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