Material Agreement Form 8 K

On October 18, 2024, Carrier Global Corporation, on behalf of itself and certain of its affiliates ("Carrier"), entered into a Settlement and Plan Support Agreement (the "PSA") with KFI Wind-Down Corp. (f/k/a Kidde-Fenwal, Inc.) ("KFI"), the Official Committee of Unsecured Creditors appointed in KFI's bankruptcy case (the "Committee"), and the co-leads of the Plaintiffs' Executive Committee (the "MDL PEC Co-Leads") appointed in the aqueous film-forming foam ("AFFF") multi-district litigation pending in the U.S. District Court for the District of South Carolina (the "MDL Court").

KFI was a separate legal entity of United Technologies Corporation ("UTC") that was spun-off with Carrier as part of Carrier's separation from UTC in April 2020. KFI previously owned and operated a business that manufactured and sold AFFF. KFI was indirectly owned by UTC from 2005 to 2013. In May 2023, KFI filed for chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware ("Bankruptcy Court"). Pacific Avenue Capital Partners acquired substantially all of KFI's assets in July 2024.

The PSA provides that Carrier will enter into three distinct settlement agreements (the "Proposed Settlements") with KFI, the Committee, and the MDL PEC Co-Leads. Neither the PSA nor the Proposed Settlements constitute an admission of liability or wrongdoing by Carrier.

The first of the Proposed Settlements relates to estate claims (the "Estate Claims Settlement"). Estate claims include all current and future claims that Carrier is responsible for liabilities arising from KFI's manufacture or sale of AFFF. Upon Bankruptcy Court approval, the Estate Claims Settlement will permanently resolve all present and future claims that Carrier is responsible for any liabilities of KFI, including all liabilities arising from KFI's manufacture and sale of AFFF.

The second and third of the Proposed Settlements release a very substantial amount of current and future direct claims against Carrier (the "Direct Claims Settlements"). Direct claims allege that UTC, which indirectly owned KFI's AFFF business for eight years, engaged in conduct independent of KFI that caused harm to AFFF claimants. Carrier agreed to indemnify UTC for these direct claims when it was spun-off from UTC.

The parties to the Direct Claims Settlements are Carrier and: (a) participating Public Water Systems, as defined in the Safe Drinking Water Act, that were tested or otherwise analyzed for per- and polyfluoroalkyl substances, including but not limited to perfluorooctanoic acid and perfluorooctanesulfonic acid ("PFAS"), and found to contain PFAS at any level prior to the date of the settlement agreements (the "Settlement Date") and all other Public Water Systems that as of the Settlement Date: (1) are required to test, monitor, or analyze for certain PFAS under the U.S. EPA's Fifth Unregulated Contaminant Monitoring Rule; or (2) serve more than 3,300 people according to the U.S. EPA Safe Drinking Water Information System Federal Reporting Services system; and (b) participating airports, including airports (i) that are named plaintiffs in lawsuits against Carrier or KFI in the MDL Court prior to the date of settlement, (ii) are subject to certification under 14 CFR Part 139, which subjects such airports to certain aircraft rescue or firefighting provisions, and (iii) with a PFAS detection in the soil and/or groundwater underlying such property within six months after the MDL Court preliminarily approves the settlement. Upon approval by the MDL Court, the Direct Claims Settlements resolve and enjoin all current and future AFFF-related direct claims against Carrier by these parties.

Non-settling parties may still assert direct AFFF-related claims, although we expect a vast majority of public water providers and airports will participate in the Direct Claims Settlements.

As part of the Proposed Settlements, Carrier will pay $615 million in cash payable over five (5) years, 100% of the net sale proceeds from the sale of KFI's assets, which are estimated to be $115 million, and contribute the right to recover proceeds under certain insurance policies. Carrier will be entitled to receive up to $2.4 billion of proceeds from such insurance policies and will contribute the first $125 million of such proceeds as additional consideration in the Direct Claims Settlements. Carrier will also be entitled to any earnouts payable to KFI under the KFI sale agreement. Carrier expects insurance payments it receives, in the aggregate, to cover the full amount paid by Carrier under the Proposed Settlements.