TAX SHARING AGREEMENT

EXHIBIT 10.1

TAX SHARING AGREEMENT

by and among

FMC TECHNOLOGIES, INC.

AND ITS AFFILIATES

and

JOHN BEAN TECHNOLOGIES CORPORATION

AND ITS AFFILIATES

TABLE OF CONTENTS

 

 

i

 

ii

TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT, dated as of July 31, 2008, by and among FMC TECHNOLOGIES, INC. (“Parent”), a Delaware corporation, by and on behalf of itself and each Affiliate of Parent, and JOHN BEAN TECHNOLOGIES CORPORATION (“Spinco”), a Delaware corporation and currently a direct, wholly owned subsidiary of Parent, by and on behalf of itself and each Affiliate of Spinco. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof.

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”);

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 Separation and Distribution Agreement dated as of July 31, 2008 (the “Separation 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 of Parent (the “Parent Common Stock”) as of the Record Date 100% of the issued and outstanding shares of common stock 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, the Contribution and Distribution are intended to qualify as a tax-free reorganization and distribution under Sections 368(a)(1)(D) and 355 of the Code; and

WHEREAS, in contemplation of the Distribution, Parent and Spinco desire to set forth their agreement on the rights and obligations of Parent and Spinco and their respective Affiliates with respect to the responsibility, handling and allocation of federal, state, local, and foreign Taxes, and various other Tax matters.

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants, and provisions of this Agreement, Parent, Spinco, and their respective Affiliates mutually covenant and agree as follows:

ARTICLE I

DEFINITIONS

“Affiliate” means any corporation, partnership, limited liability company, or other entity directly or indirectly Controlled by the entity in question. For purposes of this Agreement, an Affiliate of Parent shall not include Spinco or any entity that is also an Affiliate of Spinco.

“After Tax Amount” means any additional amount necessary to reflect (through a gross-up mechanism) the hypothetical Tax consequences of the receipt or accrual of any payment required to be made under this Agreement (including payment of an additional amount or amounts hereunder and the effect of the deductions available for interest paid or accrued and for Taxes such as state and local Income Taxes), determined by using the applicable corporate Tax rate (or rates, in the case of an item that affects more than one Tax) for the relevant taxable jurisdiction and period (or portion thereof).

“Agreement” means this Tax Sharing Agreement, including any schedules, exhibits, and appendices attached hereto.

“Cash Acquisition Merger” means a merger of a newly-formed subsidiary of Spinco with a corporation, limited liability company, limited partnership, general partnership or joint venture (in each case, not previously owned, directly or indirectly, by Spinco) solely for cash pursuant to which Spinco acquires such corporation, limited liability company, limited partnership, general partnership or joint venture and no Equity Securities of Spinco or any Spinco Affiliate are issued, sold, redeemed, or acquired, directly or indirectly.

“Code” means the Internal Revenue Code of 1986 (or, if relevant, the Internal Revenue Code of 1954), as amended, or any successor thereto, as in effect for the taxable period in question.

“Combined Jurisdiction” means, for any taxable period, any jurisdiction with respect to which a Combined Return is filed for United States federal, state, local, or foreign Income Tax purposes.

“Combined Return” means any combined, unitary, or consolidated Tax Return or report, or any Tax Return or report for a single entity that operated a Spinco Business for any portion of the relevant Tax period (and which is not otherwise a Spinco Separate Tax Return), used in the determination of a United States federal, state, local, or foreign Income Tax liability.

“Contribution” has the meaning prescribed in the recitals to this Agreement.

“Control” means the ownership of stock or other securities possessing at least 50 percent of the total combined voting power of all classes of securities entitled to vote.

“Deferred Tax Assets” means, as of a given date, the amount of deferred tax benefits (including deferred tax consequences attributable to deductible temporary differences and carryforwards) that would be recognized as assets on a business enterprise’s balance sheet computed in accordance with GAAP, but without regard to valuation allowances.

“Deferred Tax Liabilities” means, as of a given date, the amount of deferred tax liabilities (including deferred tax consequences attributable to deductible temporary differences) that would be recognized as liabilities on a business enterprise’s balance sheet computed in accordance with GAAP, but without regard to valuation allowances.

“Deferred Taxes” means, as of a given date, the amount of Deferred Tax Assets, less the amount of Deferred Tax Liabilities. Deferred Taxes may be a net negative or positive amount, and shall be computed without regard to any payments to be made pursuant to Section 2.10.

“Distribution” has the meaning prescribed in the preamble to this Agreement.

“Distribution Date” means the date on which the Spinco stock is distributed by Parent to its shareholders in a transaction intended to qualify as a tax-free distribution under Sections 355 and 368(a)(1)(D) of the Code.

“Employee Restricted Stock” means either Parent Restricted Stock or Spinco Restricted Stock.

“Employee Stock Option” means either a Parent Stock Option or a Spinco Stock Option.

“Equity Securities” means any stock or other equity securities treated as stock for Tax purposes, or options, warrants, rights, convertible debt, or any other instrument or security that affords any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the value of stock.

“Estimated Spinco Separate Tax Liability” has the meaning prescribed in Section 2.2(e).

“Filing Party” has the meaning prescribed in Section 3.2(b).

“Final Determination” shall mean the final resolution of liability for any Tax for a taxable period, including any related interest, penalties or other additions to tax, (i) by Internal Revenue Service Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the IRS, or by a comparable form under the laws of other jurisdictions; except that a Form 870 or 870-AD or comparable form that reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund and/or the right of the Taxing Authority to assert a further deficiency with respect to a Tax Item shall not constitute a Final Determination with respect to such Tax Item; (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Section 7121 or Section 7122 of the Code, or comparable agreements under the laws of other jurisdictions; (iv) by any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; or (v) by any other final disposition, including by reason of the expiration of the applicable statute of limitations.

 

2

“GAAP” means United States generally accepted accounting principles as in effect on the Distribution Date.

“Income Taxes” means all federal, state, local, and foreign income Taxes or other Taxes based on income or net worth, and any other franchise or similar Taxes.

“IRS” means the United States Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.

“Liability Issue” has the meaning prescribed in Section 5.1(c).

“Non-filing Party” has the meaning prescribed in Section 3.2(b).

“Non-preparing Party” has the meaning prescribed in Section 3.4(a).

“Option” means an option to acquire common stock, or other equity-based incentives the economic value of which is designed to mirror that of an option, including non-qualified stock options, discounted non-qualified stock options, cliff options to the extent stock is issued or issuable (as opposed to cash compensation), and tandem stock options to the extent stock is issued or issuable (as opposed to cash compensation).

“Other Taxes” means all taxes other than Income Taxes, including (but not limited to) transfer, sales, use, payroll, property, and unemployment Taxes.

“Owed Party” has the meaning prescribed in Section 7.5.

“Owing Party” has the meaning prescribed in Section 7.5.

“Parent” has the meaning prescribed in the preamble to this Agreement.

“Parent Common Stock” has the meaning prescribed in the recitals to this Agreement.

“Parent Consolidated Group” means the affiliated group of corporations (within the meaning of Section 1504 of the Code) of which Parent is the common parent prior to the Distribution Date.

“Parent Employee” means an employee of Parent or any Parent Affiliate immediately after the Distribution.

“Parent Group” means the group of corporations that, immediately after the Distribution Date, are members of the affiliated group of corporations of which Parent is the common parent (within the meaning of Section 1504 of the Code).

 

3

“Parent Representation Letter” means an officer’s certificate in which certain representations, warranties and covenants are made on behalf of Parent and its Affiliates in connection with the issuance of a Tax Opinion or Tax Ruling.

“Parent Restricted Stock” means Parent common stock received by a Parent or Spinco Employee in connection with his or her employment, which stock has not yet been included in the income of such Employee as of the Distribution Date.

“Parent Separate Tax Return” means any Tax Return for any Tax period that includes one or more members of the Parent Group, but does not include any members of the Spinco Group.

“Parent Stock Option” means an Option to acquire Parent common stock received by a Parent or Spinco Employee in connection with his or her employment, which Option has not yet been exercised as of the Distribution Date.

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, proprietorship, trust, association, union, governmental authority or other entity, enterprise, authority or organization.

“Post-Distribution Tax Period” means, with respect to a given entity, any taxable period (or portion thereof) for which a Tax Return is filed, if such period begins after the Distribution Date.

“Pre-Distribution Tax Period” means, with respect to a given entity, any taxable period (or portion thereof) for which a Tax Return is filed, if such period ends on or before the Distribution Date.

“Preparing Party” has the meaning prescribed in Section 3.4(a).

“Reportable Transaction” means a reportable or listed transaction as defined in Section 6011 of the Code or Treasury Regulations thereunder.

“Representation Letter” means the Spinco Representation Letter and the Parent Representation Letter.

“Responsible Party” has the meaning prescribed in Section 5.2.

“Restriction Period” means the period beginning on the date hereof and ending on the second anniversary of the Distribution Date.

“Ruling Documents” means the Ruling Request, the appendices, attachments and exhibits thereto, and any additional or supplemental information submitted to the IRS in connection with the Ruling Request.

“Ruling Request” means the private letter ruling request filed by Parent with the IRS dated March 20, 2008 pertaining to certain Tax aspects of the Contribution and the Distribution.

 

4

“Separation Agreement” has the meaning prescribed in the recitals to this Agreement.

“Spinco” has the meaning prescribed in the preamble to this Agreement.

“Spinco Available FTCs” has the meaning prescribed in Section 2.6(a).

“Spinco Allocated FTCs” has the meaning prescribed in Section 2.6(a).

“Spinco Available NOLs” has the meaning prescribed in Section 2.5(a).

“Spinco Allocated NOLs” has the meaning prescribed in Section 2.5(a).

“Spinco Assets” has the meaning prescribed in Section 1.1 of the Separation Agreement.