SEPARATION AND DISTRIBUTION AGREEMENT

EXHIBIT 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

FMC TECHNOLOGIES, INC.

 

and

JOHN BEAN TECHNOLOGIES CORPORATION

 

Dated as of July 31, 2008

TABLE OF CONTENTS

 

 

i

Schedules to Separation and Distribution Agreement

 

 

ii

Exhibits to Separation and Distribution Agreement

 

 

iii

SEPARATION AND DISTRIBUTION AGREEMENT

This SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of July 31, 2008, is by and between FMC TECHNOLOGIES, INC. , a Delaware corporation (“ Parent ”), and JOHN BEAN TECHNOLOGIES CORPORATION , a Delaware corporation and a wholly owned subsidiary of Parent (“ Spinco ”) (each of Parent and Spinco, a “ Part y” and together, the “ Parties ”).

RECITALS

WHEREAS, the Board of Directors of Parent has determined that it is in the best interests of Parent and its stockholders to separate Parent’s existing businesses into two independent companies (the “ Separation ”), pursuant to the terms and subject to the conditions set forth in this Agreement;

WHEREAS, to effect the Separation, Parent intends to cause the transfer to Spinco of certain assets of Parent and its subsidiaries, and the assumption by Spinco of certain liabilities of Parent and its subsidiaries associated with the assets being transferred, all of which are primarily related to the Spinco Business (the “ Contribution ”) as contemplated by this Agreement and the Ancillary Agreements;

WHEREAS, in connection with the Separation, the Board of Directors of Parent has determined that it would be advisable and in the best interests of Parent and its stockholders for Parent to distribute to the holders of the issued and outstanding shares of common stock, par value $0.01 per share, of Parent (the “ Parent Common Stock ”) as of the Record Date 100% of the issued and outstanding shares of common stock, par value $0.01 per share, of Spinco (the “ Spinco Common Stock ”), together with the associated preferred stock purchase rights (each share of such stock, together with the associated preferred stock purchase right, a “Spinco Share ”), on the basis of 0.216 Spinco Shares for every share of Parent Common Stock (the “ Distribution ”);

WHEREAS, it is the intention of the parties to this Agreement that, for United States federal income tax purposes, the Distribution shall qualify as a tax-free spin-off under Section 355 of the Internal Revenue Code of 1986, as amended;

WHEREAS, the Boards of Directors of Parent and Spinco have each determined that the Separation, the Contribution, the Distribution and the other transactions contemplated by this Agreement and the Ancillary Agreements are in furtherance of and consistent with their respective business strategies and are in the best interests of their respective companies and stockholders and have approved this Agreement and the Ancillary Agreements; and

WHEREAS, it is appropriate and desirable to set forth the principal corporate transactions required to effect the Separation and certain other agreements that will govern certain matters relating to the Separation, the Contribution, the Distribution and the relationship of Parent and Spinco and their respective subsidiaries following the Separation and the Distribution.

 

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NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 General . As used in this Agreement, the following terms shall have the following meanings:

Action: any claim, demand, action, lawsuit, countersuit, arbitration, inquiry, proceeding or investigation by or before any governmental or regulatory authority or any arbitration or mediation tribunal.

After Tax Operating Cash Flow: the sum of, based on Parent’s financial reporting system for the period from and including January 1, 2008 to and including the close of business on the Distribution Date, with all business transactions accounted for according Parent’s established cut-off, accounting and reporting procedures and protocols, the Net Operating Income of the Spinco Business’s continuing operations, plus or minus each of the following (as specified below):

(1) plus, Net Operating Income of Spinco’s discontinued businesses,

(2) plus, Spinco’s incremental corporate staff expense, after tax,

(3) plus the decrease or minus the increase in Spinco’s capital employed for its continuing operations, excluding cash and cash equivalents,

(4) plus the decrease or minus the increase in Spinco’s capital employed for its discontinued operations, excluding cash and cash equivalents,

(5) plus or minus, as applicable, the correcting adjustment for foreign exchange translation related to Spinco’s capital employed for both its continuing and discontinued operations,

(6) plus the increase or minus the decrease in Spinco’s liability for current and deferred income taxes and deferred tax assets,

(7) plus or minus, as applicable, the correcting adjustment for the foreign exchange translation adjustment related to Spinco’s liability for current and deferred income taxes and deferred tax assets,

(8) plus restatement gains or minus restatement losses, net of tax,

(9) plus impact of OCI, deferred derivative gains (losses) and other,

(10) plus, provisions for defined benefit retirement plans, pre-tax,

 

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(11) less, amortization expense in 2008 related to the 2006 restricted stock equity award, pre-tax,

(12) plus the increase or minus the decrease in Spinco’s health care reserves, and

(13) plus the increase or minus the decrease in Spinco’s insurance reserves.

Parent and Spinco agree to make such other adjustments as the parties determine necessary to fairly state the After Tax Operating Cash Flow and the Dividend Amount. Examples may include adjustments required for the impact on tax reserves of intercompany interest income or expense and prior year(s) taxes paid in 2008. Exhibit J includes an example of the calculation methodology for After Tax Operating Cash Flow.

Ancillary Agreements: the Tax Sharing Agreement, the agreements relating to the transfers and assumptions contemplated by Section 2.3 , the Transition Services Agreement substantially in the form of Exhibit B , the Trademark License Agreement substantially in the form of Exhibit F , the Trademark Assignment and Coexistence Agreement substantially in the form of Exhibit G , the Distributor Agreements substantially in the forms attached as Exhibit I , the Sublease Agreements substantially in the forms attached as Exhibit H and the other agreements entered into or to be entered into in connection with the Separation as contemplated by Article II of this Agreement.

Assets: any and all assets, properties and rights (including goodwill), whether accrued, contingent or otherwise, whether now existing or hereafter acquired, wheresoever situated, and in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:

(1) all cash, cash equivalents, notes, accounts receivable, notes receivable and mortgages receivable (whether current or non-current);

(2) all interests in any capital stock or other equity interests, all rights as a partner or joint venturer or participant, certificates of deposit, banker’s acceptances, bonds, notes, debentures, evidences of indebtedness, certificates of interest or participation in profit-sharing agreements, all puts, calls and options and all other securities of any kind;

(3) all Intellectual Property Rights;

(4) all rights, title and interests in, to and under leases, subleases, contracts, licenses, permits, registrations, certifications, distribution arrangements, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products, other sales and purchase agreements, confidentiality agreements, and other agreements and business arrangements;

(5) all rights, title and interests in, to and under real property of whatever nature, including all easements and rights of way, servitudes, leases, subleases, permits, licenses, options and other real property rights and interests, as an owner, mortgagee or

 

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holder of a security interest in real property, lessor, sublessor, lessee, sublessee or otherwise, and all rights, title and interests in and to all buildings, fixtures and improvements thereon;

(6) all leasehold improvements, fixtures, trade fixtures, machinery, equipment (including transportation and office equipment), tools, dies, furniture and furnishings;

(7) all fixtures, machinery, equipment, tools, other inventories of supplies and spare parts, vehicles and transportation equipment, miscellaneous supplies, models, prototypes, test devices and other tangible assets or properties of any kind;

(8) all computers and other electronic data processing and computer equipment and all computer applications, programs and other software, including design tools, systems documentation and instructions;

(9) all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(10) all raw materials, parts, work-in-process, supplies, finished goods, consigned goods, products and other inventories;

(11) all deposits, letters of credit, performance and surety bonds, prepayments and prepaid or advanced payments and expenses, trade accounts and other accounts and notes receivable;

(12) all rights to causes of action, lawsuits, judgments, claims, causes in action, all rights under express or implied warranties, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers, all rights of recovery and all rights of setoff of any kind and demands of any nature, in each case whether mature, contingent or otherwise, whether in tort, contract or otherwise, whether arising by way of counterclaim or otherwise;

(13) all rights to receive mail, payments on accounts receivable and other communications;

(14) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(15) all accounting and other files, records and data, including schematics, books, manuals, technical information and engineering data, programming information, computerized data, books of account, ledgers, employment records, lists and files relating to customers, vendors, suppliers and agents, quality records and reports, research records, cost information, pricing data, market surveys and marketing know-how, mailing lists, purchase and sale records and correspondence, advertising and marketing records, of every kind;

(16) all goodwill as a going concern and other intangible properties;

 

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(17) all rights under employee contracts;

(18) all tax assets (including carryforwards) described in the Tax Sharing Agreement; and

(19) all permits, approvals, orders, authorizations, consents, licenses, certificates, franchises, exemptions of, or filings or registrations with or issued by, any governmental or regulatory authority in any jurisdiction, and all pending applications therefor.

Assumption Time: 12:01 a.m. on the Distribution Date.

Contribution: as defined in the Recitals hereto.

Distribution: as defined in the Recitals hereto.

Distribution Date: the date as of which the Distribution shall be effected, to be determined by, or under the authority of, the Board of Directors of Parent consistent with this Agreement.

Dividend Amount: an amount equal to:

(1) $200,000,000, plus

(2) the aggregate amount of cash and cash equivalents (as such term is defined in the footnotes to the financial statements included in Parent’s most recent Form 10-K filed with the U.S. Securities and Exchange Commission) of Spinco as of 11:59 p.m. on the Distribution Date, minus

(3) the amount of any Spinco indebtedness for borrowed money to the extent the creditor is not Parent, Spinco or any of their respective affiliates, minus

(4) the value of the After Tax Operating Cash Flow of the Spinco Business for the period from and including January 1, 2008 to and including 11:59 p.m. on the Distribution Date, if that amount is positive, plus

(5) the absolute value of the After Tax Operating Cash Flow of the Spinco Business for the period from and including January 1, 2008 to and including 11:59 p.m. on the Distribution Date, if such After Tax Operating Cash Flow amount is negative, minus

(6) the after-tax offset for excess assets left in Parent’s Brazilian pension plan, which is estimated at $463,737 (66% of $702,632).

Exhibit J includes an illustration of the calculation methodology for the Dividend Amount, including the identification of the accounts to be used to determine the After Tax Operating Cash Flow for the applicable period.

 

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Group: the Parent Group or the Spinco Group.

Guarantees: as defined in Section 5.3 hereof.

Indemnifiable Losses: all Liabilities suffered (and not actually reimbursed by insurance proceeds, provided that it is understood that any amount paid by a third party administrator that is within a self-insured retention shall not be considered to have been reimbursed by insurance proceeds) by an Indemnitee, including any reasonable out-of-pocket fees, costs or expenses of enforcing any indemnity hereunder; provided that “Indemnifiable Losses” shall not include:

(1) any special, indirect, incidental, punitive or consequential damages whatsoever of any indemnitee, including damages for lost profits and lost business opportunities, arising in connection with any Action other than any Action by any Person (including any governmental or regulatory authority) who is not a party to this Agreement or an affiliate or subsidiary of such a party; or

(2) any such Liability caused by, resulting from or arising out of the gross negligence, willful misconduct or fraud of such indemnitee.

Information: all records, books, contracts, instruments, computer data and other data and information.

Information Statement: as defined in Section 3.4 hereof.

Intellectual Property Rights:

(1) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof;

(2) all Marks, whether registered or unregistered Marks, and all applications, registrations, and renewals in connection with the Marks;

(3) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, all computer software (including data and related documentation), all websites as well as supporting HTML coding and source code, all mask works and all applications, registrations, and renewals in connection therewith;

(4) all trade secrets and confidential information, including ideas, research and development, know-how, proprietary processes and formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals;

(5) any income, royalties and payments which accrue as of the Distribution Date or thereafter with respect to any of the foregoing items, including payments for past, present or future infringements or misappropriation thereof, the right to sue and recover for past infringements or misappropriation thereof;

 

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(6) any goodwill associated with any of the foregoing;

(7) all other proprietary rights; and

(8) all copies and tangible embodiments thereof (in whatever form or medium).

Liabilities: losses, damages, Actions, judgments, payments, debts, commissions, duties, costs, fees, expenses, settlements, salaries, performance or delivery penalties, liabilities, warranty liabilities (whether implicit or explicit or whether granted orally or in writing) and obligations (whether pecuniary or not, including obligations to perform or forebear from performing acts or services), fines or penalties, of any kind or nature (including all reasonable out-of-pocket costs, fees and expenses, whether legal, accounting or otherwise), whether accrued or fixed, absolute or contingent, matured or un-matured, determined or determinable, known or unknown.

Marks : all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivation, and combinations thereof and including all goodwill associated therewith.

Parent: as defined in the Recitals hereto.

Parent Assets: all of the Assets owned by Parent or its subsidiaries, other than the Spinco Assets.

Parent Business: all businesses and operations (including related joint ventures and alliances) of Parent, other than the Spinco Business.

Parent Common Stock: as defined in the Recitals hereto.

Parent Group: Parent and its subsidiaries other than members of the Spinco Group.

Parent Indemnitees: Parent, each affiliate of Parent and each of their respective Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

Parent Liabilities: all of the Liabilities of Parent and its subsidiaries, other than the Spinco Liabilities.

Person: an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or any department or agency thereof.

 

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Record Date: the close of business on the date to be determined by the Board of Directors of Parent as the record date for determining shareholders of Parent entitled to receive shares of Spinco Common Stock in the Distribution.

Registration Statement : Spinco’s final registration statement on Form 10 filed with the U.S. Securities and Exchange Commission in connection with the Distribution.

Representative: with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys and representatives.

Separation: as defined in the Recitals to this Agreement.

Spinco: as defined in the Recitals hereto.

Spinco Assets: except as expressly provided in this Agreement or in the Ancillary Agreements,

(1) all Assets reflected on the Spinco Balance Sheet as set forth in the Registration Statement or the accounting records supporting the Spinco Balance Sheet and all Assets of either the Parent Group or the Spinco Group acquired between December 31, 2007 and the Assumption Time that would have been included on the Spinco Balance Sheet had they been owned on December 31, 2007, excluding any Assets sold or otherwise disposed of on or prior to the Assumption Time;

(2) all Assets primarily related to or used by the Spinco Business that are owned, leased, licensed or held by any member of either Group at the Assumption Time;

(3) all equity interests in any of Spinco’s subsidiaries and other equity interests and similar arrangements primarily related to the Spinco Business, including those shares of capital stock and other interests listed on Schedule 1.1(a) ;

(4) all hedge and option arrangements entered into by Parent in respect of the Spinco Business;

(5) all rights held of Spinco set forth in Section 9.14 ; and

(6) all of the Assets listed on Schedule 1.1(b) ; provided that:

(a) Intellectual Property Rights shall be Spinco Assets only in the form and to the extent provided in Section 2.1(b) ;

(b) cash shall be a Spinco Asset only to the extent set forth in Section 2.6 hereof;

(c) the leased real property at 200 E. Randolph Drive, Suite 6600, Chicago, Illinois shall not be a Spinco Asset or a Spinco Liability, but the Parties shall enter into a sublease agreement substantially in the form of Exhibit H with respect to such leased property;

 

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(d) pension assets shall be transferred to Spinco only in the amounts, to the extent and in the manner set forth in Section 2.7; and

(e) Spinco Assets shall not include the Assets set forth on Schedule 1.1(c) .

Spinco Balance Sheet: the audited combined balance sheet of Spinco as of December 31, 2007, and the notes thereto, as set forth in the Registration Statement.

Spinco Business: all businesses, operations or products (including related joint ventures and alliances) of the FoodTech and Airport Systems businesses of Parent and its subsidiaries and affiliates (whether or not currently owned, used or occupied by the Parent and its subsidiaries or affiliates).

Spinco Common Stock: as defined in the Recitals to this Agreement.

Spinco Group: Spinco and its subsidiaries.

Spinco Indemnitees: Spinco, each affiliate of Spinco and each of their respective Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

Spinco Liabilities: all Liabilities related to or arising out of the Spinco Assets or the Spinco Business or otherwise specified as Spinco Liabilities in this Agreement or any Ancillary Agreement, including:

(1) except as expressly provided in the Ancillary Agreements, all Liabilities reflected on the Spinco Balance Sheet as set forth in the Registration Statement or the accounting records supporting such Spinco Balance Sheet and all Liabilities of either Group incurred or arising between December 31, 2007 and the Assumption Time which would have been included on the Spinco Balance Sheet had they been incurred or arisen on or prior to December 31, 2007, excluding those Liabilities (or portions thereof) that have been satisfied, paid or discharged prior to the Assumption Time;

(2) all Liabilities of any discontinued or closed business, operation or product that would have been part of the Spinco Business as of December 31, 2007 if such business, operation or product had not been discontinued or closed prior to such time; provided that, notwithstanding such general rule, any discontinued or closed business, operation or product listed on Schedule 1.1(d)-(2)  shall be the obligation and liability of Spinco and/or Parent as specified on such Schedule 1.1(d)-(2) ;

(3) all environmental Liabilities primarily related to the Spinco Business or any environmental Liability to the extent arising out of or resulting from the use by Spinco Business of any property owned, operated, used or leased in the course of operating any Spinco Business at any time or any other property where the Spinco Business contracted or arranged for disposal at any time; provided that, notwithstanding such general rule, environmental Liabilities for the facilities set forth on Schedule 1.1(d)-(3)  shall be the obligation and liability of Spinco and/or Parent as specified on such Schedule 1.1(d)-(3) . With respect to environmental Liabilities arising from any facility

 

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that was jointly used by Spinco and Parent, except as otherwise specified on Schedule 1.1(d)-(3) , if one party was the primary or predominant user of the property, that party shall be responsible to administer any Action related thereto, including providing any required defense, and the other party shall cooperate in the administration and defense. Liabilities associated with any such Action shall be shared equally by Parent and Spinco unless there is another allocation methodology that more accurately and reasonably reflects the appropriate allocation of responsibility as between Parent and Spinco (including, for the avoidance of doubt, a reasonable estimation of relative fault or cause of the Liabilities);

(4) all Liabilities related to or incurred in the manufacture of products of the Spinco Business sold to third parties by any member of either the Parent Group or the Spinco Group;

(5) Liabilities for Taxes specifically allocated to Spinco under the Tax Sharing Agreement; and

(6) all Liabilities with respect to the various claims and potential claims set forth on Schedule 1.1(d)-(6) .

To the extent any third party has purchased products or services from business units of the Energy Processing or Energy Production divisions of Parent prior to the Distribution Date through (i) formal or informal distribution arrangements between the FoodTech or Airport Systems businesses, on the hand, and any such Energy Processing or Energy Production business units, on the other hand, or (ii) contracts executed by legal entities operating as FoodTech or Airport Systems businesses whose ownership is transferred to Spinco in the Contribution, any Liabilities resulting from such arrangements are Parent Liabilities and will not be considered to be Spinco Liabilities; provided that, to the extent that any such Liability arises out of or relates to the actions or inactions of Spinco or any person acting on behalf of Spinco or the FoodTech or Airport Businesses in a manner inconsistent with the applicable arrangement with the Energy Processing or Energy Production divisions of Parent, such Liabilities shall be Spinco Liabilities.

Tax: as defined in the Tax Sharing Agreement.

Tax Sharing Agreement: the Tax Sharing Agreement between Parent and Spinco, substantially in the form of Exhibit A hereto.

Trademark License Agreement: the Trademark License Agreement between Parent and Spinco, substantially in the form of Exhibit F .

 

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ARTICLE II

THE CONTRIBUTION

SECTION 2.1 Contribution .

(a) On or prior to the Assumption Time, Parent shall assign and transfer to a member of the Spinco Group to be selected by Spinco, all of Parent’s and its subsidiaries’ respective rights, title and interests in all Spinco Assets except as otherwise specified in this Agreement. Except to the extent of any later transfers described in Section 2.3 , the transfers described in this Section will become effective at the Assumption Time. In partial consideration for the transfers described above, Spinco shall deliver to Parent all of the shares of Spinco Common Stock.

(b) Effective as of the Assumption Time, Spinco shall assume and discharge in due course all of the Spinco Liabilities in accordance with their respective terms.

(i) Separation of Assets . The Spinco Assets (other than Intellectual Property Rights, which will be licensed or assigned only as set forth in Section 2.1(b)(ii) ) shall, to the extent reasonably practicable (including taking into account the costs of any actions taken), be separated from the Parent Assets so that members of the Spinco Group will own and control the Spinco Assets at the Assumption Time and members of the Parent Group will own and control the Parent Assets at the Assumption Time. Such separation shall be effected in a manner that does not unreasonably disrupt either the Spinco Business or the Parent Business and minimizes, to the extent practicable, current and future costs (and losses of Tax or other economic benefits) of the respective businesses. With respect to any Asset that cannot reasonably be separated or otherwise allocated as provided above (A) all right, title and interest of the Parent Group shall be allocated to the party as to which such Asset is primarily used or held for use or primarily relates and (B) the other party shall have a right to use such Asset in its business in a manner consistent with past practice for a period which is coterminous with the life of the Asset described in (A) (and the obligation to pay its allocable share of any costs or expenses related to such Asset based on the methodology historically used by Parent); provided that if any Ancillary Agreement provides a more specific allocation or methodology with respect to any such Asset, the more specific treatment provided in the Ancillary Agreement shall prevail. To the extent the separation of Assets cannot be achieved in a reasonably practicable manner, the parties will enter into appropriate arrangements regarding such shared Asset.

(ii) Intellectual Property. In connection with the Contribution, any Intellectual Property Rights of Parent or any of its subsidiaries shall be licensed or assigned to Spinco, as the case may be, as follows:

 

(1)

With respect to Intellectual Property Rights (other than any Intellectual Property Rights described in the Trademark License Agreement, which shall remain assets of Parent other than as set forth in the Trademark License Agreement) used or held for use primarily in connection with the Spinco Business (“ Spinco Group IP ”), including the Intellectual Property Rights listed in Schedule 2.1(b) , Spinco shall have full ownership (to the extent of Parent’s rights therein) of such rights.

 

(2)

Except as otherwise provided in Schedule 2.1(b) , with respect to Spinco Group IP used or held for use in both the Spinco Business and the Parent Business on or before the Assumption Time, the Parent

 

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Group shall have a non-exclusive, worldwide, fully-paid, perpetual, royalty-free license, with the right to grant sublicenses in the ordinary course of an on-going business, to all rights therein only to the extent it was used or held for use by the Parent Business at or before the Assumption Time. Parent and Spinco shall jointly determine the most cost-efficient means of obtaining and using software that is used by the Parent corporate staff prior to the Assumption Time and shall evenly divide the cost of obtaining new licenses for or copies of existing software that both Groups will require to operate their respective corporate staffs.

 

(3)

Except as otherwise provided in Schedule 2.1(b) , with respect to Intellectual Property Rights other than Spinco Group IP that are used or held for use in both the Spinco Business and the Parent Business on or before the Assumption Time, title to such rights shall be owned by the Parent Group, and the Spinco Group shall have a non-exclusive, worldwide, fully-paid, perpetual, royalty-free license, with the right to grant sublicenses in the ordinary course of an ongoing business, to all rights in the Intellectual Property Rights only to the extent it was used or held for use by the Spinco Business on or before the Assumption Time; provided that to the extent any such Intellectual Property Rights are of the kind covered by the Trademark License Agreement or the Trademark Assignment and Coexistence Agreement in substantially the form set forth on Exhibit G , the terms of the Trademark License Agreement or Trademark Assignment and Coexistence Agreement, as applicable, shall prevail and the license rights described in this paragraph shall not apply.

 

(4)

The licenses specified in this Section shall not restrict the subsequent transfer or license by the licensee (within the applicable field of use) of the Intellectual Property Rights, other than as specified in the Trademark License Agreement.

 

(5)

Notwithstanding anything to the contrary in this Agreement, the Intellectual Property Rights described in the Trademark Assignment and Coexistence Agreement in substantially the form set forth on Exhibit G shall be transferred to Spinco only to the extent set forth in such agreement, and the terms of such agreement shall prevail with respect to any Intellectual Property Rights described in such agreement.

SECTION 2.2 Conditions Precedent to Completion of the Contribution .

The obligations of the parties to complete the Contribution shall be conditioned on the satisfaction, or waiver by Parent, of the following conditions:

(a) Final approval of the Contribution shall have been given by the Board of Directors of Parent in its sole discretion; and

 

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(b) The conditions to the completion of the Distribution set forth in Section 3.6 hereof shall have been satisfied or waived pursuant to such Section 3.6 .

SECTION 2.3 Transfers Not Effected Prior to the Separation; Transfers Deemed Effective at the Assumption Time .

To the extent that any transfers contemplated by this Article II shall not have been completed at the Assumption Time, the parties shall cooperate and use reasonable efforts to effect such transfers as promptly following the Assumption Time as shall be practicable. Nothing in this Agreement shall be deemed to require the transfer of any Assets or the assumption of any Liabilities which by their terms or operation of law cannot be transferred or assumed; provided , however , that Parent and Spinco shall cooperate and use reasonable efforts to obtain any necessary consents or approvals for the transfer of all Assets and Liabilities contemplated to be transferred pursuant to this Article II . In the event that any such transfer of Assets or Liabilities has not been completed effective as of and after the Assumption Time, the party retaining such Asset or Liability shall thereafter hold such Asset for the use and benefit of the party entitled thereto (at the expense of the party entitled thereto) and retain such Liability for the account of the party by whom such Liability is to be assumed pursuant hereto, and take such other action as may be reasonably requested by the party to which such Asset is to be transferred, or by whom such Liability is to be assumed, as the case may be, in order to place such party, insofar as reasonably possible, in the same position as would have existed had such Asset or Liability been transferred as contemplated by this Agreement. As and when any such Asset or Liability becomes transferable, such transfer shall be effected promptly. The parties agree that, at the Assumption Time, each Party shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such party is entitled to acquire or required to assume pursuant to the terms of this Agreement.

SECTION 2.4 Ancillary Agreements .

Parent and Spinco shall, on or prior to the Assumption Time, enter into the Ancillary Agreements in connection with the Separation, including (i)(A) such bills of sale, stock powers, capital contribution agreements, certificates of title, assignments of contracts and other instruments of transfer and assignment as and to the extent necessary to evidence the transfer and assignment of all of Parent’s and its respective subsidiaries’ right, title and interest in and to the Spinco Assets to Spinco or any subsidiary thereof and (B) such bills of sale, stock powers, capital contribution agreements, certificates of title, assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Spinco Liabilities by Spinco or any subsidiary thereof, and (ii) agreements with respect to (A) transition services (including shared facilities) pursuant to the Transition Services Agreement between Parent and Spinco, substantially in the form of Exhibit B , (B) intellectual property licenses as contemplated by Section 2.1(b) , (C) each other Ancillary

 

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Agreement and (D) other matters as may be advisable. The Ancillary Agreements (or, in the case of the forms of agreement attached hereto, any amendments thereto) shall be on terms reasonably acceptable to Parent and Spinco.

SECTION 2.5 Certificate of Incorporation; By-laws; Rights Plan .

Prior to the completion of the Distribution, Parent and Spinco shall take all action necessary so that (i) the Amended and Restated Certificate of Incorporation and the Amended and Restated By-laws, each as previously finalized as set forth on Exhibits C and D , respectively, shall remain in full force and effect on the Distribution Date, and (ii) the Preferred Share Purchase Rights Agreement of Spinco, in substantially the form of Exhibit E hereto, shall become effective upon the Distribution.

SECTION 2.6 Dividend and Cash .

(a) On or before the Distribution Date,

(i) Spinco shall cause to be received from the Credit Agreement and the Note Purchase Agreement, each dated on or before the Distribution Date, in substantially the forms reviewed by Parent prior to the Distribution Date, an amount not less than that necessary to enable Spinco to pay the Initial Dividend Amount to Parent on or before the Distribution Date

(ii) Spinco and Parent shall jointly determine the Initial Dividend Amount, which amount shall be based on the parties’ best estimate of the expected pro forma accounts of the Spinco Business as of the Distribution Date; and

(iii) Spinco shall cause to be paid to Parent an amount equal to the estimate of the Dividend Amount (such amount actually paid to Parent on or before the Distribution Date, the “Initial Dividend Amount”).

(b) Unless otherwise specified in this Agreement or any exhibit or schedule hereto, for purposes of calculating the Initial Dividend Amount, the Final Dividend Amount and the After Tax Operating Cash Flow of the Spinco Business, those certain one time expenses, restructuring expenses (including tax costs associated with foreign transfers) and deal related costs specified in Section 9.2 are to be paid by Parent, including reimbursement to Spinco for any such costs incurred.

(c) Settlement of inter-company loans will not create any third party indebtedness for borrowed money.

(d) Within 60 days after the Distribution Date, Spinco shall determine the final Dividend Amount (such amount, subject to adjustment for any dispute settled as set forth in this Section 2.6(d), the “Final Dividend Amount”) and shall deliver to Parent the calculation of the Final Dividend Amount, along with all relevant documents used to determine the Final Dividend Amount. At Parent’s reasonable request, Spinco shall promptly deliver or make available to Parent all books and records used or useful in Parent’s review of the Final Dividend Amount. Parent shall have 30 days to review the Final Dividend Amount delivered by Spinco, and shall bring any dispute to Spinco’s attention by written notice within such 30 day review period. If

 

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Parent agrees to the Final Dividend Amount and such amount is less than the Initial Dividend Amount, Parent shall pay the difference to Spinco not later than 10 business days after Parent’s written agreement to such amount (or 10 business days after the expiration of the 30-day review period, if earlier). If the Final Dividend Amount is greater than the Initial Dividend Amount, Spinco shall pay the excess to Parent not later than 10 business days after