UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 6, 2020 (March 31, 2020)
HOWMET AEROSPACE INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-3610 | 25-0317820 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
201 Isabella Street, Suite 200 | |
Pittsburgh, Pennsylvania | 15212-5872 |
(Address of Principal Executive Offices) | (Zip Code) |
Office of Investor Relations (412) 553-1950
Office of the Secretary (412) 553-1940
(Registrant’s telephone number, including area code)
Arconic Inc
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $1.00 per share | HWM | New York Stock Exchange |
$3.75 Cumulative Preferred Stock, par value $100 per share | HWM PR | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Preferred Stock |
Item 1.01. | Entry into a Material Definitive Agreement. |
On March 31, 2020, in connection with the Separation and the Distribution (each as defined below), Howmet Aerospace Inc. (formerly known as Arconic Inc.) (the “Company” or “Howmet Aerospace”), entered into several agreements with Arconic Corporation (formerly known as Arconic Rolled Products Corporation) (“Arconic Corporation”), that govern the relationship of the parties following the Distribution, including the following:
· | Separation and Distribution Agreement; |
· | Tax Matters Agreement; |
· | Employee Matters Agreement; |
· | Howmet Aerospace Inc. to Arconic Corporation Patent, Know-How, and Trade Secret License Agreement; |
· | Arconic Corporation to Howmet Aerospace Inc. Patent, Know-How, and Trade Secret License Agreement; |
· | Arconic Corporation to Howmet Aerospace Inc. Trademark License Agreement (Arconic) |
· | Arconic Corporation to Howmet Aerospace Inc. Trademark License Agreement (ARMX); |
· | Master Agreement for Product Supply; |
· | Second Supplemental Tax and Project Certificate and Agreement; and |
· | Lease and Property Management Agreement. |
Summaries of the material terms of these agreements can be found in the Information Statement of Arconic Corporation, dated February 13, 2020, which is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K, under the section entitled “Certain Relationships and Related Party Transactions.” These summaries are incorporated herein by reference. The foregoing descriptions of these agreements set forth under this Item 1.01 are not complete and are subject to, and qualified in their entirety by reference to, the full text of the agreements, which are attached hereto as Exhibits 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9 and 2.10, and are incorporated herein by reference.
Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On April 1, 2020, the Company completed the previously announced separation of its business into two independent, publicly traded companies (the “Separation”). Following the Separation, Arconic Corporation holds the Global Rolled Products businesses (global rolled products, aluminum extrusions and building and construction systems) previously held by the Company. The Company retained the Engineered Products and Forgings businesses (engine products, fastening systems, engineered structures and forged wheels).
The Separation was effected by the distribution (the “Distribution”) of all of the outstanding shares of Arconic Corporation common stock to the Company’s stockholders who held shares of the Company’s common stock as of the close of business on March 19, 2020 (the “Record Date”). The Company’s stockholders of record as of the Record Date received one share of Arconic Corporation common stock for every four shares of the Company’s common stock held as of the Record Date. The Company did not issue fractional shares of Arconic Corporation common stock in the Distribution. Instead, each stockholder otherwise entitled to receive a fractional share of Arconic Corporation common stock will receive cash in lieu of fractional shares.
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Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Effective as of the Separation, Timothy D. Myers, former Executive Vice President of the Company and Group President, Global Rolled Products, resigned from his position with the Company. Mr. Myers became Chief Executive Officer of Arconic Corporation.
In addition, effective as of the Separation, Tolga Oal became Co-Chief Executive Officer and a director of the Company and John C. Plant, who previously served as Chief Executive Officer of the Company, became Co-Chief Executive Officer and continued as Executive Chairman of the Company.
In addition, in connection with the Separation and the Distribution, Messrs. Christopher L. Ayers, Elmer L. Doty, and E. Stanley O’Neal resigned as directors of the Company to serve on the Board of Directors of Arconic Corporation, effective as of immediately prior to the Separation.
Effective as of the Separation, Joseph S. Cantie, Robert F. Leduc, Jody G. Miller and Nicole W. Piasecki became directors of the Company. Mr. Cantie became a member of the Audit, Compensation and Benefits, and Finance Committees. Mr. Leduc became Chair of the Compensation and Benefits Committee. Ms. Miller became a member of the Governance and Nominating Committee. Ms. Piasecki became a member of the Compensation and Benefits Committee. In addition, effective as of the Separation, James F. Albaugh, who was already a director of the Company, became Lead Independent Director of the Company’s Board of Directors.
Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
The Company’s Board of Directors approved an amendment to the Company’s Certificate of Incorporation, which became effective as of 11:59 p.m. on March 31, 2020, pursuant to which all references in the Certificate of Incorporation to “Arconic Inc.” were replaced with references to “Howmet Aerospace Inc.”
The Company’s Board of Directors approved an amendment to the Company’s Bylaws, which became effective as of the completion of the Separation, pursuant to which all references in the Bylaws to “Arconic Inc.” were replaced with references to “Howmet Aerospace Inc.”
The foregoing description of the amendment to the Company’s Certificate of Incorporation is not complete and is subject to, and qualified in its entirety by reference to, the full text of the amendment, which is attached hereto as Exhibit 3.1, and is incorporated herein by reference. The foregoing description of the amendment to the Company’s Bylaws is not complete and is subject to, and qualified in its entirety by reference to, the full text of the amendment, which was filed with the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on February 6, 2020, and is incorporated herein by reference.
Item 7.01. | Regulation FD Disclosure. |
On April 6, 2020, the Company issued a press release related to recent actions taken in response to the COVID-19 pandemic.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 and in Exhibit 99.2 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. In addition, the furnishing of this Item 7.01 of Form 8-K and Exhibit 99.2 will not be deemed an admission that such information includes material information that is not otherwise publicly available.
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Item 8.01. | Other Events. |
On April 1, 2020, the Company issued a press release announcing the completion of the Separation. A copy of the press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
On April 6, 2020, the Company issued a press release announcing that it had completed the previously indicated early redemption of all of its 6.150% Notes due 2020 and early partial redemption of its 5.40% Notes due 2021 in the aggregate principal amount of $1,000,000,000 and $300,000,000, respectively. A copy of the press release is attached hereto as Exhibit 99.4 and is incorporated herein by reference.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
The following are filed as exhibits to this report:
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Exhibit No. | Exhibit |
99.2 | Press Release of Howmet Aerospace Inc., issued April 6, 2020 |
99.3 | Press release of Howmet Aerospace Inc., issued April 1, 2020. |
99.4 | Press release of Howmet Aerospace Inc., issued April 6, 2020. |
104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL |
Forward-Looking Statements
This communication contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts and expectations relating to the growth of end markets; statements and guidance regarding future financial results or operating performance; statements regarding future strategic actions; and statements about Howmet Aerospace’s strategies, outlook, business and financial prospects. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) the impact of the Separation on the businesses of Howmet Aerospace; (b) deterioration in global economic and financial market conditions generally, including as a result of pandemic health issues (including coronavirus and its effects, among other things, on global supply, demand, and distribution disruptions as the coronavirus outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; (e) competition from new product offerings, disruptive technologies or other developments; (f) political, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (g) manufacturing difficulties or other issues that impact product performance, quality or safety; (h) Howmet Aerospace’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, expansions, or joint ventures; (i) the impact of potential cyber attacks and information technology or data security breaches; (j) the loss of significant customers or adverse changes in customers’ business or financial conditions; (k) adverse changes in discount rates or investment returns on pension assets; (l) the impact of changes in aluminum prices and foreign currency exchange rates on costs and results; (m) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; and (n) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2019 and other reports filed with the U.S. Securities and Exchange Commission. Market projections are subject to the risks discussed above and other risks in the market. The statements in this communication are made as of the date of this communication, even if subsequently made available by Howmet Aerospace on its website or otherwise. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HOWMET AEROSPACE INC. | ||
Dated: April 6, 2020 | By: | /s/ Katherine H. Ramundo |
Name: | Katherine H. Ramundo | |
Title: | Executive Vice President, Chief Legal Officer and Secretary |
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Exhibit 2.1
EXECUTION VERSION
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
ARCONIC INC.
AND
ARCONIC ROLLED PRODUCTS CORPORATION
DATED AS OF MARCH 31, 2020
TABLE OF CONTENTS
Page | ||
Article I DEFINITIONS | 2 | |
Article II THE SEPARATION | 15 | |
2.1 | Transfer of Assets and Assumption of Liabilities | 15 |
2.2 | GRP&E/BCS Assets; Parent Assets | 18 |
2.3 | GRP&E/BCS Liabilities; Parent Liabilities | 20 |
2.4 | Approvals and Notifications | 22 |
2.5 | Novation of Liabilities | 26 |
2.6 | Release of Guarantees | 27 |
2.7 | Termination of Agreements | 30 |
2.8 | Treatment of Shared Contracts | 30 |
2.9 | Bank Accounts; Cash Balances | 31 |
2.10 | Ancillary Agreements | 32 |
2.11 | Disclaimer of Representations and Warranties | 32 |
2.12 | Financial Information Certifications | 33 |
2.13 | Transition Committee and Other Matters | 33 |
2.14 | GRP&E/BCS Financing Arrangements | 34 |
Article III THE DISTRIBUTION | 35 | |
3.1 | Sole and Absolute Discretion; Cooperation | 35 |
3.2 | Actions Prior to the Distribution | 35 |
3.3 | Conditions to the Distribution | 37 |
3.4 | The Distribution | 38 |
Article IV MUTUAL RELEASES; INDEMNIFICATION | 40 | |
4.1 | Release of Pre-Distribution Claims | 40 |
4.2 | Indemnification by GRP&E/BCS SpinCo | 42 |
4.3 | Indemnification by Parent | 42 |
4.4 | Indemnification Obligations Net of Insurance Proceeds and Other Amounts | 43 |
4.5 | Procedures for Indemnification of Third-Party Claims | 44 |
4.6 | Additional Matters | 47 |
4.7 | Right of Contribution | 48 |
4.8 | Covenant Not to Sue | 48 |
4.9 | Remedies Cumulative | 49 |
4.10 | Survival of Indemnities | 49 |
4.11 | Environmental Matters | 49 |
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Article V CERTAIN OTHER MATTERS | 52 | |
5.1 | Tail Policies: Directors and Officers Insurance, Fiduciary Liability Insurance, and Employment Practice Liability Insurance | 52 |
5.2 | Insurance Matters Generally | 53 |
5.3 | Late Payments | 61 |
5.4 | Treatment of Payments for Tax Purposes | 62 |
5.5 | Inducement | 62 |
5.6 | Post-Effective Time Conduct | 62 |
Article VI EXCHANGE OF INFORMATION; CONFIDENTIALITY | 62 | |
6.1 | Agreement for Exchange of Information and Cooperation | 62 |
6.2 | Ownership of Information | 63 |
6.3 | Compensation for Providing Information | 63 |
6.4 | Record Retention | 64 |
6.5 | Limitations of Liability | 64 |
6.6 | Other Agreements Providing for Exchange of Information | 64 |
6.7 | Production of Witnesses; Records; Cooperation | 64 |
6.8 | Privileged Matters | 65 |
6.9 | Confidentiality | 68 |
6.10 | Protective Arrangements | 69 |
Article VII DISPUTE RESOLUTION | 70 | |
7.1 | Good-Faith Negotiation | 70 |
7.2 | Mediation | 70 |
7.3 | Arbitration | 71 |
7.4 | Litigation and Unilateral Commencement of Arbitration | 72 |
7.5 | Conduct During Dispute Resolution Process | 72 |
Article VIII FURTHER ASSURANCES AND ADDITIONAL COVENANTS | 72 | |
8.1 | Further Assurances | 72 |
8.2 | Continued Use of Arconic Name | 74 |
8.3 | Domain Name Use | 74 |
Article IX TERMINATION | 74 | |
9.1 | Termination | 74 |
9.2 | Effect of Termination | 74 |
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Article X MISCELLANEOUS | 74 | |
10.1 | Counterparts; Entire Agreement; Corporate Power | 74 |
10.2 | Governing Law | 75 |
10.3 | Assignability | 76 |
10.4 | Third-Party Beneficiaries | 76 |
10.5 | Notices | 76 |
10.6 | Severability | 77 |
10.7 | Force Majeure | 77 |
10.8 | No Set-Off | 78 |
10.9 | Publicity | 78 |
10.10 | Expenses | 78 |
10.11 | Headings | 78 |
10.12 | Survival of Covenants | 78 |
10.13 | Waivers of Default | 78 |
10.14 | Specific Performance | 78 |
10.15 | Amendments | 79 |
10.16 | Interpretation | 79 |
10.17 | Limitations of Liability | 79 |
10.18 | Performance | 80 |
10.19 | Mutual Drafting; Precedence | 80 |
EXHIBITS | ||
Exhibit A | Amended and Restated Certificate of Incorporation of Arconic Rolled Products Corporation | |
Exhibit B | Amended and Restated Bylaws of Arconic Rolled Products Corporation |
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FORM OF SEPARATION AND DISTRIBUTION AGREEMENT
This SEPARATION AND DISTRIBUTION AGREEMENT, dated as of March 31, 2020 (this “Agreement”), is by and between Arconic Inc., a Delaware corporation (“Parent”), and Arconic Rolled Products Corporation, a Delaware corporation (“GRP&E/BCS SpinCo”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I.
R E C I T A L S
WHEREAS, the board of directors of Parent (the “Parent Board”) has determined that it is in the best interests of Parent and its stockholders to create a new publicly traded company that will operate the GRP&E/BCS Business;
WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the GRP&E/BCS Business from the Howmet Aerospace Business (the “Separation”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of one hundred percent (100%) of the outstanding GRP&E/BCS Shares owned by Parent (the “Distribution”);
WHEREAS, GRP&E/BCS SpinCo has been incorporated solely for these purposes and has not engaged in activities except in preparation for the Separation and the Distribution;
WHEREAS, for U.S. federal income tax purposes, the contribution by Parent of the GRP&E/BCS Assets and the GRP&E/BCS Liabilities to GRP&E/BCS SpinCo in exchange for the actual or deemed issuance by GRP&E/BCS SpinCo to Parent of GRP&E/BCS Shares (the “Contribution”) and the Distribution, taken together, are intended to qualify as a transaction that is generally tax-free under Section 355(a) and 368(a)(1)(D) of the Code;
WHEREAS, for U.S. federal income tax purposes, this Agreement (including the Separation Step Plan attached hereto as Schedule 2.1(a)) is intended to be, and is hereby adopted as, a “plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations Section 1.368-1(c);
WHEREAS, GRP&E/BCS SpinCo and Parent have prepared, and GRP&E/BCS SpinCo has filed with the SEC, the Form 10, which includes the Information Statement, and which sets forth disclosure concerning GRP&E/BCS SpinCo, the Separation and the Distribution;
WHEREAS, each of Parent and GRP&E/BCS SpinCo has determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect the Separation and the Distribution and certain other agreements that will govern certain matters relating to the Separation and the Distribution and the relationship of Parent, GRP&E/BCS SpinCo and the members of their respective Groups following the Distribution; and
WHEREAS, the Parties acknowledge that this Agreement and the Ancillary Agreements represent the integrated agreement of Parent and GRP&E/BCS SpinCo relating to the Separation and the Distribution, are being entered into together, and would not have been entered independently.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
Article
I
DEFINITIONS
For the purpose of this Agreement, the following terms shall have the following meanings:
“Action” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.
“Affiliate” shall mean, when used with respect to a specified Person, a Person (for the avoidance of doubt, other than a natural person) that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, prior to, at and after the Effective Time, for purposes of this Agreement and the Ancillary Agreements, (a) no member of the GRP&E/BCS Group shall be deemed to be an Affiliate of any member of the Parent Group and (b) no member of the Parent Group shall be deemed to be an Affiliate of any member of the GRP&E/BCS Group.
“Agent” shall mean the trust company or bank duly appointed by Parent to act as distribution agent, transfer agent and registrar for the GRP&E/BCS Shares in connection with the Distribution.
“Agreement” shall have the meaning set forth in the Preamble.
“Alcoa SDA” shall mean the Separation and Distribution Agreement, dated as of October 31, 2016, by and between Alcoa Inc. and Alcoa Upstream Corporation.
“Ancillary Agreements” shall mean all agreements (other than this Agreement) entered into by the Parties or members of their respective Groups (but as to which no Third Party is a party) in connection with the Separation, the Distribution, or the other transactions contemplated by this Agreement, including the Tax Matters Agreement, the Employee Matters Agreement, the Metal Supply Agreements, the Intellectual Property Agreements, the Leases, the Kofem Site Services Agreement, the Davenport Tax Exempt Bonds Reimbursement Agreement, the Transfer Documents and any other agreement that by its express terms provides that it shall be an Ancillary Agreement for purposes of this Agreement.
“Approvals or Notifications” shall mean any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any Third Party, including any Governmental Authority.
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“Arbitration Request” shall have the meaning set forth in Section 7.3(a).
“Arconic Name and Arconic Marks” shall mean the names, marks, trade dress, logos, monograms, domain names and other source or business identifiers of either Party or any member of its Group using or containing “Arconic,” or any other word or element listed on Schedule 1.1 (in block letters or otherwise), either alone or in combination with other words or elements, and all names, marks, trade dress, logos, monograms, domain names and other source or business identifiers confusingly similar to or embodying any of the foregoing either alone or in combination with other words or elements, together with the goodwill associated with any of the foregoing.
“Assets” shall mean, with respect to any Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other Third Parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, 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 such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.
“Change of Control” with respect to a Person shall mean any occurrence resulting in (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities entitled to vote in the election of members of the board of directors or similar governing body of such Person having 50% or more of the then-outstanding voting power of such Person; (ii) such Person becoming a party to a merger, consolidation, share exchange, reorganization, sale of assets or other similar extraordinary transaction, or a proxy contest, in each case as a consequence of which members of the board of directors or similar governing body of such Person in office immediately prior to such transaction or event constitute less than a majority of such board or other body thereafter; or (iii) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the board of directors or similar governing body of such Person (including for this purpose any new director or similar person whose election or nomination for election was approved by a vote of at least two-thirds of the directors or similar persons then still in office who served in such capacities at the beginning of such period, other than those such directors or similar persons appointed, or nominated for election, in connection with an actual or threatened proxy contest or other non-consensual attempt to influence or modify such board or other body) ceasing for any reason to constitute at least a majority of such board or other body.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
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“Combined Tail D&O Program” shall have the meaning set forth in Section 5.1(a).
“Combined Tail Employment Practices Program” shall have the meaning set forth in Section 5.1(c).
“Combined Tail Fiduciary Program” shall have the meaning set forth in Section 5.1(b).
“Contribution” shall have the meaning set forth in the Recitals.
“CPR” shall have the meaning set forth in Section 7.2.
“Davenport Tax Exempt Bonds Reimbursement Agreement” shall mean the Second Supplemental Tax and Project Certificate and Agreement to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as it may be amended from time to time.
“Delayed Parent Asset” shall have the meaning set forth in Section 2.4(h).
“Delayed Parent Liability” shall have the meaning set forth in Section 2.4(h).
“Delayed GRP&E/BCS Asset” shall have the meaning set forth in Section 2.4(c).
“Delayed GRP&E/BCS Liability” shall have the meaning set forth in Section 2.4(c).
“Disclosure Document” shall mean any registration statement (including the Form 10) filed with the SEC by or on behalf of any Party or any member of its Group, and also includes any information statement (including the Information Statement), prospectus, offering memorandum, offering circular, periodic report or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, in each case which describes the Separation or the Distribution or the GRP&E/BCS Group or primarily relates to the transactions contemplated hereby.
“Dispute” shall have the meaning set forth in Section 7.1.
“Distribution” shall have the meaning set forth in the Recitals.
“Distribution Date” shall mean the date of the consummation of the Distribution, which shall be determined by the Parent Board in its sole and absolute discretion.
“Distribution Ratio” shall have the meaning set forth in Section 3.4(b).
“Effective Time” shall mean 12:01 a.m., New York City time, on the Distribution Date.
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“Employee Matters Agreement” shall mean the Employee Matters Agreement to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as it may be amended from time to time.
“Environmental Law” shall mean any Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, Release or discharge of Hazardous Materials or the protection of or prevention of harm to human health and safety.
“Environmental Liabilities” shall mean all Liabilities relating to, arising out of or resulting from any Hazardous Materials (except for Third-Party Claims alleging personal injury out of exposure to asbestos and/or asbestos-containing materials), Environmental Law or contract or agreement relating to health and safety matters (but solely with respect to exposure to, or Releases of, Hazardous Materials) or environmental matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, post-closure monitoring, operation and maintenance, regulatory Liabilities, natural resources damages, personal injury damages, costs of compliance with any product take back requirements or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) (including the Parent Environmental Liabilities, the Shared Environmental Liabilities and the GRP&E/BCS Environmental Liabilities) and all costs and expenses, interest, fines, penalties, financial guarantees or other monetary sanctions in connection therewith.
“Environmental Permit” shall mean any Permit relating to Environmental Laws or Hazardous Materials.
“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
“Force Majeure” shall mean, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and (b) by its nature would not reasonably have been foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any significant and prolonged failure in electrical or air conditioning equipment. Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.
“Form 10” shall mean the registration statement on Form 10 filed by GRP&E/BCS SpinCo with the SEC to effect the registration of GRP&E/BCS Shares pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time prior to the Distribution.
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“Governmental Approvals” shall mean any Approvals or Notifications to be made to, or obtained from, any Governmental Authority.
“Governmental Authority” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof, including the NYSE and any similar self-regulatory body under applicable securities Laws.
“Group” shall mean either the GRP&E/BCS Group or the Parent Group, as the context requires.
“GRP&E/BCS Accounts” shall have the meaning set forth in Section 2.9(a).
“GRP&E/BCS Assets” shall have the meaning set forth in Section 2.2(a).
“GRP&E/BCS Balance Sheet” shall mean the pro forma condensed combined balance sheet of GRP&E/BCS SpinCo, including any notes and subledgers thereto, as of September 30, 2019, as presented in the Information Statement mailed to the Record Holders.
“GRP&E/BCS Business” shall mean (a) fabricated aluminum and laminated rolled and cast plate, sheet and foil; aluminum extrusions and tube; aluminum wire, rod, bar, cable and welding; residential and commercial building products and architectural systems for building facades, walls, store fronts, doors, windows and roofs; armor; aluminum research and development, engineering and testing services; advanced manufacturing—additive manufacturing and powdered metals—other than related to forgings; aluminum, plastic and other packaging, printing and labeling materials and equipment (cans, aseptic, closures, bags); thermoformed plastic; appliances and parts; non-aero and non-IGT aluminum castings (pots, pans, cutlery—including forged); aluminum and aluminum dross recycling; aluminum automotive parts (rolled products, extrusions, wire harnesses, non-wheel castings, non-wheel forgings); telecommunications; all products, businesses, operations and activities of Parent in Russia; related businesses, operations, processes and activities; in each case as conducted at any time prior to the Effective Time by either Party or any current or former member of its Group and (b) any terminated, divested or discontinued businesses, operations and activities that, at the time of termination, divestiture or discontinuation, primarily related to the businesses, operations or activities described in clause (a) as then conducted, including those set forth on Schedule 1.7, excluding, in the case of each of clauses (a) and (b), the business, operations and activities primarily related to the Parent Assets.
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“GRP&E/BCS Contracts” shall mean the following contracts and agreements to which either Party or any member of its Group is a party or by which it or any member of its Group or any of their respective Assets is bound, whether or not in writing; provided that GRP&E/BCS Contracts shall not include (x) any contract or agreement that is contemplated to be retained by Parent or any member of the Parent Group from and after the Effective Time pursuant to any provision of this Agreement or any Ancillary Agreement, (y) any contract or agreement that would constitute GRP&E/BCS Software or GRP&E/BCS Know-How or (z) any contract set forth Schedule 1.9(a)):
(a) any vendor contracts or agreements with a Third Party pursuant to which such Third Party provides information technology, human resources or financial services to either Party or any member of its Group primarily in connection with the GRP&E/BCS Business as of the Effective Time;
(b) other than any vendor contracts or agreements addressed in clause (a) above to the extent that they shall constitute a GRP&E/BCS Contract, (i) any customer, distribution, supply or vendor contract or agreement entered into prior to the Effective Time exclusively related to the GRP&E/BCS Business and (ii) with respect to any customer, distribution, supply or vendor contract or agreement entered into prior to the Effective Time that relates to the GRP&E/BCS Business but is not exclusively related to the GRP&E/BCS Business, that portion of any such customer, distribution, supply or vendor contract or agreement that relates to the GRP&E/BCS Business;
(c) other than any vendor contracts or agreements addressed in clauses (a) and (b) above to the extent that they shall constitute a GRP&E/BCS Contract, (i) any license agreement entered into prior to the Effective Time exclusively related to the GRP&E/BCS Business and (ii) with respect to any license agreement entered into prior to the Effective Time that relates to the GRP&E/BCS Business but is not exclusively related to the GRP&E/BCS Business, that portion of any such license agreement that relates to the GRP&E/BCS Business;
(d) any contract that is, or portion of any contract containing, any guarantee, indemnity, representation, covenant, warranty or other Liability of either Party or any member of its Group in respect of any other GRP&E/BCS Contract, any GRP&E/BCS Liability or the GRP&E/BCS Business;
(e) any employment, change of control, retention, consulting, indemnification, termination, severance or other similar agreements with any GRP&E/BCS Group Employee (as defined in the Employee Matters Agreement) or consultants of the GRP&E/BCS Group that are in effect as of the Effective Time;
(f) any contract or agreement that is otherwise expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements to be assigned to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group;
(g) any interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements related exclusively to the GRP&E/BCS Business or entered into by or on behalf of any division, business unit or member of the GRP&E/BCS Group, including those set forth on Schedule 1.8;
(h) any credit or other financing agreement entered into by GRP&E/BCS SpinCo and/or any member of the GRP&E/BCS Group in connection with the Separation;
(i) any other contract or agreement exclusively related to the GRP&E/BCS Business or GRP&E/BCS Assets; and
(j) any contracts, agreements or settlements listed on Schedule 1.9(b), including the right to recover any amounts under such contracts, agreements or settlements.
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“GRP&E/BCS Designees” shall mean any and all entities (including corporations, general or limited partnerships, trusts, joint ventures, unincorporated organizations, limited liability entities or other entities) designated by GRP&E/BCS SpinCo to be members of the GRP&E/BCS Group as of immediately prior to the Effective Time.
“GRP&E/BCS Environmental Liabilities” shall mean the Liabilities set forth on Schedule 1.10 and all Environmental Liabilities relating to, arising out of or resulting from the GRP&E/BCS Business or that are otherwise allocated to a member of the GRP&E/BCS Group pursuant to this Agreement.
“GRP&E/BCS Financing Arrangements” shall have the meaning set forth in Section 2.14(a).
“GRP&E/BCS Group” shall mean (a) prior to the Effective Time, GRP&E/BCS SpinCo and each Person that will be a Subsidiary of GRP&E/BCS SpinCo as of immediately after the Effective Time, including the Transferred Entities, even if, prior to the Effective Time, such Person is not a Subsidiary of GRP&E/BCS SpinCo; and (b) on and after the Effective Time, GRP&E/BCS SpinCo and each Person that is a Subsidiary of GRP&E/BCS SpinCo.
“GRP&E/BCS Indemnitees” shall have the meaning set forth in Section 4.3.
“GRP&E/BCS Intellectual Property” shall mean (a) the Arconic Name and Arconic Marks, (b) the Registrable IP set forth on Schedule 1.11, and (c) all Other IP owned by, primarily used or primarily held for use in the GRP&E/BCS Business, including any Other IP set forth on Schedule 1.11, but excluding Registrable IP and Other IP of Parent.
“GRP&E/BCS Know-How” shall mean all Know-How owned or licensed by either Party or any member of its Group primarily used or primarily held for use in the GRP&E/BCS Business as of the Effective Time.
“GRP&E/BCS Liabilities” shall have the meaning set forth in Section 2.3(a).
“GRP&E/BCS Permits” shall mean all Permits owned or licensed by either Party or any member of its Group exclusively used or exclusively held for use in the GRP&E/BCS Business as of the Effective Time.
“GRP&E/BCS Policies” shall mean those Insurance Policies in effect at any time prior to the Effective Time, where the first or primary named insured is or was a member of the GRP&E/BCS Group. A partial listing of such policies, not intended to be comprehensive and for illustration only, is set forth on Schedule 5(b).
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“GRP&E/BCS Shares” shall mean the shares of common stock, par value $0.01 per share, of GRP&E/BCS SpinCo.
“GRP&E/BCS Software” shall mean all Software owned or licensed by either Party or member of its Group primarily used or primarily held for use in the GRP&E/BCS Business as of the Effective Time, including Software set forth on Schedule 1.12, but excluding Software set forth on Schedule 1.4.
“GRP&E/BCS SpinCo” shall have the meaning set forth in the Preamble.
“GRP&E/BCS SpinCo Bylaws” shall mean the Amended and Restated Bylaws of GRP&E/BCS SpinCo, substantially in the form of Exhibit B.
“GRP&E/BCS SpinCo Certificate of Incorporation” shall mean the Amended and Restated Certificate of Incorporation of GRP&E/BCS SpinCo, substantially in the form of Exhibit A.
“Hazardous Materials” shall mean any chemical, material, substance, waste, pollutant, emission, discharge, release or contaminant that could result in Liability under, or that is prohibited, limited or regulated by any Governmental Authority or pursuant to any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) that could cause harm to human health or the environment, including petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances.
“Howmet Aerospace Business” shall mean (a) the multi-material, multi-process titanium and super alloy investment casting; aluminum semi-finished and finished aerospace and IGT structural and engine castings; fasteners; titanium mill products (cast, rolled, extruded, and forged); multi-material machining and forming; medical products; oil and gas finished products; rings; aluminum forgings; forged and cast aluminum wheels; powders, pigments and fused minerals; friction stir welding; alumina based electronic products; related businesses, operations, processes and activities; and any other businesses not included in the GRP&E/BCS Business, including the Engineered Products and Forgings Group (consisting of Arconic Engines, Arconic Fastening Systems, Arconic Engineered Systems, and Arconic Wheel & Transportation Products business units) of Parent, in each case as conducted at any time prior to the Effective Time by either Party or any current or former member of its Group and (b) any terminated, divested or discontinued businesses, operations and activities that, at the time of termination, divestiture or discontinuation, primarily related to the businesses, operations or activities described in clause (a) as then conducted, including those set forth on Schedule 1.2, excluding, in the case of each of clauses (a) and (b), the business, operations and activities primarily related to the GRP&E/BCS Assets.
“Indemnifying Party” shall have the meaning set forth in Section 4.4(a).
“Indemnitee” shall have the meaning set forth in Section 4.4(a).
“Indemnity Payment” shall have the meaning set forth in Section 4.4(a).
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“Information” shall mean information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, records, books, contracts, instruments, surveys, concepts, Know-How, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, or other removable media, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data; provided that “Information” shall not include Registrable IP.
“Information Statement” shall mean the information statement to be sent to the holders of Parent Shares in connection with the Distribution, as such information statement may be amended or supplemented from time to time prior to the Distribution.
“Initial Notice” shall have the meaning set forth in Section 7.1.
“Insurance Policies” shall mean insurance policies and insurance contracts of any kind, including primary, excess and umbrella policies, comprehensive general liability policies, directors and officers liability, fiduciary liability, automobile, aircraft, property and casualty, workers’ compensation, employers’ liability, employment practices liability, cyber liability, crime, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.
“Insurance Proceeds” shall mean those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof; provided, however, that with respect to a captive insurance arrangement, Insurance Proceeds shall only include amounts received by the captive insurer in respect of any reinsurance arrangement.
“Intellectual Property” shall mean all of the following whether arising under the Laws of the United States or of any foreign or multinational jurisdiction: (a) patents, patent applications (including patents issued thereon), utility models, industrial design registrations and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions, (b) trademarks, service marks, trade names, service names, trade dress, logos and other source or business identifiers, including all goodwill associated with any of the foregoing, and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing, (c) Internet domain names, accounts with Facebook, LinkedIn, Twitter and similar social media platforms, registrations and related rights, (d) copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions, (e) trade secrets, invention disclosures and Know-How, and (f) any other intellectual property rights, in each case other than Software.
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“Intellectual Property Agreements” shall mean (a) the Arconic Corporation to Howmet Aerospace Inc. Patent, Know-How, and Trade Secret License Agreement, (b) the Howmet Aerospace Inc. to Arconic Corporation Patent, Know-How, and Trade Secret License Agreement, (c) the Arconic Corporation to Howmet Aerospace Inc. Trademark License Agreement and (d) the Howmet Aerospace Inc. to Arconic Corporation Trademark License Agreement, in each case to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution, and the other transactions contemplated by this Agreement, as it may be amended from time to time.
“Kofem Site Services Agreement” shall mean the Kofem Site Services Agreement to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution, and the other transactions contemplated by this Agreement, as it may be amended from time to time.
“Know-How” shall mean all technology, designs, formulae, algorithms, procedures, methods, discoveries, processes, techniques, ideas, know-how, research and development, technical data, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship in any media, confidential, proprietary or nonpublic information, and other similar materials, and all recordings, graphs, drawings, reports, analyses and other writings, and other tangible embodiments of the foregoing in any form whether or not listed herein, in each case, other than Software.
“Law” shall mean any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any income tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.
“Leases” shall mean the Massena Lease, the Kofem Site Services Agreement, and the other land use, leasing or subleasing agreements to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, including the agreement in respect of the Pittsburgh offices.
“Liabilities” shall mean all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses (including attorneys’ fees) relating thereto.
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“Linked” shall have the meaning set forth in Section 2.9(a).
“Losses” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.
“Mediation Request” shall have the meaning set forth in Section 7.2.
“Metal Supply Agreements” shall mean the U.S. Master Agreement for Product Supply and the Hungary Metal Supply & Tolling Agreement, in each case to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, each as it may be amended from time to time.
“Non-Performing Party” shall have the meaning set forth in Section 4.11(a)(i).
“NYSE” shall mean the New York Stock Exchange.
“Other IP” shall mean all Intellectual Property, other than Registrable IP, that is owned by, licensed by or to, or sublicensed by or to either Party or any member of its Group as of the Effective Time.
“Parent” shall have the meaning set forth in the Preamble.
“Parent Accounts” shall have the meaning set forth in Section 2.9(a).
“Parent Assets” shall have the meaning set forth in Section 2.2(b).
“Parent Board” shall have the meaning set forth in the Recitals.
“Parent Environmental Liabilities” shall mean the Liabilities set forth on Schedule 1.3 and all Environmental Liabilities of any member of the Parent Group other than those relating to, arising out of or resulting from the GRP&E/BCS Business or that are otherwise allocated to a member of the GRP&E/BCS Group pursuant to this Agreement.
“Parent Group” shall mean Parent and each Person that is a Subsidiary of Parent (other than GRP&E/BCS SpinCo and any other member of the GRP&E/BCS Group).
“Parent Indemnitees” shall have the meaning set forth in Section 4.2.
“Parent Liabilities” shall have the meaning set forth in Section 2.3(b).
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“Parent Policies” shall mean those Insurance Policies in effect at any time prior to the Effective Time, where the first or primary named insured is or was a member of the Parent Group. A partial listing of such policies, not intended to be comprehensive and for illustration only, is set forth on Schedule 5(a).
“Parent Shares” shall mean the shares of common stock, par value $1.00 per share, of Parent.
“Parties” shall mean the parties to this Agreement.
“Performing Party” shall have the meaning set forth in Section 4.11(a)(i).
“Permits” shall mean permits, approvals, authorizations, consents, licenses or certificates issued by any Governmental Authority.
“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.
“Prime Rate” shall mean the rate that Bloomberg displays as “Prime Rate by Country United States” or “Prime Rate by Country US-BB Comp” at http://www.bloomberg.com/quote/PRIME:IND or on a Bloomberg terminal at PRIMBB Index.
“Privileged Information” shall mean any information, in written, oral, electronic or other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a Party or any member of its Group would be entitled to assert or have asserted a privilege, including the attorney-client and attorney work product privileges.
“Record Date” shall mean the close of business on the date to be determined by the Parent Board as the record date for determining holders of Parent Shares entitled to receive GRP&E/BCS Shares in the Distribution.
“Record Holders” shall mean the holders of record of Parent Shares as of the Record Date.
“Registrable IP” shall mean all patents, patent applications, statutory invention registrations, trademark applications, registered trademarks, registered service marks, registered Internet domain names and copyright registrations.
“Release” shall mean any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into the environment (including ambient air, surface water, groundwater and surface or subsurface strata).
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“Remediation Work” shall mean all actions required to (i) clean up, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment, (ii) prevent the Release of Hazardous Materials (including by way of vapor intrusion) so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (iii) perform pre-remedial studies and investigations and post-remedial monitoring and care or (iv) respond to requests of any Governmental Authority for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment.
“Representatives” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“Security Interest” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.
“Self-Insurance” shall mean deductibles, retrospective premiums, self-insured retentions or other forms of self-insurance, including related fees and expenses.
“Separation” shall have the meaning set forth in the Recitals.
“Separation Step Plan” shall have the meaning set forth in Section 2.1(a).
“Shared Contract” shall have the meaning set forth in Section 2.8(a).
“Shared Environmental Liabilities” shall mean the Liabilities set forth on Schedule 1.5 and any other Environmental Liabilities not known to the Parties prior to the Effective Time and arising out of both GRP&E/BCS Business operations and Howmet Aerospace Business operations.
“Specified Guarantee Coverage” shall have the meaning set forth in the Alcoa SDA.
“Software” shall mean any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, (d) screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and (e) documentation, including user manuals and other training documentation, relating to any of the foregoing.
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“Specified Ancillary Agreement” shall have the meaning set forth in Section 10.19(b).
“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities of such Person, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has voting power, either directly or indirectly, to elect a majority of the board of directors or similar governing body.
“Tangible Information” shall mean information that is contained in written, electronic or other tangible forms.
“Tax” shall have the meaning set forth in the Tax Matters Agreement.
“Tax Matters Agreement” shall mean the Tax Matters Agreement to be entered into by and between Parent and GRP&E/BCS SpinCo or members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as it may be amended from time to time.
“Tax Return” shall have the meaning set forth in the Tax Matters Agreement.
“Third Party” shall mean any Person other than the Parties and any members of their respective Groups.
“Third-Party Claim” shall have the meaning set forth in Section 4.5(a).
“Transfer Documents” shall have the meaning set forth in Section 2.1(b).
“Transferred Entities” shall mean the entities set forth on Schedule 1.6.
“Transition Committee” shall have the meaning set forth in Section 2.13.
“Transition Period” shall have the meaning set forth in Section 8.2.
“Unreleased Parent Liability” shall have the meaning set forth in Section 2.5(b)(ii).
“Unreleased GRP&E/BCS Liability” shall have the meaning set forth in Section 2.5(a)(ii).
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Article
II
THE SEPARATION
2.1 Transfer of Assets and Assumption of Liabilities.
(a) On or prior to the Effective Time, in accordance with the plan set forth on Schedule 2.1(a) (the “Separation Step Plan”), but subject to Section 2.4:
(i) Transfer and Assignment of GRP&E/BCS Assets. Parent shall, and shall cause the applicable members of its Group to, contribute, assign, transfer, convey or deliver to GRP&E/BCS SpinCo, or the applicable GRP&E/BCS Designees, or take such steps as may be necessary for GRP&E/BCS SpinCo or such GRP&E/BCS Designees to succeed to, and GRP&E/BCS SpinCo or such GRP&E/BCS Designees shall accept from Parent and the applicable members of the Parent Group, all of Parent’s and such Parent Group member’s respective direct or indirect right, title and interest in and to all of the GRP&E/BCS Assets (it being understood that if any GRP&E/BCS Asset shall be held by a Transferred Entity or a wholly owned Subsidiary of a Transferred Entity, such GRP&E/BCS Asset may be assigned, transferred, conveyed and delivered to GRP&E/BCS SpinCo as a result of the transfer of all of the equity interests in such Transferred Entity from Parent or the applicable members of the Parent Group to GRP&E/BCS SpinCo or the applicable GRP&E/BCS Designee);
(ii) Acceptance and Assumption of GRP&E/BCS Liabilities. GRP&E/BCS SpinCo and the applicable GRP&E/BCS Designees shall accept, assume, agree faithfully to perform, discharge and fulfill, or succeed to, all the GRP&E/BCS Liabilities in accordance with their respective terms. GRP&E/BCS SpinCo and such GRP&E/BCS Designees shall be responsible for all GRP&E/BCS Liabilities, regardless of when or where such GRP&E/BCS Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such GRP&E/BCS Liabilities are asserted or determined (including any GRP&E/BCS Liabilities arising out of claims made by Parent’s or GRP&E/BCS SpinCo’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the GRP&E/BCS Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the GRP&E/BCS Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates;
(iii) Transfer and Assignment of Parent Assets. Parent and GRP&E/BCS SpinCo shall cause GRP&E/BCS SpinCo and the GRP&E/BCS Designees to contribute, assign, transfer, convey or deliver to Parent or certain members of the Parent Group designated by Parent, or take such steps as may be necessary for Parent or such members of the Parent Group to succeed to, and Parent or such other members of the Parent Group shall accept from GRP&E/BCS SpinCo and the GRP&E/BCS Designees, all of GRP&E/BCS SpinCo’s and such GRP&E/BCS Designees’ respective direct or indirect right, title and interest in and to all Parent Assets held by GRP&E/BCS SpinCo or a GRP&E/BCS Designee; and
(iv) Acceptance and Assumption of Parent Liabilities. Parent and certain members of the Parent Group designated by Parent shall accept and assume, agree faithfully to perform, discharge and fulfill, or succeed to, all of the Parent Liabilities held by GRP&E/BCS SpinCo or any GRP&E/BCS Designee and Parent and the applicable members of the Parent Group shall be responsible for all Parent Liabilities in accordance with their respective terms, regardless of when or where such Parent Liabilities arose or arise, whether the facts on which they are based occurred prior to or subsequent to the Effective Time, where or against whom such Parent Liabilities are asserted or determined (including any such Parent Liabilities arising out of claims made by Parent’s or GRP&E/BCS SpinCo’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the GRP&E/BCS Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the GRP&E/BCS Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates.
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(b) Transfer Documents. In furtherance of the contribution, assignment, transfer, conveyance and delivery of and succession to the Assets and the acceptance and assumption of, performance, discharge and fulfillment of and succession to the Liabilities in accordance with Section 2.1(a), each Party shall execute and deliver, and shall cause the applicable members of its Group to execute and deliver, to the other Party, (i) such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contracts and other instruments of contribution, transfer, conveyance, assignment, delivery and succession as and to the extent necessary to evidence the contribution, transfer, conveyance, assignment, delivery and succession of all of such Party’s and the applicable members of its Group’s right, title and interest in and to such Assets to the other Party and the applicable members of its Group in accordance with Section 2.1(a) and (ii) such assumptions of contracts and other instruments of acceptance and assumption, performance, discharge and fulfillment and succession as and to the extent necessary to evidence the valid and effective assumption of the Liabilities by such Party and the applicable members of its Group in accordance with Section 2.1(a). All of the foregoing documents contemplated by this Section 2.1(b) shall be referred to collectively herein as the “Transfer Documents.”
(c) Misallocations. In the event that at any time or from time to time (whether prior to, at or after the Effective Time), one Party (or any member of such Party’s Group) shall receive or otherwise possess any Asset that is allocated to the other Party (or any member of such other Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such Party shall promptly transfer, or cause to be transferred, such Asset to the Party (or to any member of such Party’s Group) so entitled thereto, and such Party (or member of such Party’s Group) shall accept such Asset. Prior to any such transfer, the Person receiving or possessing such Asset shall hold such Asset in trust for such other Person. In the event that at any time or from time to time (whether prior to, at or after the Effective Time), one Party hereto (or any member of such Party’s Group) shall receive or otherwise assume any Liability that is allocated to the other Party (or any member of such Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such Party shall promptly transfer, or cause to be transferred, such Liability to the Party responsible therefor (or to any member of such Party’s Group), and such Party (or member of such Party’s Group) shall accept, assume and agree to faithfully perform such Liability.
(d) Waiver of Bulk-Sale and Bulk-Transfer Laws. GRP&E/BCS SpinCo hereby waives compliance by each and every member of the Parent Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the GRP&E/BCS Assets to any member of the GRP&E/BCS Group. Parent hereby waives compliance by each and every member of the GRP&E/BCS Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Parent Assets to any member of the Parent Group.
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2.2 GRP&E/BCS Assets; Parent Assets.
(a) GRP&E/BCS Assets. For purposes of this Agreement, “GRP&E/BCS Assets” shall mean:
(i) all issued and outstanding capital stock or other equity interests of the Transferred Entities that are owned by either Party or any members of its Group as of the Effective Time;
(ii) all Assets of either Party or any members of its Group included or reflected as assets of the GRP&E/BCS Group on the GRP&E/BCS Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the GRP&E/BCS Balance Sheet; provided that the amounts set forth on the GRP&E/BCS Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of GRP&E/BCS Assets pursuant to this clause (ii);
(iii) all Assets of either Party or any of the members of its Group as of the Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets of GRP&E/BCS SpinCo or members of the GRP&E/BCS Group on a pro forma combined balance sheet of the GRP&E/BCS Group or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Assets included on the GRP&E/BCS Balance Sheet), it being understood that (A) the GRP&E/BCS Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of GRP&E/BCS Assets pursuant to this clause (iii); and (B) the amounts set forth on the GRP&E/BCS Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of GRP&E/BCS Assets pursuant to this clause (iii);
(iv) all Assets of either Party or any of the members of its Group as of the Effective Time that are expressly provided by this Agreement or any Ancillary Agreement as Assets to be transferred to GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group;
(v) all GRP&E/BCS Contracts as of the Effective Time and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;
(vi) all GRP&E/BCS Intellectual Property, GRP&E/BCS Software and GRP&E/BCS Know-How as of the Effective Time and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time, and any license of Intellectual Property of Parent or any member of the Parent Group to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group pursuant to the terms of the Intellectual Property Agreements;
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(vii) all GRP&E/BCS Permits as of the Effective Time and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;
(viii) all Assets of either Party or any of the members of its Group as of the Effective Time that are exclusively related to, or otherwise necessary for the operation of, the GRP&E/BCS Business;
(ix) all rights, interests and claims of either Party or any of the members of its Group as of the Effective Time with respect to Information that is exclusively related to the GRP&E/BCS Assets, the GRP&E/BCS Liabilities, the GRP&E/BCS Business or the Transferred Entities and, subject to the provisions of the applicable Ancillary Agreements, a non-exclusive right to all Information that is related to, but not exclusively related to, the GRP&E/BCS Assets, the GRP&E/BCS Liabilities, the GRP&E/BCS Business or the Transferred Entities; and
(x) any and all Assets set forth on Schedule 2.2(a)(x).
Notwithstanding the foregoing, the GRP&E/BCS Assets shall not in any event include any Asset referred to in clauses (i) through (v) of Section 2.2(b).
(b) Parent Assets. For the purposes of this Agreement, “Parent Assets” shall mean all Assets of either Party or the members of its Group as of the Effective Time, other than the GRP&E/BCS Assets, it being understood that the Parent Assets shall include:
(i) all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by Parent or any other member of the Parent Group;
(ii) all contracts and agreements of either Party or any of the members of its Group as of the Effective Time, other than the GRP&E/BCS Contracts;
(iii) all Intellectual Property, Software and Know-How of either Party or any of the members of its Group as of the Effective Time (for the avoidance of doubt, including any license of Intellectual Property of GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group to Parent or any member of the Parent Group pursuant to the terms of the Intellectual Property Agreements), other than (A) the GRP&E/BCS Intellectual Property and (B) any license of Intellectual Property of Parent or any member of the Parent Group to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group pursuant to the terms of the Intellectual Property Agreements, including the Parent Intellectual Property set forth on Schedule 2.2(b)(iii); and
(iv) all Permits of either Party or any of the members of its Group as of the Effective Time, other than the GRP&E/BCS Permits.
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2.3 GRP&E/BCS Liabilities; Parent Liabilities.
(a) GRP&E/BCS Liabilities. For the purposes of this Agreement, “GRP&E/BCS Liabilities” shall mean the following Liabilities of either Party or any of the members of its Group:
(i) all Liabilities included or reflected as liabilities or obligations of GRP&E/BCS SpinCo or the members of the GRP&E/BCS Group on the GRP&E/BCS Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the GRP&E/BCS Balance Sheet; provided that the amounts set forth on the GRP&E/BCS Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of GRP&E/BCS Liabilities pursuant to this clause (i);
(ii) all Liabilities as of the Effective Time that are of a nature or type that would have resulted in such Liabilities being included or reflected as liabilities or obligations of GRP&E/BCS SpinCo or the members of the GRP&E/BCS Group on a pro forma combined balance sheet of the GRP&E/BCS Group or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Liabilities included on the GRP&E/BCS Balance Sheet), it being understood that (A) the GRP&E/BCS Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of GRP&E/BCS Liabilities pursuant to this clause (ii); and (B) the amounts set forth on the GRP&E/BCS Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of GRP&E/BCS Liabilities pursuant to this clause (ii);
(iii) all Liabilities relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent that such Liabilities relate to, arise out of or result from the GRP&E/BCS Business or a GRP&E/BCS Asset;
(iv) any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group, and all agreements, obligations and Liabilities of any member of the GRP&E/BCS Group under this Agreement or any of the Ancillary Agreements;
(v) all Liabilities to the extent relating to, arising out of or resulting from the GRP&E/BCS Contracts, the GRP&E/BCS Intellectual Property, the GRP&E/BCS Software, the GRP&E/BCS Know-How or the GRP&E/BCS Permits;
(vi) notwithstanding anything to the contrary in Section 2.3(b), the applicable portion of any and all Liabilities set forth on Schedule 2.3(a)(vi);
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(vii) notwithstanding anything to the contrary in Section 2.3(b), (A) all GRP&E/BCS Environmental Liabilities, (B) the applicable portion of all Shared Environmental Liabilities set forth on Schedule 1.5, and (C) with respect to all Environmental Liabilities other than the Environmental Liabilities addressed in the foregoing clauses (A) or (B), Section 2.3(a)(vi), Section 2.3(b)(ii) or Section 2.3(b)(iii), the applicable portion of such Environmental Liabilities which shall be allocated equitably to GRP&E/BCS SpinCo based on consideration of the following factors:
(A) whether, but for the Environmental Liability for which one of the Parties is solely responsible, an Environmental Liability or Remediation Work obligation would have arisen for the other Party;
(B) the relative quantity, toxicity and area affected by the Hazardous Materials for which the respective Parties are responsible;
(C) the degree to which the regulated substance for which a Party is responsible affects the selection of the Remediation Work, the cost of the Remediation Work, and the period of time over which the Remediation Work must be implemented; and
(D) other relevant considerations relating to each Party’s role or obligations with respect to the applicable Environmental Liability;
(viii) notwithstanding anything to the contrary in Section 2.3(b), any and all Liabilities set forth on Schedule 2.3(a)(viii); and
(ix) all Liabilities arising out of claims made by Parent’s or GRP&E/BCS SpinCo’s respective directors, officers, shareholders, employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the GRP&E/BCS Group to the extent relating to, arising out of or resulting from the GRP&E/BCS Business or the GRP&E/BCS Assets or the other business, operations, activities or Liabilities referred to in clauses (i) through (viii) of this Section 2.3(a);
provided that, notwithstanding the foregoing, the Parties agree that the Liabilities set forth on Schedule 2.3(b)(i) or Schedule 1.3, the applicable portion of all Liabilities set forth on Schedule 2.3(a)(vi) or Schedule 1.5 and any Liabilities of any member of the Parent Group pursuant to the Ancillary Agreements shall not be GRP&E/BCS Liabilities but instead shall be Parent Liabilities.
(b) Parent Liabilities. For the purposes of this Agreement, “Parent Liabilities” shall mean (i) all Liabilities relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time) of any member of the Parent Group and, prior to the Effective Time, any member of the GRP&E/BCS Group, in each case that are not GRP&E/BCS Liabilities, including:
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(i) any and all Liabilities set forth on Schedule 2.3(b)(i);
(ii) notwithstanding anything to the contrary in Section 2.3(a), the applicable portion of any and all Liabilities set forth on Schedule 2.3(a)(vi);
(iii) notwithstanding anything to the contrary in Section 2.3(a), (A) all Parent Environmental Liabilities, (B) the applicable portion of all Shared Environmental Liabilities set forth on Schedule 1.5, and (C) with respect to all Environmental Liabilities other than the Environmental Liabilities addressed in the foregoing clauses (A) or (B), Section 2.3(a)(vi), Section 2.3(a)(vii) or Section 2.3(b)(ii), the applicable portion of such Environmental Liabilities which shall be allocated equitably to Parent based on consideration of the factors specified in Section 2.3(a)(vii); and
(iv) all Liabilities arising out of claims made against any member of the Parent Group or the GRP&E/BCS Group to the extent relating to, arising out of or resulting from the Howmet Aerospace Business or the Parent Assets.
2.4 Approvals and Notifications.
(a) Approvals and Notifications for GRP&E/BCS Assets. To the extent that the contribution, assignment, transfer, conveyance or delivery of or succession to any GRP&E/BCS Asset, or the acceptance or assumption of, performance, discharge and fulfillment of, or succession to any GRP&E/BCS Liability, in each case under Section 2.1, is determined to be a transfer or assignment that requires any Approvals or Notifications, or to the extent that the Separation or the Distribution requires any Approvals or Notifications, the Parties shall use commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided, however, that, except to the extent expressly provided in this Agreement or any of the Ancillary Agreements or as otherwise agreed between Parent and GRP&E/BCS SpinCo, neither Parent nor GRP&E/BCS SpinCo shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.
(b) Delayed GRP&E/BCS SpinCo Transfers. If and to the extent that the valid, complete and perfected contribution, assignment, transfer, conveyance or delivery to or succession of the GRP&E/BCS Group of any GRP&E/BCS Asset or acceptance or assumption by, performance, discharge and fulfillment by, or succession by the GRP&E/BCS Group of any GRP&E/BCS Liability would be a violation of applicable Law or is determined to be a transfer or assignment that requires any Approvals or Notifications in connection with the Separation or the Distribution that have not been obtained or made by the Effective Time then, unless the Parties mutually determine otherwise, the contribution, assignment, transfer, conveyance or delivery to or succession of the GRP&E/BCS Group of such GRP&E/BCS Assets or the acceptance or assumption by, performance, discharge and fulfillment of, or succession by the GRP&E/BCS Group of such GRP&E/BCS Liabilities, as the case may be, shall be automatically deemed deferred and any of the foregoing shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such GRP&E/BCS Assets or GRP&E/BCS Liabilities shall continue to constitute GRP&E/BCS Assets and GRP&E/BCS Liabilities for all other purposes of this Agreement.
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(c) Treatment of Delayed GRP&E/BCS Assets and Delayed GRP&E/BCS Liabilities. (i) If any contribution, assignment, transfer, conveyance or delivery of or succession to any GRP&E/BCS Asset or any acceptance or assumption of, performance, discharge and fulfillment of, or succession to any GRP&E/BCS Liability intended to be contributed, assigned, transferred, conveyed, delivered, succeeded to, accepted, assumed, or performed, discharged or fulfilled hereunder, as the case may be, is not consummated on or prior to the Effective Time, whether as a result of the provisions of Section 2.4(b) or for any other reason, and (ii) with respect to the agreements set forth on Schedule 2.4(c)(ii), which such agreements and capital stock or other equity interests shall not be contributed, assigned, transferred, conveyed, delivered, succeeded to, accepted, assumed, or performed, discharged or fulfilled pursuant to Section 2.1(a) (notwithstanding anything therein to the contrary) (any such GRP&E/BCS Asset, a “Delayed GRP&E/BCS Asset” and any such GRP&E/BCS Liability, a “Delayed GRP&E/BCS Liability”), then, insofar as reasonably possible and subject to applicable Law, the member of the Parent Group retaining such Delayed GRP&E/BCS Asset or such Delayed GRP&E/BCS Liability, as the case may be, shall thereafter hold such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability, as the case may be, for the use and benefit of the member of the GRP&E/BCS Group entitled thereto (at the expense of the member of the GRP&E/BCS Group entitled thereto) and such member of the GRP&E/BCS Group shall be afforded all the benefits and burdens of such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability, as applicable. In addition, the member of the Parent Group retaining such Delayed GRP&E/BCS Asset or such Delayed GRP&E/BCS Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the member of the GRP&E/BCS Group to whom such Delayed GRP&E/BCS Asset is to be contributed, assigned, transferred, conveyed or succeeded to, or which is to accept or assume, perform, discharge and fulfill or succeed to, such Delayed GRP&E/BCS Liability, as the case may be, in order to place such member of the GRP&E/BCS Group in a substantially similar position as if such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability had been contributed, assigned, transferred, conveyed, succeeded to, accepted, assumed or performed, discharged or fulfilled as contemplated hereby and so that all the benefits and burdens relating to such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Effective Time to the GRP&E/BCS Group.
(d) Transfer of Delayed GRP&E/BCS Assets and Delayed GRP&E/BCS Liabilities. If and when the Approvals or Notifications, the absence of which caused the deferral of contribution, assignment, transfer, conveyance or delivery of or succession to any Delayed GRP&E/BCS Asset or the deferral of acceptance or assumption of, performance, discharge and fulfillment of or succession to any Delayed GRP&E/BCS Liability pursuant to Section 2.4(b), are obtained or made, and, if and when any other legal impediments for the transfer or assignment of any Delayed GRP&E/BCS Asset or the assumption of any Delayed GRP&E/BCS Liability have been removed, the contribution, assignment, transfer, conveyance or delivery of or succession to the applicable Delayed GRP&E/BCS Asset or the acceptance and assumption of, performance, discharge and fulfillment of or succession to the applicable Delayed GRP&E/BCS Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.
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(e) Costs for Delayed GRP&E/BCS Assets and Delayed GRP&E/BCS Liabilities. Any member of the Parent Group retaining a Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability due to the deferral of the contribution, assignment, transfer, conveyance or delivery of or succession to such Delayed GRP&E/BCS Asset or the deferral of the acceptance or assumption of, performance, discharge and fulfillment of or succession to such Delayed GRP&E/BCS Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by GRP&E/BCS SpinCo or the member of the GRP&E/BCS Group entitled to the Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by GRP&E/BCS SpinCo or the member of the GRP&E/BCS Group entitled to such Delayed GRP&E/BCS Asset or Delayed GRP&E/BCS Liability.
(f) Approvals and Notifications for Parent Assets. To the extent that the contribution, assignment, transfer, conveyance or delivery of or succession to any Parent Asset or the acceptance or assumption of, performance, discharge and fulfillment, or succession to any Parent Liability, in each case under Section 2.1, is determined to be a transfer or assignment that requires any Approvals or Notifications, the Parties shall use commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided, however, that, except to the extent expressly provided in this Agreement or any of the Ancillary Agreements or as otherwise agreed between Parent and GRP&E/BCS SpinCo, neither Parent nor GRP&E/BCS SpinCo shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.
(g) Delayed Parent Transfers. If and to the extent that the valid, complete and perfected contribution, assignment, transfer, conveyance or delivery to or succession of the Parent Group of any Parent Asset or acceptance or assumption by, performance, discharge and fulfillment by, or succession by the Parent Group of any Parent Liability would be a violation of applicable Law or is determined to be a transfer or assignment that requires any Approval or Notification that has not been obtained or made by the Effective Time then, unless the Parties mutually determine otherwise, the contribution, assignment, transfer, conveyance or delivery to or succession of the Parent Group of such Parent Assets or the acceptance or assumption by, performance, discharge and fulfillment of or, or succession by the Parent Group of such Parent Liability, as the case may be, shall be automatically deemed deferred and any of the foregoing shall be null and void until such time as all legal impediments are removed or such Approval or Notification has been obtained or made. Notwithstanding the foregoing, any such Parent Assets or Parent Liabilities shall continue to constitute Parent Assets and Parent Liabilities for all other purposes of this Agreement.
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(h) Treatment of Delayed Parent Assets and Delayed Parent Liabilities. If any contribution, assignment, transfer, conveyance or delivery of or succession to any Parent Asset or any acceptance or assumption of, performance, discharge and fulfillment of, or succession to any Parent Liability intended to be contributed, assigned, transferred, conveyed, delivered, succeeded to, accepted, assumed, or performed, discharged or fulfilled hereunder, as the case may be, is not consummated on or prior to the Effective Time whether as a result of the provisions of Section 2.4(g) or for any other reason (any such Parent Asset, a “Delayed Parent Asset” and any such Parent Liability, a “Delayed Parent Liability”), then, subject to applicable Law, the member of the GRP&E/BCS Group retaining such Delayed Parent Asset or such Delayed Parent Liability, as the case may be, shall thereafter hold such Delayed Parent Asset or Delayed Parent Liability, as the case may be, for the use and benefit of the member of the Parent Group entitled thereto (with associated costs being for the account of the member of the Parent Group entitled thereto) and such member of the Parent Group shall be afforded all the benefits and burdens of such Delayed Parent Asset or Delayed Parent Liability, as applicable. In addition, the member of the GRP&E/BCS Group retaining such Delayed Parent Asset or such Delayed Parent Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed Parent Asset or Delayed Parent Liability in the ordinary course of business in accordance with past practice. Such member of the GRP&E/BCS Group shall also take such other actions as may be reasonably requested by the member of the Parent Group to which such Delayed Parent Asset is to be contributed, assigned, transferred, conveyed or succeeded to, or which is to accept or assume, perform, discharge and fulfill or succeed to, such Delayed Parent Liability, as the case may be, in order to place such member of the Parent Group in a substantially similar position as if such Delayed Parent Asset or Delayed Parent Liability had been contributed, assigned, transferred, conveyed, succeeded to, accepted, assumed or performed, discharged or fulfilled as contemplated hereby and so that all the benefits and burdens relating to such Delayed Parent Asset or Delayed Parent Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Effective Time to the Parent Group.
(i) Transfer of Delayed Parent Assets and Delayed Parent Liabilities. With respect to the agreements set forth therein, if and when the Approvals or Notifications, the absence of which caused the deferral of contribution, assignment, transfer, conveyance or delivery of or succession to any Delayed Parent Asset or the deferral of acceptance or assumption of, performance, discharge and fulfillment of or succession to any Delayed Parent Liability, are obtained or made, and, if and when any other legal impediments for the contribution, assignment, transfer, conveyance or delivery of or succession to any Delayed Parent Asset or the acceptance and assumption of, performance, discharge and fulfillment of or succession to any Delayed Parent Liability have been removed, the transfer or assignment of the applicable Delayed Parent Asset or the assumption of the applicable Delayed Parent Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.
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(j) Costs for Delayed Parent Assets and Delayed Parent Liabilities. Any member of the GRP&E/BCS Group retaining a Delayed Parent Asset or Delayed Parent Liability due to the deferral of the contribution, assignment, transfer, conveyance or delivery of or succession to such Delayed Parent Asset or the deferral of the acceptance or assumption of, performance, discharge and fulfillment of or succession to such Delayed Parent Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by Parent or the member of the Parent Group entitled to the Delayed Parent Asset or Delayed Parent Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by Parent or the member of the Parent Group entitled to such Delayed Parent Asset or Delayed Parent Liability.
2.5 Novation of Liabilities.
(a) Novation of GRP&E/BCS Liabilities.
(i) Except for the GRP&E/BCS Liabilities set forth in Schedule 2.5(a), each of Parent and GRP&E/BCS SpinCo, at the request of the other, shall use commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all GRP&E/BCS Liabilities and obtain in writing the unconditional release of each member of the Parent Group that is a party to any such arrangements, so that, in any such case, the members of the GRP&E/BCS Group shall be solely responsible for such GRP&E/BCS Liabilities; provided, however, that, except as otherwise expressly provided in this Agreement (including Section 2.6) or any of the Ancillary Agreements, neither Parent nor GRP&E/BCS SpinCo shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Third Party from whom any such consent, substitution, approval, amendment or release is requested.
(ii) If Parent or GRP&E/BCS SpinCo is unable to obtain, or to cause to be obtained, any consent, substitution, approval, amendment or release referred to in clause (i) of this Section 2.5(a) and the applicable member of the Parent Group continues to be bound by such GRP&E/BCS Liability (each, including, for the avoidance of doubt, each GRP&E/BCS Liability set forth in Schedule 2.5(a), an “Unreleased GRP&E/BCS Liability”), GRP&E/BCS SpinCo shall, to the extent not prohibited by Law, as indemnitor, guarantor, agent or subcontractor for such member of the Parent Group, as the case may be, (A) pay, perform and discharge fully all the obligations or other Liabilities of such member of the Parent Group that constitute Unreleased GRP&E/BCS Liabilities from and after the Effective Time and (B) use commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the Parent Group. Except for the GRP&E/BCS Liabilities set forth in Schedule 2.5(a), if and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased GRP&E/BCS Liabilities shall otherwise become assignable or able to be novated, Parent shall promptly assign, or cause to be assigned, and GRP&E/BCS SpinCo or the applicable GRP&E/BCS Group member shall assume, such Unreleased GRP&E/BCS Liabilities without exchange of further consideration.
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(b) Novation of Parent Liabilities.
(i) Each of Parent and GRP&E/BCS SpinCo, at the request of the other, shall use commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all Parent Liabilities and obtain in writing the unconditional release of each member of the GRP&E/BCS Group that is a party to any such arrangements, so that, in any such case, the members of the Parent Group shall be solely responsible for such Parent Liabilities; provided, however, that, except as otherwise expressly provided in this Agreement (including Section 2.6) or any of the Ancillary Agreements, neither Parent nor GRP&E/BCS SpinCo shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Third Party from whom any such consent, substitution, approval, amendment or release is requested.
(ii) If Parent or GRP&E/BCS SpinCo is unable to obtain, or to cause to be obtained, any consent, substitution, approval, amendment or release referred to in clause (i) of this Section 2.5(b) and the applicable member of the GRP&E/BCS Group continues to be bound by such Parent Liability (each, an “Unreleased Parent Liability”), Parent shall, to the extent not prohibited by Law, as indemnitor, guarantor, agent or subcontractor for such member of the GRP&E/BCS Group, as the case may be, (A) pay, perform and discharge fully all the obligations or other Liabilities of such member of the GRP&E/BCS Group that constitute Unreleased Parent Liabilities from and after the Effective Time and (B) use commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the GRP&E/BCS Group. If and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased Parent Liabilities shall otherwise become assignable or able to be novated, GRP&E/BCS SpinCo shall promptly assign, or cause to be assigned, and Parent or the applicable Parent Group member shall assume, such Unreleased Parent Liabilities without exchange of further consideration.
2.6 Release of Guarantees. In furtherance of, and not in limitation of, the obligations set forth in Section 2.5:
(a) On or prior to the Effective Time or as soon as practicable thereafter, each of Parent and GRP&E/BCS SpinCo shall, at the request of the other Party and with the reasonable cooperation of such other Party and the applicable member(s) of such other Party’s Group, use commercially reasonable efforts to (i) have any member(s) of the Parent Group removed as guarantor of or obligor for any GRP&E/BCS Liability to the extent that it relates to GRP&E/BCS Liabilities, including the removal of any Security Interest on or in any Parent Asset that may serve as collateral or security for any such GRP&E/BCS Liability; and (ii) have any member(s) of the GRP&E/BCS Group removed as guarantor of or obligor for any Parent Liability to the extent that it relates to Parent Liabilities, including the removal of any Security Interest on or in any GRP&E/BCS Asset that may serve as collateral or security for any such Parent Liability.
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(b) To the extent required to obtain a release from a guarantee or other credit support provided by or on behalf of:
(i) any member of the Parent Group, GRP&E/BCS SpinCo shall promptly (A) other than in the case of a guarantee by a member of the Parent Group, provide or cause to be provided a replacement letter of credit, bank guarantee or other credit support of the type provided by or on behalf of the Parent Group on substantially the same terms as that provided by or on behalf of any member of the Parent Group, to the extent (x) in the case of a letter of credit, GRP&E/BCS SpinCo has reasonably available capacity under its revolving credit facility to obtain such letter of credit and (y) such arrangement would not violate or breach the terms of any contract or other agreement to which GRP&E/BCS SpinCo or any of its subsidiaries is a party, or (B) in the case of a guarantee by a member of the Parent Group, execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which such agreement shall include the removal of any Security Interest on or in any Parent Asset that may serve as collateral or security for any such Parent Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which GRP&E/BCS SpinCo would be reasonably unable to comply or (B) which GRP&E/BCS SpinCo would not reasonably be able to avoid breaching; and
(ii) any member of the GRP&E/BCS Group, Parent shall promptly (A) other than in the case of a guarantee by a member of the GRP&E/BCS Group, provide or cause to be provided a replacement letter of credit, bank guarantee or other credit support of the type provided by or on behalf of the GRP&E/BCS Group on substantially the same terms as that provided by or on behalf of any member of the GRP&E/BCS Group, to the extent (x) in the case of a letter of credit, Parent has reasonably available capacity under its revolving credit facility to obtain such letter of credit and (y) such arrangement would not violate or breach the terms of any contract or other agreement to which Parent or any of its subsidiaries is a party, or (B) in the case of a guarantee by a member of the GRP&E/BCS Group, execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which such agreement shall include the removal of any Security Interest on or in any GRP&E/BCS Asset that may serve as collateral or security for any such GRP&E/BCS Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (A) with which Parent would be reasonably unable to comply or (B) which Parent would not reasonably be able to avoid breaching.
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(c) If Parent or GRP&E/BCS SpinCo is unable to obtain, or to cause to be obtained, any such removal or release referred to in Section 2.6(a) or (b), (i) the Party or the relevant member of its Group that has assumed the Liability with respect to such guarantee shall indemnify, defend and hold harmless the guarantor or obligor against or from any Liability arising from or relating thereto in accordance with the provisions of Article IV and shall, as agent or subcontractor for such guarantor or obligor, pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder; and (ii) each of Parent and GRP&E/BCS SpinCo, on behalf of itself and the other members of their respective Group, agrees not to renew or extend the term of, increase any obligations under, or transfer to a Third Party, any loan, guarantee, lease, contract or other obligation for which the other Party or a member of such other Party’s Group is or may be liable unless all obligations of such other Party and the members of such other Party’s Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to such other Party.
(d) Each of Parent and GRP&E/BCS SpinCo shall keep the other Party reasonably informed regarding the matters that are the subject of this Section 2.6, including with respect to any material discussions and negotiations relating to the novation of Liabilities and releases of guarantees and other credit support obligations and the status and terms thereof, as well as any proposed or contemplated amendments, terminations, waivers or modifications that would be reasonably likely to adversely affect such other Party.
(e) Notwithstanding anything to the contrary in Section 2.6(a) through Section 2.6(d), with respect to the guarantees and contracts set forth on Schedule 2.6(e), Parent or the applicable member of the Parent Group shall remain the guarantor or obligor thereunder and GRP&E/BCS SpinCo shall indemnify, defend and hold harmless Parent or the applicable member of the Parent Group against or from fifty percent (50%) of (i) any Liability arising from or relating thereto in accordance with the provisions of Article IV (it being agreed that (A) notwithstanding anything to the contrary herein, as between GRP&E/BCS SpinCo (or any member of its Group) and Parent (or any member of its Group), Parent (or the applicable member of its Group) shall control any Action with any Third Party (including Alcoa Corporation and its Affiliates) relating thereto and (B) any such indemnification will be net of any recovery of the Parent Group pursuant to any applicable Specified Guarantee Coverage) and (ii) any amounts paid by Parent or any member of the Parent Group to purchase Specified Guarantee Coverage for which Alcoa Corporation has failed to pay or reimburse (or has threatened to fail to pay or reimburse) Parent or the applicable member of the Parent Group in accordance with the provisions of Article IV, provided that to the extent any such amount is subsequently reimbursed by Alcoa Corporation or its Affiliates to Parent or any member of the Parent Group, or to GRP&E/BCS SpinCo or any member of the GRP&E/BCS SpinCo Group, such Party or member of its Group shall pay over to the other Party or a member of its Group fifty percent (50%) of the amount so reimbursed.
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2.7 Termination of Agreements.
(a) Except as set forth in Section 2.7(b), in furtherance of the releases and other provisions of Section 4.1, GRP&E/BCS SpinCo and each member of the GRP&E/BCS Group, on the one hand, and Parent and each member of the Parent Group, on the other hand, hereby terminate any and all agreements, arrangements, commitments or understandings, whether or not in writing, between or among GRP&E/BCS SpinCo and/or any member of the GRP&E/BCS Group, on the one hand, and Parent and/or any member of the Parent Group, on the other hand, effective as of the Effective Time. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time. Each Party shall, at the reasonable request of the other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.7(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the Parties or any of the members of their respective Groups or to be continued from and after the Effective Time); (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.7(b)(ii); (iii) any agreements, arrangements, commitments or understandings to which any Third Party is a party; (iv) any intercompany accounts payable or accounts receivable accrued as of the Effective Time that are reflected in the books and records of the Parties or otherwise documented in writing in accordance with past practices, which shall be settled in the manner contemplated by Section 2.7(c); (v) any agreements, arrangements, commitments or understandings to which any non-wholly owned Subsidiary of Parent or GRP&E/BCS SpinCo, as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests shall be disregarded for purposes of determining whether a Subsidiary is wholly owned); and (vi) any Shared Contracts.
(c) All of the intercompany accounts receivable and accounts payable between any member of the Parent Group, on the one hand, and any member of the GRP&E/BCS Group, on the other hand, outstanding as of the Effective Time shall, as promptly as practicable after the Effective Time, be repaid, settled or otherwise eliminated by means of cash payments, a dividend, capital contribution, a combination of the foregoing, or otherwise as determined by Parent in its sole and absolute discretion.
2.8 Treatment of Shared Contracts.
(a) Subject to applicable Law and without limiting the generality of the obligations set forth in Section 2.1, unless the Parties otherwise agree or the benefits of any contract, agreement, arrangement, commitment or understanding described in this Section 2.8 are expressly conveyed to the applicable Party pursuant to this Agreement or an Ancillary Agreement, any contract or agreement, a portion of which is a GRP&E/BCS Contract, but the remainder of which is a Parent Asset (any such contract or agreement, a “Shared Contract”), shall be assigned in relevant part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to, on or after the Effective Time, so that each Party or the member of its Group shall, as of the Effective Time, be entitled to the rights and benefits, and shall assume the related portion of any Liabilities, inuring to its respective businesses; provided, however, that (i) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a portion of any Shared Contract which is not assignable (or cannot be amended) by its terms (including any terms imposing consents or conditions on an assignment where such consents or conditions have not been obtained or fulfilled) and (ii) if any Shared Contract cannot be so partially assigned by its terms or otherwise, or cannot be amended or if such assignment or amendment would impair the benefit the parties thereto derive from such Shared Contract, then the Parties shall, and shall cause each of the members of their respective Groups to, take such other reasonable and permissible actions (including by providing prompt notice to the other Party with respect to any relevant claim of Liability or other relevant matters arising in connection with a Shared Contract so as to allow such other Party the ability to exercise any applicable rights under such Shared Contract) to cause a member of the GRP&E/BCS Group or the Parent Group, as the case may be, to receive the rights and benefits of that portion of each Shared Contract that relates to the GRP&E/BCS Business or the Howmet Aerospace Business, as the case may be (in each case, to the extent so related), as if such Shared Contract had been assigned to a member of the applicable Group pursuant to this Section 2.8 (or appropriately amended), and to bear the burden of the corresponding Liabilities (including any Liabilities that may arise by reason of such arrangement), as if such Liabilities had been assumed by a member of the applicable Group pursuant to this Section 2.8 (or appropriately amended).
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(b) Each of Parent and GRP&E/BCS SpinCo shall, and shall cause the members of its Group to, (i) treat for all Tax purposes the portion of each Shared Contract inuring to its respective businesses as Assets owned by, and/or Liabilities of, as applicable, such Party, or the members of its Group, as applicable, not later than the Effective Time, and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by applicable Law).
(c) Nothing in this Section 2.8 shall require any member of either Group to make any non de minimis payment (except to the extent advanced, assumed or agreed in advance to be reimbursed by any member of the other Group), incur any non de minimis obligation or grant any non de minimis concession for the benefit of any member of the other Group in order to effect any transaction contemplated by this Section 2.8.
2.9 Bank Accounts; Cash Balances.
(a) Each Party agrees to take, or cause the members of its Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group (collectively, the “GRP&E/BCS Accounts”) and all contracts or agreements governing each bank or brokerage account owned by Parent or any other member of the Parent Group (collectively, the “Parent Accounts”) so that each such GRP&E/BCS Account and Parent Account, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “Linked”) to any Parent Account or GRP&E/BCS Account, respectively, is no longer Linked to such Parent Account or GRP&E/BCS Account, respectively.
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(b) With respect to any outstanding checks issued or payments initiated by Parent, GRP&E/BCS SpinCo or any of the members of their respective Groups prior to the Effective Time, such outstanding checks and payments shall be honored following the Effective Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated, respectively.
(c) As between Parent and GRP&E/BCS SpinCo (and the members of their respective Groups), all payments made and reimbursements received after the Effective Time by either Party (or member of its Group) that relate to a business, Asset or Liability of the other Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, promptly following receipt by such Party of any such payment or reimbursement, such Party shall, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement without right of set-off.
(d) Notwithstanding anything to the contrary in this Agreement, GRP&E/BCS SpinCo shall promptly pay over to Parent any GRP&E/BCS True-up Payment (as used herein, such term shall have the meaning given in Schedule 2.14) as may be required in accordance with Schedule 2.14, or Parent shall promptly pay over to GRP&E/BCS SpinCo any Parent True-up Payment (as used herein, such term shall have the meaning given in Schedule 2.14) as may be required in accordance with Schedule 2.14. For U.S. federal (and applicable state and local) income tax purposes, any GRP&E/BCS True-up Payment or Parent True-up Payment shall be treated as being made pursuant to the Contribution, except to the extent required by applicable Law.
(e) Notwithstanding anything to the contrary in this Agreement, Parent shall promptly pay over to GRP&E/BCS SpinCo all proceeds received by Parent or any member of its Group (whether prior to or after the Effective Time) in consideration for the asset sales pursuant to the agreements set forth on Schedule 2.9(e), without right of set-off, and in all respects as set forth in, Schedule 2.9(e). For U.S. federal (and applicable state and local) income tax purposes, the foregoing payment(s) shall be treated as being made pursuant to the Contribution, except to the extent required by applicable Law.
2.10 Ancillary Agreements. Effective on or prior to the Effective Time, each of Parent and GRP&E/BCS SpinCo shall, or shall cause the applicable members of their Groups to, execute and deliver all Ancillary Agreements to which it or such member, as applicable, is a party.
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2.11 Disclaimer of Representations and Warranties. EACH OF PARENT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE PARENT GROUP) AND GRP&E/BCS SPINCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE GRP&E/BCS GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER OR THEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (A) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (B) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.
2.12 Financial Information Certifications. Parent’s disclosure controls and procedures and internal control over financial reporting (as each is contemplated by the Exchange Act) are currently applicable to GRP&E/BCS SpinCo as its Subsidiary. In order to enable the principal executive officer and principal financial officer of GRP&E/BCS SpinCo to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002, Parent, within thirty-five (35) days of the end of any fiscal quarter during which GRP&E/BCS SpinCo remains Parent’s Subsidiary, shall provide GRP&E/BCS SpinCo with one or more certifications with respect to such disclosure controls and procedures, its internal control over financial reporting and the effectiveness thereof. Such certification(s) shall be provided by Parent (and not by any officer or employee in their individual capacity).
2.13 Transition Committee and Other Matters.
(a) Prior to the Effective Time, the Parties shall establish a transition committee (the “Transition Committee”) that shall consist of an equal number of members from Parent and GRP&E/BCS SpinCo. The Transition Committee shall be responsible for monitoring and managing all matters related to any of the transactions contemplated by this Agreement or any Ancillary Agreements. The Transition Committee shall have the authority to (a) establish one or more subcommittees from time to time as it deems appropriate or as may be described in any Ancillary Agreements, with each such subcommittee comprised of one or more members of the Transition Committee or one or more employees of either Party or any member of its respective Group, and each such subcommittee having such scope of responsibility as may be determined by the Transition Committee from time to time; (b) delegate to any such committee any of the powers of the Transition Committee; (c) combine, modify the scope of responsibility of, and disband any such subcommittees; and (d) modify or reverse any such delegations. The Transition Committee shall establish general procedures for managing the responsibilities delegated to it under this Section 2.13, and may modify such procedures from time to time. All decisions by the Transition Committee or any subcommittee thereof shall be effective only if mutually agreed by both Parties. The Parties shall utilize the procedures set forth in Article VII to resolve any matters as to which the Transition Committee is not able to reach a decision.
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(b) Parent and GRP&E/BCS SpinCo acknowledge that prior to the Effective Time, each of the Parent Board and the board of directors of GRP&E/BCS SpinCo shall approve resolutions undertaking the enhanced compliance procedures contemplated by the Plea Agreement, dated January 8, 2014, between the United States of America and Alcoa World Alumina LLC and the Cease and Desist Order, dated January 9, 2014, In the Matter of Alcoa Inc.
2.14 GRP&E/BCS Financing Arrangements.
(a) Prior to the Effective Time and pursuant to the Separation Step Plan, (i) GRP&E/BCS SpinCo or other member(s) of the GRP&E/BCS Group shall enter into one or more financing arrangements and agreements pursuant to which it or they shall borrow a principal amount of one billion two hundred million dollars ($1,200,000,000) (the “GRP&E/BCS Financing Arrangements”), and (ii) GRP&E/BCS SpinCo or such other member(s) of the GRP&E/BCS Group that entered into the GRP&E/BCS Financing Arrangements shall transfer all or a portion of the proceeds from the GRP&E/BCS Financing Arrangements to Parent or other member(s) of the Parent Group in accordance with the Separation Step Plan.
(b) Parent and GRP&E/BCS SpinCo agree to take all necessary actions to assure the full release and discharge of Parent and the other members of the Parent Group from all obligations pursuant to the GRP&E/BCS Financing Arrangements as of no later than the Effective Time. The parties agree that GRP&E/BCS SpinCo or another member of the GRP&E/BCS Group, as the case may be, and not Parent or any member of the Parent Group, are and shall be responsible for all costs and expenses incurred in connection with the GRP&E/BCS Financing Arrangements.
(c) Prior to the Effective Time, Parent and GRP&E/BCS SpinCo shall cooperate in the preparation of all materials as may be necessary or advisable to execute the GRP&E/BCS Financing Arrangements.
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Article
III
THE DISTRIBUTION
3.1 Sole and Absolute Discretion; Cooperation.
(a) Parent shall, in its sole and absolute discretion, determine the terms of the Distribution, including the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing and conditions to the consummation of the Distribution. In addition, Parent may, at any time and from time to time until the consummation of the Distribution, modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Nothing herein shall in any way limit Parent’s right to terminate this Agreement or the Distribution as set forth in Article IX or alter the consequences of any such termination from those specified in Article IX.
(b) GRP&E/BCS SpinCo shall cooperate with Parent to accomplish the Distribution and shall, at Parent’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including in respect of the registration under the Exchange Act of GRP&E/BCS Shares on the Form 10. Parent shall select any investment bank or manager in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for Parent. GRP&E/BCS SpinCo and Parent, as the case may be, will provide to the Agent any information required in order to complete the Distribution.
3.2 Actions Prior to the Distribution. Prior to the Effective Time and subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:
(a) Notice to NYSE. Parent shall, to the extent possible, give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.
(b) GRP&E/BCS SpinCo Certificate of Incorporation and GRP&E/BCS SpinCo Bylaws. On or prior to the Distribution Date, Parent and GRP&E/BCS SpinCo shall take all necessary actions so that, as of the Effective Time, the GRP&E/BCS SpinCo Certificate of Incorporation and the GRP&E/BCS SpinCo Bylaws shall become the certificate of incorporation and bylaws of GRP&E/BCS SpinCo, respectively.
(c) GRP&E/BCS SpinCo Directors and Officers. On or prior to the Distribution Date, Parent and GRP&E/BCS SpinCo shall take all necessary actions so that as of the Effective Time: (i) the directors and executive officers of GRP&E/BCS SpinCo shall be those set forth in the Information Statement mailed to the Record Holders prior to the Distribution Date, unless otherwise agreed by the Parties; (ii) each individual referred to in clause (i) shall have resigned from his or her position, if any, as a member of the Parent Board and/or as an executive officer of Parent; and (iii) GRP&E/BCS SpinCo shall have such other officers as GRP&E/BCS SpinCo shall appoint.
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(d) NYSE Listing. GRP&E/BCS SpinCo shall prepare and file, and shall use its reasonable best efforts to have approved, an application for the listing of the GRP&E/BCS Shares to be distributed in the Distribution on the NYSE, subject to official notice of distribution.
(e) Securities Law Matters. GRP&E/BCS SpinCo shall file any amendments or supplements to the Form 10 as may be necessary or advisable in order to cause the Form 10 to become and remain effective as required by the SEC or federal, state or other applicable securities Laws. Parent and GRP&E/BCS SpinCo shall cooperate in preparing, filing with the SEC and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. Parent and GRP&E/BCS SpinCo shall prepare, and GRP&E/BCS SpinCo shall, to the extent required under applicable Law, file with the SEC any such documentation and any requisite no-action letters that Parent determines are necessary or desirable to effectuate the Distribution, and Parent and GRP&E/BCS SpinCo shall use reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable. Parent and GRP&E/BCS SpinCo shall take all such action as may be necessary or appropriate under the securities or blue sky laws of the United States (and any comparable Laws under any foreign jurisdiction) in connection with the Distribution.
(f) Mailing of Information Statement. Parent shall, as soon as is reasonably practicable after the Form 10 is declared effective under the Exchange Act and the Parent Board has approved the Distribution, cause the Information Statement to be mailed to the Record Holders.
(g) The Distribution Agent. Parent shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.
(h) Stock-Based Employee Benefit Plans. Parent and GRP&E/BCS SpinCo shall take all actions as may be necessary to approve the grants of adjusted equity awards by Parent (in respect of Parent shares) and GRP&E/BCS SpinCo (in respect of GRP&E/BCS SpinCo shares) in connection with the Distribution in order to satisfy the requirements of Rule 16b-3 under the Exchange Act.
(i) Name Change. (i) Parent and GRP&E/BCS SpinCo shall take all actions necessary such that, coincident with the Distribution, (A) Arconic Rolled Products Corporation will change its name to Arconic Corporation and (B) Parent will change its name to Howmet Aerospace Inc., and (ii) Parent shall prepare and file, and shall use its reasonable best efforts to have approved, a supplemental listing application with the NYSE to facilitate its name change.
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3.3 Conditions to the Distribution.
(a) The consummation of the Distribution shall be subject to the satisfaction, or waiver by Parent in its sole and absolute discretion, of the following conditions:
(i) The SEC shall have declared effective the Form 10; no order suspending the effectiveness of the Form 10 shall be in effect; and no proceedings for such purposes shall have been instituted or threatened by the SEC.
(ii) The Information Statement shall have been mailed to the Record Holders.
(iii) Parent shall have received an opinion from Wachtell, Lipton, Rosen & Katz, satisfactory to the Parent Board, regarding the qualification of the Contribution and the Distribution, taken together, as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355(a) and 368(a)(1)(D) of the Code.
(iv) The transfer of the GRP&E/BCS Assets (other than any Delayed GRP&E/BCS Asset) and GRP&E/BCS Liabilities (other than any Delayed GRP&E/BCS Liability) contemplated to be transferred from Parent to GRP&E/BCS SpinCo on or prior to the Distribution shall have occurred as contemplated by Section 2.1, and the transfer of the Parent Assets (other than any Delayed Parent Asset) and Parent Liabilities (other than any Delayed Parent Liability) contemplated to be transferred from GRP&E/BCS SpinCo to Parent on or prior to the Distribution Date shall have occurred as contemplated by Section 2.1, in each case pursuant to the Separation Step Plan.
(v) An independent appraisal firm acceptable to Parent shall have delivered one or more opinions to the Parent Board confirming the solvency and financial viability of Parent and GRP&E/BCS SpinCo after consummation of the Distribution, and such opinions shall be acceptable to Parent in form and substance in Parent’s sole discretion and such opinions shall not have been withdrawn or rescinded.
(vi) The actions and filings necessary or appropriate under applicable U.S. federal, U.S. state or other securities Laws or blue sky Laws and the rules and regulations thereunder shall have been taken or made, and, where applicable, have become effective or been accepted.
(vii) Each of the Ancillary Agreements shall have been duly executed and delivered by the applicable parties thereto.
(viii) No order, injunction or decree issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Separation, the Distribution or any of the transactions related thereto shall be in effect.
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(ix) The GRP&E/BCS Shares to be distributed to the Parent stockholders in the Distribution shall have been accepted for listing on the NYSE, subject to official notice of distribution.
(x) Parent shall have received the proceeds from the GRP&E/BCS Financing Arrangements contemplated by Section 2.14 and shall be satisfied in its sole and absolute discretion that, as of the Effective Time, it shall have no further Liability under the GRP&E/BCS Financing Arrangements.
(xi) No other events or developments shall exist or shall have occurred that, in the judgment of the Parent Board, in its sole and absolute discretion, makes it inadvisable to effect the Separation, the Distribution or the transactions contemplated by this Agreement or any Ancillary Agreement.
(b) The foregoing conditions are for the sole benefit of Parent and shall not give rise to or create any duty on the part of Parent or the Parent Board to waive or not waive any such condition or in any way limit Parent’s right to terminate this Agreement as set forth in Article IX or alter the consequences of any such termination from those specified in Article IX. Any determination made by the Parent Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in Section 3.3(a) shall be conclusive and binding on the Parties. If Parent waives any material condition, it shall promptly issue a press release disclosing such fact and file a Current Report on Form 8-K with the SEC describing such waiver.
3.4 The Distribution.
(a) Subject to Section 3.3, on or prior to the Effective Time, GRP&E/BCS SpinCo shall deliver to the Agent, for the benefit of the Record Holders, book-entry transfer authorizations for such number of the outstanding GRP&E/BCS Shares as is necessary to effect the Distribution, and shall cause the transfer agent for the Parent Shares to instruct the Agent to distribute at the Effective Time the appropriate number of GRP&E/BCS Shares to each such Record Holder or designated transferee or transferees of thereof by way of direct registration in book-entry form. GRP&E/BCS SpinCo shall not issue paper stock certificates in respect of the GRP&E/BCS Shares. The Distribution shall be effective at the Effective Time.
(b) Subject to Sections 3.3 and 3.4(c), each Record Holder will be entitled to receive in the Distribution one (1) GRP&E/BCS Share for every four (4) Parent Share held by such Record Holder on the Record Date (the “Distribution Ratio”), rounded down to the nearest whole number.
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(c) No fractional shares shall be distributed or credited to book-entry accounts in connection with the Distribution, and any such fractional share interests to which a Record Holder would otherwise be entitled shall not entitle such Record Holder to vote or to any other rights as a stockholder of GRP&E/BCS SpinCo. In lieu of any such fractional shares, each Record Holder who, but for the provisions of this Section 3.4(c), would be entitled to receive a fractional share interest of a GRP&E/BCS Share pursuant to the Distribution, shall be paid cash, without any interest thereon, as hereinafter provided. As soon as practicable after the Effective Time, Parent shall direct the Agent to determine the number of whole and fractional GRP&E/BCS Shares allocable to each Record Holder, to aggregate all such fractional shares into whole shares, and to sell the whole shares obtained thereby in the open market at the then-prevailing prices on behalf of each Record Holder who otherwise would be entitled to receive fractional share interests (with the Agent, in its sole and absolute discretion, determining when, how and through which broker-dealer and at what price to make such sales), and to cause to be distributed to each such Record Holder, in lieu of any fractional share, such Record Holder’s or owner’s ratable share of the total proceeds of such sale, after deducting any Taxes required to be withheld and applicable transfer Taxes, and after deducting the costs and expenses of such sale and distribution, including brokers fees and commissions. None of Parent, GRP&E/BCS SpinCo or the Agent shall be required to guarantee any minimum sale price for the fractional GRP&E/BCS Shares sold in accordance with this Section 3.4(c). Neither Parent nor GRP&E/BCS SpinCo shall be required to pay any interest on the proceeds from the sale of fractional shares. Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold shall be Affiliates of Parent or GRP&E/BCS SpinCo. Solely for purposes of computing fractional share interests pursuant to this Section 3.4(c) and Section 3.4(d), the beneficial owner of Parent Shares held of record in the name of a nominee in any nominee account shall be treated as the Record Holder with respect to such shares.
(d) Any GRP&E/BCS Shares or cash in lieu of fractional shares with respect to GRP&E/BCS Shares that remain unclaimed by any Record Holder one hundred and eighty (180) days after the Distribution Date shall be delivered to GRP&E/BCS SpinCo, and GRP&E/BCS SpinCo or its transfer agent shall hold such GRP&E/BCS Shares and cash for the account of such Record Holder, and the Parties agree that all obligations to provide such GRP&E/BCS Shares and cash, if any, in lieu of fractional share interests shall be obligations of GRP&E/BCS SpinCo, subject in each case to applicable escheat or other abandoned property Laws, and Parent shall have no Liability with respect thereto.
(e) Until the GRP&E/BCS Shares are duly transferred in accordance with this Section 3.4 and applicable Law, from and after the Effective Time, GRP&E/BCS SpinCo shall regard the Persons entitled to receive such GRP&E/BCS Shares as record holders of GRP&E/BCS Shares in accordance with the terms of the Distribution without requiring any action on the part of such Persons. GRP&E/BCS SpinCo agrees that, subject to any transfers of such shares, from and after the Effective Time, (i) each such holder shall be entitled to receive all dividends payable on, and exercise voting rights and all other rights and privileges with respect to, the GRP&E/BCS Shares then held by such holder, and (ii) each such holder will be entitled, without any action on the part of such holder, to receive evidence of ownership of the GRP&E/BCS Shares then held by such holder.
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Article
IV
MUTUAL RELEASES; INDEMNIFICATION
4.1 Release of Pre-Distribution Claims.
(a) GRP&E/BCS SpinCo Release of Parent. Except as provided in Sections 4.1(c) and (d), effective as of the Effective Time, GRP&E/BCS SpinCo does hereby, for itself and each other member of the GRP&E/BCS Group, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the GRP&E/BCS Group (in each case, in their respective capacities as such), remise, release and forever discharge (i) Parent and the members of the Parent Group, and their respective successors and assigns, (ii) all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the Parent Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, and (iii) all Persons who at any time prior to the Effective Time are or have been shareholders, directors, officers, agents or employees of a Transferred Entity and who are not, as of immediately following the Effective Time, directors, officers or employees of GRP&E/BCS SpinCo or a member of the GRP&E/BCS Group, in each case from: (A) all GRP&E/BCS Liabilities, (B) all Liabilities arising from or in connection with the transactions and all other activities to implement the Separation and the Distribution and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the GRP&E/BCS Business, the GRP&E/BCS Assets or the GRP&E/BCS Liabilities.
(b) Parent Release of GRP&E/BCS SpinCo. Except as provided in Sections 4.1(c) and (d), effective as of the Effective Time, Parent does hereby, for itself and each other member of the Parent Group and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been shareholders, directors, officers, agents or employees of any member of the Parent Group (in each case, in their respective capacities as such), remise, release and forever discharge GRP&E/BCS SpinCo and the members of the GRP&E/BCS Group and their respective successors and assigns, from (i) all Parent Liabilities, (ii) all Liabilities arising from or in connection with the transactions and all other activities to implement the Separation and the Distribution and (iii) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the Howmet Aerospace Business, the Parent Assets or the Parent Liabilities.
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(c) Obligations Not Affected. Nothing contained in Section 4.1(a) or (b) shall impair any right of any Person to enforce this Agreement or any Ancillary Agreement, or any agreements, arrangements, commitments or understandings which Section 2.7(b) (or the applicable Schedules thereto) provide shall not terminate as of the Effective Time, in each case in accordance with their respective terms. Nothing contained in Section 4.1(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement among any members of the Parent Group or the GRP&E/BCS Group which Section 2.7(b) (or the applicable Schedules thereto) provide shall not terminate as of the Effective Time, or any other Liability which Section 2.7(b) provides shall not terminate as of the Effective Time;
(ii) any Liability, 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, this Agreement or any Ancillary Agreement;
(iii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of the other Group prior to the Effective Time;
(iv) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement, any Ancillary Agreement or otherwise for claims brought against the Parties by Third Parties, which Liability shall be governed by the provisions of this Article IV and Article V and, if applicable, the appropriate provisions of the Ancillary Agreements;
(v) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.1; or
(vi) any Liability set forth on Schedule 4.1(c).
In addition, nothing contained in Section 4.1(a) shall release any member of the Parent Group from honoring its existing obligations to indemnify any director, officer or employee of a member of the GRP&E/BCS Group who was a director, officer or employee of any member of the Parent Group on or prior to the Effective Time, to the extent such director, officer or employee was, is or becomes a named defendant in any Action with respect to which such director, officer or employee was, is or becomes entitled to such indemnification pursuant to such existing obligations; it being understood that, if the underlying obligation giving rise to such Action is a GRP&E/BCS Liability, GRP&E/BCS SpinCo shall indemnify Parent for such Liability (including Parent’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article IV.
(d) No Claims. GRP&E/BCS SpinCo shall not make, and shall not permit any other member of the GRP&E/BCS 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 Parent or any other member of the Parent Group, or any other Person released pursuant to Section 4.1(a), with respect to any Liabilities released pursuant to Section 4.1(a). Parent shall not make, and shall not permit any other member of the Parent 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 GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group, or any other Person released pursuant to Section 4.1(b), with respect to any Liabilities released pursuant to Section 4.1(b).
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(e) Execution of Further Releases. At any time at or after the Effective Time, at the request of either Party, the other Party shall cause each member of its Group to execute and deliver releases reflecting the provisions of this Section 4.1.
4.2 Indemnification by GRP&E/BCS SpinCo. Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, GRP&E/BCS SpinCo shall, and shall cause the other members of the GRP&E/BCS Group to, indemnify, defend and hold harmless Parent, each member of the Parent Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Parent Indemnitees”), from and against any and all Liabilities of the Parent Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):
(a) any GRP&E/BCS Liability;
(b) any failure of GRP&E/BCS SpinCo, any other member of the GRP&E/BCS Group or any other Person to pay, perform or otherwise promptly discharge any GRP&E/BCS Liabilities in accordance with their terms, whether prior to, on or after the Effective Time;
(c) any breach by GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group of this Agreement or any of the Ancillary Agreements;
(d) except to the extent it relates to a Parent Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the GRP&E/BCS Group by any member of the Parent Group that survives following the Distribution; and
(e) 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 Form 10, the Information Statement (as amended or supplemented if GRP&E/BCS SpinCo shall have furnished any amendments or supplements thereto) or any other Disclosure Document, other than the matters described in clause (e) of Section 4.3.
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4.3 Indemnification by Parent. Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, Parent shall, and shall cause the other members of the Parent Group to, indemnify, defend and hold harmless GRP&E/BCS SpinCo, each member of the GRP&E/BCS Group and each of their respective past, present and future directors, officers, employees or agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “GRP&E/BCS Indemnitees”), from and against any and all Liabilities of the GRP&E/BCS Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):
(a) any Parent Liability;
(b) any failure of Parent, any other member of the Parent Group or any other Person to pay, perform or otherwise promptly discharge any Parent Liabilities in accordance with their terms, whether prior to, on or after the Effective Time;
(c) any breach by Parent or any other member of the Parent Group of this Agreement or any of the Ancillary Agreements;
(d) except to the extent it relates to a GRP&E/BCS Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the Parent Group by any member of the GRP&E/BCS Group that survives following the Distribution; and
(e) 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 statements made explicitly in Parent’s name in the Form 10, the Information Statement (as amended or supplemented if GRP&E/BCS SpinCo shall have furnished any amendments or supplements thereto) or any other Disclosure Document; it being agreed that the statements set forth on Schedule 4.3(e) shall be the only statements made explicitly in Parent’s name in the Form 10, the Information Statement or any other Disclosure Document, and all other information contained in the Form 10, the Information Statement or any other Disclosure Document shall be deemed to be information supplied by GRP&E/BCS SpinCo.
4.4 Indemnification Obligations Net of Insurance Proceeds and Other Amounts.
(a) The Parties intend that any Liability subject to indemnification, contribution or reimbursement pursuant to this Article IV or Article V will be net of Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Liability. Accordingly, the amount that either Party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification or contribution hereunder (an “Indemnitee”) shall be reduced by any Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds or any other amounts in respect of such Liability, then, within ten (10) calendar days of receipt of such Insurance Proceeds, the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or expenses incurred in the collection thereof) had been received, realized or recovered before the Indemnity Payment was made.
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(b) The Parties agree that an insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of any provision contained in this Agreement or any Ancillary Agreement, have any subrogation rights with respect thereto, it being understood 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) by virtue of the indemnification and contribution provisions hereof. Each Party shall, and shall cause the members of its Group to, use commercially reasonable efforts (taking into account the probability of success on the merits and the cost of expending such efforts, including attorneys’ fees and expenses) to collect or recover, any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification or contribution may be available under this Article IV. Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required, or otherwise satisfying any indemnification obligation, under the terms of this Agreement pending the outcome of any Action to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or contribution or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.
4.5 Procedures for Indemnification of Third-Party Claims.
(a) Notice of Claims. If, at or following the date of this Agreement, an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the Parent Group or the GRP&E/BCS Group of any claim or of the commencement by any such Person of any Action (collectively, a “Third-Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 4.2 or 4.3, or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof as soon as practicable, but in any event within twenty one (21) days (or sooner if the nature of the Third-Party Claim so requires) after becoming aware of such Third-Party Claim. Any such notice shall describe the Third-Party Claim in reasonable detail, including the facts and circumstances giving rise to such claim for indemnification, and include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim. Notwithstanding the foregoing, (i) the failure of an Indemnitee to provide notice in accordance with this Section 4.5(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent the Indemnifying Party is actually prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 4.5(a), and (ii) no such notice shall be required with respect to each matter set forth on Schedule 4.5.
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(b) Control of Defense. An Indemnifying Party may elect to defend, at its own expense and with its own counsel, any Third-Party Claim; provided that, prior to the Indemnifying Party assuming and controlling the defense of such Third-Party Claim, it shall first confirm to the Indemnitee in writing that, assuming the facts presented to the Indemnifying Party by the Indemnitee are true, the Indemnifying Party shall indemnify the Indemnitee for any such Losses to the extent resulting from, or arising out of, such Third-Party Claim; provided, further, that notwithstanding the foregoing, with respect to each matter set forth on Schedule 4.5, the applicable Indemnifying Party set forth therein shall be deemed to have elected to defend, and to have confirmed that it shall indemnify for, such matter as of the date hereof, and no further election or confirmation of such Indemnifying Party shall be required. Notwithstanding the foregoing, if the Indemnifying Party assumes such defense and, in the course of defending such Third-Party Claim, (i) the Indemnifying Party discovers that the facts presented at the time the Indemnifying Party acknowledged its indemnification obligation in respect of such Third-Party Claim were not true and (ii) such untruth provides a reasonable basis for asserting that the Indemnifying Party does not have an indemnification obligation in respect of such Third-Party Claim, then (A) the Indemnifying Party shall not be bound by such acknowledgment, (B) the Indemnifying Party shall promptly thereafter provide the Indemnitee written notice of its assertion that it does not have an indemnification obligation in respect of such Third-Party Claim and (C) the Indemnitee shall have the right to assume the defense of such Third-Party Claim. Within thirty (30) days after the receipt of a notice from an Indemnitee in accordance with Section 4.5(a) (or sooner, if the nature of the Third-Party Claim so requires), the Indemnifying Party shall provide written notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third-Party Claim. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of the notice from an Indemnitee as provided in Section 4.5(a), then the Indemnitee that is the subject of such Third-Party Claim shall be entitled to continue to conduct and control the defense of such Third-Party Claim.
(c) Allocation of Defense Costs. If an Indemnifying Party has elected to assume the defense of a Third-Party Claim, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third-Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred by the Indemnifying Party during the course of the defense of such Third-Party Claim by such Indemnifying Party, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a notice from an Indemnitee as provided in Section 4.5(a), and the Indemnitee conducts and controls the defense of such Third-Party Claim and the Indemnifying Party has an indemnification obligation with respect to such Third-Party Claim, then the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third-Party Claim.
(d) Right to Monitor and Participate. An Indemnitee that does not conduct and control the defense of any Third-Party Claim, or an Indemnifying Party that has failed to elect to defend any Third-Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third-Party Claim for which it is a potential Indemnitee or Indemnifying Party, as applicable, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 4.5(c) shall not apply to such fees and expenses. Notwithstanding the foregoing, but subject to Sections 6.7 and 6.8, such Party shall cooperate with the Party entitled to conduct and control the defense of such Third-Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto, in each case as are reasonably required by the controlling Party. In addition to the foregoing, if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation in connection with a Third-Party Claim inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnitees.
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(e) No Settlement. Neither any member of the Parent Group, nor any member of the GRP&E/BCS Group, may settle or compromise any Third-Party Claim for which a GRP&E/BCS Indemnitee or a Parent Indemnitee, respectively, is seeking or is reasonably expected to seek to be indemnified hereunder without the prior written consent of GRP&E/BCS SpinCo or Parent, respectively, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages that are fully payable by the settling or compromising Party, does not involve any admission, finding or determination of wrongdoing or violation of Law by any GRP&E/BCS Indemnitee or any Parent Indemnitee, respectively, and provides for a full, unconditional and irrevocable release of each GRP&E/BCS Indemnitee or each Parent Indemnitee, respectively, from all Liability in connection with the Third-Party Claim. The Parties hereby agree that if a Party presents the other Party with a written notice containing a proposal to settle or compromise a Third-Party Claim for which an Indemnitee is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within twenty (20) days or such longer period, not to exceed thirty (30) days, as may be agreed by the Parties (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal.
(f) Ancillary Agreements Govern. The provisions of this Section 4.5 and the provisions of Section 4.6 do not apply to Taxes, which shall be governed by the Tax Matters Agreement. In the case of any conflict between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.
4.6 Additional Matters.
(a) Timing of Payments. Indemnification or contribution payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification or contribution under this Article IV shall be paid reasonably promptly (but in any event within thirty (30) days of the final determination of the amount that the Indemnitee is entitled to indemnification or contribution under this Article IV) by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification or contribution payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity and contribution provisions contained in this Article IV shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee, and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification hereunder.
(b) Notice of Direct Claims. Any claim for indemnification or contribution under this Agreement or any Ancillary Agreement that does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the applicable Indemnifying Party; provided, that the failure by an Indemnitee to so assert any such claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is prejudiced thereby. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty (30)-day period, such specified claim shall be conclusively deemed a Liability of the Indemnifying Party under this Section 4.6(b) or, in the case of any written notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of the claim (or such portion thereof) becomes finally determined. If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnitee shall, subject to the provisions of Article VII, be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.
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(c) Pursuit of Claims Against Third Parties. If (i) a Party incurs any Liability arising out of this Agreement or any Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available for any reason against the other Party to satisfy the Liability incurred by the incurring Party; and (iii) a legal or equitable remedy may be available to the other Party against a Third Party for such Liability, then the other Party shall use its commercially reasonable efforts to cooperate with the incurring Party, at the incurring Party’s expense, to permit the incurring Party to obtain the benefits of such legal or equitable remedy against such Third Party.
(d) Subrogation. In the event of payment by or on behalf of any 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, defense 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, defense or claim.
(e) Substitution. In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in Section 4.5 and this Section 4.6, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement and the cost of any interest or penalties relating to any judgment or settlement.
4.7 Right of Contribution.
(a) Contribution. If any right of indemnification contained in Section 4.2 or 4.3 is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the members of its Group, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.
(b) Allocation of Relative Fault. Solely for purposes of determining relative fault pursuant to this Section 4.7: (i) any fault associated with the business conducted with the Delayed GRP&E/BCS Assets or Delayed GRP&E/BCS Liabilities (except for the gross negligence or intentional misconduct of a member of the Parent Group) or with the ownership, operation or activities of the GRP&E/BCS Business prior to the Effective Time shall be deemed to be the fault of GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group, and no such fault shall be deemed to be the fault of Parent or any other member of the Parent Group and (ii) any fault associated with the business conducted with Delayed Parent Assets or Delayed Parent Liabilities (except for the gross negligence or intentional misconduct of a member of the GRP&E/BCS Group) or with the ownership, operation or activities of the Howmet Aerospace Business prior to the Effective Time shall be deemed to be the fault of Parent and the other members of the Parent Group, and no such fault shall be deemed to be the fault of GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group.
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4.8 Covenant Not to Sue. Each Party hereby covenants and agrees that none of it, the members of its Group or any Person claiming through it or them shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, mediator or administrative agency anywhere in the world, alleging that: (a) the assumption of any GRP&E/BCS Liabilities by GRP&E/BCS SpinCo or a member of the GRP&E/BCS Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; (b) the retention of any Parent Liabilities by Parent or a member of the Parent Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason, or (c) the provisions of this Article IV are void or unenforceable for any reason.
4.9 Remedies Cumulative. The remedies provided in this Article IV shall be cumulative and, subject to the provisions of Article VIII, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.
4.10 Survival of Indemnities. The rights and obligations of each of Parent and GRP&E/BCS SpinCo and their respective Indemnitees under this Article IV shall survive (a) the sale or other transfer by either Party or any member of its Group of any assets or businesses or the assignment by it of any liabilities; or (b) any merger, consolidation, business combination, sale of all or substantially all of its Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any member of its Group.
4.11 Environmental Matters.
(a) Management of Environmental Liabilities.
(i) The Party designated or otherwise deemed to be the Party responsible for an Environmental Liability under this Agreement shall be the Party responsible for managing such Environmental Liability (the “Performing Party” or “Lead Party”) and the other Party will be the non-performing Party with respect to such Environmental Liability (the “Non-Performing Party” or “Non-Lead Party”), unless (1) Schedules 1.3, 1.5 or 1.10 provide otherwise, or (2) the Non-Performing Party (or a member of its Group) is the owner of the property impacted by the Environmental Liability in which case such property owner shall be the Performing Party. With respect to any Environmental Liability, the Performing Party shall be required to perform all Remediation Work and other remediation and compliance activities required by applicable Environmental Laws or the requirements of any Governmental Authority with jurisdiction over such Environmental Liability and/or Remediation Work or to comply with any obligations of either Party to indemnify any Third Party with respect to Environmental Liabilities or avoid Liability to any Third Party under applicable Environmental Law.
(ii) With regard to any Remediation Work that could result in Environmental Liability to the Non-Performing Party to be performed following the date of this Agreement, (A) all proposals for Remediation Work and all decisions as to Remediation Work shall be made by the Performing Party in reasonable consultation with the Non-Performing Party upon written request by the Non-Performing Party and reasonably taking in account the input of the Non-Performing Party and its consultants, and (B) the Performing Party shall retain only reasonably qualified environmental consultants to assist it in undertaking and completing such Remediation Work. With regard to any Remediation Work performed or to be performed following the date of this Agreement, the Performing Party shall provide to the Non-Performing Party, as promptly as reasonably practicable, a copy of any and all final written correspondence, results, tables, figures, conclusions, reports and other documents (I) generated by any consultant or (II) submitted to, filed with or received from any Governmental Authority, but, in each case, only to the extent the Non-Performing Party submits a written request to the Performing Party to receive such documents.
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(iii) With regard to Remediation Work where the Performing Party will bear less than half of the costs under this Agreement, (i) the non-Performing Party will have the right to select the contractors, consultants, and other third parties to perform the Remediation Work, subject to the approval of the Performing Party, which approval shall not be withheld except for good cause, (ii) at non-Performing Party’s request in writing, non-Performing Party will be involved in all significant discussions with Performing Party and any relevant third party regarding all aspects of any Remediation Work, (iii) non-Performing Party will have a meaningful opportunity to provide comment to Performing Party and any relevant third party regarding all material aspects of any Remediation Work to be taken, and (iv) Performing Party shall take into consideration any such comments by non-Performing Party and implement them where reasonably feasible.
(iv) With respect to any Environmental Liability or Remediation Work identified in Schedule 1.5, if the Non-Performing Party is the property owner, the Performing Party shall not initiate any communication with any Governmental Authority or other Third Party without the prior written consent of the Non-Performing Party, such consent not to be unreasonably withheld, conditioned or delayed.
(b) Substitution.
(i) The Performing Party shall use its reasonable best efforts to obtain any consents, transfers, assignments, assumptions, waivers or other legal instruments necessary to cause the Performing Party or the appropriate subsidiary of the Performing Party to be fully substituted for the Non-Performing Party or any other applicable member of the Non-Performing Party’s Group with respect to any order, decree, judgment, agreement or Action with respect to Environmental Liabilities for which such Performing Party is the Performing Party that are in effect as of the Effective Time. In addition, each Party shall use its reasonable best efforts to obtain any consents, transfers, assignments, assumptions, waivers or other legal instruments necessary to cause such Party or the appropriate subsidiary of such Party to be fully substituted for the other Party or any other applicable member of the other Party’s Group with respect to any order, decree, judgment, agreement or Action with respect to Environmental Permits, financial assurance obligations or instruments, or other environmental approvals or filings associated with the GRP&E/BCS Assets, in the case of GRP&E/BCS SpinCo, or the Parent Assets, in the case of Parent. Each Party shall inform the applicable Governmental Authority about its assumption of the applicable Environmental Liabilities associated with the matters listed on Schedule 1.3, 1.5 and 1.10 and request that the Governmental Authorities direct all communications, requirements, notifications and/or official letters related to such matters to such Party. Each Party shall use its reasonable best efforts to provide necessary assistance or signatures to the other Party to achieve the purposes of this Section 4.11(b).
(ii) Until such time as GRP&E/BCS SpinCo and Parent complete the substitutions outlined in this Section 4.11(b), each Party shall comply with all applicable Environmental Laws, including all reporting obligations, and the terms and conditions of all orders, decrees, judgments, agreements, actions, Environmental Permits, financial assurances, obligations, instruments or other environmental approvals or filings that remain in the other Party’s name but for which substitutions are to be made pursuant to this Section 4.11(b).
(iii) Notwithstanding anything in this Section 4.11(b) to the contrary, nothing in this Section 4.11(b) shall require either Party to take any actions that would reasonably be expected to increase the overall collective Liabilities of Parent and GRP&E/BCS SpinCo, in the aggregate, to any Third Party.
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(c) Standards for Remediation.
(i) The Performing Party shall perform all Remediation Work and other remediation and compliance activities contemplated by this Section 4.11, at a minimum, up to but not beyond the standards applicable to commercial/industrial uses.
(ii) The Parties shall implement deed restrictions, engineering and other institutional controls, and risk-based corrective action to manage or close out any Remediation Work or other remediation and compliance activities contemplated by this Section 4.11, provided that such deed restrictions, engineering and other institutional controls do not materially limit or materially increase the cost of the Non-Performing Party’s ongoing and future operations or the Performing Party’s ability to expand industrial or commercial operations or sell such any applicable property for industrial or commercial use in the future.
(iii) Where feasible and commercially advantageous with respect to the cost for Remediation Work, waste from either Performing Party or non-Performing Party should be consolidated into existing on-site disposal areas.
(iv) The Performing Party may take additional measures beyond the minimum required by this Section 4.11, but at the sole expense of Performing Party, regardless of non-Performing Party’s share of liability for the Remediation Work unless required by the Governmental Authorities in which case the non-Performing Party will continue to pay its full share.
Article
V
CERTAIN OTHER MATTERS
5.1 Tail Policies: Directors and Officers Insurance, Fiduciary Liability Insurance, and Employment Practice Liability Insurance.
(a) Prior to the Effective Time, Parent shall obtain and fully pay for “tail” directors and officers liability insurance policies having a policy period of six (6) years from and after the Effective Time and providing prior acts coverage for claims made after the Effective Time with respect to wrongful acts that were committed prior to the Effective Time. Such directors and officers liability insurance policies, being referred to as the “Combined Tail D&O Program,” shall be consistent in all material respects with the directors and officers liability insurance policies maintained by Parent as of the Effective Time (except for policy period and provisions excluding coverage for wrongful acts committed after the Effective Time).
(b) Prior to the Effective Time, Parent shall obtain and fully pay for fiduciary liability insurance policies having a policy period of six (6) years from and after the Effective Time and providing prior acts coverage for claims made after the Effective Time with respect to wrongful acts that were committed prior to the Effective Time. Such fiduciary liability insurance policies, being referred to as the “Combined Tail Fiduciary Program,” shall be consistent in all material respects with the fiduciary liability insurance policies maintained by Parent as of the Effective Time (except for policy period and provisions excluding coverage for wrongful acts committed after the Effective Time).
(c) Prior to the Effective Time, Parent shall obtain and fully pay for employment practices liability insurance policies having a policy period of six (6) years from and after the Effective Time and providing prior acts coverage for claims made after the Effective Time with respect to wrongful acts that were committed prior to the Effective Time. Such employment practices liability insurance policies, being referred to as the “Combined Tail Employment Practices Program,” shall be consistent in all material respects with the employment practices liability insurance policies maintained by Parent as of the Effective Time (except for policy period and provisions excluding coverage for wrongful acts committed after the Effective Time).
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(d) Parent shall timely provide to GRP&E/BCS SpinCo copies of all policies comprising the Combined Tail D&O Program, the Combined Tail Fiduciary Program and the Combined Tail Employment Practices Program as well as copies of all binders.
(e) With respect to any claims that potentially implicate coverage provided under the Combined Tail D&O Program, the Combined Tail Fiduciary Program or the Combined Tail Employment Practices Program, on the one hand, and other insurance policies such as directors and officers liabilities insurance policies, fiduciary liability policies and employment practices liability insurance policies obtained by a Parent or GRP&E/BCS SpinCo for wrongful acts committed after the Effective Time, on the other hand, GRP&E/BCS SpinCo and Parent agree to cooperate and to act in good faith to ensure that an appropriate allocation of loss, if any, and an insurance contribution and Self-Insurance contribution, in accordance with the terms and provisions of the respective policies and the law, are effectuated.
5.2 Insurance Matters Generally.
(a) From and after the Effective Time, subject to the provisions of this Article V, (i) Parent and any members of the Parent Group insured under the Parent Policies on or before the Effective Date shall continue to be insured under the Parent Policies and shall retain all of the rights under the Parent Policies to the same extent, including their rights to recover for, without limitation, any Parent Liabilities under the Parent Policies, and (ii) GRP&E/BCS SpinCo and any members of the GRP&E/BCS Group insured under the GRP&E/BCS Policies on or before the Effective Date shall continue to be insured under the GRP&E/BCS Policies and shall retain all of their rights under the GRP&E/BCS Policies, including rights to recover for, without limitation, any GRP&E/BCS Liabilities under the GRP&E/BCS Policies.
(b) Subject only to Sections 5.1, 5.2(g) and 5.2(k), in no event shall Parent, any other member of the Parent Group or any Parent Indemnitee have any Liability or obligation whatsoever to any member of the GRP&E/BCS Group in the event that any insurance policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the GRP&E/BCS Group for any reason whatsoever or shall not be renewed or extended beyond the current expiration date. Subject only to Sections 5.1, 5.2(g) and 5.2(l), in no event shall GRP&E/BCS SpinCo, any other member of the GRP&E/BCS Group or any GRP&E/BCS Indemnitee have any Liability or obligation whatsoever to any member of the Parent Group in the event that any insurance policy or other contract or policy of insurance shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the Parent Group for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.
(c) From and after the Effective Time, with respect to any GRP&E/BCS Liability, (i) GRP&E/BCS SpinCo and each member of the GRP&E/BCS Group, to the extent permitted by law, will have and will be fully entitled to exercise all rights that any of them may have as of the Effective Time, including the right to make claims, under the Parent Policies, it being the intent that this Agreement shall not operate to reduce any insurance recovery that otherwise would be available in the absence of the Separation; and (ii) to the extent permitted by law and necessary to effectuate the purpose of this Section 5.2(c), Parent assigns, transfers and conveys to GRP&E/BCS SpinCo all rights to, proceeds from, and all claims and choses in action for coverage, defense, indemnity, payment and reimbursement provided under the Parent Policies to such members of the GRP&E/BCS Group with respect to the GRP&E/BCS Liabilities, but solely to the extent that such policies provided coverage for such members of the GRP&E/BCS Group prior to the Effective Time with respect to such GRP&E/BCS Liabilities; provided that such access to, and such right to make claims under, the Parent Policies, shall be subject to the terms, conditions and exclusions of such insurance policies, including any limits on coverage or scope, and any Self-Insurance, and shall be subject to the following additional conditions:
(i) Subject to Section 5.2(o), GRP&E/BCS SpinCo will be solely responsible for notifying, tendering and submitting any claim for insurance coverage of any GRP&E/BCS Liability under the Parent Policies and for communicating with the issuers of the Parent Policies with respect to such claims for coverage. With respect to such GRP&E/BCS SpinCo claim for coverage of a GRP&E/BCS Liability under the Parent Policies, (A) GRP&E/BCS SpinCo shall provide to Parent contemporaneous copies of any such notifications, tenders, submissions and communications and (B) GRP&E/BCS SpinCo shall have the right to notify, tender to, submit to, communicate with, and receive Insurance Proceeds from the issuers of the Parent Policies (which such Insurance Proceeds, to the extent paid by the issuer(s) to Parent, shall be paid over to GRP&E/BCS SpinCo by Parent within the timeframe set forth in Section 5.2(i) after Parent’s receipt of an invoice therefor from GRP&E/BCS SpinCo). Parent and GRP&E/BCS SpinCo agree to consent to reasonable modifications, additions or deletions to such procedures before or after the Effective Time to effectuate the purpose of this Section and to furnish reasonable cooperation to each other to ensure that the purposes of Section 5.2(c) are effectuated;
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(ii) GRP&E/BCS SpinCo and the members of the GRP&E/BCS Group shall timely indemnify, hold harmless and reimburse Parent and the members of the Parent Group for any Self-Insurance incurred by Parent or any members of the Parent Group to the extent attributable to any claims (or portions of claims) made by GRP&E/BCS SpinCo or any other members of the GRP&E/BCS Group attributable to any GRP&E/BCS Liability under any Parent Policies, including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by GRP&E/BCS SpinCo, any other member of the GRP&E/BCS Group, their employees or Third Parties;
(iii) With respect to any GRP&E/BCS Liability, the members of the GRP&E/BCS Group shall exclusively bear and be liable for (and neither Parent nor any members of the Parent Group shall have any obligation to repay or reimburse GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group for) all uninsured, uncovered, unavailable or uncollectible amounts of all claims (or portions of claims) attributable to such GRP&E/BCS Liability made by GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group under the Parent Policies; and
(iv) For avoidance of doubt, with respect to any Parent Liability, the members of the Parent Group shall exclusively bear and be liable for (and neither GRP&E/BCS SpinCo nor any members of the GRP&E/BCS Group shall have any obligation to repay or reimburse Parent or any member of the Parent Group for) all uninsured, uncovered, unavailable or uncollectible amounts of all claims (or portions of claims) attributable to such Parent Liability made by Parent or any member of the Parent Group under the Parent Policies.
(d) In the event an insurance policy aggregate limit of a Parent Policy under which any member of the GRP&E/BCS Group was covered prior to the Effective Time is exhausted, or is believed likely to be exhausted, due to noticed claims, the members of the GRP&E/BCS Group, on the one hand, and the members of the Parent Group, on the other hand, shall be responsible for their pro rata portion of the reinstatement premium, based upon the losses of such Group paid or payable by the issuers of the Parent Policies (including any submissions prior to the Effective Time) to the extent any such reinstatement of the policy is available; provided, that Parent and GRP&E/BCS SpinCo may instead mutually agree not to reinstate the policy, in which event each Group shall bear its own future costs without regard to any insurance coverage that would have been otherwise provided by such reinstatement. To the extent that the Parent Group or the GRP&E/BCS Group is allocated more than its pro rata portion of such reinstatement premium due to the timing of losses submitted to and paid by the issuers of the Parent Policies, GRP&E/BCS SpinCo or Parent, respectively, shall promptly pay the other party an amount so that each Group has been properly allocated its pro rata portion of the reinstatement premium. Further, (i) in the event Parent wishes to reinstate the Parent Policy, but GRP&E/BCS SpinCo does not, Parent, in its sole discretion, shall have the right to pay the entire reinstatement premium, in which event Parent and the other members of the Parent Group shall have the exclusive right to recover Insurance Proceeds resulting from the reinstatement of the Parent Policy, and GRP&E/BCS SpinCo shall cooperate with Parent in allowing Parent to exercise this right; and (ii) in the event GRP&E/BCS SpinCo wishes to reinstate the Parent Policy, but Parent does not, GRP&E/BCS SpinCo, in its sole discretion, shall have the right to pay the entire reinstatement premium, in which event GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group shall have the exclusive right to recover Insurance Proceeds resulting from the reinstatement of the Parent Policy, and Parent shall cooperate with GRP&E/BCS SpinCo in allowing GRP&E/BCS SpinCo to exercise this right.
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(e) From and after the Effective Time, with respect to any Parent Liability, (i) Parent and each member of the Parent Group, to the extent permitted by law, will have and will be fully entitled to exercise all rights that any of these may have as of the Effective Time, including the right to make claims, under the GRP&E/BCS Policies, it being the intent that this Agreement shall not operate to reduce any insurance recovery that otherwise would be available in the absence of the Separation; and (ii) to the extent permitted by law and necessary to effectuate the purpose of this Section 5.2(e), GRP&E/BCS SpinCo assigns, transfers, and conveys to Parent all rights to, proceeds from, and all claims and choses in action for coverage, defense, indemnitees, payment and reimbursement provided under the GRP&E/BCS Policies to such members of the Parent Group with respect to Parent Liabilities, but solely to the extent that such policies provided coverage for such members of the Parent Group prior to the Effective Time with respect to such Parent Liabilities; provided that such access to, and such right to make claims under, GRP&E/BCS Policies, shall be subject to the terms, conditions and exclusions of such insurance policies, including any limits on coverage or scope, any Self-Insurance, and shall be subject to the following additional conditions:
(i) Subject to Section 5.2(o), Parent will be solely responsible for notifying, tendering and submitting any claim for insurance coverage of any Parent Liability under the GRP&E/BCS Policies and for communicating with the issuers of the GRP&E/BCS Policies with respect to such claims for coverage. With respect to a Parent claim for coverage of a Parent Liability under the GRP&E/BCS Policies, (i) Parent shall provide to GRP&E/BCS SpinCo contemporaneous copies of any such notifications, tenders, submissions and communications and (ii) Parent shall have the right to notify, tender to, submit to, communicate with, and receive Insurance Proceeds from the issuers of the GRP&E/BCS Policies (which such Insurance Proceeds, to the extent paid by the issuer(s) to GRP&E/BCS SpinCo, shall be paid over to Parent by GRP&E/BCS SpinCo within the timeframe set forth in Section 5.2(j) after GRP&E/BCS SpinCo’s receipt of an invoice therefor from Parent). GRP&E/BCS SpinCo and Parent agree to consent to reasonable modifications, additions or deletions to such procedures before or after the Effective Time to effectuate the purposes of this Section and to furnish reasonable cooperation to each other to ensure that the purpose of this Section 5.2(e) is effectuated;
(ii) Parent and the members of the Parent Group shall timely indemnify, hold harmless and reimburse GRP&E/BCS SpinCo and the members of the GRP&E/BCS Group for any Self-Insurance incurred by GRP&E/BCS SpinCo or any members of the GRP&E/BCS Group to the extent resulting from any claims (or portions of claims) made by Parent or any other members of the Parent Group attributable to any Parent Liability under any GRP&E/BCS Policies, including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by Parent, any other member of the Parent Group, their employees or Third Parties;
(iii) With respect to any Parent Liability, the members of the Parent Group shall exclusively bear and be liable for (and neither GRP&E/BCS SpinCo nor any members of the GRP&E/BCS Group shall have any obligation to repay or reimburse Parent or any member of the Parent Group for) all uninsured, uncovered, unavailable or uncollectible amounts of all claims (or portions of claims) attributable to such Parent Liability made by Parent or any member of the Parent Group under the GRP&E/BCS Policies; and
(iv) For avoidance of doubt, with respect to GRP&E/BCS Liability, the members of the GRP&E/BCS Group shall exclusively bear and be liable for (and neither Parent nor any members of the Parent Group shall have any obligation to repay or reimburse GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group for) all uninsured, uncovered, unavailable or uncollectible amounts of all claims (or portions of claims) attributable to such GRP&E/BCS Liability made by GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group under the GRP&E/BCS Policies.
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(f) In the event an insurance policy aggregate limit of a GRP&E/BCS Policy under which any member of the Parent Group was covered prior to the Effective Time is exhausted, or is believed likely to be exhausted, due to noticed claims, the members of the Parent Group, on the one hand, and the members of the GRP&E/BCS Group, on the other hand, shall be responsible for their pro rata portion of the reinstatement premium, based upon the losses of such Group paid or payable by issuers of the GRP&E/BCS Policies (including any submissions prior to the Effective Time) to the extent any such reinstatement of the policy is available; provided, that GRP&E/BCS SpinCo and Parent may instead mutually agree not to reinstate the policy, in which event the members of each Group shall bear their own future costs without regard to any insurance coverage that would have been otherwise provided by such reinstatement. To the extent that the GRP&E/BCS Group or the Parent Group is allocated more than its pro rata portion of such reinstatement premium due to the timing of losses submitted to or paid by issuers of the GRP&E/BCS Policies, Parent or GRP&E/BCS SpinCo, respectively, shall promptly pay the first party an amount so that each Group has been properly allocated its pro rata portion of the reinstatement premium. Further, (i) in the event GRP&E/BCS SpinCo wishes to reinstate the GRP&E/BCS Policies, but Parent does not, GRP&E/BCS SpinCo, in its sole discretion, shall have the right to pay the entire reinstatement premium, in which event GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group shall have the exclusive right to recover Insurance Proceeds resulting from the reinstatement of the GRP&E/BCS Policies, and Parent shall cooperate with GRP&E/BCS SpinCo in allowing GRP&E/BCS SpinCo to exercise this right; and (ii) in the event Parent wishes to reinstate the GRP&E/BCS Policies, but GRP&E/BCS SpinCo does not, Parent, in its sole discretion, shall have the right to pay the entire reinstatement premium, in which event Parent and the other members of the Parent Group shall have the exclusive right to recover Insurance Proceeds resulting from the reinstatement of the GRP&E/BCS Policies, and GRP&E/BCS SpinCo shall cooperate with Parent in allowing Parent to exercise this right.
(g) The limits of the Parent Policies and GRP&E/BCS Policies shall be paid and payable, and the Self-Insurance pertaining thereto shall be applicable and applied, on a first-come first-served basis, absent any agreement between Parent and GRP&E/BCS SpinCo to modify this first come-first served method of payment; provided, however, no member of the GRP&E/BCS Group or the Parent Group shall, or shall seek to, accelerate or delay either the notification and submission of claims, on the one hand, or the demand for coverage for and receipt of insurance payments, on the other hand, in a manner that would differ from that which each would follow in the ordinary course when acting without regard to sufficiency of limits or the terms of Self-Insurance. Further, in the event that either GRP&E/BCS SpinCo or Parent becomes aware of information that would lead it reasonably to expect that the policy limits or the Self-Insurance limits of a Parent Policy or GRP&E/BCS Policy (in either case, under which members of the Parent Group and GRP&E/BCS Group are both insured) are likely to be exhausted based on existing insurance claims, it shall promptly notify the other in writing of that expectation, the basis therefor, and the parties shall cooperate to ensure that the purposes and intent of the second sentence of this Section 5.2(g) are properly effectuated.
(h) Except as provided in Section 5.1, at the Effective Time, GRP&E/BCS SpinCo and Parent shall have in effect all insurance programs required to comply with their respective contractual obligations and such other insurance policies required by law or as reasonably necessary or appropriate for companies operating a business similar to GRP&E/BCS SpinCo’s or Parent’s, respectively. Such insurance programs may include general liability, commercial auto liability, workers’ compensation, employer’s liability, product liability, professional services liability, property, cargo, employment practices liability, employee dishonesty/crime, directors’ and officers’ liability and fiduciary liability. Except as provided in Section 5.1, neither Parent nor any of the members of the Parent Group shall have any obligation to secure extended reporting for any claims under any Liability policies of Parent or any member of the Parent Group for any acts or omissions by any member of the GRP&E/BCS Group committed prior to the Effective Time.
(i) All payments and reimbursements owed by Parent to GRP&E/BCS SpinCo pursuant to Section 5.1 and this Section 5.2 shall be made within sixty (60) days after Parent’s receipt of an invoice therefor from GRP&E/BCS SpinCo.
(j) All payments and reimbursements owed by GRP&E/BCS SpinCo to Parent pursuant to Section 5.1 and this Section 5.2 shall be made within sixty (60) days after GRP&E/BCS SpinCo’s receipt of an invoice therefor from Parent.
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(k) In the event that after the Effective Time, Parent proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Parent Policies under which a member of the GRP&E/BCS Group has or may in the future have rights to assert claims pursuant to this Section 5.2 in a manner that would reasonably be expected to adversely affect any such rights of a member of the GRP&E/BCS SpinCo in any material respect, (i) Parent will give GRP&E/BCS SpinCo thirty (30) days prior written notice thereof and consult with GRP&E/BCS SpinCo with respect to such action, (ii) Parent will not take such action without the prior written consent of GRP&E/BCS SpinCo, such consent not to be unreasonably withheld, conditioned or delayed, and (iii) Parent will pay to GRP&E/BCS SpinCo its equitable share (which shall be mutually agreed upon by Parent and GRP&E/BCS SpinCo, acting in all cases reasonably and without unreasonable delay), if any, of any net proceeds actually received by Parent (or any member of the Parent Group) from the insurer under the applicable Parent Policy as a result of such action by Parent (after deducting Parent’s out-of-pocket expenses incurred in connection with such action).
(l) In the event that after the Effective Time, GRP&E/BCS SpinCo proposes to amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any GRP&E/BCS Policies under which a member of the Parent Group has or may in the future have rights to assert claims pursuant to this Section 5.2 in a manner that would reasonably be expected to adversely affect any such rights of a member of the Parent in any material respect, (i) GRP&E/BCS SpinCo will give Parent thirty (30) days prior written notice thereof and consult with Parent with respect to such action, (ii) GRP&E/BCS SpinCo will not take such action without the prior written consent of Parent, such consent not to be unreasonably withheld, conditioned or delayed, and (iii) GRP&E/BCS SpinCo will pay to Parent its equitable share (which shall be mutually agreed upon by GRP&E/BCS SpinCo and Parent, acting in all cases reasonably and without unreasonable delay), if any, of any net proceeds actually received by GRP&E/BCS SpinCo (or any member of the GRP&E/BCS Group) from the insurer under the applicable GRP&E/BCS Policy as a result of such action by GRP&E/BCS SpinCo (after deducting GRP&E/BCS SpinCo’s out-of-pocket expenses incurred in connection with such action).
(m) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the Parent Group or the GRP&E/BCS Group or any of their respective directors, officers or employees in respect of any insurance policy or any other contract or policy of insurance.
(n) An insurance carrier that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the provisions of this Section 5.2, have any subrogation rights against any member of the Parent Group or GRP&E/BCS Group with respect thereto, it being expressly understood and agreed that no insurance carrier or any Third Party shall be entitled to a benefit (i.e., a benefit such Person would not be entitled to receive in the absence of the Separation) by virtue of the provisions hereof. No provision of this Agreement is intended to relieve any insurer of any Liability under any policy.
(o) Parent and GRP&E/BCS SpinCo intend that with respect to GRP&E/BCS Liabilities and Parent Liabilities, recoveries under Parent Policies and GRP&E/BCS Policies shall be available to no lesser extent than would have been the case in the absence of the Separation. Parent and GRP&E/BCS SpinCo and the members of Parent Group and GRP&E/BCS Group agree to provide all reasonable and timely cooperation necessary to ensure that the provisions of Section 5.1 and this Section 5.2 are effectuated, including:
(i) providing for an orderly transition of insurance coverage from and after the Effective Time;
(ii) timely exchanging information regarding depletion or exhaustion of insurance policy limits, including loss runs;
(iii) providing any consents, not to be unreasonably withheld or delayed, necessary to allow for recovery of Insurance Proceeds, including communicating with the issuers of the Parent Policies and the GRP&E/BCS Policies (A) the consent, as necessary, of Parent to allow GRP&E/BCS SpinCo to effectively make claims for and to pursue insurance recoveries in accordance with the terms of this Section 5.2, and (B) the consent of GRP&E/BCS SpinCo to allow Parent to effectively make claims for and to pursue insurance recoveries in accordance with the terms of this Section 5.2;
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(iv) allowing Parent or other member of the Parent Group to make claims for an insurance recovery and communicate and negotiate with insurers in the name of GRP&E/BCS SpinCo (or other member of the GRP&E/BCS Group), including the initiation of litigation or arbitration, subject to the consent of GRP&E/BCS SpinCo or other member of the GRP&E/BCS Group, not to be unreasonably withheld or delayed, and to provide reasonable cooperation to such members of the Parent Group with respect to such claims. The out-of-pocket costs of making such claims shall be borne by Parent;
(v) allowing GRP&E/BCS SpinCo or other member of the GRP&E/BCS Group to make claims for an insurance recovery and communicate and negotiate with insurers in the name of Parent or other member of the Parent Group, including the initiation of litigation or arbitration, subject to the consent of Parent or other member of the Parent Group, not to be unreasonably withheld or delayed, and to provide reasonable cooperation to such member(s) of the GRP&E/BCS Group with response to such claims. The out-of-pocket costs of making such claims shall be borne by GRP&E/BCS SpinCo;
(vi) timely providing to GRP&E/BCS SpinCo copies in the possession of Parent of communications to and from insurers regarding coverage for any GRP&E/BCS Liability;
(vii) timely providing to Parent copies in the possession of GRP&E/BCS SpinCo of communications to and from insurers regarding any Parent Liability;
(viii) timely providing to GRP&E/BCS SpinCo copies of any Parent Policies under which on or prior to the Effective Time any member of the GRP&E/BCS Group was an insured as well as any documentation relating to the procurement of such policies; and
(ix) timely providing to Parent copies of GRP&E/BCS Policies under which on or prior to the Effective Time any member of the Parent Group was an insured as well as any documentation relating to the procurement of such policies.
Parent and the other members of the Parent Group shall notify and make claims for coverage under a Parent Policy of a GRP&E/BCS Liability but only if all of the following are applicable: (a) GRP&E/BCS SpinCo requests that Parent or other member of the Parent Group notify and make such claims for coverage; (b) it is impractical for GRP&E/BCS SpinCo and other members of the GRP&E/BCS Group themselves to notify and make such claims for coverage of a GRP&E/BCS Liability under the Parent Policies; and (c) Parent consents to make and notify such claims for coverage of a GRP&E/BCS Liability under the Parent Policies, such consent not to be unreasonably withheld. The non de minimis out-of-pocket costs of making such claims shall be borne by GRP&E/BCS SpinCo. GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group shall notify and make claims for coverage under a GRP&E/BCS Policy of a Parent Liability but only if all of the following are applicable: (a) Parent requests that GRP&E/BCS SpinCo or other member of the GRP&E/BCS Group notify and make such claims for coverage; (b) it is impractical for Parent and other members of the Parent Group themselves to notify and make such claims for coverage of an Parent Liability under the GRP&E/BCS Policies; and (c) GRP&E/BCS SpinCo consents to make and notify such claims for coverage of a Parent Liability under the GRP&E/BCS Policies, such consent not to be unreasonably withheld. The non de minimis out-of-pocket costs of making such claims shall be borne by Parent.
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(p) To the extent that any member of the Parent Group incurs out of pocket expenses in cooperating with any member of the GRP&E/BCS Group as required in this Section 5.2, GRP&E/BCS SpinCo shall reimburse Parent for such reasonable non de minimis out-of-pocket expenses provided that: (i) Parent shall have given GRP&E/BCS SpinCo advance written notice of its intent to recover such out-of-pocket expenses from GRP&E/BCS SpinCo and a reasonable estimate of the amount and nature of such expenses; and (ii) Parent shall reasonably cooperate with GRP&E/BCS SpinCo in managing the out-of-pocket expenses in an efficient manner.
(q) To the extent that any member of the GRP&E/BCS Group incurs out of pocket expenses in cooperating with any member of the Parent Group as required in this Section 5.2, Parent shall reimburse GRP&E/BCS SpinCo for such reasonable non de minimis out-of-pocket expenses provided that: (i) GRP&E/BCS SpinCo shall have given Parent advance written notice of its intent to recover such out-of-pocket expenses from Parent and a reasonable estimate of the amount and nature of such expenses; and (ii) GRP&E/BCS SpinCo shall reasonably cooperate with Parent in managing the out-of-pocket expenses in an efficient manner.
5.3 Late Payments. Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within sixty (60) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to Prime Rate plus two (2%) percent.
5.4 Treatment of Payments for Tax Purposes. For all applicable income tax purposes, the Parties agree to treat any payment required by this Agreement pursuant to Section 14.01 of the Tax Matters Agreement.
5.5 Inducement. Each of GRP&E/BCS SpinCo and Parent acknowledges and agrees that the other’s willingness to cause, effect and consummate the Separation and the Distribution has been conditioned upon and induced by its covenants and agreements in this Agreement and the Ancillary Agreements, including its assumption and/or retention of the GRP&E/BCS Liabilities or the Parent Liabilities, as applicable, pursuant to the Separation and the provisions of this Agreement and its covenants and agreements contained in Article IV.
5.6 Post-Effective Time Conduct. The Parties acknowledge that, after the Effective Time, each Party shall be independent of the other Party, with responsibility for its own actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its business, operations and activities following the Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Article IV) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.
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Article
VI
EXCHANGE OF INFORMATION; CONFIDENTIALITY
6.1 Agreement for Exchange of Information and Cooperation.
(a) Subject to Section 6.9 and any other applicable confidentiality obligations, each of Parent and GRP&E/BCS SpinCo, on behalf of itself and each member of its Group, agrees to use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party and the members of such other Party’s Group, at any time before, on or after the Effective Time, as soon as reasonably practicable after request therefor, any information and documents or other materials (or a copy thereof) in the possession or under the control of such Party or its Group that the requesting Party or its Group requests to the extent that (i) such information relates to the GRP&E/BCS Business, or any GRP&E/BCS Asset or GRP&E/BCS Liability, if GRP&E/BCS SpinCo is the requesting Party, or to the Howmet Aerospace Business, or any Parent Asset or Parent Liability, if Parent is the requesting Party; (ii) such information is reasonably requested in connection with the requesting Party’s compliance with its obligations under this Agreement or any Ancillary Agreement, or under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking to which it or any member of its Group is a party or by which any of their respective properties or assets are bound; (iii) such information is reasonably requested in connection with the requesting Party’s compliance with any obligation imposed by any Governmental Authority or under any applicable Law or securities exchange rule; or (iv) such information is reasonably requested by the requesting Party in evaluating its potential exposure to Liabilities of the other Party’s Group under guarantees and other obligations that have not been fully novated, replaced and/or transferred to such other Party’s Group in accordance with Sections 2.5 and 2.6; provided, however, that, in the event that the Party to whom the request has been made determines that any such provision of information could be commercially detrimental to the Party providing the information, violate any Law or agreement, or waive any privilege available under applicable Law, including any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence. The Party providing information pursuant to this Section 6.1 shall only be obligated to provide such information in the form, condition and format in which it then exists, and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such information, and nothing in this Section 6.1 shall expand the obligations of a Party under Section 6.4.
(b) Without limiting the generality of the foregoing, following the Effective Time, each Party shall use its commercially reasonable efforts to cooperate with the other Party in its information requests and other reasonable requests to enable (i) the other Party to meet its applicable financial reporting and related obligations under applicable Laws and securities exchange rules and timetable for dissemination of its earnings releases, financial statements, and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act; (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other applicable Laws; (iii) the other Party to meet its other applicable obligations imposed by any Governmental Authority or under any applicable Law or securities exchange rule; and (iv) the other Party to meet its applicable obligations under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking to which it or any member of its Group is a party or by which any of their respective properties or assets are bound.
6.2 Ownership of Information. The provision of any information pursuant to Section 6.1 or 6.7 shall not affect the ownership of such information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute a grant of rights in or to any such information.
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6.3 Compensation for Providing Information. A Party requesting information shall reimburse the other Party for any non de minimis, reasonable costs, if any, of creating, gathering, copying, transporting and otherwise complying with the request with respect to such information (including any reasonable costs and expenses incurred in any review of information for purposes of protecting the Privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested information). Except as may be otherwise specifically provided elsewhere in this Agreement, any Ancillary Agreement or any other agreement between the Parties, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.
6.4 Record Retention. To facilitate the possible exchange of information pursuant to this Article VI and other provisions of this Agreement after the Effective Time, each Party agrees to use reasonable best efforts, which shall be no less rigorous than those used for retention of such Party’s own information, to retain all information in its possession or control at the Effective Time in accordance with the policies of Parent as in effect at the Effective Time or such other policies as may be adopted by Parent after the Effective Time (provided that Parent notifies GRP&E/BCS SpinCo in writing of any such change); provided, however, that in the case of any information relating to Taxes, employee benefits or Environmental Liabilities, such retention period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof). Notwithstanding the foregoing, Section 9.01 of the Tax Matters Agreement shall govern the retention of Tax Records (as defined in the Tax Matters Agreement) and Section 9.01 of the Employee Matters Agreement shall govern the retention of employment and benefits related records.
6.5 Limitations of Liability. Neither Party shall have any Liability to the other Party in the event that any information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of gross negligence, bad faith or willful misconduct by the Party providing such information. Neither Party shall have any Liability to any other Party if any information is destroyed after commercially reasonable efforts by such Party to comply with the provisions of Section 6.4.
6.6 Other Agreements Providing for Exchange of Information.
(a) The rights and obligations granted under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of information set forth in any Ancillary Agreement.
(b) Any party that receives, pursuant to a request for information in accordance with this Article VI, Tangible Information that is not relevant to its request shall, at the request of the providing Party, (i) return it to the providing Party or destroy it, at the providing Party’s election; and (ii) deliver to the providing Party a written confirmation that such Tangible Information was returned or destroyed, as the case may be, which confirmation shall be signed by an authorized representative of the requesting Party.
6.7 Production of Witnesses; Records; Cooperation.
(a) After the Effective Time, except in the case of an adversarial Action or Dispute between Parent and GRP&E/BCS SpinCo, or any members of their respective Groups, each Party shall use commercially reasonable efforts to make available to the other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its Group as witnesses and any books, records or other documents or information within its control or which it otherwise has the ability to make available without unreasonable burden, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents or information may be reasonably be required in connection with any Action in which the requesting Party (or member of its Group) may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all costs and expenses in connection therewith.
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(b) If an Indemnifying Party elects to defend any Third-Party Claim, the other Party shall make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents or information within its control or which it otherwise has the ability to make available without unreasonable burden, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents or information may reasonably be required in connection with such defense or any related settlement or compromise, and shall otherwise cooperate in such defense or any related settlement or compromise.
(c) Without limiting the foregoing, the Parties shall cooperate and consult to the extent reasonably necessary with respect to any Actions and in accordance with the provisions regarding cooperation and/or consultation set forth in any Ancillary Agreement.
(d) Without limiting any provision of this Section 6.7 and subject to the terms of the Intellectual Property Agreements, each Party agrees to cooperate, and to cause the members of its Group to cooperate, with the other Party and the members of its Group in the defense of any infringement or similar claim with respect to any Intellectual Property, and each Party agrees not to, and not to permit any member of its respective Group to, claim to acknowledge, the validity or infringing use of any Intellectual Property of a Third Parties in a manner that would hamper or undermine the defense of such infringement or similar claim.
(e) The obligation of the Parties to provide witnesses pursuant to this Section 6.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses directors, officers, employees, other personnel and agents without regard to whether such person could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 6.7(a)).
6.8 Privileged Matters.
(a) The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the Parent Group and the GRP&E/BCS Group, and that each of the members of the Parent Group and the GRP&E/BCS Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges and immunities that may be asserted under applicable Law in connection therewith. The Parties recognize that legal and other professional services will be provided following the Effective Time, which services shall be rendered solely for the benefit of the Parent Group or the GRP&E/BCS Group, as the case may be.
(b) The Parties agree as follows:
(i) Parent shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Howmet Aerospace Business and not to the GRP&E/BCS Business, whether or not the Privileged Information is in the possession or under the control of any member of the Parent Group or any member of the GRP&E/BCS Group. Parent shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Parent Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of any member of the Parent Group or any member of the GRP&E/BCS Group.
(ii) GRP&E/BCS SpinCo shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the GRP&E/BCS Business and not to the Howmet Aerospace Business, whether or not the Privileged Information is in the possession or under the control of any member of the GRP&E/BCS Group or any member of the Parent Group. GRP&E/BCS SpinCo shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any GRP&E/BCS Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the privileged Information is in the possession or under the control of any member of the GRP&E/BCS Group or any member of the Parent Group.
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(iii) If the Parties do not agree as to whether certain information is Privileged Information, then such information shall be treated as Privileged Information, and the Party that believes that such information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information unless the Parties otherwise agree. The Parties shall use the procedures set forth in Article VII to resolve any disputes as to whether any information relates solely to the Howmet Aerospace Business, solely to the GRP&E/BCS Business, or to both the Howmet Aerospace Business and the GRP&E/BCS Business.
(c) Subject to the remaining provisions of this Section 6.8, the Parties agree that they shall have a shared privilege or immunity with respect to (i) all privileges and immunities not allocated pursuant to Section 6.8(b) and (ii) all privileges and immunities relating to any Actions or other matters that involve both Parties (or one or more members of their respective Groups) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by either Party without the consent of the other Party.
(d) If any dispute arises between the Parties or any members of their respective Groups regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party and/or any member of its Group, each Party agrees that it shall (i) negotiate with the other Party in good faith; (ii) endeavor to minimize any prejudice to the rights of the other Party; and (iii) not unreasonably withhold consent to any request for waiver by the other Party. In addition, each Party specifically agrees that it shall not withhold its consent to the waiver of a privilege or immunity for any purpose except to protect its own legitimate interests.
(e) In the event of any adversarial Action between Parent and GRP&E/BCS SpinCo, or any members of their respective Groups, either Party may waive a privilege in which the other Party or member of such other Party’s Group has a shared privilege, without obtaining consent pursuant to Section 6.8(c); provided that such waiver of a shared privilege shall be effective only as to the use of information with respect to the Action between the Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to any Third Party.
(f) Upon receipt by either Party, or by any member of its Group, of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Privileged Information subject to a shared privilege or immunity or as to which the other Party has the sole right hereunder to assert a privilege or immunity, or if either Party obtains knowledge that any of its, or any member of its respective Group’s, current or former directors, officers, agents or employees has received any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of such Privileged Information, such Party shall promptly notify the other Party of the existence of the request (which notice shall be delivered to such other Party no later than five (5) business days following the receipt of any such subpoena, discovery or other request) and shall provide the other Party a reasonable opportunity to review the Privileged Information and to assert any rights it or they may have under this Section 6.8 or otherwise to prevent the production or disclosure of such Privileged Information.
(g) Any furnishing of, or access or transfer of, any information pursuant to this Agreement is made in reliance on the agreement of Parent and GRP&E/BCS SpinCo set forth in this Section 6.8 and in Section 6.9 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that (i) their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Groups pursuant to this Agreement, shall not be deemed a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise, and (ii) in the event of any exchange by one Party to the other Party of any Privileged Information that should not have been transferred pursuant to the terms of this Article VI, the Party receiving such Privileged Information shall promptly return such Privileged Information to and at the request of the Party that has the right to assert the privilege or immunity.
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(h) In connection with any matter contemplated by Section 6.7 or this Section 6.8, each Party agrees to, and to cause the applicable members of its Group to, use reasonable efforts to maintain the other Party’s separate, and both Parties’ joint, privileges and immunities, including by executing joint defense and/or common interest agreements to implement and/or supersede the provisions of Section 6.7 or this Section 6.8 where necessary or useful for this purpose.
6.9 Confidentiality.
(a) Confidentiality. Subject to Section 6.10 and, and without prejudice to any longer period that may be provided for in any of the Ancillary Agreements, from and after the Effective Time until the five (5)-year anniversary of the Effective Time, each of Parent and GRP&E/BCS SpinCo, on behalf of itself and each member of its Group, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to Parent’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party or any member of the other Party’s Group or their respective businesses that is either in its possession (including confidential and proprietary information in its possession prior to the date hereof) or furnished by any such other Party or any member of such other Party’s Group or their respective Representatives at any time pursuant to this Agreement, any Ancillary Agreement or otherwise, and shall not use such confidential and proprietary information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential and proprietary information has been (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any member of such Party’s Group or any of their respective Representatives in violation of this Agreement, (ii) later lawfully acquired from other sources by such Party (or any member of such Party’s Group) which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information, or (iii) independently developed or generated without reference to or use of any proprietary or confidential information of such other Party or any member of such other Party’s Group. If any confidential and proprietary information of one Party or any member of its Group is disclosed to the other Party or any member of such other Party’s Group in connection with providing services to such first Party or any member of its Group under this Agreement or any Ancillary Agreement, then such disclosed confidential and proprietary information shall be used only as required to perform such services.
(b) No Release; Return or Destruction. Each Party agrees not to release or disclose, or permit to be released or disclosed, any information addressed in Section 6.9(a) to any other Person, except its Representatives who need to know such information in their capacities as such (who shall be advised of their obligations hereunder with respect to such information), and except in compliance with Section 6.10. Without limiting the foregoing, when any such information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, and is no longer subject to any legal hold or other document preservation obligation, each Party shall promptly, at the request of the other Party, either return to the other Party all such information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or notify the other Party in writing that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon); provided, that the Parties may retain electronic back-up versions of such information maintained on routine computer system backup tapes, disks or other backup storage devices; provided further, that any such information so retained shall remain subject to the confidentiality provisions of this Agreement or any Ancillary Agreement.
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(c) Third-Party Information; Privacy or Data Protection Laws. Each Party acknowledges that it and the members of its Group may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or legally-protected personal information relating to, Third Parties (i) that was received under privacy policies and/or confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or members of such other Party’s Group, on the other hand, prior to the Effective Time; or (ii) that, as between the two Parties, was originally collected by the other Party or members of such other Party’s Group and that may be subject to and protected by privacy policies, as well as privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause the members of its Group and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or legally-protected personal information relating to, Third Parties in accordance with privacy policies and privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among the other Party or members of the other Party’s Group, on the one hand, and such Third Parties, on the other hand.
6.10 Protective Arrangements. In the event that a Party or any member of its Group either determines on the advice of its counsel that it is required to disclose any information pursuant to applicable Law or receives any request or demand under lawful process or from any Governmental Authority to disclose or provide information of the other Party (or any member of the other Party’s Group) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party (to the extent legally permitted) as promptly as practicable under the circumstances prior to disclosing or providing such information and shall cooperate, at the expense of the other Party, in seeking any appropriate protective order requested by the other Party. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.
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Article
VII
DISPUTE RESOLUTION
7.1 Good-Faith Negotiation. Subject to Section 7.4 and except as otherwise provided in any Ancillary Agreement, either Party seeking resolution of any dispute, controversy or claim arising out of or relating to this Agreement or any Ancillary Agreement (including regarding whether any Assets are GRP&E/BCS Assets, any Liabilities are GRP&E/BCS Liabilities or the validity, interpretation, breach or termination of this Agreement or any Ancillary Agreement) (a “Dispute”), shall provide written notice thereof to the other Party (the “Initial Notice”), and within thirty (30) days of the delivery of the Initial Notice, the Parties shall attempt in good faith to negotiate a resolution of the Dispute. The negotiations shall be conducted by executives who hold, at a minimum, the title of vice president and who have authority to settle the Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the Parties are unable for any reason to resolve a Dispute within thirty (30) days after the delivery of such notice or if a Party reasonably concludes that the other Party is not willing to negotiate as contemplated by this Section 7.1, the Dispute shall be submitted to mediation in accordance with Section 7.2.
7.2 Mediation. Any Dispute not resolved pursuant to Section 7.1 shall, at the written request of a Party (a “Mediation Request”), be submitted to nonbinding mediation in accordance with the then current International Institute for Conflict Prevention and Resolution (“CPR”) Mediation Procedure, except as modified herein. The mediation shall be held in Pittsburgh, Pennsylvania or such other place as the Parties may mutually agree in writing. The Parties shall have twenty (20) days from receipt by a Party of a Mediation Request to agree on a mediator. If no mediator has been agreed upon by the Parties within twenty (20) days of receipt by a party of a Mediation Request, then a Party may request (on written notice to the other Party), that CPR appoint a mediator in accordance with the CPR Mediation Procedure. All mediation pursuant to this clause shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence, and no oral or documentary representations made by the Parties during such mediation shall be admissible for any purpose in any subsequent proceedings. No Party shall disclose or permit the disclosure of any information about the evidence adduced or the documents produced by the other Party in the mediation proceedings or about the existence, contents or results of the mediation without the prior written consent of such other Party, except in the course of a judicial or regulatory proceeding or as may be required by Law or requested by a Governmental Authority or securities exchange. Before making any disclosure permitted by the preceding sentence, the Party intending to make such disclosure shall, to the extent reasonably practicable, give the other Party reasonable written notice of the intended disclosure and afford the other Party a reasonable opportunity to protect its interests. If the Dispute has not been resolved within sixty (60) days of the appointment of a mediator, or within ninety (90) days after receipt by a Party of a Mediation Request (whichever occurs sooner), or within such longer period as the Parties may agree to in writing, then the Dispute shall be submitted to binding arbitration in accordance with Section 7.3. All costs and expenses charged by the mediator and/or by CPR shall be shared equally by Parent and GRP&E/BCS SpinCo.
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7.3 Arbitration.
(a) In the event that a Dispute has not been resolved within sixty (60) days of the appointment of a mediator in accordance with Section 7.2, or within ninety (90) days after receipt by a Party of a Mediation Request (whichever occurs sooner), or within such longer period as the Parties may agree to in writing, then such Dispute shall, upon the written request of a Party (the “Arbitration Request”) be submitted to be finally resolved by binding arbitration pursuant to the CPR arbitration procedure. The arbitration shall be held in the same location as the mediation pursuant to Section 7.2. Unless otherwise agreed by the Parties in writing, any Dispute to be decided pursuant to this Section 7.3 shall be decided (i) before a sole arbitrator if the amount in dispute, inclusive of all claims and counterclaims, totals less than $10 million; or (ii) by a panel of three (3) arbitrators if the amount in dispute, inclusive of all claims and counterclaims, totals $10 million or more. All costs and expenses charged by the arbitrator and/or by CPR shall be shared equally by Parent and GRP&E/BCS SpinCo.
(b) The panel of three (3) arbitrators will be chosen as follows: (i) within fifteen (15) days from the date of the receipt of the Arbitration Request, each Party shall name an arbitrator; and (ii) the two (2) Party-appointed arbitrators shall thereafter, within thirty (30) days from the date on which the second of the two (2) arbitrators was named, name a third, independent arbitrator who shall act as chairperson of the arbitral tribunal. In the event that either Party fails to name an arbitrator within fifteen (15) days from the date of receipt of the Arbitration Request, then upon written application by either Party, that arbitrator shall be appointed pursuant to the CPR arbitration procedure. In the event that the two (2) Party-appointed arbitrators fail to appoint the third, then the third, independent arbitrator shall be appointed pursuant to the CPR arbitration procedure. If the arbitration shall be before a sole independent arbitrator, then the sole independent arbitrator shall be appointed by agreement of the Parties within fifteen (15) days of the date of receipt of the Arbitration Request. If the Parties cannot agree to a sole independent arbitrator during such fifteen (15)-day period, then upon written application by either Party, the sole independent arbitrator shall be appointed pursuant to the CPR arbitration procedure.
(c) The arbitrator(s) shall have the right to award, on an interim basis, or include in the final award, any relief which it deems proper in the circumstances, including money damages (with interest on unpaid amounts from the due date), injunctive relief (including specific performance) and attorneys’ fees and costs; provided that the arbitrator(s) shall not award any relief not specifically requested by the Parties and, in any event, shall not award any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim), except as may be otherwise provided in an Ancillary Agreement. Upon selection of the arbitrator(s) following any grant of interim relief by a special arbitrator or court pursuant to Section 7.4, the arbitrator(s) may affirm or disaffirm that relief, and the parties shall seek modification or rescission of the order entered by the court as necessary to accord with the decision of the arbitrator(s). The award of the arbitrator(s) shall be final and binding on the Parties, and may be enforced in any court of competent jurisdiction. The initiation of mediation or arbitration pursuant to this Article VII shall toll the applicable statute of limitations for the duration of any such proceedings.
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7.4 Litigation and Unilateral Commencement of Arbitration. Notwithstanding the foregoing provisions of this Article VII, (a) a Party may seek preliminary provisional or injunctive judicial relief with respect to a Dispute without first complying with the procedures set forth in Sections 7.1, 7.2 and 7.3 if such action is reasonably necessary to avoid irreparable damage and (b) either Party may initiate arbitration before the expiration of the periods specified in Sections 7.2 and 7.3 if (i) such Party has submitted a Mediation Request or Arbitration Request, as applicable, and the other Party has failed, within the applicable periods set forth in Section 7.3, to agree upon a date for the first mediation session to take place within thirty (30) days after the appointment of such mediator or such longer period as the Parties may agree to in writing or (ii) such Party has failed to comply with Section 7.3 in good faith with respect to commencement and engagement in arbitration. In such event, the other Party may commence and prosecute such arbitration unilaterally in accordance with the CPR arbitration procedure.
7.5 Conduct During Dispute Resolution Process. Unless otherwise agreed in writing, the Parties shall, and shall cause the respective members of their Groups to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by hereby and thereby during the course of dispute resolution pursuant to the provisions of this Article VII unless such commitments are the specific subject of the Dispute at issue.
Article
VIII
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
8.1 Further Assurances.
(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall use its reasonable best efforts, prior to, on and after the Effective Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the Effective Time, each Party shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all Approvals or Notifications of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the GRP&E/BCS Assets and the Parent Assets and the assignment and assumption of the GRP&E/BCS Liabilities and the Parent Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party shall, at the reasonable request, cost and expense of the other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.
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(c) On or prior to the Effective Time, Parent and GRP&E/BCS SpinCo in their respective capacities as direct and indirect shareholders of the members of their Groups, shall each ratify any actions that are reasonably necessary or desirable to be taken by Parent, GRP&E/BCS SpinCo or any of the members of their respective Groups, as the case may be, to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements.
(d) Parent and GRP&E/BCS SpinCo, and each of the members of their respective Groups, waive (and agree not to assert against any of the others) any claim or demand that any of them may have against any of the others for any Liabilities or other claims relating to or arising out of: (i) the failure of GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group, on the one hand, or of Parent or any other member of the Parent Group, on the other hand, to provide any notification or disclosure required under any state Environmental Law in connection with the Separation or the other transactions contemplated by this Agreement, including the transfer by any member of any Group to any member of the other Group of ownership or operational control of any Assets not previously owned or operated by such transferee; or (ii) any inadequate, incorrect or incomplete notification or disclosure under any such state Environmental Law by the applicable transferor. To the extent any Liability to any Governmental Authority or any Third Party arises out of any action or inaction described in clause (i) or (ii) of the preceding sentence, the transferee of the applicable Asset hereby assumes and agrees to pay any such Liability.
8.2 Continued Use of Arconic Name. Except as otherwise provided in the Intellectual Property Agreements, Parent undertakes to (and to cause the members of the Parent Group to) discontinue the use of the name “Arconic” and the related trademark symbol as soon as reasonably practicable after the Effective Time, but in any case not longer than the period set forth in the Intellectual Property Agreements (the “Transition Period”). Notwithstanding the foregoing, effective as of the Effective Time, GRP&E/BCS SpinCo, on behalf of itself and its Affiliates, hereby grants to the members of the Parent Group a non-exclusive, sublicenseable, worldwide and royalty-free license to use and have used the name “Arconic” and the related trademark symbol for the sale of inventory containing the such name or trademark applied to such products created: (a) prior to the Effective Time and (b) during the Transition Period; provided, that Parent shall (and shall cause the members of the Parent Group and its sublicensees to) use such name or trademark at a level of quality equivalent to that in effect as of the Effective Time.
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8.3 Domain Name Use. Upon the request of a Party that used a domain name in connection with its business prior to the date of this Agreement, the Party now owning the domain name will re-direct traffic for that domain name to a domain name identified by the requesting Party for a period ending one (1) year after the date of the Agreement.
Article
IX
TERMINATION
9.1 Termination. This Agreement and all Ancillary Agreements may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by Parent, in its sole and absolute discretion, without the approval or consent of any other Person, including GRP&E/BCS SpinCo. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by a duly authorized officer of each of the Parties.
9.2 Effect of Termination. In the event of any termination of this Agreement prior to the Effective Time, no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party by reason of this Agreement.
Article
X
MISCELLANEOUS
10.1 Counterparts; Entire Agreement; Corporate Power.
(a) This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties hereto or the parties thereto, respectively, and delivered to the other Party hereto or parties thereto, respectively.
(b) This Agreement, the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.
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(c) Parent represents on behalf of itself and each other member of the Parent Group, and GRP&E/BCS SpinCo represents on behalf of itself and each other member of the GRP&E/BCS Group, as follows:
(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and
(ii) this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.
(d) Each Party acknowledges that it and each other Party is executing certain of the Ancillary Agreements by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it shall as promptly as reasonably practicable cause each such Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.
10.2 Governing Law.
(a) This Agreement and, unless expressly provided therein, each Ancillary Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.
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(b) Subject to the provisions of Article VII, each of the Parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, in any action or proceeding arising out of or relating to this Agreement for recognition or enforcement of any judgment relating hereto, and each of the Parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, (iii) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any such action or proceeding in such courts and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in such courts.
10.3 Assignability. Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties hereto and the parties thereto, respectively, and their respective successors and permitted assigns; provided, however, that neither Party nor any such party thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other Party hereto or other parties thereto, as applicable. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement and the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a Change of Control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.
10.4 Third-Party Beneficiaries. Except for any Parent Indemnitee or GRP&E/BCS Indemnitee (in their respective capacities as such) expressly entitled to indemnification rights under this Agreement or any Ancillary Agreement, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties hereto and parties thereto, respectively, and are not intended to confer upon any other Person any rights or remedies hereunder, and (b) there are no third-party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.
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10.5 Notices. All notices, requests, claims, demands or other communications under this Agreement and, to the extent, applicable and unless otherwise provided therein, under each of the Ancillary Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service or electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service or by registered or certified mail postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.5):
If to Parent, to:
Arconic Inc.
390 Park Avenue
New York, NY 10022
Attention: Chief Legal Officer
E-mail: Kate.Ramundo@howmet.com
If to GRP&E/BCS SpinCo, to:
Arconic Rolled Products Corporation
201 Isabella Street
Pittsburgh, PA 15212
Attention: Chief Legal Officer
E-Mail: Diana.Toman@arconic.com
A Party may, by notice to the other Party, change the address to which such notices are to be given.
10.6 Severability. If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.
10.7 Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay unless this Agreement has previously been terminated under Article IX. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.
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10.8 No Set-Off. Except as expressly set forth in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any member of such Party’s Group shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any member of its Group arising out of this Agreement or any Ancillary Agreement.
10.9 Publicity. Prior to the Effective Time, each of GRP&E/BCS SpinCo and Parent shall consult with each other prior to issuing any press releases or otherwise making public statements with respect to the Separation, the Distribution or any of the other transactions contemplated hereby or under any Ancillary Agreement and prior to making any filings with any Governmental Authority with respect thereto.
10.10 Expenses. Except as otherwise expressly set forth in this Agreement (including Section 2.14(b)) or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all costs and expenses incurred (a) on or prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement and any Ancillary Agreement, the Registration Statement, the Separation and the Distribution and the consummation of the transactions contemplated hereby and thereby shall be charged to and paid by Parent and (b) after the Effective Time shall be borne by the Party or its applicable Subsidiary incurring such costs or expenses.
10.11 Headings. The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.
10.12 Survival of Covenants. Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and each Ancillary Agreement, and Liability for the breach of any obligations contained herein, shall survive the Separation and the Distribution and shall remain in full force and effect.
10.13 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement must be in writing and shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
10.14 Specific Performance. Subject to the provisions of Article VII, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party hereto or parties thereto, respectively, who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of their respective rights under this Agreement or such Ancillary Agreement, as applicable, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that (a) the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss, and (b) any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.
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10.15 Amendments. No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.
10.16 Interpretation. In this Agreement and any Ancillary Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement); (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified; (d) unless otherwise stated, all references to any agreement (including this Agreement and each Ancillary Agreement) shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in Pittsburgh, Pennsylvania or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; and (k) unless expressly stated to the contrary in this Agreement or in any Ancillary Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to March 31, 2020.
10.17 Limitations of Liability. Notwithstanding anything in this Agreement to the contrary, neither GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group, on the one hand, nor Parent or any member of the Parent Group, on the other hand, shall be liable under this Agreement to the other for any indirect, incidental, consequential, special, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim), except as may be otherwise provided in an Ancillary Agreement.
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10.18 Performance. Parent shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Parent Group. GRP&E/BCS SpinCo shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the GRP&E/BCS Group. Each Party (including its permitted successors and assigns) further agrees that it shall (a) give timely notice of the terms, conditions and continuing obligations contained in this Agreement and any applicable Ancillary Agreement to all of the other members of its Group and (b) cause all of the other members of its Group not to take any action or fail to take any such action inconsistent with such Party’s obligations under this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby.
10.19 Mutual Drafting; Precedence.
(a) This Agreement and the Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.
(b) In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Tax Matters Agreement, the Employee Matters Agreement, the Metal Supply Agreements, the Intellectual Property Agreements, the Leases, the Kofem Site Services Agreement, the Davenport Tax Exempt Bonds Reimbursement Agreement (each, a “Specified Ancillary Agreement”), the terms of the applicable Specified Ancillary Agreement shall control with respect to the subject matter addressed by such Specified Ancillary Agreement to the extent of such conflict or inconsistency.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Separation and Distribution Agreement to be executed by their duly authorized representatives as of the date first written above.
ARCONIC INC. | ||||
By: | /s/ Kenneth J. Giacobbe | |||
Name: | Kenneth J. Giacobbe | |||
Title: | Executive Vice President and Chief Financial Officer |
[Signature Page to Separation and Distribution Agreement]
ARCONIC ROLLED PRODUCTS CORPORATION | ||||
By: | /s/ Timothy D. Myers | |||
Name: | Timothy D. Myers | |||
Title: | President |
[Signature Page to Separation and Distribution Agreement]
Exhibit 2.2
EXECUTION VERSION
TAX MATTERS AGREEMENT
DATED AS OF March 31, 2020
BY AND BETWEEN
ARCONIC INC.
AND
ARCONIC ROLLED PRODUCTS CORPORATION
TABLE OF CONTENTS
Page
Article 1. Definition of Terms | 2 |
Article 2. Allocation of Tax Liabilities | 15 |
Section 2.01 General Rule | 15 |
Section 2.02 Allocation of United States Federal Taxes | 15 |
Section 2.03 Allocation of State Taxes | 16 |
Section 2.04 Allocation of Foreign Taxes | 17 |
Section 2.05 Certain Transaction Transfer and Other Taxes | 18 |
Article 3. Proration of Taxes for Straddle Periods. | 19 |
Section 3.01 General Method of Proration | 19 |
Section 3.02 Transaction Treated as Extraordinary Item | 19 |
Article 4. Preparation and Filing of Tax Returns. | 19 |
Section 4.01 Parent Returns | 19 |
Section 4.02 GRP&E/BCS Returns | 19 |
Section 4.03 Tax Reporting Practices | 20 |
Section 4.04 Consolidated or Combined Tax Returns | 20 |
Section 4.05 Right to Review Tax Returns | 21 |
Section 4.06 Adjustment Requests and GRP&E/BCS Carryback Items | 22 |
Section 4.07 Apportionment of Earnings and Profits and Tax Attributes | 22 |
Article 5. Payments | 23 |
Section 5.01 Payment of Taxes | 23 |
Section 5.02 Adjustments Resulting in Underpayments | 23 |
Section 5.03 Indemnification Payments | 23 |
Section 5.04 Payors; Payees; Treatment | 23 |
Article 6. Tax Benefits | 24 |
Section 6.01 Tax Benefits | 24 |
Section 6.02 Parent and GRP&E/BCS SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation | 26 |
Article 7. Tax-Free Status | 27 |
Section 7.01 Representations of Parent and GRP&E/BCS SpinCo | 27 |
Section 7.02 Restrictions on GRP&E/BCS SpinCo. | 27 |
Section 7.03 Certain Issuances of GRP&E/BCS Capital Stock | 29 |
Section 7.04 Restrictions on Parent | 30 |
Section 7.05 Procedures Regarding Post-Distribution Rulings and Unqualified Tax Opinions | 30 |
Section 7.06 Liability for Separation Tax Losses | 31 |
Section 7.07 Payment of Separation Taxes | 32 |
Section 7.08 Section 336(e) Election | 33 |
Article 8. Assistance and Cooperation | 33 |
Section 8.01 Assistance and Cooperation | 33 |
Section 8.02 Tax Return Information | 34 |
Section 8.03 Reliance by Parent | 34 |
Section 8.04 Reliance by GRP&E/BCS SpinCo | 34 |
Article 9. Tax Records | 35 |
Section 9.01 Retention of Tax Records | 35 |
Section 9.02 Access to Tax Records | 35 |
Section 9.03 Preservation of Privilege | 35 |
Article 10. Tax Contests | 36 |
Section 10.01 Notice | 36 |
Section 10.02 Control of Tax Contests | 36 |
Article 11. Taxes and Tax Benefits Payable by Contract. | 39 |
Section 11.01 Tax Indemnities Assigned under Separation and Distribution Agreement. | 39 |
Section 11.02 GRP&E/BCS Retained Taxes and GRP&E/BCS Retained Tax Benefits | 39 |
Article 12. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements | 40 |
Article 13. Survival of Obligations | 40 |
Article 14. Treatment of Payments; Tax Gross-Up | 40 |
Section 14.01 Treatment of Tax Indemnity and Tax Benefit Payments | 40 |
Section 14.02 Tax Gross-Up | 41 |
Section 14.03 Interest | 41 |
Article 15. Disagreements | 41 |
Section 15.01 Dispute Resolution | 41 |
Section 15.02 Injunctive Relief | 42 |
Article 16. Late Payments | 42 |
Article 17. Expenses | 42 |
Article 18. General Provisions | 42 |
Section 18.01 Counterparts; Entire Agreement; Corporate Power. | 42 |
Section 18.02 Governing Law | 43 |
Section 18.03 Assignability | 44 |
Section 18.04 Third-Party Beneficiaries | 44 |
Section 18.05 Notices | 44 |
Section 18.06 Severability | 45 |
Section 18.07 Force Majeure | 45 |
Section 18.08 No Set-Off | 45 |
Section 18.09 Headings | 45 |
Section 18.10 Waivers of Default | 45 |
Section 18.11 Specific Performance | 45 |
Section 18.12 Amendments | 46 |
Section 18.13 Interpretation | 46 |
Section 18.14 Limitations of Liability | 46 |
Section 18.15 Performance | 46 |
Section 18.16 Mutual Drafting | 47 |
TAX MATTERS AGREEMENT
This TAX MATTERS AGREEMENT (this “Agreement”) is entered into as of March 21, 2020 by and between Arconic Inc., a Delaware corporation (“Parent”), and Arconic Rolled Products Corporation, a Delaware corporation (“GRP&E/BCS SpinCo”) (collectively, the “Companies” and each, a “Company”).
RECITALS
WHEREAS, Parent and GRP&E/BCS SpinCo have entered into a Separation and Distribution Agreement, dated as of March 31,2020 (the “Separation and Distribution Agreement”), providing for the separation of the Howmet Aerospace Business from the GRP&E/BCS Business (the “Separation”);
WHEREAS, Parent and its Subsidiaries have engaged in certain restructuring transactions to facilitate the Separation as set forth in the Separation Step Plan;
WHEREAS, pursuant to the Separation Step Plan and the terms of the Separation and Distribution Agreement, Parent will, among other things, (a) contribute, convey, sell and otherwise transfer (and cause its Subsidiaries to contribute, convey, sell and otherwise transfer) the GRP&E/BCS Assets to GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group and (b) cause GRP&E/BCS SpinCo and the other members of the GRP&E/BCS Group to assume the GRP&E/BCS Liabilities;
WHEREAS, pursuant to the Separation Step Plan and the terms of the Separation and Distribution Agreement, among other things, (a) Arcolux will transfer all of the equity interests in New GRP Holdco to Parent in exchange for a note (which note will be distributed to AIHC, which at the time of such distribution will be treated as disregarded as separate from Parent for U.S. federal income tax purposes, and cancelled by AIHC) (the “First Internal Distribution”), (b) Arcolux will distribute all of the equity interests of Arconic UK Holdings Limited, a United Kingdom company (which at the time of such distribution will be treated as disregarded as separate from Arcolux for U.S. federal income tax purposes and which will own all of the equity interests of Arconic Manufacturing), to AIHC (the “Second Internal Distribution”), (c) Parent will contribute the GRP&E/BCS Assets to GRP&E/BCS SpinCo in exchange for (i) the assumption by GRP&E/BCS SpinCo of the GRP&E/BCS Liabilities, (ii) the actual or deemed issuance by GRP&E/BCS SpinCo to Parent of GRP&E/BCS Shares, and (iii) the GRP&E/BCS Cash Payment (the “Contribution”) and (d) Parent will make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of all of the outstanding GRP&E/BCS Shares (the “External Distribution,” and, together with the First Internal Distribution and the Second Internal Distribution, the “Distributions”);
WHEREAS, for Federal Income Tax purposes, it is intended that the Contribution and the External Distribution, taken together, shall qualify as a “reorganization” pursuant to Sections 368(a)(1)(D) and 355(a) of the Code;
WHEREAS, Parent intends to transfer amounts received pursuant to the GRP&E/BCS Cash Payment to its creditors in pursuance of the plan of reorganization for purposes of Section 361(b)(1)(A) and 361(b)(3) of the Code; and
WHEREAS, the Companies desire to provide for and agree upon the allocation between them of liabilities for Taxes arising prior to, as a result of, and subsequent to the Distributions, and to provide for and agree upon other matters relating to Taxes.
NOW, THEREFORE, in consideration of the mutual agreements contained herein, the Companies hereby agree as follows:
Article 1. Definition of Terms. For purposes of this Agreement (including the Recitals hereof), the following terms have the following meanings:
“Accounting Cutoff Date” means any date as of the end of which there is a closing of the financial accounting records.
“ACICL” means Arconic (China) Investment Company Limited, a Chinese company.
“Active Trade or Business” means, with respect to each of Parent and GRP&E/BCS SpinCo, the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by such entity and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of the trades or businesses relied upon to satisfy Section 355(b) of the Code with respect to the External Distribution (as further described in the Representation Letters) as conducted immediately prior to the External Distribution.
“Actually Realized” or “Actually Realizes” means actually incurred or realized (or actually incurs or realizes), and, for purposes of determining the timing of the incurrence of any Tax Liability or the realization of a Refund (or any related Tax cost or Tax Benefit), whether by receipt or as a credit or other offset to Taxes otherwise payable, by a Person in respect of any payment, transaction, occurrence or event, such Tax Liability or Refund (or any related Tax cost or Tax Benefit) shall be Actually Realized at the time at which the amount of Taxes paid or Refund realized by such Person is increased above or reduced below the amount of Taxes that such Person would have been required to pay or Refund that such Person would have realized but for such payment, transaction, occurrence or event.
“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, Refund, or credit of Taxes, including (a) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (b) any claim for equitable recoupment or other offset and (c) any claim for Refund of Taxes previously paid.
“Affiliate” has the meaning set forth in the Separation and Distribution Agreement.
“Agreement” has the meaning set forth in the Preamble.
“AIHC” means Arconic International Holding Company LLC, a Delaware limited liability company.
“Alcoa” means Alcoa Corporation, a Delaware corporation.
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“Ancillary Agreements” has the meaning set forth in the Separation and Distribution Agreement.
“Arcolux” means Arconic Luxembourg S.à.r.l., a Luxembourg company.
“Arconic (Kunshan)” means Arconic (Kunshan) Aluminum Products Company, Ltd., a Chinese company.
“Arconic Manufacturing” means Arconic Manufacturing (GB) Limited, a United Kingdom company.
“Arconic (Qinhuangdao)” means Arconic (Qinhuangdao) Aluminum Industries Co. Ltd, a Chinese company.
“Business” means the Howmet Aerospace Business or the GRP&E/BCS Business, or both, as the context requires.
“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by Law to close in Pittsburgh, Pennsylvania or New York, New York.
“Capital Stock” means all classes or series of capital stock of an entity, including (a) common stock, (b) all options, warrants and other rights to acquire such capital stock and (c) all instruments properly treated as stock in such entity for Federal Income Tax purposes.
“CFO Certificate” has the meaning set forth in Section 7.03.
“Change of Control” has the meaning set forth in the Separation and Distribution Agreement.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Combined Return” means a consolidated, affiliated, combined, unitary, group or other similar Tax Return (including a Tax Return with respect to a profit and/or loss sharing group, group payment or similar group or fiscal unity other than a Tax Return with respect to a group entitled to or claiming “group relief” under the applicable Tax Laws of the United Kingdom or a Tax Return of any member of such group) that actually includes, by election or otherwise, one or more members of the Parent Group together with one or more members of the GRP&E/BCS Group (for the avoidance of doubt, including any such Income Tax Return that is a Parent Federal Consolidated Income Tax Return and not including any Tax Return required to be filed on a separate basis by any French entity that is a member of a French tax consolidated group).
“Companies” or “Company” has the meaning set forth in the Preamble.
“Compensatory Equity Interests” has the meaning set forth in Section 6.02(a).
“Contribution” has the meaning set forth in the Recitals.
“Distributions” has the meaning set forth in the Recitals.
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“Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.
“Due Date” means the date (taking into account all valid extensions) upon which a Tax Return is required to be filed.
“Effective Time” has the meaning set forth in the Separation and Distribution Agreement.
“External Distribution” has the meaning set forth in the Recitals.
“Employee Matters Agreement” means the Employee Matters Agreement, dated as of March 31, 2020, by and between Parent and GRP&E/BCS SpinCo.
“Federal Income Tax” means any Tax imposed by Subtitle A of the Code.
“Federal Other Tax” means any Tax imposed by the federal government of the United States of America other than any Federal Income Tax.
“Federal Tax” means any Federal Income Tax or Federal Other Tax.
“Federal Traceable Tax” means any Federal Other Tax that can be clearly and directly traced to a specific location used, or function or activity engaged in, exclusively by a member or members of only one Group or only one Business (for the avoidance of doubt, excluding any Taxes traceable to any corporate locations, functions or activities that were used by or supported members of both Groups or both Businesses, such as property/rents or similar taxes imposed with respect to any Pre-Distribution Period on Parent’s New York, New York, headquarters).
“First Internal Distribution” has the meaning set forth in the Recitals.
“Fifty-Percent or Greater Interest” has the meaning ascribed to the term “50-percent or greater interest” for purposes of Sections 355(d) and (e) of the Code and the Treasury Regulations thereunder.
“Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a Tax Period, by (a) IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the Laws of a State, local or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of Law) the right of the taxpayer to file a claim for Refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (b) a decision, judgment, decree or other order by a court of competent jurisdiction, which has become final and unappealable; (c) a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or a comparable agreement under the Laws of a State, local or foreign taxing jurisdiction; (d) any allowance of a Refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such Refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; or (e) any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the Companies.
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“Force Majeure” has the meaning set forth in the Separation and Distribution Agreement.
“Foreign Income Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, which is an income tax as defined in Treasury Regulations Section 1.901-2.
“Foreign Other Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, other than any Foreign Income Tax.
“Foreign Tax” means any Foreign Income Tax or Foreign Other Tax.
“Foreign Traceable Tax” means any Foreign Other Tax that can be clearly and directly traced to a specific location used, or function or activity engaged in, exclusively by a member or members of only one Group or only one Business (for the avoidance of doubt, excluding any Taxes traceable to any corporate locations, functions or activities that were used by or supported members of both Groups or both Businesses).
“Former GRP&E/BCS Group Employee” has the meaning ascribed to the term “Former Spinco Group Employee” in the Employee Matters Agreement.
“Former Nonemployee Director” has the meaning set forth in the Employee Matters Agreement.
“Former Parent Group Employee” has the meaning set forth in the Employee Matters Agreement.
“Governmental Authority” has the meaning set forth in the Separation and Distribution Agreement.
“Group” means the Parent Group or the GRP&E/BCS Group, or both, as the context requires.
“GRP&E/BCS Assets” has the meaning set forth in the Separation and Distribution Agreement.
“GRP&E/BCS Business” has the meaning set forth in the Separation and Distribution Agreement.
“GRP&E/BCS Capital Stock” means all classes or series of capital stock of GRP&E/BCS SpinCo, including (a) the GRP&E/BCS Shares, (b) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in GRP&E/BCS SpinCo for Federal Income Tax purposes.
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“GRP&E/BCS Carryback Item” means any net operating loss, net capital loss, excess tax credit or other similar Tax item of any member of the GRP&E/BCS Group which may or must be carried from any Post-Distribution Period to any Pre-Distribution Period under the Code or other applicable Tax Law.
“GRP&E/BCS Cash Payment” means the cash distribution made by GRP&E/BCS SpinCo to Parent on the date hereof in connection with the Contribution and the Distribution.
“GRP&E/BCS Comp Deduction” has the meaning set forth in Section 6.02(a).
“GRP&E/BCS Group” means (a) GRP&E/BCS SpinCo and each of its Subsidiaries (including, for the avoidance of doubt, (i) any Subsidiary acquired or created by GRP&E/BCS SpinCo or any of its Subsidiaries after the External Distribution, (ii) any entity to which GRP&E/BCS SpinCo or any of its Subsidiaries is a successor for Federal Income Tax Purposes (or other applicable Tax purposes) and (iii) any entity that was a Subsidiary of GRP&E/BCS SpinCo immediately prior to the termination of such Subsidiary’s legal existence or the disposition of such Subsidiary) and (b) any entity that was disposed of or the legal existence of which was terminated prior to the Distribution Date that, prior to such disposition or termination, conducted businesses, operations or activities or held assets that primarily related to the GRP&E/BCS Business.
“GRP&E/BCS Liabilities” has the meaning set forth in the Separation and Distribution Agreement.
“GRP&E/BCS Retained Tax Benefit” means (a) any Tax Benefit in respect of any GRP&E/BCS Retained Taxes and (b) any Tax Benefit attributable to a GRP&E/BCS Comp Deduction.
“GRP&E/BCS Retained Taxes” means (a) one half of any Parent Upstream Spin Taxes, (b) 33.66% of any Taxes described in clause (i) of the definition of “UpstreamCo Retained Taxes” in the Upstream Spin TMA (such that 66% of such Taxes for which Parent is responsible pursuant to the Upstream Spin TMA shall be GRP&E/BCS Retained Taxes), (c) any Foreign Taxes for any Pre-Distribution Period imposed by the Federative Republic of Brazil (or any political subdivision thereof) other than any such Taxes imposed on or with respect to Howmet Rodas de Aluminio Ltda., (d) 25% of any Foreign Income Taxes for any Tax Period (or portion thereof) ending on or before December 31, 2019, imposed by Hungary (or any political subdivision thereof) on or with respect to Arconic Kofem Kft, and (e) any Traceable Taxes clearly and directly traced to the specific location used, or function or activity engaged in, exclusively by one or more members of the GRP&E/BCS Group or the GRP&E/BCS Business.
“GRP&E/BCS Return” has the meaning set forth in Section 4.02.
“GRP&E/BCS Separate Return” means any Separate Return of GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group.
“GRP&E/BCS Shares” means the shares of common stock, par value $0.01 per share, of GRP&E/BCS SpinCo, representing all of the outstanding GRP&E/BCS Capital Stock as of immediately before the Effective Time.
“GRP&E/BCS SpinCo” has the meaning set forth in the Preamble, and references herein to GRP&E/BCS SpinCo shall include any entity treated as a successor to GRP&E/BCS SpinCo.
“High-Level Dispute” means any dispute or disagreement (a) relating to liability under Section 7.06 of this Agreement or (b) in which the amount of liability in dispute exceeds $5,000,000.
“Howmet Aerospace Business” has the meaning set forth in the Separation and Distribution Agreement.
“Income Tax” means any Federal Income Tax, State Income Tax or Foreign Income Tax.
“Indemnitee” has the meaning set forth in Section 14.03.
“Indemnitor” has the meaning set forth in Section 14.03.
“Internal Spinco” means New GRP Holdco and Arconic Manufacturing.
“IRS” means the United States Internal Revenue Service.
“Joint Traceable Tax Contest” means any Tax Contest in respect of both (a) Traceable Taxes that are Parent Retained Taxes and (b) Traceable Taxes that are GRP&E/BCS Retained Taxes.
“Law” has the meaning set forth in the Separation and Distribution Agreement.
“Liabilities” has the meaning set forth in the Separation and Distribution Agreement.
“Loss” has the meaning set forth in Section 6.01(b).
“New GRP Holdco” means Arconic Nederland Holding B.V., a Netherlands company.
“Notified Action” has the meaning set forth in Section 7.05(a).
“Parent” has the meaning set forth in the Preamble.
“Parent Affiliated Group” means the affiliated group (as such term is defined in Section 1504 of the Code and the Treasury Regulations thereunder) of which Parent is the common parent.
“Parent Assets” has the meaning set forth in the Separation and Distribution Agreement.
“Parent Comp Deduction” has the meaning set forth in Section 6.02(a).
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“Parent Federal Consolidated Income Tax Return” means any Federal Income Tax Return for the Parent Affiliated Group.
“Parent Group” means Parent and each of its Subsidiaries (including, for the avoidance of doubt, (a) any Subsidiary acquired or created by Parent or any of its Subsidiaries after the External Distribution, (b) any entity to which Parent or any of its Subsidiaries is a successor for Federal Income Tax Purposes (or other applicable Tax purposes) and (c) any entity that was a Subsidiary of Parent immediately prior to the termination of such Subsidiary’s legal existence or the disposition of such Subsidiary), other than a member of the GRP&E/BCS Group.
“Parent Group Tax Attribute” has the meaning set forth in Section 6.01(d).
“Parent Liabilities” has the meaning set forth in the Separation and Distribution Agreement.
“Parent Nonemployee Director” has the meaning set forth in the Employee Matters Agreement.
“Parent Retained Tax Benefit” means (a) any Tax Benefit in respect of any Parent Retained Taxes and (b) any Tax Benefit attributable to a Parent Comp Deduction.
“Parent Retained Taxes” means (a) one half of any Foreign Income Taxes for any Tax Period (or portion thereof) ending on or before March 31, 2017, imposed by India (or any political subdivision thereof) on or with respect to Arconic of India Private Limited, (b) all Foreign Taxes for any Tax Period (or portion thereof) beginning after March 31, 2017 and ending on or before the Distribution Date, imposed by India (or any political subdivision thereof) on or with respect to Arconic of India Private Limited and (c) any Traceable Taxes clearly and directly traced to a specific location used, or function or activity engaged in, exclusively by one or more members of the Parent Group or the Howmet Aerospace Business.
“Parent Return” has the meaning set forth in Article 4.
“Parent Separate Return” means any Separate Return of Parent or any other member of the Parent Group.
“Parent Upstream Spin Taxes” means any (a) Separation Tax Losses (as such term is defined in the Upstream Spin TMA) allocated to Parent under Article 2 of the Upstream Spin TMA, including, for the avoidance of doubt, any such Separation Tax Losses for which Parent indemnifies Alcoa under the Upstream TMA and (b) Taxes allocated to Parent under Section 2.05(a)(i) the Upstream Spin TMA, including, for the avoidance of doubt, any such Taxes that are Australian stamp Taxes, provided, however, that, in each case, any Separation Tax Losses and/or Taxes resulting from or imposed by reason of any action, transaction or failure to act by Parent or any member of the Parent Group following the Distribution Date shall not constitute Parent Upstream Spin Taxes.
“Parent Shares” has the meaning set forth in the Separation and Distribution Agreement.
“Past Practices” has the meaning set forth in Section 4.03(a).
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“Payment Date” means (a) with respect to any Parent Federal Consolidated Income Tax Return, the due date for any required installment of estimated taxes determined under Section 6655 of the Code, the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, and the date the return is filed, and (b) with respect to any other Tax Return, the corresponding or similar dates determined under the applicable Tax Law.
“Permitted GRP&E/BCS SpinCo Carryback” has the meaning set forth in Section 6.01(d).
“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for Federal Income Tax purposes.
“Post-Distribution Period” means any Tax Period beginning after the Distribution Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning the day after the Distribution Date.
“Post-Distribution Ruling” has the meaning set forth in Section 7.02(c).
“Pre-Distribution Period” means any Tax Period ending on or before the Distribution Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Distribution Date.
“Prime Rate” has the meaning set forth in the Separation and Distribution Agreement.
“Privilege” means any privilege that may be asserted under applicable Law, including any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.
“Privileged Documentation” has the meaning set forth in Section 9.03.
“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by GRP&E/BCS SpinCo management or shareholders, is a hostile acquisition, or otherwise, as a result of which GRP&E/BCS SpinCo would merge or consolidate with any other Person or as a result of which any Person or Persons would (directly or indirectly) acquire, or have the right to acquire, from GRP&E/BCS SpinCo and/or one or more holders of outstanding shares of GRP&E/BCS Capital Stock, a number of shares of GRP&E/BCS Capital Stock that would, when combined with any other changes in ownership of GRP&E/BCS Capital Stock potentially pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (a) the value of all outstanding shares of stock of GRP&E/BCS SpinCo as of the date of such transaction, or, in the case of a series of transactions, the date of the last transaction of such series, or (b) the total combined voting power of all outstanding shares of voting stock of GRP&E/BCS SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (a) the adoption by GRP&E/BCS SpinCo of a shareholder rights plan or (b) issuances by GRP&E/BCS SpinCo that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the shareholders whose voting power increases as a result or the non-exchanging or redeemed shareholders, as applicable. This definition and the application thereof are intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated into this definition and its interpretation.
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“Recipient” means, with respect to any transfer of assets (including equity interests) or liabilities occurring pursuant to any of the Separation Transactions, the Person receiving such assets and/or liabilities.
“Record Date” has the meaning set forth in the Separation and Distribution Agreement.
“Refund” means any refund of Taxes, including any refund or reduction in Tax Liabilities by means of a credit or offset.
“Representation Letter” means any statement of facts and representations, officer’s certificate, representation letter and any other materials delivered by Parent, GRP&E/BCS SpinCo and/or any of their respective Affiliates or representatives in connection with the rendering by any Tax Advisor of any Tax Opinion.
“Responsible Company” means, with respect to any Tax Return, the Company having responsibility for preparing such Tax Return under this Agreement.
“Restriction Period” means the period beginning on the date hereof and ending (and including) the two-year anniversary of the Distribution Date.
“Retention Date” has the meaning set forth in Section 9.01.
“Second Internal Distribution” has the meaning set forth in the Recitals.
“Section 336(e) Election” has the meaning set forth in Section 7.08.
“Section 7.03 Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 30% instead of 40%.
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“Separate GRP&E/BCS SpinCo Traceable Tax Contest” means any Tax Contest solely in respect of any Traceable Tax that is (a) a GRP&E/BCS Retained Tax and (b) reported or required to be reported on a Parent Separate Return or Parent Combined Return.
“Separate Parent Traceable Tax Contest” means any Tax Contest solely in respect of any Traceable Tax that is (a) a Parent Retained Tax and (b) reported or required to be reported on a GRP&E/BCS Separate Return.
“Separate Return” means (a) in the case of any Tax Return of any member of the Parent Group (including any consolidated, affiliated, combined, unitary, group or other similar Tax Return (including a Tax Return with respect to a profit and/or loss sharing group, group payment or similar group or fiscal unity)), any such Tax Return that does not include any member of the GRP&E/BCS Group and (b) in the case of any Tax Return of any member of the GRP&E/BCS Group (including any consolidated, affiliated, combined, unitary, group or other similar Tax Return (including a Tax Return with respect to a profit and/or loss sharing group, group payment or similar group or fiscal unity)), any such Tax Return that does not include any member of the Parent Group.
“Separate Traceable Tax Contest” means either a Separate Parent Traceable Tax Contest or a Separate GRP&E/BCS SpinCo Traceable Tax Contest.
“Separation” has the meaning set forth in the Recitals.
“Separation and Distribution Agreement” has the meaning set forth in the Recitals.
“Separation-Related Tax Contest” means any Tax Contest in which the IRS, another Tax Authority or any other party asserts a position that could reasonably be expected to (a) adversely affect, jeopardize or prevent (i) the Tax-Free Status or (ii) a Separation Transaction to have the tax treatment described in the Tax Opinions (or, if not so described in the Tax Opinions, in the Separation Step Plan) or to qualify as tax-free to the extent that tax-free treatment was intended or (b) otherwise affect the amount of Taxes imposed with respect to any of the Separation Transactions.
“Separation Step Plan” means the global step plan setting forth the specific transactions undertaken in furtherance of the Separation, attached as Schedule 2.1(a) to the Separation and Distribution Agreement, as subsequently adjusted or revised by the Companies (including to set forth the intended tax treatment of relevant transactions).
“Separation Tax Losses” means (a) all Taxes imposed pursuant to (or any reduction in a Refund resulting from) any settlement, Final Determination, judgment or otherwise; (b) all third-party accounting, legal and other professional fees and court costs incurred in connection with such Taxes (or reduction in a Refund), as well as any other out-of-pocket costs incurred in connection with such Taxes (or reduction in a Refund); and (c) all third-party costs, expenses and damages associated with any stockholder litigation or other controversy and any amount required to be paid by Parent (or any Affiliate of Parent) or GRP&E/BCS SpinCo (or any Affiliate of GRP&E/BCS SpinCo) in respect of any liability of or to shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from (x) the failure of the Tax-Free Status or (y) the failure of a Separation Transaction to have the tax treatment described in the Tax Opinions (or, if not so described in the Tax Opinions, in the Separation Step Plan) or to qualify as tax-free to the extent that tax-free treatment was intended; provided that amounts shall be treated as having been required to be paid for purposes of clause (c) of this definition to the extent they are paid in a good-faith compromise or settlement of an asserted claim.
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“Separation Transactions” means the Contribution, the Distributions and the other transactions contemplated by the Separation and Distribution Agreement and the Separation Step Plan in furtherance of the Separation.
“State Income Tax” means any Tax imposed by any State of the United States or by any political subdivision of any such State or the District of Columbia that is imposed on or measured by income, including state and local franchise or similar Taxes measured by income, as well as any state or local franchise, capital or similar Taxes imposed in lieu of a Tax imposed on or measured by income.
“State Other Tax” means any Tax imposed by any State of the United States or by any political subdivision of any such State or the District of Columbia, other than any State Income Tax.
“State Tax” means any State Income Tax or State Other Tax.
“State Traceable Tax” means any State Other Tax that can be clearly and directly traced to a specific location used, or function or activity engaged in, exclusively by a member or members of only one Group or only one Business (for the avoidance of doubt, excluding any Taxes traceable to any corporate locations, functions or activities that were used by or supported members of both Groups or both Businesses).
“Straddle Period” means any Tax Period that begins on or before and ends after the Distribution Date.
“Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.
“Tax” or “Taxes” means any taxes, fees, assessments, duties or other similar charges imposed by any Tax Authority, including, without limitation, income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers’ compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value-added, alternative minimum, estimated, unclaimed property or escheat, or other tax (including any fee, assessment, duty, or other charge in the nature of or in lieu of any tax), and any interest, penalties, additions to tax or additional amounts in respect of the foregoing. For the avoidance of doubt, Tax includes any increase in Tax as a result of a Final Determination.
“Tax Advisor” means tax counsel or accountant of recognized national standing.
“Tax Advisor Dispute” has the meaning set forth in Section 15.01.
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“Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit or any other similar Tax Item that could reduce a Tax or create a Tax Benefit.
“Tax Authority” means any Governmental Authority imposing any Tax, charged with the collection of Taxes or otherwise having jurisdiction with respect to any Tax.
“Tax Benefit” means any Refund, credit, offset or other reduction in Taxes paid or payable. For purposes of this Agreement, the amount of any Tax Benefit Actually Realized by a Person as a result of any Tax Item shall be determined on a “with and without basis” as the excess of (a) the hypothetical liability of such Person for the relevant Tax for the relevant Tax Period, calculated as if such Tax Item had not been utilized but with all other facts unchanged, over (b) the actual liability of such Person for such Tax for such Tax Period, calculated taking into account such Tax Item (and, for this purpose, treating a Refund as a reduction in liability for Tax).
“Tax Contest” means an audit, review, examination or any other administrative or judicial proceeding with respect to Taxes (including any administrative or judicial review of any claim for any Refund or other Tax Benefit).
“Tax-Free Status” means the qualification of (a) the First Distribution as a distribution described in Section 355(a) of the Code and a transaction in which the equity interests of New GRP Holdco distributed thereby constitute “qualified property” for purposes of Sections 355(c) of the Code (and neither Section 355(d) nor 355(e) of the Code causes such equity to be treated as other than “qualified property” for such purposes), (b) the Second Distribution as a distribution described in Section 355(a) of the Code and a transaction in which the equity interests of Arconic Manufacturing treated as distributed thereby constitute “qualified property” for purposes of Sections 355(c) of the Code (and neither Section 355(d) nor 355(e) of the Code causes such equity to be treated as other than “qualified property” for such purposes), (c) the Contribution and the External Distribution, taken together, as a “reorganization” described in Sections 368(a)(1)(D) and 355(a) of the Code, (d) the External Distribution as a transaction in which the stock distributed thereby is “qualified property” for purposes of Section 361(c) of the Code (and neither Section 355(d) nor 355(e) of the Code causes such stock to be treated as other than “qualified property” for such purposes) and (e) the Contribution and the Distributions as transactions in which Parent, GRP&E/BCS SpinCo, and the members of each of the Parent Group and GRP&E/BCS Group, as applicable, recognize no income or gain for Federal Income Tax purposes pursuant to Sections 355, 361 and/or 1032 of the Code, other than, in the case of the External Distribution, intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code.
“Tax Item” means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit.
“Tax Law” means the Law of any Governmental Authority relating to any Tax.
“Tax Liability” means any liability or obligation for Taxes.
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“Tax Opinion” means any opinion of a Tax Advisor delivered to Parent in connection with the Contribution and the External Distribution, or otherwise with respect to the Separation Transactions.
“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.
“Tax Records” means any Tax Returns, Tax Return workpapers, documentation relating to any Tax Contest, and any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) maintained or required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority, in each case, with respect to or otherwise relating to Taxes.
“Tax Return” or “Return” means any report of Taxes due, any claim for Refund of Taxes paid, any information return with respect to Taxes, or any other report, statement, declaration, or document in respect of Taxes filed or required to be filed under the Code or other Tax Law, including any attachments, exhibits, schedules or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.
“Third Party” has the meaning set forth in the Separation and Distribution Agreement.
“Third-Party Claim” has the meaning set forth in the Separation and Distribution Agreement.
“Traceable Tax” means any Federal Traceable Tax, State Traceable Tax or Foreign Traceable Tax.
“Traceable Tax Contest” means any Joint Traceable Tax Contest or any Separate Traceable Tax Contest.
“Transaction Transfer Taxes” means any sales, use, value-added, goods and services, stock transfer, registration, real estate transfer, stamp, documentary, notarial, filing, recordation and similar Taxes imposed on any transfer of assets (including equity interests) or liabilities occurring pursuant to the Separation Transactions.
“Transferor” means, with respect to any transfer of assets (including equity interests) or liabilities occurring pursuant to any of the Separation Transactions, the Person transferring such assets and/or liabilities.
“Transferred Director” has the meaning set forth in the Employee Matters Agreement.
“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.
“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor, which Tax Advisor is acceptable to Parent, and on which opinion Parent may rely, to the effect that (a) a transaction will not affect the Tax-Free Status and (b) will not adversely affect any of the conclusions set forth in the Tax Opinions; provided that any tax opinion obtained in connection with a proposed acquisition of GRP&E/BCS Capital Stock or Capital Stock of any Internal Spinco entered into during the Restriction Period shall not qualify as an Unqualified Tax Opinion unless such tax opinion concludes that such proposed acquisition will not be treated as “part of a plan (or series of related transactions),” within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, that includes any of the Distributions. Any such opinion must assume that the transactions described in the definition of “Tax-Free Status” would have qualified for Tax-Free Status if the transaction in question did not occur.
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“Upstream Spin TMA” means that certain Tax Matters Agreement, dated as of October 31, 2016, by and between Alcoa Inc., a Pennsylvania corporation (the predecessor of Parent) and Alcoa (f/k/a Alcoa Upstream Corporation).
Article 2. Allocation of Tax Liabilities.
Section 2.01 General Rule. From and after the Distribution Date:
(a) Parent Liability. Parent shall be liable for, and shall indemnify and hold harmless the GRP&E/BCS Group from and against any liability for, any Taxes (whether payable to a Tax Authority or to another Person pursuant to a contractual indemnity obligation) which are allocated to Parent, or for which Parent is responsible, pursuant to this Article 2.
(b) GRP&E/BCS Liability. GRP&E/BCS SpinCo shall be liable for, and shall indemnify and hold harmless the Parent Group from and against any liability for, any Taxes (whether payable to a Tax Authority or to another Person pursuant to a contractual indemnity obligation) which are allocated to GRP&E/BCS SpinCo, or for which GRP&E/BCS SpinCo is responsible, pursuant to this Article 2.
(c) Costs and Expenses. The amounts for which Parent or GRP&E/BCS SpinCo, as applicable, is liable pursuant to Sections 2.01(a) and (b), respectively, shall include all accounting, legal and other professional fees, and court costs incurred in connection with the relevant Taxes.
(d) Final Determination Taxes. For the avoidance of doubt, any reference to any Taxes due with respect to, attributable to or required to be reported on any Tax Return contained in Section 2.02, Section 2.03 or Section 2.04, and any reference to any Taxes in Section 2.05, shall include, unless specifically excluded, a reference to any such Taxes imposed or payable as a result of a Final Determination.
(e) Certain Specified Taxes. Schedule 2.01(e) sets forth certain allocations in respect of Taxes specified thereon as an aid in interpreting this Agreement. The provisions of this Agreement (including, for the avoidance of doubt, the definitions of “GRP&E/BCS Retained Taxes” and “Parent Retained Taxes”) shall not be interpreted in a manner inconsistent with such schedule.
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Section 2.02 Allocation of United States Federal Taxes. Except as otherwise provided in Section 2.05, Federal Taxes shall be allocated as follows:
(a) Federal Income Taxes Relating to Combined Returns. Parent shall be responsible for any and all Federal Income Taxes due with respect to, attributable to or required to be reported on any Combined Return; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Federal Income Taxes that are GRP&E/BCS Retained Taxes.
(b) Federal Income Taxes Relating to Separate Returns.
(i) Parent shall be responsible for any and all Federal Income Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Federal Income Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all Federal Income Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such Federal Other Taxes that are Parent Retained Taxes.
(c) Federal Other Taxes.
(i) Parent shall be responsible for any and all Federal Other Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Federal Other Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all Federal Other Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such Federal Other Taxes that are Parent Retained Taxes.
Section 2.03 Allocation of State Taxes. Except as otherwise provided in Section 2.05, State Taxes shall be allocated as follows:
(a) State Income Taxes Relating to Combined Returns. Parent shall be responsible for any and all State Income Taxes due with respect to, attributable to or required to be reported on any Combined Return; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such State Income Taxes that are GRP&E/BCS Retained Taxes.
(b) State Income Taxes Relating to Separate Returns.
(i) Parent shall be responsible for any and all State Income Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such State Income Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all State Income Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such State Income Taxes that are Parent Retained Taxes.
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(c) State Other Taxes Relating to Combined Returns. Parent shall be responsible for any and all State Other Taxes due with respect to, attributable to or required to be reported on any Combined Return; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such State Other Taxes that are GRP&E/BCS Retained Taxes.
(d) State Other Taxes Relating to Separate Returns.
(i) Parent shall be responsible for any and all State Other Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such State Other Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all State Other Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such State Other Taxes that are Parent Retained Taxes.
Section 2.04 Allocation of Foreign Taxes. Except as otherwise provided in Section 2.05, Foreign Taxes shall be allocated as follows:
(a) Foreign Income Taxes Relating to Combined Returns. Parent shall be responsible for any and all Foreign Income Taxes due with respect to, attributable to or required to be reported on any Combined Return; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Foreign Income Taxes that are GRP&E/BCS Retained Taxes.
(b) Foreign Income Taxes Relating to Separate Returns.
(i) Parent shall be responsible for any and all Foreign Income Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Foreign Income Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all Foreign Income Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such Foreign Income Taxes that are Parent Retained Taxes.
(c) Foreign Other Taxes Relating to Combined Returns.
(i) Parent shall be responsible for any and all Foreign Other Taxes due with respect to, attributable to or required to be reported on any Combined Return; provided, however, that GRP&E/BCS SpinCo shall be liable for any such Foreign Other Taxes that are GRP&E/BCS Retained Taxes.
(d) Foreign Other Taxes Relating to Separate Returns.
(i) Parent shall be responsible for any and all Foreign Other Taxes due with respect to, attributable to or required to be reported on any Parent Separate Return for any Tax Period; provided, however, that GRP&E/BCS SpinCo shall be responsible for any such Foreign Other Taxes that are GRP&E/BCS Retained Taxes.
(ii) GRP&E/BCS SpinCo shall be responsible for any and all Foreign Other Taxes due with respect to, attributable to or required to be reported on any GRP&E/BCS Separate Return for any Tax Period; provided, however, that Parent shall be responsible for any such Foreign Other Taxes that are Parent Retained Taxes.
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Section 2.05 Certain Transaction Transfer and Other Taxes.
(a) Transaction Taxes. Subject to Section 2.05(b) and (c):
(i) Parent shall be responsible for all Taxes imposed on, arising from or assessed with respect to any transfer of assets (including equity interests) and/or liabilities by the Transferor occurring pursuant to the Separation Transactions; provided that Parent shall not be responsible for any such Taxes imposed on a member of the GRP&E/BCS Group pursuant to a Final Determination or otherwise to the extent such Taxes are not required to be paid in cash to the relevant Tax Authority as a result of the utilization by any member of the GRP&E/BCS Group of any Tax Attribute that existed as of immediately after the Distribution Date being available, at the time of the relevant Final Determination, to reduce (or eliminate) the cash payment obligation in respect of such Taxes. Where relevant under applicable Law, The Transferor shall issue proper invoices usable by the Recipient to recover (by way of credit, Refund, rebate or input VAT) any Transaction Transfer Taxes in jurisdictions where they are recoverable. The Transferor and the Recipient shall cooperate to minimize any Transaction Transfer Taxes and in obtaining any credit, Refund or rebate of Transaction Transfer Taxes, or to apply an exemption or zero-rating for goods or services giving rise to any Transaction Transfer Taxes, including by filing any exemption or other similar forms or providing valid tax identification numbers or other relevant registration numbers, certificates or other documents. The Recipient and the Transferor shall cooperate regarding any requests for information, audits or similar requests by any Tax Authority concerning Transaction Transfer Taxes payable with respect to the transfers occurring pursuant to the Separation Transactions.
(ii) Notwithstanding anything to the contrary herein, any penalties or interest imposed in connection with any Taxes described in Section 2.05(a)(i) shall be the responsibility of GRP&E/BCS SpinCo if such penalties or interest are the result of an action or failure to act by any member of the GRP&E/BCS Group.
(b) Parent Liability. Parent shall be liable for, and shall indemnify and hold harmless the GRP&E/BCS Group from and against any liability for:
(i) any Tax resulting from a breach by Parent of any representation or covenant in the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement; and
(ii) any Separation Tax Losses for which Parent is responsible pursuant to Section 7.06(b).
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(c) GRP&E/BCS Liability. GRP&E/BCS SpinCo shall be liable for, and shall indemnify and hold harmless the Parent Group from and against any liability for:
(i) any Tax resulting from a breach by GRP&E/BCS SpinCo of any representation or covenant in the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement; and
(ii) any Separation Tax Losses for which GRP&E/BCS SpinCo is responsible pursuant to Section 7.06(a).
(d) Employment Taxes. Notwithstanding anything contained in this Article 2 to the contrary, this Agreement shall not apply with respect to any liability or responsibility for Taxes allocated pursuant to the Employee Matters Agreement.
Article 3. Proration of Taxes for Straddle Periods.
Section 3.01 General Method of Proration. In the case of any Straddle Period, Tax Items shall be apportioned between Pre-Distribution Periods and Post-Distribution Periods in accordance with the principles of Treasury Regulations Section 1.1502-76(b) and any other applicable Tax Law as reasonably interpreted and applied by Parent. No election shall be made under Treasury Regulations Section 1.1502-76(b)(2)(ii) (relating to ratable allocation of a year’s Tax Items). If the Distribution Date is not an Accounting Cutoff Date, the provisions of Treasury Regulations Section 1.1502-76(b)(2)(iii) shall be applied to ratably allocate the Tax Items (other than extraordinary Tax Items) for the month which includes the Distribution Date.
Section 3.02 Transaction Treated as Extraordinary Item. In determining the apportionment of Tax Items between Pre-Distribution Periods and Post-Distribution Periods, any Tax Items relating to the Separation Transactions shall be treated as extraordinary items described in Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to the Distribution Date) be allocated to Pre-Distribution Periods, and any Taxes related to such items shall be treated under Treasury Regulations Section 1.1502-76(b)(2)(iv) as relating to such extraordinary item and shall (to the extent occurring on or prior to the Distribution Date) be allocated to Pre-Distribution Periods.
Article 4. Preparation and Filing of Tax Returns.
Section 4.01 Parent Returns. Parent shall prepare or cause to be prepared (a) all Combined Returns and (b) all Parent Separate Returns (each, a “Parent Return”). Parent shall file or cause to be filed all Parent Returns and shall pay or cause to be paid all Taxes shown to be due on any such Parent Return to the relevant Tax Authority, and GRP&E/BCS SpinCo shall make any payments to Parent required pursuant to Section 5.01 in respect of any such Parent Return.
Section 4.02 GRP&E/BCS Returns. GRP&E/BCS SpinCo shall prepare and timely file, or cause to be prepared and timely filed (in each case, taking into account extensions) all GRP&E/BCS Separate Returns and any other Tax Return required to be filed by or with respect to a member of the GRP&E/BCS Group other than any Tax Return which Parent is required to prepare pursuant to Section 4.01 (each, a “GRP&E/BCS Return”). GRP&E/BCS SpinCo shall file or cause to be filed all GRP&E/BCS Returns and shall pay or cause to be paid all Taxes shown to be due on any such GRP&E/BCS Return to the relevant Tax Authority, and Parent shall make any payments to GRP&E/BCS SpinCo required pursuant to Section 5.01 in respect of any such GRP&E/BCS Return.
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Section 4.03 Tax Reporting Practices.
(a) Except as otherwise provided in Section 4.03(b), in the case of any Tax Return in respect of which GRP&E/BCS SpinCo is the Responsible Company and that is a Tax Return for any Pre-Distribution Period or any Straddle Period (or any Post-Distribution Period to the extent items reported on such Tax Return could reasonably be expected to affect items reported on any Tax Return for any Pre-Distribution Period or any Straddle Period for which Parent is the Responsible Party), such Tax Return shall be prepared in accordance with past practices, accounting methods, elections and conventions (“Past Practices”) used with respect to the Tax Returns in question, and, to the extent there is no Past Practice with respect to such item, in accordance with reasonable Tax accounting or other practices selected by GRP&E/BCS SpinCo and reasonably acceptable to Parent.
(b) Except to the extent otherwise required by a change in applicable Law or as a result of a Final Determination, (i) neither Parent nor GRP&E/BCS SpinCo shall, and each shall not permit or cause any member of its respective Group to, take any position that is inconsistent with the Tax-Free Status, the tax treatment of any of the Separation Transactions as described in the Tax Opinions or, if not described in the Tax Opinions, in the Separation Step Plan; provided that in any case or with respect to any item where there is no relevant Tax Opinion or description in the Separation Step Plan, the tax treatment of any of the Separation Transactions shall be as determined by Parent in its good faith judgment, and (ii) GRP&E/BCS SpinCo shall not, and shall not permit or cause any member of the GRP&E/BCS Group to, take any position with respect to an item of income, deduction, gain, loss or credit on a Tax Return, or otherwise treat such item in a manner which is inconsistent with the manner such item is reported on a Tax Return required to be prepared and filed by Parent pursuant to Section 4.01 (including, without limitation, the claiming of a deduction previously claimed on any such Tax Return), except with the prior written consent of Parent.
Section 4.04 Consolidated or Combined Tax Returns. Except to the extent otherwise required pursuant to clause (i) of Section 4.03(b), Parent shall determine in its sole discretion whether to file a Tax Return for any Tax Period as a Combined Return and the entities to be included in any Combined Return, and Parent shall (and shall be entitled to) make or revoke any Tax elections, adopt or change any Tax accounting methods, and determine any other position taken on or in respect of any Combined Return; provided that any Combined Return prepared and filed by Parent pursuant to this Agreement shall, to the extent relating to GRP&E/BCS SpinCo or the GRP&E/BCS Group, be prepared in good faith. GRP&E/BCS SpinCo shall elect and join (and take any other action necessary to give effect to such election), and shall cause its respective Affiliates to elect and join (and take any other action necessary to give effect to such election), in filing any Combined Returns (including any Parent Federal Consolidated Income Tax Returns) that Parent determines are required to be filed (or that Parent chooses to file) by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Distribution Date in accordance with this Section 4.04.
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Section 4.05 Right to Review Tax Returns.
(a) General. The Responsible Company with respect to any material Tax Return shall make such Tax Return (or the relevant portions thereof), related workpapers and other supporting documents available for review by the other Company, to the extent (i) such Tax Return relates to Taxes for which such other Company is or would reasonably be expected to be liable, (ii) such other Company is or would reasonably be expected to be liable, in whole or in part, for any additional Taxes owing as a result of adjustments to the amount of Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the other Company would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) reasonably necessary for the other Company to confirm compliance with the terms of this Agreement. The Responsible Company shall (i) consult with the other Company with respect to the preparation of, and positions taken on, any such Tax Return (to the extent relating to any matters described in clauses (i) through (iii) of the immediately preceding sentence), (ii) use reasonable efforts to make such Tax Return (or the relevant portions thereof), workpapers and other supporting documents available for review as required under this Section 4.05(a) promptly once such Tax Return is materially complete, such that the other Company has an opportunity to review and comment on such Tax Return prior to the filing thereof, and (iii) shall consider in good faith any comments provided by the other Company on such Tax Return reasonably in advance of the due date for filing such Tax Return (taking into account extensions). Parent and GRP&E/BCS SpinCo shall attempt in good faith to resolve any disagreement arising out of the review of any Tax Return pursuant to this Section 4.05(a). For the avoidance of doubt, any dispute among the Companies with respect to a Company’s compliance with the requirements of this Section 4.05(a) shall be resolved in accordance with the disagreement resolution provisions of Article 15 as promptly as practicable.
(b) Disputes. In the event the Companies have not resolved any disputed item or items with respect to a Tax Return described in Section 4.05(a) by the Due Date for such Tax Return, such Tax Return shall be filed as prepared by the Responsible Company (as revised to reflect all initially disputed items that the Companies have agreed upon prior to such date). Following such filing, such disputed items (or items) shall be resolved in accordance with Article 15. In the event that the resolution of such disputed item (or items) in accordance with Article 15 with respect to a Tax Return is inconsistent with such Tax Return as filed, the Responsible Company (with cooperation from the other Company) shall, as promptly as practicable, amend such Tax Return to properly reflect the final resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due and owing on a Tax Return is adjusted as a result of a resolution pursuant to Article 15, proper adjustment shall be made to the amounts previously paid or required to be paid in accordance with Article 5 in a manner that reflects such resolution.
(c) Executing Returns. In the case of any Tax Return which is required to be prepared and filed by one Company under this Agreement and which is required by Law to be signed by the other Company (or by its authorized representative), the Company which is legally required to sign such Tax Return shall not be required to sign such Tax Return under this Agreement unless there is at least a greater than 50% likelihood of prevailing on the merits for the tax treatment of each material item reported on the Tax Return. For the avoidance of doubt, any dispute among the Companies with respect to the likelihood of any tax treatment prevailing on the merits shall be resolved in accordance with the disagreement resolution provisions of Article 15 as promptly as practicable.
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Section 4.06 Adjustment Requests and GRP&E/BCS Carryback Items. Unless Parent otherwise consents in writing, GRP&E/BCS SpinCo shall (and shall cause each member of the GRP&E/BCS Group to) (a) not file any Adjustment Request with respect to any Combined Return (or any other Tax Return reflecting Taxes for which Parent is responsible under Article 2), (b) make any available election to relinquish, waive or otherwise forgo a carryback of any GRP&E/BCS Carryback Item arising in a Post-Distribution Period to any Combined Return, and (c) not make any affirmative election to claim any such GRP&E/BCS Carryback Item.
Section 4.07 Apportionment of Earnings and Profits and Tax Attributes.
(a) If the Parent Affiliated Group has a Tax Attribute, the portion, if any, of such Tax Attribute required to be apportioned to GRP&E/BCS SpinCo or the members of the GRP&E/BCS Group and treated as a carryover to the first Post-Distribution Period of GRP&E/BCS SpinCo (or such member) shall be determined in good faith by Parent in accordance with Treasury Regulations Sections 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if applicable, 1.1502-21A and 1.1502-79A.
(b) No Tax Attribute with respect to consolidated Federal Income Tax of the Parent Affiliated Group, other than those Tax Attributes described in Section 4.07(a), and no Tax Attribute with respect to consolidated, combined or unitary state, local or foreign Income Tax, in each case, arising in respect of a Combined Return shall be apportioned to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group, except as Parent (or such member of the Parent Group as Parent shall designate) determines in good faith is otherwise required under applicable Law.
(c) Parent (or its designee) shall determine the portion, if any, of any Tax Attribute which must (absent a Final Determination to the contrary) be apportioned to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group in accordance with this Section 4.07 and applicable Law and the amount of tax basis and earnings and profits to be apportioned to GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group in accordance with applicable Law, and shall provide written notice of the calculation thereof to GRP&E/BCS SpinCo as soon as reasonably practicable after the information necessary to make such calculation becomes available to Parent. For the avoidance of doubt, Parent shall not be liable to GRP&E/BCS SpinCo (or any member of its Group) for any failure of any determination under this Section 4.07 to be accurate under applicable Law or for the failure of Parent (or its designee) to make a determination under this Section 4.07.
(d) The written notices delivered by Parent pursuant to Section 4.07(c) shall be binding on GRP&E/BCS SpinCo and each member of its Group and shall not be subject to dispute resolution (including pursuant to Article 15 or Article VII of the Separation and Distribution Agreement). Except to the extent otherwise required by applicable Law or pursuant to a Final Determination, neither Parent nor GRP&E/BCS SpinCo shall (and each shall cause its Affiliates not to) take any position (whether on a Tax Return or otherwise) that is inconsistent with the information contained in such written notices.
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Article 5. Payments.
Section 5.01 Payment of Taxes. In the case of any Tax Return reflecting Taxes for which the Company that is not the Responsible Company is responsible under Article 2, the Responsible Company shall pay any Taxes required to be paid to the applicable Tax Authority on or before the relevant Payment Date (and provide notice and proof of payment to the other Company). The Responsible Company shall compute the amount of such Taxes allocable to the other Company under the provisions of Article 2 and shall provide written notice and demand for payment of such amount, accompanied by a statement detailing the Taxes paid or to be paid and describing in reasonable detail the particulars relating thereto, to the other Company. The Company that is not the Responsible Company shall pay to the Responsible Company the amount of such Taxes allocable to the Company that is not the Responsible Company under the provisions of Article 2 within twenty (20) Business Days of the date of receipt of such written notice and demand; provided that no such payment shall be required to be made earlier than five (5) Business Days prior to the relevant Payment Date.
Section 5.02 Adjustments Resulting in Underpayments. In the case of any adjustment pursuant to a Final Determination with respect to any Tax Return, the Responsible Company shall pay to the applicable Tax Authority when due any additional Taxes due with respect to such Tax Return required to be paid as a result of such adjustment. Except as otherwise provided in Section 7.07, the Responsible Company shall compute the amount of such Taxes allocable to the other Company under the provisions of Article 2 and shall provide written notice and demand for payment of such amount, accompanied by a statement detailing the Taxes paid or to be paid and describing in reasonable detail the particulars relating thereto, to the other Company. The Company that is not the Responsible Company shall pay to the Responsible Company the amount of such Taxes allocable to the Company that is not the Responsible Company under the provisions of Article 2 within twenty (20) Business Days of the date of receipt of such written notice and demand; provided that no such payment shall be required to be made earlier than five (5) Business Days prior to the date the additional Tax is required to be paid to the applicable Tax Authority.
Section 5.03 Indemnification Payments. Unless otherwise specified in this Agreement, all indemnification payments required to be made under this Agreement shall be made within twenty (20) Business Days of the date of receipt by the indemnifying Company of written notice from the indemnified Company of the amount owed, together with reasonable documentation showing the basis for the calculation of such amount and evidence of payment of such amounts by the indemnified Company to the relevant Tax Authority or other recipient.
Section 5.04 Payors; Payees; Treatment. All payments made under this Agreement shall be made by Parent directly to GRP&E/BCS SpinCo and by GRP&E/BCS SpinCo directly to Parent; provided, however, that if the Companies mutually agree with respect to any such payment, any member of the Parent Group, on the one hand, may make such indemnification payment to any member of the GRP&E/BCS Group, on the other hand, and vice versa (for the avoidance of doubt, if a Company makes a request to the other Company to the effect that any payment required to be made by it to the other Company or received by it from the other Company, in each case, pursuant to this Agreement, be made or received by a member of the relevant Company’s Group other than a Company, the other Company’s consent to such request shall not be unreasonably withheld, conditioned or delayed). All payments made pursuant to this Agreement shall be treated in the manner described in Article 14.
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Article 6. Tax Benefits.
Section 6.01 Tax Benefits.
(a) Except as set forth below, (i) Parent shall be entitled to any Refund (and any interest thereon received from the applicable Tax Authority) of any Taxes (A) for which Parent is liable hereunder (other than any such Refund that is a GRP&E/BCS Retained Tax Benefit), or (B) that is a Parent Retained Tax Benefit and (ii) GRP&E/BCS SpinCo shall be entitled to any Refund (and any interest thereon received from the applicable Tax Authority) (A) of any Taxes for which GRP&E/BCS SpinCo is liable hereunder or (B) that is a GRP&E/BCS Retained Tax Benefit, in each case, other than any Refund to which Parent is entitled pursuant to clause (i) above). The Company receiving a Refund to which the other Company is entitled hereunder, in whole or in part, shall pay over the amount of such Refund (or portion thereof) (and any interest on such amount received from the applicable Tax Authority but net of any costs and expenses (including Taxes) incurred by the Company (or a member of its Group) receiving such Refund in connection with obtaining or securing such Refund) to such other Company within twenty (20) Business Days after the receipt of such Refund or application of such Refund against Taxes otherwise payable. To the extent that any Refund (or portion thereof) in respect of which any amounts were paid over pursuant to the immediately preceding sentence is subsequently disallowed by the applicable Tax Authority, the Company that received such amounts shall promptly repay such amounts (together with any penalties, interest or other charges imposed by the relevant Tax Authority) to the other Company.
(b) If (i) a member of the GRP&E/BCS Group Actually Realizes any Tax Benefit (A) as a result of an adjustment pursuant to a Final Determination that increases Taxes for which a member of the Parent Group is liable hereunder or otherwise, (B) as a result of any liability, obligation, loss or payment (each, a “Loss”) for which a member of the Parent Group is required to indemnify any member of the GRP&E/BCS Group pursuant to the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement (in each case, without duplication of any amounts otherwise payable or taken into account under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement), (C) that is a Parent Retained Tax Benefit (other than a Refund) or (D) as a result of any Section 336(e) Election (including, for the avoidance of doubt, any Tax Benefit Actually Realized by any member of the GRP&E/BCS Group as a result of any step-up in asset basis for Federal Income Tax purposes resulting from such Section 336(e) Election, except to the extent any such Tax Benefit is directly attributable to Taxes imposed on any member of the Parent Group as a result of such Section 336(e) Election and for which a member of the GRP&E/BCS Group has actually indemnified Parent pursuant to this Agreement), or (ii) a member of the Parent Group Actually Realizes any Tax Benefit (A) as a result of an adjustment pursuant to a Final Determination that increases Taxes for which a member of the GRP&E/BCS Group is liable hereunder or otherwise, (B) as a result of any Loss for which a member of the GRP&E/BCS Group is required to indemnify any member of the Parent Group pursuant to the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement (in each case, without duplication of any amounts otherwise payable or taken into account under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement), or (C) that is a GRP&E/BCS Retained Tax Benefit (other than a Refund), GRP&E/BCS SpinCo or Parent, as the case may be, shall make a payment to the other Company in an amount equal to the amount of such Actually Realized Tax Benefit in cash within twenty (20) Business Days of Actually Realizing such Tax Benefit. To the extent that any Tax Benefit (or portion thereof) in respect of which any amounts were paid over pursuant to the foregoing provisions of this Section 6.01(b) is subsequently disallowed by the applicable Tax Authority, the Company that received such amounts shall promptly repay such amounts (together with any penalties, interest or other charges imposed by the relevant Tax Authority) to the other Company.
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(c) No later than twenty (20) Business Days after a Tax Benefit described in Section 6.01(b) is Actually Realized by a member of the Parent Group or a member of the GRP&E/BCS Group, Parent or GRP&E/BCS SpinCo, as the case may be, shall provide the other Company with a written calculation of the amount payable to such other Company pursuant to Section 6.01(b) and describing in reasonable detail the particulars relating thereto. In the event that Parent or GRP&E/BCS SpinCo, as the case may be, disagrees with any such calculation described in this Section 6.01(c), Parent or GRP&E/BCS SpinCo shall so notify the other Company in writing within twenty (20) Business Days of receiving such written calculation. Parent and GRP&E/BCS SpinCo shall endeavor in good faith to resolve such disagreement, and, failing that, the amount payable under this Article 6 shall be determined in accordance with Article 15 as promptly as practicable.
(d) GRP&E/BCS SpinCo shall be entitled to any Refund that is attributable to, and would not have arisen but for, a GRP&E/BCS Carryback Item that is required to be carried back to a Pre-Distribution Period under applicable Law and is carried back pursuant to and in accordance with Section 4.06 (a “Permitted GRP&E/BCS SpinCo Carryback”); provided, however, that GRP&E/BCS SpinCo shall indemnify and hold the members of the Parent Group harmless from and against any and all related costs and expenses and any collateral Tax consequences resulting from, attributable to or caused by any such Permitted GRP&E/BCS SpinCo Carryback, including (but not limited to) the loss or postponement of any benefit from the use of any Tax Attribute of any member of the Parent Group (each, a “Parent Group Tax Attribute”) if (x) such Parent Group Tax Attribute expires unutilized, but would have been utilized but for such Permitted GRP&E/BCS SpinCo Carryback, or (y) the use of such Parent Group Tax Attribute is postponed to a later Tax Period than the Tax Period in which such Parent Group Tax Attribute would have been utilized but for such Permitted GRP&E/BCS SpinCo Carryback. Any such payment of the amount of such Refund made by Parent to GRP&E/BCS SpinCo pursuant to this Section 6.01(d) shall be recalculated in light of any Final Determination (or any other facts that may arise or come to light after such payment is made, such as a carryback of a Parent Group Tax Attribute to a Tax Period in respect of which such Refund is received) that would affect the amount to which GRP&E/BCS SpinCo is entitled, and an appropriate adjusting payment shall be made by GRP&E/BCS SpinCo to Parent such that the aggregate amount paid pursuant to this Section 6.01(d) equals such recalculated amount. To the extent that any Refund (or portion thereof) in respect of which any amounts were paid over by Parent to GRP&E/BCS SpinCo pursuant to the foregoing provisions of this Section 6.01(d) is subsequently disallowed by the applicable Tax Authority, GRP&E/BCS SpinCo shall promptly repay such amounts (together with any penalties, interest or other charges imposed by the relevant Tax Authority) to Parent.
Section 6.02 Parent and GRP&E/BCS SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation.
(a) To the extent permitted by applicable Law, any and all Income Tax deductions arising (i) by reason of exercises of options to acquire Parent or GRP&E/BCS SpinCo stock, vesting of “restricted” Parent stock or GRP&E/BCS SpinCo stock, or settlement of stock appreciation rights, restricted stock awards, restricted stock units or performance share units, or exercises, vesting or settlement of any other compensatory equity or equity-based award, in each case, following the External Distribution, with respect to Parent stock or GRP&E/BCS SpinCo stock (such options, stock appreciation rights, restricted stock, restricted stock units, performance share units, deferred stock units, and other compensatory equity or equity-based awards, collectively, “Compensatory Equity Interests”) held by any Person shall be claimed (A) in the case of a Parent Group Employee, Former Parent Group Employee, Parent Nonemployee Director or Former Nonemployee Director, solely by the Parent Group, and (B) in the case of a GRP&E/BCS Group Employee, Former GRP&E/BCS Group Employee or Transferred Director, solely by the GRP&E/BCS Group and (ii) by reason of any other compensation or employee benefit payment shall be claimed (A) in the case of a Parent Group Employee, Former Parent Group Employee, Parent Nonemployee Director or Former Nonemployee Director (any deduction allocated to Parent or a member of its Group pursuant to clause (i) or (ii), a “Parent Comp Deduction”), solely by the Parent Group and (B) in the case of a GRP&E/BCS Group Employee, Former GRP&E/BCS Group Employee or Transferred Director (any deduction allocated to GRP&E/BCS SpinCo or a member of its Group pursuant to clause (i) or (ii), a “GRP&E/BCS Comp Deduction”), solely by the GRP&E/BCS Group. To the extent that any Parent Comp Deduction may not be claimed under applicable Law by a member of the Parent Group but may be claimed under applicable Law by a member of the GRP&E/BCS Group, GRP&E/BCS SpinCo shall (or shall cause the relevant member of the GRP&E/BCS Group) to claim such deduction. To the extent that any GRP&E/BCS Comp Deduction may not be claimed under applicable Law by a member of the GRP&E/BCS Group but may be claimed under applicable Law by a member of the Parent Group, Parent shall (or shall cause the relevant member of the Parent Group) to claim such deduction.
(b) Tax reporting and withholding with respect to Compensatory Equity Interests shall be governed by Section 4.02(h) of the Employee Matters Agreement. To the extent that any payroll, unemployment, contribution, social security or similar Taxes are not covered by the Employee Matters Agreement, (i) Parent shall be responsible for any such Taxes attributable to a Parent Group Employee, Former Parent Group Employee, Parent Nonemployee Director or Former Nonemployee Director (and such Taxes shall be treated as Traceable Taxes that are clearly and directly traceable to one or more members of the Parent Group for all purposes of this Agreement) and (ii) GRP&E/BCS SpinCo shall be responsible for any such Taxes attributable to a GRP&E/BCS Group Employee, Former GRP&E/BCS Group Employee or Transferred Director (and such Taxes shall be treated as Traceable Taxes that are clearly and directly traceable to one or more members of the GRP&E/BCS Group for all purposes of this Agreement).
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Article 7. Tax-Free Status.
Section 7.01 Representations of Parent and GRP&E/BCS SpinCo.
(a) Each of Parent and GRP&E/BCS SpinCo hereby represents and warrants that (i) it has examined the Representation Letters and the Tax Opinions (including, without limitation, the representations to the extent that they relate to the plans, proposals, intentions and policies of it, its Subsidiaries, its business or its Group), and (ii) to the extent in reference to it, its Subsidiaries, its business or its Group, the facts presented and the representations made therein are true, correct and complete.
(b) GRP&E/BCS SpinCo hereby represents and warrants that (i) it has no plan or intention of taking any action, or failing to take any action (or causing or permitting any Affiliate of GRP&E/BCS SpinCo to take or fail to take any action), and knows of no circumstance that could reasonably be expected to (A) adversely affect, jeopardize or prevent the Tax-Free Status, (B) adversely affect, jeopardize or prevent any Separation Transaction from having the tax treatment described in the Tax Opinions (or, if not so described in the Tax Opinions, in the Separation Step Plan) or to qualify under any Tax Law as wholly or partially tax-free or tax-deferred to the extent that tax-free or tax-deferred treatment was intended or (C) cause any representation or factual statement made in the Separation and Distribution Agreement, this Agreement, any other Ancillary Agreement, the Representation Letters or the Tax Opinions to be untrue, and (ii) during the period beginning two years before the Distribution Date and ending on the Distribution Date, there was no “agreement, understanding, arrangement, substantial negotiations” or “discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of any member of the GRP&E/BCS Group or by any other person or persons with the implicit or explicit permission of one or more of such officers or directors regarding an acquisition of all or a significant portion of the GRP&E/BCS Capital Stock (and any predecessor); provided that no representation or warranty is made by GRP&E/BCS SpinCo regarding any “agreement, understanding, arrangement, substantial negotiations” or “discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of Parent.
Section 7.02 Restrictions on GRP&E/BCS SpinCo.
(a) GRP&E/BCS SpinCo shall not take or fail to take, or cause or permit any Affiliate of GRP&E/BCS SpinCo to take or fail to take, any action if such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letter or Tax Opinion. GRP&E/BCS SpinCo shall not take or fail to take, or cause or permit any Affiliate of GRP&E/BCS SpinCo to take or fail to take, any action if such action or failure to act would or reasonably could be expected to adversely affect, jeopardize or prevent (i) the Tax-Free Status or (ii) any Separation Transaction from having the tax treatment described in the Tax Opinions (or, if not so described in the Tax Opinions, in the Separation Step Plan) or to qualify under any Tax Law as wholly or partially tax-free or tax-deferred to the extent that tax-free or tax-deferred treatment was intended.
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(b) From the date hereof until the first Business Day after the Restriction Period, GRP&E/BCS SpinCo shall (i) maintain its status as a company engaged in the GRP&E/BCS SpinCo Active Trade or Business, (ii) not engage in any transaction that would or reasonably could result in it ceasing to be a company engaged in the GRP&E/BCS SpinCo Active Trade or Business for purposes of Section 355(b)(2) of the Code and (iii) cause New GRP Holdco and Arconic Manufacturing (and the “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of each) to (x) maintain the active conduct (as defined in Section 355(b)(2) of the Code and the Treasury Regulations promulgated thereunder) of the trade(s) or business(es) relied upon to satisfy Section 355(b) of the Code with respect to the First Distribution and the Second Distribution, respectively, as conducted immediately prior to the First Distribution and the Second Distribution, respectively, and (y) not engage in any transaction that would result in New GRP Holdco or Arconic Manufacturing (and the applicable “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of each) ceasing to be engaged in the active conduct of such trade or business for purposes of Section 355(b)(2) of the Code.
(c) From the date hereof until the first Business Day after the Restriction Period, GRP&E/BCS SpinCo shall not:
(i) enter into or permit to occur any Proposed Acquisition Transaction, or, to the extent GRP&E/BCS SpinCo has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Transaction to occur;
(ii) merge or consolidate with any other Person or liquidate or partially liquidate (including any transaction treated as a liquidation or partial liquidation for Federal Income Tax purposes);
(iii) in a single transaction or series of transactions sell or transfer or cause or permit any of its Affiliates to sell or transfer (directly or indirectly) (A) all or substantially all of the assets that were transferred to GRP&E/BCS SpinCo pursuant to the Contribution, (B) 30% or more of the gross assets of any Active Trade or Business or (C) 30% or more of the consolidated gross assets of GRP&E/BCS SpinCo and its Affiliates (in each case, for this purpose, a sale or transfer of assets includes any transaction treated as a sale or transfer of such assets for Federal Income Tax purposes);
(iv) redeem or otherwise repurchase (directly or through an Affiliate of GRP&E/BCS SpinCo) any GRP&E/BCS Capital Stock, or rights to acquire GRP&E/BCS Capital Stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48);
(v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of GRP&E/BCS Capital Stock (including, without limitation, through the conversion of one class of GRP&E/BCS Capital Stock into another class of GRP&E/BCS Capital Stock);
(vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Representation Letters or the Tax Opinions) which in the aggregate (and taking into account any other transactions described in this subparagraph (c)) would or reasonably could have the effect of causing or permitting one or more persons (whether or not acting in concert) to acquire, directly or indirectly, stock representing a Fifty-Percent or Greater Interest in GRP&E/BCS SpinCo (or any successor) or otherwise jeopardize the Tax-Free Status; or
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(vii) cause or permit New GRP Holdco or Arconic Manufacturing to take any action or enter into any transaction described in the preceding clauses (i), (ii), (iii), (iv), (v) or (vi) (substituting references therein to “GRP&E/BCS SpinCo”, the “Active Trade or Business” and “GRP&E/BCS Capital Stock” with references to New GRP Holdco or Arconic Manufacturing (as applicable), the active conduct of the trade(s) or business(es) relied upon with respect to the First Distribution or the Second Distribution (as applicable) for purposes of Section 355(b)(2) of the Code, and the Capital Stock of such corporation),
unless prior to taking any such action set forth in the foregoing clauses (i) through (vii), (A) GRP&E/BCS SpinCo shall have requested that Parent obtain a private letter ruling (or, if applicable, a supplemental ruling) from the IRS (and/or any other applicable Tax Authority) (a “Post-Distribution Ruling”) in accordance with Section 7.05(b) and (d) to the effect that such action or transaction will not affect the Tax-Free Status, and Parent shall have received such a Post-Distribution Ruling in form and substance satisfactory to Parent in its sole and absolute discretion, (B) GRP&E/BCS SpinCo shall have provided Parent with an Unqualified Tax Opinion in form and substance satisfactory to Parent in its sole and absolute discretion (provided that Parent shall use reasonable efforts to timely make a determination as to whether an opinion is satisfactory to Parent, and provided, further, that in determining whether an opinion is satisfactory, Parent may consider, among other factors, the appropriateness of any underlying assumptions, and any management representations used as a basis for the Unqualified Tax Opinion, and Parent may determine that no opinion would be acceptable to Parent) or (C) Parent shall have waived (which waiver may be withheld by Parent in its sole and absolute discretion) the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion.
(d) From the date hereof until the first Business Day after the Restriction Period, GRP&E/BCS SpinCo shall not cause or permit either Arconic (Qinhuangdao), Arconic (Kunshan) or ACICL, if treated as disregarded as separate from its owner as of the Distribution Date, to be treated as other than disregarded as separate from its owner (whether by election under Treasury Regulations Section 301.7701-3 or otherwise), without the prior written consent of Parent.
Section 7.03 Certain Issuances of GRP&E/BCS Capital Stock. If GRP&E/BCS SpinCo proposes to enter into any Section 7.03 Acquisition Transaction or, to the extent GRP&E/BCS SpinCo has the right to prohibit any Section 7.03 Acquisition Transaction, proposes to permit any Section 7.03 Acquisition Transaction to occur, in each case, during the period from the date hereof until the first Business Day after the Restriction Period, GRP&E/BCS SpinCo shall provide Parent, no later than ten (10) days following the signing of any written agreement with respect to the Section 7.03 Acquisition Transaction, with a written description of such transaction (including the type and amount of GRP&E/BCS Capital Stock to be issued in such transaction) and a certificate of the chief financial officer of GRP&E/BCS SpinCo to the effect that the Section 7.03 Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 7.02(c) apply (a “CFO Certificate”).
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Section 7.04 Restrictions on Parent. Parent agrees that it shall not take or fail to take, or cause or permit any Affiliate of Parent to take or fail to take, any action if such action or failure to act would or reasonably could be inconsistent with or cause to be untrue any statement, information, covenant or representation in any Representation Letter or Tax Opinion. Parent shall not take or fail to take, or cause or permit any Affiliate of Parent to take or fail to take, any action that would or reasonably could be expected to adversely affect, jeopardize or prevent (a) the Tax-Free Status or (b) any Separation Transaction from having the tax treatment described in the Tax Opinions (or, if not so described in the Tax Opinions, in the Separation Step Plan) or to qualify under any Tax Law as wholly or partially tax-free or tax-deferred to the extent that tax-free or tax-deferred treatment was intended.
Section 7.05 Procedures Regarding Post-Distribution Rulings and Unqualified Tax Opinions.
(a) If GRP&E/BCS SpinCo determines that it desires to take one of the actions described in clauses (i) through (vii) of Section 7.02(c) (a “Notified Action”), GRP&E/BCS SpinCo shall notify Parent of this fact in writing.
(b) Post-Distribution Rulings or Unqualified Tax Opinions at GRP&E/BCS SpinCo’s Request. Unless Parent shall have waived the requirement to obtain such Post-Distribution Ruling or Unqualified Tax Opinion, upon the reasonable request of GRP&E/BCS SpinCo pursuant to Section 7.02(c), Parent shall cooperate with GRP&E/BCS SpinCo and use commercially reasonable efforts to seek to obtain, as expeditiously as possible, a Post-Distribution Ruling or an Unqualified Tax Opinion for the purpose of permitting GRP&E/BCS SpinCo to take the Notified Action. Notwithstanding the foregoing, Parent shall not be required to file or cooperate in the filing of any request for a Post-Distribution Ruling under this Section 7.05(b) unless GRP&E/BCS SpinCo represents that (i) it has reviewed such request for a Post-Distribution Ruling, and (ii) all statements, information and representations relating to any member of the GRP&E/BCS Group contained in such request for a Post-Distribution Ruling are (subject to any qualifications therein) true, correct and complete. GRP&E/BCS SpinCo shall reimburse Parent for all reasonable costs and expenses, including out-of-pocket expenses and expenses relating to the utilization of Parent personnel, incurred by the Parent Group in obtaining a Post-Distribution Ruling or Unqualified Tax Opinion requested by GRP&E/BCS SpinCo within ten (10) Business Days after receiving an invoice from Parent therefor.
(c) Post-Distribution Rulings or Unqualified Tax Opinions at Parent’s Request. Parent shall have the right to obtain a Post-Distribution Ruling or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Parent determines to obtain a Post-Distribution Ruling or an Unqualified Tax Opinion, GRP&E/BCS SpinCo shall (and shall cause each Affiliate of GRP&E/BCS SpinCo to) cooperate with Parent and take any and all actions reasonably requested by Parent in connection with obtaining the Post-Distribution Ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS, any other applicable Tax Authority or a Tax Advisor; provided that GRP&E/BCS SpinCo shall not be required to make (or cause any Affiliate of GRP&E/BCS SpinCo to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which matters or events it has no control). Parent shall reimburse GRP&E/BCS SpinCo for all reasonable costs and expenses, including out-of-pocket expenses and expenses relating to the utilization of GRP&E/BCS SpinCo personnel, incurred by the Parent Group in connection with such cooperation within ten (10) Business Days after receiving an invoice from GRP&E/BCS SpinCo therefor.
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(d) Parent shall have sole and exclusive control over the process of obtaining any Post-Distribution Ruling, and only Parent shall be permitted to apply for a Post-Distribution Ruling. In connection with obtaining a Post-Distribution Ruling, Parent shall (i) keep GRP&E/BCS SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Parent in connection therewith; (ii)(A) reasonably in advance of the submission of any request for any Post-Distribution Ruling provide GRP&E/BCS SpinCo with a draft copy thereof; (B) reasonably consider GRP&E/BCS SpinCo’s comments on such draft copy; and (C) provide GRP&E/BCS SpinCo with a final copy; and (iii) provide GRP&E/BCS SpinCo with notice reasonably in advance of, and GRP&E/BCS SpinCo shall have the right to attend, any formally scheduled meetings with the IRS or other applicable Tax Authority (subject to the approval of the IRS or such Tax Authority) that relate to such Post-Distribution Ruling. Neither GRP&E/BCS SpinCo nor any Affiliate of GRP&E/BCS SpinCo directly or indirectly controlled by GRP&E/BCS SpinCo shall seek any guidance from the IRS or any other Tax Authority (whether written, oral or otherwise) at any time concerning the Separation Transactions (including the impact of any transaction on the Separation Transactions).
Section 7.06 Liability for Separation Tax Losses.
(a) Notwithstanding anything in this Agreement or the Separation and Distribution Agreement to the contrary (and in each case regardless of whether a Post-Distribution Ruling, Unqualified Tax Opinion or waiver described in clause (C) of Section 7.02(c) may have been provided), subject to Section 7.06(c), GRP&E/BCS SpinCo shall be responsible for, and shall indemnify, defend, and hold harmless Parent and its Affiliates from and against, any Separation Tax Losses that are attributable to or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the External Distribution or any of the other Separation Transactions) of all or a portion of GRP&E/BCS SpinCo’s and/or its Affiliates’ Capital Stock and/or assets by any means whatsoever by any Person, (ii) any negotiations, understandings, agreements, arrangements or discussions by GRP&E/BCS SpinCo or any of its Affiliates with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause any of the Distributions to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly a Fifty-Percent or Greater Interest in GRP&E/BCS SpinCo or any Internal Spinco (or any successor of any of them), (iii) any action or failure to act by GRP&E/BCS SpinCo after the External Distribution (including, without limitation, any amendment to GRP&E/BCS SpinCo’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the voting rights of GRP&E/BCS SpinCo stock (including, without limitation, through the conversion of one class of GRP&E/BCS Capital Stock into another class of GRP&E/BCS Capital Stock), (iv) any act or failure to act by GRP&E/BCS SpinCo or any Affiliate of GRP&E/BCS SpinCo described in Section 7.02 or Section 7.03 (regardless whether such act or failure to act may be covered by a Post-Distribution Ruling, Unqualified Tax Opinion or waiver described in clause (C) of Section 7.02(c) or a CFO Certificate) or (v) any breach by GRP&E/BCS SpinCo of any of its agreements or representations set forth in Section 7.01, Section 7.02 or Section 7.03.
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(b) Notwithstanding anything in this Agreement or the Separation and Distribution Agreement to the contrary, subject to Section 7.06(c), Parent shall be responsible for, and shall indemnify, defend, and hold harmless GRP&E/BCS SpinCo and its Affiliates from and against, any Separation Tax Losses that are attributable to, or result from any one or more of the following: (i) the acquisition (other than pursuant to the Contribution, the External Distribution or any of the other Separation Transactions) of all or a portion of Parent’s and/or its Affiliates’ Capital Stock and/or its assets by any means whatsoever by any Person, (ii) any negotiations, agreements, arrangements or discussions by Parent with respect to transactions or events (including, without limitation, stock issuances, pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of such transactions or events) that cause any of the Distributions to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly stock of Parent or Arcolux (or any successor of any of them) representing a Fifty-Percent or Greater Interest therein, or (iii) any act or failure to act by Parent or a member of the Parent Group described in Section 7.04 or any breach by Parent of any of its agreements or representations set forth in Section 7.01(a) or Section 7.04.
(c) To the extent that any Separation Tax Loss reasonably could be subject to indemnity under either or both Sections 7.06(a) and (b), responsibility for such Separation Tax Loss shall be shared by Parent and GRP&E/BCS SpinCo according to relative fault as determined by Parent in good faith.
Section 7.07 Payment of Separation Taxes.
(a) Calculation of Separation Taxes Owed. Parent shall calculate in good faith the amount of any Separation Tax Losses for which GRP&E/BCS SpinCo is responsible under Section 7.06. Such calculation shall be binding on GRP&E/BCS SpinCo absent manifest error.
(b) Notification of Separation Taxes Owed. At least fifteen (15) Business Days prior to the date of payment of any Separation Tax Losses, Parent shall notify GRP&E/BCS SpinCo of the amount of any Separation Tax Losses for which GRP&E/BCS SpinCo is responsible under Section 7.06. In connection with such notification, Parent shall make available to GRP&E/BCS SpinCo the portion of any Tax Return or other documentation and related workpapers that are relevant to the determination of the Separation Tax Losses attributable to GRP&E/BCS SpinCo pursuant to Section 7.06.
(c) Payment of Separation Taxes Owed.
(i) At least ten (10) Business Days prior to the date of payment of any Separation Tax Losses with respect to which New GRP&E/BCS SpinCo has received notification pursuant to Section 7.07(b), GRP&E/BCS SpinCo shall pay to Parent the amount attributable to the GRP&E/BCS Group as calculated by Parent pursuant to Section 7.07(a). If Parent determines that it does not have a reasonable basis to file a Tax Return in a manner consistent with the Tax Opinions, GRP&E/BCS SpinCo shall pay the amount of Separation Tax Losses for which it is responsible, as determined by Parent pursuant to Section 7.07(a) and reported to GRP&E/BCS SpinCo pursuant to Section 7.07(b), at least ten (10) Business Days before such Tax Return is due (taking into account extensions).
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(ii) With respect to all other Separation Tax Losses, GRP&E/BCS SpinCo shall pay to Parent the amount attributable to the GRP&E/BCS Group as calculated by Parent pursuant to Section 7.07(a) within five (5) Business Days of the receipt by GRP&E/BCS SpinCo of notification of the amount due.
Section 7.08 Section 336(e) Election. If Parent determines, in its sole discretion, that a protective election under Section 336(e) of the Code (a “Section 336(e) Election”) shall be made with respect to the External Distribution, GRP&E/BCS SpinCo shall (and shall cause its relevant Affiliates to) join with Parent (or its relevant Affiliate) in the making of such election and shall take any action reasonably requested by Parent or that is otherwise necessary to effect such election. If a Section 336(e) Election is made, then this Agreement shall be amended in such a manner, if any, as is determined by Parent in good faith to take into account such Section 336(e) Election.
Article 8. Assistance and Cooperation.
Section 8.01 Assistance and Cooperation.
(a) The Companies shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Companies, including (i) preparing and filing Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any Refund or any Tax Benefit, in each case, pursuant to this Agreement or otherwise, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making available, upon reasonable notice, all information and documents in their possession relating to the other Company and its Affiliates as provided in Article 9. Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceeding relating to Taxes.
(b) Any information or documents provided under this Article 8 or Article 9 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision in this Agreement to the contrary, (i) neither Parent nor any of its Affiliates shall be required to provide GRP&E/BCS SpinCo or any of its Affiliates or any other Person access to or copies of any information, documents or procedures (including the proceedings of any Tax Contest) other than information, documents or procedures that relate to GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group, the business or assets of GRP&E/BCS SpinCo or any other member of the GRP&E/BCS Group and (ii) in no event shall either of the Companies or any of its respective Affiliates be required to provide the other Company or any of its respective Affiliates or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that either Company determines that the provision of any information to the other Company or its Affiliates could be commercially detrimental, violate any Law or agreement or waive any Privilege, the Companies shall use reasonable best efforts to permit compliance with its obligations under this Article 8 or Article 9 in a manner that avoids any such harm or consequence.
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Section 8.02 Tax Return Information. GRP&E/BCS SpinCo and Parent acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Parent or GRP&E/BCS SpinCo pursuant to this Agreement. GRP&E/BCS SpinCo and Parent acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by Parent or GRP&E/BCS SpinCo could cause irreparable harm. Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns. Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis (but in no event later than ninety (90) days after such request).
Section 8.03 Reliance by Parent. If any member of the GRP&E/BCS Group supplies information to a member of the Parent Group in connection with Taxes and an officer of a member of the Parent Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Parent Group identifying the information being so relied upon, the chief financial officer of GRP&E/BCS SpinCo (or any officer of GRP&E/BCS SpinCo as designated by the chief financial officer of GRP&E/BCS SpinCo) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. GRP&E/BCS SpinCo agrees to indemnify and hold harmless each member of the Parent Group and its directors, officers and employees from and against any fine, penalty or other cost or expense of any kind attributable to a member of the GRP&E/BCS Group having supplied, pursuant to this Article 8, a member of the Parent Group with inaccurate or incomplete information in connection with Taxes.
Section 8.04 Reliance by GRP&E/BCS SpinCo. If any member of the Parent Group supplies information to a member of the GRP&E/BCS Group in connection with Taxes and an officer of a member of the GRP&E/BCS Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the GRP&E/BCS Group identifying the information being so relied upon, the chief financial officer of Parent (or any officer of Parent as designated by the chief financial officer of Parent) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. Parent agrees to indemnify and hold harmless each member of the GRP&E/BCS Group and its directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to a member of the Parent Group having supplied, pursuant to this Article 8, a member of the GRP&E/BCS Group with inaccurate or incomplete information in connection with Taxes.
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Article 9. Tax Records.
Section 9.01 Retention of Tax Records. Each Company shall preserve and keep all Tax Records (including emails and other digitally stored materials and related workpapers and other documentation) in its possession as of the date hereof or relating to Taxes of the Groups for Pre-Distribution Periods or Taxes or Tax matters that are the subject of this Agreement, in each case, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) ninety (90) days after the expiration of any applicable statutes of limitations (taking into account any extensions), or (ii) seven (7) years after the Distribution Date (such later date, the “Retention Date”). After the Retention Date, each Company may dispose of such Tax Records upon ninety (90) days’ prior written notice to the other Company. If, prior to the Retention Date, a Company reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Article 9 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such Tax Records upon ninety (90) days’ prior notice to the other Company. Any notice of an intent to dispose given pursuant to this Section 9.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book or other record accumulation being disposed. The notified Company shall have the opportunity, at its cost, to copy or remove, within such ninety (90) day period, all or any part of such Tax Records, and the other Company shall then dispose of the same Tax Records.
Section 9.02 Access to Tax Records. The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records to the extent reasonably required by the other Company in connection with the preparation of financial accounting statements, audits, litigation, the preparation of Tax Returns or the resolution of items under this Agreement.
Section 9.03 Preservation of Privilege. The Companies agree to (and to cause the applicable members of their respective Groups to) cooperate and use commercially reasonable efforts to maintain Privilege with respect to any documentation relating to Taxes existing prior to the Distribution Date or Separation Tax Losses to which Privilege may reasonably be asserted (any such documentation, “Privileged Documentation”), including by executing joint defense and/or common interest agreements where necessary or useful for this purpose. No member of the GRP&E/BCS Group shall provide access to or copies of, or otherwise disclose to any Person, any Privileged Documentation without the prior written consent of Parent, such consent not to be unreasonably withheld, conditioned or delayed. No member of the Parent Group shall provide access to or copies of or otherwise disclose to any Person any Privileged Documentation without the prior written consent of GRP&E/BCS SpinCo, such consent not to be unreasonably withheld, conditioned or delayed. Notwithstanding any of the foregoing, in the event that (x) any Governmental Authority requests, outside of normal working hours, that either Company (or any of its Affiliates) provide to such Governmental Authority access to or copies of or otherwise disclose any Privileged Documentation, (y) immediate compliance with such request is required under applicable Law, and (z) such Company attempts in good faith to obtain the prior written consent of the other Company but is not able to do so, then such Company shall be permitted to comply with such request by such Governmental Authority without obtaining the prior written consent of the other Company and shall as promptly as practicable inform the other Company of such request and the access and/or disclosure provided pursuant thereto.
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Article 10. Tax Contests.
Section 10.01 Notice. Each of the Companies shall provide prompt notice to the other Company of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest relating to Taxes, Refunds or other Tax Benefits for which it may be entitled to indemnification by the other Company hereunder or for which it may be required to indemnify the other Company hereunder. Such notice shall include copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability and/or other relevant Tax matters in reasonable detail. The failure of one Company to notify the other of such communication in accordance with the immediately preceding sentences shall not relieve such other Company of any liability or obligation to pay such Tax or make indemnification payments under this Agreement, except to the extent that the failure timely to provide such notification actually prejudices the ability of such other Company to contest such Tax liability (or contest any determination in respect of any Refund or Tax Benefit) or increases the amount of such Tax liability (or reduces the amount of such Refund or Tax Benefit).
Section 10.02 Control of Tax Contests.
(a) Separate Returns. Except in the case of any Traceable Tax Contests (which shall be governed by Section 10.02(c)):
(i) In the case of any Tax Contest with respect to any Parent Separate Return, Parent shall have exclusive control over such Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(d) and Section 10.02(f).
(ii) In the case of any Tax Contest with respect to any GRP&E/BCS Separate Return, GRP&E/BCS SpinCo shall have exclusive control over such Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(e) and (f).
(b) Combined Tax Returns. Except in the case of any Traceable Tax Contests (which shall be governed by Section 10.02(c)), in the case of any Tax Contest with respect to any Combined Return, Parent shall have exclusive control over such Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(d) and Section 10.02(f).
(c) Traceable Tax Contests.
(i) Parent shall have exclusive control over any Separate Parent Traceable Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(d) and Section 10.02(f); provided that if Parent fails to defend a Separate Parent Traceable Tax Contest (whether by failing to participate in any portion of such Tax Contest or by failing to submit any materials in connection with such Tax Contest or otherwise), GRP&E/BCS SpinCo shall have the right to assume exclusive control of such Tax Contest (at Parent’s expense), including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(e) and Section 10.02(f).
(ii) GRP&E/BCS SpinCo shall have exclusive control over any Separate GRP&E/BCS SpinCo Traceable Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(e) and Section 10.02(f); provided that if GRP&E/BCS SpinCo fails to defend a Separate GRP&E/BCS SpinCo Traceable Tax Contest (whether by failing to participate in any portion of or by failing to submit any materials in connection with such Tax Contest or otherwise), Parent shall have the right to assume exclusive control of such Tax Contest (at GRP&E/BCS SpinCo’s expense), including exclusive authority with respect to any settlement of such Tax Contest, subject to Section 10.02(d) and Section 10.02(f).
(iii) In the event of any Joint Traceable Tax Contest, the Companies shall cooperate and shall jointly control such Tax Contest, subject to Section 10.02(f). In the event of any disagreement regarding such Tax Contest, the provisions of Article 15 shall apply.
(d) GRP&E/BCS SpinCo Rights. In the case of any Tax Contest described in Section 10.02(a)(i), Section 10.2(b), Section 10.02(c)(i) or the proviso in Section 10.02(c)(ii) (other than, in each case, any Tax Contest described in Section 10.02(f)), if (x) as a result of such Tax Contest, GRP&E/BCS SpinCo could reasonably be expected to become liable to make any material indemnification payment to Parent hereunder and (y) Parent has control of such Tax Contest, then (i) Parent shall keep GRP&E/BCS SpinCo reasonably informed in a timely manner of all significant developments in respect of such Tax Contest and all significant actions taken or proposed to be taken by Parent with respect to such Tax Contest, (ii) Parent shall timely provide GRP&E/BCS SpinCo with copies of any written materials prepared, furnished or received in connection with such Tax Contest, (iii) Parent shall consult with GRP&E/BCS SpinCo reasonably in advance of taking any significant action in connection with such Tax Contest, (iv) Parent shall consult with GRP&E/BCS SpinCo, offer GRP&E/BCS SpinCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Contest and shall consider GRP&E/BCS SpinCo’s comments in good faith, (v) Parent shall defend such Tax Contest diligently and in good faith as if it were the only party in interest in connection with such Tax Contest, (vi) in determining whether to settle, compromise or abandon any such Tax Contest, Parent shall otherwise make such determination in good faith as if it were the only party in interest in connection with such Tax Contest and (vii) in the case of any Tax Contest relating to Taxes for which Parent is responsible pursuant to this Agreement or otherwise as well as Taxes for which GRP&E/BCS SpinCo is responsible pursuant to this Agreement or otherwise, Parent shall not settle, compromise or abandon any such Tax Contest in a manner that would materially and disproportionately disadvantage GRP&E/BCS SpinCo without obtaining the prior written consent of GRP&E/BCS SpinCo, which consent shall not be unreasonably withheld, conditioned or delayed.
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(e) Parent Rights. In the case of any Tax Contest described in Section 10.02(a)(ii), Section 10.02(c)(ii) or the proviso in Section 10.02(c)(i), if (x) as a result of such Tax Contest, Parent could reasonably be expected to become liable to make any material indemnification payment to GRP&E/BCS SpinCo hereunder and (y) GRP&E/BCS SpinCo has control of such Tax Contest, then (i) GRP&E/BCS SpinCo shall keep Parent reasonably informed in a timely manner of all significant developments in respect of such Tax Contest and all significant actions taken or proposed to be taken by GRP&E/BCS SpinCo with respect to such Tax Contest, (ii) GRP&E/BCS SpinCo shall timely provide Parent with copies of any written materials prepared, furnished or received in connection with such Tax Contest, (iii) GRP&E/BCS SpinCo shall consult with Parent reasonably in advance of taking any significant action in connection with such Tax Contest, (iv) GRP&E/BCS SpinCo shall consult with Parent and offer Parent a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Contest and shall consider Parent’s comments in good faith, (v) GRP&E/BCS SpinCo shall defend such Tax Contest diligently and in good faith as if it were the only party in interest in connection with such Tax Contest and (vi) GRP&E/BCS SpinCo shall not settle, compromise or abandon any such Tax Contest without obtaining the prior written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed.
(f) Separation-Related Tax Contests. Parent shall have exclusive control over any Separation-Related Tax Contest, including exclusive authority with respect to any settlement of such Tax Contest, subject to the following provisions of this Section 10.02(f). In the event of any Separation-Related Tax Contest as a result of which GRP&E/BCS SpinCo could reasonably be expected to become liable for any Separation Tax Losses, (i) Parent shall keep GRP&E/BCS SpinCo reasonably informed in a timely manner of all significant developments in respect of such Tax Contest and all significant actions taken or proposed to be taken by Parent with respect to such Tax Contest, (ii) Parent shall timely provide GRP&E/BCS SpinCo with copies of any written materials prepared, furnished or received in connection with such Tax Contest, (iii) Parent shall consult with GRP&E/BCS SpinCo reasonably in advance of taking any significant action in connection with such Tax Contest and (iv) Parent shall offer GRP&E/BCS SpinCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Contest. Notwithstanding anything in the preceding sentence to the contrary, the final determination of the positions taken, including with respect to settlement or other disposition, in any Separation-Related Tax Contest shall be made in the sole discretion of Parent and shall be final and not subject to Article 15 of this Agreement or Article VII of the Separation and Distribution Agreement.
(g) Power of Attorney.
(i) Each member of the GRP&E/BCS Group shall execute and deliver to Parent (or such member of the Parent Group as Parent shall designate) any power of attorney or other similar document reasonably requested by Parent (or such designee) in connection with any Tax Contest controlled by Parent that is described in this Article 10.
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(ii) Each member of the Parent Group shall execute and deliver to GRP&E/BCS SpinCo (or such member of the GRP&E/BCS Group as GRP&E/BCS SpinCo shall designate) any power of attorney or other similar document reasonably requested by GRP&E/BCS SpinCo (or such designee) in connection with any Tax Contest controlled by GRP&E/BCS SpinCo that is described in this Article 10.
Article 11. Taxes and Tax Benefits Payable by Contract.
Section 11.01 Tax Indemnities Assigned under Separation and Distribution Agreement.
(a) Except with respect to any Taxes or Tax Benefits described in the definition of “GRP&E/BCS Retained Taxes” and “GRP&E/BCS Retained Tax Benefits,” respectively, notwithstanding Section 4.5(f) of the Separation and Distribution Agreement, nothing in this Agreement is intended to affect the contribution, assignment, transfer, conveyance and delivery of any indemnification rights or obligations in respect of Taxes under any GRP&E/BCS Contract (as such term is defined in the Separation and Distribution Agreement, and not, for the avoidance of doubt, including any rights or obligations under the Upstream Spin TMA) to GRP&E/BCS SpinCo (or members of its Group), or the acceptance, assumption, agreement faithfully to perform, discharge and fulfill and succession to such rights or obligations by GRP&E/BCS SpinCo (or members of its Group), in each case, pursuant to the Separation and Distribution Agreement.
(b) Notwithstanding Section 4.5(f) of the Separation and Distribution Agreement, nothing in this Agreement is intended to affect the allocation of Liabilities set forth on Schedule 2.3(a)(vi)(1) of the Separation and Distribution Agreement.
(c) In the event of any conflict between this Agreement and the Separation and Distribution Agreement (or Schedule 2.3(a)(vi)(1) of the Separation and Distribution Agreement) to the extent relating to the indemnification rights or obligations described in Section 11.01(a) or the allocation of Liabilities described in Section 11.01(b), the Separation and Distribution Agreement shall prevail.
Section 11.02 GRP&E/BCS Retained Taxes and GRP&E/BCS Retained Tax Benefits. To the extent that GRP&E/BCS SpinCo has any liability under this Agreement for any Tax for which Alcoa is to be indemnified under the Upstream Spin TMA, and such Tax does not in any way relate to or affect any Tax for which Parent is liable under this Agreement (or any Tax for which Parent is liable under the Upstream Spin TMA and GRP&E/BCS SpinCo is not liable under this Agreement) (an “Alcoa Indemnified Tax”), Parent shall reasonably cooperate with GRP&E/BCS SpinCo to exercise Parent’s rights under the Upstream Spin TMA with respect to Tax Contests and/or Tax Returns, to the extent solely relating to such Alcoa Indemnified Tax, as directed by GRP&E/BCS SpinCo at the sole cost and expense of GRP&E/BCS SpinCo. Parent shall reasonably cooperate with GRP&E/BCS SpinCo to recover any Tax Benefits to which Parent is entitled to under the Upstream Spin TMA and to which GRP&E/BCS SpinCo is entitled to under this Agreement at the sole cost and expense of GRP&E/BCS SpinCo. For the avoidance of doubt, Parent shall have no liability hereunder to GRP&E/BCS SpinCo for the amount of any Tax Benefit realized by Alcoa to which Parent is entitled under Upstream Spin TMA, except to the extent of amounts actually paid by Alcoa to Parent in respect thereof.
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Article 12. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements. This Agreement shall be effective as of the Effective Time. To the knowledge of the Companies, there are no prior intercompany Tax allocation agreements or arrangements solely between or among Parent and/or any of its Subsidiaries, on the one hand, and GRP&E/BCS SpinCo and/or any of its Subsidiaries, on the other hand, and no termination of any such arrangement or agreement, or any settlement of amounts owing in respect of any such arrangement or agreement should be required. To the extent that, contrary to the expectation of the Companies, there is any such intercompany arrangement or agreement in place as of immediately prior to the Effective Time, (a) such arrangement or agreement shall be deemed terminated as of the Effective Time, and (b) amounts due under such agreements as of the date on which the Effective Time occurs shall be settled as promptly as practicable. Upon such settlement, no further payments by or to Parent or any of its Subsidiaries or by or to GRP&E/BCS SpinCo or any of its Subsidiaries with respect to such agreements shall be made, and all other rights and obligations resulting from such agreements between the Companies and their Affiliates shall cease at such time. Any payments pursuant to such agreements shall be disregarded for purposes of computing amounts due under this Agreement.
Article 13. Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.
Article 14. Treatment of Payments; Tax Gross-Up.
Section 14.01 Treatment of Tax Indemnity and Tax Benefit Payments. In the absence of any change in Tax treatment under the Code or other applicable Tax Law and except as otherwise agreed between the Companies or as otherwise required by applicable Law, for all Income Tax purposes, the Companies agree to treat, and to cause their respective Affiliates to treat, (a) the GRP&E/BCS Cash Payment as a payment made pursuant to the Contribution; (b) any payment required by this Agreement or by the Separation and Distribution Agreement (other than the GRP&E/BCS Cash Payment) as, as applicable, (i) a contribution by Parent to GRP&E/BCS SpinCo or a distribution by GRP&E/BCS SpinCo to Parent or a contribution by Alcolux to an Internal Spinco or a distribution by an Internal Spinco to Arcolux, as the case may be, occurring immediately prior to the First Distribution, the Second Distribution or the External Distribution, as applicable (but only to the extent the payment does not relate to a Tax allocated to the payor in accordance with Section 1552 of the Code or the Treasury Regulations thereunder or Treasury Regulations Section 1.1502-33(d) (or under corresponding principles of other applicable Tax Laws)), (ii) an adjustment to the purchase price, or (iii) as payments of an assumed or retained liability, (c) any payment of interest or State Income Taxes by or to a Tax Authority, as taxable or deductible, as the case may be, to the Company entitled under this Agreement to retain such payment or required under this Agreement to make such payment, (d) any GRP&E/BCS True-up Payment or Parent True-up Payment (as such terms are defined in the Separation and Distribution Agreement) as described in Section 2.9(d) of the Separation and Distribution Agreement and (e) the payment contemplated by Section 2.9(e) of the Separation and Distribution Agreement as described in Section 2.9(d) of the Separation and Distribution Agreement.
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Section 14.02 Tax Gross-Up. If, notwithstanding the manner in which payments described in clause (b) of Section 14.01 were reported, there is an adjustment to the Tax Liability of a Company as a result of its receipt of a payment pursuant to this Agreement or the Separation and Distribution Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by the amount of all Income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive.
Section 14.03 Interest. Anything herein to the contrary notwithstanding, to the extent one Company (such Company in its capacity as an indemnitor, an “Indemnitor”) makes a payment of interest to the other Company (such Company in its capacity as an indemnitee, an “Indemnitee”) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by Law) and as interest income by the Indemnitee (includible in income to the extent provided by Law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.
Article 15. Disagreements.
Section 15.01 Dispute Resolution. The Companies desire that collaboration will continue between them. Accordingly, they shall try, and they shall cause their respective Group members to try, to resolve in good faith all disagreements regarding their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (other than a High-Level Dispute) (a “Tax Advisor Dispute”) between any member of the Parent Group and any member of the GRP&E/BCS Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Tax departments of the Companies shall negotiate in good faith to resolve the Tax Advisor Dispute. If, within thirty (30) Business Days such good faith negotiations do not resolve the Tax Advisor Dispute, then the matter shall be referred to such Tax Advisor as the Companies mutually agree. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall resolve the Tax Advisor Dispute according to such procedures as the Tax Advisor deems advisable and shall furnish written notice to the Companies of its resolution of any such Tax Advisor Dispute as soon as practicable, but in any event no later than forty-five (45) days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor shall be consistent with the terms of this Agreement, and if so consistent, shall be conclusive and binding on the Companies. Following receipt of the Tax Advisor’s written notice to the Companies of its resolution of the Tax Advisor Dispute, the Companies shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. In accordance with Article 17, each Company shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor. All fees and expenses of the Tax Advisor in connection with such referral shall be shared equally by the Companies. Any High-Level Dispute shall be resolved pursuant to the procedures set forth in Article VII of the Separation and Distribution Agreement.
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Section 15.02 Injunctive Relief. Nothing in this Article 15 shall prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Advisor Dispute through the Tax Advisor (or any delay resulting from the efforts to resolve any High-Level Dispute through the procedures set forth in Article VII of the Separation and Distribution Agreement) could result in serious and irreparable injury to either Company. Notwithstanding anything to the contrary in the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement, Parent and GRP&E/BCS SpinCo are the only members of their respective Groups entitled to commence a dispute resolution procedure under this Agreement, and each of Parent and GRP&E/BCS SpinCo shall cause its respective Group members not to commence any dispute resolution procedure other than through such Company as provided in this Article 15.
Article 16. Late Payments. Any amount owed by one Company to another Company under this Agreement which is not paid when due shall bear interest at the Prime Rate plus two percent (2%), compounded semiannually, from the due date of the payment to the date paid. To the extent interest required to be paid under this Article 16 duplicates interest required to be paid under any other provision of this Agreement, interest shall be computed at the higher of the interest rate provided under this Article 16 or the interest rate provided under such other provision.
Article 17. Expenses. Except as otherwise provided in this Agreement, each Company and its Affiliates shall bear their own expenses incurred in connection with the preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.
Article 18. General Provisions.
Section 18.01 Counterparts; Entire Agreement; Corporate Power. (a)This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Companies and delivered to the other Company.
(b) The Separation and Distribution Agreement, this Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Companies with respect to the subject matter hereof, and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Companies other than those set forth or referred to herein or therein.
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(c) Parent represents on behalf of itself and each other member of the Parent Group, and GRP&E/BCS SpinCo represents on behalf of itself and each other member of the GRP&E/BCS Group, as follows:
(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and
(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.
(d) Each Company acknowledges that the delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Company expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it shall not assert that any such signature or delivery is not adequate to bind such Company to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Company at any time, it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date hereof) and delivered in person, by mail or by courier.
Section 18.02 Governing Law.
(a) This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Company to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.
(b) Subject to the provisions of Article 15, each of the Companies hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, in any action or proceeding arising out of or relating to this Agreement for recognition or enforcement of any judgment relating hereto, and each of the Companies hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in the Court of Chancery of the State of Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the Federal court of the United States of America sitting in Delaware, and appellate courts thereof, or, if (and only if) such court finds it lacks jurisdiction, another state court in the State of Delaware, (iii) waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any such action or proceeding in such courts and (iv) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in such courts.
Section 18.03 Assignability. This Agreement shall be binding upon and inure to the benefit of the Companies and their successors and permitted assigns; provided, however, that neither Company may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Company, as applicable. Notwithstanding the foregoing, no such consent shall be required for the assignment of a Company’s rights and obligations under this Agreement in whole in connection with a Change of Control of a Company so long as the resulting, surviving or transferee Person assumes all the obligations of such Company by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Company.
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Section 18.04 Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Companies and are not intended to confer upon any other Person any rights or remedies hereunder, and there are no third-party beneficiaries of this Agreement, and this Agreement shall not provide any Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.
Section 18.05 Notices. All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service or by electronic transmission with receipt confirmed (followed by delivery of an original via overnight courier service or by registered or certified mail postage prepaid, return receipt requested) to the respective Companies at the following addresses (or at such other address for a Company as shall be specified in a notice given in accordance with this Section 18.05):
If to Parent, to:
Arconic Inc.
390 Park Avenue
New York, NY 10022
Attention: Chief Legal Officer
Email: Kate.Ramundo@howmet.com
If to GRP&E/BCS SpinCo, to:
Arconic Rolled Products Corporation
201 Isabella Street
Pittsburgh, PA 15212
Attention: Chief Legal Officer
Email: Diana.Toman@arconic.com
A Company may, by notice to the other Company, change the address to which such notices are to be given.
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Section 18.06 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Companies shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Companies.
Section 18.07 Force Majeure. No Company shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder so long as and to the extent any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Company claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Company of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable.
Section 18.08 No Set-Off. Except as expressly set forth in this Agreement or as otherwise mutually agreed to in writing by the Companies, neither Company nor any member of such Company’s Group shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or (b) any other amounts claimed to be owed to the other Company or any member of its Group arising out of this Agreement.
Section 18.09 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 18.10 Waivers of Default. Waiver by a Company of any default by the other Company of any provision of this Agreement must be in writing and shall not be deemed a waiver by the waiving Company of any subsequent or other default, nor shall it prejudice the rights of the other Company. No failure or delay by a Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 18.11 Specific Performance. Subject to the provisions of Article 15, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Company that is, or is to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its rights under this Agreement in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Companies agree that (a) the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss, and (b) any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Companies.
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Section 18.12 Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Company, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Company against whom it is sought to enforce such waiver, amendment, supplement or modification.
Section 18.13 Interpretation. In this Agreement (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Exhibits and Appendices hereto) and not to any particular provision of this Agreement; (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement (including the Separation and Distribution Agreement, this Agreement and each Ancillary Agreement) shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; and (i) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to March 31, 2020.
Section 18.14 Limitations of Liability. Notwithstanding anything in this Agreement to the contrary, neither GRP&E/BCS SpinCo or any member of the GRP&E/BCS Group, on the one hand, nor Parent or any member of the Parent Group, on the other hand, shall be liable under this Agreement to the other for any indirect, incidental, consequential, special, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim).
Section 18.15 Performance. Parent shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Parent Group. GRP&E/BCS SpinCo shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the GRP&E/BCS Group. Each Company (including its permitted successors and assigns) further agrees that it shall (a) give timely notice of the terms, conditions and continuing obligations contained in this Agreement to all of the other members of its Group and (b) cause all of the other members of its Group not to take any action or fail to take any such action inconsistent with such Company’s obligations under this Agreement or the transactions contemplated hereby.
Section 18.16 Mutual Drafting. This Agreement shall be deemed to be the joint work product of the Companies and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Companies have caused this Tax Matters Agreement to be executed by their duly authorized representatives as of the date first written above.
ARCONIC INC. |
By: | /s/ Kenneth J. Giacobbe | |||
Name | Kenneth J. Giacobbe | |||
Title: | Chief Financial Officer |
[Signature Page to Tax Matters Agreement]
ARCONIC ROLLED PRODUCTS CORPORATION |
By: | /s/ Timothy D. Myers | |||
Name: | Timothy D. Myers | |||
Title: | Chief Executive Officer |
[Signature Page to Tax Matters Agreement]
Exhibit 2.3
EMPLOYEE MATTERS AGREEMENT
BY AND BETWEEN
ARCONIC INC.
AND
ARCONIC ROLLED PRODUCTS CORPORATION
DATED AS OF MARCH 31, 2020
TABLE OF CONTENTS
Article I DEFINITIONS | 1 | |
Section 1.01. | Definitions | 1 |
Section 1.02. | Interpretation | 8 |
Article II GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES | 8 | |
Section 2.01. | General Principles | 8 |
Section 2.02. | Service Credit | 9 |
Section 2.03. | Benefit Plans | 10 |
Section 2.04. | Individual Agreements | 11 |
Section 2.05. | Collective Bargaining | 12 |
Section 2.06. | Non-U.S. Regulatory Compliance | 12 |
Article III ASSIGNMENT OF EMPLOYEES | 12 | |
Section 3.01. | Active Employees | 12 |
Section 3.02. | Nonsolicitation | 14 |
Article IV EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION | 14 | |
Section 4.01. | Generally | 14 |
Section 4.02. | Equity Incentive Awards | 15 |
Section 4.03. | Nonequity Incentive Plans | 19 |
Section 4.04. | Severance Benefits | 19 |
Section 4.05. | Director Compensation | 20 |
Article V QUALIFIED RETIREMENT PLANS | 23 | |
Section 5.01. | Spinco Pension Plans | 23 |
Section 5.02. | Nondivided Qualified Pension Plans | 26 |
Section 5.03. | Spinco Savings Plans | 26 |
Section 5.04. | Nondivided Savings Plans | 28 |
Article VI NONQUALIFIED DEFERRED COMPENSATION PLANS | 28 | |
Section 6.01. | Spinco Nonqualified Plans | 28 |
Section 6.02. | Nondivided Nonqualified Plans | 29 |
Section 6.03. | Rabbi Trust | 30 |
Section 6.04. | Participation; Distributions | 30 |
Article VII WELFARE BENEFIT PLANS | 30 | |
Section 7.01. | Welfare Plans | 30 |
Section 7.02. | COBRA and HIPAA | 32 |
Section 7.03. | Vacation, Holidays and Leaves of Absence | 32 |
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Section 7.04. | Severance and Unemployment Compensation | 32 |
Section 7.05. | Workers’ Compensation | 32 |
Section 7.06. | Insurance Contracts | 32 |
Section 7.07. | Third-Party Vendors | 33 |
Section 7.08. | Nondivided Welfare Plans | 33 |
Article VIII NON-U.S. EMPLOYEES | 33 | |
Article IX MISCELLANEOUS | 33 | |
Section 9.01. | Employee Records | 33 |
Section 9.02. | Preservation of Rights to Amend | 35 |
Section 9.03. | Fiduciary Matters | 35 |
Section 9.04. | Further Assurances | 35 |
Section 9.05. | Counterparts; Entire Agreement; Corporate Power | 35 |
Section 9.06. | Governing Law | 35 |
Section 9.07. | Assignability | 35 |
Section 9.08. | Third-Party Beneficiaries | 36 |
Section 9.09. | Notices | 36 |
Section 9.10. | Severability | 36 |
Section 9.11. | Force Majeure | 36 |
Section 9.12. | Headings | 37 |
Section 9.13. | Survival of Covenants | 37 |
Section 9.14. | Waivers of Default | 37 |
Section 9.15. | Dispute Resolution | 37 |
Section 9.16. | Specific Performance | 37 |
Section 9.17. | Amendments | 37 |
Section 9.18. | Interpretation | 37 |
Section 9.19. | Mutual Drafting | 37 |
Section 9.20. | Provisions Incorporated by Reference | 38 |
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FORM OF EMPLOYEE MATTERS AGREEMENT
This EMPLOYEE MATTERS AGREEMENT, dated as of March 31, 2020 (this “Agreement”), is by and between Arconic Inc., a Delaware corporation (“Parent”), and Arconic Rolled Products Corporation, a Delaware corporation (“Spinco”).
R E C I T A L S:
WHEREAS, the board of directors of Parent (the “Parent Board”) has determined that it is in the best interests of Parent and its shareholders to create a new publicly traded company that shall operate the Spinco Business;
WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the Spinco Business from the Parent Business (the “Separation”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of all the outstanding Spinco Shares owned by Parent (the “Distribution”);
WHEREAS, to effectuate the Separation and Distribution, Parent and Spinco have entered into a Separation and Distribution Agreement, dated as of March 31, 2020 (the “Separation and Distribution Agreement”); and
WHEREAS, in addition to the matters addressed by the Separation and Distribution Agreement, the Parties desire to enter into this Agreement to set forth the terms and conditions of certain employment, compensation and benefit matters.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Article
I
DEFINITIONS
Section 1.01. Definitions. For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings ascribed to them in the Separation and Distribution Agreement. “Action” shall have the meaning set forth in the Separation and Distribution Agreement.
“Affiliate” shall have the meaning set forth in the Separation and Distribution Agreement.
“Agreement” shall have the meaning set forth in the preamble to this Agreement and shall include all Schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 9.17.
“Ancillary Agreement” shall have the meaning set forth in the Separation and Distribution Agreement.
“Assets” shall have the meaning set forth in the Separation and Distribution Agreement.
“Benefit Plan” shall mean any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature from an employer to any Employee, or to any family member, dependent, or beneficiary of any such Employee, including pension plans, thrift plans, supplemental pension plans and welfare plans, and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, travel and accident, life, accidental death and dismemberment, disability and accident insurance, tuition reimbursement, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays; provided, however, that the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, unemployment or any similar plans, programs or policies.
“Cash-Settled Units” shall have the meaning set forth in Section 4.05(a).
“COBRA” shall mean the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified in Section 601 et seq. of ERISA and in Section 4980B of the Code.
“Code” shall have the meaning set forth in the Separation and Distribution Agreement.
“Delayed Transfer Employee” shall have the meaning set forth in Section 3.01(b).
“Destination Employer” shall have the meaning set forth in Section 3.01(b).
“Dispute” shall have the meaning set forth in the Separation and Distribution Agreement.
“Distribution” shall have the meaning set forth in the recitals to this Agreement.
“Distribution Date” shall have the meaning set forth in the Separation and Distribution Agreement.
“Distribution Ratio” shall have the meaning set forth in the Separation and Distribution Agreement.
“Effective Time” shall have the meaning set forth in the Separation and Distribution Agreement.
“Employee” shall mean any Parent Group Employee or Spinco Group Employee.
“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“FICA” shall have the meaning set forth in Section 3.01(f).
“Final Trading Day” shall mean the last Trading Session ending prior to the Effective Time.
“Force Majeure” shall have the meaning set forth in the Separation and Distribution Agreement.
“Former Employees” shall mean Former Parent Group Employees and Former Spinco Group Employees.
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“Former Nonemployee Director” shall mean each former member of the Parent Board whose service on the Parent Board ended prior to the Effective Time.
“Former Parent Group Employee” shall mean any individual who is a former employee of Parent or any of its Subsidiaries or former Subsidiaries as of the Operational Separation Date and who is not a Former Spinco Group Employee, including any individual whose most recent employment was at a location that was sold or otherwise closed prior to the Operational Separation Date and who is identified as a Former Parent Group Employee on the master list prepared by Parent prior to the Operational Separation Date. Notwithstanding the foregoing or anything else herein to the contrary, any individual who has received a written communication from the Parent Group prior to the Operational Separation Date indicating that such individual will be classified as a former employee of the Parent Group for purposes of compensation and benefits will be treated as a Former Parent Group Employee for purposes of this Agreement.
“Former Spinco Group Employee” shall mean (i) any individual who is a former employee of Parent or any of its Subsidiaries or former Subsidiaries as of the Operational Separation Date, in each case, whose most recent employment with Parent was with a member of the Spinco Group or the Spinco Business, and (ii) any individual who is a former employee of Parent or its Subsidiaries or former Subsidiaries whose most recent employment was at a work location that has been sold or otherwise closed prior to the Operational Separation Date and who is identified as a Former Spinco Group Employee on the master list prepared by Parent prior to the Operational Separation Date. Notwithstanding the foregoing or anything else herein to the contrary, any individual who has received a written communication from the Parent Group prior to the Operational Separation Date indicating that such individual will be classified as a former employee of the Spinco Group for purposes of compensation and benefits will be treated as a Former Spinco Group Employee for purposes of this Agreement.
“FUTA” shall have the meaning set forth in Section 3.01(f).
“Governmental Authority” shall have the meaning set forth in the Separation and Distribution Agreement.
“HIPAA” shall mean the U.S. Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.
“Individual Agreement” shall mean any individual (i) employment contract, (ii) retention, severance or change of control agreement, (iii) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of taxes and living standards in the host country), or (iv) other agreement containing restrictive covenants (including confidentiality, noncompetition and nonsolicitation provisions) between a member of the Parent Group and a Spinco Group Employee, as in effect immediately prior to the Operational Separation Date.
“IRS” shall have the meaning set forth in the Separation and Distribution Agreement.
“Law” shall have the meaning set forth in the Separation and Distribution Agreement.
“Liabilities” shall have the meaning set forth in the Separation and Distribution Agreement.
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“Operational Separation Date” shall mean February 1, 2020, except with respect to the Arconic Retirement Plan I, Amended and Restated effective January 1, 2015 and the Arconic Retirement Plan II, Amended and Restated effective January 1, 2015 for which the Operational Separation Date shall mean January 1, 2020.
“Parent” shall have the meaning set forth in the preamble to this Agreement.
“Parent Annual Bonus Plans” shall have the meaning set forth in Section 4.03(a).
“Parent Awards” shall mean Parent Options, Parent RSU Awards and Parent PSU Awards, collectively.
“Parent Benefit Plan” shall mean any Benefit Plan established, sponsored or maintained by Parent or any of its Subsidiaries immediately prior to the Operational Separation Date, excluding any Spinco Benefit Plan.
“Parent Board” shall have the meaning set forth in the recitals to this Agreement.
“Parent Business” shall have the meaning set forth in the Separation and Distribution Agreement.
“Parent Compensation Committee” shall mean the Compensation Committee of the Parent Board.
“Parent Deferred Fee Plans” shall have the meaning set forth in Section 4.05(a).
“Parent Divided Nonqualified Plans” shall mean the Arconic Deferred Compensation Plan, as amended and restated effective August 1, 2016, the Arconic Inc. Employees’ Excess Benefits Plan A, as amended and restated effective August 1, 2016, the Arconic Inc. Employees’ Excess Benefits Plan B, as amended and restated effective August 1, 2016, the Arconic Inc. Employees Excess Benefits Plan C, as amended and restated effective August 1, 2016, the Arconic Supplemental Pension Plan for Senior Executives, as amended and restated effective August 1, 2016 and the Arconic Global Pension Plan, effective August 1, 2016.
“Parent Divided Pension Plans” shall mean the Arconic Retirement Plan I, Amended and Restated effective January 1, 2015 and the Arconic Retirement Plan II, Amended and Restated effective January 1, 2015.
“Parent Equity Plan” shall mean any equity compensation plan sponsored or maintained by Parent immediately prior to the Effective Time, including the 2013 Arconic Stock Incentive Plan, as Amended and Restated, the RTI International Metals, Inc. 2014 Stock and Incentive Plan, as amended, the Amended and Restated 2009 Alcoa Stock Incentive Plan, as amended and the RTI International Metals, Inc. 2004 Stock Plan, as amended.
“Parent Fee Continuation Plan” shall have the meaning set forth in Section 4.05(b).
“Parent Group” shall have the meaning set forth in the Separation and Distribution Agreement.
“Parent Group Employees” shall have the meaning set forth in Section 3.01(a).
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“Parent HSA” shall have the meaning set forth in Section 7.01(c).
“Parent Liability” shall have the meaning set forth in the Separation and Distribution Agreement.
“Parent Nonemployee Director” means each member of the Parent Board as of immediately after the Effective Time who is not a Parent Group Employee.
“Parent Option” shall mean an option to purchase Parent Shares granted pursuant to a Parent Equity Plan that is outstanding as of immediately prior to the Effective Time.
“Parent Pension Trust” shall mean the Arconic Retirement Plans Master Trust, amended and restated effective as of August 1, 2016 by and between Arconic Inc. and The Bank of New York Mellon.
“Parent PSU Award” shall mean a performance-based restricted stock unit award granted pursuant to a Parent Equity Plan that is outstanding as of immediately prior to the Effective Time.
“Parent Ratio” shall mean the quotient obtained by dividing the Parent Stock Value by the Post-Separation Parent Stock Value.
“Parent RSU Award” shall mean a restricted stock unit award granted pursuant to a Parent Equity Plan that is outstanding as of immediately prior to the Effective Time.
“Parent Savings Plan” shall mean the Arconic Salaried Retirement Savings Plan, as Amended and Restated effective January 1, 2015 and the Arconic Bargaining Retirement Savings Plan, as amended and restated effective January 1, 2015.
“Parent Share Fund” shall have the meaning set forth in Section 5.03(b).
“Parent Shares” shall have the meaning set forth in the Separation and Distribution Agreement.
“Parent Stock Value” shall mean the per share closing trading price of Parent Shares trading “regular way” on the New York Stock Exchange on the Final Trading Day.
“Parent Welfare Plan” shall mean any Welfare Plan established, sponsored, maintained or contributed to by Parent or any of its Subsidiaries for the benefit of Employees or Former Employees, including the Employees’ Group Benefits Plan of Arconic Inc., Plan I, as amended and restated effective August 1, 2016, the Employees’ Group Benefits Plan of Arconic Inc., Plan II, as amended and restated effective August 1, 2016, the Employees’ Group Benefits Plan of Arconic Inc. Plan I for Retirees, the Employees’ Group Benefits Plan of Arconic Inc. Plan II for Retirees, the Arconic Health Reimbursement Arrangement Plan for Medicare Eligible Retirees, the Arconic Medicare Part B Reimbursement Plan for Certain Eligible Retirees, the Arconic Executive Permanent Life Insurance Plan, the Optional Life Insurance Plan, the Involuntary Separation Plan, the Supplemental Unemployment Benefit Plan, the Arconic Change in Control Severance Plan, as amended and restated effective February 1, 2018, the Arconic Executive Severance Plan and the Legal Fee Reimbursement Plan, effective April 30, 2018, but excluding (i) each Welfare Plan identified in Section 7.08, and (ii) any Spinco Welfare Plan.
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“Party” shall mean a party to this Agreement.
“Person” shall have the meaning set forth in the Separation and Distribution Agreement.
“Post-Separation Parent Awards” shall mean Post-Separation Parent Options, Post-Separation Parent RSU Awards, and the Post-Separation Parent PSU Awards, collectively.
“Post-Separation Parent Option” shall mean a Parent Option adjusted as of the Effective Time in accordance with Section 4.02(b).
“Post-Separation Parent PSU Award” shall mean a Parent PSU Award adjusted as of the Effective Time in accordance with Section 4.02(e).
“Post-Separation Parent RSU Award” shall mean a Parent RSU Award adjusted as of the Effective Time in accordance with Section 4.02(c).
“Post-Separation Parent Stock Value” shall mean the opening per share price of Parent Shares on the New York Stock Exchange in the first Trading Session immediately after the Effective Time.
“Providing Party” shall have the meaning set forth in Section 2.02(b).
“QDRO” shall mean a qualified domestic relations order within the meaning of Section 206(d) of ERISA and Section 414(p) of the Code.
“Record Date” shall have the meaning set forth in the Separation and Distribution Agreement.
“Requesting Party” shall have the meaning set forth in Section 2.02(b).
“Securities Act” shall mean the U.S. Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.
“Separation” shall have the meaning set forth in the recitals to this Agreement.
“Separation and Distribution Agreement” shall have the meaning set forth in the recitals to this Agreement.
“Severance Benefits” shall have the meaning set forth in Section 4.04.
“Spinco” shall have the meaning set forth in the preamble to this Agreement.
“Spinco Annual Bonus Plans” shall have the meaning set forth in Section 4.03(a).
“Spinco Awards” shall mean Spinco Options, Spinco RSU Awards, and Spinco PSU Awards, collectively.
“Spinco Benefit Plan” shall mean any Benefit Plan established, sponsored, maintained or contributed to by a member of the Spinco Group as of or after the Operational Separation Date.
“Spinco Board” shall mean the Board of Directors of Spinco.
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“Spinco Business” shall have the meaning set forth in the Separation and Distribution Agreement.
“Spinco Deferred Fee Plan for Directors” shall have the meaning set forth in Section 4.05(a).
“Spinco Designees” shall have the meaning set forth in the Separation and Distribution Agreement.
“Spinco Equity Plan” shall mean the Spinco 2020 Stock Incentive Plan.
“Spinco Group” shall have the meaning set forth in the Separation and Distribution Agreement.
“Spinco Group Employees” shall have the meaning set forth in Section 3.01(a).
“Spinco HSA” shall have the meaning set forth in Section 7.01(c).
“Spinco Liability” shall have the meaning set forth in the Separation and Distribution Agreement.
“Spinco Nonemployee Director” shall mean each member of the Spinco Board as of immediately after the Effective Time who is not a Spinco Group Employee.
“Spinco Nonqualified Plans” shall mean the plans established by the Spinco Group pursuant to Section 6.01(a) that correspond to the Parent Divided Nonqualified Plans.
“Spinco Option” shall mean an option to purchase Spinco Shares granted by Spinco pursuant to the Spinco Equity Plan in accordance with Section 4.02(b).
“Spinco Pension Plans” shall have the meaning set forth in Section 5.01(a).
“Spinco Pension Trust” shall have the meaning set forth in Section 5.01(a).
“Spinco PSU Award” shall mean a performance-based restricted stock unit award granted pursuant to the Spinco Equity Plan in accordance with Section 4.02(f).
“Spinco Ratio” shall mean the quotient obtained by dividing the Parent Stock Value by the Spinco Stock Value.
“Spinco RSU Award” shall mean a restricted stock unit award granted pursuant to the Spinco Equity Plan in accordance with Section 4.02(d).
“Spinco Savings Plans” shall have the meaning set forth in Section 5.03(a).
“Spinco Share Fund” shall have the meaning set forth in Section 5.03(c).
“Spinco Shares” shall have the meaning set forth in the Separation and Distribution Agreement.
“Spinco Stock Value” shall mean the opening per share price of Spinco Shares on the New York Stock Exchange in the first Trading Session immediately after the Effective Time.
“Spinco Welfare Plans” shall mean the Welfare Plans established, sponsored, maintained or contributed to by any member of the Spinco Group for the benefit of Spinco Group Employees and Former Spinco Group Employees, including each such Welfare Plan that corresponds to a Parent Welfare Plan.
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“Subsidiary” shall have the meaning set forth in the Separation and Distribution Agreement.
“Third Party” shall have the meaning set forth in the Separation and Distribution Agreement.
“Trading Session” shall mean the period of time during any given calendar day, commencing with the determination of the opening price on the New York Stock Exchange and ending with the determination of the closing price on the New York Stock Exchange, in which trading in Parent Shares or Spinco Shares (as applicable) is permitted on the New York Stock Exchange.
“Transferred Account Balances” shall have the meaning set forth in Section 7.01(d).
“Transferred Director” shall have the meaning set forth in Section 4.05(a).
“Transition Services Agreement” shall have the meaning set forth in the Separation and Distribution Agreement.
“U.S.” shall mean the United States of America.
“Welfare Plan” shall mean any “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, mental health, substance abuse and retiree health), disability benefits, or life, accidental death and dismemberment, and business travel insurance, pre-tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time-off programs, contribution funding toward a health savings account, flexible spending accounts or cashable credits.
Section 1.02. Interpretation. Section 10.16 of the Separation and Distribution Agreement is hereby incorporated by reference.
Article
II
GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
Section 2.01. General Principles.
(a) Acceptance and Assumption of Spinco Liabilities. On or prior to the Operational Separation Date, Spinco and the applicable Spinco Designees shall, except as otherwise expressly provided herein, accept, assume and agree to faithfully perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a Spinco Liability):
(i) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), equity compensation (as the same may be modified by this Agreement), commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Spinco Group Employees and Former Spinco Group Employees after the Operational Separation Date, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;
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(ii) any and all Liabilities whatsoever with respect to claims made by or with respect to any Spinco Group Employees or Former Spinco Group Employees in connection with any Benefit Plan not retained or assumed by any member of the Parent Group pursuant to this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement; and
(iii) any and all Liabilities expressly assumed or retained by any member of the Spinco Group pursuant to this Agreement.
(b) Acceptance and Assumption of Parent Liabilities. On or prior to the Operational Separation Date, Parent and certain members of the Parent Group designated by Parent shall, except as otherwise expressly provided herein, accept, assume and agree to faithfully perform, discharge and fulfill all of the following Liabilities held by Spinco or any Spinco Designee and Parent and the applicable members of the Parent Group shall be responsible for such Liabilities in accordance with their respective terms (each of which shall be considered a Parent Liability):
(i) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), equity compensation (as the same may be modified by this Agreement), commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Parent Group Employees and Former Parent Group Employees after the Operational Separation Date, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;
(ii) any and all Liabilities whatsoever with respect to claims made by or with respect to any Parent Group Employees or Former Parent Group Employees in connection with any Benefit Plan not retained or assumed by any member of the Spinco Group pursuant to this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement; and
(iii) any and all Liabilities expressly assumed or retained by any member of the Parent Group pursuant to this Agreement.
(c) Unaddressed Liabilities. To the extent that this Agreement does not address particular Liabilities under any Benefit Plan and the Parties later determine that they should be allocated in connection with the Distribution, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.
Section 2.02. Service Credit.
(a) Service for Eligibility, Vesting and Benefit Purposes. The Spinco Benefit Plans shall, and Spinco shall cause each member of the Spinco Group to, recognize each Spinco Group Employee’s and each Former Spinco Group Employee’s full service with Parent or any of its Subsidiaries or predecessor entities at or before the Operational Separation Date, to the same extent that such service was credited by Parent or its Subsidiary for similar purposes prior to the Operational Separation Date as if such full service had been performed for a member of the Spinco Group, for purposes of eligibility, vesting and determination of level of benefits under any such Spinco Benefit Plan. The Parent Benefit Plans shall, and Parent shall cause each member of the Parent Group to, recognize each Parent Group Employee’s and each Former Parent Group Employee’s full service with Spinco or any of its Subsidiaries or predecessor entities at or before the Operational Separation Date, to the same extent that such service was credited by Spinco or its Subsidiary for similar purposes prior to the Operational Separation Date as if such full service had been performed for a member of the Parent Group, for purposes of eligibility, vesting and determination of level of benefits under any such Parent Benefit Plan.
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(b) Evidence of Prior Service. Notwithstanding anything to the contrary in this Agreement, but subject to Section 3.02 and applicable Law, upon reasonable request by either Party (the “Requesting Party”), the other Party (the “Providing Party”) will provide to the Requesting Party copies of any records available to the Providing Party to document the service, plan participation and membership of former Employees of the Providing Party who are then Employees of the Requesting Party, and will cooperate with the Requesting Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any such Employee.
Section 2.03. Benefit Plans.
(a) Establishment of Plans. As of the Operational Separation Date, Spinco shall, or shall cause an applicable member of the Spinco Group to, adopt Benefit Plans (and related trusts, if applicable), with terms comparable (or such other standard as is specified in this Agreement with respect to any particular Benefit Plan) to those of the corresponding Parent Benefit Plans; provided, however, that Spinco may limit participation in any such Spinco Benefit Plan to Spinco Group Employees and Former Spinco Group Employees who participated in the corresponding Parent Benefit Plan immediately prior to the Operational Separation Date.
(b) Information and Operation. Parent shall provide Spinco with information describing each Parent Benefit Plan election made by a Spinco Group Employee or a Former Spinco Group Employee that may have application to Spinco Benefit Plans from and after the Operational Separation Date, and Spinco shall use its commercially reasonable efforts to administer the Spinco Benefit Plans using those elections. Each Party shall, upon reasonable request, provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.
(c) No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, no participant in any Spinco Benefit Plan shall receive service credit or benefits to the extent that receipt of such service credit or benefits would result in duplication of benefits provided to such participant by the corresponding Parent Benefit Plan or any other plan, program or arrangement sponsored or maintained by a member of the Parent Group. Furthermore, unless expressly provided for in this Agreement, the Separation and Distribution Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting or entitlements under any compensation or Benefit Plan, program or arrangement sponsored or maintained by a member of the Parent Group or member of the Spinco Group on the part of any Employee or Former Employee.
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(d) No Expansion of Participation. Unless otherwise expressly provided in this Agreement, determined or agreed to by Parent and Spinco, required by applicable Law, or explicitly set forth in a Spinco Benefit Plan, a Spinco Group Employee or a Former Spinco Group Employee shall be entitled to participate in the Spinco Benefit Plans at the Operational Separation Date only to the extent that such Spinco Group Employee or a Former Spinco Group Employee was entitled to participate in the corresponding Parent Benefit Plan as in effect immediately prior to the Operational Separation Date (to the extent that such Spinco Group Employee or a Former Spinco Group Employee does not participate in the respective Spinco Benefit Plan immediately prior to the Operational Separation Date), it being understood that this Agreement does not expand (i) the number of Spinco Group Employees or Former Spinco Group Employees entitled to participate in any Spinco Benefit Plan, or (ii) the participation rights of Spinco Group Employees or Former Spinco Group Employees in any Spinco Benefit Plans beyond the rights of such Spinco Group Employees or Former Spinco Group Employees under the corresponding Parent Benefit Plans, in each case, after the Operational Separation Date.
(e) Transition Services. The Parties acknowledge that the Parent Group or the Spinco Group may provide administrative services for certain of the other Party’s compensation and benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to cooperate in good faith to negotiate a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.
(f) Beneficiaries. References to Parent Group Employees, Former Parent Group Employees, Spinco Group Employees, Former Spinco Group Employees, and nonemployee directors of either Parent or Spinco (including Transferred Directors), shall be deemed to refer to their beneficiaries, dependents, survivors and alternate payees, as applicable.
Section 2.04. Individual Agreements.
(a) Assignment by Parent. To the extent necessary, Parent shall assign, or cause an applicable member of the Parent Group to assign, to Spinco or another member of the Spinco Group, as designated by Spinco, all Individual Agreements, with such assignment to be effective as of the Operational Separation Date; provided, however, that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Operational Separation Date, each member of the Spinco Group shall be considered to be a successor to each member of the Parent Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the Spinco Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Spinco Group; provided, further, that in no event shall Parent be permitted to enforce any Individual Agreement (including any agreement containing noncompetition or nonsolicitation covenants) against a Spinco Group Employee or a Former Spinco Group Employee for action taken in such individual’s capacity as a Spinco Group Employee or a Former Spinco Group Employee.
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(b) Assumption by Spinco. Effective as of the Operational Separation Date, Spinco will assume and honor, or will cause a member of the Spinco Group to assume and honor, any individual agreement to which any Spinco Group Employee or Former Spinco Group Employee is a Party with any member of the Parent Group, including any Individual Agreement.
Section 2.05. Collective Bargaining. Effective as of the Distribution Date, to the extent necessary, Spinco shall cause the appropriate member of the Spinco Group to (a) assume or retain all collective bargaining agreements (including any national, sector or local collective bargaining agreement) that cover Spinco Group Employees or Former Spinco Group Employees, including any such agreements negotiated in connection with the Separation, and the Liabilities arising under any such collective bargaining agreements, and (b) join any industrial, employer or similar association or federation if membership is required for the relevant collective bargaining agreement to continue to apply. In the event of any conflict between a provision of this Agreement and the requirements of a collective bargaining agreement applicable to either Party, the requirements of the collective bargaining agreement shall control and the Parties shall cooperate in good faith to modify the applicable provision of this Agreement to the minimum extent necessary to permit compliance with the applicable collective bargaining agreement requirements while preserving to the maximum extent possible the originally intended result of such modified provision.
Section 2.06. Non-U.S. Regulatory Compliance. Parent shall have the authority to adjust the treatment described in this Agreement with respect to Spinco Group Employees who are located outside of the United States to ensure compliance with the applicable laws or regulations of countries outside of the United States or to preserve the tax benefits provided under such local tax law or regulation.
Article
III
ASSIGNMENT OF EMPLOYEES
Section 3.01. Active Employees.(a)Assignment and Transfer of Employees. Effective no later than immediately prior to the Operational Separation Date and except as otherwise required by applicable Law or agreed by the Parties, (i) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the Spinco Group as of the Operational Separation Date (including any such individual who is not actively working as of the Operational Separation Date as a result of an illness, injury or approved leave of absence (or leave of absence otherwise taken in accordance with applicable Law) (collectively, the “Spinco Group Employees”)) is employed by a member of the Spinco Group as of the Operational Separation Date, and (ii) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the Parent Group as of the Operational Separation Date (including any such individual who is not actively working as of the Operational Separation Date as a result of an illness, injury or approved leave of absence (or leave of absence otherwise taken in accordance with applicable Law)) and any other individual employed by the Parent Group as of the Operational Separation Date who is not a Spinco Group Employee (collectively, the “Parent Group Employees”) is employed by a member of the Parent Group as of the Operational Separation Date. Each of the Parties agrees to execute, and to seek to have the applicable Employees execute, such documentation, if any, as may be necessary to reflect such assignment and/or transfer.
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(b) Delayed Transfer Employees. To the extent that applicable Law prevents the Parties from causing any (i) Spinco Group Employee to be employed by a member of the Spinco Group as of the Operational Separation Date as contemplated by Section 3.01(a)(i) or (ii) Parent Group Employee to be employed by a member of the Parent Group as of the Operational Separation Date as contemplated by Section 3.01(a)(ii) (each such employee, a “Delayed Transfer Employee” and the Spinco Group or Parent Group entity to which such Delayed Transfer Employee would have been transferred under Section 3.01(a), the “Destination Employer”), the Parties shall use commercially reasonable efforts to ensure that (A) such Delayed Transfer Employee becomes employed by the Destination Employer at the earliest time permitted by applicable Law and, with respect to any Delayed Transfer Employee who is actively employed as of the Operational Separation Date, and (B) the Destination Employer receives the benefit of such Delayed Transfer Employee’s services from and after the Operation Separation Date, including by entering into an employee leasing or similar arrangement. From and after the commencement of a Delayed Transfer Employee’s employment with the Destination Employer, such Delayed Transfer Employee shall be treated for all purposes of this Agreement, including Section 2.02, as if such Delayed Transfer Employee commenced employment with the Destination Employer as of the Operational Separation Date as contemplated by Section 3.01(a).
(c) At-Will Status. Nothing in this Agreement shall create any obligation on the part of any member of the Parent Group or any member of the Spinco Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period after the date of this Agreement (except as required by applicable Law), or (ii) change the employment status of any Employee from “at-will,” to the extent that such Employee is an “at-will” employee under applicable Law.
(d) Severance. The Parties acknowledge and agree that the Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.01 shall not be deemed an involuntary termination of employment that entitles any Spinco Group Employee or Parent Group Employee to severance payments or benefits.
(e) Not a Change of Control/Change in Control. The Parties acknowledge and agree that neither the consummation of the Distribution nor any transaction contemplated by this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement shall be deemed a “change of control,” “change in control,” or term of similar import for purposes of any Benefit Plan sponsored or maintained by any member of the Parent Group or member of the Spinco Group.
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(f) Payroll and Related Taxes. With respect to any Spinco Group Employee or group of Spinco Group Employees, the Parties shall, or shall cause their respective Subsidiaries to, (i) treat Spinco (or the applicable member of the Spinco Group) as a “successor employer” and Parent (or the applicable member of the Parent Group) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, for purposes of taxes imposed under the United States Federal Insurance Contributions Act, as amended (“FICA”), or the United States Federal Unemployment Tax Act, as amended (“FUTA”), (ii) cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA upon or following the Operational Separation Date or the Distribution Date, as applicable, with respect to each such Spinco Group Employee for the tax year during which the Operational Separation Date or the Distribution Date, as applicable, occurs, and (iii) use commercially reasonable efforts to implement the alternate procedure described in Section 5 of Revenue Procedure 2004-53; provided, however, that to the extent that Spinco (or the applicable member of the Spinco Group) cannot be treated as a “successor employer” to Parent (or the applicable member of the Parent Group) within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code with respect to any Spinco Group Employee or group of Spinco Group Employees, (x) with respect to the portion of the tax year commencing on January 1, 2020 and ending on the Operational Separation Date or the Distribution Date, as applicable, Parent will (A) be responsible for all payroll obligations, tax withholding and reporting obligations for such Spinco Group Employees, and (B) furnish a Form W-2 or similar earnings statement to all such Spinco Group Employees for such period, and (y) with respect to the remaining portion of such tax year, Spinco will (A) be responsible for all payroll obligations, tax withholding and reporting obligations regarding such Spinco Group Employees, and (B) furnish a Form W-2 or similar earnings statement to all such Spinco Group Employees.
Section 3.02. Nonsolicitation. Each Party agrees that, for a period of twelve (12) months from the Operational Separation Date, such Party shall not solicit for employment any individual who is a Parent Group Employee, in the case of a Spinco, or a Spinco Group Employee, in the case of Parent; provided, however, that without limiting the generality of the foregoing prohibition on solicitation of Employees of the other Party, this Section 3.02 shall not prohibit (a) generalized solicitations that are not directed to specific Persons or Employees of the other Party, (b) the solicitation of a Person whose employment was involuntarily terminated by the other Party, or (c) the solicitation of a Person after receipt by the soliciting Party (in advance of any solicitation or, in the case of a response to a general solicitation as permitted under the foregoing clause (a), in advance of any subsequent solicitation in connection with the recruiting process) of the express written consent of the Party that employs the Person who is to be solicited. Except as provided in the foregoing clause (b) with respect to involuntary terminations, without regard to the use of the term “Employee” or “employs,” the restrictions under this Section 3.02 shall be applicable to (i) Parent Group Employees whose employment terminates after the Operational Separation Date, and (ii) Spinco Group Employees whose employment terminates after the Operational Separation Date, in each case, until the date that is six (6) months after such Employee’s last date of employment with Parent or Spinco, as applicable. For the avoidance of doubt, the restrictions under this Section 3.02 shall not apply to Former Parent Group Employees or Former Spinco Group Employees whose most recent employment with Parent and its Subsidiaries was terminated prior to the Operational Separation Date.
Article
IV
EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION
Section 4.01. Generally. Parent Awards that are outstanding as of immediately prior to the Effective Time shall be adjusted as described below; provided, however, that effective immediately prior to the Effective Time, the Parent Compensation Committee may provide for different adjustments with respect to some or all Parent Awards to the extent that the Parent Compensation Committee deems such adjustments necessary and appropriate. Any adjustments made by the Parent Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties and their respective Affiliates. Before the Effective Time, the Spinco Equity Plan shall be established, with such terms as are necessary to permit the implementation of the provisions of Section 4.02.
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Section 4.02. Equity Incentive Awards.
(a) Outstanding Parent Options Held by Parent Group Employees and Former Parent Group Employees. Each Parent Option held by a Parent Group Employee or a Former Parent Group Employee, that is outstanding and unexercised as of immediately prior to the Effective Time, shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Parent Option immediately prior to the Effective Time; provided, however, that certain restrictions may be imposed on the Parent Option after the Effective Time if necessary and appropriate to comply with applicable Law; and further, provided, however, that from and after the Effective Time:
(i) the number of Parent Shares subject to such Parent Option, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (A) the number of Parent Shares subject to such Parent Option immediately prior to the Effective Time by (B) the Parent Ratio; and
(ii) the per share exercise price of such Parent Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (A) the per share exercise price of such Parent Option immediately prior to the Effective Time by (B) the Parent Ratio.
(b) Outstanding Parent Options Held by Spinco Group Employees and Former Spinco Group Employees. Each Parent Option held by a Spinco Group Employee or a Former Spinco Group Employee, that is outstanding and unexercised as of immediately prior to the Effective Time, shall be converted into a Spinco Option and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding Parent Option immediately prior to the Effective Time (except that references to “Parent” in the applicable plan and award agreement shall be deemed to refer to “Spinco,” unless clearly dictated otherwise by context); provided, however, that certain restrictions may be imposed on the Spinco Option after the Effective Time if necessary and appropriate to comply with applicable Law; and further provided, however, that from and after the Effective Time:
(i) the number of Spinco Shares subject to such Spinco Option, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent Option immediately prior to the Effective Time by (B) the Spinco Ratio; and
(ii) the per share exercise price of such Spinco Option, rounded up to the nearest whole cent, shall be equal to the quotient obtained by dividing (A) the per share exercise price of the corresponding Parent Option immediately prior to the Effective Time by (B) the Spinco Ratio.
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(c) Outstanding Parent RSU Awards Held by Parent Group Employees and Former Parent Group Employees. Each Parent RSU Award held by a Parent Group Employee or a Former Parent Group Employee that is outstanding as of immediately prior to the Effective Time, shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Parent RSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares; provided, however, that certain restrictions may be imposed on the Parent RSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further, provided, however, that from and after the Effective Time, the number of Parent Shares to which such Parent RSU Award relates shall be equal to the product obtained by multiplying (i) the number of Parent Shares to which such Parent RSU Award related immediately prior to the Effective Time by (ii) the Parent Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Post-Separation Parent Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, Parent or any member of the Parent Group, as determined by Parent in its sole discretion, the shares subject to the Parent RSU Award may instead be rounded down to the nearest whole number of shares).
(d) Outstanding Parent RSU Awards Held by Spinco Group Employees and Former Spinco Group Employees. Each Parent RSU Award held by a Spinco Group Employee or Former Spinco Group Employee that is outstanding as of immediately prior to the Effective Time, shall be converted into a Spinco RSU Award, and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding Parent RSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares (except that references to Parent in the applicable plan and award agreement shall be deemed to refer to Spinco, unless clearly dictated otherwise by context); provided, however, that certain restrictions may be imposed on the Spinco RSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further, provided, however, that from and after the Effective Time, the number of Spinco Shares to which such Spinco RSU Award relates shall be equal to the product obtained by multiplying (i) the number of Parent Shares to which the corresponding Parent RSU Award related immediately prior to the Effective Time by (ii) the Spinco Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Spinco Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, Parent, any member of the Parent Group, Spinco or any member of the Spinco Group, as determined by Parent in its sole discretion, the shares subject to the Spinco RSU Award may instead be rounded down to the nearest whole number of shares).
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(e) Outstanding Parent PSU Awards Held by Parent Group Employees and Former Parent Group Employees. Each Parent PSU Award held by a Parent Group Employee or a Former Parent Group Employee that is outstanding as of immediately prior to the Effective Time, shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Parent PSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares; provided, however, that certain restrictions may be imposed on the Parent PSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further, provided, however, that from and after the Effective Time:
(i) the number of Parent Shares to which such Parent PSU Award relates shall be equal to the product obtained by multiplying (A) the number of Parent Shares to which such Parent PSU Award related immediately prior to the Effective Time by (B) the Parent Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Post-Separation Parent Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, Parent or any member of the Parent Group, as determined by Parent in its sole discretion, the shares subject to the Parent PSU Award may instead be rounded down to the nearest whole number of shares); and
(ii) the performance conditions applicable to each such Parent PSU Award shall be (A) for the 2018-2020 performance period with respect to any such Parent PSU Award, deemed achieved at the Effective Time based on the actual level of achievement of the applicable performance goals during the portion of the performance period ending on December 31, 2019, and (B) for the 2020-2022 performance period, the conditions established by the Parent Compensation Committee prior to the Effective Time. For each such Parent PSU Award held by the ParentCo Chief Executive Officer that has performance conditions based on the attainment of stock price performance goals relating to Parent, such goals shall remain in effect and measurement of the level of achievement of such goals shall be determined based on the combined value of Parent Shares and Spinco Shares (as adjusted to reflect to the Distribution Ratio) in accordance with the methodology approved by the Parent Compensation Committee prior to the Effective Time.
(f) Outstanding Parent PSU Awards Held by Spinco Group Employees and Former Spinco Group Employees. Each Parent PSU Award held by a Spinco Group Employee or a Former Spinco Group Employee that is outstanding as of immediately prior to the Effective Time shall be converted into a Spinco PSU Award and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding Parent PSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares (except that references to Parent in the applicable plan and award agreement shall be deemed to refer to Spinco, unless clearly dictated otherwise by context); provided, however, that certain restrictions may be imposed on the Spinco PSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further provided, however, that from and after the Effective Time:
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(i) the number of Spinco Shares to which such Spinco PSU Award relates shall be equal to the product obtained by multiplying (A) the number of Parent Shares to which the corresponding Parent PSU Award related immediately prior to the Effective Time by (B) the Spinco Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Spinco Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, the Parent, any member of the Parent Group, Spinco or any member of the Spinco Group, as determined by the Parent in its sole discretion, the shares subject to the Spinco PSU Award may instead be rounded down to the nearest whole number of shares); and
(ii) the performance conditions applicable to each such Spinco PSU Award shall be (A) for the 2018-2020 performance period with respect to any such Spinco PSU Award, deemed achieved at the Effective Time based on the actual level of achievement of the applicable performance goals during the portion of the performance period ending on December 31, 2019, and (B) for the 2020-2022 performance period, the conditions established by the Parent Compensation Committee prior to the Effective Time.
(g) Miscellaneous Award Terms. None of the Separation, the Distribution nor any employment transfer described in Section 3.01(a) shall constitute a termination of employment for any Employee for purposes of any Post-Separation Parent Award or any Spinco Award. After the Effective Time, for any award adjusted under this Section 4.02, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or Parent Equity Plan applicable to such award (i) with respect to Post-Separation Parent Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or Parent Equity Plan, and (ii) with respect to Spinco Awards, shall be deemed to refer to a “Change in Control” as defined in the Spinco Equity Plan.
(h) Tax Reporting and Withholding. Unless prohibited by applicable Law, following the Effective Time, (i) Parent shall be solely responsible for all Liabilities, including all income, payroll and other tax remittance and reporting, and entitled to all tax deductions, associated with Post-Separation Parent Awards, and (ii) Spinco shall be solely responsible for all Liabilities, including all income, payroll and other tax remittance and reporting, and entitled to all tax deductions associated with, Spinco Awards. Parent and Spinco agree to enter into any necessary agreements regarding the subject matter of this Section 4.02(h) to enable Parent and Spinco to fulfill their respective obligations hereunder, including but not limited to, compliance with all applicable Laws regarding the reporting, withholding or remitting of income and/or taxes.
(i) Registration and Other Regulatory Requirements. Spinco agrees to file Forms S-1, S-3 and S-8 registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the Spinco Shares authorized for issuance under the Spinco Equity Plan, as required pursuant to the Securities Act, before the date of issuance of any Spinco Shares pursuant to the Spinco Equity Plan. The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 4.02(i), including compliance with securities Laws and other legal requirements associated with equity compensation awards in affected non-U.S. jurisdictions. Parent agrees to facilitate the adoption and approval of the Spinco Equity Plan consistent with the requirements of Treasury Regulations Section 1.162-27(f)(4)(iii).
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(j) Parent Awards in Certain Non-U.S. Jurisdictions. Notwithstanding the foregoing provisions of this Section 4.02, the Parties may mutually agree, in their sole discretion, not to adjust certain outstanding Parent Awards held by individuals located outside of the United States pursuant to the foregoing provisions of this Section 4.02, where those actions would create or trigger adverse legal, accounting or tax consequences for Parent, Spinco, and/or the affected non-U.S. award holders. In such circumstances, Parent and/or Spinco may take any action necessary or advisable to prevent any such adverse legal, accounting or tax consequences, including, but not limited to, agreeing to modify any aspect of the adjustment method set forth in this Section 4.02 or to apply an alternate adjustment method. Where and to the extent required by applicable Law or tax considerations outside the United States, the adjustments described in this Section 4.02 shall be deemed to have been effectuated immediately prior to the Distribution Date.
Section 4.03. Nonequity Incentive Plans.
(a) Annual Bonus Plans. Immediately prior to the Effective Time, Spinco Group Employees shall cease participating in each Parent annual bonus plan or policy (the “Parent Annual Bonus Plans”) and, as of the Effective Time, Spinco Group Employees who were eligible to participate in Parent Annual Bonus Plans shall be eligible to participate in the Spinco annual bonus plans or policies (the “Spinco Annual Bonus Plans”). Spinco shall be solely responsible for funding, paying and discharging all obligations under the Spinco Annual Bonus Plans in respect of the annual bonus payable to the Spinco Group Employees in respect of the calendar year in which the Effective Time occurs (and Parent shall have no liability with respect to annual bonuses for such year).
(b) Incentive Plans. As of the Effective Time, (i) the Parent Group shall retain (or assume to the extent necessary) sponsorship of all commission bonus and sales incentive plans covering Parent Group Employees, and, from and after the Effective Time, all Liabilities thereunder shall be Liabilities of the Parent Group, and (ii) the Spinco Group shall retain (or assume to the extent necessary) sponsorship of all commission bonus and sales incentive plans covering Spinco Group Employees, and, from and after the Effective Time, all Liabilities thereunder shall be Liabilities of the Spinco Group.
Section 4.04. Severance Benefits. Spinco shall be solely responsible for all Liabilities in respect of all of the costs of providing benefits under any applicable severance, separation, redundancy, termination or similar plan, program, practice, contract, agreement, law or regulation (such benefits to include, if applicable, any medical or other welfare benefits, outplacement benefits, accrued vacation, and taxes) (collectively, “Severance Benefits”) relating to the termination or alleged termination of employment of any Former Spinco Group Employee and of any Spinco Group Employee that occurs on or after the Operational Separation Date. Parent shall be solely responsible for all Liabilities in respect of all the costs of providing the Severance Benefits relating to the termination or alleged termination of employment of any Former Parent Group Employee and of any Parent Group Employee that occurs on or after the Operational Separation Date.
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Section 4.05. Director Compensation.
(a) Establishment of Deferred Fee Plan for Directors. Before the Effective Time, Spinco shall establish the Spinco Deferred Fee Plan for Directors. Each Spinco Nonemployee Director who served on the Parent Board immediately prior to the Effective Time but who will no longer serve on the Parent Board following the Effective Time (a “Transferred Director”), and held a deferred fee account under the Amended and Restated Arconic Deferred Fee Plan for Directors, effective November 1, 2016, or the Arconic Deferred Fee Plan for Directors, as amended effective July 9, 1999, or the Arconic Deferred Fee Estate Enhancement Plan for Directors, effective July 10, 1998 (collectively, the “Parent Deferred Fee Plans”) immediately prior to the Effective Time, shall, as of the Effective Time, be credited under the Spinco Deferred Fee Plan for Directors with the amount of his or her deferred fee account balance under the Parent Deferred Fee Plans and shall cease participation in the Parent Deferred Fee Plans as of the Effective Time (it being understood that such cessation shall not trigger any distribution of payments or benefits under the Parent Deferred Fee Plans), and, as of the Effective Time, except as otherwise provided in clause (f) below, Parent shall cease to have any Liability to any such Spinco Nonemployee Director under the Parent Deferred Fee Plans. All cash-settled Parent Shares notionally credited to each Transferred Director’s deferred fee account under the Parent Deferred Fee Plans (“Cash-Settled Units”), the liability for which is transferred to Spinco and the Spinco Deferred Fee Plan for Directors pursuant to the preceding sentence, shall be adjusted so that, from and after the Effective Time, such Cash-Settled Units relate to a number of Spinco Shares (including any resulting fractional share) equal to the product obtained by multiplying (i) the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time, by (ii) the Spinco Ratio. Notwithstanding the preceding sentence, if a Transferred Director holds, as of immediately prior to the Effective Time, Parent Shares, Parent RSU Awards, and Cash-Settled Units with a value of at least two times the stock ownership guideline under Parent’s non-employee director compensation policy, all of such Transferred Director’s Cash-Settled Units shall be adjusted so that, immediately after the Effective Time, such Cash-Settled Units relate to (A) a number of Parent Shares equal to the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time and (B) a number of Spinco Shares equal to the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time multiplied by the Distribution Ratio, and all such adjusted Cash-Settled Units will otherwise continue to have the same terms and conditions that applied to the original Cash-Settled Units immediately prior to the Effective Time.
(b) Parent Deferred Fee Plan and Parent Fee Continuation Plan. Parent shall continue to be responsible for Liabilities in respect of the Parent Nonemployee Directors and Former Nonemployee Directors under the Parent Deferred Fee Plans and the Arconic Fee Continuation Plan for Non-Employee Directors as amended effective November 10, 1995 and September 15, 2006 (the “Parent Fee Continuation Plan”) and shall be responsible for Liabilities in respect of Transferred Directors under the Parent Deferred Fee Plans solely to the extent provided by clause (f) below.
(i) All Cash-Settled Units held in the accounts of Parent Nonemployee Directors under the Parent Deferred Fee Plans immediately after the Effective Time shall be adjusted so that, from and after the Effective Time, such Cash-Settled Units relate to a number of Parent Shares (including any resulting fractional share) equal to the product obtained by multiplying (A) the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time, by (B) the Parent Ratio. Notwithstanding the preceding sentence, if a Parent Nonemployee Director holds, as of immediately prior to the Effective Time, Parent Shares, Parent RSU Awards, and Cash-Settled Units with a value of at least two times the stock ownership guideline under Parent’s non-employee director compensation policy, all of such Parent Nonemployee Director’s Cash-Settled Units shall be adjusted so that, immediately after the Effective Time, such Cash-Settled Units relate to (1) a number of Parent Shares equal to the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time and (2) a number of Spinco Shares equal to the number of Parent Shares to which such Cash-Settled Units related immediately prior to the Effective Time multiplied by the Distribution Ratio, and all such adjusted Cash-Settled Units will otherwise continue to have the same terms and conditions that applied to the original Cash-Settled Units immediately prior to the Effective Time.
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(ii) All cash-settled Parent Shares notionally credited to the accounts of Former Nonemployee Directors under the Parent Deferred Fee Plans immediately after the Effective Time shall be adjusted so that, from and after the Effective Time, such notionally credited shares represent (A) a number of cash-settled Parent Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time and (B) a number of cash-settled Spinco Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time multiplied by the Distribution Ratio.
(iii) Each Former Nonemployee Director’s share-based payment entitlement under the Parent Fee Continuation Plan shall be adjusted so that, immediately after the Effective Time, such entitlement relates to (A) a number of Parent Shares equal to the number of Parent Shares to which such payment entitlement related immediately prior to the Effective Time and (B) a number of Spinco Shares equal to the number of Parent Shares to which such payment entitlement related immediately prior to the Effective Time multiplied by the Distribution Ratio.
(c) Director Compensation. Parent shall be responsible for the payment of any fees for service on the Parent Board that are earned at, before, or after the Effective Time, and Spinco shall not have any responsibility for any such payments. With respect to any Spinco Nonemployee Director, Spinco shall be responsible for the payment of any fees for service on the Spinco Board that are earned at any time after the Effective Time and Parent shall not have any responsibility for any such payments. Notwithstanding the foregoing, Spinco shall commence paying quarterly cash retainers to Spinco Nonemployee Directors in respect of the quarter in which the Effective Time occurs; provided that (i) if Parent has already paid such quarter’s cash retainers to Parent nonemployee directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, Spinco will pay Parent an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to Spinco after the Distribution Date (other than any amount that is subject to a deferral election and is credited or to be credited to any such director’s account under the Spinco Deferred Fee Plan for Directors), and (ii) if Parent has not yet paid such quarter’s cash retainers to Parent Nonemployee Directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, Parent will pay Spinco an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to Parent on and prior to the Distribution Date.
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(d) Outstanding Parent RSU Awards Held by Parent Nonemployee Directors. Each vested, unvested and/or deferred (including under the Parent Deferred Fee Plans) Parent RSU Award held by a Parent Nonemployee Director that is outstanding as of immediately prior to the Effective Time, shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to such Parent RSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares; provided, however, that certain restrictions may be imposed on the Parent RSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further, provided, however, that from and after the Effective Time, the number of Parent Shares to which such Parent RSU Award relates shall be equal to the product obtained by multiplying (i) the number of Parent Shares to which such Parent RSU Award related immediately prior to the Effective Time by (ii) Parent Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Post-Separation Parent Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, Parent or any member of the Parent Group, as determined by Parent in its sole discretion, the shares subject to the Parent RSU Award may instead be rounded down to the nearest whole number of shares).
(e) Outstanding Parent RSU Awards Held by Transferred Nonemployee Directors. Each vested, unvested and/or deferred (including under the Parent Deferred Fee Plans) Parent RSU Award held by a Transferred Nonemployee Director that is outstanding as of immediately prior to the Effective Time, shall be converted into a Spinco RSU Award, and shall otherwise be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding Parent RSU Award immediately prior to the Effective Time, including any deferral election applicable to the delivery of vested shares (except that references to Parent in the applicable plan and award agreement shall be deemed to refer to Spinco, unless clearly dictated otherwise by context); provided, however, that certain restrictions may be imposed on the Spinco RSU Award after the Effective Time if necessary and appropriate to comply with applicable Law; and further provided, however, that from and after the Effective Time, the number of Spinco Shares to which such Spinco RSU Award relates shall be equal to the product obtained by multiplying (i) the number of Parent Shares to which the corresponding Parent RSU Award related immediately prior to the Effective Time by (ii) the Spinco Ratio (with any resulting fractional share paid to the award holder promptly following the Effective Time in the form of a cash payment equal to the product of such fractional share and the Spinco Stock Value; provided, however, that if the cash payment may result in adverse tax or legal treatment of the award holder, Parent, any member of the Parent Group, Spinco or any member of the Spinco Group, as determined by Parent in its sole discretion, the shares subject to the Spinco RSU Award may instead be rounded down to the nearest whole number of shares).
(f) Outstanding Parent RSU Awards Held by Former Nonemployee Directors. Each Former Nonemployee Director who holds a vested Parent RSU Award that is deferred under the Parent Deferred Fee Plans as of immediately prior to the Effective Time shall receive, as of the Effective Time, a vested Spinco RSU Award for a number of Spinco Shares equal to the number of Parent Shares subject to such award immediately prior to the Effective Time multiplied by the Distribution Ratio. Except as set forth in this Section 4.05(f), the vested Parent RSU Award and vested Spinco RSU Award issued in accordance with this Section 4.05(f) shall, from and after the Effective Time, each be subject to the same terms and conditions (including with respect to payment timing) as were applicable to the vested Parent RSU Award immediately prior to the Effective Time.
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(g) Tax Reporting and Withholding.
(i) Unless prohibited by applicable Law, following the Effective Time, (A) Parent shall be solely responsible for all Liabilities, including all income, payroll and other tax remittance and reporting, associated with compensation and benefits for Parent Nonemployee Directors and Former Nonemployee Directors (including, without limitation, with respect to Spinco RSU Awards held by Former Nonemployee Directors), and (B) Spinco shall be solely responsible for all Liabilities, including all income, payroll and other tax remittance and reporting, associated with compensation and benefits for Transferred Directors. Parent and Spinco agree to enter into any necessary agreements regarding the subject matter of this Section 4.05(g) to enable Parent and Spinco to fulfill their respective obligations hereunder, including but not limited to, compliance with all applicable Laws regarding the reporting, withholding or remitting of income and/or taxes.
(ii) After the Effective Time, Parent RSU Awards, regardless of by whom held, shall be settled by Parent, and Spinco RSU Awards, regardless of by whom held, shall be settled by Spinco.
(iii) Cooperation. Each of the Parties shall establish an appropriate administration system in order to administer, in an orderly manner, (A) the settlement of SpinCo RSU Awards held by Former Nonemployee Directors, and (B) the reporting requirements with respect to such Spinco RSU Awards.
Article
V
QUALIFIED RETIREMENT PLANS
Section 5.01. Spinco Pension Plans.
(a) Establishment and Retention of Spinco Pension Plans. As of the Operational Separation Date, Spinco shall establish Spinco pension plans and a Spinco pension trust, each of which shall initially have substantially the same terms as those of the corresponding Parent Divided Pension Plan and Parent Pension Trust, respectively, as in effect immediately prior to the Operational Separation Date (such plans shall be referred to as the “Spinco Pension Plans” and the “Spinco Pension Trust,” respectively). At least thirty (30) days prior to the Operational Separation Date, Parent shall have filed the notice required under Section 6058(b) of the Code. On, or as soon as practicable after, the Operational Separation Date and after receipt by Parent of (i) a copy of the Spinco Pension Plans; and (ii) a copy of certified resolutions of the Spinco Board (or its authorized committee or other delegate) evidencing adoption of the Spinco Pension Plans and the Spinco Pension Trust and the assumption by the Spinco Pension Plans of the Liabilities described in Section 5.01(b), Parent shall direct the trustee of the Parent Pension Trust to transfer assets of the Spinco Pension Plans to the Spinco Pension Trust in the amounts described in Section 5.01(b).
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(b) Assumption of Liabilities; ERISA Section 4044 Transfer.
(i) Parent Divided Pension Plans. As of the Operational Separation Date, Spinco shall cause each Spinco Pension Plan to assume Liabilities for Spinco Group Employees and Former Spinco Group Employees under the corresponding Parent Divided Pension Plan and shall cause the Spinco Pension Trust to accept Assets with respect to such assumed Liabilities (including Assets and Liabilities in respect of beneficiaries and/or alternate payees). In accordance with the rules set forth in Section 5.01(b)(ii), the Parent Pension Trust shall transfer such Assets to the Spinco Pension Trust and, upon completion of such Asset transfer, the Parent Divided Pension Plans and the Parent Group shall be relieved of such Liabilities.
(ii) Transfer of Assets. The amount of Assets (whether in cash or kind, as determined by Parent’s Benefits Management Committee) to be transferred from the Parent Pension Trust to the Spinco Pension Trust in respect of the assumption of Liabilities by Spinco under Section 5.01(b)(i) shall be determined as of the Operational Separation Date in accordance with, and shall comply with, Section 414(l) of the Code and, to the extent deemed applicable by the Parties, ERISA Section 4044. Assumptions used to determine the value (or amount) of the Assets to be transferred shall be the safe harbor assumptions specified for valuing benefits in trusteed plans under Department of Labor Regulations Section 4044.51-57 and, to the extent not so specified, shall be based on the assumptions used in the annual valuation report to determine minimum funding requirements most recently prepared before the transfer by the actuary for the Parent Divided Pension Plans. The transfer amounts described above shall be credited or debited, as applicable, with a pro rata share of the actual investment earnings or losses allocable to the transfer amount for the period between the Operational Separation Date and an assessment date set by Parent that is as close as practicable, taking into account the timing and reporting of valuation of Assets in the Parent Pension Trust, to the date upon which Assets equal in value to the transfer amount are actually transferred from the Parent Pension Trust to the Spinco Pension Trust. During the time before such transfer, benefits for Spinco Group Employees who terminate employment with the Spinco Group shall be paid from the Parent Pension Trust. The ultimate transfer amount shall be reduced by the amount of these benefits and credited or debited by the actual investment earnings or losses from the payment date to the assessment date set above by Parent. In addition, during this period, Spinco will be responsible for a pro rata share of third party fees, costs and expenses, including investment management, trustee and administration fees attributable to the Assets of the Spinco Pension Plan that remain in the Parent Pension Trust. The entries in the Parent Divided Pension Plan funding standard accounts shall be divided between the Parent Divided Pension Plan and the Spinco Pension Plan based on the guidance provided in Revenue Rulings 81-212 and 86-47. The Parties agree that to the extent necessary to effectuate the provisions of this Section 5.01(b), there may be additional transfers of Assets between the Parent Pension Trust and Spinco Pension Trust on such dates as agreed by the Parties.
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(c) Spinco Pension Plan Provisions. The Spinco Pension Plans shall provide that:
(i) Spinco Group Employees and Former Spinco Group Employees shall (A) be eligible to participate in the corresponding Spinco Pension Plan as of the Operational Separation Date to the extent that they were eligible to participate in the applicable Parent Divided Pension Plan as of immediately prior to the Operational Separation Date, and (B) receive credit for vesting, eligibility and benefit service for all service credited for those purposes under the applicable Parent Divided Pension Plan as of the Operational Separation Date;
(ii) the compensation paid by the Parent Group to a Spinco Group Employee or a Former Spinco Group Employee that is recognized under the applicable Parent Divided Pension Plan as of immediately prior to the Operational Separation Date shall be credited and recognized for all applicable purposes under the corresponding Spinco Pension Plan;
(iii) the accrued benefit of each Spinco Group Employee or Former Spinco Group Employee under the applicable Parent Divided Pension Plan as of the Operational Separation Date shall be payable under the corresponding Spinco Pension Plan at the time and in a form that would have been permitted under the corresponding Parent Divided Pension Plan as in effect as of the Operational Separation Date to the extent required by Section 411(d)(6) of the Code, with employment by the Parent Group before the Operational Separation Date treated as employment by the Spinco Group under the applicable Spinco Pension Plan for purposes of determining eligibility for optional forms of benefit, early retirement benefits, or other benefit forms; and
(iv) each Spinco Pension Plan shall assume and honor the terms of all QDROs, beneficiary designations and benefit elections in effect under the corresponding Parent Divided Pension Plan as of immediately prior to the Operational Separation Date with respect to Spinco Group Employees and Former Spinco Group Employees.
(d) Determination Letter Request. Spinco shall submit an application to the IRS as soon as practicable after the Operational Separation Date (but no later than the last day of the applicable remedial amendment period as defined in applicable Code provisions) requesting a determination letter regarding the qualified status of the Spinco Pension Plans under Section 401(a) of the Code and the tax-exempt status of the Spinco Pension Trust under Section 501(a) of the Code as of the Operational Separation Date and shall make any amendments reasonably requested by the IRS to receive such a favorable determination letter.
(e) Parent Divided Pension Plans after Operational Separation Date. From and after the Operational Separation Date, (i) the Parent Divided Pension Plans shall continue to be responsible for Liabilities in respect of Parent Group Employees and Former Parent Group Employees, and (ii) no Spinco Group Employees or Former Spinco Group Employees shall accrue any benefits under the Parent Divided Pension Plans. Without limiting the generality of the foregoing, Spinco Group Employees or Former Spinco Group Employees shall cease to be participants in the Parent Divided Pension Plans, effective as of the Operational Separation Date.
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(f) Plan Fiduciaries. For all periods after the Operational Separation Date, the Parties agree that the applicable fiduciaries of each of the Parent Divided Pension Plans and the Spinco Pension Plans, respectively, shall have the authority with respect to the Parent Divided Pension Plans and the Spinco Pension Plans, respectively, to determine the plan investments and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.
(g) No Loss of Unvested Benefits; No Distributions. The transfer of any Spinco Group Employee’s employment to the Spinco Group will not result in the loss of that Spinco Group Employee’s unvested accrued benefits (if any) under the Parent Divided Pension Plans, the Liability for which benefits shall be assumed under the Spinco Pension Plans as provided herein. No Spinco Group Employee shall be entitled to a distribution of his or her benefit under the applicable Parent Divided Pension Plan or the applicable Spinco Pension Plan as a result of such transfer of employment.
Section 5.02. Nondivided Qualified Pension Plans. As of the Operational Separation Date, the Parent Group shall retain (or assume to the extent necessary) sponsorship of the Howmet Corporation Pension Plan as amended and restated effective January 1, 2015, the Howmet Corporation Muskegon County Operations Hourly Employees Pension Plan as amended and restated effective January 1, 2015, the Huck International, Inc. Retirement Plan as amended and restated effective January 1, 2015, the Pension Plan of RMI Titanium Co. as amended and restated effective January 1, 2013 and the Pension Plan for Salaried Employees of RMI Titanium Co. as amended and restated effective January 1, 2013, and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group.
Section 5.03. Spinco Savings Plans.
(a) Establishment of Plans. As of the Operational Separation Date, Spinco shall establish the Spinco savings plans (the “Spinco Savings Plans”), each of which shall initially have substantially the same terms as those of the corresponding Parent Savings Plan as in effect immediately prior to the Operational Separation Date. As of the Operational Separation Date, Spinco shall provide Parent with (i) a copy of the Spinco Savings Plans; and (ii) a copy of certified resolutions of the Spinco Board (or its authorized committee or other delegate) evidencing adoption of the Spinco Savings Plans and the related trust(s) and the assumption by the Spinco Savings Plan of the Liabilities described in Section 5.03(b).
(b) Transfer of Account Balances. Effective as of the Operational Separation Date, Parent shall cause the trustee(s) of the Parent Savings Plans to transfer from the trust(s) which forms a part of the Parent Savings Plans to the trust(s) which forms a part of the Spinco Savings Plans the account balances of the Spinco Group Employees and Former Spinco Group Employees under the Parent Savings Plans, determined as of the date of the transfer. Such transfers shall be made in kind, including promissory notes evidencing the transfer of outstanding loans, and, with respect to unitized investments in the Parent Common Stock Fund (the “Parent Share Fund”), Parent Shares. Any Asset and Liability transfers pursuant to this Section 5.03(b) shall comply in all respects with Sections 414(l) and 411(d)(6) of the Code.
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(c) Spinco Share Fund in Spinco Savings Plan. The Spinco Savings Plan will provide, effective as of the Effective Time: (i) for the establishment of a share fund for Spinco Shares (the “Spinco Share Fund”); (ii) that such Spinco Share Fund shall receive a transfer of and hold all Spinco Shares distributed in connection with the Distribution in respect of Parent Shares held in Parent Savings Plan accounts of Spinco Group Employees and Former Spinco Group Employees participating in the Spinco Savings Plan immediately prior to the Effective Time; and (iii) that, following the Effective Time, contributions made by or on behalf of such participants shall be allocated to the Spinco Share Fund, if so directed in accordance with the terms of the Spinco Savings Plan.
(d) Parent Share Fund in Spinco Savings Plan. Participants in the Spinco Savings Plans will be prohibited from increasing their holdings in the Parent Share Fund under the Spinco Savings Plans and may elect to liquidate their holdings in the Parent Share Fund and invest those monies in any other investment fund offered under the Spinco Savings Plan. After the Effective Time, but in no event earlier than the date that is six (6) months following the Effective Time or later than approximately the first anniversary of the Effective Time, all outstanding investments in the Parent Share Fund under the Spinco Savings Plans shall be liquidated and reinvested in other investment funds offered under the Spinco Savings Plans, on such dates and in accordance with such procedures as are determined by the administrator and the named fiduciary of the Spinco Savings Plans.
(e) Spinco Share Fund in Parent Savings Plan. Spinco Shares distributed in connection with the Distribution in respect of Parent Shares held in Parent Savings Plans accounts of Parent Group Employees or Former Parent Group Employees who participate in the Parent Savings Plans shall be deposited in a Spinco Share Fund under the Parent Savings Plans, and such participants in the Parent Savings Plans will be prohibited from increasing their holdings in such Spinco Share Fund under the Parent Savings Plans and may elect to liquidate their holdings in such Spinco Share Fund and invest those monies in any other investment fund offered under the Parent Savings Plans. After the Effective Time, but in no event earlier than the date that is six (6) months following the Effective Time or later than approximately the first anniversary of the Effective Time, all outstanding investments in the Spinco Share Fund under the Parent Savings Plans shall be liquidated and reinvested in other investment funds offered under the Parent Savings Plans, on such dates and in accordance with such procedures as are determined by the administrator and the named fiduciary of the Parent Savings Plans.
(f) Spinco Savings Plans Provisions. The Spinco Savings Plans shall provide that:
(i) Spinco Group Employees and Former Spinco Group Employees shall (A) be eligible to participate in the corresponding Spinco Savings Plan as of the Operational Separation Date to the extent that they were eligible to participate in the applicable Parent Savings Plan as of immediately prior to the Operational Separation Date, and (B) receive credit for all service credited for that purpose under the Parent Savings Plans as of immediately prior to the Operational Separation Date as if that service had been rendered to Spinco; and
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(ii) the account balance of each Spinco Group Employee and Former Spinco Group Employee under the applicable Parent Savings Plan as of the date of the transfer of Assets from such Parent Savings Plan (including any outstanding promissory notes) shall be credited to such individual’s account balance under the corresponding Spinco Savings Plan.
(g) Determination Letter Request. Spinco shall submit an application to the IRS as soon as practicable after the Operational Separation Date (but no later than the last day of the applicable remedial amendment period as defined in applicable Code provisions) requesting a determination letter regarding the qualified status of the Spinco Savings Plans under Sections 401(a) and 401(k) of the Code and the tax-exempt status of their related trust under Section 501(a) of the Code and shall make any amendments reasonably requested by the IRS to receive such a favorable determination letter.
(h) Parent Savings Plans after Operational Separation Date. From and after the Operational Separation Date, (i) the Parent Savings Plans shall continue to be responsible for Liabilities in respect of Parent Group Employees and Former Parent Group Employees, and (ii) no Spinco Group Employees or Former Spinco Group Employees shall accrue any benefits under the Parent Savings Plans. Without limiting the generality of the foregoing, Spinco Group Employees and Former Spinco Group Employees shall cease to be participants in the Parent Savings Plans effective as of the Operational Separation Date.
(i) Plan Fiduciaries. For all periods after the Operational Separation Date, the Parties agree that the applicable fiduciaries of each of the Parent Savings Plan and the Spinco Savings Plan, respectively, shall have the authority with respect to the Parent Savings Plan and the Spinco Savings Plan, respectively, to (subject to Sections 5.03(d) and 5.03(e)) determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.
(j) No Loss of Unvested Benefits; No Distributions. The transfer of any Spinco Group Employee’s employment to the Spinco Group will not result in the loss of that Spinco Group Employee’s unvested benefits (if any) under the applicable Parent Savings Plan, the Liability for which benefits will be assumed under the corresponding Spinco Savings Plan as provided herein. No Spinco Group Employee shall be entitled to a distribution of his or her benefit under the Parent Savings Plan or Spinco Savings Plan as a result of such transfer of employment.
Section 5.04. Nondivided Savings Plans. As of the Operational Separation Date, the Parent Group shall retain (or assume to the extent necessary) sponsorship of Arconic Retirement Savings Plan for ATEP Bargaining Employees, effective January 1, 2017, as amended, and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group.
Article
VI
NONQUALIFIED DEFERRED COMPENSATION PLANS
Section 6.01. Spinco Nonqualified Plans.
(a) Establishment of Spinco Nonqualified Plans. Effective as of the Operational Separation Date, Spinco shall establish the Spinco Nonqualified Plans. Each of the Spinco Nonqualified Plans shall initially have substantially the same terms as those of the corresponding Parent Divided Nonqualified Plan as in effect immediately prior to the Operational Separation Date.
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(b) Assumption of Liabilities from Parent. As of the Operational Separation Date, Spinco shall, and shall cause each Spinco Nonqualified Plan to, assume all Liabilities under the corresponding Parent Divided Nonqualified Plan for the account balances and accrued benefits of Spinco Group Employees and Former Spinco Group Employees and their respective beneficiaries and/or alternate payees determined as of immediately prior to the Operational Separation Date, and the Parent Group and the Parent Divided Nonqualified Plans shall be relieved of all such Liabilities. All Parent Shares notionally credited to participants’ accounts under the Parent Divided Nonqualified Plans, the liability for which is transferred to Spinco, and the Spinco Nonqualified Plans pursuant to the preceding sentence, shall be adjusted so that, from and after the Effective Time, such notionally credited shares represent: (i) a number of Parent Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time and (ii) a number of Spinco Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time multiplied by the Distribution Ratio.
(c) Parent Divided Nonqualified Plans. Parent shall retain all Liabilities under the Parent Divided Nonqualified Plans for the benefits for Parent Group Employees and Former Parent Group Employees and their respective beneficiaries and/or alternate payees. From and after the Operational Separation, Spinco Group Employees and Former Spinco Group Employees shall cease to be participants in the Parent Divided Nonqualified Plans. All Parent Shares notionally credited to participants’ accounts under the Parent Divided Nonqualified Plans shall be adjusted so that, from and after the Effective Time, such notionally credited shares represent: (i) a number of Parent Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time and (ii) a number of Spinco Shares equal to the number of Parent Shares notionally credited to such account immediately prior to the Effective Time multiplied by the Distribution Ratio.
Section 6.02. Nondivided Nonqualified Plans. As of the Operational Separation Date, (a) the Parent Group shall retain (or assume to the extent necessary) sponsorship of the Howmet Corporation Supplemental Executive Retirement Plan, as amended and restated effective November 1, 2016, the Howmet Corporation Retirement Income Make-Up Plan “B”, as amended and restated effective November 1, 2016, the Huck International, Inc. Excess Benefit Plan for Selected Employees, as amended and restated effective November 1, 2016, the Howmet (Pechiney) Deferred Compensation Plan and the RTI International Metals, Inc. Supplemental Pension Program, as amended and restated effective January 30, 2015 and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group, and (b) the Spinco Group shall retain (or assume to the extent necessary) sponsorship of the Alumax Deferred Compensation Plan and the Alumax LLC Excess Benefit Plan, as amended and restated August 1, 2016 and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Spinco Group.
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Section 6.03. Rabbi Trust. From and after the Operational Separation Date, that certain grantor trust sponsored by Alumax Inc. (or a Subsidiary thereof) and relating to certain deferred compensation obligations shall be retained by the Spinco Group.
Section 6.04. Participation; Distributions. The Parties acknowledge that none of the transactions contemplated by this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement will trigger a payment or distribution of compensation under any of the Parent Divided Nonqualified Plans or Spinco Nonqualified Plans for any participant and, consequently, that the payment or distribution of any compensation to which such participant is entitled under any of the Parent Divided Nonqualified Plans or Spinco Nonqualified Plans will occur upon such participant’s separation from service from the Spinco Group or at such other time as provided in the applicable Spinco Nonqualified Plan or participant’s deferral election.
Article
VII
WELFARE BENEFIT PLANS
Section 7.01. Welfare Plans.
(a) Establishment of Spinco Welfare Plans. As of the Operational Separation Date, Spinco shall, or shall cause the applicable member of the Spinco Group to, establish the Spinco Welfare Plans, which shall initially have terms substantially similar in the aggregate to those of the corresponding Parent Welfare Plans as in effect immediately prior to the Operational Separation Date.
(b) Waiver of Conditions; Benefit Maximums. Spinco shall use commercially reasonable efforts to cause the Spinco Welfare Plans to:
(i) with respect to initial participation as of the Operational Separation Date, waive (A) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any Spinco Group Employee or Former Spinco Group Employee, other than limitations that were in effect with respect to such Spinco Group Employee or Former Spinco Group Employee under the applicable Parent Welfare Plan as of immediately prior to the Operational Separation Date, and (B) any waiting period limitation or evidence of insurability requirement applicable to a Spinco Group Employee or Former Spinco Group Employee other than limitations or requirements that were in effect with respect to such Spinco Group Employee or Former Spinco Group Employee under the applicable Parent Welfare Plans as of immediately prior to the Operational Separation Date; and
(ii) take into account (A) with respect to aggregate annual, lifetime, or similar maximum benefits available under the Spinco Welfare Plans, any Spinco Group Employee’s or Former Spinco Group Employee’s prior claim experience under the Parent Welfare Plans and any Benefit Plan that provides leave benefits; and (B) any eligible expenses incurred by a Spinco Group Employee or Former Spinco Group Employee and his or her covered dependents during the portion of the plan year of the applicable Parent Welfare Plan ending as of the Operational Separation Date to be taken into account under such Spinco Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Spinco Group Employee or Former Spinco Group Employee and his or her covered dependents for the applicable plan year to the same extent as such expenses were taken into account by Parent for similar purposes prior to the Operational Separation Date as if such amounts had been paid in accordance with such Spinco Welfare Plan.
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(c) Health Savings Accounts. As of the Operational Separation Date, Spinco shall, or shall cause a member of the Spinco Group to, establish a Spinco Welfare Plan that will provide health savings account benefits to Spinco Group Employees on and after the Operational Separation Date (an “Spinco HSA”). It is the intention of the Parties that all activity under a Spinco Group Employee’s health savings account under a Parent Welfare Plan (a “Parent HSA”) for the year in which the Operational Separation Date occurs be treated instead as activity under the corresponding account under the Spinco HSA, such that (i) any period of participation by a Spinco Group Employee in a Parent HSA during the year in which the Operational Separation Date occurs will be deemed a period when such Spinco Group Employee participated in the corresponding Spinco HSA; (ii) all expenses incurred during such period will be deemed incurred while such Spinco Group Employee’s coverage was in effect under the corresponding Spinco HSA; and (iii) all elections and reimbursements made with respect to such period under the Parent HSA will be deemed to have been made with respect to the corresponding Spinco HSA.
(d) Flexible Spending Accounts. The Parties shall use commercially reasonable efforts to ensure that as of the Operational Separation Date any health or dependent care flexible spending accounts of Spinco Group Employees (whether positive or negative) (the “Transferred Account Balances”) under Parent Welfare Plans that are health or dependent care flexible spending account plans are transferred, as soon as practicable after the Operational Separation Date, from the Parent Welfare Plans to the corresponding Spinco Welfare Plans. Such Spinco Welfare Plans shall assume responsibility as of the Operational Separation Date for all outstanding health or dependent care claims under the corresponding Parent Welfare Plans of each Spinco Group Employee for the year in which the Operational Separation Date occurs and shall assume and agree to perform the obligations of the corresponding Parent Welfare Plans from and after the Operational Separation Date. As soon as practicable after the Operational Separation Date, and in any event within thirty (30) days after the amount of the Transferred Account Balances is determined or such later date as mutually agreed upon by the Parties, Spinco shall pay Parent the net aggregate amount of the Transferred Account Balances, if such amount is positive, and Parent shall pay Spinco the net aggregate amount of the Transferred Account Balances, if such amount is negative.
(e) Allocation of Welfare Assets and Liabilities. Effective as of the Operational Separation Date, the Spinco Group shall assume all Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of Spinco Group Employees or Former Spinco Group Employees or their covered dependents under the Parent Welfare Plans or Spinco Welfare Plans before, at or after the Operational Separation Date. No Parent Welfare Plan shall provide coverage to any Spinco Group Employee or Former Spinco Group Employee after the Operational Separation Date. Notwithstanding the foregoing or anything else herein to the contrary, with respect to Employees and Former Employees who provide or provided services in Brazil, (i) Parent shall retain all Liabilities relating to Parent or any of its Subsidiaries or predecessor entities in Brazil, and (ii) Spinco shall assume (A) the Liability for compensation and benefits required to be provided to certain Former Spinco Group Employees located in Brazil in accordance with the terms and conditions set forth in Schedule 7.01(e) and (B) all other Employee and Former Employee health and welfare Liabilities relating to operations in Brazil prior to the Separation.
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Section 7.02. COBRA and HIPAA. The Parent Group shall continue to be responsible for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the Parent Welfare Plans with respect to any Parent Group Employees and any Former Parent Group Employees (and their covered dependents) who incur a qualifying event under COBRA before, as of, or after the Operational Separation Date. Effective as of the Operational Separation Date, the Spinco Group shall assume responsibility for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the Spinco Welfare Plans with respect to any Spinco Group Employees or Former Spinco Group Employees (and their covered dependents) who incur a qualifying event or loss of coverage under the Parent Welfare Plans and/or the Spinco Welfare Plans before, as of, or after the Operational Separation Date. The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.
Section 7.03. Vacation, Holidays and Leaves of Absence. Effective as of the Operational Separation Date, the Spinco Group shall assume all Liabilities of the Parent Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Spinco Group Employee. The Parent Group shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Parent Group Employee.
Section 7.04. Severance and Unemployment Compensation. Without limiting the generality of Section 4.04, effective as of the Operational Separation Date, the Spinco Group shall assume any and all Liabilities to, or relating to, Spinco Group Employees and Former Spinco Group Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred before, at, or after the Operational Separation Date. The Parent Group shall be responsible for any and all Liabilities to, or relating to, Parent Group Employees and Former Parent Group Employees in respect of severance and unemployment compensation, regardless of whether the event giving rise to the Liability occurred before, at or after the Operational Separation Date.
Section 7.05. Workers’ Compensation. With respect to claims for workers’ compensation in the United States, (a) the Spinco Group shall be responsible for claims in respect of Spinco Group Employees and Former Spinco Group Employees, whether occurring before, at or after the Operational Separation Date, and (b) the Parent Group shall be responsible for all claims in respect of Parent Group Employees and Former Parent Group Employees, whether occurring before, at or after the Operational Separation. The treatment of workers’ compensation claims by Spinco with respect to Parent insurance policies shall be governed by Section 5.1 of the Separation and Distribution Agreement.
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Section 7.06. Insurance Contracts. To the extent that any Parent Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, the Parties will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for Spinco (except to the extent that changes are required under applicable state insurance Laws or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both Parent and Spinco for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.06.
Section 7.07. Third-Party Vendors. Except as provided below, to the extent that any Parent Welfare Plan is administered by a third-party vendor, the Parties will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for Spinco and to maintain any pricing discounts or other preferential terms for both Parent and Spinco for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.07.
Section 7.08. Nondivided Welfare Plans. As of the Operational Separation Date, (a) the Parent Group shall retain (or assume to the extent necessary) sponsorship of the Howmet Severance Pay Plan, the Occupational Injury Benefit Plan for Texas Employees of Howmet Corp., the Program of Insurance Benefits for Employees of RMI Titanium Co. Hourly Employees-Niles & Extrusion and the Supplemental Unemployment Benefit-Niles Plant, and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Parent Group, and (b) the Spinco Group shall retain (or assume to the extent necessary) sponsorship of the Kawneer Severance Pay Plan, the Alumax Executive Post Retirement Life Program and the Alumax Split Dollar Life Insurance Plan, and, from and after the Operational Separation Date, all Assets and Liabilities thereunder shall be Assets and Liabilities of the Spinco Group.
Article VIII
NON-U.S. EMPLOYEES
Spinco Group Employees and Former Spinco Group Employees who reside outside of the United States or otherwise are subject to non-U.S. Law and their related benefits and Liabilities shall be treated in the same manner as the Spinco Group Employees and Former Spinco Group Employees, respectively, who are residents of the United States and are not subject to non-U.S. Law. Notwithstanding anything to the contrary in this Agreement, all actions taken with respect to non-U.S. Employees or U.S. Employees working in non-U.S. jurisdictions shall be subject to and accomplished in accordance with applicable Law in the custom of the applicable jurisdictions.
Article
IX
MISCELLANEOUS
Section 9.01. Employee Records.
(a) Sharing of Information. Subject to any limitations imposed by applicable Law, Parent and Spinco (acting directly or through members of the Parent Group or the Spinco Group, respectively) shall provide to the other and their respective authorized agents and vendors all information necessary for the Parties to perform their respective duties under this Agreement. The provision of any information pursuant to Section 9.1 shall not affect the ownership of such information (which shall be determined solely in accordance with the terms of this Agreement and the Separation and Distribution Agreement) or constitute a grant of rights in or to any such information.
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(b) Transfer of Personnel Records and Authorization. Subject to any limitation imposed by applicable Law and to the extent that it has not done so before the Operational Separation Date, (i) Parent shall transfer to Spinco any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to Spinco Group Employees and Former Spinco Group Employees and other records reasonably required by Spinco to enable Spinco properly to carry out its obligations under this Agreement, and (ii) Spinco shall transfer to Parent any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to Parent Group Employees and Former Parent Group Employees and other records reasonably required by Parent to enable Parent properly to carry out its obligations under this Agreement. Such transfer of records generally shall occur as soon as administratively practicable at or after the Operational Separation Date; provided that the Parties shall cooperate, subject to applicable Law, to effectuate such transfer at such later date as may be necessary or appropriate with respect to any Delayed Transfer Employee. Each Party will permit the other Party reasonable access to Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.
(c) Access to Records. To the extent not inconsistent with this Agreement, the Separation and Distribution Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related records after the Operational Separation Date will be provided to members of the Parent Group and members of the Spinco Group pursuant to the terms and conditions of Article VI of the Separation and Distribution Agreement.
(d) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, Parent and Spinco shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.
(e) Cooperation. After the Effective Time, except in the case of an adversarial Action or Dispute between Parent and Spinco, or any members of their respective groups, each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, resolutions, government filings, data, payroll, employment and benefit plan information on regular timetables and cooperate as needed with respect to (i) any litigation with respect to any employee benefit plan, policy or arrangement contemplated by this Agreement, (ii) efforts to seek a determination letter, private letter ruling or advisory opinion from the IRS or U.S. Department of Labor on behalf of any employee benefit plan, policy or arrangement contemplated by this Agreement, and (iii) any filings that are required to be made or supplemented to the IRS, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.
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(f) Confidentiality. Notwithstanding anything to the contrary in this Agreement, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 6.9 of the Separation and Distribution Agreement and the requirements of applicable Law.
Section 9.02. Preservation of Rights to Amend. The rights of each member of the Parent Group and each member of the Spinco Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.
Section 9.03. Fiduciary Matters. Parent and Spinco each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.
Section 9.04. Further Assurances. Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.
Section 9.05. Counterparts; Entire Agreement; Corporate Power.
(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.
(b) This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.
Section 9.06. Governing Law. Section 10.2 (Governing Law) of the Separation and Distribution Agreement is hereby incorporated herein by reference and shall apply as if fully set forth herein mutatis mutandis.
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Section 9.07. Assignability. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto; provided, however, that each Party may assign all of its rights and obligations under this Agreement to any of its Subsidiaries; and provided, further, that no such assignment shall release the assigning Party from any of its liabilities or obligations under this Agreement. Notwithstanding the foregoing, no consent for assignment shall be required for the assignment of a Party’s rights and obligations under this Agreement, the Separation and Distribution Agreement and all other Ancillary Agreements in whole (i.e., the assignment of a Party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant Party by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.
Section 9.08. Third-Party Beneficiaries. The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder. There are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Parties.
Section 9.09. Notices. All notices, requests, claims, demands or other communications under this Agreement shall be delivered in accordance with Section 10.5 of the Separation and Distribution Agreement.
Section 9.10. Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of any such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.
Section 9.11. Force Majeure. No Party shall be deemed to be in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.
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Section 9.12. Headings. The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 9.13. Survival of Covenants. Except as expressly set forth in this Agreement, the covenants, representations and warranties and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.
Section 9.14. Waivers of Default. Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.
Section 9.15. Dispute Resolution. The dispute resolution procedures set forth in Article VII of the Separation and Distribution Agreement shall apply to any dispute, controversy or claim arising out of or relating to this Agreement.
Section 9.16. Specific Performance. Subject to Article VII of the Separation and Distribution Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its rights or their rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at Law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at Law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.
Section 9.17. Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.
Section 9.18. Interpretation. Section 10.6 (Interpretation) of the Separation and Distribution Agreement is hereby incorporated herein by reference and shall apply as if fully set forth herein mutatis mutandis.
Section 9.19. Mutual Drafting. This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.
Section 9.20. Provisions Incorporated by Reference. The following provisions of the Separation and Distribution Agreement are hereby incorporated herein by reference and shall apply as if fully set forth herein mutatis mutandis: (a) Section 6.3 (Compensation for Providing Information), (b) Section 6.5 (Limitations of Liability); and (c) Section 6.9 (Confidentiality).
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IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be executed by their duly authorized representatives.
ARCONIC INC. | |||
By: | /s/ Ken Giacobbe | ||
Name: | Ken Giacobbe | ||
Title: | Executive Vice President and Chief Financial Officer | ||
ARCONIC ROLLED PRODUCTS CORPORATION | |||
By: | /s/ Timothy D. Myers | ||
Name: | Timothy D. Myers | ||
Title: | President |
Exhibit 2.4
EXECUTION VERSION
PATENT, KNOW-HOW, AND TRADE SECRET LICENSE AGREEMENT – HOWMET AEROSPACE INC. TO ARCONIC CORP.
This Patent, Know-How, and Trade Secret License Agreement (the “Agreement”) is made and entered into as of this 31st day of March, 2020 and effective as of 12:01 a.m. on April 1, 2020 (the “Effective Date”), by and between ARCONIC INC., a corporation organized under the laws of Delaware (“Licensor”) and ARCONIC ROLLED PRODUCTS CORP., a corporation organized under the laws of Delaware (“Licensee”).
WHEREAS, Licensor and Licensee have entered into a Separation and Distribution Agreement having an effective time of 12:01 a.m. on April 1, 2020 (“Separation and Distribution Agreement”); unless specifically defined in this Agreement, any capitalized term in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement.
WHEREAS, Licensee formerly operated as a business unit of Licensor;
WHEREAS, as part of the Separation and Distribution Agreement, Licensor and Licensee are now two separate publicly traded companies;
WHEREAS, Licensee wishes to license from Licensor the right to use Licensor’s Technology as hereinafter defined below;
NOW THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Licensor and Licensee agree as follows:
Article 1. Definitions. As used in this Agreement, the following terms, whether used in the singular or plural and/or in various verb tenses, shall have the following meanings:
1.1 “Affiliate” shall have the meaning ascribed to it in the Separation and Distribution Agreement and shall, include without limitation, any subsidiary, or any joint venture in which Licensee participates as a joint venturer, and will include any current or future Affiliate.
1.2 “Alloy 10M” means the alloy whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to Patent Cooperation Treaty Application Serial No. PCT/US2018/058421, Publication No. WO2019/089736 (Ascent reference no. 116972).
1.3 “Brazing” means joining metals (e.g., in a furnace) by fusion of nonferrous alloys that have melting points above 425°C (800°F) but lower than those of the metals being joined.
1.4 “Brazing Sheet” means a Sheet of an alloy suitable for Brazing, or a Sheet clad with an alloy suitable for Brazing on one or both sides.
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1.5 “C-Alloys and E-Tempers” means certain alloys and aluminum Tempering processes described in Schedule 2.
1.6 “Change of Control” shall have the meaning ascribed to it in the Separation and Distribution Agreement.
1.7 “Confidential Information” means all materials, trade secrets, or other Intellectual Property and information, including, without limitation, proprietary information and materials (whether or not patentable) regarding the Technology that is disclosed at any time by Licensor to Licensee under this Agreement or known to Licensee prior to this Agreement, including without limitation the Know-How and Trade Secrets.
1.8 “Extrusion” means an alloy product formed by pushing material through a horizontal die so as to create a generally linear or curved product having a uniform cross-section along a dimension (length) in the direction in which the material is pushed through the die that is significantly greater than a dimension (width/height) defined by the die through which the material is pushed.
1.9 “Fan Blade” means the forged product(s) whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to U.S. Patent Application Serial Nos. 12/799,244, 13/998,831, 14/847,303, and 16/158,198, including U.S. Patent Nos. 9163304, 10053754, and 10,119,184 (Ascent reference no. 102725).
1.10 “Feedstock” means raw material supplied to a manufacturing plant or production operation for use in an industrial process.
1.11 “Forging” means a metal part worked to a predetermined shape by one or more of processes such as hammering, upsetting, pressing, spinning, etc.
1.12 “Improvement” means non-de-minimis improvements made to a Technology.
1.13 “Ingot” means a cast form of an alloy suitable for re-melting or mechanical working.
1.14 “Intellectual Property” means all works, including literary works, pictorial, graphic and sculptural works, architectural works, works of visual art, and any other work that may be the subject matter of copyright protection; advertising and marketing concepts; trademarks; information; data; formulas; designs; models; drawings; computer programs; including all documentation, related listings, design specifications, and flowcharts, trade secrets, and any inventions including all business processes, manufactures and compositions of matter and any other invention that may be the subject matter of patent protection; and all statutory protection obtained or obtainable thereon.
1.15 “Know-How and Trade Secrets” means proprietary know-how and trade secrets relating to the Licensed Products including, without limitation, the “R Nos.”, “C-Alloys”, and “E-Tempers” set forth in Schedules 1 and 2.
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1.16 “Licensed Products” means: (i) 10M Alloy as defined in Schedule 6; (ii) Fan Blade products as defined in Schedule 5; (iii) C-Alloys and E-Tempers as defined in Schedule 2; (vi) RSR as defined in Schedule 4; and (v) Miscellaneous Products as defined in Schedule 3.
1.7 “Licensor Patent Rights” means the patent applications (including provisional patent applications and PCT patent applications), patents, and invention reports listed on Schedule 1 hereto, as well as the inventions described therein, all foreign equivalents (unless otherwise limited by the scope of the applicable license grant), divisional applications and continuation applications, or continuations-in-part applications of such patent applications, all patents issuing from such applications, divisional applications and continuation applications, or continuations-in-part applications, and any reexamination or reissue patents of any such patents.
1.8 “Miscellaneous Products” means products, other than those described in Schedules 2 and 4-6, made using miscellaneous proprietary methods and/or processes, including but not limited to R nos. set forth in Schedule 1 and any and all material, product, service, procedure, or kit (including work-in process) whose manufacture, use, importation, or sale practices any Valid Claim or pending claim within the Licensor Patent Rights or is based on or otherwise uses any of the Technology, including without limitation, any product made using the methods claimed in any issued or pending claim within the Licensor Patent Rights as set forth in Schedule 1.
1.19 “Plate” means a rolled alloy product that is rectangular in cross section and with a thickness of not less than 0.250 inch.
1.20 “RSR” means resistance spot rivets and the methods by which they are used to join materials and whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to U.S. Patent Applications Nos. 14/315,698, 14/967,777, 14/611,555, 15/266,331, 15/469,161, 62/778,938, 62/778,939 and International Patent Application No. PCT/US2018/065329 and one to-be-filed application (Ascent reference nos. 104346, 104443, 105574, 109939, 113837, 118478, 118479, 118530, 118877).
1.20 “Scrap” means fragments of Feedstock removed in manufacturing and/or manufactured articles or parts rejected or discarded and useful only as waste material for reprocessing.
1.21 “Sheet” means a rolled alloy product that is rectangular in cross section with a thickness less than 0.250 inch and with sheared or sawed edges.
1.22 “Technology” means, with respect to Licensed Products, the Licensor Patent Rights and the Know-How and Trade Secrets.
1.23 “Temper” means the condition produced in an alloy by either mechanical or thermal treatment, or both, and characterized by a certain structure and mechanical properties.
1.24 “Valid Claim” means a claim of any unexpired patent that has not been withdrawn or canceled, nor held invalid by a court of competent jurisdiction in an un-appealed decision.
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1.25 “Wrought Product” means an alloy product that has been subjected to mechanical working by such processes as rolling, extruding, forging, etc.
Article 2. Grant of Rights.
2.1 License Grants. Subject to the terms and conditions of this Agreement, Licensor on behalf of itself and its Affiliates hereby grants to Licensee and Licensee hereby accepts the licenses for the Licensed Products as described in Schedules 2 through 6.
2.2 Improvements. Unless otherwise specified in a Schedule hereto, there is no requirement by either party to share or disclose to the other party Improvements that a party makes to the Technology in connection with the Licensed Products. Licensee shall have the right during the term of this Agreement and always subject to the terms herein, including, without limitation, the terms of Article 7, to modify, improve and otherwise create derivative works of the Technology applicable to Miscellaneous Products. For the purpose of this Agreement any such Licensee modification, improvement or creation of derivative work using the Technology shall be considered an Improvement.
Article 3. Maintenance and Support. Licensee is solely responsible for providing all maintenance and support to its customers of the Licensed Products. Licensor has, and shall have, no obligation to provide any maintenance or support to Licensee or any of Licensee’s customers with respect to any Technology and/or Licensed Products.
Article 4. Patent Prosecution. The filing, prosecution, and maintenance of all Licensor Patent Rights shall be the primary responsibility of Licensor. In the event that Licensor elects to abandon a Licensor Patent Right applicable to the Licensed Products, Licensor shall notify Licensee in writing of its intention to abandon such Licensor Patent Right at least thirty (30) days, if possible, prior to the date (including all permissible extensions of time) on which the Licensor Patent Right shall be deemed, by the applicable government authority, to be abandoned. In response to such notice, Licensee shall have fifteen (15) days, if possible, to notify the Licensor of Licensee’s decision to acquire, at no charge, the Licensor Patent Right from Licensor. In the event Licensee decides to acquire such Licensor Patent Right, Licensor shall: (a) receive and enjoy, from Licensee, a license to such assigned Licensor Patent Right, such license to be subject to the terms of Schedule 3 of the Patent, Know-How, and Trade Secret License Agreement – Arconic Corp. to Howmet Aerospace Inc. signed contemporaneously herewith; and (b) execute any reasonable documentation necessary to assign such Licensor Patent Right to Licensee upon request and without further consideration, such documentation to be prepared at Licensee’s expense. For clarity, if Licensee does not respond within the fifteen (15) day notice period, Licensor may abandon the applicable Licensor Patent Right without any further recourse or accounting to Licensee.
Article 5. Reserved.
Article 6. Confidential Information.
6.1 Treatment of Confidential Information. Licensee: (i) shall maintain the Confidential Information in confidence, using appropriate access control and physical security measures to safeguard the confidentiality thereof; (ii) shall not disclose, divulge or otherwise communicate such Confidential Information to others (except to exploit the Confidential Information for its own internal use), or use it for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement; and (iii) agrees to exercise commercially reasonable precautions to prevent and restrain the unauthorized disclosure of such Confidential Information by any of its directors, officers, employees, consultants, subcontractors, sublicensees, or agents. Prior to disclosure of Confidential Information to Licensee’s directors, officers, employees, consultants, subcontractors, sublicensees, or agents, Licensee will enter into written agreements with such parties that contain restrictions on the disclosure of confidential information that are at least as restrictive as the terms and conditions of this Agreement. With respect to Know-How and Trade Secrets, the obligations of confidentiality and nondisclosure imposed on the Licensee by this Agreement shall continue until the occurrence of one of the conditions set forth in Section 6.2. With respect to other forms of Confidential Information, the obligations of confidentiality and nondisclosure imposed on the Licensee by this Agreement shall extend for the longer of: (a) two (2) years from the date of termination of this Agreement; and (b) until the occurrence of one of the conditions set forth in Section 6.2. Licensor and Licensee also agree to maintain the terms and conditions of the Agreement in confidence in accordance with this Section 6.1 for so long as this Agreement remains in full force and effect.
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6.2 Release of Obligations. The obligations of Licensee, and of its Affiliates’ directors, officers, employees and agents, with respect to any Confidential Information disclosed thereto by Licensor pursuant to this Agreement shall cease if Licensee can establish to the satisfaction of Licensor or, failing agreement by Licensor, of a court of competent jurisdiction (provided it is a court of last resort, the Parties have agreed to abandon all appeals or the time for filing an appeal has expired) that the Confidential Information: (a) was legally known to or in the possession of Licensee, without obligation of confidentiality or non-use, at the time of disclosure to Licensee by Licensor; (b) legally is or has become part of the public domain through no fault of Licensee; or (c) has been disclosed to Licensee by a third party on a non-confidential basis and without breaching any contractual, confidential or fiduciary obligation to Licensor or any law. A general disclosure in the public domain, or possession by Licensee of general information, will not cause more specific (but related) information to be excluded as Confidential Information under one of the above exceptions. Similarly, a combination of several pieces of information, where each piece of information individually is in the public domain or in the possession of Licensee, will not operate to exempt the combination as Confidential Information unless the combination itself is in the public domain. In the event Licensee becomes legally compelled by law, regulation, court order or administrative body to disclose any of Licensor’s Confidential Information, Licensee shall be entitled to disclose such information, provided that Licensee provides Licensor with prompt prior written notice (if legally able) so that Licensor may seek a protective order or such other appropriate remedy and Licensee limits disclosure of Licensor’s Confidential Information to only that portion which is legally required.
6.3 Ownership and Return of Confidential Information. All Confidential Information, together with all copies, reproductions, summaries, evaluations, analyses, notes, reports or other records created by Licensee in respect of the Confidential Information and all other information, know-how, data and materials generated by the use of the Confidential Information shall be treated as Confidential Information of Licensor, shall be the sole and exclusive property of Licensor and shall be returned to Licensor by Licensee forthwith upon termination pursuant to Article 10. Notwithstanding the above, one copy of such material may be retained in the legal files of Licensee solely for compliance purposes.
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Article 7. Acknowledgement and Obligations.
7.1 Ownership. Licensor will retain and own all right, title, and interest in and to the Licensor Patent Rights and Know-How and Trade Secrets, including, for the avoidance of doubt, any Improvements made by Licensor. Licensee acknowledges the validity and ownership by Licensor of the Technology. This Agreement shall in no way be construed to grant Licensee any ownership rights in any of the Technology.
7.2 Third Party Infringement. If legally able and without breaching any confidentiality provisions of a contract with a third party, Licensee shall promptly report in writing to Licensor during the term of this Agreement any: (a) known infringement or suspected infringement by a third party of any of the Licensor Patent Rights; or (b) unauthorized use or misappropriation of the Know-How and Trade Secrets by a third party of which it becomes aware, and shall provide Licensor with all available evidence supporting the infringement, suspected infringement or unauthorized use or misappropriation. Licensor shall have the sole and exclusive right to bring an infringement action or proceeding against any infringing third party, and, in the event that Licensor brings such an action or proceeding, Licensee shall cooperate and provide full information and reasonable assistance to Licensor and its counsel, at Licensor’s expense, in connection with any such action or proceeding.
Article 8. Representations and Warranties, Limitations of Liability and Disclaimers.
8.1 Mutual Representations. Each party hereto represents and warrants to the other that: (a) it has the full right and power to enter into and fully perform this Agreement in accordance with its terms; (b) this Agreement constitutes a legal, valid and binding agreement of such party, enforceable against such party in accordance with its terms; (c) it will comply with all applicable laws and regulations in the exercise and performance of its rights and obligations under this Agreement; and (d) its execution, delivery and performance of this Agreement throughout its duration: (i) does not require consent from any third party; (ii) will not violate (with the lapse of time or giving of notice or both) rights granted by such party to any third party or violate or otherwise interfere with the provisions of any agreement to which such party is a party or otherwise bound; (iii) will not preclude such party from complying with the provisions hereof; and (iv) will not violate any applicable law or regulation or judicial order.
8.2 No Warranty. Licensor, by this Agreement, makes no warranties or guarantees, either express or implied, arising by law or otherwise with regard to the Technology, the Licensor Patent Rights, the Know-How and Trade Secrets, and/or Licensed Products. In particular, Licensor assumes no obligation and makes no representations or warranties hereunder, express or implied, in law or in fact, with respect to: (i) the utility, quality or characteristics of the Technology or any use, embodiment, or modification thereof; (ii) the use of any Licensed Product or method within the Licensor Patent Rights or any embodiments or modifications thereof; or (iii) whether such Licensed Products or methods or any use, embodiments, or modifications thereof would be in compliance with any federal, state or local laws, regulations, standards or criteria with respect to any claim which may arise in connection with any sale or use of Licensed Products, or with respect to the practice of any methods within the Licensor Patent Rights. LICENSOR SPECIFICALLY DISCLAIMS, AND WILL HAVE NO OBLIGATION OR LIABILITY FROM THIS AGREEMENT WITH REGARD TO THE LICENSOR PATENT RIGHTS, KNOW-HOW AND TRADE SECRETS, AND/OR LICENSED PRODUCTS FOR ANY: (1) IMPLIED WARRANTY OF MERCHANTABILITY; (2) IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (3) IMPLIED WARRANTY OF NONINFRINGEMENT; AND (4) implied warranty of any other type.
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8.3 LIMITATION OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, LICENSOR DISCLAIMS AND SHALL HAVE NO OBLIGATION OR LIABILITY TO LICENSEE FOR ANY TYPE OF INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY BREACH OF WARRANTY OR OTHERWISE UNDER THIS AGREEMENT (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR BREACH OF STATUTORY DUTY) OR OTHERWISE) EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER ARISING UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
Article 9. Indemnification.
9.1 Indemnification by Licensee. Licensee will indemnify and hold Licensor harmless from and against any and all claims, damages, liabilities, losses, costs and expenses, including, without limitation, legal expenses and reasonable counsel fees, arising out of, incidental to, or in any way resulting from: (a) Licensee’s commercialization, and any use, of Licensed Products, including any third party claims of infringement; (b) Licensee’s use and/or commercialization of the Technology and/or Licensed Products; and (c) any personal injury, death or property damage that arises out of, or relates to, the sale of Licensed Products.
9.2 Indemnification Procedure. After receipt by Licensor of a notice of commencement of any action involving the subject matter of the foregoing indemnity provisions under Section 9.1, Licensor will promptly notify Licensee of the commencement thereof, provided that, any delay in providing such notification shall not relieve Licensee of its indemnification obligations hereunder except to the extent, if any, that such delay prejudices Licensee’s ability to successfully defend such claim. Upon proper notification, Licensee shall have the right, but not the obligation, to control the defense of Licensor against any such third-party claims, utilizing counsel chosen in Licensee’s discretion, provided that Licensor may participate in any such defense, at its own expense, by separate counsel of its choice, and further provided that any such participation shall not limit Licensee’s right to control such defense. Notwithstanding anything contained in the foregoing sentence to the contrary, Licensee: (a) shall not be entitled to have sole control over any third party claim or action that: (i) seeks an order, injunction or other equitable relief against Licensor; or (ii) is the subject of such third party indemnification claim in which both Licensee and Licensor are named as parties and either Licensor or Licensee determines with advice of counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the other party or that a conflict of interest between such parties may exist in respect of such action; and (b) shall obtain the prior written approval of Licensor before ceasing to defend against any third party indemnification claim or entering into any settlement, adjustment or compromise of such claim involving injunctive or similar equitable relief being asserted against Licensor. Licensor shall cooperate with Licensee in the provision of any such defense by providing to Licensee all such information, assistance and authority as may reasonably be requested by Licensee.
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Article 10. Term and Termination.
10.1 Term. This Agreement shall commence upon the Effective Date and continue until terminated as set forth in this Article 10.
10.2 Termination for Breach. Licensor and Licensee will be entitled to terminate this Agreement by written notice to the other party in the event the other party is in breach of any of its obligations hereunder and shall fail to remedy any such default within sixty (60) days after notice thereof by the non-breaching party.
10.3 Termination for Patent Expiration. The licenses granted under this Agreement shall terminate with respect to the Licensor Patent Rights upon the expiration of the last issued patent of the Licensor Patent Rights. The licenses granted under this Agreement with respect to Know-How and Trade Secrets shall continue notwithstanding the expiration of the Licensor Patent Rights.
10.4 Survival of Obligations; Return of Confidential Information. Notwithstanding any expiration or termination of this Agreement, Articles 1, 3, 6, 7, 8, 9, this Section 10.4 and Article 11 shall survive and continue to be enforceable as set forth herein.
Article 11. Miscellaneous.
11.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to its conflicts of law principles.
11.2 Jurisdiction and Venue. Each of the parties: (a) submits to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware for any action or proceeding arising out of, or relating to, this Agreement; (b) agrees that all claims in respect of the action or proceeding may be heard and determined in any such court; and (c) agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party agrees that a final judgment in any action or proceeding so brought will be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.
11.3 Waiver. The waiver by one party of a breach or a default of any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of a party to exercise or avail itself of any right, power or privilege that it has, or may have, hereunder operate as a waiver of any right, power or privilege by such party.
11.4 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
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11.5 Notices. Any notice or other communication under this Agreement shall be effective when: (a) delivered in person; (b) if mailed, when deposited in the mail by registered or certified mail, return receipt requested; or (c) if delivered by overnight mail by a recognized overnight carrier (e.g., FedEx, UPS, DHL). All such notices and other communications shall be addressed to the other party as follows:
If to Licensor: | If to Licensee: | |
Arconic Inc. | Arconic Corp. | |
201 Isabella Street | 201 Isabella Street | |
Pittsburgh, PA 15212 | Pittsburgh, PA 15212 | |
Attn.: General Counsel | Attn.: General Counsel |
11.6 No Agency. Nothing herein shall be deemed to constitute Licensor, on the one hand, or Licensee, on the other hand, as the agent or representative of the other, or as joint venturers or partners for any purpose. Neither Licensor, on the one hand, nor Licensee, on the other hand, shall be responsible for the acts or omissions of the other. No party will have authority to speak for, represent or obligate the other party in any way without prior written authority from such other party.
11.7 Entire Agreement. This Agreement and the Separation and Distribution Agreement together contain the full understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and writings relating thereto. No waiver, alteration or modification of any of the provisions hereof shall be binding unless made in writing and signed by the parties.
11.8 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement.
11.9 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected and the invalid provision shall be severed herefrom.
11.10 Assignment. This Agreement may not be assigned by Licensee without the consent of Licensor which consent shall not be unreasonably withheld. Notwithstanding the foregoing, no such consent of Licensor is required under this Agreement in the event of a Change of Control of Licensee, so long as: (a) the resulting, surviving or transferee Person assumes all the obligations of the Licensee by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the Licensor; and (b) the licenses granted herein shall not be transferrable or sublicensable to Affiliates of such Person unless such Affiliates were Affiliates of Licensee prior to such Change of Control.
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11.11 Export Control and Requirements. Licensee agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C. 2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Licensee agrees that it will not transfer or disclose any information it receives from Licensor that constitutes an export-controlled item, data, or service to foreign persons employed by or associated with, or under contract to Licensee or Licensee’s suppliers, without the authority of an export license, agreement, or applicable exemption or exception. Licensee shall immediately notify Licensor if it is, or becomes, listed in any Denied Parties List or if Licensee’s export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S. Government entity or agency. Licensee, whether U.S. or foreign, engaged in the business of brokering, exporting or manufacturing (whether exporting or not) defense articles or furnishing defense services, or related technical data as defined on the United States Munitions List 22 C.F.R. Part 121, represents that it is registered with the Office of Defense Trade Controls as required by the ITAR.
11.12 Counterparts; Images Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of such together shall constitute one and the same instrument. Scanned PDF copies of signatures and facsimile copies of signatures may be deemed original signatures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the Effective Date.
ARCONIC INC. | ARCONIC ROLLED PRODUCTS CORP. | ||||
By: | /s/ Ken Giacobbe | By: | /s/ Timothy D. Myers | ||
(Signature) | (Signature) | ||||
Name: | Ken Giacobbe | Name: | Timothy D. Myers | ||
(Printed) | (Printed) | ||||
Title: | Executive Vice President and Chief Financial Officer | Title: | President |
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Exhibit 2.5
EXECUTION VERSION
patent, know-how, and Trade secret license agreement – ARCONIC CORP. TO HOWMET AEROSPACE INC.
This Patent, Know-How, and Trade Secret License Agreement (the “Agreement”) is made and entered into as of this 31st day of March, 2020 and effective as of 12:01 a.m. on April 1, 2020 (the “Effective Date”), by and between ARCONIC ROLLED PRODUCTS CORP., a corporation organized under the laws of Delaware (“Licensor”) and ARCONIC INC., a corporation organized under the laws of Delaware (“Licensee”).
WHEREAS, Licensor and Licensee have entered into a Separation and Distribution Agreement having an effective time of 12:01 a.m. on April 1, 2020 (“Separation and Distribution Agreement”); unless specifically defined in this Agreement, any capitalized term in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement.
WHEREAS, Licensor formerly operated as a business unit of Licensee;
WHEREAS, as part of the Separation and Distribution Agreement, Licensor and Licensee are now two separate publicly traded companies;
WHEREAS, Licensee wishes to license from Licensor the right to use Licensor’s Technology as hereinafter defined below;
NOW THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, Licensor and Licensee agree as follows:
Article 1. Definitions. As used in this Agreement, the following terms, whether used in the singular or plural and/or in various verb tenses, shall have the following meanings:
1.1 “2xxx series aluminum alloys (C455H and 2x39 type)” or “2xxx SALs” means those alloys whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to:
(a) U.S. Patent Application Serial No. 62/756,963 (Ascent Reference No. 118459 also referred to the “C455H Alloy),
(b) U.S. Patent Application Serial Nos. 62/768,626 and 62/808,181 (Ascent Reference. No. 118505 also referred to as the “2x39 Derivative Alloy”),
1.2 “7xxx New C-Alloys” means those alloys whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to:
(a) U.S. Patent Application Serial Nos. 62/126,182, 62/126,101, 62/159,768, 15/376,400 (Ascent Reference No. 106424),
(b) U.S. Patent Application Serial Nos. 62/523,128, 62/571,401, and U.S. Patent Application No. 16/708,117 (Ascent Reference. No. 115977),
(c) U.S. Patent Application Serial No. 62/865,716 and a to-be-filed international PCT application (Ascent Reference No. 118698); and
(d) U.S. Patent Application Serial Nos. 62/791,597, 62/791,604, 62/791,613, 62/791,622, and 62/791,633 (Ascent Reference No. 118551), which are maintained by Licensor as trade secrets.
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1.3 “Affiliate” shall have the meaning ascribed to it in the Separation and Distribution Agreement and shall, include without limitation, any subsidiary, or any joint venture in which Licensee participates as a joint venturer, and will include any current or future Affiliate.
1.4 “C-Alloys and E-Tempers” means certain alloys and aluminum Tempering processes described in Schedule 2.
1.5 “Change of Control” shall have the meaning ascribed to it in the Separation and Distribution Agreement.
1.6 “Confidential Information” means all materials, trade secrets, or other Intellectual Property and information, including, without limitation, proprietary information and materials (whether or not patentable) regarding the Technology that is disclosed at any time by Licensor to Licensee under this Agreement or known to Licensee prior to this Agreement, including without limitation the Know-How and Trade Secrets.
1.7 “Extrusion” means an alloy product formed by pushing material through a horizontal die so as to create a generally linear or curved product having a uniform cross-section along a dimension (length) in the direction in which the material is pushed through the die that is significantly greater than a dimension (width/height) defined by the die through which the material is pushed.
1.8 “Feedstock” means raw material supplied to a manufacturing plant or production operation for use in an industrial process.
1.9 “Forging” means a metal part worked to a predetermined shape by one or more of processes such as hammering, upsetting, pressing, spinning, etc.
1.10 “Improvement” means non-de-minimis improvements made to a Technology.
1.11 “Ingot” means a cast form of an alloy suitable for re-melting or mechanical working.
1.12 “Intellectual Property” means all works, including literary works, pictorial, graphic and sculptural works, architectural works, works of visual art, and any other work that may be the subject matter of copyright protection; advertising and marketing concepts; trademarks; information; data; formulas; designs; models; drawings; computer programs; including all documentation, related listings, design specifications, and flowcharts, trade secrets, and any inventions including all business processes, manufactures and compositions of matter and any other invention that may be the subject matter of patent protection; and all statutory protection obtained or obtainable thereon.
1.13 “Know-How and Trade Secrets” means proprietary know-how and trade secrets relating to the Licensed Products including, without limitation, the “R Nos.”, “C-Alloys”, and “E-Tempers” set forth in Schedules 1 and 2.
1.14 “Licensed Products” means: (i) C-Alloys and E-Tempers as defined in Schedule 2; (ii) the Miscellaneous Products as defined in Schedule 3; (iii) the Right of First Offer Alloys as defined in Schedule 4; (iv) the 7xxx New C-Alloys as defined in Schedule 5; and (v) the 2xxx series aluminum alloys (C455H and 2x39 type) as defined in Schedule 6.
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1.15 “Licensor Patent Rights” means the patent applications (including provisional patent applications and PCT patent applications), patents, and invention reports listed on Schedule 1 hereto, as well as the inventions described therein, all foreign equivalents (unless otherwise limited by the scope of the applicable license grant), divisional applications and continuation applications, or continuations-in-part applications of such patent applications, all patents issuing from such applications, divisional applications and continuation applications, or continuations-in-part applications, and any reexamination or reissue patents of any such patents.
1.16 “Miscellaneous Products” means products, other than those described in Schedules 2 and 4-6, made using miscellaneous proprietary methods and/or processes, including but not limited to R nos. set forth in Schedule 1 and any and all material, product, service, procedure, or kit (including work-in process) whose manufacture, use, importation, or sale practices any Valid Claim or pending claim within the Licensor Patent Rights or is based on or otherwise uses any of the Technology, including without limitation, any product made using the methods claimed in any issued or pending claim within the Licensor Patent Rights as set forth in Schedule 1.
1.17 “Plate” means a rolled alloy product that is rectangular in cross section and with a thickness not less than 0.250 inch.
1.18 “Right of First Offer Alloys” means those alloys whose manufacture, use, importation, or sale practices any Valid Claim or pending claim of any and all patents and patent applications worldwide related to:
(a) U.S. Patent Application Serial Nos. 12/211,515 and 10/678,290 (Ascent Reference No. 101347 also referred to as the “2060 Alloys”);
(b) U.S. Patent Application Serials Nos. 60/426,597 and 10/716,073 (Ascent Reference No. 103090 also referred to as the “7055 Alloys”); and
(c) U.S. Patent Application Serial Nos. 12/328,622, 14/242,577, 60/992,330, 13/368,586, and 95/002,150 (Ascent Reference Nos. 102338 and 103600 also referred to as the “2055 Alloys”).
1.19 “Sheet” means a rolled alloy product that is rectangular in cross section with a thickness of less than 0.250 inch and with sheared or sawed edges.
1.20 “Technology” means, with respect to Licensed Products, the Licensor Patent Rights and the Know-How and Trade Secrets.
1.21 “Temper” means the condition produced in an alloy by either mechanical or thermal treatment, or both, and characterized by a certain structure and mechanical properties.
1.22 “Valid Claim” means a claim of any unexpired patent that has not been withdrawn or canceled, nor held invalid by a court of competent jurisdiction in an un-appealed decision.
1.23 “Wrought Product” means an alloy product that has been subjected to mechanical working by such processes as rolling, extruding, forging, etc.
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Article 2. Grant of Rights.
2.1 License Grants. Subject to the terms and conditions of this Agreement, Licensor on behalf of itself and its Affiliates hereby grants to Licensee and Licensee hereby accepts the licenses for the Licensed Products as described in Schedules 2 through 6.
2.2 Improvements. There is no requirement by either party to share or disclose to the other party Improvements that a party makes to the Technology in connection with the Licensed Products. Licensee shall have the right during the term of this Agreement and always subject to the terms herein, including, without limitation, the terms of Article 7, to modify, improve and otherwise create derivative works of the Technology applicable to Miscellaneous Products. For the purpose of this Agreement any such Licensee modification, improvement or creation of derivative work using the Technology shall be considered an Improvement.
Article 3. Maintenance and Support. Licensee is solely responsible for providing all maintenance and support to its customers of the Licensed Products. Licensor has, and shall have, no obligation to provide any maintenance or support to Licensee or any of Licensee’s customers with respect to any Technology and/or Licensed Products.
Article 4. Patent Prosecution. The filing, prosecution, and maintenance of all Licensor Patent Rights shall be the primary responsibility of Licensor. In the event that Licensor elects to abandon a Licensor Patent Right applicable to the Licensed Products, Licensor shall notify Licensee in writing of its intention to abandon such Licensor Patent Right at least thirty (30) days, if possible, prior to the date (including all permissible extensions of time) on which the Licensor Patent Right shall be deemed, by the applicable government authority, to be abandoned. In response to such notice, Licensee shall have fifteen (15) days, if possible, to notify the Licensor of Licensee’s decision to acquire, at no charge, the Licensor Patent Right from Licensor. In the event Licensee decides to acquire such Licensor Patent Right, Licensor shall: (a) receive and enjoy, from Licensee, a license to such assigned Licensor Patent Right, such license to be subject to the terms of Schedule 3 of the Patent, Know-How, and Trade Secret License Agreement – Howmet Aerospace Inc. to Arconic Corp. signed contemporaneously herewith; and (b) execute any reasonable documentation necessary to assign such Licensor Patent Right to Licensee upon request and without further consideration, such documentation to be prepared at Licensee’s expense. For clarity, if Licensee does not respond within the fifteen (15) day notice period, Licensor may abandon the applicable Licensor Patent Right without any further recourse or accounting to Licensee.
Article 5. Reserved.
Article 6. Confidential Information.
6.1 Treatment of Confidential Information. Licensee: (i) shall maintain the Confidential Information in confidence, using appropriate access control and physical security measures to safeguard the confidentiality thereof; (ii) shall not disclose, divulge or otherwise communicate such Confidential Information to others (except to exploit the Confidential Information for its own internal use), or use it for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement; and (iii) agrees to exercise commercially reasonable precautions to prevent and restrain the unauthorized disclosure of such Confidential Information by any of its directors, officers, employees, consultants, subcontractors, sublicensees, or agents. Prior to disclosure of Confidential Information to Licensee’s directors, officers, employees, consultants, subcontractors, sublicensees, or agents, Licensee will enter into written agreements with such parties that contain restrictions on the disclosure of confidential information that are at least as restrictive as the terms and conditions of this Agreement. With respect to Know-How and Trade Secrets, the obligations of confidentiality and nondisclosure imposed on the Licensee by this Agreement shall continue until the occurrence of one of the conditions set forth in Section 6.2. With respect to other forms of Confidential Information, the obligations of confidentiality and nondisclosure imposed on the Licensee by this Agreement shall extend for the longer of: (a) two (2) years from the date of termination of this Agreement; and (b) until the occurrence of one of the conditions set forth in Section 6.2. Licensor and Licensee also agree to maintain the terms and conditions of the Agreement in confidence in accordance with this Section 6.1 for so long as this Agreement remains in full force and effect.
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6.2 Release of Obligations. The obligations of Licensee, and of its Affiliates’ directors, officers, employees and agents, with respect to any Confidential Information disclosed thereto by Licensor pursuant to this Agreement shall cease if Licensee can establish to the satisfaction of Licensor or, failing agreement by Licensor, of a court of competent jurisdiction (provided it is a court of last resort, the Parties have agreed to abandon all appeals or the time for filing an appeal has expired) that the Confidential Information: (a) was legally known to or in the possession of Licensee, without obligation of confidentiality or non-use, at the time of disclosure to Licensee by Licensor; (b) legally is or has become part of the public domain through no fault of Licensee; or (c) has been disclosed to Licensee by a third party on a non-confidential basis and without breaching any contractual, confidential or fiduciary obligation to Licensor or any law. A general disclosure in the public domain, or possession by Licensee of general information, will not cause more specific (but related) information to be excluded as Confidential Information under one of the above exceptions. Similarly, a combination of several pieces of information, where each piece of information individually is in the public domain or in the possession of Licensee, will not operate to exempt the combination as Confidential Information unless the combination itself is in the public domain. In the event Licensee becomes legally compelled by law, regulation, court order or administrative body to disclose any of Licensor’s Confidential Information, Licensee shall be entitled to disclose such information, provided that Licensee provides Licensor with prompt prior written notice (if legally able) so that Licensor may seek a protective order or such other appropriate remedy and Licensee limits disclosure of Licensor’s Confidential Information to only that portion which is legally required.
6.3 Ownership and Return of Confidential Information. All Confidential Information, together with all copies, reproductions, summaries, evaluations, analyses, notes, reports or other records created by Licensee in respect of the Confidential Information and all other information, know-how, data and materials generated by the use of the Confidential Information shall be treated as Confidential Information of Licensor, shall be the sole and exclusive property of Licensor and shall be returned to Licensor by Licensee forthwith upon termination pursuant to Article 10. Notwithstanding the above, one copy of such material may be retained in the legal files of Licensee solely for compliance purposes.
Article 7. Acknowledgement and Obligations.
7.1 Ownership. Licensor will retain and own all right, title, and interest in and to the Licensor Patent Rights and Know-How and Trade Secrets, including, for the avoidance of doubt, any Improvements made by Licensor. Licensee acknowledges the validity and ownership by Licensor of the Technology. This Agreement shall in no way be construed to grant Licensee any ownership rights in any of the Technology.
7.2 Third Party Infringement. If legally able and without breaching any confidentiality provisions of a contract with a third party, Licensee shall promptly report in writing to Licensor during the term of this Agreement any: (a) known infringement or suspected infringement by a third party of any of the Licensor Patent Rights; or (b) unauthorized use or misappropriation of the Know-How and Trade Secrets by a third party of which it becomes aware, and shall provide Licensor with all available evidence supporting the infringement, suspected infringement or unauthorized use or misappropriation. Licensor shall have the sole and exclusive right to bring an infringement action or proceeding against any infringing third party, and, in the event that Licensor brings such an action or proceeding, Licensee shall cooperate and provide full information and reasonable assistance to Licensor and its counsel, at Licensor’s expense, in connection with any such action or proceeding.
Article 8. Representations and Warranties, Limitations of Liability and Disclaimers.
8.1 Mutual Representations. Each party hereto represents and warrants to the other that: (a) it has the full right and power to enter into and fully perform this Agreement in accordance with its terms; (b) this Agreement constitutes a legal, valid and binding agreement of such party, enforceable against such party in accordance with its terms; (c) it will comply with all applicable laws and regulations in the exercise and performance of its rights and obligations under this Agreement; and (d) its execution, delivery and performance of this Agreement throughout its duration: (i) does not require consent from any third party; (ii) will not violate (with the lapse of time or giving of notice or both) rights granted by such party to any third party or violate or otherwise interfere with the provisions of any agreement to which such party is a party or otherwise bound; (iii) will not preclude such party from complying with the provisions hereof; and (iv) will not violate any applicable law or regulation or judicial order.
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8.2 No Warranty. Licensor, by this Agreement, makes no warranties or guarantees, either express or implied, arising by law or otherwise with regard to the Technology, the Licensor Patent Rights, the Know-How and Trade Secrets, and/or Licensed Products. In particular, Licensor assumes no obligation and makes no representations or warranties hereunder, express or implied, in law or in fact, with respect to: (i) the utility, quality or characteristics of the Technology or any use, embodiment, or modification thereof; (ii) the use of any Licensed Product or method within the Licensor Patent Rights or any embodiments or modifications thereof; or (iii) whether such Licensed Products or methods or any use, embodiments, or modifications thereof would be in compliance with any federal, state or local laws, regulations, standards or criteria with respect to any claim which may arise in connection with any sale or use of Licensed Products, or with respect to the practice of any methods within the Licensor Patent Rights. LICENSOR SPECIFICALLY DISCLAIMS, AND WILL HAVE NO OBLIGATION OR LIABILITY FROM THIS AGREEMENT WITH REGARD TO THE LICENSOR PATENT RIGHTS, KNOW-HOW AND TRADE SECRETS, AND/OR LICENSED PRODUCTS FOR ANY: (1) IMPLIED WARRANTY OF MERCHANTABILITY; (2) IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (3) IMPLIED WARRANTY OF NONINFRINGEMENT; AND (4) implied warranty of any other type.
8.3 LIMITATION OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, LICENSOR DISCLAIMS AND SHALL HAVE NO OBLIGATION OR LIABILITY TO LICENSEE FOR ANY TYPE OF INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY BREACH OF WARRANTY OR OTHERWISE UNDER THIS AGREEMENT (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR BREACH OF STATUTORY DUTY) OR OTHERWISE) EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER ARISING UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
Article 9. Indemnification.
9.1 Indemnification by Licensee. Licensee will indemnify and hold Licensor harmless from and against any and all claims, damages, liabilities, losses, costs and expenses, including, without limitation, legal expenses and reasonable counsel fees, arising out of, incidental to, or in any way resulting from: (a) Licensee’s commercialization, and any use, of Licensed Products, including any third party claims of infringement; (b) Licensee’s use and/or commercialization of the Technology and/or Licensed Products; and (c) any personal injury, death or property damage that arises out of, or relates to, the sale of Licensed Products.
9.2 Indemnification Procedure. After receipt by Licensor of a notice of commencement of any action involving the subject matter of the foregoing indemnity provisions under Section 9.1, Licensor will promptly notify Licensee of the commencement thereof, provided that, any delay in providing such notification shall not relieve Licensee of its indemnification obligations hereunder except to the extent, if any, that such delay prejudices Licensee’s ability to successfully defend such claim. Upon proper notification, Licensee shall have the right, but not the obligation, to control the defense of Licensor against any such third-party claims, utilizing counsel chosen in Licensee’s discretion, provided that Licensor may participate in any such defense, at its own expense, by separate counsel of its choice, and further provided that any such participation shall not limit Licensee’s right to control such defense. Notwithstanding anything contained in the foregoing sentence to the contrary, Licensee: (a) shall not be entitled to have sole control over any third party claim or action that: (i) seeks an order, injunction or other equitable relief against Licensor; or (ii) is the subject of such third party indemnification claim in which both Licensee and Licensor are named as parties and either Licensor or Licensee determines with advice of counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the other party or that a conflict of interest between such parties may exist in respect of such action; and (b) shall obtain the prior written approval of Licensor before ceasing to defend against any third party indemnification claim or entering into any settlement, adjustment or compromise of such claim involving injunctive or similar equitable relief being asserted against Licensor. Licensor shall cooperate with Licensee in the provision of any such defense by providing to Licensee all such information, assistance and authority as may reasonably be requested by Licensee.
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Article 10. Term and Termination.
10.1 Term. This Agreement shall commence upon the Effective Date and continue until terminated as set forth in this Article 10.
10.2 Termination for Breach. Licensor and Licensee will be entitled to terminate this Agreement by written notice to the other party in the event the other party is in breach of any of its obligations hereunder and shall fail to remedy any such default within sixty (60) days after notice thereof by the non-breaching party.
10.3 Termination for Patent Expiration. The licenses granted under this Agreement shall terminate with respect to the Licensor Patent Rights upon the expiration of the last issued patent of the Licensor Patent Rights. The licenses granted under this Agreement with respect to Know-How and Trade Secrets shall continue notwithstanding the expiration of the Licensor Patent Rights.
10.4 Survival of Obligations; Return of Confidential Information. Notwithstanding any expiration or termination of this Agreement, Articles 1, 3, 6, 7, 8, 9, this Section 10.4 and Article 11 shall survive and continue to be enforceable as set forth herein.
Article 11. Miscellaneous.
11.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to its conflicts of law principles.
11.2 Jurisdiction and Venue. Each of the parties: (a) submits to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware for any action or proceeding arising out of, or relating to, this Agreement; (b) agrees that all claims in respect of the action or proceeding may be heard and determined in any such court; and (c) agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party agrees that a final judgment in any action or proceeding so brought will be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.
11.3 Waiver. The waiver by one party of a breach or a default of any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of a party to exercise or avail itself of any right, power or privilege that it has, or may have, hereunder operate as a waiver of any right, power or privilege by such party.
11.4 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.
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11.5 Notices. Any notice or other communication under this Agreement shall be effective when: (a) delivered in person; (b) if mailed, when deposited in the mail by registered or certified mail, return receipt requested; or (c) if delivered by overnight mail by a recognized overnight carrier (e.g., FedEx, UPS, DHL). All such notices and other communications shall be addressed to the other party as follows:
If to Licensor: | If to Licensee: | ||
Arconic Corp. | Arconic Inc. | ||
201 Isabella Street | 201 Isabella Street | ||
Pittsburgh, PA 15212 | Pittsburgh, PA 15212 | ||
Attn.: General Counsel | Attn.: General Counsel |
11.6 No Agency. Nothing herein shall be deemed to constitute Licensor, on the one hand, or Licensee, on the other hand, as the agent or representative of the other, or as joint venturers or partners for any purpose. Neither Licensor, on the one hand, nor Licensee, on the other hand, shall be responsible for the acts or omissions of the other. No party will have authority to speak for, represent or obligate the other party in any way without prior written authority from such other party.
11.7 Entire Agreement. This Agreement and the Separation and Distribution Agreement together contain the full understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and writings relating thereto. No waiver, alteration or modification of any of the provisions hereof shall be binding unless made in writing and signed by the parties.
11.8 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement.
11.9 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected and the invalid provision shall be severed herefrom.
11.10 Assignment. This Agreement may not be assigned by Licensee without the consent of Licensor which consent shall not be unreasonably withheld. Notwithstanding the foregoing, no such consent of Licensor is required under this Agreement in the event of a Change of Control of Licensee, so long as: (a) the resulting, surviving or transferee Person assumes all the obligations of the Licensee by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the Licensor; and (b) the licenses granted herein shall not be transferrable or sublicensable to Affiliates of such Person unless such Affiliates were Affiliates of Licensee prior to such Change of Control.
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11.11 Export Control and Requirements. Licensee agrees to comply with all applicable U.S. export control laws and regulations, specifically including, but not limited to, the requirements of the Arms Export Control Act, 22 U.S.C. 2751-2794, including the International Traffic in Arms Regulation (ITAR), 22 C.F.R. 120 et seq.; and the Export Administration Act, 50 U.S.C. 2401-2420, including the Export Administration Regulations, 15 C.F.R. 730-774; including the requirement for obtaining any export license or agreement, if applicable. Without limiting the foregoing, Licensee agrees that it will not transfer or disclose any information it receives from Licensor that constitutes an export-controlled item, data, or service to foreign persons employed by or associated with, or under contract to Licensee or Licensee’s suppliers, without the authority of an export license, agreement, or applicable exemption or exception. Licensee shall immediately notify Licensor if it is, or becomes, listed in any Denied Parties List or if Licensee’s export privileges are otherwise denied, suspended or revoked in whole or in part by any U.S. Government entity or agency. Licensee, whether U.S. or foreign, engaged in the business of brokering, exporting or manufacturing (whether exporting or not) defense articles or furnishing defense services, or related technical data as defined on the United States Munitions List 22 C.F.R. Part 121, represents that it is registered with the Office of Defense Trade Controls as required by the ITAR.
11.12 Counterparts; Images Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of such together shall constitute one and the same instrument. Scanned PDF copies of signatures and facsimile copies of signatures may be deemed original signatures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the Effective Date.
ARCONIC ROLLED PRODUCTS CORP. | ARCONIC INC. | ||||
By: | /s/ Timothy D. Myers | By: | /s/ Ken Giacobbe | ||
(Signature) | (Signature) | ||||
Name: | Timothy D. Myers | Name: | Ken Giacobbe | ||
(Printed) | (Printed) | ||||
Title: | President | Title: |
Executive
Vice President
and Chief Financial Officer |
||
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Exhibit 2.6
EXECUTION VERSION
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this “Agreement”), made and entered into as of the 31st day of March, 2020 and effective as of 12:01 a.m. on April 1, 2020 (the “Effective Date”), by and between ARCONIC ROLLED PRODUCTS CORP. a corporation organized under the laws of Delaware (“Licensor”) and ARCONIC INC., a corporation organized under the laws of Delaware (“Licensee”).
WHEREAS, Licensor and Licensee entered into a Separation and Distribution Agreement having an effective time of 12:01 a.m. on April 1, 2020 (“Separation and Distribution Agreement”); unless specifically defined in this Agreement, any capitalized term in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement.
WHEREAS, Licensor formerly operated as a business unit of Licensee;
WHEREAS, as part of and further to the Separation and Distribution Agreement: (a) Licensor and Licensee are now two separate publicly traded companies; and (b) Licensor was assigned all right, title, and interest to the trademarks “ARCONIC” and and certain other trademarks identified and set forth in Schedule 1 annexed hereto and made a part hereof (collectively, the “Licensed Marks”);
WHEREAS, Licensee wishes to license from Licensor the right to the Licensed Marks as hereinafter defined below;
WHEREAS, Licensee wishes to obtain from Licensor, subject to the terms and conditions set forth in this Agreement, the right and license to use, have used, manufacture, have manufactured, sell, have sold, advertise, have advertised, import, have imported, export, have exported, offer for sale, and have offered for sale the Licensed Products (later defined) using the Licensed Marks (the “Licensed Purpose”);
WHEREAS, Licensor is willing to grant such rights, upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
1. Grant and Scope of License.
1.1 Grant of License. Licensor on behalf of itself and its Affiliates hereby grants to Licensee the limited licenses to use and have used the Licensed Marks: (i) for the Licensed Products as set forth on Schedule 3; (ii) as set forth on Schedule 2, concerning agreements entered into by Licensee prior to the Effective Date (“Existing Agreements”) for a transitional period set forth in Schedule 2; and (iii) on webpages bearing the Licensed Marks on the Effective Date for a period not to exceed nine (9) months from the Effective Date provided that within: (A) three (3) months from the Effective Date, the twenty percent (20%) of Licensee’s webpages that experience the greatest number of unique visitor visits shall have the Licensed Marks removed; (B) six (6) months from the Effective Date, the sixty percent (60%) of Licensee’s webpages that experience the greatest number of unique visitor visits shall have the Licensed Marks removed (which sixty percent (60%) shall include the twenty percent (20%) in clause (A)); and (C) such (9) months from the Effective Date all one hundred percent (100%) of Licensee’s webpages shall have the Licensed Marks removed. For the avoidance of doubt, Licensor also grants to Licensee and its subsidiaries and affiliates a non-exclusive, worldwide royalty-free license for continued use of the Licensed Marks for the production and sale of inventory containing the Licensed Marks applied to such products during the Transition Period as set forth in section 8.2 of the Separation and Distribution Agreement and in Schedule 3 of this Agreement. Licensee will not, however, use the Licensed Marks except for: (i) the production and sale of inventory as provided in this Section 1.1 and in Section 8.2 of the Separation and Distribution Agreement and in Schedule 3 of this Agreement; and (ii) for Licensee’s webpages as provided in this Section 1.1. For avoidance of doubt, to the extent that any of the licenses granted by the terms of this Agreement include any right to sublicense, such right to sublicense shall extend to Licensee’s subsidiaries and joint venturers.
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1.2 Goodwill. Licensee expressly recognizes and acknowledges that its use of the Licensed Marks shall inure solely to the benefit of Licensor, and shall not confer on Licensee any ownership rights to the Licensed Marks. Licensee agrees and covenants that it shall not challenge, contest, or take any actions inconsistent with Licensor’s exclusive rights of ownership of the Licensed Marks.
1.3 Trademark Notices. All print and electronic displays of the Licensed Marks by Licensee shall include at Licensor’s option, a notice to the effect that the Licensed Marks are owned by Licensor and used by Licensee under license from Licensor.
1.4 Licensee Cooperation. Licensee agrees to reasonably cooperate with Licensor in achieving registration of the Licensed Marks worldwide, and in maintaining and protecting existing registrations therefor at Licensor’s sole expense. Licensee shall execute any and all documents which Licensor may reasonably request in support of such registrations, and, at Licensor’s request, Licensee shall provide use evidence, testimony, and documentation that may be required in any ex parte or inter partes administrative proceedings and prosecutions, maintenance and renewals involving registrations of the Licensed Marks, at Licensee’s sole expense.
1.5 Quality Control, Licensor Approvals. Licensor, as owner of the Licensed Marks, shall have the right at all times to control and approve the nature and quality of the Licensed Products (and the Licensed Marks thereon), and to inspect Licensee’s business operations upon reasonable prior notice for the purpose of ensuring that a high level of quality of the Licensed Products is being maintained by Licensee. At Licensor’s reasonable request during each calendar year, Licensee shall submit samples to Licensor, at no cost to Licensor, and shall not materially depart therefrom without Licensor’s prior express written consent. The Licensed Products, as well as all promotional, packaging and advertising material relative thereto, shall include all appropriate legal notices as required by Licensor. No more frequently than once per year, a third party auditor chosen by Licensor and approved by Licensee, such approval not to be unreasonably withheld, shall be entitled at any time on reasonable notice to the Licensee to enter, during regular business hours, any premises used by the Licensee or its manufacturers for the manufacture, packaging or storage of the Licensed Products, to inspect such premises, all plant, workforce and machinery used for manufacture, packaging or storage of Licensed Products and all other aspects of the manufacture, packaging and storage of Licensed Products (“Access Rights”). Prior to exercising such Access Rights, the third party auditor shall enter into a nondisclosure agreement with Licensee that, among other terms deemed acceptable by Licensee and such third party auditor, shall: (a) limit the content of any report made by the third party auditor to Licensor to a description of the manner in which, and the conditions under which, the Licensed Marks are used by Licensee or its manufacturers; and (b) prevent the disclosure of any of Licensee’s trade secrets and/or Confidential Information. To the extent reasonably practicable, all Licensed Products shall include notices on labeling and packaging for the Licensed Products stating that the Licensed Marks is owned by Licensor and used by Licensee under license from Licensor. The Licensed Products shall be of a quality commensurate with previous production or the samples approved by Licensor. If the quality of a class of the Licensed Products falls below such standards, Licensee shall use commercially reasonable efforts to restore such quality. In the event that Licensee has not taken appropriate steps to restore such quality within one-hundred twenty (120) days after notification by Licensor, Licensor shall have the right to terminate this Agreement.
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1.6 Compliance with Trademark Usage Guidelines. Licensee agrees to comply with Licensor’s trademark usage guidelines and any other policies and requirements applicable to the Licensed Marks.
2. Enforcement of Intellectual Property.
If legally able and without breaching any confidentiality provisions of a contract with a third party, in the event that Licensee becomes aware that any third party is infringing the Licensed Marks, Licensee shall promptly notify Licensor and provide pertinent details. Licensor shall have the right in its sole discretion to bring a legal action for infringement against the third party, together with the right to enforce and collect any judgment thereon. If Licensor elects to exercise such right, Licensee shall, at Licensor’s request, provide reasonable assistance to Licensor, at the sole expense of Licensor.
3. Indemnification.
Licensee shall defend, indemnify and hold harmless Licensor and its officers, directors, employees, agents, corporate subsidiaries, parents, and affiliates (“Licensor Indemnitees”) from and against any and all demands, claims, actions or causes of action, assessments, deficiencies, damages, losses, liabilities and expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), incurred in conjunction with or arising out of or relating to any third-party claim concerning the Licensed Products and any acts or omissions of Licensee with respect to the Licensed Marks, including without limitation Licensee’s performance of its obligations under this Agreement. The Licensor Indemnitees agree to cooperate with Licensee, at Licensee’s expense, to provide copies of any documents or materials reasonably requested by Licensee in support of its defense of the Licensor Indemnitees.
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4. Term and Termination.
4.1 Term. The Term of this Agreement will commence on the Effective Date and shall continue for the time periods set forth in Schedules 2 and 3 unless sooner terminated in accordance with the terms of this Agreement.
4.2 Termination for Breach. Licensor and Licensee will be entitled to terminate this Agreement by written notice to the other party in the event the other party is in material breach of any of its obligations hereunder and shall fail to remedy any such default within one hundred twenty (120) days after notice thereof by the non-breaching party.
4.3 Termination Upon Bankruptcy. Either party may terminate this Agreement by written notice to the other in the event of: (a) the other party’s making assignment for the benefit of its creditors or filing a voluntary petition under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import; or (b) the filing of an involuntary petition against the other party under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under any law of like import; or (c) the appointment of a trustee or receiver for the party or its property.
4.4 Survival of Obligations; Return of Confidential Information. Notwithstanding any expiration or termination of this Agreement, Sections 1.4, 3, 4.4, 5.1, 5.2, and 6.1 through 6.11 shall survive and continue to be enforceable as set forth herein. Upon any expiration or termination of this Agreement, Licensee shall promptly return to Licensor, or at Licensor’s direction, destroy all Licensor confidential information and all copies thereof in Licensee’s possession.
5. Representations and Warranties.
5.1 Licensor represents and warrants to Licensee that Licensor’s performance of its obligations under this Agreement is not in conflict with, and will not result in a breach of or constitute a default under, any other contract, instrument, rule of law or order of any court or governmental agency to which Licensor is a party or by which Licensor is bound.
5.2 Licensee represents and warrants to Licensor that Licensee’s performance of its obligations under this Agreement are not in conflict with, and will not result in a breach of or constitute a default under, any other contract, instrument, rule of law or order of any court or governmental agency to which Licensee is a party or by which Licensee is bound.
5.3 No Warranty. But for the warranty set forth in section 5.1., supra, Licensor, by this Agreement, makes no warranties or guarantees, either express or implied, arising by law or otherwise with regard to the Licensed Marks and/or the Licensed Products. In particular, Licensor assumes no obligation and makes no representations or warranties hereunder, express or implied, in law or in fact, with respect to: (i) the utility, quality or characteristics of the Licensed Marks or any use, embodiment, or modification thereof; (ii) the use of any Licensed Product, embodiments, or modifications thereof, or (iii) whether such Licensed Products, or any use, embodiments, or modifications thereof, would be in compliance with any federal, state or local laws, regulations, standards or criteria with respect to any claim which may arise in connection with any sale or use of Licensed Products. LICENSOR SPECIFICALLY DISCLAIMS, AND WILL HAVE NO OBLIGATION OR LIABILITY FROM THIS AGREEMENT WITH REGARD TO THE LICENSED MARKS FOR ANY: (1) IMPLIED WARRANTY OF MERCHANTABILITY; (2) IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (3) IMPLIED WARRANTY OF NONINFRINGEMENT; AND (4) implied warranty of any other type.
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6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to its conflicts of law principles.
6.2 Jurisdiction and Venue. Each of the parties: (a) submits to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware for any action or proceeding arising out of, or relating to, this Agreement; (b) agrees that all claims in respect of the action or proceeding may be heard and determined in any such court; and (c) agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party agrees that a final judgment in any action or proceeding so brought will be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.
6.3 Waiver. The waiver by one party of a breach or a default of any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of a party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such party.
6.4 Waiver of Jury Trial. To the fullest extent permitted by applicable law each party hereby irrevocably waives all right of trial by jury in any action, proceeding, claim, or counterclaim arising out of or in connection with this Agreement or any matter arising hereunder.
6.5 Notices. Any notice or other communication under this Agreement shall be effective when: (a) delivered in person; (b) if mailed, when deposited in the mail by registered or certified mail, return receipt requested; or (c) if delivered by overnight mail by a recognized overnight carrier (e.g., FedEx, UPS, DHL). All such notices and other communications shall be addressed to the other party as follows:
If to Licensor: | If to Licensee: | |
Arconic Rolled Products Corp.. | Arconic Inc. | |
201 Isabella Street | 201 Isabella Street | |
Pittsburgh, PA 15212 | Pittsburgh, PA 15212 | |
Attn.: General Counsel | Attn: General Counsel |
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6.6 No Agency. Nothing herein shall be deemed to constitute Licensor, on the one hand, or Licensee, on the other hand, as the agent or representative of the other, or as joint venturers or partners for any purpose. Neither Licensor, on the one hand, nor Licensee, on the other hand, shall be responsible for the acts or omissions of the other. No party will have authority to speak for, represent or obligate the other party in any way without prior written authority from such other party.
6.7 Entire Agreement. This Agreement and the Separation and Distribution Agreement together contain the full understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and writings relating thereto. No waiver, alteration or modification of any of the provisions hereof shall be binding unless made in writing and signed by the parties.
6.8 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement.
6.9 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected and the invalid provision shall be severed herefrom.
6.10 Assignment. This Agreement may not be assigned by Licensee without the consent of Licensor which consent shall not be unreasonably withheld. Notwithstanding the foregoing, no such consent of Licensor is required under this Agreement in the event of a Change of Control of Licensee, so long as: (a) the resulting, surviving or transferee Person assumes all the obligations of the Licensee by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the Licensor; and (b) the licenses granted herein shall not be transferrable or sublicensable to Affiliates of such Person unless such Affiliates were Affiliates of Licensee prior to such Change of Control.
6.11 “ARCONIC-THOR”. Licensor recognizes that after the Effective Date of this Agreement, Licensee shall be the owner of an “ARCONIC-THOR” trademark (or applications therefor) in various countries worldwide, including in the United States for “Titanium and its alloys and titanium alloy ingots.” So as to avoid confusion, Licensee agrees to discontinue use of the “ARCONIC-THOR” trademark globally within one (1) year of the Effective Date.
6.12 Counterparts; Images Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of such together shall constitute one and the same instrument. Scanned PDF copies of signatures and facsimile copies of signatures may be deemed original signatures.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the Effective Date.
ARCONIC ROLLED PRODUCTS CORP. | ||
By: | /s/ Timothy D. Myers | |
Name: | Timothy D. Myers | |
Title: | President | |
ARCONIC INC. | ||
By: | /s/ Ken Giacobbe | |
Name: | Ken Giacobbe | |
Title: | Executive Vice President and Chief Financial Officer |
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Exhibit 2.7
EXECUTION VERSION
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this “Agreement”), made and entered into as of the 31st day of March, 2020 and effective as of 12:01 a.m. on April 1, 2020 (the “Effective Date”), by and between ARCONIC INC., a corporation organized under the laws of Delaware (“Licensee”) and ARCONIC ROLLED PRODUCTS CORP., a corporation organized under the laws of Delaware (“Licensor”).
WHEREAS, Licensor and Licensee entered into a Separation and Distribution Agreement having an effective time of 12:01 a.m. on April 1, 2020 (“Separation and Distribution Agreement”); unless specifically defined in this Agreement, any capitalized term in this Agreement shall have the meaning set forth in the Separation and Distribution Agreement.
WHEREAS, Licensor formerly operated as a business unit of Licensee;
WHEREAS, as part of and further to the Separation and Distribution Agreement: (a) Licensor and Licensee are now two separate publicly traded companies; and (b) Licensor was assigned all right, title, and interest to the trademark “ARMX” (the “Licensed Mark”);
WHEREAS, Licensee wishes to license from Licensor the right to the Licensed Mark as hereinafter defined below;
WHEREAS, Licensee wishes to obtain from Licensor, subject to the terms and conditions set forth in this Agreement, the right and license to use, have used, manufacture, have manufactured, sell, have sold, advertise, have advertised, import, have imported, export, have exported, offer for sale, and have offered for sale the Licensed Products (later defined) using the Licensed Mark (the “Licensed Purpose”);
WHEREAS, Licensor is willing to grant such rights, upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
1. Grant and Scope of License.
1.1 Grant of License. Licensor on behalf of itself and its Affliates hereby grants to Licensee the limited licenses to use and have used the Licensed Mark: (i) for the Licensed Products as set forth on Schedule 2; and (ii) as set forth on Schedule 1, concerning agreements entered into by Licensee prior to the Effective Date (“Existing Agreements”). For the avoidance of doubt, Licensor also grants to Licensee and its subsidiaries and affiliates a non-exclusive, worldwide royalty-free license for continued use of the Licensed Mark for the production and sale of inventory containing the Licensed Mark applied to such products during the Transition Period as set forth in section 8.2 of the Separation and Distribution Agreement and in Schedule 2 of this Agreement. Licensee will not, however, use the Licensed Mark except for the production and sale of inventory as provided in this Section 1.1 and in Section 8.2 of the Separation and Distribution Agreement and Schedule 2 of this Agreement. For avoidance of doubt, to the extent that any of the licenses granted by the terms of this Agreement include any right to sublicense, such right to sublicense shall extend to Licensee’s subsidiaries and joint venturers.
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1.2 Goodwill. Licensee expressly recognizes and acknowledges that its use of the Licensed Mark shall inure solely to the benefit of Licensor, and shall not confer on Licensee any ownership rights to the Licensed Mark. Licensee agrees and covenants that it shall not challenge, contest, or take any actions inconsistent with Licensor’s exclusive rights of ownership of the Licensed Mark.
1.3 Trademark Notices. All print and electronic displays of the Licensed Mark by Licensee shall include at Licensor’s option, a notice to the effect that the Licensed Mark are owned by Licensor and used by Licensee under license from Licensor.
1.4 Licensee Cooperation. Licensee agrees to reasonably cooperate with Licensor in achieving registration of the Licensed Mark worldwide, and in maintaining and protecting existing registrations therefor at Licensor’s sole expense. Licensee shall execute any and all documents which Licensor may reasonably request in support of such registrations, and, at Licensor’s request, Licensee shall provide use evidence, testimony, and documentation that may be required in any ex parte or inter partes administrative proceedings and prosecutions, maintenance and renewals involving registrations of the Licensed Mark, at Licensee’s sole expense.
1.5 Quality Control, Licensor Approvals. Licensor, as owner of the Licensed Mark, shall have the right at all times to control and approve the nature and quality of the Licensed Products (and the Licensed Mark thereon), and to inspect Licensee’s business operations upon reasonable prior notice for the purpose of ensuring that a high level of quality of the Licensed Products is being maintained by Licensee. At Licensor’s reasonable request during each calendar year, Licensee shall submit samples to Licensor, at no cost to Licensor, and shall not materially depart therefrom without Licensor’s prior express written consent. The Licensed Products, as well as all promotional, packaging and advertising material relative thereto, shall include all appropriate legal notices as required by Licensor. No more frequently than once per year, a third party auditor chosen by Licensor and approved by Licensee, such approval not to be unreasonably withheld, shall be entitled at any time on reasonable notice to the Licensee to enter, during regular business hours, any premises used by the Licensee or its manufacturers for the manufacture, packaging or storage of the Licensed Products, to inspect such premises, all plant, workforce and machinery used for manufacture, packaging or storage of Licensed Products and all other aspects of the manufacture, packaging and storage of Licensed Products (“Access Rights”). Prior to exercising such Access Rights, the third party auditor shall enter into a nondisclosure agreement with Licensee that, among other terms deemed acceptable by Licensee and such third party auditor, shall: (a) limit the content of any report made by the third party auditor to Licensor to a description of the manner in which, and the conditions under which, the Licensed Mark are used by Licensee or its manufacturers; and (b) prevent the disclosure of any of Licensee’s trade secrets and/or Confidential Information. To the extent reasonably practicable, all Licensed Products shall include notices on labeling and packaging for the Licensed Products stating that the Licensed Mark is owned by Licensor and used by Licensee under license from Licensor. The Licensed Products shall be of a quality commensurate with previous production or the samples approved by Licensor. If the quality of a class of the Licensed Products falls below such standards, Licensee shall use commercially reasonable efforts to restore such quality. In the event that Licensee has not taken appropriate steps to restore such quality within one-hundred twenty (120) days after notification by Licensor, Licensor shall have the right to terminate this Agreement.
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1.6 Compliance with Trademark Usage Guidelines. Licensee agrees to comply with Licensor’s trademark usage guidelines and any other policies and requirements applicable to the Licensed Mark.
2. Enforcement of Intellectual Property.
If legally able and without breaching any confidentiality provisions of a contract with a third party, in the event that Licensee becomes aware that any third party is infringing the Licensed Mark, Licensee shall promptly notify Licensor and provide pertinent details. Licensor shall have the right in its sole discretion to bring a legal action for infringement against the third party, together with the right to enforce and collect any judgment thereon. If Licensor elects to exercise such right, Licensee shall, at Licensor’s request, provide reasonable assistance to Licensor, at the sole expense of Licensor.
3. Indemnification.
Licensee shall defend, indemnify and hold harmless Licensor and its officers, directors, employees, agents, corporate subsidiaries, parents, and affiliates (“Licensor Indemnitees”) from and against any and all demands, claims, actions or causes of action, assessments, deficiencies, damages, losses, liabilities and expenses (including, without limitation, reasonable expenses of investigation and attorneys’ fees and expenses), incurred in conjunction with or arising out of or relating to any third-party claim concerning the Licensed Products and any acts or omissions of Licensee with respect to the Licensed Mark, including without limitation Licensee’s performance of its obligations under this Agreement. The Licensor Indemnitees agree to cooperate with Licensee, at Licensee’s expense, to provide copies of any documents or materials reasonably requested by Licensee in support of its defense of the Licensor Indemnitees.
4. Term and Termination.
4.1 Term. The Term of this Agreement will commence on the Effective Date and shall continue for the time periods set forth in Schedules 1 and 2 unless sooner terminated in accordance with the terms of this Agreement.
4.2 Termination for Breach. Licensor and Licensee will be entitled to terminate this Agreement by written notice to the other party in the event the other party is in material breach of any of its obligations hereunder and shall fail to remedy any such default within one hundred twenty (120) days after notice thereof by the non-breaching party.
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4.3 Termination Upon Bankruptcy. Either party may terminate this Agreement by written notice to the other in the event of: (a) the other party’s making assignment for the benefit of its creditors or filing a voluntary petition under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import; or (b) the filing of an involuntary petition against the other party under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under any law of like import; or (c) the appointment of a trustee or receiver for the party or its property.
4.4 Survival of Obligations; Return of Confidential Information. Notwithstanding any expiration or termination of this Agreement, Sections 1.4, 3, 4.4, 5.1, 5.2, and 6.1 through 6.11 shall survive and continue to be enforceable as set forth herein. Upon any expiration or termination of this Agreement, Licensee shall promptly return to Licensor, or at Licensor’s direction, destroy all Licensor confidential information and all copies thereof in Licensee’s possession.
5. Representations and Warranties.
5.1 Licensor represents and warrants to Licensee that Licensor’s performance of its obligations under this Agreement is not in conflict with, and will not result in a breach of or constitute a default under, any other contract, instrument, rule of law or order of any court or governmental agency to which Licensor is a party or by which Licensor is bound.
5.2 Licensee represents and warrants to Licensor that Licensee’s performance of its obligations under this Agreement are not in conflict with, and will not result in a breach of or constitute a default under, any other contract, instrument, rule of law or order of any court or governmental agency to which Licensee is a party or by which Licensee is bound.
5.3 No Warranty. But for the warranty set forth in section 5.1., supra, Licensor, by this Agreement, makes no warranties or guarantees, either express or implied, arising by law or otherwise with regard to the Licensed Mark and/or the Licensed Products. In particular, Licensor assumes no obligation and makes no representations or warranties hereunder, express or implied, in law or in fact, with respect to: (i) the utility, quality or characteristics of the Licensed Mark or any use, embodiment, or modification thereof; (ii) the use of any Licensed Product, embodiments, or modifications thereof, or (iii) whether such Licensed Products, or any use, embodiments, or modifications thereof, would be in compliance with any federal, state or local laws, regulations, standards or criteria with respect to any claim which may arise in connection with any sale or use of Licensed Products. LICENSOR SPECIFICALLY DISCLAIMS, AND WILL HAVE NO OBLIGATION OR LIABILITY FROM THIS AGREEMENT WITH REGARD TO THE LICENSED MARK FOR ANY: (1) IMPLIED WARRANTY OF MERCHANTABILITY; (2) IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (3) IMPLIED WARRANTY OF NONINFRINGEMENT; AND (4) implied warranty of any other type.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to its conflicts of law principles.
6.2 Jurisdiction and Venue. Each of the parties: (a) submits to the exclusive jurisdiction of any state or federal court sitting in Wilmington, Delaware for any action or proceeding arising out of, or relating to, this Agreement; (b) agrees that all claims in respect of the action or proceeding may be heard and determined in any such court; and (c) agrees not to bring any action or proceeding arising out of, or relating to, this Agreement in any other court. Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto. Each party agrees that a final judgment in any action or proceeding so brought will be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.
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6.3 Waiver. The waiver by one party of a breach or a default of any provision of this Agreement by the other party shall not be construed as a waiver of any succeeding breach of the same or any other provision, nor shall any delay or omission on the part of a party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such party.
6.4 Waiver of Jury Trial. To the fullest extent permitted by applicable law each party hereby irrevocably waives all right of trial by jury in any action, proceeding, claim, or counterclaim arising out of or in connection with this Agreement or any matter arising hereunder.
6.5 Notices. Any notice or other communication under this Agreement shall be effective when: (a) delivered in person; (b) if mailed, when deposited in the mail by registered or certified mail, return receipt requested; or (c) if delivered by overnight mail by a recognized overnight carrier (e.g., FedEx, UPS, DHL). All such notices and other communications shall be addressed to the other party as follows:
If to Licensor: | If to Licensee: | |
Arconic Inc. | Arconic Rolled Products Corp. | |
201 Isabella Street | 201 Isabella Street | |
Pittsburgh, PA 15212 | Pittsburgh, PA 15212 | |
Attn.: General Counsel | Attn: General Counsel |
6.6 No Agency. Nothing herein shall be deemed to constitute Licensor, on the one hand, or Licensee, on the other hand, as the agent or representative of the other, or as joint venturers or partners for any purpose. Neither Licensor, on the one hand, nor Licensee, on the other hand, shall be responsible for the acts or omissions of the other. No party will have authority to speak for, represent or obligate the other party in any way without prior written authority from such other party.
6.7 Entire Agreement. This Agreement and the Separation and Distribution Agreement together contain the full understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and writings relating thereto. No waiver, alteration or modification of any of the provisions hereof shall be binding unless made in writing and signed by the parties.
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6.8 Headings. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement.
6.9 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall not be affected and the invalid provision shall be severed herefrom.
6.10 Assignment. This Agreement may not be assigned by Licensee without the consent of Licensor which consent shall not be unreasonably withheld. Notwithstanding the foregoing, no such consent of Licensor is required under this Agreement in the event of a Change of Control of Licensee so long as: (a) the resulting, surviving or transferee Person assumes all the obligations of the Licensee by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the Licensor; and (b) the licenses granted herein shall not be transferrable or sublicensable to Affiliates of such Person unless such Affiliates were Affiliates of Licensee prior to such Change of Control.
6.11 Counterparts; Images Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of such together shall constitute one and the same instrument. Scanned PDF copies of signatures and facsimile copies of signatures may be deemed original signatures.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized officers as of the Effective Date.
ARCONIC INC. | ||
By | /s/ Ken Giacobbe | |
Name: | Ken Giacobbe | |
Title: | Executive Vice President and Chief Financial Officer | |
ARCONIC ROLLED PRODUCTS CORP. | ||
By | /s/ Timothy D. Myers | |
Name: | Timothy D. Myers | |
Title: | President |
Signature Page to Arconic to Howmet Trademark License for ARMX
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Exhibit 2.8
MASTER AGREEMENT FOR PRODUCT SUPPLY
This MASTER AGREEMENT FOR PRODUCT SUPPLY (this “Agreement”) is made by and between Arconic Massena LLC, Arconic Lafayette LLC and Arconic Davenport LLC, all Delaware limited liability companies (“Seller”) and Arconic Inc., a Delaware corporation on behalf of its Engineered Structures business (“Buyer”) (collectively “Parties”).
WHEREAS, Seller wishes to sell certain aluminum products (with various alloying agents) to Buyer and Buyer wishes to purchase such products from Seller; and
WHEREAS, the Parties desire that the terms of this Agreement will be used for such product sales and purchases.
NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions contained herein and intending to be legally bound, the Parties agree to the following terms and conditions.
1. | TERM |
This Agreement will be effective as of 12:01 a.m. on April 1, 2020 (“Effective Date”) and terminate as provided in this Section 1, unless sooner terminated as provided in this Agreement:
(a) | With respect to Requirements Products (as defined in Exhibit D), the term of this Agreement shall commence on the Effective Date and continue through December 31, 2030 for Requirements Products (as defined in Exhibit D) (the “Requirements Products Term”); and |
(b) | With respect to all Products that are not Requirements Products, the term of this Agreement shall commence on the Effective Date and continue through December 31, 2025 for all Products that are not Requirements Products (“Standard Products Term”) |
For purposes of this Agreement unless otherwise defined “Term” means the applicable Standard Products Term or Requirements Products Term as applicable to the Product covered in the applicable Sections in the Agreement.
2. | PURCHASE AND SALE OF PRODUCTS |
Buyer agrees to purchase from Seller and Seller agrees to supply Buyer with the products described on Exhibit A (“Products”) from Seller’s locations identified in Exhibit A (“Locations”) to Buyer’s location in Cleveland Ohio. For the avoidance of doubt, Buyer is not obligated to order Products and Buyer has no volume commitment for Products.
Products will be sold in the form of plate, extrusions or cast billet, and shall meet the specifications and requirements set forth in Exhibit B or the ordinary and customary revisions applicable to the specifications and requirements that exist as of the issuance of the Order (“Specifications”).
3. | PRICE, INFLATIONARY ADJUSTMENT |
Product pricing shall be calculated in accordance with Exhibit C (“Pricing & Inflationary Adjustments”) and will not be subject to change except pursuant to Exhibit C and Exhibit D (“Supplemental Terms”), Section 5. Pricing shall apply as of the original Schedule Delivery Date (as defined herein).
4. | DELIVERY |
Except as otherwise provided in Exhibit D and/or Exhibit E (“Terms and Conditions”), Product delivery will be made FOB Buyer’s location in Cleveland, Ohio. Buyer shall bear the cost of transportation of the Product from Seller’s Location to Buyer’s location.
5. | PAYMENT |
The Price does not include any taxes or duties of any kind. For the Products supplied under this Agreement, Seller will invoice Buyer at the time of shipment. The terms of payment will be Net 45 days from the date of invoice, and Buyer will pay the invoiced amount via Electronic Funds Transfer to an account designated by Seller.
6. | TERMS AND CONDITIONS |
The terms and conditions governing each sale and purchase of Products are set forth in Exhibit D and Exhibit E.
7. | PRECEDENCE OF DOCUMENTS |
In the event of any conflict between the documents comprising this Agreement, the order of precedence will be as follows.
(a) | The accepted Order, excluding pre-printed terms and conditions |
(b) | This Agreement, including Exhibits A, B, and C |
(c) | The Supplemental Terms set forth in Exhibit D |
(d) | The Terms and Conditions set forth in Exhibit E |
8. | INCORPORATION BY REFERENCE |
Exhibits A - E are attached hereto and incorporated by reference herein.
9. | GOVERNING LAW; ENTIRE AGREEMENT; NO WAIVER; NO ASSIGNMENT |
(a) | This Agreement will be governed by, and interpreted in accordance with, the laws of Delaware, excluding the United Nations Convention on Contracts for the International Sale of Goods, and without regard to principles of conflict of laws. The application of the United Nations Convention on Contracts for the International Sale of Products ("CISG") is hereby expressly excluded. Any and all claims or matters of dispute referenced in this paragraph will be resolved in a court of competent jurisdiction in Wilmington, Delaware, which courts will have exclusive jurisdiction of all such disputes; the Parties waive any and all objections that it might otherwise have as to personal jurisdiction or venue in such courts. |
(b) | This Agreement, together with the Exhibits hereto and any accepted Order constitutes the entire agreement between the Parties with respect to the subject matter of this Agreement and supersedes all existing agreements and understandings, oral or written, relating to the subject matter of this Agreement. Seller and Buyer acknowledge that while purchase orders, sales acknowledgment forms and other standard documents may be utilized by the parties in the administration of this Agreement, no terms or conditions contained therein shall vary the terms set forth in this Agreement and/or the Exhibits. Any change or modification of the terms of this Agreement and/or Exhibits will be made only in a writing signed by authorized signatories of each of the parties. |
(c) | This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. |
(d) | This Agreement may not be released, discharged, abandoned, changed or modified in any manner, except by an instrument in writing signed by a duly authorized officer or representative of each of the parties hereto. No provision of this Agreement and no breach of any provision of this Agreement will be deemed waived by reason of any previous waiver or breach of such provision. |
(e) | Neither party may assign this Agreement or any rights, obligations or interest hereunder, in whole or in part, without the prior written consent of the non-assigning party which consent not to be unreasonably withheld. A change in control, including without limitation by operation of law, merger, consolidation, or otherwise, shall be deemed an assignment under this section. Any attempted assignment without such prior written consent shall be null and void and shall constitute a material breach of the Agreement. The non-assigning party may terminate this Agreement for an assignment without consent. Any permitted assignee or transferee shall assume all obligations of Seller and be subject to all of the terms and conditions under this Agreement. |
10. | SURVIVAL |
All rights, obligations and duties hereunder, which by their nature or by their express terms extend beyond the expiration or termination of the Agreement, including but not limited to warranties, indemnifications, intellectual property, and product support obligations shall survive the expiration or termination of the Agreement.
11. | NOTICES |
All notices required or permitted to be given under this Agreement or any related purchase order or sales order acknowledgement shall be in writing and shall be sent by responsible overnight courier service to the receiving party at the address set forth below (or such other address as may be provided by such party to the other in writing) or by electronic mail (provided a means of verifying the transmission exists) at the e-mail address set forth below (or such other e-mail address as may be provided by such party to the other in writing). The day following the date of couriering or e-mail transmission shall be the date of delivery of notice.
(a) | If to Buyer: |
Bessie Williams
Global Director of Procurement
201 Isabella Street
Pittsburgh, PA 15212-5858
Email: Bessie.Williams@howmet.com
(b) | If to Seller: |
James Perrin
Director, Global Marketing & Customer Service, Extrusions
3131 E. Main Street
Lafayette, IN 47905
Email: James.Perrin@arconic.com
Bradley Blomberg
Director, Supply Chain & Customer Service, Extrusions
3131 E. Main Street
Lafayette, IN 47905
Email: Brad.Blomberg@arconic.com
With a copy to:
Justin Waddell
Business Unit Counsel
201 Isabella Street
Pittsburgh, PA 15212
Email: Justin.Waddell@arconic.com
The parties have signed this Agreement by their duly authorized representatives on the day and year set forth above.
[Signature page follows]
ARCONIC MASSENA LLC | ARCONIC INC. | ||||
Name: | Max W. Laun | Name: | Ken Giacobbe | ||
Title: | President | Title: | Executive Vice President and Chief Financial Officer | ||
Signature: | /s/ Max W. Laun | Signature: | /s/ Ken Giacobbe | ||
Date: | March 31, 2020 | Date: | March 31, 2020 | ||
ARCONIC LAFAYETTE LLC | ARCONIC DAVENPORT LLC | ||||
Name: | Max W. Laun | Name: | Max W. Laun | ||
Title: | President | Title: | President | ||
Signature: | /s/ Max W. Laun | Signature: | /s/ Max W. Laun | ||
Date: | March 31, 2020 | Date: | March 31, 2020 |
Exhibit 2.9
Second Supplemental Tax and Project Certificate and Agreement
As of March 31, 2020 and effective as of 12:01 a.m. on April 1, 2020
The undersigned, on behalf of, respectively, Arconic Inc., a Delaware corporation (the “Borrower”), Arconic Davenport LLC (the “Prospective Owner”), and, solely with respect to Section 10, Arconic Rolled Products Corporation (“GRP&E/BCS SpinCo”), acknowledge, agree, certify and represent as set forth below in this Second Supplemental Tax and Project Certificate and Agreement (this “Second Supplement”). This Second Supplement supplements the Tax Exemption Certificate and Agreement, dated August 14, 2012 (the “Original Tax Agreement”), among the Iowa Finance Authority (the “Issuer”), Arconic Inc., a Pennsylvania corporation (which was subsequently reincorporated as a Delaware incorporation by means of a merger of the Pennsylvania corporation with a newly formed direct wholly owned subsidiary incorporated in Delaware) and formerly known as Alcoa Inc., as original borrower (the “Original Borrower”), and U.S. Bank National Association, as trustee (the “Trustee”), and the Project Certificate, dated August 14, 2012 (the “Original Project Certificate”), of the Original Borrower, all as supplemented by the Supplemental Tax and Project Certificate, dated as of December 29, 2017 (the “First Supplement”), between the Original Borrower and the Borrower. The Original Tax Agreement and the Original Project Certificate, each as supplemented by the First Supplement, are referred to herein together as the “Tax Agreement.” Capitalized terms used herein and not defined herein have the meanings set forth in the Tax Agreement.
This Second Supplement is executed and delivered in connection with the anticipated transfer of the Project from the Borrower to the Prospective Owner as part of a corporate separation plan involving certain of the Borrower’s businesses (the “Transaction”). In order to effectuate the Transaction, Borrower and GRP&E/BCS SpinCo have entered into a Separation and Distribution Agreement, dated as of March 31, 2020 (as it may be amended and in effect from time to time, the “Separation and Distribution Agreement”).
1. Authority. Each of the undersigned represents that it has full authority to make the statements contained in this Second Supplement on behalf of, respectively, the Borrower and the Prospective Owner.
2. Familiarity with Proceedings. The undersigned representative of the Borrower certifies that such undersigned is familiar with the proceedings taken preliminary to and in connection with the issuance by the Issuer of its Midwestern Disaster Area Revenue Bonds (Alcoa Inc. Project) Series 2012 in the aggregate principal amount of $250,000,000 (the “Bonds”) and the execution and delivery of the Tax Agreement. The undersigned representative of the Borrower and the undersigned representative of the Prospective Owner each certifies that such undersigned is familiar with (a) the purposes of the Bonds and the purposes and uses of the Project and (b) the Transaction. The undersigned representative of the Prospective Owner has reviewed the Tax Agreement.
3. Delegation of Responsibility. The Borrower hereby delegates to the Prospective Owner the responsibility for operating all components of the Project in a manner and location consistent with the definition and description of the Project set forth in the Tax Agreement. Such delegation is effective on the earlier of the date that title to the Project transfers to the Prospective Owner and the date the Prospective Owner commences operation of the Project. The Prospective Owner hereby accepts such delegation and agrees to such commencement date.
4. Continuing Application Notwithstanding Delegation. For the benefit of the Issuer and the registered owners of the Bonds from time to time, the Borrower acknowledges and agrees that it remains responsible for complying or causing the Prospective Owner to comply with all provisions of the Tax Agreement notwithstanding the Transaction and the delegation described in Section 3 above.
5. Notification, Recordkeeping and Cooperation to Maintain Tax Status. The Prospective Owner agrees to provide written notice to the Borrower and the Trustee at least 90 days prior to (a) any change in ownership of any portion of the Project or (b) any change in the operation or location of any portion of the Project that is inconsistent with the description of the operation or location of the Project set forth in the Tax Agreement. The Borrower agrees to retain any such notices with its books and records for the Bonds for a period of not less than four years following the later of the final payment or redemption of the Bonds or any obligations issued or executed and delivered to refund the Bonds. The Borrower and the Prospective Owner agree that, in the event any change in ownership or operation of any portion of the Project causes or threatens to cause a violation of the agreements or covenants set forth in the Tax Agreement or otherwise threatens the continued status of the Bonds as tax-exempt obligations under Section 103 of the Code, the Borrower and the Prospective Owner will cooperate to take such actions as may be necessary in the opinion of Bond Counsel delivered to the Issuer and the Trustee to remediate such violation or adverse impact on the status of the Bonds. The Prospective Owner further agrees to cooperate with the Borrower, the Issuer and the Trustee in the event of an examination of the Bonds by the Internal Revenue Service or a ruling or closing agreement application made the Internal Revenue Service, including but not limited to providing information concerning the location, ownership and use of any component of the Project and any Gross Proceeds relating to the Project (such as, for example, any Gross Proceeds from any sale or other disposition of any portion of the Project).
6. Indemnification. In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement or any other Ancillary Agreement (as defined in the Separation and Distribution Agreement), the Prospective Owner will pay, and will defend, indemnify and hold the Borrower, and its respective past, present and future members, officers, directors, employees, agents and any other person, if any, who “controls” the Borrower, as that term is defined in Section 15 of the Securities Act of 1933, as amended, and each of the heirs, executors, successors and assigns of the foregoing (the Borrower and the other listed persons, collectively referred to as, the “Indemnified Persons”) harmless from and against any and all liabilities, losses, damages, taxes, penalties, costs and expenses (including attorneys’ fees and expenses), causes of action, suits, proceedings, claims, demands, tax reviews and audits of the Internal Revenue Service, closing agreements with the Internal Revenue Service, investigations and judgments of whatsoever kind and nature (including, but not limited to, those arising or resulting from any injury to or death of any person or damage to property) arising from or in any manner directly or indirectly growing out of or connected with the following:
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(1) | the use, non-use, condition or occupancy of the Project, including any repairs, construction, alterations, renovation, relocation, remodeling and equipping thereof or thereto or the condition of the Project including adjoining sidewalks, streets or alleys and any equipment or facilities at any time located on or connected with the Project or used in connection therewith but which are not the result of the gross negligence of the Borrower; |
(2) | a violation of any agreement, warranty, covenant or condition of (i) the Loan Agreement, dated as of August 1, 2012, between the Issuer and the Borrower, as successor to the Original Borrower pursuant to the Assumption Agreement, dated as of December 29, 2017, between the Original Borrower and the Borrower, (ii) the Tax Agreement or (iii) any other agreement executed in connection with the issuance of the Bonds relating to the use, non-use or relocation of the Project (in each case, to the extent caused by any action or omission of the Prospective Owner or any of its subsidiaries or other affiliates); |
(3) | a violation by the Prospective Owner of any contract, agreement or restriction by the Prospective Owner relating to the Project (including this Second Supplement); |
(4) | a violation by the Prospective Owner or any of its subsidiaries or other affiliates of any law, ordinance, rule, regulation or court order affecting the Project or the ownership, occupancy or use thereof; or |
(5) | a failure by the Prospective Owner or any of its subsidiaries or other affiliates to comply with any applicable provisions of the Internal Revenue Code of 1986, as amended, any successor statutes thereto, the treasury regulations promulgated thereunder or pertinent provisions of other administrative pronouncements of the Internal Revenue Service or the United States Department of the Treasury relating to the use, non-use or relocation of the Project. |
In case any claim is made or any action is brought against one or more of the Indemnified Persons in respect of which indemnity can be sought against the Prospective Owner pursuant to the preceding paragraph, the Indemnified Person seeking indemnity must promptly notify the Prospective Owner, in writing, and the Prospective Owner (a) must promptly assume the defense thereof, including the employment of counsel chosen by the Prospective Owner and approved by the Borrower (provided, that such approval by the Borrower may not be unreasonably withheld) and (b) must pay all expenses relating thereto. If any Indemnified Person is advised in a written opinion of counsel that there may be legal defenses available to such Indemnified Person which are adverse to or in conflict with those available to the Prospective Owner, or that the defense of such Indemnified Person should be handled by separate counsel, the Prospective Owner does not have the right to assume the defense of such Indemnified Person, but the Prospective Owner will be responsible for the reasonable fees and expenses of counsel retained by such Indemnified Person in assuming its own defense, and provided also that, if the Prospective Owner has failed to assume the defense of such action or to retain counsel reasonably satisfactory to the Borrower within a reasonable time after notice of the commencement of such action, such Indemnified Person may assume the defense of such action and the reasonable fees and expenses of counsel retained by the Indemnified Person must be paid by the Prospective Owner. Notwithstanding the foregoing, any one or more of the Indemnified Persons has the right to employ separate counsel with respect to any such claim or in any such action and to participate in the defense thereof, but the fees and expenses of such counsel must be paid by such Indemnified Person unless the employment of such counsel has been consented to in writing by the Prospective Owner or unless the provisions of the immediately preceding sentence are applicable. Neither the Indemnified Party nor the Prospective Owner may settle or compromise any claim or action in respect of which indemnity is sought without the prior written consent of the other party, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages that are fully payable by the settling or compromising party, does not involve any admission, finding or determination of wrongdoing or violation of law by the non-settling or non-compromising party and provides for a full, unconditional and irrevocable release of the non-settling or non-compromising party from all liability in connection with the claim or action. If any claim or action is settled with the consent of the Prospective Owner, or if there is a final judgment in favor of the third-party plaintiff in any such action with or without consent, the Prospective Owner agrees to indemnify and hold harmless the Indemnified Person from and against any loss, liability or expense by reason of such settlement or judgment.
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7. Status of the Project. The Borrower represents that the description of the Project set forth in the Tax Agreement is true, correct and complete as of the date hereof. The Borrower further represents that there have been no changes to the Project since the date the Bonds were issued on August 14, 2012 or since the date the Project was placed in service and that all of the components of the Project are still located and operated exclusively in Scott County, Iowa. The Borrower and the Prospective Owner each represents that there will be no change to the location and operation of the Project as a result of the Transaction.
8. No Reissuance. The Borrower and the Prospective Owner each acknowledges that the Transaction is not intended to cause a reissuance, for federal income tax purposes, of the Bonds. The Borrower represents that it will remain the borrower under the Loan Agreement after the Transaction has been completed and that it is not assigning its responsibilities under the Loan Agreement (or any guarantees relating to the Bonds) to the Prospective Owner or to any other entity. As a result of the Transaction, there will be no substantial enhancement or impairment of the Borrower’s capacity to meet the payment obligations under the Loan Agreement. The Borrower acknowledges that any modifications hereafter to any document relating to the Bonds may cause some or all of the Bonds to be reissued (and therefore deemed exchanged by the registered owners thereof) for federal income tax purposes. The Borrower covenants to provide the Issuer and the Trustee with an approving opinion of Bond Counsel prior to agreeing to any such amendments or other modifications to any of such documents.
9. Third Party Beneficiaries. The Issuer and the Trustee are hereby deemed third party beneficiaries of this Second Supplement.
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10. Guarantee. GRP&E/BCS SpinCo hereby agrees to cause the Prospective Owner to perform all of its representations, warranties, covenants, obligations, agreements and undertakings made or required to be performed by the Prospective Owner under this Second Supplement. As a material inducement to the Borrower’s willingness to enter into this Second Supplement and perform its obligations hereunder, GRP&E/BCS SpinCo (a) hereby unconditionally guarantees to the Borrower the full performance and payment by the Prospective Owner of each of its covenants, obligations and undertakings under this Second Supplement (such covenants, obligations and undertakings, the “Guaranteed Obligations”) and (b) shall be liable for any breach of any representation, warranty, covenant or obligation of the Prospective Owner under this Second Supplement. GRP&E/BCS SpinCo hereby represents, acknowledges and agrees that any breach of, or other failure to perform, any such representation, warranty, covenant, obligation, agreement or undertaking of the Prospective Owner shall also be deemed to be a breach or failure to perform by GRP&E/BCS SpinCo, and the Borrower shall have the right, exercisable in its sole discretion, to pursue any and all available remedies it may have arising out of any such breach or nonperformance directly against either or both of GRP&E/BCS SpinCo and the Prospective Owner in the first instance. This is a guarantee of payment and performance and not collectability. GRP&E/BCS SpinCo hereby waives diligence, presentment, promptness, demand of performance, notice of acceptance of this guarantee, notice of non-performance, default, dishonor and protest, notice of any Guaranteed Obligations incurred, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, all suretyship defenses, filing of any claim, any right to require any proceeding first against the Prospective Owner, protest, notice and all demands whatsoever in connection with the performance of its obligations set forth in this Second Supplement. GRP&E/BCS SpinCo agrees that the Guaranteed Obligations shall not be discharged except by complete performance or payment of the Guaranteed Obligations, as applicable, and that the obligations of GRP&E/BCS SpinCo hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure or delay on the part of the Borrower to assert any claim or demand or to enforce any right or remedy against the Prospective Owner or GRP&E/BCS SpinCo; (ii) any change in the time, place or manner of payment of any of the Guaranteed Obligations or any waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of this Second Supplement made in accordance with the terms thereof or any agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations; (iii) any change in the corporate existence, structure or ownership of GRP&E/BCS SpinCo, Prospective Owner or any other person interested in the transactions contemplated by this Second Supplement; or (iv) the adequacy of any other means Borrower may have of obtaining payment or performance related to any of the Guaranteed Obligations. If at any time payment or performance under this Second Supplement is rescinded or must be otherwise restored or returned by the Borrower upon the insolvency, bankruptcy or reorganization of the Prospective Owner or GRP&E/BCS SpinCo or otherwise, GRP&E/BCS SpinCo’s obligations hereunder with respect to such payment or performance shall be reinstated upon such restoration or return being made by the Borrower, all as though such payment had not been made. GRP&E/BCS SpinCo acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by this Second Supplement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Second Supplement as of the date first written above.
Arconic Inc., a Delaware corporation | ||
By | /s/ Ken Giacobbe | |
Name | Ken Giacobbe | |
Title | Executive Vice President and Chief Financial Officer | |
Arconic Davenport LLC | ||
By | /s/ Max W. Laun | |
Name | Max W. Laun | |
Title | President | |
Arconic
Rolled Products Corporation
(solely with respect to Section 10) |
||
By | /s/ Timothy D. Myers | |
Name | Timothy D. Myers | |
Title | President |
[Signature Page to Second Supplement (Davenport Bonds)]
Exhibit 2.10
LEASE AND PROPERTY MANAGEMENT AGREEMENT
THIS LEASE AND PROPERTY MANAGEMENT AGREEMENT (this “Lease”) dated this 31st day of March 2020 and effective as of 12:01 a.m. on April 1, 2020 (“Effective Date”), by and between ARCONIC INC., a Delaware corporation with offices at 201 Isabella Street, Pittsburgh, PA 15212 ("Lessor"), and ARCONIC MASSENA LLC, a Delaware limited liability company with offices at 201 Isabella Street, Pittsburgh, PA 15212 (“Lessee”).
RECITALS
WHEREAS, Lessor is the owner of real property in Massena, New York as shown on Exhibit A attached hereto (“Property”);
WHEREAS, Lessor announced its intentions to separate itself into two (2) separate, independent and publicly-traded companies (“Separation”) and as part thereof, intends to enter into that certain Separation and Distribution Agreement with Arconic Rolled Products Corporation (to be renamed Arconic Corporation), the eventual parent company to Lessee (“Separation Agreement”);
WHEREAS, as part of Separation, Lessor desires to lease a portion of the Property identified on Exhibit A (“Premises”), and to transfer to Lessee all of Lessor’s right, title and interest in and to all of buildings, structures, fixtures, and improvements owned by Lessor on, over, under, above or at the Premises, together with all other or additional buildings, structures, fixtures and improvements which may hereafter be installed, constructed, or created by or on behalf of Lessee (collectively “Improvements”), and (b) all equipment owned by Lessor on, over, under, above or at the Premises, and together with all additions, alterations, modifications, substitutions and replacements thereof which may hereafter be installed, constructed or created by or on behalf of Lessee (collectively, “Equipment”); and,
WHEREAS, also as part of Separation, Lessor desires, and Lessee hereby agrees, to act on behalf of Lessor as Lessor’s property manager in managing the Property, on all of the terms, covenants, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. PREMISES.
1.1 | Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for the Term, at the rental and upon all of the conditions set forth herein all of Lessor’s right, title and interest in and to the Premises identified on Exhibit A attached hereto and made part hereof. |
1.2 | Restrictions. Lessee takes possession of the Premises, and this Lease is subject and subordinate to, (i) all conditions, covenants, exceptions, reservations, easements, rights of others, and limitations which are set forth in recorded instruments affecting the Property, including but not limited to the Premises; (ii) all leases existing as of the Effective Date between Lessor as landlord and third parties, including but not limited to, that certain Lease between Lessor and Alcoa USA Corp. (“Alcoa”); and (iii) all laws restricting or regulating the use or occupancy of the Premises. Without limiting the generality of the foregoing, Lessee’s rights herein shall be subject and subordinate to all said prior instruments and applicable restrictions. |
2. TERM.
2.1 | Term. The term of this Lease (the “Term”) shall commence on April 1, 2020 (the “Commencement Date”) and shall expire on the earlier of: (i) March 31, 2025 or (ii) 30 days following the date that Lessor’s on-site landfill is no longer needed, or no longer has capacity, for disposal of sediments and wastes generated as part of Lessor’s Grasse River remediation project. |
3. RENT AND PROPERTY MANAGEMENT FEE.
3.1 | Rent. In lieu of monthly rent payments, Lessee shall assume and pay all costs and expenses, and bear all obligations of Lessor with respect to the Property, including but not limited to, the Premises and those other properties leased or licensed as of the date hereof by Lessor to third parties. Without limiting the generality of the foregoing, Lessee shall pay or reimburse Lessor for all taxes, utilities, insurance and management costs associated with the Property, including but not limited to, the Premises. |
3.2 | Lessor Property Management Fee. Lessor assigns to Lessee, and expressly waives any claim to, all of Lessor’s rights to receive payments of any kind now or hereafter owed or made to Lessor, including but not limited to, all payments, compensation and reimbursements made by Alcoa and/or other third party lessees and licensees of any portion of the Property, including but not limited to the Premises. |
4. | PROPERTY MANAGEMENT. Lessee shall have the sole obligation, and shall pay and bear all costs and expenses, of managing the Property, including but not limited to the Premises, on Lessor’s behalf. Without limiting the generality of the foregoing, Lessee shall have the obligation, and shall pay and bear all costs and expenses, in managing Lessor’s lease with Alcoa Corp and in managing Lessor’s leases and licenses with other third parties concerning other portions of the Property. Lessor appoints Lessee as its property manager to take all said actions necessary to implement, revise, and satisfy in full Lessee’s rights and obligations under this paragraph and under the Alcoa Corp lease. |
5. USE OF, AND RIGHT TO DEVELOP, PREMISES.
5.1 | Use. Lessee shall have the sole and exclusive right, including as against Lessor, to occupy, possess, and use the Premises for its manufacturing operations and for any other lawful purpose, subject to the terms herein. |
5.2 | Right to Market Third Party Uses of the Property. Lessee shall have the sole and exclusive right as against Lessor to market all other lawful uses and arrangements (e.g., sales, additional leases, subleases, licenses, etc.) of all or any portion of the Premises with third parties. Lessor and Lessee shall make best and reasonable efforts to cooperate in such marketing efforts and take all necessary and appropriate actions to facilitate such third party uses and/or purchases of the Property. Lessor shall not market or sell the Property or any portion thereof, to any third party, except as may be authorized in Paragraph 14 herein (Default). Lessee shall have the right to sublease or license the Premises, with the consent of Lessor, which shall not be unreasonably withheld. |
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5.3 | Lessor Permits, Licenses and Agreements. Lessor and Lessee shall take all reasonable actions and cooperate fully with one another to ensure that all permits, licenses and agreements, whether needed as of the Effective Date or in the future, are transferred, assigned or held by or in the name of Lessee. To the extent that any such transfer, assignment or change cannot be effectuated, or Lessee, at no fault of Lessee, cannot otherwise obtain such permits, licenses or agreements in its own name, then Lessor shall maintain and keep in effect all existing permits, licenses and agreements with 3rd parties, including environmental permits and approvals with governmental authorities, with respect to the Property (e.g., such as for purposes of illustration Lessor’s Petroleum Bulk Storage license, State Pollution Discharge Elimination System (SPDES) permit; and Chemical Bulk Storage license) so as to allow Lessee to realize the benefit and rights of such permits, licenses and agreements in its possession, use, operation and management of the Property as provided herein. Lessee shall indemnify Lessor for any liabilities, fines, penalties and costs (including reasonable attorney fees and costs) incurred by Lessor arising out of Lessee’s use, violation or reliance on any such permits, licenses and agreements maintained by Lessor. |
5.4 | Restrictions on Use. Nothwithstanding the above anything herein to the contrary, Lessee shall not do or permit anything to be done in or about the Premises which will cause the Premises to be used for any unlawful purpose. Moreover, Lessee shall not do, permit or suffer in, on or about the Premises, the commission of any waste or nuisance, or otherwise, impair or diminish the quality of the Premises. Lessee shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises and its occupancy and shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in or upon, or in connection with, the Premises, all at Lessee’s sole expense. Lessor shall not be required to pay for any capital improvements for any reason, including but not limited to, capital improvements to ensure that the Premises, or the Lessee’s use thereof, comply with any statutes, ordinances, rules, regulations, orders, covenants and restrictions of record. Where capital improvements may be necessary or desired due to Lessee’s use of the Premises Lessee shall undertake such capital improvements at Lessee’s sole cost and expense. |
5.5 Compliance with Law.
(a) | Lessee is responsible for obtaining, at its own cost and expense, all permits, licenses and consents necessary for its use of the Premises. |
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(b) | Lessee shall, at Lessee's expense, promptly comply with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, including without limitation, all environmental and safety statues, ordinances, rules, regulations and orders. |
(c) | Each party shall take any actions that may be required to comply with the terms of the USA Patriot Act of 2001, as amended, any regulations promulgated under the foregoing law, Executive Order No. 13224 on Terrorist Financing, any sanctions program administrated by the U.S. Department of Treasury’s Office of Foreign Asset Control or Financial Crimes Enforcement Network, or any other laws, regulations, executive orders or government programs designed to combat terrorism or money laundering, if applicable, with respect to this Lease. Each party represents and warrants to the other party that it is not an entity named on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Department of Treasury, as last updated prior to the date of this Lease. |
(d) | Lessee agrees to comply with the U.S. Foreign Corrupt Practices Act and all other applicable anti-corruption laws and regulations and any applicable import/export laws and regulations. |
5.6 | Condition of Premises. Lessee hereby accepts the Premises in its condition existing as of the Commencement Date, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Lessee acknowledges that neither Lessor nor Lessor's agents or representatives have made any representation or warranty with respect to the Premises. The taking of possession of the Premises by Lessee shall establish that the Premises were at such time in satisfactory condition, order and repair. The Premises are demised to Lessee in an "as is" and "with all faults" condition. |
5.7 | Use and Access of Premises by Lessor. Lessor and its employee, agents, representatives and invitees shall not access or use any portion of the Premises without Lessee’s authorization, which authorization shall not to be unreasonably withheld. Notwithstanding the foregoing, Lessor shall be authorized to access and use any portion of the Premises to the extent necessary and upon reasonable notice to Lessee in responding to an emergency that impacts Lessor or to facilitate review by a governmental authority with respect to any permit or license held by Lessor. During any such use or access of the Premises by Lessor, Lessor shall at all times abide by all of Lessee’s requirements, restrictions, policies and procedures imposed as a condition of such access or use, including, but not limited to, all such requirements and restrictions concerning health, safety and the environment such as, but not necessarily limited to, any health and safety training required by Lessee. |
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6. MAINTENANCE, REPAIRS AND ALTERATIONS.
6.1 | Lessor’s Obligations. Lessor shall have no obligations or responsibilities whatsoever to maintain or make any repairs to the Premises, or to any structure (e.g,. roof, walls, building support, etc.) or primary infrastructure (e.g., sewer lines, water supply lines, electrical lines, etc.) located at the Premises. |
6.2 | Lessee's Obligations. |
(a) | Lessee shall have the sole and absolute obligation to maintain and make repairs to the Premises, and to all structures (e.g,. roof, walls, building support, etc.) and primary infrastructure (e.g., sewer lines, water supply lines, electrical lines, etc.) located at the Premises. |
(b) | If Lessee fails to perform Lessee's obligations under section 6.2(a) immediately above, Lessor may, but has no obligation to, enter upon the Premises after ten (10) days' prior written notice to Lessee (except in the case of emergency, in which no notice shall be required), perform such obligations on Lessee's behalf and put the Premises in good order and condition and the cost thereof, together with interest thereon at the maximum rate then allowable by law, shall be due and payable as additional rent to Lessor within ten (10) days after Lessee’s receipt of an invoice therefor. |
6.3 Alterations and Additions.
(a) | Lessee shall have the right, without Lessor's prior written consent, to make any alterations, improvements or additions in, on or about the Premises, in its sole and absolute discretion, subject to the terms and conditions of this Lease. In the unlikely event that Lessee does not take title to the Premises at the termination or expiration hereof, Lessor may then reasonably require that Lessee restore the Premises to a condition commensurate with the condition of the Premises as of the Commencement Date, normal wear and tear excepted. |
(b) | Lessee shall acquire all permits, approvals and authorizations from appropriate governmental agencies in making any alterations, improvements or additions in, on or about the Premises prior to the commencement of the work and shall comply with the terms and conditions thereof. |
(c) | Lessee shall ensure that no liens are placed against the Premises by virtue of its conduct during the Term. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises. Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole cost and expense, defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. Lessee shall indemnify Lessor for any costs (including reasonable attorney’s fees and costs) incurred by Lessor in responding to, defending and removing liens placed on the Premises for any reason. |
(d) | All alterations, improvements or additions which may be made on the Premises shall be the property of Lessee and shall remain upon and be surrendered with the Premises at the expiration or termination of the Lease. If Lessee determines in its sole and absolute discretion to remove any alterations, improvments or additions, it shall do so at its sole cost and expense. |
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7. INSURANCE; INDEMNITY.
7.1 | Liability Insurance. Lessee shall, at Lessee’s sole cost and expense, obtain and keep in force during the Term and in accordance with the terms of this Lease commercially reasonable insurance coverage compliant with the minimum coverages detailed below in this Section 7.1 that insures Lessee and Lessor against liability arising out of the use, occupancy or maintenance of the Premises by Lessee. The limits of said insurance shall not, however, limit the liability of Lessee for its obligations under this Lease. |
(a) | Minimum required insurance coverages: |
(1) | Worker’s Compensation Insurance or qualification as a self-insurer to satisfy the laws of the states which have jurisdiction over Lessee’s employees. To the extent permitted by law, Seller’s Worker’s Compensation Insurer or Lessee, if self-insured, agrees to waive rights of subrogation against Lessor. |
(2) | Employers’ Liability Insurance for Bodily Injury per accident with limits of not less than $1,000,000 and Bodily Injury by Disease with limits of not less than $1,000,000 per policy. |
(3) | Commercial General Liability Insurance for bodily injury, personal injury and property damage, including coverage for products/completed operations and contractual liability, with combined limits of not less than $2,000,000 per occurrence. |
(4) | Automobile Liability Insurance covering use of all owned, non-owned and hired vehicles with minimum combined single limits of liability for bodily injury and property damage of not less than $1,000,000 per occurrence. |
(b) | Lessee agrees that during the Lease, Lessor will be named as an additional insured via endorsement on Lessee’s Commercial General Liability and that all Lessee’s insurance identified in Section 7.1(a) above will specifically indicate that coverage with respect to Lessor will be primary without right of contribution of any other insurance carried by or on behalf of Lessor. The intent is to exhaust all of the Lessee’s available and applicable coverage before the Lessor’s coverage is called upon to protect the Lessor. All of the above mentioned Lessee insurance will be occurrence-based coverages. Lessee may satisfy the limits of insurance required herein with any combination of primary and umbrella/excess insurance policies. |
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(c) | Upon request, Lessee shall provide Lessor with written certification, reasonably acceptable to Lessor, certifying that (i) the required insurance coverages are in effect and will not be cancelled or materially changed until thirty (30) days after prior written notice has been delivered to Lessor, (ii) Lessor is designated as an additional insured on Lessee’s Commercial General Liability policy, and (iii) all of Lessee’s insurance identified herein will be primary and not contributory or excess of any other insurance carried by or on behalf of Lessor. |
(d) | The requirements in this Section 7 are separate and distinct from any other obligations of Lessee under this Lease. |
7.2 | Insurance Policies. Lessee shall not do or permit to do anything which shall invalidate the insurance policies carried by Lessee. |
7.3 | Mutual Waiver of Subrogation. Lessor and Lessee each hereby releases the other, its officers, directors, employees, affiliated companies and agents, from any and all liability or responsibility (to the other or anyone claiming through or under them by way of subrogation or otherwise) for any loss or damage to property covered by insurance which either party is required to maintain under this Lease, even if such loss or damage shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible. However, this release shall be applicable and in force and effect only with respect to loss or damage occurring during such time as the releasor’s insurance policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder. Lessor and Lessee each agrees that any fire and extended coverage insurance policies will include such a clause or endorsement as long as the same shall be obtainable without extra cost, or, if extra cost shall be charged therefor, so long as the other party pays such extra cost. If extra cost shall be chargeable therefor, each party shall advise the other party of the amount of the extra cost, and the other party, at its election, may pay the same, but shall not be obligated to do so. |
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7.4 | Indemnity. Except to the extent arising out of the actions or inactions of Lessor, or Lessor’s employees, agents, representatives or invitees, Lessee, for itself, and for its representatives and successors and assigns, shall indemnify and hold harmless Lessor, its agents, representatives, officers, shareholders, directors, affiliated companies and employees, and its successors and assigns (any one hereafter defined as a “Lessor Indemnitee” and collectively as the "Lessor Indemnitees") from and against any and all claims arising from Lessee's use of the Premises, or from the conduct of Lessee's agents, contractors, employees, invitees or business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor Indemnitees from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee's part to be performed under the terms of this Lease, including from any claim that Lessor’s act or omission gave rise to or caused Lessor to default on any current or future third party agreement for use of the Property, or arising from any act or omission of Lessee, or any of Lessee's agents, contractors, employees or invitees, and from and against all costs, attorney's fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against any Lessor Indemnitee by reason of any such claim, Lessee upon notice from such Lessor Indemnitee, shall defend the same at Lessee's expense through counsel of its own selection and Lessor Indemnitee shall cooperate with Lessee in such defense. Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property of Lessee or injury to persons, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against any Lessor Indemnitee. The obligations of Lessee under this section shall survive the termination of this Lease as to any right of indemnity which shall have accrued prior to such termination. |
Lessee, for itself, and for its representatives and successors and assigns hereby expressly agrees to waive any provision of any workers’ compensation act or other similar law whereby Lessee could preclude its joinder by a Lessor Indemnity as an additional defendant, or avoid liability for damages, contribution or indemnity in any action at law, or otherwise where Lessee’s or its representative’s employee or employees, heirs, assigns or anyone otherwise entitled to receive damages by reason of injury or death brings an action at law against any Lessor Indemnitee. Lessee’s obligation to Lessor Indemnitees herein will not be limited by any limitation on the amount or type of damages, benefits or compensation payable by or for Lessee under any workers’ compensation acts, disability benefit acts, or other employee benefit acts on account of claims against any Lessor Indemnitee by an employee of Lessee or anyone employed directly or indirectly by Lessee or its representatives or anyone for whose acts Lessee may be liable. The obligations in this Section 7.4 are in addition to Lessee’s duty to provide insurance and will not be altered by any limitation on the amount or type of damages, compensation, or benefits payable by Lessee under any Workers’ Compensation Act or any other employee benefit act. Lessee’s obligations hereunder will not be limited to the extent of any insurance available to or provided by Lessee.
7.5 | Indemnity Process. If any claim or demand is asserted by third parties that may give rise to indemnification provided in Section 7.4, the Lessor Indemnitee shall notify the Lessee with respect of the existence of such claim or demand and of the facts within the Lessor Indemnitee’s actual knowledge that could reasonably relate thereto within 30 days after discovery or receipt of notice of such claim or demand; provided, however, any failure to provide notice of the claim or demand shall not affect the indemnity obligations except to the extent of any additional damage which is attributable to the delay. Lessee shall then have the right to contest, negotiate or settle any such claim or demand through counsel of its own selection, solely at the cost, risk and expense of Lessee. |
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7.6 | Exemption of Lessor from Liability. Except to the extent arising out of the actions or inactions of Lessor, or Lessor’s employees, agents, representatives or invitees, Lessee hereby agrees that Lessor shall not be liable for injury to Lessee's business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Lessee, Lessee's employees, invitees, customers, or any other person in or about the Premises, nor shall Lessor be liable for injury to the person of Lessee, Lessee's employees, agents, contractors, invitees or customers, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises, or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Lessee. |
8. ENVIRONMENTAL MATTERS.
8.1 Definitions.
(a) | For the purposes of this Lease, the term "Hazardous Substance" shall mean any substance, chemical, contaminant or waste that is listed or defined as hazardous, toxic, or dangerous under Environmental Law (defined below), and any asbestos containing materials, radioactive materials or petroleum products. |
(b) | For purposes hereof, the term "Environmental Law" means all federal, state and local laws, statutes, ordinances, regulations, rules and common law related to the protection of the environment, and/or the presences or release of Hazardous Substances including by way of example only, and without limiting the generality thereof, the following: the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; and the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; Emergency Planning & Community Right-to-Know Act (“EPCRA”), 42 U.S.C. §§ 11001 et seq.; each as amended from time to time, or any successor laws thereto, together with the rules and regulations promulgated there under, and any and all orders, decrees or requests from the United States Environmental Protection Agency, the appropriate state and local governmental and regulatory bodies, or any other governmental agency, authority or instrumentality having jurisdiction. |
8.2 | Lessee's Indemnity. In addition to, and without limiting the generality of, Lessee’s indemnity under Section 7.4, Lessee, for itself and its representatives and successors and assigns, agrees to defend, indemnify, and hold Lessor Indemnitees harmless against any and all liabilities, losses, foreseeable and unforeseeable consequential damages, obligations, liens, indebtedness, accounts, actions, causes of action, costs, fees of attorneys, consultants and experts and other expenses of any nature whatsoever which the Lessor Indemnitees may sustain, suffer or incur or which may be claimed or asserted against any of the Lessor Indemnitees, on account of any grounds whatsoever in law or in equity, by reason of, or in consequence of, any claim of any nature, including without limitation, any suit, administrative proceeding, citation, remediation demand, or judgments by any person or entity whether private, administrative or governmental, arising out of the spillage, release, discharge, disposal, or placement of any Hazardous Substance in, on, upon or about the soil or water in, on, under or about the Premises or arising out of the access, use, occupancy, or possession of the Premises by Lessee or any representive or invitee of Lessee. |
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9. | INTENTIONALLY OMMITTED. |
10. DAMAGE OR DESTRUCTION TO PREMISES.
This lease may not be unilaterally terminated, canceled, or altered in any way by either party if during the Term of this Lease the Premises are destroyed or damaged by fire, explosion or other casualty, regardless of whether such is or is not related to Lessee’s operations or activities at the Premises, and/or regardless of whether the Premises are wholly rendered unfit for Lessee's permitted use or not. Moreover, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, or casualty, except and to the extent such damage is caused by Lessor.
11. TAXES.
11.1 | Lessee shall be responsible for payment of all real estate taxes specifically levied or assessed on the Property during the term of this Lease, and also for any increase in real estate taxes or special assessments applicable to the Property. Lessee at its sole and absolute discretion and cost may petition any taxing authority for a change or reduction in property taxes owed on the Property. |
11.2 | Lessee shall pay all taxes assessed against and levied upon Lessee’s Equipment, fixtures, improvements and all other personal property of Lessee contained in, at, above, or under the Premises or elsewhere. |
12. UTILITIES, SECURITY AND JANITORIAL SERVICES.
12.1 | Lessee shall be responsible for and pay for all water, gas, heat, light, power, telephone, janitorial, waste removal and all and any other utilities and services supplied to the Premises or to Lessee, together with any taxes thereon. |
12.2 | Lessee shall be responsible for and pay for all necessary security and guard service to the Premises, and Lessee assumes all risk and responsibility for the protection of Lessee, its employees, representative, agents, and invitees to the Premises and to its Equipment and all other fixutres, improvements and all other personal property of Lessee and of Lessee's agents and invitees as it concerns the Premises. |
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13. ASSIGNMENT.
Neither Lessee nor Lessor shall assign this Lease without the prior written consent of the other, such consent not to be unreasonably withheld or excercised.
14. DEFAULT; REMEDIES.
14.1 | Default. The occurrence of any one or more of the following events shall constitute a material default of this Lease by Lessee: |
(a) The vacating or abandonment of the Premises by Lessee.
(b) | The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Lessee. |
(c) | The failure by Lessee to fulfill any other of Lessee’s material obligations as described herein or to otherwise materially observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, where such failure shall continue for a period of thirty (30) days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee's noncompliance is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. |
(d) | (i) The making by Lessee of any general arrangement or general assignment for the benefit of creditors, (ii) Lessee becomes a "debtor" as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days), (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within thirty (30) days, or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days. |
14.2 | Remedies. In the event of any such material default by Lessee, Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default: |
(a) | Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease and the Term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor and surrender all benefits and burdens conferred hereunder. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee's default including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorney's fees, and any real estate commission actually paid, the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the Term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided, and that portion of any leasing commission paid by Lessor applicable to the unexpired Term of this Lease. |
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(b) | Remove any of Lessee’s employees, agents, representatives or invitees from any portion of the Premises, and/or bar Lessee or any of Lessee’s employees, agents, representatives or invitees from future access to or use of the Premises, as a result of the unauthorized access to or use thereof. |
(c) | Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the State of New York, including but not limited to, the right to specific performance of this Lease by Lessee. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law. |
14.3 | Default by Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligation, provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Upon any such default by Lessor, Lessee may pursue any remedy now or hereafter available to Lessee under the laws or judicial decisions of the State of New York, including but not limited to, the right to specific performance of this Lease by Lessor. |
14.4 | Mutually Exclusive Remedies. Lessor’s and Lessee’s remedies contained herein are mutually exclusive, and are in addition to any other remedies available at law or in equity. |
15. | CONDEMNATION. |
If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), then this Lease shall terminate with respect to said portion of the Premises so condemned, but continue unabated or unimpacted with respect to the remaining portion of the Premises not so condemned. Moreover, Lessee shall be entitled to all awards and compensation or any payment made as a result of, or under the threat of, a taking, whether the same be for all or a portion of the Premises, or of any Equipment or Improvements at, on, above or under the Premises.
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16. ESTOPPEL CERTIFICATE.
16.1 | Each party (as "responding party") shall at any time upon not less than ten (10) days' prior written notice from the other party ("requesting party") execute, acknowledge and deliver to the requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to the responding party's knowledge, any uncured defaults on the part of the requesting party, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises or of the business of the requesting party. |
16.2 | The failure to deliver such statement or objection in a reasonable time following such request by the requesting party shall be conclusive upon the responding party that (i) this Lease is in full force and effect, without modification except as may be represented by the requesting party, and (ii) there are no uncured defaults in the requesting party's performance. |
17. | TIME OF ESSENCE. |
Time is of the essence with respect to the obligations to be performed under this Lease.
18. | INCORPORATION OF PRIOR AGREEMENTS; MODIFICATION. |
This Lease, collectively with the Separation Agreement and any all agreements referenced therein and ancillary thereto, contains all agreements of the parties with respect to the Premises and to any matter mentioned herein and that no prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective. To the extent there is a conflict between the Separation Agreement and this Lease, the parties agree that both shall be construed in a manner giving as much effect to both as is possible under the circumstances, but to the extent it is not possible, and Separation Agreement shall govern. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification.
19. | NOTICES. |
Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery, certified mail or electronic mail (e.g., e-mail), and shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below. Either party may by notice to the other specify a different address for notice purposes except that upon Lessee's taking possession of the Premises, the Premises shall automatically be deemed to constitute an acceptable address of Lessee for notice purposes. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by notice to Lessee.
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Arconic Inc. Attn: Global Real Estate 201 Isabella Street Pittsburgh, Pennsylvania 15212 ashley.stockdill@arconic.com
with a copy to:
Emily Lewis Arconic Inc. Legal Department 201 Isabella Street Pittsburgh, PA 15212 emily.lewis@arconic.com
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Arconic Massena LLC Attn: Global Real Estate 201 Isabella Street Pittsburgh, Pennsylvania 15212 richard.dworek@arconic.com
with a copy to:
Rick Dworek Arconic Rolled Products Corporation Legal Department 201 Isabella Street Pittsburgh, PA 15212 richard.dworek@arconic.com |
20. | WAIVERS. |
No waiver by either party of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by the other party of the same or any other provision. The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding or subsequent breach by Lessee of any provision hereof other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor's knowledge of such preceding breach at the time of acceptance of such rent.
21. | BINDING EFFECT; CHOICE OF LAW. |
This Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State of New York, without regard to its conflict of laws.
22. | ATTORNEY'S FEES. |
Except as may be otherwise specified herein, if either party brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action shall be entitled to its reasonable attorney's fees to be paid by the non-prevailing party as fixed by the court.
23. | SIGNS. |
Lessee may install any signage it deems appropriate at its sole and absolute discretion. All signage shall, however, be subject to and in compliance with, all applicable regulations, ordinances and rules governing same.
24. | QUIET POSSESSION; AUTHORITY. |
Upon Lessee observing and performing all of the covenants, conditions and provisions on Lessee's part to be observed and performed hereunder, Lessee shall have exclusive and quiet possession of the Premises for the entire Term hereof subject to the provisions of this Lease. The individuals executing this Lease on behalf of Lessor and Lessee represent and warrant to the other that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and Lessee, and that such execution is binding upon the parties and their successors and assigns.
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25. Force Majeure.
Neither party shall be deemed in default with respect to the failure to perform any of the terms, covenants and conditions of this Lease if and to the extent that such failure is due in whole or in part to any commonly-understood force majeure event whose cause is beyond the party’s reasonable control. In such event, the time for performance shall be extended by an amount of time equal to the period of the delay so caused.
26. TRANSFER OF title.
Lessee shall have the right for the payment of $100 and other good and valuable consideration to purchase and take title to the Property, including but not limited to the Premises or any portion thereof, at its sole and absolute discretion at any time during the Term. Should Lessee not have purchased all of the Property prior to the expiration or termination of the Term of this Lease, Lessee shall be obligated to purchase and take title to the Property, including but not limited to Premises, at or as soon as reasonably possible following the expiration or termination of the Term hereof. Should Lessee fail to purchase and take title to the Property, including the Premises, following the expiration or termination of the Term hereof, Lessor shall have the right to put the Property, including but not limited to the Premises, to Lessee, and Lessee shall at that time take title to the Property, including but not limited to the Premises. The parties agree to take all actions necessary to effectuate the purchase and transfer of title to the Property, including but not limited to the Premises, from Lessor to Lessee. Any such purchase and transfer of title shall include all of Lessor’s right, title and interest in the Property, including but not limited to the Premises or any portion thereof, at the time of the transfer. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
[Rest of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease effective as of the date first above written.
ARCONIC INC. | ARCONIC MASSENA LLC | ||
By: | /s/ Ken Giacobbe | By: | /s/ Max W. Laun |
Name: | Ken Giacobbe | Name: | Max W. Laun |
Title: | Executive Vice President and Chief Financial Officer | Title: | President |
Exhibit 3.1
Certificate of Amendment
of
Certificate of Incorporation
of
Arconic Inc.
Pursuant to Section 242 of the General Corporation Law of the State of Delaware
ARCONIC INC., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:
1. | Article I of the Certificate of Incorporation of the Corporation is hereby amended in its entirety to read as follows: |
“The name of the corporation is: Howmet Aerospace Inc. (the “Corporation”).
2. | The amendment to the Certificate of Incorporation effected hereby has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. |
3. | This Certificate of Amendment will become effective at 11:59 p.m. on March 31, 2020. |
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by its duly authorized officer this 30th day of March, 2020.
ARCONIC INC. | |||
By: | /s/ Kate Ramundo | ||
Name: | Kate Ramundo | ||
Title: | EVP, Chief Legal Officer and Secretary |
| Sincerely, | |
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John C. Plant
Chairman and Chief Executive Officer Arconic Inc. |
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| Sincerely, | |
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Timothy D. Myers
Chief Executive Officer Arconic Rolled Products Corporation |
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| | | | F-1 | | |
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What is Arconic Corporation and why is ParentCo separating the Arconic Corporation Businesses and distributing Arconic Corporation common stock?
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| | Arconic Corporation, which is currently a wholly owned subsidiary of ParentCo, was formed to own and operate ParentCo’s Arconic Corporation Businesses. The separation of Arconic Corporation from ParentCo and the distribution of Arconic Corporation common stock is intended, among other things, to enable the management of the two companies to pursue opportunities for long-term growth and profitability unique to each company’s business and to allow each business to more effectively implement its own distinct capital structure and capital allocation strategies. ParentCo expects that the separation will result in enhanced long-term performance of each business for the reasons discussed in the section entitled “The Separation and Distribution — Reasons for the Separation.” | |
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Why am I receiving this document?
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| | ParentCo is delivering this document to you because you are a holder of shares of ParentCo common stock. If you are a holder of shares of ParentCo common stock as of the close of business on March 19, 2020, the record date of the distribution, you will be entitled to receive one share of Arconic Corporation common stock for every four shares of ParentCo common stock that you hold at the close of business on such date. This document will help you understand how the separation and distribution will affect your post-separation ownership in Howmet Aerospace and Arconic Corporation. | |
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How will the separation of Arconic Corporation from ParentCo work?
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| | As part of the separation, and prior to the distribution, ParentCo and its subsidiaries expect to complete an internal reorganization (which we refer to as the “internal reorganization”) in order to transfer the Arconic Corporation Businesses that Arconic Corporation will own following the separation to Arconic Corporation. To accomplish the separation, ParentCo will distribute all of the outstanding shares of Arconic Corporation common stock to ParentCo stockholders on a pro rata basis in a distribution intended to be generally tax-free to ParentCo stockholders for U.S. federal income tax purposes. Following the separation, the number of shares of ParentCo common stock (which, as a result of ParentCo’s name change to Howmet Aerospace, will be Howmet Aerospace shares) you own will not change as a result of the separation. | |
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What is the record date for the distribution?
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The record date for the distribution will be March 19, 2020.
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When will the distribution occur?
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| | We expect that all of the outstanding shares of Arconic Corporation common stock will be distributed by ParentCo at 12:01 a.m., Eastern Time, on April 1, 2020, to holders of record of shares of ParentCo common stock at the close of business on March 19, 2020, the record date for the distribution. | |
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What do stockholders need to do to participate in the distribution?
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| | Stockholders of ParentCo as of the record date for the distribution will not be required to take any action to receive Arconic Corporation common stock in the distribution, but you are urged to read this entire information statement carefully. No stockholder approval of the distribution is required. You are not being asked for a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of ParentCo common stock or take | |
| | | | any other action to receive your shares of Arconic Corporation common stock. Please do not send in your ParentCo stock certificates. The distribution will not affect the number of outstanding shares of ParentCo common stock or any rights of ParentCo stockholders, although it will affect the market value of each outstanding share of ParentCo common stock (which, as a result of ParentCo’s name change to Howmet Aerospace, will be Howmet Aerospace shares). | |
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How will shares of Arconic Corporation common stock be issued?
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| | You will receive shares of Arconic Corporation common stock through the same channels that you currently use to hold or trade shares of ParentCo common stock, whether through a brokerage account, 401(k) plan or other channel. Receipt of Arconic Corporation shares will be documented for you in the same manner that you typically receive stockholder updates, such as monthly broker statements and 401(k) statements. | |
| | | | If you own shares of ParentCo common stock as of the close of business on the record date for the distribution, including shares owned in certificate form, ParentCo, with the assistance of Computershare Trust Company, N.A., the distribution agent for the distribution (the “distribution agent” or “Computershare”), will electronically distribute shares of Arconic Corporation common stock to you or to your brokerage firm on your behalf in book-entry form. Computershare will mail you a book-entry account statement that reflects your shares of Arconic Corporation common stock, or your bank or brokerage firm will credit your account for the shares. | |
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How many shares of Arconic Corporation common stock will I receive in the distribution?
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| | ParentCo will distribute to you one share of Arconic Corporation common stock for every four shares of ParentCo common stock held by you as of close of business on the record date for the distribution. Based on approximately 434,416,204 shares of ParentCo common stock outstanding as of January 31, 2020, a total of approximately 108,604,051 shares of Arconic Corporation common stock will be distributed to ParentCo’s stockholders. For additional information on the distribution, see “The Separation and Distribution.” | |
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Will Arconic Corporation issue fractional shares of its common stock in the distribution?
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| | No. Arconic Corporation will not issue fractional shares of its common stock in the distribution. Fractional shares that ParentCo stockholders would otherwise have been entitled to receive will be aggregated and sold in the public market by the distribution agent. The net cash proceeds of these sales will be distributed pro rata (based on the fractional share such holder would otherwise be entitled to receive) to those stockholders who would otherwise have been entitled to receive fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts paid in lieu of fractional shares. | |
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What are the conditions to the distribution?
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| | The distribution is subject to the satisfaction (or waiver by ParentCo in its sole and absolute discretion) of the following conditions: | |
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the U.S. Securities and Exchange Commission (the “SEC”) declaring effective the registration statement of which this information statement forms a part; there being no order suspending the effectiveness of the registration statement in effect; and no proceedings for such purposes having been
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instituted or threatened by the SEC;
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this information statement having been made available to ParentCo stockholders;
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the receipt by ParentCo and continuing validity of an opinion of its outside counsel, satisfactory to the ParentCo Board of Directors, regarding the qualification of the distribution, together with certain related transactions, as a “reorganization” within the meaning of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”);
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the internal reorganization having been completed and the transfer of assets and liabilities of the Arconic Corporation Businesses from ParentCo to Arconic Corporation, and the transfer of assets and liabilities of the Howmet Aerospace Businesses from Arconic Corporation to ParentCo, having been completed in accordance with the separation and distribution agreement, which is described below in this information statement (the “separation agreement”);
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the receipt of one or more opinions from an independent appraisal firm to the ParentCo Board of Directors as to the solvency of Howmet Aerospace and Arconic Corporation after the completion of the distribution, in each case in a form and substance acceptable to the ParentCo Board of Directors in its sole and absolute discretion;
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all actions necessary or appropriate under applicable U.S. federal, state or other securities or blue sky laws and the rules and regulations thereunder having been taken or made and, where applicable, having become effective or been accepted;
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the execution of certain agreements contemplated by the separation agreement;
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no order, injunction or decree issued by any government authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the separation, the distribution or any of the related transactions being in effect;
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| | | |
•
the shares of Arconic Corporation common stock to be distributed having been accepted for listing on the NYSE, subject to official notice of distribution;
|
|
| | | |
•
ParentCo having received certain proceeds from the financing arrangements described under “Description of Material Indebtedness” and being satisfied in its sole and absolute discretion that, as of the effective time of the distribution, it will have no further liability under such arrangements; and
|
|
| | | |
•
no other event or development existing or having occurred that, in the judgment of ParentCo’s Board of Directors, in its sole and absolute discretion, makes it inadvisable to effect the separation, the distribution and the other related transactions.
|
|
| | | | or other nominee understands whether you want to sell your ParentCo common stock with or without your entitlement to Arconic Corporation common stock pursuant to the distribution. | |
|
Where will I be able to trade shares of Arconic Corporation common stock?
|
| | Arconic Corporation intends to apply for authorization to list its common stock on the NYSE under the symbol “ARNC.” ParentCo will change its name to Howmet Aerospace and its stock symbol from “ARNC” to “HWM” upon completion of the separation. Arconic Corporation anticipates that trading in shares of its common stock will begin on a “when-issued” basis on or shortly before the record date for the distribution and will continue up to and through the distribution date, and that “regular-way” trading in Arconic Corporation common stock will begin on the first trading day following the completion of the distribution. If trading begins on a “when-issued” basis, you may purchase or sell Arconic Corporation common stock up to and through the distribution date, but your transaction will not settle until after the distribution date. Arconic Corporation cannot predict the trading prices for its common stock before, on or after the distribution date. | |
|
What will happen to the listing of ParentCo common stock?
|
| | ParentCo common stock will continue to trade on the NYSE after the distribution but will be traded as Howmet Aerospace common stock due to ParentCo’s name change to Howmet Aerospace and under the stock symbol “HWM” instead of “ARNC.” | |
|
Will the number of shares of ParentCo common stock that I own change as a result of the distribution?
|
| | No. The number of shares of ParentCo common stock that you own will not change as a result of the distribution. Following the separation, ParentCo common stock will be Howmet Aerospace common stock as a result of ParentCo’s name change to Howmet Aerospace. | |
|
Will the distribution affect the market price of my ParentCo common stock?
|
| | Yes. As a result of the distribution, ParentCo expects the trading price of shares of ParentCo common stock (which, as a result of ParentCo’s name change to Howmet Aerospace, will be Howmet Aerospace common stock) immediately following the distribution to be different from the “regular-way” trading price of such shares immediately prior to the distribution because the trading price will no longer reflect the value of the Arconic Corporation Businesses. There can be no assurance whether the aggregate market value of the Howmet Aerospace common stock and the Arconic Corporation common stock following the separation will be higher or lower than the market value of ParentCo common stock if the separation did not occur. This means, for example, that the combined trading prices of a share of Howmet Aerospace common stock and one-fourth of a share of Arconic Corporation common stock after the distribution may be equal to, greater than or less than the trading price of a share of ParentCo common stock before the distribution. | |
|
What are the material U.S. federal income tax consequences of the separation and the distribution?
|
| | It is a condition to the distribution that ParentCo receive an opinion of its outside counsel, satisfactory to the ParentCo Board of Directors, regarding the qualification of the distribution, together with certain related transactions, as a “reorganization” within the meaning of Sections 355 and 368(a)(1)(D) of the Code. | |
| | | | If the distribution, together with certain related transactions, so qualifies, generally no gain or loss will be recognized by you, and no | |
| | | | amount will be included in your income, for U.S. federal income tax purposes upon your receipt of Arconic Corporation common stock in the distribution. You will, however, recognize gain or loss for U.S. federal income tax purposes with respect to cash received in lieu of a fractional share of Arconic Corporation common stock. | |
| | | | You should consult your own tax advisor as to the particular consequences of the distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as any non-U.S. tax laws. For more information regarding the material U.S. federal income tax consequences of the distribution, see the section entitled “Material U.S. Federal Income Tax Consequences.” | |
|
What will Arconic Corporation’s relationship be with Howmet Aerospace following the separation?
|
| | After the distribution, Howmet Aerospace and Arconic Corporation will be separate companies with separate management teams and separate boards of directors. Arconic Corporation will enter into a separation agreement with ParentCo to effect the separation and to provide a framework for Arconic Corporation’s relationship with Howmet Aerospace after the separation, and will enter into certain other agreements, including a tax matters agreement, an employee matters agreement, intellectual property license agreements, metal supply agreements and real estate and office leases. These agreements will provide for the allocation between Arconic Corporation and Howmet Aerospace of the assets, employees, liabilities and obligations (including, among others, investments, property and employee benefits and tax-related assets and liabilities) of ParentCo and its subsidiaries attributable to periods prior to, at and after the separation and will govern the relationship between Arconic Corporation and Howmet Aerospace subsequent to the completion of the separation. For additional information regarding the separation agreement and other transaction agreements, see the sections entitled “Risk Factors — Risks Related to the Distribution” and “Certain Relationships and Related Party Transactions.” | |
|
Who will manage Arconic Corporation after the separation?
|
| | Led by Timothy D. Myers, who will be Arconic Corporation’s Chief Executive Officer, and Erick R. Asmussen, who will be Arconic Corporation’s Chief Financial Officer, Arconic Corporation will benefit from a management team with an extensive background in the Arconic Corporation Businesses. For more information regarding Arconic Corporation’s management and directors, see “Management” and “Directors.” | |
|
Are there risks associated with owning Arconic Corporation common stock?
|
| | Yes. Ownership of Arconic Corporation common stock is subject to both general and specific risks relating to the Arconic Corporation Businesses, the industry in which it operates, its ongoing contractual relationships with Howmet Aerospace and its status as a separate, publicly traded company. Ownership of Arconic Corporation common stock is also subject to risks relating to the separation. Certain of these risks are described in the “Risk Factors” section of this information statement. We encourage you to read that section carefully. | |
|
Does Arconic Corporation plan to pay dividends?
|
| | We expect that we will pay cash dividends in an aggregate amount of up to approximately $50 million in the first year following the distribution and up to approximately $100 million per annum thereafter. However, the timing, declaration, amount of, and payment | |
|
|
| |
Transportation consumption 2019:
4,761 and 2023: 6,161 CAGR 6.7% |
|
Key Markets
|
| |
Key Customers
|
|
Ground Transportation | | | Ford, FCA, General Motors, Daimler, Paccar, Entrans/Heil | |
Aerospace | | | Boeing, Airbus, Spirit AeroSystems, Embraer | |
Building and Construction | | | Fabricators, installers, architects and developers around the world | |
Industrial | | | Ryerson, Thyssenkrupp MA, Reliance, Kloeckner, Champagne Metals | |
Packaging | | | Ball, CANPACK | |
($ in millions; shipments in thousands of metric tons (kmt))
|
| |
For the three
months ended December 31, |
| |
For the year
ended December 31, |
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| ||||||||||||
| | |
(Unaudited)
|
| |
(Unaudited)
|
| |
(Unaudited)
|
| |
(Audited)
|
| ||||||||||||
Third-party sales
|
| | | $ | 1,667 | | | | | $ | 1,755 | | | | | $ | 7,082 | | | | | $ | 7,223 | | |
Intersegment sales
|
| | | $ | 41 | | | | | $ | 44 | | | | | $ | 183 | | | | | $ | 205 | | |
Segment operating profit
|
| | | $ | 150 | | | | | $ | 93 | | | | | $ | 625 | | | | | $ | 481 | | |
Segment operating profit margin(1)
|
| | | | 9.0% | | | | | | 5.3% | | | | | | 8.8% | | | | | | 6.7% | | |
Provision for depreciation and amortization
|
| | | $ | 58 | | | | | $ | 68 | | | | | $ | 233 | | | | | $ | 253 | | |
Restructuring and other charges
|
| | | $ | (18) | | | | | $ | (160) | | | | | $ | 81 | | | | | $ | (157) | | |
Third-party aluminum shipments (kmt)
|
| | | | 330 | | | | | | 319 | | | | | | 1,379 | | | | | | 1,301 | | |
Capital expenditures
|
| | | $ | 78 | | | | | $ | 120 | | | | | $ | 189 | | | | | $ | 308 | | |
($ in millions; shipments in thousands of metric tons (kmt))
|
| |
For the three
months ended December 31, |
| |
For the year
ended December 31, |
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| ||||||||||||
Third-party sales – unrelated party
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 7,211 | | |
Third-party sales – related party
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 206 | | |
Segment operating profit(1)
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 420 | | |
Provision for depreciation and amortization
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 253 | | |
Restructuring and other charges
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | (159) | | |
Third-party aluminum shipments – unrelated party (kmt)
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 1,301 | | |
Capital expenditures
|
| | | | N/A | | | | | | N/A | | | | | | * | | | | | $ | 308 | | |
| | |
As of and for the nine months ended September 30,
|
| |
As of and for the year ended December 31,
|
| ||||||||||||||||||||||||||||||||||||
(in millions)
|
| |
Pro forma
2019 |
| |
2019
|
| |
2018
|
| |
Pro forma
2018 |
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||||||||
Sales
|
| | | $ | 5,569 | | | | | $ | 5,569 | | | | | $ | 5,633 | | | | | $ | 7,442 | | | | | $ | 7,442 | | | | | $ | 6,824 | | | | | $ | 6,661 | | |
Net income
|
| | | | 81 | | | | | | 39 | | | | | | 71 | | | | | | 210 | | | | | | 170 | | | | | | 209 | | | | | | 155 | | |
Total assets
|
| | | | 5,819 | | | | | | 4,790 | | | | | | 4,968 | | | | | | N/A | | | | | | 4,795 | | | | | | 4,902 | | | | | | 4,705 | | |
Total debt
|
| | | | 1,174 | | | | | | 250 | | | | | | 260 | | | | | | N/A | | | | | | 250 | | | | | | 255 | | | | | | 256 | | |
| | |
September 30, 2019
|
| |||||||||
(in millions)
|
| |
As Reported
|
| |
Pro Forma
|
| ||||||
| | |
(Unaudited)
|
| |||||||||
Cash | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 47 | | | | | $ | 400 | | |
Capitalization: | | | | | | | | | | | | | |
Debt Outstanding | | | | | | | | | | | | | |
Long-term debt, including amount due within one year
|
| | | $ | 250 | | | | | $ | 1,174 | | |
Equity | | | | | | | | | | | | | |
Common stock, par value
|
| | | $ | — | | | | | $ | 1 | | |
Additional capital
|
| | | | — | | | | | | 2,468 | | |
Parent Company net investment
|
| | | | 2,416 | | | | | | — | | |
Accumulated other comprehensive income (loss)
|
| | | | 310 | | | | | | (1,159) | | |
Sub-total equity
|
| | | | 2,726 | | | | | | 1,310 | | |
Noncontrolling interest
|
| | | | 14 | | | | | | 14 | | |
Total equity
|
| | | | 2,740 | | | | | | 1,324 | | |
Total capitalization
|
| | | $ | 2,990 | | | | | $ | 2,498 | | |
| | |
As of and for the nine months
ended September 30, |
| |
As of and for the year ended December 31,
|
| ||||||||||||||||||||||||||||||||||||
(in millions)
|
| |
2019
|
| |
2018
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
| |
2014
|
| |||||||||||||||||||||
Sales
|
| | | $ | 5,569 | | | | | $ | 5,633 | | | | | $ | 7,442 | | | | | $ | 6,824 | | | | | $ | 6,661 | | | | | $ | 7,046 | | | | | $ | 8,321 | | |
Net income (loss)
|
| | | | 39 | | | | | | 71 | | | | | | 170 | | | | | | 209 | | | | | | 155 | | | | | | (60) | | | | | | (124) | | |
Total assets
|
| | | | 4,790 | | | | | | 4,968 | | | | | | 4,795 | | | | | | 4,902 | | | | | | 4,705 | | | | | | 4,627 | | | | | | 4,886 | | |
Total debt
|
| | | | 250 | | | | | | 260 | | | | | | 250 | | | | | | 255 | | | | | | 256 | | | | | | 253 | | | | | | 249 | | |
Supplemental Information(1): | | | | | | | | | |||||||||||||||||||||||||||||||||||
Capital expenditures
|
| | | $ | 120 | | | | | $ | 195 | | | | | $ | 317 | | | | | $ | 241 | | | | | $ | 350 | | | | | | | | | | | | | | |
Segment Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rolled Products
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales
|
| | | | 4,294 | | | | | | 4,333 | | | | | | 5,731 | | | | | | 5,125 | | | | | | 4,996 | | | | | | | | | | | | | | |
Segment operating profit
|
| | | | 346 | | | | | | 268 | | | | | | 328 | | | | | | 384 | | | | | | 374 | | | | | | | | | | | | | | |
Extrusions
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales
|
| | | | 420 | | | | | | 409 | | | | | | 546 | | | | | | 518 | | | | | | 551 | | | | | | | | | | | | | | |
Segment operating profit
|
| | | | (29) | | | | | | 2 | | | | | | 1 | | | | | | 34 | | | | | | 74 | | | | | | | | | | | | | | |
Building and Construction Systems
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales
|
| | | | 855 | | | | | | 866 | | | | | | 1,140 | | | | | | 1,066 | | | | | | 1,011 | | | | | | | | | | | | | | |
Segment operating profit
|
| | | | 89 | | | | | | 74 | | | | | | 91 | | | | | | 82 | | | | | | 86 | | | | | ||||||||||
Non-GAAP Financial Measures(2):
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales — as adjusted
|
| | | $ | 5,415 | | | | | $ | 5,432 | | | | | $ | 7,185 | | | | | $ | 6,443 | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | | 470 | | | | | | 410 | | | | | | 542 | | | | | | 531 | | | | | | | | | | | | | | | | | | | | |
Further Adjusted EBITDA
|
| | | | 595 | | | | | | 472 | | | | | | 632 | | | | | | 671 | | | | | | | | | | | | | | | | | | | | |
Adjusted EBIT
|
| | | | 280 | | | | | | 212 | | | | | | 270 | | | | | | 265 | | | | | | | | | | | | | | | | | | | | |
Further Adjusted EBIT
|
| | | | 407 | | | | | | 277 | | | | | | 363 | | | | | | 399 | | | | | | | | | | | | | | | | | | | | |
Capital expenditures — as
adjusted |
| | | | 118 | | | | | | 193 | | | | | | 313 | | | | | | 236 | | | | | | | | | | | | | | | | | | | | |
| | |
As of and for the nine months
ended September 30, |
| |
As of and for the year ended December 31,
|
| |||||||||||||||||||||||||||
(in millions)
|
| |
2019
|
| |
2018
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
| |
2014
|
| ||||||||||||
Segment Information: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Rolled Products
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales — as adjusted
|
| | | | 4,179 | | | | | | 4,198 | | | | | | 5,552 | | | | | | 4,909 | | | | | | | | | | | |
Adjusted EBITDA
|
| | | | 485 | | | | | | 422 | | | | | | 540 | | | | | | 589 | | | | | | | | | | | |
Further Adjusted EBITDA
|
| | | | 520 | | | | | | 453 | | | | | | 584 | | | | | | 641 | | | | | | | | | | | |
Extrusions
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales — as adjusted
|
| | | | 381 | | | | | | 368 | | | | | | 493 | | | | | | 468 | | | | | | | | | | | |
Adjusted EBITDA
|
| | | | (7) | | | | | | 19 | | | | | | 24 | | | | | | 56 | | | | | | | | | | | |
Further Adjusted EBITDA
|
| | | | (6) | | | | | | 20 | | | | | | 26 | | | | | | 59 | | | | | | | | | | | |
Building and Construction Systems
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales — as adjusted
|
| | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | | | | | | |
Adjusted EBITDA
|
| | | | 103 | | | | | | 88 | | | | | | 109 | | | | | | 98 | | | | | | | | | | | |
Further Adjusted EBITDA
|
| | | | 105 | | | | | | 90 | | | | | | 111 | | | | | | 101 | | | | | | | | | | | |
| | |
For the nine months
ended September 30, |
| |
For the year ended December 31,
|
| |||||||||||||||||||||||||||
(in millions)
|
| |
2019
|
| |
2018
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
| |
2014
|
| ||||||||||||
Reconciliation of Adjusted Sales: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales
|
| | | $ | 5,569 | | | | | $ | 5,633 | | | | | $ | 7,442 | | | | | $ | 6,824 | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (154) | | | | | | (201) | | | | | | (257) | | | | | | (381) | | | | | | ||||||
Sales — as adjusted
|
| | | $ | 5,415 | | | | | $ | 5,432 | | | | | $ | 7,185 | | | | | $ | 6,443 | | | | | | ||||||
Reconciliation of Adjusted EBITDA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income
|
| | | $ | 39 | | | | | $ | 71 | | | | | $ | 170 | | | | | $ | 209 | | | | | | | | | | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to noncontrolling interests
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | |
Provision for income taxes
|
| | | | 55 | | | | | | 33 | | | | | | 71 | | | | | | 42 | | | | | | | | | | | |
Other (income) expenses, net
|
| | | | (4) | | | | | | 9 | | | | | | 4 | | | | | | (287) | | | | | | | | | | | |
Interest expense
|
| | | | 86 | | | | | | 99 | | | | | | 129 | | | | | | 168 | | | | | | | | | | | |
Restructuring and other charges
|
| | | | 104 | | | | | | — | | | | | | (104) | | | | | | 133 | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 190 | | | | | | 198 | | | | | | 272 | | | | | | 266 | | | | | | ||||||
Adjusted EBITDA
|
| | | $ | 470 | | | | | $ | 410 | | | | | $ | 542 | | | | | $ | 531 | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other special items*
|
| | | | 63 | | | | | | 7 | | | | | | 13 | | | | | | 48 | | | | | | | | | | | |
Divestitures
|
| | | | (6) | | | | | | (8) | | | | | | (8) | | | | | | (1) | | | | | | | | | | | |
Pension/OPEB
|
| | | | 68 | | | | | | 63 | | | | | | 85 | | | | | | 93 | | | | | | ||||||
Further Adjusted EBITDA
|
| | | $ | 595 | | | | | $ | 472 | | | | | $ | 632 | | | | | $ | 671 | | | | | | ||||||
|
| | |
For the nine months
ended September 30, |
| |
For the year ended December 31,
|
| ||||||||||||||||||||||||||||||||||||
(in millions)
|
| |
2019
|
| |
2018
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
| |
2014
|
| |||||||||||||||||||||
Reconciliation of Adjusted EBIT: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income
|
| | | $ | 39 | | | | | $ | 71 | | | | | $ | 170 | | | | | $ | 209 | | | | | | | | | | | | | | | | | | | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income attributable to noncontrolling interests
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | |
Provision for income taxes
|
| | | | 55 | | | | | | 33 | | | | | | 71 | | | | | | 42 | | | | | | | | | | | | | | | | | | | | |
Other (income) expenses, net
|
| | | | (4) | | | | | | 9 | | | | | | 4 | | | | | | (287) | | | | | | | | | | | | | | | | | | | | |
Interest expense
|
| | | | 86 | | | | | | 99 | | | | | | 129 | | | | | | 168 | | | | | | | | | | | | | | | | | | | | |
Restructuring and other charges
|
| | | | 104 | | | | | | — | | | | | | (104) | | | | | | 133 | | | | | | | | | | | | | | | | | | |||
Adjusted EBIT
|
| | | $ | 280 | | | | | $ | 212 | | | | | $ | 270 | | | | | $ | 265 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other special items*
|
| | | | 63 | | | | | | 7 | | | | | | 13 | | | | | | 48 | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (4) | | | | | | (5) | | | | | | (5) | | | | | | (7) | | | | | | | | | | | | | | | | | | | | |
Pension/OPEB
|
| | | | 68 | | | | | | 63 | | | | | | 85 | | | | | | 93 | | | | | | | | | | | | | | | | | | | | |
Further Adjusted EBIT
|
| | | $ | 407 | | | | | $ | 277 | | | | | $ | 363 | | | | | $ | 399 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Adjusted Capital Expenditures:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures
|
| | | $ | 120 | | | | | $ | 195 | | | | | $ | 317 | | | | | $ | 241 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (2) | | | | | | (2) | | | | | | (4) | | | | | | (5) | | | | | | | | | | | | | | | | | | | | |
Capital expenditures — as adjusted
|
| | | $ | 118 | | | | | $ | 193 | | | | | $ | 313 | | | | | $ | 236 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Rolled Products Adjusted Third-Party Sales:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales
|
| | | $ | 4,294 | | | | | $ | 4,333 | | | | | $ | 5,731 | | | | | $ | 5,125 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (115) | | | | | | (135) | | | | | | (179) | | | | | | (216) | | | | | | | | | | | | | | | | | | | | |
Third-party sales — as adjusted
|
| | | $ | 4,179 | | | | | $ | 4,198 | | | | | $ | 5,552 | | | | | $ | 4,909 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Rolled Products Adjusted EBITDA:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating profit
|
| | | $ | 346 | | | | | $ | 268 | | | | | $ | 328 | | | | | $ | 384 | | | | | | | | | | | | | | | | | | | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 139 | | | | | | 154 | | | | | | 212 | | | | | | 205 | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 485 | | | | | $ | 422 | | | | | $ | 540 | | | | | $ | 589 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | — | | | | | | (3) | | | | | | (1) | | | | | | 5 | | | | | | | | | | | | | | | | | | | | |
Pension/OPEB
|
| | | | 35 | | | | | | 34 | | | | | | 45 | | | | | | 47 | | | | | | |||||||||||||||
Further Adjusted EBITDA
|
| | | $ | 520 | | | | | $ | 453 | | | | | $ | 584 | | | | | $ | 641 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Extrusions Adjusted Third-Party Sales:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales
|
| | | $ | 420 | | | | | $ | 409 | | | | | $ | 546 | | | | | $ | 518 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (39) | | | | | | (41) | | | | | | (53) | | | | | | (50) | | | | | | | | | | | | | | | | | | | | |
Third-party sales — as adjusted
|
| | | $ | 381 | | | | | $ | 368 | | | | | $ | 493 | | | | | $ | 468 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Extrusions Adjusted EBITDA:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating profit
|
| | | $ | (29) | | | | | $ | 2 | | | | | $ | 1 | | | | | $ | 34 | | | | | | | | | | | | | | | | | | | | |
| | |
For the nine months
ended September 30, |
| |
For the year ended December 31,
|
| ||||||||||||||||||||||||||||||||||||
(in millions)
|
| |
2019
|
| |
2018
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
| |
2014
|
| |||||||||||||||||||||
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 22 | | | | | | 17 | | | | | | 23 | | | | | | 22 | | | | | | | | | | | | | | | | | | |||
Adjusted EBITDA
|
| | | $ | (7) | | | | | $ | 19 | | | | | $ | 24 | | | | | $ | 56 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Divestitures
|
| | | | (8) | | | | | | (7) | | | | | | (10) | | | | | | (10) | | | | | | | | | | | | | | | | | | | | |
Pension/OPEB
|
| | | | 9 | | | | | | 8 | | | | | | 12 | | | | | | 13 | | | | | | |||||||||||||||
Further Adjusted EBITDA
|
| | | $ | (6) | | | | | $ | 20 | | | | | $ | 26 | | | | | $ | 59 | | | | | | | | | | | | | | | | | | | | |
Reconciliation of Building and Construction Systems Adjusted EBITDA:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment operating profit
|
| | | $ | 89 | | | | | $ | 74 | | | | | $ | 91 | | | | | $ | 82 | | | | | | | | | | | | | | | | | | | | |
Add: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 14 | | | | | | 14 | | | | | | 18 | | | | | | 16 | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA
|
| | | $ | 103 | | | | | $ | 88 | | | | | $ | 109 | | | | | $ | 98 | | | | | | | | | | | | | | | | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pension/OPEB
|
| | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 3 | | | | | | | | | | | | | | | | | | | | |
Further Adjusted EBITDA
|
| | | $ | 105 | | | | | $ | 90 | | | | | $ | 111 | | | | | $ | 101 | | | | | | | | | | | | | | | | | | | | |
|
For the nine months ended September 30, 2019
|
| |
As Reported
|
| |
Pro Forma
Adjustments |
| | | | |
Pro Forma
|
| | | | | | | |||||||||
Sales
|
| | | $ | 5,569 | | | | | | | | | | | | | | $ | 5,569 | | | | | | | | |
Cost of goods sold (exclusive of expenses below)
|
| | | | 4,810 | | | | | | (56) | | | |
(a)
|
| | | | 4,754 | | | | | | | | |
Selling, general administrative, and other expenses
|
| | | | 255 | | | | | | (33) | | | |
(a)(b)
|
| | | | 222 | | | | | | | | |
Research and development expenses
|
| | | | 34 | | | | | | (1) | | | |
(a)
|
| | | | 33 | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 190 | | | | | | | | | | | | | | | 190 | | | | | | | | |
Restructuring and other charges
|
| | | | 104 | | | | | | | | | | | | | | | 104 | | | | | | | | |
Operating income
|
| | | | 176 | | | | | | 90 | | | | | | | | | 266 | | | | | | | | |
Interest expense
|
| | | | 86 | | | | | | (37) | | | |
(c)
|
| | | | 49 | | | | | | | | |
Other (income) expenses, net
|
| | | | (4) | | | | | | 74 | | | |
(a)
|
| | | | 70 | | | | | | | | |
Income before income taxes
|
| | | | 94 | | | | | | 53 | | | | | | | | | 147 | | | | | | | | |
Provision for income taxes
|
| | | | 55 | | | | | | 11 | | | |
(d)
|
| | | | 66 | | | | | | | | |
Net income
|
| | | | 39 | | | | | | 42 | | | | | | | | | 81 | | | | | | | | |
Less: Net income attributable to noncontrolling interest
|
| | | | — | | | | | | | | | | | | | | | — | | | | | | | | |
Net income attributable to Arconic Rolled Products Corporation
|
| | | $ | 39 | | | | | | 42 | | | | | | | | $ | 81 | | | | | | | | |
Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | $ | 0.71 | | | | | | (e) | | |
Diluted
|
| | | | | | | | | | | | | | | | | | $ | 0.71 | | | | | | (e) | | |
Weighted-average shares outstanding: | | | | | | | | | | | | | | | | | | | ||||||||||
Basic
|
| | | | | | | | | | | | | | | | | | | 112.7 | | | | | | (e) | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | 113.8 | | | | | | (e) | | |
For the year ended December 31, 2018
|
| |
As Reported
|
| |
Pro Forma
Adjustments |
| | | | |
Pro Forma
|
| | | | | | | |||||||||
Sales
|
| | | $ | 7,442 | | | | | | | | | | | | | | $ | 7,442 | | | | | | | | |
Cost of goods sold (exclusive of expenses below)
|
| | | | 6,549 | | | | | | (73) | | | |
(a)
|
| | | | 6,476 | | | | | | | | |
Selling, general administrative, and other expenses
|
| | | | 288 | | | | | | (10) | | | |
(a)
|
| | | | 278 | | | | | | | | |
Research and development expenses
|
| | | | 63 | | | | | | (1) | | | |
(a)
|
| | | | 62 | | | | | | | | |
Provision for depreciation and amortization
|
| | | | 272 | | | | | | | | | | | | | | | 272 | | | | | | | | |
Restructuring and other charges
|
| | | | (104) | | | | | | | | | | | | | | | (104) | | | | | | | | |
Operating income
|
| | | | 374 | | | | | | 84 | | | | | | | | | 458 | | | | | | | | |
Interest expense
|
| | | | 129 | | | | | | (61) | | | |
(c)
|
| | | | 68 | | | | | | | | |
Other expenses, net
|
| | | | 4 | | | | | | 93 | | | |
(a)
|
| | | | 97 | | | | | | | | |
Income before income taxes
|
| | | | 241 | | | | | | 52 | | | | | | | | | 293 | | | | | | | | |
Provision for income taxes
|
| | | | 71 | | | | | | 12 | | | |
(d)
|
| | | | 83 | | | | | | | | |
Net income
|
| | | | 170 | | | | | | 40 | | | | | | | | | 210 | | | | | | | | |
Less: Net income attributable to noncontrolling interest
|
| | | | — | | | | | | | | | | | | | | | — | | | | | | | | |
Net income attributable to Arconic Rolled Products Corporation
|
| | | $ | 170 | | | | | | 40 | | | | | | | | $ | 210 | | | | | | | | |
Earnings per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic
|
| | | | | | | | | | | | | | | | | | $ | 1.74 | | | | | | (e) | | |
Diluted
|
| | | | | | | | | | | | | | | | | | $ | 1.72 | | | | | | (e) | | |
Weighted-average shares outstanding: | | | | | | | | | | | | | | | | | | | ||||||||||
Basic
|
| | | | | | | | | | | | | | | | | | | 120.7 | | | | | | (e) | | |
Diluted
|
| | | | | | | | | | | | | | | | | | | 122.1 | | | | | | (e) | | |
September 30, 2019
|
| |
As Reported
|
| |
Pro Forma
Adjustments |
| | | | |
Pro Forma
|
| |||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 47 | | | | | | 353 | | | |
(c)
|
| | | $ | 400 | | |
Receivables from customers
|
| | | | 436 | | | | | | 386 | | | |
(f)
|
| | | | 822 | | |
Inventories
|
| | | | 877 | | | | | | | | | | | | | | | 877 | | |
Other current assets
|
| | | | 175 | | | | | | | | | | | | | | | 175 | | |
Total current assets
|
| | | | 1,535 | | | | | | 739 | | | | | | | | | 2,274 | | |
Properties, plants, and equipment, net
|
| | | | 2,711 | | | | | | | | | | | | | | | 2,711 | | |
Other noncurrent assets
|
| | | | 544 | | | | | | 290 | | | |
(c)(d)
|
| | | | 834 | | |
Total assets
|
| | | $ | 4,790 | | | | | | 1,029 | | | | | | | | $ | 5,819 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable, trade
|
| | | $ | 1,056 | | | | | | | | | | | | | | $ | 1,056 | | |
Environmental remediation
|
| | | | 77 | | | | | | 7 | | | |
(g)
|
| | | | 84 | | |
Other current liabilities
|
| | | | 206 | | | | | | 67 | | | |
(a)(c)
|
| | | | 273 | | |
Total current liabilities
|
| | | | 1,339 | | | | | | 74 | | | | | | | | | 1,413 | | |
Long-term debt
|
| | | | 250 | | | | | | 918 | | | |
(c)
|
| | | | 1,168 | | |
Accrued pension and other postretirement benefits
|
| | | | 51 | | | | | | 1,549 | | | |
(a)
|
| | | | 1,600 | | |
Environmental remediation
|
| | | | 152 | | | | | | 7 | | | |
(g)
|
| | | | 159 | | |
Other noncurrent liabilities
|
| | | | 258 | | | | | | (103) | | | |
(d)
|
| | | | 155 | | |
Total liabilities
|
| | | | 2,050 | | | | | | 2,445 | | | | | | | | | 4,495 | | |
Equity | | | | | | | | | | | | | | | | | | | | | | |
Common stock
|
| | | | — | | | | | | 1 | | | |
(h)
|
| | | | 1 | | |
Additional capital
|
| | | | — | | | | | | 2,468 | | | |
(h)
|
| | | | 2,468 | | |
Parent Company net investment
|
| | | | 2,416 | | | | | | (2,416) | | | |
(i)
|
| | | | — | | |
Accumulated other comprehensive income (loss)
|
| | | | 310 | | | | | | (1,469) | | | |
(a)(d)
|
| | | | (1,159) | | |
Sub-total equity
|
| | | | 2,726 | | | | | | (1,416) | | | | | | | | | 1,310 | | |
Noncontrolling interest
|
| | | | 14 | | | | | | | | | | | | | | | 14 | | |
Total equity
|
| | | | 2,740 | | | | | | (1,416) | | | | | | | | | 1,324 | | |
Total liabilities and equity
|
| | | $ | 4,790 | | | | | | 1,029 | | | | | | | | $ | 5,819 | | |
| | |
For the nine months ended
September 30, 2019 |
| |
For the year ended
December 31, 2018 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
COGS(1)
|
| |
SG&A(1)
|
| |
R&D(1)
|
| |
Other
expenses, net |
| |
Pretax
income |
| |
COGS(1)
|
| |
SG&A(1)
|
| |
R&D(1)
|
| |
Other
expenses, net |
| |
Pretax
income |
| ||||||||||||||||||||||||||||||
Pro forma adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Removal of corporate allocation
|
| | | $ | (10) | | | | | $ | (10) | | | | | $ | (1) | | | | | $ | — | | | | | $ | 21 | | | | | $ | (14) | | | | | $ | (11) | | | | | $ | (2) | | | | | $ | — | | | | | $ | 27 | | |
Addition of corporate expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | 28 | | | | | | (28) | | | | | | — | | | | | | 1 | | | | | | 1 | | | | | | 34 | | | | | | (36) | | |
Reclassification of nonservice cost(2)
|
| | | | (46) | | | | | | — | | | | | | — | | | | | | 46 | | | | | | — | | | | | | (59) | | | | | | — | | | | | | — | | | | | | 59 | | | | | | — | | |
| | | | $ | (56) | | | | | $ | (10) | | | | | $ | (1) | | | | | $ | 74 | | | | | $ | (7) | | | | | $ | (73) | | | | | $ | (10) | | | | | $ | (1) | | | | | $ | 93 | | | | | $ | (9) | | |
| | |
For the nine months ended
September 30, 2019 |
| |
For the year ended
December 31, 2018 |
| ||||||||||||||||||||||||||||||
| | |
Gross
expense |
| |
Amount
capitalized |
| |
Net
expense |
| |
Gross
expense |
| |
Amount
capitalized |
| |
Net
expense |
| ||||||||||||||||||
As reported
|
| | | $ | 95 | | | | | $ | 9 | | | | | $ | 86 | | | | | $ | 138 | | | | | $ | 9 | | | | | $ | 129 | | |
Pro forma adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Removal of cost allocation
|
| | | | (86) | | | | | | — | | | | | | (86) | | | | | | (125) | | | | | | — | | | | | | (125) | | |
Removal of Davenport Bond
|
| | | | (9) | | | | | | — | | | | | | (9) | | | | | | (12) | | | | | | — | | | | | | (12) | | |
New indebtedness
|
| | | | 58 | | | | | | — | | | | | | 58 | | | | | | 76 | | | | | | — | | | | | | 76 | | |
| | | | | (37) | | | | | | — | | | | | | (37) | | | | | | (61) | | | | | | — | | | | | | (61) | | |
Pro forma
|
| | | $ | 58 | | | | | $ | 9 | | | | | $ | 49 | | | | | $ | 77 | | | | | $ | 9 | | | | | $ | 68 | | |
|
|
| |
Transportation consumption 2019: 4,761 and 2023: 6,161 CAGR 6.7%
|
|
Key Markets
|
| |
Key Customers
|
|
Ground Transportation | | | Ford, FCA, General Motors, Daimler, Paccar, Entrans/Heil | |
Aerospace | | | Boeing, Airbus, Spirit AeroSystems, Embraer | |
Building and Construction | | | Fabricators, installers, architects and developers around the world | |
Industrial | | | Ryerson, Thyssenkrupp MA, Reliance, Kloeckner, Champagne Metals | |
Packaging | | | Ball, CANPACK | |
Country
|
| |
Location
|
| |
Products
|
|
Brazil | | | Itapissuma(1) | | | Specialty Foil | |
China | | | Kunshan | | | Sheet and Plate | |
| | | Qinhuangdao(2) | | | Sheet and Plate | |
Hungary | | | Székesfehérvár | | | Sheet and Plate/Slabs and Billets | |
Russia | | | Samara | | |
Sheet and Plate/Extrusions and Forgings
|
|
United Kingdom
|
| | Birmingham | | | Plate | |
United States | | | Davenport, IA | | | Sheet and Plate | |
| | | Danville, IL | | | Sheet and Plate | |
| | | Hutchinson, KS | | | Sheet and Plate | |
| | | Lancaster, PA | | | Sheet and Plate | |
| | | Alcoa, TN | | | Sheet | |
| | |
San Antonio, TX(3)
|
| | Sheet | |
Country
|
| |
Location
|
| |
Products
|
|
Germany | | | Hannover(1) | | | Extrusions | |
United States
|
| | Massena, NY | | | Extrusions | |
| | | Lafayette, IN | | | Extrusions | |
| | |
Halethorpe, MD(1)
|
| | Extrusions | |
| | | Chandler, AZ(1) | | | Extrusions | |
Country
|
| |
Location
|
| |
Products
|
|
Canada | | |
Lethbridge, Alberta
|
| |
Architectural Products and Systems
|
|
France | | | Merxheim(1) | | | Architectural Products | |
United Kingdom
|
| | Runcorn | | |
Architectural Products and Systems
|
|
United States | | | Springdale, AR | | |
Architectural Products and Systems
|
|
| | | Visalia, CA | | |
Architectural Products and Systems
|
|
| | | Eastman, GA | | | Architectural Products | |
| | | Bloomsburg, PA | | |
Architectural Products and Systems
|
|
| | | Cranberry, PA | | |
Architectural Products and Systems
|
|
| | |
For the Years Ended December 31,
|
| |||||||||||||||
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Flat-rolled aluminum
|
| | | | 77% | | | | | | 75% | | | | | | 75% | | |
Architectural aluminum systems
|
| | | | 15% | | | | | | 16% | | | | | | 16% | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Cost of goods sold(1)
|
| | | $ | 11 | | | | | $ | 35 | | | | | $ | 30 | | |
Selling, general administrative, and other expenses(2)
|
| | | | 56 | | | | | | 120 | | | | | | 141 | | |
Research and development expenses
|
| | | | 24 | | | | | | 28 | | | | | | 33 | | |
Provision for depreciation and amortization
|
| | | | 10 | | | | | | 10 | | | | | | 8 | | |
Restructuring and other charges(3)
|
| | | | 50 | | | | | | 6 | | | | | | 9 | | |
Interest expense
|
| | | | 125 | | | | | | 162 | | | | | | 94 | | |
Other expenses (income), net(4)
|
| | | | (12) | | | | | | (285) | | | | | | (11) | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Third-party sales*
|
| | | $ | 5,731 | | | | | $ | 5,125 | | | | | $ | 4,996 | | |
Intersegment sales
|
| | | | 15 | | | | | | 15 | | | | | | 9 | | |
Total sales
|
| | | $ | 5,746 | | | | | $ | 5,140 | | | | | $ | 5,005 | | |
Segment operating profit
|
| | | $ | 328 | | | | | $ | 384 | | | | | $ | 374 | | |
Third-party aluminum shipments (kmt)*
|
| | | | 1,309 | | | | | | 1,257 | | | | | | 1,400 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Third-party sales*
|
| | | $ | 546 | | | | | $ | 518 | | | | | $ | 551 | | |
Segment operating profit
|
| | | $ | 1 | | | | | $ | 34 | | | | | $ | 74 | | |
Third-party aluminum shipments (kmt)*
|
| | | | 59 | | | | | | 59 | | | | | | 57 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Third-party sales
|
| | | $ | 1,140 | | | | | $ | 1,066 | | | | | $ | 1,011 | | |
Segment operating profit
|
| | | $ | 91 | | | | | $ | 82 | | | | | $ | 86 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Total segment operating profit
|
| | | $ | 420 | | | | | $ | 500 | | | | | $ | 534 | | |
Unallocated amounts: | | | | | | | | | | | | | | | | | | | |
Cost allocations(1)
|
| | | | (101) | | | | | | (193) | | | | | | (212) | | |
Restructuring and other charges(2)
|
| | | | 104 | | | | | | (133) | | | | | | (67) | | |
Other
|
| | | | (49) | | | | | | (42) | | | | | | 1 | | |
Combined operating income
|
| | | $ | 374 | | | | | $ | 132 | | | | | $ | 256 | | |
Interest expense(2)
|
| | | | (129) | | | | | | (168) | | | | | | (97) | | |
Other (expenses) income, net(2)
|
| | | | (4) | | | | | | 287 | | | | | | 9 | | |
Combined income before income taxes
|
| | | $ | 241 | | | | | $ | 251 | | | | | $ | 168 | | |
|
| | |
Total
|
| |
2019
|
| |
2020 – 2021
|
| |
2022 – 2023
|
| |
Thereafter
|
| |||||||||||||||
Operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Raw material purchase obligations
|
| | | $ | 324 | | | | | $ | 316 | | | | | $ | 8 | | | | | $ | — | | | | | $ | — | | |
Energy-related purchase obligations
|
| | | | 67 | | | | | | 33 | | | | | | 28 | | | | | | 6 | | | | | | — | | |
Other purchase obligations
|
| | | | 19 | | | | | | 4 | | | | | | 7 | | | | | | 6 | | | | | | 2 | | |
Operating leases
|
| | | | 158 | | | | | | 34 | | | | | | 50 | | | | | | 31 | | | | | | 43 | | |
Interest related to debt
|
| | | | 285 | | | | | | 12 | | | | | | 24 | | | | | | 24 | | | | | | 225 | | |
Estimated minimum required pension funding
|
| | | | 12 | | | | | | 3 | | | | | | 6 | | | | | | 3 | | | | | | — | | |
Other postretirement benefit payments
|
| | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | |
Layoff and other restructuring payments
|
| | | | 4 | | | | | | 4 | | | | | | — | | | | | | — | | | | | | — | | |
Deferred revenue arrangements
|
| | | | 18 | | | | | | 12 | | | | | | 6 | | | | | | — | | | | | | — | | |
Uncertain tax positions
|
| | | | 18 | | | | | | — | | | | | | — | | | | | | — | | | | | | 18 | | |
Financing activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Debt
|
| | | | 250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 250 | | |
Investing activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital projects
|
| | | | 207 | | | | | | 155 | | | | | | 52 | | | | | | — | | | | | | — | | |
Totals
|
| | | $ | 1,363 | | | | | $ | 573 | | | | | $ | 181 | | | | | $ | 70 | | | | | $ | 539 | | |
| | | | | |
Pension benefits
|
| |
Other postretirement
benefits |
| ||||||||||||||||||||||||||||||
| | | | | |
For the year ended
December 31, |
| |
For the year ended
December 31, |
| ||||||||||||||||||||||||||||||
Type of Plan
|
| |
Type of Expense
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2018
|
| |
2017
|
| |
2016
|
| ||||||||||||||||||
Direct Plans
|
| | Net periodic benefit cost* | | | | $ | 5 | | | | | $ | 5 | | | | | $ | 5 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Shared Plans
|
| |
Multiemployer contribution expense
|
| | | | 67 | | | | | | 82 | | | | | | 78 | | | | | | 21 | | | | | | 20 | | | | | | 23 | | |
Shared Plans
|
| | Cost allocation | | | | | 20 | | | | | | 39 | | | | | | 31 | | | | | | 5 | | | | | | 4 | | | | | | 8 | | |
| | | | | | | $ | 92 | | | | | $ | 126 | | | | | $ | 114 | | | | | $ | 26 | | | | | $ | 24 | | | | | $ | 31 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Cost of goods sold(1)
|
| | | $ | 11 | | | | | $ | 9 | | |
Selling, general administrative, and other expenses(2)
|
| | | | 80 | | | | | | 49 | | |
Research and development expenses
|
| | | | 8 | | | | | | 18 | | |
Provision for depreciation and amortization
|
| | | | 9 | | | | | | 7 | | |
Restructuring and other charges
|
| | | | 5 | | | | | | (3) | | |
Interest expense
|
| | | | 86 | | | | | | 95 | | |
Other expenses (income), net
|
| | | | 4 | | | | | | (4) | | |
| | |
Nine months ended
September 30, |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Third-party sales*
|
| | | $ | 4,294 | | | | | $ | 4,333 | | |
Intersegment sales
|
| | | | 20 | | | | | | 12 | | |
Total sales
|
| | | $ | 4,314 | | | | | $ | 4,345 | | |
Segment operating profit
|
| | | $ | 346 | | | | | $ | 268 | | |
Third-party aluminum shipments (kmt)*
|
| | | | 1,058 | | | | | | 986 | | |
| | |
Nine months ended
September 30, |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Third-party sales*
|
| | | $ | 420 | | | | | $ | 409 | | |
Segment operating profit
|
| | | $ | (29) | | | | | $ | 2 | | |
Third-party aluminum shipments (kmt)*
|
| | | | 45 | | | | | | 46 | | |
| | |
Nine months ended
September 30, |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Third-party sales
|
| | | $ | 855 | | | | | $ | 866 | | |
Segment operating profit
|
| | | $ | 89 | | | | | $ | 74 | | |
For the nine-months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Total segment operating profit
|
| | | $ | 406 | | | | | $ | 344 | | |
Unallocated amounts: | | | | ||||||||||
Cost allocations(1)
|
| | | | (108) | | | | | | (83) | | |
Restructuring and other charges(2)
|
| | | | (104) | | | | | | — | | |
Other
|
| | | | (18) | | | | | | (49) | | |
Combined operating income
|
| | | $ | 176 | | | | | $ | 212 | | |
Interest expense(2)
|
| | | | (86) | | | | | | (99) | | |
Other income (expenses), net(2)
|
| | | | 4 | | | | | | (9) | | |
Combined income before income taxes
|
| | | $ | 94 | | | | | $ | 104 | | |
Name
|
| |
Age
|
| |
Position
|
|
| | | | ||||
Timothy D. Myers | | |
54
|
| | Chief Executive Officer | |
Erick R. Asmussen | | |
53
|
| | Chief Financial Officer | |
Mary Zik | | |
48
|
| | Controller | |
Diana C. Toman | | |
41
|
| | Chief Legal Officer | |
Name
|
| |
Age
|
| |
Position
|
|
Frederick “Fritz” A. Henderson
|
| |
61
|
| | Chairman | |
Timothy D. Myers | | |
54
|
| | Director and Chief Executive Officer | |
William F. Austen | | |
61
|
| | Director | |
Christopher L. Ayers | | |
53
|
| | Director | |
Margaret “Peg” S. Billson | | |
58
|
| | Director | |
Austin G. Camporin | | |
37
|
| | Director | |
Jacques Croisetiere | | |
65
|
| | Director | |
Elmer L. Doty | | |
65
|
| | Director | |
Carol S. Eicher | | |
61
|
| | Director | |
E. Stanley O’Neal | | |
68
|
| | Director | |
Jeffrey Stafeil | | |
50
|
| | Director | |
| | |
Audit
|
| |
Compensation
and Benefits |
| |
Finance
|
| |
Governance
and Nominating |
|
William F. Austen*
|
| |
✓
|
| |
Chair
|
| |
✓
|
| | | |
Christopher L. Ayers*
|
| |
✓
|
| | | | |
✓
|
| | | |
Margaret “Peg” S. Billson*
|
| | | | |
✓
|
| | | | | | |
Austin G. Camporin*
|
| | | | | | | |
✓
|
| | | |
Jacques Croisetiere*
|
| |
Chair
|
| | | | |
Chair
|
| | | |
Elmer L. Doty
|
| | | | | ||||||||
Carol S. Eicher*
|
| | | | | | | | | | |
✓
|
|
Frederick “Fritz” A. Henderson*
|
| | | | | | | | | | |
✓
|
|
Timothy D. Myers
|
| | | | | | | | | | | | |
E. Stanley O’Neal*
|
| | | | |
✓
|
| | | | |
Chair
|
|
Jeffrey Stafeil*
|
| |
✓
|
| | | | |
✓
|
| | | |
|
Compensation and Benefits Committee
|
| |
•
Establishes the Chief Executive Officer’s compensation for Board ratification, based upon an evaluation of performance in light of approved goals and objectives
•
Reviews and approves the compensation of Arconic Corporation’s officers
•
Oversees the implementation and administration of Arconic Corporation’s compensation and benefits plans, including pension, savings, incentive compensation and equity-based plans
•
Reviews and approves general compensation and benefit policies
•
Approves the Compensation Discussion and Analysis for inclusion in the proxy statement
•
Has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement
|
|
|
Finance Committee
|
| | Reviews and provides advice and counsel to the Board regarding Arconic Corporation’s: | |
| | | |
•
capital structure;
•
financing transactions;
•
capital expenditures and capital plan;
•
acquisitions and divestitures;
•
share repurchase and dividend programs;
•
policies relating to interest rate, commodity and currency hedging; and
•
employee retirement plan performance and funding.
|
|
|
Governance and Nominating Committee
|
| |
•
Identifies individuals qualified to become Board members and recommends them to the full Board for consideration, including evaluating all potential candidates, whether initially recommended by management, other Board members or stockholders
•
Reviews and makes recommendations to the Board regarding the appropriate structure and operations of the Board and Board committees
•
Makes recommendations to the Board regarding Board committee assignments
•
Develops and annually reviews corporate governance guidelines for the Company, and oversees other corporate governance matters
•
Reviews related person transactions
•
Oversees an annual performance review of the Board, Board committees and individual director nominees
•
Periodically reviews and makes recommendations to the Board regarding director compensation
|
|
|
Compensation Type
|
| |
Guiding Principle
|
|
| Base Salary | | | Target total direct compensation, including salary, at median of market to provide competitive pay | |
| Short-Term Annual Incentive Compensation | | |
Choose annual IC weighted metrics that focus management’s actions on achieving greatest positive impact on ParentCo’s financial performance and that include a means to assess and motivate performance relative to peers
Set annual IC targets that challenge management to achieve continuous improvement as part of an overall strategy to deliver long-term growth
Take into account individual performance that may include non-financial measures of the success of ParentCo
|
|
| Long-Term Incentive Compensation | | |
Make LTI equity the most significant portion of total compensation for senior executives and managers
Set LTI target grant levels in line with median among industry peers that are competitive to attract, retain and motivate executives and factor in individual performance and future potential for long-term retention
In prior years, ParentCo has granted a portion of each ParentCo named executive officer’s LTI awards as performance-based restricted share units, choosing performance metrics that focus management’s actions on achieving the greatest positive impact on ParentCo’s financial performance and that include a means to assess and motivate performance relative to peers and setting targets that challenge management to achieve continuous improvement in performance and deliver long-term growth. However, in anticipation of the separation and given the difficulty of continuing to measure multi-year performance goals after the separation, 100% of the full value LTI awards granted to ParentCo named executive officers in 2019 (other than the ParentCo chief executive officer, who received certain performance-based restricted share units in connection with the extension of his employment agreement) are in the form of time-based vesting restricted share units.
|
|
| Alcoa Corp. | | | Spirit AeroSystems | |
| U.S. Steel | | | TransDigm Group | |
| Reliance Steel & Aluminum | | | Triumph Group | |
| AK Steel Holding | | | Oshkosh | |
| Commercial Metals | | | Terex Corp. | |
| Allegheny Technologies | | | AGCO Corp. | |
| Olin Corp. | | | Stanley Black & Decker | |
| The Chemours Co. | | | Dover Corp. | |
| Ball Corp. | | | Flowserve Corp. | |
| Harris | | | AMETEK | | | Worthington Industries | |
| L3 Technologies | | | General Cable | | | Xylem | |
| Rockwell Collins | | | TE Connectivity | | | CSX | |
| SAIC | | | Ameren | | | Norfolk Southern | |
| Spirit AeroSystems | | | AVANGRID | | | Agilent Technologies | |
| Textron | | | CMS Energy | | | Boston Scientific | |
| Triumph Group | | | Eversource Energy | | | Zimmer Biomet | |
| Air Products and Chemicals | | | PPL | | | Alcoa | |
| Axalta Coating Systems | | | UGI | | | Allegheny Technologies | |
| Chemours Company | | | Vistra Energy | | | Commercial Metals | |
| Eastman Chemical | | | WEC Energy Group | | | Newmont Mining | |
| Ecolab | | | Williams Companies | | | Peabody Energy | |
| Mosaic | | | Ball | | | United States Steel | |
| Praxair | | | Crown Holdings | | | CVR Energy | |
| Westlake Chemical | | | Fortive Corporation | | | DCP Midstream | |
| EMCOR Group | | |
Goodyear Tire & Rubber
|
| | EnLink Midstream | |
| Jacobs Engineering | | | Greif | | | Occidental Petroleum | |
|
Fortune Brands Home & Security
|
| | Ingersoll Rand | | | ONEOK | |
| Masco | | | Owens Corning | | | BorgWarner | |
| Newell Brands | | | Parker Hannifin | | |
Cooper Standard Automotive
|
|
| Polaris Industries | | | Rockwell Automation | | | Dana | |
| Sonoco Products | | | Snap-on Inc. | | | Harley-Davidson | |
| Avery Dennison | | |
Stanley Black & Decker
|
| | Oshkosh | |
| Berry Plastics | | | Terex | | | Tenneco | |
| Clorox | | | Timken | | | Trinity Industries | |
| PVH Corp. | | | Vulcan Materials | | | | |
Arconic Corporation Named Executive Officer
|
| |
Base Salary
|
| |||
Timothy D. Myers, Chief Executive Officer
|
| | | $ | 850,000 | | |
|
Arconic Corporation Named Executive Officer
|
| |
Annual Incentive Compensation Opportunity
|
|
| Timothy D. Myers, Chief Executive Officer | | |
125% of base salary
|
|
Arconic Corporation Named
Executive Officer |
| |
Grant Date Value of
2020 Time-Based Annual LTI Award |
| |
Grant Date Value of
2020 Performance-Based Annual LTI Award (at Target) |
| ||||||
Timothy D. Myers, Chief Executive Officer
|
| | | $ | 1,720,000(1) | | | | | $ | 2,580,000(2) | | |
Name and Principal
Position |
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) |
| |
Stock
Awards ($) |
| |
Option
Awards ($) |
| |
Non-Equity
Incentive Plan Compensation ($) |
| |
Change in
Pension Value and Non- Qualified Deferred Compensation Earnings ($) |
| |
All Other
Compensation ($) |
| |
Total
($) |
| |||||||||||||||||||||||||||
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
| |
(i)
|
| |
(j)
|
| |||||||||||||||||||||||||||
Timothy D. Myers(1)
Chief Executive Officer |
| | |
|
2019
|
| | | |
$
|
574,333
|
| | | |
$
|
0
|
| | | |
$
|
1,200,001
|
| | | |
$
|
0
|
| | | |
$
|
861,500
|
| | | |
$
|
657,119
|
| | | |
$
|
58,705
|
| | | |
$
|
3,351,658
|
| |
| | | 2018 | | | | | $ | 542,500 | | | | | $ | 0 | | | | | $ | 1,056,189 | | | | | $ | 264,036 | | | | | $ | 233,818 | | | | | $ | 0 | | | | | $ | 57,120 | | | | | $ | 2,153,663 | | | ||
| | | 2017 | | | | | $ | 436,250 | | | | | $ | 0 | | | | | $ | 949,308 | | | | | $ | 228,052 | | | | | $ | 396,356 | | | | | $ | 516,994 | | | | | $ | 19,333 | | | | | $ | 2,546,293 | | |
| | |
Company Matching Contribution
|
| |
3% Retirement Contribution
|
| |
Total Company
Contribution |
| |||||||||||||||||||||
Name
|
| |
Savings Plan
|
| |
Def. Comp. Plan
|
| |
Savings Plan1
|
| |
Def. Comp. Plan
|
| ||||||||||||||||||
Timothy D. Myers
|
| | | $ | 16,800 | | | | | $ | 17,660 | | | | | $ | 8,400 | | | | | $ | 15,844 | | | | | $ | 58,705 | | |
| | | | | | | | |
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1) |
| |
All Other
Stock Awards: Number of Shares of Stock or Units(2) (#) |
| |
2019 Grant
Date Fair Value of Stock and Option Awards ($) |
| |||||||||||||||||||||
Name
|
| |
Grant Dates
|
| |
Threshold ($)
|
| |
Target ($)
|
| |
Maximum ($)
|
| | | | | | | | | | | | | ||||||||||||
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(i)
|
| |
(l)
|
| ||||||||||||||||||
Timothy D. Myers
|
| | | | | | | | | $ | 287,167 | | | | | $ | 574,333 | | | | | $ | 1,723,000 | | | | | | | | | | | | | | |
| | | | | 2/28/2019 | | | | | | | | | | | | | | | | | | | | | | | | 64,900 | | | | | $ | 1,200,001 | | |
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Name
|
| |
Number of
Securities Underlying Unexercised Options (Exercisable) (#) |
| |
Number of
Securities Underlying Unexercised Options (Unexercisable) (#) |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number
of Shares or Units of Stock That Have Not Vested (#) |
| |
Market
Value of Shares or Units of Stock That Have Not Vested ($) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| |||||||||||||||||||||||||||
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
| |
(i)
|
| |
(j)
|
| |||||||||||||||||||||||||||
Timothy D. Myers
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 132,780 | | | | | | 4,085,641 | | | | | | — | | | | | | — | | |
Time-Vested Options2
|
| | | | 12,144 | | | | | | 12,143 | | | | | | — | | | | | $ | 21.13 | | | | | | 1/13/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | 8,990 | | | | | | 17,980 | | | | | | — | | | | | $ | 30.22 | | | | | | 1/19/2028 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||
Name
|
| |
Number of Shares
Acquired on Exercise (#) |
| |
Value Realized
on Exercise ($) |
| |
Number of Shares
Acquired on Vesting (#) |
| |
Value Realized
on Vesting ($) |
| ||||||||||||
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| ||||||||||||
Timothy D. Myers
|
| | | | 31,502 | | | | | $ | 192,134 | | | | | | 18,487 | | | | | $ | 315,943 | | |
Name(1)
|
| |
Plan Name(s)
|
| |
Years of
Credited Service |
| |
Present Value of
Accumulated Benefits |
| |
Payments During
Last Fiscal Year |
| |||||||||
Timothy D. Myers
|
| |
ParentCo Retirement Plan
|
| | | | 26.52 | | | | | $ | 1,213,338 | | | | | | | | |
| | |
Excess Benefits Plan C
|
| | | | | | | | | $ | 1,661,316 | | | | | | | | |
| | |
Total
|
| | | | | | | | |
$
|
2,874,654
|
| | | | | N/A | | |
Name
|
| |
Executive
Contributions in 2019 ($) |
| |
Registrant
Contributions in 2019 ($) |
| |
Aggregate
Earnings in 2019 ($) |
| |
Aggregate
Withdrawals Distributions ($) |
| |
Aggregate
Balance at 12/31/2019 FYE ($) |
| |||||||||||||||
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |||||||||||||||
| | | | | | | | | | | | | | | | $ | 272,235 E | | | | | | | | | | | | | | |
Timothy D. Myers
|
| | | $ | 17,660 | | | | | $ | 33,505 | | | | | $ | 2,169 D | | | | | | — | | | | | $ | 680,629 | | |
Name
|
| |
Estimated Net
Present Value of Cash Severance Payments |
| |
Estimated Net
Present Value of Two Years Additional Retirement Accrual |
| |
Estimated net
present value of continued active health care benefits |
| |
Total
|
| ||||||||||||
Timothy D. Myers
|
| | | $ | 1,138,237 | | | | | $ | 1,377,103 | | | | | $ | 41,664 | | | | | $ | 2,557,004 | | |
Name
|
| |
Estimated net present value of change
in control severance and benefits |
| |||
Timothy D. Myers
|
| | | $ | 6,092,905 | | |
Compensation Element
|
| |
Amount
|
| |||
Annual Cash Retainer
|
| | | $ | 120,000 | | |
Annual Equity Award (Restricted Share Units Granted Following Each Annual Meeting of Stockholders)
|
| | | $ | 150,000 | | |
Other Annual Fees
|
| | | | | | |
•
Lead Director Fee
|
| | | $ | 30,000 | | |
•
Audit Committee Chair Fee (includes Audit Committee Member Fee)
|
| | | $ | 20,000 | | |
•
Compensation and Benefits Committee Chair Fee
|
| | | $ | 15,000 | | |
•
Other Committee Chair Fee
|
| | | $ | 15,000 | | |
Per Meeting Fee for Meetings in Excess of Regularly Scheduled Meetings
|
| | | $ | 1,2001 | | |
Name and Address of Beneficial Owner
|
| |
Amount and Nature of Beneficial
Ownership |
| |
Percent of Class
|
| ||||||
The Vanguard Group
100 Vanguard Boulevard Malvern, PA 19355 |
| | | | 11,529,889(1) | | | | | | 10.17% | | |
Elliott Investment Management L.P.
40 West 57th Street New York, NY 10019 |
| | | | 10,391,414(2) | | | | | | 9.6% | | |
BlackRock, Inc.
55 East 52nd Street New York, NY 10055 |
| | | | 8,479,035(3) | | | | | | 7.8% | | |
Orbis Investment Management Limited
Orbis House 25 Front Street Hamilton, Bermuda HM11 |
| | | | 7,221,179(4) | | | | | | 6.65% | | |
Orbis Investment Management (U.S.), L.P.
600 Montgomery Street, Suite 3800 San Francisco, CA 94111 |
| | | | | | | | | | | | |
First Pacific Advisors, LP
J. Richard Atwood Steven T. Romick 11601 Wilshire Blvd., Suite 1200 Los Angeles, CA 90025 |
| | | | 6,547,112(5) | | | | | | 6.03% | | |
Name of Beneficial Owner
|
| |
Shares of
Common Stock(1) |
| |
Deferred Share
Units(2) |
| |
Deferred
Restricted Share Units(3) |
| |
Total
|
| ||||||||||||
Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
William F. Austen
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Christopher L. Ayers
|
| | | | 1,875 | | | | | | 7,310 | | | | | | — | | | | | | 9,185 | | |
Margaret “Peg” S. Billson
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Austin G. Camporin
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Jacques Croisetiere
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Elmer L. Doty(4)
|
| | | | 17,670 | | | | | | 4,321 | | | | | | — | | | | | | 21,991 | | |
Carol S. Eicher
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Frederick “Fritz” A. Henderson
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
E. Stanley O’Neal
|
| | | | — | | | | | | 10,418 | | | | | | 11,717 | | | | | | 22,135 | | |
Jeffrey Stafeil
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | |
Erick R. Asmussen
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | |
Timothy D. Myers*
|
| | | | 27,922 | | | | | | 5,139 | | | | | | 24,744 | | | | | | 57,805 | | |
Diana C. Toman
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | |
Mary Zik
|
| | | | 1,624 | | | | | | — | | | | | | 2,820 | | | | | | 4,444 | | |
All directors and executive officers as a group
(14 persons) |
| | | | 49,091 | | | | | | 27,188 | | | | | | 39,281 | | | | | | 115,560 | | |
| | |
Page
|
| |||
Audited Combined Financial Statements | | | | | | | |
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
Unaudited Combined Financial Statements | | | | | | | |
| | | | F-44 | | | |
| | | | F-45 | | | |
| | | | F-46 | | | |
| | | | F-47 | | | |
| | | | F-48 | | | |
| | | | F-49 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Sales to unrelated parties
|
| | | $ | 7,236 | | | | | $ | 6,642 | | | | | $ | 6,481 | | |
Sales to related parties (A)
|
| | | | 206 | | | | | | 182 | | | | | | 180 | | |
Total Sales (C and D)
|
| | | | 7,442 | | | | | | 6,824 | | | | | | 6,661 | | |
Cost of goods sold (exclusive of expenses below)
|
| | | | 6,549 | | | | | | 5,866 | | | | | | 5,602 | | |
Selling, general administrative, and other expenses
|
| | | | 288 | | | | | | 361 | | | | | | 396 | | |
Research and development expenses
|
| | | | 63 | | | | | | 66 | | | | | | 83 | | |
Provision for depreciation and amortization
|
| | | | 272 | | | | | | 266 | | | | | | 257 | | |
Restructuring and other charges (E)
|
| | | | (104) | | | | | | 133 | | | | | | 67 | | |
Operating income
|
| | | | 374 | | | | | | 132 | | | | | | 256 | | |
Interest expense (F)
|
| | | | 129 | | | | | | 168 | | | | | | 97 | | |
Other expenses (income), net (G)
|
| | | | 4 | | | | | | (287) | | | | | | (9) | | |
Income before income taxes
|
| | | | 241 | | | | | | 251 | | | | | | 168 | | |
Provision for income taxes (I)
|
| | | | 71 | | | | | | 42 | | | | | | 13 | | |
Net income
|
| | | | 170 | | | | | | 209 | | | | | | 155 | | |
Less: Net income attributable to noncontrolling interests
|
| | | | — | | | | | | — | | | | | | — | | |
Net income attributable to Arconic Rolled Products Corporation
|
| | | $ | 170 | | | | | $ | 209 | | | | | $ | 155 | | |
| | |
Arconic Rolled Products
Corporation |
| |
Noncontrolling
interests |
| |
Total
|
| |||||||||||||||||||||||||||||||||||||||||||||
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||||||||||||||
Net income
|
| | | $ | 170 | | | | | $ | 209 | | | | | $ | 155 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 170 | | | | | $ | 209 | | | | | $ | 155 | | |
Other comprehensive (loss) income, net
of tax (K): |
| | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits
|
| | | | 4 | | | | | | (4) | | | | | | (4) | | | | | | — | | | | | | — | | | | | | — | | | | | | 4 | | | | | | (4) | | | | | | (4) | | |
Foreign currency translation adjustments
|
| | | | (164) | | | | | | (214) | | | | | | 334 | | | | | | — | | | | | | 2 | | | | | | (1) | | | | | | (164) | | | | | | (212) | | | | | | 333 | | |
Total Other comprehensive (loss) income, net of tax
|
| | | | (160) | | | | | | (218) | | | | | | 330 | | | | | | — | | | | | | 2 | | | | | | (1) | | | | | | (160) | | | | | | (216) | | | | | | 329 | | |
Comprehensive income (loss)
|
| | | $ | 10 | | | | | $ | (9) | | | | | $ | 485 | | | | | $ | — | | | | | $ | 2 | | | | | $ | (1) | | | | | $ | 10 | | | | | $ | (7) | | | | | $ | 484 | | |
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 81 | | | | | $ | 126 | | |
Receivables from customers, less allowances of $2 in 2018 and $5 in 2017(A)
|
| | | | 408 | | | | | | 423 | | |
Other receivables
|
| | | | 127 | | | | | | 123 | | |
Inventories (L)
|
| | | | 818 | | | | | | 804 | | |
Prepaid expenses and other current assets
|
| | | | 42 | | | | | | 64 | | |
Total current assets
|
| | | | 1,476 | | | | | | 1,540 | | |
Properties, plants, and equipment, net (M)
|
| | | | 2,861 | | | | | | 2,861 | | |
Goodwill (N)
|
| | | | 385 | | | | | | 394 | | |
Deferred income taxes (I)
|
| | | | 15 | | | | | | 26 | | |
Other noncurrent assets
|
| | | | 58 | | | | | | 81 | | |
Total assets
|
| | | $ | 4,795 | | | | | $ | 4,902 | | |
Liabilities | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable, trade
|
| | | $ | 1,165 | | | | | $ | 958 | | |
Accrued compensation and retirement costs
|
| | | | 66 | | | | | | 74 | | |
Taxes, including income taxes
|
| | | | 37 | | | | | | 51 | | |
Environmental remediation (S)
|
| | | | 69 | | | | | | 30 | | |
Other current liabilities
|
| | | | 56 | | | | | | 77 | | |
Total current liabilities
|
| | | | 1,393 | | | | | | 1,190 | | |
Long-term debt (O)
|
| | | | 250 | | | | | | 250 | | |
Deferred income taxes (I)
|
| | | | 82 | | | | | | 92 | | |
Accrued pension and other postretirement benefits (H)
|
| | | | 55 | | | | | | 59 | | |
Environmental remediation (S)
|
| | | | 170 | | | | | | 236 | | |
Other noncurrent liabilities and deferred credits (P)
|
| | | | 168 | | | | | | 68 | | |
Total liabilities
|
| | | | 2,118 | | | | | | 1,895 | | |
Contingencies and commitments (S)
|
| | | | | | | | | | | | |
Equity | | | | | | | | | | | | | |
Parent Company net investment (A)
|
| | | | 2,415 | | | | | | 2,584 | | |
Accumulated other comprehensive income (K)
|
| | | | 250 | | | | | | 410 | | |
Sub-total equity
|
| | | | 2,665 | | | | | | 2,994 | | |
Noncontrolling interests
|
| | | | 12 | | | | | | 13 | | |
Total equity
|
| | | | 2,677 | | | | | | 3,007 | | |
Total liabilities and equity
|
| | | $ | 4,795 | | | | | $ | 4,902 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Operating Activities | | | | | | | | | | | | | | | | | | | |
Net income
|
| | | $ | 170 | | | | | $ | 209 | | | | | $ | 155 | | |
Adjustments to reconcile net income to cash provided from operations: | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 272 | | | | | | 266 | | | | | | 257 | | |
Deferred income taxes (I)
|
| | | | (4) | | | | | | 29 | | | | | | (31) | | |
Restructuring and other charges (E)
|
| | | | (104) | | | | | | 133 | | | | | | 67 | | |
Net loss (gain) from investing activities — asset sales (G)
|
| | | | 4 | | | | | | (267) | | | | | | 3 | | |
Net periodic pension benefit cost (H)
|
| | | | 5 | | | | | | 5 | | | | | | 5 | | |
Stock-based compensation (J)
|
| | | | 22 | | | | | | 30 | | | | | | 26 | | |
Other
|
| | | | 1 | | | | | | (2) | | | | | | 7 | | |
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
|
| | | | | | | | | | | | | | | | | | |
(Increase) in receivables
|
| | | | (24) | | | | | | (32) | | | | | | (7) | | |
(Increase) in inventories
|
| | | | (51) | | | | | | (137) | | | | | | (25) | | |
Decrease (Increase) in prepaid expenses and other current assets
|
| | | | 24 | | | | | | (4) | | | | | | (8) | | |
Increase in accounts payable, trade
|
| | | | 247 | | | | | | 71 | | | | | | 190 | | |
(Decrease) in accrued expenses
|
| | | | (38) | | | | | | (51) | | | | | | (21) | | |
Increase (Decrease) in taxes, including income taxes
|
| | | | 1 | | | | | | (32) | | | | | | 12 | | |
Pension contributions (H)
|
| | | | (4) | | | | | | (4) | | | | | | (2) | | |
(Increase) in noncurrent assets
|
| | | | (2) | | | | | | (14) | | | | | | (19) | | |
(Decrease) Increase in noncurrent liabilities
|
| | | | (16) | | | | | | (18) | | | | | | 9 | | |
Cash provided from operations
|
| | | | 503 | | | | | | 182 | | | | | | 618 | | |
Financing Activities | | | | | | | | | | | | | | | | | | | |
Net transfers (to) from Parent Company
|
| | | | (531) | | | | | | 148 | | | | | | (292) | | |
Contributions from noncontrolling interests
|
| | | | — | | | | | | — | | | | | | 11 | | |
Distributions to noncontrolling interests
|
| | | | — | | | | | | (14) | | | | | | — | | |
Other
|
| | | | (5) | | | | | | 2 | | | | | | 3 | | |
Cash (used for) provided from financing activities
|
| | | | (536) | | | | | | 136 | | | | | | (278) | | |
Investing Activities | | | | | | | | | | | | | | | | | | | |
Capital expenditures
|
| | | | (317) | | | | | | (241) | | | | | | (350) | | |
Proceeds from the sale of assets and businesses (R)
|
| | | | 307 | | | | | | (9) | | | | | | — | | |
Cash used for investing activities
|
| | | | (10) | | | | | | (250) | | | | | | (350) | | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
| | | | (2) | | | | | | 4 | | | | | | (3) | | |
Net change in cash and cash equivalents and restricted cash (B)
|
| | | | (45) | | | | | | 72 | | | | | | (13) | | |
Cash and cash equivalents and restricted cash at beginning of year (B)
|
| | | | 126 | | | | | | 54 | | | | | | 67 | | |
Cash and cash equivalents and restricted cash at end of year (B)
|
| | | $ | 81 | | | | | $ | 126 | | | | | $ | 54 | | |
| | |
Parent
Company net investment |
| |
Accumulated
other comprehensive income |
| |
Noncontrolling
interests |
| |
Total
equity |
| ||||||||||||
Balance at December 31, 2015
|
| | | $ | 2,645 | | | | | $ | 298 | | | | | $ | 13 | | | | | $ | 2,956 | | |
Net income
|
| | | | 155 | | | | | | — | | | | | | — | | | | | | 155 | | |
Other comprehensive income (loss) (K)
|
| | | | — | | | | | | 330 | | | | | | (1) | | | | | | 329 | | |
Change in ParentCo contribution
|
| | | | (623) | | | | | | — | | | | | | — | | | | | | (623) | | |
Contributions
|
| | | | — | | | | | | — | | | | | | 11 | | | | | | 11 | | |
Other
|
| | | | — | | | | | | — | | | | | | 2 | | | | | | 2 | | |
Balance at December 31, 2016
|
| | | $ | 2,177 | | | | | $ | 628 | | | | | $ | 25 | | | | | $ | 2,830 | | |
Net income
|
| | | | 209 | | | | | | — | | | | | | — | | | | | | 209 | | |
Other comprehensive (loss) income (K)
|
| | | | — | | | | | | (218) | | | | | | 2 | | | | | | (216) | | |
Change in ParentCo contribution
|
| | | | 198 | | | | | | — | | | | | | — | | | | | | 198 | | |
Distributions
|
| | | | — | | | | | | — | | | | | | (14) | | | | | | (14) | | |
Balance at December 31, 2017
|
| | | $ | 2,584 | | | | | $ | 410 | | | | | $ | 13 | | | | | $ | 3,007 | | |
Net income
|
| | | | 170 | | | | | | — | | | | | | — | | | | | | 170 | | |
Other comprehensive loss (K)
|
| | | | — | | | | | | (160) | | | | | | — | | | | | | (160) | | |
Change in ParentCo contribution
|
| | | | (339) | | | | | | — | | | | | | — | | | | | | (339) | | |
Other
|
| | | | — | | | | | | — | | | | | | (1) | | | | | | (1) | | |
Balance at December 31, 2018
|
| | | $ | 2,415 | | | | | $ | 250 | | | | | $ | 12 | | | | | $ | 2,677 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Cost of goods sold(1)
|
| | | $ | 11 | | | | | $ | 35 | | | | | $ | 30 | | |
Selling, general administrative, and other expenses(2)
|
| | | | 56 | | | | | | 120 | | | | | | 141 | | |
Research and development expenses
|
| | | | 24 | | | | | | 28 | | | | | | 33 | | |
Provision for depreciation and amortization
|
| | | | 10 | | | | | | 10 | | | | | | 8 | | |
Restructuring and other charges (E)(3)
|
| | | | 50 | | | | | | 6 | | | | | | 9 | | |
Interest expense (F)
|
| | | | 125 | | | | | | 162 | | | | | | 94 | | |
Other expenses (income), net (G)(4)
|
| | | | (12) | | | | | | (285) | | | | | | (11) | | |
| | |
Structures
|
| |
Machinery
and equipment |
| ||||||
Rolled Products
|
| | | | 31 | | | | | | 21 | | |
Extrusions
|
| | | | 32 | | | | | | 19 | | |
Building and Construction Systems
|
| | | | 24 | | | | | | 18 | | |
| | |
Software
|
| |
Other
intangible assets |
| ||||||
Rolled Products
|
| | | | 5 | | | | | | 9 | | |
Extrusions
|
| | | | 4 | | | | | | 10 | | |
Building and Construction Systems
|
| | | | 4 | | | | | | 16 | | |
For the year ended December 31,
|
| |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
Segments |
| ||||||||||||
2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Ground Transportation
|
| | | $ | 2,585 | | | | | $ | 107 | | | | | $ | — | | | | | $ | 2,692 | | |
Building and Construction
|
| | | | 217 | | | | | | — | | | | | | 1,140 | | | | | | 1,357 | | |
Aerospace
|
| | | | 895 | | | | | | 285 | | | | | | — | | | | | | 1,180 | | |
Industrial Products
|
| | | | 994 | | | | | | 104 | | | | | | — | | | | | | 1,098 | | |
Packaging
|
| | | | 1,005 | | | | | | — | | | | | | — | | | | | | 1,005 | | |
Other
|
| | | | 35 | | | | | | 50 | | | | | | — | | | | | | 85 | | |
Total end-market revenue
|
| | | $ | 5,731 | | | | | $ | 546 | | | | | $ | 1,140 | | | | | $ | 7,417 | | |
2017 | | | | | | | | | | | | | | | | | | | | | | | | | |
Ground Transportation
|
| | | $ | 2,110 | | | | | $ | 92 | | | | | $ | — | | | | | $ | 2,202 | | |
Building and Construction
|
| | | | 204 | | | | | | — | | | | | | 1,065 | | | | | | 1,269 | | |
Aerospace
|
| | | | 887 | | | | | | 273 | | | | | | — | | | | | | 1,160 | | |
Industrial Products
|
| | | | 894 | | | | | | 123 | | | | | | — | | | | | | 1,017 | | |
Packaging
|
| | | | 995 | | | | | | — | | | | | | — | | | | | | 995 | | |
Other
|
| | | | 35 | | | | | | 30 | | | | | | 1 | | | | | | 66 | | |
Total end-market revenue
|
| | | $ | 5,125 | | | | | $ | 518 | | | | | $ | 1,066 | | | | | $ | 6,709 | | |
2016 | | | | | | | | | | | | | | | | | | | | | | | | | |
Ground Transportation
|
| | | $ | 1,683 | | | | | $ | 81 | | | | | $ | — | | | | | $ | 1,764 | | |
Building and Construction
|
| | | | 200 | | | | | | — | | | | | | 1,010 | | | | | | 1,210 | | |
Aerospace
|
| | | | 944 | | | | | | 309 | | | | | | — | | | | | | 1,253 | | |
Industrial Products
|
| | | | 820 | | | | | | 136 | | | | | | — | | | | | | 956 | | |
Packaging
|
| | | | 1,328 | | | | | | — | | | | | | — | | | | | | 1,328 | | |
Other
|
| | | | 21 | | | | | | 25 | | | | | | 1 | | | | | | 47 | | |
Total end-market revenue
|
| | | $ | 4,996 | | | | | $ | 551 | | | | | $ | 1,011 | | | | | $ | 6,558 | | |
| | |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
|
| ||||||||||||
2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales – unrelated party
|
| | | $ | 5,586 | | | | | $ | 485 | | | | | $ | 1,140 | | | | | $ | 7,211 | | |
Third-party sales – related party
|
| | | | 145 | | | | | | 61 | | | | | | — | | | | | | 206 | | |
Intersegment sales
|
| | | | 15 | | | | | | 3 | | | | | | — | | | | | | 18 | | |
Total sales
|
| | | $ | 5,746 | | | | | $ | 549 | | | | | $ | 1,140 | | | | | $ | 7,435 | | |
Segment operating profit
|
| | | $ | 328 | | | | | $ | 1 | | | | | $ | 91 | | | | | $ | 420 | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | $ | 212 | | | | | $ | 23 | | | | | $ | 18 | | | | | $ | 253 | | |
Restructuring and other charges
|
| | | | (156) | | | | | | — | | | | | | (3) | | | | | | (159) | | |
2017 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales – unrelated party
|
| | | $ | 4,992 | | | | | $ | 469 | | | | | $ | 1,066 | | | | | $ | 6,527 | | |
Third-party sales – related party
|
| | | | 133 | | | | | | 49 | | | | | | — | | | | | | 182 | | |
Intersegment sales
|
| | | | 15 | | | | | | 2 | | | | | | 1 | | | | | | 18 | | |
Total sales
|
| | | $ | 5,140 | | | | | $ | 520 | | | | | $ | 1,067 | | | | | $ | 6,727 | | |
Segment operating profit
|
| | | $ | 384 | | | | | $ | 34 | | | | | $ | 82 | | | | | $ | 500 | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | $ | 205 | | | | | $ | 22 | | | | | $ | 16 | | | | | $ | 243 | | |
Restructuring and other charges
|
| | | | 73 | | | | | | — | | | | | | 11 | | | | | | 84 | | |
| | |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
|
| ||||||||||||
2016 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales – unrelated party
|
| | | $ | 4,864 | | | | | $ | 504 | | | | | $ | 1,010 | | | | | $ | 6,378 | | |
Third-party sales – related party
|
| | | | 132 | | | | | | 47 | | | | | | 1 | | | | | | 180 | | |
Intersegment sales
|
| | | | 9 | | | | | | 2 | | | | | | — | | | | | | 11 | | |
Total sales
|
| | | $ | 5,005 | | | | | $ | 553 | | | | | $ | 1,011 | | | | | $ | 6,569 | | |
Segment operating profit
|
| | | $ | 374 | | | | | $ | 74 | | | | | $ | 86 | | | | | $ | 534 | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | $ | 201 | | | | | $ | 20 | | | | | $ | 16 | | | | | $ | 237 | | |
Restructuring and other charges
|
| | | | 40 | | | | | | 1 | | | | | | — | | | | | | 41 | | |
2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment assets
|
| | | $ | 3,627 | | | | | $ | 490 | | | | | $ | 469 | | | | | $ | 4,586 | | |
Supplemental information:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures
|
| | | | 255 | | | | | | 32 | | | | | | 21 | | | | | | 308 | | |
Goodwill
|
| | | | 245 | | | | | | 71 | | | | | | 69 | | | | | | 385 | | |
2017 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment assets
|
| | | $ | 3,667 | | | | | $ | 462 | | | | | $ | 475 | | | | | $ | 4,604 | | |
Supplemental information:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures
|
| | | | 178 | | | | | | 28 | | | | | | 25 | | | | | | 231 | | |
Goodwill
|
| | | | 252 | | | | | | 71 | | | | | | 71 | | | | | | 394 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Sales: | | | | | | | | | | | | | | | | | | | |
Total segment sales
|
| | | $ | 7,435 | | | | | $ | 6,727 | | | | | $ | 6,569 | | |
Elimination of intersegment sales
|
| | | | (18) | | | | | | (18) | | | | | | (11) | | |
Other*
|
| | | | 25 | | | | | | 115 | | | | | | 103 | | |
Combined sales
|
| | | $ | 7,442 | | | | | $ | 6,824 | | | | | $ | 6,661 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Income before income taxes: | | | | | | | | | | | | | | | | | | | |
Total segment operating profit
|
| | | $ | 420 | | | | | $ | 500 | | | | | $ | 534 | | |
Unallocated amounts:
|
| | | | | | | | | | | | | | | | | | |
Cost allocations (A)
|
| | | | (101) | | | | | | (193) | | | | | | (212) | | |
Restructuring and other charges (E)
|
| | | | 104 | | | | | | (133) | | | | | | (67) | | |
Other
|
| | | | (49) | | | | | | (42) | | | | | | 1 | | |
Combined operating income
|
| | | $ | 374 | | | | | $ | 132 | | | | | $ | 256 | | |
Interest expense (F)
|
| | | | (129) | | | | | | (168) | | | | | | (97) | | |
Other (expenses) income, net (G)
|
| | | | (4) | | | | | | 287 | | | | | | 9 | | |
Combined income before income taxes
|
| | | $ | 241 | | | | | $ | 251 | | | | | $ | 168 | | |
|
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Assets: | | | | | | | | | | | | | |
Total segment assets
|
| | | $ | 4,586 | | | | | $ | 4,604 | | |
Unallocated amounts:
|
| | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | 81 | | | | | | 126 | | |
Corporate fixed assets, net
|
| | | | 102 | | | | | | 103 | | |
Deferred income taxes (I)
|
| | | | 15 | | | | | | 26 | | |
Other
|
| | | | 11 | | | | | | 43 | | |
Combined assets
|
| | | $ | 4,795 | | | | | $ | 4,902 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Sales: | | | | | | | | | | | | | | | | | | | |
Flat-rolled aluminum
|
| | | | 5,700 | | | | | | 5,097 | | | | | | 4,985 | | |
Architectural aluminum systems
|
| | | | 1,152 | | | | | | 1,113 | | | | | | 1,055 | | |
Extrusions
|
| | | | 559 | | | | | | 584 | | | | | | 609 | | |
Other
|
| | | | 31 | | | | | | 30 | | | | | | 12 | | |
| | | | $ | 7,442 | | | | | $ | 6,824 | | | | | $ | 6,661 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Sales: | | | | | | | | | | | | | | | | | | | |
United States
|
| | | $ | 4,713 | | | | | $ | 4,146 | | | | | $ | 4,120 | | |
Hungary*
|
| | | | 675 | | | | | | 608 | | | | | | 497 | | |
Russia*
|
| | | | 553 | | | | | | 500 | | | | | | 433 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
China
|
| | | | 487 | | | | | | 486 | | | | | | 484 | | |
France
|
| | | | 328 | | | | | | 293 | | | | | | 275 | | |
Other
|
| | | | 686 | | | | | | 791 | | | | | | 852 | | |
| | | | $ | 7,442 | | | | | $ | 6,824 | | | | | $ | 6,661 | | |
|
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Long-lived assets: | | | | | | | | | | | | | |
United States
|
| | | $ | 2,028 | | | | | $ | 1,960 | | |
China
|
| | | | 274 | | | | | | 301 | | |
Russia
|
| | | | 253 | | | | | | 276 | | |
Hungary
|
| | | | 112 | | | | | | 117 | | |
Other
|
| | | | 194 | | | | | | 207 | | |
| | | | $ | 2,861 | | | | | $ | 2,861 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Net (gain) loss on divestitures of assets and businesses (R)
|
| | | $ | (152) | | | | | $ | 60 | | | | | $ | — | | |
Asset impairments
|
| | | | 4 | | | | | | 43 | | | | | | 27 | | |
Layoff costs
|
| | | | 1 | | | | | | 31 | | | | | | 18 | | |
Other*
|
| | | | 53 | | | | | | 2 | | | | | | 29 | | |
Reversals of previously recorded layoff costs
|
| | | | (10) | | | | | | (3) | | | | | | (7) | | |
Restructuring and other charges
|
| | | $ | (104) | | | | | $ | 133 | | | | | $ | 67 | | |
| | |
Layoff costs
|
| |
Other costs
|
| |
Total
|
| |||||||||
Reserve balances at December 31, 2015
|
| | | $ | 8 | | | | | $ | 9 | | | | | $ | 17 | | |
2016 | | | | | | | | | | | | | | | | | | | |
Cash payments
|
| | | | (10) | | | | | | (12) | | | | | | (22) | | |
Restructuring charges
|
| | | | 18 | | | | | | 14 | | | | | | 32 | | |
Other(1) | | | | | (4) | | | | | | (7) | | | | | | (11) | | |
Reserve balances at December 31, 2016
|
| | | | 12 | | | | | | 4 | | | | | | 16 | | |
2017 | | | | | | | | | | | | | | | | | | | |
Cash payments
|
| | | | (18) | | | | | | (2) | | | | | | (20) | | |
Restructuring charges
|
| | | | 31 | | | | | | 1 | | | | | | 32 | | |
Other(1) | | | | | (3) | | | | | | (1) | | | | | | (4) | | |
Reserve balances at December 31, 2017
|
| | | | 22 | | | | | | 2 | | | | | | 24 | | |
2018 | | | | | | | | | | | | | | | | | | | |
Cash payments
|
| | | | (12) | | | | | | (1) | | | | | | (13) | | |
Restructuring charges
|
| | | | 1 | | | | | | 1 | | | | | | 2 | | |
Other(1) | | | | | (10) | | | | | | 1 | | | | | | (9) | | |
Reserve balances at December 31, 2018(2)
|
| | | $ | 1 | | | | | $ | 3 | | | | | $ | 4 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Amount charged to expense
|
| | | $ | 129 | | | | | $ | 168 | | | | | $ | 97 | | |
Amount capitalized
|
| | | | 9 | | | | | | 8 | | | | | | 10 | | |
| | | | $ | 138 | | | | | $ | 176 | | | | | $ | 107 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Interest income
|
| | | $ | (13) | | | | | $ | (10) | | | | | $ | (6) | | |
Foreign currency losses (gains), net
|
| | | | 17 | | | | | | 1 | | | | | | (1) | | |
Net loss (gain) from asset sales
|
| | | | 4 | | | | | | (267) | | | | | | 3 | | |
Other, net
|
| | | | (4) | | | | | | (11) | | | | | | (5) | | |
| | | | $ | 4 | | | | | $ | (287) | | | | | $ | (9) | | |
| | | | | |
Pension benefits
|
| |
Other postretirement benefits
|
| ||||||||||||||||||||||||||||||
| | | | | |
For the year ended December 31,
|
| |
For the year ended December 31,
|
| ||||||||||||||||||||||||||||||
Type of Plan
|
| |
Type of Expense
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2018
|
| |
2017
|
| |
2016
|
| ||||||||||||||||||
Direct Plans
|
| | Net periodic benefit cost | | | | $ | 5 | | | | | $ | 5 | | | | | $ | 5 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Shared Plans
|
| |
Multiemployer contribution
|
| | | | 67 | | | | | | 82 | | | | | | 78 | | | | | | 21 | | | | | | 20 | | | | | | 23 | | |
Shared Plans
|
| | Cost allocation | | | | | 20 | | | | | | 39 | | | | | | 31 | | | | | | 5 | | | | | | 4 | | | | | | 8 | | |
| | | | | | | $ | 92 | | | | | $ | 126 | | | | | $ | 114 | | | | | $ | 26 | | | | | $ | 24 | | | | | $ | 31 | | |
| | |
Pension benefits
|
| |||||||||
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Change in benefit obligation | | | | | | | | | | | | | |
Benefit obligation at beginning of year
|
| | | $ | 134 | | | | | $ | 115 | | |
Service cost
|
| | | | 3 | | | | | | 3 | | |
Interest cost
|
| | | | 4 | | | | | | 4 | | |
Actuarial (gains) losses
|
| | | | (5) | | | | | | 6 | | |
Benefits paid
|
| | | | (7) | | | | | | (5) | | |
Foreign currency translation impact
|
| | | | (7) | | | | | | 11 | | |
Benefit obligation at end of year
|
| | | $ | 122 | | | | | $ | 134 | | |
Change in plan assets | | | | | | | | | | | | | |
Fair value of plan assets at beginning of year
|
| | | $ | 79 | | | | | $ | 68 | | |
Actual return on plan assets
|
| | | | (3) | | | | | | 6 | | |
Employer contributions
|
| | | | 4 | | | | | | 4 | | |
Benefits paid
|
| | | | (5) | | | | | | (4) | | |
Foreign currency translation impact
|
| | | | (5) | | | | | | 5 | | |
Fair value of plan assets at end of year
|
| | | $ | 70 | | | | | $ | 79 | | |
Funded status
|
| | | $ | (52) | | | | | $ | (55) | | |
Amounts recognized in the Combined Balance Sheet consist of: | | | | | | | | | | | | | |
Noncurrent assets
|
| | | $ | 2 | | | | | $ | 3 | | |
Current liabilities
|
| | | | (1) | | | | | | (1) | | |
Noncurrent liabilities
|
| | | | (53) | | | | | | (57) | | |
Net amount recognized
|
| | | $ | (52) | | | | | $ | (55) | | |
Amounts recognized in Accumulated Other Comprehensive Income consist of: | | | | | | | | | | | | | |
Net actuarial loss, before tax effect
|
| | | $ | 45 | | | | | $ | 51 | | |
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Loss consist of:
|
| | | | | | | | | | | | |
Net actuarial (gain) loss
|
| | | $ | (3) | | | | | $ | 8 | | |
Amortization of accumulated net actuarial loss
|
| | | | (3) | | | | | | (3) | | |
Total, before tax effect
|
| | | $ | (6) | | | | | $ | 5 | | |
|
| | |
Pension benefits
|
| |||||||||
| | |
2018
|
| |
2017
|
| ||||||
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
|
| | | | | | | | | | | | |
Projected benefit obligation
|
| | | $ | 122 | | | | | $ | 134 | | |
Accumulated benefit obligation
|
| | | | 115 | | | | | | 130 | | |
The aggregate projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets was as follows:
|
| | | | | | | | | | | | |
Projected benefit obligation
|
| | | | 104 | | | | | | 114 | | |
Fair value of plan assets
|
| | | | 50 | | | | | | 56 | | |
The aggregate accumulated benefit obligation and fair value of plan assets for pension plans
with accumulated benefit obligations in excess of plan assets was as follows: |
| | | | | | | | | | | | |
Accumulated benefit obligation
|
| | | | 98 | | | | | | 106 | | |
Fair value of plan assets
|
| | | | 50 | | | | | | 56 | | |
| | |
Pension benefits
|
| |||||||||||||||
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Service cost
|
| | | $ | 3 | | | | | $ | 3 | | | | | $ | 3 | | |
Interest cost
|
| | | | 4 | | | | | | 4 | | | | | | 3 | | |
Expected return on plan assets
|
| | | | (5) | | | | | | (5) | | | | | | (4) | | |
Recognized net actuarial loss(1)
|
| | | | 3 | | | | | | 3 | | | | | | 3 | | |
Net periodic benefit cost(2)
|
| | | $ | 5 | | | | | $ | 5 | | | | | $ | 5 | | |
| | |
Benefit obligations
|
| |
Net periodic benefit cost
|
| ||||||||||||||||||||||||
| | |
December 31,
|
| |
For the year ended December 31,
|
| ||||||||||||||||||||||||
| | |
2018
|
| |
2017
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Discount rate
|
| | | | 3.12% | | | | | | 2.94% | | | | | | 2.94% | | | | | | 3.26% | | | | | | 3.31% | | |
Rate of compensation increase
|
| | | | 3.42 | | | | | | 3.33 | | | | | | 3.33 | | | | | | 3.31 | | | | | | 3.27 | | |
Expected long-term rate of return on plan assets
|
| | | | — | | | | | | — | | | | | | 6.72 | | | | | | 6.76 | | | | | | 6.79 | | |
| | | | | |
Plan assets
at December 31, |
| |||||||||
Asset class
|
| |
Policy range
|
| |
2018
|
| |
2017
|
| ||||||
Equities
|
| |
20 – 50%
|
| | | | 40% | | | | | | 42% | | |
Fixed income
|
| |
20 – 50%
|
| | | | 40 | | | | | | 40 | | |
Other investments
|
| |
15 – 30%
|
| | | | 20 | | | | | | 18 | | |
Total
|
| | | | | | | 100% | | | | | | 100% | | |
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Equity securities(1)
|
| | | $ | 28 | | | | | $ | 33 | | |
Fixed income: | | | | | | | | | | | | | |
Intermediate and long duration government/credit(2)
|
| | | $ | 23 | | | | | $ | 26 | | |
Other
|
| | | | 1 | | | | | | 2 | | |
| | | | $ | 24 | | | | | $ | 28 | | |
Other investments(3): | | | | | | | | | | | | | |
Real estate
|
| | | $ | 7 | | | | | $ | 9 | | |
Other
|
| | | | 7 | | | | | | 5 | | |
| | | | $ | 14 | | | | | $ | 14 | | |
Net asset value sub-total
|
| | | $ | 66 | | | | | $ | 75 | | |
Other fixed income
|
| | | | 4 | | | | | | 4 | | |
Total
|
| | | $ | 70 | | | | | $ | 79 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
United States
|
| | | $ | 171 | | | | | $ | 264 | | | | | $ | 86 | | |
Foreign
|
| | | | 70 | | | | | | (13) | | | | | | 82 | | |
| | | | $ | 241 | | | | | $ | 251 | | | | | $ | 168 | | |
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Current: | | | | | | | | | | | | | | | | | | | |
Federal
|
| | | $ | 47 | | | | | $ | (7) | | | | | $ | 19 | | |
Foreign
|
| | | | 20 | | | | | | 17 | | | | | | 21 | | |
State and local
|
| | | | 8 | | | | | | 3 | | | | | | 4 | | |
| | | | | 75 | | | | | | 13 | | | | | | 44 | | |
Deferred: | | | | | | | | | | | | | | | | | | | |
Federal
|
| | | | (13) | | | | | | (1) | | | | | | (7) | | |
Foreign
|
| | | | 9 | | | | | | 28 | | | | | | (24) | | |
State and local
|
| | | | — | | | | | | 2 | | | | | | — | | |
| | | | | (4) | | | | | | 29 | | | | | | (31) | | |
Total
|
| | | $ | 71 | | | | | $ | 42 | | | | | $ | 13 | | |
|
For the year ended December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
U.S. federal statutory rate
|
| | | | 21.0% | | | | | | 35.0% | | | | | | 35.0% | | |
Taxes on foreign operations
|
| | | | 0.8 | | | | | | (6.2) | | | | | | (5.9) | | |
Net income/loss related to intercompany amounts capitalized
|
| | | | 0.4 | | | | | | (2.9) | | | | | | (5.1) | | |
U.S. state and local taxes
|
| | | | 2.1 | | | | | | 1.9 | | | | | | 1.0 | | |
Permanent differences on restructuring and other charges and asset disposals
|
| | | | — | | | | | | (12.1) | | | | | | (1.2) | | |
Statutory tax rate and law changes*
|
| | | | — | | | | | | (19.9) | | | | | | (9.8) | | |
Changes in valuation allowances
|
| | | | 6.3 | | | | | | 14.7 | | | | | | (4.9) | | |
Changes in uncertain tax positions
|
| | | | — | | | | | | 7.0 | | | | | | (0.1) | | |
Tax holidays
|
| | | | (1.1) | | | | | | (0.6) | | | | | | (1.2) | | |
Other
|
| | | | — | | | | | | (0.2) | | | | | | (0.1) | | |
Effective tax rate
|
| | | | 29.5% | | | | | | 16.7% | | | | | | 7.7% | | |
| | |
2018
|
| |
2017
|
| ||||||||||||||||||
December 31,
|
| |
Deferred
tax assets |
| |
Deferred
tax liabilities |
| |
Deferred
tax assets |
| |
Deferred
tax liabilities |
| ||||||||||||
Depreciation
|
| | | $ | 23 | | | | | $ | 185 | | | | | $ | 24 | | | | | $ | 194 | | |
Employee benefits
|
| | | | 33 | | | | | | — | | | | | | 35 | | | | | | — | | |
Loss provisions
|
| | | | 61 | | | | | | — | | | | | | 79 | | | | | | — | | |
Deferred income/expense
|
| | | | 7 | | | | | | 3 | | | | | | 2 | | | | | | 3 | | |
Tax loss carryforwards
|
| | | | 109 | | | | | | — | | | | | | 98 | | | | | | — | | |
Other
|
| | | | 6 | | | | | | 11 | | | | | | 9 | | | | | | 13 | | |
| | | | $ | 239 | | | | | $ | 199 | | | | | $ | 247 | | | | | $ | 210 | | |
Valuation allowance
|
| | | | (107) | | | | | | — | | | | | | (103) | | | | | | — | | |
| | | | $ | 132 | | | | | $ | 199 | | | | | $ | 144 | | | | | $ | 210 | | |
December 31, 2018
|
| |
Expires
within 10 years |
| |
Expires
within 11 – 12 years |
| |
No
Expiration(1) |
| |
Other(2)
|
| |
Total
|
| |||||||||||||||
Tax loss carryforwards
|
| | | $ | 52 | | | | | $ | 5 | | | | | $ | 52 | | | | | $ | — | | | | | $ | 109 | | |
Other
|
| | | | — | | | | | | — | | | | | | 16 | | | | | | 114 | | | | | | 130 | | |
Valuation allowance
|
| | | | (52) | | | | | | (1) | | | | | | (54) | | | | | | — | | | | | | (107) | | |
| | | | $ | — | | | | | $ | 4 | | | | | $ | 14 | | | | | $ | 114 | | | | | $ | 132 | | |
December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Balance at beginning of year
|
| | | $ | 103 | | | | | $ | 88 | | | | | $ | 100 | | |
Establishment of new allowances(1)
|
| | | | — | | | | | | 3 | | | | | | 8 | | |
Net change to existing allowances(2)
|
| | | | 7 | | | | | | 7 | | | | | | 3 | | |
Release of allowances(3)
|
| | | | — | | | | | | — | | | | | | (19) | | |
Foreign currency translation
|
| | | | (3) | | | | | | 5 | | | | | | (4) | | |
Balance at end of year
|
| | | $ | 107 | | | | | $ | 103 | | | | | $ | 88 | | |
December 31,
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Balance at beginning of year
|
| | | $ | 23 | | | | | $ | — | | | | | $ | 1 | | |
Additions for tax positions of the current year
|
| | | | — | | | | | | 23 | | | | | | — | | |
Reductions for tax positions of prior years
|
| | | | (4) | | | | | | — | | | | | | — | | |
Expiration of the statute of limitations
|
| | | | — | | | | | | — | | | | | | (1) | | |
Foreign currency translation
|
| | | | (1) | | | | | | — | | | | | | — | | |
Balance at end of year
|
| | | $ | 18 | | | | | $ | 23 | | | | | $ | — | | |
| | |
Stock options
|
| |
Stock units
|
| ||||||||||||||||||
| | |
Number of
options |
| |
Weighted
average exercise price |
| |
Number of
units |
| |
Weighted
average FMV per unit |
| ||||||||||||
Outstanding, January 1, 2018
|
| | | | 1,743,703 | | | | | $ | 23.94 | | | | | | 1,257,500 | | | | | $ | 21.47 | | |
Granted
|
| | | | 99,680 | | | | | | 28.94 | | | | | | 397,500 | | | | | | 27.22 | | |
Exercised
|
| | | | (166,389) | | | | | | 17.48 | | | | | | — | | | | | | — | | |
Converted
|
| | | | — | | | | | | — | | | | | | (222,191) | | | | | | 34.53 | | |
Expired or forfeited
|
| | | | (62,789) | | | | | | 24.13 | | | | | | (59,387) | | | | | | 19.27 | | |
Performance share adjustment
|
| | | | — | | | | | | — | | | | | | (36,883) | | | | | | 18.79 | | |
Other
|
| | | | 115 | | | | | | 23.12 | | | | | | 43,183 | | | | | | 21.04 | | |
Outstanding, December 31, 2018
|
| | | | 1,614,320 | | | | | | 24.93 | | | | | | 1,379,722 | | | | | | 21.18 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Pension and other postretirement benefits (H) | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period
|
| | | $ | (36) | | | | | $ | (32) | | | | | $ | (28) | | |
Other comprehensive income (loss):
|
| | | | | | | | | | | | | | | | | | |
Unrecognized net actuarial loss and prior service cost
|
| | | | 1 | | | | | | (8) | | | | | | (7) | | |
Tax benefit
|
| | | | 1 | | | | | | 2 | | | | | | 1 | | |
Total Other comprehensive income (loss) before reclassifications, net
of tax |
| | | | 2 | | | | | | (6) | | | | | | (6) | | |
Amortization of net actuarial loss and prior service cost(1)
|
| | | | 3 | | | | | | 3 | | | | | | 3 | | |
Tax expense(2)
|
| | | | (1) | | | | | | (1) | | | | | | (1) | | |
Total amount reclassified from Accumulated other comprehensive loss, net of tax(4)
|
| | | | 2 | | | | | | 2 | | | | | | 2 | | |
Total Other comprehensive income (loss)
|
| | | | 4 | | | | | | (4) | | | | | | (4) | | |
Balance at end of period
|
| | | $ | (32) | | | | | $ | (36) | | | | | $ | (32) | | |
Foreign currency translation | | | | | | | | | | | | | | | | | | | |
Balance at beginning of period
|
| | | $ | 446 | | | | | $ | 660 | | | | | $ | 326 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Other comprehensive (loss) income(3)
|
| | | | (164) | | | | | | (214) | | | | | | 334 | | |
Balance at end of period
|
| | | $ | 282 | | | | | $ | 446 | | | | | $ | 660 | | |
Total balance at end of period
|
| | | $ | 250 | | | | | $ | 410 | | | | | $ | 628 | | |
|
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Finished goods
|
| | | $ | 235 | | | | | $ | 238 | | |
Work-in-process
|
| | | | 812 | | | | | | 760 | | |
Purchased raw materials
|
| | | | 79 | | | | | | 91 | | |
Operating supplies
|
| | | | 65 | | | | | | 65 | | |
| | | | | 1,191 | | | | | | 1,154 | | |
LIFO reserve
|
| | | | (373) | | | | | | (350) | | |
| | | | $ | 818 | | | | | $ | 804 | | |
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Land and land rights
|
| | | $ | 27 | | | | | $ | 30 | | |
Structures: | | | | | | | | | | | | | |
Rolled Products
|
| | | | 1,068 | | | | | | 1,090 | | |
Extrusions
|
| | | | 152 | | | | | | 152 | | |
Building and Construction Systems
|
| | | | 96 | | | | | | 99 | | |
Other
|
| | | | 24 | | | | | | 45 | | |
| | | | | 1,340 | | | | | | 1,386 | | |
Machinery and equipment: | | | | | | | | | | | | | |
Rolled Products
|
| | | | 4,629 | | | | | | 4,641 | | |
Extrusions
|
| | | | 537 | | | | | | 493 | | |
Building and Construction Systems
|
| | | | 191 | | | | | | 182 | | |
Other
|
| | | | 164 | | | | | | 214 | | |
| | | | | 5,521 | | | | | | 5,530 | | |
| | | | | 6,888 | | | | | | 6,946 | | |
Less: accumulated depreciation and amortization
|
| | | | 4,341 | | | | | | 4,333 | | |
| | | | | 2,547 | | | | | | 2,613 | | |
Construction work-in-progress
|
| | | | 314 | | | | | | 248 | | |
| | | | $ | 2,861 | | | | | $ | 2,861 | | |
| | |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Other*
|
| |
Total
|
| |||||||||||||||
Balances at December 31, 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Goodwill
|
| | | $ | 241 | | | | | $ | 71 | | | | | $ | 95 | | | | | $ | 25 | | | | | $ | 432 | | |
Accumulated impairment losses
|
| | | | — | | | | | | — | | | | | | (28) | | | | | | (25) | | | | | | (53) | | |
Goodwill, net
|
| | | | 241 | | | | | | 71 | | | | | | 67 | | | | | | — | | | | | | 379 | | |
Translation
|
| | | | 11 | | | | | | — | | | | | | 4 | | | | | | — | | | | | | 15 | | |
Balances at December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Goodwill
|
| | | | 252 | | | | | | 71 | | | | | | 99 | | | | | | 25 | | | | | | 447 | | |
Accumulated impairment losses
|
| | | | — | | | | | | — | | | | | | (28) | | | | | | (25) | | | | | | (53) | | |
Goodwill, net
|
| | | | 252 | | | | | | 71 | | | | | | 71 | | | | | | — | | | | | | 394 | | |
Translation
|
| | | | (7) | | | | | | — | | | | | | (2) | | | | | | — | | | | | | (9) | | |
Balances at December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Goodwill
|
| | | | 245 | | | | | | 71 | | | | | | 97 | | | | | | — | | | | | | 413 | | |
Accumulated impairment losses
|
| | | | — | | | | | | — | | | | | | (28) | | | | | | — | | | | | | (28) | | |
Goodwill, net
|
| | | $ | 245 | | | | | $ | 71 | | | | | $ | 69 | | | | | $ | — | | | | | $ | 385 | | |
December 31, 2018
|
| |
Gross
carrying amount |
| |
Accumulated
amortization |
| |
Net carrying
amount |
| |||||||||
Computer software
|
| | | $ | 194 | | | | | $ | (172) | | | | | $ | 22 | | |
Patents and licenses
|
| | | | 28 | | | | | | (28) | | | | | | — | | |
Other
|
| | | | 34 | | | | | | (14) | | | | | | 20 | | |
Total other intangible assets
|
| | | $ | 256 | | | | | $ | (214) | | | | | $ | 42 | | |
|
December 31, 2017
|
| |
Gross
carrying amount |
| |
Accumulated
amortization |
| |
Net carrying
amount |
| |||||||||
Computer software
|
| | | $ | 227 | | | | | $ | (189) | | | | | $ | 38 | | |
Patents and licenses
|
| | | | 28 | | | | | | (28) | | | | | | — | | |
Other
|
| | | | 34 | | | | | | (11) | | | | | | 23 | | |
Total other intangible assets
|
| | | $ | 289 | | | | | $ | (228) | | | | | $ | 61 | | |
December 31,
|
| |
2018
|
| |
2017
|
| ||||||
Sale-leaseback financing obligation
|
| | | $ | 119 | | | | | $ | — | | |
Accrued compensation and retirement costs
|
| | | | 38 | | | | | | 42 | | |
Other
|
| | | | 11 | | | | | | 26 | | |
| | | | $ | 168 | | | | | $ | 68 | | |
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||
Interest, net of amount capitalized*
|
| | | $ | 120 | | | | | $ | 146 | | | | | $ | 88 | | |
Income taxes, net of amount refunded
|
| | | $ | 24 | | | | | $ | 37 | | | | | $ | 10 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Sales to unrelated parties
|
| | | $ | 5,427 | | | | | $ | 5,472 | | |
Sales to related parties (A)
|
| | | | 142 | | | | | | 161 | | |
Total Sales (C and D)
|
| | | | 5,569 | | | | | | 5,633 | | |
Cost of goods sold (exclusive of expenses below)
|
| | | | 4,810 | | | | | | 4,952 | | |
Selling, general administrative, and other expenses
|
| | | | 255 | | | | | | 224 | | |
Research and development expenses
|
| | | | 34 | | | | | | 47 | | |
Provision for depreciation and amortization
|
| | | | 190 | | | | | | 198 | | |
Restructuring and other charges (E)
|
| | | | 104 | | | | | | — | | |
Operating income
|
| | | | 176 | | | | | | 212 | | |
Interest expense
|
| | | | 86 | | | | | | 99 | | |
Other (income) expenses, net (F)
|
| | | | (4) | | | | | | 9 | | |
Income before income taxes
|
| | | | 94 | | | | | | 104 | | |
Provision for income taxes (H)
|
| | | | 55 | | | | | | 33 | | |
Net income
|
| | | | 39 | | | | | | 71 | | |
Less: Net income attributable to noncontrolling interest
|
| | | | — | | | | | | — | | |
Net income attributable to Arconic Rolled Products Corporation
|
| | | $ | 39 | | | | | $ | 71 | | |
| | |
Arconic Rolled Products Corporation
|
| |
Noncontrolling
interest |
| |
Total
|
| |||||||||||||||||||||||||||
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| ||||||||||||||||||
Net income
|
| | | $ | 39 | | | | | $ | 71 | | | | | $ | — | | | | | $ | — | | | | | $ | 39 | | | | | $ | 71 | | |
Other comprehensive income (loss), net of tax (I):
|
| | | | | | | ||||||||||||||||||||||||||||||
Change in unrecognized net actuarial loss and prior service cost related to pension and other postretirement benefits
|
| | | | 1 | | | | | | 6 | | | | | | — | | | | | | — | | | | | | 1 | | | | | | 6 | | |
Foreign currency translation adjustments
|
| | | | 59 | | | | | | (10) | | | | | | — | | | | | | — | | | | | | 59 | | | | | | (10) | | |
Total Other comprehensive income (loss), net of tax
|
| | | | 60 | | | | | | (4) | | | | | | — | | | | | | — | | | | | | 60 | | | | | | (4) | | |
Comprehensive income
|
| | | $ | 99 | | | | | $ | 67 | | | | | $ | — | | | | | $ | — | | | | | $ | 99 | | | | | $ | 67 | | |
| | |
September 30,
2019 Pro Forma (Note A) |
| |
September 30,
2019 |
| |
December 31,
2018 |
| |||||||||
Assets | | | | | | | | | | ||||||||||
Current assets: | | | | | | | | | | ||||||||||
Cash and cash equivalents
|
| | | $ | 47 | | | | | $ | 47 | | | | | $ | 81 | | |
Receivables from customers, less allowances of $3 in 2019 and $2 in 2018
|
| | | | 436 | | | | | | 436 | | | | | | 408 | | |
Other receivables
|
| | | | 126 | | | | | | 126 | | | | | | 127 | | |
Inventories (J)
|
| | | | 877 | | | | | | 877 | | | | | | 818 | | |
Prepaid expenses and other current assets
|
| | | | 49 | | | | | | 49 | | | | | | 42 | | |
Total current assets
|
| | | | 1,535 | | | | | | 1,535 | | | | | | 1,476 | | |
Properties, plants, and equipment
|
| | | | 7,131 | | | | | | 7,131 | | | | | | 7,202 | | |
Less: Accumulated depreciation and amortization
|
| | | | 4,420 | | | | | | 4,420 | | | | | | 4,341 | | |
Properties, plants, and equipment, net
|
| | | | 2,711 | | | | | | 2,711 | | | | | | 2,861 | | |
Goodwill
|
| | | | 380 | | | | | | 380 | | | | | | 385 | | |
Operating lease right-of-use assets (K)
|
| | | | 127 | | | | | | 127 | | | | | | — | | |
Deferred income taxes
|
| | | | 2 | | | | | | 2 | | | | | | 15 | | |
Other noncurrent assets
|
| | | | 35 | | | | | | 35 | | | | | | 58 | | |
Total assets
|
| | | $ | 4,790 | | | | | $ | 4,790 | | | | | $ | 4,795 | | |
Liabilities | | | | | | | | | | ||||||||||
Current liabilities: | | | | | | | | | | ||||||||||
Accounts payable, trade
|
| | | $ | 1,056 | | | | | $ | 1,056 | | | | | $ | 1,165 | | |
Accrued compensation and retirement costs
|
| | | | 74 | | | | | | 74 | | | | | | 66 | | |
Taxes, including income taxes
|
| | | | 38 | | | | | | 38 | | | | | | 37 | | |
Environmental remediation (M)
|
| | | | 77 | | | | | | 77 | | | | | | 69 | | |
Operating lease liabilities (K)
|
| | | | 31 | | | | | | 31 | | | | | | — | | |
Distribution payable to ParentCo (A)
|
| | | | 804 | | | | | | — | | | | | | — | | |
Other current liabilities
|
| | | | 63 | | | | | | 63 | | | | | | 56 | | |
Total current liabilities
|
| | | | 2,143 | | | | | | 1,339 | | | | | | 1,393 | | |
Long-term debt
|
| | | | 250 | | | | | | 250 | | | | | | 250 | | |
Deferred income taxes
|
| | | | 113 | | | | | | 113 | | | | | | 82 | | |
Accrued pension and other postretirement benefits
|
| | | | 51 | | | | | | 51 | | | | | | 55 | | |
Environmental remediation (M)
|
| | | | 152 | | | | | | 152 | | | | | | 170 | | |
Operating lease liabilities (K)
|
| | | | 97 | | | | | | 97 | | | | | | — | | |
Other noncurrent liabilities and deferred credits (B)
|
| | | | 48 | | | | | | 48 | | | | | | 168 | | |
Total liabilities
|
| | | | 2,854 | | | | | | 2,050 | | | | | | 2,118 | | |
Contingencies and commitments (M) | | | | | | | | | | | | | | | | | | | |
Equity | | | | | | | | | | | | | | | | | | | |
Parent Company net investment (A)
|
| | | | 1,612 | | | | | | 2,416 | | | | | | 2,415 | | |
Accumulated other comprehensive income (I)
|
| | | | 310 | | | | | | 310 | | | | | | 250 | | |
Sub-total equity
|
| | | | 1,922 | | | | | | 2,726 | | | | | | 2,665 | | |
Noncontrolling interest
|
| | | | 14 | | | | | | 14 | | | | | | 12 | | |
Total equity
|
| | | | 1,936 | | | | | | 2,740 | | | | | | 2,677 | | |
Total liabilities and equity
|
| | | $ | 4,790 | | | | | $ | 4,790 | | | | | $ | 4,795 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Operating Activities | | | | | | | | | | | | | |
Net income
|
| | | $ | 39 | | | | | $ | 71 | | |
Adjustments to reconcile net income to cash provided from operations: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 190 | | | | | | 198 | | |
Deferred income taxes
|
| | | | 20 | | | | | | (3) | | |
Restructuring and other charges (E)
|
| | | | 104 | | | | | | — | | |
Net loss from investing activities – asset sales (F)
|
| | | | 1 | | | | | | 3 | | |
Net periodic pension benefit cost (G)
|
| | | | 4 | | | | | | 4 | | |
Stock-based compensation
|
| | | | 28 | | | | | | 18 | | |
Other
|
| | | | 6 | | | | | | 1 | | |
Changes in assets and liabilities, excluding effects of acquisitions, divestitures, and foreign currency translation adjustments:
|
| | | | | | | | | | | | |
(Increase) in receivables
|
| | | | (48) | | | | | | (74) | | |
(Increase) in inventories
|
| | | | (69) | | | | | | (117) | | |
(Increase) Decrease in prepaid expenses and other current assets
|
| | | | (12) | | | | | | 3 | | |
(Decrease) Increase in accounts payable, trade
|
| | | | (96) | | | | | | 225 | | |
(Decrease) in accrued expenses
|
| | | | (48) | | | | | | (27) | | |
Increase in taxes, including income taxes
|
| | | | 13 | | | | | | 21 | | |
Pension contributions
|
| | | | (2) | | | | | | (3) | | |
(Increase) in noncurrent assets
|
| | | | (6) | | | | | | (6) | | |
Increase (Decrease) in noncurrent liabilities
|
| | | | 21 | | | | | | (8) | | |
Cash provided from operations
|
| | | | 145 | | | | | | 306 | | |
Financing Activities | | | | | | | | | | | | | |
Net transfers to Parent Company
|
| | | | (69) | | | | | | (131) | | |
Other
|
| | | | 1 | | | | | | 5 | | |
Cash used for financing activities
|
| | | | (68) | | | | | | (126) | | |
Investing Activities | | | | | | | | | | | | | |
Capital expenditures
|
| | | | (120) | | | | | | (195) | | |
Proceeds from the sale of assets and businesses (L)
|
| | | | 11 | | | | | | 5 | | |
Cash used for investing activities
|
| | | | (109) | | | | | | (190) | | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
| | | | (2) | | | | | | (2) | | |
Net change in cash and cash equivalents and restricted cash
|
| | | | (34) | | | | | | (12) | | |
Cash and cash equivalents and restricted cash at beginning of year
|
| | | | 81 | | | | | | 126 | | |
Cash and cash equivalents and restricted cash at end of period
|
| | | $ | 47 | | | | | $ | 114 | | |
| | |
Parent
Company net investment |
| |
Accumulated
other comprehensive income |
| |
Noncontrolling
interest |
| |
Total
equity |
| ||||||||||||
Balance at December 31, 2017
|
| | | $ | 2,584 | | | | | $ | 410 | | | | | $ | 13 | | | | | $ | 3,007 | | |
Net income
|
| | | | 71 | | | | | | — | | | | | | — | | | | | | 71 | | |
Other comprehensive loss (I)
|
| | | | — | | | | | | (4) | | | | | | — | | | | | | (4) | | |
Change in ParentCo contribution
|
| | | | (147) | | | | | | — | | | | | | — | | | | | | (147) | | |
Balance at September 30, 2018
|
| | | $ | 2,508 | | | | | $ | 406 | | | | | $ | 13 | | | | | $ | 2,927 | | |
Balance at December 31, 2018
|
| | | $ | 2,415 | | | | | $ | 250 | | | | | $ | 12 | | | | | $ | 2,677 | | |
Adoption of accounting standard (B)
|
| | | | 73 | | | | | | — | | | | | | — | | | | | | 73 | | |
Net income
|
| | | | 39 | | | | | | — | | | | | | — | | | | | | 39 | | |
Other comprehensive income (I)
|
| | | | — | | | | | | 60 | | | | | | — | | | | | | 60 | | |
Change in ParentCo contribution
|
| | | | (111) | | | | | | — | | | | | | — | | | | | | (111) | | |
Other
|
| | | | — | | | | | | — | | | | | | 2 | | | | | | 2 | | |
Balance at September 30, 2019
|
| | | $ | 2,416 | | | | | $ | 310 | | | | | $ | 14 | | | | | $ | 2,740 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Cost of goods sold(1)
|
| | | $ | 11 | | | | | $ | 9 | | |
Selling, general administrative, and other expenses(2)
|
| | | | 80 | | | | | | 49 | | |
Research and development expenses
|
| | | | 8 | | | | | | 18 | | |
Provision for depreciation and amortization
|
| | | | 9 | | | | | | 7 | | |
Restructuring and other charges (E)
|
| | | | 5 | | | | | | (3) | | |
Interest expense
|
| | | | 86 | | | | | | 95 | | |
Other expenses (income), net (F)
|
| | | | 4 | | | | | | (4) | | |
For the nine-months ended September 30,
|
| |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
Segments |
| ||||||||||||
2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Ground Transportation
|
| | | $ | 1,878 | | | | | $ | 88 | | | | | $ | — | | | | | $ | 1,966 | | |
Building and Construction
|
| | | | 149 | | | | | | — | | | | | | 855 | | | | | | 1,004 | | |
Aerospace
|
| | | | 754 | | | | | | 221 | | | | | | — | | | | | | 975 | | |
Industrial Products
|
| | | | 804 | | | | | | 75 | | | | | | — | | | | | | 879 | | |
Packaging
|
| | | | 687 | | | | | | — | | | | | | — | | | | | | 687 | | |
Other
|
| | | | 22 | | | | | | 36 | | | | | | — | | | | | | 58 | | |
Total end-market revenue
|
| | | $ | 4,294 | | | | | $ | 420 | | | | | $ | 855 | | | | | $ | 5,569 | | |
|
For the nine-months ended September 30,
|
| |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
Segments |
| ||||||||||||
2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Ground Transportation
|
| | | $ | 1,942 | | | | | $ | 78 | | | | | $ | — | | | | | $ | 2,020 | | |
Building and Construction
|
| | | | 167 | | | | | | — | | | | | | 866 | | | | | | 1,033 | | |
Aerospace
|
| | | | 648 | | | | | | 207 | | | | | | — | | | | | | 855 | | |
Industrial Products
|
| | | | 760 | | | | | | 90 | | | | | | — | | | | | | 850 | | |
Packaging
|
| | | | 788 | | | | | | — | | | | | | — | | | | | | 788 | | |
Other
|
| | | | 28 | | | | | | 34 | | | | | | — | | | | | | 62 | | |
Total end-market revenue
|
| | | $ | 4,333 | | | | | $ | 409 | | | | | $ | 866 | | | | | $ | 5,608 | | |
|
For the nine-months ended September 30,
|
| |
Rolled
Products |
| |
Extrusions
|
| |
Building and
Construction Systems |
| |
Total
|
| ||||||||||||
2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales—unrelated party
|
| | | $ | 4,193 | | | | | $ | 379 | | | | | $ | 855 | | | | | $ | 5,427 | | |
Third-party sales—related party
|
| | | | 101 | | | | | | 41 | | | | | | — | | | | | | 142 | | |
Intersegment sales
|
| | | | 20 | | | | | | 1 | | | | | | — | | | | | | 21 | | |
Total sales
|
| | | $ | 4,314 | | | | | $ | 421 | | | | | $ | 855 | | | | | $ | 5,590 | | |
Segment operating profit
|
| | | $ | 346 | | | | | $ | (29) | | | | | $ | 89 | | | | | $ | 406 | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | $ | 139 | | | | | $ | 22 | | | | | $ | 14 | | | | | $ | 175 | | |
Restructuring and other charges
|
| | | | 69 | | | | | | (1) | | | | | | 31 | | | | | | 99 | | |
2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales: | | | | | | | | | | | | | | | | | | | | | | | | | |
Third-party sales—unrelated party
|
| | | $ | 4,223 | | | | | $ | 358 | | | | | $ | 866 | | | | | $ | 5,447 | | |
Third-party sales—related party
|
| | | | 110 | | | | | | 51 | | | | | | — | | | | | | 161 | | |
Intersegment sales
|
| | | | 12 | | | | | | 3 | | | | | | — | | | | | | 15 | | |
Total sales
|
| | | $ | 4,345 | | | | | $ | 412 | | | | | $ | 866 | | | | | $ | 5,623 | | |
Segment operating profit
|
| | | $ | 268 | | | | | $ | 2 | | | | | $ | 74 | | | | | $ | 344 | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for depreciation and amortization
|
| | | $ | 154 | | | | | $ | 17 | | | | | $ | 14 | | | | | $ | 185 | | |
Restructuring and other charges
|
| | | | 2 | | | | | | 1 | | | | | | — | | | | | | 3 | | |
For the nine-months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Total segment operating profit
|
| | | $ | 406 | | | | | $ | 344 | | |
Unallocated amounts: | | | | | | | | | | | | | |
Cost allocations (A)
|
| | | | (108) | | | | | | (83) | | |
Restructuring and other charges (E)
|
| | | | (104) | | | | | | — | | |
Other
|
| | | | (18) | | | | | | (49) | | |
Combined operating income
|
| | | $ | 176 | | | | | $ | 212 | | |
Interest expense
|
| | | | (86) | | | | | | (99) | | |
Other income (expenses), net (F)
|
| | | | 4 | | | | | | (9) | | |
Combined income before income taxes
|
| | | $ | 94 | | | | | $ | 104 | | |
| | |
Layoff costs
|
| |
Other costs
|
| |
Total
|
| |||||||||
Reserve balances at December 31, 2017
|
| | | $ | 22 | | | | | $ | 2 | | | | | $ | 24 | | |
Cash payments
|
| | | | (12) | | | | | | (1) | | | | | | (13) | | |
Restructuring charges
|
| | | | 1 | | | | | | 1 | | | | | | 2 | | |
Other(1)
|
| | | | (10) | | | | | | 1 | | | | | | (9) | | |
Reserve balances at December 31, 2018
|
| | | | 1 | | | | | | 3 | | | | | | 4 | | |
Cash payments
|
| | | | (7) | | | | | | (3) | | | | | | (10) | | |
Restructuring charges
|
| | | | 28 | | | | | | 1 | | | | | | 29 | | |
Other(1)
|
| | | | (1) | | | | | | — | | | | | | (1) | | |
Reserve balances at September 30, 2019(2)
|
| | | $ | 21 | | | | | $ | 1 | | | | | $ | 22 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Interest income
|
| | | | (11) | | | | | | (9) | | |
Foreign currency (gains) losses, net
|
| | | | (3) | | | | | | 13 | | |
Net loss from asset sales
|
| | | | 1 | | | | | | 3 | | |
Other, net
|
| | | | 9 | | | | | | 2 | | |
| | | | $ | (4) | | | | | $ | 9 | | |
| | | | | |
Pension benefits
|
| |
Other postretirement
benefits |
| ||||||||||||||||||
| | | | | |
For the nine months ended
September 30, |
| |
For the nine months ended
September 30, |
| ||||||||||||||||||
Type of Plan
|
| |
Type of Expense
|
| |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| ||||||||||||
Direct Plans
|
| | Net periodic benefit cost | | | | $ | 4 | | | | | $ | 4 | | | | | $ | — | | | | | $ | — | | |
Shared Plans
|
| |
Multiemployer contribution
|
| | | | 46 | | | | | | 51 | | | | | | 15 | | | | | | 15 | | |
Shared Plans
|
| | Cost allocation | | | | | 15 | | | | | | 15 | | | | | | 4 | | | | | | 4 | | |
| | | | | | | $ | 65 | | | | | $ | 70 | | | | | $ | 19 | | | | | $ | 19 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Service cost
|
| | | $ | 2 | | | | | $ | 2 | | |
Interest cost
|
| | | | 3 | | | | | | 3 | | |
Expected return on plan assets
|
| | | | (4) | | | | | | (4) | | |
Recognized net actuarial loss
|
| | | | 3 | | | | | | 3 | | |
Net periodic benefit cost*
|
| | | $ | 4 | | | | | $ | 4 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Pre-tax income at estimated annual effective income tax rate before discrete items
|
| | | $ | 54 | | | | | $ | 31 | | |
Interim period treatment of operational losses in foreign jurisdictions for which no tax benefit
is recognized |
| | | | — | | | | | | 1 | | |
Other discrete items
|
| | | | 1 | | | | | | 1 | | |
Provision for income taxes
|
| | | $ | 55 | | | | | $ | 33 | | |
For the nine months ended September 30,
|
| |
2019
|
| |
2018
|
| ||||||
Pension and other postretirement benefits (G) | | | | | | | | | | | | | |
Balance at beginning of period
|
| | | $ | (32) | | | | | $ | (36) | | |
Other comprehensive income: | | | | | | | | | | | | | |
Unrecognized net actuarial loss and prior service cost
|
| | | | (1) | | | | | | 6 | | |
Tax expense
|
| | | | — | | | | | | (2) | | |
Total Other comprehensive (loss) income before reclassifications, net of tax
|
| | | | (1) | | | | | | 4 | | |
Amortization of net actuarial loss and prior service cost(1)
|
| | | | 3 | | | | | | 3 | | |
Tax expense(2)
|
| | | | (1) | | | | | | (1) | | |
Total amount reclassified from Accumulated other comprehensive loss, net of tax(4)
|
| | | | 2 | | | | | | 2 | | |
Total Other comprehensive income
|
| | | | 1 | | | | | | 6 | | |
Balance at end of period
|
| | | $ | (31) | | | | | $ | (30) | | |
Foreign currency translation
|
| | | | | | | | | | | | |
Balance at beginning of period
|
| | | $ | 282 | | | | | $ | 446 | | |
Other comprehensive income (loss)(3)
|
| | | | 59 | | | | | | (10) | | |
Balance at end of period
|
| | | $ | 341 | | | | | $ | 436 | | |
Total balance at end of period
|
| | | $ | 310 | | | | | $ | 406 | | |
| | |
September 30,
2019 |
| |
December 31,
2018 |
| ||||||
Finished goods
|
| | | $ | 256 | | | | | $ | 235 | | |
Work-in-process
|
| | | | 804 | | | | | | 812 | | |
Purchased raw materials
|
| | | | 80 | | | | | | 79 | | |
Operating supplies
|
| | | | 70 | | | | | | 65 | | |
| | | | | 1,210 | | | | | | 1,191 | | |
LIFO reserve
|
| | | | (333) | | | | | | (373) | | |
| | | | $ | 877 | | | | | $ | 818 | | |
| | |
September 30,
2019 |
| |
December 31,
2018 |
| ||||||
2019
|
| | | $ | 10 | | | | | $ | 34 | | |
2020
|
| | | | 35 | | | | | | 28 | | |
2021
|
| | | | 27 | | | | | | 22 | | |
2022
|
| | | | 20 | | | | | | 17 | | |
2023
|
| | | | 16 | | | | | | 14 | | |
Thereafter
|
| | | | 50 | | | | | | 43 | | |
Total lease payments
|
| | | $ | 158 | | | | | $ | 158 | | |
Less: imputed interest
|
| | | | 30 | | | | | | | | |
Present value of lease liabilities
|
| | | $ | 128 | | | | | | | | |
Exhibit 99.2
Investor Contact | Media Contact | |
Paul T. Luther | Esra Ozer | |
(412) 553-1950 | (412) 553-2666 | |
Paul.luther@howmet.com | Esra.ozer@howmet.com |
Howmet Aerospace Provides Business Update Related to COVID-19
Key Announcements
· | COVID-19 impact on operations |
· | Cost cutting program |
· | Dividend suspension to preserve cash and provide additional flexibility |
· | Company to provide updated 2020 outlook with its first quarter 2020 earnings release |
PITTSBURGH – April 6, 2020 – Howmet Aerospace Inc. (NYSE: HWM) indicated that certain original equipment manufacturer (“OEM”) customers have suspended manufacturing operations in North America and Europe on a temporary basis due to matters associated with COVID-19 (coronavirus). These temporary suspensions are impacting operations at certain Howmet Aerospace facilities. As a result, the Company is taking a series of actions to address the financial impact.
Howmet Aerospace has commenced plans to reduce costs and is targeting approximately $100M of run rate savings.
In addition, the Company has suspended the dividend on its Common Stock, preserving cash and providing additional flexibility in the current environment.
Although the Company is currently unable to reasonably estimate the impact of COVID-19 on its 2020 outlook, Howmet Aerospace does expect this situation to have an impact on its 2020 financial performance and is in the process of reassessing its full-year financial guidance. The Company plans to provide an update to its financial outlook in its first quarter 2020 earnings release.
Executive Chairman and Co-CEO John Plant said, “It is important that we keep our production efficient and working safely during this crisis period. Howmet Aerospace is vital to national defense, to the commercial airline industry, and to the rebound of the global economy that relies heavily on transportation.” Plant added, “Our company’s financial position is strong. Reducing costs in our operations in the face of this pandemic will help preserve our financial strength through these challenging times.”
1 |
On April 6, 2020, the Company will redeem all $1.0 billion of its outstanding 6.150% Notes due 2020 and $300 million aggregate principal amount of its outstanding 5.40% Notes due 2021. Cash used to paydown notes includes the $700 million cash dividend received from the separated Arconic Corporation on April 1, 2020 as well as a portion of the $1.7 billion of cash on Howmet Aerospace’s balance sheet as of December 31, 2019.
As of April 6, Howmet Aerospace has an undrawn revolving credit facility of $1.5 billion.
About Howmet Aerospace
Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and titanium structural parts necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged wheels for commercial transportation. With nearly 1,300 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft to operate with a lower carbon footprint. In 2019, the businesses of Howmet Aerospace reported annual revenue of over $7 billion. For more information, visit www.howmet.com. Follow @howmet: LinkedIn, Twitter, Instagram, Facebook, and YouTube.
Dissemination of Company Information
Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.
2 |
Forward-Looking Statements
This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts and expectations relating to the growth of end markets; statements and guidance regarding future financial results or operating performance; statements regarding future strategic actions; and statements about Howmet Aerospace's strategies, outlook, business and financial prospects. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) the impact of the separation on the businesses of Howmet Aerospace; (b) deterioration in global economic and financial market conditions generally, including as a result of pandemic health issues (including coronavirus and its effects, among other things, on global supply, demand, and distribution disruptions as the coronavirus outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; (e) competition from new product offerings, disruptive technologies or other developments; (f) political, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (g) manufacturing difficulties or other issues that impact product performance, quality or safety; (h) Howmet Aerospace’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, expansions, or joint ventures; (i) the impact of potential cyber attacks and information technology or data security breaches; (j) the loss of significant customers or adverse changes in customers’ business or financial conditions; (k) adverse changes in discount rates or investment returns on pension assets; (l) the impact of changes in aluminum prices and foreign currency exchange rates on costs and results; (m) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; and (n) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2019 and other reports filed with the U.S. Securities and Exchange Commission (SEC). Market projections are subject to the risks discussed above and other risks in the market. The statements in this release are made as of the date of this release, even if subsequently made available by Howmet Aerospace on its website or otherwise. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
(end)
3 |
Exhibit 99.3
Investor Contact | Media Contact | |
Paul T. Luther | Esra Ozer | |
(412) 553-1950 | (412) 553-2666 | |
Paul.luther@howmet.com | Esra.ozer@howmet.com |
Howmet Aerospace, Leading Global Provider of Advanced Engineered Solutions, Launches as Standalone Company
Separation of Arconic Inc. into Two Standalone Companies Complete
Howmet Begins Trading Today as “HWM” on the New York Stock Exchange
PITTSBURGH – April 1, 2020 – Howmet Aerospace launches today as a leader in advanced engineered solutions after the separation of Arconic Inc. into two standalone companies – Howmet Aerospace Inc. and Arconic Corporation. Howmet Aerospace will start trading today on the New York Stock Exchange under the ticker "HWM.”
In 2019, the businesses comprising Howmet Aerospace generated more than $7 billion in revenue, up five percent from the prior year, with more than 70 percent of Howmet’s revenue derived from the aerospace market.
The new company will be led by co-Chief Executive Officers John C. Plant, who will also serve as Executive Chairman of the Board, and Tolga Oal, who previously served as President of Arconic Engineered Structures. More about Howmet Aerospace and the leadership team can be found at https://www.howmet.com/.
Howmet has been a trusted brand for over 90 years. Today, Howmet Aerospace has the technological capabilities to support the innovation and growth of next-generation aerospace programs. Composed of engine products, fastening systems, engineered structures and forged wheels businesses, Howmet Aerospace is transforming the next phase of more fuel-efficient, quieter aerospace engines and sustainable ground transportation.
“Howmet Aerospace, an iconic and storied brand in the aerospace industry, today launches as a standalone company,” said Mr. Plant. “With strong market positions, differentiated technology and collaborative relationships across our customer base, the Company is well-positioned to benefit from a strong and growing aerospace market.” Mr. Plant continued, “Today is the culmination of a year of focus and hard work by our team to establish a strong and competitive company. We will build on that work and continue to serve our customers with precision-engineered and highly innovative products.”
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About Howmet Aerospace
Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and titanium structural parts necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged wheels for commercial transportation. With nearly 1,300 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft to operate with a lower carbon footprint. In 2019, the businesses of Howmet Aerospace reported annual revenue of over $7 billion. For more information, visit www.howmet.com. Follow @howmet: LinkedIn, Twitter, Instagram, Facebook, and YouTube.
Dissemination of Company Information
Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.
Forward-Looking Statements
This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates," "believes," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "outlook," "plans," "projects," "seeks," "sees," "should," "targets," "will," "would," or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts and expectations relating to the growth of end markets; statements and guidance regarding future financial results or operating performance; statements regarding future strategic actions; and statements about Howmet Aerospace's strategies, outlook, business and financial prospects. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) the impact of the separation on the businesses of Howmet Aerospace; (b) deterioration in global economic and financial market conditions generally, including as a result of pandemic health issues (including coronavirus and its effects, among other things, on global supply, demand, and distribution disruptions as the coronavirus outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations); (c) unfavorable changes in the markets served by Howmet Aerospace; (d) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated or targeted; (e) competition from new product offerings, disruptive technologies or other developments; (f) political, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (g) manufacturing difficulties or other issues that impact product performance, quality or safety; (h) Howmet Aerospace’s inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, expansions, or joint ventures; (i) the impact of potential cyber attacks and information technology or data security breaches; (j) the loss of significant customers or adverse changes in customers’ business or financial conditions; (k) adverse changes in discount rates or investment returns on pension assets; (l) the impact of changes in aluminum prices and foreign currency exchange rates on costs and results; (m) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; and (n) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2019 and other reports filed with the U.S. Securities and Exchange Commission (SEC). Market projections are subject to the risks discussed above and other risks in the market. The statements in this release are made as of the date of this release, even if subsequently made available by Howmet Aerospace on its website or otherwise. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.
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Exhibit 99.4
FOR IMMEDIATE RELEASE
Investor Contact: | Media Contact: | |
Paul T. Luther | Esra Ozer | |
(412) 553-1950 | (412) 553-2666 | |
Paul.Luther@howmet.com | Esra.Ozer@howmet.com |
Howmet Aerospace Completes Early Redemption of 6.150% Notes Due 2020 and
Early Partial Redemption of 5.40% Notes Due 2021
PITTSBURGH, April 6, 2020 – Howmet Aerospace Inc. (NYSE: HWM) announced today that it has completed the previously indicated early redemption of all of its 6.150% Notes due 2020 (the “6.150% Notes”) and the early partial redemption of its 5.40% Notes due 2021 (the “5.40% Notes”) in the aggregate principal amount of $1,000,000,000 and $300,000,000, respectively. Holders of the 6.150% Notes were paid $1,020.15 per $1,000.00 aggregate principal amount of the 6.150% Notes, or an aggregate of $1,020.2 million, plus accrued and unpaid interest up to, but not including, the redemption date; and holders of the 5.40% Notes were paid $1,050.35 per $1,000.00 aggregate principal amount of the 5.40% Notes, or an aggregate of $315.1 million, plus accrued and unpaid interest up to, but not including, the redemption date.
Taken together, the actions that Howmet Aerospace has taken in 2020 have resulted in the Company reducing its total debt by approximately $1.3 billion.
About Howmet Aerospace
Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and titanium structural parts necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged wheels for commercial transportation. With nearly 1,300 granted and pending patents, the Company’s differentiated technologies enable lighter, more fuel-efficient aircraft to operate with a lower carbon footprint. In 2019, the businesses of Howmet Aerospace reported annual revenue of over $7 billion. For more information, visit www.howmet.com.
Dissemination of Company Information
Howmet Aerospace intends to make future announcements regarding Company developments and financial performance through its website at www.howmet.com.
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