EXHIBIT 2
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DISTRIBUTION AGREEMENT
by and among
▇▇▇▇▇▇▇▇ CORPORATION,
ENPRO INDUSTRIES, INC.
and
COLTEC INDUSTRIES INC
dated as of
May 31, 2002
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS................................................................................ 2
Section 1.01 Definitions....................................................................... 2
ARTICLE 2 CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION; THE DISTRIBUTION.......................... 9
Section 2.01 Cooperation Prior to the Distribution............................................. 9
Section 2.02 Board Actions.................................................................... 11
Section 2.03 Conditions Precedent............................................................. 11
Section 2.04 The Aerospace Distribution....................................................... 12
Section 2.05 The EnPro Contribution........................................................... 13
Section 2.06 The Distribution................................................................. 13
Section 2.07 Fractional Shares................................................................ 13
ARTICLE 3 ACCESS TO INFORMATION..................................................................... 13
Section 3.01 Provision of Corporate Records................................................... 13
Section 3.02 Access to Information............................................................ 14
Section 3.03 Litigation Cooperation........................................................... 14
Section 3.04 Reimbursement.................................................................... 14
Section 3.05 Treatment of Records............................................................. 15
Section 3.06 Preservation of Privilege........................................................ 15
Section 3.07 Confidentiality.................................................................. 15
Section 3.08 Notice Preceding Compelled Disclosure............................................ 16
ARTICLE 4 CERTAIN OTHER AGREEMENTS.................................................................. 16
Section 4.01 Post-Distribution Adjustments.................................................... 16
Section 4.02 Intercompany Accounts............................................................ 20
Section 4.03 Further Assurances and Consents.................................................. 20
Section 4.04 Payments......................................................................... 20
ARTICLE 5 INDEMNIFICATION........................................................................... 21
Section 5.01 Exculpation and Indemnification by EnPro......................................... 21
Section 5.02 Exculpation and Indemnification by ▇▇▇▇▇▇▇▇...................................... 21
Section 5.03 Third Party Claims; Notice and Payment of Claims................................. 22
Section 5.04 Procedures for Defense of Third-Party Claims..................................... 23
Section 5.05 Specific Indemnification Issues.................................................. 24
ARTICLE 6 RELEASES.................................................................................. 26
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TABLE OF CONTENTS
(continued)
Section 6.01 Release of Pre-Distribution Claims............................................... 26
ARTICLE 7 DISPUTE RESOLUTION........................................................................ 28
Section 7.01 Application...................................................................... 28
Section 7.02 Initial Discussions.............................................................. 28
Section 7.03 Appeal to Higher Management...................................................... 28
Section 7.04 Mediation........................................................................ 28
Section 7.05 Jurisdiction..................................................................... 29
ARTICLE 8 MISCELLANEOUS.............................................................................. 29
Section 8.01 Notices.......................................................................... 29
Section 8.02 Interpretation................................................................... 30
Section 8.03 Amendments; No Waivers........................................................... 30
Section 8.04 Nonexclusive Remedies............................................................ 31
Section 8.05 Successors and Assigns........................................................... 31
Section 8.06 Third-Party Beneficiaries........................................................ 31
Section 8.07 Governing Law.................................................................... 31
Section 8.08 Counterparts; Effectiveness...................................................... 31
Section 8.09 Entire Agreement................................................................. 31
Section 8.10 Severability..................................................................... 31
Section 8.11 Termination...................................................................... 31
Section 8.12 Survival......................................................................... 32
Section 8.13 Expenses......................................................................... 32
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TABLE OF CONTENTS
(continued)
SCHEDULES
Schedule 1.01 Contributed Subsidiaries
Schedule 1.02 EnPro Litigation
Schedule 1.03 ▇▇▇▇▇▇▇▇ Litigation
Schedule 5.04(a) Defense Procedure Exceptions
Schedule 8.13 Expense Exceptions
ANNEXES
Annex A Coltec/GPEC Plan of Reorganization
Annex B ▇▇▇▇▇▇▇▇/EnPro Plan of Reorganization
Annex C Contribution and Assumption of Liabilities Agreement (Coltec/DS, LLC)
Annex D Contribution and Assumption of Liabilities Agreement (Coltec/GLG, LLC)
Annex E Contribution and Assumption of Liabilities Agreement (Coltec/GPEC)
Annex F Employee Matters Agreement
Annex G Escrow Agreement
Annex H Tax Matters Arrangements
Annex I TIDES Indemnification Agreement
Annex J Transition Services Agreement
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DISTRIBUTION AGREEMENT
Distribution Agreement, dated as of May 31, 2002 (this "AGREEMENT"), by
and among ▇▇▇▇▇▇▇▇ Corporation, a New York corporation ("▇▇▇▇▇▇▇▇"), EnPro
Industries, Inc., a North Carolina corporation ("ENPRO") and Coltec Industries
Inc, a Pennsylvania corporation ("COLTEC").
RECITALS
A. Coltec and GPEC have entered into an Agreement and Plan of
Corporate Separation and Reorganization dated as of May 16, 2002 (the
"COLTEC/GPEC PLAN OF REORGANIZATION") and attached hereto as Annex ▇.
▇. ▇▇▇▇▇▇▇▇ and EnPro have entered into an Agreement and Plan of
Corporate Separation and Reorganization dated as of May 20, 2002 (the
"▇▇▇▇▇▇▇▇/ENPRO PLAN OF REORGANIZATION") and attached hereto as Annex B.
C. The Board of Directors of Coltec, pursuant to the Coltec/GPEC
Plan of Reorganization and after consultation with Coltec's management and
financial and legal advisors, has determined that it is appropriate and in the
best interests of Coltec and its sole shareholder to separate its aerospace
segment from its engineered industrial products segment by effecting a (i)
contribution of Coltec Aerospace to GPEC and its Subsidiaries (the "AEROSPACE
RESTRUCTURING") and (ii) dividend of all of the GPEC Common Stock to ▇▇▇▇▇▇▇▇
(the "AEROSPACE DISTRIBUTION") pursuant to the terms and subject to the
conditions of this Agreement and the Aerospace Contribution Agreements.
D. After the Aerospace Distribution Date and prior to the
Distribution Time, ▇▇▇▇▇▇▇▇ will contribute to EnPro (i) Coltec and its direct
and indirect Subsidiaries, excluding Coltec Aerospace and (ii) a promissory note
in the original aggregate principal amount of $201.9 million from Coltec to
▇▇▇▇▇▇▇▇ in exchange for EnPro Common Stock in an amount equal to the difference
of (x) the number of shares of EnPro Common Stock equal to one fifth of the
number of shares of ▇▇▇▇▇▇▇▇ Common Stock outstanding on the Record Date,
including any fraction of a share of EnPro Common Stock, minus (y) 1,000 shares
of EnPro Common Stock (the "ENPRO CONTRIBUTION") pursuant to the terms and
subject to the conditions of this Agreement and the EnPro Contribution
Agreement.
E. The Board of Directors of ▇▇▇▇▇▇▇▇, pursuant to the
▇▇▇▇▇▇▇▇/EnPro Plan of Reorganization and after consultation with ▇▇▇▇▇▇▇▇'▇
management and financial and legal advisors, has determined that it is
appropriate and in the best interests of ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇▇▇ Shareholders
to divest ▇▇▇▇▇▇▇▇'▇ indirect ownership interest in the EnPro Business, through
a pro rata distribution of all of the EnPro Common Stock to the ▇▇▇▇▇▇▇▇
Shareholders (the "DISTRIBUTION") pursuant to the terms and subject to the
conditions of this Agreement and the Ancillary Agreements.
F. The Aerospace Distribution and the Distribution are intended
to qualify as tax-free transactions (except as to payment of cash in lieu of
fractional shares) to Coltec,
▇▇▇▇▇▇▇▇ and their respective shareholders, as applicable, under Sections 361
and 355 of the Code.
▇. ▇▇▇▇▇▇▇▇, EnPro, Coltec and certain other of their respective
Subsidiaries have entered into, or will enter into by the Distribution Date, the
Transfer Documents, and have agreed to complete the transactions, and take or
cause to be taken the other actions, contemplated by the Transfer Documents in
order to complete the Aerospace Restructuring, the Aerospace Distribution, and
the EnPro Contribution.
▇. ▇▇▇▇▇▇▇▇, EnPro and Coltec desire to set forth herein the
matters relating to the relationship and the respective rights and obligations
of the parties to one another following the Aerospace Distribution and the
Distribution.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and undertakings contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
▇▇▇▇▇▇▇▇, EnPro and Coltec hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. The following terms, as used herein,
have the following meanings:
"Action" means any claim, suit, action, demand, order,
arbitration, inquiry, investigation or other proceeding of any nature (whether
criminal, civil, legislative, administrative, regulatory, prosecutorial or
otherwise) asserted or brought by or before any arbitrator, mediator or
Governmental Entity or similar Person or body.
"Aerospace Contribution Agreements" means the (i) Contribution
and Assumption of Liabilities Agreement by and between Coltec and Delavan Spray,
LLC, dated as of May 22, 2002, (ii) the Contribution and Assumption of
Liabilities Agreement by and between Coltec and ▇▇▇▇▇▇▇▇ Landing Gear, LLC,
dated as of May 22, 2002, and (iii) the Contribution and Assumption of
Liabilities Agreement by and between Coltec and GPEC, dated as of May 23, 2002,
each attached hereto as Annex C, Annex D and Annex E, respectively, that will
transfer Coltec Aerospace to GPEC and its Subsidiaries prior to the Aerospace
Distribution Date.
"Aerospace Distribution" has the meaning set forth in the
recitals.
"Aerospace Distribution Date" means May 29, 2002.
"Aerospace Restructuring" has the meaning set forth in the
recitals.
"Affiliate" has the meaning ascribed to such term in
Rule 12b-2 of the Exchange Act as of the date hereof; provided, however, that
▇▇▇▇▇▇▇▇ and EnPro (in each case with the
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members of their respective Groups) shall not be deemed to be Affiliates of each
other for purposes of this Agreement.
"Agreement" has the meaning set forth in the preamble.
"Ancillary Agreements" means all agreements, certificates,
deeds, instruments, assignments and other written arrangements (other than this
Agreement and the Transfer Documents) entered into between ▇▇▇▇▇▇▇▇ and one or
more members of the EnPro Group in connection with the Distribution, including
the Employee Matters Agreement, the Tax Matters Arrangements, the TIDES
Indemnification Agreement and the Transition Services Agreement.
"AP Excess" has the meaning set forth in Section 4.01(d)(iii).
"AP Option" has the meaning set forth in Section 4.01(d)(iii).
"Asbestos Payments" has the meaning set forth in Section
4.01(d)(i).
"Asbestos Payments Statement" has the meaning set forth in
Section 4.01(d)(i).
"Business Day" means any day other than a Saturday, Sunday or
one on which banks are authorized or required by law to close in Charlotte,
North Carolina.
"Cash" has the meaning set forth in Section 4.01(a)(i).
"Cash Statement" has the meaning set forth in Section
4.01(a)(i).
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder, including any successor language.
"Coltec" has the meaning set forth in the preamble.
"Coltec Aerospace" means the aerospace assets and Liabilities
of Coltec and its Subsidiaries to be transferred pursuant to the Aerospace
Contribution Agreements.
"Coltec/GPEC Plan of Reorganization" has the meaning set
forth in the recitals.
"Coltec Insurance Block" has the meaning set forth in
Section 5.03(e).
"Coltec's Prior Accounting Practices and Policies" means
accounting practices and policies consistent with those applied in the
preparation of the December 31, 2001 consolidated balance sheet of Coltec and
its subsidiaries and the consolidated statement of income for the fiscal year
then ended, as contained in the Form 10.
"Commission" means the Securities and Exchange Commission.
"Contributed Subsidiaries" means all entities listed on
Schedule 1.01, which include (i) the direct or indirect Subsidiaries of EnPro,
(ii) those other entities in which, as of the Distribution Date, EnPro or any
direct or indirect Subsidiary of EnPro owns a minority interest and (iii) all
predecessors to those entities referenced in (i) and (ii) above.
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"Corporate Records" has the meaning set forth in Section 3.01.
"Damages" means, with respect to any Person, any and all
damages (including punitive and consequential damages if not otherwise expressly
excluded), losses, Liabilities, fines, costs and expenses incurred or suffered
by such Person (including all expenses of investigation, all reasonable
attorneys' and expert witnesses' fees and all other costs, charges and
out-of-pocket expenses incurred in connection with any Action or threatened
Action).
"Distribution" has the meaning set forth in the recitals.
"Distribution Agent" means The Bank of New York.
"Distribution Date" means May 31, 2002.
"Distribution Time" means 11:59 p.m., Charlotte, North
Carolina time, on the Distribution Date.
"EIP Businesses" has the meaning set forth in Section
4.01(b)(i).
"Employee Matters Agreement" means the Employee Matters
Agreement entered into on the Distribution Date between ▇▇▇▇▇▇▇▇ and EnPro,
attached hereto as Annex F.
"EnPro" has the meaning set forth in the preamble.
"EnPro Business" means the businesses conducted by the EnPro
Group at any time prior to or on the Distribution Date, including businesses
that have been discontinued, sold, transferred or otherwise disposed of by a
member of the EnPro Group, but in each case excluding the ▇▇▇▇▇▇▇▇ Business and
Coltec Aerospace.
"EnPro Common Stock" means the common stock, par value $0.01
per share, of EnPro.
"EnPro Contribution" has the meaning set forth in the
recitals.
"EnPro Contribution Agreement" means the Contribution and
Assumption of Liabilities Agreement, dated as of May 31, 2002 and effective as
of 10:59 p.m. on the Distribution Date, by and between EnPro and ▇▇▇▇▇▇▇▇.
"EnPro Group" means EnPro and the Contributed Subsidiaries,
including all successors to each of those Persons.
"EnPro Group Liabilities" means the following and only the
following obligations and Liabilities of any and all members of the EnPro Group:
- Liabilities of, associated with, arising from or
relating primarily to the ownership, use, possession,
operation or conduct of the EnPro Business or the
assets, business or operations of the EnPro Group
prior to, on or after the Distribution Date;
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- all other Liabilities of the EnPro Group under this
Agreement, any Transfer Document or any Ancillary
Agreement, including the EnPro Litigation;
- all Liabilities that would be reflected as
liabilities or obligations on a consolidated balance
sheet or reflected as contingencies with respect to
such a consolidated balance sheet relating to the
EnPro Business after giving effect to the Aerospace
Distribution and the Distribution;
- all Liabilities associated with the information in
the Information Statement and the Form 10 provided by
EnPro pursuant to the Side Letter; and
- all Liabilities arising from or out of a breach by
any member of the EnPro Group of its obligations
under this Agreement, any Ancillary Agreement or any
Transfer Document.
but does not include (x) Liabilities for Taxes (which will be governed by the
Tax Matters Arrangements), (y) Liabilities specifically addressed in the
Employee Matters Agreement and the TIDES Indemnification Agreement and (z) any
and all ▇▇▇▇▇▇▇▇ Group Liabilities.
"EnPro Indemnifiable Liabilities" has the meaning set forth in
Section 5.01.
"EnPro Indemnitees" has the meaning set forth in Section 5.02.
"EnPro Litigation" means the litigation identified as such on
Schedule 1.02 and any additional Actions brought in connection therewith.
"EnPro Released Parties" has the meaning set forth in
Section 6.01(b).
"Escrow Agent" means The Bank of New York.
"Escrow Agreement" means the Escrow Agreement entered into on
the Distribution Date among Coltec, GPEC and the Escrow Agent, attached hereto
as Annex G.
"Escrow Property" has the meaning set forth in Section
4.01(g)(i).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excess" has the meaning set forth in Section 4.01(b)(iii).
"Finally Determined" means, with respect to any Action,
threatened Action or other matter, that the outcome or resolution of that
Action, threatened Action or other matter either (i) has been decided through
binding arbitration or by a Governmental Entity of competent jurisdiction by
judgment, order, award, or other ruling or (ii) has been settled or voluntarily
dismissed by the parties pursuant to the dispute resolution procedure set forth
in Article 7 or otherwise and, in the case of each of clauses (i) and (ii), the
claimants' rights to maintain that Action, threatened Action or other matter
have been finally adjudicated, waived, released, discharged, barred or
extinguished, and that judgment, order, ruling, award, settlement or dismissal
(whether mandatory or voluntary, but if voluntary that dismissal must be final,
binding
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and with prejudice as to all claims specifically pleaded in that Action,
threatened Action or other matter) is subject to no further appeal, vacatur
proceeding or discretionary review.
"Form 10" means the registration statement on Form 10 filed by
EnPro with the Commission to effect the registration of the EnPro Common Stock
pursuant to the Exchange Act in connection with the Distribution, as such
registration statement may be amended or supplemented from time to time.
"▇▇▇▇▇▇▇▇" has the meaning set forth in the preamble.
"▇▇▇▇▇▇▇▇ Business" means the businesses conducted by the
▇▇▇▇▇▇▇▇ Group at any time prior to or on the Distribution Date, including
businesses that have been discontinued, sold, transferred or otherwise disposed
of by a member of the ▇▇▇▇▇▇▇▇ Group, but in each case excluding the EnPro
Business.
"▇▇▇▇▇▇▇▇ Common Stock" means the common stock, par value
$5.00 per share, of ▇▇▇▇▇▇▇▇.
"▇▇▇▇▇▇▇▇/EnPro Plan of Reorganization" has the meaning set
forth in the recitals.
"▇▇▇▇▇▇▇▇ Group" means ▇▇▇▇▇▇▇▇ and its direct and indirect
Subsidiaries, including all successors to each of those Persons, other than the
EnPro Group.
"▇▇▇▇▇▇▇▇ Group Liabilities" means the following and only the
following obligations and Liabilities of any and all members of the ▇▇▇▇▇▇▇▇
Group:
- Liabilities of, associated with, arising from or
relating primarily to the ownership, use, possession,
operation or conduct of the ▇▇▇▇▇▇▇▇ Business or the
assets, business or operations of the ▇▇▇▇▇▇▇▇ Group
prior to, on or after the Distribution Date;
- all other Liabilities of ▇▇▇▇▇▇▇▇ under this
Agreement, any Transfer Document or any Ancillary
Agreement, including the ▇▇▇▇▇▇▇▇ Litigation;
- all Liabilities that would be reflected as
liabilities or obligations on a consolidated balance
sheet or reflected as contingencies with respect to
such a consolidated balance sheet relating to the
▇▇▇▇▇▇▇▇ Business after giving effect to the
Aerospace Distribution and the Distribution;
- all Liabilities associated with the information in
the Information Statement and the Form 10 provided by
▇▇▇▇▇▇▇▇ pursuant to the Side Letter; and
- all Liabilities arising from or out of a breach by
any member of the ▇▇▇▇▇▇▇▇ Group of its obligations
under this Agreement, any Ancillary Agreement or any
Transfer Document.
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but does not include (x) Liabilities for Taxes (which are governed by the Tax
Matters Arrangements), (y) Liabilities specifically addressed in the Employee
Matters Agreement and the TIDES Indemnification Agreement and (z) any and all
EnPro Group Liabilities.
"▇▇▇▇▇▇▇▇ Indemnifiable Liabilities" has the meaning set forth
in Section 5.02.
"▇▇▇▇▇▇▇▇ Indemnitees" has the meaning set forth in
Section 5.01.
"▇▇▇▇▇▇▇▇ Litigation" means the litigation identified as such
on Schedule 1.03 and any additional Actions brought in connection therewith.
"▇▇▇▇▇▇▇▇ Released Parties" has the meaning set forth in
Section 6.01(a).
"▇▇▇▇▇▇▇▇ Shareholders" means the holders of ▇▇▇▇▇▇▇▇ Common
Stock of record as of the Record Date.
"Governmental Entity" means any federal, state, local or
foreign government or any court, tribunal, administrative agency or commission
or other governmental or regulatory authority or agency, domestic, foreign or
supranational.
"GPEC" means ▇▇▇▇▇▇▇▇ Pump and Engine Control Systems, Inc., a
Delaware corporation.
"GPEC Common Stock" means the common stock, par value $1.00
per share, of GPEC.
"Group" means, as the context requires, the EnPro Group or the
▇▇▇▇▇▇▇▇ Group.
"Indemnified Party" has the meaning set forth in Section
5.03(a).
"Indemnifying Party" has the meaning set forth in Section
5.03(a).
"Information Statement" has the meaning set forth in Section
2.01(a).
"Law" means any applicable federal, state, local or foreign
law, statute, ordinance, directive, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement, license or permit of
any Governmental Entity.
"Liability" or "Liabilities" means any and all losses, claims,
charges, debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, bonds, indemnities and
similar obligations, exoneration, covenants, contracts, controversies,
agreements, promises, doings, omissions, guarantees, make whole agreements and
similar obligations, and other liabilities and requirements, including all
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened or contemplated
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Actions), order or consent decree of any Governmental Entity or any award of any
arbitrator or mediator of any kind, and those arising under any contract,
commitment or undertaking, including those arising under this Agreement, any
Transfer Document or any Ancillary Agreement, in each case, whether or not
recorded or reflected or required to be recorded or reflected on the books and
records or financial statements of any Person.
"Net Other Liabilities/Assets" has the meaning set forth in
Section 4.01(c)(i).
"Net Other Liabilities/Assets Statement" has the meaning set
forth in Section 4.01(c)(i).
"Net Receivables" has the meaning set forth in Section
4.01(b)(i).
"Net Trade Receivables/Payables Statement" has the meaning set
forth in Section 4.01(b)(i).
"NTR/P Option" has the meaning set forth in Section
4.01(b)(iii).
"NYSE" means The New York Stock Exchange.
"OL/A Option" has the meaning set forth in Section
4.01(c)(iii).
"Opening Adjustment" means the sum of (a) $3,045,000
(representing the May 2002 Fairbanks ▇▇▇▇▇ engine purchase) and (b) $1,575,000
(representing the bank fees paid in May 2002).
"Opening Cash Target" means $50,000,000, reduced by the amount
of the Opening Adjustment.
"Person" means any individual, corporation (including
not-for-profit corporations), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, Governmental
Entity or other entity of any kind or nature, unless another definition is
specifically provided for herein, in which instance such other definition shall
control only in the context in which it is used.
"Record Date" means May 28, 2002, which is the date used for
determining the ▇▇▇▇▇▇▇▇ Shareholders entitled to receive the EnPro Common Stock
to be issued in the Distribution.
"Shortfall" has the meaning set forth in Section 4.01(c)(iii).
"Side Letter" has the meaning set forth in Section 5.05(b).
"Statements" has the meaning set forth in Section 4.01(e)(i).
"Subsidiary" of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
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directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however, that no Person that is not directly or indirectly wholly
owned by any other Person shall be a Subsidiary of such other Person unless such
other Person controls, or has the right, power and ability to control, that
Person.
"Taxes" has the meaning set forth in the Tax Matters
Arrangements.
"Tax Matters Arrangements" means the Tax Matters Arrangements
entered into on the Distribution Date between ▇▇▇▇▇▇▇▇ and EnPro, attached
hereto as Annex H.
"TIDES" means the $150 million liquidation value of 5 1/4%
Convertible Preferred Securities - Term Income Deferred Equity Securities issued
by Coltec Capital Trust.
"TIDES Indemnification Agreement" means the TIDES
Indemnification Agreement entered into on the Distribution Date among EnPro,
▇▇▇▇▇▇▇▇, Coltec and Coltec Capital Trust, attached hereto as Annex I.
"Transfer" means assign, contribute, convey, transfer and
deliver.
"Transfer Documents" means all agreements, certificates,
deeds, instruments, assignments and other written arrangements, including the
Aerospace Contribution Agreements, the EnPro Contribution Agreement, the
Coltec/GPEC Plan of Reorganization and the ▇▇▇▇▇▇▇▇/EnPro Plan of
Reorganization, relating to the corporate restructuring that, among other
things, will (i) transfer Coltec Aerospace from Coltec to ▇▇▇▇▇▇▇▇ through a
series of transactions that will culminate in the Aerospace Distribution on the
Aerospace Distribution Date and (ii) effect the EnPro Contribution.
"Transition Services Agreement" means the Transition Services
Agreement entered into on the Distribution Date between ▇▇▇▇▇▇▇▇ and EnPro,
attached hereto as Annex J.
ARTICLE 2
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTION; THE DISTRIBUTION
Section 2.01 Cooperation Prior to the Distribution. Prior to the
Distribution Date:
(a) ▇▇▇▇▇▇▇▇, EnPro and Coltec shall prepare, and EnPro
shall file with the Commission, the Form 10, which shall include an information
statement (the "INFORMATION STATEMENT") that will describe the Distribution and
EnPro and will substantially comply with Regulation 14C under the Exchange Act.
▇▇▇▇▇▇▇▇ and EnPro shall use their reasonable efforts to cause the Form 10 to
become effective under the Exchange Act as promptly as reasonably practicable.
As promptly as reasonably practicable after the Form 10 has become effective,
▇▇▇▇▇▇▇▇ shall mail the Information Statement to the ▇▇▇▇▇▇▇▇ Shareholders.
(b) ▇▇▇▇▇▇▇▇ and EnPro shall cooperate in preparing,
filing with the Commission and causing to become effective any registration
statements or amendments thereto
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that are necessary, advisable or appropriate to reflect the establishment of,
or amendments to, any employee benefit or other plans of ▇▇▇▇▇▇▇▇ or EnPro
contemplated by any Ancillary Agreement or otherwise necessary, advisable or
appropriate in connection with the Distribution.
(c) ▇▇▇▇▇▇▇▇ and EnPro shall take all such action as may
be necessary, advisable 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, the Transfer Documents and the
Ancillary Agreements.
(d) ▇▇▇▇▇▇▇▇ and EnPro shall prepare, and EnPro shall
file and seek to make effective, an original listing application to permit the
listing of the EnPro Common Stock on the NYSE.
(e) Coltec shall use its reasonable efforts, both prior
to and after the Aerospace Distribution Date, to duly and validly Transfer all
transferable licenses, permits and authorizations issued by any Governmental
Entity that relate to Coltec Aerospace but that are held in the name of Coltec
or any other member of the EnPro Group or any of their respective employees,
officers, directors, shareholders, agents or otherwise, on behalf of Coltec or
any other member of the EnPro Group, to GPEC (or another member of the ▇▇▇▇▇▇▇▇
Group designated by ▇▇▇▇▇▇▇▇). In the event any such Transfer cannot be effected
prior to the Aerospace Distribution Date, Coltec shall, to the extent permitted
by Law, allow GPEC, or the relevant member of the ▇▇▇▇▇▇▇▇ Group, to operate
under such licenses, permits or authorizations until such Transfer can be
effected.
(f) ▇▇▇▇▇▇▇▇ shall use its reasonable efforts, both prior
to and after the Distribution Date, to duly and validly Transfer all
transferable licenses, permits and authorizations issued by any Governmental
Entity that relate to the EnPro Business but that are held in the name of
▇▇▇▇▇▇▇▇ or any other member of the ▇▇▇▇▇▇▇▇ Group or any of their respective
employees, officers, directors, shareholders, agents or otherwise, on behalf of
▇▇▇▇▇▇▇▇ or any other member of the ▇▇▇▇▇▇▇▇ Group, to EnPro (or another member
of the EnPro Group designated by EnPro). In the event any such Transfer cannot
be effected prior to the Distribution Date, ▇▇▇▇▇▇▇▇ shall, to the extent
permitted by Law, allow EnPro, or the relevant member of the EnPro Group, to
operate under such licenses, permits or authorizations until such Transfer can
be effected.
(g) ▇▇▇▇▇▇▇▇ and EnPro shall cooperate prior to, on and
after the Distribution Date to identify any product licenses or technology
licenses that are (i) in the name of one or more members of one Group but used
solely by the other Group and (ii) in the name of one or more members of one
Group but used jointly with the other Group. With respect to the licenses
described in (i) above, the Group holding such license shall Transfer such
license to the other Group as soon as reasonably practicable and shall grant
access, subcontract or provide such other benefits as may be necessary so that
the other Group may continue to use the relevant products or technology after
the Distribution Date until such Transfer can be effected. With respect to the
licenses described in (ii) above, the Group holding such license shall, as soon
as reasonably practicable, negotiate and enter into a commercially based fair
market value license agreement with the other Group and shall grant access,
subcontract or provide such other benefits as may be necessary so that the other
Group may continue to use the relevant products or technology after the
Distribution Date until such agreement becomes effective. In either case, the
Group using
10
the products or technology will bear any expenses incurred as a result of the
use of the products or technology, including expenses incurred in connection
with the granting of access, subcontracting or provision of other benefits under
this Section 2.01(g).
Section 2.02 Board Actions.
(a) Coltec's Board of Directors shall establish, or
delegate authority to establish, (i) the Aerospace Distribution Date, which
shall be the record date for the Aerospace Distribution and (ii) any appropriate
procedures in connection with the Aerospace Distribution.
(b) ▇▇▇▇▇▇▇▇'▇ Board of Directors shall establish, or
delegate authority to establish, (i) the Record Date and the Distribution Date
and (ii) any appropriate procedures in connection with the EnPro Contribution
and the Distribution.
(c) EnPro's Board of Directors shall approve the EnPro
Contribution.
Section 2.03 Conditions Precedent.
(a) The obligation of Coltec to consummate the Aerospace
Distribution is subject to the following conditions, any of which may be waived
by Coltec in its sole and absolute discretion, except to the extent the
satisfaction of such condition is required by Law in connection with the
Aerospace Distribution:
(i) all material regulatory approvals necessary
to consummate the Aerospace Distribution shall have been received and
shall be in full force and effect;
(ii) no order, preliminary or permanent
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
consummation of the Aerospace Distribution shall be in effect and no
other event shall have occurred or failed to occur that prevents
consummation of the Aerospace Distribution;
(iii) the Coltec Board of Directors shall have
approved the Aerospace Distribution;
(iv) Coltec shall have received an opinion of tax
counsel to the effect that the Aerospace Distribution will be tax-free
to Coltec and its sole shareholder for federal income tax purposes, in
form and substance satisfactory to Coltec in its sole discretion; and
(v) each Transfer Document and the TIDES
Indemnification Agreement shall have been duly executed and delivered
by the parties thereto.
(b) The obligation of ▇▇▇▇▇▇▇▇ to consummate the
Distribution is subject to the following conditions, any of which may be waived
by ▇▇▇▇▇▇▇▇ in its sole and absolute discretion, except to the extent the
satisfaction of such condition is required by Law in connection with the
Distribution:
11
(i) the Form 10 shall have become effective
under the Exchange Act, and there shall be no stop order in effect with
respect thereto, and the Information Statement shall have been mailed
to all ▇▇▇▇▇▇▇▇ Shareholders;
(ii) the EnPro Common Stock to be delivered in
the Distribution shall have been approved for listing on the NYSE,
subject to official notice of issuance;
(iii) all material regulatory approvals necessary
to consummate the Distribution shall have been received and shall be in
full force and effect;
(iv) no order, preliminary or permanent
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
consummation of the Distribution shall be in effect and no other event
shall have occurred or failed to occur that prevents consummation of
the Distribution;
(v) the ▇▇▇▇▇▇▇▇ Board of Directors shall have
approved the Distribution and shall have deemed there to be no other
events or developments that shall have occurred that would result in
the Distribution having an adverse effect on ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇'▇
Shareholders;
(vi) ▇▇▇▇▇▇▇▇ shall have received an opinion of
tax counsel to the effect that the Distribution will be tax-free to
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Shareholders (except with respect to cash
received in lieu of fractional shares) for federal income tax purposes,
in form and substance satisfactory to ▇▇▇▇▇▇▇▇ in its sole discretion;
(vii) each Ancillary Agreement shall have been
duly executed and delivered by the parties thereto;
(viii) Coltec Aerospace shall have been transferred
by Coltec to ▇▇▇▇▇▇▇▇ on the Aerospace Distribution Date, pursuant to
the Transfer Documents;
(ix) the EnPro Contribution shall have been
consummated; and
(x) the Escrow Agreement shall have been duly
executed and delivered by the parties thereto.
Section 2.04 The Aerospace Distribution.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, on the Aerospace Distribution Date ▇▇▇▇▇▇▇▇ shall be
entitled to receive in the Aerospace Distribution all of the outstanding shares
of GPEC Common Stock.
(b) On the Aerospace Distribution Date, Coltec will
deliver one or more stock certificates representing all of the outstanding
shares of GPEC owned by Coltec and duly executed stock powers evidencing the
transfer of ownership from Coltec to ▇▇▇▇▇▇▇▇ of all of the outstanding GPEC
Common Stock. All such shares of GPEC Common Stock shall be fully paid,
nonassessable and free of preemptive rights.
12
Section 2.05 The EnPro Contribution. After the Aerospace
Distribution Date and before the Distribution Date, ▇▇▇▇▇▇▇▇ and EnPro shall
effect the EnPro Contribution pursuant to the EnPro Contribution Agreement.
Section 2.06 The Distribution.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, each holder of ▇▇▇▇▇▇▇▇ Common Stock on the Record Date,
other than ▇▇▇▇▇▇▇▇, (or such holder's designated transferee or transferees)
will be entitled to receive in the Distribution one share of EnPro Common Stock
for every five shares of ▇▇▇▇▇▇▇▇ Common Stock held by that shareholder on the
Record Date.
(b) On the Distribution Date, ▇▇▇▇▇▇▇▇ will deliver to
the Distribution Agent a global certificate representing the aggregate number of
shares of EnPro Common Stock to be distributed to ▇▇▇▇▇▇▇▇ Shareholders, other
than ▇▇▇▇▇▇▇▇, in the Distribution, which number will be certified by the
Distribution Agent. Such certificate shall be registered in the name of the
Distribution Agent as agent for the ▇▇▇▇▇▇▇▇ Shareholders. As soon as
practicable following the Distribution Time, the Distribution Agent will deliver
to ▇▇▇▇▇▇▇▇ Shareholders stock certificates representing shares of EnPro Common
Stock. All such distributed shares of EnPro Common Stock shall be fully paid,
nonassessable and free of preemptive rights. Shares of EnPro Common Stock
represented by the global certificate in excess of the final number of shares to
be distributed to ▇▇▇▇▇▇▇▇ Shareholders will be canceled.
Section 2.07 Fractional Shares. No certificates representing
fractional shares of EnPro Common Stock will be distributed in the Distribution.
▇▇▇▇▇▇▇▇ will direct the Distribution Agent to determine the number of whole
shares and fractional shares of EnPro Common Stock allocable to each ▇▇▇▇▇▇▇▇
Shareholder. Upon the determination by the Distribution Agent of the number of
fractional shares of EnPro Common Stock, as soon as practicable after the
Distribution Date, the Distribution Agent, acting on behalf of the holders
thereof, shall sell such fractional shares for cash on the open market in each
case at the then-prevailing market prices and shall disburse to each holder
entitled thereto, in lieu of any fractional share of EnPro Common Stock, without
interest, that holder's ratable share of the proceeds of that sale, after making
appropriate deductions of the amounts required, if any, to be withheld for
United States federal income tax purposes, and to repay expenses reasonably
incurred by the Distribution Agent in connection with such sale.
ARTICLE 3
ACCESS TO INFORMATION
Section 3.01 Provision of Corporate Records. Except as otherwise
specifically set forth in this Agreement, any Transfer Document or any Ancillary
Agreement, and subject to normal corporate document retention policies that
permit destruction of documents, prior to or as soon as practicable following
the Distribution Date, each Group shall provide to the other Group all
documents, books, records, computer data and other data (including minute books,
stock registers, stock certificates and documents of title) (collectively,
"CORPORATE RECORDS") in its possession relating primarily to the other Group or
its businesses, operations or properties (after giving effect to the
transactions contemplated hereby and the Transfer Documents); provided,
13
however, that if any such Corporate Records relate to both Groups or the
businesses, operations or properties of both Groups, each such Group shall
provide to the other Group true and complete copies of such Corporate Records.
Data stored in electronic form shall be provided in the format in which it
existed at the Distribution Date, except as otherwise specifically set forth in
this Agreement or any Ancillary Agreement or any Transfer Document.
Section 3.02 Access to Information. From and after the
Distribution Date, each Group shall afford promptly to the other Group and its
accountants, counsel and other designated representatives reasonable access
during normal business hours to all personnel and Corporate Records in such
Group's possession relating to the other Group or the businesses, operations or
properties of the other Group (after giving effect to the transactions
contemplated hereby and by the Transfer Documents) (other than data and
information subject to (i) an attorney-client or other privilege that is not
specifically subject to the provisions of this Article 3 or (ii) in the case of
any joint-defense arrangements between a member or members of one Group and a
member or members of the other Group, the access provisions of the relevant
joint-defense agreement), insofar as such access is reasonably required by such
other Group, including for audit, accounting, litigation, regulatory compliance,
disclosure or reporting purposes.
Section 3.03 Litigation Cooperation. From and after the
Distribution Date:
(a) Each Group shall use reasonable efforts to make
available to the other Group and its accountants, counsel, and other designated
representatives, upon written request, its current and former directors,
officers, employees and representatives as witnesses, and shall otherwise
cooperate with the other Group, to the extent reasonably required in connection
with any Action or threatened Action arising out of either Group's businesses,
operations or properties in which the requesting party may from time to time be
involved and to the extent that there is no conflict in the Action or threatened
Action between the requesting Group and itself.
(b) Each Group shall promptly notify the other Group
hereto, upon its receipt or the receipt by any of its members, of a request or
requirement (by written questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demands or other similar processes)
that relates to the businesses, operations or properties of the other Group
reasonably regarded as calling for the inspection or production of any documents
or other information in its possession, custody or control, as received from any
Person. In addition to complying with the applicable provisions of Section 3.06,
each Group shall assert and maintain, or cause its members to assert and
maintain, any applicable claim to privilege, immunity, confidentiality or
protection in order to protect such documents and other information from
disclosure, and shall seek to condition any disclosure that may be required on
such protective terms as may be appropriate. Neither Group may voluntarily
waive, undermine or fail to take any action reasonably necessary to preserve an
applicable privilege without the prior written consent of the affected party (or
any affected Group member or Affiliates of any such party).
Section 3.04 Reimbursement. Except to the extent that any member
of a Group is obligated to indemnify any member of the other Group under
Article 5 for that cost or expense, each Group providing information or
witnesses to the other Group, or otherwise incurring any expense in connection
with its cooperation under Section 3.01, Section 3.02 or Section 3.03, will be
entitled to receive from the recipient thereof, upon the presentation of
14
reasonably detailed invoices therefor, payment for all out-of-pocket costs and
expenses that may reasonably be incurred in providing such information,
witnesses or cooperation.
Section 3.05 Treatment of Records. Except as otherwise required
by Law or agreed to in writing, upon compliance with the requirements set forth
in Section 3.01, each of ▇▇▇▇▇▇▇▇ and EnPro shall, and shall cause the members
of its respective Group to return any photocopies or similar reproductions of
all Corporate Records provided by, or relating primarily to, the other Group or
its businesses, operations or properties (after giving effect to the
Distribution) to the other Group. Any Corporate Records received by any member
of a Group after the Distribution Date and relating primarily to the other Group
or its businesses, operations or properties shall promptly be provided to such
other Group in accordance with the procedures set forth in Section 3.01 and this
Section 3.05. Notwithstanding the foregoing, there shall be no requirement for
▇▇▇▇▇▇▇▇ or EnPro, or any members of their respective Groups, to destroy or
otherwise dispose of any Corporate Records (or photocopies or similar
reproductions thereof) to the extent that such Corporate Records relate to its
respective businesses, operations or properties (after giving effect to the
Distribution).
Section 3.06 Preservation of Privilege. ▇▇▇▇▇▇▇▇ and EnPro
recognize that in preparation for and as a consequence of the transactions
contemplated by this Agreement, the Ancillary Agreements and the Transfer
Documents, they may have common interests in the defense of certain pending or
threatened Actions that may necessitate the exchange between ▇▇▇▇▇▇▇▇ and EnPro
or their counsel of documents or other information that is subject to the
attorney-client privilege, the work product doctrine or other legally recognized
privileges, protections or immunities from discovery. Each of ▇▇▇▇▇▇▇▇ and EnPro
agree to take in addition to, and not in limitation of, its obligations under
Section 3.03(b) all reasonable efforts to protect and maintain, and to cause its
Affiliates to protect and maintain, any applicable claim to privilege, immunity,
protection or confidentiality in order to protect such documents and other
information from disclosure or use of which the affected party (or any of its
Affiliates) does not approve. In addition to, and not in limitation of, its
obligations under Section 3.03(b) and without limiting the generality of the
foregoing, neither ▇▇▇▇▇▇▇▇ nor EnPro nor their respective Affiliates may
voluntarily waive or undermine, or fail to defend in a commercially reasonable
manner, any privilege or protection or take or fail to take any other
commercially reasonable action (a) that could result in the disclosure of any
common-interest or joint-defense materials to any Person that is neither a party
to this Agreement nor an Affiliate of any such party or (b) that would have the
effect of waiving or undermining such privilege or protection, in either case,
without the prior written consent of the affected party and any affected
Affiliate of such affected party.
Section 3.07 Confidentiality. Except as may be more specifically
addressed in any Ancillary Agreement or Transfer Document, each party shall hold
and shall cause its consultants and advisors and the members of its Group to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of Law or applicable requirements of any national stock exchange or inter-dealer
automated quotation system on which the securities of such party or any of its
Affiliates are traded, all information known to be confidential or proprietary
(other than any such information relating solely to the businesses, operations
or properties of such party) concerning the other Group furnished it by such
other Group or its representatives pursuant to this
15
Agreement, any Transfer Document or any Ancillary Agreement (except to the
extent that such information can be shown to have been (i) previously known by
the receiving party, (ii) in the public domain through no fault of the receiving
party, (iii) independently developed by the receiving party or (iv) disclosed to
the receiving party by a third party without violation of an obligation of
confidentiality known to the receiving party) and each party shall not release
or disclose such information to any other Person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors who
shall be advised of the provisions of this Section 3.07. Each party shall
exercise the same care to hold confidential information concerning or supplied
by the other party as it takes to preserve confidentiality for its own similar
information.
Section 3.08 Notice Preceding Compelled Disclosure. If either
Group is legally compelled, pursuant to a subpoena, civil investigative demand,
regulatory demand or similar process, to disclose any information which relates
to the other Group, such Group will promptly notify the other Group to permit it
to seek a protective order or take other appropriate action. The Group will also
cooperate in all reasonable efforts by the other Group to obtain a protective
order or other reasonable assurance that confidential treatment will be accorded
the information. If, in the absence of a protective order, either Group is
compelled to disclose information as a matter of law (including as a matter of
federal or state securities law) or pursuant to the rules and policies of any
national securities exchange on which any securities of any member of either
Group are listed for trading, such Group may disclose only that part of the
information as is required by law to be disclosed (in which case, prior to such
disclosure, such Group will advise and consult with the other Group, such Group
and its counsel as to such disclosure and the nature and wording of such
disclosure), and, to the extent practical in the circumstances, such Group will
use its reasonable best efforts to obtain confidential treatment for any
information so disclosed.
ARTICLE 4
CERTAIN OTHER AGREEMENTS
Section 4.01 Post-Distribution Adjustments.
(a) Cash Adjustment.
(i) Within 30 days following the Distribution
Date, EnPro shall prepare and submit to ▇▇▇▇▇▇▇▇ a statement (the "CASH
STATEMENT"), based on the consolidated balance sheet of EnPro as of the
Distribution Date (after giving effect to the Distribution). The Cash
Statement shall set forth in reasonable detail the amount of cash and
cash equivalents (the "CASH") of the EnPro Group, on a consolidated
basis, as of the Distribution Date (after giving effect to the
Distribution). For purposes of the Cash Statement, Cash will (A)
include the amounts of any checks of the EnPro Group that are issued
but uncleared as of the Distribution Time, to the extent that the
amount of such checks exceeds $2,000,000 in the aggregate, and (B)
exclude any lockbox receipts received by the EnPro Group after the
Distribution Time.
(ii) Within ten days following receipt by
▇▇▇▇▇▇▇▇ of the Cash Statement, ▇▇▇▇▇▇▇▇ shall notify EnPro if it
agrees with EnPro's calculation of Cash or, if ▇▇▇▇▇▇▇▇ does not agree
with EnPro's calculation of Cash, of the amount of Cash as
16
determined by the Controller of ▇▇▇▇▇▇▇▇. Any such determination made
by the Controller of ▇▇▇▇▇▇▇▇ shall be conclusive absent manifest
error.
(iii) If, upon completion of the Cash Statement
and the final determination of the Cash pursuant to Section
4.01(a)(ii), (A) the Cash is less than the Opening Cash Target,
▇▇▇▇▇▇▇▇ shall owe to EnPro the amount of such deficit, or (B) the Cash
is greater than the Opening Cash Target, EnPro shall owe to ▇▇▇▇▇▇▇▇
the amount of such excess, in each case such amount payable pursuant to
Section 4.01(g).
(b) Net Trade Receivables/Payables Adjustment.
(i) Within 30 days following the Distribution
Date, ▇▇▇▇▇▇▇▇ shall prepare and submit to EnPro a statement (the "NET
TRADE RECEIVABLES/PAYABLES STATEMENT"), based on the consolidated
balance sheet of the Engineered Industrial Products operating
businesses (as shown by the Hyperion entity "IND_SPCO") (the "EIP
BUSINESSES") as of the Distribution Date (after giving effect to the
Distribution). The Net Trade Receivables/Payables Statement shall set
forth the value of trade receivables as recorded in Hyperion Account
"AR_NET" less the value of trade payables as recorded in Hyperion
Account "ACCTS_PAY" of the EIP Businesses, on a consolidated basis, as
of the Distribution Date (after giving effect to the Distribution) (the
"NET RECEIVABLES").
(ii) Within ten days following receipt by EnPro
of the Net Trade Receivables/Payables Statement, EnPro shall notify
▇▇▇▇▇▇▇▇ if it agrees with ▇▇▇▇▇▇▇▇'▇ calculation of Net Receivables
or, if EnPro does not agree with ▇▇▇▇▇▇▇▇'▇ calculation of Net
Receivables, of the amount of Net Receivables as determined by the
Chief Financial Officer of EnPro. Final determination of the amount of
Net Receivables will be made by the Controller of ▇▇▇▇▇▇▇▇ and any such
determination shall be conclusive absent manifest error.
(iii) If, upon completion of the Net Trade
Receivables/Payables Statement and the final determination of the Net
Receivables pursuant to Section 4.01(b)(ii), the Net Receivables
exceeds $55,800,000, ▇▇▇▇▇▇▇▇ shall have the right, but not the
obligation (the "NTR/P OPTION"), to require EnPro to pay to ▇▇▇▇▇▇▇▇
the amount by which the Net Receivables exceeds $55,800,000 (the
"EXCESS"). Within ten days following final determination of the Net
Receivables pursuant to Section 4.01(b)(ii), ▇▇▇▇▇▇▇▇ will provide
notice to EnPro setting forth whether ▇▇▇▇▇▇▇▇ will exercise its NTR/P
Option and the amount of the Excess ▇▇▇▇▇▇▇▇ will require EnPro to owe
to ▇▇▇▇▇▇▇▇, such amount payable pursuant to Section 4.01(g).
(c) Other Liabilities/Assets Adjustment.
(i) Within 30 days following the Distribution
Date, ▇▇▇▇▇▇▇▇ shall prepare and submit to EnPro a statement (the "NET
OTHER LIABILITIES/ASSETS STATEMENT"), based on the consolidated balance
sheet of the EIP Businesses as of the Distribution Date (after giving
effect to the Distribution). The Net Other Liabilities/Assets Statement
shall set forth the value of accrued expenses plus other non-current
liabilities as recorded in Hyperion Accounts "ACC_EXP" and "OTHER_NC",
respectively, less the value of other non-current assets as recorded in
Hyperion Account "OTH_ASSETS" of the EIP
17
Businesses, on a consolidated basis, as of the Distribution Date (after
giving effect to the Distribution) (the "NET OTHER
LIABILITIES/ASSETS").
(ii) Within ten days following receipt by EnPro
of the Net Other Liabilities/Assets Statement, EnPro shall notify
▇▇▇▇▇▇▇▇ if it agrees with ▇▇▇▇▇▇▇▇'▇ calculation of Net Other
Liabilities/Assets or, if EnPro does not agree with ▇▇▇▇▇▇▇▇'▇
calculation of Net Other Liabilities/Assets, of the amount of Net Other
Liabilities/Assets as determined by the Chief Financial Officer of
EnPro. Final determination of the amount of Net Other
Liabilities/Assets will be made by the Controller of ▇▇▇▇▇▇▇▇ and any
such determination shall be conclusive absent manifest error.
(iii) If, upon completion of the Net Other
Liabilities/Assets Statement and the final determination of the Net
Other Liabilities/Assets pursuant to Section 4.01(c)(ii), the Net Other
Liabilities/Assets are less than $51,000,000, ▇▇▇▇▇▇▇▇ shall have the
right, but not the obligation (the "OL/A OPTION") to require EnPro to
pay to ▇▇▇▇▇▇▇▇ the amount by which the Net Other Liabilities/Assets is
less than $51,000,000 (the "SHORTFALL"). Within ten days following the
final determination of the Net Other Liabilities/Assets pursuant to
Section 4.01(c)(ii), ▇▇▇▇▇▇▇▇ will provide notice to EnPro setting
forth whether ▇▇▇▇▇▇▇▇ will exercise its OL/A Option and the amount of
the Shortfall ▇▇▇▇▇▇▇▇ will require EnPro to owe to ▇▇▇▇▇▇▇▇, such
amount payable pursuant to Section 4.01(g).
(d) Asbestos Payments Adjustment.
(i) Within 45 days following the Distribution
Date, EnPro shall prepare and submit to ▇▇▇▇▇▇▇▇ a statement (the
"ASBESTOS PAYMENTS STATEMENT"). The Asbestos Payments Statement shall
set forth in reasonable detail the total amount of payments (the
"ASBESTOS PAYMENTS") made by any member of the EnPro Group to any third
party from January 1, 2002 through the Distribution Date related to
asbestos indemnity, defense and administration.
(ii) Within ten days following receipt by
▇▇▇▇▇▇▇▇ of the Asbestos Payments Statement, ▇▇▇▇▇▇▇▇ shall notify
EnPro if it agrees with EnPro's calculation of the Asbestos Payments
or, if ▇▇▇▇▇▇▇▇ does not agree with EnPro's calculation of the Asbestos
Payments, of the amount of Asbestos Payments as determined by the
Controller of ▇▇▇▇▇▇▇▇. Any such determination made by the Controller
of ▇▇▇▇▇▇▇▇ shall be conclusive absent manifest error.
(iii) If, upon completion of the Asbestos Payments
Statement and the final determination of the Asbestos Payments pursuant
to Section 4.01(d)(ii), the Asbestos Payments exceed $74,000,000,
▇▇▇▇▇▇▇▇ shall have the right, but not the obligation (the "AP
OPTION"), to require EnPro to pay to ▇▇▇▇▇▇▇▇ the amount by which the
Asbestos Payments exceed $74,000,000 (the "AP EXCESS"). Within ten days
following final determination of the Asbestos Payments pursuant to
Section 4.01(d)(ii), ▇▇▇▇▇▇▇▇ will provide notice to EnPro setting
forth whether ▇▇▇▇▇▇▇▇ will exercise its AP Option and the amount of
the AP Excess ▇▇▇▇▇▇▇▇ will require EnPro to owe to ▇▇▇▇▇▇▇▇, such
amount payable pursuant to Section 4.01(g).
18
(e) General.
(i) During the periods the Cash Statement and
the Asbestos Payments Statement (collectively, the "STATEMENTS") are
being prepared, ▇▇▇▇▇▇▇▇ shall have the right to oversee the
preparation of the Statements and to participate in the preparation of
the Statements. During the period the Net Trade Receivables/Payables
Statement and the Net Other Liabilities/Assets Statement is being
prepared, EnPro shall have the right to participate in the preparation
of these statements.
(ii) Each party shall provide the other party and
its representatives with reasonable access to books and records and
relevant personnel during the preparation of the Statements, the Net
Trade Receivables/Payables Statement and the Net Other
Liabilities/Assets Statement.
(iii) Except as otherwise provided in Section
4.01(a)(i)(A) hereof, (a) the Statements shall be prepared in
accordance with Coltec's Prior Accounting Practices and Policies, and
(b) any calculations by the Controller of ▇▇▇▇▇▇▇▇ shall be made in
good faith in accordance with Coltec's Prior Accounting Practices and
Policies.
(f) Characterization of Payments. Notwithstanding that
this Section 4.01 provides for payments to be made by EnPro to ▇▇▇▇▇▇▇▇, the
actual payment obligation is an obligation of Coltec to GPEC, and such payments
shall be made in accordance with Section 4.01(g). It is the intention of the
parties to this Agreement that such payments be treated as relating back to the
pre-Distribution transactions between Coltec and GPEC as adjustments to capital
(i.e., capital contributions to GPEC). The parties shall not take any position
inconsistent with such intention before any taxing authority, except to the
extent that a final determination (as defined in section 1313 of the Code)
causes any such payment not to be so treated.
(g) Provisions for Payment.
(i) Upon execution of this Agreement, Coltec
shall deposit $9,000,000 (the "ESCROW PROPERTY") in an account to be
held and administered by the Escrow Agent pursuant to the terms of the
Escrow Agreement.
(ii) When either party is entitled to payment
from the other under this Section 4.01, such amount shall be payable
from the Escrow Property pursuant to the terms of the Escrow Agreement.
If the Escrow Property is depleted, the party to be paid shall recover
any amounts directly from the party who is obligated to pay and such
amounts (A) shall be paid within five Business Days following (x) the
date the Controller of ▇▇▇▇▇▇▇▇ finally determines the amount to be
paid pursuant to Section 4.01(a) or, (y) the date notice is provided by
▇▇▇▇▇▇▇▇ that it will exercise its option pursuant to Section 4.01(b),
Section 4.01(c) or Section 4.01(d), (B) shall be paid by wire transfer
in immediately available funds to an account designated by the payee,
and (C) if paid after June 1, 2002, shall include interest on such
amount at the rate of one percent per month, compounded daily from
June 1, 2002 until the payment date.
(h) Payments by ▇▇▇▇▇▇▇▇ to EnPro.
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(i) Any payment by ▇▇▇▇▇▇▇▇ to EnPro under
Section 4.01(a) shall be netted against any payments due to ▇▇▇▇▇▇▇▇
from EnPro under Section 4.01(b), Section 4.01(c) and Section 4.01(d).
(ii) Notwithstanding any other provision of this
Section 4.01, the net payment from ▇▇▇▇▇▇▇▇ to EnPro under Section
4.01(h)(i) shall not exceed (x) ten percent (10%) of the value of
EnPro's assets at the Distribution Time on the Distribution Date, less
(y) the value of any assets of EnPro that are not Coltec Stock or the
Promissory Note (as those terms are defined in the Contribution
Agreement between ▇▇▇▇▇▇▇▇ and EnPro of even date herewith).
Section 4.02 Intercompany Accounts.
(a) Except as otherwise specifically set forth in any
Transfer Document or any Ancillary Agreement, all intercompany trade, accounts
receivable and accounts payable between any member of one Group and any member
of another Group in existence at the Distribution Time shall be settled and paid
in accordance with their terms.
(b) On or before the Distribution Date, each of ▇▇▇▇▇▇▇▇
and EnPro shall enter into, or, where applicable, shall cause its respective
Subsidiary or Subsidiaries to enter into, each Ancillary Agreement.
(c) On or before the Distribution Date, each of ▇▇▇▇▇▇▇▇
and EnPro shall enter into, or, where applicable, shall cause its respective
Subsidiary or Subsidiaries to enter into, each Transfer Document.
Section 4.03 Further Assurances and Consents. In addition to the
actions specifically provided for elsewhere in this Agreement, each of ▇▇▇▇▇▇▇▇,
EnPro and Coltec shall use its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things reasonably necessary,
advisable or appropriate under applicable Laws or otherwise to consummate and
make effective the transactions contemplated by this Agreement, the Ancillary
Agreements and the Transfer Documents, including using its reasonable efforts to
obtain any consents and approvals, to enter into all agreements and to make any
filings and applications necessary, advisable or appropriate in order to
consummate the transactions contemplated by this Agreement. Notwithstanding the
foregoing, no party shall be obligated to pay any consideration therefor (except
for filing fees and other similar charges) to any third party from whom such
consents or approvals are requested or to take any action or omit to take any
action if the taking of or the omission to take such action would be
unreasonably burdensome to the party, its Group or its Group's business. Each of
▇▇▇▇▇▇▇▇, EnPro and Coltec agree to enter into and execute such additional
documents as may be reasonably necessary, advisable or appropriate to effect the
transactions contemplated by this Agreement, any Transfer Document or any
Ancillary Agreement; provided, however, that such additional documents shall not
diminish any of the rights granted or increase any of the Liabilities of either
Group, as set forth in this Agreement, any Transfer Document or any Ancillary
Agreement.
Section 4.04 Payments. If, after the Distribution Time, any party
or any member of such party's Group receives payments belonging to another party
or any member of
20
such other party's Group, the recipient shall promptly account for and remit
said payment (or cause it to be accounted for and remitted) to such other party.
ARTICLE 5
INDEMNIFICATION
Section 5.01 Exculpation and Indemnification by EnPro. Subject to
the provisions of Section 5.03, from and after the Distribution Date, each of
EnPro and Coltec, without any further responsibility or liability of, or
recourse to, ▇▇▇▇▇▇▇▇, any member of the ▇▇▇▇▇▇▇▇ Group, any Affiliate of
▇▇▇▇▇▇▇▇ or any of their respective directors, shareholders, officers,
employees, agents, consultants, representatives, successors, transferees or
assignees (collectively, the "▇▇▇▇▇▇▇▇ INDEMNITEES"), shall as between EnPro and
Coltec, on the one hand, and the ▇▇▇▇▇▇▇▇ Group, on the other hand, absolutely
and irrevocably be solely liable and responsible for the EnPro Group Liabilities
and shall indemnify, defend, save and hold harmless ▇▇▇▇▇▇▇▇ and each of the
▇▇▇▇▇▇▇▇ Indemnitees from and against all Damages not actually paid by cash or
delivery of products or services by the Indemnified Party prior to the Aerospace
Distribution Date and arising out of, associated with or resulting from (i) any
EnPro Group Liability and (ii) the breach by EnPro, Coltec or any other member
of the EnPro Group of any of its obligations under this Agreement or any
Transfer Document (clauses (i) and (ii) are collectively referred to as the
"ENPRO INDEMNIFIABLE LIABILITIES"). Neither ▇▇▇▇▇▇▇▇ nor any ▇▇▇▇▇▇▇▇ Indemnitee
shall be liable to EnPro, Coltec, any other member of the EnPro Group or any of
their respective Affiliates, directors, shareholders, officers, employees,
agents, consultants, customers, end users (including any Persons who came into
contact with any product associated with the EnPro Business), representatives,
successors, transferees or assignees for any reason whatsoever on account of any
EnPro Indemnifiable Liabilities. Notwithstanding the foregoing, ▇▇▇▇▇▇▇▇ shall
remain liable to EnPro and Coltec for any breach by ▇▇▇▇▇▇▇▇ or any member of
the ▇▇▇▇▇▇▇▇ Group of any of its or their obligations under this Agreement.
Section 5.02 Exculpation and Indemnification by ▇▇▇▇▇▇▇▇. Subject
to the provisions of Section 5.03, from and after the Distribution Date,
▇▇▇▇▇▇▇▇, without any further responsibility or liability of, or recourse to,
EnPro, any member of the EnPro Group, any Affiliate of EnPro or any of their
respective directors, shareholders, officers, employees, agents, consultants,
representatives, successors, transferees or assignees (collectively, the "ENPRO
INDEMNITEES"), shall as between ▇▇▇▇▇▇▇▇ and the EnPro Group absolutely and
irrevocably be solely liable and responsible for the ▇▇▇▇▇▇▇▇ Group Liabilities
and shall indemnify, defend, save and hold harmless EnPro and each of the EnPro
Indemnitees from and against all Damages not actually paid by cash or delivery
of products or services by the Indemnified Party prior to the Aerospace
Distribution Date and arising out of, associated with or resulting from (i) any
▇▇▇▇▇▇▇▇ Group Liability and (ii) the breach by ▇▇▇▇▇▇▇▇ or any member of the
▇▇▇▇▇▇▇▇ Group of any of its obligations under this Agreement or any Transfer
Document (clauses (i) and (ii) are collectively referred to as the "▇▇▇▇▇▇▇▇
INDEMNIFIABLE LIABILITIES"). Neither EnPro nor any of the other EnPro
Indemnitees shall be liable to ▇▇▇▇▇▇▇▇, any member of the ▇▇▇▇▇▇▇▇ Group or any
of their respective Affiliates, directors, shareholders, officers, employees,
agents, consultants, customers, end users (including any Persons who come in
contact with any product associated with the ▇▇▇▇▇▇▇▇ Business),
representatives, successors, transferees or assignees for any reason whatsoever
on account of any ▇▇▇▇▇▇▇▇ Indemnifiable Liabilities. Notwithstanding
21
the foregoing, EnPro shall remain liable to ▇▇▇▇▇▇▇▇ for any breach by EnPro or
any member of the EnPro Group of any of its or their obligations under this
Agreement.
Section 5.03 Third Party Claims; Notice and Payment of Claims.
(a) (i) If either a party to this Agreement or any Person
entitled to a defense or indemnification under this Agreement (an "INDEMNIFIED
PARTY") determines that it is or may be entitled to a defense or indemnification
by ▇▇▇▇▇▇▇▇, on the one hand, or EnPro or Coltec, on the other hand, as the case
may be (the "INDEMNIFYING PARTY"), under this Agreement:
(A) the Indemnified Party shall deliver promptly
to the Indemnifying Party a written notice and demand for a
defense or indemnification, specifying the basis for the claim
for defense or indemnification, the nature of the claim, and,
if known, the amount for which the Indemnified Party
reasonably believes it is entitled to be indemnified; and
(B) the Indemnifying Party shall deliver to the
Indemnified Party promptly after receipt of the notice
requesting indemnification a written notice stating that the
Indemnifying Party intends to (x) assume the defense of such
litigation or claim (subject to Section 5.04(a)); (y) pay the
claim in immediately available funds; or (z) object or reserve
its rights with respect to the demand for a defense or
indemnification.
(ii) If the amount for which the Indemnifying
Party may be liable is not known or reasonably determinable at the time
of such notice, the Indemnified Party shall deliver to the Indemnifying
Party a further notice specifying the amount for which the Indemnified
Party reasonably believes it is entitled to be indemnified as soon as
reasonably practicable after such amount is known or reasonably
determinable and the Indemnifying Party shall have a further
opportunity to take action as set forth above. Nothing in this section
shall be interpreted to abrogate or delay a party's obligation to
provide the other with a defense under this Agreement.
(iii) The failure by an Indemnified Party to
promptly notify an Indemnifying Party of a notice and demand for a
defense or indemnification shall not relieve the Indemnifying Party of
any indemnification or defense responsibility under this Article 5,
except to the extent such failure materially prejudices the ability of
the Indemnifying Party to defend such claim.
(b) Any objection to a claim for a defense or
indemnification shall be resolved in accordance with Article 7. Anything in this
Article to the contrary notwithstanding, the Indemnifying Party shall not
without the Indemnified Party's prior written consent, which shall not be
unreasonably withheld, settle or compromise any Action or claim or consent to
the entry of any judgment with respect to any Action, claim or proceeding for
anything other than money damages paid by the Indemnifying Party unless the
settlement does not involve the imposition of any liability on the Indemnified
Party or any restriction on its activities.
(c) The amount of any Damages for which an Indemnifying
Party must provide indemnification hereunder shall be reduced by any insurance
recovery if and when
22
actually realized or received by the Indemnified Party. With regard to any claim
which is covered by a third party non-captive insurance policy of the
Indemnified Party, the Indemnified Party shall reasonably pursue all rights
thereunder. If an Indemnified Party receives an amount under insurance coverage
with respect to Damages at any time subsequent to any indemnification provided
by an Indemnifying Party pursuant to this Article 5, then, subject to
subparagraphs (d) and (e) below, such Indemnified Party shall promptly reimburse
the Indemnifying Party for any payment made or expense incurred by such
Indemnifying Party in connection with providing such indemnification up to such
amount actually received by the Indemnified Party. The potential availability of
insurance coverage to ▇▇▇▇▇▇▇▇ or EnPro shall not relieve the Indemnifying Party
of its obligations for defense or indemnification hereunder or delay its
obligation to defend or pay any sums due hereunder. If an Indemnified Party
seeks to resolve an insurance coverage dispute with a third party non-captive
insurer by entering into a settlement agreement, including any buyback
agreement, that releases the insurer from claims or potential claims under the
insurer's policy that, in the absence of insurance coverage, are the
responsibility of the Indemnifying Party, the Indemnified Party must obtain the
Indemnifying Party's written consent prior to entering the settlement agreement
with the insurer. Subject to paragraphs (d) and (e) below, the Indemnifying
Party shall be entitled to the portion of such settlement proceeds that relate
to the claims or potential claims that are subject to indemnity.
(d) If any proceeds under any ▇▇▇▇▇▇▇▇ Group captive
insurance policy are paid to the EnPro Group with respect to any Damages, such
amounts shall be reimbursed to the ▇▇▇▇▇▇▇▇ Group by EnPro.
(e) If any proceeds from the Coltec Insurance Block are
paid to the ▇▇▇▇▇▇▇▇ Group with respect to any Damages, such amounts shall be
reimbursed to the EnPro Group by ▇▇▇▇▇▇▇▇; provided, however, that the
reimbursement of such amounts by ▇▇▇▇▇▇▇▇ shall not relieve the Indemnifying
Party of its obligations for defense or indemnification with respect to such
amounts or delay its obligation to defend or pay such amounts to the Indemnified
Party pursuant to this Article 5. The "COLTEC INSURANCE BLOCK" is defined as the
general liability insurance policies purchased by Colt Industries Inc, now known
as Coltec Industries Inc, that were in place for public and products liability
for third party bodily injury and property damage claims (whether primary,
umbrella or excess policies) and that were in effect from July 1, 1974 through
July 1, 1985.
Section 5.04 Procedures for Defense of Third-Party Claims.
(a) If the Indemnified Party's claim for indemnification
is based, under this Agreement, on an Action, judicial or otherwise, brought by
a third party, and the Indemnifying Party does not object under Section
5.03(b)), the Indemnifying Party shall assume the defense of such third-party
claim at the Indemnifying Party's sole cost and expense. Any such defenses shall
be conducted by attorneys employed or retained by the Indemnifying Party and
reasonably acceptable to the Indemnified Party. The Indemnified Party shall have
the right to participate in (but not control) the defense of such claim at its
sole cost and expense. Notwithstanding the first sentence of this Section
5.04(a), if (i) the Indemnifying Party does not assume the defense of a claim as
provided in this Section 5.04(a), (ii) the nature of any claim presents a
conflict of interest between the Indemnified Party and the Indemnifying Party or
(iii) as otherwise provided on Schedule 5.04(a), then the Indemnified Party may
assume and control its own defense, and
23
the Indemnifying Party shall be liable for all reasonable costs or expenses paid
or incurred by the Indemnified Party in connection therewith.
(b) The Indemnifying Party shall pay to the Indemnified
Party in immediately available funds the amounts for which the Indemnified Party
is entitled to be indemnified within 30 days after such third-party claim is
Finally Determined (or within such longer period as agreed to by the parties).
If the Indemnifying Party does not assume the defense of any such third-party
claims, the Indemnifying Party shall be bound by the result obtained with
respect thereto by the Indemnified Party, except that the Indemnifying Party has
the right to contest that it is obligated to the Indemnified Party in respect of
the third-party claim under the terms of this Agreement.
Section 5.05 Specific Indemnification Issues.
(a) Notwithstanding anything in this Agreement to the
contrary: (i) any claims or demands in connection with the ▇▇▇▇▇▇▇▇ Litigation
or the EnPro Litigation shall not be deemed to be third-party claims for
purposes of this Agreement; (ii) ▇▇▇▇▇▇▇▇, with respect to the ▇▇▇▇▇▇▇▇
Litigation, and EnPro, with respect to the EnPro Litigation, shall have the
exclusive right to (A) control the defense of such litigation and (B) settle,
compromise or discharge such litigation; and (iii) ▇▇▇▇▇▇▇▇, with respect to the
EnPro Litigation, and EnPro, with respect to the ▇▇▇▇▇▇▇▇ Litigation, shall:
(Y) provide cooperation in litigation pursuant to the terms of Section 3.03; and
(Z) to the extent reasonably requested by ▇▇▇▇▇▇▇▇ or EnPro, as the case may be,
sign such documents as may be reasonably necessary to effect or assist in the
pursuit, defense, settlement, compromise or discharge of such litigation.
(b) If the indemnification provided for in this Article 5
is unavailable to an Indemnified Party with respect to a loss for which
indemnification would otherwise be required to be provided pursuant to the terms
hereof that arises out of or is related to information contained in the
Information Statement or Form 10, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, in such proportion
as is appropriate to reflect the relative fault of ▇▇▇▇▇▇▇▇, on the one hand,
and EnPro, on the other hand. The relative fault of any party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by that party or a member of its
Group. ▇▇▇▇▇▇▇▇ and EnPro have entered into a letter agreement that sets forth
the responsibilities of the parties for the disclosure in the Information
Statement and Form 10 (the "SIDE LETTER").
(c) With respect to any Liabilities or any Actions
arising out of or associated with, or alleged to arise out of or be associated
with, an act or omission of any former, current or future officer, director,
employee or agent of ▇▇▇▇▇▇▇▇ on the one hand, or EnPro or any Contributed
Subsidiary on the other hand, prior to the Distribution Date, the respective
obligations of ▇▇▇▇▇▇▇▇ and EnPro pursuant to this Agreement (including their
respective indemnification obligations) shall remain unaffected and in full
force and effect, regardless of whether such person was, at the time of such act
or omission, an officer, director, employee or agent whose duties related
primarily to the ▇▇▇▇▇▇▇▇ Business or the EnPro Business, and regardless of
whether such Liabilities or Actions are alleged or determined in any judgment,
24
award or decree after trial to arise out of or be associated with such person's
negligence, gross negligence, recklessness or intentional conduct or
culpability.
(d) The parties acknowledge that after the Distribution
Date the parties will have negotiated business relationships, which
relationships will be described in contracts, agreements and other documents
entered into in the normal course of business. Such documents may include
agreements by the parties and their Affiliates and Subsidiaries to supply, after
the Distribution Date, materials, products and services and to lease facilities,
tangible and intangible property. Such business relationships shall not be
subject to the indemnity provisions hereof, unless the parties expressly agree
to the contrary in the agreements governing such relationships.
(e) Except as otherwise provided herein, in the event an
Action is brought by a third party in which the liability as between ▇▇▇▇▇▇▇▇
and EnPro is Finally Determined to be joint or in which the entitlement to
indemnification hereunder is not readily determinable, the parties shall
negotiate in good faith in an effort to agree, as between ▇▇▇▇▇▇▇▇, on the one
hand, and EnPro and Coltec, on the other hand, on the proper allocation of
liability or entitlement to indemnification, as well as the proper allocation of
the costs of any joint defense or settlement pursuant to Section 5.04, all in
accordance with the provisions of, and the principles set forth in, this
Agreement. In the absence of any such agreement, such allocation of liability or
entitlement to indemnification, and such allocation of costs, shall be subject
to ultimate resolution between ▇▇▇▇▇▇▇▇, on the one hand, and EnPro and Coltec,
on the other hand, pursuant to Article 7.
(f) Certain of the indemnity provisions in this Article 5
relate to obligations undertaken by Coltec and ▇▇▇▇▇▇▇▇ in connection with
certain transactions between Coltec and GPEC occurring prior to the Aerospace
Distribution Date and certain transactions between ▇▇▇▇▇▇▇▇ and EnPro occurring
prior to the Aerospace Distribution Date. It is the intention of the parties
that any payments arising out of such obligations be treated as relating back to
such transactions as adjustments to capital (i.e., capital contributions to GPEC
or EnPro, as the case may be), and the parties shall not take any position
inconsistent with such intention before any Tax authority, except to the extent
that a final determination (as defined in Section 1313 of the Code) with respect
to the recipient party causes any such payment not to be so treated.
25
ARTICLE 6
RELEASES
Section 6.01 Release of Pre-Distribution Claims.
(a) Except as provided in Section 6.01(c)(i), effective
as of the Distribution Date, each of EnPro and Coltec does hereby, for itself
and each other member of the EnPro Group and their respective Affiliates,
successors and assigns, and all Persons who at any time prior to the
Distribution Date have been directors, shareholders, officers, employees,
agents, consultants, representatives or successors of any member of the EnPro
Group (in each case, in their respective capacities as such and in a derivative
and not personal capacity), remise, fully and forever release and absolutely
discharge each of ▇▇▇▇▇▇▇▇, the members of the ▇▇▇▇▇▇▇▇ Group, their respective
Affiliates, successors and assigns, and all Persons who at any time prior to the
Distribution Date have been directors, shareholders, officers, employees,
agents, consultants, representatives or successors of any member of the ▇▇▇▇▇▇▇▇
Group (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns
(collectively, the "▇▇▇▇▇▇▇▇ RELEASED PARTIES"), from any and all Liabilities
whatsoever, whether at law or in equity (including any right of contribution),
whether arising under any contract or agreement, by operation of law or
otherwise, existing or arising from any acts or events occurring or failing to
occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Distribution Date,
including in connection with the transactions and all other activities to
implement the Distribution.
(b) Except as provided in Section 6.01(c)(i), effective
as of the Distribution Date, ▇▇▇▇▇▇▇▇ does hereby, for itself and each other
member of the ▇▇▇▇▇▇▇▇ Group and their respective Affiliates, successors and
assigns, and all Persons who at any time prior to the Distribution Date have
been directors, shareholders, officers, employees, agents, consultants,
representatives or successors of any member of the ▇▇▇▇▇▇▇▇ Group (in each case,
in their respective capacities as such and in a derivative and not personal
capacity), remise, fully and forever release and absolutely discharge each of
EnPro, the members of the EnPro Group, their respective Affiliates, successors
and assigns, and all Persons who at any time prior to the Distribution Date have
been directors, shareholders, officers, employees, agents, consultants,
representatives or successors of any member of the EnPro Group (in each case, in
their respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns (collectively, the "ENPRO RELEASED
PARTIES"), from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Distribution Date, including in connection with the transactions and
all other activities to implement the Distribution.
(c) Notwithstanding anything to the contrary in
Section 6.01(a) or Section 6.01(b):
26
(i) Nothing contained in Section 6.01(a) or
Section 6.01(b) shall impair any right of any Person to enforce this
Agreement, any Ancillary Agreement or any Transfer Document in
accordance with its terms. Nothing contained in Section 6.01(a) or
Section 6.01(b) shall release any Person from:
(A) any Liabilities, contingent or otherwise,
assumed, transferred, assigned or allocated to the Group of
which such Person is a member in accordance with, or any other
Liability of any member of any Group under the Transfer
Documents or any Ancillary Agreement;
(B) any Liability that the parties may have with
respect to indemnification or contribution pursuant to this
Agreement for claims brought against the parties by third
Persons, which Liability shall be governed by the provisions
of Article 7 and, if applicable, the appropriate provisions of
the Ancillary Agreement; or
(C) any Liability the release of which would
result in the release of any Person other than a Person
released pursuant to this Section 6.01; provided, however,
that the parties agree not to bring suit or permit any of
their Subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would
be released with respect thereto by this Section 6.01 but for
the provisions of this clause (C).
(ii) Nothing contained in Section 6.01(a) shall
release ▇▇▇▇▇▇▇▇ from honoring its existing obligations (A) to
indemnify any former, current or future director, officer or employee
of EnPro who was a director, officer or employee of ▇▇▇▇▇▇▇▇ or any
Subsidiary of ▇▇▇▇▇▇▇▇ on or prior to the Distribution Date, to the
extent such director, officer or employee becomes a named defendant in
any litigation involving ▇▇▇▇▇▇▇▇ or any former or current Subsidiary
of ▇▇▇▇▇▇▇▇ and was entitled to such indemnification pursuant to then
existing obligations or (B) as a guarantor of the TIDES.
(iii) Nothing contained in Section 6.01(b) shall
release any member of the EnPro Group from honoring its existing
obligations to indemnify any former, current or future director,
officer or employee of ▇▇▇▇▇▇▇▇ who was a director, officer or employee
of any member of the EnPro Group on or prior to the Distribution Date,
to the extent such director, officer or employee becomes a named
defendant in any litigation involving any member of the EnPro Group and
was entitled to such indemnification pursuant to then existing
obligations.
(d) EnPro shall not, and shall not permit any member of
the EnPro Group, to make any claim or demand or commence any Action
asserting any claim or demand, including any claim of contribution or
any indemnification, against ▇▇▇▇▇▇▇▇ or any member of the ▇▇▇▇▇▇▇▇
Group, or any other Person released pursuant to Section 6.01(a), with
respect to any Liabilities released pursuant to Section 6.01(a).
▇▇▇▇▇▇▇▇ shall not, and shall not permit any member of the ▇▇▇▇▇▇▇▇
Group, to make any claim or demand or commence any Action asserting
any claim or demand, including any claim of contribution or any
indemnification against EnPro or any member of the EnPro Group, or any
other Person released pursuant to Section 6.01(b), with respect to any
Liabilities released pursuant to Section 6.01(b).
27
(e) It is the intent of ▇▇▇▇▇▇▇▇, EnPro and Coltec, by
virtue of the provisions of this Section 6.01, to provide for a full and
complete release and discharge of all Liabilities existing or arising from all
acts and events occurring or failing to occur or alleged to have occurred or to
have failed to occur and all conditions existing or alleged to have existed on
or before the Distribution Date between or among EnPro or any member of the
EnPro Group, on the one hand, and ▇▇▇▇▇▇▇▇ or any member of the ▇▇▇▇▇▇▇▇ Group,
on the other hand (including any contractual agreements or arrangements existing
or alleged to exist between or among any such members on or before the
Distribution Date), except as expressly set forth in Section 6.01(c). At any
time, at the request of any other party, each party shall cause each member of
its respective Group to execute and deliver releases reflecting the provisions
hereof.
ARTICLE 7
DISPUTE RESOLUTION
Section 7.01 Application. Any dispute arising out of or relating
to this Agreement (excluding under Section 4.01, which disputes will be resolved
in accordance with the terms of such section), including the breach or
termination hereof, shall be resolved in accordance with the procedures
specified in this Article 7, which shall be the sole and exclusive procedure for
the resolution of any such disputes; provided, however, that a party may file a
complaint to seek a preliminary injunction or other provisional judicial relief,
if in its sole judgment such action is necessary. Despite such action, the
parties will continue to participate in good faith in the procedures set forth
in this Article 7 and each party is required to continue to perform its
obligations under this Agreement, pending final resolution of any dispute
arising out of or relating to this Agreement, unless to do so would be
impossible or impracticable under the circumstances. All negotiations between
the parties pursuant to this Article 7 are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of
evidence. The requirements of this Article 7 shall not be deemed a waiver of any
right of termination under this Agreement.
Section 7.02 Initial Discussions. Any dispute shall be first
discussed by an appropriate senior executive officer of each of the parties or
his or her designee. Any party may initiate such discussions by giving the other
party written notice specifying in detail the nature of the dispute. Within 15
Business Days after delivery of the notice, the receiving party shall submit to
the other a written response, which includes a statement of such party's
position and a summary of arguments supporting such position. Within ten
Business Days (or such other period as agreed upon by the parties) after receipt
of such response, the executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All reasonable requests for
information made by one party to the other shall be honored.
Section 7.03 Appeal to Higher Management. If, in spite of such
discussions, no mutually acceptable solution is reached within 30 Business Days
after the delivery of one party's written request to the other party to discuss
such dispute, any such dispute shall be referred to the respective chief
executive officers of the parties.
Section 7.04 Mediation. If the dispute is not resolved within 30
Business Days (or such other period as agreed upon by the parties) following the
submission of the dispute to
28
the chief executive officers, the parties shall attempt to resolve the dispute
employing non-binding mediation under the then-current CPR Mediation Procedure.
If within ten Business Days (or any other period agreed upon by the parties)
after the commencement of such mediation the dispute still has not been
resolved, each of the parties may pursue any available legal or equitable
remedy.
Section 7.05 Jurisdiction. Any Action seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby may be brought in any court of
competent jurisdiction sitting in the State of New York, and each of the parties
hereby consents to the jurisdiction of such court (and of the appropriate
appellate courts therefrom) in any such Action and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such Action in any such court or that any
such action which is brought in any such court has been brought in an
inconvenient forum. Process in any such Action may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in this Section 7.05 shall be deemed effective service
of process on such party.
ARTICLE 8
MISCELLANEOUS
Section 8.01 Notices. All notices, requests, consents and other
communications hereunder must be in writing and will be deemed to have been duly
given (a) when received if personally delivered or sent by facsimile, (b) one
Business Day after being sent by nationally recognized overnight delivery
service, or (c) five Business Days after being sent by nationally registered or
certified mail, return receipt requested, postage prepaid, and in each case
addressed as follows (any party by written notice to the other party in the
manner prescribed by this section may change the address or the persons to whom
notices thereof shall be directed):
To ▇▇▇▇▇▇▇▇ at:
▇▇▇▇▇▇▇▇ Corporation
Four Coliseum Centre
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
North Point
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
29
To EnPro or Coltec at:
EnPro Industries, Inc. or Coltec Industries Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Section 8.02 Interpretation. The headings contained in this
Agreement are solely for convenience of reference and shall not be given any
effect in the construction or interpretation of this Agreement. Whenever the
word "including" is used in this Agreement, it shall be deemed to be followed by
the words "without limitation." Whenever a reference is made in this Agreement
to a "party" or "parties," such reference shall be to a party or parties to this
Agreement unless otherwise indicated. The use of any gender herein shall be
deemed to be or include the other genders and the use of the singular herein
shall be deemed to include the plural (and vice versa), wherever appropriate.
Whenever a reference is made in this Agreement to an Article, Section, Schedule
or Annex, such reference shall be to an Article or Section of, or a Schedule or
Annex to, this Agreement unless otherwise indicated. The use of the words
"hereof" and "herein" and words of similar import shall refer to this entire
Agreement and not to any particular article, section, subsection, clause,
paragraph or other subdivision of this Agreement, unless the context clearly
indicates otherwise. Each party stipulates and agrees that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement to
favor any party against the other, and that no party, including any drafting
party, shall have the benefit of any legal presumption (including "meaning of
the authors") or the detriment of any burden of proof by reason of any ambiguity
or uncertain meaning contained in this Agreement.
Section 8.03 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each party, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
30
Section 8.04 Nonexclusive Remedies. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
Section 8.05 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of the other parties,
which consent shall not be unreasonably withheld.
Section 8.06 Third-Party Beneficiaries. Nothing contained in this
Agreement is intended to nor shall it confer upon any Person or entity, other
than the parties hereto and their respective Subsidiaries, successors and
permitted assigns, any benefit, right or remedies under or by reason of this
Agreement, except that the provisions of Article 5 shall inure to the benefit of
the ▇▇▇▇▇▇▇▇ Indemnitees and the EnPro Indemnitees and the provisions of Article
6 shall inure to the benefit of the ▇▇▇▇▇▇▇▇ Released Parties and the EnPro
Released Parties.
Section 8.07 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York, without regard
to the conflict of laws principles thereof.
Section 8.08 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
Section 8.09 Entire Agreement. This Agreement, the Ancillary
Agreements and the Transfer Documents constitute the entire understanding of the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter hereof and thereof. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein or in the Ancillary Agreements and the Transfer Documents has
been made or relied upon by any party. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by a Transfer Document or an Ancillary Agreement.
Section 8.10 Severability. If any one or more of the provisions
contained in this Agreement should be declared invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained in this Agreement shall not in any way be affected or
impaired thereby so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a declaration, the parties shall modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner so that the transactions contemplated hereby are consummated
as originally contemplated to the fullest extent possible.
Section 8.11 Termination. Notwithstanding any provision in this
Agreement to the contrary, this Agreement may be terminated and the Distribution
and the Aerospace Distribution amended, modified or abandoned at any time prior
to the Record Date, without penalty or liability, by and in the sole and
absolute discretion of ▇▇▇▇▇▇▇▇ by written notice to EnPro and Coltec and
without the approval of EnPro or Coltec.
31
Section 8.12 Survival. All covenants and agreements of the
parties contained in this Agreement shall survive the Aerospace Distribution
Date and the Distribution Date.
Section 8.13 Expenses. Except as otherwise set forth in this
Agreement or any Ancillary Agreement, each party shall pay its own costs and
expenses incurred (whether such costs and expenses are incurred prior to, on or
after the Distribution Date), except as set forth on Schedule 8.13.
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IN WITNESS WHEREOF, the parties hereto have caused this Distribution
Agreement to be duly executed by their respective authorized officers as of the
date first above written.
▇▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
ENPRO INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President, Secretary
and General Counsel
COLTEC INDUSTRIES INC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Assistant Secretary