Exhibit 10.1
================================================================================
TAX MATTERS ARRANGEMENTS
by and between
XXXXXXXX CORPORATION
and
ENPRO INDUSTRIES, INC.
dated as of
_______________, 2002
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS............................................................. 1
Section 1.01 General........................................................ 1
Section 1.02 Schedules, etc................................................. 5
ARTICLE 2 FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS........................ 5
Section 2.01 Preparation of Tax Returns..................................... 5
Section 2.02 Payment of Taxes............................................... 7
Section 2.03 Tax Refunds and Carrybacks..................................... 10
Section 2.04 Allocation of Straddle Period Taxes............................ 11
ARTICLE 3 TAX INDEMNIFICATION; TAX CONTESTS....................................... 11
Section 3.01 Indemnification................................................ 11
Section 3.02 EnPro Tax Acts................................................. 13
Section 3.03 Notice of Indemnity............................................ 14
Section 3.04 Payments....................................................... 14
Section 3.05 Tax Contests................................................... 16
ARTICLE 4 INTEREST CHARGE FOR LATE PAYMENTS; CURRENCY CALCULATIONS;
EFFECTIVE TIME OF TRANSACTIONS.......................................... 16
Section 4.01 Interest Charge for Late Payments.............................. 16
Section 4.02 Currency Calculations.......................................... 16
Section 4.03 Effective Time of Transactions................................. 16
ARTICLE 5 COOPERATION AND EXCHANGE OF INFORMATION................................. 17
Section 5.01 Inconsistent Actions........................................... 17
Section 5.02 Ruling Request and Tax Opinion................................. 17
Section 5.03 Cooperation and Exchange of Information........................ 17
Section 5.04 Tax Records.................................................... 17
ARTICLE 6 DISPUTE RESOLUTION...................................................... 18
Section 6.01 Initial Discussions............................................ 18
Section 6.02 Mediation...................................................... 18
Section 6.03 Consent to Jurisdiction........................................ 18
ARTICLE 7 MISCELLANEOUS........................................................... 19
Section 7.01 Notices........................................................ 19
Section 7.02 Interpretation................................................. 20
i
TABLE OF CONTENTS
(continued)
Page
----
Section 7.03 Amendments; No Waivers......................................... 20
Section 7.04 Nonexclusive Remedies.......................................... 21
Section 7.05 Successors and Assigns......................................... 21
Section 7.06 Third-Party Beneficiaries...................................... 21
Section 7.07 Governing Law.................................................. 21
Section 7.08 Counterparts; Effectiveness.................................... 21
Section 7.09 Entire Agreement............................................... 21
Section 7.10 Severability................................................... 21
Section 7.11 Termination.................................................... 21
Section 7.12 Survival....................................................... 21
SCHEDULES
Schedule 1.01 Transaction Agreements
Schedule 2.01(g) Tax Returns to be Filed by Non-Responsible Party
Schedule 2.03(c) Claims for Refund of Taxes
ii
TAX MATTERS ARRANGEMENTS
Tax Matters Arrangements, dated as of ______, 2002 (this "AGREEMENT"), by
and between Xxxxxxxx Corporation, a New York corporation ("XXXXXXXX"), on its
own behalf and on behalf of its subsidiaries, and EnPro Industries, Inc., a
North Carolina corporation and, as of the date hereof, a wholly owned subsidiary
of Xxxxxxxx ("ENPRO"), on its own behalf and on behalf of its subsidiaries.
RECITALS
A. The Board of Directors of Coltec (as hereinafter defined) has determined
that it is appropriate and in the best interests of Coltec and its sole
shareholder to distribute all of the common stock of GPEC (as hereinafter
defined) to Xxxxxxxx (the "AEROSPACE DISTRIBUTION").
B. The Board of Directors of Xxxxxxxx has determined that it is appropriate
and in the best interests of Xxxxxxxx and the holders of Xxxxxxxx Common Stock
(as hereinafter defined) to distribute all of the EnPro Common Stock (as
hereinafter defined) on a pro rata basis to the holders of Xxxxxxxx Common Stock
(the "DISTRIBUTION").
C. The Aerospace Distribution and the Distribution (as hereinafter defined)
are intended to qualify as tax-free transactions (except as to payment of cash
in lieu of fractional shares) to Coltec, Xxxxxxxx and their respective
shareholders, as applicable, under Sections 361 and 355 of the Code (as
hereinafter defined); and
X. Xxxxxxxx and EnPro desire to provide for and agree upon the allocation
between the Xxxxxxxx Tax Group (as hereinafter defined) and the EnPro Tax Group
(as hereinafter defined) of all responsibilities, liabilities and benefits
relating to or affecting Taxes (as hereinafter defined) paid or payable by
either of them for all taxable periods, whether beginning before, on or after
the Distribution Date (as hereinafter defined).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
undertakings contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Xxxxxxxx and EnPro hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01 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):
1
"Actually Realized" shall mean, for purposes of determining the timing of
any Taxes (or related Tax cost or benefit) relating to any payment, transaction,
occurrence or event, the time at which the amount of Taxes (including estimated
Taxes) due and payable by any person is increased above or reduced below, as the
case may be, the amount of Taxes that such person would be required to pay but
for the payment, transaction, occurrence or event.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Coltec" shall mean Coltec Industries Inc, a Pennsylvania corporation.
"Distribution" shall have the meaning ascribed thereto in the recitals.
"Distribution Agreement" shall mean the Distribution Agreement, dated as of
_______, 2002, by and among Xxxxxxxx, EnPro and Coltec.
"Distribution Date" shall mean the date on which the Distribution occurs
(or, if different, the date on which the Distribution is deemed to occur for
U.S. federal Income Tax purposes). For purposes of this Agreement, the
Distribution shall be deemed effective as of the end of the day on the
Distribution Date.
"Distribution Time" shall have the meaning ascribed thereto in the
Distribution Agreement.
"Distribution Transaction" shall mean any transaction undertaken in
connection with the Distribution and described in the Ruling Request or the Tax
Opinion.
"EnPro" shall have the meaning ascribed thereto in the preamble.
"EnPro Common Stock" shall mean the common stock, par value $0.01 per
share, of EnPro.
"EnPro Tax Act" shall have the meaning set forth in Section 3.02(a).
"EnPro Tax Group" shall mean (i) EnPro, (ii) any corporation which,
immediately following the Distribution, is a member of the affiliated group
within the meaning of Section 1504(a)(1) of the Code, but without regard to
Section 1504(b)(3) of the Code, of which EnPro is the common parent and (iii)
any other corporate or noncorporate legal entity in which, immediately following
the Distribution, EnPro directly or indirectly owns an interest.
"Foreign Income Tax" shall mean any Income Tax other than a U.S. federal,
state or local Income Tax.
"Foreign Income Tax Return" shall mean any Income Tax Return which is not a
U.S. federal, state or local Income Tax Return.
2
"Xxxxxxxx" shall have the meaning ascribed thereto in the preamble.
"Xxxxxxxx Common Stock" shall mean the common stock, par value $5.00 per
share, of Xxxxxxxx.
"Xxxxxxxx Tax Group" shall mean (i) Xxxxxxxx, (ii) any corporation which,
immediately following the Distribution, is a member of the affiliated group
within the meaning of Section 1504(a)(1) of the Code, but without regard to
Section 1504(b)(3) of the Code, of which Xxxxxxxx is the common parent, (iii)
any other corporate or noncorporate legal entity in which, immediately following
the Distribution, Xxxxxxxx directly or indirectly owns an interest and (iv) any
other corporate or noncorporate legal entity (other than a member of the EnPro
Tax Group) in which, at any time prior to the Distribution, Xxxxxxxx directly or
indirectly owned an interest, but only with respect to the period during which
Xxxxxxxx so owned an interest.
"GPEC" shall mean Xxxxxxxx Pump and Engine Control Systems, Inc., a
Delaware corporation.
"Income Tax" shall mean (a) any Tax based upon, measured by, or calculated
with respect to (i) net income or profits (including, but not limited to, any
capital gains Tax, minimum Tax or any Tax on items of Tax preference, but not
including sales, use, real or personal property, gross or net receipts, transfer
or similar Taxes) or (ii) multiple bases (including, but not limited to,
corporate franchise, doing business or occupation Taxes) if one or more of the
bases which such Tax may be based upon, measured by, or calculated with respect
to is described in (i) above, or (b) any U.S. state or local franchise Tax,
including in the case of each of (a) and (b) any related interest and any
penalties, additions to such Tax or additional amounts imposed with respect
thereto by any Tax Authority.
"Income Tax Benefit" shall mean for any taxable period the excess of (i)
the hypothetical Income Tax liability of the taxpayer for the taxable period
calculated as if the Timing Difference or Reverse Timing Difference, as the case
may be, had not occurred but with all other facts unchanged, over (ii) the
actual Income Tax liability of the taxpayer for the taxable period, calculated
taking into account the Timing Difference or Reverse Timing Difference, as the
case may be (treating an Income Tax refund or credit as a negative Income Tax
liability for purposes of such calculation).
"Income Tax Detriment" shall mean for any taxable period the excess of (i)
the actual Income Tax liability of the taxpayer for the taxable period,
calculated taking into account the Timing Difference or Reverse Timing
Difference, as the case may be, over (ii) the hypothetical Income Tax liability
of the taxpayer for the taxable period, calculated as if the Timing Difference
or Reverse Timing Difference, as the case may be, had not occurred but with all
other facts unchanged (treating an Income Tax refund or credit as a negative
Income Tax liability for purposes of such calculation).
"Income Tax Return" shall mean any Tax Return that relates to Income Taxes.
"Indemnitee" shall have the meaning set forth in Section 3.03.
3
"Indemnitor" shall have the meaning set forth in Section 3.03.
"Indemnity Issue" shall have the meaning set forth in Section 3.03.
"Intragroup Transaction" shall mean any transfer of intellectual property
between members of the Xxxxxxxx Tax Group or members of the EnPro Tax Group or
between a member of the Xxxxxxxx Tax Group and a member of the EnPro Tax Group
which occurs on or before the Distribution Date.
"IRS" shall mean the Internal Revenue Service.
"Non-Income Tax" shall mean any Tax which is not an Income Tax.
"Non-Income Tax Return" shall mean any Tax Return that relates to
Non-Income Taxes.
"Person" shall have the meaning ascribed thereto in the Distribution
Agreement.
"Post-Distribution Tax Act" shall have the meaning set forth in Section
3.01(a).
"Post-Distribution Taxable Period" shall mean a taxable period beginning
after the Distribution Date.
"Post-Tax Indemnification Period" shall mean any Post-Distribution Taxable
Period and that portion of any Straddle Period that begins on the day after the
Distribution Date.
"Pre-Distribution Taxable Period" shall mean a taxable period ending on or
before the Distribution Date.
"Responsible Party" shall have the meaning set forth in Section 3.05.
"Reverse Timing Difference" shall mean an increase in income, gain or
recapture, or a decrease in deduction, loss or credit, as calculated for Income
Tax purposes, of the taxpayer for any Tax Indemnification Period coupled with an
increase in deduction, loss or credit, or a decrease in income, gain or
recapture, of the taxpayer for any Post-Tax Indemnification Period.
"Ruling" shall mean the private letter ruling, including any amendment or
supplement thereto, issued by the IRS in response to the Ruling Request.
"Ruling Request" shall mean the private letter ruling request dated July
25, 2001, filed by Xxxxxxxx with the IRS (as modified or supplemented by any
materials subsequently submitted to the IRS), seeking a ruling under Treasury
Regulation Section 1.355-6(d)(5)(ii).
"Straddle Period" shall mean a taxable period that includes but does not
end on the Distribution Date.
4
"Tax" and "Taxes" shall mean all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
federal, state, municipal, governmental, territorial, local, foreign or other
body, and, without limiting the generality of the foregoing, shall include net
income, gross income, gross receipts, sales, use, value added, ad valorem,
transfer, recording, franchise, profits, license, lease, service, service use,
payroll, wage, withholding, employment, unemployment insurance, workers
compensation, social security, excise, severance, stamp, business license,
business organization, occupation, premium, property, environmental, windfall
profits, customs, duties, alternative minimum, estimated or other taxes, fees,
premiums, assessments or charges of any kind whatever imposed or collected by
any governmental entity or political subdivision thereof, together with any
related interest and any penalties, additions to such Tax or additional amounts
imposed with respect thereto by any Tax Authority.
"Tax Authority" shall mean, with respect to any Tax, any governmental
entity, quasi-governmental body or political subdivision thereof that imposes
such Tax and the agency (if any) charged with the determination or collection of
such Tax for such entity, body or subdivision.
"Tax Group" shall mean the Xxxxxxxx Tax Group or the EnPro Tax Group, as
the case may be.
"Tax Indemnification Period" shall mean any Pre-Distribution Taxable Period
and that portion of any Straddle Period that ends on the Distribution Date.
"Tax Opinion" shall mean the opinions of Kronish Xxxx Xxxxxx & Xxxxxxx LLP
rendered in connection with the Distribution and certain related transactions.
"Tax Return" shall mean any return, filing, questionnaire, information
return, election or other document required or permitted to be filed, including
requests for extensions of time, filings made with respect to estimated tax
payments, claims for refund and amended returns that may be filed, for any
period with any Tax Authority (whether domestic or foreign) in connection with
any Tax (whether or not a payment is required to be made with respect to such
filing).
"Timing Difference" shall mean an increase in income, gain or recapture, or
a decrease in deduction, loss or credit, as calculated for Income Tax purposes,
of the taxpayer for any Post-Tax Indemnification Period coupled with an increase
in deduction, loss or credit, or a decrease in income, gain or recapture, of the
taxpayer for any Tax Indemnification Period.
"Transaction Agreements" shall have the meaning ascribed thereto in
Schedule 1.01 to this Agreement.
Any capitalized term not otherwise defined in this Agreement shall have the
meaning ascribed to it in the Distribution Agreement.
5
SECTION 1.02 Schedules, etc. References to a "Schedule" are, unless
otherwise specified, to one of the Schedules attached to this Agreement;
references to "Section" or "Article" are, unless otherwise specified, to one of
the Sections or Articles of this Agreement; and references to this Agreement
include the Schedules.
ARTICLE 2
FILING OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS
SECTION 2.01 Preparation of Tax Returns.
(a) UNITED STATES FEDERAL INCOME TAX RETURNS. Xxxxxxxx shall prepare and
timely file or cause to be prepared and timely filed all U.S. federal Income Tax
Returns (including amendments thereto) which include a member of the Xxxxxxxx
Tax Group and are required to be filed for any Pre-Distribution Taxable Period
or Straddle Period. EnPro hereby irrevocably designates, and agrees to cause
each of its affiliates to so designate, Xxxxxxxx as its agent to take any and
all actions necessary or incidental to the preparation and filing of such U.S.
federal Income Tax Returns.
(b) UNITED STATES STATE AND LOCAL INCOME TAX RETURNS. (i) Xxxxxxxx shall
prepare and timely file or cause to be prepared and timely filed all U.S. state
and local Income Tax Returns (including amendments thereto) which (A) are
required to be filed for any Pre-Distribution Taxable Period and include a
member of the Xxxxxxxx Tax Group or a member of the EnPro Tax Group or (B) are
required to be filed for any Straddle Period and (I) relate to a member or
members of the Xxxxxxxx Tax Group or their respective businesses, assets or
activities, (II) relate to members of both the Xxxxxxxx Tax Group and the EnPro
Tax Group or their respective businesses, assets or activities but include any
member of the EnPro Tax Group only for the period of time up to and including
the Distribution Date or (III) relate to a member of the EnPro Tax Group for a
period in which such member conducts or has conducted both an EnPro business and
a non-EnPro business. EnPro hereby irrevocably designates, and agrees to cause
each of its affiliates to so designate, Xxxxxxxx as its agent to take any and
all actions necessary or incidental to the preparation and filing of such U.S.
state and local Income Tax Returns.
(ii) EnPro shall prepare and timely file or cause to be prepared and timely
filed all U.S. state and local Income Tax Returns (including amendments thereto)
which are required to be filed for any Straddle Period, relate to a member or
members of the EnPro Tax Group or their respective businesses, assets or
activities and are not the responsibility of Xxxxxxxx.
(c) FOREIGN INCOME TAX RETURNS. (i) EnPro shall prepare and timely file or
cause to be prepared and timely filed all Foreign Income Tax Returns which are
required to be filed for any Straddle Period and relate to a member or members
of the EnPro Tax Group. Xxxxxxxx hereby irrevocably designates, and agrees to
cause each of its affiliates to so designate, EnPro as its agent to take any and
all actions necessary or incidental to the preparation and filing of such
Foreign Income Tax Returns.
6
(ii) Xxxxxxxx shall prepare and timely file or cause to be prepared and
timely filed all Foreign Income Tax Returns (including amendments thereto) which
(A) are required to be filed for any Pre-Distribution Taxable Period and include
a member of the Xxxxxxxx Tax Group or the EnPro Tax Group or (B) are required to
be filed for any Straddle Period, include a member of the Xxxxxxxx Tax Group and
are not the responsibility of EnPro. EnPro hereby irrevocably designates, and
agrees to cause each of its affiliates to so designate, Xxxxxxxx as its agent to
take any and all actions necessary or incidental to the preparation and filing
of such Foreign Income Tax Returns.
(d) NON-INCOME TAX RETURNS. (i) All Non-Income Tax Returns (including
amendments thereto) for all Pre-Distribution Taxable Periods and Straddle
Periods which relate to a member of members of the Xxxxxxxx Tax Group or their
respective businesses, assets or activities shall be the responsibility of the
Xxxxxxxx Tax Group. EnPro hereby irrevocably designates, and agrees to cause
each of its affiliates to so designate, Xxxxxxxx as its agent to take any and
all actions necessary or incidental to the preparation and filing of such
Non-Income Tax Returns.
(ii) All Non-Income Tax Returns (including amendments thereto) for all Pre-
Distribution Taxable Periods and Straddle Periods which relate to a member or
members of the EnPro Tax Group or their respective businesses, assets or
activities and are not the responsibility of the Xxxxxxxx Tax Group shall be the
responsibility of the EnPro Tax Group.
(e) POST-DISTRIBUTION TAX RETURNS. All Tax Returns (including amendments
thereto) for all Post-Distribution Taxable Periods shall be the responsibility
of the Xxxxxxxx Tax Group if such Tax Returns relate to a member or members of
the Xxxxxxxx Tax Group or their respective businesses, assets or activities and
shall be the responsibility of the EnPro Tax Group if such Tax Returns relate to
a member or members of the EnPro Tax Group or their respective businesses,
assets or activities.
(f) CONSISTENT WITH PAST PRACTICE; REVIEW BY NON-RESPONSIBLE PARTY. Unless
Xxxxxxxx and EnPro agree otherwise in writing, all Tax Returns (including
amendments thereto) described in this Section 2.01 filed after the date of this
Agreement for Pre-Distribution Taxable Periods or Straddle Periods shall, in the
absence of a change in controlling law or circumstances, be prepared on a basis
consistent with the elections, accounting methods, conventions and principles of
taxation used for the most recent taxable periods for which Tax Returns
involving similar matters have been filed. Upon the request of the party not
responsible under this Section 2.01 for preparation of a particular Tax Return
for any Pre-Distribution Taxable Period or Straddle Period, the responsible
party shall make available a draft of such Tax Return (or relevant portions
thereof) for review and comment by such non-responsible party. Subject to the
provisions of this Agreement, all decisions relating to the preparation of Tax
Returns shall be made in the sole discretion of the party responsible under this
Agreement for such preparation.
(g) RESPONSIBILITY FOR FILING. Notwithstanding that, pursuant to this
Agreement, Xxxxxxxx or EnPro may be responsible for filing a particular Tax
Return, Xxxxxxxx
7
and EnPro have agreed that the actual preparation and filing of certain Tax
Returns will be done by the non-responsible party. Schedule 2.01(g) attached
hereto sets forth a schedule specifying such Tax Returns. Xxxxxxxx and EnPro may
agree from time to time to additions to or deletions from Schedule 2.01(g).
SECTION 2.02 Payment of Taxes.
(a) UNITED STATES FEDERAL INCOME TAXES. Except as otherwise provided in
this Agreement, Xxxxxxxx shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the U.S. federal Income Tax liability for (A) all
Pre-Distribution Taxable Periods of all members of the Xxxxxxxx Tax Group and
the EnPro Tax Group and (B) the Straddle Period, the Tax Return for which
includes members of the Xxxxxxxx Tax Group.
(b) UNITED STATES STATE AND LOCAL INCOME TAXES. Except as otherwise
provided in this Agreement:
(i) Xxxxxxxx shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the U.S. state and local Income Tax liability (A)
for all Pre-Distribution Taxable Periods of all members of the Xxxxxxxx Tax
Group and the EnPro Tax Group and (B) for all Straddle Periods which relate
to (I) a member or members of the Xxxxxxxx Tax Group or their respective
businesses, assets or activities, (II) members of both the Xxxxxxxx Tax
Group and the EnPro Tax Group or their respective businesses, assets or
activities, or (III) a member of the EnPro Tax Group for a period in which
such member conducts or has conducted both an EnPro business and a
non-EnPro business; provided, however, that EnPro, on behalf of the EnPro
Tax Group, hereby agrees to pay directly to or at the direction of
Xxxxxxxx, at least two days prior to the date payment (including estimated
payment) thereof is due, the portion of such U.S. state and local Income
Taxes which relates to a member or members of the EnPro Tax Group or their
respective businesses, assets or activities for the portion of any Straddle
Period which begins on the day after the Distribution Date; and
(ii) EnPro shall pay or cause to be paid, on a timely basis, all Taxes
due with respect to the U.S. state and local Income Tax liability for all
Straddle Periods which relate to a member or members of the EnPro Tax Group
or their respective businesses, assets or activities and are not the
responsibility of Xxxxxxxx; provided, however, that Xxxxxxxx hereby agrees
to pay directly to or at the direction of EnPro, at least two days prior to
the date payment (including estimated payment) thereof is due, the portion
of such U.S. state and local Income Taxes imposed in connection with the
transactions contemplated by the Transaction Agreements or any other
agreement entered into for the purpose of implementing the Distribution.
(c) FOREIGN INCOME TAXES. Except as otherwise provided in this Agreement:
(i) EnPro shall pay or cause to be paid, on a timely basis, all
Foreign
8
Income Taxes due with respect to the Foreign Income Tax liability of all
members of the EnPro Tax Group for all Pre-Distribution Taxable Periods and
all Straddle Periods; provided, however, that Xxxxxxxx hereby agrees to pay
directly to or at the direction of EnPro, at least two day prior to the
date payment (including estimated payment) thereof is due, the portion of
such Foreign Income Taxes imposed in connection with the transactions
contemplated by the Transaction Agreements or any other agreement entered
into for the purpose of implementing the Distribution.
(ii) Xxxxxxxx shall pay or cause to be paid, on a timely basis, all
Foreign Income Taxes due with respect to the Foreign Income Tax liability
of all members of the Xxxxxxxx Tax Group for all Pre-Distribution Taxable
Periods and Straddle Periods.
(d) NON-INCOME TAXES. Except as otherwise provided in this Agreement:
(i) Xxxxxxxx shall pay or cause to be paid, on a timely basis, all
Taxes due with respect to the Non-Income Tax liability for all
Pre-Distribution Taxable Periods and Straddle Periods which relate to a
member or members of the Xxxxxxxx Tax Group or their respective businesses,
assets or activities;
(ii) EnPro shall pay or cause to be paid, on a timely basis, all Taxes
due with respect to the Non-Income Tax liability for all Pre-Distribution
Taxable Periods and Straddle Periods which relate to a member of the EnPro
Tax Group for a period in which such member conducts or has conducted both
an EnPro business and a non-EnPro business; provided, however, that
Xxxxxxxx, on behalf of the Xxxxxxxx Tax Group, hereby agrees to pay
directly to or at the direction of EnPro, at least two days prior to the
date payment (including estimated payment) thereof is due, the portion of
such Non-Income Taxes which (A) relates to a member or members of the
Xxxxxxxx Tax Group or their respective businesses, assets or activities for
such Pre-Distribution Taxable Periods and Straddle Periods or (B) results
from any Distribution Transaction or Intragroup Transaction; and
(iii) EnPro shall pay or cause to be paid, on a timely basis, all Non-
Income Taxes for all Pre-Distribution Taxable Periods and Straddle Periods
which relate to the EnPro Tax Group's businesses, assets or activities and
are neither the responsibility of Xxxxxxxx nor provided for in Section
2.02(d)(ii) above; provided, however, that Xxxxxxxx hereby agrees to pay
directly to or at the direction of EnPro, at least two day prior to the
date payment (including estimated payment) thereof is due, the portion of
such Non-Income Taxes imposed in connection with any Intragroup Transaction
or the transactions contemplated by the Transaction Agreements or any other
agreement entered into for the purpose of implementing the Distribution.
(e) POST-DISTRIBUTION TAXES. Except as otherwise provided in this
Agreement, all Taxes for all Post-Distribution Taxable Periods shall be paid or
caused to be paid by the party responsible under this Agreement for filing the
Tax Return pursuant to which such
9
Taxes are due or, if no Tax Return is required to be filed, by the party liable
for such Taxes under applicable law.
(f) CREDIT FOR PRIOR TAX PAYMENTS. To the extent any member of a Tax Group
has made a payment of Taxes (including estimated Taxes) on or before the
Distribution Date, the party liable for paying such Taxes under this Agreement
shall be entitled to treat the payment as having been paid or caused to be paid
by such party, and such party shall not be required to reimburse the party which
actually paid such Taxes.
(g) RESPONSIBILITY FOR PAYMENT; NOTICE OF PAYMENT DUE. Notwithstanding
that, pursuant to this Agreement, Xxxxxxxx or EnPro may be responsible for
paying a particular Tax liability, Xxxxxxxx and EnPro may agree that the actual
payment to a Taxing Authority of certain Tax liabilities will be made by the
non-responsible party. Xxxxxxxx and EnPro may agree to prepare a schedule
setting forth such Tax liabilities and may agree from time to time to additions
to or deletions from such schedule. In each case where Xxxxxxxx or EnPro, as the
case may be, is required to make a payment of Taxes to or at the direction of
the other party, EnPro or Xxxxxxxx, as the case may be, shall notify the other
party as to the amount of Taxes due from the other party at least five days
prior to the date payment (including estimated payment) is due.
SECTION 2.03 Tax Refunds and Carrybacks.
(a) RETENTION AND PAYMENT OF TAX REFUNDS. Except as otherwise provided in
this Agreement, Xxxxxxxx shall be entitled to retain, or to receive within ten
days after Actually Realized by the EnPro Tax Group, the portion of all refunds
or credits of Taxes for which the Xxxxxxxx Tax Group is liable pursuant to
Section 2.02 or Section 3.01(a) or which the Xxxxxxxx Tax Group is treated as
having paid or caused to be paid pursuant to Section 2.02(f), and EnPro shall be
entitled to retain, or to receive within ten days after Actually Realized by the
Xxxxxxxx Tax Group, the portion of all refunds or credits of Taxes for which the
EnPro Tax Group is liable pursuant to Section 2.02 or Section 3.01(b) (including
all Non-Income Taxes for which EnPro would have been liable pursuant to Section
2.02(d) had such Non-Income Taxes been due and not paid) or which the EnPro Tax
Group is treated as having paid or caused to be paid pursuant to Section
2.02(f). The amount of any refund or credit of Taxes which Xxxxxxxx or EnPro is
entitled to retain or receive pursuant to the foregoing sentence shall be
reduced to take account of any Taxes incurred by the EnPro Tax Group, in the
case of a refund or credit to which Xxxxxxxx is entitled, or the Xxxxxxxx Tax
Group, in the case of a refund or credit to which EnPro is entitled, upon the
receipt of such refund or credit.
(b) CARRYBACKS. EnPro shall be entitled, where permitted by law, to (i)
elect to carry back to a Pre-Distribution Taxable Period or Periods any net
operating loss, net capital loss, charitable contribution or other Tax item
attributable to the EnPro Tax Group arising after the Distribution Date or (ii)
elect to carry forward any such Tax item. Except as otherwise provided in this
Agreement, notwithstanding the provisions of Section 2.03(a), any refund or
credit of Taxes resulting from the carryback to a Tax Indemnification Period of
any Tax item attributable to the Xxxxxxxx Tax Group or the EnPro Tax Group
arising in a Post-Tax Indemnification Period shall be for the account and
benefit of the Xxxxxxxx Tax Group;
10
provided, however, that (i) if the Xxxxxxxx Tax Group Actually Realizes a Tax
benefit that would not have been realized but for the carryback of an EnPro Tax
item (whether for the carryback year or any other year), Xxxxxxxx shall pay to
EnPro, within ten days after such Tax benefit has been Actually Realized, an
amount equal to 50% of such Tax benefit and (ii) if a Tax audit or amendment of
a Tax Return results in an increase or decrease in the amount of any Tax benefit
Actually Realized by the Xxxxxxxx Tax Group on account of the carryback of an
EnPro Tax item, Xxxxxxxx or EnPro, as the case may be, shall pay to the other
party, within ten days after such an increase has been Actually Realized, or
within ten days after Xxxxxxxx has notified EnPro that such a decrease has been
Actually Realized, an amount equal to 50% of such increase or decrease, as the
case may be.
(c) REFUND CLAIMS. Xxxxxxxx shall be permitted to file at Xxxxxxxx'x sole
expense, and EnPro shall reasonably cooperate with Xxxxxxxx in connection with,
any claims for refund of Taxes to which Xxxxxxxx is or would be entitled
pursuant to this Section 2.03 or any other provision of this Agreement,
including those described on Schedule 2.03(c). Xxxxxxxx shall reimburse EnPro
for any reasonable out-of-pocket costs and expenses incurred by any member of
the EnPro Tax Group in connection with such cooperation. EnPro shall be
permitted to file at EnPro's sole expense, and Xxxxxxxx shall reasonably
cooperate with EnPro in connection with, any claims for refunds of Taxes to
which EnPro is or would be entitled pursuant to this Section 2.03 or any other
provision of this Agreement. EnPro shall reimburse Xxxxxxxx for any reasonable
out-of-pocket costs and expenses incurred by any member of the Xxxxxxxx Tax
Group in connection with such cooperation.
SECTION 2.04 Allocation of Straddle Period Taxes. In the case of any
Straddle Period:
(a) PERIODIC TAXES. (i) The periodic Taxes of a member of the Xxxxxxxx Tax
Group or the EnPro Tax Group or its business, assets or activities that are not
based on income or receipts (e.g., property Taxes) for the portion of any
Straddle Period ending on the Distribution Date shall be computed based on the
ratio of the number of days in such portion of the Straddle Period and the
number of days in the entire taxable period; and (ii) the periodic Taxes of a
member of the Xxxxxxxx Tax Group or the EnPro Tax Group or its business, assets
or activities that are not based on income or receipts for the portion of any
Straddle Period beginning on the day after the Distribution Date shall be
computed based on the ratio of the number of days in such portion of the
Straddle Period and the number of days in the entire taxable period.
(b) NON-PERIODIC TAXES. (i) The Taxes of a member of the Xxxxxxxx Tax Group
or the EnPro Tax Group or its business, assets or activities (other than Taxes
described in Section 2.04(a) above) for the portion of any Straddle Period
ending on the Distribution Date shall be computed on a "closing-of-the-books"
basis as if such taxable period ended as of the close of business on the
Distribution Date, and, in the case of any Taxes of a member of the Xxxxxxxx Tax
Group or the EnPro Tax Group or its business, assets or activities with respect
to any equity interest in any partnership or other "flowthrough" entity, as if
the taxable period of such partnership or other "flowthrough" entity ended on
the Distribution Date; and (ii) the Taxes of a member of the Xxxxxxxx Tax Group
or the EnPro Tax Group or its business, assets or activities (other than Taxes
described in Section 2.04(a) above) for the portion of any Straddle
11
Period beginning after the Distribution Date shall be computed on a
"closing-of-the-books" basis as if such taxable period began on the day after
the Distribution Date, and, in the case of any Taxes of a member of the Xxxxxxxx
Tax Group or the EnPro Tax Group or its business, assets or activities with
respect to any equity interest in any partnership or other "flowthrough" entity,
as if the taxable period of such partnership or other "flowthrough" entity began
as of the day after the Distribution Date.
(c) The Taxes of the Xxxxxxxx Tax Group and the EnPro Tax Group with
respect to any Straddle Period for which the Tax Return includes a member, or
the respective business, assets, or activities of a member, of each of the
Xxxxxxxx Tax Group and the EnPro Tax Group shall be allocated between the
Xxxxxxxx Tax Group and the EnPro Tax Group in a manner analogous to that set
forth in Treasury Regulation Section 1.1552-1(a)(2).
ARTICLE 3
TAX INDEMNIFICATION; TAX CONTESTS
SECTION 3.01 Indemnification.
(a) XXXXXXXX INDEMNIFICATION. Subject to Section 3.01(b) and Section 3.02,
Xxxxxxxx shall indemnify, defend and hold harmless each member of the EnPro Tax
Group and each of their respective shareowners, directors, officers, employees
and agents and each of the heirs, executors, successors and assigns of any of
the foregoing from and against:
(i) all Taxes of the Xxxxxxxx Tax Group;
(ii) all Taxes of the EnPro Tax Group for (A) all Pre-Distribution
Taxable Periods and (B) the portion of all Straddle Periods prior to and
including the Distribution Date, which Taxes for such portion shall be
computed in the manner specified in Section 2.04;
(iii) all liability as a result of Treasury Regulation Section
1.1502-6(a) (which imposes several liability on members of an affiliated
group that files a U.S. federal consolidated Income Tax return), or any
comparable U.S. state or local provision, for Income Taxes of any person
which is or has ever been affiliated with any member of the Xxxxxxxx Tax
Group or with which any member of the Xxxxxxxx Tax Group joins or has ever
joined (or is or has ever been required to join) in filing any
consolidated, combined or unitary Income Tax Return for any
Pre-Distribution Taxable Period or Straddle Period, but only for the period
during which such person is or was affiliated with a member of the Xxxxxxxx
Tax Group or joins or joined (or is or was required to join) with a member
of the Xxxxxxxx Tax Group in filing any consolidated, combined or unitary
Income Tax Return;
(iv) all Taxes for any Tax period (whether beginning before, on or
after the Distribution Date) that would not have been payable but for the
breach by any
12
member of the Xxxxxxxx Tax Group of any representation, warranty, covenant
or obligation under this Agreement;
(v) all liability for a breach by any member of the Xxxxxxxx Tax Group
of any representation, warranty, covenant or obligation under this
Agreement;
(vi) all Income Taxes and Non-Income Taxes imposed in connection with
the transactions contemplated by the Transaction Agreements or any other
agreement entered into for the purpose of implementing the Distribution;
(vii) all Taxes for which Xxxxxxxx is liable pursuant to Section 3.02;
and
(viii) all liability for any reasonable legal, accounting, appraisal,
consulting or similar fees and expenses relating to the foregoing.
Notwithstanding the foregoing and subject to Section 3.01(b) and Section 3.02,
Xxxxxxxx shall not indemnify, defend or hold harmless any member of the EnPro
Tax Group from any liability for Taxes attributable to any action (including the
making of an election under Section 338 of the Code) taken by any member of the
EnPro Tax Group after the Distribution (other than any such action expressly
required or otherwise expressly contemplated by the Transaction Agreements or
any other agreement entered into for the purpose of implementing the
Distribution or taken in the ordinary course of business) (hereinafter a
"POST-DISTRIBUTION TAX ACT").
(b) ENPRO INDEMNIFICATION. EnPro shall be liable for, and shall indemnify,
defend and hold harmless each member of the Xxxxxxxx Tax Group and each of their
respective shareowners, directors, officers, employees and agents and each of
the heirs, executors, successors and assigns of any of the foregoing from and
against:
(i) all Taxes of any member of the EnPro Tax Group (other than Taxes
for which Xxxxxxxx provides indemnification pursuant to Section 3.01(a));
(ii) all Taxes for any Tax period (whether beginning before, on or
after the Distribution Date) that would not have been payable but for the
breach by any member of the EnPro Tax Group of any representation,
warranty, covenant or obligation under this Agreement;
(iii) all liability for a breach by any member of the EnPro Tax Group
of any representation, warranty, covenant or obligation under this
Agreement;
(iv) all Taxes for which EnPro is liable pursuant to Section 3.02;
(v) all Taxes attributable to a Post-Distribution Tax Act; and
(vi) all liability for any reasonable legal, accounting, appraisal,
consulting or similar fees and expenses relating to the foregoing.
13
SECTION 3.02 EnPro Tax Acts.
(a) Notwithstanding anything to the contrary in Section 3.01, EnPro agrees
to indemnify, defend and hold harmless each member of the Xxxxxxxx Tax Group and
each of their respective shareowners, directors, officers, employees and agents
and each of the heirs, executors, successors and assigns of any of the foregoing
from and against any Taxes resulting from any action or failure to act by any
member of the EnPro Tax Group which causes (i) the Distribution to fail to
qualify as tax-free to Xxxxxxxx under Section 361(c) of the Code or (ii) any
pre-Distribution transaction undertaken in connection with the Distribution to
become taxable (hereinafter an "ENPRO TAX ACT").
(b) EnPro shall, and shall cause each member of the EnPro Tax Group to,
comply with and take no action inconsistent with the representation letter
delivered by EnPro in connection with the Tax Opinion, unless, pursuant to a
favorable ruling letter obtained from the IRS which is satisfactory to Xxxxxxxx
or the advice of Kronish Xxxx Xxxxxx & Xxxxxxx LLP or other nationally
recognized tax counsel to Xxxxxxxx, which advice shall be satisfactory to
Xxxxxxxx, such act or omission would not adversely affect the U.S. federal
Income Tax consequences of the Distribution to Xxxxxxxx or the shareowners of
Xxxxxxxx. Notwithstanding Sections 3.01(b)(iii), 3.01(b)(iv) and 3.01(b)(vi),
the parties intend that the sole remedy for breach of the covenants contained in
this Section 3.02(b) shall be as set forth in Section 3.02(a).
(c) Notwithstanding the foregoing, an EnPro Tax Act shall not include any
transaction or action specifically disclosed or specifically described in any of
the Transaction Agreements or any action taken on or prior to the Distribution
Date. An EnPro Tax Act shall not include any action on the part of any member of
the Xxxxxxxx Tax Group. Xxxxxxxx agrees to indemnify and hold each member of the
EnPro Tax Group harmless from and against any Taxes resulting from the failure
of the Distribution to qualify as tax-free to Xxxxxxxx under Section 361(c) of
the Code, except where such failure is attributable to an EnPro Tax Act.
SECTION 3.03 Notice of Indemnity. Whenever a party hereto (hereinafter an
"INDEMNITEE") becomes aware of the existence of an issue raised by any Tax
Authority which could reasonably be expected to result in a determination that
would increase the liability for any Tax of the other party hereto or any member
of its Tax Group for any Tax period or require a payment hereunder by the other
party (hereinafter an "INDEMNITEE ISSUE"), the Indemnitee shall in good faith
promptly give notice to such other party (hereinafter the "INDEMNITOR") of such
Indemnity Issue. The failure of the Indemnitee to give such notice shall not
relieve the Indemnitor of its obligations under this Agreement, except to the
extent such Indemnitor or a member of its Tax Group is actually prejudiced by
such failure to give notice.
SECTION 3.04 Payments.
(a) TIMING ADJUSTMENTS. (i) Timing Differences. If a Tax audit proceeding
or an amendment of a Tax Return results in a Timing Difference, and such Timing
Difference results in an Income Tax Benefit to the Xxxxxxxx Tax Group, then in
each Post-Tax Indemnification Period in which the EnPro Tax Group Actually
Realizes an Income Tax Detriment, Xxxxxxxx shall pay to EnPro an amount equal to
such Income Tax Detriment;
14
provided, however, that the aggregate payments which Xxxxxxxx shall be required
to make under this Section 3.04(a)(i) with respect to any Timing Difference
shall not exceed the aggregate amount of the Income Tax Benefits realized by the
Xxxxxxxx Tax Group for all taxable periods and the EnPro Tax Group for all Tax
Indemnification Periods as a result of such Timing Difference. Xxxxxxxx shall
make all such payments within ten days after EnPro notifies Xxxxxxxx that the
relevant Income Tax Detriment has been Actually Realized.
(ii) Reverse Timing Differences. If a Tax audit proceeding or an amendment
of a Tax Return results in a Reverse Timing Difference, and, such Reverse Timing
Difference results in an Income Tax Detriment to the Xxxxxxxx Tax Group, then in
each Post-Tax Indemnification Period in which the EnPro Tax Group Actually
Realizes an Income Tax Benefit, EnPro shall pay to Xxxxxxxx within ten days
after EnPro has Actually Realized such Income Tax Benefit an amount equal to
such Income Tax Benefit; provided, however, that the aggregate payments which
EnPro shall be required to make under this Section 3.04(a)(ii) with respect to
any Reverse Timing Difference shall not exceed the aggregate amount of the
Income Tax Detriments suffered by the EnPro Tax Group and the Xxxxxxxx Tax Group
for all Tax Indemnification Periods as a result of such Reverse Timing
Difference.
(b) TIME FOR PAYMENT. Except as otherwise provided in this Section 3.04(b),
any indemnity payment required to be made pursuant to this Agreement shall be
paid within thirty days after the Indemnitee makes written demand upon the
Indemnitor, provided that in no event shall such payment be required to be made
earlier than five business days prior to the date on which the relevant Taxes
(including estimated Taxes) are required to be paid (or would be required to be
paid if no such Taxes are due) to the relevant Tax Authority. Notwithstanding
any other provision in this Agreement, to simplify the administration of this
Agreement, the payment of any amount less than $100,000 required to be made
pursuant to this Agreement by one party hereto to the other party hereto need
not be made to such other party prior to thirty days following the later of (i)
the close of the calendar quarter during which such payment obligation arose and
(ii) the day during such calendar quarter when the aggregate amount of all such
less than $100,000 payment obligations arising during such calendar quarter
exceeds $500,000. Unless otherwise specified by the recipient for items
exceeding $250,000, any such payment may be made on a net Tax basis (i.e.,
reduced to take account of any net Tax benefit to be realized by the recipient
(computed at the effective Tax rate set forth in Section 3.04(c)) to the extent
such recipient is entitled to a corresponding deduction.
(c) PAYMENTS NET OF TAXES AND TAX BENEFITS. The amount of any payment under
this Agreement shall be (i) reduced to take into account any net Tax benefit
realized by the recipient's Tax Group arising from the incurrence or payment by
such Tax Group of any amount in respect of which such payment is made and (ii)
increased to take into account any net Tax cost incurred by the Tax Group as a
result of the receipt or accrual of payments hereunder (grossed-up for such
increase), in each case determined by treating the recipient as recognizing all
other items of income, gain, loss, deduction or credit before recognizing any
item arising from the receipt or accrual of any payment hereunder. In
determining the amount of any such Tax benefit or Tax cost, the recipient's Tax
Group shall be deemed to be subject to (A) U.S. federal Income Taxes and Foreign
Income Taxes at the maximum statutory rate then in effect and (B) U.S. state and
local Income Taxes at an assumed rate of five percent (tax effected at such
15
maximum statutory U.S. federal Income Tax rate). Except as otherwise provided in
this Agreement or unless the parties otherwise agree to an alternative method
for determining the present value of any such anticipated Tax benefit or Tax
cost, any payment hereunder shall initially be made without regard to this
Section and shall be increased or reduced to reflect any such net Tax cost
(including gross-up) or net Tax benefit only after the recipient's Tax Group has
Actually Realized such Tax cost or Tax benefit.
(d) RIGHT TO OFFSET. Any party making a payment under this Agreement shall
have the right to reduce any such payment by any undisputed amounts owed to it
by the other party to this Agreement.
(e) CHARACTERIZATION OF PAYMENTS. This Agreement defines certain
obligations undertaken by Xxxxxxxx and Coltec, which will be a member of the
EnPro Tax Group, in connection with certain pre-Distribution transactions
between (i) Coltec and GPEC, which will be a member of the Xxxxxxxx Tax Group,
and (ii) Xxxxxxxx and EnPro. Notwithstanding that this Agreement provides for
payments relating to Taxes and refunds or credits of Taxes to be made by EnPro
to or at the direction of Xxxxxxxx, the actual payment obligation is an
obligation of Coltec to GPEC, and such payments relating to Taxes and refunds or
credits of Taxes shall be made by Coltec to or at the direction of GPEC. It is
the intention of the parties to this Agreement that payments made pursuant to
this Agreement be treated as relating back to the pre-Distribution transactions
between Coltec and GPEC and between Xxxxxxxx and EnPro as adjustments to capital
(i.e., capital contributions to GPEC or EnPro, as the case may be), and the
parties shall not take any position inconsistent with such intention before any
Tax Authority, except to the extent that a final determination (as defined in
Section 1313 of the Code) with respect to the recipient party causes any such
payment not to be so treated.
SECTION 3.05 Tax Contests. The Indemnitor and its representatives, at the
Indemnitor's expense, shall be entitled to participate (a) in all conferences,
meetings and proceedings with any Tax Authority, the subject matter of which is
or includes an Indemnity Issue, and (b) in all appearances before any court, the
subject matter of which is or includes an Indemnity Issue. The party which has
responsibility for filing the Tax Return under this Agreement (hereinafter the
"RESPONSIBLE PARTY") with respect to which there could be an increase in
liability for any Tax or with respect to which a payment could be required
hereunder shall have the right to decide as between the parties hereto how such
matter is to be dealt with and finally resolved with the appropriate Tax
Authority and shall control all audits and similar proceedings; provided,
however, that Xxxxxxxx shall be treated as the Responsible Party with respect to
any Tax Return filed by any member of the EnPro Tax Group for any
Pre-Distribution Taxable Period ending on or before the acquisition of Coltec by
Xxxxxxxx. If no Tax Return is or was required to be filed in respect of an
Indemnity Issue, the Indemnitor shall be treated as the Responsible Party with
respect thereto. The Responsible Party agrees to cooperate with the other party
in the settlement of any Indemnity Issue and to take such other party's
interests into account. Notwithstanding any other provision of this Agreement,
if Xxxxxxxx has materially satisfied its obligations under this Agreement and
EnPro fails to permit Xxxxxxxx to control any audit or proceeding regarding any
Indemnity Issue relating to (a) the qualification of the Distribution as
tax-free to Xxxxxxxx under Section 361(c) of the Code or (b) the qualification
of
16
any transaction undertaken pursuant to the Transaction Agreements or described
in the Ruling Request or the Tax Opinion as a transaction described in Section
355 of the Code, a "reorganization" within the meaning of Section 368(a)(1)(D)
of the Code, or an otherwise tax-free transaction, then Xxxxxxxx shall not be
liable for and shall not indemnify the EnPro Tax Group for any Tax deficiency
resulting from an adverse determination of such Indemnity Issue.
ARTICLE 4
INTEREST CHARGE FOR LATE PAYMENTS;
CURRENCY CALCULATIONS; EFFECTIVE
TIME OF TRANSACTIONS
SECTION 4.01 Interest Charge for Late Payments. Any amount due and owing by
one party to the other party pursuant to this Agreement that is not paid when
due shall bear interest from the due date thereof until paid at a rate equal to
the rate(s) of interest per annum announced from time to time by Citibank N.A.
(or its successor) as its U.S. prime rate, plus one percent.
SECTION 4.02 Currency Calculations. All currency calculations shall be
made in accordance with .
SECTION 4.03 Effective Time of Transactions. Xxxxxxxx and EnPro agree that
any transaction which, pursuant to the Distribution Agreement, is expressly
effective immediately after the Distribution Time shall be treated for federal
Income Tax purposes as occurring at the beginning of the day following the
Distribution Date.
ARTICLE 5
COOPERATION AND EXCHANGE OF INFORMATION
SECTION 5.01 Inconsistent Actions. Each party to this Agreement agrees (i)
to, and to cause each of the relevant members of its Tax Group to, report the
Distribution as a transaction described in Section 355 of the Code undertaken
pursuant to the plan relating to a "reorganization" described in Section
368(a)(1)(D) of the Code on all Tax Returns and other filings, (ii) to use its
best efforts to ensure that the Distribution receives such treatment for U.S.
federal Tax purposes and (iii) that, unless it has obtained the prior written
consent of the other party, it (and the members of its Tax Group) shall not take
any action inconsistent with, or fail to take any action required by, the
Transaction Agreements.
SECTION 5.02 Ruling Request and Tax Opinion. Each party hereto represents
that neither it nor any of the members of its Tax Group has taken, or has any
plan or intention to take, any action which is inconsistent with any factual
statements, representations or other similar conditions contained in the Ruling
Request, the Ruling or the Tax Opinion.
SECTION 5.03 Cooperation and Information Exchange. Each party hereto agrees
to provide, and to cause each member of its Tax Group to provide, such
cooperation and
17
information as the other party hereto shall request, on a timely basis, in
connection with the preparation or filing of any Tax Return or claim for Tax
refund not inconsistent with this Agreement or in conducting any Tax audit, Tax
dispute, or otherwise in respect of Taxes or to carry out the provisions of this
Agreement. To the extent necessary to carry out the purposes of this Agreement
and subject to the other provisions of this Agreement, such cooperation and
information shall include, without limitation, promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Tax Authority which relate to the EnPro Tax Group for the Tax
Indemnification Period and providing copies of all relevant Tax Returns for the
Tax Indemnification Period, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by Tax
Authorities, including, without limitation, foreign Tax Authorities, and records
concerning the ownership and Tax basis of property, which either party may
possess. Each party to this Agreement shall make, or shall cause its affiliates
to make, employees and facilities available on a mutually convenient basis to
provide an explanation of any documents or information provided hereunder.
SECTION 5.04 Tax Records.
(a) Xxxxxxxx and EnPro agree to (and to cause each member of their
respective Tax Groups to) (i) retain all Tax Returns, related schedules and
workpapers, and all material records and other documents relating thereto as
required under Section 6001 of the Code and the regulations promulgated
thereunder which exist on the date hereof or are created through the
Distribution Date, for a period of at least ten years following the Distribution
Date and (ii) allow the other party to this Agreement, at times and dates
reasonably acceptable to the retaining party, to inspect, review and make copies
of such records, as Xxxxxxxx and EnPro may reasonably deem necessary or
appropriate from time to time. In addition, after the expiration of such
ten-year period, such Tax Returns, related schedules and workpapers, and
material records shall not be destroyed or otherwise disposed of at any time,
unless the party proposing to destroy or otherwise dispose of such records shall
have provided no less than 30 days' prior written notice to the other party,
specifying in reasonable detail the records proposed to be destroyed or disposed
of. If a recipient of such notice requests in writing prior to the scheduled
date for such destruction or disposal that any of the records proposed to be
destroyed or disposed of be delivered to such requesting party, the party
proposing the destruction or disposal shall promptly arrange for the delivery of
such requested records at the expense of the party requesting such records.
(b) Notwithstanding anything in this Agreement to the contrary, if any
party fails to comply with the requirements of Section 5.04(a) hereof, the party
failing so to comply shall be liable for, and shall hold the other party
harmless from, any Taxes (including, without limitation, penalties for failure
to comply with the record retention requirements of the Code) and other costs
resulting from such party's failure to comply.
ARTICLE 6
DISPUTE RESOLUTION
SECTION 6.01 Initial Discussions. Any dispute arising under or relating to
18
this Agreement shall be first discussed by the parties hereto. Either party may
initiate such discussions by giving the other party written notice specifying in
detail the nature of the dispute. Within 15 days after delivery of the notice,
the party receiving the notice shall submit a written response, which shall
include a statement of such party's position, to the other party. Within ten
days after delivery of the response, the parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests for
information made by either party to the other party shall be honored.
SECTION 6.02 Mediation. If any dispute is not resolved by the parties
within 30 days (or such other period as may be agreed upon by the parties)
following the parties' first meeting relating to such dispute, the parties shall
attempt to resolve the dispute employing non-binding mediation under [THE
THEN-CURRENT CPR MEDIATION PROCEDURE]. If within 10 days (or any other period
agreed upon by the parties) after the commencement of such mediation the dispute
still has not been resolved, each of the parties may pursue any available legal
or equitable remedy.
SECTION 6.03 Consent to Jurisdiction. Any suit, action or other proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought only in a court of competent jurisdiction sitting in the State of New
York, and each of the parties hereby (a) agrees not to commence any such suit,
action or other proceeding except in such a court, (b) consents to the
jurisdiction of any such court (and of the appropriate appellate courts
therefrom) in such suit, action or other proceeding and (c) irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have the right to claim (i) to the laying of the venue of any such
suit, action or other proceeding in any such court or (ii) that any such suit,
action or other proceeding which is brought in any such court has been brought
in an inconvenient forum. Notwithstanding the foregoing, each party agrees that
a final judgment in any such suit, action or other proceeding shall be
conclusive and may be enforced by suit on the judgment in any jurisdiction or in
any other manner provided at law or in equity. Process in any such suit, action
or other proceeding may be served on either party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of any process on such party hand
delivered or sent by U.S. registered mail to such party's address set forth in
Section 7.01 shall be deemed effective service of process on such party.
ARTICLE 7
MISCELLANEOUS
SECTION 7.01 Notices. All notices, requests, consents and other
communications hereunder must be in writing and will be deemed to have been duly
given (a) when received if personally delivered or sent by facsimile, (b) one
business day after being sent by nationally recognized overnight delivery
service or (c) five business days after being sent by nationally registered or
certified mail, return receipt requested, postage prepaid, and in each case
addressed as follows (any party by written notice to the other party in the
manner prescribed by this section
19
may change the address or the persons to whom notices thereof shall be
directed):
(a) If to Xxxxxxxx:
Xxxxxxxx Corporation
Four Coliseum Centre
0000 X. Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Director, Tax
Telecopy: (000) 000-0000
E-mail: xxxx.xxxxxxxxx@xxxxxxxx.xxx
with a copy to:
Xxxxxxxx Corporation
Four Coliseum Centre
0000 X. Xxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Senior Vice President, Human Resources
and Administration, General Counsel and
Secretary
Telecopy: (000) 000-0000
E-mail: xxxxx.xxxxxxx@xxxxxxxx.xxx
(b) If to EnPro:
EnPro Industries, Inc.
____ Xxxxxxxx Xxxxxxxxx, Xxxxx ____
Xxxxxxxxx, Xxxxx Xxxxxxxx _____
Attention: Xxxxxxxxx X. Standing
Director, Tax
Telecopy: (704) _____________
E-mail: __________________
with a copy to:
EnPro Industries, Inc.
____ Xxxxxxxx Xxxxxxxxx, Xxxxx ___
Xxxxxxxxx, Xxxxx Xxxxxxxx _____
Attention: Xxxxxxx X. Xxxxx
Senior Vice President,
General Counsel and
20
Secretary
Telecopy: (704) ___________
E-mail: _________________
SECTION 7.02 Interpretation. The headings contained in this Agreement are
solely for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement. Whenever the word "including"
is used in this Agreement, it shall be deemed to be followed by the words
"without limitation." Whenever a reference is made in this Agreement to a
"party" or "parties," such reference shall be to a party or parties to this
Agreement unless otherwise indicated. The use of any gender herein shall be
deemed to be or include the other genders and the use of the singular herein
shall be deemed to include the plural (and vice versa), wherever appropriate.
Whenever a reference is made in this Agreement to an Article, Section, or
Schedule, such reference shall be to an Article or Section of, or a Schedule to,
this Agreement unless otherwise indicated. The use of the words "hereof" and
"herein" and words of similar import shall refer to this entire Agreement and
not to any particular article, or section of this Agreement, unless the context
clearly indicates otherwise. Each party stipulates and agrees that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement to
favor any party against the other, and that no party, including any drafting
party, shall have the benefit of any legal presumption (including "meaning of
the authors") or the detriment of any burden of proof by reason of any ambiguity
or uncertain meaning contained in this Agreement.
SECTION 7.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by each party, or in the case of a waiver, by the party against whom
the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other further exercise thereof or the
exercise of any other right, power or privilege.
SECTION 7.04 Nonexclusive Remedies. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 7.05 Successor and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld.
SECTION 7.06 Third-Party Beneficiaries. Except for the provisions of
Article 3 relating to Tax indemnification, nothing contained in this Agreement
is intended nor shall it confer upon any person or entity, other than the
parties hereto and the members of their respective Tax Groups, successors and
permitted assigns, any benefit, right or remedies under or by reason of this
Agreement.
21
SECTION 7.07 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of New York, without regard to the
conflict of laws principles thereof.
SECTION 7.08 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 7.09 Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof.
SECTION 7.10 Severability. If any one or more of the provisions contained
in this Agreement should be declared invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected or impaired thereby
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a declaration, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner so
that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
SECTION 7.11 Termination. Notwithstanding any provision in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Distribution, without penalty or liability, by and in the sole and absolute
discretion of Xxxxxxxx by written notice to EnPro and without the approval of
EnPro.
SECTION 7.12 Survival. All covenants and agreements of the parties
contained in this Agreement shall survive the Distribution Date.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
XXXXXXXX CORPORATION
By:
-----------------------------------------------
Name:
Title:
ENPRO INDUSTRIES, INC.
By:
-----------------------------------------------
Name:
Title:
23
