Exhibit 2.2
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Conformed Copy
COMBINATION AGREEMENT
AMONG
AUTOLIV AB,
▇▇▇▇▇▇ INTERNATIONAL, INC.,
AUTOLIV, INC.
AND
ASP MERGER SUB INC.
Dated as of November 25, 1996
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TABLE OF CONTENTS
ARTICLE I
THE MERGER............................. 3
Section 1.1 The Merger ................................................. 3
Section 1.2 Effective Time; Closing .................................... 4
Section 1.3 Effect of the Merger ....................................... 4
Section 1.4 Certificate of Incorporation; By-Laws; Corporate Name ...... 4
Section 1.5 Directors and Officers of the Surviving Corporation ........ 4
ARTICLE II
CONVERSION OF SECURITIES IN THE MERGER................ 5
Section 2.1 Conversion of Capital Stock ................................ 5
Section 2.2 Exchange of Certificates ................................... 5
Section 2.3 Stock Transfer Books ....................................... 9
Section 2.4 Employee/Director Stock Options ............................ 9
ARTICLE III
ADDITIONAL TRANSACTIONS...................... 10
Section 3.1 The Exchange Offer ......................................... 10
Section 3.2 Depositary ................................................. 11
Section 3.3 Compulsory Acquisition ..................................... 12
Section 3.4 Spinoff .................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇............. 12
Section 4.1 Organization and Qualification; Subsidiaries ............... 12
Section 4.2 Certificate of Incorporation and By-Laws ................... 13
Section 4.3 Capitalization ............................................. 13
Section 4.4 Authority Relative to this Agreement ....................... 14
Section 4.5 No Conflict; Required Filings and Consents ................. 15
Section 4.6 Permits; Compliance ........................................ 16
Section 4.7 SEC Filings; Financial Statements .......................... 17
Section 4.8 Absence of Certain Changes or Events ....................... 18
Section 4.9 Employee Benefit Plans; Labor Matters ...................... 19
Section 4.10 Tax Matters ................................................ 23
Section 4.11 Contracts; Debt Instruments ................................ 25
Section 4.12 Litigation ................................................. 25
Section 4.13 Environmental Matters ...................................... 26
Section 4.14 Trademarks, Patents and Copyrights ......................... 27
Section 4.15 No Violation of Spinco Representations ..................... 27
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Section 4.16 Rights Agreement ........................................... 27
Section 4.17 Opinion of Financial Advisor ............................... 28
Section 4.18 Brokers .................................................... 28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AUTOLIV............ 28
Section 5.1 Organization and Qualification; Subsidiaries ............... 28
Section 5.2 Corporate Organization Documents ........................... 29
Section 5.3 Capitalization ............................................. 29
Section 5.4 Authority Relative to this Agreement ....................... 29
Section 5.5 No Conflict; Required Filings and Consents ................. 30
Section 5.6 Permits; Compliance ........................................ 31
Section 5.7 Stock Exchange and SEC Filings; Financial Statements ....... 31
Section 5.8 Absence of Certain Changes or Events ....................... 32
Section 5.9 Employee Benefit Plans; Labor Matters ...................... 33
Section 5.10 Tax Matters ................................................ 37
Section 5.11 Contracts; Debt Instruments ................................ 38
Section 5.12 Litigation ................................................. 38
Section 5.13 Environmental Matters ...................................... 39
Section 5.14 Trademarks, Patents and Copyrights ......................... 39
Section 5.15 Opinions of Financial Advisors ............................. 40
Section 5.16 Brokers .................................................... 40
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO AND NEWCO SUB....... 40
Section 6.1 Organization and Qualification; Subsidiaries ............... 40
Section 6.2 Certificate of Incorporation and By-Laws ................... 41
Section 6.3 Capitalization ............................................. 41
Section 6.4 Authority Relative to this Agreement ....................... 42
Section 6.5 No Conflict ................................................ 42
Section 6.6 No Activities .............................................. 42
ARTICLE VII
COVENANTS.............................. 43
Section 7.1 Conduct of Business by ▇▇▇▇▇▇ Pending the Closing .......... 43
Section 7.2 Conduct of Business by Autoliv Pending the Closing ......... 46
Section 7.3 Cooperation; Liaison Committee ............................. 49
Section 7.4 Notices of Certain Events .................................. 49
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ARTICLE VIII
ADDITIONAL AGREEMENTS........................ 50
Section 8.1 Registration Statements .................................... 50
Section 8.2 Stockholders' Meetings ..................................... 53
Section 8.3 Access to Information; Confidentiality ..................... 54
Section 8.4 No Solicitation of Transactions ............................ 55
Section 8.5 Employee Benefits Matters .................................. 57
Section 8.6 Directors' and Officers' Indemnification and Insurance ..... 57
Section 8.7 Affiliate Letters .......................................... 59
Section 8.8 Letters of Accountants ..................................... 60
Section 8.9 Further Action; Consents; Filings .......................... 60
Section 8.10 Newco Organization ......................................... 62
Section 8.11 Depositary Facility for Newco Common Stock ................. 63
Section 8.12 Plan of Reorganization ..................................... 63
Section 8.13 Ancillary Agreements ....................................... 64
Section 8.14 Year-End Financial Statements .............................. 64
Section 8.15 Public Announcements ....................................... 65
Section 8.16 Obligations of Newco Sub. .................................. 65
Section 8.17 Stock Exchange Listings and De-listings .................... 65
Section 8.18 Maintenance of Certain Facilities; Corporate Headquarters .. 66
Section 8.19 Cancellation of Newco Common Stock Owned by Autoliv and Morton66
Section 8.20 Delivery of Tax Certificates ............................... 66
Section 8.21 Safety Credit Agreement .................................... 66
Section 8.22 Post-Closing Transactions .................................. 66
ARTICLE IX
CONDITIONS TO THE TRANSACTIONS.................... 67
Section 9.1 Conditions to the Obligations of Each Party to Consummate
the Transactions......................................... 67
Section 9.2 Conditions to the Obligations of ▇▇▇▇▇▇ .................... 69
Section 9.3 Conditions to the Obligations of Autoliv ................... 70
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER................. 71
Section 10.1 Termination ................................................ 71
Section 10.2 Effect of Termination ...................................... 74
Section 10.3 Amendment .................................................. 74
Section 10.4 Waiver ..................................................... 74
Section 10.5 Expenses ................................................... 75
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ARTICLE XI
GENERAL PROVISIONS......................... 77
Section 11.1 Non Survival of Representations, Warranties and Agreements . 77
Section 11.2 Notices .................................................... 77
Section 11.3 Certain Definitions ........................................ 78
Section 11.4 Severability ............................................... 80
Section 11.5 Assignment; Binding Effect; Benefit ........................ 80
Section 11.6 Schedules, Annexes and Exhibits ............................ 80
Section 11.7 Specific Performance ....................................... 80
Section 11.8 Governing Law .............................................. 81
Section 11.9 Submission to Jurisdiction; Venue .......................... 81
Section 11.10 Headings ................................................... 81
Section 11.11 Counterparts ............................................... 82
Section 11.12 Entire Agreement ........................................... 82
ANNEX A Employee Benefits
Exhibit A Form of Distribution Agreement
Exhibit B Form of Certificate of Incorporation of Surviving Corporation
Exhibit C Form of ▇▇▇▇▇▇ Affiliate Letter
Exhibit D Form of Autoliv Affiliate Letter
Schedule A ▇▇▇▇▇▇ Disclosure Schedule
Schedule B Autoliv Disclosure Schedule
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INDEX OF DEFINED TERMS FOR COMBINATION AGREEMENT
Defined Term Section
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ADSs Recitals
Affiliate 8.7(a)
affiliate 11.3(a)
Agreement Recitals
Ancillary Agreements Recitals
Autoliv Recitals
Autoliv Authorized Agent 11.9
Autoliv Disclosure Schedule 5.9(a)
Autoliv ERISA Affiliate 5.9(a)
Autoliv Foreign Benefit Plan 5.9(n)
Autoliv Material Adverse Effect 5.1
Autoliv Permits 5.6
Autoliv Plans 5.9(a)
Autoliv Reports 5.7(a)
Autoliv Securities Recitals
Autoliv Shares Recitals
Autoliv Tax Certificate 9.1(g)(ii)(B)
Autoliv Transaction Recitals
beneficial owner 11.3(b)
Blackstone 5.15
Blue Sky Laws 4.5(b)
business day 11.3 (c)
CERCLA 4.13(d)
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Defined Term Section
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Certificates 2.2(a)
Code Recitals
Competing Transaction 8.4(d)
Confidentiality Agreements 8.3(b)
Contracting Subsidiary 4.4
control 11.3(d)
controlled by 11.3(d)
Costs 8.6 (d)
Delaware Certificate of Merger 1.2
Delaware Law Recitals
Depositary 3.2
Distribution Agreement Recitals
Effective Time 1.2
Employee Benefits Allocation Agreement Recitals
Enskilda 5.15
Environmental Laws 4.13(d)
Environmental Permits 4.13(d)
Exchange Act 4.5 (b)
Exchange Agent 2.2(a)
Exchange Fund 2.2(a)
Exchange Offer Recitals
Exchange Offer Commencement Date 3.1(a)
Exchange Offer Conditions 3.1(a)
Exchange Offer Ratio 3.1(a)
Exchange Ratio 2.1(a)
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Defined Term Section
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Executive Management Committee 8.10(b)
Expenses 10.5(b)
Expiration Date 3.1(a)
FSA 3.1(b)
▇▇▇▇▇▇▇ ▇▇▇▇▇ 4.17
Governmental Entity 4.5(b)
Hazardous Materials 4.13(d)
HSR Act 4.5 (b)
Indemnified Parties 8.6(d)
Indiana Articles of Merger 1.2
Indiana Law Recitals
International Prospectus 5.15
knowledge 11.3(e)
Law 4.5(a)
Liaison Committee 7.3(b)
Merger Recitals
Minimum Condition 3.1(a)
▇▇▇▇▇▇ Recitals
▇▇▇▇▇▇ Disclosure Schedule 4.3
▇▇▇▇▇▇ ERISA Affiliate 4.9(a)
▇▇▇▇▇▇ Foreign Benefit Plan 4.9(n)
▇▇▇▇▇▇ Material Adverse Effect 4.1
▇▇▇▇▇▇ Material Contract 4.11
▇▇▇▇▇▇ Option Plan 2.4
▇▇▇▇▇▇ Options 2.4
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Defined Term Section
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▇▇▇▇▇▇ Permits 4.6
▇▇▇▇▇▇ Plans 4.9(a)
▇▇▇▇▇▇ Preferred Stock 4.3
▇▇▇▇▇▇ SEC Reports 4.7(a)
▇▇▇▇▇▇ Shares Recitals
▇▇▇▇▇▇ Stockholder Approval Condition 3.1(a)
▇▇▇▇▇▇ Stockholders' Meeting 8.1(a)
▇▇▇▇▇▇ Tax Certificate 9.1(g)(ii)(A)
Newco Recitals
Newco Common Stock Recitals
Newco Option Plan 2.4
Newco Sub Recitals
Newco Sub Common Stock 6.3(b)
Newco Registration Statement 8.1(a)
Newco Tax Certificate 9.1(g)(ii)(A)
NYSE 2.2(e)
Order 8.9(b)(ii)
PBGC 4.9(c)
person 11.3(f)
Proxy/Prospectus 8.1(a)
Registration Statements 8.1(a)
Registration Statement Effective Date 8.1(a)
Regulations Recitals
Representatives 8.3(a)(i)
Retained Business 4.1
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Defined Term Section
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Retained Business Balance Sheet 4.7(c)
Retained Business Intellectual Property 4.14
Retained Debt 7.1(e)(ii)
Retained ▇▇▇▇▇▇ Subsidiaries 4.1
Rights 4.16
Rights Agreement 4.3
SDRs Recitals
SEC 2.4
Securities Act 4.5 (b)
Skadden LLP 9.1(g)(ii)(B)
SPD 4.9 (b)
Spinco Recitals
Spinco Common Stock Recitals
Spinco Registration Statement 8.1(a)
Spinoff Recitals
SSE 3.1(b)
subsidiaries 11.3(g)
subsidiary 11.3(g)
Surviving Corporation 1.1
Swedish Prospectus 3.1(b)
Tax Return 4.10(b)
Tax Sharing Agreement Recitals
Taxes 4.10(b)
Terminating Autoliv Breach 10.1(h)
Terminating ▇▇▇▇▇▇ Breach 10.1(g)
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Defined Term Section
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Third Party Provisions 11.5
Third-Party Transaction 8.4(c)
Transactions Recitals
under common control with 11.3(d)
U.S. Offer to Purchase 8.1(a)
Wachtell 9.1(g)(ii)(A)
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COMBINATION AGREEMENT
COMBINATION AGREEMENT, dated as of November 25, 1996 (this
"Agreement"), by and among Autoliv AB, a corporation organized under the laws of
the Kingdom of Sweden ("Autoliv"), ▇▇▇▇▇▇ International, Inc., an Indiana
corporation ("▇▇▇▇▇▇"), Autoliv, Inc., a newly formed Delaware corporation
("Newco"), and ASP Merger Sub Inc., a Delaware corporation and a wholly-owned
subsidiary of Newco ("Newco Sub").
WHEREAS, Autoliv and ▇▇▇▇▇▇ have entered into a non-binding letter
of intent, dated September 30, 1996, providing for, among other things, the
creation of a new holding company, Newco, to combine Autoliv and the automotive
safety products business of ▇▇▇▇▇▇ and in which the shareholders of Autoliv and
▇▇▇▇▇▇ would receive an equity interest of 53.5% and 46.5%, respectively;
WHEREAS, the Boards of Directors of Autoliv and ▇▇▇▇▇▇ have
determined that it is in the best interests of their respective companies and
stockholders to combine Autoliv with ▇▇▇▇▇▇'▇ automotive safety products
businesses in a "merger of equals" transaction to be effected as set forth in
this Agreement, and the boards of directors of Newco and Newco Sub have
determined that it is also in the respective best interests of their companies
and stockholders to consummate the transactions contemplated by this Agreement;
WHEREAS, the Board of Directors of ▇▇▇▇▇▇ has approved a
Distribution Agreement in the form attached hereto as Exhibit A (the
"Distribution Agreement"), which will be entered into prior to the Effective
Time (as defined in Section 1.2), pursuant to which and subject to the terms of
which (a) all of the assets of ▇▇▇▇▇▇ other than the Safety Assets (as defined
in the Distribution Agreement), together with a capital contribution or
repayment in cash of intercompany indebtedness in the aggregate amount of
$750,000,000, and the Safety Supplemental Distribution (as defined in the
Distribution Agreement), subject to adjustment in accordance with Section
2.10(b) of the Distribution Agreement, will be contributed or paid by ▇▇▇▇▇▇ to
a newly formed, wholly owned subsidiary of ▇▇▇▇▇▇ ("Spinco") or a subsidiary of
Spinco, (b) all of the liabilities of ▇▇▇▇▇▇ other than the Safety Liabilities
(as defined in the Distribution Agreement) will be assumed by Spinco, (c) all of
the issued and outstanding shares of common stock, par value $1 per share, of
Spinco (the "Spinco Common Stock"), including associated preferred share
purchase rights of Spinco, will be distributed (the "Spinoff") to the holders of
common stock, par value $1 per share, of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Shares"), and (d)
▇▇▇▇▇▇ will be divested of all of its businesses and operations other than those
included in the Safety Business (as defined in the Distribution Agreement),
including, without limitation, the Adhesives & Chemical Specialties Group, the
Coatings Group, the Electronic Materials Group, the Salt Group and the Corporate
Operations (as defined in the Distribution Agreement);
WHEREAS, upon the terms and subject to the conditions of this
Agreement, (i) Newco will acquire pursuant to an exchange offer (the "Exchange
Offer") and, if necessary, through compulsory acquisition proceedings in
accordance with the Swedish Companies Act or otherwise (collectively, the
"Autoliv Transaction"), all the issued and outstanding Common Shares, par value
SEK 10 per share, of Autoliv (the "Autoliv Shares") and American Depositary
Shares, each representing one Autoliv Share (the "ADSs" and, collectively with
the Autoliv Shares, the "Autoliv Securities") and (ii) Newco will acquire,
pursuant to the merger (the "Merger", and together with the Autoliv Transaction,
the "Transactions") of Newco Sub with and into ▇▇▇▇▇▇ in accordance with the
General Corporation Law of the State of Delaware (the "Delaware Law") and the
Indiana Business Corporation Law (the "Indiana Law"), all the issued and
outstanding ▇▇▇▇▇▇ Shares;
WHEREAS, (a) as a result of the Transactions, Autoliv and ▇▇▇▇▇▇
will become, directly or indirectly, wholly owned subsidiaries of Newco, and (b)
the holders of Autoliv Securities (other than Autoliv Securities acquired
through compulsory acquisition proceedings or as otherwise described herein) and
▇▇▇▇▇▇
Shares will receive either (i) newly issued shares of Common Stock, par
value $.01 per share, of Newco (the "Newco Common Stock") or (ii) if deemed
appropriate by Autoliv, in the case of certain holders of Autoliv Shares,
Swedish Depositary Receipts ("SDRs"), each SDR evidencing one share of Newco
Common Stock;
WHEREAS, as set forth in Section 8.13 hereof, as a condition to and
in consideration of the transactions contemplated hereby and by the Distribution
Agreement, ▇▇▇▇▇▇, Spinco and certain other parties are entering or will enter
into (a) a Tax Sharing Agreement in the form attached as Exhibit D to the
Distribution Agreement (the "Tax Sharing Agreement"), (b) an Employee Benefits
Allocation Agreement in the form attached as Exhibit A to the Distribution
Agreement (the "Employee Benefits Allocation Agreement" and, together with the
Distribution Agreement and the Tax Sharing Agreement, here after collectively
referred to as the "Ancillary Agreements");
WHEREAS, for United States federal income tax purposes, the Spinoff
is intended to qualify as a tax-free distribution under the provisions of
Sections 355 and 368(a)(1)(D) of the United States Internal Revenue Code of
1986, as amended (the "Code") and the Treasury Regulations (the "Regulations")
thereunder, the Merger is intended to qualify as a reorganization under the
provisions of Section 368(a) of the Code and Regulations thereunder, and the
Exchange Offer, together with the Merger, is intended to qualify as a transfer
of property described in Section 351(a) of the Code and Regulations thereunder,
and it is further intended that, for Swedish income tax purposes, none of Newco,
Autoliv or the Autoliv stockholders (with certain exceptions) will recognize
taxable income or gain as a result of the Exchange Offer;
WHEREAS, the Board of Directors of Autoliv has approved the Autoliv
Transaction and recommended that all the stockholders of Autoliv tender their
Autoliv Securities into the Exchange Offer;
WHEREAS, the Board of Directors of ▇▇▇▇▇▇ has adopted this Agreement
and approved the Spinoff and recommended that the stockholders of ▇▇▇▇▇▇ vote to
approve this Agreement, the Merger and the transactions contemplated by the
Distribution Agreement upon the terms and subject to the conditions contained
herein and therein; and
WHEREAS, this Agreement has been approved by the Boards of Directors
of Newco and Newco Sub, adopted by Autoliv and ▇▇▇▇▇▇ as the sole stockholders
of Newco, and adopted by Newco as sole stockholder of Newco Sub in accordance
with the Delaware Law.
NOW THEREFORE, in consideration of the foregoing and the Ancillary
Agreements and the mutual covenants and agreements herein contained and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Provided that this Agreement shall not have
been terminated in accordance with Section 10.1, upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with Section 252
of the Delaware Law and Section 23-1-40-7 of the Indiana Law, at the Effective
Time Newco Sub shall be merged with and into ▇▇▇▇▇▇. As a result of the Merger,
the separate corporate existence of Newco Sub shall cease and ▇▇▇▇▇▇ shall be
the surviving corporation of the Merger (the "Surviving Corporation").
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Section 1.2 Effective Time; Closing. Provided that this Agreement
shall not have been terminated in accordance with Section 10.1, as promptly as
practicable after the Spinoff and satisfaction or, if permissible and effected
as provided in Section 10.4, waiver of the Exchange Offer Conditions (as
hereinafter defined) (or such other date as may be agreed to in writing by
Autoliv and ▇▇▇▇▇▇), and substantially contemporaneously with the purchase of
Autoliv Securities by Newco pursuant to the Autoliv Transaction, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Delaware Certificate of Merger") with the Secretary of State of the
State of Delaware in such form as required by, and executed in accordance with,
Section 252 of the Delaware Law, and articles of merger (the "Indiana Articles
of Merger") with the Secretary of State of the State of Indiana in such form as
required by, and executed in accordance with, Section 23-1-40-5 of the Indiana
Law. The Merger shall become effective upon the date (the "Effective Time") on
which the Delaware Certificate of Merger and the Indiana Articles of Merger have
been duly filed with the Secretary of State of the State of Delaware and the
Secretary of State of the State of Indiana, respectively, or at such later date
or time as set forth therein.
Section 1.3 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the Delaware Law and the Indiana Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Retained Business (as defined in Section 4.1) and Newco Sub shall be vested
in the Surviving Corporation, and all debts, liabilities and duties of the
Retained Business and Newco Sub shall become the debts, liabilities and duties
of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-Laws; Corporate Name.
At the Effective Time, (a) the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated in its entirety to read in the form
attached hereto as Exhibit B with such changes between the date hereof and the
Effective Time as agreed to by the parties hereto, and (b) the By-laws of Newco
Sub, as in effect immediately prior to the Effective Time, shall become the
By-laws of the Surviving Corporation.
Section 1.5 Directors and Officers of the Surviving Corporation. (a)
The directors of Newco Sub at the Effective Time shall, from and after the
Effective Time, become the directors of the Surviving Corporation until their
successors shall have been elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws and (b) the officers of
▇▇▇▇▇▇ at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors shall have been
elected or appointed or qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-laws.
ARTICLE II
CONVERSION OF SECURITIES IN THE MERGER
Section 2.1 Conversion of Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of ▇▇▇▇▇▇, Newco Sub,
Newco or the holders of any ▇▇▇▇▇▇ Shares:
(a) each ▇▇▇▇▇▇ Share issued and outstanding immediately prior
to the Effective Time (other than any ▇▇▇▇▇▇ Shares to be cancelled pursuant to
Section 2.1(b)) shall be converted, subject to Section 2.2(e), into the right to
receive a number of shares (the "Exchange Ratio") of Newco Common Stock equal to
the quotient, rounded to the nearest thousandth, or if there shall not be a
nearest thousandth, the next highest thousandth, of (i) 47,803,738 divided by
(ii) the number of ▇▇▇▇▇▇ Shares issued and outstanding
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immediately prior to the Effective Time (other than any ▇▇▇▇▇▇ Shares to be
cancelled pursuant to Section 2.1(b));
(b) each ▇▇▇▇▇▇ Share held in the treasury of ▇▇▇▇▇▇ and each
▇▇▇▇▇▇ Share owned by Autoliv or any direct or indirect wholly owned subsidiary
of Autoliv or of ▇▇▇▇▇▇ shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto; and
(c) each issued and outstanding share of common stock, par
value $.01 per share, of Newco Sub shall be converted into one duly authorized,
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. Newco shall deposit, or shall cause to be
deposited, promptly after the Effective Time with a bank trust company
designated by ▇▇▇▇▇▇ and reasonably satisfactory to Autoliv (the "Exchange
Agent"), for the benefit of the holders of certificates that immediately prior
to the Effective Time represented outstanding ▇▇▇▇▇▇ Shares (the
"Certificates"), for exchange in accordance with this Article II through the
Exchange Agent, certificates representing the shares of Newco Common Stock
issuable pursuant to Section 2.1(a) (such certificates for shares of Newco
Common Stock, together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund"). Newco shall give the
Exchange Agent irrevocable instructions to deliver the shares of Newco Common
Stock contemplated to be issued pursuant to Section 2.1 out of the Exchange Fund
as promptly as practicable after the Effective Time. Except as contemplated by
Section 2.2(f) hereof, the Exchange Fund shall not be used for any other
purpose. Newco shall pay all charges and expenses, including those of the
Exchange Agent, in connection with the exchange of Certificates for certificates
representing shares of Newco Common Stock and cash as contemplated hereby.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Newco shall cause the Exchange Agent to mail to each registered
holder of a Certificate (i) a letter of transmittal (which shall be in customary
form and shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Newco Common Stock and cash in lieu of any fractional shares. Upon
surrender to the Exchange Agent of a Certificate for exchange, together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Newco Common Stock that such holder has the right to receive in
respect of such Certificate (after taking into account all ▇▇▇▇▇▇ Shares then
held by such holder), a check in the amount of any cash in lieu of any
fractional shares of Newco Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.2(c), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of ▇▇▇▇▇▇ Shares that is not registered in the transfer records of
▇▇▇▇▇▇, a certificate representing the proper number of shares of Newco Common
Stock, cash in lieu of any fractional shares of Newco Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c) may be
issued to a transferee if the Certificate representing such ▇▇▇▇▇▇ Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender a certificate or
certificates representing shares of Newco Common Stock, cash in lieu of any
fractional shares of Newco Common
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Stock to which such holder is entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(c).
(c) Distributions with Respect to Unexchanged Newco Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to the Newco Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Newco Common Stock represented thereby, and no cash payment in
lieu of any fractional shares shall be paid to any such holder pursuant to
Section 2.2(e), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable Laws (as
defined in Section 4.5(a)), following surrender of any such Certificate, there
shall be paid to the holder of the certificate representing whole shares of
Newco Common Stock issued in exchange therefor, without interest, (i) promptly,
the amount of any cash payable with respect to a fractional share of Newco
Common Stock to which such holder is entitled pursuant to Section 2.2(e) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore declared or made with respect to such whole
shares of Newco Common Stock but unpaid because of such holder's failure to
surrender such Certificate, and (ii) at the appropriate payment date, the amount
of dividends or other distributions, with a record date after the Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Newco Common Stock.
(d) No Further Rights in ▇▇▇▇▇▇ Shares. All shares of Newco
Common Stock issued upon conversion of the ▇▇▇▇▇▇ Shares in accordance with the
terms hereof (and any cash paid pursuant to Section 2.2(c) or (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
▇▇▇▇▇▇ Shares.
(e) No Fractional Shares. No certificates or scrip
representing fractional shares of Newco Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a stockholder of
Newco. Each holder of a fractional share interest shall be paid an amount in
cash representing the product of (i) such fractional amount and (ii) the average
for each of the first five trading days beginning immediately following the
Effective Time of the average of the daily high and low trading prices on the
New York Stock Exchange, Inc. ("NYSE") of Newco Common Stock. As soon as
practicable after the determination of the amount of cash, if any, to be paid to
former holders of ▇▇▇▇▇▇ Shares in lieu of any fractional shares of ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ shall deposit an estimate of such amount into the Exchange Fund,
and the Exchange Agent shall make available such amounts to such former holders
of ▇▇▇▇▇▇ Shares without interest. For purposes of paying such cash in lieu of
fractional shares, all Certificates surrendered for exchange on the same letter
of transmittal shall be aggregated, with the holder thereof receiving the
aggregate whole number of shares of Newco Common Stock, and no ▇▇▇▇▇▇
stockholder will receive cash in lieu of fractional shares in an amount equal to
or greater than the value of one full share of Newco Common Stock with respect
to such surrendered Certificates. As necessary to provide sufficient funds to
make the payments in lieu of fractional shares described in this paragraph,
Newco shall deposit additional funds into the Exchange Fund so that the Exchange
Agent may promptly deliver such funds to the former holders of ▇▇▇▇▇▇ Shares.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the former holders of ▇▇▇▇▇▇ Shares for six
months after the Effective Time shall be delivered to Newco, upon demand, and
any holders of Certificates shall thereafter look only to Newco for Newco Common
Stock, any cash in lieu of fractional shares of Newco Common Stock to which they
are entitled pursuant to Section 2.2(e) and any dividends or other distributions
with respect to the Newco Common Stock to which they are entitled pursuant to
Section 2.2(c). Neither Newco nor the Surviving Corporation shall be liable to
any holder of ▇▇▇▇▇▇ Shares for any shares of Newco Common Stock (or dividends
or
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distributions with respect thereto) or cash in lieu of fractional shares
delivered to a public official pursuant to any abandoned property, escheat or
similar Law.
(g) Withholding Rights. Each of the Surviving Corporation and
Newco shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of ▇▇▇▇▇▇ Shares such amounts
as it is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Surviving Corporation or Newco,
as the case may be, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the ▇▇▇▇▇▇ Shares in respect
of which such deduction and withholding was made by the Surviving Corporation or
Newco, as the case may be.
(h) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Newco Common Stock, any cash in lieu of fractional shares of
Newco Common Stock to which the holders thereof are entitled pursuant to Section
2.2(e) and any dividends or other distributions to which the holders thereof are
entitled pursuant to Section 2.2(c).
Section 2.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of ▇▇▇▇▇▇ shall be closed and there shall be no further
registration of transfers of ▇▇▇▇▇▇ Shares thereafter on the records of ▇▇▇▇▇▇.
From and after the Effective Time, the holders of Certificates representing
▇▇▇▇▇▇ Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to ▇▇▇▇▇▇ Shares represented thereby, except as
otherwise provided herein or by Law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or Newco for any reason shall be
converted into shares of Newco Common Stock, any cash in lieu of fractional
shares of Newco Common Stock to which the holders thereof are entitled pursuant
to Section 2.2(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.2(c).
Section 2.4 Employee/Director Stock Options. ▇▇▇▇▇▇ and Newco shall
cooperate and take all action necessary (including obtaining the consent of the
holders of options to acquire ▇▇▇▇▇▇ Shares pursuant to the ▇▇▇▇▇▇
International, Inc. 1989 Incentive Plan or any predecessor thereof (such
options, the "▇▇▇▇▇▇ Options" and such plan, the "▇▇▇▇▇▇ Option Plan"), if
required, and, if deemed necessary or appropriate, seeking a "no-action" letter
or interpretive advice from the Securities and Exchange Commission (the "SEC")
to amend (if necessary) the ▇▇▇▇▇▇ Option Plan and to adopt an option plan of
Newco (the "Newco Option Plan")) so that as of the Effective Time, each ▇▇▇▇▇▇
Option which is outstanding and not exercised prior to the Effective Time and
which is held by a Company Individual (as defined in the Employee Benefits
Allocation Agreement) shall, without any action on the part of the holder
thereof, be converted into an option to purchase shares of Newco Common Stock,
the number of shares of Newco Common Stock subject to, and the exercise 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 daily high and low trading prices on the NYSE for the ▇▇▇▇▇▇
Shares for each of the last five trading days prior to the earlier of the
Effective Time and the Distribution Date (as defined in the Distribution
Agreement) (unless, prior thereto, the ▇▇▇▇▇▇ Shares trade ex-dividend with
respect to either or both the Spinoff and the Merger, in which case the average
shall be based on such prices for each of the last five trading days prior to
the date on which the ▇▇▇▇▇▇ Shares trade on the NYSE ex-dividend with respect
to either such transaction) and (b) the average of the high and low trading
prices on the NYSE for the Newco Common Stock for each of the first five trading
days following the Effective Time on which the Newco Common Stock is traded
regular way on the NYSE, such option to be subject to substantially similar
terms and conditions as in effect prior to the conversion,
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including, without limitation, to the extent such option to purchase ▇▇▇▇▇▇
Shares is exercisable as of the Effective Time, such option to purchase shares
of Newco Common Stock shall be immediately exercisable to the same extent. The
exercise price of any such option shall be rounded to the nearest $.01; the
number of shares subject to any such option shall be rounded to the nearest
share. Any related limited stock appreciation rights or supplemental cash
payment rights held by Company Individuals shall be adjusted in a consistent
manner and shall be assumed by, and become the responsibility of, Newco. ▇▇▇▇▇▇
Options held by New ▇▇▇▇▇▇ Individuals (as defined in the Employee Benefits
Allocation Agreement) shall be adjusted at or prior to the Effective Time to
become options to acquire Spinco Common Stock pursuant to the terms of the
Employee Benefits Allocation Agreement.
ARTICLE III
ADDITIONAL TRANSACTIONS
Section 3.1 The Exchange Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 10.1, Newco shall commence the Exchange
Offer on or as soon as practicable after the Registration Statement Effective
Date (the "Exchange Offer Commencement Date") as contemplated by the U.S. Offer
to Purchase and the Swedish Prospectus (each as hereinafter defined) and
otherwise in accordance with applicable Laws. Pursuant to the Exchange Offer,
(i) Newco shall offer to exchange for each Autoliv Share, subject to the
conditions set forth below, one share of Newco Common Stock or, if deemed
appropriate by Newco, one SDR and (ii) Newco shall offer to exchange for each
ADS, subject to the conditions set forth below, one share of Newco Common Stock
(the "Exchange Offer Ratio"). The obligation of Newco to exchange Newco Common
Stock for Autoliv Securities tendered pursuant to the Exchange Offer shall be
subject only to this Agreement not having been terminated pursuant to Section
10.1 and the satisfaction or waiver, if permissible and effected as provided in
Section 10.4, of (i) the condition that a number of Autoliv Securities
representing more than 90% of the number of shares and voting power of the then
outstanding Autoliv Securities shall have been validly tendered and not
withdrawn prior to the expiration of the Exchange Offer (the "Minimum
Condition"), (ii) the condition that this Agreement and the transactions
contemplated by the Distribution Agreement shall have been approved by the
holders of a majority of the issued and outstanding ▇▇▇▇▇▇ Shares in accordance
with the Indiana Law and ▇▇▇▇▇▇'▇ Restated Articles of Incorporation and By-Laws
(the "▇▇▇▇▇▇ Stockholder Approval Condition") and (iii) the other conditions set
forth in Article IX of this Agreement occurring prior to, or substantially
contemporaneously with, the Effective Time (together with the Minimum Condition
and the ▇▇▇▇▇▇ Stockholder Approval Condition, the "Exchange Offer Conditions").
The initial expiration date of the Exchange Offer shall be the date which is 20
business days after the Exchange Offer Commencement Date (such date, as it may
be extended from time to time as hereinafter provided, the "Expiration Date").
If on the initial scheduled Expiration Date all the Exchange Offer Conditions
shall not have been satisfied and this Agreement shall not have been terminated
in accordance with Section 10.1, Newco shall, unless ▇▇▇▇▇▇ and Autoliv
otherwise agree, extend the Expiration Date from time to time thereafter until
such time as all of the Exchange Offer Conditions have been satisfied; provided,
however, that unless a Third-Party Transaction involving Autoliv has theretofore
been proposed, neither party shall unreasonably object if the other party
determines not to extend the Expiration Date if the Minimum Condition has not
been satisfied at such time following (i) the date of the ▇▇▇▇▇▇ Stockholders'
Meeting and (ii) the satisfaction of the conditions set forth in Section 9.1(e),
(f) and (g)(i). Subject only to the conditions set forth above and applicable
Law, Newco shall accept for exchange and shall exchange all Autoliv Securities
validly tendered and not withdrawn pursuant to the terms of the Exchange Offer
at the earliest practicable time following the Expiration Date.
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(b) Prior to or substantially contemporaneously with the
Exchange Offer Commencement Date, Newco shall file a Swedish language prospectus
(the "Swedish Prospectus") with the Stockholm Stock Exchange (the "SSE") or with
the Financial Supervisory Authority (the "FSA"), as required by the Laws of
Sweden.
Section 3.2 Depositary. Newco shall appoint a bank or trust company
designated by Autoliv and reasonably satisfactory to ▇▇▇▇▇▇ to act as depositary
for the Exchange Offer (the "Depositary").
Section 3.3 Compulsory Acquisition.
(a) As soon as practicable after the Effective Time, assuming
that the Minimum Condition has been satisfied and not waived, Newco shall take
or cause to be taken (through a Swedish subsidiary), unless the parties mutually
agree that there is a more effective method of achieving the objectives
described in this Section 3.3 (in which case such method shall be used), all
actions necessary and proper under the Swedish Companies Act to commence a
process leading to a compulsory acquisition under the Swedish Companies Act to
acquire all the issued and outstanding Autoliv Securities not acquired by Newco
pursuant to the Exchange Offer or otherwise.
(b) In the event of consummation of the Transactions following
the waiver of the Minimum Condition effected as provided in Section 10.4, Newco
shall, as promptly as practicable following the Effective Time, conduct,
directly or indirectly, such other offers (including, without limitation,
pursuant to open market purchases) as are necessary to obtain, when aggregated
with the number of shares and voting power of Autoliv Securities already owned
by it, more than 90% of the number of shares and voting power of the then
outstanding Autoliv Securities. Thereafter, Newco shall take the actions
described in Section 3.3(a).
Section 3.4 Spinoff. Subject to Section 3.03 of the Distribution
Agreement, ▇▇▇▇▇▇ shall use reasonable efforts to consummate as promptly as
reasonably practicable the transactions provided for in the Distribution
Agreement, including, without limitation, the Spinoff.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ hereby represents and warrants to Autoliv that:
Section 4.1 Organization and Qualification; Subsidiaries. Each of
▇▇▇▇▇▇ and each subsidiary of ▇▇▇▇▇▇ that will be owned, directly or indirectly,
by Newco following the Spinoff (the "Retained ▇▇▇▇▇▇ Subsidiaries") has been
duly organized, and is validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, as the case may be, and
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a ▇▇▇▇▇▇ Material Adverse Effect
(defined below). Each of ▇▇▇▇▇▇ and the Retained ▇▇▇▇▇▇ Subsidiaries is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a ▇▇▇▇▇▇
Material Adverse Effect. For purposes of this Agreement, "▇▇▇▇▇▇ Material
Adverse Effect" means any change in or effect on the business that will be
retained by ▇▇▇▇▇▇ and the Retained ▇▇▇▇▇▇ Subsidiaries following the Spinoff
(the "Retained Business"),
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after giving effect to the Transactions and the provisions of the Distribution
Agreement and the other Ancillary Agreements, that is, or is reasonably likely
to be, materially adverse to the business, properties, financial condition or
results of operations of the Retained Business taken as a whole.
Section 4.2 Certificate of Incorporation and By-Laws. The copies of
▇▇▇▇▇▇'▇ Restated Articles of Incorporation and By-Laws that are set forth as
exhibits to ▇▇▇▇▇▇'▇ Form 10-K for the year ended June 30, 1996 are complete and
correct copies thereof. Such Restated Articles of Incorporation and By-Laws are
in full force and effect. ▇▇▇▇▇▇ is not in violation of any of the provisions of
its Restated Articles of Incorporation or By-Laws. ▇▇▇▇▇▇ has heretofore
delivered or made available to Autoliv accurate and complete copies of the
certificates of incorporation and by-laws or equivalent organizational documents
as currently in effect of each of the Retained ▇▇▇▇▇▇ Subsidiaries.
Section 4.3 Capitalization. The authorized capital stock of ▇▇▇▇▇▇
consists of (a) 300,000,000 ▇▇▇▇▇▇ Shares and (b) 25,000,000 shares of preferred
stock, par value $1.00 per share. As of October 31, 1996 (i) 142,636,930 ▇▇▇▇▇▇
Shares were issued and outstanding, all of which were validly issued, fully paid
and nonassessable, (ii) 6,348,999 ▇▇▇▇▇▇ Shares were reserved for issuance upon
exercise of outstanding stock options granted pursuant to the ▇▇▇▇▇▇ Option Plan
and (iii) 600,000 shares of ▇▇▇▇▇▇ Series A Junior Participating Preferred Stock
("▇▇▇▇▇▇ Preferred Stock") were reserved for issuance under the Rights Agreement
(the "Rights Agreement") dated as of June 12, 1989 between ▇▇▇▇▇▇ and the First
National Bank of Chicago, as amended on January 24, 1991 and as further amended
on August 11, 1994, and November 22, 1996, as more fully described below. As of
the date of this Agreement, no shares of ▇▇▇▇▇▇ Preferred Stock are issued and
outstanding. Except for the options granted or rights issued pursuant to the
▇▇▇▇▇▇ Option Plan, the Rights Agreement or pursuant to agreements or
arrangements described in Section 4.3 of the Disclosure Schedule delivered by
▇▇▇▇▇▇ to Autoliv prior to the execution of (and forming part of) this Agreement
(the "▇▇▇▇▇▇ Disclosure Schedule"), there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which ▇▇▇▇▇▇
is a party or by which ▇▇▇▇▇▇ is bound relating to the issued or unissued
capital stock of ▇▇▇▇▇▇ or any Retained ▇▇▇▇▇▇ Subsidiary or obligating ▇▇▇▇▇▇
or any Retained ▇▇▇▇▇▇ Subsidiary to issue or sell any shares of capital stock
of, or other equity interests in, ▇▇▇▇▇▇ or any Retained ▇▇▇▇▇▇ Subsidiary. All
▇▇▇▇▇▇ Shares subject to issuance as aforesaid upon issuance prior to the
Effective Time on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. Except as set forth in Section 4.3 of the ▇▇▇▇▇▇ Disclosure
Schedule, there are no outstanding contractual obligations of ▇▇▇▇▇▇ or any
Retained ▇▇▇▇▇▇ Subsidiary to repurchase, redeem or otherwise acquire any ▇▇▇▇▇▇
Shares or any capital stock of any Retained ▇▇▇▇▇▇ Subsidiary. Each outstanding
share of capital stock of each Retained ▇▇▇▇▇▇ Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such share of a Retained
▇▇▇▇▇▇ Subsidiary owned by ▇▇▇▇▇▇ or another Retained ▇▇▇▇▇▇ Subsidiary is free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on ▇▇▇▇▇▇'▇ or such other Retained ▇▇▇▇▇▇
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except in connection with the Retained Debt (as defined below) or
where failure to own such shares free and clear would not, individually or in
the aggregate, have a ▇▇▇▇▇▇ Material Adverse Effect. Except as set forth in
Section 4.3 of the ▇▇▇▇▇▇ Disclosure Schedule, there are no material outstanding
contractual obligations of ▇▇▇▇▇▇ or any Retained ▇▇▇▇▇▇ Subsidiary to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Retained ▇▇▇▇▇▇ Subsidiary or any other person with respect
to the Retained Business, other than guarantees by ▇▇▇▇▇▇ of any indebtedness of
any Retained ▇▇▇▇▇▇ Subsidiary.
Section 4.4 Authority Relative to this Agreement. Each of ▇▇▇▇▇▇ and
each subsidiary of ▇▇▇▇▇▇ which is a party to any of the Ancillary Agreements
(each such subsidiary, a "Contracting Subsidiary") has all necessary corporate
power and authority to execute and deliver this Agreement and the Ancillary
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Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions (including, without limitation, the Transactions)
contemplated herein and therein (but only to the extent it is a party thereto).
The execution and delivery of this Agreement by ▇▇▇▇▇▇ have been, and the
execution and delivery of the Ancillary Agreements by ▇▇▇▇▇▇ and each
Contracting Subsidiary (to the extent it is a party thereto) will be, and the
consummation of the transactions contemplated hereby and thereby have been or
will be, duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of ▇▇▇▇▇▇ or any Contracting Subsidiary
(to the extent it is a party thereto) are necessary to authorize this Agreement
or to consummate such transactions (other than (a) the approval of this
Agreement, the Merger and the transactions contemplated by the Distribution
Agreement by the affirmative vote of the stockholders of ▇▇▇▇▇▇ holding a
majority of the issued and outstanding ▇▇▇▇▇▇ Shares and (b) actions to be taken
by the Boards of Directors of ▇▇▇▇▇▇ and certain Contracting Subsidiaries in
connection with the matters contemplated by the Ancillary Agreements, which
actions described in clause (b) above will be duly and validly taken prior to
the Effective Time). This Agreement has been, and each of the Ancillary
Agreements will be, prior to the Effective Time, duly authorized and validly
executed and delivered by ▇▇▇▇▇▇ and each Contracting Subsidiary (to the extent
it is a party thereto) and constitutes, or will constitute, the legal, valid and
binding obligation of ▇▇▇▇▇▇ and each Contracting Subsidiary (to the extent it
is a party thereto), enforceable against ▇▇▇▇▇▇ and each Contracting Subsidiary
(to the extent it is a party thereto) in accordance with its terms. ▇▇▇▇▇▇ has
taken all appropriate actions so that the restrictions on business combinations
contained in Section 23-1-43-18 of the Indiana Law and Article Eighth of the
▇▇▇▇▇▇ Restated Articles of Incorporation will not apply with respect to or as a
result of the Transactions.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement do not, and
the execution and delivery at or prior to the time of the Spinoff of the
Ancillary Agreements by ▇▇▇▇▇▇ and each Contracting Subsidiary (to the extent it
is a party thereto) will not, and the performance of this Agreement and the
Ancillary Agreements by ▇▇▇▇▇▇ and each Contracting Subsidiary (to the extent it
is a party thereto) will not, (i) conflict with or violate any provision of the
articles of incorporation or by-laws of ▇▇▇▇▇▇ or any Contracting Subsidiary,
(ii) assuming that all consents, approvals, authorizations and other actions
described in Section 4.5(b) have been obtained and all filings and obligations
described in Section 4.5(b) have been made, conflict with or violate any foreign
or domestic law, statute, European Union legislation or Directive, ordinance,
rule, regulation, order, judgment or decree ("Law") applicable to ▇▇▇▇▇▇ or any
Contracting Subsidiary or by which any property or asset of ▇▇▇▇▇▇ or any
Contracting Subsidiary is bound or affected, or (iii) except as set forth in
Section 4.5(a) of the ▇▇▇▇▇▇ Disclosure Schedule, result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of ▇▇▇▇▇▇ or any Contracting
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults, or other occurrences which would neither,
individually or in the aggregate, (A) have a ▇▇▇▇▇▇ Material Adverse Effect nor
(B) prevent or materially delay the performance of this Agreement or any
Ancillary Agreement by ▇▇▇▇▇▇ or any Contracting Subsidiary (to the extent it is
a party thereto).
(b) The execution and delivery of this Agreement do not, and
the execution and delivery of the Ancillary Agreements by ▇▇▇▇▇▇ and each
Contracting Subsidiary (to the extent it is a party thereto) will not, and the
performance of this Agreement and the Ancillary Agreements by ▇▇▇▇▇▇ and each
Contracting Subsidiary (to the extent it is a party thereto) will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign governmental or regulatory authority
("Governmental Entity"), except (i) for applicable requirements of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act"), the
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Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act"), state securities or "blue sky"
laws ("Blue Sky Laws"), the NYSE, state takeover laws, the pre-merger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), the
filing of notifications in accordance with the antitrust laws of Sweden, Germany
and Belgium, filing and recordation of the Certificate of Merger and Articles of
Merger as required by the Delaware Law and the Indiana Law, respectively, and
the regulations and guidance promulgated thereunder, and as set forth in Section
4.5(b) of the ▇▇▇▇▇▇ Disclosure Schedule and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not (A) prevent or materially delay consummation of the
Transactions, (B) otherwise prevent ▇▇▇▇▇▇ or any Contracting Subsidiary from
performing its material obligations under this Agreement and the Ancillary
Agreements (to the extent it is a party thereto), or (C) individually or in the
aggregate, have a ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.6 Permits; Compliance. Each of ▇▇▇▇▇▇ and the Retained
▇▇▇▇▇▇ Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for ▇▇▇▇▇▇ or any
Retained ▇▇▇▇▇▇ Subsidiary to own, lease and operate its properties or to carry
on the Retained Business as it is now being conducted (collectively, the "▇▇▇▇▇▇
Permits"), except where the failure to have, or the suspension or cancellation
of, any of the ▇▇▇▇▇▇ Permits would neither, individually or in the aggregate,
(A) have a ▇▇▇▇▇▇ Material Adverse Effect nor (B) prevent or materially delay
the performance of this Agreement or any of the Ancillary Agreements by ▇▇▇▇▇▇
or any Contracting Subsidiary (to the extent it is a party thereto), and, as of
the date of this Agreement, no suspension or cancellation of any of the ▇▇▇▇▇▇
Permits is pending or, to the knowledge of ▇▇▇▇▇▇, threatened, except where the
failure to have, or the suspension or cancellation of, any of the ▇▇▇▇▇▇ Permits
would neither, individually or in the aggregate, (A) have a ▇▇▇▇▇▇ Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement or any of the Ancillary Agreements by ▇▇▇▇▇▇ or any Contracting
Subsidiary (to the extent it is a party thereto). Neither ▇▇▇▇▇▇ nor any
Retained ▇▇▇▇▇▇ Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to ▇▇▇▇▇▇ or any Retained ▇▇▇▇▇▇ Subsidiary with respect
to the Retained Business or by which any property or asset of ▇▇▇▇▇▇ or any
Retained ▇▇▇▇▇▇ Subsidiary is bound or affected with respect to the Retained
Business or (ii) any ▇▇▇▇▇▇ Permits, except for any such conflicts, defaults or
violations that would neither, individually or in the aggregate, (A) have a
▇▇▇▇▇▇ Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement or any of the Ancillary Agreements or consummation
of the Transactions by ▇▇▇▇▇▇ or any Contracting Subsidiary (to the extent it is
a party thereto).
Section 4.7 SEC Filings; Financial Statements.
(a) ▇▇▇▇▇▇ has filed all forms, reports and documents required
to be filed by it under the Exchange Act since July 1, 1993 through the date of
this Agreement (collectively, the "▇▇▇▇▇▇ SEC Reports"). The ▇▇▇▇▇▇ SEC Reports
(i) were prepared in accordance in all material respects with the requirements
of the Exchange Act and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
subsidiary of ▇▇▇▇▇▇ is subject to the periodic reporting requirements of the
Exchange Act.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the ▇▇▇▇▇▇ SEC Reports was
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of ▇▇▇▇▇▇ and its
subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein. Except as and to the
extent set forth on the consolidated
-11-
balance sheets (including the notes thereto) included in the financial
statements contained in the ▇▇▇▇▇▇ SEC Reports, ▇▇▇▇▇▇ does not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with United States generally accepted
accounting principles, except for (i) liabilities or obligations incurred in the
ordinary course of business since July 1, 1996, (ii) liabilities or obligations
incurred outside the ordinary course of business since July 1, 1996 that would
neither, individually or in the aggregate, (A) have a ▇▇▇▇▇▇ Material Adverse
Effect nor (B) prevent or materially delay the performance of this Agreement or
any of the Ancillary Agreements by ▇▇▇▇▇▇ or any Contracting Subsidiary (to the
extent it is a party thereto), (iii) the Retained Debt and (iv) liabilities or
obligations incurred in connection with the execution and delivery of this
Agreement and the Ancillary Agreements and consummation of the transactions
contemplated hereby and thereby.
(c) Exhibit A to Section 4.7(c) of the ▇▇▇▇▇▇ Disclosure
Schedule contains (i) audited consolidated balance sheets of the Retained
Business as of June 30, 1996 (the "Retained Business Balance Sheet") and June
30, 1995, (ii) statements of income and cash flow for the Retained Business for
the twelve-month periods ending June 30, 1996, June 30, 1995 and June 30, 1994.
The Retained Business Balance Sheet fairly presents in all material respects the
financial position of the Retained Business as of June 30, 1996. Except as and
to the extent set forth on the Retained Business Balance Sheet (including the
notes thereto), the Retained Business does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on a balance sheet or in notes thereto
prepared in accordance with United States generally accepted accounting
principles, except for (i) liabilities or obligations incurred in the ordinary
course of business since July 1, 1996, (ii) liabilities or obligations incurred
outside the ordinary course of business since July 1, 1996 that do not,
individually or in the aggregate, (A) have a ▇▇▇▇▇▇ Material Adverse Effect nor
(B) prevent or materially delay the performance of this Agreement or any of the
Ancillary Agreements by ▇▇▇▇▇▇ or any Contracting Subsidiary (to the extent it
is a party thereto), (iii) the Retained Debt and (iv) liabilities or obligations
incurred in connection with the execution and delivery of this Agreement and the
Ancillary Agreements and consummation of the transactions contemplated hereby
and thereby.
Section 4.8 Absence of Certain Changes or Events. Since July 1,
1996, except as contemplated by or as disclosed in this Agreement or the
Ancillary Agreements, as set forth in Section 4.8 of the ▇▇▇▇▇▇ Disclosure
Schedule or as disclosed in any ▇▇▇▇▇▇ SEC Report filed since July 1, ▇▇▇▇,
▇▇▇▇▇▇ and its subsidiaries have conducted the Retained Business only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been (a) any ▇▇▇▇▇▇ Material Adverse Effect other than due
to events, changes or developments relating to the economy in general, the
automotive industry (including strikes affecting one or more automotive
companies) or the automotive safety products industry in general, (b) any event
that would, or is reasonably likely to, have a material adverse effect on the
ability of ▇▇▇▇▇▇ or any Contracting Subsidiary (to the extent it is a party
thereto) to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements or perform their respective obligations thereunder, (c) any
material change by ▇▇▇▇▇▇ in its accounting methods, principles or practices,
(d) any declaration, setting aside or payment of any dividend (other than in
accordance with ▇▇▇▇▇▇'▇ regular dividend practice) or distribution (other than
in connection with the Spinoff) in respect of the ▇▇▇▇▇▇ Shares or any
redemption, purchase or other acquisition of any of ▇▇▇▇▇▇'▇ securities, other
than (i) for cash or (ii) in connection with the exercise of outstanding ▇▇▇▇▇▇
Options, or (e) with respect to employees engaged exclusively in the Retained
Business, any increase in the compensation or benefits or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any
-12-
executive officers of ▇▇▇▇▇▇ or any of its subsidiaries who are Company
Individuals (as defined in the Employee Benefits Allocation Agreement), except
in each case in the ordinary course of business consistent with past practice or
except in each case as required by applicable Law.
Section 4.9 Employee Benefit Plans; Labor Matters. Except for such
failures, liabilities, penalties, taxes, claims or other events or matters
described in subsections (c) through (n), but excluding subsection (g), below
that would not, individually or in the aggregate, have a ▇▇▇▇▇▇ Material Adverse
Effect:
(a) Section 4.9(a) of the ▇▇▇▇▇▇ Disclosure Schedule contains
a true and complete list of each material bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, change-in-control, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement, and each other material
employee benefit plan, program, agreement or arrangement, sponsored, maintained
or contributed to or required to be contributed to by ▇▇▇▇▇▇, any of its
subsidiaries or by any trade or business, whether or not incorporated (a "▇▇▇▇▇▇
ERISA Affiliate"), that together with ▇▇▇▇▇▇ would be deemed a "single employer"
within the meaning of section 4001(b)(1) of ERISA, for the benefit of any
employee or former employee of ▇▇▇▇▇▇, any of its subsidiaries or any ▇▇▇▇▇▇
ERISA Affiliate (the "▇▇▇▇▇▇ Plans").
(b) With respect to each of the ▇▇▇▇▇▇ Plans, ▇▇▇▇▇▇ has
heretofore delivered or made available to Autoliv true and complete copies of
each of the following documents: (A) a copy of each of the ▇▇▇▇▇▇ Plans
(including all amendments thereto); (B) a copy of the most recent annual report,
if required under ERISA or other applicable Law, with respect to each such
▇▇▇▇▇▇ Plan; (C) a copy of the most recent actuarial report, if required under
ERISA or other applicable Law, with respect to each such ▇▇▇▇▇▇ Plan; (D) a copy
of the most recent Summary Plan Description ("SPD"), if any, together with all
Summaries of Material Modification issued with respect to each such SPD,
required under ERISA or other applicable Law with respect to such ▇▇▇▇▇▇ Plan;
(E) if any ▇▇▇▇▇▇ Plan is funded through a trust or any other funding vehicle, a
copy of the trust or other funding agreement (including all amendments thereto)
and the latest financial statements thereof; and (F) the most recent
determination letter received from the Internal Revenue Service with respect to
each ▇▇▇▇▇▇ Plan that is intended to be qualified under section 401 of the Code.
(c) No liability under Title IV of ERISA has been incurred by
▇▇▇▇▇▇, any of its subsidiaries or any ▇▇▇▇▇▇ ERISA Affiliate since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to ▇▇▇▇▇▇, any of its subsidiaries or any
▇▇▇▇▇▇ ERISA Affiliate of incurring a liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty Corporation ("PBGC"),
which payments have been or will be made when due. To the extent this
representation applies to sections 4064, 4069 or 4204 of Title IV of ERISA, it
is made not only with respect to the ▇▇▇▇▇▇ Plans but also with respect to any
employee benefit plan, program, agreement or arrangement subject to Title IV of
ERISA to which ▇▇▇▇▇▇, any of its subsidiaries or any ▇▇▇▇▇▇ ERISA Affiliate
made, or was required to make, contributions during the five-year period ending
on the last day of ▇▇▇▇▇▇'▇ most recent fiscal year.
(d) To the knowledge of ▇▇▇▇▇▇, there are no proceedings
pending to terminate any of the ▇▇▇▇▇▇ Plans and no condition exists that
presents a material risk that such proceedings will be instituted.
(e) Neither ▇▇▇▇▇▇, any of its subsidiaries, any ▇▇▇▇▇▇ ERISA
Affiliate, any of the ▇▇▇▇▇▇ Plans, any trust created thereunder nor, to the
knowledge of ▇▇▇▇▇▇, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
▇▇▇▇▇▇,
-13-
any of its subsidiaries, any ▇▇▇▇▇▇ ERISA Affiliate, any of the ▇▇▇▇▇▇ Plans,
any such trust, any trustee or administrator thereof, or any party dealing with
the ▇▇▇▇▇▇ Plans or any such trust could be subject to either a civil penalty
assessed pursuant to section 409 or 502(i) of ERISA or a tax imposed pursuant to
section 4975, 4976 or 4980B of the Code.
(f) None of the ▇▇▇▇▇▇ Plans or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the ▇▇▇▇▇▇ Plans ended
prior to the date of this Agreement.
(g) Except as set forth in Section 4.9(g) of the ▇▇▇▇▇▇
Disclosure Schedule, no ▇▇▇▇▇▇ Plan is a "multiemployer plan," as such term is
defined in section 3(37) of ERISA.
(h) Except as set forth in Section 4.9(h) of the ▇▇▇▇▇▇
Disclosure Schedule, each of the ▇▇▇▇▇▇ Plans has been operated and administered
in accordance with applicable Laws of each relevant jurisdiction, including but
not limited to ERISA and the Code.
(i) Each of the ▇▇▇▇▇▇ Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified and
the trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code.
(j) Except as set forth in Section 4.9(j) of the ▇▇▇▇▇▇
Disclosure Schedule, no amounts payable under the ▇▇▇▇▇▇ Plans or any other
agreement or arrangement to which ▇▇▇▇▇▇, any of its subsidiaries or any ▇▇▇▇▇▇
ERISA Affiliate is a party will, as a result of the transactions contemplated
hereby, fail to be deductible for federal income tax purposes by virtue of
section 280G of the Code.
(k) Except as set forth in Section 4.9(k) of the ▇▇▇▇▇▇
Disclosure Schedule, no ▇▇▇▇▇▇ Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees after retirement or other termination of service
(other than (i) coverage mandated by applicable law, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in section 3(2) of ERISA, or (iii) benefits, the full cost of which is borne by
the current or former employee (or beneficiary thereof)).
(l) Except as set forth in Section 4.9(l) of the ▇▇▇▇▇▇
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of
▇▇▇▇▇▇, any of its subsidiaries or any ▇▇▇▇▇▇ ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly provided in
this Agreement or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(m) There are no pending or threatened claims by or on behalf
of any ▇▇▇▇▇▇ Plan, by any employee or beneficiary covered under any such ▇▇▇▇▇▇
Plan, or otherwise involving any such ▇▇▇▇▇▇ Plan (other than routine claims for
benefits).
(n) With respect to each ▇▇▇▇▇▇ Plan that is not subject to
United States Law (a "▇▇▇▇▇▇ Foreign Benefit Plan"):
(i) all employer and employee contributions to each ▇▇▇▇▇▇
Foreign Benefit Plan required by Law or by the terms of such ▇▇▇▇▇▇
Foreign Benefit Plan have been made, or if applicable, accrued in
accordance with normal accounting practices;
-14-
(ii) the fair market value of the assets of each funded ▇▇▇▇▇▇
Foreign Benefit Plan, the liability of each insurer for any ▇▇▇▇▇▇ Foreign
Benefit Plan funded through insurance or the book reserve established for
any ▇▇▇▇▇▇ Foreign Benefit Plan, together with any accrued contributions,
is sufficient to procure or provide for the accrued benefit obligations,
as of the Effective Time, with respect to all current and former
participants in such plan according to the actuarial assumptions and
valuations most recently used to determine employer contributions to such
▇▇▇▇▇▇ Foreign Benefit Plan and no transaction contemplated by this
Agreement shall cause such assets or insurance obligations to be less than
such benefit obligations; and
(iii) each ▇▇▇▇▇▇ Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing
with applicable regulatory authorities.
(o) Except as set forth in Section 4.9(o) of the ▇▇▇▇▇▇
Disclosure Schedule, and except for country-wide collective bargaining or other
country-wide labor union contracts, as of the date of this Agreement, neither
▇▇▇▇▇▇ nor any of its subsidiaries is a party to any collective bargaining or
other labor union contract applicable to persons employed by ▇▇▇▇▇▇ or any of
its subsidiaries and no collective bargaining agreement or other labor union
contract is being negotiated by ▇▇▇▇▇▇ or any of its subsidiaries. As of the
date of this Agreement, there is no labor dispute, litigation, arbitration,
strike or work stoppage against the Retained Business pending or threatened in
writing which may interfere with the business activities of the Retained
Business, except where such dispute, litigation, arbitration, strike or work
stoppage would not have a ▇▇▇▇▇▇ Material Adverse Effect. As of the date of this
Agreement, to the knowledge of ▇▇▇▇▇▇, none of ▇▇▇▇▇▇, any of its subsidiaries,
or their respective representatives or employees, has committed any unfair labor
practices in connection with the operation of the Retained Business, and there
is no charge or complaint against ▇▇▇▇▇▇ or any of its subsidiaries in
connection with the operation of the Retained Business by or before the National
Labor Relations Board or any comparable state or foreign governmental authority
or agency pending or threatened in writing, except where such unfair labor
practice, charge or complaint would not have a ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.10 Tax Matters.
(a) Neither ▇▇▇▇▇▇ nor, to the knowledge of ▇▇▇▇▇▇, any of its
affiliates has taken or agreed to take any action except pursuant to the terms
of this Agreement or the Ancillary Agreements that would prevent the Spinoff
from constituting a transaction qualifying under Sections 355 and 368(a)(1)(D)
of the Code or the Merger from constituting a transaction qualifying under
Section 368(a) of the Code or (in conjunction with the acquisition of Autoliv
Securities pursuant to the Exchange Offer) from constituting a transaction
qualifying under Section 351(a) of the Code, or would prevent the Exchange Offer
(in conjunction with the acquisition of ▇▇▇▇▇▇ Shares pursuant to the Merger)
from constituting a transaction qualifying under Section 351(a) of the Code or a
transaction in which, for Swedish income tax purposes, neither Newco, Autoliv
nor the Autoliv stockholders will recognize taxable income or gain. ▇▇▇▇▇▇ is
not aware of any agreement, plan or other circumstance that would prevent the
Merger or the Exchange Offer from so qualifying under Section 368(a) or Section
351(a) of the Code or under applicable Swedish tax Laws.
(b) Except for such matters that would not have a ▇▇▇▇▇▇
Material Adverse Effect or as set forth in Section 4.10(b) of the ▇▇▇▇▇▇
Disclosure Schedule, (i) ▇▇▇▇▇▇ and its subsidiaries have timely filed all Tax
Returns due to be filed with any taxing authority with respect to Taxes on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of ▇▇▇▇▇▇ and its subsidiaries, and such Tax
Returns are true, correct and complete in all material respects, (ii) all Taxes
shown to be payable on such Tax Returns that are due prior to the Effective Time
have been paid, (iii) no deficiency for any material amount of Tax has been
asserted or assessed by a taxing authority against ▇▇▇▇▇▇ or any of its
subsidiaries, (iv) ▇▇▇▇▇▇ and its subsidiaries have provided adequate reserves
in their financial
-15-
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns, (v) neither ▇▇▇▇▇▇ nor any of its subsidiaries has made any
change in accounting methods, received a ruling from any taxing authority or
signed an agreement with any taxing authority which is reasonably likely to have
a ▇▇▇▇▇▇ Material Adverse Effect, (vi) ▇▇▇▇▇▇ and its subsidiaries have complied
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
foreign laws) and have, within the time and manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws, (vii) no
federal, state, local or foreign audits or other administrative proceedings or
court proceedings have been initiated or are presently pending with regard to
any Taxes or Tax Returns of ▇▇▇▇▇▇ or its subsidiaries, and neither ▇▇▇▇▇▇ nor
its subsidiaries have received any notice of any such audits or proceedings,
(viii) the federal income Tax Returns of ▇▇▇▇▇▇ and its subsidiaries have been
examined by the Internal Revenue Service (or the applicable statute of
limitations for the assessment of Taxes for such periods has expired) for all
periods through and including June 30, 1992, (ix) there are no outstanding
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies against
▇▇▇▇▇▇ or any of its subsidiaries, and no power of attorney granted by either
▇▇▇▇▇▇ or any of its subsidiaries with respect to any Taxes is currently in
force, (x) neither ▇▇▇▇▇▇ nor any of its subsidiaries has, with regard to any
assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by ▇▇▇▇▇▇ or
any of its subsidiaries and (xi) neither ▇▇▇▇▇▇ nor any of its subsidiaries has
any deferred gain from a deferred intercompany transaction within the meaning of
Treasury Regulation Section 1.1502-13 (or any similar provision under state,
local or foreign law). As used in this Agreement, "Taxes" shall mean any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs, and similar charges. "Tax Return" shall mean any
return, report, document, declaration or other information or filing required to
be supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes, including, without limitation, information returns, any
documents with respect to or accompanying payments of estimated Taxes, or with
respect to or accompanying requests for the extension of time in which to file
any such report, return, document, declaration or other information.
(c) Except as set forth in Section 4.10(c) of the ▇▇▇▇▇▇
Disclosure Schedule, none of ▇▇▇▇▇▇ or its subsidiaries is a party to, is bound
by, or has any obligation under, a tax sharing contract, other than the Tax
Sharing Agreement.
Section 4.11 Contracts; Debt Instruments. Except as disclosed in
Section 4.9(a) or 4.11 of the ▇▇▇▇▇▇ Disclosure Schedule, there is no contract
or agreement as of the date hereof that is material to the business, financial
condition or results of operations of the Retained Business (each, a "▇▇▇▇▇▇
Material Contract") which would be required to be filed as an exhibit to
▇▇▇▇▇▇'▇ annual report on Form 10-K pursuant to applicable SEC regulations if
▇▇▇▇▇▇'▇ only business were the Retained Business. Except as disclosed in the
▇▇▇▇▇▇ SEC Reports or in Section 4.11 of the ▇▇▇▇▇▇ Disclosure Schedule, neither
▇▇▇▇▇▇ nor any of the Retained Subsidiaries is in violation of or in default
under (nor does there exist any condition which with the passage of time or the
giving of notice would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture or lease, or any other
contract, agreement, arrangement or understanding with respect to the Retained
Business to which it is a party or by which it or any of its properties or
-16-
assets is bound with respect to the Retained Business, except for violations or
defaults that would not, individually or in the aggregate, result in a ▇▇▇▇▇▇
Material Adverse Effect.
Section 4.12 Litigation. Except as disclosed in the ▇▇▇▇▇▇ SEC
Reports or in Section 4.12 of the ▇▇▇▇▇▇ Disclosure Schedule, there is no suit,
claim, action, proceeding, investigation or product recall pending or, to the
knowledge of ▇▇▇▇▇▇, threatened in writing against ▇▇▇▇▇▇ or any of its
subsidiaries that, individually or in the aggregate, is reasonably likely to
have a ▇▇▇▇▇▇ Material Adverse Effect. Except as disclosed in the ▇▇▇▇▇▇ SEC
Reports or in Section 4.12 of the ▇▇▇▇▇▇ Disclosure Schedule, neither ▇▇▇▇▇▇ nor
any of its subsidiaries is subject to any outstanding Order (as defined in
Section 8.9(b)), writ, injunction or decree which, individually or in the
aggregate, would have a ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.13 Environmental Matters. Except as disclosed in the
▇▇▇▇▇▇ SEC Reports or in Section 4.13 of the ▇▇▇▇▇▇ Disclosure Schedule or as
would not, individually or in the aggregate, have a ▇▇▇▇▇▇ Material Adverse
Effect:
(a) The Retained Business (i) is in compliance with all
applicable Environmental Laws (defined below), (ii) holds all required
Environmental Permits (defined below) for the operation of the Retained Business
as currently conducted, and (iii) is in compliance with its required
Environmental Permits.
(b) The Retained Business has not received any written request
for information that is outstanding, or been notified that it is a potentially
responsible party, under CERCLA (defined below) or any similar state, local or
foreign Law or applicable Environmental Law.
(c) The Retained Business has not entered into or agreed to
any consent decree or order and is not subject to any judgment, decree or
judicial order relating to compliance with all applicable Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring, treatment,
remediation, removal or cleanup of Hazardous Materials (defined below).
(d) None of the real property owned or leased by the Retained
Business is listed or, to the best knowledge of ▇▇▇▇▇▇, proposed for listing on
the "National Priorities List" under CERCLA, as updated through the date hereof,
or any similar state or foreign list of sites requiring investigation or
cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state, local or foreign statute,
law, European Union legislation or directive, ordinance, regulation, rule, code
or order and any enforceable judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the environment or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, as in effect as of the date hereof.
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any applicable Environmental Law.
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"Hazardous Materials" means (a) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (b) any chemical, material or
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
Section 4.14 Trademarks, Patents and Copyrights. Except (i) as set
forth in Section 4.12 or 4.14 of the ▇▇▇▇▇▇ Disclosure Schedule, (ii) with
respect to the "▇▇▇▇▇▇" name and related trademarks and trade names, or (iii) to
the extent the inaccuracy of any of the following (or the circumstances giving
rise to such inaccuracy), individually or in the aggregate, would not have a
▇▇▇▇▇▇ Material Adverse Effect, ▇▇▇▇▇▇ and each of the Retained ▇▇▇▇▇▇
Subsidiaries own or possess, or prior to the Spinoff will own or possess,
adequate licenses or other legal rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights, servicemarks, trade secrets, applications for trademarks and for
servicemarks, mask works and know-how used in connection with the Retained
Business as currently conducted (the "Retained Business Intellectual Property"),
and to ▇▇▇▇▇▇'▇ knowledge, as of the date hereof, there is no claim challenging
the validity of any of the foregoing. Except as set forth in the Ancillary
Agreements, there are no contracts, agreements or licenses pursuant to which
Spinco or any of its subsidiaries will possess rights or interests of any kind
in or affecting the Retained Business Intellectual Property. The conduct of the
Retained Business as currently conducted does not infringe any patent, patent
right, license, trademark, trademark right, trade dress, trade name, trade name
right, service ▇▇▇▇, mask work or copyright of any third party, except for such
infringements that, individually or in the aggregate, would not have a ▇▇▇▇▇▇
Material Adverse Effect. To ▇▇▇▇▇▇'▇ knowledge, there are no infringements of
any proprietary rights owned by or licensed by or to the Retained Business that,
individually or in the aggregate, would have a ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.15 No Violation of Spinco Representations. Spinco has not
breached in any material respect any of the representations or warranties made
by it in the Distribution Agreement.
Section 4.16 Rights Agreement. The Board of Directors of ▇▇▇▇▇▇ has
taken all requisite action in order to amend the Rights Agreement so as to
render the preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement inapplicable to the Merger and the other transactions
contemplated by this Agreement and the Distribution Agreement and to extinguish
the Rights in connection with such transactions.
Section 4.17 Opinion of Financial Advisor. ▇▇▇▇▇▇▇, Sachs & Co.
("▇▇▇▇▇▇▇ ▇▇▇▇▇") has delivered to ▇▇▇▇▇▇ its opinion to the effect that, as of
the date of its delivery, the consideration to be received by ▇▇▇▇▇▇'▇
stockholders in the Spinoff and the Merger, taken as a whole, is fair to
▇▇▇▇▇▇'▇ stockholders. ▇▇▇▇▇▇▇ ▇▇▇▇▇ has authorized the inclusion in its
entirety of its written opinion (dated the date of this Agreement) in the
Proxy/Prospectus, and ▇▇▇▇▇▇ will promptly deliver a signed copy of such opinion
to Autoliv upon its receipt.
Section 4.18 Brokers. No broker, finder or investment banker (other
than ▇▇▇▇▇▇▇ ▇▇▇▇▇) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of ▇▇▇▇▇▇ or any subsidiary of ▇▇▇▇▇▇. ▇▇▇▇▇▇ has heretofore made
available to Autoliv a complete and correct copy of all agreements between
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to which such firm would be entitled to any
payment relating to the Transactions.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AUTOLIV
Autoliv hereby represents and warrants to ▇▇▇▇▇▇ that:
Section 5.1 Organization and Qualification; Subsidiaries. Each of
Autoliv and its subsidiaries has been duly organized and is validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have an Autoliv Material Adverse Effect (defined below). Each of
Autoliv and its subsidiaries is duly qualified or licensed to do business, and
is in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not, individually or in
the aggregate, have an Autoliv Material Adverse Effect. For purposes of this
Agreement, "Autoliv Material Adverse Effect" means any change in or effect on
the business, after giving effect to the Transactions and the provisions of the
Distribution Agreement and the other Ancillary Agreements, of Autoliv and its
subsidiaries that is, or is reasonably likely to be, materially adverse to the
business, properties, financial condition or results of operations of Autoliv
and its subsidiaries taken as a whole.
Section 5.2 Corporate Organization Documents. Autoliv has heretofore
delivered or made available to ▇▇▇▇▇▇ accurate and complete copies of its
Articles of Association and By-laws or equivalent organizational documents, as
currently in effect. Such Articles of Association, By-laws and all other
corporate organization documents are in full force and effect. Autoliv is not in
violation of any of the provisions of its Articles of Association or other
corporate organization documents.
Section 5.3 Capitalization. Autoliv's Articles of Association
provide that Autoliv's authorized share capital may not exceed 200,000,000
shares, par value SEK 10 per share. As of the date hereof, 55,000,000 Autoliv
Shares are issued and outstanding, all of which are validly issued and fully
paid. There are no warrants or other rights, arrangements or commitments of any
character to which Autoliv is a party or by which Autoliv is bound relating to
the issued or unissued capital stock of Autoliv or any subsidiary of Autoliv or
obligating Autoliv or any subsidiary of Autoliv to issue or sell any shares of
capital stock of, or other equity interests in, Autoliv or any subsidiary of
Autoliv. There are no outstanding contractual obligations of Autoliv or any
subsidiary of Autoliv to redeem or otherwise acquire any Autoliv Securities or
any capital stock of any subsidiary of Autoliv. Each outstanding share of
capital stock of each subsidiary of Autoliv is duly authorized, validly issued
and fully paid and each such share of an Autoliv subsidiary owned by Autoliv or
another subsidiary of Autoliv is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the voting rights, charges and other encumbrances of any nature
whatsoever, except where failure to own such shares free and clear would not,
individually or in the aggregate, have an Autoliv Material Adverse Effect. There
are no material outstanding contractual obligations of Autoliv or any subsidiary
of Autoliv to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any subsidiary of Autoliv or any other
person, other than guarantees by Autoliv of any indebtedness of any subsidiary
of Autoliv.
Section 5.4 Authority Relative to this Agreement. Autoliv has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated herein to be consummated by Autoliv. The execution and delivery of
this Agreement by Autoliv and the consummation by Autoliv of such transactions
have been duly and validly
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authorized by all necessary corporate action and no other corporate proceedings
on the part of Autoliv are necessary to authorize this Agreement or to
consummate such transactions. This Agreement has been duly authorized and
validly executed and delivered by Autoliv and constitutes a legal, valid and
binding obligation of Autoliv, enforceable against Autoliv in accordance with
its terms.
Section 5.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Autoliv do
not, and the performance of this Agreement by Autoliv will not, (i) conflict
with or violate any provision of the Articles of Association or other corporate
organizational documents of Autoliv or any equivalent organizational documents
of any subsidiary of Autoliv, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 5.5(b) have been obtained
and all filings and obligations described in Section 5.5(b) have been made,
conflict with or violate any Law applicable to Autoliv or any subsidiary of
Autoliv or by which any property or asset of Autoliv or any subsidiary of
Autoliv is bound or affected, or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Autoliv or any subsidiary of Autoliv
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults, or other occurrences which would neither, individually or in the
aggregate, (A) have an Autoliv Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement by Autoliv.
(b) The execution and delivery of this Agreement by Autoliv do
not, and the performance of this Agreement by Autoliv will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for applicable requirements of the SSE,
the FSA, the Exchange Act, the Securities Act, Blue Sky Laws, the NYSE and state
takeover laws, the pre-merger notification requirements of the HSR Act, the
filing of notifications in accordance with the antitrust laws of Sweden, Germany
and Belgium, and the filing of a request with the Stockholm District Court with
regard to the compulsory acquisition described in Section 3.3 and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not (A) prevent or materially delay
consummation of the Transactions, (B) otherwise prevent Autoliv from performing
its material obligations under this Agreement, or (C) individually or in the
aggregate, have an Autoliv Material Adverse Effect.
Section 5.6 Permits; Compliance. Each of Autoliv and its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for Autoliv or any
subsidiary of Autoliv to own, lease and operate its properties or to carry on
its business as it is now being conducted (collectively, the "Autoliv Permits"),
except where the failure to have, or the suspension or cancellation of, any of
the Autoliv Permits would neither, individually or in the aggregate, (A) have an
Autoliv Material Adverse Effect nor (B) prevent or materially delay the
performance of this Agreement by Autoliv, and, as of the date of this Agreement,
no suspension or cancellation of any of the Autoliv Permits is pending or, to
the knowledge of Autoliv, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Autoliv Permits would neither,
individually or in the aggregate, (A) have an Autoliv Material Adverse Effect
nor (B) prevent or materially delay the performance of this Agreement by
Autoliv. Neither Autoliv nor any subsidiary of Autoliv is in conflict with, or
in default or violation of, (i) any Law applicable to Autoliv or any subsidiary
of Autoliv or by which any property or asset of Autoliv or any subsidiary of
Autoliv is bound or affected or (ii) any Autoliv Permits, except for any such
conflicts, defaults or violations that would neither, individually or in
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the aggregate, (A) have an Autoliv Material Adverse Effect nor (B) prevent or
materially delay the performance of this Agreement or consummation of the
Transactions by Autoliv or any of its subsidiaries.
Section 5.7 Stock Exchange and SEC Filings; Financial Statements.
(a) Autoliv has filed all forms, reports and documents
required to be filed by it under Rule 12g 3-2(B) of the Exchange Act or with the
SSE since June 30, 1994 through the date of this Agreement (collectively, the
"Autoliv Reports"). The Autoliv Reports (i) were prepared in accordance in all
material respects with the requirements of the Exchange Act, the SSE or Swedish
Laws or regulations, as the case may be, and (ii) did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No subsidiary of Autoliv is subject to the periodic
reporting requirements of the Exchange Act or required to file any form, report
or other document with the SEC, the FSA, the SSE or any other comparable
Governmental Entity.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Autoliv Reports conform in all
material respects with International Accounting Standards, in each case applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of Autoliv and its consolidated
subsidiaries as at the respective dates thereof and for the respective periods
indicated therein.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Autoliv and its consolidated subsidiaries as of December 31,
1995, including the notes thereto, neither Autoliv nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with International Accounting
Standards, except for (i) liabilities or obligations incurred in the ordinary
course of business since December 31, 1995, (ii) liabilities or obligations
incurred outside the ordinary course of business since December 31, 1995 that
would neither, individually or in the aggregate, (A) have an Autoliv Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by Autoliv and (iii) liabilities and obligations incurred in
connection with the execution and delivery of this Agreement and consummation of
the Transactions contemplated hereby.
Section 5.8 Absence of Certain Changes or Events. Since January 1,
1996, except as contemplated by or as disclosed in this Agreement or as
disclosed in any Autoliv Report filed since January 1, 1996, Autoliv and its
subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since such date, there has not been
(a) any Autoliv Material Adverse Effect, other than due to events, changes or
developments relating to the economy in general, the automotive industry
(including strikes affecting one or more automotive companies) or the automotive
safety products industry in general, (b) any event that would, or is reasonably
likely to, have a material adverse effect on the ability of Autoliv to
consummate the transactions contemplated by this Agreement or perform its
obligations hereunder, (c) any material change by Autoliv in its accounting
methods, principles or practices, (d) any declaration, setting aside or payment
of any dividend (other than in accordance with Autoliv's regular dividend
practice) or distribution in respect of the Autoliv Securities or any
redemption, purchase or other acquisition of any of Autoliv's securities, or (e)
any increase in the compensation or benefits or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of
Autoliv or any subsidiary of Autoliv except in
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each case in the ordinary course of business consistent with past practice or
except in each case as required by applicable law.
Section 5.9 Employee Benefit Plans; Labor Matters.
Except for such failures, liabilities, penalties, taxes, claims or
other events or matters described in subsections (c) through (n), but excluding
subsection (g), below that would not, individually or in the aggregate, have an
Autoliv Material Adverse Effect:
(a) Section 5.9(a) of the Disclosure Schedule delivered by
Autoliv to ▇▇▇▇▇▇ prior to the execution of (and forming part of) this Agreement
(the "Autoliv Disclosure Schedule") contains a true and complete list of each
material bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance or termination pay, change-in-control, hospitalization
or other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
and each other material employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Autoliv, any of its subsidiaries or by any trade or business,
whether or not incorporated (an "Autoliv ERISA Affiliate"), that together with
Autoliv would be deemed a "single employer" within the meaning of section
4001(b)(1) of ERISA, for the benefit of any employee or former employee of
Autoliv, any of its subsidiaries or any Autoliv ERISA Affiliate (the "Autoliv
Plans").
(b) With respect to each of the Autoliv Plans, Autoliv has
heretofore delivered or made available to ▇▇▇▇▇▇ true and complete copies of
each of the following documents: (A) a copy of each of the Autoliv Plans
(including all amendments thereto); (B) a copy of the most recent annual
report, if required under ERISA or other applicable Law, with respect to each
such Autoliv Plan; (C) a copy of the most recent actuarial report, if required
under ERISA or other applicable Law, with respect to each such Autoliv Plan; (D)
a copy of the most recent SPD, if any, together with all Summaries of Material
Modification issued with respect to such SPD, required under ERISA or other
applicable Law with respect to each such Autoliv Plan; (E) if any Autoliv Plan
is funded through a trust or any other funding vehicle, a copy of the trust or
other funding agreement (including all amendments thereto) and (F) the latest
financial statements thereof; and the most recent determination letter received
from the Internal Revenue Service with respect to each Autoliv Plan that is
intended to be qualified under section 401 of the Code.
(c) No liability under Title IV of ERISA has been incurred by
Autoliv, any of its subsidiaries or any Autoliv ERISA Affiliate since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Autoliv, any of its subsidiaries or any
Autoliv ERISA Affiliate of incurring a liability under such Title, other than
liability for premiums due the PBGC, which payments have been or will be made
when due. To the extent this representation applies to sections 4064, 4069 or
4204 of Title IV of ERISA, it is made not only with respect to the Autoliv Plans
but also with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which Autoliv, any of its
subsidiaries or any Autoliv ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the last day of Autoliv's
most recent fiscal year.
(d) To the knowledge of Autoliv, there are no proceedings
pending to terminate any of the Autoliv Plans and no condition exists that
presents a material risk that such proceedings will be instituted.
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(e) Neither Autoliv, any of its subsidiaries, any Autoliv
ERISA Affiliate, any of the Autoliv Plans, any trust created thereunder nor, to
the knowledge of Autoliv, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
Autoliv, any of its subsidiaries, any Autoliv ERISA Affiliate, any of the
Autoliv Plans, any such trust, any trustee or administrator thereof, or any
party dealing with the Autoliv Plans or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a
tax imposed pursuant to section 4975, 4976 or 4980B of the Code.
(f) None of the Autoliv Plans or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each of the Autoliv Plans ended
prior to the date of this Agreement.
(g) Except as set forth in Section 5.9(g) of the Autoliv
Disclosure Schedule, no Autoliv Plan is a "multiemployer plan," as such term is
defined in section 3(37) of ERISA.
(h) Except as set forth in Section 5.9(h) of the Autoliv
Disclosure Schedule, each of the Autoliv Plans has been operated and
administered in all material respects in accordance with applicable Laws of each
relevant jurisdiction, including but not limited to ERISA and the Code.
(i) Each of the Autoliv Plans that is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified and
the trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code.
(j) Except as set forth in Section 5.9(j) of the Autoliv
Disclosure Schedule, no amounts payable under the Autoliv Plans or any other
agreement or arrangement to which Autoliv, any of its subsidiaries or any
Autoliv ERISA Affiliate is a party will, as a result of the transactions
contemplated hereby, fail to be deductible for federal income tax purposes by
virtue of section 280G of the Code.
(k) Except as set forth in Section 5.9(k) of the Autoliv
Disclosure Schedule, no Autoliv Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees after retirement or other termination of service
(other than (i) coverage mandated by applicable law, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in section 3(2) of ERISA, or (iii) benefits, the full cost of which is borne by
the current or former employee (or beneficiary thereof)).
(l) Except as set forth in Section 5.9(l) of the Autoliv
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of
Autoliv, any of its subsidiaries or any Autoliv ERISA Affiliate to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer.
(m) There are no pending or threatened claims by or on behalf
of any Autoliv Plan, by any employee or beneficiary covered under any such
Autoliv Plan, or otherwise involving any such Autoliv Plan (other than routine
claims for benefits).
(n) With respect to each Autoliv Plan that is not subject to
United States Law (an "Autoliv Foreign Benefit Plan"):
-23-
(i) all employer and employee contributions to each Autoliv
Foreign Benefit Plan required by Law or by the terms of such Autoliv
Foreign Benefit Plan have been made, or if applicable, accrued in
accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded
Autoliv Foreign Benefit Plan, the liability of each insurer for any
Autoliv Foreign Benefit Plan funded through insurance or the book reserve
established for any Autoliv Foreign Benefit Plan, together with any
accrued contributions, is sufficient to procure or provide for the accrued
benefit obligations, as of the Effective Time, with respect to all
current and former participants in such plan according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to such Autoliv Foreign Benefit Plan and no transaction
contemplated by this Agreement shall cause such assets or insurance
obligations to be less than such benefit obligations; and
(iii) each Autoliv Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing
with applicable regulatory authorities.
(o) Except as set forth in Section 5.9(o) of the Autoliv
Disclosure Schedule, and except for country-wide collective bargaining or other
country-wide labor union contracts, as of the date of this Agreement, neither
Autoliv nor any subsidiary of Autoliv is a party to any collective bargaining or
other labor union contract applicable to persons employed by Autoliv or any
subsidiary of Autoliv and no collective bargaining agreement or other labor
union contract is being negotiated by Autoliv or any subsidiary of Autoliv. As
of the date of this Agreement, there is no labor dispute, litigation,
arbitration, strike or work stoppage against Autoliv or any subsidiary of
Autoliv pending or threatened in writing that may interfere with the respective
business activities of Autoliv or any subsidiary of Autoliv, except where such
dispute, litigation, arbitration, strike or work stoppage would not have an
Autoliv Material Adverse Effect. As of the date of this Agreement, to the
knowledge of Autoliv, none of Autoliv, any subsidiary of Autoliv, or their
respective representatives or employees, has committed any unfair labor
practices in connection with the operation of the respective businesses of
Autoliv or any subsidiary of Autoliv, and there is no charge or complaint
against Autoliv or any subsidiary of Autoliv by or before the National Labor
Relations Board or any comparable state or foreign governmental authority or
agency pending or threatened in writing, except where such unfair labor
practice, charge or complaint would not have an Autoliv Material Adverse Effect.
Section 5.10 Tax Matters.
(a) Neither Autoliv nor, to the knowledge of Autoliv, any of
its affiliates has taken or agreed to take any action that would prevent the
Spinoff from constituting a transaction qualifying under Sections 355 and
368(a)(1)(D) of the Code or the Merger from constituting a transaction
qualifying under Section 368(a) of the Code or (in conjunction with the
acquisition of Autoliv Securities pursuant to the Exchange Offer) from
constituting a transaction qualifying under Section 351(a) of the Code, or would
prevent the Exchange Offer (in conjunction with the acquisition of ▇▇▇▇▇▇ Shares
pursuant to the Merger) from constituting a transaction qualifying under Section
351(a) of the Code or a transaction in which, for Swedish income tax purposes,
neither Newco, Autoliv nor the Autoliv stockholders will recognize taxable
income or gain. Autoliv is not aware of any agreement, plan or other
circumstance that would prevent the Merger or the Exchange Offer from so
qualifying under Section 368(a) or Section 351(a) of the Code or under
applicable Swedish tax Laws.
(b) Except for such matters that would not have an Autoliv
Material Adverse Effect or as set forth in Section 5.10(b) of the Autoliv
Disclosure Schedule, (i) Autoliv and its subsidiaries have timely filed all Tax
Returns due to be filed with any taxing authority with respect to Taxes on or
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of Autoliv
-24-
and its subsidiaries, and such Tax Returns are true, correct and complete in all
material respects, (ii) all Taxes shown to be payable on such Tax Returns that
are due prior to the Effective Time have been paid, (iii) no deficiency for any
material amount of Tax has been asserted or assessed by a taxing authority
against Autoliv or any of its subsidiaries, (iv) Autoliv and its subsidiaries
have provided adequate reserves in their financial statements for any Taxes that
have not been paid, whether or not shown as being due on any returns, (v)
neither Autoliv nor any of its subsidiaries has made any change in accounting
methods, received a ruling from any taxing authority or signed an agreement with
any taxing authority which is reasonably likely to have an Autoliv Material
Adverse Effect, (vi) Autoliv and its subsidiaries have complied in all respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
foreign laws) and have, within the time and manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws, (vii) no
federal, state, local or foreign audits or other administrative proceedings or
court proceedings have been initiated or are presently pending with regard to
any Taxes or Tax Returns of Autoliv or its subsidiaries, and neither Autoliv nor
its subsidiaries have received any notice of any such audits or proceedings,
(viii) no federal income Tax Returns of Autoliv subsidiaries that are United
States corporations have been examined by the Internal Revenue Service, (ix)
there are no outstanding requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against Autoliv or any of its subsidiaries, and no power of
attorney granted by either Autoliv or any of its subsidiaries with respect to
any Taxes is currently in force, and (x) neither Autoliv nor any of its
subsidiaries has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of Section 341(f) of
the Code, or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Autoliv or any of its subsidiaries.
Section 5.11 Contracts; Debt Instruments. Except as disclosed in
Section 5.9(a) or 5.11 of the Autoliv Disclosure Schedule, there is no contract
or agreement, as of the date hereof, that is material to the business, financial
condition or results of operations of Autoliv and its subsidiaries, taken as a
whole, which, if Autoliv and its subsidiaries, taken as a whole, were subject to
the reporting requirements under the Exchange Act as of the date hereof, would
be required to be filed by Autoliv as an exhibit to its annual report on Form
10-K. Except as disclosed in the Autoliv Reports or in Section 5.11 of the
Autoliv Disclosure Schedule, neither Autoliv nor any subsidiary of Autoliv is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture or
lease, or any other contract, agreement, arrangement or understanding to which
it is a party or by which it or any of its properties or assets is bound, except
for violations or defaults that would not, individually or in the aggregate,
result in an Autoliv Material Adverse Effect.
Section 5.12 Litigation. Except as disclosed in Autoliv Reports or
in Section 5.12 of the Autoliv Disclosure Schedule, there is no suit, claim,
action, proceeding, investigation or product recall pending or, to the knowledge
of Autoliv, threatened in writing against Autoliv or any subsidiary of Autoliv
which, individually or in the aggregate, is reasonably likely to have an Autoliv
Material Adverse Effect. Except as disclosed in the Autoliv Reports or in
Section 5.12 of the Autoliv Disclosure Schedule, neither Autoliv nor any
subsidiary of Autoliv is subject to any outstanding Order, writ, injunction or
decree which, individually or in the aggregate, would have an Autoliv Material
Adverse Effect.
Section 5.13 Environmental Matters. Except as disclosed in the
Autoliv Reports or as would not, individually or in the aggregate, have an
Autoliv Material Adverse Effect:
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(a) Autoliv and its subsidiaries (i) are in compliance with
all applicable Environmental Laws, (ii) hold all required Environmental Permits
for the operation of Autoliv's business as currently conducted, and (iii) are in
compliance with their required Environmental Permits.
(b) None of Autoliv or any subsidiary of Autoliv has received
any written request for information that is outstanding, or been notified that
it is a potentially responsible party, under CERCLA or any similar state, local
or foreign Law or applicable Environmental Law.
(c) None of Autoliv or any subsidiary of Autoliv has entered
into or agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with all applicable
Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous Materials.
(d) None of the real property owned or leased by Autoliv or
any subsidiary of Autoliv is listed or, to the best knowledge of Autoliv,
proposed for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites requiring
investigation or cleanup.
Section 5.14 Trademarks, Patents and Copyrights. Except (i) as set
forth in Section 5.12 or 5.14 of the Autoliv Disclosure Schedule, or (ii) to the
extent the inaccuracy of any of the following (or the circumstances giving rise
to such inaccuracy), individually or in the aggregate, would not have an Autoliv
Material Adverse Effect, Autoliv and its subsidiaries own or possess adequate
licenses or other legal rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
servicemarks, trade secrets, applications for trademarks and for servicemarks,
mask works and know-how used in connection with the business of Autoliv and its
subsidiaries as currently conducted and, to Autoliv's knowledge, as of the date
hereof, there is no claim challenging the validity of any of the foregoing. The
conduct of the business of Autoliv and its subsidiaries as currently conducted
does not infringe any patent, patent right, license, trademark, trademark
right, trade dress, trade name, trade name right, service ▇▇▇▇, mask work or
copyright of any third party except for such infringements that, individually or
in the aggregate, would not have an Autoliv Material Adverse Effect. To
Autoliv's knowledge, there are no infringements of any proprietary rights owned
by or licensed by or to Autoliv or any subsidiary of Autoliv that, individually
or in the aggregate, would have an Autoliv Material Adverse Effect.
Section 5.15 Opinions of Financial Advisors. Each of Enskilda
Securities ("Enskilda") and The Blackstone Group L.P. ("Blackstone") has
delivered to Autoliv its written opinion to the effect that, as of the date of
this Agreement, the consideration to be received by Autoliv's stockholders in
the Exchange Offer is fair to Autoliv's stockholders from a financial point of
view. Each of Enskilda and Blackstone has authorized the inclusion of its
opinion in the Proxy/Prospectus, the Swedish Prospectus and the English
translation of the Swedish Prospectus to be provided to Autoliv's stockholders
located outside of Sweden, the United States and Canada (the "International
Prospectus"), and Autoliv will promptly, after the date of this Agreement,
deliver signed copies of such opinions to ▇▇▇▇▇▇.
Section 5.16 Brokers. Except as set forth in Section 5.16 of the
Autoliv Disclosure Schedule, no broker, finder or investment banker (other than
Enskilda and Blackstone) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Autoliv or any subsidiary of Autoliv. Autoliv has heretofore
made available to ▇▇▇▇▇▇ a complete and correct copy of all agreements between
Autoliv and Enskilda and between Autoliv and Blackstone or any other person
listed in Section 5.16 of the Autoliv Disclosure Schedule pursuant to which such
firms would be entitled to any payment relating to the Transactions.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO AND NEWCO SUB
Newco and Newco Sub hereby jointly and severally represent and
warrant to Autoliv and ▇▇▇▇▇▇ that:
Section 6.1 Organization and Qualification; Subsidiaries. Each of
Newco and Newco Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Each of Newco and Newco Sub is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary. Neither Newco nor Newco Sub has
any subsidiaries other than, in the case of Newco, Newco Sub. Upon formation or
organization, the entities to be formed in connection with the actions
contemplated by Section 3.3(a) will be duly incorporated or organized.
Section 6.2 Certificate of Incorporation and By-Laws. Each of Newco
and Newco Sub has heretofore made available to each of Autoliv and ▇▇▇▇▇▇ a
complete and correct copy of its Certificate of Incorporation and By-Laws. Such
Certificates of Incorporation and By-Laws are in full force and effect. Neither
Newco nor Newco Sub is in violation of any of the provisions of its Certificate
of Incorporation or By-Laws.
Section 6.3 Capitalization.
(a) As of the date of this Agreement, (i) the authorized
capital stock of Newco consists of 1,000 shares of Newco Common Stock, (ii)
1,000 shares of Newco Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and (iii) each of Autoliv and
▇▇▇▇▇▇ own 500 shares of Newco Common Stock free and clear of all encumbrances
of any kind. No shares of Newco capital stock are held in the treasury of Newco.
On or prior to the Effective Time, the Certificate of Incorporation of Newco
will be amended to provide that the authorized capital stock of Newco will
consist of (i) 250,000,000 shares of Newco Common Stock and (ii) 40,000,000
shares of preferred stock. As of the Registration Statement Effective Date,
1,000 shares of Newco Common Stock will be issued and outstanding, all of which
will be validly issued, fully paid and nonassessable and no shares of preferred
stock of Newco will be issued or outstanding. Except as provided in this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Newco or obligating Newco to issue or sell any shares of
capital stock of, or other equity interests in, Newco. The Newco Common Stock to
be issued in connection with the Transactions, when issued as contemplated
herein, will be duly authorized, validly issued, fully paid and nonassessable
and will not be issued in violation of any preemptive rights. Should SDRs be
issued in connection with the Exchange Offer, such SDRs, when issued as
contemplated herein will be validly issued. Should SDRs be issued, the
depositary agreement under which such SDRs are to be issued will have been duly
authorized, executed and delivered by Newco and will constitute a legal, valid
and binding obligation of Newco enforceable against Newco in accordance with its
terms.
(b) The authorized capital stock of Newco Sub consists of
1,000 shares of common stock, par value $.01 per share, of Newco Sub (the "Newco
Sub Common Stock"). As of the date of this Agreement, 1,000 shares of Newco Sub
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable. Each issued and outstanding share of Newco Sub Common
Stock is
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owned by Newco, free and clear of all encumbrances of any kind. No shares of
Newco Sub Common Stock are held in the treasury of Newco Sub. There are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Newco Sub or
obligating Newco or Newco Sub to issue or sell any shares of capital stock of,
or other equity interests in, Newco Sub. As of the Effective Time, all of the
outstanding shares of capital stock of the Surviving Corporation will be duly
authorized, validly issued, fully paid and nonassessable and will be owned by
Newco, free and clear of all encumbrances of any kind.
Section 6.4 Authority Relative to this Agreement. Each of Newco and
Newco Sub has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions (including, without limitation, the Transactions) contemplated
herein to be consummated by it. The execution and delivery of this Agreement by
each of Newco and Newco Sub and the consummation by each of Newco and Newco Sub
of such transactions have been duly and validly authorized by all necessary
corporate action (including, in the case of Newco Sub, the approval of Newco as
sole stockholder of Newco Sub) and no other corporate proceedings on the part of
either Newco or Newco Sub are necessary to authorize this Agreement or to
consummate such Transactions. This Agreement has been duly authorized and
validly executed and delivered by each of Newco and Newco Sub and constitutes a
legal, valid and binding obligation of each of Newco and Newco Sub, enforceable
against each of Newco and Newco Sub in accordance with its terms.
Section 6.5 No Conflict. The execution and delivery of this
Agreement by each of Newco and Newco Sub do not, and the performance of this
Agreement by each of Newco and Newco Sub will not, conflict with or violate any
provision of the Newco or Newco Sub Certificate of Incorporation or By-laws.
Section 6.6 No Activities. Except for obligations or liabilities
incurred in connection with its respective incorporation or organization and the
Transactions, neither Newco nor Newco Sub has incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or liabilities or engaged
in any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
ARTICLE VII
COVENANTS
Section 7.1 Conduct of Business by ▇▇▇▇▇▇ Pending the Closing.
▇▇▇▇▇▇ agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 7.1 of the ▇▇▇▇▇▇ Disclosure Schedule or as
contemplated by any other provision of this Agreement or the Ancillary
Agreements, unless Autoliv shall otherwise agree in writing, which agreement
shall not be unreasonably withheld or delayed, (1) the operations of the
Retained Business shall be conducted only in, and neither ▇▇▇▇▇▇ nor any of its
subsidiaries shall take any action with respect to the operations of the
Retained Business except in, the ordinary course of business consistent with
past practice, and except that solely for purposes of the Distribution
Agreement, the Retained Business shall to the fullest extent reasonably
practicable be treated as if it were a stand-alone, self-financed entity as
provided for in accordance with Section 2.01(c) of the Distribution Agreement,
(2) ▇▇▇▇▇▇ and its subsidiaries will conduct the operations of all businesses
other than the Retained Business in the ordinary course of business except where
the failure to so conduct would not have a ▇▇▇▇▇▇ Material Adverse Effect, (3)
▇▇▇▇▇▇ and its subsidiaries will prepare and file all Tax Returns due on or
before the Effective Time on a basis consistent with the elections, conventions,
accounting methods and principles of taxation used for the most recent periods
for which Tax Returns have been filed, and (4) with respect to the Retained
Business, ▇▇▇▇▇▇ and its subsidiaries shall each use their respective reasonable
efforts
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to keep available the services of such of the current officers, significant
employees and consultants of ▇▇▇▇▇▇ and its subsidiaries and to preserve the
current relationships of ▇▇▇▇▇▇ and its subsidiaries with such of the
customers, suppliers and other persons with which ▇▇▇▇▇▇ or any subsidiary of
▇▇▇▇▇▇ has significant business relations as ▇▇▇▇▇▇ ▇▇▇▇▇ reasonably necessary
in order to preserve substantially intact the Retained Business. By way of
amplification and not limitation, except as set forth in Section 7.1 of the
▇▇▇▇▇▇ Disclosure Schedule or as contemplated by any other provision of this
Agreement or the Ancillary Agreements, neither ▇▇▇▇▇▇ nor any Retained ▇▇▇▇▇▇
Subsidiaries shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following, without the
prior written consent of Autoliv, which consent shall not be unreasonably
withheld or delayed:
(a) amend or otherwise change the Restated Certificate of
Incorporation or By-laws or equivalent organizational documents of ▇▇▇▇▇▇ or any
Retained ▇▇▇▇▇▇ Subsidiaries;
(b) issue, sell, pledge, dispose of, grant, transfer,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, guarantee or encumbrance of any stock of any class, or
securities convertible or exchangeable or exercisable for any shares of such
capital stock, or any options, warrants or other rights of any kind to acquire
any shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of ▇▇▇▇▇▇ or any Retained ▇▇▇▇▇▇
Subsidiary, except for (i) issuance and sale of ▇▇▇▇▇▇ Preferred Stock pursuant
to the Rights Agreement; (ii) issuance and sale of ▇▇▇▇▇▇ Shares; (iii) issuance
of rights to purchase shares of ▇▇▇▇▇▇ Preferred Stock issuable in connection
with issuances of ▇▇▇▇▇▇ Shares; (iv) grants of options to purchase ▇▇▇▇▇▇
Shares pursuant to the ▇▇▇▇▇▇ Option Plan to persons who are not Company
Individuals (as defined in the Employee Benefits Allocation Agreement); (v)
issuance, sale or other transfer or disposition by a wholly-owned subsidiary of
its capital stock to its parent; and (vi) in connection with newly hired Company
Individuals, grants of options to purchase up to 3,000 ▇▇▇▇▇▇ Shares per newly
hired employee consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, other than (i) quarterly cash dividends in the ordinary course in
an amount consistent with past practice and not in excess of $.15 per ▇▇▇▇▇▇
Share (other than dividends to be paid after August 31, 1997), (ii) the Spinoff
or (iii) dividends from a wholly-owned subsidiary to its parent, with respect to
any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock other
than for cash;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any division
thereof or any assets, in each case which would become part of the Retained
Business, other than acquisitions of assets in the ordinary course of business
and any other acquisitions which would not, individually, be material to the
Retained Business;
(ii) incur any indebtedness for borrowed money, issue any debt
securities, make any loans, advances or capital contributions to any other
person or assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person for borrowed money which, in each
case, would become a Safety Liability (as defined in the Distribution
Agreement), that would not be eliminated as of the Effective Time, except for
$750 million in indebted ness (the "Retained Debt") in connection with the
Safety Credit Agreement (as defined in the Distribution Agreement);
(iii) terminate, cancel, or agree to any material change in,
or enter into any contract or agreement, other than the Retained Debt, material
to the business, results of operations or financial condition of the Retained
Business, in either case other than in the ordinary course of business;
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(iv) make or authorize any capital expenditure with respect to
the Retained Business, other than capital expenditures that are not, in the
aggregate, in excess of the amount set forth in the capital budget through June
30, 1997 for ▇▇▇▇▇▇ and its subsidiaries, described in Section 7.1 of the ▇▇▇▇▇▇
Disclosure Schedule, or authorized under a prior year's capital budget;
(v) change the Retained Business' practices with respect to
the timing of payments or collections in any material respect; or
(vi) enter into any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under this Section
7.1(e);
(f) (i) except in the ordinary course of business in
accordance with past practices or ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇ policy in effect as of the
date of this Agreement, increase the compensation payable or to become pay able
to any Company Individual (as defined in the Employee Benefits Allocation
Agreement) (or any other person for whom the Retained Business will have
liability) or grant any rights to severance or termination pay to, or enter into
any employment or severance agreement with, any Company Individual (or any other
person for whom the Retained Business will have liability), or (ii) establish,
terminate, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
Company Individual (or any other person for whom the Retained Business will have
liability), that will create or materially increase any material liability of
▇▇▇▇▇▇ and its subsidiaries, taken as a whole, except as contemplated by this
Agreement or the Ancillary Agreements or to the extent required by applicable
Law or the terms of a collective bargaining agreement;
(g) transfer, sell, lease, license, encumber or otherwise
dispose of any material assets relating to the Retained Business outside the
ordinary course of business;
(h) adopt or change any accounting policies or procedures
relating to or materially affecting the Retained Business, other than actions in
the ordinary course of business and consistent with past practice, except as may
be required by Regulation S-X of the SEC;
(i) waive, release, assign, settle or compromise any material
claims or litigation relating to the Retained Business other than in the
ordinary course of business;
(j) make any material tax election, settle or compromise any
material federal, state, local or foreign income tax liability, file any amended
Tax Returns containing any material amendment or change any material method of
tax accounting, in each case that would be materially adverse to the Retained
Business;
(k) engage in or allow transfers of assets or liabilities or
engage or enter into other transactions between the Retained Business on the one
hand, and Spinco and its subsidiaries on the other hand, other than in the
ordinary course of business or as contemplated by the Ancillary Agreements; or
(l) fail to abide or fail to cause Spinco to abide by their
respective obligations under the Ancillary Agreements.
Section 7.2 Conduct of Business by Autoliv Pending the Closing.
Autoliv agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 7.2 of the Autoliv Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless ▇▇▇▇▇▇ shall
otherwise agree in writing (which agreement shall not be unreasonably withheld
or delayed) or unless prohibited by
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any applicable Swedish Law, (1) the business of Autoliv and its subsidiaries
shall be conducted only in, and Autoliv and its subsidiaries shall not take any
action except in, the ordinary course of business consistent with past practice
and (2) Autoliv shall use reasonable efforts to keep available the services of
such of the current officers, significant employees and consultants of Autoliv
and its subsidiaries and to preserve the current relationships of Autoliv and
its subsidiaries with such of the customers, suppliers and other persons with
which Autoliv or any subsidiary of Autoliv has significant business relations as
Autoliv deems reasonably necessary in order to preserve substantially intact its
business organization. By way of amplification and not limitation, except as set
forth in Section 7.2 of the Autoliv Disclosure Schedule or as contemplated by
any other provision of this Agreement, neither Autoliv nor any subsidiary of
Autoliv shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of ▇▇▇▇▇▇, which consent shall not be unreasonably
withheld or delayed:
(a) amend or otherwise change its Articles of Association or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer,
guarantee, encumber, or authorize the issuance, sale, pledge, disposition,
grant, transfer, guarantee or encumbrance of, any shares of capital stock of
Autoliv or any subsidiary of Autoliv of any class, or securities convertible or
exchangeable or exercisable for any shares of such capital stock, or any
options, warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interests (including, without limitation,
any phantom interest), of Autoliv or any subsidiary of Autoliv, provided,
however, that nothing in this Section 7.2(b) shall prevent a wholly-owned
subsidiary of Autoliv from issuing, selling or otherwise transferring or
disposing of its capital stock to its parent;
(c) recommend to its stockholders that the stockholders
declare, set aside, make or pay any dividend or other distribution other than
(i) regular annual cash dividends in the ordinary course consistent with past
practice and, in the aggregate, not in excess of the lesser of (x) 20% of
Autoliv's net income per share for fiscal year 1996 and (y) SEK 2.75 per Autoliv
Share (other than dividends to be declared and paid after August 31, 1997), or
(ii) dividends from a wholly-owned subsidiary to its parent, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any division
thereof or any assets, other than acquisitions of assets in the ordinary course
of business consistent with past practice, which are disclosed in Section 7.2(e)
of the Autoliv Disclosure Schedule, or any other acquisitions which would not,
individually, be material to Autoliv;
(ii) incur any indebtedness for borrowed money, issue any debt
securities, make any loans, advances or capital contributions to any
other person or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person
for borrowed money.
(iii) terminate, cancel or agree to any material change in, or
enter into any, contract or agreement material to the business,
results of operations or financial condition of Autoliv and its
subsidiaries taken as a whole, in either case other than in the
ordinary course of business, consistent with past practice;
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(iv) make or authorize any capital expenditure, other than
capital expenditures that are not, in the aggregate, in excess of
the amount set forth in Section 7.2 of the Autoliv Disclosure
Schedule, or authorized under a prior year's capital budget; or
(v) enter into any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under
this Section 7.2(e);
(f) (i) except in the ordinary course of business in
accordance with past practices or Autoliv's severance policy in effect on the
date of this Agreement, increase the compensation payable or to become pay able
to its officers or employees in salaries or wages of employees of Autoliv or any
subsidiary of Autoliv who are not officers of Autoliv or grant any rights to
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of Autoliv or any
subsidiary of Autoliv, or (ii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee, that will
create or materially increase any material liability of Autoliv and its
subsidiaries, taken as a whole, except to the extent required by applicable Law
or the terms of a collective bargaining agreement;
(g) transfer, sell, lease, license, encumber or otherwise
dispose of any material assets of Autoliv or any subsidiary of Autoliv outside
the ordinary course of business;
(h) adopt or change any accounting policies or procedures,
other than actions in the ordinary course of business and consistent with past
practice except as may be required by applicable Law or stock exchange
regulation;
(i) waive, release, assign, settle or compromise any material
claims or litigation other than in the ordinary course of business;
(j) make any material tax election, settle or compromise any
material federal, state, local or foreign income tax liability, file any amended
Tax Returns containing any material amendment or change any material method of
tax accounting, in each case which would be materially adverse to Autoliv and
its subsidiaries, taken as a whole; or
(k) engage in or allow transfers of assets or liabilities or
engage or enter into other transactions between Autoliv and its subsidiaries
other than in the ordinary course of business.
Section 7.3 Cooperation; Liaison Committee.
(a) To the extent permitted by applicable Laws, Autoliv and
▇▇▇▇▇▇ shall coordinate and cooperate in connection with (i) the preparation of
the Newco Registration Statement (as defined in Section 8.1(a)), (ii)
determining whether any action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts of ▇▇▇▇▇▇
(including the ▇▇▇▇▇▇ Material Contracts) or Autoliv Material Contracts, in
connection with the consummation of the Transactions and (iii) seeking any such
actions, consents, approvals or waivers.
(b) To the extent permitted by applicable Laws, upon the
execution and delivery of this Agreement, Autoliv and ▇▇▇▇▇▇ will establish a
committee (the "Liaison Committee") for the purpose of facilitating the
consummation of the transactions contemplated hereby. The Liaison Committee
will consist of
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four members, two of whom will be designated by Autoliv, and two of whom will be
designated by ▇▇▇▇▇▇. The Liaison Committee will be dissolved as of the
Effective Time.
Section 7.4 Notices of Certain Events. Prior to the Effective Time,
each of Autoliv and ▇▇▇▇▇▇ shall give prompt notice to the other of (a) any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the Transactions, where the
failure to obtain such consent (if required) would have a ▇▇▇▇▇▇ Material
Adverse Effect or Autoliv Material Adverse Effect, respectively, (b) any notice
or other communication from any Governmental Entity in connection with the
Transactions, (c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened in writing against, relating to or
involving or otherwise affecting Autoliv, ▇▇▇▇▇▇ or their subsidiaries that
relate to the consummation of the Transactions, (d) the occurrence of a default
or event that, with notice or lapse of time or both, will become a default under
any material contract of ▇▇▇▇▇▇ or any material contract of Autoliv, which event
or default would have a ▇▇▇▇▇▇ Material Adverse Effect or Autoliv Material
Adverse Effect, respectively, and (e) any change that is reasonably likely to
result in a ▇▇▇▇▇▇ Material Adverse Effect or an Autoliv Material Adverse Effect
or is likely to materially delay or impede the ability of either ▇▇▇▇▇▇ or
Autoliv to consummate the transactions contemplated by this Agreement or to
fulfill its obligations set forth herein.
ARTICLE XIII
ADDITIONAL AGREEMENTS
Section 8.1 Registration Statements.
(a) As promptly as practicable after the execution of this
Agreement, Autoliv and ▇▇▇▇▇▇ shall jointly prepare and file (or cause Newco to
file) with the SEC a single document that will constitute (i) the proxy
statement of ▇▇▇▇▇▇ relating to the special meeting of ▇▇▇▇▇▇'▇ stockholders
(the "▇▇▇▇▇▇ Stockholders' Meeting") to be held to consider approval of this
Agreement, the Merger, and the transactions contemplated by the Distribution
Agreement, (ii) the prospectus forming part of the registration statement on
Form S-4 of Spinco (together with all amendments thereto, the "Spinco
Registration Statement"), in connection with the registration under the
Securities Act of the Spinco Common Stock to be issued to ▇▇▇▇▇▇ stockholders
pursuant to the Spinoff, (iii) the prospectus forming part of the registration
statement on Form S-4 of Newco (together with all amendments thereto, the "Newco
Registration Statement" and, collectively with the Spinco Registration
Statement, the "Registration Statements"), in connection with the registration
under the Securities Act of the Newco Common Stock to be issued to the
stockholders of Autoliv and ▇▇▇▇▇▇ pursuant to the Exchange Offer in the United
States and the Merger, respectively, and (iv) the offer to purchase (the "U.S.
Offer to Purchase") to be used by Newco in connection with the Exchange Offer in
the United States (such document, together with any amendments thereof or
supplements thereto, the "Proxy/Prospectus"). Autoliv, ▇▇▇▇▇▇ and Newco each
shall use reasonable efforts to cause the Registration Statements to become
effective as promptly as practicable, and, prior to the effective date of the
Registration Statements (the "Registration Statement Effective Date"), Newco
shall take all or any action required under any applicable Laws in connection
with the issuance of Newco Common Stock and, if applicable, SDRs pursuant to the
Merger and the Exchange Offer. Autoliv or ▇▇▇▇▇▇, as the case may be, shall
furnish all information concerning Autoliv or ▇▇▇▇▇▇ as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statements, the Swedish Prospectus and the International
Prospectus. As promptly as practicable after the Registration Statement
Effective Date, the Proxy/Prospectus will be mailed to the stockholders of
▇▇▇▇▇▇ and the U.S. and Canadian stockholders of Autoliv and provided to the
NYSE and SSE. In addition, as promptly as practicable after the Registration
Statement Effective Date, Newco will mail the Swedish Prospectus to Autoliv
stockholders located in Sweden and the International Prospectus to Autoliv
stockholders
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located outside of the United States, Canada and Sweden. Autoliv, ▇▇▇▇▇▇ and
Newco shall cause the Newco Registration Statement, the Swedish Prospectus and
the International Prospectus to comply as to form and substance in all material
respects with the applicable requirements of (i) the Exchange Act, including,
without limitation, Section 14(e) thereof and the respective regulations
promulgated thereunder, (ii) the NYSE and the SSE or the FSA, (iii) the
Securities Act, (iv) the NBK ("N_ringslivets Borskommittes") Recommendations
Concerning Public Offers for the Acquisition of Shares (1988) and (v) the
Indiana Law.
(b) (i) The Proxy/Prospectus shall include the unanimous
recommendation of the Board of Directors of ▇▇▇▇▇▇ to the stockholders of ▇▇▇▇▇▇
that they vote in favor of approval of this Agreement and the Distribution
Agreement; provided, however, that if a Competing Transaction (as defined in
Section 8.4 (d)) shall have been made for ▇▇▇▇▇▇, the Board of Directors of
▇▇▇▇▇▇ may, at any time prior to the Effective Time, withdraw, modify or change
any such recommendation if the Board of Directors of ▇▇▇▇▇▇ determines in good
faith that failure to so withdraw, modify or change its recommendation would
cause the Board of Directors of ▇▇▇▇▇▇ to breach its fiduciary duties to
▇▇▇▇▇▇'▇ stockholders under applicable Laws after consultation with independent
legal counsel (who may be ▇▇▇▇▇▇'▇ regularly engaged independent legal counsel).
In addition, the Proxy/Prospectus will include the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇
referred to in Section 4.17.
(ii) The Proxy/Prospectus, the Swedish Prospectus and
the International Prospectus shall include the unanimous recommendation of the
Board of Directors of Autoliv to the stockholders of Autoliv that they accept
the Exchange Offer; provided, however, that if a Competing Transaction shall
have been made for Autoliv, the Board of Directors of Autoliv may, at any time
prior to the Effective Time, withdraw, modify or change any such recommendation
if the Board of Directors of Autoliv determines in good faith that failure to so
withdraw, modify or change its recommendation would cause the Board of Directors
of Autoliv to breach its fiduciary duties to Autoliv or Autoliv's stockholders
under applicable Laws after consultation with independent legal counsel (who may
be Autoliv's regularly engaged independent legal counsel). In addition, the
Proxy/Prospectus, the Swedish Prospectus and the International Prospectus will
include the opinions of Enskilda and Blackstone referred to in Section 5.15.
(c) No amendment or supplement to the Registration Statements
will be made without the approval of Autoliv and ▇▇▇▇▇▇, which approval shall
not be unreasonably withheld or delayed. Each of Newco, Autoliv and ▇▇▇▇▇▇ will
advise the others, promptly after it receives notice thereof, of the time when
the Newco Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of the qualification of Newco Common Stock or, if applicable, the SDRs issuable
in connection with the Merger and the Exchange Offer for offering or sale in any
jurisdiction, or of any request by the SEC, the NYSE, the SSE or the FSA for
amendment of the Newco Registration Statement or comments thereon and responses
thereto or requests by the SEC, the SSE or the FSA for additional information.
(d) The information supplied by Autoliv for inclusion in the
Registration Statements, the Swedish Prospectus and/or the International
Prospectus shall not, at (i) the time the Registration Statements are declared
effective, (ii) the time the Proxy/Prospectus, the Swedish Prospectus and the
International Prospectus (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of Autoliv or ▇▇▇▇▇▇, as the case may be, (iii)
the time of the ▇▇▇▇▇▇ Stockholders' Meeting, (iv) the Effective Time and (v)
the Expiration Date, contain any untrue statement of a material fact or fail to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. If at any time prior to the
Effective Time, any event or circumstance relating to Autoliv or any subsidiary
of Autoliv, or their respective officers or directors, should be discovered by
Autoliv that should be set forth in an amendment or a supplement to either of
the Registration Statements, Autoliv shall promptly inform ▇▇▇▇▇▇. Autoliv
agrees that all documents that Autoliv or Newco is responsible for filing in
connection with the Transactions
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will comply as to form and substance in all material respects with the
applicable requirements of the SSE or the FSA, the Delaware Law, the Securities
Act and the Exchange Act.
(e) The information supplied by ▇▇▇▇▇▇ for inclusion in the
Registration Statements, the Swedish Prospectus and/or the International
Prospectus shall not, at (i) the time the Registration Statements are declared
effective, (ii) the time the Proxy/Prospectus, the Swedish Prospectus and the
International Prospectus (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of ▇▇▇▇▇▇ or Autoliv, as the case may be, (iii)
the time of the ▇▇▇▇▇▇ Stockholders' Meeting, (iv) the Effective Time, and (v)
the Expiration Date, contain any untrue statement of a material fact or fail to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. If at any time prior to the
Effective Time any event or circumstance relating to ▇▇▇▇▇▇ or any subsidiary of
▇▇▇▇▇▇, or their respective officers or directors, should be discovered by
▇▇▇▇▇▇ that should be set forth in an amendment or a supplement to either of the
Registration Statements, the Swedish Prospectus or the International Prospectus,
▇▇▇▇▇▇ shall promptly inform Autoliv. ▇▇▇▇▇▇ agrees that all documents that
▇▇▇▇▇▇ is responsible for filing with the SEC in connection with the
Transactions will comply as to form and substance in all material respects with
the applicable requirements of the Indiana Law, the Securities Act and the
Exchange Act.
Section 8.2 Stockholders' Meetings. (a) ▇▇▇▇▇▇ shall call and hold
the ▇▇▇▇▇▇ Stockholders' Meeting as promptly as practicable after the
Registration Statement Effective Date for the purpose of voting upon approval of
this Agreement and the Distribution Agreement and Autoliv, ▇▇▇▇▇▇ and Newco will
cooperate with one another to cause the ▇▇▇▇▇▇ Stockholders' Meeting to be held
prior to and proximate to the Expiration Date of the Exchange Offer. ▇▇▇▇▇▇
shall use its reasonable efforts (through its agents or otherwise) to solicit
from its stockholders proxies in favor of approval of this Agreement and the
Distribution Agreement, and shall take all other action necessary or advisable
to secure the affirmative vote of its stockholders required by the Indiana Law
to secure such approval, except to the extent that the Board of Directors of
▇▇▇▇▇▇ determines in good faith that doing so would cause the Board of Directors
of ▇▇▇▇▇▇ to breach its fiduciary duties to ▇▇▇▇▇▇'▇ stockholders under
applicable Laws after consultation with independent legal counsel (who may be
▇▇▇▇▇▇'▇ regularly engaged independent legal counsel).
(b) In the event that Autoliv shall call and hold an annual
general meeting or an extraordinary meeting to be held prior to the Effective
Time, Autoliv shall use its reasonable efforts to cause such meeting to be held
and concluded in a manner that will not delay materially the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements. To the
extent any matters to be proposed relate to this Agreement or the transactions
contemplated hereby, Autoliv shall consult in advance with ▇▇▇▇▇▇ as to such
matters.
Section 8.3 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which Autoliv or ▇▇▇▇▇▇ or any
of their respective subsidiaries is a party or pursuant to applicable Law or the
regulations or requirements of any stock exchange or other regulatory
organization with whose rules the parties are required to comply, from the date
of this Agreement to the Effective Time:
(i) Autoliv shall (and shall cause its subsidiaries to): (A)
provide to ▇▇▇▇▇▇ (and its officers, directors, employees,
accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") reasonable access
at reasonable times, upon reasonable prior notice, to its officers,
employees, agents, properties, offices and other facilities of it
and its subsidiaries and to the books and records thereof and (B)
furnish promptly such information concerning its business,
properties, contracts, assets, liabilities,
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personnel and other aspects of it and its subsidiaries as ▇▇▇▇▇▇ or
▇▇▇▇▇▇'▇ Representatives may reasonably request.
(ii) ▇▇▇▇▇▇ shall (and shall cause its subsidiaries to):
provide to Autoliv and Autoliv's Representatives reasonable access
at reasonable times, upon reasonable prior notice, (A) to the
officers, employees, agents, properties, offices and other
facilities and the books and records relating to the Retained
Business, (B) to personnel at ▇▇▇▇▇▇'▇ corporate headquarters to the
extent necessary to confirm the proper division of assets and
liabilities between Spinco and ▇▇▇▇▇▇ pursuant to the Distribution
Agreement and the other Ancillary Agreements and (C) to personnel at
▇▇▇▇▇▇'▇ corporate headquarters (and counsel, consultants and
divisional ▇▇▇▇▇▇ managers if appropriate), with respect to ▇▇▇▇▇▇'▇
contingent liabilities in a manner consistent generally with the
approach taken by ▇▇▇▇▇▇ and Autoliv prior to the date of this
Agreement. ▇▇▇▇▇▇ shall (and shall cause its subsidiaries to)
furnish promptly such information as Autoliv or Autoliv's
Representatives may reasonably request concerning the business,
properties, contracts, assets, liabilities, personnel and other
aspects relating to (1) the Retained Business and (2) ▇▇▇▇▇▇, to the
extent necessary to confirm the proper division of assets and
liabilities between Spinco and ▇▇▇▇▇▇ pursuant to the Distribution
Agreement and the other Ancillary Agreements.
No investigation conducted pursuant to this Section 8.3 shall
affect or be deemed to modify any representation or warranty made in this
Agreement.
(b) The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the reciprocal Confidentiality Agreements dated July 18, 1996 (the
"Confidentiality Agreements") between Autoliv and ▇▇▇▇▇▇ with respect to the
information disclosed pursuant to this Section 8.3 or any information disclosed
by the other party prior to the date hereof.
(c) Effective upon the Spinoff, ▇▇▇▇▇▇ will (i) assign all of
its rights under the Confidentiality Agreements, other than with respect to the
Retained Business and (ii) cause Spinco to assume all of the obligations of
▇▇▇▇▇▇ under the Confidentiality Agreements from and after the Spinoff, other
than with respect to the Retained Business.
Section 8.4 No Solicitation of Transactions.
(a) Prior to the Effective Time, each party to this Agreement
(i) will not, directly or indirectly, and will not authorize or permit its
officers, directors, employees, subsidiaries, agents or advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), to, directly or indirectly, solicit, initiate or
knowingly encourage (including by way of furnishing non-public information), or
take any other action knowingly to facilitate, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
its stockholders) that constitutes, or may reasonably be expected to lead to,
any Third-Party Transaction, or enter into or maintain or continue discussions
or negotiate with any person or entity in furtherance of such inquiries or to
obtain a Third-Party Transaction, or agree to or endorse any Third-Party
Transaction; (ii) shall notify the other parties promptly if any proposal or
offer, or any inquiry or contact with any person with respect thereto, regarding
a Third-Party Transaction is made; (iii) shall immediately cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to a Third-Party Transaction and promptly request that
all confidential information furnished on behalf of such party be returned; and
(iv) agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
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(b) Notwithstanding anything to the contrary in Section
8.4(a), each party to this Agreement may furnish information to, and may
participate in discussions or negotiations with, any person that, unsolicited by
such party, has delivered a bona fide written proposal with respect to a
Competing Transaction, in each case to the extent that the Board of Directors of
such party determines in good faith that the failure to do so would cause the
Board of Directors of such party to breach its fiduciary duties to such party or
its stockholders under applicable Laws after consultation with independent legal
counsel (who may be such party's regularly engaged independent legal counsel)
and, notwithstanding anything to the contrary contained in this Agreement or the
Ancillary Agreements, any such furnishing of information and participation in
discussions or negotiations shall not constitute a breach of this Agreement or
the Ancillary Agreements by such party; provided, however, that any party
furnishing such information, or participating in such discussions or
negotiations shall notify the other promptly of such action and shall, in any
such notice, indicate the identity of the person making the written proposal
referred to in this Section 8.4(b) and, in reasonable detail, the terms and
conditions of such written proposal.
(c) A "Third-Party Transaction" means any of the following
involving Autoliv or ▇▇▇▇▇▇, as the case may be (other than the transactions
contemplated by this Agreement): (i) a merger, consolidation, share exchange,
business combination or other similar transaction; (ii) any sale, lease,
exchange, transfer or other disposition of 10% or more of the assets of such
party and its subsidiaries, taken as a whole or (iii) a tender offer or exchange
offer for, or any other acquisition of 10% or more of the outstanding voting
securities of such party; provided, however, that the term "Third-Party
Transaction" shall not include any transactions which relate solely to the
businesses to be owned by Spinco and its subsidiaries following the Spinoff and
which would not prevent or materially delay consummation of the Transactions.
(d) A "Competing Transaction" means a bona fide Third-Party
Transaction relating to a merger, consolidation, share exchange, tender or
exchange offer, business combination or other similar transaction involving all
or substantially all of the assets (and in any event, for the avoidance of
doubt, more than 50% of the assets) or more than 50% of the voting securities of
▇▇▇▇▇▇ or Autoliv.
(e) Nothing contained in this Section 8.4 will prohibit ▇▇▇▇▇▇
or Autoliv from making any disclosure to their stockholders if, in the good
faith judgment of its Board of Directors, after consultation with independent
legal counsel (who may be such party's regularly engaged independent legal
counsel), failure so to disclose would be inconsistent with applicable Law;
provided, however, neither ▇▇▇▇▇▇ nor Autoliv, nor their respective Boards of
Directors or any committee thereof shall, except as permitted by Section 8.1(b),
withdraw, modify or change its recommendation with respect to the transactions
contemplated by this Agreement.
Section 8.5 Employee Benefits Matters. Annex A hereto sets forth
certain agreements among the parties hereto with respect to employee benefits
matters and is incorporated herein by this reference.
Section 8.6 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions that are set forth, as of the
date of this Agreement, in the Restated Articles of Incorporation and the
By-Laws, respectively, of ▇▇▇▇▇▇, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would affect adversely the rights thereunder of individuals
who at or at any time prior to the Effective Time were directors, officers,
employees, fiduciaries or agents of ▇▇▇▇▇▇.
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(b) Subject to commercial availability, for a period of six
years after the Effective Time, Newco shall cause to be maintained in effect the
current directors' and officers' liability insurance policies maintained by
▇▇▇▇▇▇ and Autoliv (provided that Newco may, and in the event of the
cancellation or termination of such policies, Newco shall, substitute therefor
policies reasonably satisfactory to the indemnified parties of at least the same
coverage containing terms and conditions which are no less advantageous) with
respect to claims arising from facts or events that occurred prior to the
Effective Time.
(c) This Section 8.6 is intended to be for the benefit of, and
shall be enforceable by, the indemnified parties, their heirs and personal
representatives and shall be binding on Newco and the Surviving Corporation and
their respective successors and assigns.
(d) From and after the Effective Time, Newco agrees that it
shall indemnify and hold harmless each present and former director and officer
of ▇▇▇▇▇▇ or Autoliv, determined as of the Effective Time (the "Indemnified
Parties"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent that ▇▇▇▇▇▇ or Autoliv would have been permitted
under applicable Indiana or Swedish law, as the case may be, and their charter
documents (each as in effect on the date hereof) to indemnify such Indemnified
Parties (and Newco shall also advance expenses as incurred to the fullest extent
permitted under applicable Law; provided that the Indemnified Party to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification); and provided, further, that any determination required to be
made with respect to whether an officer's or director's conduct complies with
the standards set forth under applicable Indiana or Swedish law and ▇▇▇▇▇▇ or
Autoliv's charter documents shall be made by independent counsel selected by
Newco.
(e) To the extent paragraph (d) shall not serve to indemnify
and hold harmless an Indemnified Party, for a period of six years after the
Effective Time, Newco shall, subject to the terms set forth herein, indemnify
and hold harmless, to the fullest extent permitted under applicable Law (and
Newco shall also advance expenses as incurred to the fullest extent permitted
under applicable Law; provided that the Indemnified Party to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification), each
Indemnified Party against any Costs incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to the
transactions contemplated by this Agreement; provided, however, that Newco shall
not be required to indemnify any Indemnified Party pursuant hereto if it shall
be determined that the Indemnified Party acted in bad faith and not in a manner
such Indemnified Party believed to be in or not opposed to the best interests of
▇▇▇▇▇▇ or Autoliv, as the case may be.
(f) Any Indemnified Party wishing to claim indemnification
under paragraphs (d) or (e) of this Section 8.6, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly notify Newco
thereof, but the failure to so notify shall not relieve Newco of any liability
it may have to such Indemnified Party if such failure does not materially
prejudice Newco. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Newco
shall have the right to assume the defense thereof and Newco shall not be liable
to such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Newco elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues which may
raise conflicts of interest between Newco and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Newco shall pay
all
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reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Newco
shall be obligated pursuant to this paragraph (f) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest, (ii) the Indemnified Parties will reasonably cooperate in the
defense of any such matter and (iii) Newco shall not be liable for any
settlement effected without its prior written consent; and provided, further,
that Newco shall not have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law. If such indemnity is not available with respect to any Indemnified Party,
then Newco and the Indemnified Party shall contribute to the amount payable in
such proportion as is appropriate to reflect relative faults and benefits.
(g) If Newco or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provisions shall be made so that the successors and assigns of
Newco shall assume all of the obligations set forth in this Section 8.6.
Section 8.7 Affiliate Letters.
(a) Not fewer than 30 days prior to the Effective Time, ▇▇▇▇▇▇
shall deliver to Autoliv a list of names and addresses of those persons who
were, in ▇▇▇▇▇▇'▇ reasonable judgment, at the record date for the ▇▇▇▇▇▇
Stockholders' Meeting, affiliates within the meaning of Rule 145 of the rules
and regulations promulgated under the Securities Act (each such person, an
"Affiliate") of ▇▇▇▇▇▇. ▇▇▇▇▇▇ shall provide Autoliv with such information and
documents as Autoliv shall reasonably request for purposes of reviewing such
list. ▇▇▇▇▇▇ shall use reasonable efforts to deliver or cause to be delivered to
Autoliv, prior to the Effective Time, an affiliate letter in the form attached
hereto as Exhibit C, executed by each of the Affiliates of ▇▇▇▇▇▇ identified in
the foregoing list.
(b) Not fewer than 30 days prior to the Effective Time,
Autoliv shall deliver to ▇▇▇▇▇▇ a list of names and addresses of those persons
who were, in Autoliv's reasonable judgment, at the record date for the ▇▇▇▇▇▇
Stockholders' Meeting, Affiliates of Autoliv. Autoliv shall provide ▇▇▇▇▇▇ such
information and documents as ▇▇▇▇▇▇ shall reasonably request for purposes of
reviewing such list. Autoliv shall use reasonable efforts to deliver or cause to
be delivered to ▇▇▇▇▇▇, prior to the Effective Time, an affiliate letter in the
form attached hereto as Exhibit D, executed by each of the Affiliates of Autoliv
identified in the foregoing list.
Section 8.8 Letters of Accountants.
(a) ▇▇▇▇▇▇ shall use reasonable efforts to cause to be
delivered to Autoliv "comfort" letters of Ernst & Young LLP, ▇▇▇▇▇▇'▇
independent public accountants, dated and delivered on the Registration
Statement Effective Date and as of the Effective Time, and addressed to Autoliv,
in form and substance reasonably satisfactory to Autoliv and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement. At the request of Ernst & Young LLP, Autoliv shall deliver a
customary letter to Ernst & Young LLP in connection with Autoliv's receipt of
such "comfort" letters.
(b) Autoliv shall use reasonable efforts to cause to be
delivered to ▇▇▇▇▇▇ "comfort" letters of Ernst & Young AB (or of an affiliated
entity within the Ernst & Young group), Autoliv's independent public
accountants, dated and delivered on the Registration Statement Effective Date
and as of the
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Effective Time, and addressed to ▇▇▇▇▇▇, in form and substance reasonably
satisfactory to ▇▇▇▇▇▇ and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement. At the request of
Ernst & Young LLP, ▇▇▇▇▇▇ shall deliver a customary letter to Ernst & Young AB
in connection with ▇▇▇▇▇▇'▇ receipt of such letters.
Section 8.9 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof,
including, without limitation, the respective rights of the parties under
Sections 8.4(b) and 10.1, each of the parties hereto shall use reasonable
efforts to (i) take, or cause to be taken, all appropriate action, and do, or
cause to be done, all things necessary, proper or advisable under applicable Law
or otherwise to consummate and make effective the Transactions, (ii) obtain from
Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Autoliv or ▇▇▇▇▇▇ or
any of their subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the Transactions, (iii) make all necessary filings, and thereafter make any
other submissions either required or deemed appropriate by each of the parties,
with respect to this Agreement, the Ancillary Agreements and the Transactions
required under (A) the rules and regulations of the SSE or the FSA, (B) the
Securities Act, the Exchange Act and any other applicable federal or Blue Sky
Laws, (C) the HSR Act, (D) the filing of notifications in accordance with the
antitrust laws of Sweden, Germany and Belgium and (E) any other applicable Law
and (iv) procure any third-party consents, required to consummate the
Transactions and the Spinoff, relating to any material contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which it
or any of its subsidiaries is a party. The parties hereto shall cooperate and
consult with one another in connection with the making of all such filings with
Governmental Entities, including by providing copies of all such documents to
the nonfiling party and its advisors prior to filing, and none of the parties
will file any such document if any of the other parties shall have reasonably
objected to the filing of such document. No party to this Agreement shall
consent to any voluntary extension of any statutory deadline or waiting period
or to any voluntary delay of the consummation of the Transactions at the behest
of any Governmental Entity without the consent and agreement of the other
parties to this Agreement, which consent shall not be unreasonably withheld or
delayed.
(b) Without limiting the generality of Section 8.9(a), each of
Autoliv and ▇▇▇▇▇▇ shall use reasonable efforts to:
(A) take promptly any or all of the following actions to
the extent necessary to obtain the approval of any Governmental
Entity with jurisdiction over the enforcement of any applicable Laws
regarding the legality of the Transactions and the Spinoff: entering
into negotiations, providing information, making proposals, entering
into and performing agreements or submitting to judicial or
administrative orders, or selling or otherwise disposing of, or
holding separate (through the establishment of a trust or otherwise)
particular assets or categories of assets, or businesses, of
Autoliv, ▇▇▇▇▇▇ or any of their affiliates; provided, however,
neither Autoliv nor ▇▇▇▇▇▇ shall be obligated to take any action
that would have an Autoliv Material Adverse Effect or a ▇▇▇▇▇▇
Material Adverse Effect, as the case may be, assuming for purposes
of this proviso that the Transactions and the Spinoff have been
consummated;
(B) prevent the entry in a judicial or administrative
proceeding brought under any Law by any Governmental Entity or any
other party of any permanent or preliminary injunction or other
order (an "Order") that would make consummation of any of the
Transactions or the Spinoff in accordance with the terms of this
Agreement or the Ancillary
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Agreements unlawful or that would prevent or delay such
consummation, including, without limitation, taking the steps
contemplated by Section 8.9(b)(i); and
(C) take promptly, in the event that such an Order has
been issued in such a proceeding, any and all steps, including,
without limitation, the appeal thereof, the posting of a bond or the
steps contemplated by Section 8.9(b)(i), necessary to vacate, modify
or suspend such injunction or order so as to permit such
consummation on a schedule as close as possible to that
contemplated by this Agreement.
Section 8.10 Newco Organization.
(a) Immediately prior to the Effective Time, Newco shall, and
Autoliv and ▇▇▇▇▇▇ shall cause Newco to, take action to (i) cause the full Board
of Directors of Newco at the Effective Time to consist of Gunnar Bark (who will
be Chairman of the Board), ▇▇▇▇ Charlety, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, two
additional non-executive directors designated by ▇▇▇▇▇▇ and two additional
non-executive directors designated by Autoliv and (ii) cause to be confirmed as
(w) the senior executive officer of Newco in the position as Chief Executive
Officer, ▇▇▇▇ ▇▇▇▇▇▇, (x) President and Chief Operating Officer, ▇▇▇▇ Charlety,
and such others as ▇▇▇▇▇▇ and Autoliv shall agree. Autoliv and ▇▇▇▇▇▇ shall
designate the persons who will be the directors of Newco at the Effective Time
no later than the Registration Statement Effective Date. Notwithstanding
anything to the contrary in this Section 8.10(a), at any time prior to the
Effective Time, each of ▇▇▇▇▇▇ and Autoliv may, at its election, replace its
respective designees to the Board of Directors, and upon the request of ▇▇▇▇▇▇
or Autoliv, as the case may be, the Board shall replace such party's respective
designees to the officer positions, of Newco.
(b) At the Effective Time, Autoliv and ▇▇▇▇▇▇ shall cause
Newco to have an Executive Management Committee (the "Executive Management
Committee") consisting of such members as ▇▇▇▇▇▇ and Autoliv shall agree. The
CEO shall be the chairman of the Executive Management Committee. The purpose and
function of the Executive Management Committee shall be set forth in the
Restated Certificate of Incorporation and By-laws of Newco, but in any event
shall be intended to enhance communication, coordination, and effective shared
decision making among the senior executives of Newco.
(c) Autoliv, ▇▇▇▇▇▇ and Newco shall take all action necessary
to cause the Restated Certificate of Incorporation and By-laws of Newco, as of
the Effective Time, to be in the forms agreed to by the parties hereto between
the date hereof and the Effective Time.
Section 8.11 Depositary Facility for Newco Common Stock. As soon as
practicable after the date hereof, Newco will use reasonable efforts to cause a
commercial bank to operate a depositary facility in Sweden for the Newco Common
Stock. Newco shall pay all fees of such commercial bank relating to the
establishment and operation of such depositary facility, including, without
limitation, any fees payable in connection with the trading of the SDRs, if SDRs
are issued in connection with the Autoliv Transaction, and the distribution of
dividends.
Section 8.12 Plan of Reorganization. This Agreement and the
Ancillary Agreements are intended to constitute a "plan of reorganization"
within the meaning of Section 1.368-2(g) of the Treasury regulations promulgated
under the Code. From and after the date of this Agreement and until the
Effective Time, each party hereto shall use reasonable efforts to cause the
Merger to qualify as a reorganization under Section 368(a) of the Code, and will
not, without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken except pursuant to the terms of this
Agreement or the Ancillary Agreements which could prevent the Spinoff from
constituting a transaction qualifying under Sections 355
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and 368(a)(1)(D) of the Code or the Merger from qualifying, as a reorganization
under the provisions of Section 368(a) of the Code or (in conjunction with the
acquisition of Autoliv Securities pursuant to the Exchange Offer) as a transfer
of property described in Section 351(a) of the Code. From and after the date of
this Agreement and until the Effective Time, each party hereto shall use
reasonable efforts to cause the Exchange Offer (in conjunction with the
acquisition of ▇▇▇▇▇▇ Shares pursuant to the Merger) to qualify, and will not,
without the prior written consent of the parties hereto, knowingly take any
actions or cause any actions to be taken which could prevent the Exchange Offer
from qualifying, as a transfer of property described in Section 351(a) of the
Code. Following the Effective Time, and in accordance with the Distribution
Agreement, none of the Surviving Corporation, Newco, Autoliv or any of their
affiliates shall knowingly take any action or knowingly cause any action to be
taken which would prevent the Spinoff from constituting a transaction qualifying
under Sections 355 and 368(a)(1)(D) of the Code or the Merger or the Exchange
Offer to fail to so qualify as a reorganization under Section 368(a) of the Code
or as a transfer of property described in Section 351(a) of the Code, as the
case may be.
Section 8.13 Ancillary Agreements.
(a) Prior to the Spinoff, ▇▇▇▇▇▇ and certain of its
subsidiaries will enter into the Distribution Agreement and each of the other
Ancillary Agreements.
(b) ▇▇▇▇▇▇ shall not waive or amend any terms of the
Distribution Agreement or any of the other Ancillary Agreements without the
consent of Autoliv, which consent shall not be unreasonably withheld.
(c) The parties hereto acknowledge that the indemnities of
Spinco contained in the Distribution Agreement and the other Ancillary
Agreements shall inure to the benefit of the Surviving Corporation and Newco.
Newco shall not, and shall not permit any of its subsidiaries to, take any
action which would or would be reasonably likely to adversely affect the ability
of the Surviving Corporation to perform its obligations under the Ancillary
Agreements.
(d) Autoliv accepts and agrees that the form of certificate of
incorporation and by-laws of Spinco adopted in contemplation of the Spinoff
shall be as agreed to by ▇▇▇▇▇▇ and Spinco in their sole discretion, provided
that nothing in the charter and by-laws shall adversely affect Spinco's
performance of its obligations under the Ancillary Agreements.
Section 8.14 Year-End Financial Statements.
(a) The parties hereto acknowledge that Ernst & Young LLP will
audit the consolidated balance sheet of the Retained Business as of December 31,
1996. ▇▇▇▇▇▇ hereby agrees to use its reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable to assist and otherwise cause Ernst & Young LLP to complete the
audit of such balance sheet as promptly as practicable and no later than by
February 28, 1997. Prior to the Effective Time, ▇▇▇▇▇▇ also agrees to provide
Autoliv as promptly as reasonably practicable such quarterly unaudited financial
information relating to the Retained Business and covering periods following the
date hereof as may be prepared by ▇▇▇▇▇▇ in the ordinary course.
(b) The parties hereto acknowledge that Ernst & Young AB will
audit the consolidated balance sheet of Autoliv as of December 31, 1996. Autoliv
hereby agrees to use its reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable to assist and otherwise cause Ernst & Young AB to complete the audit
of such balance sheet by January 30, 1997, but in no event shall such audit be
completed later than February 15, 1997. Prior to the Effective Time,
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Autoliv also agrees to provide ▇▇▇▇▇▇ as promptly as reasonably practicable such
quarterly unaudited financial information relating to Autoliv and covering
periods following the date hereof as may be prepared by Autoliv in the ordinary
course.
Section 8.15 Public Announcements. The initial press release
relating to the execution of this Agreement shall be a joint press release and,
thereafter until the Effective Time, Autoliv and ▇▇▇▇▇▇ shall consult with each
other before issuing any press release and shall use reasonable efforts to
consult with each other before otherwise making any public statements with
respect to this Agreement, the Ancillary Agreements, the Spinoff or any
Transaction and shall not issue any such press release, and shall use reasonable
efforts not to make any such public statement, prior to such consultation,
except to the extent required by applicable Law or the requirements of the SSE
or the NYSE, in which case the issuing party shall use reasonable efforts to
consult with the other party before issuing any such release or making any such
public statement.
Section 8.16 Obligations of Newco Sub. Newco shall take all action
necessary to cause Newco Sub to perform its obligations under this Agreement and
to consummate the Merger on the terms and subject to the conditions set forth in
this Agreement.
Section 8.17 Stock Exchange Listings and De-listings. Newco shall
use its reasonable efforts to cause the shares of Newco Common Stock to be
issued in the Merger and the Autoliv Transaction to be approved for listing on
the NYSE, the SSE and such other exchange(s) that Newco deems to be appropriate,
subject to official notice of issuance, prior to the Effective Time. If SDRs are
issued in connection with the Autoliv Transaction, Newco shall use its
reasonable efforts to cause such SDRs to be approved for listing on the SSE,
subject to official notice of issuance, prior to the Effective Time. ▇▇▇▇▇▇
shall use its reasonable efforts to cause the ▇▇▇▇▇▇ Common Stock to be
de-listed from the NYSE and de-registered under the Exchange Act as soon as
practicable following the Effective Time if such actions are determined prior to
the Effective Time in the reasonable judgment of ▇▇▇▇▇▇ and Autoliv to be
necessary to the consummation of the Transactions. Autoliv shall use its
reasonable efforts to cause (i) the Autoliv Shares to be delisted from the SSE
and (ii) the quotation of the ADSs on the Private Offerings, Resales and Trading
through Automated Linkages system to be terminated, in each case as soon as
permitted under applicable Laws.
Section 8.18 Maintenance of Certain Facilities; Corporate
Headquarters. As part of its global capability, Newco intends to retain and
develop regional operating centers in each of Ogden, Utah and Stockholm, Sweden.
It is intended that the executive headquarters of Newco shall be in either
Amsterdam or London.
Section 8.19 Cancellation of Newco Common Stock Owned by Autoliv and
▇▇▇▇▇▇. The shares of Newco Common Stock owned by Autoliv and ▇▇▇▇▇▇ immediately
prior to the consummation of the Transactions will be cancelled immediately upon
consummation of the Transactions.
Section 8.20 Delivery of Tax Certificates. On or prior to the
Effective Time, Newco, ▇▇▇▇▇▇ and Autoliv shall each deliver the tax
certificates described in Section 9.1(g)(ii) (A) and (B) as provided in such
sections.
Section 8.21 Safety Credit Agreement. Autoliv and Newco will use
their reasonable efforts, to cooperate with ▇▇▇▇▇▇ in ▇▇▇▇▇▇'▇ obtaining and
entering into the Safety Credit Agreement (as defined in the Distribution
Agreement).
Section 8.22 Post-Closing Transactions. Newco shall not for a period
of one year following the Effective Time engage or agree to engage or cause its
subsidiaries to engage in any of the following
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transactions, unless (a) an opinion in form and substance reasonably
satisfactory to Spinco is obtained from nationally recognized tax counsel to
Newco and/or (b) a supplemental ruling is obtained from the Internal Revenue
Service, in either case to the effect that such transaction(s) would not
adversely affect the tax consequences of the contributions, transfers,
assumptions, Merger and Spinoff to Spinco, any subsidiary thereof, or any
shareholder of Spinco. The transactions subject to this provision are: (i)
causing the Surviving Corporation to cease to engage in an active trade or
business within the meaning of Section 355(b) of the Code, whether by means of a
disposition or distribution of stock or assets, or otherwise; (ii) disposing of
any of the historic business assets of ▇▇▇▇▇▇ that would result in the Surviving
Corporation failing the continuity of business enterprise test of Treasury
Regulation Section 1.368-1(d); (iii) transferring or causing the Surviving
Corporation to issue shares of capital stock of the Surviving Corporation that
would cause Newco to fail to be in control of the Surviving Corporation within
the meaning of Section 368(c) of the Code; (iv) reacquiring any of the Newco
Common Stock issued in the Merger; or (v) liquidating or merging with or into
any other entity (including a subsidiary of either Newco or the Surviving
Corporation). Newco hereby represents and warrants that Newco has no plan or
intention to undertake or cause its subsidiaries to undertake any of the
transactions set forth in (i), (ii), (iii), (iv) or (v) above. Notwithstanding
the foregoing, any act or transaction that is consistent with the
representations contained in (x) the request for rulings and any supplement
thereto filed with the Internal Revenue Service in connection with the Spinoff
or (y) the tax certificates described in Section 9.2(g)(ii) hereof relating to
the opinions of counsel to be rendered in connection with the Merger or the
Exchange Offer, shall not be subject to the provisions of this Section 8.22.
ARTICLE IX
CONDITIONS TO THE TRANSACTIONS
Section 9.1 Conditions to the Obligations of Each Party to
Consummate the Transactions. The obligations of Autoliv, ▇▇▇▇▇▇, Newco and Newco
Sub to consummate the Transactions, or to permit the consummation of the
Transactions, are subject to the satisfaction or, if permitted by applicable
Law, waiver, of the following conditions:
(a) the Registration Statements shall have been declared
effective by the SEC under the Securities Act and no stop order suspending the
effectiveness of the Registration Statements shall have been issued by the SEC
and no proceeding for that purpose shall have been initiated by the SEC;
(b) the Spinoff shall have been consummated in accordance with
the terms of the Distribution Agreement;
(c) the ▇▇▇▇▇▇ Stockholder Approval Condition;
(d) no court of competent jurisdiction shall have issued or
entered any Order which is then in effect and has the effect of making any of
the Transactions illegal or otherwise prohibiting their consummation;
(e) any waiting period (and any extension thereof) applicable
to the consummation of the Transactions under the HSR Act and any other
competition, merger control or similar Law, including any waiting periods
arising from the filing of notification in accordance with the antitrust laws of
Sweden, Germany and Belgium, shall have expired or been terminated;
(f) all consents, approvals and authorizations required to be
obtained to consummate the Transactions shall have been obtained from all
Governmental Entities, except where the failure to
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obtain any such consents, approvals and authorizations would not result in a
change in or effect on the Retained Business or the business of Autoliv, in each
case after giving effect to the Transactions and provisions of the Distribution
Agreement and the other Ancillary Agreements, that is, or is reasonably likely
to be, materially adverse to the business, properties, financial condition or
results of operations of Autoliv and its subsidiaries and the Retained Business,
taken as a whole;
(g) (i) ▇▇▇▇▇▇ shall have received, and provided a copy
thereof to Newco and Autoliv, in form and substance reasonably satisfactory to
▇▇▇▇▇▇ and Autoliv, a ruling from the Internal Revenue Service substantially to
the effect that no gain or loss will be recognized by ▇▇▇▇▇▇ or ▇▇▇▇▇▇'▇
stockholders as a result of the Spinoff;
(ii) Autoliv, ▇▇▇▇▇▇ and Newco shall have received the
following opinions:
(A) Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ ("▇▇▇▇▇▇▇▇") shall have
issued its opinion, addressed to ▇▇▇▇▇▇, based upon (1) customary
representations of ▇▇▇▇▇▇ and Newco contained in customary tax
certificates (the "▇▇▇▇▇▇ Tax Certificate" and the "Newco Tax
Certificate") to be delivered by ▇▇▇▇▇▇ and Newco, respectively, to
Wachtell prior to the Effective Time, and (2) customary assumptions,
substantially to the effect that the Merger will be treated for U.S.
federal income tax purposes as a reorganization qualifying under the
provision of Section 368(a) of the Code and that each of ▇▇▇▇▇▇,
Newco and Newco Sub will be a party to the reorganization within the
meaning of Section 368(b) of the Code, such opinion to be dated as
of the Effective Time; and
(B) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP ("Skadden LLP")
shall have issued its opinion, addressed to Autoliv, based upon (1)
customary representations of Autoliv, Newco and ▇▇▇▇▇▇ contained in
the ▇▇▇▇▇▇ Tax Certificate, the Newco Tax Certificate and a
customary tax certificate to be delivered by Autoliv to Skadden LLP
prior to the Effective Time (the "Autoliv Tax Certificate"), and (2)
customary assumptions, substantially to the effect that the Exchange
Offer (in conjunction with the acquisition of ▇▇▇▇▇▇ Shares pursuant
to the Merger) will be treated for U.S. federal income tax purposes
as a transfer of property described in Section 351(a) of the Code,
such opinion to be dated as of the Effective Time;
(h) (i) There shall be no proposed legislation introduced and
pending in ▇▇▇▇ form and pending action in the United States Congress which, if
enacted into law, would have the effect of amending the Code so as to alter in
any materially adverse respect any of the United States federal income tax
consequences described in the private letter ruling or the tax opinions of
counsel described in paragraph (g) above.
(ii) There shall be no proposed legislation introduced and
pending in the Swedish Parliament which, if enacted into law, would have the
effect of materially adversely affecting the Swedish income tax consequences of
the Exchange Offer to be described in the tax opinion of Ernst & Young AB
pursuant to Paragraph (i) below.
(i) Ernst & Young AB shall have issued their opinion,
addressed to Newco, Autoliv and ▇▇▇▇▇▇, based upon representations of Autoliv
and assumptions concerning, among other things, the actions of holders of
Autoliv Securities, to the effect that, under the income tax laws of Sweden,
none of Newco, Autoliv or the Autoliv stockholders (with certain exceptions)
will recognize taxable income or gain as a result of the Exchange Offer.
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(j) the shares of Newco Common Stock to be issued pursuant to
the Merger and the Exchange Offer shall have been authorized for listing on the
NYSE, subject to official notice of issuance, and the shares of Newco Common
Stock or SDRs to be issued in connection with the Autoliv Transaction shall have
been authorized for listing on the SSE;
(k) the Minimum Condition; and
(l) ▇▇▇▇▇▇ shall have established a credit facility or entered
into other financial arrangements providing for the Retained Debt on terms
acceptable in the reasonable judgment of Autoliv and ▇▇▇▇▇▇ the liability for
which will be retained by the Surviving Corporation, and shall have made the New
▇▇▇▇▇▇ Capital Contribution (as defined in the Distribution Agreement)
immediately prior to the Distribution Date (as defined in the Distribution
Agreement) to Spinco, pursuant to the Distribution Agreement.
Section 9.2 Conditions to the Obligations of ▇▇▇▇▇▇. The obligations
of ▇▇▇▇▇▇ to consummate the Transactions, or to permit the consummation of the
Transactions, are subject to the satisfaction or, if permitted by applicable
Law, waiver of the following further conditions:
(a) each of the representations and warranties of Autoliv
contained in this Agreement shall be true and correct as of the date hereof and
as of the Effective Time as though made on and as of the Effective Time, except
where any such failure or failures to be so true and correct, in the aggregate,
would not have an Autoliv Material Adverse Effect, and except that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date, except where any such failure or
failures to be so true and correct, in the aggregate, would not have an Autoliv
Material Adverse Effect, and ▇▇▇▇▇▇ shall have received a certificate of
Autoliv, executed on its behalf by the Chairman, President or Chief Financial
Officer of Autoliv to such effect;
(b) Autoliv shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and the
conditions set forth in Section 9.2(c) shall have been satisfied, and ▇▇▇▇▇▇
shall have received a certificate of Autoliv, executed on its behalf by the
Chairman, President or Chief Financial Officer of Autoliv to that effect; and
(c) Autoliv and its subsidiaries shall own or possess adequate
licenses or other legal rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
servicemarks, trade secrets, applications for trademarks and for servicemarks,
mask works and know-how used in connection with the business of Autoliv and its
subsidiaries as currently conducted, except where the failure to own or possess
any of the foregoing, individually or in the aggregate, would not have an
Autoliv Material Adverse Effect.
Section 9.3 Conditions to the Obligations of Autoliv. The
obligations of Autoliv to consummate the Transactions, or to permit the
consummation of the Transactions, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of ▇▇▇▇▇▇
contained in this Agreement shall be true and correct as of the date hereof and
as of the Expiration Date, as though made on and as of the Expiration Date,
except where any such failure or failures to be so true and correct, in the
aggregate, would not have a ▇▇▇▇▇▇ Material Adverse Effect, and except that
those representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date, except where any
such failure or failures to be so true and correct, in the aggregate, would not
have a ▇▇▇▇▇▇ Material Adverse
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Effect, and Autoliv shall have received a certificate of ▇▇▇▇▇▇, executed on its
behalf by the Chairman, President or Chief Financial Officer of ▇▇▇▇▇▇ to such
effect;
(b) ▇▇▇▇▇▇ shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and the
conditions set forth in Section 9.3(e) shall have been satisfied, and Autoliv
shall have received a certificate of ▇▇▇▇▇▇, executed on its behalf by the
Chairman, President or Chief Financial Officer of ▇▇▇▇▇▇ to that effect;
(c) the Ancillary Agreements shall have been executed and
delivered substantially in the form of Exhibit A attached hereto and Exhibits A
and D to the Distribution Agreement (except for changes that have been mutually
agreed upon by the parties hereto);
(d) the indebtedness for borrowed money of the Retained
Business shall not exceed $750 million in addition to indebtedness (not to
exceed $1.1 million) incurred prior to the date hereof related to the Ogden,
Utah facility of the Retained Business; and
(e) except with regard to the "▇▇▇▇▇▇" name and related
trademarks and trade names, ▇▇▇▇▇▇ and the Retained ▇▇▇▇▇▇ Subsidiaries shall
own or possess adequate licenses or other legal rights to use all patents,
patent rights, trademarks, trademark rights, trade names, trade dress, trade
name rights, copyrights, servicemarks, trade secrets, applications for
trademarks and for servicemarks, mask works and know-how used in connection with
the Retained Business as currently conducted, except where the failure to own or
possess any of the foregoing, individually or in the aggregate, would not have a
▇▇▇▇▇▇ Material Adverse Effect.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated and the
Merger and the Exchange Offer may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement, as follows:
(a) by mutual written consent duly authorized by the Board of
Directors of each of Autoliv and ▇▇▇▇▇▇;
(b) by either Autoliv or ▇▇▇▇▇▇, if the Effective Time shall
not have occurred on or before August 31, 1997; provided, however, that the
right to terminate this Agreement under this Section 10.1(b) shall not be
available to the party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
(c) by either Autoliv or ▇▇▇▇▇▇, if any Order preventing the
consummation of the Merger or the Autoliv Transaction shall have been entered by
any court of competent jurisdiction and shall have become final and
nonappealable;
(d) by Autoliv, if (i) the Board of Directors of ▇▇▇▇▇▇
withdraws, modifies or changes its recommendation of this Agreement, (ii) the
Board of Directors of ▇▇▇▇▇▇ shall have recommended to the stockholders of
▇▇▇▇▇▇ a Third-Party Transaction or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 10% or more of the outstanding shares of
capital stock of ▇▇▇▇▇▇ is commenced, and the
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Board of Directors of ▇▇▇▇▇▇ fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders);
(e) by ▇▇▇▇▇▇, if (i) the Board of Directors of Autoliv
withdraws, modifies or changes its recommendation of the Exchange Offer, (ii)
the Board of Directors of Autoliv shall have recommended to the stockholders of
Autoliv a Third-Party Transaction or shall have resolved to do so, or (iii) a
public announcement is made with regard to a bid for 10% or more of the
outstanding shares of capital stock of Autoliv (other than the Exchange Offer),
and the Board of Directors of Autoliv fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders);
(f) by Autoliv or ▇▇▇▇▇▇ if (i) this Agreement and the
Distribution Agreement shall fail to receive the vote for approval by the
holders of a majority of the outstanding ▇▇▇▇▇▇ Shares at the ▇▇▇▇▇▇
Stockholders' Meeting, unless such meeting is adjourned or postponed, in which
case at any adjournment or postponement thereof or (ii) the Exchange Offer
expires pursuant to Section 3.1(a) without any Autoliv Securities having been
accepted for payment;
(g) by Autoliv upon 10 days' written notice, upon a breach of
any material representation, warranty, covenant or agreement on the part of
▇▇▇▇▇▇ set forth in this Agreement, or if any material representation or
warranty of ▇▇▇▇▇▇ shall have become untrue, in either case such that the
conditions set forth in Section 9.3 cannot be satisfied ("Terminating ▇▇▇▇▇▇
Breach"); provided, however, that, if such Terminating ▇▇▇▇▇▇ Breach is curable
by ▇▇▇▇▇▇ through the exercise of reasonable efforts and for so long as ▇▇▇▇▇▇
continues to exercise such reasonable efforts, Autoliv may not terminate this
Agreement under this Section 10.1(g);
(h) by ▇▇▇▇▇▇ upon 10 days' written notice, upon breach of any
material representation, warranty, covenant or agreement on the part of Autoliv
set forth in this Agreement, or if any material representation or warranty of
Autoliv shall have become untrue, in either case such that the conditions set
forth in Section 9.2 cannot be satisfied ("Terminating Autoliv Breach");
provided, however, that, if such Terminating Autoliv Breach is curable by
Autoliv through reasonable efforts and for so long as Autoliv continues to
exercise such reasonable efforts, ▇▇▇▇▇▇ may not terminate this Agreement under
this Section 10.1(h);
(i) by Autoliv, if the Board of Directors of Autoliv,
following consultation with independent legal counsel (who may be Autoliv's
regularly engaged independent legal counsel) determines in good faith that
failure to so terminate would cause the Board of Directors of Autoliv to breach
its fiduciary duties under applicable Laws, shall have withdrawn, modified or
changed its recommendation of the approval of the Exchange Offer in a manner
adverse to Newco or ▇▇▇▇▇▇ and, on or prior to such date, any person (other than
Newco or ▇▇▇▇▇▇) shall have made a public announcement with respect to a
Competing Transaction that the Board of Directors of Autoliv determines in its
good faith judgment (based upon the advice of Enskilda and Blackstone) may be
more favorable to their stockholders than the transactions contemplated by this
Agreement; provided, however, that Autoliv may not terminate this Agreement
pursuant to this subsection (i) until three business days have elapsed following
delivery to ▇▇▇▇▇▇ of written notice of such determination of Autoliv (which
written notice will inform ▇▇▇▇▇▇ of the material terms and conditions of the
Competing Transaction); provided, further, however, that such termination under
this Section 10.1(i) shall not be effective until Autoliv has made payment to
▇▇▇▇▇▇ of the amounts required to be paid pursuant to Section 10.5(c); or
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(j) by ▇▇▇▇▇▇, if the Board of Directors of ▇▇▇▇▇▇, following
consultation with independent legal counsel (who may be ▇▇▇▇▇▇'▇ regularly
engaged independent legal counsel) determines in good faith that failure to so
terminate would cause the Board of Directors of ▇▇▇▇▇▇ to breach its fiduciary
duties under applicable Laws, shall have withdrawn, modified or changed its
recommendation of the adoption of this Agreement in a manner adverse to Newco or
Autoliv and, on or prior to such date, any person (other than Newco or Autoliv)
shall have made a public announcement with respect to a Competing Transaction
that the Board of Directors of ▇▇▇▇▇▇ determines in its good faith judgment
(based upon the advice of ▇▇▇▇▇▇▇ Sachs) may be more favorable to their
stockholders than the transactions contemplated by this Agreement; provided,
however, that ▇▇▇▇▇▇ may not terminate this Agreement pursuant to this
subsection (j) until three business days have elapsed following delivery to
Autoliv of written notice of such determination of ▇▇▇▇▇▇ (which written notice
will inform Autoliv of the material terms and conditions of the Competing
Transaction); provided, further, however, that such termination under this
Section 10.1(j) shall not be effective until ▇▇▇▇▇▇ has made payment to Autoliv
of the amounts required to be paid pursuant to Section 10.5(b).
Section 10.2 Effect of Termination. Except as provided in Section
11.1, in the event of termination of this Agreement pursuant to Section 10.1,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of Autoliv, ▇▇▇▇▇▇, Newco or Newco Sub or any of
their respective officers or directors, and all rights and obligations of each
party hereto (other than with respect to any confidentiality obligations on the
part of any party contained herein or in the Confidentiality Agreements entered
into between the parties) shall cease, subject to the remedies of the parties
set forth in Sections 10.5(b), (c) and (d); provided, however, that nothing
herein shall relieve any party from liability for the willful breach of any of
its representations and warranties or the breach of any of its covenants or
agreements set forth in this Agreement.
Section 10.3 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
approval of this Agreement by the stockholders of ▇▇▇▇▇▇, no amendment may be
made that would reduce the amount or change the type of consideration into which
each ▇▇▇▇▇▇ Share shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 10.4 Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement or condition
contained herein; provided, however, that the Minimum Condition may be waived
only with the mutual consent of Autoliv and ▇▇▇▇▇▇, which consent may not be
unreasonably withheld by either party, and provided further, that Newco and
Newco Sub (x) will waive any of the conditions to the Transactions contained in
Article IX if so directed by Autoliv and ▇▇▇▇▇▇, jointly, and (y) may not waive
any of such conditions without the prior written consent of each of ▇▇▇▇▇▇ and
Autoliv. Any waiver of a condition set forth in Section 9.1, or any
determination that such a condition has been satisfied, will be effective only
if made in writing by each of ▇▇▇▇▇▇ and Autoliv and, unless otherwise specified
in such writing, shall thereafter operate as a waiver (or satisfaction) of such
condition for any and all purposes of this Agreement. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
Section 10.5 Expenses.
(a) Except as set forth in this Section 10.5 and except as
otherwise specifically provided in the Ancillary Agreements, all Expenses (as
defined below) incurred in connection with this Agreement and the Transactions
shall be paid by the party incurring such expenses, whether or not the Merger or
the
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Exchange Offer is consummated, except that Autoliv and ▇▇▇▇▇▇ each shall pay
one-half of all expenses relating to printing, filing and mailing the Proxy
Statement/Prospectus, the Newco Registration Statement, the Swedish Prospectus
and the International Prospectus and all SEC and other regulatory filing fees
incurred in connection with the Proxy Statement/Prospectus, the Newco
Registration Statement, the Swedish Prospectus and the International Prospectus
and all filing fees in connection with the HSR Act and regulatory filings in
other jurisdictions in connection with the Transactions.
(b) ▇▇▇▇▇▇ agrees that, if this Agreement is terminated
pursuant to Section 10.1(d) or Section 10.1(j), then promptly after such
termination, ▇▇▇▇▇▇ shall reimburse Autoliv for all of its Expenses (in each
case, upon receipt of documentation in respect thereof which, in the case of
out-of-pocket expenses, shall consist of copies of invoices, and for all other
expenses shall consist of a certificate of the Chief Financial Officer of
Autoliv certifying as to the accuracy of such expenses) up to an aggregate
amount of $20 million. "Expenses" as used in this Agreement shall consist of all
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, financial institutions, experts and consultants
to a party hereto and its affiliates and other direct and indirect costs)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement, the transactions contemplated hereby, the preparation, printing,
filing and mailing of the Proxy Statement/Prospectus, the Registration
Statements, the Swedish Prospectus and the International Prospectus, the
solicitation of stockholder approvals and all other matters related to the
consummation of the transactions contemplated hereby.
(c) Autoliv agrees that, if this Agreement is terminated
pursuant to Section 10.1(e) or Section 10.1(i), then promptly after such
termination, Autoliv shall reimburse ▇▇▇▇▇▇ for all its Expenses (upon receipt
of documentation in respect thereof which, in the case of out-of-pocket
expenses, shall consist of copies of invoices, and for all other expenses shall
consist of a certificate of the Chief Financial Officer of ▇▇▇▇▇▇ certifying as
to the accuracy of such expenses) up to an aggregate amount of $20 million.
(d) Each of Autoliv and ▇▇▇▇▇▇ agrees that the payments
provided for in Sections 10.5(b) and (c) shall be the sole and exclusive
remedies of the parties upon a termination of this Agreement pursuant to Section
10.1(d), (e), (i), or (j), as the case may be, and such remedies shall be
limited to the payments stipulated in Sections 10.5(b) and (c); provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations and warranties or the breach of any
of its covenants or agreements set forth in this Agreement.
(e) Any payment required to be made pursuant to Section
10.5(b) or (c) shall be made to the party entitled to receive such payment not
later than two business days after delivery to the other party of notice of
demand for payment and shall be made by wire transfer of immediately available
funds to an account designated by the party entitled to receive payment in the
notice of demand for payment delivered pursuant to this Section 10.5(e).
(f) In the event that Autoliv or ▇▇▇▇▇▇, as the case may be,
shall fail to pay any expenses described in this Section 10.5 when due, the
amount of any such expenses shall be increased to include the costs and expenses
actually incurred or accrued by the other (including, without limitation, fees
and expenses of counsel) in connection with the collection under and enforcement
of this Section 10.5, together with interest on such unpaid expenses, commencing
on the date that such expenses became due, at a rate equal to the rate of
interest publicly announced by Bank of America, Illinois, from time to time, in
the City of Chicago, as such bank's Reference Rate plus 1.00%.
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ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations, Warranties and
Agreements. Except as otherwise expressly set forth in the Distribution
Agreement, the representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to Section 10.1, as the
case may be, except that the agreements set forth in Articles I, II and III and
Sections 8.3(b), 8.3(c), 8.5, 8.6, 8.12, 8.13(c), the last two sentences of
8.17, 8.18, 8.22, 10.5(a) and this Article XI and the representations and
warranties and agreements contained in the ▇▇▇▇▇▇ Tax Certificate, Autoliv Tax
Certificate and the Newco Tax Certificate shall survive the Effective Time, and
those set forth in Sections 8.3(b) and 10.5 and this Article XI shall survive
termination. The obligation of the parties to maintain the confidentiality of
information related to Spinco and its subsidiaries shall survive the Effective
Time. Each party agrees that, except for the representations and warranties
contained in this Agreement and the Ancillary Agreements, no party hereto has
made any other representations and warranties, express or implied, and each
party hereby disclaims any other representations and warranties made by itself
or any of its officers, directors, employees, agents, financial and legal
advisors or other representatives with respect to the accuracy or completeness
of any information regarding ▇▇▇▇▇▇ or Autoliv, the execution and delivery of
this Agreement or the transactions contemplated herein, notwithstanding the
delivery or disclosure to any other party or any party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
Section 11.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy and facsimile or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 11.2):
If to Autoliv:
Autoliv AB
▇▇▇ ▇▇▇ ▇▇
▇-▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Vice President, General
Counsel
Telecopier: 46-8-24-44-93
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telecopier: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
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If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopier: ▇-▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier: ▇-▇▇▇-▇▇▇-▇▇▇▇
Notices to Newco or Newco Sub shall be delivered to each of Autoliv and ▇▇▇▇▇▇
as provided herein.
Section 11.3 Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares of capital
stock means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding, or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates or person with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York, USA or in
Stockholm, Sweden;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "knowledge" means, with respect to any matter in question,
that the senior executive officers of Autoliv or ▇▇▇▇▇▇, as the case may be,
after due inquiry of the senior officers of the Retained Business and the
executive officers of ▇▇▇▇▇▇ (in the case of ▇▇▇▇▇▇) or the senior officers of
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Autoliv and the managing directors or other senior officers of the material
subsidiaries of Autoliv and its affiliates (in the case of Autoliv), have actual
knowledge of such matter;
(f) "person" means an individual, corporation, company,
limited liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(g) "subsidiary" or "subsidiaries" of any person means any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with any
other subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
Section 11.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
Section 11.5 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Sections 8.3(c), 8.5, 8.6, the last sentence of 8.12, 8.13(c) and 8.22 (the
"Third Party Provisions"), nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. The Third Party Provisions may
be enforced by the beneficiaries thereof. The provisions of Sections 8.3(c),
8.12, 8.13(c), and 8.22 shall inure to the benefit of Spinco.
Section 11.6 Schedules, Annexes and Exhibits. The Autoliv Disclosure
Schedule, the ▇▇▇▇▇▇ Disclosure Schedule, Annex A and all Exhibits attached
hereto and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein. Matters reflected
on the Autoliv Disclosure Schedule or the ▇▇▇▇▇▇ Disclosure Schedule are not
necessarily limited to matters required by this Agreement to be reflected on
such Schedules and shall not be deemed to be a representation that a matter set
forth therein, or omitted therefrom, is or is not material in any respect. Such
additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature.
Section 11.7 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 11.8 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware to the greatest
extent permissible by law; provided,
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however, that the parties specifically agree that (i) all questions of Swedish
corporate or securities law and the interpretation thereof (including, without
limitation, questions relating to the fiduciary duties of the directors of
Autoliv) shall be governed by the Laws of the Kingdom of Sweden and (ii) all
questions of Delaware and Indiana corporate or securities law and the
interpretation thereof (including, without limitation, questions relating to the
fiduciary duties of the directors of ▇▇▇▇▇▇, which shall be governed by the laws
of Indiana) shall be governed by the laws of Delaware and Indiana, respectively.
Section 11.9 Submission to Jurisdiction; Venue. The parties hereto
unconditionally and irrevocably agree and consent to the exclusive jurisdiction
of, and service of process, and venue in, any state or federal court located in
the State of Delaware and waive any objection with respect thereto, for the
purpose of any action, suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby and further agree not to
commence any such action, suit or proceeding except in any such court. Each
party irrevocably waives any objections or immunities to jurisdiction to which
it may otherwise be entitled or become entitled (including sovereign immunity)
in any legal suit, action or proceeding against it arising out of or relating to
this Agreement or the transactions contemplated hereby which is instituted in
any such court. Autoliv hereby appoints CT Corporation as its authorized agent
(the "Autoliv Authorized Agent") upon whom process may be served in any such
action arising out of or relating to this Agreement or the transactions
contemplated hereby which may be instituted in any federal or state court
located in the State of Delaware by any other party hereto. Such appointment
shall be irrevocable. Autoliv agrees to take any and all action, including the
filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Autoliv Authorized Agent and written notice of such service to
Autoliv shall be deemed, in every respect, effective service of process upon
Autoliv.
Section 11.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 11.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 11.12 Entire Agreement. This Agreement (including Annex A,
the Exhibits, the Autoliv Disclosure Schedule, the ▇▇▇▇▇▇ Disclosure Schedule)
and the agreements and other documents referred to herein, including, without
limitation, the Ancillary Agreements and the Confidentiality Agreements
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto.
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IN WITNESS WHEREOF, Autoliv, ▇▇▇▇▇▇, Newco and Newco Sub have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
AUTOLIV AB
By: /s/ Per ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: Per ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
AUTOLIV, INC.
By: /s/ ▇▇▇▇ Charlety
---------------------------------
Name: ▇▇▇▇ Charlety
Title: Treasurer
ASP MERGER SUB INC.
By: /s/ ▇▇▇▇ Charlety
---------------------------------
Name: ▇▇▇▇ Charlety
Title: Treasurer
▇▇▇▇▇▇ INTERNATIONAL, INC.
By: /s/ S. ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: S. ▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
-55-
ANNEX A
EMPLOYEE BENEFITS
Autoliv, ▇▇▇▇▇▇ and Newco agree to the following with respect to the
compensation and benefits programs of Autoliv and the Surviving Corporation and
their respective subsidiaries:
1. Continuation of Benefits. Except as contemplated by the Agreement
or this Annex A, for a period of one year following the Effective Time,
Autoliv and the Surviving Corporation shall each maintain employee benefit
plans and arrangements (directly or in conjunction with Newco) which in
the aggregate will provide a level of benefits to active and retired
employees of Autoliv and its subsidiaries at least comparable, when taken
as a whole, to those provided under Autoliv Plans and arrangements as in
effect immediately prior to the Effective Time and a level of benefits to
Company Individuals (as defined in the Employee Benefits Allocation
Agreement) at least comparable, when taken as a whole, to those provided
under ▇▇▇▇▇▇ Plans and arrangements as in effect immediately prior to the
Effective Time; provided, however, that changes may be made to such
employee benefit plans and arrangements to the extent necessary to comply
with applicable Law. From and after the Effective Time, Newco shall honor,
and shall cause the Surviving Corporation or Autoliv, as the case may be,
to honor in accordance with their terms, the ▇▇▇▇▇▇ Plans and the Autoliv
Plans, including without limitation, all existing employment and severance
agreements and plans providing severance benefits which apply to current
or former employees or directors of Autoliv or its subsidiaries or ▇▇▇▇▇▇
or its subsidiaries.
2. Service Recognition. To the extent that service is relevant for
purposes of eligibility, participation, vesting or benefit accrual under
any employee benefit plan, program or arrangement established or
maintained by Newco, Autoliv, ▇▇▇▇▇▇ or any subsidiary of Autoliv or
▇▇▇▇▇▇, employees of Autoliv and its subsidiaries and Company Individuals
shall be credited for service accrued or deemed accrued prior to the
Effective Time with Autoliv, a subsidiary of Autoliv, ▇▇▇▇▇▇ or a
subsidiary of ▇▇▇▇▇▇, as the case may be; provided, however, that such
crediting of service does not result in the duplication of benefits or an
unintended windfall with respect to the accrual of benefits.