Stock Purchase Agreement

Exhibit 10.1


STOCK PURCHASE AGREEMENT


by and between


BREED TECHNOLOGIES, INC.


and


SIEMENS AKTIENGESELLSCHAFT


dated as of October 14, 1997


TABLE OF CONTENTS


Page


Section 1. Definitions and Principles of Construction................ 1
1.01 Defined Terms............................................. 1
1.02 Principles of Construction................................ 5 Section 2. Sale and Purchase of Stock................................ 5
2.01 Sale and Purchase of Stock................................ 5
2.02 Purchase Price; Number of Shares to be Purchased.......... 5
2.03 Closing................................................... 5


Section 3. Representations and Warranties of the Company............. 6
3.01 Organization and Good Standing............................ 6
3.02 Authorization............................................. 6
3.03 Enforceability............................................ 7
3.04 Approvals................................................. 7
3.05 Capitalization............................................ 7
3.06 Subsidiaries.............................................. 7
3.07 Compliance with Laws and Orders........................... 8
3.08 SEC Reports and Financial Statements...................... 8
3.09 Absence of Certain Changes or Events...................... 9
3.10 Absence of Undisclosed Liabilities........................ 9
3.11 Legal Proceedings......................................... 9
3.12 Patents and Trademarks..................................... 9
3.13 Taxes..................................................... 10
3.14 Employee Benefit Plans.................................... 10
3.15 Environmental............................................. 11
3.16 Affiliate Transactions.................................... 11
3.17 AlliedSignal Transaction...................................11
3.18 Disclosure.................................................12
3.19 Brokers....................................................12


Section 4. Representations and Warranties of Purchaser....... 12
4.01 Investment Intent......................................... 12
4.02 No Registration of Securities............................. 12
4.03 Investor Status........................................... 12
4.04 Authority to Execute and Perform Agreement................ 13
4.05 Brokers................................................... 13
4.06 Approvals................................................. 13


Section 5. Covenants of the Company and Purchaser.................... 13
5.01 Company................................................... 13
5.02 Purchaser................................................. 15


Section 6. Conditions Precedent to Obligations of Purchaser.......... 15


Section 7. Conditions Precedent to Obligations of the Company........ 18


Section 8. Notices................................................... 19


Section 9. Survival of Representations and Warranties................ 20


Section 10. Indemnification................................... 20
10.01 Indemnity by the Company.................................. 20
10.02 Purchaser's Indemnity..................................... 21
10.03 Procedure................................................. 21
10.04 Basket and Cap Provisions................................. 23


Section 11. Termination....................................... 23
11.01 Termination............................................... 23
11.02 No Liability.............................................. 24
11.03 Notice.................................................... 24


Section 12. Miscellaneous..................................... 24
12.1 Amendment or Waiver....................................... 24
12.2 Consent to Jurisdiction................................... 24
12.3 Release of Siemens Aktiengesellschaft..................... 24
12.4 Waiver of Jury Trial; Trial Costs......................... 25
12.5 Assignment................................................ 25
12.6 Entire Agreement.......................................... 25
12.7 Expenses.................................................. 25
12.8 Public Announcements...................................... 25


Schedule 3.02 Authorization Schedule 3.04 Approvals for Company Schedule 3.05(b) Options Schedule 3.06 Subsidiaries Schedule 3.08(a) SEC Filings Schedule 3.08(b) Treatment of Subsidiaries on Financial Statements Schedule 3.09 Absence of Changes Schedule 3.10 Undisclosed Liabilities Schedule 3.11 Legal Proceedings Schedule 3.12 Intellectual Property Schedule 3.14 Employee Benefit Plans Schedule 3.15 Environmental Matters Schedule 3.16 Transactions with Affiliates Schedule 3.17 AlliedSignal Agreement Schedule 4.06 Approvals for Purchaser Schedule 6(l) Financing Terms


Exhibit A Form of Certificate of Designations Exhibit B Form of Make-Whole Agreement Exhibit C Opinion of Special Counsel to the Company Exhibit D Form of Registration Rights Agreement Exhibit E Form of Stockholders Agreement Exhibit F Opinions of Counsel to Purchaser


This STOCK PURCHASE AGREEMENT, dated as of October 14, 1997, is by and between Breed Technologies, Inc., a Delaware corporation (the "Company"), and Siemens Aktiengesellschaft, a company organized under the laws of the Federal Republic of Germany ("Purchaser").


WHEREAS, the Company has entered into an agreement to acquire the automotive safety restraints business of AlliedSignal Inc. (the "AlliedSignal Acquisition");


WHEREAS, Purchaser desires to invest in the Company as a result and in furtherance of the AlliedSignal Acquisition; and


WHEREAS, the Company and Purchaser (through their respective Affiliates) intend to form a joint venture for the worldwide research, development and marketing of motor vehicle occupant safety restraint systems (the "Joint Venture");


In consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:


Section 1. Definitions and Principles of Construction.


1.01 Defined Terms. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:


"Additional Shares" has the meaning set forth in Section 2.02(c).


"Adjustment Period" means the period beginning on the date of this Agreement and ending six months after the date of the Closing.


"Affiliate" means any Person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether by Contract or otherwise. In any event, and without limitation of the previous sentence, any Person owning more than fifty (50%) of the voting securities of a second Person shall be deemed to control that second Person.


"Agreement" means this Agreement, as the same may be amended, supplemented or modified in accordance with the terms hereof.


"AlliedSignal Acquisition" has the meaning set forth in the forepart of this Agreement.


"AlliedSignal Agreement" has the meaning set forth in Section 3.17.


"Benefit Plan" has the meaning set forth in Section 3.14.


"Best Price" means the Initial Price Per Share less an amount equal to the Initial Price multiplied by the Biggest Discount.


"Biggest Discount" means the largest Stock Sale Discount.


"Breed Stockholders" means Allen K. Breed, Johnnie Cordell Breed, A. Breed, L.P. and J. Breed, L.P.


"Business Day" means any day other than a Saturday or a Sunday or a day when commercial banks are permitted or required by law to be closed in New York City.


"Certificate of Designations" means a Certificate of Designations in substantially the form attached hereto as Exhibit A.


"Charter Amendment" means an amendment to the Company's Certificate of Incorporation for the purpose of increasing the maximum number of shares of Common Stock that the Corporation is authorized to issue to 75,000,000.


"Claim Notice" has the meaning set forth in Section 10.03.


"Closing" has the meaning set forth in Section 2.03(a).


"Closing Date" shall mean the date on which the Closing occurs.


"Code" means the Internal Revenue Code of 1986, as amended.


"Common Stock" means the Common Stock of the Company, $.01 par value per share.


"Company" means Breed Technologies, Inc.


"Company Financial Statements" has the meaning set forth in Section 3.08.


"Company Permits" has the meaning set forth in Section 3.07.


"Company SEC Reports" has the meaning set forth in Section 3.08.


"Damages" has the meaning set forth in Section 10.01.


"ERISA" has the meaning set forth in Section 3.14.


"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


"Governmental or Regulatory Authorities" means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, the Federal Republic of Germany, any foreign jurisdiction, the European Community or any political subdivision of any of the foregoing.


"HSR Act" means Section 7A of the Clayton Act (Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder.


"Indemnified Party" and "Indemnifying Party" have the meanings set forth in Section 10.03.


"Initial Price Per Share" means the Purchase Price divided by the number of Initial Shares.


"Initial Shares" has the meaning set forth in Section 2.02(b).


"Joint Venture" means the joint venture contemplated by the Memorandum of Understanding to be formed between the parties hereto (or through their respective Affiliates) in connection with motor vehicle occupant safety restraint systems.


"Knowledge" means, as to any specified facts or information, that those facts or information are within the actual knowledge of any executive officer or senior vice president of any division, and in addition, as to Section 3.17(b) only, the actual knowledge of the Company's Director of Corporate Compliance.


"Law" means any law, statute, rule, regulation, ordinance or other pronouncement having the effect of law in the United States, the Federal Republic of Germany, the European Community or any political subdivision of the foregoing.


"Lien" means any lien, pledge, hypothecation, mortgage, security interest, claim, lease, charge, option, right of first refusal, easement encroachment, transfer restriction, or other encumbrance of any kind.


"Make-Whole Agreement" means an agreement in substantially the form attached hereto as Exhibit B.


"Material Adverse Effect" means a material adverse effect upon the business, assets, condition (financial or otherwise) or operations of the Company and its Subsidiaries, taken as a whole.


"Memorandum of Understanding" means the memorandum of understanding (including the related Term Sheet) between the Company and Purchaser, dated the same date as this Agreement, with respect to a joint venture between the parties or their affiliates.


"NYSE" means the New York Stock Exchange, Inc.


"Notice Period" has the meaning set forth in Section 10.03(a).


"Order" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority.


"Person" means an individual, partnership, corporation, association, trust, joint venture, unincorporated organization, and any government, governmental department or agency or political subdivision thereof.


"Purchase Price" has the meaning set forth in Section 2.02.


"Purchaser" means Siemens Aktiengesellschaft.


"Registration Rights Agreement" means an agreement in the form attached as Exhibit D.


"Related Agreements" means the Make-Whole Agreement, the Registration Rights Agreement and the Stockholders Agreement.


"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


"SEC" means the Securities and Exchange Commission.


"Series A Preference Share" means a share, authorized by the Certificate of Designations, which represents one one-thousandth (1/1,000) of a share of the Company's 1997 Series A Convertible Non-Voting Preferred Shares, $.001 par value per share, is convertible by the holder thereof at any time after issuance into Common Stock, and has the other rights, qualifications, limitations, restrictions and preferences set forth in the Certificate of Designations.


"Shares" has the meaning set forth in Section 2.01.


"Stockholders Agreement" means the agreement in substantially the form attached as Exhibit E.


"Stock Sale Discount" means, with respect to any sale of Common Stock by the Company, the amount, if any, by which the purchase price per share paid by the purchaser in such sale is less than the last reported sale price of the Common Stock on the NYSE on the last Trading Day preceding the date the Company first became contractually committed to make such sale, expressed as a percentage of such last reported sale price.


"Subsidiaries" has the meaning set forth in Section 3.06.


"Taxes" means any federal, state, county, local or foreign taxes, charges, fees, levies, or other assessments, including all net income, gross income, sales and use, ad valorem, transfer, gains, profits, excise, franchise, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance or withholding taxes or charges imposed by any governmental entity, including any interest and penalties (civil or criminal) on or additions to any such taxes and any expenses incurred in connection with the determination, settlement or litigation of any Tax liability.


"Tax Return" means a report, return or other information required to be supplied to a governmental entity with respect to Taxes including, where permitted or required, combined or consolidated returns for any group of entities that include the Company or any Subsidiary.


"Trading Day" means a day on which the NYSE opens for trading.


1.02 Principles of Construction. (a) All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified. The words "hereof," "herein," and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.


(b) All accounting terms used in this Agreement shall be construed in accordance with generally accepted accounting principles in the United States.


Section 2. Sale and Purchase of Stock.


2.01 Sale and Purchase of Stock. The Company agrees to issue and sell to Purchaser, and, subject to the terms and conditions hereof and in reliance on the representations, warranties and covenants set forth or referred to herein, Purchaser agrees to purchase from the Company, the number of Series A Preference Shares determined in accordance with Section 2.02 (the "Shares"). The rights, qualifications, limitations, restrictions and preferences of the Shares shall be as set forth in the Certificate of Designations.


2.02 Purchase Price; Number of Shares to be Purchased. (a) The aggregate purchase price for the Shares (the "Purchase Price") shall be $115,000,000.


(b) The number of Shares (the "Initial Shares") to be issued and sold by the Company at the Closing in consideration of the Purchase Price shall be 4,883,227. If there is a Best Price, then the number of Shares issued and sold shall equal the Purchase Price divided by the Best Price.


(c) Not later than five days after the end of the Adjustment Period, the Company shall issue and deliver to Purchaser a number of Shares (the "Additional Shares") equal to the excess of (i)the number of Shares that is equal to the Purchase Price divided by the Best Price over (ii) the number of Initial Shares.


2.03 Closing.


(a) Subject to the other provisions of this Agreement, the closing of the purchase and sale of the Initial Shares (the "Closing") will take place at the same time and place as the closing of the AlliedSignal Acquisition.


(b) On the Closing Date, Purchaser will pay the Purchase Price in immediately available funds, by wire transfer to an account designated by the Company not less than two Business Days prior to the Closing Date or, if the Company fails to so designate an account within the required time, by delivery of a certified or official bank check payable to the order of the Company.


(c) Simultaneously with Purchaser's payment of the Purchase Price, the Company will deliver to Purchaser a certificate representing the Initial Shares.


Section 3 Representations and Warranties of the Company. The Company represents and warrants to and for the benefit of Purchaser as follows (Notwithstanding anything in the Agreement to the contrary, except for the representations and warranties contained in Section 3.17, neither the Company nor any Subsidiary is making any representation or warranty concerning the AlliedSignal Agreement, the AlliedSignal Acquisition or the business, assets or operations being acquired by the Company or any Subsidiary as a result of the AlliedSignal Acquisition.):


3.01 Organization and Good Standing. Each of the Company and each Subsidiary (a) is duly organized and existing in good standing in its jurisdiction of formation, (b) is duly qualified and authorized to do business in all other jurisdictions in which the nature of its business or property makes such qualification necessary, except where such failure to qualify would not have a Material Adverse Effect, and (c) has the power to own its properties and to carry on its business as now conducted and as proposed to be conducted.


3.02 Authorization. Except as set forth on Schedule 3.02, the execution, delivery and performance by the Company of this Agreement and the Related Agreements, the issuance and sale by the Company of the Shares and the issuance of the Common Stock upon conversion of the Shares, (a) are within the Company's corporate power and authority, (b) have been duly authorized by all necessary corporate proceedings, (c) do not and will not conflict with or result in any breach or violation of any provision of the Certificate of Incorporation or Bylaws of the Company, (d) do not and will not conflict with or result in any breach or violation of any provision of any law, regulation, order, judgment, writ, injunction, license or permit, applicable to the Company or any Subsidiary, and (e) do not and will not conflict with or result in any breach or violation of any of the terms or conditions of, or constitute (or with notice or lapse of time or both constitute) a default under, or give rise to the creation of any lien upon any of the property or assets of the Company or any Subsidiary, under any contract, agreement, lease or other instrument to which the Company or any Subsidiary is a party (including without limitation all agreements and instruments to be executed and delivered in connection with the financing of the AlliedSignal Acquisition) or by which any of their respective assets or properties is bound, the consequences of which, with respect to this clause (e), could reasonably be expected to result in a Material Adverse Effect.


3.03 Enforceability. Each of this Agreement and the Related Agreements has been duly executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally and by principles of equity regarding the availability of remedies.


3.04 Approvals. Except as set forth on Schedule 3.04, the execution, delivery and performance by the Company of this Agreement and the Related Agreements, the purchase and sale of the Shares and the issuance of the number of shares of Common Stock specified in the Certificate of Designations upon conversion of the Shares, do not and will not require the approval or consent of, or any filing with, any governmental authority or agency or any other Person.


3.05 Capitalization. (a) The authorized capital stock of the Company consists solely of (i)50,000,000 shares of Common Stock, $.01 par value per share, and (ii) 5,000,000 shares of preferred stock of the Company, $.001 par value per share. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable. Upon issuance and sale to Purchaser in accordance with this Agreement the Shares will be, and the Common Stock issuable upon conversion of the Shares will upon issuance be, duly authorized, validly issued, fully paid and nonassessable and free and clear of all Liens.


(b) Except for the Make-Whole Agreement and as otherwise set forth on Schedule 3.05(b), neither the Company nor any Subsidiary has outstanding any rights (either pre-emptive or other) or options to subscribe for or purchase from the Company or such Subsidiary or any warrants or other agreements providing for or requiring the issuance or purchase or other acquisition by or on behalf of the Company or such Subsidiary of, any capital stock or other equity interests or any securities convertible into or exchangeable for the Company's or such Subsidiary's capital stock or other equity interests. Except as set forth on Schedule 3.05(b), there are no voting trusts or other agreements or understandings with respect to the voting of the capital stock or other equity interests of the Company or such Subsidiary nor any restrictions on the transferability or sale of such shares or other equity interests except as provided under the Securities Act, state "blue sky" or securities laws, this Agreement and the Related Agreements. Neither the Company nor any Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire, redeem or retire any shares of capital stock or other equity interests of the Company or such Subsidiary or any securities convertible into or exchangeable for any such capital stock or other equity interests.


3.06. Subsidiaries. Schedule 3.06 sets forth the name, jurisdiction of organization, and amount of the Company's and each other record owner's equity interest in each corporation or other entity in which the Company directly or indirectly owns or has the power to vote shares of any capital stock or other ownership interests having ordinary voting power to elect a majority of the directors of such corporation, or other persons performing similar functions for such entity, as the case may be, and each partnership and limited liability company in which such corporation or entity is a general partner or manager or member, as the case may be (the "Subsidiaries"). Except for ownership by the Company of the Subsidiaries as set forth on Schedule 3.06 or as otherwise set forth on Schedule 3.06 neither the Company nor any Subsidiary directly or indirectly owns any capital stock of, or other equity interest in, any person or participates in any joint venture or similar arrangement with any person. Except as set forth on Schedule 3.06, all of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable, and are owned, beneficially and of record, directly or indirectly, by the Company free and clear of all Liens.


3.07 Compliance with Laws and Orders. The Company and its Subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental and Regulatory Authorities necessary for the lawful conduct of their respective businesses (the "Company Permits"), except for failures to hold such permits, licenses, variances, exemptions, orders and approvals which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms of the Company Permits, except failures so to comply which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect. Except as disclosed in the Company SEC Reports (as defined in Section 3.08) filed prior to the date of this Agreement, the Company and its Subsidiaries are not in violation of or default under any Law or Order of any Governmental or Regulatory Authority, except for violations which, individually or in the aggregate, are not having and could not be reasonably expected to have a Material Adverse Effect.


3.08 SEC Reports and Financial Statements. The Company delivered to Purchaser prior to the execution of this Agreement a true and complete copy of each form, report, schedule, registration statement and other document (together with all amendments thereof and supplements thereto) filed by the Company or any of its Subsidiaries with the SEC since December 31, 1996 (as such documents have since the time of their filing been amended or supplemented, the "Company SEC Reports"), which, except as disclosed on Schedule 3.08(a), are all the documents (other than preliminary material) that the Company and its Subsidiaries were required to file with the SEC since such date. Except as disclosed in Schedule 3.08(a), and in the cases where the Company SEC Reports have been amended, as of their respective ...