EXHIBIT 2.1
DISTRIBUTION AGREEMENT
DATED AS OF
AUGUST __, 1999
BY AND BETWEEN
XXXXX INDUSTRIES, INC.
AND
CIRCOR INTERNATIONAL, INC.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT ("Agreement") dated as of August __, 1999 by and
among Xxxxx Industries, Inc., a Delaware corporation (together with its
successors and permitted assigns, "Xxxxx"), CIRCOR International, Inc., a
Delaware corporation (together with its successors and permitted assigns,
"Circor") and the subsidiaries of Xxxxx listed on the signature pages hereof.
RECITALS
A. The Board of Directors of Xxxxx has determined that it is in the best
interest of Xxxxx and the stockholders of Xxxxx to spin off the Circor Business
(as defined herein) to the stockholders of Xxxxx.
B. In order to spin off the Circor Business, Xxxxx and its subsidiaries
will, pursuant to the Internal Reorganization (as defined below), transfer
certain operating assets of the Circor Business and the capital stock of the
subsidiaries of Xxxxx engaged solely in the Circor Business.
C. After the completion of such transfers, Xxxxx will distribute (the
"Distribution") to the holders of Xxxxx Common Stock (as defined herein) all of
the outstanding shares of Circor Common Stock (as defined herein) at the rate of
one share of Circor Common Stock for every two shares of Xxxxx Common Stock
outstanding as of the Record Date (as defined herein).
D. It is the intention of the parties that the Distribution will not be
taxable to the stockholders of Xxxxx pursuant to Section 355 of the Code (as
defined herein).
E. The parties have determined that it is necessary and desirable to set
forth the principal transactions required to effect the Distribution and to set
forth other agreements that will govern certain matters following the
Distribution.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I-DEFINITIONS
Sec 1.01 Definitions. As used herein, the following terms have
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the following meanings:
"Action" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
"Adjustment" means a change in a Tax liability made by the IRS or other
taxing authority.
"Affiliate" of any Person means a Person that controls, is controlled by,
or is under common control with such Person. As used herein, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
"Affiliated Group" means an affiliated group of corporations (within the
meaning of Code Section 1504(a)).
"Ancillary Agreements" means all of the written agreements, instruments,
understandings, assignments and other arrangements entered into in connection
with the transactions contemplated hereby, including, without limitation, the
Transition Services Agreement, the Supply Agreement and the Tradename License
Agreement.
"Assets" means all properties, rights, contracts, leases and claims, of
every kind and description, wherever located, whether tangible or intangible,
and whether real, personal or mixed.
"Carryback Item" means any net operating loss, unused general business
credit or other Tax item that under the Code or other Domestic Income Tax law
can be used to reduce the Domestic Income Tax liability of a taxable period
preceding the taxable period in which such item is created.
"Carryback Period" means the taxable periods to which a Carryback Item can
be applied.
"Circor Affiliated Group" means the Affiliated Group which has Circor as
its common parent (within the meaning of Code Section 1504(a)) for the taxable
period in question.
"Circor Assets" means all Assets that are (i) owned of record or held in
the name of a member of the Circor Group, or (ii) described on Schedule A-1
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attached hereto.
"Circor Balance Sheet" means the consolidated balance sheet of Circor as of
June 30, 1999 set forth in the Information Statement.
"Circor Business" means the business conducted by Circor and its
subsidiaries on the Distribution Date.
"Circor Bylaws" means the amended and restated Bylaws of Circor in the form
filed as an exhibit to the Form 10 at the time it becomes effective.
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"Circor Certificate" means the restated certificate of incorporation of
Circor in the form filed as an exhibit to the Form 10 at the time it becomes
effective.
"Circor Common Stock" means the shares of common stock, $.01 par value, of
Circor.
"Circor Group" means Circor and its subsidiaries, which as of the
Distribution Date are listed on Exhibit A.
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"Circor Liabilities" means (i) Liabilities of Circor under this Agreement
or any Ancillary Agreement, (ii) except as otherwise expressly provided in this
Agreement or any Ancillary Agreement, Liabilities incurred in connection with
the conduct or operation of the Circor Business or the ownership or use of the
Circor Assets, whether arising before, on or after the Distribution Date, (iii)
except as otherwise expressly provided in this Agreement or any Ancillary
Agreement, Liabilities set forth on the Circor Balance Sheet as increased or
reduced in the operation of the Circor Business after June 30, 1999, and (iv)
Liabilities listed on Schedule L-1 attached hereto.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Distribution" is defined in the recitals to this Agreement.
"Distribution Agent" means BankBoston, N.A., in its capacity as agent for
Xxxxx in connection with the Distribution.
"Distribution Date" means September 30, 1999 or such other business day as
of which the Distribution shall be effective, as determined by the Board of
Directors of Xxxxx.
"Disclosure Documents" means the Form 10 and the Information Statement.
"Domestic Income Tax" means any tax imposed under Subtitle A of the Code,
any state or local tax imposed on or measured by income, and any related state
or local franchise, excise or similar tax that has customarily been included in
any provision for income taxes on Xxxxx' financial statements, together with any
related interest, penalties and additions to tax.
"Effective Realization" (and the correlative terms "Effectively Realized"
and "Effectively Realizes") means, with respect to a Tax Benefit, the first to
occur of (i) the receipt by the Xxxxx Affiliated Group or the Circor Affiliated
Group of cash from a taxing authority reflecting such Tax Benefit or (ii) the
application of such Tax Benefit to reduce (A) the tax liability on a Return of
the Xxxxx Affiliated Group or the Circor Affiliated Group, or (B) any other
outstanding tax liability of the Xxxxx Affiliated Group or the Circor Affiliated
Group.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Determination" means the final resolution of any Tax liability (
together with all related interest, penalties and additions to tax) for a
taxable period. A Final Determination shall result from the first to occur of:
(i) the expiration of 30 days after the official IRS acceptance of a Waiver of
Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of
Overassessment on Federal Revenue Form 870 or 870-AD (or any successor
comparable form) or the expiration of a comparable period with respect to any
comparable agreement or form under applicable law unless, within such period,
the taxpayer (whether Xxxxx or Circor) gives notice to the other party of the
taxpayer's intention to attempt to recover all or part of any amount paid
pursuant to the Waiver by filing a timely claim for refund; (ii) a decision,
judgment, decree or other order of a court of competent jurisdiction with
respect to any Tax liability that has become final and is not subject to further
judicial review by appeal or otherwise; (iii) the execution of a closing
agreement under Section 7121 of the Code or the official acceptance by the IRS
of an offer in compromise under Section 7122 of the Code, or comparable
agreements under applicable law; (iv) the expiration of the time for filing a
claim for refund or for instituting suit in respect of a claim for refund
disallowed in whole or part by the IRS; (v) any other final disposition of a Tax
liability by reason of the expiration of the applicable statute(s) of
limitations; or (vi) any other event that the parties agree is a final and
irrevocable determination of the Tax liability at issue.
"Form 10" means the registration statement on Form 10 filed by Circor with
the Commission to effect the registration of the Circor Common Stock pursuant to
the Exchange Act, as such registration statement may be amended from time to
time.
"Group" means the Xxxxx Group or the Circor Group, as applicable.
"Information Statement" means the information statement contained in the
Form 10 and to be sent to each holder of Xxxxx Common Stock in connection with
the Distribution.
"Intercompany Tax Payment" means any payment between the Xxxxx Affiliated
Group and the Circor Affiliated Group required under Article VII of this
Agreement.
"Internal Reorganization" means the transactions set forth in the Sequence
of Transactional Steps attached hereto as Exhibit B.
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"IRS" means the Internal Revenue Service.
"Letter Ruling" means the private letter ruling received from the IRS and
dated August ___, 1999 regarding the federal income tax consequences of the
Distribution and the Internal Reorganization.
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"Letter Ruling Request" means the request for the Letter Ruling submitted
to the IRS and dated January 28, 1999 and accompanying documents, together with
all supplements thereto and accompanying documents.
"Liabilities" means any and all claims, debts, liabilities and obligations,
absolute or contingent, matured or not matured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those debts,
liabilities and obligations arising under this Agreement, any law, rule,
regulation, 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.
"Other Tax" means any Tax other than a Domestic Income Tax or Transaction
Tax.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any governmental authority.
"Record Date" means the date designated by Xxxxx' Board of Directors as the
record date for determining the stockholders of Xxxxx entitled to receive the
Distribution.
"Return" means any Tax return, statement, report, form or election
(including, without limitation, estimated Tax returns and reports, extension
requests and forms, and information returns and reports) required to be filed
with any taxing authority, in each case as amended and finally adjusted.
"Securities Act" means the Securities Act of 1933, as amended.
"Spin-Off Tax" means any Domestic Income Tax incurred by the Xxxxx
Affiliated Group as a result of the Distribution failing to qualify as a
transaction described in Code Section 355 or through the application of Code
Section 355(d) or (e).
"Supply Agreement" means the Supply Agreement entered into on or before the
Distribution Date between Xxxxx and Circor, as amended from time to time.
"Tax" means any Domestic Income tax, Spin-Off Tax or Transaction Tax, any
tax imposed under the Code, and any net income, alternative or add-on minimum,
gross income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, withholding (as payor or recipient), payroll,
employment, excise, severance, stamp, capital stock, occupation, property, real
property gains, environmental, windfall, premium, custom, duty or other tax,
recording fee, governmental fee or other like assessment or charge of any kind
whatsoever imposed by any domestic or foreign jurisdiction, together with any
related interest, penalties and additions to tax.
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"Tax Benefit" means any item of loss, deduction, amortization, credit,
exclusion from income or similar item that reduces a Tax liability and would
not, but for an Adjustment, be allowable.
"Tax Counsel" means an attorney, law firm, accountant, accounting firm or
other person with an expertise in Tax matters.
"Tax Proceeding" means any Tax audit, dispute or proceeding (whether
administrative or judicial).
"Trademark License Agreement" means the Trademark License Agreement entered
into on or before the Distribution Date between Xxxxx and Circor, as amended
from time to time.
"Tradenames" has the meaning set forth in Section 3.06.
"Transaction Tax" means any Tax incurred as a result of the transactions
provided for in this Agreement other than a Domestic Income Tax or Spin-Off Tax
"Transition Services Agreement" means the Transition Services Agreement
entered into on or before the Distribution Date between Xxxxx and Circor, as
amended from time to time.
"Xxxxx Affiliated Group" means the Affiliated Group which has Xxxxx as its
common parent (within the meaning of Code Section 1504(a)) for the taxable
period in question.
"Xxxxx Business" means the business now or formerly conducted by Xxxxx and
its present and former subsidiaries, other than the Circor Business.
"Xxxxx Common Stock" means, collectively, the class A common stock, $.01
par value and class B common stock, $.01 par value, of Xxxxx.
"Xxxxx Group" means Xxxxx and its subsidiaries, excluding any member of the
Circor Group.
"Xxxxx Liabilities" means (i) Liabilities of Xxxxx under this Agreement or
any Ancillary Agreement, (ii) Liabilities, other than Circor Liabilities,
incurred in connection with the operation of the Xxxxx Business, whether arising
before, on or after the Distribution Date, and (iii) Liabilities listed on
Schedule L-2 attached hereto.
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ARTICLE II-THE DISTRIBUTION
Section 2.01 Actions to be Taken Prior to the Distribution.
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Xxxxx and Circor shall take the following actions before the Distribution
Date:
(a) Xxxxx and Circor shall prepare, and Circor shall file with the
Commission, the Form 10, which shall include the Information Statement. The
Information Statement shall set forth appropriate disclosure concerning Circor,
the Distribution and any other appropriate matters. Xxxxx and Circor shall use
all reasonable efforts to cause the Form 10 to become effective under the
Exchange Act. Xxxxx shall mail the Information Statement to the holders of
Xxxxx Common Stock as of the Record Date.
(b) Xxxxx and Circor shall cooperate in preparing, filing with the
Commission under the Securities Act and causing to become effective as of the
Distribution Date any registration statements or amendments thereto that are
appropriate to reflect the establishment of or amendments to any employee
benefit plan contemplated by the Benefits Agreement.
(c) Xxxxx and Circor shall by means of a stock split or stock
distribution cause the number of outstanding shares of Circor Common Stock to be
equal to the number of shares to be distributed in the Distribution.
(d) Circor shall prepare, file and pursue an application to permit
listing of the Circor Common Stock on the New York Stock Exchange.
Section 2.02. Xxxxx Board Action; Conditions Precedent to the
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Distribution.
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Xxxxx' Board of Directors shall, in its sole discretion, establish the
Record Date and the Distribution Date and any appropriate procedures in
connection with the Distribution. In no event shall the Distribution occur
unless the following conditions shall have been satisfied or waived by both
Xxxxx and Circor:
(a) the Internal Reorganization shall have been completed;
(b) Xxxxx shall have received a private letter ruling from the
Internal Revenue Service, in form and substance satisfactory to Xxxxx, that the
Distribution will not be taxable to the shareholders of Xxxxx pursuant to
Section 355 of the Code;
(c) any necessary government approvals shall have been received and
be in full force and effect;
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(d) the Form 10 shall have become and remain effective under the
Exchange Act;
(e) Circor's Board of Directors, as named in the Form 10, shall have
been elected, and the Circor Certificate and Circor Bylaws shall be in effect;
(f) Xxxxx and Circor shall have entered into the Ancillary Agreements;
(g) the Circor Common Stock shall have been approved for listing on
the New York Stock Exchange, subject to official notice of distribution; and
(h) Circor shall have obtained debt financing in amounts and on terms
and conditions satisfactory to Circor.
Section 2.03. The Distribution. On or before the Distribution Date,
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subject to satisfaction or waiver of the conditions set forth in this Agreement,
Xxxxx shall deliver to the Distribution Agent a certificate or certificates
representing all of the then outstanding shares of Circor Common Stock held by
Xxxxx, endorsed in blank, and shall instruct the Distribution Agent, except as
otherwise provided in Section 2.04, to distribute to each holder of record of
Xxxxx Common Stock on the Record Date a certificate or certificates representing
one share of Circor Common Stock for each two shares of Xxxxx Common Stock held
by such holder. Circor agrees to provide all share certificates and any
information that the Distribution Agent shall require in order to effect the
Distribution.
Section 2.04. Fractional Shares. The Distribution Agent will not
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distribute any fractional share of Circor Common Stock to any holder. Xxxxx
shall instruct the Distribution Agent to aggregate all such fractional shares
and sell them in an orderly manner after the Distribution Date in the open
market or otherwise (in each case at then prevailing trading prices) and, after
completion of such sales, distribute a pro rata portion of the proceeds from
such sales, based upon the average gross selling price of all such Circor Common
Stock, less a pro rata portion of the aggregate brokerage commissions payable in
connection with such sales, to each holder of Xxxxx Common Stock who would
otherwise have received a fractional share of Circor Common Stock.
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ARTICLE III-INTERNAL REORGANIZATION; TRANSITION ARRANGEMENTS
Section 3.01. Internal Reorganization; Discharge of Liabilities.
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(a) On or before the Distribution Date, Xxxxx will effect and will
cause its subsidiaries to effect the Internal Reorganization. In connection
therewith, Xxxxx shall execute and deliver, and shall cause its subsidiaries to
execute and deliver, such bills of sale, stock powers, certificates of title,
assignments of contracts and other instruments of transfer, conveyance and
assignment as and to the extent necessary to evidence the transfer, conveyance
and assignment of all of Xxxxx' and its subsidiaries' right, title and interest
in and to the Circor Assets to the Circor Group, and the assumption by the
Circor Group of all the Circor Liabilities.
(b) Except as otherwise expressly provided herein or in any of the
Ancillary Agreements, on the Distribution Date, whether or not all Circor Assets
and Circor Liabilities shall have been legally transferred to and assumed by the
Circor Group, (i) all Circor Assets are intended to be and shall become Assets
of the Circor Group, (ii) all Circor Liabilities are intended to be and shall
become exclusively the Liabilities of the Circor Group and (iii) all other
Assets and Liabilities of Xxxxx and its subsidiaries are intended to be and
shall remain exclusively the Assets or Liabilities of the Xxxxx Group.
(c) Circor agrees that on and after the Distribution Date it will pay,
perform and discharge, or cause to be paid, performed or discharged, all of the
Circor Liabilities in accordance with their respective terms.
(d) Xxxxx agrees that on and after the Distribution Date it will pay,
perform and discharge, or cause to be paid, performed and discharged, all of the
Xxxxx Liabilities in accordance with their respective terms.
(e) In the event that any transfer, assignment or conveyance of an
Asset required hereby is not effected on or before the Distribution Date, the
obligation to transfer such Asset shall continue past the Distribution Date and
shall be accomplished as soon thereafter as practicable.
(f) If any Circor Asset may not be transferred by reason of the
requirement to obtain the consent of any third party and such consent has not
been obtained by the Distribution Date, then such Circor Asset shall not be
transferred until such consent has been obtained, and Xxxxx shall cause the
owner of such Circor Asset to use all reasonable efforts to provide to the
appropriate member of the Circor Group all the rights and benefits under such
Circor Asset and cause such owner to enforce such Circor Asset for the benefit
of the Circor Group. Both parties shall otherwise cooperate and use all
reasonable efforts to provide the economic and operational equivalent of an
assignment or transfer of the Circor Asset.
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(g) From and after the Distribution Date, each party shall promptly
transfer or cause the members of its Group to promptly transfer to the other
party or the appropriate member of the other party's Group, from time to time,
any property received that is an Asset of the other party or a member of the
other party's Group. Without limiting the foregoing, funds received by a member
of one Group upon the payment of accounts receivable that belongs to a member of
the other Group shall be transferred to the other Group by wire transfer not
more than five (5) business days after receipt of such payment.
Section 3.02. Termination of Agreements.
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(a) Except as set forth in Section 3.02(b), in furtherance of the
releases and other provisions of Section 4.01 hereof, Circor and each member of
the Circor Group, on the one hand, and Xxxxx and each member of the Xxxxx Group,
on the other hand, hereby terminate, any and all agreements, arrangements,
commitments or understandings, whether or not in writing, between or among
Circor and/or any member of the Circor Group, on the one hand, and Xxxxx and/or
any member of the Xxxxx Group, on the other hand, effective as of the
Distribution Date. No such terminated agreement, arrangement, commitment or
understanding (including any provision thereof which purports to survive
termination) shall be of any further force or effect after the Distribution
Date. Each party shall, at the reasonable request of any other party, take, or
cause to be taken, such other actions as may be necessary to effect the
foregoing.
(b) The provisions of Section 3.02(a) shall not apply to any of the
following agreements, arrangements, commitments or understandings (or to any of
the provisions thereof): (i) this Agreement, the Ancillary Agreements and each
other agreement or instrument expressly contemplated by this Agreement or the
Ancillary Agreements to be entered into by any of the parties hereto or any of
the members of their respective Groups; (ii) any agreements, arrangements,
commitments or understandings listed or described on Schedule 3.02(b)(ii); and
(iii) any other agreements, arrangements, commitments or understandings that
this Agreement or any Ancillary Agreement expressly contemplates will survive
the Distribution Date.
Section 3.03. Disclaimer of Representations and Warranties.
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(a) Each of Xxxxx (on behalf of itself and each member of the Xxxxx
Group) and Circor (on behalf of itself and each member of the Circor Group)
understands and agrees that, except as expressly set forth herein or in any
Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any
other agreement or document contemplated by this Agreement, any Ancillary
Agreement or otherwise, is representing or warranting in any way as to the
Assets, businesses or Liabilities transferred or assumed as contemplated hereby
or thereby, as to any consents or approvals required in connection therewith, as
to the value or freedom from any security interests of, or any other matter
concerning, any Assets of such party, or as to the absence of any defenses or
right of setoff or freedom from counterclaim with respect to any claim or other
Asset, including any accounts receivable, of any party, or as
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to the legal sufficiency of any assignment, document or instrument delivered
hereunder to convey title to any Asset or thing of value upon the execution,
delivery and filing hereof or thereof. Except as may expressly be set forth
herein or in any Ancillary Agreement, all such Assets are being transferred on
an "as is," "where is" basis.
Section 3.04. Insurance.
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(a) Before the Distribution Date, Xxxxx and Circor will cooperate in
obtaining insurance (or binders therefor) providing coverage to the Circor Group
on terms and conditions satisfactory to Circor.
(b) Xxxxx will use all reasonable efforts to maintain directors' and
officers' liability insurance at substantially the level of Xxxxx'x current
directors' and officers' liability insurance policy with respect to the
directors and officers of Xxxxx who will become directors and officers of Circor
as of the Distribution Date for acts as directors and officers of members of the
Xxxxx Group during periods prior to the Distribution Date.
(c) Xxxxx will pay or reimburse the Circor Group for the amount of any
deductible or self-insured retention maintained by Xxxxx in respect of any loss
or damage to any Circor Assets in excess of normal intercompany deductibles
incurred on or before September 30, 1999 that would be covered by insurance
maintained by Xxxxx but for such deductible or self-insured retention. Circor
shall submit to Xxxxx such evidence of the loss as Xxxxx may reasonably require.
Section 3.05. Certain Intellectual Property Matters.
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(a) Except as set forth in the Trademark License Agreement, after the
Distribution Date neither party shall, directly or indirectly, use any name or
any other trademark or tradename (collectively, the "Tradenames") of the other
party or its Group or any tradename or trademark likely to cause confusion with
the Tradenames of the other party or its Group.
(b) After the Distribution Date, each party shall have the right to
sell existing inventory and to use existing brochures, packaging, labeling,
containers, supplies, advertising materials, technical data sheets and any
similar materials bearing any Tradenames until the earlier of (i) one (1) year
after the Distribution Date and (ii) the date existing stocks are exhausted.
Each party shall comply with all applicable laws or regulations in any use of
packaging or labeling containing the Tradenames.
(c) Neither party shall be obligated to change the Tradenames on
finished goods in inventory and other materials in the hands of dealers,
distributors and customers at the time of expiration of a time period set forth
in (b) above.
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(d) Each party agrees to use reasonable efforts to cease using the
Tradenames of the other party on buildings, cars, trucks and other fixed assets
as soon as possible but in any event within a period not to exceed one (1) year
after the Distribution Date.
ARTICLE IV-INDEMNIFICATION
Section 4.01. Release of Pre-closing Claims.
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(a) Except as provided in Section 4.01(c), effective as of the
Distribution Date, Circor does hereby, for itself and each other member of the
Circor Group, their respective Affiliates (other than any member of the Xxxxx
Group), successors and assigns, and all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the Circor Group (in each case, in their respective
capacities as such), release and forever discharge Xxxxx, the members of the
Xxxxx Group, their respective Affiliates (other than any member of the Circor
Group), successors and assigns, and all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the Xxxxx Group (in their capacities as such), and
their respective heirs, executors, administrators, successors and assigns, from
any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or events
occurring or failing to occur or alleged to have occurred or to have failed to
occur or any conditions existing or alleged to have existed on or before the
Distribution Date, including in connection with the transactions and all other
activities to implement any of the Internal Reorganization and the Distribution.
(b) Except as provided in Section 4.01(c), effective as of the
Distribution Date, Xxxxx does hereby, for itself and each other member of the
Xxxxx Group, their respective Affiliates (other than any member of the Circor
Group), successors and assigns, and all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the Xxxxx Group (in their respective capacities as
such), release and forever discharge Circor, the respective members of the
Circor Group, their respective Affiliates (other than any member of the Xxxxx
Group), successors and assigns, and all Persons who at any time prior to the
Distribution Date have been shareholders, directors, officers, agents or
employees of any member of the Circor Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Distribution Date, including in connection with
the transactions and all other activities to implement any of the Internal
Reorganization and the Distribution.
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(c) Nothing contained in Section 4.01(a) or (b) shall impair any right
of any Person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are specified in
Section 3.02(b) or the applicable Schedules thereto not to terminate as of the
Distribution Date, in each case in accordance with its terms. Nothing contained
in Section 4.01(a) or (b) shall release any member of the Circor Group or any
member of the Xxxxx Group from the Circor Liabilities or the Xxxxx Liabilities,
respectively.
(d) Circor shall not make, and shall not permit any member of the
Circor Group to make, any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or any indemnification,
against Xxxxx or any member of the Xxxxx Group, or any other Person released
pursuant to Section 4.01(a), with respect to any Liabilities released pursuant
to Section 4.01(a). Xxxxx shall not, and shall not permit any member of the
Xxxxx Group, to make any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or any indemnification,
against Circor or any member of the Circor Group, or any other Person released
pursuant to Section 4.01(b), with respect to any Liabilities released pursuant
to Section 4.01(b).
(e) It is the intent of each of Xxxxx and Circor by virtue of the
provisions of this Section 4.01 to provide for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Distribution Date, between or among Circor or any member of the Circor Group, on
the one hand, and Xxxxx or any member of the Xxxxx Group, on the other hand
(including any contractual agreements or arrangements existing or alleged to
exist between or among any such members on or before the Distribution Date),
except as expressly set forth in Section 4.01(c). At any time, at the request
of any other party, each party shall cause each member of its respective Group
to execute and deliver releases reflecting the provisions hereof.
Section 4.02. Circor Indemnification of the Xxxxx Group. On and after the
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Distribution Date, Circor shall indemnify, defend and hold harmless each member
of the Xxxxx Group, and each of their respective directors, officers, employees
and agents (the "Xxxxx Indemnitees") from and against any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys, fees and expenses in connection with any
and all Actions or threatened Actions) (collectively, "Indemnifiable Losses")
incurred or suffered by any of the Xxxxx Indemnitees and arising out of, or due
to the failure of Circor or any member of the Circor Group to pay, perform or
otherwise discharge, any of the Circor Liabilities, whether before or after the
Distribution Date.
Section 4.03. Xxxxx Indemnification of the Circor Group. On and after the
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Distribution Date, Xxxxx shall indemnify, defend and hold harmless each member
of the Circor Group and each of their respective directors, officers, employees
and agents (the "Circor
13
Indemnitees") from and against any and all Indemnifiable Losses incurred or
suffered by any of the Circor Indemnitees and arising out of, or due to the
failure of Xxxxx or any member of the Xxxxx Group to pay, perform or otherwise
discharge, any of the Xxxxx Liabilities, whether before or after the
Distribution Date.
Section 4.04 Insurance and Third Party Obligations. The parties intend
-------------------------------------
that any Liability subject to indemnification pursuant to this Article IV will
be net of insurance proceeds and tax benefits (if any) that actually reduce the
amount of the Liability. Accordingly, the amount which any Indemnifying Party is
required to pay to any Indemnified Party will be reduced by any insurance
proceeds theretofore actually recovered by or on behalf of the Indemnified Party
in reduction of the related Liability. If an Indemnified Party receives a
payment (an "Indemnity Payment") required by this Agreement from an Indemnifying
Party in respect of any Liability and subsequently receives insurance proceeds,
then the Indemnified Party will pay to the Indemnifying Party an amount equal to
the excess of the Indemnity Payment received over the amount of the Indemnity
Payment that would have been due if the insurance proceeds had been received or
realized before the Indemnity Payment was made. No insurer or any other third
party shall be (a) entitled to a benefit it would not be entitled to receive in
the absence of the foregoing indemnification provisions; (b) relieved of the
responsibility to pay any claims for which it is obligated or (c) entitled to
any subrogation rights with respect to any obligation hereunder. Nothing
contained in this Agreement shall obligate any member of any Group to seek to
collect or recover any insurance proceeds.
Section 4.05. Survival. The rights and obligations of each party under this
--------
Article IV shall survive the sale or other transfer by any party of any Assets
or businesses or the assignment by it of any Liabilities.
ARTICLE V-INDEMNIFICATION PROCEDURES
Section 5.01. Notice and Payment of Claims. If any Xxxxx Indemnitee or
Circor Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification by a party (the "Indemnifying Party") under Article
IV (other than in connection with any Action or claim subject to Section 6.02),
the Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. After the Indemnifying Party shall
have been notified of the amount for which the Indemnified Party seeks
indemnification, the Indemnifying Party shall, within thirty (30) days after
receipt of such notice, pay the Indemnified Party such amount in cash or other
immediately available funds (or reach agreement with the Indemnified Party as to
a mutually agreeable alternative payment schedule) unless the Indemnifying Party
objects to the claim for indemnification or the amount thereof. If the
Indemnifying Party objects to a claim for indemnification or the amount thereof
or does not respond to such claim within the same thirty (30) day period, the
Indemnified Party may exercise any and all of its rights under this Agreement
and applicable law with respect to such claim.
14
Section 5.02. Notice and Defense of Third-Party Claims.
----------------------------------------
(a) Promptly following the earlier of (i) receipt of notice of the
commencement by a third party of any Action against or otherwise involving any
Indemnified Party or (ii) receipt of information from a third party alleging the
existence of a claim against an Indemnified Party, in either case, with respect
to which indemnification may be sought pursuant to this Agreement (a "Third-
Party Claim"), the Indemnified Party shall give the Indemnifying Party written
notice thereof describing the Third-Party Claim in reasonable detail. The
failure of the Indemnified Party to give notice as provided in this Section 5.02
shall not relieve the Indemnifying Party of its obligation xxxxxx this
Agreement, except to the extent that the Indemnifying Party is prejudiced by
such failure to give notice. Within thirty (30) days after receipt of such
notice (or sooner, if the nature of the Third-Party Claim so requires), the
Indemnifying Party may by giving written notice thereof to the Indemnified
Party, (a) acknowledge, as between the parties hereto, liability for and at its
option elect to assume the defense of such Third-Party Claim at its sole cost
and expense or (b) object to the claim of indemnification set forth in the
notice delivered by the Indemnified Party pursuant to the first sentence of this
Section 5.02; provided that if the Indemnifying Party does not within the same
thirty (30) day period give the Indemnified Party written notice objecting to
such claim and setting forth the grounds therefor, the Indemnifying Party shall
be deemed to have rejected any liability for such Third-Party Claim. Any
contest of a Third-Party Claim as to which the Indemnifying Party has elected to
assume the defense shall be conducted by attorneys employed by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party; provided that the
Indemnified Party shall have the right to participate in such proceedings and to
be represented by attorneys of its own choosing at the Indemnified Party's sole
cost and expense.
If the Indemnifying Party assumes the defense of a Third-Party Claim, the
Indemnifying Party may settle or compromise the claim without the prior written
consent of the Indemnified Party; provided that the Indemnifying Party may not
agree to any such settlement pursuant to which any such remedy or relief, other
than monetary damages for which the Indemnifying Party shall be responsible
hereunder, shall be applied to or against the Indemnified Party, without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. If the Indemnifying Party does not assume the defense of
a Third-Party Claim for which it has acknowledged liability for indemnification
under Article IV, the Indemnified Party may require the Indemnifying Party to
reimburse it on a current basis for its reasonable expenses of investigation,
reasonable attorney's fees and reasonable out-of-pocket expenses incurred in
defending against such Third-Party Claim and the Indemnifying Party shall be
bound by the result obtained with respect thereto by the Indemnified Party;
provided that the Indemnifying Party shall not be liable for any settlement
effected without its consent, which consent shall not be unreasonably withheld.
The Indemnifying Party shall pay to the Indemnified Party in cash the amount for
which the Indemnified Party is entitled to be indemnified (if any) within
fifteen (15) days after the final resolution of such Third-Party Claim (whether
by the final nonappealable judgment of a court of competent jurisdiction or
otherwise) or, in the case of any Third-Party Claim as to which
15
the Indemnifying Party has not acknowledged liability, within fifteen (15) days
after such Indemnifying Party's objection has been resolved by settlement,
compromise or the final nonappealable judgment of a court of competent
jurisdiction.
(b) In the event of payment by or on behalf of any Indemnifying Party
to any Indemnified Party in connection with any Third-Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the place of such
Indemnified Party as to any events or circumstances in respect of which such
Indemnified Party may have any right, defense or claim relating to such Third-
Party Claim against any claimant or plaintiff asserting such Third-Party Claim
or against any other person. Such Indemnified Party 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, defense or claim.
ARTICLE VI-ALLOCATION OF PENSION PLAN ASSETS
Section 6.01 Establishment of Plans.
----------------------
(a) Circor shall establish the CIRCOR International, Inc. Retirement
Plan for Salaried Employees (the "Circor Salaried Plan") and the CIRCOR
International, Inc. Retirement Plan for Hourly Employees (the "Circor Hourly
Plan"), to be effective immediately following the Distribution. Participants in
the Xxxxx Industries, Inc. Retirement Plan for Salaried Employees (the "Xxxxx
Salaried Plan") who are employees of the Circor Group immediately after the
Distribution will become participants in the Circor Salaried Plan as of such
time, and participants in the Xxxxx Industries, Inc. Hourly Pension Plan (the
"Xxxxx Hourly Plan") who are employees of the Circor Group immediately after the
Distribution will become participants in the Circor Hourly Plan as of such time.
Eligible employees of the Circor Group after the Distribution shall become
participants in the Circor Salaried Plan or the Circor Hourly Plan, as
appropriate.
(b) Xxxxx currently maintains the Xxxxx Industries, Inc. 401(k)
Savings Plan (the "Xxxxx 401(k) Plan"). Effective on or about September 1, 1999
Xxxxx shall adopt a 401(k) plan with provisions substantially similar to those
of the Xxxxx 401(k) Plan (the "Circor Group 401(k) Plan") except that
participation in the Circor Group 401(k) Plan shall be limited to employees of
the Circor Group. Xxxxx shall transfer the assets of the Xxxxx 401(k) Plan which
are attributable to participants who are or were, and beneficiaries of,
employees of the Circor Group, to the Circor Group 401(k) Plan on or about
September 1, 1999. Beginning with the effective date of the Circor Group 401(k)
Plan until the Distribution, all eligible employees of the Circor Group shall
become participants in the Circor Group 401(k) Plan. At the Distribution, Xxxxx
shall transfer sponsorship of the Circor Group 401(k) Plan to Circor. Eligible
employees of the Circor Group after the Distribution shall become participants
in the Circor 401(k) Plan.
Section 6.02. Allocation of Assets and Liabilities. The assets and
------------------------------------
liabilities of the three tax-qualified retirement plans currently maintained by
Xxxxx shall be allocated between Xxxxx and Circor as described herein:
(a) Xxxxx Salaried Plan. The assets and liabilities of the Xxxxx
-------------------
Salaried Plan shall be allocated between Xxxxx and Circor, and the assets and
liabilities allocated to Circor shall be transferred to the Circor Salaried
Plan, based upon the following methodology:
16
(1) the total value of plan assets of the Xxxxx Salaried Plan as
of the Distribution Date shall be determined;
(2) the plan termination liability (the "PTL") shall be
determined for the Xxxxx Salaried Plan as of the Distribution Date ("Total
Salaried Plan PTL") . The PTL shall be the amount of benefits that would be
provided as benefits to participants in the Xxxxx Salaried Plan pursuant to
Section 4044 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations thereunder if the plan terminated, using the
assumptions used by the Pension Benefit Guaranty Corporation as of the
Distribution Date as required by Treas. Reg. Section 1.414(l)-1(b)(5)(ii). The
Total Salaried Plan PTL determined for the Xxxxx Salaried Plan shall be
bifurcated into (1) the PTL of the group of participants in the Xxxxx Salaried
Plan who will become employees of the Circor Group immediately following the
Distribution (the "Circor Salaried Plan PTL"), and (2) the difference between
the Total Salaried Plan PTL less the Circor Salaried Plan PTL (the "Non-Circor
Salaried Plan PTL");
(3) (i) If the total value of plan assets of the Xxxxx Salaried
Plan is greater than or equal to the Total Salaried Plan PTL, a portion of such
assets shall be allocated to Circor by multiplying the total amount of such
assets by a fraction, the numerator of which is the Circor Salaried Plan PTL and
the denominator of which is the Total Salaried Plan PTL.
(ii) If the total value of plan assets of the Xxxxx Salaried Plan is
less than the Total Salaried Plan PTL, the portion of plan assets which shall be
allocated to Xxxxx and Circor shall be based on the priority categories under
Section 4044 of ERISA, as required by Treas. Reg. Section 1.414(l)-1(b)(5)(ii).
(4) Within a reasonable time after the assets of the Xxxxx Salaried
Plan have been allocated as set forth above, the amount of assets allocated to
Circor which shall be transferred in cash or in kind to the Circor Salaried Plan
on the Salaried Plan Transfer Date (as defined herein) shall be equal to the sum
of the amount allocated to Circor as of the Distribution Date, plus a pro-rata
amount of the investment return earned by the Xxxxx Salaried Plan from the
Distribution Date to the most recent monthly statement date prior to the
Salaried Plan Transfer Date, plus interest at the [3-month Treasury xxxx rate]
on such allocated assets from the most recent monthly statement date to the
Salaried Plan Transfer Date, less Salaried Plan Allocated Benefit Payments (as
defined herein) and Salaried Plan Allocated Expenses (as defined herein) from
the Distribution Date to the Salaried Plan Transfer Date.
For purposes hereof, the "Salaried Plan Transfer Date" shall be defined as
the date that plan assets from the Xxxxx Salaried Plan are transferred to the
trust for the Circor Salaried Plan, which date shall occur as soon as reasonably
practicable following receipt by Circor of a favorable determination letter from
the Internal Revenue Service to the effect that the Circor Salaried Plan meets
the qualification requirements of Code Section 401(a) or an opinion from
Circor's legal counsel which is reasonably satisfactory to Xxxxx to the effect
that the Circor
17
Salaried Plan meets the qualification requirements of Code Section 401(a). For
purposes hereof, "Salaried Plan Allocated Benefit Payments" shall be equal to
any benefit payments made under the Xxxxx Salaried Plan to or in respect of any
individual who was a participant in such plan as of the Distribution, who is an
employee of the Circor Group immediately following the Distribution and who
becomes eligible for benefit payments following the Distribution but prior to
the Salaried Plan Transfer Date. For purposes hereof, "Salaried Plan Allocated
Expenses" shall be equal to any administrative expenses paid by the trust of the
Xxxxx Salaried Plan after the Distribution which are attributable to the
administration of the Xxxxx Salaried Plan with respect to participants in the
Xxxxx Salaried Plan as of the Distribution who are employees of the Circor Group
immediately following the Distribution, including, but not limited to, PBGC
premium payments, consulting fees or accounting fees. Notwithstanding the
foregoing, Xxxxx shall pay any and all expenses associated with the allocation
and transfer of assets from the Xxxxx Salaried Plan to the Circor Salaried Plan.
(b) Xxxxx Hourly Plan. The assets and liabilities of the Xxxxx Hourly
-----------------
Plan shall be allocated between Xxxxx and Circor, and the assets and liabilities
allocated to Circor shall be transferred to the Circor Hourly Plan, based upon
the following methodology:
(1) the total value of plan assets of the Xxxxx Hourly Plan as of
the Distribution Date shall be determined;
(2) the plan termination liability (the "PTL") shall be
determined for the Xxxxx Hourly Plan as of the Distribution Date ("Total Hourly
Plan PTL") . The PTL shall be the amount of benefits that would be provided as
benefits to participants in the Xxxxx Hourly Plan pursuant to Section 4044 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the regulations thereunder if the plan terminated, using the assumptions used by
the Pension Benefit Guaranty Corporation as of the Distribution Date as required
by Treas. Reg. Section 1.414(l)-1(b)(5)(ii). The Total Hourly Plan PTL
determined for the Xxxxx Hourly Plan shall be bifurcated into (1) the PTL of the
group of participants in the Xxxxx Hourly Plan who will become employees of the
Circor Group immediately following the Distribution (the "Circor Hourly Plan
PTL"), and (2) the difference between the Total Hourly Plan PTL less the Circor
Hourly Plan PTL (the "Non-Circor Hourly Plan PTL");
(3) (i) If the total value of plan assets of the Xxxxx Hourly
Plan is greater than or equal to the Total Hourly Plan PTL, a portion of such
assets shall be allocated to Circor by multiplying the total amount of such
assets by a fraction, the numerator of which is the Circor Hourly Plan PTL and
the denominator of which is the Total Hourly Plan PTL.
(ii) If the total value of plan assets of the Xxxxx Hourly
Plan is less than the Total Hourly Plan PTL, the portion of plan assets which
shall be allocated to
18
Xxxxx and Circor shall be based on the priority categories under Section 4044 of
ERISA, as required by Treas. Reg. Section 1.414(l)-1(b)(5)(ii).
(4) Within a reasonable time after the assets of the Xxxxx Hourly
Plan have been allocated as set forth above, the amount of assets allocated to
Circor which shall be transferred in cash or in kind to the Circor Hourly Plan
on the Hourly Plan Transfer Date (as defined herein) shall be equal to the sum
of the amount allocated to Circor as of the Distribution Date, plus a pro-rata
amount of the investment return earned by the Xxxxx Hourly Plan from the
Distribution Date to the most recent monthly statement date prior to the Hourly
Plan Transfer Date, plus interest at the [3-month Treasury xxxx rate] on such
allocated assets from the most recent monthly statement date to the Hourly Plan
Transfer Date, less Hourly Plan Allocated Benefit Payments (as defined herein)
and Hourly Plan Allocated Expenses (as defined herein) from the Distribution
Date to the Hourly Plan Transfer Date.
For purposes hereof, the "Hourly Plan Transfer Date" shall be defined as
the date that plan assets from the Xxxxx Hourly Plan are transferred to the
trust for the Circor Hourly Plan, which date shall occur as soon as reasonably
practicable following receipt by Circor of a favorable determination letter from
the Internal Revenue Service to the effect that the Circor Hourly Plan meets the
qualification requirements of Code Section 401(a) or an opinion from Circor's
legal counsel which is reasonably satisfactory to Xxxxx to the effect that the
Circor Hourly Plan meets the qualification requirements of Code Section 401(a).
For purposes hereof, "Hourly Plan Allocated Benefit Payments" shall be equal to
any benefit payments made under the Xxxxx Hourly Plan to or in respect of any
individual who was a participant in such plan as of the Distribution, who is an
employee of the Circor Group immediately following the Distribution and who
becomes eligible for benefit payments following the Distribution but prior to
the Hourly Plan Transfer Date. For purposes hereof, "Hourly Plan Allocated
Expenses" shall be equal to any administrative expenses paid by the trust of the
Xxxxx Hourly Plan after the Distribution which are attributable to the
administration of the Xxxxx Hourly Plan with respect to participants in the
Xxxxx Hourly Plan as of the Distribution who are employees of the Circor Group
immediately following the Distribution, including, but not limited to, PBGC
premium payments, consulting fees or accounting fees. Notwithstanding the
foregoing, Xxxxx shall pay any and all expenses associated with the allocation
and transfer of assets from the Xxxxx Hourly Plan to the Circor Hourly Plan.
19
Section 6.03. Reporting Requirements. Xxxxx and Circor shall each
----------------------
reasonably cooperate with the other party with respect to any required Internal
Revenue Service, Department of Labor or Pension Benefit Guaranty Corporation
reporting for the transfer of assets described herein.
ARTICLE VII-TAX MATTERS
Section 7.01. Returns and Tax Proceedings.
---------------------------
(a) Domestic Income Taxes. With respect to Domestic Income Taxes,
---------------------
Xxxxx shall be responsible for filing Returns for members of the Xxxxx
Affiliated Group for taxable periods beginning before the Distribution Date.
(b) Other Taxes. With respect to Other Taxes, responsibility for
-----------
filing a Return shall fall on the party that under Section 7.03(b) is
responsible for paying the Other Tax to which the Return relates.
(c) Post-Distribution Periods. With respect to Domestic Income Taxes
-------------------------
for taxable periods other than taxable periods beginning before the Distribution
Date, Xxxxx shall be responsible for filing Returns for members of the Xxxxx
Affiliated Group, and Circor shall be responsible for filing Returns for members
of the Circor Affiliated Group.
(d) Transaction Taxes. Xxxxx shall be responsible for filing Returns
-----------------
relating to Transaction Taxes.
(e) Tax Proceedings. Except as provided in Section 7.06(a), the party
---------------
responsible for filing a Return under this Section 7.01 shall have full control
over any Tax Proceeding regarding matters subject to such Return.
20
Section 7.02. Tax Return Positions. Xxxxx and Circor agree that, except as
--------------------
otherwise provided herein, the transactions contemplated in this Agreement shall
be treated by Xxxxx and Circor on all Returns in a manner which conforms to the
representations, undertakings and statements made in the Letter Ruling Request.
In their preparation and filing of Returns, both the Xxxxx Affiliated Group (and
any direct or indirect subsidiaries) and the Circor Affiliated Group (and any
direct or indirect subsidiaries) shall follow prior methods, practices and
procedures (except to the extent that departure from such methods, practices and
procedures would not materially adversely affect members of the other Affiliated
Group (or their direct or indirect subsidiaries) and Xxxxx shall not
discriminate against members of the Circor Affiliated Group (or their direct or
indirect subsidiaries) in the preparation of Returns under Section 7.01(a) for
the period beginning July 1, 1999.
Section 7.03. Responsibility for Taxes Generally.
----------------------------------
(a) Domestic Income Taxes.
---------------------
(i) Except as otherwise provided herein, the Xxxxx Affiliated Group
shall pay, and shall indemnify and hold harmless each member of the Circor
Affiliated Group (and each direct or indirect foreign subsidiary thereof) from,
all Domestic Income Taxes with respect to which Xxxxx is responsible for filing
a Return under Section 7.01(a) and (c), and the Xxxxx Affiliated Group shall be
entitled to receive and retain all refunds of Income Taxes for which the Xxxxx
Affiliated Group would have been responsible hereunder in the absence of the
refund.
(ii) Except as otherwise provided herein, the Circor Affiliated Group
shall pay, and shall indemnify and hold harmless each member of the Xxxxx
Affiliated Group (and each direct or indirect foreign subsidiary thereof) from,
all Domestic Income Taxes with respect to which Circor is responsible for filing
a Return under Section 7.01(c), and the Circor Affiliated Group shall be
entitled to receive and retain all refunds of Income Taxes for which the Circor
Affiliated Group would have been responsible hereunder in the absence of the
refund.
(b) Other Taxes.
-----------
(i) Except as otherwise provided herein, the Xxxxx Affiliated Group
shall pay, and shall indemnify and hold harmless each member of the Circor
Affiliated Group and each foreign subsidiary thereof from, all Other Taxes
attributable to a Xxxxx Asset or the operation of the Xxxxx Business, and the
Xxxxx Affiliated Group shall be entitled to receive and retain all refunds of
Other Taxes for which the Xxxxx Affiliated Group would have been responsible
hereunder in the absence of the refund.
(ii) Except as otherwise provided herein, the Circor Affiliated Group
shall pay, and shall indemnify and hold harmless each member of the Xxxxx
Affiliated Group and each foreign subsidiary thereof from, all Other Taxes
attributable to a Circor Asset or the operation of the Circor Business, and the
Circor Affiliated Group shall be entitled to receive and
21
retain all refunds of Other Taxes for which the Circor Affiliated Group would
have been responsible hereunder in the absence of the refund.
(iii) In no event shall the Circor Affiliated Group be required to
reimburse the Xxxxx Affiliated Group for Other Taxes actually paid by the Xxxxx
Affiliated Group prior to the Distribution Date.
(c) Transaction Taxes. Except as otherwise provided herein, the Xxxxx
-----------------
Affiliated Group shall pay, and shall indemnify and hold harmless each member of
the Circor Affiliated Group (and each direct or indirect foreign subsidiary
thereof) from, all Transaction Taxes, and the Xxxxx Affiliated Group shall be
entitled to receive and retain all refunds of Transaction Taxes for which the
Xxxxx Affiliated Group would have been responsible hereunder in the absence of
the refund.
(d) Tax Benefits.
------------
(i) If an Adjustment to any Return filed by Xxxxx under Section
7.01(a) or (c) results in a Tax Benefit to the Circor Affiliated Group, Circor
shall pay Xxxxx an amount equal to the cash value of such Tax Benefit (net of
any concomitant increase in any Tax liability incurred by Circor) as and to the
extent that such Tax Benefit is Effectively Realized.
(ii) If an Adjustment to any Return filed by Circor under Section
7.01(c) results in a Tax Benefit to the Xxxxx Affiliated Group, Xxxxx shall pay
Circor an amount equal to the cash value of such Tax Benefit (net of any
concomitant increase in any Tax liability incurred by Xxxxx) as and to the
extent that such Tax Benefit is Effectively Realized.
(e) Carrybacks. If the Carryback Period of a Circor Carryback Item
----------
includes a taxable period subject to a Return filed by Xxxxx under Section
7.01(a), Circor shall elect (under Code Section 172(b)(3) and (f)(6) and any
other applicable Code provision and, to the extent feasible, any similar
provision of applicable state or local Income Tax law) to relinquish such
Carryback Period unless the parties agree otherwise.
(f) Allocation. Neither Xxxxx nor CIRCOR shall make the election
----------
available under Regulations Section 1.1502-76(b)(2)(ii)(D) to ratably allocate
items of members of the Circor Affiliated Group unless the parties agree
otherwise.
Section 7.04. Responsibility for Spin-Off Tax; Covenants.
------------------------------------------
(a) Circor Responsibility. Circor and any successor shall be
---------------------
responsible for, and shall indemnify and hold harmless each member of the Xxxxx
Affiliated Group (and each direct or indirect foreign subsidiary thereof) from,
any loss (including but not limited to any increase in Domestic Income Taxes and
reasonable expenses) directly or indirectly caused by a Spin-Off Tax that is
attributable to any action or omission of Circor (or any successor).
22
(b) Xxxxx Responsibility. Xxxxx and any successor shall be
responsible for, and shall indemnify and hold harmless each member of the Circor
Affiliated Group (and each direct or indirect foreign subsidiary thereof) from,
any loss (including but not limited to any increase in Domestic Income Taxes and
reasonable expenses) directly or indirectly caused by a Spin-Off Tax that is
attributable to any action or omission of Xxxxx (or any successor).
(c) Shared Responsibility. If a Spin-Off Tax is incurred and
responsibility for such Spin-Off Tax under Section 7.04(a) and (b) rests either
with both parties or neither party, Xxxxx shall be responsible for --% and
Circor shall be responsible for --% of any loss (including but not limited to
any increase in Domestic Income Taxes and reasonable expenses) directly or
indirectly caused by such Spin-Off Tax. Xxxxx shall indemnify and hold harmless
each member of the Circor Affiliated Group (and each direct or indirect foreign
subsidiary thereof) from Xxxxx' share of such loss, and Circor shall indemnify
and hold harmless each member of the Xxxxx Affiliated Group (and each direct or
indirect foreign subsidiary thereof) from Circor's share of such loss.
(d) Circor Covenants. Circor covenants and agrees to:
----------------
(i) engage in a public offering of a significant amount of Circor
stock within one year of the Distribution Date in a manner consistent with the
Letter Ruling and the Letter Ruling Request.
(ii) not participate in any merger, reorganization, acquisition,
equity restructuring or other transaction that results in one or more persons
acquiring in Circor a 50% or greater interest, within the meaning of subsection
(e) of Section 355 of the Code, within two years of the Distribution Date; and
(iii) not undertake any action (or inaction) that is
inconsistent with any undertaking, representation or statement made in the
Letter Ruling Request.
(e) Xxxxx Covenants. Xxxxx covenants and agrees to:
---------------
(i) not participate in any merger, reorganization, acquisition, equity
restructuring or other transaction that results in one or more persons acquiring
in Xxxxx a 50% or greater interest, within the meaning of subsection (e) of
Section 355 of the Code, within two years of the Distribution Date; and
(ii) not undertake any action (or inaction) that is inconsistent with
any undertaking, representation or statement made in the Letter Ruling Request.
(f) Exceptions. Notwithstanding the foregoing, Xxxxx or Circor may
----------
act or fail to act in a way that is contrary to the covenants in Section 7.04(d)
and (e) if prior to such action (or inaction) Xxxxx or Circor, as the case may
be, (i) promptly notifies the other party that it intends to pursue such action
(or inaction), and (ii) obtains an opinion from Xxxxxxx, Procter
23
& Xxxx LLP (or other mutually acceptable Tax Counsel) or a ruling from the IRS
to the effect that such action (or inaction) will not result in a Spin-Off Tax.
Section 7.05. Payments.
--------
(a) Interest. Any Intercompany Tax Payment that is not paid when due
---------
under section 7.03(d) (or, where Section 7.03(d) is inapplicable, under
Article X) shall bear interest as provided in Article X.
(b) Reporting. Xxxxx and Circor agree that all Intercompany Tax
Payments shall be reported for U.S. federal income tax purposes as non-
deductible and non-taxable.
Section 7.06. Cooperation and Exchange of Information.
---------------------------------------
(a) Tax Proceedings.
---------------
(i) Notice. If during the course of a Tax Proceeding under the
------
control of one party (whether Xxxxx or Circor, and whether such control is
pursuant to Section 7.01(e) or pursuant to applicable Tax law) (the "Tax
Indemnitee") any taxing authority proposes or indicates an intention to propose
an Adjustment which would result, if confirmed by a Final Determination, in a
loss against which the other party (the "Tax Indemnitor") may be required to
indemnify the Tax Indemnitee pursuant to this Article VII, the Tax Indemnitee
shall promptly notify the Tax Indemnitor thereof in writing. Such notice shall
include sufficient information with respect to the issues as to which indemnity
may be sought to enable the Tax Indemnitor to determine whether to request the
Tax Indemnitee to contest the Adjustment.
(ii) Contest Rights and Conditions. If the Tax Indemnitor requests in
-----------------------------
writing within 20 days of the receipt of the notification referred to in Section
7.06(a)(i) that the Tax Indemnitee contest the Adjustment, the Tax Indemnitee
shall contest the Adjustment; provided that in no event shall the Tax Indemnitee
be required to contest any Adjustment unless coincident with the Tax
Indemnitor's request (A) the Tax Indemnitee shall have received (I) a written
acknowledgment from the Tax Indemnitor of its obligation to indemnify the Tax
Indemnitee in the event it does not prevail in contesting such Adjustment and
(II) an opinion from mutually acceptable Tax Counsel to the effect that a
reasonable basis exists for contesting such Adjustment; and (B) if such contest
is to be conducted in a manner requiring payment of a proposed tax deficiency,
the Tax Indemnitor shall have advanced to the Tax Indemnitee, on an interest-
free basis, an amount sufficient to make payment of the amount attributable to
the contested Adjustment, together with any required interest, penalties and
additions to tax. If any funds are advanced by the Tax Indemnitor in connection
with any Tax Proceeding, any refund received to the extent fairly attributable
to such advance shall be returned to the Tax Indemnitor, together with any
interest thereon paid by the relevant taxing authority, promptly upon the Tax
Indemnitee's receipt of such funds. If the Tax Indemnitor shall have requested
the Tax Indemnitee to contest an Adjustment and complied with each of the terms
and conditions set forth above, such Adjustment shall be contested, at the
direction of the Indemnitor, by mutually acceptable Tax Counsel. If the Tax
Indemnitor or the Tax Counsel conducting the contest advocates or fails to
protest before any taxing authority a position
24
which would result in a material tax detriment to the Tax Indemnitee not subject
to indemnification hereunder, the Tax Indemnitee may replace such Tax Counsel
with Tax Counsel of its own selection and any tax detriment suffered by the Tax
Indemnitee attributable to such position shall be an amount for which the Tax
Indemnitee is entitled to indemnification hereunder.
(iii) Settlement; Release of Indemnification. If the Tax Indemnitor
--------------------------------------
shall have requested the Tax Indemnitee to contest an Adjustment and complied
with each of the terms and conditions set forth above, the Tax Indemnitee shall
not settle or compromise any Adjustment for which indemnity is sought hereunder
without the consent of the Tax Indemnitor unless it simultaneously releases the
Tax Indemnitor from its obligations to indemnify the Tax Indemnitee with respect
to the issues so settled or compromised. If the Tax Indemnitor shall fail to
request the Tax Indemnitee to contest any Adjustment or shall fail to comply
with the terms and conditions entitling it to make such request as set forth in
Section 7.06(a)(ii), the Tax Indemnitee may in its sole discretion elect to
contest (or not contest) such Adjustment with Tax Counsel selected by it, and
may at any time settle or compromise the matter without the consent of the Tax
Indemnitor and without releasing its rights to indemnity from the Tax
Indemnitor.
(iv) Joint Responsibility. If for the reasons described in
--------------------
Section 7.04(c) a Spin-Off Tax is incurred or is proposed by the IRS (or other
taxing authority), the notice provisions in Section 7.06(a)(i) hereof shall
apply, and notwithstanding any other provision of this Article VII Xxxxx shall
have control over any Tax Proceeding relating to such Spin-Off Tax, including
without limitation the choice of Tax Counsel to represent it; provided, however,
that Xxxxx shall keep Circor informed of the such Tax Proceeding and shall
consult with Circor regarding the material issues raised; and further provided
that (A) any choice of forum, (B) any decision to appeal, and (C) any settlement
relating to the Spin-Off Tax shall be subject to Circor's approval, which shall
not be unreasonably withheld.
(b) Cooperation. Without limiting Section 7.06(a) hereof, Xxxxx and
-----------
Circor agree to cooperate fully with each other in connection with all matters
subject to this Agreement. Such cooperation includes but is not limited to:
(i) making personnel and records available within 10 days (or such
other period as may be reasonable under the circumstances) after a request for
such personnel or records is made by the other party;
(ii) retaining all records which may contain information or provide
evidence relevant to any taxable period until such time as a Final Determination
occurs with respect to such taxable period; provided, however, that such records
need not be retained longer than 15 years after the end of the latest taxable
period to which they relate and such records do not relate to an ongoing
contest;
(iii) executing, acknowledging and delivering any instrument
or document (including protective refund claims) that may be necessary or
helpful in connection with (A) any Return that the other party has the authority
to prepare and file under this
25
Agreement, (B) any refund or Tax Benefit to which
the other party may be entitled, (C) any Tax Proceeding or other litigation,
investigation or action that the other party has authority to control under this
Agreement or which may effect any obligation or Tax liability of the other party
under this Agreement, or (D) the carrying out of any obligation of the other
party under this Agreement;
(iv) using best efforts to obtain any documentation from any
governmental authority or other third party that may be necessary or helpful in
connection with the foregoing; and
(v) keeping the other party fully informed with respect to any
material developments relating to any matter subject to this Agreement.
(c) Failure to Cooperate. If Xxxxx or Circor, as the case may be,
--------------------
fails to provide any information requested pursuant to Section 7.06(b)(i), then
the requesting party shall have the right to engage a public accountant of its
choice to gather such information. Xxxxx and Circor agree to permit such public
accountant full access to all appropriate records or other information in the
possession of any member of the Xxxxx Affiliated Group or the Circor Affiliated
Group, as the case may be, during reasonable business hours, and to reimburse or
pay directly all costs and expenses in connection with the engagement of such
public accountant.
(d) Indemnity. Xxxxx agrees to indemnify and hold harmless each
member of the Circor Affiliated Group and each direct or indirect foreign
subsidiary thereof (and their officers and employees), and Circor agrees to
indemnify and hold harmless each member of the Xxxxx Affiliated Group and each
direct or indirect foreign subsidiary thereof (and their officers and employees)
from any cost, fine, penalty or other expense of any kind attributable to the
negligence or misconduct of a member of the Xxxxx Affiliated Group or the Circor
Affiliated Group, as the case may be, in supplying inaccurate or incomplete
information to a member of the other Affiliated Group.
Section 7.07. Sole Tax Sharing Agreement.
--------------------------
(a) All existing Tax sharing agreements or arrangements (if any),
written or unwritten, between the Xxxxx Affiliated Group the Circor Affiliated
Group shall be or shall have been terminated as of the Distribution Date. On
and after the Distribution Date the Xxxxx Affiliated Group and the Circor
Affiliated Group shall have no rights or liabilities (including, without
limitation, any rights and liabilities that accrued prior to the Distribution
Date) under such terminated agreements and arrangements, and this Article VII
shall constitute the sole Tax sharing agreement between the Xxxxx Affiliated
Group and the Circor Affiliated Group.
(b) This Article VII does not address the Tax sharing arrangements, if
any, (i) among members of the Xxxxx Affiliated Group or (ii) among members of
the Circor Affiliated Group.
26
ARTICLE VIII-ACCOUNTING MATTERS
Section 8.01. Allocation of Prepaid Items and Reserves. All prepaid items
----------------------------------------
and reserves that have been maintained by Xxxxx on a consolidated basis but that
relate in part to assets or liabilities of the Circor Group shall be allocated
between Xxxxx and Circor in such reasonable manner as they shall mutually agree.
Section 8.02. Accounting Treatment of Assets Transferred and Liabilities
----------------------------------------------------------
Assumed. All transfers of Assets of the Xxxxx Group to the Circor Group
-------
pursuant to this Agreement shall constitute contributions by Xxxxx to the
capital of Circor. All transfers of Assets of the Circor Group to the Xxxxx
Group, and the assumption by the Circor Group of Liabilities of the Xxxxx Group,
net of Assets received, shall be treated as a distribution by Circor to Xxxxx.
Section 8.03 Intercompany Accounts. All intercompany accounts between
---------------------
members of the Xxxxx Group and members of the Circor Group existing as of
September 30, 1999, shall be canceled as of September 30, 1999 and netted into
equity in accordance with Section 8.02 above.
ARTICLE IX-INFORMATION
Section 9.01 Provision of Corporate Records. Xxxxx and Circor shall each
------------------------------
arrange as soon as practicable following the Distribution Date for the delivery
to the other of existing corporate documents (e.g. minute books, stock
registers, stock certificates, documents of title, contracts, etc.) in its
possession relating to the other or its business and affairs.
Section 9.02. Access to Information. From and after the Distribution Date,
---------------------
Xxxxx and Circor shall each afford the other and its accountants, counsel and
other designated 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, contacts,
instruments, computer data and other data and information in its possession
relating to the business and affairs of the other (other than data and
information subject to an attorney/client or other privilege), insofar as such
access is reasonably required by the other including, without limitation, for
audit, accounting and litigation purposes.
Section 9.03 Litigation Cooperation. Xxxxx and Circor shall each use
----------------------
reasonable efforts to make available to the other, upon written request, its
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any legal, administrative
or other proceedings arising out of the business of the other prior to the
Distribution Date in which the requesting party may from time to time be
involved.
Section 9.04 Reimbursement. Xxxxx and Circor, each providing information
-------------
or witnesses under Sections 9.01, 9.02 or 9.03 to the other, shall be entitled
to receive from the
27
recipient, upon the presentation of invoices therefor, payment for all out-of-
pocket costs and expenses as may be reasonably incurred in providing such
information or witnesses.
Section 9.05. Retention of Records. Except as otherwise required by law
--------------------
or agreed to in writing, each party shall, and shall cause the members of its
Group to, retain all information relating to the other's business in accordance
with the Xxxxx Industries, Inc. record retention policy and with past practice.
Notwithstanding the foregoing, either party may destroy or otherwise dispose of
any information at any time in accordance with the corporate record retention
policy maintained by such party with respect to its own records.
Section 9.06 Confidentiality.
---------------
(a) Each party shall, and shall cause each member of its Group to,
hold and cause its directors, officers, employees, agents, consultants and
advisors to hold, in strict confidence, all information concerning the other
party (except to the extent that such information can be shown to have been (i)
in the public domain through no fault of such party or any of its directors,
officers, employees, agents, consultants or advisors, or (ii) later lawfully
acquired on a non-confidential basis from other sources by the party to which it
was furnished), and neither party shall release or disclose such information to
any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants and advisors, who shall be advised of and agree in writing
to comply with the provisions of this Section 9.06. Each party shall be deemed
to have satisfied its obligation to hold confidential information concerning or
supplied by the other party if it exercises the same care as it takes to
preserve confidentiality for its own similar information.
(b) In the event that any party or any member of its Group either (i)
determines on the advice of its counsel that it is required to disclose any
information pursuant to applicable law or (ii) receives any demand under lawful
process or from any governmental authority to disclose or provide information of
any other party (or any member of any other party's Group) that is subject to
the confidentiality provisions hereof, such party shall notify the other party
prior to disclosing or providing such information and shall cooperate at the
expense of the requesting party in seeking any reasonable protective
arrangements requested by such other party. Subject to the foregoing, the
person that received such request may thereafter disclose or provide information
to the extent required by such law (as so advised by counsel) or by lawful
process or such governmental authority.
ARTICLE X-INTEREST ON PAYMENTS
Except as otherwise expressly provided in this Agreement, all payments by
one party to the other under this Agreement or any Ancillary Agreement shall be
paid, by wire transfer of immediately available funds to an account in the
United States designated by the recipient, within [thirty (30)] days after
receipt of an invoice or other written request for payment setting forth the
specific amount due and a description of the basis therefor in reasonable
detail. Any
28
amount remaining unpaid beyond its due date, including disputed amounts that are
ultimately determined to be payable, shall bear interest at a floating rate of
interest equal to the prime commercial lending rate publicly announced by
BankBoston, N.A. or any successor thereto at its principal office (or any
alternative rate substituted therefor by such bank).
ARTICLE XI-MISCELLANEOUS
Section 11.01. Expenses. Except as specifically provided in this
--------
Agreement or any Ancillary Agreement, all costs and expenses incurred in
connection with the preparation, execution, delivery and implementation of this
Agreement and the Ancillary Agreements and with the consummation of the
transactions contemplated by this Agreement (including transfer taxes and the
fees and expenses of the Distribution Agent and of all counsel, accountants and
financial and other advisors) shall be paid by Xxxxx. Without limiting the
foregoing, Xxxxx shall pay the legal, filing, accounting, printing and other
expenses in connection with the preparation, printing and filing of the Form 10.
Section 11.02 Notices. All notices and communications under this
-------
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been duly given addressed as follows (i) one business day
after deposit with a recognized overnight mail carrier, (ii) upon receipt of a
confirmation by the sender, in the case of a facsimile, or (iii) if sent by
certified U.S. Mail, three (3) days after being deposited:
If to Xxxxx, to: Xxxxx Industries, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
If to Circor, to: Circor International, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Secretary
Either party may, by written notice so delivered to the other party, change the
address to which delivery of any notice shall thereafter be made.
Section 11.03. Amendment and Waiver. This Agreement may not be altered or
--------------------
amended, nor may rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver. No
waiver of any terms, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision, condition, right or remedy or as a waiver of
any other term, provision or condition of this Agreement.
29
Section 11.04 Entire Agreement. This Agreement, together with the
----------------
Ancillary Agreements, constitutes the entire understanding of the parties hereto
with respect to the subject matter hereof, superseding all negotiations, prior
discussions and prior agreements and understandings relating to such subject
matter. To the extent that the provisions of this Agreement are inconsistent
with the provisions of any Ancillary Agreement, the provisions of such Ancillary
Agreement shall prevail.
Section 11.05. Assignment. Neither of the parties hereto may assign its
----------
rights or delegate any of its duties under this Agreement without the prior
written consent of the other party. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. Nothing contained in this Agreement, express
or implied, is intended to confer any benefits, rights or remedies upon any
person or entity other than members of the Xxxxx Group and the Circor Group and
the Xxxxx Indemnitees and Circor Indemnitees under Articles IV and V hereof.
Section 11.06. Further Assurances and Consents. In addition to the
-------------------------------
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable efforts to (i) execute and deliver such
further instruments and documents and take such other actions as any other party
may reasonably request in order to effectuate the purposes of this Agreement and
to carry out the terms hereof and (ii) take, or cause to be taken, all actions,
and to do, or cause to be done, all things, reasonably necessary, proper or
advisable under applicable laws, regulations and agreements or otherwise to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using its reasonable efforts to obtain any
consents and approvals and to make any filings and applications necessary or
desirable in order to consummate the transactions contemplated by this
Agreement; provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to any
third party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the party or its Group
or the business thereof.
Section 11.07 Severability. The provisions of this Agreement are
------------
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
Section 11.08. Governing Law. This Agreement shall be construed in
-------------
accordance with, and governed by, the laws of The Commonwealth of Massachusetts,
without regard to the conflicts of law rules of such commonwealth.
Section 11.09. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same Agreement.
30
Section 11.10 Survival of Covenants. Except as expressly set forth in any
---------------------
Ancillary Agreement, the covenants, representations and warranties contained in
this Agreement and each Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive the Distribution and shall remain in
full force and effect.
Section 11.11 Disputes.
--------
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, "Disputes"), shall be subject to the provisions of this
Section 11.11; provided, however, that nothing contained herein shall preclude
either party from seeking or obtaining equitable or other judicial relief
(including without limitation injunctive relief) to enforce the provisions
hereof or to preserve the status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. The parties shall
thereupon attempt in good faith to resolve any Dispute promptly by negotiation
between executives who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within twenty (20) days after delivery of the
notice, the receiving party shall submit to the other a written response. The
notice and the response shall include a statement of such party's position and a
summary of arguments supporting that position and the name and title of the
executive who will represent that party and of any other person who will
accompany such executive. Within forty-five (45) days after delivery of the
first notice, the executives of both 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
one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiation within sixty
(60) days of the first party's notice, or if the parties failed to meet within
forty-five (45) days, the parties shall endeavor to settle the Dispute by
mediation under the mediation rules of the Center for Public Resources (the
"CPR") with the mediator to be appointed by the CPR from its National CPR Panel.
(d) If the Dispute has not been resolved within 180 days after
delivery of the first notice under Section 11.11(b), then the Dispute shall be
finally settled by binding arbitration conducted expeditiously in accordance
with the Center for Public Resources Rules for Nonadministered Arbitration of
Business Disputes (the "CPR Arbitration Rules"). The Center for Public
Resources shall appoint a neutral advisor from its National CPR Panel. The
arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
(S)(S)1-16, and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof. The place of arbitration
shall be Boston, Massachusetts.
31
Such proceedings shall be administered by the neutral advisor in accordance
with the CPR Arbitration Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
(i) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the initiation of the
procedure;
(ii) no other discovery;
(iii) hearings before the neutral advisor which shall consist of
a summary presentation by each side of not more than three hours; such
hearings to take place on one or two days at a maximum; and
(iv) decision to be rendered not more than ten (10) days
following such hearings.
Notwithstanding anything to the contrary contained herein, the provisions
of this Section 11.11 shall not apply with respect to any equitable remedies to
which any party may be entitled.
[END OF TEXT]
32
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
XXXXX INDUSTRIES, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
CIRCOR INTERNATIONAL, INC.
By:
-------------------------------------
Xxxxx X. Xxxxx, Xx.
President and Chief Executive Officer
33
EXHIBIT A
---------
Circor Group
34
EXHIBIT B
---------
Sequence of Transactional Steps
See attached.
35
Schedule 3.02(b)(ii)
--------------------
Agreements Surviving the Distribution
36
Schedule A-1
------------
Circor Assets
00
Xxxxxxxx X-0
------------
Xxxxxx Liabilities
38
Schedule L-2
------------
Xxxxx Liabilities
39
