Exhibit 2.03
EMPLOYEE BENEFITS ALLOCATION AGREEMENT
DATED AS OF APRIL 30, 1997
BY AND BETWEEN
▇▇▇▇▇▇ INTERNATIONAL, INC.,
AN INDIANA CORPORATION
AND
NEW ▇▇▇▇▇▇ INTERNATIONAL, INC.,
AN INDIANA CORPORATION
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 General................................... 2
Section 1.02 Schedules, Etc............................ 11
Section 1.03 Certain Constructions..................... 11
ARTICLE II
EMPLOYEE BENEFITS; LABOR MATTERS
Section 2.01 New ▇▇▇▇▇▇ Free-Standing Qualified Plan... 12
Section 2.02 Company Retained Qualified Plans.......... 14
Section 2.03 Company-New ▇▇▇▇▇▇ Joint Qualified Plans.. 15
Section 2.04 Foreign Plans............................. 22
Section 2.05 Welfare Plans............................. 24
Section 2.06 Stock Option Plans........................ 26
Section 2.07 Company Incentive Plans................... 27
Section 2.08 Severance Pay............................. 29
Section 2.09 Company Restricted Trust.................. 30
Section 2.10 Company Miscellaneous Plans; Post-
Distribution Liabilities................ 31
Section 2.11 Collective Bargaining Agreements; Labor
Management Relations Act................ 31
Section 2.12 Other Balance Sheet Adjustments........... 32
Section 2.13 Preservation of Rights To Amend or
Terminate Plans......................... 32
Section 2.14 Reimbursement; Indemnification............ 33
Section 2.15 Further Transfers......................... 34
ARTICLE III
MISCELLANEOUS
Section 3.01 Complete Agreement; Construction.......... 35
Section 3.02 Guarantee of Subsidiaries' Obligations.... 35
Section 3.03 Failure of the Company and New ▇▇▇▇▇▇
To Agree on Certain Determinations...... 36
Section 3.04 Governing Law............................. 36
Section 3.05 Notices................................... 37
Section 3.06 Amendments................................ 38
Section 3.07 Successors and Assigns.................... 38
Section 3.08 Termination............................... 38
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Section 3.09 No Third Party Beneficiaries.............. 38
Section 3.10 Titles and Headings....................... 38
Section 3.11 Schedules................................. 39
Section 3.12 Legal Enforceability...................... 39
Signatures.............................................. 40
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EMPLOYEE BENEFITS ALLOCATION AGREEMENT
Employee Benefits Allocation Agreement (the "Agree-
ment"), dated as of April 30, 1997, by and between ▇▇▇▇▇▇
International, Inc., an Indiana corporation (the "Company"),
and New ▇▇▇▇▇▇ International, Inc., an Indiana corporation and
a wholly owned subsidiary of the Company ("New ▇▇▇▇▇▇").
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to enter into the
Distribution Agreement (the "Distribution Agreement") dated as
of April 30, 1997, by and between the Company and New ▇▇▇▇▇▇,
pursuant to which, among other things, the Company will dis-
tribute to holders of its common stock all the issued and out-
standing shares of common stock of New ▇▇▇▇▇▇ (the "Distribu-
tion");
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to enter into the
Combination Agreement, dated as of November 25, 1996 (the
"Combination Agreement"), by and among the Company, Autoliv AB,
a corporation organized under the laws of the Kingdom of Sweden
("Autoliv"), Autoliv, Inc., a Delaware corporation ("New
Parent"), and ASP Merger Sub Inc. a Delaware corporation
("Newco Sub") and wholly owned subsidiary of New Parent,
pursuant to which, among other things, Newco Sub will be merged
with and into the Company (the "Merger") and New Parent will
offer to acquire all of the outstanding capital stock of Auto-
liv pursuant to the Exchange Offer (as defined in the Combina-
tion Agreement, and, together with the other transactions con-
templated thereby, the "Transactions");
WHEREAS, it is intended that in connection with such
separation and distribution New ▇▇▇▇▇▇ will adopt employee ben-
efit plans and programs which are substantially identical to
those sponsored by the Company; and
WHEREAS, in connection with such separation and dis-
tribution, the Company and New ▇▇▇▇▇▇ desire to provide for the
allocation of assets and liabilities and other matters relating
to employee benefit arrangements.
NOW, THEREFORE, in consideration of the mutual agree-
ments, provisions and covenants contained in this Agreement,
the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. As used in this Agreement,
the following terms shall have the following meanings:
Accountants: Ernst & Young or any other "Big Six"
accounting firm which is New ▇▇▇▇▇▇'▇ outside auditor.
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Bonus Plan: the ▇▇▇▇▇▇ International, Inc. executive
bonus program which is comprised of the ▇▇▇▇▇▇ International,
Inc. Key Executive Annual Bonus Program, the ▇▇▇▇▇▇ Interna-
tional, Inc. Staff Executive Annual Bonus Program and the Mor-
ton International, Inc. Group Executive Annual Bonus Program.
Code: the Internal Revenue Code of 1986, as amended,
or any successor legislation.
Collective Bargaining Agreement: any collective bar-
gaining and other labor agreement to which the Company or any
of its subsidiaries is a party, including, without limitation,
those listed on Schedule A.
Commission: the Securities and Exchange Commission.
Company Business: any business or operation of the
Company and its subsidiaries which is, pursuant to the Distri-
bution Agreement, to be conducted, following the Distribution,
by the Company or any Company Subsidiary or any business or
operation which is, following the Distribution, otherwise con-
ducted by the Company or any Company Subsidiary.
Company Common Stock: the Common Stock, par value
$1.00 per share, of the Company.
Company Employee: any individual who is, following
the Distribution, intended to be employed by the Company or any
Company Subsidiary on an ongoing basis.
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Company Incentive Plan: the Bonus Plan, the Company
Option Plan or the LTIP.
Company Individual: any individual who (i) is a Com-
pany Employee as of the Cut-off Date or, following the Distri-
bution, becomes a Company Employee pursuant to Section 2.15
hereof or (ii) is, as of the Cut-off Date, an employee of or
former employee of the Company or its predecessors whose last
employment with the Company or its predecessors was with a Com-
pany Business or a Former Company Business other than anyone
who is to become a New ▇▇▇▇▇▇ Employee pursuant to Section 2.15
hereof or who was a corporate officer at the time of retirement
or (iii) is a beneficiary of any individual specified in clause
(i) or (ii).
Company Miscellaneous Plans: the Plans of the Com-
pany and its subsidiaries, including, without limitation, the
Plans listed on Schedule D, but excluding any Qualified Plan,
Welfare Plan, any of the Company Incentive Plan, any Plan which
provides for the payment of severance, salary continuation or
similar benefits and any Plan which is governed by a Collective
Bargaining Agreement.
Company-New ▇▇▇▇▇▇ Joint Qualified Plan: the ▇▇▇▇▇▇
International, Inc. Pension Plan (the "Joint Defined Benefit
Plan") or the ▇▇▇▇▇▇ International, Inc. Employee Savings and
Investment Plan (the "Joint Savings Plan").
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Company Option: an option to purchase shares of the
Company Common Stock granted pursuant to the Company Option
Plan.
Company Option Plan: the ▇▇▇▇▇▇ International, Inc.
1989 Incentive Plan or any predecessor stock option plan of the
Company pursuant to which there are outstanding options.
Company Restricted Trust: the trust established pur-
suant to a trust agreement between the Company and Bankers
Trust Company, as trustee, dated June 23, 1989.
Company Retained Foreign Plan: any Plan which is
maintained by a foreign subsidiary or foreign division of the
Company or any of its subsidiaries exclusively for the benefit
of Company Individuals.
Company Retained Qualified Plan: a Qualified Plan
sponsored or maintained by the Company or any of its subsidiar-
ies exclusively for the benefit of Company Individuals.
Company Subsidiary: as of and following the Dis-
tribution Date, any direct or indirect subsidiary of the Com-
pany other than New ▇▇▇▇▇▇ or any New ▇▇▇▇▇▇ Subsidiary.
Company VEBA: the ▇▇▇▇▇▇ International, Inc. Employ-
ees' Insurance Trust established pursuant to a Trust Agreement
dated February 22, 1995 between the Company and Bank of America
Illinois (successor to Continental Trust Company).
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Current Plan Year: the plan year or fiscal year, to
the extent applicable with respect to any Plan, during which
the Cut-off Date occurs. The plan year for the Bonus Plan, the
Company Option Plan and the LTIP shall be the year ended
June 30.
Cut-off Date: the close of business on the Distrib-
ution Date.
Distribution: the distribution to holders of Company
Common Stock of the shares of New ▇▇▇▇▇▇ Common Stock and re-
lated rights owned by the Company on the Distribution Date on
the basis of one share of New ▇▇▇▇▇▇ Common Stock for each out-
standing share of Company Common Stock.
Distribution Date: the date determined by the Compa-
ny's Board as of which the Distribution shall be effected,
which is presently contemplated to be April 30, 1997.
Enrolled Actuary: ▇▇▇▇▇▇ Associates, or any other
enrolled actuary making actuarial or similar determinations
with respect to assets or liabilities relating to a particular
employee benefit plan selected by New ▇▇▇▇▇▇.
ERISA: the Employee Retirement Income Security Act
of 1974, as amended, or any successor legislation.
Ex-Distribution Date: the first trading day prior to
the Distribution Date on which the Company Common Stock is
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traded on the New York Stock Exchange ex-dividend with respect
to the Distribution of New ▇▇▇▇▇▇ Common Stock; provided, that
if the Company Common Stock does not trade ex-dividend prior to
the Distribution Date, the Ex-Distribution Date shall be deemed
to be the Distribution Date.
Former Company Businesses: all of the businesses and
operations heretofore but not currently conducted by the Com-
pany or any of its current or former subsidiaries or conducted
currently or heretofore by any of the Company's former subsid-
iaries all of which are listed on Schedule B and all businesses
or operations predominantly managed or operated by, or other-
wise operationally related to, the Company's Automotive Safety
Products Group which have been sold or otherwise disposed of or
discontinued prior to the Distribution Date but shall not in-
clude any of the Former New ▇▇▇▇▇▇ Businesses.
Former New ▇▇▇▇▇▇ Businesses: all of the businesses
and operations heretofore but not currently conducted by the
Company or any of its current or former subsidiaries or hereto
or currently conducted by any of its former subsidiaries or
predecessors which are listed on Schedule C and any other busi-
ness and operation not currently conducted by the Company or
any of its current subsidiaries or any predecessors of the Com-
pany including ▇▇▇▇▇▇ Thiokol, Inc., Thiokol Chemical Corpo-
ration, Thiokol Corporation or ▇▇▇▇▇▇ Norwich Products Inc. and
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their respective subsidiaries and affiliates which does not
constitute a Former Company Business.
IRS: the Internal Revenue Service.
LTIP: the ▇▇▇▇▇▇ International, Inc. Key Executive
Long Term Incentive Program.
New ▇▇▇▇▇▇ Businesses: any business or operation of
the Company and its subsidiaries which is, pursuant to the Dis-
tribution Agreement, to be conducted, following the Distribu-
tion, by New ▇▇▇▇▇▇ or any New ▇▇▇▇▇▇ Subsidiary, including the
Corporate Operations (as defined in the Distribution Agreement)
or any business or operation which is, following the Distribu-
tion, otherwise conducted by New ▇▇▇▇▇▇ or any New ▇▇▇▇▇▇ Sub-
sidiary.
New ▇▇▇▇▇▇ Common Stock: the Common Stock, par value
$1.00 per share, of New ▇▇▇▇▇▇.
New ▇▇▇▇▇▇ Employee: any individual who is, follow-
ing the Distribution, intended to be employed by New ▇▇▇▇▇▇ or
a New ▇▇▇▇▇▇ Subsidiary on an ongoing basis.
New ▇▇▇▇▇▇ Free-Standing Foreign Plan: any Plan
which is maintained by a foreign subsidiary or foreign division
of the Company or any of its subsidiaries exclusively for the
benefit of New ▇▇▇▇▇▇ Individuals.
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New ▇▇▇▇▇▇ Free-Standing Qualified Plan: the ▇▇▇▇▇▇
International, Inc. Pension Plan for Collectively Bargained
Employees, the ▇▇▇▇▇▇ International, Inc. Retirement Income
Plan for Collectively Bargained Employees, the ▇▇▇▇▇▇ Interna-
tional, Inc. Bargaining Unit Employee Savings and Investment
Plan, and the ▇▇▇▇▇▇ International, Inc. Retirement Savings
Plan.
New ▇▇▇▇▇▇ Individual: any individual who (i) is a
New ▇▇▇▇▇▇ Employee as of the Cut-off Date or, following the
Distribution, becomes a New ▇▇▇▇▇▇ Employee pursuant to the
second sentence of Section 2.15 hereof, (ii) is, as of the Cut-
off Date, an employee of or former employee of the Company or
its predecessors whose last employment with the Company or its
predecessors was with a New ▇▇▇▇▇▇ Business or a Former New
▇▇▇▇▇▇ Business (including, without limitation, retirees from
corporate headquarters' staff who retired on or prior to the
Cut-off Date or any corporate officer who retired prior to the
Cut-Off Date) other than anyone who is to become a Company Em-
ployee, or (iii) is a beneficiary of any individual specified
in clause (i) or (ii).
New ▇▇▇▇▇▇ Subsidiary: any direct or indirect sub-
sidiary of the Company that, effective as of the Distribution
Date or otherwise in connection with the Distribution, will be,
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or is contemplated by the Distribution Agreement to be, a di-
rect or indirect subsidiary of New ▇▇▇▇▇▇, and any other sub-
sidiary of New ▇▇▇▇▇▇ which may be organized or acquired on or
after the Distribution Date.
New ▇▇▇▇▇▇ Option Plan: a Plan to be adopted by New
▇▇▇▇▇▇ pursuant to which options to purchase shares of New Mor-
ton Common Stock may be granted to New ▇▇▇▇▇▇ Employees.
New ▇▇▇▇▇▇ Qualified Plan: a Qualified Plan to be
sponsored or maintained by New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsid-
iary which will provide benefits for New ▇▇▇▇▇▇ Individuals
who, immediately prior to the Cut-off Date, are active or inac-
tive participants in or otherwise entitled to benefits under
any Company-New ▇▇▇▇▇▇ Joint Qualified Plan and which is ex-
pected to provide substantially identical benefits to the Com-
pany-New ▇▇▇▇▇▇ Joint Qualified Plan in which each such New
▇▇▇▇▇▇ Individual currently participates.
Plan: any plan, program, policy or arrangement or
contract or agreement providing benefits for any group of em-
ployees or former employees or individual employee or former
employee, or the beneficiary or beneficiaries of any such em-
ployee or former employee, whether formal or informal or writ-
ten or unwritten and whether or not legally binding, and in-
cluding, without limitation, any means, whether or not legally
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required, pursuant to which any benefit is provided by an em-
ployer to any employee or former employee or the beneficiary or
beneficiaries of any such employee or former employee.
Prior Plan Year: a plan year or fiscal year, to the
extent applicable with respect to any Plan, which ended on or
prior to the Cut-off Date.
Qualified Plan: a Plan which is an employee pension
benefit plan (within the meaning of Section 3(2) of ERISA) and
which constitutes or is intended in good faith to constitute a
qualified plan under Section 401(a) of the Code.
Welfare Plan: any Plan, including, without limita-
tion, the Plans listed on Schedule E, which is not a Qualified
Plan and which provides medical, health, disability, accident,
life insurance, death, dental or any other welfare benefit,
including, without limitation, any post-employment benefit.
Section 1.02 Schedules, Etc. References to a "Sche-
dule" are, unless otherwise specified, to one of the Schedules
attached to this Agreement, and references to a "Section" are,
unless otherwise specified, to one of the Sections of this
Agreement.
Section 1.03 Certain Constructions. References to
the singular in this Agreement shall refer to the plural and
vice-versa and references to the disjunctive shall refer to the
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conjunctive and vice-versa and references to the masculine
shall refer to the feminine and vice-versa.
ARTICLE II
EMPLOYEE BENEFITS; LABOR MATTERS
Section 2.01 New ▇▇▇▇▇▇ Free-Standing Qualified
Plan.
(a) Effective as of the Cut-off Date, New ▇▇▇▇▇▇
shall or shall cause one or more New ▇▇▇▇▇▇ Subsidiaries, as
appropriate, to assume or retain, as the case may be, and be
solely responsible for, all assets, liabilities and obligations
whatsoever of the Company and its subsidiaries under the New
▇▇▇▇▇▇ Free-Standing Qualified Plan; provided, however, that
the Company shall make all required contributions, no later
than the later of the Cut-off Date and the date such contribu-
tions are legally required to be made, to such New ▇▇▇▇▇▇ Free-
Standing Qualified Plan for all Prior Plan Years, to the extent
not previously made. The Company and New ▇▇▇▇▇▇ shall take
such action as is necessary to effect an adjustment to the
books of the Company and New ▇▇▇▇▇▇ so that, as of the Cut-off
Date, the prepaid expense balances and accrued pension liabi-
lities with respect to the New ▇▇▇▇▇▇ Free-Standing Qualified
Plan are reflected on New ▇▇▇▇▇▇'▇ consolidated balance sheet
rather than the Company's consolidated balance sheet as of the
Cut-off Date. New ▇▇▇▇▇▇ and the Company shall each take, or
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cause to be taken, all such actions as may be necessary or ap-
propriate in order to establish New ▇▇▇▇▇▇ or the New ▇▇▇▇▇▇
Subsidiaries, as appropriate, as successor to the Company or
any of its subsidiaries, as to all rights, assets, duties, li-
abilities and obligations under, or with respect to, the New
▇▇▇▇▇▇ Free-Standing Qualified Plan, including, but not limited
to, the rights, assets, duties, liabilities and obligations of
the Company or any of its subsidiaries under, or with respect
to, any and all trust agreements to the extent that they relate
to such New ▇▇▇▇▇▇ Free-Standing Qualified Plan. From and af-
ter the Cut-off Date, the Company and the Company Subsidiaries
shall cease to have any liability or obligation whatsoever with
respect to the New ▇▇▇▇▇▇ Free-Standing Qualified Plan, except
as otherwise specifically provided in this Section 2.01.
(b) Upon New ▇▇▇▇▇▇ or any New ▇▇▇▇▇▇ Subsidiary
becoming the successor employer or successor plan sponsor to
the Company or any of its subsidiaries under such New ▇▇▇▇▇▇
Free-Standing Qualified Plan, the Company agrees to take such
actions as may be necessary to amend each individual trust in
order for New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary effectively to
maintain and administer such New ▇▇▇▇▇▇ Free-Standing Qualified
Plan, including, if necessary, to direct the trustee of each
individual trust, or, to the extent applicable, each master
trust in which assets of such New ▇▇▇▇▇▇ Free-Standing Quali-
fied Plan are invested, to transfer to the new trustee or other
funding agent appointed by New ▇▇▇▇▇▇ for such plan the amount
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of assets in such individual trust or master trust, as the case
may be, determined by the former trustee of such New ▇▇▇▇▇▇
Free-Standing Qualified Plan to be attributable to such New
▇▇▇▇▇▇ Free-Standing Qualified Plan. Such transfer shall be
made in cash, securities, other property or a combination
thereof, as determined by the Company and New ▇▇▇▇▇▇. The Com-
pany agrees, during the period ending with the date of complete
transfer of assets to a trust or other funding arrangement
maintained by New ▇▇▇▇▇▇ to cause distributions in respect of
retired or terminated participants who are New ▇▇▇▇▇▇ Individu-
als to be made, on behalf of New ▇▇▇▇▇▇, from the New ▇▇▇▇▇▇
Free-Standing Qualified Plan in accordance with applicable law
and pursuant to plan provisions and to cause loans and hardship
distributions to be made in accordance with applicable law and
pursuant to plan provisions. The Company agrees that it shall,
as soon as practicable after the Distribution Date, provide New
▇▇▇▇▇▇ such information (in the possession of the Company or a
Company Subsidiary and not already in the possession of New
▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary) as may be reasonably re-
quested by New ▇▇▇▇▇▇ and necessary in order for New ▇▇▇▇▇▇ or
any New ▇▇▇▇▇▇ Subsidiary effectively to maintain and adminis-
ter the New ▇▇▇▇▇▇ Free-Standing Qualified Plan.
Section 2.02 Company Retained Qualified Plans. Ef-
fective as of the Cut-off Date, the Company shall or shall
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cause one or more Company Subsidiaries, as appropriate, to re-
tain and be solely responsible for, all liabilities and obliga-
tions whatsoever of the Company and its subsidiaries under each
of the Company Retained Qualified Plans. The Company and New
▇▇▇▇▇▇ shall take such action as is necessary to effect an ad-
justment to the books of the Company and New ▇▇▇▇▇▇ so that, as
of the Cut-off Date, the prepaid expense balances and accrued
pension liabilities with respect to the Company Retained Quali-
fied Plans are reflected on the Company's consolidated balance
sheet rather than New ▇▇▇▇▇▇'▇ consolidated balance sheet as of
the Cut-off Date. From and after the Cut-off Date, New ▇▇▇▇▇▇
and the New ▇▇▇▇▇▇ Subsidiaries shall cease to have any li-
ability or obligation whatsoever with respect to any of the
Company Retained Qualified Plans.
Section 2.03 Company-New ▇▇▇▇▇▇ Joint Qualified
Plans.
(a) As soon as practicable after the date hereof and
effective as of the Cut-off Date, New ▇▇▇▇▇▇ shall take, or
cause to be taken, all action necessary and appropriate to es-
tablish and administer one or more new New ▇▇▇▇▇▇ Qualified
Plans and to provide benefits thereunder for all New ▇▇▇▇▇▇
Individuals who, immediately prior to the Cut-off Date, were
participants in or otherwise entitled to benefits under any
Company-New ▇▇▇▇▇▇ Joint Qualified Plan. New ▇▇▇▇▇▇ agrees
that each such New ▇▇▇▇▇▇ Individual shall be, to the extent
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applicable, entitled, for all purposes under any applicable new
New ▇▇▇▇▇▇ Qualified Plan, to be credited with the term of ser-
vice and any accrued benefit or account balance credited to
such New ▇▇▇▇▇▇ Individual as of the Cut-off Date under the
terms of any applicable Company-New ▇▇▇▇▇▇ Joint Qualified Plan
as if such service had been rendered to New ▇▇▇▇▇▇ and as if
such accrued benefit or account balance had originally been
credited to such New ▇▇▇▇▇▇ Individual under the new New ▇▇▇▇▇▇
Qualified Plan. The Company agrees to provide New ▇▇▇▇▇▇, as
soon as practicable after the Distribution Date (with the coop-
eration of New ▇▇▇▇▇▇, to the extent that relevant information
is in the possession of New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary),
with a list of the New ▇▇▇▇▇▇ Individuals who were, to the best
knowledge of the Company, participants in or otherwise entitled
to benefits under each Company-New ▇▇▇▇▇▇ Joint Qualified Plan
immediately prior to the Cut-off Date, together with a listing,
if requested by New ▇▇▇▇▇▇, of each such New ▇▇▇▇▇▇ Individ-
ual's term of service for eligibility and vesting purposes un-
der such Plan and a listing of each such New ▇▇▇▇▇▇ Individu-
al's accrued benefit or account balance thereunder. The Com-
pany shall, as soon as practicable after the Distribution Date,
provide New ▇▇▇▇▇▇ with such additional information (in the
possession of the Company or a Company Subsidiary and not al-
ready in the possession of New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsid-
iary) as may be reasonably requested by New ▇▇▇▇▇▇ and neces-
sary in order for New ▇▇▇▇▇▇ or the New ▇▇▇▇▇▇ Subsidiary to
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establish and administer effectively any new New ▇▇▇▇▇▇ Quali-
fied Plan.
(b) The Company agrees, as soon as practicable fol-
lowing the Distribution Date, to direct the trustee of the
trust funding the Company-New ▇▇▇▇▇▇ Joint Qualified Plan which
is a Joint Defined Benefit Plan to transfer to the trustee or
other funding agent of any applicable new New ▇▇▇▇▇▇ Qualified
Plan, in cash, securities, other property or a combination
thereof, as determined by the Company and New ▇▇▇▇▇▇, an amount
equal to (W) plus (X) less (Y), as adjusted by (Z) and as fur-
ther reduced to reflect contributions due but not paid in re-
spect of New ▇▇▇▇▇▇ Individuals with respect to the portion of
the Current Plan Year which ends on the Cut-off Date (as set
forth on Annex I); where (W) equals that amount of the assets
of the Joint Defined Benefit Plan which would be allocated to
the plan participants and beneficiaries who are New ▇▇▇▇▇▇ In-
dividuals if the Company-New ▇▇▇▇▇▇ Joint Defined Benefit Plan
had been terminated as of the Distribution Date (the "Valuation
Date"), using the actuarial assumptions and methods set forth
in Annex I, including the procedures outlined in ERISA Section
4044 for allocating assets among priority categories (with all
of the foregoing calculations being determined as of the Valua-
tion Date by the Enrolled Actuary, which determination shall be
based upon the actuarial assumptions set forth on Annex I
hereto); where (X) equals the amount of all contributions, if
any, attributable to New ▇▇▇▇▇▇ Individuals made subsequent to
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the Valuation Date to the Joint Defined Benefit Plan through
the date of complete transfer; where (Y) equals aggregate pay-
ments made from the trust relating to the Joint Defined Benefit
Plan in respect of New ▇▇▇▇▇▇ Individuals from the Valuation
Date through the date of complete transfer; and where (Z)
equals the amount of the net earnings or losses, as the case
may be, from the Valuation Date through the date of transfer,
on the average of the daily balances of W, X and Y and based
upon the actual rate of return earned by the applicable Joint
Defined Benefit Plan during such period. To the extent that
total assets of the Joint Defined Benefit Plan exceeds the to-
tal liabilities of the Joint Defined Benefit Plan as of the
Valuation Date calculated using the actuarial assumptions on
Annex I (the "Excess"), then in addition to the transfer de-
scribed in the preceding sentence an additional amount of as-
sets shall be transferred equal to the percentage of such Ex-
cess that the liabilities of such plan (determined using the
same actuarial assumptions) attributable to New ▇▇▇▇▇▇ Individ-
uals bears to the total plan liabilities. Notwithstanding the
foregoing provisions of Section 2.03(b), each such transfer
shall be adjusted, if and to the extent necessary, to comply
with Section 414(l) of the Code and the regulations promulgated
thereunder. The Company further agrees that, as soon as prac-
ticable following the later of the Distribution Date and the
establishment of the qualified trust for the New ▇▇▇▇▇▇ Quali-
fied Plan which is a Joint Defined Benefit Plan, an initial
-18-
transfer of assets will be made based on an estimate prepared
by the Enrolled Actuary of the amount described in clause (W)
as of the Valuation Date (using January 1, 1996 participant
data for such estimate). Once the final transfer amount is
determined, a transfer of assets will be made from the Company-
New ▇▇▇▇▇▇ Joint Qualified Plan to the New ▇▇▇▇▇▇ Qualified
Plan (or vice versa) as necessary to result in a split of as-
sets which is consistent with this section.
(c) The Company agrees, as soon as practicable fol-
lowing the Distribution Date, to direct the trustee of the
trust funding the Company-New ▇▇▇▇▇▇ Joint Qualified Plan which
is a Joint Savings Plan to transfer to the trustee or other
funding agent of any applicable new New ▇▇▇▇▇▇ Qualified Plan
in cash, securities or other property or a combination thereof,
as determined by the Company and New ▇▇▇▇▇▇, an amount equal to
the account balances as of the date of transfer attributable to
the participants and beneficiaries in the Joint Savings Plan
who are New ▇▇▇▇▇▇ Individuals plus the portion of any unallo-
cated contributions and trust earnings attributable to such
participants and beneficiaries who are New ▇▇▇▇▇▇ Individuals.
To the extent practicable such transfers shall be effected so
as to preserve investment elections of the participants and
beneficiaries in the Joint Savings Plan.
(d) New ▇▇▇▇▇▇ and the Company shall, in connection
with the transfers described in this Section 2.03, cooperate in
-19-
making any and all appropriate filings required under the Code
or ERISA, and the regulations thereunder, and any applicable
securities laws and take all such action as may be necessary
and appropriate to cause such transfers to take place as soon
as practicable after the Distribution Date; provided, however,
that each such transfer shall not take place until as soon as
practicable after the later of (i) the expiration of a 30-day
period following the date of filing the required Forms 5310 (or
any successor form thereto) with the IRS and (ii) the earlier
of (A) the receipt of a favorable IRS determination letter with
respect to the qualification of each applicable new New ▇▇▇▇▇▇
Qualified Plan under Section 401(a) of the Code or (B) the re-
ceipt by the Company of an opinion of New ▇▇▇▇▇▇'▇ counsel in
the form set forth in Annex III hereto to the effect that each
applicable new New ▇▇▇▇▇▇ Qualified Plan is intended in good
faith to be qualified under Section 401(a) of the Code. The
Company agrees to provide to New ▇▇▇▇▇▇'▇ counsel such informa-
tion in the possession of the Company or any Company Subsidiary
as may be reasonably requested by New ▇▇▇▇▇▇'▇ counsel in con-
nection with the issuance of such opinion. The Company agrees,
during the period ending with the date of complete transfer of
assets and liabilities to each such new New ▇▇▇▇▇▇ Qualified
Plan, to cause distributions in respect of terminated or re-
tired participants who are New ▇▇▇▇▇▇ Individuals to be made,
on behalf of New ▇▇▇▇▇▇, from the relevant Company-New ▇▇▇▇▇▇
-20-
Joint Qualified Plan in accordance with applicable law and pur-
suant to plan provisions.
(e) Except as specifically set forth in this Section
2.03, from and after the Cut-off Date, the Company and the Com-
pany Subsidiaries shall cease to have any liability or obliga-
tion whatsoever with respect to New ▇▇▇▇▇▇ Individuals under
the Company-New ▇▇▇▇▇▇ Joint Qualified Plans, and New ▇▇▇▇▇▇
shall assume or retain, as the case may be, and shall be solely
responsible for, all liabilities and obligations whatsoever of
the Company and its subsidiaries with respect to New ▇▇▇▇▇▇
Individuals under the Company-New ▇▇▇▇▇▇ Joint Qualified Plans;
provided, however, that the Company shall either be responsible
for or make all required contributions, no later than the later
of the Cut-off Date and the date such contributions are legally
required to be made, in respect of New ▇▇▇▇▇▇ Individuals with
respect to each Company-New ▇▇▇▇▇▇ Joint Qualified Plan for all
Prior Plan Years and for the portion of the Current Plan Year
ending on the Cut-off Date (determined as set forth in Section
2.03(b)), to the extent not previously made. The Company and
New ▇▇▇▇▇▇ shall take such action as is necessary to effect an
adjustment to the books of the Company and New ▇▇▇▇▇▇ so that,
as of the Cut-off Date, the prepaid expense balances and ac-
crued pension liabilities with respect to the Company-New Mor-
ton Joint Qualified Plans to the extent attributable to the New
▇▇▇▇▇▇ Individuals are reflected on New ▇▇▇▇▇▇'▇ consolidated
-21-
balance sheet rather than the Company's consolidated balance
sheet as of the Cut-off Date.
Section 2.04 Foreign Plans. (a) With respect to
each New ▇▇▇▇▇▇ Free-Standing Foreign Plan:
(i) New ▇▇▇▇▇▇ and the Company shall take, or cause
to be taken, all such action as may be necessary or ap-
propriate in order to establish New ▇▇▇▇▇▇ or one or more
New ▇▇▇▇▇▇ Subsidiaries, as appropriate, as successor to
the Company or any of its subsidiaries as to all rights,
assets, duties, liabilities and obligations as of the Cut-
off Date under, or with respect to, such New ▇▇▇▇▇▇ Free-
Standing Foreign Plan. The Company agrees that it shall,
as soon as practicable, provide New ▇▇▇▇▇▇ with all infor-
mation (in the possession of the Company or a Company Sub-
sidiary and not already in the possession of New ▇▇▇▇▇▇ or
a New ▇▇▇▇▇▇ Subsidiary) as may be reasonably requested by
New ▇▇▇▇▇▇ and necessary for the New ▇▇▇▇▇▇ or New ▇▇▇▇▇▇
Subsidiaries to administer effectively such New ▇▇▇▇▇▇
Free-Standing Foreign Plan.
(ii) From and after the Cut-off Date, the Company and
the Company Subsidiaries shall cease to have any liability
or obligation whatsoever under such New ▇▇▇▇▇▇ Free-
Standing Foreign Plan; provided, however, that the Company
shall make all required contributions to such New ▇▇▇▇▇▇
Free-Standing Foreign Plan for all Prior Plan Years, to
-22-
the extent not previously made. The Company and New Mor-
ton shall take such action as is necessary to effect an
adjustment to the books of the Company and New ▇▇▇▇▇▇ so
that, as of the Cut-off Date, the prepaid expense balances
and accrued pension liabilities with respect to such New
▇▇▇▇▇▇ Free-Standing Foreign Plan are reflected on New
▇▇▇▇▇▇'▇ consolidated balance sheet, rather than the
Company's consolidated balance sheet as of the Cut-off
Date. As of the Cut-off Date, New ▇▇▇▇▇▇ and the New Mor-
ton Subsidiaries shall assume or retain, as the case may
be, and shall be solely responsible for, all liabilities
and obligations whatsoever under such New ▇▇▇▇▇▇ Free-
Standing Foreign Plan, except as otherwise specifically
provided in this Section 2.04(a)(ii).
(b) Effective as of the Cut-off Date, Company and
the Company Subsidiaries shall take, or cause to be taken, all
such action as may be necessary or appropriate in order to es-
tablish Company or one or more Company Subsidiaries, as ap-
propriate, to retain and be solely responsible for all assets,
liabilities and obligations whatsoever of the Company and its
subsidiaries under each Company Retained Foreign Plan. The
Company and New ▇▇▇▇▇▇ shall take such action as is necessary
to effect an adjustment to the books of the Company and New
▇▇▇▇▇▇ so that, as of the Cut-off Date, the prepaid expense
balances and accrued pension liabilities with respect to the
Company Retained Foreign Plans are reflected on the Company's
-23-
consolidated balance sheet rather than New ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇-
dated balance sheet as of the Cut-off Date. From and after the
Cut-off Date, New ▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Subsidiaries shall
cease to have any liability or obligation whatsoever with re-
spect to any of the Company Retained Foreign Plans.
Section 2.05 Welfare Plans.
(a) As of the Cut-off Date, New ▇▇▇▇▇▇ shall assume
or retain, or cause a New ▇▇▇▇▇▇ Subsidiary to assume or re-
tain, as the case may be, and shall be solely responsible for,
or cause its insurance carriers to be responsible for, all li-
abilities and obligations whatsoever of the Company and its
subsidiaries whether or not incurred prior to the Cut-off Date
in connection with claims under any Welfare Plan (including any
Welfare Plan providing for post-retirement benefits) brought by
or in respect of any New ▇▇▇▇▇▇ Individual and the Company and
the Company Subsidiaries shall cease to have any such liability
or obligation.
(b) New ▇▇▇▇▇▇ shall take, or cause to be taken, all
actions necessary and appropriate on behalf of itself and the
New ▇▇▇▇▇▇ Subsidiaries (i) to assume any existing Welfare Plan
of the Company or any of its subsidiaries, which Welfare Plan,
as of the Cut-off Date, provides benefits solely for New ▇▇▇▇▇▇
Individuals or (ii) otherwise to adopt such Welfare Plans as
necessary to provide welfare benefits, effective as of the Cut-
off Date, and in either case shall assume the liabilities and
-24-
obligations to New ▇▇▇▇▇▇ Individuals which are or shall become
the responsibility of New ▇▇▇▇▇▇ under Section 2.05(a). For
this purpose with respect to any New ▇▇▇▇▇▇ individual, New
▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary shall, to the extent appli-
cable, credit such New ▇▇▇▇▇▇ Individual with term of service
and consider such New ▇▇▇▇▇▇ Individual to have satisfied any
other eligibility criteria (including satisfaction of ap-
plicable deductibles or coinsurance amounts) as of the Cut-off
Date as if such service had been rendered to New ▇▇▇▇▇▇ or the
New ▇▇▇▇▇▇ Subsidiary and as if such eligibility criteria had
been satisfied while employed by New ▇▇▇▇▇▇ or the New ▇▇▇▇▇▇
Subsidiary. In connection with the foregoing, the Company
agrees to provide New ▇▇▇▇▇▇ or its designated insurance repre-
sentative with such information (in the possession of the Com-
pany or any Company Subsidiary and not already in the posses-
sion of New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary) as may be rea-
sonably requested by New ▇▇▇▇▇▇ and necessary for New ▇▇▇▇▇▇
and the New ▇▇▇▇▇▇ Subsidiaries to assume or establish any such
Welfare Plan.
(c) The Company shall take, or cause to be taken,
all actions necessary and appropriate to direct the trustee of
the Company VEBA to transfer in cash to the new trustee or
other funding agent appointed by New ▇▇▇▇▇▇ for a trust ar-
rangement similar to the Company VEBA the amount of assets in
such trust determined by the Accountants to be attributable as
of the last day of the month in which the Cut-off Date occurs
-25-
to contributions (and earnings thereon) made by the employees
who are New ▇▇▇▇▇▇ Employees. The Company shall, as soon as
practicable after the Distribution Date, provide New ▇▇▇▇▇▇
with such additional information (not already in the possession
of New ▇▇▇▇▇▇ or the New ▇▇▇▇▇▇ Subsidiaries) as may be reason-
ably requested by New ▇▇▇▇▇▇ and necessary in order for the New
▇▇▇▇▇▇ Subsidiaries to manage effectively the trust assets
transferred in accordance with this Section 2.05(c).
(d) The Company and the Company Subsidiaries shall
assume, or retain, all liabilities and obligations whatsoever
of the Company and its subsidiaries for benefits under any Wel-
fare Plan other than as set forth in Section 2.05(a).
Section 2.06 Stock Option Plans. The Company and
New ▇▇▇▇▇▇ shall cooperate and take all action necessary (in-
cluding obtaining the consent of the holders of the Company
Options, if required, and, if deemed necessary or appropriate,
seeking a "no-action" letter or interpretive advice from the
Commission) to amend (if necessary) the Company Option Plan and
to adopt the New ▇▇▇▇▇▇ Option Plan so that as of the Distribu-
tion Date, each Company Option which is outstanding and not ex-
ercised immediately prior to the Distribution Date and which is
held by a New ▇▇▇▇▇▇ Individual shall, without any action on
the part of the holder thereof, be converted into an option to
purchase shares of New ▇▇▇▇▇▇ Common Stock, the number of
shares of New ▇▇▇▇▇▇ Common Stock subject to, and the exercise
-26-
price of such option to be determined in accordance with, the
requirements of Section 424 of the Code and the regulations
promulgated thereunder, based upon (A) the average of the high
and low trading prices on the New York Stock Exchange for the
Company Common Stock for each of the last five trading days
prior to the Ex-Distribution Date and (B) the average of the
high and low trading prices on the New York Stock Exchange for
the New ▇▇▇▇▇▇ Common Stock for each of the first five trading
days following the Distribution Date on which the New ▇▇▇▇▇▇
Common Stock is traded regular way on the New York Stock Ex-
change; such option to be subject to substantially similar
terms and conditions as in effect prior to the conversion. The
exercise price of any such option shall be rounded to the near-
est $.01; the number of shares subject to any such option shall
be rounded to the nearest share. Any related limited stock ap-
preciation rights or supplemental cash payment rights held by
New ▇▇▇▇▇▇ Individuals shall be adjusted in a consistent manner
and shall be assumed by, and become the responsibility of, New
▇▇▇▇▇▇.
Section 2.07 Company Incentive Plans.
(a) The Company shall be responsible for the payment
of all liabilities and obligations for benefits due and payable
or unpaid as of and through the Cut-off Date under each Company
Incentive Plan with respect to any Prior Plan Year (other than
the Current Plan Year). Any deferred bonuses that were earned
-27-
with respect to any Prior Plan Year that are not paid as of the
Cut-off Date shall be treated as benefits for the Current Plan
Year in accordance with Section 2.07(b).
(b) Except as specifically provided in Section 2.06,
for any Current Plan Year under each Company Incentive Plan,
the Company and the Company Subsidiaries shall be responsible
for the payment of all liabilities and obligations for benefits
unpaid as of and through the Cut-off Date (including for de-
ferred compensation) with respect to Company Individuals and
New ▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Subsidiaries shall assume and be
responsible for the payment of all liabilities and obligations
for benefits unpaid as of and through the Cut-off Date (includ-
ing for deferred compensation) with respect to New ▇▇▇▇▇▇ Indi-
viduals. Except as specifically provided in Section 2.06, each
of the Company and New ▇▇▇▇▇▇ will, to the extent practicable,
either continue each such Company Incentive Plan or adopt a new
Plan in substitution therefor and, in this connection, adjust,
in a manner equitable to participants, any incentive goals con-
tained in each Company Incentive Plan to reflect the Distribu-
tion.
(c) For purposes of the Company Incentive Plans,
individuals who, in connection with the Distribution, cease to
be employees of the Company and become New ▇▇▇▇▇▇ Employees
shall not be deemed to have terminated employment for purposes
of any deferral elections made by such individuals and service
-28-
with New ▇▇▇▇▇▇ shall be deemed continuous service with the
Company.
Section 2.08 Severance Pay.
(a) New ▇▇▇▇▇▇ and the Company agree that, with re-
spect to individuals who, in connection with the Distribution,
cease to be employees of the Company and become New ▇▇▇▇▇▇ ▇▇-
ployees, such cessation shall not be deemed a severance of em-
ployment from the Company and its subsidiaries for purposes of
any Plan of the Company or any of its subsidiaries that pro-
vides for the payment of severance, salary continuation or sim-
ilar benefits and shall, in connection with the Distribution,
if and to the extent appropriate obtain waivers from individu-
als against any such assertion.
(b) Notwithstanding anything in the Agreement to the
contrary, the Company and the Company Subsidiaries shall assume
and be solely responsible for all liabilities and obligations
whatsoever in connection with claims made by or on behalf of
the Company Individuals and New ▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Sub-
sidiaries shall assume and be solely responsible for all li-
abilities and obligations whatsoever in connection with claims
made by or on behalf of New ▇▇▇▇▇▇ Individuals in respect of
severance pay, salary continuation and similar obligations re-
lating to the termination or alleged termination of any such
person's employment either before, to the extent unpaid on the
Cut-off Date, or on or after the Cut-off Date.
-29-
Section 2.08 Company Restricted Trust.
(a) Effective as of the Distribution Date, New Mor-
ton shall or shall cause one or more New ▇▇▇▇▇▇ Subsidiaries,
as appropriate, to assume or retain, as the case may be, and be
solely responsible for, all assets, liabilities and obligations
whatsoever of the Company and its subsidiaries with respect to
New ▇▇▇▇▇▇ Individuals to the extent such liabilities are fund-
ed as of the Cut-off Date under the Company Restricted Trust.
In this connection, New ▇▇▇▇▇▇ agrees to establish one or more
trusts substantially similar to the Company Restricted Trust to
hold the assets attributable to such liabilities and the Com-
pany agrees to take such action as may be necessary to amend
the Company Restricted Trust to effectuate the purposes of this
Section 2.09 and to direct the trustee of the Company Restrict-
ed Trust to transfer to the new trustee or other funding agent
appointed by New ▇▇▇▇▇▇ the amount of assets, plus the portion
of any unallocated contributions and trust earnings, determined
by the Enrolled Actuary in accordance with the procedures set
forth on Annex II hereto to be attributable to New ▇▇▇▇▇▇ Indi-
viduals. Such transfer shall be made in cash, securities,
other property or a combination thereof, as determined by the
Company and New ▇▇▇▇▇▇.
-30-
Section 2.10 Company Miscellaneous Plans; Post-
Distribution Liabilities.
(a) The Company and the Company Subsidiaries shall
be solely responsible for the payment of all liabilities and
obligations whatsoever with respect to any Company Individual
unpaid as of and through the Cut-off Date under any Company
Miscellaneous Plan and New ▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Subsidiar-
ies shall assume and be solely responsible for the payment of
all liabilities and obligations whatsoever with respect to any
New ▇▇▇▇▇▇ Individual unpaid as of and through the Cut-off Date
under any Company Miscellaneous Plan.
(b) The Company and the Company Subsidiaries shall
be solely responsible for the payment of all liabilities and
obligations whatsoever arising with respect to any Company In-
dividual and attributable to any period subsequent to the Cut-
off Date and New ▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Subsidiaries shall
be solely responsible for the payment of all liabilities and
obligations whatsoever arising with respect to any New ▇▇▇▇▇▇
Individual and attributable to any period subsequent to the
Cut-off Date.
Section 2.11 Collective Bargaining Agreements; Labor
Management Relations Act. New ▇▇▇▇▇▇ agrees that it shall as-
sume and discharge all of the liabilities and obligations of
the Company and its subsidiaries relating to New ▇▇▇▇▇▇ Indi-
viduals which have not been satisfied as of and through the
-31-
Cut-off Date with respect to any Collective Bargaining Agree-
ment, and to be bound by any and all provisions of such Collec-
tive Bargaining Agreements with respect to such New ▇▇▇▇▇▇ In-
dividuals as if New ▇▇▇▇▇▇ or a New ▇▇▇▇▇▇ Subsidiary were the
signatory employer. The provisions of this Section 2.11 are,
to the extent applicable, governed by and subject to the Labor
Management Relations Act, as amended.
Section 2.12 Other Balance Sheet Adjustments. To
the extent not otherwise provided in this Agreement, the Com-
pany and New ▇▇▇▇▇▇ shall take such action as is necessary to
effect an adjustment to the books of the Company and New ▇▇▇▇▇▇
so that, as of the Cut-off Date, the prepaid expense balances
and accrued liabilities with respect to any employee liability
or obligation assumed or retained as of the Cut-off Date by the
Company and the Company Subsidiaries, on the one hand, and New
▇▇▇▇▇▇ and the New ▇▇▇▇▇▇ Subsidiaries, on the other hand, are
appropriately reflected on the respective consolidated balance
sheets as of the Cut-off Date, respectively, of the Company and
New ▇▇▇▇▇▇.
Section 2.13 Preservation of Rights To Amend or Ter-
minate Plans. No provisions of this Agreement, including,
without limitation, the agreement of the Company or New ▇▇▇▇▇▇
that it, or any Company Subsidiary or New ▇▇▇▇▇▇ Subsidiary,
will make a contribution or payment to or under any Plan herein
referred to for any period, shall be construed as a limitation
-32-
on the right of the Company or New ▇▇▇▇▇▇ or any Company Sub-
sidiary or New ▇▇▇▇▇▇ Subsidiary to amend such Plan or termi-
nate its participation therein which the Company or New ▇▇▇▇▇▇
or any Company Subsidiary or New ▇▇▇▇▇▇ Subsidiary would other-
wise have under the terms of such Plan or otherwise, and no
provision of this Agreement shall be construed to create a
right in any employee or former employer or beneficiary of such
employee or former employee under a Plan which such employee or
former employer or beneficiary would not otherwise have under
the terms of the Plan itself.
Section 2.14 Reimbursement; Indemnification. The
Company and New ▇▇▇▇▇▇ acknowledge that the Company and the
Company Subsidiaries, on the one hand, and New ▇▇▇▇▇▇ and the
New ▇▇▇▇▇▇ Subsidiaries, on the other hand, may incur costs and
expenses (including, but not limited to, contributions to Plans
and the payment of insurance premiums) arising from or related
to any of the Plans which are, as set forth in this Agreement,
the responsibility of the other party hereto. Accordingly, the
Company (and any Company Subsidiary responsible therefor) and
New ▇▇▇▇▇▇ (and any New ▇▇▇▇▇▇ Subsidiary responsible therefor)
agree to reimburse each other, as soon as practicable but in
any event within 30 days of receipt from the other party of
appropriate verification, for all such costs and expenses re-
duced by the amount of any tax reduction or recovery of tax
benefit realized by the Company or New ▇▇▇▇▇▇, as the case may
-33-
be, in respect of the corresponding payment made by it; pro-
vided, however, that notwithstanding anything in this Section
2.14 to the contrary, costs and expenses or other recovery
arising from any challenge by the U.S. Government to the al-
location of assets set forth in Section 2.03 shall not be sub-
ject to reimbursement and indemnification under this Agreement
or the Distribution Agreement. All liabilities and obligations
retained, assumed or indemnified by New ▇▇▇▇▇▇ or any New Mor-
ton Subsidiary pursuant to this Agreement, in each case, shall
be deemed to be New ▇▇▇▇▇▇ Liabilities, as defined in the Dis-
tribution Agreement, and all liabilities retained, assumed or
indemnified by the Company or any Company Subsidiary pursuant
to this Agreement, shall be deemed to be Safety Liabilities, as
defined in the Distribution Agreement, and, in each case, shall
be subject to the indemnification provisions set forth in Ar-
ticle V thereof.
Section 2.15 Further Transfers. The Company and New
▇▇▇▇▇▇ recognize that there may be New ▇▇▇▇▇▇ Individuals who
will, after the Distribution Date, become employed by the Com-
pany and there may be Company Individuals who become employed,
after the Distribution Date, by New ▇▇▇▇▇▇. Any such transfers
or assumptions will be considered to be governed by the terms
of this Agreement and shall not require the agreement of the
Company and New ▇▇▇▇▇▇ if they occur within 12 months of the
Distribution Date. After such date, if the Company and New
-34-
▇▇▇▇▇▇ so agree with respect to any such individuals, the as-
sets and liabilities with respect to such employees which are
associated with the plans and programs described in this Agree-
ment may be transferred and assumed in a manner consistent with
this Agreement. Any costs associated with or arising out of
such transfers and assumptions shall be borne by the party that
becomes the new employer of the transferred individual.
ARTICLE III
MISCELLANEOUS
Section 3.01 Complete Agreement; Construction. This
Agreement, including the Schedules and Annexes hereto and the
agreements and documents referred to herein, shall constitute
the entire agreement between the parties with respect to the
subject matter hereof and shall supersede all previous negotia-
tions, commitments and writings with respect to such subject
matter. Notwithstanding any other provisions in this Agreement
or the Distribution Agreement to the contrary, in the event and
to the extent that there shall be a conflict between the provi-
sions of the Distribution Agreement and this Agreement, the
provisions of this Agreement shall control, except with respect
to Section 9.03 of the Distribution Agreement, which shall con-
trol over any contrary provision hereof.
Section 3.02 Guarantee of Subsidiaries' Obligations.
The Company shall cause to be performed, and hereby guarantees
-35-
the performance and payment of, all actions, agreements, obli-
gations and liabilities set forth herein to be performed or
paid by the Company Subsidiaries and New ▇▇▇▇▇▇ shall cause to
be performed, and hereby guarantees the performance and payment
of, all actions, obligations and liabilities set forth herein
to be performed or paid by the New ▇▇▇▇▇▇ Subsidiaries.
Section 3.03 Failure of the Company and New ▇▇▇▇▇▇
To Agree on Certain Determinations. In any case in which the
Company shall disagree with the determination of an amount
which this Agreement requires to be made by the Enrolled Actu-
ary or the Accountants (as the case may be), the Company shall
have the right within 30 days after receipt of notice of such
determination and back-up workpapers to engage at the expense
of the Company, an enrolled actuary (or "Big Six" accounting
firm) to make the determination of such amount. If the amount
determined by such actuaries (or "Big Six" accounting firm)
should differ, such amount shall be finally determined by an-
other enrolled actuary (or "Big Six" accounting firm) selected
by agreement between or among the Enrolled Actuary (or the Ac-
countants) and the enrolled actuary or enrolled actuaries (or
Big Six accounting firm or firms) for the Company, whose fees
and expenses shall be borne solely by the Company.
Section 3.04 Governing Law. Subject to applicable
federal law, this Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 3.05 Notices. All notices and other com-
munications hereunder shall be in writing and shall be deliv-
ered by hand or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses
(or at such other addresses for a party as shall be specified
by like notice) and shall be deemed given on the date on which
such notice is received:
To the Company:
Autoliv ASP, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
with a copy to:
Autoliv, Inc.
▇/▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention: Corporate Secretary
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
To New ▇▇▇▇▇▇:
New ▇▇▇▇▇▇ International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Secretary
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Section 3.06 Amendments. This Agreement may not be
modified or amended except by an agreement in writing signed by
the parties.
Section 3.07 Successors and Assigns. This Agreement
and all of the provisions hereof shall be binding upon and in-
ure to the benefit of the parties and their respective succes-
sors and permitted assigns.
Section 3.08 Termination. This Agreement may be
terminated in the event that the Distribution Agreement is ter-
minated and the Distribution abandoned prior to the Distribu-
tion Date. In the event of such termination, neither party
shall have any liability of any kind to the other party.
Section 3.09 No Third Party Beneficiaries. This
Agreement is solely for the benefit of the parties hereto and
their respective subsidiaries and should not be deemed to con-
fer upon third parties any remedy, claim, liability, reimburse-
ment, claim of action or other right in excess of those exist-
ing without reference to this Agreement.
Section 3.10 Titles and Headings. Titles and head-
ings to sections herein are inserted for the convenience of
reference only and are not intended to be a part of or to af-
fect the meaning of or interpretation of this Agreement.
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Section 3.11 Schedules. The Schedules shall be con-
strued with and as an integral part of this Agreement to the
same extent as if the same had been set forth verbatim herein.
Section 3.12 Legal Enforceability. Any provision of
this Agreement which is prohibited or unenforceable in any ju-
risdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without in-
validating the remaining provisions hereof. Any such prohibi-
tion or unenforceability in any jurisdiction shall not invali-
date or render unenforceable such provision in any other juris-
diction.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the day and year first
above written.
▇▇▇▇▇▇ INTERNATIONAL, INC.
By /s/ P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President and Secretary
NEW ▇▇▇▇▇▇ INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Human Resources