EXHIBIT 10.18
DISTRIBUTION AND INDEMNITY AGREEMENT
BETWEEN
WESTERN ATLAS INC.
AND
UNOVA, INC.
DISTRIBUTION AND INDEMNITY AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
THE DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1 The Distribution. . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Cooperation Prior to the Distribution . . . . . . . . . . . . 4
Section 2.3 Conditions to Distribution. . . . . . . . . . . . . . . . . . 5
ARTICLE III.
TRANSACTIONS RELATING TO THE DISTRIBUTION. . . . . . . . . . . . . . . . . . 6
Section 3.1 Intercorporate Reorganization . . . . . . . . . . . . . . . . 6
Section 3.2 Dividend; Cancellation of Intercompany
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 The UNOVA Board . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 UNOVA Charter and By-laws . . . . . . . . . . . . . . . . . . 7
Section 3.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.7 Western Atlas Employees Good Government Fund. . . . . . . . . 10
Section 3.8 Western Atlas Foundation. . . . . . . . . . . . . . . . . . . 10
ARTICLE IV.
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.1 Indemnification by Western Atlas. . . . . . . . . . . . . . . 11
Section 4.2 Indemnification by UNOVA. . . . . . . . . . . . . . . . . . . 11
Section 4.3 Limitations on Indemnification Obligations. . . . . . . . . . 12
Section 4.4 Procedures for Indemnification of Third-Party Claims. . . . . 12
Section 4.5 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 16
Section 4.6 Survival of Indemnities . . . . . . . . . . . . . . . . . . . 16
Page
ARTICLE V.
ACCESS TO INFORMATION; SERVICES. . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.1 Access to Information . . . . . . . . . . . . . . . . . . . . 16
Section 5.2 Production of Witnesses . . . . . . . . . . . . . . . . . . . 17
Section 5.3 Retention of Records. . . . . . . . . . . . . . . . . . . . . 17
Section 5.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.5 Provision of Services . . . . . . . . . . . . . . . . . . . . 18
Section 5.6 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1 Complete Agreement; Construction. . . . . . . . . . . . . . . 19
Section 6.2 Survival of Agreements. . . . . . . . . . . . . . . . . . . . 19
Section 6.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.6 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 21
Section 6.8 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.9 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 21
Section 6.10 Titles and Headings . . . . . . . . . . . . . . . . . . . . . 22
Section 6.11 Legal Enforceability. . . . . . . . . . . . . . . . . . . . . 22
Section 6.12 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 22
DISTRIBUTION AND INDEMNITY AGREEMENT
DISTRIBUTION AND INDEMNITY AGREEMENT (this "Agreement"), dated as
of October 31, 1997, between WESTERN ATLAS INC., a Delaware corporation
("Western Atlas"), and UNOVA, INC., a Delaware corporation and, as of the
date hereof, a wholly owned subsidiary of Western Atlas ("UNOVA").
WHEREAS, the Western Atlas Board has determined that it is
appropriate and desirable to spin off its holdings of UNOVA by distributing
all outstanding shares of UNOVA Common Stock on a pro rata basis to holders
of Western Atlas Common Stock; and
WHEREAS, Western Atlas and UNOVA have determined that it is
appropriate and desirable to set forth the principal corporate transactions
required to effect such distribution and certain other agreements that will
govern certain matters relating to such distribution and the relationships
thereafter between Western Atlas and UNOVA; and
WHEREAS, Western Atlas and UNOVA are entering into this Agreement
in the spirit of mutual benefit and good faith.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, and the benefits to be
derived from the distribution by Western Atlas and UNOVA, the parties hereby
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 GENERAL. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
ACTION: any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
AFFILIATE: as defined in Rule 12b-2 under the Exchange Act,
including, with respect to Western Atlas, any Western Atlas Subsidiary and,
with respect to UNOVA, any UNOVA Subsidiary.
AGENT: ChaseMellon Shareholder Services, L.L.C., as distribution
agent.
BENEFITS AGREEMENT: the Benefits Agreement between UNOVA and
Western Atlas, the form of which is attached hereto as Annex A.
CODE: the Internal Revenue Code of 1986, as amended.
COMMISSION: the Securities and Exchange Commission.
DISTRIBUTION: the distribution to holders of Western Atlas Common
Stock of the shares of UNOVA Common Stock owned by Western Atlas on the
Distribution Date.
DISTRIBUTION DATE: the date determined by the Western Atlas Board
on which the Distribution shall be effected.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
FORM 10: the registration statement on Form 10 filed by UNOVA with
the Commission to effect the registration of the UNOVA Common Stock pursuant
to the Exchange Act.
INFORMATION STATEMENT: the information statement to be sent to the
holders of Western Atlas Common Stock in connection with the Distribution.
INSURANCE PROCEEDS: those monies (i) received by an insured from
an insurance carrier on an insurance claim or (ii) paid by an insurance
carrier on behalf of the insured on an insurance claim, in either case net of
any applicable deductibles, retentions, or costs paid by such insured, but
such term does not refer to proceeds received from an insurer on an employee
benefits group insurance policy.
INTELLECTUAL PROPERTY AGREEMENT: the Intellectual Property
Agreement between UNOVA and Western Atlas, the form of which is attached
hereto as Annex B.
IRS: the Internal Revenue Service.
LIABILITIES: any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising and whether or not
the same would be reflected on a bal-
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ance sheet (unless otherwise specified in this Agreement), including all
costs and expenses relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under any law, rule, regulation,
Action, threatened Action, order or consent decree of any governmental entity
or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
LOSSES: any and all losses, Liabilities, claims, damages,
obligations, fines, penalties, payments, costs and expenses, matured or
unmatured, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, known or unknown (including, without limitation, the costs and
expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees
and any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any such Actions or threatened Actions).
RECORD DATE: the close of business on the date to be determined by
the Western Atlas Board as the record date for the Distribution.
SUBSIDIARIES: the term "subsidiaries" as used herein with respect
to any entity shall be deemed to refer to other entities in which such entity
owns or controls a majority of the voting power and shall, unless otherwise
indicated, be deemed to refer to both direct and indirect subsidiaries of
such entity.
TAX SHARING AGREEMENT: the Tax Sharing Agreement between UNOVA and
Western Atlas, the form of which is attached hereto as Annex C.
UNOVA COMMON STOCK: the Common Stock, par value $.01 per share, of
UNOVA.
UNOVA SUBSIDIARY: any direct or indirect subsidiary of UNOVA that
will remain a direct or indirect subsidiary of UNOVA immediately following
the Distribution Date, and any other direct or indirect subsidiary of UNOVA
that thereafter may be organized or acquired.
WAI INSURANCE PROGRAM: the insurance policies and self-insurance
program of Western Atlas referred to in Section 3.6 hereof.
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XXXXXXX XXXXX BOARD: the Board of Directors of Western Atlas.
WESTERN ATLAS COMMON STOCK: the Common Stock, $1.00 par value, of
Western Atlas.
WESTERN ATLAS SUBSIDIARY: any direct or indirect subsidiary of
Western Atlas other than UNOVA or any UNOVA Subsidiary.
ARTICLE II.
THE DISTRIBUTION
Section 2.1 THE DISTRIBUTION. Subject to Section 2.3 hereof, on
the Distribution Date, Western Atlas will deliver to the Agent, for the
benefit of holders of record of Western Atlas Common Stock on the Record
Date, a single stock certificate, endorsed by Western Atlas in blank,
representing all of the then outstanding shares of UNOVA Common Stock owned
by Western Atlas, and shall instruct the Agent to distribute on the
Distribution Date (or as soon as practicable thereafter) the appropriate
number of such shares of UNOVA Common Stock to each such holder or designated
transferee or transferees of such holder. The Distribution shall be
effective on the Distribution Date. UNOVA will provide to the Agent all
information or documents necessary to effect direct registration, and Western
Atlas will provide to the Agent any information required in order to complete
the Distribution on the basis of one share of UNOVA Common Stock for each
share of Western Atlas Common Stock outstanding on the Record Date.
Section 2.2 COOPERATION PRIOR TO THE DISTRIBUTION.
(a) Western Atlas and UNOVA have prepared, and Western Atlas
shall mail, prior to the Distribution Date, to the holders of Western Atlas
Common Stock, the Information Statement, which shall set forth appropriate
disclosure concerning UNOVA, the Distribution and other matters. Western
Atlas and UNOVA have prepared, and UNOVA has filed with the Commission, the
Form 10, which includes or incorporates by reference the Information
Statement. Western Atlas and UNOVA shall use reasonable efforts to cause the
Form 10 to become effective under the Exchange Act as soon as practicable.
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(b) Western Atlas and UNOVA shall cooperate in preparing,
filing with the Commission and causing to become effective any registration
statements or amendments thereof which are required to reflect the
establishment of, or amendments to, any employee benefit and other plans
contemplated by the Benefits Agreement.
(c) Western Atlas and UNOVA shall take all such action as may
be necessary or appropriate under the securities or blue sky laws of states
or other political subdivisions of the United States, in connection with the
transactions contemplated by this Agreement.
(d) Western Atlas and UNOVA have prepared, and UNOVA has filed
in preliminary form and shall seek to make effective, applications to list
the UNOVA Common Stock on the New York Stock Exchange (the "NYSE").
Section 2.3 CONDITIONS TO DISTRIBUTION. This Agreement and the
consummation of each of the transactions provided for herein shall be subject
to approval of the Western Atlas Board. The Western Atlas Board shall in its
discretion establish the Record Date and the Distribution Date and all
appropriate procedures in connection with the Distribution, but in no event
shall the Distribution Date occur prior to such time as each of the following
have occurred or have been waived by the Western Atlas Board in its sole
discretion: (i) the Western Atlas Board shall have formally approved the
Distribution; (ii) the Form 10 shall have been declared effective by the
Commission; (iii) Western Atlas shall have received a statement from the
Staff of the Commission that the Distribution may be effected without
registration of the UNOVA Common Stock under the Securities Act of 1933;
(iv) the Western Atlas Board shall have received opinions of counsel
satisfactory to it that the Distribution will be a tax-free "spin-off" under
Sections 355 and/or 368(a)(1)(D) of the Code; (v) the Board of Directors of
UNOVA, constituted as contemplated by Section 3.4, shall have been duly
elected, and the Certificate of Incorporation and the By-laws of UNOVA, as
described in Section 3.5, shall have been adopted and be in effect; (vi) the
UNOVA Common Stock shall have been authorized for listing on the NYSE; (vii)
the transactions contemplated by Sections 3.1, 3.2 and 3.3 shall have been
consummated in all material respects; (viii) UNOVA shall have arranged for a
bank credit facility or comparable source of funding for its capital needs;
and (ix) no preliminary or permanent injunction or other order,
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decree or ruling issued by a court of competent jurisdiction or by a
government, regulatory or administrative agency or commission, and no
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, shall be in effect preventing the payment of the
Distribution; PROVIDED that the satisfaction of such conditions shall not
create any obligation on the part of Western Atlas or any other party hereto
to effect the Distribution or in any way limit Western Atlas' power of
termination set forth in Section 6.8 or alter the consequences of any such
termination from those specified in such Section.
ARTICLE III.
TRANSACTIONS RELATING TO THE DISTRIBUTION
Section 3.1 INTERCORPORATE REORGANIZATION.
(a) At or prior to the Distribution, there shall have been
contributed to Honsberg Lamb Sonderwerkzeugmachinen Gmbh, as additional
paid-in capital, a shareholder loan in the amount of DM 2.8 million (U.S.
$1,546,961). At or prior to the Distribution, there shall have been
transferred to UNOVA Industrial Automation Systems, Inc. all of the assets
and liabilities of Western Atlas Xxxxxx USA Division (MIS # M02610),
including all the assets and liabilities of Xxxxxxx Division and CITCO
Division; all the assets and liabilities of Western Atlas Lamb Technicon Body
& Assembly Division (MIS # M02415), including all outstanding shares of Grand
Design, Inc. and X.X. XxXxxxxx Company; all the assets and liabilities of
Western Atlas Lamb Technicon Machining Systems Division (MIS # M02410); and
all the outstanding shares of M M & E, Inc. At or prior to the Distribution,
there shall have been transferred to UNOVA all of the outstanding shares of
UNOVA Industrial Automation Systems, Inc., Standard Components Corp., Limited
Partner I Corporation, General Partner I Corporation, Xxxxxx UNOVA
Corporation, UNOVA Canada, Inc., UNOVA U.K. Limited, Intermec Technologies
Corporation, Lamb-Unima Maschinenbau Gmbh and Honsberg Lamb
Sonderwerkzeugmachinen Gmbh. At or prior to the Distribution, there shall
have been transferred to UNOVA certain assets and liabilities of Western
Atlas Corporate Division (MIS # Z00050 and MIS # Z00900), and all the assets
and liabilities of Western Atlas IAS Administration Division (MIS # M09010).
The transfer of capital stock shall be effected by means of delivery of stock
certificates duly endorsed or accompanied by duly executed stock powers and
notation on the stock record books of the corporations or other legal
entities in-
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volved. Following the Distribution Date, Western Atlas and UNOVA shall
cooperate and, if requested, assist each other in perfecting title to various
properties referred to in this paragraph, at the expense of the party
requesting such assistance.
(b) Prior to the Distribution Date, Western Atlas and UNOVA
shall take all steps necessary to increase the outstanding shares of UNOVA
Common Stock so that immediately prior to the Distribution, Western Atlas
will hold a number of shares of UNOVA Common Stock equal to the number of
shares of Western Atlas Common Stock outstanding on the Record Date.
Section 3.2 DIVIDEND; CANCELLATION OF INTERCOMPANY INDEBTEDNESS.
Immediately prior to the Distribution, UNOVA shall pay a dividend to Western
Atlas in the amount of $230 million, which amount shall be utilized by
Western Atlas to repay short-term debt. Any intercompany indebtedness owed
by UNOVA and the UNOVA Subsidiaries to Western Atlas and the Western Atlas
Subsidiaries shall be canceled as a contribution to the capital of UNOVA.
Section 3.3 OTHER AGREEMENTS. On or prior to the date of the
Distribution, Western Atlas and UNOVA will execute and deliver agreements
substantially in the form of Annexes A through C.
Section 3.4 THE UNOVA BOARD. Western Atlas and UNOVA shall take
all actions that may be required to elect or otherwise appoint as directors
of UNOVA, on or prior to the Distribution Date, the persons named in the Form
10 to constitute the Board of Directors of UNOVA on the Distribution Date.
Section 3.5 UNOVA CHARTER AND BY-LAWS. Prior to the Distribution
Date, (a) Western Atlas shall cause the Certificate of Incorporation of
UNOVA, substantially in the form of Annex B to the Form 10, to be filed with
the Secretary of State of Delaware and to be in effect on the Distribution
Date, and (b) the Board of Directors of UNOVA shall adopt the By-laws of
UNOVA substantially in the form of Annex C to the Form 10.
Section 3.6 INSURANCE.
(a) Western Atlas will continue to provide coverage for
workers' compensation, general liability, automobile liability, other liability,
property and other insurable business risks and exposures to UNOVA and the UNOVA
Subsidiaries in the same
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manner and to the same extent as in effect on the date of this Agreement (the
"WAI Insurance Program") for incidents, acts, omissions or occurrences
occurring from the date such coverage first commenced until 12:00 midnight on
the Distribution Date or such later date as may be agreed to in writing by
Western Atlas and UNOVA, and UNOVA and the UNOVA Subsidiaries shall pay
Western Atlas the costs, fees and expenses for such coverage in accordance
with the past and current practices established between Western Atlas, UNOVA
and the UNOVA Subsidiaries. Such costs include, but are not limited to,
premiums, deductibles, retrospective rating adjustments, assessments paid and
audit adjustments completed.
(b) Western Atlas shall cooperate and, if requested, shall
assist UNOVA and the UNOVA Subsidiaries in obtaining their own separate
insurance coverage and self-insurance coverage for UNOVA and the UNOVA
Subsidiaries, effective with respect to incidents, acts, omissions or
occurrences occurring from and after the Distribution Date. Following the
Distribution Date, each of the parties shall cooperate with and assist the
other party in the prevention of conflicts or gaps in insurance coverage
and/or collection of Insurance Proceeds.
(c) Western Atlas and UNOVA agree that UNOVA and the UNOVA
Subsidiaries shall have the right to present claims directly to Western
Atlas' insurers under the WAI Insurance Program for insured and self-insured
incidents, acts, omissions or occurrences occurring from the date said
coverage first commenced until the Distribution Date. Any such claims shall
be subject to the terms and conditions of the WAI Insurance Program which for
this purpose shall include the so-called "tail" coverage referred to below in
this subsection (c). All such claims by UNOVA or the UNOVA Subsidiaries
against Western Atlas' insurers shall be presented when known by UNOVA and in
any event by the reporting requirements specified under an insurance policy
with respect to a specific claim. The parties acknowledge that any such
policies written on a "claims made" rather than "occurrence" basis may not,
in their present form, provide coverage to UNOVA and the UNOVA Subsidiaries
for incidents, acts, omissions or occurrences occurring prior to the
Distribution Date but which are first reported after the Distribution Date
and, accordingly, the parties have agreed that Western Atlas shall cooperate
and, if requested, assist UNOVA and the UNOVA Subsidiaries in acquiring
"tail" insurance coverage, effective upon the Distribution Date.
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(d) With respect to any insured Losses or retrospective premium
adjustments relating to assets and/or operations of UNOVA and/or the UNOVA
Subsidiaries prior to the Distribution Date: (i) Western Atlas shall pay
over to UNOVA within 60 days of receipt any Insurance Proceeds it receives on
account of such Losses and any such retrospective premium reductions (all
subject to support documentation); and (ii) UNOVA and the UNOVA Subsidiaries
shall reimburse Western Atlas within 60 days of Western Atlas' request for
all costs, expenses or payments (all subject to support documentation) made
by Western Atlas after the Distribution Date to insurers or incurred by
Western Atlas with respect to self-insurance on account of such Losses and
any such retrospective premium increases, except that self-insured Losses
shall be funded directly by UNOVA through a Western Atlas bank account
maintained to fund such Losses. The defense of and the responsibility for
any litigation or claims pending at the Distribution Date, or commenced after
the Distribution Date (as respects Losses which occurred prior to the
Distribution Date), relating to UNOVA or the UNOVA Subsidiaries and covered
by the WAI Insurance Program shall continue to be managed by UNOVA and the
UNOVA Subsidiaries. UNOVA shall advise Western Atlas when there is a
reasonable expectation that any such litigation will exceed the policy limits
of the current WAI Insurance Program or result in a loss not covered by such
program.
(e) Western Atlas shall maintain as part of the WAI Insurance
Program the Directors and Officers insurance program with the same insurance
carriers, limits of liability, terms and conditions through May 31, 1999.
UNOVA shall obtain and maintain a similar Directors and Officers insurance
program at least through May 31, 1999. Material modification to either
party's Directors and Officers insurance program prior to May 31, 1999 shall
require the prior approval of the other party, which shall not be
unreasonably withheld. Material modifications include adverse changes in
terms and conditions, decreased limits of liability and the substitution of
insurance carriers.
(f) Western Atlas maintains various bonding facilities on
behalf of itself and its various subsidiaries, including UNOVA and the UNOVA
Subsidiaries. UNOVA and the UNOVA Subsidiaries shall have the right to
continue to have the benefit of such bonding facilities after the
Distribution Date until UNOVA is able to arrange its own bonding facilities;
provided, however, that UNOVA shall reimburse Western Atlas for the amount of
any Losses on Western Atlas bonds covering UNOVA and the UNOVA Sub-
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sidiaries and shall also reimburse Western Atlas for all fees and
out-of-pocket costs incurred by Western Atlas with respect to Western Atlas
bonds covering UNOVA and the UNOVA Subsidiaries.
(g) In recognition that premiums, premium adjustments,
retrospective rating adjustments, assessments and audit adjustments have been
paid or charged to UNOVA and the UNOVA Subsidiaries prior to the Distribution
Date, and that similar such payments and charges will be made by and to UNOVA
and the UNOVA Subsidiaries after the Distribution Date, Western Atlas agrees
to cooperate with UNOVA and the UNOVA Subsidiaries in insured litigation.
Furthermore, in insured litigation in which the reasonable expectation is
that UNOVA and/or UNOVA Subsidiaries will be financially responsible for the
entire result in the litigation (a "UNOVA Responsibility Case"), UNOVA shall
have the right to participate and control at its cost the defense of such
litigation, to the extent that Western Atlas would be able to do so. In such
event, Western Atlas shall cooperate with UNOVA in all reasonable respects in
the defense and resolution of such UNOVA Responsibility Case.
(h) For purposes of this Section 3.6, the term Distribution
Date means 12:00 midnight on the later of the date determined by the Western
Atlas Board on which the Distribution shall be effected or the later date
agreed upon pursuant to subsection 3.6(a).
(i) For purposes of this Section 3.6, the terms "self-insured" and
"self-insurance" refer only to those incidents, omissions or occurrences
related to the self-insured portion of the State of Washington Workers'
Compensation exposures.
Section 3.7 WESTERN ATLAS EMPLOYEES GOOD GOVERNMENT FUND. Prior
to the Distribution Date, (i) UNOVA shall undertake to sponsor a political
committee by establishing a nonprofit, unincorporated association in the
State of California (the "UNOVA Fund"), and (ii) the parties shall cause all
moneys in the Western Atlas Inc. Employees Good Government Fund that relate
to the employees of UNOVA or any UNOVA Subsidiary to be transferred to the
UNOVA Fund.
Section 3.8 WESTERN ATLAS FOUNDATION. Prior to the Distribution
Date, the parties shall cause The Western Atlas Foundation, a private
foundation under the Code and a nonprofit public benefit corporation
organized under the laws of the State
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of California, to change its name to "The UNOVA Foundation," and UNOVA will
be substituted for Western Atlas as the sponsor of The UNOVA Foundation from
and after such name change.
ARTICLE IV.
INDEMNIFICATION
Section 4.1 INDEMNIFICATION BY WESTERN ATLAS. Except with respect
to employee benefits or other Liabilities to employees, which shall be
governed by the Benefits Agreement, and except with respect to insurance and
self-insurance claims, which shall be governed by Sections 3.6 and 4.3
hereof, Western Atlas shall indemnify, defend and hold harmless UNOVA, each
Affiliate of UNOVA and each of their respective directors, officers,
employees and agents (in their capacities as directors, officers, employees
and agents of UNOVA and its Affiliates) and each of the heirs, executors,
successors and assigns of any of the foregoing (the "UNOVA Indemnitees") from
and against any and all Losses of the UNOVA Indemnitees arising out of or due
to the failure of Western Atlas or any of its Affiliates to pay, perform or
otherwise discharge in due course any item set forth on Schedule A. Anything
in this Section 4.1 to the contrary notwithstanding, neither Western Atlas
nor any Western Atlas Subsidiary shall have any liability whatsoever to
either UNOVA or any UNOVA Subsidiary in respect of any Tax (as such term is
defined in the Tax Sharing Agreement), except as otherwise provided in
Schedule A hereto or in the Tax Sharing Agreement.
Section 4.2 INDEMNIFICATION BY UNOVA. Except with respect to
employee benefits or other Liabilities to employees, which shall be governed
by the Benefits Agreement, and except with respect to insurance and
self-insurance claims, which shall be governed by Sections 3.6 and 4.3
hereof, UNOVA shall indemnify, defend and hold harmless Western Atlas, each
Affiliate of Western Atlas and each of their respective directors, officers,
employees and agents (in their capacities as directors, officers, employees
and agents of Western Atlas and its Affiliates) and each of the heirs,
executors, successors and assigns of any of the foregoing (the "Western Atlas
Indemnitees") from and against any and all Losses of the Western Atlas
Indemnitees arising out of or due to the failure of UNOVA or any of its
Affiliates to pay, perform or otherwise discharge in due course any item set
forth on Schedule B. Anything in this Section 4.2 to the contrary
notwithstanding, neither UNOVA nor any UNOVA Subsidiary
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shall have any liability whatsoever to either Western Atlas or any Western
Atlas Subsidiary in respect of any Tax, except as otherwise provided in
Schedule B hereto or in the Tax Sharing Agreement.
Section 4.3 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The
amount that any party (an "Indemnifying Party") is or may be required to pay
to any other party (an "Indemnitee") pursuant to Section 4.1 or Section 4.2
shall be reduced (including, without limitation, retroactively) by any
Insurance Proceeds or other amounts actually recovered by or on behalf of
such Indemnitee, in reduction of the related Loss. If an Indemnitee shall
have received the payment required by this Agreement from an Indemnifying
Party in respect of any Loss and the Indemnitee shall subsequently actually
receive Insurance Proceeds or other amounts in respect of such Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the
amount of such Insurance Proceeds or other amounts actually received (up to
but not in excess of the amount of any indemnity payment made hereunder). An
insurer who would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto, or, solely by virtue of
the indemnification provisions hereof, have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer or
any other third party shall be entitled to a "windfall" (I.E., a benefit they
would not be entitled to receive in the absence of the indemnification
provisions hereof) by virtue of the indemnification provisions hereof.
Section 4.4 PROCEDURES FOR INDEMNIFICATION OF THIRD-PARTY CLAIMS.
Procedures for Indemnification of Third-Party Claims shall be as follows:
(a) If an Indemnitee shall receive notice or otherwise learn of
the assertion or probable assertion by a person (including, without
limitation, any governmental entity) who is not a party to this Agreement or
to any of the agreements in the form of Annexes A through C hereto
(hereinafter referred to as the "Other Agreements") of any claim or of the
commencement by any such person of any Action (a "Third-Party Claim") with
respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to Section 4.1, 4.2 or any other Section of this
Agreement or pursuant to the Other Agreements, such Indemnitee shall give
such Indemnifying Party written notice thereof promptly after becoming aware
of such Third-Party Claim; PROVIDED
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that the failure of any Indemnitee to give notice as provided in this Section
4.4(a) shall not relieve the related Indemnifying Party of its obligations
under this Article IV, unless the notice was intentionally withheld and such
Indemnifying Party is prejudiced by such failure to give notice. Such notice
shall describe the Third-Party Claim in reasonable detail and, if reasonably
ascertainable, shall indicate the amount (estimated if necessary) of the Loss
that has been or may be sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to
settle or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third-Party Claim. Within 30 days of
the receipt of notice from an Indemnitee in accordance with Section 4.4(a)
(or sooner, if the nature of such Third-Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third-Party
Claim, which election shall specify any reservations or exceptions. After
notice from an Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third-Party Claim, such Indemnifying Party shall not be
liable to such Indemnitee under this Article IV for any legal or other
expenses (except expenses approved in advance by the Indemnifying Party)
subsequently incurred by such Indemnitee in connection with the defense
thereof; PROVIDED that if the defendants in any such claim include both the
Indemnifying Party and one or more Indemnitees and in any Indemnitee's
reasonable judgment a conflict of interest between one or more of such
Indemnitees and such Indemnifying Party exists in respect of such claim or if
the Indemnifying Party shall have assumed responsibility for such claim with
any reservations or exceptions, such Indemnitees shall have the right to
employ separate counsel to represent such Indemnitees and in that event the
reasonable fees and expenses of such separate counsel (but not more than one
separate counsel reasonably satisfactory to the Indemnifying Party) shall be
paid by such Indemnifying Party; provided, however, if and to the extent that
there is a conflict of defenses or positions among the Indemnitees, the
Indemnitees shall have the right to retain such number of additional separate
counsel, reasonably satisfactory to the Indemnifying Party, as is reasonably
necessary to avoid such conflicts, and the Indemnifying Party shall be
responsible for the reasonable fees and expenses of such additional separate
counsel. If an Indemnifying Party elects not to assume responsibility for
defending a Third-Party Claim, or fails to notify an Indemnitee of its
election as provided in this Section 4.4(b), such Indemni-
-13-
tee may defend or (subject to the remainder of this Section 4.4(b)) seek to
compromise or settle such Third-Party Claim. Notwithstanding the foregoing,
neither an Indemnifying Party nor an Indemnitee may settle or compromise any
claim over the objection of the other; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld or delayed; and
PROVIDED FURTHER, HOWEVER, if the Indemnifying Party has not affirmatively
elected by written notice to the Indemnitee within 30 days of notice from the
Indemnitee to assume the defense of, or to seek to settle or compromise the
Third-Party Claim, and the Indemnifying Party has not similarly acknowledged,
within such 30-day period, its responsibility to indemnify the Indemnitee
against the Third-Party Claim, the Indemnitee may settle or compromise the
Third-Party Claim over the objections of the Indemnifying Party without
prejudice to the Indemnitee's claim against the Indemnifying Party. Neither
an Indemnifying Party nor an Indemnitee shall consent to entry of any
judgment or enter into any settlement of any Third-Party Claim which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee, in the case of a consent or settlement by an
Indemnifying Party, or the Indemnifying Party, in the case of a consent or
settlement by the Indemnitee, of a written release from all liability in
respect to such Third-Party Claim.
(c) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third-Party Claim, the related Indemnitee shall make
available to such Indemnifying Party any personnel or any books, records or
other documents within its control or which it otherwise has the ability to
make available that are necessary or appropriate for such defense, settlement
or compromise, and shall otherwise cooperate in the defense, settlement or
compromise of such Third-Party Claims. The Indemnifying Party shall promptly
reimburse the Indemnitee its out-of-pocket costs incurred in providing
assistance pursuant to the foregoing sentence and for the Indemnitee's
personnel costs on any occasion on which personnel of the Indemnitee spend
one full day or more in providing such assistance.
(d) Notwithstanding anything else in this Section 4.4 to the
contrary, if an Indemnifying Party notifies the related Indemnitee in writing
of such Indemnifying Party's desire to settle or compromise a Third-Party
Claim on the basis set forth in such notice (provided that such settlement or
compromise includes as an unconditional term thereof the giving by the
claimant or plaintiff of a written release of the Indemnitee from all liabil-
-14-
ity in respect thereof) and the Indemnitee shall notify the Indemnifying
Party in writing that such Indemnitee declines to accept any such settlement
or compromise, such Indemnitee may continue to contest such Third-Party
Claim, free of any participation by such Indemnifying Party, at such
Indemnitee's sole expense. In such event, the obligation of such
Indemnifying Party to such Indemnitee with respect to such Third-Party Claim
shall be equal to (i) the costs and expenses of such Indemnitee prior to the
date such Indemnifying Party notifies such Indemnitee of the offer to settle
or compromise (to the extent such costs and expenses are otherwise
indemnifiable hereunder) PLUS (ii) the lesser of (A) the amount of any offer
of settlement or compromise that such Indemnitee declined to accept and (B)
the actual out-of-pocket amount such Indemnitee is obligated to pay
subsequent to such date as a result of such Indemnitee's continuing to pursue
such Third-Party Claim.
(e) Any claim on account of a Loss that does not result from a
Third-Party Claim shall be asserted by written notice given by the Indemnitee
to the related Indemnifying Party. Such Indemnifying Party shall have a
period of 30 days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30-day
period, such Indemnifying Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party does not respond
within such 30-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party under this Agreement or under applicable law except as otherwise
required by Section 6.12.
(f) In addition to any adjustments required pursuant to Section
4.3, if the amount of any Loss shall, at any time subsequent to the payment
required by this Agreement, be reduced by recovery, settlement or otherwise,
the amount of such reduction that has been received by the Indemnitee, less
any expenses incurred in connection therewith, shall promptly be repaid by
the Indemnitee to the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to
any events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third-Party Claim against any claimant or
plain-
-15-
tiff asserting such Third-Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable
manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 4.5 REMEDIES CUMULATIVE. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party under Article IV of this Agreement or under
Western Atlas' directors and officers liability insurance policy.
Section 4.6 SURVIVAL OF INDEMNITIES. The obligations of each of
Western Atlas and UNOVA under this Article IV shall survive the sale or other
transfer by it of any assets, businesses or Liabilities.
ARTICLE AUTONUMOUT
ARTICLE V.
ACCESS TO INFORMATION; SERVICES
Section 5.1 ACCESS TO INFORMATION. From and after the
Distribution Date, Western Atlas shall afford to UNOVA and its authorized
accountants, counsel and other designated representatives (collectively,
"Representatives") reasonable access (including using reasonable efforts to
give access to persons or firms possessing information) and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and information (collectively,
"Information") within Western Atlas' possession relating to UNOVA or any
UNOVA Subsidiary, insofar as such access is reasonably required by UNOVA or
any UNOVA Subsidiary, without cost to UNOVA. Similarly, UNOVA shall afford
to Western Atlas and its Representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to Information within
UNOVA's possession or in the possession of the UNOVA Subsidiaries relating to
Western Atlas or any Western Atlas Subsidiary and insofar as such access is
reasonably required by Western Atlas or any Western Atlas Subsidiary, without
cost to Western Atlas. For purposes of this Section 5.1 only, Information is
limited to information relating to periods ending on or preceding the
Distribution Date. Information may be requested under this Article V for,
without limitation, audit, accounting, claims, litigation and tax purposes,
as well as for purposes of fulfill-
-16-
ing disclosure and reporting obligations and for performing this Agreement
and the transactions contemplated hereby. After the Distribution Date, (i)
to the extent that Western Atlas has in its possession Information relating
solely to UNOVA or any UNOVA Subsidiary, Western Atlas shall deliver the
originals of such Information to UNOVA within a reasonable time following the
Distribution Date, and (ii) to the extent that UNOVA or any UNOVA Subsidiary
has in its possession Information relating solely to Western Atlas, UNOVA or
such UNOVA Subsidiary shall deliver the originals of such Information to
Western Atlas within a reasonable time following the Distribution Date.
Section 5.2 PRODUCTION OF WITNESSES. After the Distribution
Date, each of Western Atlas and UNOVA and its respective subsidiaries shall
use reasonable efforts to make available to the other party and its
subsidiaries, upon written request, its directors, officers, employees and
agents as witnesses to the extent that any such person may reasonably be
required (giving consideration to business demands of such Representatives)
in connection with any legal, administrative or other proceedings in which
the requesting party may from time to time be involved, without cost to the
requesting party.
Section 5.3 RETENTION OF RECORDS. Except as otherwise required
by law or agreed to in writing, each of Western Atlas and UNOVA shall retain,
and shall cause its subsidiaries to retain following the Distribution Date,
for a period consistent with the document retention policies in effect at
Western Atlas and UNOVA, respectively, all significant Information relating
to the business of the other and the other's subsidiaries, but not less than
the three-year period following the Distribution Date. In addition, such
Information shall not be destroyed or otherwise disposed of if during such
period a party shall request in writing that any of the Information be
retained for additional specific and reasonable periods of time at the
expense of the party so requesting.
Section 5.4 CONFIDENTIALITY. Each of UNOVA and the UNOVA
Subsidiaries on the one hand, and Western Atlas and the Western Atlas
Subsidiaries on the other hand, shall hold, and shall cause its
Representatives to hold, in strict confidence, all Information concerning the
other in its possession or furnished by the other or the other's
Representatives pursuant to this Agreement or any of the Other Agreements
(except to the extent that such Information has been (a) in the public domain
-17-
through no fault of such party or (b) later lawfully acquired from other
sources by such party or subsequently developed by such party), and each
party shall not release or disclose such Information to any other person,
except to its auditors, attorneys, financial advisors, bankers and other
consultants and advisors, and on terms and conditions substantially the same
as the terms and conditions on which such party releases its own Information,
unless compelled to disclose by judicial or administrative process or, as
advised by its counsel, by other requirements of law.
Section 5.5 PROVISION OF SERVICES.
(a) Western Atlas shall make available to UNOVA, during normal
business hours and in a manner that will not unreasonably interfere with
Western Atlas' business, its tax, internal audit, accounting, treasury,
legal, risk management and similar staff services (collectively "Services")
whenever and to the extent that they may be reasonably required in connection
with the preparation of tax returns, audits, claims or litigation, and
otherwise to assist in effecting an orderly transition following the
Distribution. Western Atlas shall be entitled to receive from UNOVA, upon
the presentation of invoices therefor, reimbursement for all direct costs of
providing the Services, including such amounts relating to supplies,
disbursements and other out-of-pocket expenses.
(b) UNOVA shall make available to Western Atlas, during normal
business hours and in a manner that will not unreasonably interfere with
UNOVA's business, Services whenever and to the extent that they may be
reasonably required in connection with the preparation of tax returns,
audits, claims or litigation, and otherwise to assist in effecting an orderly
transition following the Distribution. UNOVA shall be entitled to receive
from Western Atlas, upon the presentation of invoices therefor, reimbursement
for all direct costs of providing the Services, including such amounts
relating to supplies, disbursements and other out-of-pocket expenses.
(c) UNOVA shall make available to Western Atlas, during normal
business hours and in a manner that will not interfere with UNOVA's business,
risk management Services, similar to the Services currently being provided to
the Oilfield Services group to the extent that they may be reasonably
required in connection with the WAI Insurance Program, and otherwise to
assist in ef-
-18-
fecting an orderly transition following the Distribution. UNOVA shall be
entitled to receive from Western Atlas, upon presentation of invoices
therefor, reimbursement for all direct costs of providing such Services,
including such amounts relating to supplies, disbursements and other
out-of-pocket expenses.
(d) For a period of not less than one year following the
Distribution, UNOVA shall provide to Western Atlas, during normal business
hours and in a manner that will not interfere with UNOVA's business, stock
option administration services, similar to the services currently being
provided to the executives of Western Atlas and its subsidiaries who
participate in the WAI Stock Option Program, and otherwise to assist in the
administration of such program following the Distribution. UNOVA shall be
entitled to receive from Western Atlas, upon presentation of invoices
therefor, reimbursement for all direct costs of providing such services,
including such amounts relating to personnel, supplies, disbursements and
other out-of-pocket expenses.
Section 5.6 COSTS. Unless otherwise provided in this Agreement,
each party shall bear all costs and expenses of that party in its performance
of its obligations under this Agreement.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement,
the Benefits Agreement and the Tax Sharing Agreement, including any schedules
and exhibits hereto or thereto, and other agreements and documents referred
to herein, shall constitute the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all previous
negotiations, commitments and writings with respect to such subject matter.
Notwithstanding any other provisions in this Agreement to the contrary, in
the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the provisions of any of the Other
Agreements, the provisions of the Other Agreements shall control.
Section 6.2 SURVIVAL OF AGREEMENTS. Except as otherwise
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
-19-
Section 6.3 EXPENSES. Except as otherwise set forth in this
Agreement or any of the Other Agreements, all costs and expenses arising on
or prior to the Distribution Date (whether or not then payable) in connection
with the Distribution (other than the costs incurred in printing the stock
certificates of UNOVA) shall be paid by Western Atlas to the extent that
appropriate documentation concerning such costs and expenses shall be
provided to Western Atlas.
Section 6.4 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
Section 6.5 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be delivered by
hand, mailed by registered or certified mail (return receipt requested), or
sent by cable, telegram, telex or telecopy (confirmed by regular, first-class
mail), 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:
if to Western Atlas:
Western Atlas Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Fax No.: (000) 000-0000
or to such other person or place as Western Atlas shall have specified to
UNOVA in a notice in accordance with this Section 6.5,
if to UNOVA:
UNOVA, Inc.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax No.: (000) 000-0000
-20-
or to such other person or place as UNOVA shall have specified to Western
Atlas in a notice in accordance with this Section 6.5.
Section 6.6 AMENDMENTS. This Agreement may not be modified or
amended except by an agreement in writing signed by the parties.
Section 6.7 SUCCESSORS AND ASSIGNS. Neither party shall have the
right to assign this Agreement or any of its rights or interests herein
without the written consent of the other party, and any attempted assignment
without such consent shall be null and void; provided, however, that Western
Atlas shall have the right to assign this Agreement to a purchaser or
acquirer of substantially all of the business, properties, and assets of
Western Atlas or to the survivor of a statutory merger or consolidation to
which Western Atlas is a constituent party; provided, however, that UNOVA
shall have the right to assign this Agreement to a purchaser or acquirer of
substantially all of the business, properties and assets of UNOVA or to the
survivor of a statutory merger or consolidation to which UNOVA is a
constituent party; and provided further, however, that in the event of any
such assignment by Western Atlas or UNOVA, Western Atlas or UNOVA, as the
case may be, shall nevertheless remain liable and obligated under this
Agreement. This Agreement and the Agreements in the form of Annexes A
through C hereof, as the same may be amended or modified, and the provisions
hereof and thereof, shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
Section 6.8 TERMINATION. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Distribution Date by and
in the sole discretion of the Western Atlas Board without the approval of
UNOVA or Western Atlas' shareholders. In the event of such termination, no
party shall have any liability of any kind to any other party on account of
such termination except that expenses incurred in connection with the
transactions contemplated hereby shall be paid as provided in Section 6.3.
Section 6.9 NO THIRD-PARTY BENEFICIARIES. Except for the
provisions of Article IV relating to Indemnitees, and except as may be
otherwise provided for in any of the Agreements in the form of Annexes A
through C hereto, as the same may be amended or modified, this Agreement is
solely for the benefit of the parties hereto and their respective Affiliates
and should not be deemed
-21-
to confer upon third parties (including any employee of Western Atlas or
UNOVA or any Western Atlas or UNOVA Subsidiary) any remedy, claim,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
Section 6.10 TITLES AND HEADINGS. Titles and headings to
sections herein are inserted for the convenience of reference only and are
not intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 6.11 LEGAL ENFORCEABILITY. Any provision of this
Agreement that 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.
Section 6.12 ARBITRATION. Any dispute hereunder which is not
resolved by agreement of the parties, shall be subject to resolution by
arbitration in accordance with the Rules of the American Arbitration
Association but subject to the procedural stipulation set forth on Schedule
C. Any decision or award in such arbitration shall be legally enforceable
between the parties by any Court of competent jurisdiction. Such arbitration
proceeding shall be conducted before a single arbitrator unless either party
requests a panel of three arbitrators.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
WESTERN ATLAS INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
UNOVA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
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SCHEDULE A
TO THE DISTRIBUTION AND INDEMNITY AGREEMENT
Items with respect to which Western Atlas will indemnify the UNOVA
Indemnitees in accordance with Section 4.1 of the Agreement:
(1) All Losses arising out of the businesses conducted or to be
conducted by Western Atlas or any Western Atlas Subsidiary, whether such
Losses relate to events occurring, or whether such Losses are asserted,
before or after the Distribution Date (excluding the businesses conducted or
to be conducted by UNOVA (whether directly or through a subsidiary or
Affiliate of UNOVA) and the UNOVA Subsidiaries) and all Losses arising out
of, or attributable to, any and all of the businesses or operations of
Western Atlas or any of Western Atlas' current or former subsidiaries which
have been discontinued, designated discontinued (excluding UNOVA's inclusion
in such account), liquidated, sold or otherwise disposed of at any time on or
prior to the Distribution Date and which relate or did relate to the
businesses to be conducted by Western Atlas and the Western Atlas
Subsidiaries following the Distribution Date (the "Western Atlas Discontinued
Operations"), including without limitation the Core Laboratories Division,
the manufacturing operations of the Western Geophysical Division and the
Western Atlas Software Division (except to the extent provided for in the
Benefits Agreement); and
(2) All of Western Atlas' and any Western Atlas Subsidiary's
Liabilities arising out of this Agreement or any of the Other Agreements,
except as otherwise provided for in such Other Agreements;
(3) All Losses arising out of or based upon any untrue statement
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, with respect to all
information set forth in the following sections of the Information Statement
or any preliminary or final Form 10 or any amendment thereto:
"Introduction"; "The Distribution"; "Arrangements Between Western Atlas and
UNOVA Relating to the Distribution"; "Summary of Certain Information" (only
to the extent that such summary includes information also contained in the
foregoing sections); and any letter to shareholders from an officer of
Western Atlas; and
(4) Any Liability arising in connection with any Action brought by
or on behalf of any governmental entity for reimbursement, surrender or
delivery to a governmental entity of unclaimed property under the escheat
laws of any State or Country, to the extent that such Liability is
attributable to the businesses conducted or to be conducted by Western Atlas
or any Western Atlas Subsidiary following the Distribution Date (excluding
the businesses conducted or to be conducted by UNOVA (whether directly or
through a subsidiary or Affiliate of UNOVA) and the UNOVA Subsidiaries or to
any of the "UNOVA Discontinued Operations" (as defined in Schedule B)) or to
any of the Western Atlas Discontinued Operations, whether such liability
arose before or arises after the Distribution Date.
-2-
SCHEDULE B
TO THE DISTRIBUTION AND INDEMNITY AGREEMENT
Items with respect to which UNOVA will indemnify the Western Atlas
Indemnitees in accordance with Section 4.2 of the Agreement:
(1) All Losses arising out of any guarantees, indemnities, or
obligations to third parties including, without limitation, letters of credit
and surety bonds, of Western Atlas or any Western Atlas Subsidiary with
respect to any obligations of UNOVA or any UNOVA Subsidiary to third parties
or with respect to the obligations of Western Atlas to third parties arising
out of or attributable to any and all of the businesses or operations of
Western Atlas or any of Western Atlas' current or former subsidiaries which
have been discontinued, designated discontinued, liquidated, sold or
otherwise disposed of at any time on or prior to the Distribution Date and
which relate or did relate to the businesses to be conducted by UNOVA and the
UNOVA Subsidiaries following the Distribution Date, including without
limitation the Material Handling Systems Division, the VantageWare Division,
the Automated Guided Vehicles Division, Pro-Tac System AB, Lamb-Unima and
Western Atlas Filtration Systems (collectively, the "UNOVA Discontinued
Operations"); and the Liabilities of UNOVA under the Benefits Agreement which
shall be included within UNOVA's indemnity of Western Atlas and the Western
Atlas Subsidiaries;
(2) All Losses arising out of the businesses conducted or to be
conducted by UNOVA (whether directly or through a subsidiary or Affiliate of
UNOVA) and the UNOVA Subsidiaries, and any Liability of UNOVA or of any of
the UNOVA Subsidiaries with respect to the UNOVA Discontinued Operations,
whether such Losses relate to events occurring, or whether such Losses are
asserted before or after the Distribution Date;
(3) The liability and obligation of Western Atlas or of any
Western Atlas Subsidiary under or with respect to any Revenue Bond financing
related to any of the properties and assets utilized by UNOVA or any of the
UNOVA Subsidiaries in their respective businesses, irrespective of whether or
not Western Atlas has suffered actual loss;
(4) All of UNOVA's and any of the UNOVA Subsidiaries' Liabilities
arising out of this Agreement or any of the Other Agreements, except as
otherwise provided for in such Other Agreements; and
(5) All Losses arising out of or based upon any untrue statement
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, with respect to all
information contained in the Information Statement or any preliminary or
final Form 10 or any amendment thereto; PROVIDED, HOWEVER, that such
indemnification shall not apply to any Losses that arise out of or are based
upon any statement or omission made in any of the sections of the Information
Statement or Form 10 that are listed in paragraph (3) of Schedule A;
(6) Any Liability arising in connection with any Action brought by
or on behalf of any governmental entity for reimbursement, surrender or
delivery to a governmental entity of unclaimed property under the escheat
laws of any State or Country, to the extent that such Liability is
attributable to the businesses conducted or to be conducted by UNOVA or any
UNOVA Subsidiary or to any of the UNOVA Discontinued Operations, whether such
liability arose before or arises after the Distribution Date.
-2-
SCHEDULE C
TO THE DISTRIBUTION AND INDEMNITY AGREEMENT
ARBITRATION PROCEDURAL RULES
1. ADMINISTRATION AND CONDUCT OF ARBITRATION.
(a) At the discretion of the Arbitrator, an administrative
conference with the Arbitrator and the parties and/or their representatives
will be scheduled in appropriate cases to expedite the Arbitration
proceedings.
(b) It is intended that the Arbitration be conducted in an
expeditious manner and without evidentiary hearing or oral presentation and
argument, unless the Arbitrator determines that an evidentiary hearing,
and/or oral presentation or argument is required for the rendition of an
award or a decision. However, any such evidentiary hearing shall be limited
to not more than fifteen days, and oral presentation and argument shall be
limited to eight hours, with time equally divided between the parties.
(c) On such schedule as may be established by the Arbitrator, each
of the parties shall submit simultaneous briefs, including exhibits, to the
Arbitrator supporting their respective positions. There shall be no limit to
the number of pages included in such briefs or to the number of exhibits.
Each party shall have a reasonable opportunity, as determined by the
Arbitrator, to reply to the brief of the other. The Arbitrator shall have
the right to request additional written statements of all or any of the
parties; provided that each party shall have the reasonable opportunity to
reply to any such additional statements submitted in response to the request
of the Arbitrator.
(d) The Arbitrator shall render its award or decision within two
months of the Arbitrator's appointment.
2. FIXING OF LOCALE. The parties may mutually agree to the locale
where the Arbitration is to be held. If the parties cannot agree on the
locale, the Arbitrator shall have the power to determine the locale and its
decision shall be final and binding.
3. DATE, TIME AND PLACE OF HEARING. The Arbitrator shall set the
date, time, and place for any hearing. The Arbitrator shall mail to each
party notice thereof at least ten days in advance, unless the parties by
mutual agreement waive such notice or modify the terms thereof.
4. POSTPONEMENTS. The Arbitrator for good cause shown may postpone
any hearing upon the request of a party or upon the Arbitrator's own
initiative, and shall also grant such postponement when all of the parties
agree thereto.
5. OATHS. Before proceeding with the first hearing, the Arbitrator
may take an oath of office and, if required by law, shall do so. The
Arbitrator may require witnesses to testify under oath administered by any
duly qualified person and, if it is required by law, shall do so.
6. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR.
(a) A hearing shall be opened by the filing of the oath of the
Arbitrator, where required, and by the recording of the date, time, and place
of the hearing, and the presence of the Arbitrator, the parties, and their
representatives, if any.
(b) The Arbitrator may, at the beginning of the hearing, ask for
statements clarifying the issues involved.
(c) The complaining party shall then present evidence and/or
argument, as required by the Arbitrator, to support its claim. The defending
party shall then present evidence and/or argument supporting its position and
responding to the position of the other. Witnesses, if any, for each party
shall submit to questions or other examination. The Arbitrator has the
discretion to vary this procedure but, within the time limits specified
above, shall afford a full and equal opportunity to all parties for the
presentation of any material and relevant evidence.
(d) Exhibits, when offered by either party, may be received in
evidence by the Arbitrator. The names and addresses of any witnesses and a
description of the exhibits in the order received shall be made a part of the
record.
(e) There shall be no direct communication between either of the
parties and the Arbitrator other than at oral hearing, unless the parties and
the Arbitrator agree in writing.
7. ARBITRATION IN THE ABSENCE OF A PARTY OR REPRESENTATIVE. Unless
the law provides to the contrary, the Arbitration may proceed in the absence
of any party or representative who, after due notice, fails to be present or
fails to obtain a postponement ("absent in default"). An award shall not be
made solely on the default of a party. The Arbitrator shall require the
party
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who is present to submit such evidence as the Arbitrator may require for the
making of an award.
8. EVIDENCE.
(a) The parties may offer such evidence as is relevant and
material to the dispute and shall produce such evidence as the Arbitrator may
deem necessary to an understanding and determination of the dispute.
(b) The Arbitrator shall be the judge of the relevance and
materiality of the evidence offered, and conformity to legal rules of
evidence shall not be necessary. All evidence shall be taken in the presence
of the Arbitrator and all of the parties, except where any of the parties is
absent in default or has waived the right to be present.
9. EVIDENCE BY AFFIDAVIT AND POST-HEARING FILING OF
DOCUMENTS OR OTHER EVIDENCE.
(a) The Arbitrator may receive and consider the evidence of
witnesses by affidavit, but shall give it only such weight as the Arbitrator
deems it to be entitled to after consideration of any objection made to its
admission.
(b) If the parties agree or the Arbitrator directs that documents
or other evidence be submitted to the Arbitrator after the hearing, the
documents or other evidence shall be filed with the Arbitrator. All parties
shall be afforded an opportunity to examine such documents or other evidence.
10. CLOSING OF HEARING. If satisfied that the record is complete, the
Arbitrator shall declare the hearing closed and a minute thereof shall be
recorded. If briefs are to be filed, the hearing shall be declared closed
as of the final date set by the Arbitrator for the receipt of briefs. If
documents are to be filed as provided in Section 9 and the date set for their
receipt is later than that set for the receipt of briefs, the later date
shall be the date of closing and the hearing.
11. REOPENING OF HEARING. The hearing may be reopened on the
Arbitrator's initiative at any time before the award is made. If reopening
the hearing would prevent the making of the award within the specified time
limit, the matter may not be reopened unless the parties agree on an
extension of time.
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12. WAIVER OF ORAL HEARING. The parties may provide, by written
agreement, for the waiver of oral hearing in any case.
13. WAIVER OF RULES. Any party who proceeds with the Arbitration after
knowledge that any provision or requirement of these rules has not been
complied with and who fails to state an objection thereto in writing shall be
deemed to have waived the right to object.
14. EXTENSIONS OF TIME. The parties may modify any period of time by
mutual agreement. The Arbitrator may for good cause extend any period of
time established by these rules, except the time for making the award. The
Arbitrator shall notify the parties of any extension.
15. SERVING OF NOTICE. Each party shall be deemed to have consented
that any papers, notices, or process necessary or proper for the initiation
or continuation of an Arbitration under these rules, for any court action in
connection therewith, or for the entry of judgment on any award made under
these rules may be served on a party by mail addressed to the party or its
representative at the address specified in Section 6.15 or by personal
service, in or outside the state where the Arbitration is to be held,
provided that reasonable opportunity to be heard with regard thereto has been
granted to the party.
16. TIME OF THE AWARD. The award shall be made promptly by the
Arbitrator and, unless otherwise agreed by the parties in writing or
specified by law, no later than thirty days from the date of closing the
hearing, or, if oral hearings have not been held, from the date of the
transmittal of the final briefs, statements and proofs to the Arbitrator.
17. AWARD UPON SETTLEMENT. If the parties settle their dispute during
the course of the Arbitration, the Arbitrator may set forth the terms of the
agreed settlement in an award. Such an award is referred to as a consent
award.
18. DELIVERY OF AWARD TO PARTIES. Parties shall accept as legal
delivery of the award the placing of the award or a true copy thereof in the
mail addressed to a party or its representative at the last known address,
personal service of the award, or the filing of the award in any other manner
that is permitted by law.
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19. APPLICATIONS TO COURT AND EXCLUSION OF LIABILITY.
(a) No judicial proceeding by a party relating to the subject
matter of the Arbitration shall be deemed a waiver of the party's right to
arbitrate.
(b) Parties to these rules shall be deemed to have consented that
judgment upon the Arbitration award may be entered in any federal or state
court having jurisdiction thereof.
20. INTERPRETATION AND APPLICATION OF RULES. The Arbitrator shall
interpret and apply these rules insofar as they relate to the Arbitrator's
powers and duties. If there is more than one Arbitrator and a difference
arises among them concerning the meaning or application of these rules, it
shall be decided by a majority vote.
21. COMPLEX PROCEDURES. Notwithstanding the foregoing, if the parties
mutually agree, any Arbitration to be conducted between the parties may be
conducted in the manner provided for in the Supplementary Procedure for Large
Complex Disputes of the American Arbitration Association.
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