Exhibit 2.2
TAX SHARING AGREEMENT
DATED AS OF APRIL 30, 1997
BY AND BETWEEN
MORTON INTERNATIONAL, INC.,
AN INDIANA CORPORATION
AND
NEW MORTON INTERNATIONAL, INC.,
AN INDIANA CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
. . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
FILING OF TAX RETURNS
Section 2.01 Manner of Filing . . . . . . . . . . . . 6
Section 2.02 Pre-Distribution Tax Returns . . . . . . 7
Section 2.03 Post-Distribution Tax Returns . . . . . 9
ARTICLE III
BALANCE SHEET ADJUSTMENTS AND PAYMENT OF TAXES
Section 3.01 Allocation of Tax Liabilities With Respect
to Unfiled Returns for Pre-Distribution
Periods . . . . . . . . . . . . . . . 10
(a) United States Consolidated Income
Tax for Periods Ended on the
Distribution Date . . . . . . . . 10
(b) State and Local Income and Similar
Taxes for Periods Ended on or
Before the Distribution Date for
which the Company is Responsible 13
(c) Federal, State and Local Taxes Other
Than Income Taxes for Periods that
Include the Distribution Date for
which the Company is Responsible 16
(d) Federal, State and Local Taxes for
which New Morton is Responsible . 18
(e) Foreign Tax Returns . . . . . . . . 21
Section 3.02
(a) Change in the Company Filed Returns 21
(b) Changes in New Morton Group Member
Filed Returns . . . . . . . . . . 24
(c) Manner of Payment; Miscellaneous . 27
Section 3.03 Restructuring Taxes . . . . . . . . . . 27
Section 3.04 Liability for Taxes with Respect to Post-
Distribution Periods . . . . . . . . . 28
Section 3.05
(a) Carrybacks . . . . . . . . . . . . 29
(b) Payment . . . . . . . . . . . . . . 30
Section 3.06 Liabilities . . . . . . . . . . . . . . 30
Section 3.07 Payment . . . . . . . . . . . . . . . . 33
Section 3.08 Breach . . . . . . . . . . . . . . . . . 33
ARTICLE IV
INDEMNITY; COOPERATION AND EXCHANGE OF INFORMATION
Section 4.01 Indemnity . . . . . . . . . . . . . . . 34
Section 4.02 Tax Controversies . . . . . . . . . . . 35
Section 4.03 Cooperation and Exchange of Information 39
ARTICLE V
MISCELLANEOUS
Section 5.01 Expenses . . . . . . . . . . . . . . . . 42
Section 5.02 Entire Agreement; Termination of Prior
Agreements . . . . . . . . . . . . . . 42
Section 5.03 Notices . . . . . . . . . . . . . . . . 43
Section 5.04 Resolution of Disputes . . . . . . . . . 44
Section 5.05 Application to Present and Future
Subsidiaries . . . . . . . . . . . . . 44
Section 5.06 Term . . . . . . . . . . . . . . . . . . 45
Section 5.07 Titles and Headings . . . . . . . . . . 45
Section 5.08 Legal Enforceability . . . . . . . . . . 45
Section 5.09 Singular and Plural . . . . . . . . . . 46
Section 5.10 Governing Law . . . . . . . . . . . . . 46
TAX SHARING AGREEMENT
Tax Sharing Agreement (the "Agreement"), dated as of
April 30, 1997, by and between Morton International, Inc., an
Indiana corporation (the "Company"), and New Morton
International, Inc., an Indiana corporation and a wholly owned
subsidiary of the Company ("New Morton").
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to enter into the
Distribution Agreement (the "Distribution Agreement") dated as
of April 30, 1997, by and between the Company and New Morton,
pursuant to which, among other things, the Company will
distribute to holders of its common stock all the issued and
outstanding shares of common stock of New Morton (the
"Distribution");
WHEREAS, the Board of Directors of the Company has
determined it is appropriate and desirable to enter into the
Combination Agreement, dated as of November 25, 1996 (the
"Combination Agreement"), by and among the Company, Autoliv
AB, a corporation organized under the laws of the Kingdom of
Sweden ("Autoliv"), Autoliv, Inc., a Delaware corporation
("New Parent"), and ASP Merger Sub Inc., a Delaware
corporation and a wholly owned subsidiary of New Parent
("Safety Sub"), pursuant to which, among other things, Safety
Sub will be merged with and into the Company (the "Merger")
and New Parent will offer to acquire all of the outstanding
capital stock of Autoliv pursuant to the Offer (as defined in
the Combination Agreement, and, together with the other
transactions contemplated thereby, the "Transactions");
WHEREAS, the Company, on behalf of itself and its
present and future subsidiaries other than the New Morton
Group (as hereinafter defined) (the "Company Group"), and New
Morton, on behalf of itself and its present and future
subsidiaries (the "New Morton Group"), wish to provide for the
allocation between the Company Group and the New Morton Group
of all responsibilities, liabilities and benefits relating to
or affecting Taxes (as hereinafter defined) paid or payable by
either of them for all taxable periods, whether beginning
before, on or after the Distribution Date (as hereinafter
defined) and to provide for certain other matters.
NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained in this
Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Any capitalized terms used but not defined in this
Agreement shall have the meanings ascribed thereto in the
Distribution Agreement. As used in this Agreement, the
following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and
the plural forms of the terms defined):
"Code" means the Internal Revenue Code of 1986, as
amended, and shall include corresponding provisions of any
subsequently enacted federal tax laws.
"Distribution Date" means the date determined by the
Company's Board of Directors as of which the Distribution
shall be effected, which is presently contemplated to be the
close of business on April 30, 1997.
"due date" means, with respect to any Tax Return or
payment, the date on which such Tax Return is due to be filed
with or such payment is due to be made to the appropriate
governmental authority pursuant to applicable law, giving
effect to any applicable extensions of the time for such
filing or payment.
"Final Determination" shall mean the final
resolution of liability for any Tax for a taxable period, (i)
by IRS Form 870 or 870-AD (or any successor forms thereto), on
the date of acceptance by or on behalf of the IRS, or by a
comparable form under the laws of other jurisdictions; except
that a Form 870 or 870-AD or comparable form that reserves
(whether by its terms or by operation of law) the right of the
taxpayer to file a claim for refund and/or the right of the
taxing authority to assert a further deficiency shall not
constitute a Final Determination; (ii) by a decision,
judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii)
by a closing agreement or accepted offer in compromise under
Section 7121 or 7122 of the Code, or comparable agreements
under the laws of other jurisdictions; (iv) by any allowance
of a refund or credit in respect of an overpayment of Tax, but
only after the expiration of all periods during which such
refund may be recovered (including by way of offset) by the
Tax imposing jurisdiction; or (v) by any other final
disposition, including by reason of the expiration of the
applicable statute of limitations.
"IRS" means the Internal Revenue Service.
"Reasonable Basis" means "reasonable basis" within
the meaning of section 1.6662-7(d) of the Treasury
Regulations.
"Restructuring Taxes" means any Taxes resulting from
the transfers of stock and/or assets undertaken to effect the
Distribution; including, without limitation, any Tax imposed
pursuant to or as a result of Code Section 311.
"Tax" means any of the Taxes.
"Tax Benefit" means any item of loss, deduction,
credit or any other Tax Item which decreases Taxes paid or
payable.
"Tax Detriment" means any item of income, gain,
recapture of credit or any other Tax Item which increases
Taxes paid or payable.
"Tax Item" means any item of income, gain, loss,
deduction, credit, recapture of credit or any other item which
increases or decreases Taxes paid or payable, including an
adjustment under Code Section 481 resulting from a change in
accounting method.
"Tax Return" means any return, filing, questionnaire
or other document required to be filed, including requests for
extensions of time, filings made with estimated tax payments,
claims for refund and amended returns that may be filed, for
any period with any taxing authority (whether domestic or
foreign) in connection with any Tax or Taxes (whether or not a
payment is required to be made with respect to such filing).
"Taxes" means all forms of taxation, whenever
created or imposed, and whether of the United States or
elsewhere, and whether imposed by a local, municipal,
governmental, state, federation or other body, and without
limiting the generality of the foregoing, shall include
income, sales, use, ad valorem, gross receipts, value added,
franchise, transfer, recording, withholding, payroll,
employment, excise, occupation, premium and property taxes,
together with any related interest, penalties and additions to
any such tax, or additional amounts imposed by any taxing
authority (domestic or foreign) upon the New Morton Group,
the Company Group or any of their respective members,
divisions, assets or branches.
ARTICLE II
FILING OF TAX RETURNS
Section 2.1. Manner of Filing. All Tax Returns
filed after the date hereof relating to taxable periods
beginning prior to the close of business on the Distribution
Date shall be prepared on a basis which is consistent with the
rulings obtained in connection with the Distribution (in the
absence of a controlling change in law or circumstances) and
otherwise in accordance with past practice and shall be filed
on a timely basis (including extensions) by the party
responsible for such filing under this Agreement. To the
extent that an inconsistent position would result in a Tax
Detriment to the other party and in the absence of a
controlling change in law or circumstances, all Tax Returns
filed after the date hereof relating to taxable periods
beginning prior to the Distribution Date shall be prepared on
a basis consistent with the elections, accounting methods,
conventions, and principles of taxation used for the most
recent taxable periods for which Tax Returns involving similar
Tax Items have been filed. Subject to the provisions of this
Agreement, all decisions relating to the preparation of Tax
Returns shall be made in the reasonable discretion of the
party responsible under this Agreement for such preparation.
Section 2.2. Pre-Distribution Tax Returns. All
consolidated federal income Tax Returns which include a member
of the Company Group and the New Morton Group that are
required to be filed for periods beginning before the
Distribution Date ("Pre-Distribution Federal Periods") shall
be prepared by New Morton and provided to the Company at least
twenty days prior to the due date for such Tax Return. If
requested to do so by New Morton, the Company shall make
consent dividend elections or any other elections provided for
under the Code and, for a newly organized New Morton Group
member, including, without limitation, New Morton, to adopt
any permissible accounting method with respect to the
Company's consolidated federal income Tax Return for the
Company's taxable year ending on the Distribution Date;
provided, that the Company shall not be required to make any
such election if the Company determines in good faith that
such election would cause a material Tax Detriment or other
material adverse effect to any member of the Company Group.
All state and local income and/or franchise Tax
Returns or other Tax Returns for state and local Taxes
measured by income including, without limitation, the Michigan
Single Business Tax, which include a member of the Company
Group and/or the New Morton Group that may be or are required
to be filed for periods beginning before the Distribution Date
shall be prepared by New Morton and provided to the Company at
least twenty days prior to the due date for such Tax Return.
Notwithstanding the foregoing, if the corresponding return for
the most recent period for which such a Tax Return was filed
was filed by a member of the New Morton Group, such New Morton
Group member shall file such return.
Unless otherwise agreed to by the Company and New
Morton, all foreign Tax Returns and any other Tax Returns not
described elsewhere in this Section 2.02 which include a
member of the New Morton Group that are required to be filed
for periods beginning before the Distribution Date shall be
prepared by New Morton and provided to the Company at least
twenty days prior to the due date for such Tax Return. Such
Tax Return shall be filed by the member of the Company Group
or the New Morton Group, as the case may be, who filed the
corresponding Tax Return for the most recent period for which
such a Tax Return has been filed, or, if no such corresponding
Tax Return has been filed, by the appropriate entity in
accordance with local law or custom.
Except as otherwise provided in this Section 2.02,
the Company shall consent to and assume responsibility for the
filing of each Tax Return described in this Section 2.02 as
prepared by New Morton, which consent shall not be withheld
unless the Company delivers written notice to New Morton that
the Company disagrees with one or more Tax Items (each, a
"Disputed Item") in such Tax Return at least ten days prior to
the due date for such Tax Return. If, after receiving such
notice and prior to such due date for such Tax Return, New
Morton delivers to the Company an opinion of nationally
recognized tax counsel to the effect that each of the Disputed
Items has a Reasonable Basis, then the Company shall file such
Tax Return as prepared by New Morton, and an amended Tax
Return shall, if necessary, be filed to report such Disputed
Item as determined pursuant to Section 5.04 of this Agreement.
Notwithstanding the foregoing, if the Company disagrees with
the treatment of any Tax Item as reported on a Tax Return
described in this Section 2.02, and such Tax Item is a Tax
Item the liability for which is allocated to the Company
pursuant to Article III hereof (a "Safety Item"), such Safety
Item shall be reported as directed by the Company, provided
that the Company shall first provide New Morton with an
opinion of counsel to the effect that there is a Reasonable
Basis for the treatment of such Safety Item as directed by the
Company. If New Morton and the Company have not agreed to the
treatment of a Safety Item as of the due date of such Tax
Return, the Tax Return shall be filed as prepared by New
Morton, and an amended Tax Return shall, if necessary, be
filed to report such Safety Item as determined pursuant to
Section 5.04 of this Agreement.
Section 2.3. Post-Distribution Tax Returns. All
Tax Returns for periods beginning after the Distribution Date
shall be the responsibility of the New Morton Group if such
Tax Returns relate solely to New Morton Businesses, and all
other Tax Returns shall be the responsibility of the Company.
ARTICLE III
BALANCE SHEET ADJUSTMENT
AND PAYMENT OF TAXES
Section 3.1. Allocation of Tax Liabilities With
Respect to Unfiled Returns for Pre-Distribution Periods.
(a) United States Consolidated Income Tax for
Periods Ended on the Distribution Date. Except as otherwise
provided in this Section 3.01(a), the Company shall pay, on a
timely basis, all Taxes due with respect to the United States
consolidated income tax liability for Pre-Distribution Federal
Periods ("Pre-Distribution Consolidated Federal Tax
Liability"). New Morton hereby assumes and agrees to pay on
or prior to the due date for payment thereof its share of the
Pre-Distribution Consolidated Federal Tax Liability, which
payment may be made either directly to the IRS by New Morton
(provided that New Morton shall provide the Company with
written notice of such payment at least ten business days
prior to the due date of the corresponding Tax Return and
provide proof of such payment within five business days of
making such payment) or to the Company which shall then
forward such New Morton payment to the IRS together with its
own payment, if any.
New Morton's share of the Pre-Distribution
Consolidated Federal Tax Liability for each Pre-Distribution
Federal Period shall be
(i) that portion of the total tax liability shown
on the Company's United States consolidated income tax return
for such Pre-Distribution Federal Period, as filed (each, a
"Company Pre-Distribution Consolidated Federal Return"), as
would be allocated to New Morton under the Company's existing
federal income tax allocation election (it being agreed and
understood that with respect to New Morton and the New Morton
Businesses amounts will be allocated to the Pre-Distribution
Federal Period which ends on the Distribution Date and the
post-Distribution period which ends June 30, 1998 using the
ratable allocation election provided for in Treasury
Regulation SECTION 1.1502-76) if: (p) the Company and New Morton
were separately incorporated members of the same consolidated
group for such Pre-Distribution Federal Period and all
previous taxable periods; (q) the Company owned and operated
the Safety Business during such Pre-Distribution Federal
Period and all previous taxable periods; and (r) New Morton
owned and operated the New Morton Businesses during such Pre-
Distribution Federal Period and all previous taxable periods;
(ii) reduced by the sum of (x) all amounts paid by
New Morton after the Distribution Date with respect to such
Pre-Distribution Consolidated Federal Tax Liability, and (y)
an amount equal to New Morton's share of all estimated
federal income tax payments remitted by the Company to the IRS
on or prior to the Distribution Date with respect to such Pre-
Distribution Federal Period. New Morton's share of all
estimated federal income tax payments remitted by the Company
to the IRS on or prior to the Distribution Date with respect
to such Pre-Distribution Federal Period shall with respect to
any such payment made on or after July 1, 1996, be equal to
the amount of such payments less the amounts taken into
account in determining "cash used in the Safety Business" for
purposes of Section 2.01(c) of the Distribution Agreement.
If the calculations made pursuant to paragraphs (i)
and (ii) of this Section 3.01(a) indicate that New Morton has
either overpaid or underpaid its share of any such Pre-
Distribution Consolidated Federal Tax Liability, then at the
time that the relevant Company Pre-Distribution Consolidated
Federal Return is filed, the Company shall pay New Morton the
amount of any such overpayment or New Morton shall pay the
Company the amount of any such underpayment, the amount of
such overpayment or underpayment, as the case may be, to be
equal to the difference between the amounts calculated
pursuant to paragraphs (i) and (ii) of this Section 3.01(a).
All calculations and determinations required to be
made pursuant to this Section 3.01(a) shall be made in good
faith by New Morton and shall be subject to the Company's
approval, which approval shall not be withheld unless the
Company in good faith reasonably disputes any such calculation
or determination, in which case any payments shall
nevertheless be made in accordance with New Morton's
calculations and determinations, subject to subsequent
adjustment in accordance with the provisions of Section 5.04
of this Agreement.
(b) State and Local Income and Similar Taxes for
Periods Ended on or Before the Distribution Date for which the
Company is Responsible. Except as otherwise provided in this
Section 3.01(b), the Company shall pay, on a timely basis, all
state and local income taxes, and other Taxes the calculations
of which are based upon income, including, without limitation,
the Michigan Single Business Tax, with respect to taxable
periods ending on or before the Distribution Date ("Pre-
Distribution State or Local Taxable Periods") for those Tax
Returns with respect to which it has filing responsibility
pursuant to Section 2.02 of this Agreement (each such Tax
being individually referred to as a "Pre-Distribution State or
Local Income Tax"). New Morton hereby assumes and agrees to
pay on or prior to the due date thereof its share of each Pre-
Distribution State or Local Income Tax, which payment may be
made either directly to the appropriate taxing authority by
New Morton (provided that New Morton shall provide the Company
with written notice of such payment at least ten business days
prior to the due date of the corresponding Tax Return and
provide proof of such payment within five business days of
making such payment) or to the Company which shall then
forward such New Morton payment to the appropriate taxing
authority together with its own payment, if any. For each
Pre-Distribution State or Local Taxable Period, New Morton's
share of each Pre-Distribution State or Local Income Tax shall
be
(i) that portion of each such Tax as shown on the
applicable Tax Return, as filed, as the ratio (referred to as
the "New Morton State or Local Income Tax Ratio"), of the
aggregate Pre-Distribution State or Local Income Tax liability
of the New Morton Group with respect to such Pre-Distribution
State or Local Taxable Period (determined on a separate return
basis as if the corporate separation contemplated by the
Distribution Agreement had been effected on the first day of
each relevant taxable period), bears to the sum of the
applicable Pre-Distribution State or Local Income Tax
liability of the New Morton Group and the Company Group (each
determined on a separate return basis as if the corporate
separation contemplated by the Distribution Agreement had been
the first day of each relevant taxable period);
(ii) reduced by the sum of (x) all amounts paid by
New Morton after the Distribution Date with respect to such
Pre-Distribution State or Local Income Tax and (y) an amount
equal to New Morton's share of all estimated tax payments
remitted by the Company to the relevant taxing authority on or
prior to the Distribution Date with respect to each such Pre-
Distribution State or Local Income Tax. New Morton's share of
each such estimated tax payment remitted by the Company to the
relevant taxing authority on or before the Distribution Date
shall (A) with respect to any such payment made on or before
June 30, 1996, be an amount equal to the product of (r) such
payment and (s) the applicable New Morton Pre-Distribution
State or Local Income Tax Ratio and (B) with respect to any
such payment made on or after July 1, 1996, be equal to the
amount of such payments less the amounts taken into account in
determining "cash used in the Safety Business" for purposes of
Section 2.01(c) of the Distribution Agreement.
With respect to each Pre-Distribution State or Local
Income Tax, if the calculations made pursuant to paragraphs
(i) and (ii) of this Section 3.01(b) indicate that New Morton
has either overpaid or underpaid its share of such liability,
then not later than 30 days after the actual filing date, the
Company shall pay New Morton the amount of any such
overpayment or New Morton shall pay the Company the amount of
any such underpayment, the amount of such overpayment or
underpayment, as the case may be, to be equal to the
difference between the amounts calculated pursuant to
paragraphs (i) and (ii) of this Section 3.01(b).
All calculations and determinations required to be
made pursuant to this Section 3.01(b) shall be made in good
faith by New Morton and shall be subject to the Company's
approval, which approval shall not be withheld unless the
Company in good faith reasonably disputes any such calculation
or determination, in which case any payments shall
nevertheless be made in accordance with New Morton's
calculations and determinations, subject to subsequent
adjustment in accordance with the provisions of Section 5.04
of this Agreement.
(c) Federal, State and Local Taxes Other Than
Income Taxes for Periods that Include the Distribution Date
for which the Company is Responsible. Except as otherwise
provided in this Section 3.01(c), the Company shall pay, on a
timely basis, all federal, state and local Taxes not dealt
with in either Section 3.01(a) or 3.01(b), with respect to all
Tax Returns due after the Distribution Date that include any
period ending on or before the Distribution Date with respect
to which it has filing responsibility pursuant to Section 2.02
of this Agreement (each such Tax being individually referred
to as an "1997 Other Tax"). New Morton hereby assumes and
agrees to pay prior to the due date thereof its share of each
1997 Other Tax, which payment may be made either directly to
the appropriate taxing authority by New Morton (provided that
New Morton shall provide the Company with written notice of
such payment at least ten business days prior to the due date
of the corresponding Tax Return and provide proof of such
payment within five business days of making such payment) or
to the Company which shall then forward such New Morton
payment to the appropriate taxing authority together with its
own payment, if any. New Morton's share of each 1997 Other
Tax shall be
(i) that portion of each such Tax as shown on the
applicable Tax Return, as filed, as the ratio (referred to as
the "New Morton 1997 Other Tax Ratio") of the applicable 1997
Other Tax liability of the New Morton Group (determined on a
separate return basis as if the corporate separation
contemplated by the Distribution Agreement had been effected
July 1, 1996), bears to the sum of the applicable 1997 Other
Tax liability of the New Morton Group and the Company Group
(each determined on a separate return basis as if the
corporate separation contemplated by the Distribution
Agreement had been effected July 1, 1996);
(ii) reduced by the sum of (x) all amounts paid by
New Morton after the Distribution Date with respect to such
1997 Other Tax and (y) an amount equal to New Morton's share
of all estimated or other similar payments remitted by the
Company to the relevant taxing authority on or prior to the
Distribution Date with respect to each such 1997 Other Tax.
New Morton's share of each such estimated or other similar
payment remitted by the Company on or before the Distribution
Date shall be an amount equal to the product of (r) such
payments and (s) the applicable New Morton 1997 Other Tax
Ratio.
With respect to each 1997 Other Tax, if the
calculations made pursuant to paragraphs (i) and (ii) of this
Section 3.01(c) indicate that New Morton has either overpaid
or underpaid its share of such liability, then, not later than
30 days after the actual filing date, the Company shall pay
New Morton the amount of such overpayment or New Morton shall
pay the Company the amount of any such underpayment, the
amount of such overpayment or underpayment, as the case may
be, to be equal to the difference between the amounts
calculated pursuant to paragraphs (i) and (ii) of this Section
3.01(c).
All calculations and determinations required to be
made pursuant to this Section 3.01(c) shall be made in good
faith by New Morton and shall be subject to the Company's
approval, which approval shall not be withheld unless the
Company in good faith reasonably disputes any such calculation
or determination, in which case any payments shall
nevertheless be made in accordance with New Morton's
calculations and determinations, subject to subsequent
adjustment in accordance with the provisions of Section 5.04
of this Agreement.
(d) Federal, State and Local Taxes for which New
Morton is Responsible. New Morton or a member of the New
Morton Group, as the case may be, shall pay, on a timely
basis, all federal, state and local Taxes with respect to all
Tax Returns due after the Distribution Date with respect to
periods ending on or before the Distribution Date for which
New Morton or any member of the New Morton Group has filing
responsibility pursuant to Section 2.02 of this Agreement
(each such Tax being individually referred to as a "New Morton
2.02 Tax"). The Company hereby assumes and agrees to pay
prior to the due date thereof its share of each New Morton
2.02 Tax, which payment may be made either directly to the
appropriate taxing authority by the Company (provided that the
Company shall provide New Morton with written notice of such
payment at least ten business days prior to the due date of
the corresponding Tax Return and provide proof of such payment
within five business days of making such payment) or to New
Morton which shall then forward such Company payment to the
appropriate taxing authority together with its own payment, if
any. The Company's share of each New Morton 2.02 Tax shall be
(i) that portion of each such Tax as shown on the
applicable Tax Return (other than any amended Tax Return), as
filed, as the ratio (referred to as the "Company 2.02 Ratio")
of the applicable New Morton 2.02 Tax liability of the Company
Group (determined on a separate return basis as if the
corporate separation contemplated by the Distribution
Agreement had been effected July 1, 1996), bears to the sum of
the applicable New Morton 2.02 Tax liability of the Company
Group and the New Morton Group (each determined on a separate
return basis as if the corporate separation contemplated by
the Distribution Agreement had been effected July 1, 1996);
(ii) reduced by the sum of (x) all amounts paid by
the Company after the Distribution Date with respect to such
New Morton 2.02 Tax and (y) an amount equal to the Company's
share of all estimated or other similar payments remitted by
the Company on or prior to the Distribution Date, with respect
to each such New Morton 2.02 Tax. The Company's share of each
such estimated or other similar payment remitted by the
Company on or before the Distribution Date shall be an amount
equal to the product of (r) such payments and (s) the
applicable Company 2.02 Ratio.
With respect to each New Morton 2.02 Tax, if the
calculations made pursuant to paragraphs (i) and (ii) of this
Section 3.01(d) indicate that the Company has either overpaid
or underpaid its share of such liability, then not later than
30 days after the actual filing date, New Morton shall pay the
Company the amount of any such overpayment or the Company
shall pay New Morton the amount of such underpayment, the
amount of such overpayment or underpayment, as the case may
be, to be equal to the difference between the amounts
calculated pursuant to paragraphs (i) and (ii) of this Section
3.01(d).
All calculations and determinations required to be
made pursuant to this Section 3.01(d) shall be made in good
faith by New Morton and shall be subject to the Company's
approval, which approval shall not be withheld unless the
Company in good faith reasonably disputes any such
calculation or determination, in which case any payments shall
nevertheless be made in accordance with New Morton's
calculations and determinations, subject to subsequent
adjustment in accordance with the provisions of Section 5.04
of this Agreement.
(e) Foreign Tax Returns. The New Morton Group
shall be responsible for the filing of all foreign Tax Returns
that are due with respect to periods ending on or before the
Distribution Date and for the payment of all Taxes due or
payable in connection therewith.
Section 3.2. (a) Change in the Company Filed
Returns. If as a result of any audit, amendment or other
change in a Tax Return as filed by the Company or any of the
Automotive Safety Businesses with respect to any period ending
on or before the Distribution Date, any Tax Benefit or Tax
Detriment is changed (a "Change"), then:
(i) If in connection with any such Change, the
amount of the Tax Detriments generated by or attributable to
New Morton Businesses with respect to the taxable period to
which such return relates ("New Morton Business Tax
Detriments") exceeds the amount of Tax Benefits generated by
or attributable to New Morton Businesses with respect to such
taxable period ("New Morton Business Tax Benefits"), New
Morton hereby assumes and agrees to pay to the appropriate
taxing authority (provided that New Morton shall provide the
Company with written notice of such payment at least ten
business days prior to the due date of the corresponding Tax
Return and provide proof of such payment within five business
days of making such payment), or to the Company to the extent
payment cannot be made directly to such taxing authority the
Company has previously made the payment to such taxing
authority, or no payment is due to the taxing authority, an
amount equal to the product of (x) the amount by which New
Morton Business Tax Detriments exceed New Morton Business Tax
Benefits and (y) the actual marginal tax rate applicable with
respect to the relevant Tax Return, with appropriate
adjustment to account for Tax credits generated by or
attributable to New Morton Businesses included in such
calculation and an amount equal to all interest payable with
respect thereto, which interest shall be calculated as
hereinafter set forth. New Morton shall pay interest at the
rate the taxing jurisdiction imposes upon tax deficiencies
(the "Deficiency Rate") for the relevant periods with respect
to that portion of such tax payment attributable to the lesser
of (a) the amount by which New Morton Business Tax Detriments
exceed New Morton Business Tax Benefits, and (b) the amount by
which New Morton Business Tax Detriments (net of New Morton
Business Tax Benefits) exceeds Automotive Safety Business Tax
Benefits net of Automotive Safety Business Tax Detriments,
each as defined below. New Morton shall pay interest on the
balance, if any, of such tax payment (the "Balance") in an
amount equal to one-half of the sum of (x) the interest the
taxing jurisdiction would have paid with respect to the
Balance had the Balance been a refund from the taxing
jurisdiction, and (y) the interest that New Morton would have
paid to the taxing authority with respect to the tax
deficiency represented by the Balance, in each case, for the
relevant periods (the "Blended Rate").
(ii) If in connection with any such Change, the New
Morton Business Tax Benefits exceed the New Morton Business
Tax Detriments, the Company shall pay or cause to be paid to
New Morton the product of (x) the amount by which New Morton
Business Tax Benefits exceed New Morton Business Tax
Detriments and (y) the actual marginal Tax rate applicable
with respect to the relevant Tax Return, with appropriate
adjustment to account for Tax credits generated by or
attributable to New Morton Businesses included in such
calculation plus a payment equal to any interest received by
the Company, acting as agent for New Morton with respect to
such amount. If, however, the refund of tax, exclusive of
interest, received by the Company as New Morton's agent is
less than the amount due New Morton pursuant to this Section
3.02(a)(ii), the Company shall also pay to New Morton interest
on the additional tax amount (the "Excess") in an amount equal
to one-half of the sum of (x) the interest the taxing
jurisdiction would have paid to the Company with respect to
the Excess had the Excess been refunded by the taxing
jurisdiction, and (y) the interest the Company would have paid
to the taxing jurisdiction with respect to the Excess had the
Excess been a deficiency due from the Company to such
jurisdiction, in each case, for the relevant periods.
(b) Changes in New Morton Group Member Filed
Returns. If as a result of any Change in any Tax Return as
filed by any member of the New Morton Businesses with respect
to any period ending on or before the Distribution Date, any
Tax Benefit or Tax Detriment is changed, then:
(i) If in connection with any such Change, the
amount of the Tax Detriments generated by or attributable to
Automotive Safety Businesses with respect to the taxable
period to which such return relates ("Automotive Safety
Business Tax Detriments") exceeds the amount of Tax Benefits
generated by or attributable to Automotive Safety Businesses
with respect to such taxable period ("Automotive Safety
Business Tax Benefits"), the Company shall pay to the
appropriate New Morton Business or to the appropriate taxing
authority (provided that the Company shall provide New Morton
with written notice of such payment at least ten business days
prior to the due date of the corresponding Tax Return and
provide proof of such payment within five business days of
making such payment) an amount equal to the product of (x) the
amount by which Automotive Safety Business Tax Detriments
exceed Automotive Safety Business Tax Benefits and (y) the
actual marginal Tax rate applicable with respect to the
relevant Tax Return, with appropriate adjustment to account
for Tax credits generated by or attributable to the Safety
Business included in such calculation and an amount equal to
all interest payable with respect thereto, which interest
shall be calculated as hereinafter set forth, any such payment
to be reduced to the extent it would otherwise duplicate any
Tax refund received by New Morton. The Company shall pay
interest at the Deficiency Rate for the relevant periods with
respect to that portion of such tax payment attributable to
the lesser of (a) the amount by which the Automotive Safety
Business Tax Detriments exceed the Automotive Safety Business
Tax Benefits, and (b) the amount by which the Automotive
Safety Business Tax Detriments (net of the Automotive Safety
Business Tax Benefits) exceeds New Morton Business Tax
Benefits (net of New Morton Business Tax Detriments). The
Company shall pay interest on the balance, if any, of such tax
payment (the "Company Balance") in an amount equal to one-half
of the sum of (x) the interest the taxing jurisdiction would
have paid with respect to the Company Balance had the Company
Balance been a refund from the taxing jurisdiction, and (y)
the interest that the Company would have paid to the taxing
authority with respect to the tax deficiency represented by
the Company Balance, in each case, for the relevant periods
(the "Company Blended Rate").
(ii) If in connection with any such Change, the
Automotive Safety Business Tax Benefits exceed the Automotive
Safety Business Tax Detriments, the appropriate New Morton
Business shall pay to the Company the product of (x) the
amount by which Automotive Safety Business Tax Benefits exceed
Automotive Safety Business Tax Detriments and (y) the actual
marginal Tax rate applicable with respect to the relevant Tax
Return, with appropriate adjustment for Tax credits generated
by or attributable to the Safety Business included in such
calculation, such payment to be reduced to the extent it would
otherwise duplicate any Tax refund received by the Company
directly from a taxing authority plus a payment equal to any
interest received by New Morton, acting as agent for the
Company with respect to such amount. If, however, the refund
of tax, exclusive of interest, received by New Morton as the
Company's agent is less than the amount due the Company
pursuant to this Section 3.02(a)(ii), New Morton shall also
pay to the Company interest on the additional tax amount (the
"Company Excess") in an amount equal to one-half of the sum of
(x) the interest the taxing jurisdiction would have paid New
Morton with respect to the Company Excess had the Company
Excess been refunded by the taxing jurisdiction, and (y) the
interest New Morton would have paid to the taxing jurisdiction
with respect to the Company Excess had the Company Excess been
a deficiency due from New Morton to such jurisdiction, in each
case, for the relevant periods.
(c) Manner of Payment; Miscellaneous. Any payment
required to be made pursuant to this Section 3.02 with respect
to any Tax Return shall be made by the party obligated to make
such payment at such time as such party shall reasonably
determine and direct.
Section 3.3. Restructuring Taxes. (a) (i)
Notwithstanding any other provision of this Agreement to the
contrary, and except as otherwise provided in this Section
3.03(a) or in Section 9.03 of the Distribution Agreement, New
Morton shall pay or cause to be paid, and shall fully
indemnify and hold harmless the Company from and against, all
Restructuring Taxes, including all liability, costs and
expenses associated with claims with respect to such
Restructuring Taxes asserted by third parties against any
member of the Company Group. New Morton hereby assumes and
agrees to pay prior to the due date thereof all such
Restructuring Taxes, which payment may be made either directly
to the appropriate taxing authority by New Morton (provided
that New Morton shall provide the Company with written notice
of such payment at least ten business days prior to the due
date of the corresponding Tax Return and provide proof of such
payment within five business days of making such payment) or
to the Company which shall then forward such New Morton
payment to the appropriate taxing authority.
(ii) Anything in this Section 3.03(a) to the
contrary notwithstanding, Section 3.03(a) hereof shall not
apply to any Restructuring Taxes to the extent that all or
any portion of such Restructuring Taxes would not have
resulted but for an act or omission of the Company or any of
its affiliates, a misrepresentation on the part of the Company
made in connection with the opinions of counsel described in
Section 6.03 of the Distribution Agreement, or any other post
Distribution Date transaction involving either the stock or
assets of the Company or any of its affiliates.
(b) If the Company is otherwise required to
recognize gain pursuant to Code Section 311 with respect to
the Distribution, then, to the extent permitted by law or
regulation, the Company, if so requested by New Morton, shall
elect pursuant to Code Section 336(e) to treat the
Distribution as a disposition of all the assets of New Morton;
provided, that the Company shall not be required to make any
such election if the Company determines in good faith that
such election would cause a material Tax Detriment or other
material adverse effect to any member of the Company Group.
Section 3.4. Liability for Taxes with Respect to
Post-Distribution Periods. Unless otherwise provided in this
Agreement, the Company Group shall pay all Taxes and shall be
entitled to receive and retain all refunds of Taxes with
respect to periods beginning after the Distribution Date which
are attributable to Automotive Safety Businesses. Unless
otherwise provided in this Agreement, the New Morton Group
shall pay all Taxes and shall be entitled to receive and
retain all refunds of Taxes with respect to periods beginning
after the Distribution Date which are attributable to New
Morton Businesses.
Section 3.5. (a) Carrybacks. Except as provided
in this Section 3.05, if the consolidated federal income taxes
of the Company Group are reduced for a taxable period ending
on or before the Distribution Date (a "Company Tax
Reduction"), by reason of (i) a New Morton loss or other Tax
attribute arising on or after the Distribution Date (a "New
Morton Carryback"), and/or (ii) a Company loss or other Tax
attribute arising on or after the Distribution Date (a
"Company Carryback"), then the Company shall pay to New Morton
an amount equal to the portion of the Company Tax Reduction
which is attributable to the New Morton Carryback. If both a
New Morton Carryback and a Company Carryback exist, the rules
of Treas. Reg. SECTION 1.1502-21T(b) shall be applied to determine
the portion of the Company Tax Reduction attributable to the
New Morton Carryback and the Company Carryback, respectively.
The preceding two sentences shall apply, mutatis mutandis, to
state and local Taxes. The Company shall, and shall cause
each member of the Company Group to, take all steps reasonably
necessary to receive a reduction in Taxes attributable to a
New Morton Carryback. Notwithstanding anything in this
Section 3.05 to the contrary, the Company shall not be
required to take any action to carry back a New Morton
Carryback if the Company determines in good faith that
carrying back such New Morton Carryback would cause a material
Tax Detriment or other material adverse effect to any member
of the Company Group.
(b) Payment. Any payment required to be made
pursuant to this Section 3.05 shall be made no later than 10
days after the Company Tax Reduction is actually received,
credited or otherwise utilized by the Company. Any payment
not so made within 10 days shall thereafter bear interest at
the Federal short-term rate established pursuant to Section
6621 of the Code.
Section 3.6. Liabilities.
(a) To the extent that Taxes imposed on a member of
the New Morton Group are reduced for a taxable period
beginning after the Distribution Date (the "Section 3.06(a)
Tax Reduction") by reason of a deduction, loss or credit with
respect to an item for which a member of the Company Group
bore the economic responsibility (such as a foreign tax
credit), then New Morton shall pay to the Company an amount
equal to the Section 3.06(a) Tax Reduction; provided, however,
that if a New Morton Tax Benefit, but for such deduction, loss
or credit, would have resulted in a reduction in Taxes by New
Morton or any member of the New Morton Group (the "Section
3.06(a) Hypothetical Tax Reduction") in the same taxable
period with respect to which the Section 3.06(a) Tax Reduction
occurred (assuming that such New Morton Tax Benefit had been
utilized to the extent otherwise possible in such taxable
period), New Morton shall pay to the Company only an amount
equal to the excess, if any, of the Section 3.06(a) Tax
Reduction over the Section 3.06(a) Hypothetical Tax Reduction
plus, for the taxable period in which the New Morton Tax
Benefit, in fact, results in a reduction of Taxes payable by
the New Morton Group an amount equal to such reduction of
Taxes (but such aggregate payments shall not exceed the amount
of the Section 3.06(a) Tax Reduction). New Morton shall, and
shall cause each member of the New Morton Group to, take all
steps reasonably necessary to receive a reduction in Taxes
attributable to such deduction, loss or credit. Within twelve
months of the end of each taxable year New Morton shall
provide the Company with an accounting setting forth the
utilization of the Section 3.06(a) Tax Reduction and New
Morton Tax Benefits.
(b) To the extent that Taxes imposed on a member of
the Company Group are reduced for a taxable period (the
"Section 3.06(b) Tax Reduction") by reason of a deduction,
loss or credit with respect to an item for which a member of
the New Morton Group bore the economic responsibility (such as
a foreign tax credit), then the Company shall pay to New
Morton an amount equal to the Section 3.06(b) Tax Reduction;
provided, however, that if the Company Tax Benefit, but for
such deduction, loss or credit, would have resulted in a
reduction in Taxes by the Company or any member of the Company
Group (the "Section 3.06(b) Hypothetical Tax Reduction") in
the same taxable period with respect to which the Section
3.06(b) Tax Reduction occurred (assuming that such Company Tax
Benefit had been utilized to the extent otherwise possible in
such taxable period), the Company shall pay to New Morton only
an amount equal to such excess, if any, of the Section 3.06(b)
Tax Reduction over the Section 3.06(b) Hypothetical Tax
Reduction plus, for the taxable period in which the Company
Tax Benefit, in fact, results in a reduction of Taxes payable
by the Company Group an amount equal to such reduction of
Taxes (but such aggregate payments shall not exceed the amount
of the Section 3.06(b) Tax Reduction). The Company shall, and
shall cause each member of the Company Group to, take all
steps reasonably necessary to receive a reduction in Taxes
attributable to such deduction, loss or credit. Within twelve
months of the end of each taxable year the Company shall
provide New Morton with an accounting setting forth the
utilization of the Section 3.06(b) Tax Reduction and the
Company Tax Benefits.
(c) Any payment required to be made pursuant to
this Section 3.06 shall be made no later than 10 days after
the Section 3.06(a) Tax Reduction and New Morton Tax Benefits
or the Section 3.06(b) Tax Reduction, as the case may be, is
actually received, credited or otherwise utilized, after
giving effect to the Section 3.06(a) Hypothetical Tax
Reduction or the Section 3.06(b) Hypothetical Tax Reduction
and the Company Tax Benefits, as the case may be. Any payment
not so made within 10 days shall thereafter bear interest at
the Federal short-term rate established pursuant to Section
6621 of the Code.
Section 3.7. Payment. Pursuant to Article V of the
Distribution Agreement and Article III of this Agreement, a
member of the Company Group will or may assume or satisfy, or
make an indemnification payment with respect to, a liability
of a member of the New Morton Group, and vice versa. If any
such payment or portion thereof by any member of either the
New Morton Group or the Company Group pursuant to Article III
of this Agreement or Article V of the Distribution Agreement
is characterized by any taxing authority as a Tax Detriment to
a member of the other Group, then the payor shall pay the
other Group an additional amount so the total payments made by
the payor equal the sum of (i) the portion, if any , of such
payments that was not characterized by such taxing authority
as a Tax Detriment, plus (ii) x/(l-y) where x is the amount
payable under said Article V of the Distribution Agreement or
Article III of this Agreement, as the case may be, which was
characterized by such taxing authority as a Tax Detriment,
without reference to this Section 3.07, and y is the then
highest marginal blended rate reflecting the federal corporate
income Tax and applicable state and local corporate income
Taxes.
Section 3.8. Breach. The Company shall indemnify
and hold harmless each member of the New Morton Group and New
Morton shall indemnify and hold harmless each member of the
Company Group from and against any payment required to be made
as a result of the breach by a member of the Company Group or
the New Morton Group, as the case may be, of any obligation
under this Agreement.
ARTICLE IV
INDEMNITY; COOPERATION AND EXCHANGE OF INFORMATION
Section 4.1. Indemnity. (a) Notwithstanding
anything to the contrary in this Agreement, the Company shall
indemnify and hold harmless each member of the New Morton
Group for, from and against all liability for all Taxes or
portion thereof for the payment of which the Company is
responsible pursuant to Article III of this Agreement.
(b) Notwithstanding anything to the contrary in
this Agreement, New Morton shall indemnify and hold harmless
each member of the Company Group for, from and against all
liability for all Taxes or portion thereof for the payment of
which New Morton is responsible pursuant to Article III of
this Agreement, including, without limitation, any liability
for Taxes for which New Morton is responsible under Article
III and which is imposed upon any member of the Company Group
pursuant to Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign law as a result
of any member of the New Morton Group or the Company Group
being a member of an affiliated, combined, consolidated,
unitary or similar group of corporations.
Section 4.2. Tax Controversies. (a) Whenever a
party hereto (hereinafter an "Indemnitee") is notified in
writing by any taxing authority of the existence of an issue
which could increase the liability for any Tax of the other
party hereto or any member of its Group (hereinafter an
"Indemnity Issue"), the Indemnitee shall promptly give notice
to such other party (hereinafter the "Indemnitor") of such
Indemnity Issue. The Indemnitor and its representatives, at
the Indemnitor's expense, shall be entitled to participate (i)
in all conferences, meetings or proceedings with any taxing
authority, the subject matter of which is or includes an
Indemnity Issue and (ii) in all appearances before any court,
the subject matter of which is or includes an Indemnity Issue.
The Responsible Party (as defined below) for any Tax Return
with respect to which there is an increase or decrease in
liability for any Tax or with respect to which a payment is
required hereunder shall have the right to decide as between
the parties hereto how such matter is to be dealt with and
finally resolved with the appropriate taxing authority and
shall control all audits and similar proceedings. The
Responsible Party agrees to cooperate in the settlement of any
Indemnity Issue with the other party and to take such other
party's interests into account. If the Indemnitor is not the
Responsible Party, such cooperation may include permitting the
Indemnitor, at the Indemnitor's sole expense, to litigate or
otherwise resolve any Indemnity Issue. Notwithstanding the
foregoing, if the Responsible Party is not the Indemnitor,
the Responsible Party shall not enter into a final settlement
with the relevant taxing authority with respect to any matter
involving an Indemnity Issue without first presenting the
proposed settlement to the Indemnitor, who shall provide the
Responsible Party with written consent to such settlement
within ten days of receipt (which consent may not unreasonably
be withheld), whereupon (or if the Indemnitor fails to respond
to such settlement in writing within such ten day period) the
Responsible Party may enter into such settlement with the
relevant taxing authority; provided, however, that the
Indemnitor may withhold its consent to the proposed settlement
by notifying the Responsible Party in writing within such ten
day period that the Indemnitor does not consent to the
proposed settlement. If the Indemnitor provides the
Responsible Party with written notification withholding
consent in accordance with the immediately preceding sentence,
then:
(1) The Indemnitor shall fully indemnify and hold
harmless the Responsible Party from and against any and all
liabilities for Taxes and other costs and expenses (including,
without limitation, reasonable attorneys' and accountants'
fees) over and above the payments that the Responsible Party
would have been liable for if the Responsible Party had
entered into the proposed settlement; and
(2) The Responsible Party shall, in its sole
discretion:
(A) enter into a closing agreement or other
final resolution with respect to such matter with the
relevant taxing authority with respect to all issues
other than Indemnity Issues and shall allow the
Indemnitor to continue to defend the Indemnity Issues in
proceedings with the relevant taxing authority; or
(B) settle all issues with respect to such
matter with the relevant taxing authority and/or pay any
additional liability for Taxes as provided for in such
settlement, provided, that such settlement shall permit
the Indemnitor to file a claim for refund with respect to
any Indemnity Issues; or
(C) pay to the Indemnitor any additional
liability for Taxes as provided for in such settlement to
the extent that such liability relates to issues other
than Indemnity Issues, whereupon the Indemnitor shall
assume control over and responsibility for any proceeding
related to such matter and shall be fully liable for and
shall fully indemnify and hold the Responsible Party
harmless from and against any and all liability for Taxes
with respect to such matter.
For purposes of this Agreement, "Responsible Party" shall mean
(x) with respect to a Tax Return that relates solely to the
operations of the Safety Business, the Company, and (y) with
respect to a Tax Return that relates solely to the operations
of the New Morton Business, New Morton. With respect to all
Tax Returns other than those described in clauses (x) and (y),
above, the Company and New Morton shall attempt to separate
the Indemnity Issues in controversy with respect to such Tax
Return into Indemnity Issues for which the Company shall be
the Responsible Party and Indemnity Issues for which New
Morton shall be the Responsible Party. If the Company and New
Morton do not succeed in separating such Indemnity Issues, the
Company and New Morton shall jointly act as Responsible Party
with respect to such Tax Return and shall cooperate reasonably
in any audit or similar proceeding with respect to such Tax
Return, provided, that New Morton shall always be the
Responsible Party with respect to Indemnity Issues relating to
Restructuring Taxes to the extent that New Morton bears
indemnification responsibility with respect thereto pursuant
to this Agreement. Neither the Company nor New Morton shall
take any action with respect to such Tax Return without the
other's written consent, which consent shall not be
unreasonably withheld, and the Company and New Morton shall
agree as to any settlement or compromise of Indemnity Issues
on such Tax Return. If the Company and New Morton cannot
agree as to any action to be taken with respect to any
Indemnity Issue on such Tax Return, the parties shall take
such action as shall be determined pursuant to Section 5.04
with respect to such Indemnity Issue.
(b) Notwithstanding the foregoing, if the
settlement of any Indemnity Issue would materially increase
the other party's liability for Taxes, the Responsible Party
shall not enter into a final settlement without the consent of
the other party, which consent shall not be unreasonably
withheld.
(c) The right to participate referred to in Section
4.01(a) shall include the submission and content of
documentation, protests, memoranda of fact and law and briefs,
the conduct of oral arguments or presentations, the selection
of witnesses and the negotiation of stipulations of fact.
Section 4.3. Cooperation and Exchange of
Information. (a) New Morton shall prepare and submit to the
Company on a timely basis blank Tax Return workpaper packages
for the year of the Distribution. The Company shall, and
shall cause each appropriate member of the Company Group to,
prepare and submit to New Morton in accordance with the
various due dates set forth in the tax package instructions,
all information as New Morton shall reasonably request to
enable New Morton to prepare the Company Tax Returns for the
taxable year ended the Distribution Date.
(b) The Company, on behalf of itself and each
member of the Company Group, agrees to provide the New Morton
Group, and New Morton, on behalf of itself and each member of
the New Morton Group, agrees to provide the Company Group,
with such cooperation and information as the other shall
reasonably request of the other in connection with the
preparation or filing of any Tax Return or claim for refund
contemplated by this Agreement or in conducting any audit or
other proceeding in respect of Taxes. The Company shall file
on a timely basis all Tax Returns prepared by New Morton for
filing by the Company, in accordance with this Agreement.
Such cooperation and information shall include without
limitation promptly forwarding copies of appropriate notices
and forms or other communications received from or sent to any
taxing authority which relate to Automotive Safety Businesses
in the case of the New Morton Group and New Morton Businesses
in the case of the Company Group, and providing copies of all
relevant Tax Returns, together with accompanying schedules and
related workpapers, documents relating to rulings or other
determinations by taxing authorities, including without
limitation, foreign taxing authorities, and records concerning
the ownership and Tax basis of property, which either party
may possess. Each party shall make its employees and
facilities available on a mutually convenient basis to provide
explanation of any documents or information provided
hereunder.
(c) New Morton and the Company agree to retain all
Tax Returns, related schedules and workpapers, and all
material records and other documents relating thereto existing
on the date hereof or created through or with respect to
periods ending on or before the Distribution Date, until the
expiration of the statute of limitations (including
extensions) of the taxable years to which such Tax Returns and
other documents relate and until the Final Determination of
any payments which may be required in respect of such years
under this Agreement. The Company and New Morton agree to
advise each other promptly of any such Final Determination.
Any information obtained under this Agreement shall be kept
confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund
or in conducting any audit or other proceeding.
(d) If any member of the Company Group or the New
Morton Group, as the case may be, fails to provide any
information requested pursuant to this Section 4.02 by (i) the
dates, specified in subsection (a) hereof or, (ii) with
respect to information not requested pursuant to subsection
(a) hereof, within a reasonable period, as determined in good
faith by the party requesting information, then the requesting
party shall have the right to engage a public accountant of
its choice to gather such information. New Morton and the
Company, as the case may be, agree upon 24 hours' notice, in
the case of a failure to provide information pursuant to
subsection (a) hereof, and otherwise upon 30 days' notice
after the expiration of such reasonable period, to permit any
such public accountant full access to all appropriate records
or other information in the possession of any member of the
Company Group or the New Morton Group, as the case may be,
during reasonable business hours, and to reimburse or pay
directly all costs and expenses in connection with the
engagement of such public accountant.
ARTICLE V
MISCELLANEOUS
Section 5.1. Expenses. Unless otherwise expressly
provided in this Agreement or in the Distribution Agreement,
each party shall bear any and all expenses that arise from
their respective obligations under this Agreement.
Section 5.2. Entire Agreement; Termination of Prior
Agreements. This Agreement constitutes the entire agreement
of the parties concerning the subject matter hereof and
supersedes all other agreements, whether or not written, in
respect of any Tax between or among any member or members of
the Company Group, on the one hand, and any member or members
of the New Morton Group, on the other hand. All such
agreements are hereby cancelled and any rights or obligations
existing thereunder are hereby fully and finally settled
without any payment by any party thereto. This Agreement may
not be amended except by an agreement in writing, signed by
the parties hereto. Anything in this Agreement or the
Distribution Agreement to the contrary notwithstanding, in the
event and to the extent that there shall be a conflict between
the provisions of this Agreement and the Distribution
Agreement, the provisions of this Agreement shall control.
Section 5.3. Notices. All notices and other
communications hereunder shall be in writing and shall be
delivered by hand or mailed by registered or certified mail
(return receipt requested) to the parties at the following
addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the
date on which such notice is received:
To the Company or any member of the Company Group:
Autoliv ASP, Inc.
3350 Airport Road
Ogden, Utah 84409
Attention: Corporate Secretary
with a copy to:
Autoliv, Inc.
c/o Autoliv AB
Box 70381
S-107 24 Stockholm
Sweden
Attention: Corporate Secretary
and
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Stuart M. Finkelstein, Esq.
To New Morton or any member of the New Morton Group:
Morton International, Inc.
100 North Riverside Drive
Chicago, Illinois 60606
Attention: Corporate Secretary
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Jodi J. Schwartz, Esq.
Section 5.4. Resolution of Disputes. Any disputes
between the parties with respect to this Agreement that cannot
be resolved by good faith effort by the parties shall be
resolved by a "Big Six" public accounting firm or a law firm
satisfactory to the Company and New Morton, whose
determination shall be final and binding on all parties and
whose fees and expenses shall be shared by each of New Morton
and the Company in accordance with the final allocation of the
Tax liability in dispute.
Section 5.5. Application to Present and Future
Subsidiaries. This Agreement is being entered into by the
Company and New Morton on behalf of themselves and each member
of the Company Group and New Morton Group, respectively. This
Agreement shall constitute a direct obligation of each such
member and shall be deemed to have been readopted and affirmed
on behalf of any corporation which becomes a member of the
Company Group or New Morton Group in the future. The Company
and New Morton hereby guarantee the performance of all
actions, agreements and obligations provided for under this
Agreement of each member of the Company Group and the New
Morton Group, respectively. The Company and New Morton shall,
upon the written request of the other, cause any of their
respective group members formally to execute this Agreement.
This Agreement shall be binding upon, and shall inure to the
benefit of, the successors, assigns and persons controlling
any of the corporations bound hereby for so long as such
successors, assigns or controlling persons are members of the
Company Group or the New Morton Group or their successors and
assigns.
Section 5.6. Term. This Agreement shall commence
on the date of execution indicated below and shall continue in
effect until otherwise mutually agreed to in writing by the
Company and New Morton, or their successors.
Section 5.7. Titles and Headings. Titles and
headings to sections herein are inserted for the convenience
of reference only and are not intended to be a part or to
affect the meaning or interpretation of this Agreement.
Section 5.8. Legal Enforceability. Any provision
of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies
otherwise available to any party hereto, each party hereto
acknowledges that damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be
specifically enforceable.
Section 5.9. Singular and Plural. As used herein,
the singular shall include the plural and vice versa.
Section 5.10. Governing Law. This Agreement shall
be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed this
agreement as of the 30th day of April, 1997.
MORTON INTERNATIONAL, INC. NEW MORTON INTERNATIONAL, INC.
By /s/ Thomas F. McDevitt By /s/ Raymond P. Buschmann
Thomas F. McDevitt Raymond P. Buschmann
Vice President Finance and Vice President for Legal
Chief Financial Officer Affairs and General
Counsel