLARY
AGREEMENTS, PURCHASERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED.
8. PRE-CLOSING COVENANTS.
8.1 Conduct of Business.
(a) Except to the extent waived or consented to in writing by Breed or as
otherwise expressly contemplated by this Agreement, during the period from the
date of this Agreement to the Closing, the Sellers shall conduct the Business
only in the ordinary course of business and in compliance with all applicable
Laws in all material respects and, to the extent consistent therewith, use all
reasonable efforts to preserve intact the current business organization of the
Business, keep the physical assets of the Business in good working condition
(reasonable wear and tear excepted), keep available the services of the current
officers and employees of the Business and preserve the relationships of the
Business with customers, suppliers and others having business dealings with the
Business. Without limiting the generality of the foregoing, prior to the
Closing, without the written consent of Breed or as otherwise expressly
contemplated by this Agreement, the Sellers with respect to the Business (A)
shall not, (B) shall cause the Transferred Entities not to and (C) shall use
their reasonable efforts to cause the Transferred Joint Ventures Entities not
to:
(i) acquire, sell, lease, encumber or dispose of any Assets or any shares
or other equity interests in or securities of any corporation, partnership,
association or other business organization or division thereof, other than
purchases and sales of Assets in the ordinary course of business;
(ii) except in the ordinary course of business or pursuant to existing
agreements or commitments, (A) create, incur or assume any debt not currently
outstanding (including obligations in respect of capital leases), (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person or (C) make
any loans, advances or capital contributions to, or investments in, any other
Person;
(iii) (A) enter into, adopt or amend any employee benefit plan covering
employees of the Business, except as may be required by Law and except for the
adoption or amendment of an employee benefit plan in which employees of the
Business do not constitute a majority of plan participants; (B) enter into or
amend any employment or severance agreement with any employee of the Business;
(C) increase in any manner the compensation or fringe benefits of, or modify the
employment terms of, directors, officers or employees of the Business, generally
or individually, except in the ordinary course of business or pursuant to
existing collective bargaining agreements, agreements disclosed on Schedule 6.15
or other agreements not required by the terms of Section 6.15 to be disclosed on
such Schedule; or (D) hire any new employees or consultants with respect to the
Business, except in the ordinary course of business;
(iv) change its accounting methods, principles or practices, except insofar
as may be required by GAAP;
(v) discharge or satisfy any Encumbrance or pay any obligation or liability
other than in the ordinary course of business;
(vi) mortgage or pledge any of its Assets or subject any such assets to any
Encumbrance other than Permitted Liens;
(vii) sell, assign, transfer or license any Intellectual Property, except
for licenses of Intellectual Property in the ordinary course of business in
conjunction with product sales;
(viii) take or omit to take any action that would constitute a violation of
or default under, or waive any rights under, any Contract or Permit relating to
the Business if such violation, default or waiver would have a Material Adverse
Effect;
(ix) except for any capital expenditures (x) budgeted in the 1997 Annual
Operating Plan previously delivered to Purchasers or (y) set forth in Schedule
6.26, make or commit to make any capital expenditure in excess of $100,000 per
item or, when added to capital expenditures referred to in the foregoing clauses
(x) and (y), in excess of $400,000 in the aggregate;
(x) enter into or extend any lease or sublease of real property or any
equipment lease involving payments by the Business in excess of $50,000 per
year; or
(xi) agree in writing or otherwise to take any of the foregoing actions.
(b) The Sellers shall promptly notify the Purchasers of any lawsuits,
claims, proceedings or investigations which are commenced, or, to the Knowledge
of Sellers, threatened in writing, against the Business, any Seller, Transferred
Entity, or their respective stockholders, officers or directors between the date
of this Agreement and the Closing Date which could be reasonably expected to
have a Material Adverse Effect.
(c) During the period from the date of this Agreement to the Closing, the
Sellers shall (i) accept customer orders in the ordinary course of business, and
(ii) cooperate with the Purchasers in communicating with suppliers and customers
to accomplish the transfer of the Assets to and the purchase of the Business by
the Purchasers on the Closing Date.
Notwithstanding any other provision hereof, (x) the Transferred Entities
may distribute or dividend all of their cash, cash equivalents and intercompany
accounts and notes receivable (other than any Accounts Receivable) to their
shareholders at or prior to the Closing, (y) Sellers, the Transferred Entities
and their Affiliates may repay intercompany borrowings and (z) Sellers and the
Transferred Entities may factor trade accounts receivable and trade notes
receivable of the Business and permit Encumbrances thereon until the
consummation of such factoring. With respect to the Transferred Joint Venture
Entities and with respect to the compliance by such entities with the provisions
of this Section 8.1, between the date of this Agreement and the Closing Date, if
the consent of any Seller would be required to enable a Transferred Joint
Venture Entity to take any of the actions restricted or prohibited by this
Section 8.1, such Seller shall withhold such consent.
8.2 Access to Records and Properties. From the date hereof until the
Closing Date, Sellers shall, and shall cause the Transferred Entities to:
(a) Provide Purchasers and their officers and other representatives and
employees with such access to the facilities of the Business and its principal
personnel and such books and records pertaining to the Business, as Purchasers
may reasonably request, without charge by Sellers to Purchasers (but otherwise
at Purchasers' expense), provided that Purchasers agree that such access will be
requested and exercised during normal business hours and without causing
unreasonable interference with the operations of the Business;
(b) Furnish to Purchasers or their representatives, upon reasonable
request, such additional financial and operating data and other information
relating to the Business; and
(c) Make available to Purchasers, upon reasonable request, for inspection
and review all documents, or copies thereof, listed in the Schedules hereto, and
all files, records and papers pertaining to any proceedings and matters listed
in the Schedules hereto.
8.3 Consents.
(a) On or before August 29, 1997, Sellers and Purchasers shall each make
their initial filing (and shall thereafter make any required filings (including
responses to requests for additional information)) with the FTC and the DOJ
pursuant to the H-S-R Act, and any other Governmental Authority whose
acquiescence or consent is necessary in order for the transactions contemplated
by this Agreement to be consummated. The parties shall use reasonable efforts to
demonstrate that such transactions should not be opposed by the FTC, the DOJ, or
such other Governmental Authority, and Purchasers and Sellers shall use their
reasonable efforts to eliminate as promptly as practicable any objection that
the FTC or DOJ may have to the transactions contemplated hereby.
(b) Sellers will use reasonable efforts (which shall not include any
obligation of Sellers to pay any consideration therefor or agree to relinquish
or modify any rights in exchange therefor) to obtain the Consents set forth in
Part A of Schedule 8.3. Sellers shall pay the reasonable out-of-pocket
administrative fees and expenses associated with obtaining such Consents and any
other Consents set forth on Schedule 6.4 if and when sought (which shall not
include any obligation to pay any consideration therefor or agree to relinquish
or modify any rights in exchange therefor). Purchasers will use reasonable
efforts (which shall not include any obligation of Purchasers to pay any
consideration therefor or agree to relinquish or modify any rights in exchange
therefor) to obtain the Consents set forth on Part B of Schedule 8.3. Purchasers
and Sellers shall cooperate with each other in their efforts to obtain the
Consents set forth in Schedule 8.3.
(c) Sellers shall use reasonable efforts to obtain any consents required
from the holders of the equity interests in the Transferred Joint Venture
Entities (other than a Seller or any of its Affiliates) and of any Transferred
Entity.
8.4 Public Announcements. On and after the date hereof and through the
Closing Date, Sellers and Purchasers shall consult with each other before
issuing any press releases or otherwise making any public statements with
respect to this Agreement and the transactions contemplated hereby. Neither
Sellers nor Purchasers shall issue any press release or make any public
statement prior to obtaining the other party's approval, which approval shall
not be unreasonably withheld, except that no such approval shall be necessary to
the extent disclosure may be required by Law (including, without limitation, any
required disclosures to employee representatives) or any listing agreement of
either party hereto; provided, however, that if disclosure shall be required
pursuant to applicable Law or a listing agreement, the parties shall seek to
make such disclosure in a form mutually acceptable to them.
8.5 Assurance of Title to Real Property; Survey.
(a) United States Real Property. For Real Property located in the US:
(i) Sellers have ordered title insurance binders or commitments for the
issuance of a current ALTA Owner's policy or such other form of policy
customarily used in the relevant jurisdiction, to be issued by Lawyers Title
Insurance Corporation, or such other nationally recognized title insurance
company licensed to do business in the relevant jurisdiction.
(ii) Sellers have ordered an "as built" survey of each parcel of the Real
Property. The survey shall be prepared by a licensed surveyor and shall be
certified to the Purchasers, the title insurance company, the Sellers and to
other parties as the Purchasers may reasonably direct, to a date subsequent to
the date hereof that Purchasers shall reasonably request, and shall be in form
sufficient to permit the title company to issue title insurance. The survey
shall, to the extent permitted by Law and local practice, be a "ALTA/ACSM Land
Title Survey", prepared in accordance with the "Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys" jointly established and adopted
by ALTA and ACSM in 1992, and meet the currently effective Accuracy Standards
adopted by ALTA and ACSM.
(iii) Purchasers and Sellers shall each pay one half of all costs of the
surveys described above and the premiums, search fees and related charges for
the title insurance policies to be issued pursuant to the title insurance
binders and commitments described above.
(b) UK Real Property.For Real Property located in the UK, Sellers shall
have its UK counsel prepare certificates of title. Purchasers and Sellers each
shall pay one half of all costs incurred by Sellers in obtaining said
certificates of title.
(c) Non-US and Non-UK Real Property.
(i) For Real Property owned by Sellers and located outside the US and the
UK, title to such Real Property will be verified in each case by the local
notary or equivalent official, designated by Purchasers, responsible for
preparing and filing the relevant real estate transfer document at the local
land registry. Within ten (10) calendar days after the date hereof, Purchasers
will communicate to Sellers the name of a notary or equivalent official in each
jurisdiction to handle such real estate transfers. Sellers will have five (5)
calendar days to object to Purchasers' proposal, it being understood that
Sellers will not object unless Purchasers' choice of a notary or equivalent
official would, in Sellers' reasonable opinion, give rise to a significant delay
in the execution of any Foreign Transfer Agreement.
(ii) Title to non-US and non-UK Real Property that is owned by a
Transferred Entity may be verified prior to the Closing Date by a notary or
equivalent official designated by Purchasers, provided that (A) the cost of such
verification shall be borne by Purchasers and (B) such verification shall not
constitute a valid reason to delay the execution of any Foreign Transfer
Agreement.
(iii) Purchasers and Sellers agree that the mere notation of an Encumbrance
by a notary or equivalent official shall not be deemed to release Sellers from
any representation set forth in Section 6.7(a)(i).
8.6 Guarantees. Purchasers shall use their reasonable efforts to obtain, on
or before the Closing Date, the release of each of the obligations of Sellers
(or any Affiliate thereof other than the Transferred Entities) to guaranty the
Liabilities of any Transferred Entity or any Transferred Joint Venture Entity or
which otherwise relates to the Business, including, without limitation, the
guarantees that are listed on Schedule 8.6, and, to that end, shall provide such
guarantees or other credit support as shall be required to obtain such release.
If Purchasers fail to obtain any such release or the terms of such release are
unreasonable in Sellers' good faith judgment, Purchasers shall, at the Closing,
enter into an agreement (the "Guaranty Agreement"), in form reasonably
satisfactory to Sellers (and secured by a letter of credit reasonably acceptable
to Sellers), containing covenants to indemnify the Sellers in respect of any
liability or expense incurred by Sellers (or an Affiliate thereof other than the
Transferred Entities) in respect of any claim made in respect of any such
liability or expense.
8.7 Covenant by Parents. AlliedSignal shall cause the other Sellers, and
Breed shall cause the other Purchasers, to perform and comply with their
respective obligations under this Agreement, the Foreign Transfer Agreements and
the other Ancillary Agreements.
8.8 Notification of Certain Matters. Between the date hereof and the
Closing, Sellers and Purchasers will give prompt notice in writing to the other
of (i) any information known to them that indicates that any of their
representations or warranties, as the case may be, contained herein will not be
true and correct in a manner that will result in the failure of a condition
contained in Articles 9 or 10 to the other parties' obligations hereunder and
(ii) the occurrence of any event known to Sellers or Purchasers which will
result, or have a reasonable prospect of resulting, in the failure to satisfy a
condition specified in Articles 9 (in the case of Sellers) or 10 (in the case of
Purchasers). In addition, within three (3) days prior to the Closing, Sellers
shall notify Purchasers in writing and provide Purchasers with a copy of the
following items which became effective or were created between the date hereof
and such date: (i) any written Contract of the type referred to in clauses (i)
through (viii) of Section 6.9; (ii) any written agreements with respect to
Intellectual Property of the type referred to in the second sentence of Section
6.10(a); and (iii) any written agreements or benefit plans of the type referred
to in Section 6.15 and updated lists of Salaried Employees and European
Employees, in each case for which Purchasers' consent was not required under
Section 8.1(a).
8.9 Exclusivity. The Sellers shall not and shall cause the Sellers'
Affiliates not to, and shall cause their respective officers, directors,
employees, representatives and agents not to, directly or indirectly, (a)
encourage, solicit, initiate, engage or participate in the discussions or
negotiations with any Person (other than the Purchasers) concerning any merger,
consolidation, sale of assets, tender offer, recapitalization, accumulation of
shares of stock, proxy solicitation or other business combination involving the
Business or any material portion thereof or (b) provide any non-public
information concerning the Business to any person or entity (other than the
Purchasers or in the ordinary course of business). The Sellers shall immediately
notify Breed of, and shall disclose to Breed the substantive terms of, any
inquiries, discussions or negotiations of the nature described in this Section
8.9.
8.10 Reasonable Efforts. Without limitation of the last sentence of Section
1.1, Sellers and Purchasers shall use their reasonable efforts to satisfy, and
to cooperate with and to assist the other in satisfying, the conditions set
forth in Articles 9 and 10, respectively.
8.11 Environmental Matters; Covenants.
(a) Prior to the Closing, Sellers shall use their best efforts to obtain a
construction permit issued by the appropriate local regulatory agency for the
AlliedSignal SRS facility located at 1601 Midpark Road, Knoxville, Tennessee,
containing terms and conditions that will not restrict the ability of the
facility to operate at currently planned production levels, including reasonably
anticipated expansion, for the duration of the term of the permit, as previously
requested by AlliedSignal in its draft permit application materials.
(b) Prior to the Closing, Sellers shall remove and dispose of all solid
waste (including, without limitation, waste oils and recyclable materials) and
hazardous waste generated for offsite disposal in the ordinary course of
Sellers' and the Transferred Entities' businesses more than fifteen (15) days
prior to the Closing Date from any Real Property or any real property subject to
any Real Property Lease and management of such materials shall be in accordance
and in material compliance with all applicable regulations. Sellers shall ensure
that no such solid waste, hazardous waste or waste oils generated for offsite
disposal in the ordinary course of Sellers' and the Transferred Entities'
businesses more than fifteen (15) days prior to the Closing Date are present on
any real property used primarily in the conduct of the Business as of the
Closing.
(c) Prior to the Closing, Sellers shall steam clean or otherwise thoroughly
clean the following areas: all delivery bays, waste or virgin oil storage areas,
raw material storage areas, drum storage areas, and hazardous and non-hazardous
waste storage areas located at the AlliedSignal SRS facilities located at 1601
Midpark Road, Knoxville, Tennessee; the hazardous waste storage area and battery
charging/servicing area at the AlliedSignal SRS facility located at 1644 Mustang
Drive, Maryville, Tennessee; and the hazardous and non-hazardous waste storage
area and raw material storage area outside of the AlliedSignal SRS facility
located at 201 Industrial Boulevard, Greenville, Alabama.
(d) Prior to the Closing, Sellers shall properly dispose of or cause to be
properly disposed all spent inflators and all defective live inflators generated
more than fifteen (15) days prior to the Closing Date, consistent with customer
requirements for retention of certain inflators, located at any real property
used primarily in the conduct of the Business (and including, without
limitation, any joint venture facility). Management and disposal of such
inflators shall be in accordance and in compliance with all applicable federal,
state and local Laws.
(e) Prior to the Closing, Sellers shall continue to pursue their present
efforts to obtain valid General Operating Permits for the AlliedSignal SRS
facilities located at (i) Calle 16 Avenidas, 6 Y 10, 84200 Agua Prieta, Sonora,
Mexico, and (ii) Parque Industrial Valle Hermosa 89, 87500 C.D. Valle Hermosa
(Tam), Mexico.
8.1 Manufacturing Agreement. In the event that the consent to Sellers'
assignment of the Contract referred to in Item 48 of Schedule 6.4 has not been
obtained as of the Closing, the applicable parties shall enter into a mutually
satisfactory manufacturing agreement substantially in the form of Exhibit 8.12
(the "Manufacturing Agreement") with respect to such Contract under which
Sellers shall agree to have the products subject to such Contract made by
Purchasers. The final sentence of Section 2.3(b) shall not apply to the
Manufacturing Agreement.
8.13 BAICO Agreement. Prior to the Closing, Purchasers shall enter into a
services agreement with BAICO (the "BAICO Agreement") to be effective upon the
consummation of the Closing, which agreement (a) shall provide that Purchaser
shall provide BAICO the same services as are presently being supplied to BAICO
by Sellers at a cost computed on the same basis as the cost presently charged by
Sellers to BAICO in performing Sellers' obligations thereunder and (b) shall
survive for so long as BAICO provides inflators to Breed. Prior to the Closing,
Breed shall, and Sellers shall use reasonable efforts to cause BAICO, to enter
into supply agreements between BAICO and Breed to be effective upon the
consummation of the Closing, which agreements shall be for a term of three (3)
years and shall contain terms and conditions consistent with those in the
existing agreements between BAICO and Sellers. Prior to the Closing, Sellers
shall use reasonable efforts to cause BAICO and BAG, S.p.A. to enter into a
supply agreement between BAG, S.p.A. and BAICO to be effective upon the
consummation of the Closing, which agreement shall be for a term of three (3)
years and shall contain terms and conditions consistent with those in the
existing supply agreement between BAG, S.p.A. and BAICO.
9. CONDITIONS TO OBLIGATIONS OF PURCHASERS. The obligations of Purchasers
to be performed by Purchasers at the Closing are subject to the satisfaction at
or prior to the Closing of each of the following conditions, unless waived by
Purchasers in their sole discretion:
9.1 Absence of Injunction. No order, stay, judgment or decree shall have
been issued by any court and be in effect that prohibits or enjoins in any
material respect the consummation of the transactions contemplated by this
Agreement. No lawsuit shall have been instituted by any Governmental Authority
which shall seek to restrain, prohibit or invalidate the transactions
contemplated by this Agreement or which is reasonably likely to impose a
material limitation on the right of the Purchasers to own or use the Assets or
conduct the Business acquired by Purchasers pursuant to this Agreement after the
Closing or materially affect Purchasers' conduct of such Business. No lawsuit
shall have been instituted by any other third party that Purchasers reasonably
believe would be successful and would have a material adverse effect on the
value of the Assets and the Business.
9.2 Certificates of Sellers. Purchasers shall have received all
certificates, instruments, agreements and other documents to be delivered on or
before the Closing Date pursuant to Article 12 of this Agreement; provided,
however, that Sections 9.3 and 9.5 shall be the sole conditions to Purchasers'
obligations relating to the obtaining of Consents.
9.3 Consents. Those Consents listed on Schedule 9.3 shall have been
obtained and remain in full force and effect at Closing or, if any such Consent
shall not have been obtained or shall not remain in full force and effect at the
Closing, Sellers shall have in place an arrangement reasonably satisfactory to
Purchasers pursuant to which Purchasers will receive the use and/or economic
benefits under the agreements related to such Consents not so obtained or not so
in effect.
9.4 No Breach. Each representation and warranty of Sellers contained in
this Agreement that (i) is qualified by a reference to Material Adverse Effect
shall be true and correct as of the Closing as though such representation and
warranty was made on and as of such time (except to the extent a different date
is specified therein, in which case such representation and warranty shall be
true and correct as of such date), or (ii) is not so qualified, shall be true
and correct as of the Closing as though such representation and warranty was
made on and as of such time (except to the extent a different date is specified
therein, in which case such representation and warranty shall be true and
correct as of such date) with such exceptions in the case of this clause (ii) as
could not reasonably be expected to have a Material Adverse Effect. Each
covenant and agreement of Sellers required by this Agreement to be performed by
them at or prior to the Closing will have been duly performed and complied with
in all material respects as of the Closing. At the Closing, Purchasers will have
received a certificate, dated the Closing Date and duly executed by a senior
executive officer of AlliedSignal, to the effect that the conditions set forth
in this Section 9.4 have been satisfied.
9.5 Competition Law Clearances. The waiting period under the H-S-R Act
applicable to the purchase of the Assets shall have expired or otherwise been
terminated and the Merger Approvals shall have been obtained; provided, however,
that if the parties are unable to agree as to the obligation to obtain any such
approval, such approval shall not be a Closing condition hereunder unless prior
to the Closing the party asserting such requirement promptly delivers to the
other party a written opinion of reputable local counsel to the effect that such
approval is required.
9.6 No Material Adverse Effect. Since the date of this Agreement, there
shall have been no adverse change in the condition of the Assets or the
financial condition or results of operations of the Business which has had or
could reasonably be expected to have a Material Adverse Effect.
10. CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of Sellers to be
performed by Sellers at the Closing are subject to the satisfaction at or prior
to the Closing of each of the following conditions, unless waived by Sellers in
their sole discretion:
10.1 Absence of Injunction. No order, stay, judgment or decree shall have
been issued by any court and be in effect that prohibits or enjoins in any
material respect the consummation of the transactions contemplated by this
Agreement. No lawsuit shall have been instituted by any Governmental Authority
which shall seek to restrain, prohibit or invalidate the transactions
contemplated by this Agreement.
10.2 Certificates of Purchasers. Sellers shall have received all
certificates, instruments, agreements and other documents to be delivered on or
before the Closing Date pursuant to Article 13 of this Agreement; provided,
however, that Sections 10.3 and 10.5 shall be the sole conditions to Sellers'
obligations relating to the obtaining of Consents.
10.3 Consents. Those Consents listed on Schedule 10.3 shall have been
obtained and remain in full force and effect at Closing.
10.4 No Breach. Each representation and warranty of Purchasers contained in
this Agreement that (i) is qualified by a reference to materiality shall be true
and correct in all respects as of the Closing as though such representation and
warranty was made on and as of such time (except to the extent a different date
is specified therein, in which case such representation and warranty shall be
true and correct as of such date), or (ii) is not so qualified, shall be true
and correct as of the Closing as though such representation and warranty was
made on and as of such time (except to the extent a different date is specified
therein, in which case such representation and warranty shall be true and
correct as of such date) with such exceptions in the case of this clause (ii) as
could not reasonably be expected to preclude Purchasers in any material respect
from consummating the transactions contemplated by this Agreement. Each covenant
and agreement of Purchasers required by this Agreement to be performed by them
at or prior to the Closing will have been duly performed and complied with in
all material respects as of the Closing. At the Closing, Sellers will have
received a certificate, dated the Closing Date and duly executed by a senior
executive officer of Breed, to the effect that the conditions set forth in this
Section 10.4 have been satisfied.
10.5 Competition Law Clearances. The waiting period under the H-S-R Act
applicable to the purchase of the Assets shall have expired or otherwise been
terminated and the Merger Approvals shall have been obtained; provided, however,
that if the parties are unable to agree as to the obligation to obtain any such
approval, such approval shall not be a Closing condition hereunder unless prior
to the Closing the party asserting such requirement promptly delivers to the
other party a written opinion of reputable local counsel to the effect that such
approval is required.
11. TERMINATION; SURVIVAL.
11.1 Termination. Notwithstanding anything to the contrary set forth
herein, this Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing:
(a) by mutual consent of Purchasers and Sellers;
(b) by Purchasers, (x) if the transactions contemplated hereby are not
consummated on or before December 31, 1997 (the "Deadline") as a result of the
failure of a condition in Article 9 or (y) if any condition in Article 9 shall
become incapable of being satisfied, unless, in the case of each of clauses (x)
and (y), such failure or incapacity was caused by Purchasers' breach of a
covenant or agreement contained herein;
(c) by Sellers, (x) if the transactions contemplated hereby are not
consummated on or before the Deadline as a result of the failure of a condition
in Article 10 or (y) if any condition in Article 10 shall become incapable of
being satisfied, unless, in the case of each of clauses (x) and (y), such
failure or incapacity was caused by Sellers' breach of a covenant or agreement
contained herein; or
(d) by Sellers, if as of the Closing Purchasers do not have sufficient
funds to enable them to make payment of the Initial Purchase Price at the
Closing as contemplated herein.
Notwithstanding the foregoing, with respect to the foregoing Section
11.1(d), if as of the Closing Purchasers are engaged in good faith efforts to
obtain such financing, (i) the Closing shall be deferred for fifteen (15) days,
(ii) Purchasers shall have one such fifteen (15) day period during which to cure
any failure to satisfy any condition to providing such financing of the
applicable banks, and (iii) Sellers' right to terminate this Agreement shall be
deferred until the end of such period. If Purchasers have not obtained such
financing by the end of such period, Sellers may terminate this Agreement
pursuant to Section 11.1(d).
11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 11.1, this Agreement shall become null and void and of no further force
and effect, and none of the parties hereto (nor their respective Affiliates,
directors, shareholders, officers, employees, agents, consultants,
attorneys-in-fact or other representatives) shall have any liability in respect
of such termination; provided, that notwithstanding the foregoing, (i) if such
termination is effected pursuant to Section 11.1(b) or (c) as the result of a
breach of a covenant or agreement contained herein, or such termination is
effected pursuant to Section 11.1(d) as a result of Purchasers' breach of their
representation and warranty in Section 7.6, the party having so breached shall
remain liable to the other party hereto on account of such breach, and the
non-breaching party shall retain all rights in equity or law arising as a result
of such breach and (ii) if such termination is effected pursuant to Section
11.1(b) as a result of the failure of, or incapability of satisfying, the
condition set forth in the first sentence of Section 9.4, Sellers shall remain
liable to the Purchasers for, and Purchasers' sole and exclusive remedy shall
be, reimbursement of Purchasers' out of pocket costs incurred in connection with
this Agreement and the transactions contemplated hereby. The provisions of this
Section 11.2, of Section 16.1 and of the Confidentiality Agreement shall survive
any termination of this Agreement.
12 DOCUMENTS TO BE DELIVERED BY SELLERS AT THE CLOSING. At the Closing,
Sellers shall deliver to Purchasers (subject to Section 2.3):
(a) Secretaries' certificates certifying to (i) resolutions adopted by
Sellers evidencing the authorizations described in Section 6.2, (ii) the
constituent documents of Sellers, and (iii) incumbency of the officers of
Sellers executing this Agreement, Ancillary Agreements and documents required
hereunder and thereunder;
(b) Executed and acknowledged quitclaim deeds or similar transfer documents
sufficient to convey the title of the relevant Seller, in a form reasonably
acceptable to Purchasers, with respect to each parcel of Real Property owned by
a Seller (collectively, the "Deeds"); provided, however, if with respect to US
Real Property a quitclaim deed is not sufficient to convey title or is not
insurable by Lawyers Title Insurance Company (or, if it is not licensed in a
particular jurisdiction, another nationally recognized title insurance company
licensed in that jurisdiction) in a jurisdiction where title insurance is
available, a special warranty deed (called a bargain and sale with covenants
against grantor's acts deed in New York) or its equivalent shall be the form of
deed to be used but such deed shall provide that the warranties may not be
relied upon by anyone other than Purchasers (including, without limitation,
title insurers and others later in the chain of title) and that Purchasers shall
have no rights against Sellers for any breach of the warranties contained in any
such deed;
(c) Executed Assignment and Assumption Agreements, in forms reasonably
acceptable to Purchasers, with respect to any rights appurtenant to the Real
Property owned by a Seller included in the Assets which cannot be transferred by
deed (collectively, the "Real Property Assignments");
(d) (i) An executed bill of sale or other appropriate instruments of
transfer, in form reasonably acceptable to Purchasers, with respect to all of
the Personal Property, Inventory, Accounts Receivable and any other Assets
(other than Assets ("UK Transferable Assets") located in the UK which are
capable of passing by delivery) not transferred or assigned by any other
documents or instrument described in this Section and (ii) possession of all UK
Transferable Assets;
(e) Separately executed and acknowledged Assignments, in recordable form
and reasonably acceptable to Purchasers, sufficient to transfer the Intellectual
Property (collectively, the "Intellectual Property Assignments") and powers of
attorney in forms reasonably acceptable to Purchasers executed by Sellers
permitting Purchasers to prosecute any pending applications for Intellectual
Property rights, except to the extent such documents are not delivered at the
Closing (i) they will be delivered within four (4) months after the Closing Date
with respect to US Intellectual Property and (ii) they will be delivered within
six (6) months after the Closing Date with respect to non-US Intellectual
Property;
(f) Executed Assignment and Assumption Agreements, in forms reasonably
acceptable to Purchasers, with respect to the Intellectual Property licenses
granted to Sellers by third parties and granted to third parties by Sellers
(collectively, the "License Assignments");
(g) Executed Assignment and Assumption Agreement in a form reasonably
acceptable to Purchasers, with respect to the Contracts other than the Joint
Venture Agreements (collectively, the "Contract Assignments");
(h) Executed Assignment and Assumption Agreements, in forms reasonably
acceptable to Purchasers, with respect to Sellers' rights and obligations under
the Joint Venture Agreements (the "Joint Venture Assignments");
(i) Executed a services agreement, substantially in the form of Exhibit
12(i) (the "Services Agreement");
(j) Executed agreement for the use of the "Bendix" and "AlliedSignal"
trademarks, substantially in the form of Exhibit 12(j) ("Trademark License");
(k) Executed stock transfer agreements, asset transfer agreements and/or
other instruments of conveyance with respect to the transfer of Assets outside
the US (including, without limitation, Equity Interests in entities organized in
jurisdictions outside the US) substantially in the form of Exhibit 12(k); it
being understood that such agreements and/or other instruments of conveyance are
intended solely to formalize such foreign transfers in order to comply with any
local Laws pertaining thereto ("Foreign Transfer Agreements");
(l) Certificates representing the Equity Interests in the Transferred
Entities and the Transferred Joint Venture Interests (other than the Transferred
Joint Venture Interest with respect to the Joint Venture Entity listed as item 4
on Attachment B which will be transferred to Purchasers as a result of the
transfer of the Equity Interest in the third item on Attachment D pursuant
hereto), duly endorsed in blank or accompanied with appropriate stock powers if
stock, or duly executed assignments of such Equity Interests or Transferred
Joint Venture Interests which are not held in the form of stock, or Sellers
shall have taken such other actions as may be necessary under applicable Laws to
transfer ownership of such shares, Equity Interests and Transferred Joint
Venture Interests to the Purchasers;
(m) Resignations of those officers and directors of the Transferred
Entities who are not employees of the Transferred Entity which Purchasers shall
request in writing before the Closing;
(n) Executed Assignment and Assumption Agreements, in forms reasonably
acceptable to Purchasers, with respect to each Real Property Lease in favor of a
Seller (collectively, the "Real Property Lease Assignments");
(o) Books and records of the Transferred Entities, including for each, the
corporate minute book, seal and stock ledger book;
(p) Applications and other required documentation of Sellers to Purchasers
which enable Purchasers to obtain the benefit of any applicable reductions of or
exemptions from Transfer Taxes in connection with the transfer of the Assets or
the Equity Interests by Sellers to Purchasers hereunder;
(q) Executed deed referred to in Section 5.3.3(b);
(r) Executed testing agreement with respect to load-leveling fiber and seat
belt webbing substantially in the form of Exhibit 12(r);
(s) Executed agreement for the supply of polyester and nylon fibers
substantially in the form of Exhibit 12(s);
(t) Executed agreement with respect to the products set forth in Attachment
C substantially in the form of Exhibit 12(t);
(u) Executed Manufacturing Agreement (if applicable) and Guaranty Agreement
(if applicable);
(v) Executed Assignment and Assumption Agreement, in form reasonably
acceptable to Purchasers, with respect to the CMA referred to in Section 14.12
(the "CMA Assignment");
(w) Executed sublease substantially in the form of Exhibit 14.11; and
(x) All such other documents and instruments of conveyance as shall be
reasonably necessary to transfer to Purchasers the Assets in accordance
herewith.
13. PAYMENT BY PURCHASERS AT THE CLOSING; DOCUMENTS TO BE DELIVERED BY
PURCHASERS AT THE CLOSING. At the Closing, Purchasers shall make the wire
transfer of funds called for by Section 3.1 and shall execute where applicable
and deliver to Sellers:
(a) Executed undertakings and assumptions of Purchasers, in form reasonably
satisfactory to Sellers, with respect to the assumption by Purchasers of the
Assumed Liabilities;
(b) Secretaries' certificates certifying to (i) resolutions adopted by
Purchasers evidencing the authorizations described in Section 7.2, (ii) the
constituent documents of Purchasers, and (iii) incumbency of the officers of
Purchasers executing this Agreement, Ancillary Agreements and documents required
hereunder and thereunder;
(c) Executed Real Property Assignments, Real Property Lease Assignments,
Intellectual Property Assignments, License Assignments, Contract Assignments,
Joint Venture Assignments, Services Agreement, Trademark License, Manufacturing
Agreement (if applicable), CMA Assignments, deed referred to in Section
5.3.3(b), agreements referred to in Sections 12(r), 12(s) and 12(t), sublease
referred to in Section 14.11, Guaranty Agreement (if applicable), the BAICO
Agreement and Foreign Transfer Agreements;
(d) Applications and other required documentation of Purchasers to Sellers
which enable Sellers to obtain the benefit of any applicable reductions of or
exemptions from Transfer Taxes in connection with the transfer of the Assets or
the Equity Interests by Sellers to Purchasers hereunder, including but not
limited to completed resale certificates for each state in which inventory
transferred pursuant to this Agreement is located for purposes of the respective
state's sales and use taxes; and
(e) All such other documents and instruments of assumption as shall be
reasonably necessary for Purchasers to assume the Assumed Liabilities in
accordance herewith.
14. POST-CLOSING OBLIGATIONS.
14.1 Covenant Not to Compete; No Raid.
(a) For a period of five (5) years after the Closing Date, each Seller
shall not, and shall cause its Affiliates not to, engage, and shall use its
reasonable efforts to prevent any joint venture of any Seller or any such
Affiliate from engaging, directly or indirectly, in the business of designing,
developing, manufacturing, marketing and/or selling automotive occupant
restraint products and systems (including, without limitation, seat belt and air
bag assemblies and components) anywhere in the world ("Competitive Activities");
provided that the foregoing shall not prohibit:
(i) Sellers or any of the accounts managed by them, including without
limitation, of any pension or other benefit plan of Sellers, from owning any
outstanding capital stock or other equity interests of any Person engaging in
any Competitive Activities provided the aggregate beneficial ownership of
Sellers (without reference to pension or other benefit plan assets) does not
exceed more than five percent (5%) of all issued and outstanding securities of
any such Person;
(ii) Sellers, any of their Affiliates or any such joint venture from
engaging in any or all of the Excluded Businesses or any other businesses other
than the Business;
(iii) Sellers from acquiring any Person or business that engages in
Competitive Activities provided that (x) such activities do not constitute the
principal activities of the Person or business to be acquired (based on the
sales of such business during the preceding four (4) full calendar quarters) and
(y) if Competitive Activities constitute in excess of ten percent (10%) of the
revenues of the Person or business acquired, Sellers use their reasonable
efforts to divest that portion of such Person or business that engages in
Competitive Activities within twelve (12) months after the acquisition thereof;
(iv) Sellers from maintaining or acquiring any business that designs,
develops, manufactures and/or supplies the kinds of materials or services that
are supplied to the Business as of the Closing Date, including, without
limitation, fibers, plastic components, and propellant; provided, that design,
development, manufacture and/or supply of such materials or services is part of
a broader business and Sellers are not engaging in such business solely for the
purposes of being in the automotive safety restraint business;
(v) Sellers from owning any and all of the Retained Interests during the
one-year period set forth in Section 2.3(b) and, if Sellers have not transferred
to Purchasers ownership of any such Retained Interests prior to the expiration
of such period, the ownership of such Retained Interests and, with respect to
any such Retained Interest that is a Transferred Entity or Transferred Joint
Venture Interest, the conduct of the business of such Retained Interest
thereafter;
(vi) Sellers from performing their obligations under the agreement referred
to in Section 12(t); or
(vii) Sellers (A) from owning any interest in the Joint Venture Entity
listed as item 3 on Attachment B or (B) from engaging in the business of such
entity.
(b) For a period of two (2) years following the Closing Date, (i) without
the prior approval of Breed, each Seller shall not, and shall cause its
Affiliates not to, solicit or induce (or initiate discussions relating to future
employment with) any salaried employee of the Business on the date of such
solicitation or inducement or the initiation of such discussions to accept
employment with any Seller or any Affiliate thereof and (ii) without the prior
approval of AlliedSignal, each Purchaser and each Transferred Entity shall not,
and shall cause its Affiliates not to, solicit or induce (or initiate
discussions relating to future employment with) any salaried employee of any
Seller or their Affiliates, as the case may be, on the date of such solicitation
or inducement or the initiation of such discussions to accept employment with
any Purchasers, any Transferred Entity or any of their Affiliates, except in the
case of clauses (i) and (ii) for persons whose employment is solicited or
procured through newspaper ads or through the services of executive search firms
engaged in a broad-based search (and not engaged for the purpose of
circumventing this Section 14.1(b)).
(c) This Section 14.1 is subject to the provisions of Section 15.9(b).
14.2 Tax Matters.
(a) As to Transferred Assets.
(i) Subject to the provisions of Section 14.2(c), all Taxes related to the
Business which are accrued or accruable with respect to events or conditions
occurring prior to the Closing Date shall be borne by Sellers (regardless of
whether assessed against any Purchasers as transferees or successors). For this
purpose, the day immediately preceding the Closing Date shall be treated as the
last day of a taxable period, whether or not the taxable period in fact ends on
such date.
(ii) Taxes shall be allocated between Sellers and Purchasers either (A) as
accrued or provided for in accordance with applicable generally accepted
accounting principles or (B) if not so accrued or provided for, then in the same
ratio as the number of days in the taxable period either (x) from the beginning
of the taxable period through the day immediately preceding the Closing Date (to
Sellers) or (y) from the Closing Date through the end of the taxable period (to
Purchasers) has to the total number of days in the taxable period.
(iii) Payment in full of any amount due from a Seller to Purchasers, or
from a Purchaser to Sellers, under this Section 14.2 shall be made by such party
to the other party within five (5) business days of receipt of written demand
from the other party accompanied by reasonably appropriate documentation which
demand shall not be made sooner than ten (10) business days before payment of
the Taxes which are the subject of the demand is made.
(iv) Sellers shall use reasonable efforts to cause the US Transferred Joint
Venture Entities, to the extent allowable under the Joint Venture Agreements
with respect thereto, to make an election under Section 754 of the Code
concerning an adjustment to basis of partnership property, effective as of the
day immediately preceding the Closing Date.
(b) As to Transferred Entities. With respect to the Transferred Entities
(except clauses (ii) and (iv) below which apply to both Assets transferred to
Purchasers hereunder and to Transferred Entities):
(i) Current Taxes. The applicable Transferred Entity has timely filed, or
will timely file, all Tax Returns required to be filed for all taxable periods
ending prior to the Closing Date and the applicable Transferred Entity has paid
or will pay the Taxes shown on such returns, as well as any required Tax
deposits with respect to such periods, in full. The applicable Transferred
Entity will prepare and timely file all Tax Returns for taxable periods ending
on a date on or after the Closing Date (which may include the Closing Date), in
a manner consistent with proper past practices and the applicable Transferred
Entity will pay the Taxes shown on such returns. The applicable Seller will
remit to the applicable Purchaser at least five (5) days before the date such
Tax payment is due an amount equal to the applicable Seller's allocable portion
(as determined in accordance with the provisions of Section 14.2(a)(ii)) of the
Taxes shown on such returns that would have been payable for a taxable period
ending on the close of business on the day immediately preceding the Closing
Date, reduced by any amounts of such Taxes prepaid or deposited by the
applicable Transferred Entity prior to the Closing Date (including any amounts
the applicable Seller has contributed to the applicable Transferred Entity which
have been deposited as payment of such Taxes prior to the Closing Date). To the
extent such prepayment or deposit exceeds the applicable Seller's allocable
portion of Taxes, such excess will be paid by the applicable Purchaser to the
applicable Seller at least five (5) days before the date the Tax payment is due
if the Transferred Entity applies such amount to its Tax liability for the year
or upon the receipt of the refund if such amount is to be refunded.
(ii) Adjustments. Purchasers shall indemnify and hold Sellers harmless
against all Taxes for all taxable periods ending on or after the Closing Date,
except to the extent Sellers are responsible for Taxes with respect to taxable
periods ending prior to the Closing Date. Sellers shall be entitled to all
refunds of Taxes with respect to all taxable periods ending prior to the Closing
Date (except as provided below), and Purchasers shall pay over to Sellers such
amounts received by Purchasers within ten (10) business days after their receipt
thereof. Notwithstanding the preceding sentence, in the event that (A) a
Transferred Entity shall record a net operating lost ("NOL") or shall be
entitled to any tax credit in or for any period on or after the Closing Date,
(B) such NOL or tax credit may be carried back under applicable Law by the
Transferred Entity to a taxable period that ended prior to the Closing Date, and
(C) the carry-back of such NOL or tax credit results in a refund to the
Transferred Entity for a taxable period that ended prior to the Closing Date,
the Transferred Entity shall be entitled to retain such refund.
(iii) Termination of Prior Tax Sharing Agreements. Effective on the Closing
Date, all tax sharing agreements, whether or not written, to which the Sellers
and the Transferred Entities are parties shall be terminated without further
obligations on the part of any party thereto (other than the obtaining of any
consent of a Transferred Entity to such termination as may be required under
applicable law, which consent the Sellers shall cause to be executed and
delivered) and the provisions of this Agreement shall govern the rights and
obligations of the Sellers and Transferred Entities to make or receive payments
or refunds of Taxes. Sellers shall execute (and shall cause the Transferred
Entities to execute) any documents that may be reasonably required to evidence
agreement with this Section 14.2(b)(iii).
(iv) Cooperation and Exchange of Information. Sellers and Purchasers shall
provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return, amended return or
claim for refund, determining a liability for Taxes or a right to a refund of
Taxes or in conducting any audit or other proceeding in respect of Taxes. Such
cooperation and information shall include providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by taxing authorities and records
concerning the ownership and tax basis of property, which either party may
possess. Each party shall make its employees available on a mutually convenient
basis to provide explanation of any documents or information provided hereunder.
Notwithstanding the foregoing, neither party shall be required to prepare any
documents, or determine any information not then in its possession, in response
to a request under this Section. Except as otherwise provided in this Agreement,
the party requesting assistance hereunder shall reimburse the other for any
reasonable out-of-pocket costs incurred in providing any return, document or
other written information, and shall compensate the other for any reasonable
costs (excluding wages and salaries) of making employees available, upon receipt
of reasonable documentation of such costs. Each party will retain all returns,
schedules and workpapers and all material records or other documents relating
thereto, until the expiration of the statute of limitations (including
extensions) of the taxable years to which such returns and other documents
relate and, unless such returns and other documents are offered to the other
party, until the final determination of any payments which may be required in
respect of such years under this Agreement. Any information obtained under this
Section shall be kept confidential, except as may be otherwise necessary in
connection with the filing of returns or claims for refund or in conducting any
audit or other proceeding. The Transferred Entities shall at their own cost and
expense fully and accurately complete and submit any tax data packages required
by Sellers within the time periods established by the Tax Department of
AlliedSignal consistent with past practices, subject to Sellers' reimbursement
of the Transferred Entities' reasonable out-of-pocket costs and reasonable costs
(excluding wages and salaries) of making employees available for such purpose,
upon Sellers' receipt of reasonable documentation of such costs.
(v) If in connection with any examination, investigation, audit or other
proceeding of any Tax Return covering operations of a Transferred Entity for any
period ending prior to the Closing Date (including any taxable period beginning
before and ending on or after the Closing Date, a "Joint Period"), any
governmental body or authority issues to Purchasers or a Transferred Entity a
notice of deficiency, a proposed adjustment, an assertion of claim or demand
concerning the taxable period covered by such Tax Return, Purchasers shall
notify Sellers of the receipt of such communication from the governmental body
or authority within ten (10) days after receiving such notice of deficiency,
proposed adjustment or assertion of claim or demand. In connection with any Tax
Return covering operations of a Transferred Entity for periods ending prior to
the Closing Date (including a Joint Period proceeding that affects only that
portion of the Joint Period ending on the day immediately preceding the Closing
Date), (i) Sellers shall, at their expense, have the sole and exclusive right,
power and authority to contest any such assessment, proposal, claim, demand or
other proceeding and to represent and act for and on behalf of such Transferred
Entities in connection with any notice, proposal, investigation, assessment,
audit, examination or any other proceeding of any kind whatsoever for any such
periods, and (ii) Sellers shall, at their expense, have full, right, power and
authority to take any and all actions and to do any and all things on behalf of
themselves or the Transferred Entities, which they deem necessary and
appropriate in connection with any of such proceedings, including, without
limitation, litigating any claims, settling any claims or waiving the provisions
of any applicable statute of limitation as such may apply to the assessment of
any Taxes for any such periods. Sellers and Purchasers shall jointly control any
Joint Period proceeding affecting both the portion of the Joint Period ending on
the day immediately preceding the Closing Date and the portion of the Joint
Period beginning on the Closing Date. Sellers and Purchasers agree to cooperate
in good faith to jointly represent and act for and on behalf of the Transferred
Entities and to agree to take any and all actions and to do any and all things
on behalf of the Transferred Entities, which they deem necessary and appropriate
in connection with such Joint Period proceedings. Sellers and Purchasers shall
bear their own respective costs and expenses of any Joint Period proceedings.
(c) Sellers and Purchasers shall each pay one-half of all sales, use,
registration, transfer, documentary, stamp, reporting or recording Taxes or fees
(excluding value added taxes, collectively, "Transfer Taxes"), including
interest and penalties thereon imposed as a result of failure to properly and
timely file Transfer Tax returns or documents or pay to the relevant tax
authority any such Transfer Taxes, to the extent such Transfer Taxes are imposed
or incurred by reason of the transfer of either any Assets or the shares of a
Transferred Entity by Sellers to Purchasers or the Transferred Entities
hereunder, provided that neither party to such a transfer shall be required to
share in any interest or penalties to the extent that any failure to properly
and timely file Transfer Tax returns or documents or pay Transfer Taxes was due
to the other party's negligence or willful neglect. The non-assessed party shall
pay to the assessed party its fifty percent (50%) share of Transfer Taxes within
ten (10) days of receipt of written demand from the assessed party accompanied
by reasonably appropriate documentation. The applicable parties shall file or
deliver applications or other required documentation to or with each other and
the relevant state, local and foreign tax authorities to obtain the benefit of
any applicable exemptions from Transfer Taxes in connection with the transfer of
any Assets to Purchasers hereunder. For purposes of this Section 14.2(c),
Transfer Taxes shall be deemed not to include customs duties or any recapture of
tax incentives or abatements.
(i) Neither Sellers nor Purchasers shall cause or knowingly permit this
Agreement to be brought into the UK and the parties shall take all reasonable
efforts to keep this Agreement from being brought into the UK. If a party
subsequently determines that this Agreement or any part thereof should be
introduced into the UK, that party shall secure the consent of the other party
to such action. Upon introduction of this Agreement or any part thereof into the
UK, Purchasers shall pay to the Inland Revenue any UK stamp duty payable and
take appropriate measures to ensure this Agreement or the relevant part thereof
is duly stamped.
(ii) Purchasers shall pay or cause to be paid all value added taxes ("VAT")
imposed or incurred by reason of the transfer of either Assets or the shares of
a Transferred Entity by Sellers to Purchasers hereunder or, if required by
applicable Law to be remitted by Sellers, Purchasers shall pay such VAT and
charges to Sellers. Such VAT and charges are not included in the purchase price
(i.e., the purchase price is exclusive of any VAT) and shall be borne and
remitted by Purchasers. Sellers agree to cooperate with Purchasers in all
reasonable ways to minimize such VAT and charges. The applicable parties shall
file or deliver applications or other required documentation to or with each
other and the relevant state, local and foreign tax authorities to obtain the
benefit of any applicable exemptions from VAT in connection with the transfer of
any Assets to Purchasers hereunder, provided such exemptions do not generate any
other incremental Taxes.
(iii) The purchase price to be allocated to the UK Business is exclusive of
VAT. The parties intend that the transfer of the UK Business shall be a transfer
of a part of a business as a going concern within Article 5 of the Value Added
Tax (Special Provisions) Order 1995 (the "Order"). The applicable Seller and the
applicable Purchaser agree to use all reasonable ways to ensure that such
transfer is so recognized by HM Customs & Excise, thereby eliminating the need
for appeal by the applicable Seller against any such adverse determination by HM
Customs & Excise. On or before the Closing Date, the applicable Seller of the UK
Business shall apply to HM Customs & Excise for a direction that all VAT records
relating to the UK Business which the applicable Purchaser is required to
preserve for any period after the Closing Date under sec.49(1)(b)and paragraph 6
of Schedule 11 of the Value Added Tax Act of 1994 of the United Kingdom ("VATA")
shall be preserved instead by the applicable Seller, and the applicable Seller
shall provide the applicable Purchaser with a copy of the direction made by HM
Customs & Excise upon receipt thereof. The applicable Seller shall preserve such
records for such period as may be required by law and during that period shall
permit the applicable Purchaser or its agents to inspect and copy such records
at its own cost. The applicable Purchaser hereby warrants and undertakes to the
applicable Seller that (i) the applicable Purchaser shall, prior to the Closing,
apply to HM Customs & Excise to be registered for VAT, (ii) the present
intention of the applicable Purchaser is to continue the UK Business as a going
concern, and (iii) the applicable Purchaser shall before the Closing Date make
an election under paragraph 2 of Schedule 10 VATA with effect from the Closing
Date to waive exemption from VAT in respect of all land and buildings situated
in the UK and due to be transferred pursuant to this Agreement in respect of
which the applicable Seller has made such an election, and in respect of all
freehold land, buildings and works situated in the UK and due to be transferred
pursuant to this Agreement which fall within item 1(a) of Group 1 Schedule 9
VATA, and shall give written notification of such election to HM Customs &
Excise not less than seven (7) days before the Closing Date and shall provide
the applicable Seller with a copy of such notification together with
acknowledgment by HM Customs & Excise of such notification on or before the
Closing Date. In the event HM Customs & Excise assesses the applicable Seller
for VAT in relation to the transfer of the UK Business pursuant to this
Agreement or determine that such transfer is not a transfer of a business as a
going concern within Article 5 of the Order, then the applicable Purchaser shall
on demand pay such VAT to the applicable Seller.
(d) For the avoidance of doubt, it is hereby declared that the Adjusted
Purchase Price is exclusive of value added tax, and the Purchasers agree to pay
Sellers, in addition to the Adjusted Purchase Price, such amount of value added
tax as may be payable.
14.3 Further Assurances. From time to time after the Closing, without
further consideration, the parties shall cooperate with each other and shall
execute and deliver instruments of transfer or assignment or assumption, or such
other documents, to the other party as such other party reasonably may request
to evidence or perfect Purchasers' right, title and interest to the Assets or to
more effectively relieve Sellers of any liabilities or obligations to be assumed
by Purchasers hereunder, and otherwise carry out the transactions contemplated
by this Agreement.
14.4 Reports; Access to Books and Records. After the Closing, Purchasers
shall permit Sellers to have reasonable access to and the right to make copies
of such of Purchasers' or the Transferred Entities' or their Affiliates' books,
records and files for any reasonable purpose of Sellers, such as for use in
litigation, financial reporting, tax return preparation, or tax compliance
matters. In addition, Purchasers shall make available to Sellers, upon Sellers'
reasonable request, personnel of Purchasers or the Transferred Entities or their
Affiliates who are familiar with any such matter requested. Purchasers agree to
preserve and keep all of the books, records and files of the Business included
in the Assets for a period of not less than five (5) years after the Closing
Date, or for any longer period as may be required for financial or tax purposes
(i) by any Governmental Authority, (ii) by any Law or (iii) in connection with
any ongoing litigation, suit or proceeding. Prior to disposing of any such
information, Purchasers shall afford Sellers a reasonable opportunity to
segregate, remove or copy such books, records and files as Sellers may select.
Purchasers shall also make available to Sellers, to the extent related to an
Excluded Liability, copies of (a) process, material, test, manufacturing and
quality specifications and (b) sales information reflecting volume, customers,
yearly totals and similar information.
14.5 Cooperation in Litigation. Purchasers and Sellers shall reasonably
cooperate with each other at the requesting party's expense in the prosecution
or defense of any claim, litigation or other proceeding arising from their
respective conduct of the Business acquired by Purchasers pursuant to this
Agreement and involving one or more third parties. The party requesting such
cooperation shall pay the reasonable out-of-pocket expenses incurred in
providing such cooperation (including reasonable legal fees and disbursements)
by the party providing such cooperation and by its officers, directors,
employees and agents, but shall not be responsible for reimbursing such party or
its officers, directors, employees and agents for their time spent in such
cooperation.
14.6 Names and Marks. Purchasers acknowledge and agree that they do not by
virtue of any of the transactions contemplated by this Agreement or otherwise,
except the Trademark License, obtain any of Sellers' rights to any names, marks,
trade names or trademarks incorporating "Bendix" or "AlliedSignal" or any
derivation therefrom or any corporate symbols or logos incorporating "Bendix" or
"AlliedSignal" either alone or in combinations or any goodwill represented
thereby and pertaining thereto, all of which is, and commencing on the Closing
Date will remain, the sole property of Sellers.
14.7 Confidential Information. For a period of three (3) years from the
Closing Date, Sellers and any Affiliate of Sellers shall maintain the
confidentiality of, and shall not use for the benefit of itself or others, any
confidential information concerning the Business or the Assets, including,
without limitation, any information provided pursuant to Section 8.2 (the
"Confidential Information"); provided, however, that the immediately foregoing
restriction shall not restrict (i) disclosure by Sellers of any Confidential
Information required by applicable Law or any court of competent jurisdiction,
provided that Purchasers are given notice and an adequate opportunity to contest
such disclosure, (ii) any disclosure on a confidential basis to Sellers'
attorneys, accountants, lenders and investment bankers, (iii) any disclosure of
information (x) which is available publicly as of the date of this Agreement or
(y) which, after the date of this Agreement, becomes available publicly through
no fault of the disclosing party or, (iv) Sellers' use of such Confidential
Information to protect or enforce their rights under this Agreement in
connection with tax or other regulatory filings, and (v) Sellers' and their
Affiliates' use of such Confidential Information in the conduct of their own
businesses if and to the extent not otherwise prohibited by Section 14.1.
14.8 Foreign Country Offsets. In connection with certain transactions
entered into in foreign countries, Sellers have committed through themselves and
their subsidiary companies and divisions to expend funds for goods or services
from such foreign countries or for investments in such foreign countries
("Foreign Country Offsets"). Sellers entered into these transactions in the
expectation that amounts expended or invested by the Business would be included
in calculating the Foreign Country Offsets and practices and procedures have
been established whereby the Business periodically advises Sellers of the amount
of Foreign Country Offsets expected to be obtained or which have been obtained
in connection with the Business's operations and of other information relevant
thereto. Purchasers agree for a period of five (5) years from the Closing Date
to continue to advise Sellers with respect to Foreign Country Offsets consistent
with Sellers' and the Transferred Entities practices and procedures prior to the
Closing Date; provided, however, that Purchasers may discontinue such advice
prior to such time to the extent that Purchasers can utilize such Foreign
Country Offsets in the operation of the Business. Purchasers shall provide
Sellers with a certificate of an executive officer of Purchaser and with
appropriate documentation to support any assertion by Purchaser that it can so
utilize any Foreign Country Offsets.
14.9 Intercompany Trade Account. Included in the liabilities and
obligations of the Business on the Statement of Net Assets and the Closing
Statement of Net Assets are trade accounts payable and receivable, including
accounts payable to and accounts receivable from other divisions or Affiliates
of Sellers or the Transferred Entities for goods and services provided by other
divisions and Affiliates of Sellers or the Transferred Entities to the Business
and goods and services provided by the Business to such entities, including
Sellers' allocations of corporate overhead (the net amount of such intercompany
trade payables and receivables is referred to as the "Intercompany Trade
Account"). Purchasers shall pay at the Closing an amount equal to the
Intercompany Trade Account calculated based upon all unpaid intercompany trade
payables and receivables invoiced no later than ten (10) days prior to the
Closing Date. For purposes of clarification, the parties understand and agree
that intercompany payables and receivables between other divisions and
Affiliates of Sellers or the Transferred Entities and the Business which are not
included in the Intercompany Trade Account are excluded from the Statement of
Net Assets and Closing Statement of Net Assets, except for the receivables and
payables with respect to BSRD Limited referred to in Section 2.1(o).
14.10 Performance of Obligations. The applicable Purchasers shall, and
shall cause the applicable Transferred Entities to, perform and fulfill all
obligations and commitments of the Business existing as of the Closing Date or
thereafter incurred, all in accordance with this Agreement.
14.11 Industrial Revenue Bonds. At the Closing, Purchasers and Sellers
agree to enter into a sublease agreement (and not a Real Property Assignment) in
respect of the facility located in Greenville, Alabama in respect of which the
Industrial Revenue Development Board of the City of Greenville has issued
certain industrial revenue bonds (the "Industrial Revenue Bonds"). Such sublease
shall be substantially in the form of Exhibit 14.11. The applicable Sellers
represent and warrant that, except as set forth on Schedule 6.25, they have
performed and satisfied all obligations required to be performed under all of
their agreements relating to the Industrial Revenue Bonds up to and including
the Closing Date and that the transactions contemplated by this Agreement will
not result in a determination of taxability with respect to the Industrial
Revenue Bonds, and Sellers agree to indemnify Purchasers for any breach of this
representation and warranty and for any loss resulting to Purchasers as a result
of Sellers' failure so to perform and satisfy such obligations. If as a result
of Purchasers' or the Transferred Entities' failure to perform the above stated
obligations after the Closing Date the interest on the Industrial Revenue Bonds
becomes subject to federal income tax, or Sellers shall suffer any other loss
related to such failure by Purchasers or the Transferred Entities, the
applicable Purchaser shall indemnify the applicable Seller for losses it may
suffer by reason of such event; provided, however, that (a) the applicable
Purchaser must be provided the opportunity, upon reasonable notice, to
participate in any action or proceeding that may result in a determination of
taxability or loss to the applicable Seller and (b) the applicable Seller shall
take all reasonable action necessary to mitigate such losses.
14.12 JV Cash Management Agreements. At the Closing, Breed shall assume all
rights and obligations of AlliedSignal under the Cash Management Agreement
between AlliedSignal and Morton-Bendix (the "CMA"). Breed shall assume the
economic position of AlliedSignal under the CMA as of the Closing Date with the
right to receive any amounts owing to AlliedSignal on the Closing Date pursuant
to the CMA and the obligation to pay any amounts payable by AlliedSignal on the
Closing Date pursuant to the CMA. An amount equal to the difference between the
amount (x) due to AlliedSignal on the Closing Date pursuant to the CMA, and (y)
the amount payable by AlliedSignal on the Closing Date pursuant to the CMA shall
be paid by Breed to AlliedSignal, if the amount described in clause (x) is
greater than the amount described in clause (y), or by AlliedSignal to Breed, if
the amount described in clause (y) is greater than the amount described in
clause (x), within three (3) Business Days of the Closing.
14.13 Italian Grants. If the Closing occurs, Purchasers shall use
reasonable efforts to satisfy by December 31, 1998 the requirements that were
and are the basis of the grants given and to be given to Purchasers (as
successor to AlliedSignal Sistemi di Sicurezza S.p.A.) as part of an investment
program pursuant to Italian Law No. 488 (and the agreements with respect to such
grants are described in items 39 and 40 of Schedule 6.4).
14.14 Certain Financial Information. Following the Closing, AlliedSignal
shall, at Breed's expense, provide such assistance as Breed reasonably requests
in connection with Breed's preparation of financial statements concerning the
Business solely for the purpose of making any required filings under applicable
US federal securities laws. Without limiting the foregoing, AlliedSignal shall
(i) request Price Waterhouse to afford Breed, at Breed's expense, reasonable
access following the Closing to Price Waterhouse's workpapers related to the
Business, (ii) at Breed's request, also request Price Waterhouse to prepare for
Breed, at Breed's expense, audited financial statements of the Business for
inclusion in Breed's Form 8-K filing to be made after the Closing with respect
to the transactions contemplated hereby and (iii) request Price Waterhouse to
consent to the use of the financial statements referred to above for purposes of
such US federal securities law filings. The parties acknowledge that Price
Waterhouse is not a party to this Agreement and will make any decisions with
respect to any requests by Sellers or Purchasers in their professional judgment.
15. INDEMNIFICATION.
15.1 Indemnification by Sellers. If the Closing occurs, Sellers shall,
jointly and severally, defend and indemnify and hold harmless Purchasers and
their directors, officers, employees, agents, consultants, representatives,
Affiliates, successors and permitted assigns ("Purchaser Indemnified Parties")
from and against and in respect of (on a net after tax basis assuming that each
indemnified Person has an effective tax rate of 40% (provided, however, that if
an indemnified Person establishes by clear and convincing evidence that such
Person's effective tax rate is other than 40%, such actual tax rate shall be
used) and taking into account any Tax savings from the indemnified Losses ("Net
After Tax Basis")) any and all claims, liabilities, obligations, losses, damages
(excluding consequential damages, including without limitation, lost profits),
costs, and out of pocket expenses (including without limitation, reasonable
legal, accounting and similar expenses) (individually a "Loss" and collectively,
"Losses") which any of them may incur arising out of or resulting from any one
or more of the following:
(a) any breach of any covenant or agreement on the part of a Seller in this
Agreement or the Ancillary Agreements (other than the Commercial Agreements);
(b) any breach of any representation or warranty (other than the
representations and warranties set forth in Sections 6.10 (subject to Section
15.7(c)), 6.12 and 6.23 hereof) on the part of Sellers in this Agreement (it
being understood and agreed that, except with respect to Sections 6.6, 6.8,
6.9(vii), 6.15(a), 6.15(b), 6.15(c) and 6.24 and clause (i) of Section 6.26,
notwithstanding anything to the contrary in this Agreement, such representation
or warranty shall be read as though it did not contain any materiality
exceptions);
(c) any of the Excluded Liabilities; and
(d) the conduct of the Excluded Businesses and the ownership, use and
possession of the Excluded Assets on or after the Closing Date.
Notwithstanding the foregoing, Purchasers may not make any claim hereunder
for punitive damages, except Purchasers may make a claim under this Agreement
for punitive damages constituting Losses payable by Purchasers for a third party
claim to the extent such third party has been awarded specific punitive damages
in respect to such claim.
15.2 Indemnification by Purchasers. If the Closing occurs, Purchasers
shall, jointly and severally, defend, indemnify and hold harmless Sellers and
their directors, officers, employees, agents, consultants, representatives,
Affiliates, successors and permitted assigns ("Seller Indemnified Parties") from
and against and in respect of (on a Net After Tax Basis) any and all Losses
which any of them may incur arising out of or resulting from any one or more of
the following:
(a) any breach of any covenant or agreement on the part of a Purchaser in
this Agreement or the Ancillary Agreements (other than the Commercial
Agreements);
(b) any breach of any representation or warranty on the part of Purchasers
in this Agreement;
(c) any Assumed Liability;
(d) the conduct of the Business acquired by Purchasers pursuant to this
Agreement and the ownership, use and possession of the Assets on or after the
Closing Date; and
(e) any liability to any Person for any brokerage or finder's fee or
agent's commission, or the like, in connection with this Agreement or any
transaction provided for herein (other than as a result of actions of Sellers).
Notwithstanding the foregoing, Sellers may not make any claim hereunder for
punitive damages, except Sellers may make a claim under this Agreement for
punitive damages constituting Losses payable by Sellers for a third party claim
where such third party has been awarded specific punitive damages in respect to
such claim.
15.3 Survival. The parties agree that, regardless of any investigation made
at any time by the parties, the representations and warranties made by Sellers
in this Agreement or in any Schedule (and any indemnity obligations) shall
survive the Closing and shall terminate, and be of no further force and effect,
and no claims with respect thereto may be made by Purchasers after March 31,
1999; provided, however, that, notwithstanding the foregoing, (A) claims for
indemnification relating to Losses referred to in the following clauses (i) -
(iv) shall survive to the expiration of the applicable statute of limitations:
(i) any Excluded Liability; (ii) any breach of the representations and
warranties set forth in Section 6.21 (Taxes), or of any covenant or agreement on
the part of the Sellers in this Agreement relating to Taxes; (iii) any liability
to the extent arising out of a defect in the title to any Assets which are not
Real Property; and (iv) any criminal penalty, in each case, for which Sellers
are responsible pursuant to this Agreement; (B) claims for indemnification
referred to in Section 15.7(c) shall survive to the second anniversary of the
Closing Date; and (C) claims for indemnification pursuant to Sections 15.6, 15.7
(other than Section 15.7(c)) and 15.8 shall survive for the period provided for
therein and where no survival period is provided, until the expiration of the
applicable statute of limitations. Further, if any claim for indemnification
hereunder, which has been previously asserted by either party to this Agreement
pursuant to a notice of claim in accordance with Section 15.5 below, is still
pending at the expiration of the applicable survival period, such claim shall
continue to be subject to the indemnification provisions of this Agreement until
resolved.
15.4 Limitations on Indemnity.
(a) Notwithstanding anything to the contrary contained in this Agreement,
Sellers shall have no liability or obligation to Purchasers with respect to a
claim made pursuant to Section 15.1(b) except as follows:
(i) The term "Excluded Loss" shall mean (x) any Loss in the amount of
$25,000 or less and (y) any Loss or Environmental Loss referred to in Section
15.6, 15.7 or 15.8; provided, however, that if and to the extent that a Loss
referred to in Section 15.8 in the amount of more than $25,000 arises out of a
breach of the representations and warranties contained in Section 6.23 and is
not otherwise required to be indemnified by Sellers under Section 15.8, such
Loss shall not be an Excluded Loss. The term "Covered Loss" shall mean any Loss
other than an Excluded Loss.
(ii) Sellers shall have no liability or obligation to Purchasers with
respect to a claim made pursuant to Section 15.1(b) to the extent that Covered
Losses in the aggregate are equal to or less than $1,500,000.
(iii) If Covered Losses in the aggregate exceed $1,500,000 and are equal to
or less than $3,000,000 (any such excess amount, the "Level 1 Losses"), Sellers'
indemnification obligation hereunder shall be limited to twenty-five percent
(25%) of such Level 1 Losses.
(iv) If Covered Losses in the aggregate exceed $3,000,000 and are equal to
or less than $4,500,000 (any such excess amount, the "Level 2 Losses"), Sellers'
indemnification obligation hereunder, in addition to the amount determined under
the foregoing subparagraph (iii), shall be limited to fifty percent (50%) of
such Level 2 Losses.
(v) If Covered Losses in the aggregate exceed $4,500,000 and are equal to
or less than $6,000,000 (any such excess amount, the "Level 3 Losses"), Sellers'
indemnification obligations hereunder, in addition to the amounts determined
under the foregoing subparagraphs (iii) and (iv), shall be limited to
seventy-five percent (75%) of such Level 3 Losses.
(vi) If Covered Losses in the aggregate exceed $6,000,000 (any such excess
amount, the "Level 4 Losses"), Sellers' indemnification obligation hereunder, in
addition to the amounts determined under the foregoing subparagraphs (iii), (iv)
and (v), shall equal one hundred percent (100%) of such Level 4 Losses.
(b) Any Environmental Loss in excess of $25,000 paid by Purchasers (and not
subject to indemnification by Sellers to Purchasers) pursuant to Section 15.6
due to Sellers' breach of any representation and warranty set forth in Section
6.12, and any Loss in excess of $25,000 paid by Purchasers (and not subject to
indemnification by Sellers to Purchasers) pursuant to Section 15.7 due to
Sellers' breach of any representation and warranty set forth in Section 6.10,
shall be included in the calculation of the maximum obligation of Purchasers
under Section 15.4(a). In no event shall the aggregate liability of all Sellers
with respect to all claims made pursuant to Sections 15.1 (other than clauses
(c) and (d) of Section 15.1), 15.6, 15.7 and 15.8 exceed fifty percent (50%) of
the Initial Purchase Price.
(c) Sellers shall have no liability or obligation to the Purchasers for any
Loss to the extent the liability attributable to such Loss is reflected or
reserved for on the Closing Statement of Net Assets as finally determined
pursuant to Section 3.2 (and such Loss shall not be included as a Loss for
purposes of any monetary threshold in Section 15.4(a), 15.6 or 15.8).
(d) Any amounts payable by Sellers pursuant to Sections 15.1, 15.6, 15.7
and 15.8 (and any amounts applied to the monetary thresholds in Sections
15.4(a), 15.6 and 15.8) shall be reduced by (i) any related insurance recoveries
net of any costs incurred for such recovery and any retrospective rate increase
resulting therefrom and (ii) any payments from third parties who are not
Affiliates of the indemnified party.
(e) The determination of the amount of any Losses arising out of the breach
of more than one representation or warranty shall be determined without
duplication or double counting of the same Loss.
(f) Upon payment of any amount pursuant to any claim for indemnification
hereunder, the Indemnifying Party shall be subrogated, to the extent of such
payment to all of the Indemnified Party's rights of recovery against any third
party with respect to the matters to which such claims relates.
(g) No claim may be made by Purchasers for breach of the representation and
warranty in Section 6.25 in respect of the following, as to each of which the
parties have agreed that their rights and obligations are governed solely by
certain provisions of this Agreement other than Section 6.25: (i) liabilities
arising from or relating to Recalls or Service Actions; (ii) Environmental
Claims (or any other liabilities relating to a violation of any Environmental
Law or to Hazardous Materials); and (iii) Intellectual Property Claims (or any
other liabilities relating to intellectual property matters).
15.5 Indemnification Procedure.
(a) Any party making a claim for indemnification hereunder (an
"Indemnitee") shall notify the indemnifying party (an "Indemnitor") of the claim
in writing promptly after receiving written notice of any action, lawsuit,
proceeding, investigation or other claim against it (if by a third party) or
discovering the liability, obligation or facts which may reasonably be expected
to give rise to such claim for indemnification, describing the claim, the amount
thereof (if known and quantifiable), and the basis thereof (a "Notice of
Claim"), provided that the failure to so notify an Indemnitor shall not relieve
the Indemnitor of its obligations hereunder except to the extent such failure
shall have actually and materially prejudiced the Indemnitor.
(b) With respect to any third party action, lawsuit, proceeding,
investigation or other claim which is the subject of a Notice of Claim (a "Third
Party Claim"), an Indemnitor shall be entitled to assume and control (with
counsel of its choice) the defense of such Third Party Claim at the Indemnitor's
expense and at its option by sending written notice of its election to do so
within fifteen (15) days after receiving the Notice of Claim from the Indemnitee
as aforesaid; provided, however, that:
(i) The Indemnitee shall be entitled to participate in the defense of such
Third Party Claim and to employ counsel of its choice for such purpose (the fees
and expenses of such separate counsel shall be borne by Indemnitee); and to
assert against any third party (other than Sellers or any of their Subsidiaries
or Affiliates) any and all crossclaims and counterclaims Purchasers may have,
subject to Sellers' consent, which consent shall not be unreasonably withheld;
(ii) If the Indemnitor elects to assume the defense of any such Third Party
Claim, the Indemnitor shall be entitled to compromise or settle such Third Party
Claim in its sole discretion so long as either (x) such is a monetary settlement
which provides an unconditional release of the Indemnitee with respect to such
claim or (y) the Indemnitor shall obtain the prior written consent of the
Indemnitee (which shall not be unreasonably withheld); and
(iii) If the Indemnitor shall not have assumed the defense of such Third
Party Claim within the fifteen (15) day period set forth above, the Indemnitee
may assume the defense of such Third Party Claim with counsel selected by it and
may make any compromise or settlement thereof or otherwise protect against the
same and be entitled to all amounts paid as a result of Third Party Claim or any
compromise or settlement thereof. The Indemnitee shall give the Indemnitor
notice of the name of counsel selected by it prior to the time of assuming the
defense and the Indemnitor shall have five (5) Business Days in which to object
to such counsel. In the event of such objection, the Indemnitor shall have the
obligation to defend on the terms specified in Section 15.5(b)(ii).
(c) The Indemnitee shall at all times cooperate, at its own expense, in all
reasonable ways with, make its relevant files and records available for
inspection and copying by, and make its employees available or otherwise render
reasonable assistance to, the Indemnitor.
15.6 Special Environmental Provisions.
(a) If the Closing occurs, Sellers shall, jointly and severally, defend and
indemnify and hold harmless the Purchaser Indemnified Parties from and against
and in respect of (on a Net After Tax Basis) Environmental Losses which any of
them may incur arising out of or resulting from any breach of any representation
or warranty on the part of Sellers in Section 6.12 of this Agreement (it being
understood and agreed that, notwithstanding anything to the contrary in this
Agreement, each such representation and warranty shall be read as though it did
not contain any materiality exceptions).
(b) As used herein, "Environmental Losses" shall mean (i) with respect to
real property, or any portion thereof (the "Affected Property"), costs which, in
accordance with GAAP, are specifically attributable to capital expenditures
relating to the making of a permanent capital improvement on such Affected
Property which shall be necessary to obtain compliance with any Environmental
Requirement(s), including with respect to environmental conditions that pose a
significant risk to human health or the environment, (which the parties agree
shall include the reasonable costs of operation and/or maintenance of any such
capital improvement for a period of up to two (2) years after the making
thereof), and (ii) with respect to Affected Property, costs which are
specifically attributable to the implementation of a remediation plan for
Hazardous Material released onto such Affected Property as of or prior to the
Closing, including with respect to environmental conditions that pose a
significant risk to human health or the environment; provided, however, that
Environmental Losses shall not include (w) costs incurred in the absence of an
Environmental Requirement, (x) employee compensation and other internal costs,
(y) employee training program costs that Purchasers believe necessary or
desirable to achieve or improve compliance, and (z) compliance assessment costs,
including, without limitation, the costs of outside counsel and/or consultants
to assess compliance with Environmental Requirements, except to the extent that
any such compliance assessment costs (other than the costs of outside counsel
and/or consultants) are reasonable in relation to any required remediation
arising out of such assessment.
(c) Notwithstanding anything to the contrary contained in this Agreement,
Sellers shall have no liability or obligation to Purchasers with respect to a
claim made pursuant to Section 15.6(a) except as follows:
(i) Sellers shall have no liability or obligation to Purchasers with
respect to a claim made pursuant to Section 15.6(a) to the extent that aggregate
Environmental Losses are equal to or less than $250,000.
(ii) If Environmental Losses in the aggregate exceed $250,000 and are equal
to or less than $500,000 (any such excess amount, the "Level A Losses"),
Sellers' indemnification obligation hereunder shall be limited to twenty-five
percent (25%) of such Level A Losses.
(iii) If Environmental Losses in the aggregate exceed $500,000 and are
equal to or less than $750,000 (any such excess amount, the "Level B Losses"),
Sellers' indemnification obligation hereunder, in addition to the amount
determined under the foregoing subparagraph (ii), shall be limited to fifty
percent (50%) of such Level B Losses.
(iv) If Environmental Losses in the aggregate exceed $750,000 and are equal
to or less than $1,000,000 (any such excess amount, the "Level C Losses"),
Sellers' indemnification obligations hereunder, in addition to the amounts
determined under the foregoing subparagraphs (ii) and (iii), shall be limited to
seventy-five percent (75%) of such Level C Losses.
(v) If Environmental Losses in the aggregate exceed $1,000,000 (any such
excess amount, the "Level D Losses"), Sellers' indemnification obligations
hereunder, in addition to the amounts determined under the foregoing
subparagraphs (ii), (iii) and (iv), shall equal one hundred percent (100%) of
such Level D Losses.
(vi) This Section 15.6 shall terminate on the date that is eighteen (18)
months after the Closing Date (except with respect to any claim for
indemnification pursuant to this Section 15.6 which has been made in writing to
Sellers prior to such date but which still is pending on such date; provided,
however, that any such pending claim(s), if not theretofore resolved, shall
terminate on the third anniversary of the Closing Date if no action is then
being taken in good faith to resolve to such claim(s)).
(d) Purchasers shall provide access to the Affected Property and facilities
thereon in order to investigate the Remedial Work that may be required and to
facilitate any Remedial Work by Sellers and their consultants. Sellers shall be
entitled to perform such tests on or of the Affected Property as are reasonably
necessary to effect any Remedial Work, and to review and inspect any report
prepared by or for the Purchasers relating to any Remedial Work. Sellers shall
use all reasonable efforts to reduce, to the extent possible, any intrusion upon
Purchasers' operations attendant to any Remedial Work.
(e) Purchasers shall promptly notify Sellers in writing of, and transmit to
them, copies of any communications from or with any Governmental Authority or
other information concerning any alleged violation of any Environmental Law or
any alleged environmental liability to a third party for which Purchasers have
claimed Sellers are liable (or which Purchasers contend will result in
Environmental Losses that Purchasers intend to apply against any threshold set
forth in Section 15.6(c)). With respect to the Environmental Losses governed by
this Section 15.6, Purchasers shall keep Sellers informed as to plans or actions
Purchasers intend to take and shall consult with Sellers as to the need for any
such plans or actions prior to making a commitment to implement such plans or
actions. Sellers shall have the right to control any and all communications and
any and all activities with any Governmental Authority or third party with
respect to matters as to which Purchasers or Sellers reasonably anticipate will
result, individually or in the aggregate (together with Environmental Losses
already incurred by Sellers or Purchasers), in Environmental Losses in excess of
$2,000,000, and Purchasers shall provide to Sellers all reasonable cooperation
in connection therewith, including, upon Sellers' request, copies of their
records relating to the alleged liability or violation in question. Sellers
shall keep Purchasers informed as to plans or actions Sellers intend to take and
shall consult with Purchasers as to the need for any such plans or actions prior
to making a commitment to implement such plans or actions.
(f) The provisions of Section 15.4 (other than Section 15.4(a)) and, as
expanded by Sections 15.6(d) and (e) above, Section 15.5 shall apply to the
matters set forth in this Section 15.6. Notwithstanding anything in this
Agreement to the contrary, this Section 15.6 shall be Purchasers' exclusive
remedy for any Losses with respect to environmental matters (other than Excluded
Liabilities), including, without limitation, any breach of the representations
and warranties set forth in Section 6.12.
15.7 Special Intellectual Property Provisions.
(a) If the Closing occurs, Sellers and Purchasers shall have the rights and
obligations set forth below with respect to the matters set forth in clauses (i)
and (ii) of the definition of Intellectual Property Claim:
(i) With respect to any such Intellectual Property Claim received by
Sellers prior to the Closing, Sellers shall, jointly and severally, indemnify
and hold harmless the Purchaser Indemnified Parties from and against and in
respect of (on a Net After Tax Basis) the Losses which any of them may incur
arising out of or resulting from such Intellectual Property Claim; provided,
however, that Sellers' indemnification obligations pursuant to this subparagraph
(i) shall be limited to such Losses that arise out of or are attributable to
actions that occurred prior to the later of (x) the Closing or (y) the
commencement of any lawsuit asserting such Intellectual Property Claim, or
within two (2) years after such later date.
(ii) With respect to any such Intellectual Property Claim relating to a
matter disclosed on Schedule 6.10(c) (other than a matter referred to in
subparagraph (i) above), (A) Sellers shall, jointly and severally, indemnify and
hold harmless the Purchaser Indemnified Parties from and against and in respect
of (on a Net After Tax Basis) the Losses which any of them may incur arising out
of or resulting from any such Intellectual Property Claim with respect to sales
of the products referred to on such Schedule prior to the Closing and (B)
Sellers shall, jointly and severally, indemnify and hold harmless the Purchaser
Indemnified Parties, and Purchasers shall, jointly and severally, indemnify and
hold harmless the Seller Indemnified Parties, in each case from and against and
in respect of (on a Net After Tax Basis) fifty percent (50%) of the Losses which
any of them may incur arising out of or resulting from any such Intellectual
Property Claim with respect to sales of the products referred to on such
Schedule after the Closing; provided, however, that the respective
indemnification obligations of Sellers and Purchasers pursuant to clauses (A)
and (B) of this subparagraph (ii) shall be limited to such Losses that arise out
of or are attributable to actions that occurred prior to the later of (x) the
Closing or (y) the assertion of such Intellectual Property Claim, or within two
(2) years after such later date.
(iii) With respect to any such Intellectual Property Claim relating to one
(1) or more products that (x) have been launched for commercial production by
the Business as of the Closing or (y) are launched for commercial production by
Purchasers within ninety (90) days after the Closing (unless, prior to or during
such ninety (90) day time period, Purchasers knew or should have reasonably
known of any basis for such Intellectual Property Claim), in each case other
than matters referred to in subparagraphs (i) and (ii) above, Sellers shall,
jointly and severally, indemnify and hold harmless the Purchaser Indemnified
Parties from and against and in respect of (on a Net After Tax Basis) the Losses
which any of them may incur arising out of or resulting from such Intellectual
Property Claim; provided, however, that Sellers' indemnification obligations
pursuant to this subparagraph (iii) shall be limited to such Losses that arise
out of or are attributable to actions that occurred prior to the later of (A)
the Closing or (B) any Purchaser becoming aware of such Intellectual Property
Claim (or oral allegations thereof), or within two (2) years after such later
date.
(b) The indemnification obligations pursuant to subparagraphs (ii) and
(iii) of Section 15.7(a) shall terminate on the second anniversary of the
Closing Date, except as to any written claim for indemnification pursuant to
such subparagraph for which both such claim and the related Intellectual
Property Claim are pending on such second anniversary.
(c) In the event that (i) Sellers breach any of their representations and
warranties set forth in Section 6.10 and (ii) the matter(s) giving rise to such
breach are not addressed by the provisions set forth in Section 15.7(a), Section
15.1(b) shall apply to such breach (subject to Sections 15.4, including without
limitation Section 15.4(a), and 15.5).
(d) Indemnifiable Losses for purposes of this Section 15.7 shall include
(i) fifty percent (50%) of the costs incurred by Purchasers or their Affiliates
to modify the design or manufacture of a product which is the subject of an
Intellectual Property Claim, if Purchasers and Sellers mutually agree that such
modification is preferable to litigation, and (ii) reasonable royalties paid to
third parties in connection with the disposition of an Intellectual Property
Claim (subject to the procedures set forth in Section 15.5(b)).
(e) Notwithstanding anything in this Agreement to the contrary, this
Section 15.7 shall not apply to the extent that (i) injunctive or other
equitable relief is sought or awarded in any Intellectual Property Claim
referred to in Section 15.7(a) or (ii) except as set forth in Section 15.7(d),
the Losses for which indemnification is sought arose out of or result from
modifications to any product made after the Closing. In addition, Purchasers
agree that they shall not, and shall cause their Affiliates not to, encourage
any third party to commence any lawsuit in respect of, or otherwise pursue, any
Intellectual Property Claim referred to in Section 15.7(a), and that the
indemnification obligations of Sellers set forth in this Section 15.7 shall be
inapplicable to any Intellectual Property Claim so encouraged.
(f) Notwithstanding anything in this Agreement to the contrary, the amount
of any indemnification payment to the Purchaser Indemnified Parties pursuant to
this Section 15.7 (and any amount counted towards the threshold in Section
15.4(a)(i)) shall be reduced by fifty percent (50%) of all amounts recovered by
the Purchaser Indemnified Parties with respect to (i) matters set forth in
clause (iii) of the definition of Intellectual Property Claim and (ii) any such
claim made by Purchasers or their Affiliates with respect to the Business
acquired by Purchasers, in the case of Sections 15.7(a)(ii) and (a)(iii) where
the lawsuit asserting such claim has been commenced prior to the second
anniversary of the Closing Date. Purchasers agree that they shall not, and shall
cause their Affiliates not to, delay the filing of any lawsuit referred to in
the foregoing clause (ii) for the purpose of avoiding this Section 15.7(f).
(g) The provisions of Sections 15.4 and 15.5 shall apply to the matters set
forth in this Section 15.7 (except that Section 15.4(a) shall apply only to the
matters set forth in Section 15.7(c)). Notwithstanding anything in this
Agreement to the contrary, this Section 15.7 shall be Purchasers' exclusive
remedy for any Losses with respect to intellectual property matters (other than
Excluded Liabilities), including, without limitation, any breach of the
representations and warranties set forth in Section 6.10.
15.8 Special Provisions Regarding Recalls and Service Actions.
(a) Subject to the limitations set forth below in this Section 15.8(a), in
Section 15.8(c)(iv)and in Section 15.4 (other than Section 15.4(a)), after the
Closing, Sellers and Purchasers shall be responsible for Losses arising out of
Recalls or Service Actions (each, a "Recall/Service Action") as follows:
(i) With respect to Losses arising out of any Recall/Service Action for air
bag safety restraint system products (I) that were (x) manufactured by the
Business prior to the Closing Date and (y) not in original equipment production
as of the Closing Date and (II) that are not subject to subparagraphs (iii),
(v), (vi) or (vii) below, (A) Purchasers shall be responsible for the first
$500,000 of Losses in the aggregate attributable to such Recall/Service Actions,
(B) Sellers and Purchasers shall each be responsible for fifty percent (50%) of
the next $500,000 of Losses in the aggregate attributable to such Recall/Service
Actions, and (C) with respect to any additional Losses attributable to such
Recall/Service Actions, Sellers shall be responsible for seventy-five percent
(75%) of such Losses and Purchasers shall be responsible for twenty-five percent
(25%) of such Losses.
(ii) With respect to Losses arising out of any Recall/Service Action for
seat belt safety restraint system products (I) that were (x) manufactured by the
Business prior to the Closing Date and (y) not in original equipment production
as of the Closing Date and (II) that are not subject to subparagraphs (iv), (v),
(vi) or (viii) below, (A) Purchasers shall be responsible for the first $500,000
of Losses in the aggregate attributable to such Recall/Service Actions, (B)
Sellers and Purchasers shall each be responsible for fifty percent (50%) of the
next $500,000 of Losses in the aggregate attributable to such Recall/Service
Actions, and (C) with respect to any additional Losses attributable to such
Recall/Service Actions, Sellers shall be responsible for seventy-five percent
(75%) of such Losses and Purchasers shall be responsible for twenty-five percent
(25%) of such Losses.
(iii) With respect to Losses arising out of any Recall/Service Action for
the air bag safety restraint system product matters set forth on Part C-1 of
Schedule 6.23 (other than for those matters set forth on Part C-2 of Schedule
6.23 ("Exclusive Liability Air Bag Matters")) and any other matters that should
have been disclosed on Part C-1 of Schedule 6.23 by reason of the representation
and warranty set forth in the last sentence of Section 6.23, (A) Purchasers
shall be responsible for the first $500,000 of Losses in the aggregate
attributable to such Recall/Service Actions, (B) Sellers and Purchasers shall
each be responsible for fifty percent (50%) of the next $500,000 of Losses in
the aggregate attributable to such Recall/Service Actions, and (C) with respect
to any additional Losses attributable to such Recall/Service Actions, Sellers
shall be responsible for seventy-five percent (75%) of such Losses and
Purchasers shall be responsible for twenty-five percent (25%) of such Losses.
(iv) With respect to Losses arising out of any Recall/Service Action for
the seat belt safety restraint system product matters set forth on Part C-3 of
Schedule 6.23 (other than those matters set forth on Part C-4 of Schedule 6.23
("Exclusive Liability Seat Belt Matters")) and any matters that should have been
disclosed on Part C-3 of Schedule 6.23 by reason of the representation and
warranty set forth in the last sentence of Section 6.23, (A) Purchasers shall be
responsible for the first $500,000 of Losses in the aggregate attributable to
such Recall/Service Actions, (B) Sellers and Purchasers shall each be
responsible for fifty percent (50%) of the next $500,000 of Losses in the
aggregate attributable to such Recall/Service Actions, and (C) with respect to
any additional Losses attributable to such Recall/Service Actions, Sellers shall
be responsible for seventy-five percent (75%) of such Losses and Purchasers
shall be responsible for twenty-five percent (25%) of such Losses.
(v) With respect to Losses arising out of any Recall/Service Action for the
product matter set forth on Part C-5 of Schedule 6.23, (A) Purchasers shall be
responsible for the first $20,000,000 of Losses in the aggregate attributable to
such Recall/Service Actions and (B) with respect to any additional Losses
attributable to such Recall/Service Actions, Sellers shall be responsible for
fifty percent (50%) of such Losses and Purchasers shall be responsible for fifty
percent (50%) of such Losses.
(vi) With respect to Losses arising out of any Recall/Service Action for
Exclusive Liability Air Bag Matters and Exclusive Liability Seat Belt Matters,
Sellers shall be responsible for one hundred percent (100%) of such Losses.
(vii) With respect to Losses arising out of any Recall/Service Action for
air bag safety restraint system products (x) in production as of the Closing
Date and (y) as designed as of the Closing Date (other than matters referred to
in subparagraph (iii), (v), or (vi) above) for which Purchasers have received
written notice stating the basis for such a Recall/Service Action prior to the
third anniversary of the Closing Date (and which notice Purchasers have promptly
delivered to Sellers), (A) Purchasers shall be responsible for the first
$500,000 of Losses in the aggregate attributable to such Recall/Service Actions,
(B) Sellers and Purchasers shall each be responsible for fifty percent (50%) of
the next $500,000 of Losses in the aggregate attributable to such Recall/Service
Actions, and (C) with respect to any additional Losses attributable to such
Recall/Service Actions, Sellers shall be responsible for seventy-five percent
(75%) of such Losses and Purchasers shall be responsible for twenty-five percent
(25%) of such Losses.
(viii) With respect to Losses arising out of any Recall/Service Action for
seat belt safety restraint system products (x) in production as of the Closing
Date and (y) as designed as of the Closing Date (other than matters referred to
in subparagraph (iv), (v) or (vi) above) for which Purchasers have received
written notice stating the basis for such a Recall/Service Action prior to the
third anniversary of the Closing Date (and which notice Purchasers have promptly
delivered to Sellers), (A) Purchasers shall be responsible for the first
$500,000 of Losses in the aggregate attributable to such Recall/Service Actions,
(B) Sellers and Purchasers shall each be responsible for fifty percent (50%) of
the next $500,000 of Losses in the aggregate attributable to such Recall/Service
Actions, and (C) with respect to any additional Losses attributable to such
Recall/Service Actions, Sellers shall be responsible for seventy-five percent
(75%) of such Losses and Purchasers shall be responsible for twenty-five percent
(25%) of such Losses.
(ix) With respect to (x) Losses arising out of any Recall/Service Action
for air bag safety restraint system products or seat belt safety restraint
system products, in each case in production as of the Closing Date and as
designed as of the Closing Date, for which Purchasers have not received written
notice stating the basis for such a Recall/Service Action prior to the third
anniversary of the Closing Date (or which notice was received but was not
promptly delivered to Sellers as provided in subparagraph (vii) or (viii) above)
or (y) Losses arising out of any Recall/Service Actions not specifically covered
by the other provisions of this Section 15.8(a), Purchasers shall be responsible
for one hundred percent (100%) of such Losses.
Notwithstanding the foregoing, Sellers shall have no responsibility of any
kind under this Section 15.8 or otherwise for Losses to the extent that such
Losses arise out of (x) a design defect arising (whether due to a new design,
design change or otherwise) after the Closing or (y) a defect in the manufacture
or assembly of a product (not attributable to a design defect that existed as of
the Closing) in a product manufactured or assembled after the Closing by the
Business acquired by Purchasers hereunder. Notwithstanding the foregoing,
Purchasers' liability pursuant to clause (C) of Sections 15.8(a)(i), (ii),
(iii), (iv), (vii) and (viii), in the aggregate, shall not exceed $10,000,000.
(b) If the Closing occurs, (i) Sellers shall, jointly and severally,
indemnify and hold harmless the Purchaser Indemnified Parties from and against
(on a Net After Tax Basis) the Losses for which Sellers are responsible pursuant
to Section 15.8(a) and (ii) Purchasers shall, jointly and severally, indemnify
and hold harmless the Seller Indemnified Parties from and against (on a Net
After Tax Basis) the Losses for which Purchasers are responsible pursuant to
Section 15.8(a).
(c) The provisions of Section 15.4 (other than Section 15.4(a)) shall apply
to the matters set forth in this Section 15.8. Notwithstanding anything to the
contrary contained in Section 15.5, the procedures set forth below shall be
applicable to any claim for indemnification made pursuant to Section 15.8(b).
(i) Any party making a claim for indemnification under Section 15.8(b)
shall notify the indemnifying party of the claim in writing promptly after
receiving written notice of any Recall/Service Action or proposed Recall/Service
Action or otherwise discovering any liability, obligation or facts which may
give rise to such claim for indemnification, describing the claim, the amount
thereof (if known and quantifiable), and the basis thereof, or such liability,
obligation or facts, provided that the failure to so notify an indemnifying
party shall not relieve the indemnifying party of its obligations hereunder
except to the extent such failure shall have actually and materially prejudiced
the indemnifying party.
(ii) Purchasers shall at all times negotiate in good faith with the
Person(s) instituting a Recall/Service Action and shall institute a
Recall/Service Action only in good faith.
(iii) Subject to subparagraph (ii) above, Purchasers shall have the
authority to defend, negotiate, compromise and settle, in each case subject to
Sellers' reasonable consent, claims made by, or other disputes with, customers
but only to the extent such claim or dispute is directly related to a
Recall/Service Action involving such customer for which Losses could be subject
to indemnification under this Section 15.8. Sellers shall have the right to
participate in all discussions regarding any such defense, negotiation,
compromise or settlement. In any event, Purchasers shall, at Sellers' reasonable
request, meet with Sellers and/or their representatives from time to time to
discuss any Recall/Service Action and matters related thereto and provide to
Sellers all information relating thereto reasonably requested by Sellers.
(iv) The parties shall at all times cooperate, at their own expense, in all
reasonable ways with, make its relevant files and records available for
inspection and copying by, and make their employees available or otherwise
render reasonable assistance to, the other parties in connection with any
Recall/Service Action. Purchasers shall cooperate with Sellers in connection
with any testing, analyses and other support services performed in connection
with or in relation to any actual or proposed Recall/Service Action pursuant to
which either party may seek indemnification under this Section 15.8. Purchasers
shall be responsible for and shall pay the initial $100,000 of actual
out-of-pocket costs (without any profit margin included therein) of such
services with respect to each such Recall/Service Action and thereafter Sellers
shall reimburse Purchasers for, or shall pay Purchasers', actual out-of-pocket
costs (without any profit margin included therein) in excess of such initial
$100,000. Such costs shall not be included in any Losses arising out of
Recall/Service Actions for purposes of Sections 15.4(a)(i) and 15.8(a) and (b).
(v) If any Recall/Service Action is remedied by the provision of substitute
products manufactured or sold by Purchasers after the Closing Date and Losses
arising out of such Recall/Service Action are subject to indemnification
pursuant to this Section 15.8 (or counted towards any threshold pursuant to this
Section 15.8 and/or Section 15.4(a)(i)), then the amount of such Losses shall be
computed based on Purchasers' standard manufacturing costs for such substitute
products (without any profit margin included therein).
(vi) Purchasers shall disclose to Sellers any benefit received from a
customer in connection with any Recall/Service Action and if any Losses arising
out of such Recall/Service Action are subject to indemnification pursuant to
this Section 15.8 (or counted towards any threshold pursuant to this Section
15.8 and/or Section 15.4(a)(i)), the amount of such Losses shall be reduced by
the amount of such benefit.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 15.8 shall be Purchasers' exclusive remedy for any Losses arising out of
Recalls and Service Actions (other than Excluded Liabilities), including,
without limitation, any breach of the representations and warranties set forth
in Section 6.23.
15.9 Exclusive Remedy.
(a) The sole and exclusive remedy of Purchasers for (i) any breach of any
representation or warranty made by Sellers, (ii) any breach, nonfulfillment or
nonperformance of any covenant or agreement to be performed, complied with or
fulfilled by Sellers under this Agreement and the Ancillary Agreements (other
than the Commercial Agreements) or (iii) any Losses referred to in Section 15.1,
15.6, 15.7 or 15.8 hereof, shall be the remedies therefore expressly provided in
this Article 15 (or Section 11.2 or 16.2, as applicable) and Sellers shall have
no other obligations with respect thereto.
(b) If Sellers breach the covenant in Section 14.1 or 14.7, Sellers
acknowledge such violation or breach will cause irreparable injury to
Purchasers, the amount of which will be impossible to estimate or determine and
which cannot be adequately compensated. Accordingly, if Sellers breach the
covenant in Section 14.1 or 14.7, Purchasers shall be entitled to specific
performance, temporary and permanent injunctive relief or such other equitable
remedies as may be available from any court of competent jurisdiction without
the necessity of proving actual damage.
16. MISCELLANEOUS.
16.1 Expenses. Except as otherwise provided herein, whether or not the
transactions contemplated hereby are consummated, all costs, expenses and
disbursements incurred by Sellers and Purchasers in connection with this
Agreement and the transactions contemplated hereby shall be borne by them,
respectively, and shall not be transferred to the other by reason of the
transfer of the Business or the Transferred Entities.
16.2 Bulk Sales. Purchasers hereby waive compliance with any applicable
bulk sales law; provided, however, that AlliedSignal and each other Seller
hereby agrees jointly and severally to indemnify Purchasers against, and to hold
Purchasers harmless from, at all times after the Closing Date, any and all loss,
damage or liability, and all expenses (including reasonable legal fees) incurred
or arising out of the failure to comply with such bulk sales laws.
16.3 Assignability. This Agreement shall not be assignable by any party
without the express written consent of AlliedSignal, in the case of a proposed
assignment by any Purchaser, or Breed, in the case of a proposed assignment by
any Seller; provided, that any Seller, other than AlliedSignal, may assign this
Agreement to a Subsidiary wholly owned, directly or indirectly, by AlliedSignal
and any Purchaser, other than Breed, may assign this Agreement to a Subsidiary
wholly owned, directly or indirectly, by Breed, in any case so long as the
assignor guarantees, by instrument in form and substance reasonably satisfactory
to the other party, the obligations of the assignee under this Agreement.
16.4 Binding Effect. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the successors and permitted assigns of the
parties hereto.
16.5 Notices. All notices or other communications required or permitted to
be given hereunder shall be (as elected by the party giving such notice)
(i) personally delivered against receipt to the party to whom it is to be given
with copies to all others listed, (ii) transmitted by telecopy,
(iii) transmitted by postage prepaid certified mail, return receipt requested,
or (iv) delivered from a point in the United States by a recognized overnight
courier service as follows:
(a) If to Sellers:
Chairman and Chief Executive Officer
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Telecopy: (201) 455-4002
with a copy to:
Senior Vice President and General Counsel
AlliedSignal Inc.
101 Columbia Road
Morristown, New Jersey 07962
Telecopy: (201) 455-4217
(b) If to Purchasers:
President and Chief Operating Officer
Breed Technologies, Inc.
5300 Old Tampa Highway
Lakeland, Florida 33807-3050
Telecopy: (941) 668-6016
with a copy to:
General Counsel
Breed Technologies, Inc.
5300 Old Tampa Highway
Lakeland, Florida 33807-3050
Telecopy: (941) 668-6039
All notices and other communications shall be deemed to have been duly
given on (A) the date of receipt if delivered personally or by telecopy (with
issuance by the transmitting machine of confirmation of successful
transmission), (B) the day of delivery as indicated on the return receipt if
delivered by mail, or (C) one (1) Business Day after the date of delivery in the
US to the overnight courier if sent by overnight courier. Any party hereto may
change its address for purposes hereof by notice to all other parties.
16.6 Counterparts. This Agreement may be executed simultaneously in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute and be the same instrument.
16.7 Attachments and Schedules. All Attachments and Schedules attached
hereto are incorporated herein and expressly made a part of this Agreement as
though completely set forth herein. All references to this Agreement herein or
in any of the Attachments or Schedules shall be deemed to refer to this entire
Agreement, including all Attachments and Schedules. Any item or matter required
to be disclosed on a particular Schedule pursuant to this Agreement shall be
deemed to have been disclosed if information for such item or matter complying
with such disclosure requirements is set forth on Schedules 3.2(b), 8.6 or 16.10
or the other Schedules referred to in Articles 5 and 6 under this Agreement
where it would be reasonably expected that it would appear. Neither the
specification of any dollar amount in the representations and warranties set
forth in Article 6 or elsewhere herein nor the indemnification provisions of
Article 15 nor the inclusion of any Schedule shall be deemed to constitute an
admission by Sellers, or otherwise imply, that any such amounts or the items so
included are material for purposes of this Agreement or are required to be
listed on the relevant schedule.
16.8 Governing Law. This Agreement shall in all respects be interpreted,
construed, and governed by and in accordance with the laws of the State of New
York, disregarding any conflict of laws provisions which may require the
application of the law of another jurisdiction.
16.9 Arbitration. In the event of any dispute between Purchasers and
Sellers with respect to the matters set forth in this Agreement (other than as
provided in Section 3.2 with respect to the Final Investment or with respect to
Sections 14.1 and 14.7), the parties shall first use their reasonable efforts to
resolve such dispute among themselves. If the parties are unable to resolve the
dispute within thirty (30) calendar days of the initiation of such procedure,
the dispute shall be settled by arbitration as hereinafter provided which shall
be the sole and exclusive procedure for the resolution of any such dispute.
Within ten (10) calendar days after receipt of written notice from one party
that it is submitting the matter to arbitration, each party shall designate in
writing one arbitrator to resolve the dispute who shall, in turn, jointly select
a third arbitrator within twenty (20) calendar days of their designation, with
the third arbitrator to be selected in accordance with the procedure established
by the American Arbitration Association. The arbitrators so designated shall
each be a lawyer experienced in commercial and business affairs who is not an
employee, consultant, officer or director of any party hereto or any affiliate
of any party to this Agreement and who has not received any compensation,
directly or indirectly, from any party hereto or any affiliate of any party to
this Agreement during the two (2) year period preceding the Closing Date. The
arbitration shall be governed by the rules of the American Arbitration
Association; provided, that the arbitrators shall have sole discretion with
regard to the admissibility of evidence. The arbitrators shall use their best
efforts to rule on each disputed issue within thirty (30) calendar days after
the completion of the hearings. The determination of the arbitrators as to the
resolution of any dispute shall be binding and conclusive upon all parties
hereto. All rulings of the arbitrators shall be in writing, with the reasons for
the ruling given, and shall be delivered to the parties hereto. Each party shall
pay the fees of its respective designated arbitrator and its own costs and
expenses of the arbitration. The fees of the third arbitrator shall be paid
fifty percent (50%) by each of the parties. Any arbitration pursuant to this
Section 16.9 shall be conducted in New York, New York. Any arbitration award may
be entered in and enforced by any court having jurisdiction thereof and the
parties hereby consent and commit themselves to the jurisdiction of the courts
of any competent jurisdiction for purposes of the enforcement of any arbitration
award.
16.10 Definitions. For purposes of this Agreement:
"ABO" shall have the meaning specified in Section 5.2.2(b).
"Accounts" shall have the meaning specified in Section 5.2.3.
"Accounts Receivable" shall have the meaning specified in Section 2.1(i).
"Adjusted Purchase Price" shall have the meaning specified in
Section 3.2(a).
"Affected Property" shall have the meaning specified in Section 15.6(b).
"Affiliate" shall mean, as to any specified Person, any other Person,
which, directly or indirectly, controls, is controlled by or is under common
control with, such specified Person. For purposes of this definition, (i)
"control" means the possession of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise and (ii) the Joint Venture Entities
shall not be considered "Affiliates" of Sellers.
"Agreement" shall have the meaning specified in the Preamble.
"AlliedSignal" shall have the meaning specified in the Preamble.
"Ancillary Agreements" shall mean each other agreement and instrument to be
executed and delivered by any Seller or Purchaser pursuant to this Agreement.
"Approval" shall mean any Consent of, or filing required to be made with,
any Governmental Authority.
"Assets" shall have the meaning specified in Section 2.1.
"Assumed Liabilities" shall have the meaning specified in Section 4.1
"BAICO" shall mean Bendix Atlantic Inflator Company.
"BAICO Agreement" shall have the meaning specified in Section 8.13.
"Bargaining Agreements" shall have the meaning specified in
Section 5.2.1(a).
"Benefit Plans" shall have the meaning specified in Section 6.15(c).
"Breed" shall have the meaning specified in the Preamble.
"Business" shall have the meaning specified in Recital A.
"Business Day" or "business day" shall mean a day other than a Saturday,
Sunday or other day on which banks in New York, New York are required to or may
be closed.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act as of 1980, as amended.
"CIF" shall have the meaning specified in Section 5.3.3.
"Closing" shall have the meaning specified in Section 1.1.
"Closing Date" shall have the meaning specified in Section 1.1.
"Closing Statement of Net Assets" shall have the meaning specified in
Section 3.2(b).
"CMA Assignment" shall have the meaning specified in Section 12(v).
"CMA" shall have the meaning specified in Section 14.12.
"COBRA" shall have the meaning specified in Section 5.2.9.
"Code" shall mean the US Internal Revenue Code of 1986, as amended.
"Commercial Agreements" means, collectively, the Services Agreement, the
sublease executed pursuant to Section 14.11, the Trademark License, the
Manufacturing Agreement (if applicable), the BAICO Agreement and the other
agreements referred to in Section 8.13 and the agreements described in Sections
12(r), 12(s) and 12(t).
"Competitive Activities" shall have the meaning specified in Section 14.1.
"Confidentiality Agreement" shall have the meaning specified in
Section 16.13.
"Confidential Information" shall have the meaning specified in
Section 14.7.
"Consent" shall mean any action, approval, consent or authorization.
"Contracts" shall have the meaning specified in Section 2.1(e).
"Contract Assignments" shall have the meaning specified in Section 12(g).
"Covered Loss" shall have the meaning specified in Section 15.4(a).
"Deadline" shall have the meaning specified in Section 11.1(b).
"Deeds" shall have the meaning specified in Section 12(b).
"DOJ" shall mean the US Department of Justice.
"E.E.O.C." shall mean the US Equal Opportunity Employment Commission.
"Employees" shall have the meaning specified in Section 5.1.
"Encumbrance" shall mean, with respect to any Real Property, a mortgage,
security interest, lien, lease, sublease, license, covenant, restriction,
easement, right of way or other encumbrance (but shall not include any zoning,
environmental or other limitations of general applicability by any Governmental
Authority).
"Enforceability Exceptions" shall have the meaning specified in
Section 6.2.
"Environmental Claims" shall mean, as to the Assets or the Business, any
third party or governmental written claim, demand, judgment, proceeding or order
giving rise to liability under Environmental Law.
"Environmental Law" shall mean any federal, state or local statute,
regulation, ordinance or common law theory as in effect prior to or at the
Closing relating to the protection of the environment, protection of the health
and safety of employees and other workers and protection of or compensation to
individuals from or related to exposures to Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. sec. 9601 et. seq.), the Hazardous Materials
Transportation Act (49 U.S.C. App. sec. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. sec. 6901 et seq.), the Clean Water Act (33 U.S.C.
sec. 1251 et seq.), the Clean Air Act (42 U.S.C. sec. 7401 et seq.), the Toxic
Substance Control Act (15 U.S.C. sec. 2601 et seq.), and the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. sec. 136 et seq.), or any
Law having similar effect in any jurisdiction other than the US.
"Environmental Losses" shall have the meaning specified in Section 15.6(b).
"Environmental Requirements" shall have the meaning specified in Section
6.12.
"Equity Interest" shall have the meaning specified in Section 6.3.2.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"European Business" shall mean that part of the Business conducted in the
European Economic Area.
"European Employee Benefit Plans" shall have the meaning specified in
Section 5.3.2.
"European Employees" shall have the meaning specified in Section 5.3.1.
"European Former Employees" shall have the meaning specified in Section
5.3.1.
"European Remuneration" shall have the meaning specified in Section 5.3.2.
"European Retained Employees" shall have the meaning specified in Section
5.3.2(g).
"Excluded Assets" shall have the meaning specified in Section 2.2.
"Excluded Businesses" shall have the meaning specified in Recital A.
"Excluded Liabilities" shall have the meaning specified in Section 4.2.
"Excluded Loss" shall have the meaning specified in Section 15.4(a).
"Exclusive Liability Air Bag Matters" shall have the meaning specified in
Section 15.8(a)(iii).
"Exclusive Liability Seat Belt Matters" shall have the meaning specified in
Section 15.8(a)(iv).
"Final Allocation" shall have the meaning specified in Section 3.3.
"Final Investment" shall have the meaning specified in Section 3.2(a).
"Firm" shall have the meaning specified in Section 3.2(c).
"Foreign Country Offsets" shall have the meaning specified in Section 14.8.
"Foreign Transfer Agreements" shall have the meaning specified in
Section 12(k).
"Former Employees" shall have the meaning specified in Section 5.1.
"French Employees" shall have the meaning specified in Section 5.3.4.
"French Former Employees" shall have the meaning specified in
Section 5.3.4.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in the United
States as in effect from time to time consistently applied.
"German Employees" shall have the meaning specified in Section 5.3.5.
"German Former Employees" shall have the meaning specified in Section
5.3.5.
"Governmental Authority" shall mean any foreign, Federal, State, county,
city or other governmental authority, agency or instrumentality.
"Guaranty Agreement" shall have the meaning specified in Section 8.6.
"Hazardous Material" means any substance, material or waste which is
regulated by the US, or any state or local government authority or any national,
provincial or local governmental authority other than the US, which substance,
material or waste includes, without limitation, petroleum and its by-products,
friable asbestos, and any material or substance which is defined as a "hazardous
waste," "hazardous substance," "hazardous material," "restricted hazardous
waste," "industrial waste," "solid waste," "contaminant," "pollutant," "toxic
waste" or "toxic substance" under any provision of Environmental Law.
"Hourly Employees" shall have the meaning specified in Section 5.2.1(a).
"H-S-R Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Income Statement" shall have the meaning specified in Section 6.6.
"Indemnitee" shall have the meaning specified in Section 15.5(a).
"Indemnitor" shall have the meaning specified in Section 15.5(a).
"Industrial Revenue Bonds" shall have the meaning specified in Section
14.11.
"Initial Investment" shall have the meaning specified in Section 3.2(a).
"Initial Purchase Price" shall have the meaning specified in
Section 3.1(a).
"Insurance Program" shall have the meaning specified in Section 14.13(b).
"Intellectual Property" shall mean all intellectual property relating
primarily to the Business (except as set forth in Section 2.2(b)), including (i)
patents and patent applications, trademarks, tradenames, service marks and
applications therefor, copyrights, copyright registrations and applications
therefor, if any, including, but not limited to, such items set forth on
Schedule 6.10(a), (ii) processes, formulas, computer software and other
electronic media, engineering designs, trade secrets, know-how, inventions and
discoveries, whether patented, patentable or not including without limitation,
those in development, and design, manufacturing, engineering and other technical
information used primarily in the Business as it is being conducted as of the
date of this Agreement, (iii) Sellers' and the Transferred Entities' ownership
interests in intellectual property developed pursuant to any intercompany cost
sharing arrangements in Europe, under which ownership rights relating to the
foregoing clauses (i) and (ii) were acquired by Sellers and the Transferred
Entities, (iv) Sellers' and the Transferred Entities' rights under all licenses,
agreements or other documents, if any, under which rights relating to the
foregoing clauses (i) and (ii) were granted to the Sellers and the Transferred
Entities by a third party, or to a third party by the Sellers and the
Transferred Entities, including but not limited to those items listed in Part A
of Schedule 16.10, (v) the goodwill associated with the trademarks, tradenames,
and service marks which have been used primarily by Sellers in connection with
the Business, (vi) tangible documentation of property and rights referred in
clauses (i)-(v) to the extent relating primarily to the Business; and (vii) all
rights as Sellers and the Transferred Entities may have to sue for infringement
of or interference with property and rights referred in clauses (i)-(v) of this
definition.
"Intellectual Property Assignments" shall have the meaning specified in
Section 12(e).
"Intellectual Property Claim" shall have the meaning specified in Section
6.10(c).
"Intercompany Trade Account" shall have the meaning specified in
Section 14.9.
"Interests" shall have the meaning specified in Section 2.3(a).
"Inventory" shall have the meaning specified in Section 2.1(b).
"IRS" shall mean the Internal Revenue Service.
"Joint Period" shall have the meaning specified in Section 14.2(b)(v).
"Joint Venture Agreements" shall mean all contracts and agreements creating
or governing the Transferred Joint Venture Interests.
"Joint Venture Assignments" shall have the meaning specified in
Section 12(h).
"Joint Venture Entities" shall have the meaning specified in Recital A.
"Joint Venture Interests" shall have the meaning specified in Recital A.
"Knowledge of Sellers", "Sellers' Knowledge" or variants thereof when used
to qualify any representation or warranty of Sellers contained in this Agreement
or any other document or instrument furnished to Purchasers by Sellers pursuant
to this Agreement refers (a) to the actual knowledge, after due inquiry, as of
the date of this Agreement of the persons employed by Sellers whose names are
set forth on Schedule 6.29 and (b) to knowledge that reasonably prudent
executives in comparable positions to those set forth on Schedule 6.29 would
reasonably be expected to have, after due inquiry.
"Laws" shall have the meaning specified in Section 6.14.
"Level A Losses" shall have the meaning specified in Section 15.6(c).
"Level B Losses" shall have the meaning specified in Section 15.6(c).
"Level C Losses" shall have the meaning specified in Section 15.6(c).
"Level D Losses" shall have the meaning specified in Section 15.6(c).
"Level 1 Losses" shall have the meaning specified in Section 15.4(a).
"Level 2 Losses" shall have the meaning specified in Section 15.4(a).
"Level 3 Losses" shall have the meaning specified in Section 15.4(a).
"Level 4 Losses" shall have the meaning specified in Section 15.4(a).
"Liabilities" shall have the meaning specified in Section 4.1.
"LIBOR" shall mean the rate for three month US dollar deposits which
appears on the Bloomberg Page BBAM as of 11:00 a.m., London time, on the day
that is one Business Day preceding the Closing Date. If such rate does not so
appear on the Bloomberg Page BBAM, "LIBOR" shall mean the average of the rates
at which three month US dollar deposits are offered by Morgan Guaranty Trust of
New York and Bankers Trust Company to first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) one Business Day preceding the
payment date.
"License Assignments" shall have the meaning specified in Section 12(f).
"Loss" and "Losses" shall have the meaning specified in Section 15.1.
"Manufacturing Agreement" shall have the meaning specified in Section 8.12.
"Material Adverse Effect" shall mean a material adverse effect on the
business, financial condition or results of operations of the Business taken as
a whole, except for (a) changes resulting from general economic, financial or
market conditions, and (b) changes resulting from changes generally applicable
to the automotive occupant restraint business or the automotive business ,which,
in the case of the foregoing clauses (a) and (b), are beyond Seller's control in
any respect.
"Material Adverse Impact" shall mean a matter or thing that prevents or
materially impairs the use or occupancy of a Real Property or the real property
demised under a Real Property Lease for the same use or occupancy as Sellers or
Transferred Entities are using or occupying same on the date hereof or which
materially increases the expenses of operating said Real Property or real
property by Sellers or the Transferred Entities on the date hereof.
"Merger Approvals" shall have the meaning specified in Section 6.5.
"National Laws" shall have the meaning specified in Section 5.3.2.
"N.L.R.B." shall mean the National Labor Relations Board.
"Net After Tax Basis" shall have the meaning specified in Section 15.1.
"NOL" shall have the meaning specified in Section 14.2(b)(ii).
"Notice of Claim" shall have the meaning specified in Section 15.5(a).
"OEM" shall have the meaning specified in Section 6.9.
"O.F.C.C.P." shall mean Office of Federal Contract Compliance Program.
"Other Employees" shall have the meaning specified in Section 5.4(a).
"Permit" shall mean any approval, permit, license or other authorization
issued by any Governmental Authority.
"Permitted Changes" shall have the meaning specified in Section 8.1.
"Permitted Liens" shall mean (i) liens for current property taxes and
assessments or other government charges or levies not yet in default or the
validity of which is being contested in good faith by appropriate proceedings,
(ii) liens of mechanics, materialmen, laborers, warehousemen, carriers and other
similar common law or statutory liens arising in the ordinary course of
business, (iii) liens arising out of pledges or deposits under workers'
compensation, unemployment insurance, old age laws, or to secure the performance
of bids, tenders or contracts or to secure statutory obligations of surety or
appeal bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business, (iv) liens and encumbrances existing on the date
hereof which are set forth on Part B of Schedule 16.10, (v) zoning, entitlement
and other land use and environmental regulations by governmental agencies,
(vi) any other liens or encumbrances which do not materially detract from the
value or materially interfere with the present use of the relevant asset or
property, (vii) liens reflecting capitalized leases from the Person financing a
purchase of equipment so long as the lien is limited to the specific equipment
so acquired, and (viii) with respect to Real Property and Real Property Leases,
leases, subleases and occupancy agreements to Persons occupying less than 25,000
square feet pursuant to arrangements on market terms when made that can be
terminated on ninety (90) or fewer days notice or that expire within one (1)
year of the Closing Date, or which otherwise have been disclosed in this
Agreement or a Schedule annexed hereto.
"Person" shall mean any individual, corporation, partnership (general,
limited or limited liability), limited liability company, joint venture,
association, trust, or other entity or organization.
"Personal Property" shall have the meaning specified in Section 2.1(c).
"POB" shall have the meaning specified in Section 5.2.2(b)(2).
"Preliminary Purchase Price" shall have the meaning specified in
Section 3.3.
"Purchaser Indemnified Parties" shall have the meaning specified in Section
15.1.
"Purchasers" shall have the meaning specified in the Preamble.
"Purchasers' UK Plan" shall have the meaning specified in Section 5.3.3.
"Purchasers' Pension Plans" shall have the meaning specified in Section
5.2.2.
"Purchasers' Savings Plans" shall have the meaning specified in Section
5.2.3.
"Real Property" shall have the meaning specified in Section 2.1(a).
"Real Property Assignments" shall have the meaning specified in
Section 12(c).
"Real Property Lease Assignments" shall have the meaning specified in
Section 12(n).
"Real Property Leases" shall have the meaning specified in Section 2.1(n).
"Recall" shall have the meaning specified in Section 6.23.
"Recall/Service Actions" shall have the meaning specified in Section
15.8(a).
"Remedial Work" shall have the meaning specified in Section 15.6(d).
"Retained Cash Balances" shall mean all cash, cash equivalents and
short-term investments of the Transferred Entities immediately following the
Closing.
"Retained Interest" shall have the meaning specified in Section 2.3(a).
"Salaried Employees" shall have the meaning specified in
Section 5.2.1(b)(1).
"Section 12(t) Agreement Management Employees" shall have the meaning
specified in Section 5.3.2(g).
"Security Interest" shall have the meaning specified in Section 6.4.
"Seller Indemnified Parties" shall have the meaning specified in Section
15.2.
"Sellers" shall have the meaning specified in the Preamble.
"Sellers' Pension Plans" shall have the meaning specified in
Section 5.2.2(a).
"Sellers' Savings Plans" shall have the meaning specified in Section 5.2.3.
"Service Action" shall have the meaning as specified in Section 6.23.
"Services Agreement" shall have the meaning specified in Section 12(i).
"Specified Accounting Principles" shall have the meaning specified in
Section 3.2(b).
"Statement of Net Assets" shall have the meaning specified in Section 6.6.
"Subsidiary" shall mean, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned by such Person.
"Tax" or "Taxes" shall mean all taxes, assessments or other governmental
charges (including, without limitation, excise taxes, sales taxes, value added
taxes, taxes withheld from employees' salaries and other withholding taxes and
obligations and all deposits required to be made with respect thereto), levies,
assessments, deficiencies, imports, duties, licenses and registration fees and
charges of any nature whatsoever, including any interest and penalties thereon
or additions thereto, imposed by any government or taxing authority which are
levied upon the property, assets, income or franchises of Sellers or the
Transferred Entities by virtue of the operations of the Business or the
ownership or lease of the Assets.
"Tax Return" shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" shall have the meaning specified in Section 15.5(b).
"Trademark License" shall have the meaning specified in Section 12(j).
"Transfer Amount" shall have the meaning specified in Section 5.2.2(b).
"Transfer Regulations" shall have the meaning specified in Section 5.3.2.
"Transfer Taxes" shall have the meaning specified in Section 14.2(c).
"Transferred Entities" shall have the meaning specified in Recital B.
"Transferred Joint Venture Entities" shall meant the Joint Venture Entities
listed as items 1, 2 and 4 on Attachment B.
"Transferred Joint Venture Interests" shall have the meaning specified in
Section 2.1(l).
"Transferred Entity Employees" shall have the meaning specified in Section
5.4(a).
"UK" shall mean the United Kingdom.
"UK Employees" shall have the meaning specified in Section 5.3.3.
"UK Former Employees" shall have the meaning specified in Section 5.3.3.
"UK Replacement Plan" shall have the meaning specified in Section 5.3.3.
"UK Retained Employee" shall have the meaning specified in Section 5.3.3.
"UK Transferable Assets" shall have the meaning specified in Section 12(d).
"US" shall mean the United States of America.
"US Retained Employees" shall have the meaning specified in
Section 5.2.1(c).
"VAT" shall have the meaning specified in Section 14.2(c)(ii).
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act.
"Welfare Plan Costs" shall have the meaning specified in Section 5.2.4(a).
16.11 Headings. The headings and subheadings of this Agreement are inserted
for convenience of reference only and shall not affect the interpretation of
this Agreement.
16.12 Amendment. This Agreement may be amended only in a writing signed by
all parties hereto.
16.13 Entire Agreement. This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede all previous agreements, understandings or
discussions with respect to the subject matter hereof, except for that certain
Confidentiality Agreement made on or about July 25, 1996 between Breed and
AlliedSignal (the "Confidentiality Agreement") and which shall be binding on the
parties to this Agreement until and shall expire at the Closing. Except as set
forth in the preceding sentence, any and all prior arrangements,
representations, promises, understandings and conditions in connection with said
subject matter and any representations, promises or conditions not expressly
incorporated herein or expressly made a part hereof shall not be binding upon
any party hereto.
16.14 Waivers. Any waiver of rights hereunder must be set forth in writing
signed by the party against whom the waiver is to be effective. A waiver of any
breach or failure to enforce any of the terms or conditions of this Agreement
shall not in any way affect, limit or waive any party's rights at any time to
enforce strict compliance thereafter with every term or condition of this
Agreement for any other breach or failure to comply with the terms and
conditions of this Agreement.
16.15 Third Party Rights. Except as otherwise provided in Article 15 hereof
with respect to the indemnification obligations for the benefit of directors,
officers, employees, agents, consultants, representatives and Affiliates, the
provisions of this Agreement are for the sole benefit of Purchasers and Sellers
and shall not inure to the benefit of any other Person (other than permitted
assigns of the parties hereto) either as a third party beneficiary or otherwise,
including, without limitation, with respect to rights of subrogation in favor of
title insurance companies.
16.16 Severability. If and to the extent that any court of competent
jurisdiction holds any provisions (or any part thereof) of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
16.17 No Rights of Set Off. Purchasers waive and relinquish any and all
rights to set off or to apply any monies held or indebtedness or other
obligations now or hereafter owing by Purchasers to Sellers or any of its
affiliates against any obligations of Sellers or any of its Affiliates now or
hereafter existing under this Agreement or any other agreement, instrument,
certificate or similar document required to be delivered pursuant to this
Agreement.
16.18 Agency. All Sellers other than AlliedSignal hereby appoint
AlliedSignal as their agent, and all Purchasers other than Breed hereby appoint
Breed as their agent, for all purposes under this Agreement, including the
giving of notices and the conduct of any dispute resolution.
16.19 Consent to Jurisdiction. Each Purchaser and each Seller hereby
submits to the non-exclusive jurisdiction of the courts of general jurisdiction
of the State of New York and the District of Columbia and the federal courts of
the US, located in the City of New York, the Northern District of Virginia and
the District of Columbia, solely in respect of the interpretation and
enforcement of the provisions of this Agreement and any other agreement,
instrument or other document entered into in connection herewith and hereby
waives, and agrees not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement of this Agreement or any such other
agreement, instrument or other document, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
such courts or that this Agreement or any such other agreement, instrument or
other document may not be enforced in or by such courts or that its property is
exempt or immune from execution, that the suit, action or proceeding is brought
in an inconvenient forum, or that the venue of the suit, action or proceeding is
improper. Service of process with respect thereto may be made upon any Purchaser
or Seller by mailing a copy thereof by registered or certified mail, postage
prepaid, to such party at its address as provided in Section 16.5 hereof,
provided that service of process may be accomplished in any other manner
permitted by applicable Law.
16.20 Foreign Transfer Agreements. The parties agree that, in the event of
any conflict or inconsistency between the terms of this Agreement and any
Foreign Transfer Agreement, the terms of this Agreement shall govern.
16.21 Agreement by Parents. On the date hereof each of AlliedSignal and
Breed are executing and delivering this Agreement. Prior to the Closing Date,
AlliedSignal shall cause each other Seller to execute and deliver to Breed, and
Breed shall deliver to AlliedSignal in writing the names of each other Purchaser
and shall cause each such other Purchaser to execute and deliver to
AlliedSignal, a counterpart of this Agreement pursuant to Section 16.6 hereof.
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Agreement on the date first
written above.
BREED TECHNOLOGIES, INC. ALLIEDSIGNAL INC.
By:/s/Charles J. Speranzella, Jr. By:/s/John W. Barter
Name:Charles J. Speranzella, Jr. Name:John W. Barter
Title: Executive Vice President Title: Executive Vice President
ALLIEDSIGNAL TECHNOLOGIES INC.
By:/s/Jeffrey M. Lipshaw
Name:Jeffrey M. Lipshaw
Title:Authorized Agent
ALLIEDSIGNAL INTERNATIONAL FINANCE
CORPORATION
By:/s/Jeffrey M. Lipshaw
Name:Jeffrey M. Lipshaw
Title:Authorized Agent
REMTEX MFG. CO.
By:/s/Jeffrey M. Lipshaw
Name:Jeffrey M. Lipshaw
Title:Authorized Agent
ALLIEDSIGNAL de MEXICO, S.A. de C.V.
By:/s/Jeffrey M. Lipshaw
Name:Jeffrey M. Lipshaw
Title:Authorized Agent
BREED TECHNOLOGIES FRANCE EURL ALLIEDSIGNAL DEUTSCHLAND GmbH
By:/s/Stuart D. Boyd By:/s/Jeffrey M. Lipshaw
Name:Stuart D. Boyd Name:Jeffrey M. Lipshaw
Title:Authorized Agent Title:Authorized Agent
BREED AUTOMOTIVE ALLIEDSIGNAL ITALIA, S.p.A.
TECHNOLOGY, INC.
By:/s/Lizanne Guptill By:/s/Jeffrey M. Lipshaw
Name:Lizanne Guptill Name:Jeffrey M. Lipshaw
Title:Secretary Title:Authorized Agent
BREED INTERNATIONAL MANUFACTURING ALLIEDSIGNAL INC. JAPAN
DEVELOPMENT CORPORATION
By:/s/Lizanne Guptill By:/s/Jeffrey M. Lipshaw
Name:Lizanne Guptill Name:Jeffrey M. Lipshaw
Title:Secretary Title:Authorized Agent
BREED AUTOMOTIVE SAFETY ALLIEDSIGNAL KOREA LTD.
SYSTEMS, S.L.
By:/s/Stuart D. Boyd By:/s/Jeffrey M. Lipshaw
Name:Stuart D. Boyd Name:Jeffrey M. Lipshaw
Title:Authorized Agent Title:Authorized Agent
BTI MICHIGAN, INC. ALLIEDSIGNAL LTD.
By:/s/Lizanne Guptill By:/s/Jeffrey M. Lipshaw
Name:Lizanne Guptill Name:Jeffrey M. Lipshaw
Title:Secretary Title:Authorized Agent
BREED UK LIMITED ALLIEDSIGNAL EUROPE SERVICES
TECHNIQUES S.A.
By:/s/Stuart D. Boyd By:/s/Jeffrey M. Lipshaw
Name:Stuart D. Boyd Name:Jeffrey M. Lipshaw
Title:Authorized Agent Title:Authorized Agent
BREED ALABAMA, INC. ALLIEDSIGNAL SISTEMAS DE
SEGURIDAD, S.A.
By:/s/Lizanne Guptill By:/s/Jeffrey M. Lipshaw
Name:Lizanne Guptill Name:Jeffrey M. Lipshaw
Title:Secretary Title:Authorized Agent
BREED ARIZONA, INC. ALLIEDSIGNAL SISTEMI DI SICUREZZA,
S.P.A.
By:/s/Lizanne Guptill By:/s/Jeffrey M. Lipshaw
Name: Name:Jeffrey M. Lipshaw
Title: Title:Authorized Agent
BREED TENNESSEE HOLDINGS, L.P.
By:/s/Lizanne Guptill
Name:Lizanne Guptill
Title:Secretary of BTI Tennessee, Inc.
General Partner
BREED AUTOMOTIVE, L.P.
By:/s/Lizanne Guptill
Name:Lizanne Guptill
Title:Secretary of Breed Manufacturing,
of Texas, Inc. General Partner
BREED ITALIAN HOLDINGS, S.R.L.
By:/s/Stuart D. Boyd
Name:Stuart D. Boyd
Title:Authorized Agent
ATTACHMENT A
Sellers
Entity Jurisdiction
AlliedSignal Inc. Delaware
AlliedSignal Technologies Inc. Arizona
AlliedSignal International Finance Corporation Delaware
Remtex Mfg. Co. Delaware
AlliedSignal de Mexico, S.A. de C.V. Mexico
AlliedSignal Deutschland GmbH Germany
AlliedSignal Italia, S.p.A. Italy
AlliedSignal Inc. Japan Japan
AlliedSignal Korea Ltd. Korea
AlliedSignal Ltd. England
AlliedSignal Europe Services Techniques S.A. France
AlliedSignal Sistemas de Seguridad, S.A. Spain
AlliedSignal Sistemi di Sicurezza, S.p.A. Italy
Autoflug, S.p.A. Italy
Compagnia Costruzione Cinture, S.p.A. Italy
ATTACHMENT B
Joint Venture Entities
Entity Jurisdiction
1. BAG, S.p.A. Italy
2. Morton Bendix Delaware
3. Bendix Atlantic Inflator Company Delaware
4. Jaybharat - AlliedSignal Ltd. India
ATTACHMENT C
Certain Products
CB-1 Buckle
WL1 Retractor
ES1 Retractor
Mechanical Pretensioner
WL3 Retractor
AGB95 Retractor/K12 Buckle
ATTACHMENT D
Transferred Entities
Entity Jurisdiction of Incorporation
ICSRD Rueckhaltesysteme Fahrzeugsicherheit GmbH Germany
BSRD Limited United Kingdom
AlliedSignal India, Inc. Delaware
Sistemas AlliedSignal de Seguridad, S.A. de C.V. Mexico
AlliedSignal Cinturones de Seguridad, S.A. de C.V. Mexico
ATTACHMENT E
Form of Sellers' Pension Plan Opinion
ATTACHMENT F
Form of Purchasers' Pension Plan Opinion
ATTACHMENT G
Form of Sellers' Savings Plan Opinion
ATTACHMENT H
Form of Purchasers' Savings Plan Opinion
AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT ("Amendment") made as of October 3, 1997 to the Asset Purchase
Agreement ("Purchase Agreement") made as of August 27, 1997 by and between
AlliedSignal Inc., a Delaware corporation ("AlliedSignal"), Breed Technologies,
Inc., a Delaware corporation ("Breed"), and the other parties thereto.
AlliedSignal, Breed and the other parties to the Purchase Agreement desire
to amend the Purchase Agreement on the terms set forth herein. Accordingly, this
Amendment shall be deemed to be part of the Purchase Agreement and all
references in the Purchase Agreement to this Agreement(or similar terminology)
shall be deemed to refer to the Purchase Agreement after giving effect to the
amendments set forth in this Amendment. All capitalized terms used herein,
unless otherwise defined herein, are used as defined in the Purchase Agreement.
In consideration of the mutual covenants and agreements contained in the
Purchase Agreement and in this Amendment, and notwithstanding anything in the
Purchase Agreement or any Ancillary Agreement to the contrary, Sellers and
Purchasers agree as follows:
1. Closing. The Closing shall take place at 10:00 a.m. local time on
November 7, 1997 (or such earlier date as Breed and AlliedSignal may mutually
agree in writing), at the locations in New York and London, respectively, set
forth in Section 1.1 of the Purchase Agreement, and shall be effective on such
date as set forth in Section 1.2 of the Purchase Agreement; provided, however,
that, if on November 7, 1997 the condition set forth in the first sentence of
Section 9.1 or Section 10.1 (the "Injunction Condition") shall not be satisfied,
the Closing Date shall be the second business day after the date on which the
Injunction Condition is satisfied; provided, further, however, that if the
Injunction Condition has not been satisfied by December 29, 1997 the Purchase
Agreement may be terminated by either party on the basis set forth in Section
11.2 of the Purchase Agreement without giving effect to the proviso in the first
sentence thereof. All references in the Purchase Agreement to the "Closing Date"
shall be deemed to refer to the date determined in accordance with the previous
sentence.
2. Certain Conditions
(a) Article 9. Without limiting Purchasers' rights under the provision of
Article 15 of the Purchase Agreement, Purchasers hereby acknowledge and agree
that (i) all of the conditions to the performance of their respective
obligations at the Closing are set forth in Article 9 of the Purchase Agreement,
(ii) the conditions set forth in Sections 9.1 (subject to clause (iii)
immediately following), 9.2, 9.3, 9.4, 9.5 and 9.6 of the Purchase Agreement are
deemed to have been satisfied and to remain satisfied through and as of the
Closing (such conditions are referred to herein collectively as the "Article 9
Satisfied Conditions"), and (iii) except for the condition set forth in the
first sentence of Section 9.1 of the Purchase Agreement, Purchasers waive any
right to assert, and may not assert, either before or at the Closing, that any
Article 9 Satisfied Condition entitles Purchasers to refrain from consummating
the transactions contemplated by the Purchase Agreement on the Closing Date.
<PAGE>
(b) Article 10. Sellers hereby acknowledge and agree that (i) all of the
conditions (b) Article 10. Sellers hereby acknowledge and agree that (i) all of
the conditions to the performance of their respective obligations at the Closing
are set forth in Article 10 of the Purchase Agreement, (ii) the conditions set
forth in Sections 10.1 (subject to clause (iii) immediately following), 10.2,
10.3, 10.4 (subject to clause (x) in Section 3 below) and 10.5 of the Purchase
Agreement are deemed to have been satisfied and to remain satisfied through and
as of the Closing (such conditions are referred to herein collectively as the
"Article 10 Satisfied Conditions"), and (iii) except for the condition set forth
in the first sentence of Section 10.1 of the Purchase Agreement and except as
provided in Section 3 below, Sellers waive any right to assert, and may not
assert, either before or at the Closing, that any Article 10 Satisfied Condition
entitles Sellers to refrain from consummating the transactions contemplated by
the Purchase Agreement on the Closing Date.
(c) Sections 9.4 and 10.4. Sections 9.4 and 10.4 of the Purchase Agreement
are hereby amended by deleting the last sentence of each such Section. At the
Closing, AlliedSignal shall deliver to Breed a certificate executed by a senior
executive officer of AlliedSignal to the effect that (x) each representation and
warranty of Sellers contained in the Purchase Agreement is true and correct as
of the Closing Date on the basis set forth in the first sentence of Section 9.4
of the Purchase Agreement except to the extent set forth in such certificate,
and (y) each covenant and agreement of Sellers required by the Purchase
Agreement to be performed by them at or prior to the closing has been performed
and complied with on the basis set forth in the second sentence of such Section
9.4 except to the extent set forth in such certificate; provided, however, that
the form and substance of such certificate (including, without limitation, the
accuracy thereof and the inclusion of any such exception) or any other claim
relating to such certificate shall not entitle Purchasers (i) to refrain from
consummating the transactions contemplated by the Purchase Agreement on the
Closing Date or (ii) to assert any rights at or after the Closing other than any
applicable indemnification rights pursuant to the terms of Article 15 of the
Purchase Agreement (as amended hereby).
3. Termination. Section 11.1 of the Purchase Agreement is hereby amended to
delete Section 11.1(b) and (c) thereof and the final two sentences of such
Section 11.1. Purchasers acknowledge and agree that if, on the Closing Date
established pursuant to Section 1 above:
(i) the conditions set forth in the first sentence of Sections 9.1 and
10.1, respectively, of the Purchase Agreement have been satisfied; and
(ii) Purchasers fail to pay the Initial Purchase Price in full in
accordance with Sections 3.1 and 13 of the Purchase Agreement, then, (x) such
failure by Purchasers shall constitute a breach of Purchasers' representation
and warranty set forth in Section 7.6 of the Purchase Agreement and a failure of
the condition in Section 10.4 of the Purchase Agreement, (y) Breed shall pay to
AlliedSignal as liquidated damages for the loss of a bargain and not as a
penalty the amount of $100,000,000 in cash by wire transfer of funds by no later
than 10:00 a.m., Eastern Time, on the first business day following the Closing
Date, and (z) Sellers shall have the right, on and after the first business day
after the Closing Date, to terminate the Purchase Agreement. Purchasers and
Sellers acknowledge and agree that (i) the damages that Sellers would sustain as
a result of a breach by Breed of its obligations to consummate the transactions
<PAGE>
contemplated by the Purchase Agreement on the Closing Date (including,
without limitation, the payment in full of the Initial Purchase Price in
accordance with Sections 3.1 and 13 of the Purchase Agreement) would be very
substantial but would be difficult or impossible to measure, (ii) the amount
provided in clause (y) above is a reasonable estimate of the damages to be
sustained by Seller as a result of such breach and is intended only to
compensate for the anticipated harm likely to be suffered thereby and (iii)
Seller's sole remedy for such breach shall be the payment provided for in clause
(y) above. Upon receipt of such $100,000,000 payment by AlliedSignal,
AlliedSignal shall have no further claim against Breed for such breach, the
Purchase Agreement shall terminate and become null and void and of no further
force and effect, and none of the parties to the Purchase Agreement (nor their
respective Affiliates, directors, shareholders, officers, employees, agents,
consultants, attorney-in-fact or other representatives) shall have any liability
in respect of such termination. The obligation of Breed to make payment of
$100,000,000 to AlliedSignal pursuant to clause (y) above is absolute and
unconditional and Breed hereby waives, and agrees not to assert, any defense of
any kind in any action, suit or proceeding to enforce such payment obligation by
AlliedSignal. If Breed fails to make the payment required by clause (y) above
when due, Sellers shall have the right to pursue all rights in equity or law
arising as a result of Breed's breach of its obligation to make such payment
required by clause (y) above. This Section 3 shall survive any termination of
the Purchase Agreement.
4. Indemnification. Section 15.4 of the Purchase Agreement is hereby
amended by adding a new clause (h) thereto at the end thereof as follows:
"(h) No claim may be made by Purchasers for indemnification pursuant to
Section 15.1, 15.6, 15.7 or 15.8 to the extent that the Losses for which
Purchasers seek such indemnification (i) arise out of or result from events or
conditions that occur after 12:01 a.m. Eastern Time, September 30, 1997 (except
to the extent arising out of a breach of any covenant or agreement on the part
of a Seller in this Agreement or the Ancillary Agreements (other than the
Commercial Agreement)) and (ii) are a result of the failure of the parties
hereto to consummate the Closing on September 30, 1997 (including, without
limitation, any deterioration in, or diminution in value of, the Business or the
Assets)."
5. Closing Documents
(a) Purchasers shall execute and deliver at the Closing an Assumption
Agreement in the form of Attachment A hereto. Purchasers acknowledge and agree
that any breach of the covenant in the preceding sentence may give rise to
irreparable harm for which money damages would not be an adequate remedy and
agree that, in addition to other remedies, Sellers will be entitled to enforce
such covenant by a decree of specific performance without the necessity of
proving the inadequacy of money damages.
(b) Sellers and Purchasers shall use reasonable efforts to agree prior to
the Closing Date on the final form of all documents required to be executed and
delivered at the Closing pursuant to Articles 5, 8, 12 and 13 of the Purchase
Agreement (the "Closing Documents"), which in the case of each Exhibit to the
Purchase Agreement shall be substantially in the form of
<PAGE>
such Exhibit as of August 27, 1997. If Sellers and Purchasers agree as of
the Closing Date that a Closing Document is mutually satisfactory, such Closing
Document shall be executed and delivered at the Closing as provided in the
Purchase Agreement. If Sellers and Purchasers do not agree as of the Closing
Date that a Closing Document is mutually satisfactory, such Closing Document
shall not be delivered at the Closing (it being understood and agreed that such
non- delivery shall have no effect on the obligations of the parties to
consummate the Closing), the issue of the appropriate form of the Closing
Document shall be settled by arbitration pursuant to Section 16.9 of the
Purchase Agreement as promptly as practicable after the Closing, and the Closing
Document shall be executed and delivered by the appropriate parties in the form
so determined promptly after such determination, with retroactive effect to the
Closing Date. Pending such determination with respect to any Exhibit to the
Purchase Agreement, the party or parties to whom services are to be provided
thereunder shall receive the benefits thereof (and perform any corresponding
obligations) based on the form of such Exhibit as of August 27, 1997. Neither
Sellers nor Purchasers shall have any liability, under Article 15 of the
Purchase Agreement or otherwise, to the other for the failure to agree on the
form of a Closing Document by the Closing Date.
(c) Purchasers acknowledge and agree that, notwithstanding any provision to
the contrary in the Purchase Agreement (including, without limitation, any
requirement in the Purchase Agreement for the delivery to Purchasers at the
Closing of documents in a form reasonably satisfactory to Purchasers or mutually
satisfactory to Purchasers and Sellers), Purchasers may not assert that any
failure to receive at the Closing a Closing Document in a form reasonable
satisfactory or satisfactory to Purchasers or any failure of Purchasers and
Sellers to agree on the form of a Closing Document as contemplated by Section
5(b) of this Amendment entitle Purchasers to refrain form consummating the
transactions contemplated by the Purchase Agreement on the Closing Date
(including, without limitation, the payment in full of the Initial Purchase
Price in accordance with Sections 3 and 13 of the Purchase Agreement and the
execution and delivery of the Assumption Agreement in the form of Attachment A
hereto).
6. Allocation of Purchase Price.
(a) Section 3.3(a) of the Purchase Agreement is hereby amended by deleting
the second sentence thereof and inserting in place of such sentence the
following sentence:
"Sellers and Purchasers shall use reasonable efforts to agree on such
allocations by the Closing Date; provided, however, that neither Sellers nor
Purchasers shall have any liability, under Article 15 or otherwise, to the other
for the failure to agree on such allocations."
(b) Section 3.3(b) of the Purchase Agreement is hereby amended and restated
in its entirety as follows:
"(b) Sellers and Purchasers shall use reasonable efforts to agree before
the Closing Date as to the allocation of the Initial Purchase Price to each Real
Property (and real property subject to any Real Property Lease if any transfer
tax is due in connection with the assignment of such lease), and such allocation
shall be utilized for purposes of (i) calculating all real property
<PAGE>
transfer taxes due in connection with the direct or indirect transfer of
the real property pursuant to the provisions of this Agreement and (ii)
determining the amount of title insurance to be purchased for any Real Property
for which title insurance is purchased. Neither Sellers nor Purchasers shall
have any liability, under Article 15 or otherwise, to the other for the failure
to agree on such allocation."
7. Representation. Section 6.4 of the Purchase Agreement is hereby amended
by adding the following sentence to the end thereof: "At the Closing, all open
purchase orders between BAG, S.p.A. and Sellers will be assignable to Purchasers
without the need to obtain any Consent thereunder."
8. Miscellaneous. In the event of any conflict or inconsistency between the
terms of this Amendment and the Purchase Agreement, the terms of this Amendment
shall govern. The provisions of Section 16.9 of the Purchase Agreement shall not
apply to the matters covered by this Amendment (other than as contemplated by
Section 4 and the third sentence of Section 5(b) of this Amendment).
9. Agreement by Parents. On the date hereof each of AlliedSignal and Breed
are executing and delivering this Amendment. Prior to the Closing Date,
AlliedSignal shall cause each other Seller to execute and deliver to Breed, and
Breed shall cause each other Purchaser to execute and deliver to AlliedSignal, a
counterpart of this Amendment.
IN WITNESS WHEREOF, the duly authorized officers or representative of the
parties hereto have duly executed this Amendment on the date first written
above.
BREED TECHNOLOGIES, INC. ALLIEDSIGNAL, INC.
By:/s/Charles J. Speranzella, Jr. By:/s/Peter H. Kreindler
Name: Charles J. Speranzella, Jr. Name: Peter H. Kreindler
Title: Vice Chairman Title: Sr. VP, General
Counsel & Secretary
