EMPLOYEE MATTERS AGREEMENT by and between DANAHER CORPORATION And VERALTO CORPORATION Dated as of [l], 2023
Exhibit 10.3
by and between
▇▇▇▇▇▇▇ CORPORATION
And
VERALTO CORPORATION
Dated as of [l], 2023
TABLE OF CONTENTS
| Page | ||||||||
ARTICLE I | ||||||||
DEFINITIONS AND INTERPRETATION | ||||||||
Section 1.1 | General | 1 | ||||||
Section 1.2 | References; Interpretation | 6 | ||||||
ARTICLE II | ||||||||
GENERAL PRINCIPLES | ||||||||
Section 2.1 | Nature of Liabilities | 7 | ||||||
Section 2.2 | Transfers of Employees and Independent Contractors Generally | 7 | ||||||
Section 2.3 | Assumption and Retention of Liabilities Generally | 8 | ||||||
Section 2.4 | Treatment of Compensation and Benefit Arrangements; Terms of Employment | 9 | ||||||
Section 2.5 | Participation in ▇▇▇▇▇▇▇ Benefit Arrangements | 9 | ||||||
Section 2.6 | Service Recognition | 9 | ||||||
Section 2.7 | Collective Bargaining Agreements | 10 | ||||||
Section 2.8 | Information and Consultation | 10 | ||||||
Section 2.9 | WARN | 10 | ||||||
| ARTICLE III | ||||||||
CERTAIN BENEFIT PLAN PROVISIONS | ||||||||
Section 3.1 | Health and Welfare Benefit Plans | 11 | ||||||
Section 3.2 | U.S. Defined Benefit Plans | 12 | ||||||
Section 3.3 | U.S. Savings Plans | 12 | ||||||
Section 3.4 | ▇▇▇▇▇▇▇ Deferred Compensation Plans | 13 | ||||||
Section 3.5 | ▇▇▇▇▇▇▇ Canadian RPP/RRSP | 13 | ||||||
Section 3.6 | Non-U.S. Plans | 14 | ||||||
Section 3.7 | Treatment of Certain Plans | 14 | ||||||
Section 3.8 | Chargeback of Certain Costs | 14 | ||||||
ARTICLE IV | ||||||||
EQUITY INCENTIVE AWARDS | ||||||||
Section 4.1 | Treatment of ▇▇▇▇▇▇▇ Stock Options | 14 | ||||||
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Section 4.2 | Treatment of ▇▇▇▇▇▇▇ Time-Based Restricted Stock Units | 15 | ||||||
| Section 4.3 | Treatment of ▇▇▇▇▇▇▇ Performance Stock Units | 15 | ||||||
Section 4.4 | Veralto Stock Plan | 16 | ||||||
Section 4.5 | General Terms | 16 | ||||||
ARTICLE V | ||||||||
ADDITIONAL MATTERS | ||||||||
Section 5.1 | Cash Incentive Programs | 16 | ||||||
Section 5.2 | Time-Off Benefits | 17 | ||||||
Section 5.3 | Workers’ Compensation Liabilities | 17 | ||||||
Section 5.4 | COBRA Compliance in the United States | 17 | ||||||
Section 5.5 | Retention Bonuses | 18 | ||||||
Section 5.6 | Code Section 409A | 18 | ||||||
Section 5.7 | Payroll Taxes and Reporting | 18 | ||||||
Section 5.8 | Regulatory Filings | 18 | ||||||
Section 5.9 | Disability | 18 | ||||||
Section 5.10 | Certain Requirements | 19 | ||||||
ARTICLE VI | ||||||||
GENERAL AND ADMINISTRATIVE | ||||||||
Section 6.1 | Employer Rights | 19 | ||||||
Section 6.2 | Effect on Employment | 19 | ||||||
Section 6.3 | Consent of Third Parties | 19 | ||||||
Section 6.4 | Access to Employees | 19 | ||||||
Section 6.5 | Beneficiary Designation/Release of Information/Right to Reimbursement | 20 | ||||||
Section 6.6 | No Third Party Beneficiaries | 20 | ||||||
Section 6.7 | No Acceleration of Benefits | 20 | ||||||
Section 6.8 | Employee Benefits Administration | 20 | ||||||
ARTICLE VII | ||||||||
MISCELLANEOUS | ||||||||
Section 7.1 | Entire Agreement | 20 | ||||||
Section 7.2 | Counterparts | 20 | ||||||
Section 7.3 | Survival of Agreements | 21 | ||||||
Section 7.4 | Notices | 21 | ||||||
Section 7.5 | Waivers | 21 | ||||||
Section 7.6 | Assignment | 21 | ||||||
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Section 7.7 | Successors and Assigns | 22 | ||||||
Section 7.8 | Termination and Amendment | 22 | ||||||
Section 7.9 | Subsidiaries | 22 | ||||||
Section 7.10 | Title and Headings | 22 | ||||||
Section 7.11 | Governing Law | 22 | ||||||
Section 7.12 | Severability | 22 | ||||||
Section 7.13 | Interpretation | 22 | ||||||
Section 7.14 | No Duplication; No Double Recovery | 22 | ||||||
Section 7.15 | No Waiver | 23 | ||||||
Section 7.16 | No Admission of Liability | 23 | ||||||
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This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of [l], 2023, is entered into by and between ▇▇▇▇▇▇▇ Corporation, a Delaware corporation (“▇▇▇▇▇▇▇”), and Veralto Corporation, a Delaware corporation (“Veralto”). “Party” or “Parties” means ▇▇▇▇▇▇▇ or Veralto, individually or collectively, as the case may be. Capitalized terms used in this Agreement, but not otherwise defined in this Agreement or the Separation Agreement, shall have the meaning set forth in Section 1.1.
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇, acting through its direct and indirect Subsidiaries, currently conducts the ▇▇▇▇▇▇▇ Retained Business and the Veralto Business;
WHEREAS, the Board of Directors of ▇▇▇▇▇▇▇ (the “Board”) has determined that it is appropriate, desirable and in the best interests of ▇▇▇▇▇▇▇ and its stockholders to separate ▇▇▇▇▇▇▇ into two separate, publicly traded companies, one for each of (i) the ▇▇▇▇▇▇▇ Retained Business, which shall be owned and conducted, directly or indirectly, by ▇▇▇▇▇▇▇ and its Subsidiaries (other than Veralto and its Subsidiaries) and (ii) the Veralto Business, which shall be owned and conducted, directly or indirectly, by Veralto and its Subsidiaries, in the manner contemplated by the Separation and Distribution Agreement by and between the Parties, dated as of the date hereof (the “Separation Agreement”);
WHEREAS, pursuant to the Separation Agreement, ▇▇▇▇▇▇▇ and Veralto have agreed to enter into this Agreement for the purpose of allocating Assets, Liabilities and responsibilities with respect to certain employee matters and employee compensation and benefit plans and programs between them and to address certain other employment-related matters.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 General. As used in this Agreement, the following terms shall have the following meanings:
(1) “Accrued Incentive Amount” shall mean the aggregate amount accrued by ▇▇▇▇▇▇▇ in respect of certain Veralto Employees selected by ▇▇▇▇▇▇▇ under any cash incentive compensation and sales commission programs applicable to such Veralto Employees and unpaid as of the date on which the employment or services of such Veralto Employees are transferred to Veralto.
(2) “Agreement” shall have the meaning set forth in the Preamble.
(3) “Automatic Transfer Employees” shall mean any Veralto Employee, where local employment Laws, including the Transfer Regulations, provide for an automatic transfer of such employees to a member of the Veralto Group by operation of Law upon the transfer of a business as a going concern and such business transfer occurs as a result of the transactions contemplated by the Separation Agreement.
(4) “Benefit Arrangement” shall mean each Benefit Plan and Benefit Policy.
(5) “Benefit Plan” shall mean, with respect to an entity, each compensation or employee benefit plan, program, policy, agreement or other arrangement, whether or not “employee benefit plans” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), including any benefit plan, program, policy, agreement or arrangement providing cash- or equity-based compensation or incentives, health, medical, dental, vision, disability, accident or life insurance benefits, severance, retention, change in control, termination, deferred compensation, individual employment or consulting, retirement, pension or savings benefits, supplemental income, retiree benefit or other fringe benefit (whether or not taxable), that are sponsored or maintained by such entity (or to which such entity contributes or is required to contribute or in which it participates), and excluding workers’ compensation plans, policies, programs and arrangements.
(6) “Benefit Policy” shall mean, with respect to an entity, each plan, program, arrangement, agreement or commitment that is a vacation pay or other paid or unpaid leave policy or practice sponsored or maintained by such entity (or to which such entity contributes or is required to contribute) or in which it participates.
(7) “Board” shall have the meaning set forth in the Recitals.
(8) “Chemtreat Plan” shall mean the Chemtreat Rule of 80, pre-65 Retiree Medical Plan.
(9) “Collective Bargaining Agreement” shall mean all agreements with the collective bargaining representatives, employee representatives, trade unions, labor or management organizations, groups of employees, or works councils or similar representative bodies of Veralto Employees, including all national or sector specific collective agreements which are applicable to Veralto Employees, in each case in effect immediately prior to the date on which the applicable Veralto Employees become employed by a member of the Veralto Group, that set forth terms and conditions of employment of Veralto Employees, and all modifications of, or amendments to, such agreements and any rules, procedures, awards or decisions of competent jurisdiction interpreting or applying such agreements.
(10) “▇▇▇▇▇▇▇” shall have the meaning set forth in the Preamble.
(11) “▇▇▇▇▇▇▇ Benefit Arrangement” shall mean any Benefit Arrangement sponsored, maintained or contributed to by any member of the ▇▇▇▇▇▇▇ Group.
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(12) “▇▇▇▇▇▇▇ Canadian RPP/RRSP” shall mean (i) the ▇▇▇▇▇▇▇ Corporation & Subsidiaries Pension Plan (Registered Pension Plan) and (ii) The Group Retirement Program Savings Plan (RSP) for the Employees of ▇▇▇▇▇▇▇ Corporation & Subsidiaries.
(13) “▇▇▇▇▇▇▇ Canadian Welfare Plan” shall mean any ▇▇▇▇▇▇▇ Welfare Plan maintained in Canada.
(14) “▇▇▇▇▇▇▇ Deferred Compensation Plans” shall mean (i) the ▇▇▇▇▇▇▇ Corporation & Subsidiaries Executive Deferred Incentive Program, as amended, (ii) the ▇▇▇▇▇▇▇ Deferred Compensation Plan, and (iii) the ▇▇▇▇▇▇▇ Excess Contribution Program as Established as a Sub-Plan Under the ▇▇▇▇▇▇▇ Corporation 2007 Omnibus Incentive Plan, as Amended and Restated.
(15) “▇▇▇▇▇▇▇ Employee” shall mean each employee of ▇▇▇▇▇▇▇ or any of its Subsidiaries or Affiliates who does not qualify as an Veralto Employee.
(16) “▇▇▇▇▇▇▇ Option” shall mean an option to purchase shares of ▇▇▇▇▇▇▇ Common Stock granted pursuant to the ▇▇▇▇▇▇▇ Stock Plan.
(17) “▇▇▇▇▇▇▇ Performance Stock Unit” shall mean an award granted by ▇▇▇▇▇▇▇ pursuant to the ▇▇▇▇▇▇▇ Corporation 2007 Omnibus Incentive Plan, as amended and restated, that was denominated as a “Performance Stock Unit” under the terms of such plan and the related award agreement.
(18) “▇▇▇▇▇▇▇ Stock Plan” shall mean the ▇▇▇▇▇▇▇ Corporation 2007 Omnibus Incentive Plan, as Amended and Restated.
(19) “▇▇▇▇▇▇▇ Time-Based Restricted Stock Unit” shall mean an award granted by ▇▇▇▇▇▇▇ pursuant to the ▇▇▇▇▇▇▇ Corporation 2007 Omnibus Incentive Plan, as amended and restated, that was denominated as a “Restricted Stock Unit” under the terms of such plan and the related award agreement and as of the Distribution Date vests solely based on the continued employment or service of the recipient.
(20) “▇▇▇▇▇▇▇ U.S. Retirement Plan” shall mean the ▇▇▇▇▇▇▇ Corporation & Subsidiaries Pension Plan.
(21) “▇▇▇▇▇▇▇ U.S. Savings Plans” shall mean the ▇▇▇▇▇▇▇ Corporation & Subsidiaries Savings Plan and any other defined contribution retirement plan maintained by ▇▇▇▇▇▇▇ or any of its Affiliates (other than a member of the Veralto Group) that is intended to be qualified under Section 401(a) of the Code.
(22) “▇▇▇▇▇▇▇ U.S. Welfare Plans” shall mean any ▇▇▇▇▇▇▇ Welfare Plan maintained in the United States.
(23) “▇▇▇▇▇▇▇ Welfare Plans” shall mean any Welfare Plan maintained by ▇▇▇▇▇▇▇ or any member of the ▇▇▇▇▇▇▇ Group.
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(24) “Delayed Transfer ▇▇▇▇▇▇▇ Employee” shall mean any ▇▇▇▇▇▇▇ Employee whose employment is determined by ▇▇▇▇▇▇▇ to not be eligible to be transferred from a member of the Veralto Group to a member of the ▇▇▇▇▇▇▇ Group on or prior to the Distribution Date as a result of (i) requirements under applicable Law, (ii) participation in a long-term disability plan or similar arrangement or (iii) a delay in setting up ▇▇▇▇▇▇▇ Business operations in a particular jurisdiction sufficient to employ such ▇▇▇▇▇▇▇ Employee.
(25) “Delayed Transfer Date” shall mean the date on which it is determined by ▇▇▇▇▇▇▇ that either (i) a Delayed Transfer Veralto Employee or Delayed Transfer ▇▇▇▇▇▇▇ Employee is permitted to transfer from the ▇▇▇▇▇▇▇ Group to the Veralto Group or from the Veralto Group to the ▇▇▇▇▇▇▇ Group, respectively, in accordance with applicable Law, or (ii) the necessary business operations are set up in the relevant jurisdiction to enable employment of the Veralto Employee or ▇▇▇▇▇▇▇ Employee by the Veralto Group or ▇▇▇▇▇▇▇ Group, as applicable.
(26) “Delayed Transfer Veralto Employee” shall mean any Veralto Employee whose employment is determined by ▇▇▇▇▇▇▇ to not be eligible to be transferred to a member of the Veralto Group on or prior to the Distribution Date as a result of (i) requirements under applicable Law, (ii) participation in a long-term disability plan or similar arrangement or (iii) a delay in setting up Veralto Business operations in a particular jurisdiction sufficient to employ such Veralto Employee.
(27) “Employee Representative” shall mean any works council, employee representative, trade union, labor or management organization, group of employees or similar representative body for Veralto Employees.
(28) “Equity Award Adjustment Ratio” shall mean the adjustment ratio adopted by the ▇▇▇▇▇▇▇ Board or the Compensation Committee of the ▇▇▇▇▇▇▇ Board in its sole and absolute discretion for purposes of making equitable adjustments to the awards held by Veralto Employees under the ▇▇▇▇▇▇▇ Stock Plan.
(29) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
(30) “Former Veralto Service Provider” shall mean (i) any individual who would qualify as an Veralto Employee or Veralto Independent Contractor, but whose employment or service with ▇▇▇▇▇▇▇ or any of its Subsidiaries or Affiliates terminated for any reason prior to the date on which such individual’s employment or service would otherwise have transferred to Veralto pursuant to this Agreement and (ii) any former employee, independent contractor or consultant of ▇▇▇▇▇▇▇ or any of its Subsidiaries or Affiliates who was exclusively or primarily engaged in an Veralto Former Business (A) at the time either (x) such business was sold, conveyed, assigned, transferred, spun-off, split-off or otherwise disposed of or divested (in whole or in part) to a Person that is not a member of the Veralto Group or the ▇▇▇▇▇▇▇ Group or (y) the operations, activities or production of which were discontinued, abandoned, completed or otherwise terminated (in whole or in part), or (B) at any other time, but in such case only to the extent relating to his or her service with such Veralto Former Business.
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(31) “Non-Automatic Transfer Employees” shall mean any Veralto Employee who is not an Automatic Transfer Employee.
(32) “Non-U.S. Plans” shall have the meaning set forth in Section 3.6.
(33) “Party” and “Parties” shall have the meanings set forth in the Preamble.
(34) “Separation Agreement” shall have the meaning set forth in the Recitals.
(35) “Transfer Regulations” shall mean (i) all Laws of any EU Member State implementing the EU Council Directive 2001/23/EC of 12 March 2001 on the approximation of the Laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (the “Acquired Rights Directive”) and legislation and regulations of any EU Member State implementing such Acquired Rights Directive, and (ii) any similar Laws in any jurisdiction providing for an automatic transfer, by operation of Law, of employment in the event of a transfer of business.
(36) “Veralto” shall have the meaning set forth in the Preamble.
(37) “Veralto Adjusted Time-Based Restricted Stock Unit” shall have the meaning set forth in Section 4.3.
(38) “Veralto Benefit Arrangement” shall mean any Benefit Arrangement sponsored, maintained or contributed to exclusively by any member of the Veralto Group.
(39) “Veralto Deferred Compensation Plans” shall have the meaning set forth in Section 3.5(a).
(40) “Veralto Employee” shall mean each individual who is employed by ▇▇▇▇▇▇▇ or any of its Subsidiaries or Affiliates as of the date on which ▇▇▇▇▇▇▇ determines to transfer the employment of applicable individuals to Veralto and who ▇▇▇▇▇▇▇ determines as of such date is either (i) exclusively or primarily engaged in the Veralto Business or (ii) necessary for the ongoing operation of the Veralto Business following the Distribution Date, in each case regardless of whether any such employee is actively at work or is not actively at work as a result of disability or illness, an approved leave of absence (including military leave with reemployment rights under federal Law and leave under the Family and Medical Leave Act of 1993), vacation, personal day or similar short- or long-term absence.
(41) “Veralto Independent Contractor” shall mean each individual who is engaged as an independent contractor or consultant by ▇▇▇▇▇▇▇ or any of its Subsidiaries or Affiliates as of the date on which ▇▇▇▇▇▇▇ determines to transfer the contracts of service of applicable individuals to Veralto and who ▇▇▇▇▇▇▇ determines as of such date is either (i) exclusively or primarily engaged in the Veralto Business or (ii) necessary for the ongoing operation of the Veralto Business following the Distribution Date.
(42) “Veralto Option” shall have the meaning set forth in Section 4.1.
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(43) “Veralto RSP” shall have the meaning set forth in Section 3.5(a).
(44) “Veralto Stock Plan” shall have the meaning set forth in Section 4.4.
(45) “Veralto Time-Based Restricted Stock Unit” shall have the meaning set forth in Section 4.2.
(46) “Veralto U.S. Savings Plans” shall have the meaning set forth in Section 3.3(a).
(47) “Veralto Welfare Plans” shall mean any Welfare Plan maintained by Veralto or any member of the Veralto Group.
(48) “Welfare Plan” shall mean, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA and in 29 C.F.R. §2510.3-1) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, retiree health and welfare, vision and mental health and substance use disorder), disability benefits, or life, accidental death and disability, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, contribution funding toward a health savings account, flexible spending accounts, tuition reimbursement or adoption assistance programs or cashable credits.
Section 1.2 References; Interpretation. References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. The words “written request” when used in this Agreement shall include email. Reference in this Agreement to any time shall be to New York City, New York time unless otherwise expressly provided herein. Unless the context requires otherwise, references in this Agreement to “▇▇▇▇▇▇▇” shall also be deemed to refer to the applicable member of the ▇▇▇▇▇▇▇ Group, references to “Veralto” shall also be deemed to refer to the applicable member of the Veralto Group and, in connection therewith, any references to actions or omissions to be taken, or refrained from being taken, as the case may be, by ▇▇▇▇▇▇▇ or Veralto shall be deemed to require ▇▇▇▇▇▇▇ or Veralto, as the case may be, to cause the applicable members of the ▇▇▇▇▇▇▇ Group or the Veralto Group, respectively, to take, or refrain from taking, any such action. In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the definitions set forth in Section 1.1, for the purpose of determining what is and is not included in such definitions, any item explicitly included on a Schedule referred to in any such definition shall take priority over any provision of the text thereof.
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ARTICLE II
GENERAL PRINCIPLES
Section 2.1 Nature of Liabilities. All Liabilities assumed or retained by a member of the ▇▇▇▇▇▇▇ Group under this Agreement shall be ▇▇▇▇▇▇▇ Retained Liabilities for purposes of the Separation Agreement. All Liabilities assumed or retained by a member of the Veralto Group under this Agreement shall be Veralto Liabilities for purposes of the Separation Agreement.
Section 2.2 Transfers of Employees and Independent Contractors Generally.
(a) Subject to the requirements of applicable Law, through and until immediately before the Distribution Date, ▇▇▇▇▇▇▇ shall use its reasonable best efforts to (i) cause the employment of any Veralto Employee and the contract of services of any Veralto Independent Contractor to be transferred to a member of the Veralto Group and (ii) cause the employment of any ▇▇▇▇▇▇▇ Employee who is employed by a member of the Veralto Group and the contract of services between any independent contractor or consultant that does not qualify as an Veralto Independent Contractor and a member of the Veralto Group to be transferred to a member of the ▇▇▇▇▇▇▇ Group.
(b) ▇▇▇▇▇▇▇ shall use its reasonable best efforts to cause each Automatic Transfer Employee to be employed by a member of the Veralto Group no later than the Distribution Date in accordance with applicable Law, or as of the applicable Delayed Transfer Date, if applicable, and Veralto agrees to take all actions reasonably necessary to cause the Veralto Employees to be so employed. If an Automatic Transfer Employee objects to the transfer of employment to a member of the Veralto Group as permitted under applicable law and consequently does not become an employee of the Veralto Group and is terminated by ▇▇▇▇▇▇▇ as a result, then Veralto shall reimburse ▇▇▇▇▇▇▇ in accordance with Section 2.3(c) for any severance or termination costs incurred by ▇▇▇▇▇▇▇ in connection with such termination of employment. Veralto shall make a qualifying offer of employment in accordance with Section 2.4 to each Non-Automatic Transfer Employee prior to the Distribution Date to become employed by a member of the Veralto Group effective as of no later than the Distribution Date, or as of the applicable Delayed Transfer Date, if applicable; provided that if Veralto fails to make such a qualifying offer of employment to a Non-Automatic Transfer Employee and such Non-Automatic Transfer does not become employed by Veralto and is terminated by ▇▇▇▇▇▇▇ as a result, then Veralto shall reimburse ▇▇▇▇▇▇▇ in accordance with Section 2.3(c) for any severance or termination costs incurred by ▇▇▇▇▇▇▇ in connection with such termination of employment.
(c) The ▇▇▇▇▇▇▇ Group and Veralto Group agree to execute, and to seek to have the applicable Veralto Employees execute, such documentation, if any, as may be necessary to reflect the transfer of employment described in this Section 2.2.
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Section 2.3 Assumption and Retention of Liabilities Generally.
(a) Except as provided in this Agreement, in connection with the Internal Reorganization and the Contribution, or, if applicable, from and after the Distribution Date, ▇▇▇▇▇▇▇ shall, or shall cause one or more members of the ▇▇▇▇▇▇▇ Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all ▇▇▇▇▇▇▇ Benefit Arrangements, whenever incurred; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all ▇▇▇▇▇▇▇ Employees and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the ▇▇▇▇▇▇▇ Group under this Agreement.
(b) Except as provided in this Agreement, in connection with the Internal Reorganization and the Contribution, or, if applicable, from and after the Distribution Date, Veralto shall, or shall cause one or more members of the Veralto Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill (i) all Liabilities under all Veralto Benefit Arrangements, whenever incurred; (ii) all Liabilities with respect to the employment, service, termination of employment or termination of service of all Veralto Employees, Former Veralto Service Providers and Veralto Independent Contractors and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred; and (iii) all other Liabilities or obligations expressly assigned to or assumed by a member of the Veralto Group under this Agreement.
(c) The Parties shall promptly reimburse one another, upon reasonable request of the Party requesting reimbursement and the presentation by such Party of such substantiating documentation as the other Party shall reasonably request, for the cost of any obligations or Liabilities satisfied or assumed by the Party requesting reimbursement or its Affiliates that are, or that have been made pursuant to this Agreement, the responsibility of the other Party or any of its Affiliates.
(d) Notwithstanding that a Delayed Transfer Veralto Employee or Delayed Transfer ▇▇▇▇▇▇▇ Employee shall not become employed by a member of the Veralto Group or ▇▇▇▇▇▇▇ Group, respectively, until the Delayed Transfer Date applicable to such employee, (i) Veralto or ▇▇▇▇▇▇▇ shall be responsible for, and shall timely reimburse the other for, all Liabilities incurred by ▇▇▇▇▇▇▇ or Veralto, respectively, with regard to each such Delayed Transfer Veralto Employee or Delayed Transfer ▇▇▇▇▇▇▇ Employee from the Distribution Date to the Delayed Transfer Date applicable to such employee and (ii) the Parties shall use their reasonable efforts to effect the provisions of this Agreement with respect to the compensation and benefits of such Delayed Transfer Veralto Employees and Delayed Transfer ▇▇▇▇▇▇▇ Employees following the Delayed Transfer Date applicable to such employee, it being understood that it may not be possible to replicate the effect of such provisions under such circumstances.
(e) Notwithstanding any provision of this Agreement or the Separation Agreement to the contrary, Veralto shall, or shall cause one or more members of the Veralto Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill all
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Liabilities that have been accepted, assumed or retained under this Agreement irrespective of whether accruals for such Liabilities have been transferred to Veralto or a member of the Veralto Group or included on a combined balance sheet of the Veralto Business or whether any such accruals are sufficient to cover such Liabilities.
Section 2.4 Treatment of Compensation and Benefit Arrangements; Terms of Employment. Except as otherwise (i) required by a Collective Bargaining Agreement, the Transfer Regulations or applicable Law, or (ii) expressly provided for in this Agreement, for a period of twelve (12) months following the Distribution Date (or if shorter, during the period of employment), Veralto shall, or shall cause a member of the Veralto Group to provide or cause to be provided to each Veralto Employee (A) a base salary or hourly wage rate, as applicable, that is at least equal to the base salary or hourly wage rate provided to such Veralto Employee immediately prior to the Distribution Date, (B) subject to Section 5.1, a cash incentive or sales commission opportunity no less favorable than the cash incentive or sales commission opportunity in effect for such Veralto Employee, if any, immediately prior to the Distribution Date, and (C) health, welfare and retirement benefits that are substantially similar to those provided to such Veralto Employee immediately prior to the Distribution Date (without regard to any defined benefit pension plan benefits for Veralto Employees based in the United States). Notwithstanding the foregoing and except as otherwise set forth in Section 3.5 or Article IV, nothing contained in this Agreement shall require Veralto to make any grants of equity awards relating to shares of Veralto Common Stock to Veralto Employees following the Distribution Date.
Section 2.5 Participation in ▇▇▇▇▇▇▇ Benefit Arrangements. Except as provided in this Agreement, including without limitation Section 3.1 of this Agreement, effective as of the Distribution Date, (i) Veralto and each member of the Veralto Group, to the extent applicable, shall cease to be a participating company in any ▇▇▇▇▇▇▇ Benefit Arrangement and (ii) each Veralto Employee shall cease to participate in, be covered by, accrue benefits under, be eligible to contribute to or have any rights under any ▇▇▇▇▇▇▇ Benefit Arrangement (except to the extent of previously accrued obligations that remain a Liability of any member of the ▇▇▇▇▇▇▇ Group pursuant to this Agreement).
Section 2.6 Service Recognition.
(a) From and after the Distribution Date, and in addition to any applicable obligations under the Transfer Regulations or other applicable Law, Veralto shall, and shall cause each member of the Veralto Group to, give each Veralto Employee full credit for purposes of eligibility, vesting, and determination of level of benefits under any Veralto Benefit Arrangement for such Veralto Employee’s prior service with any member of the ▇▇▇▇▇▇▇ Group or Veralto Group or any predecessor thereto, to the same extent such service was recognized by the applicable ▇▇▇▇▇▇▇ Benefit Arrangement; provided, that, such service shall not be recognized to the extent it would result in the duplication of benefits.
(b) Except to the extent prohibited by applicable Law, as soon as administratively practicable on or after the Distribution Date: (i) Veralto shall waive or cause to be waived all limitations as to preexisting conditions or waiting periods with respect to
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participation and coverage requirements applicable to each Veralto Employee under any Veralto Welfare Plan in which Veralto Employees participate (or are eligible to participate) to the same extent that such conditions and waiting periods were satisfied or waived under an analogous ▇▇▇▇▇▇▇ Welfare Plan, and (ii) Veralto shall provide or cause each Veralto Employee to be provided with credit for any co-payments, deductibles or other out-of-pocket amounts paid during the plan year in which the Veralto Employees become eligible to participate in the Veralto Welfare Plans in satisfying any applicable co-payments, deductibles or other out-of-pocket requirements under any such plans for such plan year.
Section 2.7 Collective Bargaining Agreements.
(a) Notwithstanding anything in this Agreement to the contrary, ▇▇▇▇▇▇▇ and Veralto shall, to the extent required by applicable Law, take or cause to be taken all actions that are necessary (if any) for Veralto or a member of the Veralto Group to continue to maintain or to assume and honor any Collective Bargaining Agreements and any pre-existing collective bargaining relationships (in each case including obligations that arise in respect of the period both before and after the date of employment by the Veralto Group) in respect of any Veralto Employees and any Employee Representatives.
(b) Effective no later than the Distribution Date, Veralto shall, or shall cause a member of the Veralto Group to, continue to maintain or to assume and honor, to the extent required by applicable Law, all Collective Bargaining Agreements and pre-existing collective bargaining relationships (in each case including obligations that arise in respect of the period both before and after the date of an Veralto Employee’s employment by the Veralto Group) that are applicable to any Veralto Employee.
(c) Nothing in this Agreement is intended to alter the provisions of any Collective Bargaining Agreement or modify in any way the obligations of the ▇▇▇▇▇▇▇ Group or the Veralto Group to any Employee Representative or any other Person as described in such agreement.
Section 2.8 Information and Consultation. The Parties shall comply with all requirements and obligations to inform, consult or otherwise notify any Veralto or ▇▇▇▇▇▇▇ Employees or Employee Representatives in relation to the transactions contemplated by this Agreement and the Separation Agreement, whether required pursuant to any Collective Bargaining Agreement, the Transfer Regulations or other applicable Law.
Section 2.9 WARN. Notwithstanding anything set forth in this Agreement to the contrary, none of the transactions contemplated by or undertaken by this Agreement is intended to and shall not constitute or give rise to an “employment loss” or employment separation within the meaning of the federal Worker Adjustment and Retraining Notification (WARN) Act, or any other federal, state, or local law or legal requirement addressing mass employment separations.
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ARTICLE III
CERTAIN BENEFIT PLAN PROVISIONS
Section 3.1 Health and Welfare Benefit Plans.
(a) Effective as of January 1, 2024, (i) the participation of each Veralto Employee who is a participant in a ▇▇▇▇▇▇▇ U.S. Welfare Plan or a ▇▇▇▇▇▇▇ Canadian Welfare Plan shall automatically cease and (ii) Veralto shall or shall cause a member of the Veralto Group (A) to have in effect Veralto Welfare Plans providing health and welfare benefits for the benefit of each Veralto Employee with terms that are substantially similar to those provided to the applicable Veralto Employee immediately prior to the date on which such Veralto Welfare Plans become effective; and (B) to fully perform, pay and discharge all claims of Veralto Employees or Former Veralto Service Providers, including but not limited to any claims incurred under any ▇▇▇▇▇▇▇ U.S. Welfare Plan on or prior to the date on which such Veralto Welfare Plans become effective, that remain unpaid as of the date on which such Veralto Welfare Plans become effective, regardless of whether any such claim was presented for payment prior to, on or after such date. For the avoidance of doubt, for the purposes of this Section 3.1, the term “Veralto Welfare Plan” shall include the Chemtreat Plan.
(b) Without limiting Section 3.1(a) above and in addition thereto, the applicable member of the Veralto Group shall reimburse the applicable ▇▇▇▇▇▇▇ U.S. Welfare Plan or ▇▇▇▇▇▇▇ Canadian Welfare Plan, as applicable, for any claims related to Veralto Employees or Former Veralto Service Providers paid by a ▇▇▇▇▇▇▇ U.S. Welfare Plan or ▇▇▇▇▇▇▇ Canadian Welfare Plan (whether prior to or after the Distribution Date) and not fully charged back to the appropriate and applicable member of the Veralto Group prior to the Distribution Date.
(c) As of January 1, 2024, any Veralto Employee who becomes eligible for post-retirement health care coverage under the Chemtreat Plan during the period commencing on the Distribution Date and ending on January 1, 2024 shall be transferred, together with all associated Liabilities into the Veralto Welfare Plan, and Veralto shall, and shall cause its Affiliates to, take all actions necessary to provide the applicable post-retirement welfare benefits to such eligible Veralto Employee, with terms that are substantially similar to those provided under the Chemtreat Plan immediately prior to January 1, 2024, under the Veralto Welfare Plan as of January 1, 2024. As of January 1, 2024, Veralto and the Veralto Welfare Plan shall fully perform, pay and discharge all obligations of the Chemtreat Plan relating to Veralto Employees and Former Veralto Service Providers.
(d) Notwithstanding anything to the contrary in this Section 3.1, Veralto Employees will continue to be considered to be “participants” in any ▇▇▇▇▇▇▇ U.S. Welfare Plan that is either a health care flexible spending account program or a dependent-care flexible spending account program for the duration of any calendar-year 2024 grace period and/or claims run-out period (in either case, solely as provided under the terms of such ▇▇▇▇▇▇▇ U.S. Welfare Plans), provided that such Veralto Employees will be considered to be participants solely for purposes of utilizing such grace period and/or claims run-out period; will not be allowed to make
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any contribution elections under such ▇▇▇▇▇▇▇ U.S. Welfare Plans for calendar year 2024 or beyond; and will cease to be participants in such ▇▇▇▇▇▇▇ U.S. Welfare Plans for all purposes upon the expiration of any grace period and/or claims run-out period.
Section 3.2 U.S. Defined Benefit Plans. ▇▇▇▇▇▇▇ shall retain all Assets and Liabilities relating to the ▇▇▇▇▇▇▇ U.S. Retirement Plan, including Liabilities in respect of pension benefits accrued thereunder by each Veralto Employee and Former Veralto Service Provider. No Assets or Liabilities of the ▇▇▇▇▇▇▇ U.S. Retirement Plan shall be transferred to a retirement plan maintained by any member of the Veralto Group.
Section 3.3 U.S. Savings Plans.
(a) (i) Effective as of the Distribution Date, ▇▇▇▇▇▇▇ shall cause a member of the Veralto Group to have in effect one or more defined contribution savings plans and related trusts that satisfy the requirements of Sections 401(a) and 401(k) of the Code in which each Veralto Employee who participated in a ▇▇▇▇▇▇▇ U.S. Savings Plan immediately prior thereto shall be eligible to participate (the “Veralto U.S. Savings Plans”), with terms that are substantially similar to those provided by the applicable ▇▇▇▇▇▇▇ U.S. Savings Plan immediately prior to the date on which such Veralto U.S. Savings Plans become effective (other than the ability to make additional investments in an investment fund invested primarily in ▇▇▇▇▇▇▇ Common Stock), (ii) the participation of each Veralto Employee who is a participant in a ▇▇▇▇▇▇▇ U.S. Savings Plan shall automatically cease effective upon the date on which the Veralto U.S. Savings Plans become effective, (iii) as soon as practicable after the Veralto U.S. Savings Plans become effective, ▇▇▇▇▇▇▇ shall cause the accounts (including any outstanding participant loan balances) in the ▇▇▇▇▇▇▇ U.S. Savings Plans attributable to Veralto Employees and all of the Assets in the ▇▇▇▇▇▇▇ U.S. Savings Plans related thereto to be transferred in-kind to the applicable Veralto U.S. Savings Plan and (iv) effective as of the Distribution Date, the Veralto U.S. Savings Plans (including all applicable accounts and underlying Assets) shall be transferred to Veralto and Veralto shall thereafter fully pay, perform and discharge, all obligations thereunder.
(b) The respective investment committees and other fiduciaries of the Veralto U.S. Savings Plans and the ▇▇▇▇▇▇▇ U.S. Savings Plans shall determine (i) the period of time, if any, following the adoption of the Veralto U.S. Savings Plans, during which Veralto Employees and ▇▇▇▇▇▇▇ Employees may receive distributions in kind from, respectively, the Veralto U.S. Savings Plans and the ▇▇▇▇▇▇▇ U.S. Savings Plans, if, and to the extent, investments under such plans are comprised of Veralto Common Stock or ▇▇▇▇▇▇▇ Common Stock, and (ii) the extent to which and when ▇▇▇▇▇▇▇ Common Stock (in the case of the Veralto U.S. Savings Plans) and Veralto Common Stock (in the case of the ▇▇▇▇▇▇▇ U.S. Savings Plans) shall cease to be investment alternatives the respective plans.
(c) ▇▇▇▇▇▇▇ shall retain all accounts and all Assets and Liabilities relating to the ▇▇▇▇▇▇▇ U.S. Savings Plans in respect of each Former Veralto Service Provider.
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Section 3.4 ▇▇▇▇▇▇▇ Deferred Compensation Plans.
(a) Effective as of the Distribution Date, the active participation of each Veralto Employee who is a participant in a ▇▇▇▇▇▇▇ Deferred Compensation Plan shall cease, and effective no later than the date of such cessation, Veralto shall or shall cause a member of the Veralto Group to have in effect one or more non-qualified deferred compensation plans for the benefit of each Veralto Employee (each, a “Veralto Deferred Compensation Plan”) with terms that are substantially similar to those provided to the applicable Veralto Employee under the ▇▇▇▇▇▇▇ Deferred Compensation Plan(s) immediately prior to the date on which the Veralto Deferred Compensation Plan(s) become effective. Effective as of the Plan Transition Date, (x) each Veralto Employee who is a participant in a ▇▇▇▇▇▇▇ Deferred Compensation Plan shall become a participant in an Veralto Deferred Compensation Plan and (y) Veralto shall or shall cause a member of the Veralto Group to fully perform, pay and discharge all obligations of the ▇▇▇▇▇▇▇ Deferred Compensation Plans relating to the accounts of the Veralto Employees transferred to an Veralto Deferred Compensation Plan; provided that for purposes of the Veralto Deferred Compensation Plans, (i) any account balances transferred from the ▇▇▇▇▇▇▇ Deferred Compensation Plans that are payable in shares of ▇▇▇▇▇▇▇ Common Stock (A) shall be payable in cash to the extent such account balances (or portion thereof) become payable in accordance with the terms applicable to such account balances prior to the Distribution Date and (B) shall be payable in shares of Veralto Common Stock in accordance with the terms applicable to such account balances on and following the Distribution Date, (ii) any account balances transferred from the ▇▇▇▇▇▇▇ Deferred Compensation Plans that were credited with earnings based on a rate of return relating to notional shares of ▇▇▇▇▇▇▇ Common Stock shall instead be credited with earnings based on a rate of return relating to notional shares of Veralto Common Stock on and following the Distribution Date, and (iii) effective as of the Distribution Date, notional shares of ▇▇▇▇▇▇▇ Common Stock and any shares of ▇▇▇▇▇▇▇ Common Stock in a deferred share account shall be adjusted in the same manner as set forth in Section 4.2 as if such shares or notional shares of ▇▇▇▇▇▇▇ Common Stock were ▇▇▇▇▇▇▇ Time-Based Restricted Stock Units).
(b) ▇▇▇▇▇▇▇ shall retain (i) all Assets relating to the ▇▇▇▇▇▇▇ Deferred Compensation Plans in respect of ▇▇▇▇▇▇▇ Employees, Veralto Employees and Former Veralto Service Providers (including any Assets relating to corporate owned life insurance policies) and (ii) all Liabilities in respect of each Former Veralto Service Provider in respect of the ▇▇▇▇▇▇▇ Deferred Compensation Plans.
Section 3.5 ▇▇▇▇▇▇▇ Canadian RPP/RRSP.
(a) (i) Effective as of the Distribution Date, the active participation of each Veralto Employee who is a Participant in the ▇▇▇▇▇▇▇ Canadian RPP/RRSP shall cease and (ii) effective no later than the date of such cessation, Veralto shall or shall cause a member of the Veralto Group to have in effect a Canadian registered savings plan (the “Veralto RSP”) with terms that are substantially similar to those provided to the applicable Veralto Employee under the ▇▇▇▇▇▇▇ Canadian RRSP immediately prior to the date on which the Veralto RSP becomes effective. Effective no later than the Plan Transition Date, ▇▇▇▇▇▇▇ shall cause to be provided to each Veralto Employee who has a balance under the ▇▇▇▇▇▇▇ Canadian RRSP an election to
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either transfer such Veralto Employee’s account balance to the Veralto RSP or a personal registered savings plan administered by the third-party administrator of the ▇▇▇▇▇▇▇ Canadian RRSP.
(b) ▇▇▇▇▇▇▇ shall retain all assets and Liabilities relating to the ▇▇▇▇▇▇▇ Canadian RPP/RRSP in respect of each Former Veralto Service Provider.
Section 3.6 Non-U.S. Plans. Notwithstanding any provision of this Agreement to the contrary other than as set forth in Section 3.1, Section 3.5 or Section 3.7, the treatment of each ▇▇▇▇▇▇▇ Benefit Arrangement and Veralto Benefit Arrangement that is maintained primarily in respect of individuals who are located outside of the United States (together, the “Non-U.S. Plans”) shall be subject to the terms and conditions set forth in the applicable Conveyancing and Assumption Instrument; provided that if the treatment of any such Non-U.S. Plan is not specifically covered by such Conveyancing and Assumption Instrument, then unless otherwise agreed by the Parties, (i) Veralto shall fully perform, pay and discharge all obligations of the Non-U.S. Plans relating to Veralto Employees, Veralto Independent Contractors and Former Veralto Service Providers, whenever incurred, (ii) ▇▇▇▇▇▇▇ shall fully perform, pay and discharge all obligations of the Non-U.S. Plans relating to ▇▇▇▇▇▇▇ Employees, whenever incurred, and (iii) the Parties shall agree on the extent to which any Assets held in respect of such Non-U.S. Plans shall be transferred to Veralto.
Section 3.7 Treatment of Certain Plans. Notwithstanding anything in this Agreement or any Conveyancing and Assumption Instrument to the contrary, with respect to any ▇▇▇▇▇▇▇ Benefit Arrangement or Veralto Benefit Arrangement that covers primarily Veralto Employees and Former Veralto Service Providers (including, without limitation, the Veralto U.S. Operating Company SERP), (i) effective no later than the Distribution Date, Veralto shall become solely liable to fully perform, pay and discharge all obligations of such arrangements, whenever incurred, and (ii) ▇▇▇▇▇▇▇ shall transfer all Assets held with respect to such arrangements to Veralto as soon as practicable after the date on which ▇▇▇▇▇▇▇ becomes so liable.
Section 3.8 Chargeback of Certain Costs. Nothing contained in this Agreement shall limit ▇▇▇▇▇▇▇’▇ ability to charge back any Liabilities that it incurs in respect of any ▇▇▇▇▇▇▇ Benefit Arrangement to any of its operating companies in the ordinary course of business consistent with its past practices.
ARTICLE IV
EQUITY INCENTIVE AWARDS
Section 4.1 Treatment of ▇▇▇▇▇▇▇ Stock Options. Each ▇▇▇▇▇▇▇ Option that is outstanding immediately prior to the Distribution Date and that is held by an Veralto Employee who continues in employment through the Distribution Date, whether vested or unvested, shall automatically be assumed by Veralto at the Distribution Date (each, a “Veralto Option”) and shall continue to have, and be subject to, the same terms and conditions (including the term, exercisability and vesting schedule) as were applicable to the corresponding ▇▇▇▇▇▇▇ Option immediately prior to the Distribution Date, except that each Veralto Option shall (i) relate to a
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number of shares of Veralto Common Stock (with each discrete grant rounded down to the nearest whole share) equal to the product of (x) the number of shares of ▇▇▇▇▇▇▇ Common Stock issuable upon the exercise of the corresponding ▇▇▇▇▇▇▇ Option immediately prior to the Distribution Date and (y) the Equity Award Adjustment Ratio and (ii) have a per-share exercise price (rounded up to the nearest whole cent, subject to Section 4.5(a)) equal to the quotient determined by dividing (x) the per share exercise price of the corresponding ▇▇▇▇▇▇▇ Option by (y) the Equity Award Adjustment Ratio.
Section 4.2 Treatment of ▇▇▇▇▇▇▇ Time-Based Restricted Stock Units. Each ▇▇▇▇▇▇▇ Restricted Stock Unit that is outstanding immediately prior to the Distribution Date and that is held by an Veralto Employee who continues in employment through the Distribution Date, whether vested or unvested, shall automatically be assumed by Veralto at the Distribution Date (each, a “Veralto Time-Based Restricted Stock Unit”) and shall continue to have, and be subject to, the same terms and conditions (including vesting schedule) as were applicable to the corresponding ▇▇▇▇▇▇▇ Time-Based Restricted Stock Unit immediately prior to the Distribution Date, except that each grant of Veralto Time-Based Restricted Stock Units shall (i) relate to that number of shares of Veralto Common Stock (with each discrete grant rounded up to the nearest whole share, subject to Section 4.5(a)) equal to the product of (x) the number of shares of ▇▇▇▇▇▇▇ Common Stock that were issuable upon the vesting of such ▇▇▇▇▇▇▇ Time-Based Restricted Stock Units immediately prior to the Distribution Date and (y) the Equity Award Adjustment Ratio and (ii) be subject to vesting solely based upon the satisfaction of any applicable continued employment requirements that apply to the corresponding ▇▇▇▇▇▇▇ Time-Based Restricted Stock Units immediately prior to the Distribution Date.
Section 4.3 Treatment of ▇▇▇▇▇▇▇ Performance Stock Units. Each ▇▇▇▇▇▇▇ Performance Stock Unit that is outstanding immediately prior to the Distribution Date and that is held by an Veralto Employee who continues in employment through the Distribution Date, whether vested or unvested, shall be assumed by Veralto at the Distribution Date and converted into a restricted stock unit denominated in shares of Veralto Common Stock (each, a “Veralto Adjusted Time-Based Restricted Stock Unit”) and shall continue to have, and be subject to, the same terms and conditions (including time-based vesting schedule and post-vesting holding period) as were applicable to the corresponding ▇▇▇▇▇▇▇ Performance Stock Unit immediately prior to the Distribution Date, except that (i) the performance-based vesting conditions applicable to such ▇▇▇▇▇▇▇ Performance Stock Unit immediately prior to the Distribution Date shall not apply from and after the Distribution Date, and (ii) each grant of Veralto Adjusted Time-Based Restricted Stock Units shall (x) relate to that number of shares of Veralto Common Stock (with each discrete grant rounded up to the nearest whole share, subject to Section 4.5(a)) equal to the product of (A) the number of shares of ▇▇▇▇▇▇▇ Common Stock that were issuable upon the vesting of such ▇▇▇▇▇▇▇ Performance Stock Unit immediately prior to the Distribution Date assuming attainment of the applicable performance metrics at the actual level of performance immediately prior to the Distribution Date and (B) the Equity Award Adjustment Ratio and (y) be subject to vesting solely based upon the satisfaction of any applicable continued employment or service requirements that apply to the corresponding ▇▇▇▇▇▇▇ Performance Stock Units immediately prior to the Distribution Date.
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Section 4.4 Veralto Stock Plan. Effective as of the Distribution Date, Veralto shall have adopted the Veralto 2023 Omnibus Incentive Plan (the “Veralto Stock Plan”), which shall permit the grant and issuance of equity incentive awards denominated in Veralto Common Stock as described in this Article IV.
Section 4.5 General Terms.
(a) All of the adjustments described in this Article IV shall be effected in accordance with Sections 424 and 409A of the Code, in each case to the extent applicable. Notwithstanding the foregoing, (i) if the treatment set forth in this Article IV would cause adverse Tax consequences to any Veralto Employee located outside of the United States, the Parties shall use their reasonable best efforts to cause the treatment to be revised and conformed in a manner that does not give rise to such adverse Tax consequences, to the extent reasonably practicable; (ii) each ▇▇▇▇▇▇▇ Option, ▇▇▇▇▇▇▇ Restricted Stock Unit, and ▇▇▇▇▇▇▇ Performance Stock Unit held by an Veralto Employee located in Canada shall be assumed and adjusted as described in this Article IV immediately prior to, but contingent upon the occurrence of, the Distribution Date; (iii) each discrete grant of a Veralto Time-Based Restricted Stock Unit held by a Veralto Employee located in Canada shall, in all events, be rounded down to the nearest whole share; and (iv) each discrete grant of a Veralto Time-Based Restricted Stock Unit held by a Veralto Employee located in France which is intended to be tax-preferential shall, in all events, be rounded down to the nearest whole share.
(b) The Parties shall use their reasonable best efforts to maintain effective registration statements with the Securities Exchange Commission with respect to the awards described in this Article IV, to the extent any such registration statement is required by applicable Law.
(c) For the avoidance of doubt, Veralto and members of the Veralto Group and not ▇▇▇▇▇▇▇ and members of the ▇▇▇▇▇▇▇ Group shall be responsible for all withholding requirements with respect to any award issued to a (i) Veralto Employee under the Veralto Omnibus Incentive Plan, including the Veralto Options, Veralto Time-Based Restricted Stock Units and Veralto Adjusted Time-Based Restricted Stock Units, or other relevant plan, or (ii) a Former Veralto Service Provider under the ▇▇▇▇▇▇▇ Stock Plan or other relevant plan. Veralto may use any method of obtaining the necessary payment or proceeds, as permitted by applicable law, to satisfy its withholding obligation with respect to any award issued under the Veralto Omnibus Incentive Plan, including the Veralto Options, Veralto Time-Based Restricted Stock Units and Veralto Adjusted Time-Based Restricted Stock Units, or other relevant plan. Notwithstanding the foregoing, if Veralto is unable to effectuate such withholding requirements or the administration, management or payment of such withholding requirements for any reason, ▇▇▇▇▇▇▇ shall retain the obligation to withhold and Veralto shall reimburse and otherwise fully indemnify ▇▇▇▇▇▇▇ for all such Liabilities.
(d)
(i) In the event that (A) any transfer of employment of any Veralto Employee as contemplated by Section 2.2 as of immediately prior to the Distribution Date or (B) any subsequent relocation of a Veralto Employee to a new jurisdiction on or after the Distribution Date, adversely affects the taxation of the Veralto Employee’s award under the
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Veralto Omnibus Incentive Plan or other relevant plan or results in a tax Liability relating to the Veralto Employee’s award under the Veralto Omnibus Incentive Plan or other relevant plan, Veralto and members of the Veralto Group shall be solely responsible for the resulting tax Liability, subject to the provisions of the applicable plan which require that each participant shall, no later than the date as of which the value of an award first becomes includible in the gross income of the participant for purposes of applicable taxes, pay to Veralto, or make arrangements satisfactory to the Administrator of the Veralto Omnibus Incentive Plan or other relevant plan regarding payment of, all applicable taxes required by applicable law to be withheld with respect to the award. Notwithstanding the foregoing, if Veralto is unable to assume any such Liability for taxes incurred or the administration, management or payment of any such Liability for any reason, ▇▇▇▇▇▇▇ shall retain such Liabilities and Veralto shall reimburse and otherwise fully indemnify ▇▇▇▇▇▇▇ for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.
(ii) In the event that (A) any transfer of employment of any ▇▇▇▇▇▇▇ Employee as contemplated by Section 2.2 as of immediately prior to the Distribution Date or (B) any subsequent relocation of a ▇▇▇▇▇▇▇ Employee to a new jurisdiction on or after the Distribution Date, adversely affects the taxation of the ▇▇▇▇▇▇▇ Employee’s award under the ▇▇▇▇▇▇▇ Stock Plan or other relevant plan or results in a tax Liability relating to the ▇▇▇▇▇▇▇ Employee’s award under the ▇▇▇▇▇▇▇ Stock Plan or other relevant plan, ▇▇▇▇▇▇▇ and members of the ▇▇▇▇▇▇▇ Group shall be solely responsible for the resulting tax Liability, subject to the provisions of the applicable plan which require that each participant shall, no later than the date as of which the value of an award first becomes includible in the gross income of the participant for purposes of applicable taxes, pay to ▇▇▇▇▇▇▇, or make arrangements satisfactory to the Administrator of the ▇▇▇▇▇▇▇ Stock Plan or other relevant plan regarding payment of, all applicable taxes required by applicable law to be withheld with respect to the award. Notwithstanding the foregoing, if ▇▇▇▇▇▇▇ is unable to assume any such Liability for taxes incurred or the administration, management or payment of any such Liability for any reason, and if Veralto or a member of the Veralto Group incurs any Liability for such tax Liability, Veralto shall retain such Liabilities and ▇▇▇▇▇▇▇ shall reimburse and otherwise fully indemnify Veralto for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.
(e) The Parties hereby acknowledge that the provisions of this Article IV are intended to achieve certain tax, legal and accounting objectives and, in the event such objectives are not achieved, the Parties agree to negotiate in good faith regarding such other actions that may be necessary or appropriate to achieve such objectives.
ARTICLE V
ADDITIONAL MATTERS
Section 5.1 Cash Incentive Programs. For any ▇▇▇▇▇▇▇ cash incentive or sales commission performance period that has not concluded as of the date on which the employment of the applicable Veralto Employees is transferred to Veralto (the “Open Incentive Obligations”), Veralto shall provide that each applicable Veralto Employee shall continue to be eligible to receive a cash incentive bonus or sales commission payment (and shall be paid by Veralto if
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earned) in accordance with the same terms and conditions as applied to such Veralto Employee under the corresponding ▇▇▇▇▇▇▇ incentive or sales commission program as in effect immediately prior to the date of such transfer, as equitably adjusted (if applicable) by the Compensation Committee of the ▇▇▇▇▇▇▇ Board of Directors to the extent necessary to reflect the transactions contemplated by the Separation Agreement; provided that in no event shall the aggregate incentive amounts paid by Veralto to the applicable Veralto Employees in respect of such applicable period be less than the Accrued Incentive Amount. Notwithstanding any provision of this Agreement or the Separation Agreement to the contrary, (i) ▇▇▇▇▇▇▇ shall not transfer assets in respect of the Accrued Incentive Amount or the Open Incentive Obligations and (ii) effective as of the date on which the employment of the applicable Veralto Employees is transferred to Veralto, Veralto shall assume all Liabilities and obligations in respect of the Accrued Incentive Amount and the Open Incentive Obligations.
Section 5.2 Time-Off Benefits. Unless otherwise required in a Collective Bargaining Agreement, the Transfer Regulations or applicable Law, Veralto shall (i) credit each Veralto Employee with the amount of accrued but unused vacation time, paid time-off and other time-off benefits as such Veralto Employee had with the ▇▇▇▇▇▇▇ Group as of immediately before the date on which the employment of the Veralto Employee transfers to Veralto and (ii) permit each such Veralto Employee to use such accrued but unused vacation time, paid time off and other time-off benefits in the same manner and upon the same terms and conditions as the Veralto Employee would have been so permitted under the terms and conditions of the applicable ▇▇▇▇▇▇▇ policies in effect for the year in which such transfer of employment occurs, up to and including full exhaustion of such transferred unused vacation time, paid-time off and other time-off benefits (if such full exhaustion would be permitted under the applicable ▇▇▇▇▇▇▇ policies in effect for that year in which the transfer of employment occurs).
Section 5.3 Workers’ Compensation Liabilities. Effective as of the Distribution Date, Veralto shall assume all Liabilities for Veralto Employees, Veralto Independent Contractors and Former Veralto Service Providers related to any and all workers’ compensation injuries, incidents, conditions, claims or coverage, whenever incurred (including claims incurred prior to the Distribution Date but not reported until after the Distribution Date), and Veralto shall be fully responsible for the administration, management and payment of all such claims and satisfaction of all such Liabilities. Notwithstanding the foregoing, if Veralto is unable to assume any such Liability or the administration, management or payment of any such claim solely because of the operation of applicable Law, ▇▇▇▇▇▇▇ shall retain such Liabilities and Veralto shall reimburse and otherwise fully indemnify ▇▇▇▇▇▇▇ for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.
Section 5.4 COBRA Compliance in the United States. Effective as of the Distribution Date, Veralto shall assume and be responsible for administering compliance with the health care continuation requirements of COBRA, in accordance with the provisions of the Veralto Welfare Plans, with respect to Veralto Employees or Veralto Former Service Providers who incurred a COBRA qualifying event under a ▇▇▇▇▇▇▇ U.S. Welfare Plan at any time on or before the Distribution Date and/or any COBRA qualifying event in connection with the transactions described in the Separation Agreement. Veralto shall also be responsible for administering compliance with the health care continuation requirements of COBRA, and the
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corresponding provisions of the Veralto Welfare Plans with respect to Veralto Employees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the Veralto Welfare Plans at any time after the Distribution Date.
Section 5.5 Retention Bonuses. Any retention bonuses payable to any Veralto Employees that relate to the transactions contemplated by the Separation Agreement and become payable after the date on which the employment of the Veralto Employee transfers to Veralto shall be assumed by Veralto as of the date of such transfer and Veralto shall pay all amounts payable thereunder to the applicable Veralto Employees in accordance with the terms thereof.
Section 5.6 Code Section 409A. Notwithstanding anything in this Agreement to the contrary, the Parties shall negotiate in good faith regarding the need for any treatment different from that otherwise provided herein with respect to the payment of compensation to ensure that the treatment of such compensation does not cause the imposition of a Tax under Section 409A of the Code. In no event, however, shall any Party be liable to another in respect of any Taxes imposed under, or any other costs or Liabilities relating to, Section 409A of the Code.
Section 5.7 Payroll Taxes and Reporting. The Parties shall, to the extent practicable, (i) treat Veralto or a member of the Veralto Group as a “successor employer” and ▇▇▇▇▇▇▇ (or the appropriate member of the ▇▇▇▇▇▇▇ Group) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Veralto Employees for purposes of Taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act, and (ii) cooperate with each other to avoid, to the extent possible, the filing of more than one IRS Form W-2 with respect to each Veralto Employee for the calendar year in which the Distribution Date occurs.
Section 5.8 Regulatory Filings. Subject to applicable Law and the Tax Matters Agreement, ▇▇▇▇▇▇▇ shall retain responsibility for all employee-related regulatory filings for reporting periods ending on or prior to the Distribution Date, except for Equal Employment Opportunity Commission EEO-1 reports and affirmative action program (AAP) reports and responses to Office of Federal Contract Compliance Programs (OFCCP) submissions, for which ▇▇▇▇▇▇▇ shall provide data and information (to the extent permitted by applicable Laws) to Veralto, which shall be responsible for making such filings in respect of Veralto Employees.
Section 5.9 Disability.
(a) To the extent any Veralto Employee is, as of January 1, 2024, receiving payments as part of any short-term disability program that is part of a ▇▇▇▇▇▇▇ U.S. Welfare Plan, such Veralto Employee’s rights to continued short-term disability benefits (a) will end under any ▇▇▇▇▇▇▇ U.S. Welfare Plan as of January 1, 2024; and (b) all remaining rights will be recognized under an Veralto Welfare Plan as of January 1, 2024, and the remainder (if any) of such Veralto Employee’s short-term disability benefits will be paid by an Veralto Welfare Plan. In the event that any Veralto Employee described above shall have any dispute with the short-term disability benefits they are receiving under an Veralto Welfare Plan, any and all appeal rights of such employees shall be realized through the Veralto Welfare Plan (and any appeal
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rights such Veralto Employee may have under any ▇▇▇▇▇▇▇ U.S. Welfare Plan will be limited to benefits received and time periods occurring prior to January 1, 2024).
(b) For any Former Veralto Service Provider who is, as of the Distribution Date, receiving payments as part of any long-term disability program that is part of a ▇▇▇▇▇▇▇ U.S. Welfare Plan, and has been receiving payments from such plan for twelve (12) months or fewer before January 1, 2024, to the extent such Former Veralto Service may have any “return to work” rights under the terms of such ▇▇▇▇▇▇▇ U.S. Welfare Plan, such Former Veralto Service Provider’s eligibility for re-employment shall be with Veralto or a member of the Veralto Group, subject to availability of a suitable position (with such availability to be determined in the sole discretion by Veralto or the applicable member of the Veralto Group), provided however that, notwithstanding the foregoing, no Former Veralto Service Provider described in this subsection will be eligible for re-employment as described in this subsection after the first anniversary of January 1, 2024.
Section 5.10 Certain Requirements. Notwithstanding anything in this Agreement to the contrary, if the Transfer Regulations, the terms of a Collective Bargaining Agreement or applicable Law require that any assets or Liabilities be retained by the ▇▇▇▇▇▇▇ Group or transferred to or assumed by the Veralto Group in a manner that is different from that set forth in this Agreement, such retention, transfer or assumption shall be made in accordance with the terms of such Collective Bargaining Agreement or applicable Law and shall not be made as otherwise set forth in this Agreement.
ARTICLE VI
GENERAL AND ADMINISTRATIVE
Section 6.1 Employer Rights. Nothing in this Agreement shall be deemed to be an amendment to any ▇▇▇▇▇▇▇ Benefit Arrangement or Veralto Benefit Arrangement or to prohibit any member of the ▇▇▇▇▇▇▇ Group or Veralto Group, as the case may be, from amending, modifying or terminating any ▇▇▇▇▇▇▇ Benefit Arrangement or Veralto Benefit Arrangement at any time within its sole discretion.
Section 6.2 Effect on Employment. Nothing in this Agreement is intended to or shall confer upon any employee or former employee of ▇▇▇▇▇▇▇, Veralto or any of their respective Affiliates any right to continued employment, or any recall or similar rights to any such individual on layoff or any type of approved leave.
Section 6.3 Consent of Third Parties. If any provision of this Agreement is dependent on the Consent of any third party and such Consent is withheld, the Parties shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the fullest extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties hereto shall negotiate in good faith to implement the provision (as applicable) in a mutually satisfactory manner.
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Section 6.4 Access to Employees. On and after the Distribution Date, ▇▇▇▇▇▇▇ and Veralto shall, or shall cause each of their respective Affiliates to, make available to each other those of their employees who may reasonably be needed in order to defend or prosecute any legal or administrative action (other than a legal action between ▇▇▇▇▇▇▇ and Veralto) to which any employee or director of the ▇▇▇▇▇▇▇ Group or the Veralto Group or any ▇▇▇▇▇▇▇ Benefit Arrangement or Veralto Benefit Arrangement is a party and which relates to a ▇▇▇▇▇▇▇ Benefit Arrangement or Veralto Benefit Arrangement. The Party to whom an employee is made available in accordance with this Section 6.4 shall pay or reimburse the other Party for all reasonable expenses which may be incurred by such employee in connection therewith, including all reasonable travel, lodging, and meal expenses, but excluding any amount for such employee’s time spent in connection herewith.
Section 6.5 Beneficiary Designation/Release of Information/Right to Reimbursement. To the extent permitted by applicable Law and except as otherwise provided for in this Agreement, all beneficiary designations, authorizations for the release of Information and rights to reimbursement made by or relating to Veralto Employees under ▇▇▇▇▇▇▇ Benefit Arrangements shall be transferred to and be in full force and effect under the corresponding Veralto Benefit Arrangements until such beneficiary designations, authorizations or rights are replaced or revoked by, or no longer apply, to the relevant Veralto Employee.
Section 6.6 No Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties and, except to the extent otherwise expressly provided herein, nothing in this Agreement, express or implied, is intended to confer any rights, benefits, remedies, obligations or Liabilities under this Agreement upon any Person, including any Veralto Employee or other current or former employee, officer, director or contractor of the ▇▇▇▇▇▇▇ Group or Veralto Group, other than the Parties and their respective successors and assigns.
Section 6.7 No Acceleration of Benefits. Except as otherwise provided in this Agreement, no provision of this Agreement shall be construed to create any right, or accelerate vesting or entitlement, to any compensation or benefit whatsoever on the part of any Veralto Employee or other former, current or future employee of the ▇▇▇▇▇▇▇ Group or Veralto Group under any Benefit Arrangement of the ▇▇▇▇▇▇▇ Group or Veralto Group.
Section 6.8 Employee Benefits Administration. At all times following the date hereof, the Parties will cooperate in good faith as necessary to facilitate the administration of employee benefits and the resolution of related employee benefit claims with respect to Veralto Employees, Former Veralto Service Providers and employees and other service providers of ▇▇▇▇▇▇▇, as applicable, including with respect to the provision of employee level information necessary for the other Party to manage, administer, finance and file required reports with respect to such administration.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement and the Separation Agreement, including the Exhibits and Schedules thereto, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter.
Section 7.2 Counterparts. This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to each of the Parties (including by facsimile, by .pdf, .gif, .jpeg or similar attachment to electronic mail or by DocuSign).
Section 7.3 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 and remain in full force and effect in accordance with their applicable terms.
Section 7.4 Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in English, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by email with receipt confirmed by a non-automated response (followed by delivery of an original via overnight courier service), or by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 7.4):
To ▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ Corporation,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇ - ▇▇▇▇▇ ▇▇▇▇
Washington, DC 20037-1701
Attn: General Counsel
To Veralto:
Veralto Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
Wood Dale, Illinois 60191
Attn: General Counsel
Section 7.5 Waivers. Any consent required or permitted to be given by any Party to the other Party under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group).
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Section 7.6 Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void. Notwithstanding the foregoing, this Agreement shall be assignable to (i) with respect to ▇▇▇▇▇▇▇, an Affiliate of ▇▇▇▇▇▇▇, or (ii) a bona fide third party in connection with a merger, reorganization, consolidation or the sale of all or substantially all the assets of a Party so long as the resulting, surviving or transferee entity assumes all the obligations of the relevant Party by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party; provided however that in the case of each of the preceding clauses (i) and (ii), no assignment permitted by this Section 7.6 shall release the assigning Party from liability for the full performance of its obligations under this Agreement.
Section 7.7 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted assigns.
Section 7.8 Termination and Amendment. This Agreement may be terminated, modified or amended at any time prior to the Distribution Date by and in the sole discretion of ▇▇▇▇▇▇▇ without the approval of Veralto or the stockholders of ▇▇▇▇▇▇▇. In the event of such termination, no Party shall have any liability of any kind to the other Party or any other Person. After the Distribution Date, this Agreement may not be terminated, modified or amended except by an agreement in writing signed by ▇▇▇▇▇▇▇ and Veralto.
Section 7.9 Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party at and after the Distribution Date, to the extent such Subsidiary remains a Subsidiary of the applicable Party.
Section 7.10 Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
Section 7.11 Governing Law. This Agreement and any dispute arising out of, in connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the conflicts of laws principles thereof.
Section 7.12 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
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Section 7.13 Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.
Section 7.14 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.
Section 7.15 No Waiver. No failure to exercise and no delay in exercising, on the part of any Party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 7.16 No Admission of Liability. The allocation of Assets and Liabilities herein is solely for the purpose of allocating such Assets and Liabilities between ▇▇▇▇▇▇▇ and Veralto and is not intended as an admission of liability or responsibility for any alleged Liabilities vis-à-vis any third party, including with respect to the Liabilities of any non-wholly owned subsidiary of ▇▇▇▇▇▇▇ or Veralto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇▇▇ CORPORATION | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
VERALTO CORPORATION | ||||||||
By: | ||||||||
Name: | ||||||||
Title: | ||||||||
[Signature Page to Employee Matters Agreement]