EXHIBIT 2
DISTRIBUTION AND INDEMNITY AGREEMENT
BETWEEN
WESTERN ATLAS INC.
AND
UNOVA, INC.
DISTRIBUTION AND INDEMNITY AGREEMENT
TABLE OF CONTENTS
PAGE
-----
ARTICLE I. DEFINITIONS............................................................................ 1
Section 1.1 General................................................................................ 1
ARTICLE II. THE DISTRIBUTION....................................................................... 2
Section 2.1 The Distribution....................................................................... 2
Section 2.2 Cooperation Prior to the Distribution.................................................. 3
Section 2.3 Conditions to Distribution............................................................. 3
ARTICLE III. TRANSACTIONS RELATING TO THE DISTRIBUTION.............................................. 4
Section 3.1 Intercorporate Reorganization.......................................................... 4
Section 3.2 Dividend; Cancellation of Intercompany Indebtedness.................................... 4
Section 3.3 Other Agreements....................................................................... 4
Section 3.4 The UNOVA Board........................................................................ 4
Section 3.5 UNOVA Charter and By-laws.............................................................. 4
Section 3.6 Insurance.............................................................................. 4
Section 3.7 Western Atlas Employees Good Government Fund........................................... 6
Section 3.8 Western Atlas Foundation............................................................... 6
ARTICLE IV. INDEMNIFICATION........................................................................ 6
Section 4.1 Indemnification by Western Atlas....................................................... 6
Section 4.2 Indemnification by UNOVA............................................................... 7
Section 4.3 Limitations on Indemnification Obligations............................................. 7
Section 4.4 Procedures for Indemnification of Third-Party Claims................................... 7
Section 4.5 Remedies Cumulative.................................................................... 9
Section 4.6 Survival of Indemnities................................................................ 9
ARTICLE V. ACCESS TO INFORMATION; SERVICES........................................................ 10
Section 5.1 Access to Information.................................................................. 10
Section 5.2 Production of Witnesses................................................................ 10
Section 5.3 Retention of Records................................................................... 10
Section 5.4 Confidentiality........................................................................ 10
Section 5.5 Provision of Services.................................................................. 11
Section 5.6 Costs.................................................................................. 11
ARTICLE VI. MISCELLANEOUS.......................................................................... 11
Section 6.1 Complete Agreement; Construction....................................................... 11
Section 6.2 Survival of Agreements................................................................. 12
Section 6.3 Expenses............................................................................... 12
Section 6.4 Governing Law.......................................................................... 12
Section 6.5 Notices................................................................................ 12
Section 6.6 Amendments............................................................................. 12
Section 6.7 Successors and Assigns................................................................. 12
Section 6.8 Termination............................................................................ 13
Section 6.9 No Third-Party Beneficiaries........................................................... 13
Section 6.10 Titles and Headings.................................................................... 13
Section 6.11 Legal Enforceability................................................................... 13
Section 6.12 Arbitration............................................................................ 13
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DISTRIBUTION AND INDEMNITY AGREEMENT
DISTRIBUTION AND INDEMNITY AGREEMENT (this "Agreement"), dated as of
, 1997, between WESTERN ATLAS INC., a Delaware corporation ("Western
Atlas"), and UNOVA, INC., a Delaware corporation and, as of the date hereof, a
wholly owned subsidiary of Western Atlas ("UNOVA").
WHEREAS, the Western Atlas Board has determined that it is appropriate and
desirable to spin off its holdings of UNOVA by distributing all outstanding
shares of UNOVA Common Stock on a pro rata basis to holders of Western Atlas
Common Stock; and
WHEREAS, Western Atlas and UNOVA have determined that it is appropriate and
desirable to set forth the principal corporate transactions required to effect
such distribution and certain other agreements that will govern certain matters
relating to such distribution and the relationships thereafter between Western
Atlas and UNOVA; and
WHEREAS, Western Atlas and UNOVA are entering into this Agreement in the
spirit of mutual benefit and good faith.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, and the benefits to be derived from the
distribution by Western Atlas and UNOVA, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
ACTION: any action, suit, arbitration, inquiry, proceeding or investigation
by or before any court, any governmental or other regulatory or administrative
agency or commission or any arbitration tribunal.
AFFILIATE: as defined in Rule 12b-2 under the Exchange Act, including, with
respect to Western Atlas, any Western Atlas Subsidiary and, with respect to
UNOVA, any UNOVA Subsidiary.
AGENT: ChaseMellon Shareholder Services, L.L.C., as distribution agent.
BENEFITS AGREEMENT: the Benefits Agreement between UNOVA and Western Atlas,
the form of which is attached hereto as Annex A.
CODE: the Internal Revenue Code of 1986, as amended.
COMMISSION: the Securities and Exchange Commission.
DISTRIBUTION: the distribution to holders of Western Atlas Common Stock of
the shares of UNOVA Common Stock owned by Western Atlas on the Distribution
Date.
DISTRIBUTION DATE: the date determined by the Western Atlas Board on which
the Distribution shall be effected.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
FORM 10: the registration statement on Form 10 filed by UNOVA with the
Commission to effect the registration of the UNOVA Common Stock pursuant to the
Exchange Act.
INFORMATION STATEMENT: the information statement to be sent to the holders
of Western Atlas Common Stock in connection with the Distribution.
INSURANCE PROCEEDS: those monies (i) received by an insured from an
insurance carrier on an insurance claim or (ii) paid by an insurance carrier on
behalf of the insured on an insurance claim, in either case net of any
applicable deductibles, retentions, or costs paid by such insured, but such term
does not refer to proceeds received from an insurer on an employee benefits
group insurance policy.
INTELLECTUAL PROPERTY AGREEMENT: the Intellectual Property Agreement between
UNOVA and Western Atlas, the form of which is attached hereto as Annex B.
IRS: the Internal Revenue Service.
LIABILITIES: any and all debts, liabilities and obligations, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising and whether or not the same would
be reflected on a balance sheet (unless otherwise specified in this Agreement),
including all costs and expenses relating thereto, and including, without
limitation, those debts, liabilities and obligations arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
governmental entity or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
LOSSES: any and all losses, Liabilities, claims, damages, obligations,
fines, penalties, payments, costs and expenses, matured or unmatured, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, known or
unknown (including, without limitation, the costs and expenses of any and all
Actions, threatened Actions, demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened Actions).
RECORD DATE: the close of business on the date to be determined by the
Western Atlas Board as the record date for the Distribution.
SUBSIDIARIES: the term "subsidiaries" as used herein with respect to any
entity shall be deemed to refer to other entities in which such entity owns or
controls a majority of the voting power and shall, unless otherwise indicated,
be deemed to refer to both direct and indirect subsidiaries of such entity.
TAX SHARING AGREEMENT: the Tax Sharing Agreement between UNOVA and Western
Atlas, the form of which is attached hereto as Annex C.
UNOVA COMMON STOCK: the Common Stock, par value $.01 per share, of UNOVA.
UNOVA SUBSIDIARY: any direct or indirect subsidiary of UNOVA that will
remain a direct or indirect subsidiary of UNOVA immediately following the
Distribution Date, and any other direct or indirect subsidiary of UNOVA that
thereafter may be organized or acquired.
WAI INSURANCE PROGRAM: the insurance policies and self-insurance program of
Western Atlas referred to in Section 3.6 hereof.
WESTERN ATLAS BOARD: the Board of Directors of Western Atlas.
WESTERN ATLAS COMMON STOCK: the Common Stock, $1.00 par value, of Western
Atlas.
WESTERN ATLAS SUBSIDIARY: any direct or indirect subsidiary of Western Atlas
other than UNOVA or any UNOVA Subsidiary.
ARTICLE II
THE DISTRIBUTION
Section 2.1 THE DISTRIBUTION. Subject to Section 2.3 hereof, on the
Distribution Date, Western Atlas will deliver to the Agent, for the benefit of
holders of record of Western Atlas Common Stock on the Record Date, a single
stock certificate, endorsed by Western Atlas in blank, representing all of the
then outstanding shares of UNOVA Common Stock owned by Western Atlas, and shall
instruct the Agent to distribute on the Distribution Date (or as soon as
practicable thereafter) the appropriate number of such shares of UNOVA Common
Stock to each such holder or designated transferee or transferees of such
holder. The Distribution shall be effective on the Distribution Date. UNOVA will
provide to the Agent all information or documents necessary to effect direct
registration, and Western Atlas will provide to the
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Agent any information required in order to complete the Distribution on the
basis of one share of UNOVA Common Stock for each share of Western Atlas Common
Stock outstanding on the Record Date.
Section 2.2 COOPERATION PRIOR TO THE DISTRIBUTION.
(a) Western Atlas and UNOVA have prepared, and Western Atlas shall mail,
prior to the Distribution Date, to the holders of Western Atlas Common Stock,
the Information Statement, which shall set forth appropriate disclosure
concerning UNOVA, the Distribution and other matters. Western Atlas and UNOVA
have prepared, and UNOVA has filed with the Commission, the Form 10, which
includes or incorporates by reference the Information Statement. Western Atlas
and UNOVA shall use reasonable efforts to cause the Form 10 to become effective
under the Exchange Act as soon as practicable.
(b) Western Atlas and UNOVA shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans contemplated by the Benefits
Agreement.
(c) Western Atlas and UNOVA shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States, in connection with the transactions
contemplated by this Agreement.
(d) Western Atlas and UNOVA have prepared, and UNOVA has filed in
preliminary form and shall seek to make effective, applications to list the
UNOVA Common Stock on the New York Stock Exchange (the "NYSE").
Section 2.3 CONDITIONS TO DISTRIBUTION. This Agreement and the consummation
of each of the transactions provided for herein shall be subject to approval of
the Western Atlas Board. The Western Atlas Board shall in its discretion
establish the Record Date and the Distribution Date and all appropriate
procedures in connection with the Distribution, but in no event shall the
Distribution Date occur prior to such time as each of the following have
occurred or have been waived by the Western Atlas Board in its sole discretion:
(i) the Western Atlas Board shall have formally approved the Distribution; (ii)
the Form 10 shall have been declared effective by the Commission; (iii) Western
Atlas shall have received a statement from the Staff of the Commission that the
Distribution may be effected without registration of the UNOVA Common Stock
under the Securities Act of 1933; (iv) the Western Atlas Board shall have
received opinions of counsel satisfactory to it that the Distribution will be a
tax-free "spin-off" under Sections 355 and/or 368(a)(1)(D) of the Code; (v) the
Board of Directors of UNOVA, constituted as contemplated by Section 3.4, shall
have been duly elected, and the Certificate of Incorporation and the By-laws of
UNOVA, as described in Section 3.5, shall have been adopted and be in effect;
(vi) the UNOVA Common Stock shall have been authorized for listing on the NYSE;
(vii) the transactions contemplated by Sections 3.1, 3.2 and 3.3 shall have been
consummated in all material respects; (viii) UNOVA shall have arranged for a
bank credit facility or comparable source of funding for its capital needs; and
(ix) no preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a government, regulatory or
administrative agency or commission, and no statute, rule, regulation or
executive order promulgated or enacted by any governmental authority, shall be
in effect preventing the payment of the Distribution; PROVIDED that the
satisfaction of such conditions shall not create any obligation on the part of
Western Atlas or any other party hereto to effect the Distribution or in any way
limit Western Atlas' power of termination set forth in Section 6.8 or alter the
consequences of any such termination from those specified in such Section.
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ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
Section 3.1 INTERCORPORATE REORGANIZATION.
(a) At or prior to the Distribution, there shall have been transferred to
UNOVA Automation Systems, Inc. all of the assets and liabilities of Western
Atlas ▇▇▇▇▇▇ USA Division (MIS # M02610), including all the assets and
liabilities of ▇▇▇▇▇▇▇ Division; all the assets and liabilities of Western Atlas
Lamb Technicon Body & Assembly Systems Division (MIS # M02415), including all
outstanding shares of Grand Design and ▇.▇. ▇▇▇▇▇▇▇▇; all the assets and
liabilities of Western Atlas Lamb Technicon Machining Systems Division (MIS #
M02410); and all the outstanding shares of M M & E, Inc. At or prior to the
Distribution, there shall have been transferred to UNOVA all of the outstanding
shares of UNOVA Automation Systems, Inc., Standard Components Corp., Limited
Partner I Corporation, General Partner I Corporation, Energy Equity Ventures
Inc., ▇▇▇▇▇▇ Western Atlas Corporation; Western Atlas Industries Inc.; Canadian
Western Atlas Inc., Western Atlas U.K. Limited, and Intermec Corporation. At or
prior to the Distribution, there shall have been transferred to Lamb-Unima
Maschinenbau GmbH the stock of Honsberg Lamb Sonderwerkzeugmachinen GmbH, and
Western Atlas' 80% interest in the stock of Lamb-Unima Maschinbau GmbH shall
have been transferred to UNOVA. At or prior to the Distribution, there shall
have been transferred to UNOVA certain assets and liabilities of Western Atlas
Corporate Division (MIS # Z00050), certain assets and liabilities of Western
Atlas Reserves (MIS # Z00900), and all the assets and liabilities of Western
Atlas IAS Administration Division (MIS # M09010). The transfer of real property
shall be effected by grant deed, limited or special warranty deed or the
equivalent statutorily approved form which conveys the property without
encumbrances or conveyances to another party by the grantor or a person claiming
under the grantor. The transfer of capital stock shall be effected by means of
delivery of stock certificates duly endorsed or accompanied by duly executed
stock powers and notation on the stock record books of the corporations or other
legal entities involved. Following the Distribution Date, Western Atlas and
UNOVA shall cooperate and, if requested, assist each other in perfecting title
to various properties referred to in this paragraph, at the expense of the party
requesting such assistance.
(b) Prior to the Distribution Date, Western Atlas and UNOVA shall take all
steps necessary to increase the outstanding shares of UNOVA Common Stock so that
immediately prior to the Distribution, Western Atlas will hold a number of
shares of UNOVA Common Stock equal to the number of shares of Western Atlas
Common Stock outstanding on the Record Date.
Section 3.2 DIVIDEND; CANCELLATION OF INTERCOMPANY INDEBTEDNESS.
Immediately prior to the Distribution, UNOVA shall pay a dividend to Western
Atlas in the amount of $230 million, which amount shall be utilized by
Western Atlas to repay short-term debt. Any intercompany indebtedness owed by
UNOVA and the UNOVA Subsidiaries to Western Atlas and the Western Atlas
Subsidiaries shall be canceled as a contribution to the capital of UNOVA.
Section 3.3 OTHER AGREEMENTS. On or prior to the date of the Distribution,
Western Atlas and UNOVA will execute and deliver agreements substantially in the
form of Annexes A through C.
Section 3.4 THE UNOVA BOARD. Western Atlas and UNOVA shall take all actions
that may be required to elect or otherwise appoint as directors of UNOVA, on or
prior to the Distribution Date, the persons named in the Form 10 to constitute
the Board of Directors of UNOVA on the Distribution Date.
Section 3.5 UNOVA CHARTER AND BY-LAWS. Prior to the Distribution Date, (a)
Western Atlas shall cause the Certificate of Incorporation of UNOVA,
substantially in the form of Annex B to the Form 10, to be filed with the
Secretary of State of Delaware and to be in effect on the Distribution Date, and
(b) the Board of Directors of UNOVA shall adopt the By-laws of UNOVA
substantially in the form of Annex C to the Form 10.
Section 3.6 INSURANCE.
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(a) Western Atlas will continue to provide coverage for workers'
compensation, general liability, automobile liability, other liability, property
and other insurable business risks and exposures to UNOVA and the UNOVA
Subsidiaries in the same manner and to the same extent as in effect on the date
of this Agreement (the "WAI Insurance Program") for incidents, acts, omissions
or occurrences occurring from the date such coverage first commenced until 12:00
midnight on the Distribution Date or such later date as may be agreed to in
writing by Western Atlas and UNOVA, and UNOVA and the UNOVA Subsidiaries shall
pay Western Atlas the costs, fees and expenses for such coverage in accordance
with the past and current practices established between Western Atlas, UNOVA and
the UNOVA Subsidiaries. Such costs include, but are not limited to, premiums,
deductibles, retrospective rating adjustments, assessments paid and audit
adjustments completed.
(b) Western Atlas shall cooperate and, if requested, shall assist UNOVA and
the UNOVA Subsidiaries in obtaining their own separate insurance coverage and
self-insurance coverage for UNOVA and the UNOVA Subsidiaries, effective with
respect to incidents, acts, omissions or occurrences occurring from and after
the Distribution Date. Following the Distribution Date, each of the parties
shall cooperate with and assist the other party in the prevention of conflicts
or gaps in insurance coverage and/or collection of Insurance Proceeds.
(c) Western Atlas and UNOVA agree that UNOVA and the UNOVA Subsidiaries
shall have the right to present claims directly to Western Atlas' insurers under
the WAI Insurance Program for insured and self-insured incidents, acts,
omissions or occurrences occurring from the date said coverage first commenced
until the Distribution Date. Any such claims shall be subject to the terms and
conditions of the WAI Insurance Program which for this purpose shall include the
so-called "tail" coverage referred to below in this subsection (c). All such
claims by UNOVA or the UNOVA Subsidiaries against Western Atlas' insurers shall
be presented when known by UNOVA and in any event by the reporting requirements
specified under an insurance policy with respect to a specific claim. The
parties acknowledge that any such policies written on a "claims made" rather
than "occurrence" basis may not, in their present form, provide coverage to
UNOVA and the UNOVA Subsidiaries for incidents, acts, omissions or occurrences
occurring prior to the Distribution Date but which are first reported after the
Distribution Date and, accordingly, the parties have agreed that Western Atlas
shall cooperate and, if requested, assist UNOVA and the UNOVA Subsidiaries in
acquiring "tail" insurance coverage, effective upon the Distribution Date.
(d) With respect to any insured Losses or retrospective premium adjustments
relating to assets and/or operations of UNOVA and/or the UNOVA Subsidiaries
prior to the Distribution Date: (i) Western Atlas shall pay over to UNOVA within
60 days of receipt any Insurance Proceeds it receives on account of such Losses
and any such retrospective premium reductions (all subject to support
documentation); and (ii) UNOVA and the UNOVA Subsidiaries shall reimburse
Western Atlas within 60 days of Western Atlas' request for all costs, expenses
or payments (all subject to support documentation) made by Western Atlas after
the Distribution Date to insurers or incurred by Western Atlas with respect to
self-insurance on account of such Losses and any such retrospective premium
increases, except that self-insured Losses shall be funded directly by UNOVA
through a Western Atlas bank account maintained to fund such Losses. The defense
of and the responsibility for any litigation or claims pending at the
Distribution Date, or commenced after the Distribution Date (as respects Losses
which occurred prior to the Distribution Date), relating to UNOVA or the UNOVA
Subsidiaries and covered by the WAI Insurance Program shall continue to be
managed by UNOVA and the UNOVA Subsidiaries. UNOVA shall advise Western Atlas
when there is a reasonable expectation that any such litigation will exceed the
policy limits of the current WAI Insurance Program or result in a loss not
covered by such program.
(e) Western Atlas shall maintain as part of the WAI Insurance Program the
Directors and Officers insurance program with the same insurance carriers,
limits of liability, terms and conditions through May 31, 1999. UNOVA shall
obtain and maintain a similar Directors and Officers insurance program at least
through May 31, 1999. Material modification to either party's Directors and
Officers insurance program prior to May 31, 1999 shall require the prior
approval of the other party, which shall not be
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unreasonably withheld. Material modifications include adverse changes in terms
and conditions, decreased limits of liability and the substitution of insurance
carriers.
(f) Western Atlas maintains various bonding facilities on behalf of itself
and its various subsidiaries, including UNOVA and the UNOVA Subsidiaries. UNOVA
and the UNOVA Subsidiaries shall have the right to continue to have the benefit
of such bonding facilities after the Distribution Date until UNOVA is able to
arrange its own bonding facilities; provided, however, that UNOVA shall
reimburse Western Atlas for the amount of any Losses on Western Atlas bonds
covering UNOVA and the UNOVA Subsidiaries and shall also reimburse Western Atlas
for all fees and out-of-pocket costs incurred by Western Atlas with respect to
Western Atlas bonds covering UNOVA and the UNOVA Subsidiaries.
(g) In recognition that premiums, premium adjustments, retrospective rating
adjustments, assessments and audit adjustments have been paid or charged to
UNOVA and the UNOVA Subsidiaries prior to the Distribution Date, and that
similar such payments and charges will be made by and to UNOVA and the UNOVA
Subsidiaries after the Distribution Date, Western Atlas agrees to cooperate with
UNOVA and the UNOVA Subsidiaries in insured litigation. Furthermore, in insured
litigation in which the reasonable expectation is that UNOVA and/or UNOVA
Subsidiaries will be financially responsible for the entire result in the
litigation (a "UNOVA Responsibility Case"), UNOVA shall have the right to
participate and control at its cost the defense of such litigation, to the
extent that Western Atlas would be able to do so. In such event, Western Atlas
shall cooperate with UNOVA in all reasonable respects in the defense and
resolution of such UNOVA Responsibility Case.
(h) For purposes of this Section 3.6, the term Distribution Date means 12:00
midnight on the later of the date determined by the Western Atlas Board on which
the Distribution shall be effected or the later date agreed upon pursuant to
subsection 3.6(a).
(i) For purposes of this Section 3.6, the terms "self-insured" and
"self-insurance" refer only to those incidents, omissions or occurrences related
to the self-insured portion of the State of Washington Workers' Compensation
exposures.
Section 3.7 WESTERN ATLAS EMPLOYEES GOOD GOVERNMENT FUND. Prior to the
Distribution Date, (i) UNOVA shall undertake to sponsor a political committee by
establishing a nonprofit, unincorporated association in the State of California
(the "UNOVA Fund"), and (ii) the parties shall cause all moneys in the Western
Atlas Inc. Employees Good Government Fund that relate to the employees of UNOVA
or any UNOVA Subsidiary to be transferred to the UNOVA Fund.
Section 3.8 WESTERN ATLAS FOUNDATION. Prior to the Distribution Date, the
parties shall cause The Western Atlas Foundation, a private foundation under the
Code and a nonprofit public benefit corporation organized under the laws of the
State of California, to change its name to "The UNOVA Foundation," and UNOVA
will be substituted for Western Atlas as the sponsor of The UNOVA Foundation
from and after such name change.
ARTICLE IV
INDEMNIFICATION
Section 4.1 INDEMNIFICATION BY WESTERN ATLAS. Except with respect to
employee benefits or other Liabilities to employees, which shall be governed by
the Benefits Agreement, and except with respect to insurance and self-insurance
claims, which shall be governed by Sections 3.6 and 4.3 hereof, Western Atlas
shall indemnify, defend and hold harmless UNOVA, each Affiliate of UNOVA and
each of their respective directors, officers, employees and agents (in their
capacities as directors, officers, employees and agents of UNOVA and its
Affiliates) and each of the heirs, executors, successors and assigns of any of
the foregoing (the "UNOVA Indemnitees") from and against any and all Losses of
the UNOVA Indemnitees arising out of or due to the failure of Western Atlas or
any of its Affiliates to pay, perform or otherwise discharge in due course any
item set forth on Schedule A. Anything in this Section 4.1 to the contrary
notwithstanding,
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neither Western Atlas nor any Western Atlas Subsidiary shall have any liability
whatsoever to either UNOVA or any UNOVA Subsidiary in respect of any Tax (as
such term is defined in the Tax Sharing Agreement), except as otherwise provided
in Schedule A hereto or in the Tax Sharing Agreement.
Section 4.2 INDEMNIFICATION BY UNOVA. Except with respect to employee
benefits or other Liabilities to employees, which shall be governed by the
Benefits Agreement, and except with respect to insurance and self-insurance
claims, which shall be governed by Sections 3.6 and 4.3 hereof, UNOVA shall
indemnify, defend and hold harmless Western Atlas, each Affiliate of Western
Atlas and each of their respective directors, officers, employees and agents (in
their capacities as directors, officers, employees and agents of Western Atlas
and its Affiliates) and each of the heirs, executors, successors and assigns of
any of the foregoing (the "Western Atlas Indemnitees") from and against any and
all Losses of the Western Atlas Indemnitees arising out of or due to the failure
of UNOVA or any of its Affiliates to pay, perform or otherwise discharge in due
course any item set forth on Schedule B. Anything in this Section 4.2 to the
contrary notwithstanding, neither UNOVA nor any UNOVA Subsidiary shall have any
liability whatsoever to either Western Atlas or any Western Atlas Subsidiary in
respect of any Tax, except as otherwise provided in Schedule B hereto or in the
Tax Sharing Agreement.
Section 4.3 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The amount that any
party (an "Indemnifying Party") is or may be required to pay to any other party
(an "Indemnitee") pursuant to Section 4.1 or Section 4.2 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee, in
reduction of the related Loss. If an Indemnitee shall have received the payment
required by this Agreement from an Indemnifying Party in respect of any Loss and
the Indemnitee shall subsequently actually receive Insurance Proceeds or other
amounts in respect of such Loss, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such Insurance Proceeds or other
amounts actually received (up to but not in excess of the amount of any
indemnity payment made hereunder). An insurer who would otherwise be obligated
to pay any claim shall not be relieved of the responsibility with respect
thereto, or, solely by virtue of the indemnification provisions hereof, have any
subrogation rights with respect thereto, it being expressly understood and
agreed that no insurer or any other third party shall be entitled to a
"windfall" (i.e., a benefit they would not be entitled to receive in the absence
of the indemnification provisions hereof) by virtue of the indemnification
provisions hereof.
Section 4.4 PROCEDURES FOR INDEMNIFICATION OF THIRD-PARTY CLAIMS. Procedures
for Indemnification of Third-Party Claims shall be as follows:
(a) If an Indemnitee shall receive notice or otherwise learn of the
assertion or probable assertion by a person (including, without limitation, any
governmental entity) who is not a party to this Agreement or to any of the
agreements in the form of Annexes A through C hereto (hereinafter referred to as
the "Other Agreements") of any claim or of the commencement by any such person
of any Action (a "Third-Party Claim") with respect to which an Indemnifying
Party may be obligated to provide indemnification pursuant to Section 4.1, 4.2
or any other Section of this Agreement or pursuant to the Other Agreements, such
Indemnitee shall give such Indemnifying Party written notice thereof promptly
after becoming aware of such Third-Party Claim; PROVIDED that the failure of any
Indemnitee to give notice as provided in this Section 4.4(a) shall not relieve
the related Indemnifying Party of its obligations under this Article IV, unless
the notice was intentionally withheld and such Indemnifying Party is prejudiced
by such failure to give notice. Such notice shall describe the Third-Party Claim
in reasonable detail and, if reasonably ascertainable, shall indicate the amount
(estimated if necessary) of the Loss that has been or may be sustained by such
Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third-Party Claim. Within 30 days of the receipt of
notice from an Indemnitee in accordance with Section 4.4(a) (or sooner, if the
nature of such Third-Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its
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election whether the Indemnifying Party will assume responsibility for defending
such Third-Party Claim, which election shall specify any reservations or
exceptions. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-Party Claim, such Indemnifying Party
shall not be liable to such Indemnitee under this Article IV for any legal or
other expenses (except expenses approved in advance by the Indemnifying Party)
subsequently incurred by such Indemnitee in connection with the defense thereof;
PROVIDED that if the defendants in any such claim include both the Indemnifying
Party and one or more Indemnitees and in any Indemnitee's reasonable judgment a
conflict of interest between one or more of such Indemnitees and such
Indemnifying Party exists in respect of such claim or if the Indemnifying Party
shall have assumed responsibility for such claim with any reservations or
exceptions, such Indemnitees shall have the right to employ separate counsel to
represent such Indemnitees and in that event the reasonable fees and expenses of
such separate counsel (but not more than one separate counsel reasonably
satisfactory to the Indemnifying Party) shall be paid by such Indemnifying
Party; provided, however, if and to the extent that there is a conflict of
defenses or positions among the Indemnitees, the Indemnitees shall have the
right to retain such number of additional separate counsel, reasonably
satisfactory to the Indemnifying Party, as is reasonably necessary to avoid such
conflicts, and the Indemnifying Party shall be responsible for the reasonable
fees and expenses of such additional separate counsel. If an Indemnifying Party
elects not to assume responsibility for defending a Third-Party Claim, or fails
to notify an Indemnitee of its election as provided in this Section 4.4(b), such
Indemnitee may defend or (subject to the remainder of this Section 4.4(b)) seek
to compromise or settle such Third-Party Claim. Notwithstanding the foregoing,
neither an Indemnifying Party nor an Indemnitee may settle or compromise any
claim over the objection of the other; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld or delayed; and
PROVIDED FURTHER, HOWEVER, if the Indemnifying Party has not affirmatively
elected by written notice to the Indemnitee within 30 days of notice from the
Indemnitee to assume the defense of, or to seek to settle or compromise the
Third-Party Claim, and the Indemnifying Party has not similarly acknowledged,
within such 30-day period, its responsibility to indemnify the Indemnitee
against the Third-Party Claim, the Indemnitee may settle or compromise the
Third-Party Claim over the objections of the Indemnifying Party without
prejudice to the Indemnitee's claim against the Indemnifying Party. Neither an
Indemnifying Party nor an Indemnitee shall consent to entry of any judgment or
enter into any settlement of any Third-Party Claim which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee, in the case of a consent or settlement by an Indemnifying Party, or
the Indemnifying Party, in the case of a consent or settlement by the
Indemnitee, of a written release from all liability in respect to such
Third-Party Claim.
(c) If an Indemnifying Party chooses to defend or to seek to compromise or
settle any Third-Party Claim, the related Indemnitee shall make available to
such Indemnifying Party any personnel or any books, records or other documents
within its control or which it otherwise has the ability to make available that
are necessary or appropriate for such defense, settlement or compromise, and
shall otherwise cooperate in the defense, settlement or compromise of such
Third-Party Claims. The Indemnifying Party shall promptly reimburse the
Indemnitee its out-of-pocket costs incurred in providing assistance pursuant to
the foregoing sentence and for the Indemnitee's personnel costs on any occasion
on which personnel of the Indemnitee spend one full day or more in providing
such assistance.
(d) Notwithstanding anything else in this Section 4.4 to the contrary, if an
Indemnifying Party notifies the related Indemnitee in writing of such
Indemnifying Party's desire to settle or compromise a Third-Party Claim on the
basis set forth in such notice (provided that such settlement or compromise
includes as an unconditional term thereof the giving by the claimant or
plaintiff of a written release of the Indemnitee from all liability in respect
thereof) and the Indemnitee shall notify the Indemnifying Party in writing that
such Indemnitee declines to accept any such settlement or compromise, such
Indemnitee may continue to contest such Third-Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole expense. In
such event, the obligation of such Indemnifying Party to such Indemnitee with
respect to such Third-Party Claim shall be equal to (i) the costs and expenses
of such Indemnitee prior to the date such Indemnifying Party notifies such
Indemnitee of the offer to settle or compromise (to the extent such
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costs and expenses are otherwise indemnifiable hereunder) plus (ii) the lesser
of (A) the amount of any offer of settlement or compromise that such Indemnitee
declined to accept and (B) the actual out-of-pocket amount such Indemnitee is
obligated to pay subsequent to such date as a result of such Indemnitee's
continuing to pursue such Third-Party Claim.
(e) Any claim on account of a Loss that does not result from a Third-Party
Claim shall be asserted by written notice given by the Indemnitee to the related
Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after
the receipt of such notice within which to respond thereto. If such Indemnifying
Party does not respond within such 30-day period, such Indemnifying Party shall
be deemed to have refused to accept responsibility to make payment. If such
Indemnifying Party does not respond within such 30-day period or rejects such
claim in whole or in part, such Indemnitee shall be free to pursue such remedies
as may be available to such party under this Agreement or under applicable law
except as otherwise required by Section 6.12.
(f) In addition to any adjustments required pursuant to Section 4.3, if the
amount of any Loss shall, at any time subsequent to the payment required by this
Agreement, be reduced by recovery, settlement or otherwise, the amount of such
reduction that has been received by the Indemnitee, less any expenses incurred
in connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim or against any other person. Such Indemnitee shall
cooperate with such Indemnifying Party in a reasonable manner, and at the cost
and expense of such Indemnifying Party, in prosecuting any subrogated right or
claim.
Section 4.5 REMEDIES CUMULATIVE. The remedies provided in this Article IV
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party under Article IV of this Agreement or under Western Atlas'
directors and officers liability insurance policy.
Section 4.6 SURVIVAL OF INDEMNITIES. The obligations of each of Western
Atlas and UNOVA under this Article IV shall survive the sale or other
transfer by it of any assets, businesses or Liabilities.
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ARTICLE V
ACCESS TO INFORMATION; SERVICES
Section 5.1 ACCESS TO INFORMATION. From and after the Distribution
Date, Western Atlas shall afford to UNOVA and its authorized accountants,
counsel and other designated representatives (collectively,
"Representatives") reasonable access (including using reasonable efforts to
give access to persons or firms possessing information) and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and information (collectively,
"Information") within Western Atlas' possession relating to UNOVA or any
UNOVA Subsidiary, insofar as such access is reasonably required by UNOVA or
any UNOVA Subsidiary, without cost to UNOVA. Similarly, UNOVA shall afford
to Western Atlas and its Representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing
information) and duplicating rights during normal business hours to
Information within UNOVA's possession or in the possession of the UNOVA
Subsidiaries relating to Western Atlas or any Western Atlas Subsidiary and
insofar as such access is reasonably required by Western Atlas or any
Western Atlas Subsidiary, without cost to Western Atlas. For purposes of
this Section 5.1 only, Information is limited to information relating to
periods ending on or preceding the Distribution Date. Information may be
requested under this Article V for, without limitation, audit, accounting,
claims, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement and
the transactions contemplated hereby. After the Distribution Date, (i) to
the extent that Western Atlas has in its possession Information relating
solely to UNOVA or any UNOVA Subsidiary, Western Atlas shall deliver the
originals of such Information to UNOVA within a reasonable time following
the Distribution Date, and (ii) to the extent that UNOVA or any UNOVA
Subsidiary has in its possession Information relating solely to Western
Atlas, UNOVA or such UNOVA Subsidiary shall deliver the originals of such
Information to Western Atlas within a reasonable time following the
Distribution Date.
Section 5.2 PRODUCTION OF WITNESSES. After the Distribution Date, each
of Western Atlas and UNOVA and its respective subsidiaries shall use
reasonable efforts to make available to the other party and its
subsidiaries, upon written request, its directors, officers, employees and
agents as witnesses to the extent that any such person may reasonably be
required (giving consideration to business demands of such Representatives)
in connection with any legal, administrative or other proceedings in which
the requesting party may from time to time be involved, without cost to the
requesting party.
Section 5.3 RETENTION OF RECORDS. Except as otherwise required by law
or agreed to in writing, each of Western Atlas and UNOVA shall retain, and
shall cause its subsidiaries to retain following the Distribution Date, for
a period consistent with the document retention policies in effect at
Western Atlas and UNOVA, respectively, all significant Information relating
to the business of the other and the other's subsidiaries, but not less than
the three-year period following the Distribution Date. In addition, such
Information shall not be destroyed or otherwise disposed of if during such
period a party shall request in writing that any of the Information be
retained for additional specific and reasonable periods of time at the
expense of the party so requesting.
Section 5.4 CONFIDENTIALITY. Each of UNOVA and the UNOVA Subsidiaries
on the one hand, and Western Atlas and the Western Atlas Subsidiaries on the
other hand, shall hold, and shall cause its Representatives to hold, in
strict confidence, all Information concerning the other in its possession or
furnished by the other or the other's Representatives pursuant to this
Agreement or any of the Other Agreements (except to the extent that such
Information has been (a) in the public domain through no fault of such party
or (b) later lawfully acquired from other sources by such party or
subsequently developed by such party), and each party shall not release or
disclose such Information to any other person, except to its auditors,
attorneys, financial advisors, bankers and other consultants and
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advisors, and on terms and conditions substantially the same as the terms
and conditions on which such party releases its own Information, unless
compelled to disclose by judicial or administrative process or, as advised
by its counsel, by other requirements of law.
Section 5.5 PROVISION OF SERVICES.
(a) Western Atlas shall make available to UNOVA, during normal business
hours and in a manner that will not unreasonably interfere with Western Atlas'
business, its tax, internal audit, accounting, treasury, legal, risk management
and similar staff services (collectively "Services") whenever and to the extent
that they may be reasonably required in connection with the preparation of tax
returns, audits, claims or litigation, and otherwise to assist in effecting an
orderly transition following the Distribution. Western Atlas shall be entitled
to receive from UNOVA, upon the presentation of invoices therefor, reimbursement
for all direct costs of providing the Services, including such amounts relating
to supplies, disbursements and other out-of-pocket expenses.
(b) UNOVA shall make available to Western Atlas, during normal business
hours and in a manner that will not unreasonably interfere with UNOVA's
business, Services whenever and to the extent that they may be reasonably
required in connection with the preparation of tax returns, audits, claims or
litigation, and otherwise to assist in effecting an orderly transition following
the Distribution. UNOVA shall be entitled to receive from Western Atlas, upon
the presentation of invoices therefor, reimbursement for all direct costs of
providing the Services, including such amounts relating to supplies,
disbursements and other out-of-pocket expenses.
(c) UNOVA shall make available to Western Atlas, during normal business
hours and in a manner that will not interfere with UNOVA's business, risk
management Services, similar to the Services currently being provided to the
Oilfield Services group to the extent that they may be reasonably required in
connection with the WAI Insurance Program, and otherwise to assist in effecting
an orderly transition following the Distribution. UNOVA shall be entitled to
receive from Western Atlas, upon presentation of invoices therefor,
reimbursement for all direct costs of providing such Services, including such
amounts relating to supplies, disbursements and other out-of-pocket expenses.
(d) For a period of not less than one year following the Distribution, UNOVA
shall provide to Western Atlas, during normal business hours and in a manner
that will not interfere with UNOVA's business, stock option administration
services, similar to the services currently being provided to the executives of
Western Atlas and its subsidiaries who participate in the WAI Stock Option
Program, and otherwise to assist in the administration of such program following
the Distribution. UNOVA shall be entitled to receive from Western Atlas, upon
presentation of invoices therefor, reimbursement for all direct costs of
providing such services, including such amounts relating to personnel, supplies,
disbursements and other out-of-pocket expenses.
Section 5.6 COSTS. Unless otherwise provided in this Agreement, each party
shall bear all costs and expenses of that party in its performance of its
obligations under this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.1 COMPLETE AGREEMENT; CONSTRUCTION. This Agreement, the Benefits
Agreement and the Tax Sharing Agreement, including any schedules and exhibits
hereto or thereto, and other agreements and documents referred to herein, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. Notwithstanding any other
provisions in this Agreement to the contrary, in the event and to the extent
that there shall be a conflict between the provisions of this Agreement and the
provisions of any of the Other Agreements, the provisions of the Other
Agreements shall control.
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Section 6.2 SURVIVAL OF AGREEMENTS. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
Section 6.3 EXPENSES. Except as otherwise set forth in this Agreement or any
of the Other Agreements, all costs and expenses arising on or prior to the
Distribution Date (whether or not then payable) in connection with the
Distribution (other than the costs incurred in printing the stock certificates
of UNOVA) shall be paid by Western Atlas to the extent that appropriate
documentation concerning such costs and expenses shall be provided to Western
Atlas.
Section 6.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
Section 6.5 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telex or telecopy (confirmed by regular, first-class mail), to
the parties at the following addresses (or at such other addresses for a party
as shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
if to Western Atlas:
Western Atlas Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or place as Western Atlas shall have specified to UNOVA
in a notice in accordance with this Section 6.5,
if to UNOVA:
UNOVA, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or place as UNOVA shall have specified to Western Atlas
in a notice in accordance with this Section 6.5.
Section 6.6 AMENDMENTS. This Agreement may not be modified or amended except
by an agreement in writing signed by the parties.
Section 6.7 SUCCESSORS AND ASSIGNS. Neither party shall have the right to
assign this Agreement or any of its rights or interests herein without the
written consent of the other party, and any attempted assignment without such
consent shall be null and void; provided, however, that Western Atlas shall have
the right to assign this Agreement to a purchaser or acquirer of substantially
all of the business, properties, and assets of Western Atlas or to the survivor
of a statutory merger or consolidation to which Western Atlas is a constituent
party; provided, however, that UNOVA shall have the right to assign this
Agreement to a purchaser or acquirer of substantially all of the business,
properties and assets of UNOVA or to the survivor of a statutory merger or
consolidation to which UNOVA is a constituent party; and provided further,
however, that in the event of any such assignment by Western Atlas or UNOVA,
Western Atlas or UNOVA, as the case may be, shall nevertheless remain liable and
obligated under this Agreement. This Agreement and the Agreements in the form of
Annexes A through C hereof, as the same may be amended or modified, and the
provisions hereof and thereof, shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns.
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Section 6.8 TERMINATION. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution Date by and in the
sole discretion of the Western Atlas Board without the approval of UNOVA or
Western Atlas' shareholders. In the event of such termination, no party shall
have any liability of any kind to any other party on account of such termination
except that expenses incurred in connection with the transactions contemplated
hereby shall be paid as provided in Section 6.3.
Section 6.9 NO THIRD-PARTY BENEFICIARIES. Except for the provisions of
Article IV relating to Indemnitees, and except as may be otherwise provided for
in any of the Agreements in the form of Annexes A through C hereto, as the same
may be amended or modified, this Agreement is solely for the benefit of the
parties hereto and their respective Affiliates and should not be deemed to
confer upon third parties (including any employee of Western Atlas or UNOVA or
any Western Atlas or UNOVA Subsidiary) any remedy, claim, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement.
Section 6.10 TITLES AND HEADINGS. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 6.11 LEGAL ENFORCEABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 6.12 ARBITRATION. Any dispute hereunder which is not resolved by
agreement of the parties, shall be subject to resolution by arbitration in
accordance with the Rules of the American Arbitration Association but subject to
the procedural stipulation set forth on Schedule C. Any decision or award in
such arbitration shall be legally enforceable between the parties by any Court
of competent jurisdiction. Such arbitration proceeding shall be conducted before
a single arbitrator unless either party requests a panel of three arbitrators.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
WESTERN ATLAS INC.
By:_________________________________________
UNOVA, INC.
By:_________________________________________
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SCHEDULE A
Items with respect to which Western Atlas will indemnify the UNOVA
Indemnitees in accordance with Section 4.1 of the Agreement:
(1) All Losses arising out of the businesses conducted or to be conducted by
Western Atlas or any Western Atlas Subsidiary, whether such Losses relate to
events occurring, or whether such Losses are asserted, before or after the
Distribution Date (excluding the businesses conducted or to be conducted by
UNOVA (whether directly or through a subsidiary or Affiliate of UNOVA) and
the UNOVA Subsidiaries) and all Losses arising out of, or attributable to,
any and all of the businesses or operations of Western Atlas or any of
Western Atlas' current or former subsidiaries which have been discontinued,
designated discontinued (excluding UNOVA's inclusion in such account),
liquidated, sold or otherwise disposed of at any time on or prior to the
Distribution Date and which relate or did relate to the businesses to be
conducted by Western Atlas and the Western Atlas Subsidiaries following the
Distribution Date (the "Western Atlas Discontinued Operations"), including
without limitation the Core Laboratories Division, the manufacturing
operations of the Western Geophysical Division and the Western Atlas
Software Division (except to the extent provided for in the Benefits
Agreement); and
(2) All of Western Atlas' and any Western Atlas Subsidiary's Liabilities arising
out of this Agreement or any of the Other Agreements, except as otherwise
provided for in such Other Agreements;
(3) All Losses arising out of or based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, with respect to all information set forth
in the following sections of the Information Statement or any preliminary or
final Form 10 or any amendment thereto: "Introduction"; "The Distribution";
"Arrangements Between Western Atlas and UNOVA Relating to the Distribution";
"Summary of Certain Information" (only to the extent that such summary
includes information also contained in the foregoing sections); and any
letter to shareholders from an officer of Western Atlas; and
(4) Any Liability arising in connection with any Action brought by or on behalf
of any governmental entity for reimbursement, surrender or delivery to a
governmental entity of unclaimed property under the escheat laws of any
State or Country, to the extent that such Liability is attributable to the
businesses conducted or to be conducted by Western Atlas or any Western
Atlas Subsidiary following the Distribution Date (excluding the businesses
conducted or to be conducted by UNOVA (whether directly or through a
subsidiary or Affiliate of UNOVA) and the UNOVA Subsidiaries or to any of
the "UNOVA Discontinued Operations" (as defined in Schedule B)) or to any of
the Western Atlas Discontinued Operations, whether such liability arose
before or arises after the Distribution Date.
SCHEDULE B
Items with respect to which UNOVA will indemnify the Western Atlas
Indemnitees in accordance with Section 4.2 of the Agreement:
(1) All Losses arising out of any guarantees, indemnities, or obligations to
third parties including, without limitation, letters of credit and surety bonds,
of Western Atlas or any Western Atlas Subsidiary with respect to any obligations
of UNOVA or any UNOVA Subsidiary to third parties or with respect to the
obligations of Western Atlas to third parties arising out of or attributable to
any and all of the businesses or operations of Western Atlas or any of Western
Atlas' current or former subsidiaries which have been discontinued, designated
discontinued, liquidated, sold or otherwise disposed of at any time on or prior
to the Distribution Date and which relate or did relate to the businesses to be
conducted by UNOVA and the UNOVA Subsidiaries following the Distribution Date,
including without limitation the Material Handling Systems Division, the
VantageWare Division, the Automated Guided Vehicles Division, Pro-Tac System AB,
Lamb-Unima and Western Atlas Filtration Systems (collectively, the "UNOVA
Discontinued Operations"); and the Liabilities of UNOVA under the Benefits
Agreement which shall be included within UNOVA's indemnity of Western Atlas and
the Western Atlas Subsidiaries;
(2) All Losses arising out of the businesses conducted or to be conducted by
UNOVA (whether directly or through a subsidiary or Affiliate of UNOVA) and the
UNOVA Subsidiaries, and any Liability of UNOVA or of any of the UNOVA
Subsidiaries with respect to the UNOVA Discontinued Operations, whether such
Losses relate to events occurring, or whether such Losses are asserted before or
after the Distribution Date;
(3) The liability and obligation of Western Atlas or of any Western Atlas
Subsidiary under or with respect to any Revenue Bond financing related to any
of the properties and assets utilized by UNOVA or any of the UNOVA
Subsidiaries in their respective businesses, irrespective of whether or not
Western Atlas has suffered actual loss;
(4) All of UNOVA's and any of the UNOVA Subsidiaries' Liabilities arising
out of this Agreement or any of the Other Agreements, except as otherwise
provided for in such Other Agreements; and
(5) All Losses arising out of or based upon any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, with respect to all information contained in the
Information Statement or any preliminary or final Form 10 or any amendment
thereto; provided, however, that such indemnification shall not apply to any
Losses that arise out of or are based upon any statement or omission made in any
of the sections of the Information Statement or Form 10 that are listed in
paragraph (3) of Schedule A;
(6) Any Liability arising in connection with any Action brought by or on
behalf of any governmental entity for reimbursement, surrender or delivery to a
governmental entity of unclaimed property under the escheat laws of any State or
Country, to the extent that such Liability is attributable to the businesses
conducted or to be conducted by UNOVA or any UNOVA Subsidiary or to any of the
UNOVA Discontinued Operations, whether such liability arose before or arises
after the Distribution Date.
SCHEDULE C
ARBITRATION PROCEDURAL RULES
1. ADMINISTRATION AND CONDUCT OF ARBITRATION.
(a) At the discretion of the Arbitrator, an administrative conference with
the Arbitrator and the parties and/or their representatives will be scheduled in
appropriate cases to expedite the Arbitration proceedings.
(b) It is intended that the Arbitration be conducted in an expeditious
manner and without evidentiary hearing or oral presentation and argument, unless
the Arbitrator determines that an evidentiary hearing, and/or oral presentation
or argument is required for the rendition of an award or a decision. However,
any such evidentiary hearing shall be limited to not more than fifteen days, and
oral presentation and argument shall be limited to eight hours, with time
equally divided between the parties.
(c) On such schedule as may be established by the Arbitrator, each of the
parties shall submit simultaneous briefs, including exhibits, to the Arbitrator
supporting their respective positions. There shall be no limit to the number of
pages included in such briefs or to the number of exhibits. Each party shall
have a reasonable opportunity, as determined by the Arbitrator, to reply to the
brief of the other. The Arbitrator shall have the right to request additional
written statements of all or any of the parties; provided that each party shall
have the reasonable opportunity to reply to any such additional statements
submitted in response to the request of the Arbitrator.
(d) The Arbitrator shall render its award or decision within two months of
the Arbitrator's appointment.
2. FIXING OF LOCALE. The parties may mutually agree to the locale where the
Arbitration is to be held. If the parties cannot agree on the locale, the
Arbitrator shall have the power to determine the locale and its decision shall
be final and binding.
3. DATE, TIME AND PLACE OF HEARING. The Arbitrator shall set the date, time,
and place for any hearing. The Arbitrator shall mail to each party notice
thereof at least ten days in advance, unless the parties by mutual agreement
waive such notice or modify the terms thereof.
4. POSTPONEMENTS. The Arbitrator for good cause shown may postpone any
hearing upon the request of a party or upon the Arbitrator's own initiative, and
shall also grant such postponement when all of the parties agree thereto.
5. OATHS. Before proceeding with the first hearing, the Arbitrator may take
an oath of office and, if required by law, shall do so. The Arbitrator may
require witnesses to testify under oath administered by any duly qualified
person and, if it is required by law, shall do so.
6. ORDER OF PROCEEDINGS AND COMMUNICATION WITH ARBITRATOR.
(a) A hearing shall be opened by the filing of the oath of the Arbitrator,
where required, and by the recording of the date, time, and place of the
hearing, and the presence of the Arbitrator, the parties, and their
representatives, if any.
(b) The Arbitrator may, at the beginning of the hearing, ask for statements
clarifying the issues involved.
(c) The complaining party shall then present evidence and/or argument, as
required by the Arbitrator, to support its claim. The defending party shall then
present evidence and/or argument supporting its position and responding to the
position of the other. Witnesses, if any, for each party shall submit to
questions or other examination. The Arbitrator has the discretion to vary this
procedure but, within the time limits specified above, shall afford a full and
equal opportunity to all parties for the presentation of any material and
relevant evidence.
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(d) Exhibits, when offered by either party, may be received in evidence by
the Arbitrator. The names and addresses of any witnesses and a description of
the exhibits in the order received shall be made a part of the record.
(e) There shall be no direct communication between either of the parties and
the Arbitrator other than at oral hearing, unless the parties and the Arbitrator
agree in writing.
7. ARBITRATION IN THE ABSENCE OF A PARTY OR REPRESENTATIVE. Unless the law
provides to the contrary, the Arbitration may proceed in the absence of any
party or representative who, after due notice, fails to be present or fails to
obtain a postponement ("absent in default"). An award shall not be made solely
on the default of a party. The Arbitrator shall require the party who is present
to submit such evidence as the Arbitrator may require for the making of an
award.
8. EVIDENCE.
(a) The parties may offer such evidence as is relevant and material to the
dispute and shall produce such evidence as the Arbitrator may deem necessary to
an understanding and determination of the dispute.
(b) The Arbitrator shall be the judge of the relevance and materiality of
the evidence offered, and conformity to legal rules of evidence shall not be
necessary. All evidence shall be taken in the presence of the Arbitrator and all
of the parties, except where any of the parties is absent in default or has
waived the right to be present.
9. EVIDENCE BY AFFIDAVIT AND POST-HEARING FILING OF DOCUMENTS OR OTHER
EVIDENCE.
(a) The Arbitrator may receive and consider the evidence of witnesses by
affidavit, but shall give it only such weight as the Arbitrator deems it to be
entitled to after consideration of any objection made to its admission.
(b) If the parties agree or the Arbitrator directs that documents or other
evidence be submitted to the Arbitrator after the hearing, the documents or
other evidence shall be filed with the Arbitrator. All parties shall be afforded
an opportunity to examine such documents or other evidence.
10. CLOSING OF HEARING. If satisfied that the record is complete, the
Arbitrator shall declare the hearing closed and a minute thereof shall be
recorded. If briefs are to be filed, the hearing shall be declared closed as of
the final date set by the Arbitrator for the receipt of briefs. If documents are
to be filed as provided in Section 9 and the date set for their receipt is later
than that set for the receipt of briefs, the later date shall be the date of
closing and the hearing.
11. REOPENING OF HEARING. The hearing may be reopened on the Arbitrator's
initiative at any time before the award is made. If reopening the hearing would
prevent the making of the award within the specified time limit, the matter may
not be reopened unless the parties agree on an extension of time.
12. WAIVER OF ORAL HEARING. The parties may provide, by written agreement,
for the waiver of oral hearing in any case.
13. WAIVER OF RULES. Any party who proceeds with the Arbitration after
knowledge that any provision or requirement of these rules has not been complied
with and who fails to state an objection thereto in writing shall be deemed to
have waived the right to object.
14. EXTENSIONS OF TIME. The parties may modify any period of time by mutual
agreement. The Arbitrator may for good cause extend any period of time
established by these rules, except the time for making the award. The Arbitrator
shall notify the parties of any extension.
15. SERVING OF NOTICE. Each party shall be deemed to have consented that any
papers, notices, or process necessary or proper for the initiation or
continuation of an Arbitration under these rules, for any court action in
connection therewith, or for the entry of judgment on any award made under these
rules may be served on a party by mail addressed to the party or its
representative at the address specified
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in Section 6.15 or by personal service, in or outside the state where the
Arbitration is to be held, provided that reasonable opportunity to be heard with
regard thereto has been granted to the party.
16. TIME OF THE AWARD. The award shall be made promptly by the Arbitrator
and, unless otherwise agreed by the parties in writing or specified by law, no
later than thirty days from the date of closing the hearing, or, if oral
hearings have not been held, from the date of the transmittal of the final
briefs, statements and proofs to the Arbitrator.
17. AWARD UPON SETTLEMENT. If the parties settle their dispute during the
course of the Arbitration, the Arbitrator may set forth the terms of the agreed
settlement in an award. Such an award is referred to as a consent award.
18. DELIVERY OF AWARD TO PARTIES. Parties shall accept as legal delivery of
the award the placing of the award or a true copy thereof in the mail addressed
to a party or its representative at the last known address, personal service of
the award, or the filing of the award in any other manner that is permitted by
law.
19. APPLICATIONS TO COURT AND EXCLUSION OF LIABILITY.
(a) No judicial proceeding by a party relating to the subject matter of the
Arbitration shall be deemed a waiver of the party's right to arbitrate.
(b) Parties to these rules shall be deemed to have consented that judgment
upon the Arbitration award may be entered in any federal or state court having
jurisdiction thereof.
20. INTERPRETATION AND APPLICATION OF RULES. The Arbitrator shall interpret
and apply these rules insofar as they relate to the Arbitrator's powers and
duties. If there is more than one Arbitrator and a difference arises among them
concerning the meaning or application of these rules, it shall be decided by a
majority vote.
21. COMPLEX PROCEDURES. Notwithstanding the foregoing, if the parties
mutually agree, any Arbitration to be conducted between the parties may be
conducted in the manner provided for in the Supplementary Procedure for Large
Complex Disputes of the American Arbitration Association.
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