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): October 1, 2012 (September 25, 2012)

 

 

TYCO INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

 

 

 

Switzerland   98-0390500

(Jurisdiction

of Incorporation)

 

(IRS Employer

Identification Number)

001-13836

(Commission File Number)

Freier Platz 10

Schaffhausen, CH-8200 Switzerland

(Address of Principal Executive Offices, including Zip Code)

41-52-633-02-44

(Registrant’s telephone number, including Area Code)

 

 

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 ( see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement

New Pentair Amended and Restated Separation and Distribution Agreement

In connection with its previously announced plan of separation, on March 27, 2012, Tyco International Ltd. (“Tyco”) entered into a Separation and Distribution Agreement with Pentair Ltd. (f/k/a Tyco Flow Control International Ltd.) (“New Pentair”) and The ADT Corporation (“ADT”) (the “Original Separation Agreement”), governing, among other things, the separation of Tyco’s flow control business from Tyco and the allocation of assets and liabilities in connection therewith. On September 27, 2012, Tyco, New Pentair and ADT entered into an Amended and Restated Separation and Distribution Agreement (the “New Pentair Separation Agreement”) to modify, clarify and supplement certain terms of the Original Separation Agreement, including certain terms relating to employee benefits matters, insurance claims and administration, treatment of equity awards held by certain employees resident outside the U.S. and the treatment of certain costs and expenses in connection with the separation.

Pursuant to the provisions of the New Pentair Separation Agreement, on September 28, 2012, Tyco effected a spin-off of New Pentair to its shareholders through the pro rata distribution of 100% of the outstanding common shares of New Pentair to Tyco’s shareholders in the form of a special dividend out of Tyco’s contributed surplus (the “New Pentair Distribution”).

A description of the material terms of the Original Separation Agreement, which reflects the material terms of the New Pentair Separation Agreement, is set forth in the section entitled “The Separation and Distribution Agreements and the Ancillary Agreements—Tyco Flow Control Separation and Distribution Agreement” in Tyco’s Definitive Proxy Statement filed with the Securities and Exchange Commission (the “SEC”) on Schedule 14A on August 3, 2012 (the “Definitive Proxy Statement”) and is incorporated herein by reference.

The description set forth in the Definitive Proxy Statement is only a summary of that agreement and is qualified in its entirety by reference to the New Pentair Separation Agreement filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated by reference herein.

ADT Separation and Distribution Agreement

On September 26, 2012, Tyco, ADT and certain of their respective subsidiaries entered into a Separation and Distribution Agreement (the “ADT Separation and Distribution Agreement”).

Pursuant to the provisions of the ADT Separation and Distribution Agreement, (i) Tyco engaged in an internal restructuring whereby certain assets related to Tyco’s residential and small business security business in the United States and Canada were transferred to ADT, and ADT assumed from Tyco certain liabilities related to Tyco’s residential and small business security business in the United States and Canada (the “ADT Separation”) and (ii) on September 28, 2012, Tyco effected a spin-off of ADT to Tyco shareholders through the pro rata distribution of 100% of the outstanding common shares of ADT to Tyco’s shareholders in the form of a special dividend out of Tyco’s contributed surplus (the “ADT Distribution” and, together with the New Pentair Distribution, the “Distributions” or the “spin-offs”).


A description of the material terms of the ADT Separation and Distribution Agreement is set forth in the section entitled “The Separation and Distribution Agreements and the Ancillary Agreements—ADT Separation and Distribution Agreement” in Tyco’s Definitive Proxy Statement and is incorporated herein by reference.

The description of the ADT Separation and Distribution Agreement set forth in the Definitive Proxy Statement is only a summary of that agreement and is qualified in its entirety by reference to the ADT Separation and Distribution Agreement filed as Exhibit 2.2 to this Current Report on Form 8-K and incorporated by reference herein.

Tax Sharing Agreement

On September 28, 2012, Tyco (together with its subsidiary Tyco International Finance S.A., or TIFSA) entered into a Tax Sharing Agreement (the “Tax Sharing Agreement”) with ADT and New Pentair that will govern the respective rights, responsibilities and obligations of Tyco, ADT and New Pentair after the spin-offs with respect to tax liabilities and benefits, tax attributes, tax contests and other tax matters regarding income taxes, other taxes and related tax returns. Because certain of New Pentair’s and ADT’s subsidiaries are members of one of Tyco’s U.S. consolidated groups, they have (and will continue to have following the spin-offs) several liability with Tyco to the IRS for the consolidated U.S. federal income taxes of such consolidated group relating to the taxable periods in which New Pentair subsidiaries and ADT subsidiaries were part of such consolidated group. The Tax Sharing Agreement provides that Tyco, New Pentair and ADT will share (i) certain pre-Distributions income tax liabilities that arise from adjustments made by tax authorities to Tyco’s, New Pentair’s and ADT’s U.S. income tax returns, and (ii) payments required to be made by Tyco with respect to a separate tax sharing agreement entered into by Tyco, Covidien Ltd. and TE Connectivity Ltd. (the “2007 Tax Sharing Agreement and, collectively, “Shared Tax Liabilities”). Tyco will be responsible for the first $500 million of Shared Tax Liabilities. New Pentair and ADT will share 42% and 58%, respectively, of the next $225 million of Shared Tax Liabilities. Tyco, New Pentair and ADT will share 52.5%, 20% and 27.5%, respectively, of Shared Tax Liabilities above $725 million.

In the event the Distributions or certain internal transactions undertaken in connection therewith were determined to be taxable as a result of actions taken after the Distributions by Tyco, ADT or New Pentair, the party responsible for such failure would be responsible for all taxes imposed on Tyco, ADT or New Pentair as a result thereof. Taxes resulting from the determination that the Distributions or any internal transactions that were intended to be tax-free, are taxable are referred to herein as “Distribution Taxes.” If such failure is not the result of actions taken after the Distributions by Tyco, ADT or New Pentair, then Tyco, ADT and New Pentair would be responsible for any Distribution Taxes imposed on Tyco, ADT or New Pentair as a result of such determination in the same manner and in the same proportions as the Shared Tax Liabilities. ADT will have sole responsibility for any income tax liability arising as a result of Tyco’s acquisition of Brink’s Home Security Holdings, Inc. (“BHS”) in May 2010, including any liability of BHS under the tax sharing agreement between BHS and The Brink’s Company dated October 31, 2008 (collectively, the “Broadview Tax Liabilities”). Costs and expenses associated with the management of Shared Tax Liabilities, Distribution Taxes and Broadview Tax Liabilities will generally be shared 20% by New Pentair, 27.5% by ADT and 52.5% by Tyco. Tyco, ADT and New Pentair are responsible for all of their own taxes that are not shared pursuant to the Tax Sharing Agreement’s sharing formulae.


The Tax Sharing Agreement provides further that, if any party were to default in its obligation to another party to pay its share of the Distribution Taxes that arise as a result of no party’s fault, each non-defaulting party would be required to pay, equally with any other non-defaulting party, the amounts in default. In addition, if another party to the Tax Sharing Agreement that is responsible for all or a portion of an income tax liability were to default in its payment of such liability to a taxing authority, Tyco could be legally liable under applicable tax law for such liabilities and be required to make additional tax payments. Accordingly, under certain circumstances, Tyco may be obligated to pay amounts in excess of its agreed-upon share of its, New Pentair’s and ADT’s tax liabilities.

Each of Tyco, New Pentair and ADT agrees to indemnify the other two parties against any amounts paid by such other parties pursuant to the Tax Sharing Agreement and with respect to which such paying parties are not responsible pursuant to the Tax Sharing Agreement. Though valid as between the parties, the Tax Sharing Agreement will not be binding on the IRS.

Under the Tax Sharing Agreement, there are restrictions on Tyco’s ability to take actions that could cause the Distributions or certain internal transactions undertaken in anticipation of the Distributions to fail to qualify for favorable treatment under the Internal Revenue Code of 1986, as amended (the “Code”), including entering into, approving or allowing any transaction that results in a change in ownership of more than 35% of its common shares (when combined with any other changes in ownership of its shares), a redemption of equity securities, a sale or other disposition of more than 35% of its assets or engaging in certain internal transactions. These restrictions will apply for the two-year period after the Distributions, unless, for certain transactions, Tyco obtains the consent of New Pentair and ADT or Tyco obtains a private letter ruling from the IRS or an unqualified opinion of a nationally recognized law firm that such action will not cause the Distributions or the internal transactions undertaken in anticipation of the Distributions to fail to qualify for favorable treatment under the Code, and such letter ruling or opinion, as the case may be, is acceptable to New Pentair and ADT. Moreover, the Tax Sharing Agreement will also provide that Tyco is responsible for any taxes imposed on New Pentair, ADT or any of their affiliates as a result of the failure of the Distributions or the internal transactions to qualify for favorable treatment under the Code if such failure is attributable to certain post-Distributions actions taken by or in respect of Tyco, any of our affiliates or our shareholders, regardless of whether the actions occur more than two years after the Distribution, New Pentair and ADT consent to such actions or Tyco obtains a favorable letter ruling or opinion of tax counsel as described above. For example, Tyco would be responsible for a third party’s acquisition of it at a time and in a manner that would cause such failure. These restrictions may prevent Tyco from entering into transactions which might be advantageous to it or its shareholders.

The foregoing is only a summary of the Tax Sharing Agreement and is qualified in its entirety by reference to the Tax Sharing Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.

Non-Income Tax Sharing Agreement

On September 28, 2012, Tyco and TIFSA entered into a tax sharing agreement with ADT that will govern the respective rights, responsibilities and obligations of Tyco and ADT after the Distributions with respect to tax returns, tax liabilities, tax attributes, tax contests and other tax matters regarding non-income taxes related to specified legal entities (the “Non-Income Tax Sharing Agreement”). The Non-Income Tax Sharing Agreement provides that Tyco and ADT will share certain non-income tax liabilities that arise for the period prior to the ADT Distribution from adjustments made by tax authorities to the non-income tax returns of the specified legal entities. Under the Non-Income Tax Sharing Agreement, Tyco is responsible for amounts equal


to accrued liabilities for non-income tax contingencies with respect to the specified entities that will be members of the Tyco group after the ADT Distribution, and ADT is responsible for amounts equal to accrued liabilities for non-income tax contingencies with respect to the specified entities that will be members of the ADT group after the ADT Distribution. In each case, payments required to be made in excess of such accrued liabilities are shared by Tyco (40%) and ADT (60%). ADT will have sole responsibility of any non-income tax liability assessed against the entities acquired in the acquisition of BHS.

ADT and Tyco agree to indemnify each other against any amounts paid by the other party for which such paying party is not responsible pursuant to the Non-Income Tax Sharing Agreement. Although valid as between the parties, the Non-Income Tax Sharing Agreement will not be binding on any taxing authority.

The foregoing is only a summary of the Non-Income Tax Sharing Agreement and is qualified in its entirety by reference to the Non-Income Tax Sharing Agreement filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference herein.

Trademark Agreement

On September 25, 2012, Tyco entered into a Trademark Agreement (the “Trademark Agreement”) with ADT that will govern each party’s use of certain trademarks, including the ADT trademark and logo (the “ADT Brand”). In addition, Tyco transferred to ADT all of its rights in the ADT Brand in the United States and Canada and retained rights to the ADT Brand elsewhere in the world. Each of ADT and Tyco agreed that they and their affiliates will not register or use (subject to a “phase out” transitional license to Tyco in the United States and Canada) the ADT Brand for any goods or services in the other party’s territory. The parties are not restricted from competing with each other under other brands. Under the Trademark Agreement, ADT is the exclusive, worldwide owner of the PULSE trademark.

The Trademark Agreement allocates the ownership of, and the parties’ rights and obligations with respect to, the ADT Brand online. In general, each party has the right to register domain names containing the ADT Brand in domain names ending in country codes in its respective territory. The Trademark Agreement also contains provisions for allocating ownership, rights and obligations in other domains and obligations in regard to third-party media (such as social networking sites).

The Trademark Agreement contains other provisions, including quality control provisions, compliance with applicable laws, and security, system and data protection measures. The Trademark Agreement took effect as of September 25, 2012, and will remain in effect in perpetuity.

Neither ADT nor Tyco may assign the Trademark Agreement, or delegate its obligations thereunder, without the consent of the other party, except that a party must assign the agreement in its entirety in connection with a sale or transfer of such party’s entire interest in the ADT Brand, or delegate corresponding obligations in the case of a transfer of less than all of its interest in the ADT Brand, and in each case the assignee must assume in writing all of the assigning party’s obligations under the agreement.


The foregoing is only a summary of the Trademark Agreement and is qualified in its entirety by reference to the Trademark Agreement filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated by reference herein.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On September 28, 2012, Tyco announced that it had completed the previously announced Distributions. Effective as of 8:00 a.m., New York time, on September 28, 2012 (the “Distribution Date”) the common shares of New Pentair and the shares of common stock of ADT were distributed to Tyco’s shareholders of record as of the close of business on September 17, 2012 (the “Record Date”). On the Distribution Date, each Tyco shareholder received (i) one share of ADT for every two shares of Tyco held by such shareholder on the Record Date and (ii) 0.239943 of common shares of New Pentair for every share of Tyco held by such shareholder on the Record Date. On September 28, 2012, Tyco issued a press release announcing the completion of the Distributions. A copy of this press release is attached hereto as Exhibit 99.1.

After the Distribution Date, Tyco does not beneficially own any shares of ADT and New Pentair and, following such date, does not expect to consolidate the financial results of ADT and New Pentair for the purpose of its own financial reporting.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Departure of Certain Directors and Appointment of Certain Directors

As previously disclosed in the Definitive Proxy Statement, effective as of the completion of the Distributions each of Messrs. Timothy M. Donahue, Bruce S. Gordon and Dinesh Paliwal resigned as directors of Tyco. Messrs. Frank M. Drendel and George R. Oliver, who were elected as directors contingent upon the completion of the Distributions, became directors of Tyco on September 28, 2012.

Departure of Certain Officers

As previously disclosed in the Definitive Proxy Statement, effective as of the completion of the Distributions each of Messrs. Edward D. Breen (Chief Executive Officer), Frank S. Sklarsky ( Executive Vice President and Chief Financial Officer), Carol A. Davidson (Senior Vice President, Controller and Chief Accounting Officer), and Naren K. Gursahaney (President, Tyco Security Solutions) resigned from their respective executive positions at Tyco.

Item 8.01 Other Events.

On September 17, 2012, Tyco’s shareholders adopted the 2012 Stock and Incentive Plan (the “2012 Plan”). A description of the material terms of the 2012 Plan is set forth in the Definitive Proxy Statement and in the definitive additional proxy materials filed with the SEC on August 21, 2012 (the “Additional Proxy Materials”) and is incorporated herein by reference.

The description of the 2012 Plan set forth in the Definitive Proxy Statement and the Additional Proxy Materials is only a summary of that plan and is qualified in its entirety by reference to the 2012 Plan filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated by reference herein.


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The exhibits listed in the accompanying Exhibit Index are being filed herewith.

Forward-Looking Statements

The exhibits to this Current Report on Form 8-K contain statements concerning expectations of financial or operational performance or economic outlook, or concerning other future events or results, or which refer to matters which are not historical facts, which are “forward-looking statements” within the meaning of the U.S. federal securities laws. Similarly, statements that describe Tyco’s objectives, expectations, plans or goals are forward-looking statements. Forward-looking statements include, without limitation, expectations concerning the outlook for Tyco’s, business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations. Forward-looking statements also include statements regarding the expected benefits of the Distributions (each as described in the Definitive Proxy Statement).

Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Important factors that could cause such differences include, but are not limited to:

 

   

the matters described in the section titled “Risk Factors” beginning on page 74 of the Definitive Proxy Statement;

 

   

the ability of Tyco to realize the intended benefits of the Distributions;

 

   

adverse changes in economic, legal or industry conditions, both in North America and globally;

 

   

continuing volatility in the capital or credit markets and other changes in the securities and capital markets;

 

   

changes affecting customers or suppliers;

 

   

competition and consolidation in the industries in which Tyco competes;

 

   

developments and changes in laws and regulations;

 

   

developments in and losses resulting from claims and litigation;

 

   

natural events such as severe weather, fires, floods and earthquakes, or acts of terrorism;

 

   

changes in tax laws and rules, and other regulatory matters, both in the U.S. and abroad;

 

   

changes in operating conditions and costs;

 

   

economic and political conditions in international markets; and

 

   

the extent of Tyco’s ability to achieve their respective operational and financial goals and initiatives.


In addition, the Distributions could disrupt current plans and operations and business relationships or pose difficulties in attracting or retaining employees for Tyco.

We caution against placing undue reliance on forward-looking statements, which reflect Tyco’s current beliefs and are based on information currently available to Tyco as of the date a forward-looking statement is made. Forward-looking statements set forth or incorporated by reference herein speak only as of the date of hereof or the date of the document incorporated by reference, as the case may be. Tyco undertakes no obligation to revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs. In the event that Tyco does update any forward-looking statements, no inference should be made that Tyco will make additional updates with respect to that statement, related matters, or any other forward looking statements. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear in Tyco’s public filings with the SEC, which are accessible at www.sec.gov, and which you are advised to consult.


SIGNATURES

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, thereunto duly authorized.

 

Date: October 1, 2012   TYCO INTERNATIONAL LTD.
  By:  

/s/ Judith A. Reinsdorf

  Name:   Judith A. Reinsdorf
  Title:   Executive Vice President and General Counsel


TYCO INTERNATIONAL LTD.

Exhibit Index to Current Report on Form 8-K

Dated October 1, 2012

 

Exhibit

Number

  

Description

  2.1    Amended and Restated Separation and Distribution Agreement, dated September 27, 2012 among Tyco International Ltd., Pentair Ltd. and The ADT Corporation
  2.2    Separation and Distribution Agreement, dated September 26, 2012 among Tyco International Ltd., Tyco International Finance S.A., The ADT Corporation and ADT LLC.
10.1    Tax Sharing Agreement, dated September 28, 2012 by and among Pentair Ltd., Tyco International Ltd., Tyco International Finance S.A. and The ADT Corporation
10.2    Non-Income Tax Sharing Agreement dated September 28, 2012 by and among Tyco International Ltd., Tyco International Finance S.A. and The ADT Corporation
10.3    Trademark Agreement, dated as of September 25, 2012, by and among ADT Services GmbH, ADT US Holdings, Inc., Tyco International Ltd. and The ADT Corporation
10.4    2012 Stock and Incentive Plan
99.1    Press Release dated September 28, 2012

Exhibit 2.1

EXECUTION VERSION

AMENDED AND RESTATED

SEPARATION AND DISTRIBUTION AGREEMENT

by and among

TYCO INTERNATIONAL LTD.,

PENTAIR LTD.,

and

THE ADT CORPORATION

Dated as of September 27, 2012


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS AND INTERPRETATION

     2   

Section 1.1.

 

General

     2   

Section 1.2.

 

References; Interpretation

     28   
ARTICLE II THE SEPARATION      28   

Section 2.1.

 

General

     28   

Section 2.2.

 

Transfer of Assets

     29   

Section 2.3.

 

Assumption and Satisfaction of Liabilities

     30   

Section 2.4.

 

Intercompany Accounts

     31   

Section 2.5.

 

Limitation of Liability

     31   

Section 2.6.

 

Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time

     32   

Section 2.7.

 

Conveyancing and Assumption Instruments

     34   

Section 2.8.

 

Further Assurances

     34   

Section 2.9.

 

Novation of Liabilities

     35   

Section 2.10.

 

Guarantees

     36   

Section 2.11.

 

Pre-Closing Actions

     37   

Section 2.12.

 

Disclaimer of Representations and Warranties

     37   
ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS      38   

Section 3.1.

 

Organizational Documents

     38   

Section 3.2.

 

Directors

     38   

Section 3.3.

 

Resignations

     38   

Section 3.4.

 

Certain Debt; Cash

     38   

Section 3.5.

 

Post-Closing Working Capital Adjustment

     39   

Section 3.6.

 

Ancillary Agreements

     41   

Section 3.7.

 

Fountain Recapitalization

     42   
ARTICLE IV THE DISTRIBUTION      42   

Section 4.1.

 

Stock Dividend to Trident Shareholders

     42   

Section 4.2.

 

Fractional Shares

     42   

Section 4.3.

 

Actions in Connection with the Distribution

     43   

Section 4.4.

 

Conditions to Distribution

     43   
ARTICLE V CERTAIN COVENANTS      43   

Section 5.1.

 

No Solicit; No Hire

     43   

 

i


Section 5.2.

 

Agreement Not To Compete

     44   

Section 5.3.

 

Financial Statements and Accounting

     45   

Section 5.4.

 

Certain Securities

     47   

Section 5.5.

 

Removal of Trident Designations

     47   

Section 5.6.

 

Asbestos Agreements

     47   

ARTICLE VI EMPLOYEE MATTERS

     48   

Section 6.1.

 

Stock Options

     48   

Section 6.2.

 

Restricted Stock Units, Performance Share Units and Deferred Stock Units

     51   

Section 6.3.

 

Nonqualified Deferred Compensation Plans

     54   

Section 6.4.

 

Pension Plans

     55   

Section 6.5.

 

Retirement Savings Plans

     58   

Section 6.6.

 

Retiree Medical Benefits

     60   

Section 6.7.

 

Health, Welfare and Fringe Benefit Plans

     60   

Section 6.8.

 

Cooperation and Administrative Provisions

     64   

Section 6.9.

 

Approval of Plans; Terms of Participation by Employees in Plans

     68   

Section 6.10.

 

Tax Consequences

     69   

Section 6.11.

 

International Regulatory Compliance

     69   

Section 6.12.

 

Alternate Procedure

     69   

Section 6.13.

 

Employee Transfer; Liabilities

     69   

ARTICLE VII ASSUMED TRIDENT CONTINGENT LIABILITIES

     70   

Section 7.1.

 

Assumed Trident Contingent Liabilities

     70   

Section 7.2.

 

Management of Assumed Trident Contingent Liabilities

     71   

Section 7.3.

 

Access to Information; Certain Services; Expenses

     71   

Section 7.4.

 

Notice Relating to Assumed Trident Contingent Liabilities; Disputes

     72   

Section 7.5.

 

Cooperation with Governmental Entity

     72   

Section 7.6.

 

Default

     73   

ARTICLE VIII INDEMNIFICATION

     73   

Section 8.1.

 

Release of Pre-Distribution Claims

     73   

Section 8.2.

 

Indemnification by Trident

     75   

Section 8.3.

 

Indemnification by Fountain

     75   

Section 8.4.

 

Indemnification with Respect to Athens NA

     76   

Section 8.5.

 

Procedures for Indemnification

     76   

Section 8.6.

 

Cooperation in Defense and Settlement

     78   

Section 8.7.

 

Indemnification Payments

     79   

 

ii


Section 8.8.

 

Contribution

     79   

Section 8.9.

 

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

     79   

Section 8.10.

 

Additional Matters; Survival of Indemnities

     80   

ARTICLE IX CONFIDENTIALITY; ACCESS TO INFORMATION

     81   

Section 9.1.

 

Provision of Corporate Records

     81   

Section 9.2.

 

Access to Information

     82   

Section 9.3.

 

Witness Services

     82   

Section 9.4.

 

Reimbursement; Other Matters

     82   

Section 9.5.

 

Confidentiality

     83   

Section 9.6.

 

Privileged Matters

     83   

Section 9.7.

 

Ownership of Information

     86   

Section 9.8.

 

Other Agreements

     86   

ARTICLE X INSURANCE

     86   

Section 10.1.

 

Policies and Rights Included Within Assets

     86   

Section 10.2.

 

Claims Made Tail Policies

     86   

Section 10.3.

 

Occurrence Based Policies

     88   

Section 10.4.

 

Administration; Other Matters

     88   

Section 10.5.

 

Agreement for Waiver of Conflict and Shared Defense

     90   

Section 10.6.

 

Cooperation

     90   

Section 10.7.

 

Certain Matters Relating to Trident’s Organizational Documents

     90   

ARTICLE XI MISCELLANEOUS

     91   

Section 11.1.

 

Complete Agreement; Construction

     91   

Section 11.2.

 

Ancillary Agreements; Merger Agreement

     91   

Section 11.3.

 

Counterparts

     91   

Section 11.4.

 

Survival of Agreements

     92   

Section 11.5.

 

Expenses

     92   

Section 11.6.

 

Notices

     92   

Section 11.7.

 

Waivers and Consents

     93   

Section 11.8.

 

Amendments

     94   

Section 11.9.

 

Assignment

     94   

Section 11.10.

 

Successors and Assigns

     94   

Section 11.11.

 

Certain Termination and Amendment Rights

     94   

Section 11.12.

 

Payment Terms

     94   

Section 11.13.

 

No Circumvention

     94   

 

iii


Section 11.14.

 

Subsidiaries

     95   

Section 11.15.

 

Third Party Beneficiaries

     95   

Section 11.16.

 

Title and Headings

     95   

Section 11.17.

 

Exhibits and Schedules

     95   

Section 11.18.

 

Governing Law

     95   

Section 11.19.

 

Consent to Jurisdiction

     95   

Section 11.20.

 

Specific Performance

     96   

Section 11.21.

 

Waiver of Jury Trial

     96   

Section 11.22.

 

Severability

     97   

Section 11.23.

 

Force Majeure

     97   

Section 11.24.

 

Interpretation

     97   

Section 11.25.

 

No Duplication; No Double Recovery

     97   

 

iv


List of Schedules

Schedule 1.01(j)(i)

  

Expenses

Schedule 1.01(j)(ii)

  

Certain Obligations and Awards

Schedule 1.1(28)

  

Assumed Trident Contingent Liabilities

Schedule 1.1(48)

  

Continuing Arrangements

Schedule 1.1(51)

  

Exclusions to Current Assets

Schedule 1.1(52)

  

Exclusions to Current Liabilities

Schedule 1.1(66)

  

Former Fountain Employees

Schedule 1.1(67)

  

Trident Corporate Employees to be Treated as Former Employees

Schedule 1.1(69)(vi)

  

Fountain Assets

Schedule 1.1(73)(v)

  

Fountain Contracts

Schedule 1.1(80)

  

Fountain Group

Schedule 1.1(82)(i)

  

Fountain Liabilities

Schedule 1.1(82)(iii)(x)

  

Fountain Assumed Divested Business Liabilities

Schedule 1.1(82)(iii)(y)

  

Fountain Assumed Divested Business Liabilities Contracts

Schedule 1.1(82)(vi)

  

Fountain Indebtedness

Schedule 1.1(95)(A)

  

Fountain Tier I Specified Employees

Schedule 1.1(95)(B)

  

Fountain Tier II Specified Employees

Schedule 1.1(123)

  

License Agreements

Schedule 1.1(179)

  

Transition Services Agreement

Schedule 1.1(186)

  

Trident Equity Plans

Schedule 1.1(187)

  

Trident Group

Schedule 1.1(193)(vi)

  

Trident Retained Assets

Schedule 1.1(195)(v)

  

Trident Retained Contracts

Schedule 1.1(196)(i)

  

Trident Retained Liabilities

Schedule 1.1(196)(iii)(x)

  

Trident Retained Divested Business Liabilities

 

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Schedule 1.1(196)(iii)(y)

  

Trident Retained Divested Business Liabilities Contracts

Schedule 2.2(a)

  

Step Plan

Schedule 2.2(b)

  

Shared Contracts

Schedule 2.3(b)

  

Contracts or Arrangements to be Entered Into by Fountain

Schedule 2.10(a)(i)

  

Trident Removal of Guarantees

Schedule 2.10(a)(ii)

  

Fountain Removal of Guarantees

Schedule 2.10(a)(ii)(B)

  

Certain Guarantees

Schedule 5.6(a)

  

Asbestos-Related Agreements

Schedule 5.6(b)

  

Asbestos-Related Actions

Schedule 6.1

  

Option Treatment

Schedule 6.1(c)

  

Trident Corporate Employees

Schedule 6.2

  

Restricted Stock Units

Schedule 6.3(a)

  

Fountain Nonqualified Deferred Compensation Plans

Schedule 6.3(b)

  

Trident Nonqualified Deferred Compensation Plans

Schedule 6.4(a)

  

Fountain Pension Plans

Schedule 6.4(b)

  

Trident Retained Pension Plans

Schedule 6.5(a)

  

Fountain Savings Plans

Schedule 6.5(b)

  

Trident Retained Savings Plans

Schedule 6.6(a)

  

Trident Retiree Medical Plans

Schedule 6.6(b)

  

Fountain Retiree Medical Plans

Schedule 6.8(c)

  

Employees on International Assignment

Schedule 6.8(d)

  

Fountain Retention Letters

Schedule 6.8(d)(i)

  

Integration Incentive Bonus Agreements

Schedule 6.9(c)

  

Service Credit Under Employee Benefit Plans

Schedule 6.13(a)

  

Employees Transferred to Trident

Schedule 6.13(b)(1)

  

Fountain Liability to Fountain Specified Employees

 

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Schedule 6.13(b)(2)

  

Trident Liability to Fountain Specified Employees

Schedule 8.10(c)

  

Retention of Records

 

List of Exhibits

  

Exhibit A

  

Tax Sharing Agreement

 

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AMENDED AND RESTATED

SEPARATION AND DISTRIBUTION AGREEMENT

AMENDED AND RESTATED SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), dated as of September 27, 2012, by and among TYCO INTERNATIONAL LTD., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Trident ”), PENTAIR LTD. (formerly known as Tyco Flow Control International Ltd.), a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Fountain ”) and, solely for the purposes of the Specified Sections of this Agreement, THE ADT CORPORATION, a Delaware corporation (“ Athens NA ”).

W I T N E S S E T H:

WHEREAS, Trident, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including the Fountain Business (as defined herein);

WHEREAS, the Board of Directors of Trident (the “ Board ”) has determined that it is appropriate, desirable and in the best interests of Trident and its stockholders to separate the Fountain Business from Trident (the “ Fountain Separation ”) and to divest the Fountain Business in the manner contemplated by this Agreement and the Merger Agreement, dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Merger Agreement ”), among Trident, Fountain, Panthro Acquisition Co., a Delaware corporation (“ AcquisitionCo ”), Panthro Merger Sub, Inc., a Minnesota corporation (“ Merger Sub ”) and Pentair, Inc., a Minnesota corporation (“ Patriot ”);

WHEREAS, in addition to the above, the Board had previously determined that it is appropriate, desirable and in the best interests of Trident and its stockholders to separate from Trident the Athens North American R/SB Business, which shall be owned and conducted, directly or indirectly, by Athens NA (the “ Athens NA Separation ”) pursuant to, among others, a separation agreement between Trident and Athens NA (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Athens NA Agreement ”);

WHEREAS, in order to effect the Fountain Separation, the Board has determined that it is appropriate, desirable and in the best interests of Trident and its stockholders (i) to enter into a series of transactions whereby Fountain and/or one or more members of the Fountain Group will, collectively, own all of the Fountain Assets and assume (or retain) all of the Fountain Liabilities and (ii) for Trident to distribute to the holders of Trident Common Stock on a pro rata basis (without consideration being paid by such stockholders) all of the outstanding shares of common stock, par value CHF 0.50 per share, of Fountain (the “ Fountain Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ Fountain Plan of Separation ”);

WHEREAS, each of Trident and Fountain has determined that it is necessary and desirable, on or prior to the Effective Time (as defined herein), (i) to allocate and transfer to the applicable Party or its Subsidiaries those Assets, and to allocate and assign to the applicable Party or its Subsidiaries responsibility for those Liabilities, in respect of the activities of the


applicable Businesses of such entities and (ii) to allocate, transfer and/or assign, as applicable, to the applicable Party or its Subsidiaries those Assets and Liabilities in respect of other current and former businesses and activities of Trident and its current and former Subsidiaries;

WHEREAS, the Parties contemplate that, pursuant to the Merger Agreement, after the Fountain Distribution, Merger Sub will be merged with and into Patriot, with Patriot surviving the Merger as an indirect wholly owned subsidiary of Fountain, and the outstanding common stock of Patriot shall be converted into the right to receive shares of Fountain on the terms and subject to the conditions set forth in the Merger Agreement;

WHEREAS, it is the intention of the Parties that the contribution of Assets to, and the assumption of Liabilities by, Fountain, together with the corresponding distribution of the Fountain Common Stock, qualifies as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”) and that this Agreement is, and is hereby adopted as, a “plan of reorganization” under Section 368 of the Code;

WHEREAS, it is the intention of the Parties that the distribution of the Fountain Common Stock to the stockholders of Trident will qualify as tax-free under Section 355(a) of the Code to such stockholders, and as tax-free to Trident under Section 361(c) of the Code;

WHEREAS, in contemplation of the foregoing on March 27, 2012, the Parties entered into a Separation and Distribution Agreement which was subsequently amended on July 25, 2012 (the “ Original Agreement ”); and

WHEREAS, the Parties desire to amend and restate the Original Agreement to modify certain of the terms thereof.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree to amend and restate the Original Agreement as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. General .

As used in this Agreement, the following terms shall have the following meanings:

(1) “ Acceptable Forms ” shall have the meaning set forth in Section 2.7.

(2) “ Acceptable Terms ” shall have the meaning set forth in the Merger Agreement.

(3) “ Accountant ” shall have the meaning set forth in Section 3.5(b) .

 

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(4) “ Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, case, litigation, proceeding or investigation (whether civil, criminal, administrative or investigative) by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal.

(5) “ AcquisitionCo ” shall have the meaning set forth in the recitals.

(6) “ Adjusted Fountain Exercise Price ” shall have the meaning set forth in Section 6.01(a)(iii) .

(7) “ Adjusted Trident Exercise Price ” shall have the meaning set forth in Section 6.01(b)(iii) .

(8) “ Allocable portion of Insurance Proceeds ” shall have the meaning set forth in Section 10.4(c) .

(9) “ Allocable share of the deductible ” shall have the meaning set forth in Section 10.4(d) .

(10) “ Athens NA ” shall have the meaning set forth in the preamble.

(11) “ Athens NA Agreement ” shall have the meaning set forth in the recitals.

(12) “ Athens NA Common Stock ” shall mean the common stock, par value $.0.01 per share of Athens NA.

(13) “ Athens NA Distribution ” shall mean the distribution on the Athens NA Distribution Date to holders of record of shares of Trident Common Stock as of the Athens NA Distribution Record Date of the Athens NA Common Stock owned by Trident pursuant to the Athens NA Agreement.

(14) “ Athens NA Distribution Date ” shall mean the date on which Trident distributes all of the issued and outstanding shares of Athens NA Common Stock to the holders of Trident Common Stock.

(15) “ Athens NA Distribution Record Date ” shall mean such date as may be determined by the Board as the record date for the Athens NA Distribution.

(16) “ Athens NA Separation ” shall have the meaning set forth in the recitals.

(17) “ Athens North American R/SB Business ” shall mean the residential and small business security business of Trident in the United States, Canada, Puerto Rico and the U.S. Virgin Islands.

 

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(18) “ Athens North American R/SB Group ” shall mean (i) Athens NA and (ii) each Person that is a direct or indirect Subsidiary of Athens NA immediately after the Athens NA Distribution Date.

(19) “ Athens North American R/SB Indemnitees ” shall mean each member of the Athens North American R/SB Group and their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(20) “ Affiliate ” shall mean, when used with respect to a specified Person, a 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 purposes of this definition, “control”, 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 or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common.

(21) “ Ancillary Agreements ” shall mean the Conveyancing and Assumption Instruments, the Tax Sharing Agreement, the License Agreements, and the Transition Services Agreement.

(22) “ Annual Reports ” shall have the meaning set forth in Section 5.3(d) .

(23) “ Applicable Fountain Percentage ” shall mean forty percent (40%).

(24) “ Applicable Percentage ” shall mean (i) as to Trident, the Applicable Trident Percentage and (ii) as to Fountain, the Applicable Fountain Percentage.

(25) “ Applicable Trident Percentage ” shall mean sixty percent (60%).

(26) “ Assets ” shall mean assets, properties, claims and rights (including goodwill), 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 Records or financial statements of any Person, including the following:

(i) all accounting and other legal and business books, records, ledgers and files whether printed, electronic or written;

(ii) all apparatuses, computer hardware and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, aircraft and other transportation equipment, special and general tools, test devices, molds, tooling, dies, prototypes and models and other tangible personal property;

 

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(iii) all inventories of products, goods, materials, parts, raw materials and supplies;

(iv) all interests in and rights with respect to real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(vi) all licenses, Contracts, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other Contracts or commitments;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written (including in electronic form) technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all Intellectual Property;

(x) all Software;

(xi) all Information;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;

(xiii) all rights under Contracts, all claims or rights against any Person, causes in action or similar rights, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations which have been issued by any Governmental Entity;

(xvi) all cash or cash equivalents, bank accounts, lock boxes and other third-party deposit arrangements; and

(xvii) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar Contracts or arrangements.

 

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(27) “ Assume ” shall have the meaning set forth in Section 2.3 ; and the terms “ Assumed ” and “ Assumption ” shall have their correlative meanings.

(28) “ Assumed Trident Contingent Liabilities ” shall mean any of the Liabilities set forth on Schedule 1.1(28) .

(29) “ Audited Party ” shall have the meaning set forth in Section 5.3(b) .

(30) “ Board ” shall have the meaning set forth in the preamble.

(31) “ Bridge Note ” shall have the meaning set forth in the Merger Agreement.

(32) “ Business ” shall mean the Trident Retained Business or the Fountain Business, as applicable.

(33) “ Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York, Minneapolis, Minnesota or Schaffhausen, Switzerland.

(34) “ Business Entity ” shall mean any corporation, partnership, limited liability company, joint venture or other entity which may legally hold title to Assets.

(35) “ Claims Administration ” shall mean the processing of claims made under the Shared Policies, including the reporting of losses or claims to insurance carriers, management and defense of claims and providing for appropriate releases upon settlement of claims.

(36) “ Closing ” shall have the meaning set forth in the Merger Agreement.

(37) “ Closing Amount ” shall have the meaning set forth in Section 3.5(c)(iii) .

(38) “ Closing Date ” shall have the meaning set forth in the Merger Agreement.

(39) “ Closing Net Indebtedness ” shall have the meaning set forth in Section 3.5(a) .

(40) “ Closing Trident Stock Price ” shall have the meaning set forth in Section 6.1(a)(ii) .

(41) “ Closing Working Capital ” shall have the meaning set forth in Section 3.5(a) .

(42) “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(43) “ Code ” shall have the meaning set forth in the preamble.

 

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(44) “ Commission ” shall mean the United States Securities and Exchange Commission.

(45) “ Competitive Activities ” shall have the meaning set forth in Section 5.2(a) .

(46) “ Confidential Information ” shall mean all non-public, confidential or proprietary Information concerning a Party and/or its Subsidiaries or their past, current or future activities, businesses or operations, or that was provided to a Party by a third party in confidence, except for any Information that (i) is publicly available through no fault of the receiving Party or its Subsidiaries, (ii) is lawfully acquired by such Party or its Subsidiaries from other sources, (iii) is independently developed by the receiving Party, (iv) is necessary for a Party to enforce its rights under this Agreement or an Ancillary Agreement or (v) is required to be disclosed pursuant to applicable Law (including in connection with financial statements or Tax Returns), stock exchange rule, subpoena or legal process, provided that the receiving Party promptly notifies the disclosing Party of any such requirement, discloses no more Information than is so required and cooperates at the disclosing Party’s expense in any attempt to obtain a protective order or similar treatment.

(47) “ Consents ” shall mean any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Entity.

(48) “ Continuing Arrangements ” shall mean those arrangements set forth on Schedule 1.1(48) .

(49) “ Contract ” shall mean any agreement, contract, subcontract, obligation, binding understanding, note, indenture, instrument, option, lease, promise, arrangement, release, warranty, license, sublicense, insurance policy, benefit plan, purchase order or legally binding commitment or undertaking of any nature (whether written or oral and whether express or implied).

(50) “ Conveyancing and Assumption Instruments ” shall mean, collectively, the various Contracts and other documents heretofore entered into and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement and the Fountain Plan of Separation, or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement in such form or forms as Trident, Fountain and Patriot reasonably agree and are consistent with the requirements of Section 2.7 .

(51) “ Current Assets ” shall mean the current assets of the Fountain Business determined in accordance with GAAP on a basis consistent with the preparation of the audited combined balance sheet included in the Audited Financial Statements (as defined in the Merger Agreement), including Intercompany Trade Receivables; provided that “Current Assets” shall not include (i) cash and cash equivalents, (ii) marketable securities, (iii) Other Intercompany Receivables or (iv) any items set forth on Schedule 1.1(51) .

(52) “ Current Liabilities ” shall mean the current liabilities of the Fountain Business determined in accordance with GAAP on a basis consistent with the preparation of the

 

7


audited combined balance sheet included in the Audited Financial Statements (as defined in the Merger Agreement), including Intercompany Trade Payables; provided that “Current Liabilities” shall not include (i) any item included in the calculation of Closing Net Indebtedness (including the current portion of any indebtedness for borrowed money), (ii) Other Intercompany Payables and Loans, (iii) any amounts payable to Fountain Employees in respect of severance or with respect to retention bonus or similar payments (A) to the extent such amounts are to be reimbursed by the Trident Group or the Trident Group is otherwise obligated to make such payments, in either case, pursuant to this Agreement or otherwise or (B) with respect to Fountain Tier I Employees in an amount up to $6,700,000, or (iv) any items set forth on Schedule 1.1(52) .

(53) “ D&O Tail Policies ” shall have the meaning set forth in Section 10.2(a) .

(54) “ Default Interest Rate ” shall mean a rate of LIBOR plus 500 basis points calculated on the basis of a year of three-hundred sixty (360) days.

(55) “ Deferred Stock Unit ” shall mean a unit granted by Trident pursuant to one of the Trident Equity Plans representing a general unsecured promise by Trident to deliver a share of Trident Common Stock.

(56) “ Disability Plan ” (i) when immediately preceded by “Trident,” shall mean any short-term disability program and long-term disability program sponsored by Trident and (ii) when immediately preceded by “Fountain,” shall mean the short-term disability program and long-term disability program to be established by Fountain under Section 6.7(d) .

(57) “ Distribution Agent ” shall mean the distribution agent selected by Trident in connection with the Fountain Separation.

(58) “ Distribution Ratio ” means the quotient of (i) the product of (x) the number of shares of Patriot Common Stock outstanding (determined on a fully-diluted basis calculated in accordance with the treasury method under GAAP without taking into account tax consequences to any party or any applicable vesting provisions) immediately prior to the Effective Time, multiplied by (y) 1.10526316 divided by (ii) the number of shares of Trident Common Stock outstanding (determined on a fully-diluted basis calculated in accordance with the treasury method under GAAP without taking into account tax consequences to any party or any applicable vesting provisions and treating any unvested equity award that (i) is scheduled to be cancelled on or after the Effective Time and (ii) is held by (A) an employee who will be terminated as of the Fountain Distribution Date or (B) an employee listed on Schedule 1.1(66) or 1.1(67) , as being cancelled immediately prior to the Effective Time) immediately prior to the Effective Time.

(59) “ DOJ ” means the United States Department of Justice.

(60) “ Effective Time ” shall mean 12:01 a.m., Eastern Daylight Time, on the Fountain Distribution Date.

(61) “ EPL Tail Policies ” shall have the meaning set forth in Section 10.2(c) .

 

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(62) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

(63) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

(64) “ Fiduciary Tail Policies ” shall have the meaning set forth in Section 10.2(b) .

(65) “ Force Majeure ” shall mean, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, without limitation, acts of God, storms, floods, riots, labor unrest, pandemics, nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a Party of a hostile takeover offer, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

(66) “ Former Fountain Employee ” shall mean any former employee who terminated employment with all members of the Trident controlled group of corporations on or before the Fountain Distribution Date and who was last employed by a member of the Fountain Group; provided , that , notwithstanding any other provision of this Agreement and solely for purposes of Sections 6.1 and 6.2 , any person listed on Schedule 1.1(66) shall be treated as a Former Fountain Employee regardless of the actual date of termination of employment);

(67) “ Former Trident Employee ” shall mean any former employee who terminated employment with all members of the Trident controlled group of corporations on or before the Fountain Distribution Date and who is not a Former Fountain Employee; provided , that , notwithstanding any other provision of this Agreement and solely for purposes of Sections 6.1 and 6.2 , any person listed on Schedule 1.1(67) shall be treated as a Former Trident Employee regardless of the actual date of termination of employment.

(68) “ Fountain ” shall have the meaning set forth in the preamble.

(69) “ Fountain Assets ” shall mean:

(i) the ownership interests in those Business Entities that are members of the Fountain Group;

(ii) all Fountain Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any Fountain Asset or the Fountain Business;

(iii) any and all Assets reflected on the Fountain Balance Sheet and any Assets acquired by or for Fountain or any member of the Fountain Group subsequent to the date

 

9


of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet not made in violation of the Merger Agreement;

(iv) subject to Article X, any and all rights of any member of the Fountain Group under any Policies, including any rights thereunder arising after the Fountain Distribution Date in respect of any Policies that are occurrence policies;

(v) any and all Assets owned or held immediately prior to the Effective Time by Trident or any of its Subsidiaries that primarily relate to or are primarily used in the Fountain Business;

(vi) the Assets set forth on Schedule 1.1(69)(vi) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or that are to be Transferred to Fountain or any other member of the Fountain Group; and

(vii) any and all furnishings and office equipment located at a physical site to the extent the ownership or leasehold interest with respect to such physical site is being Transferred to or retained by Fountain; provided that personal computers shall be Transferred to Fountain if, following the Effective Time, the Fountain Group employs the applicable employee who, prior to the Effective Time, used such personal computer.

Notwithstanding the foregoing, the Fountain Assets shall not include (x) any Assets to the extent they are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the Trident Group or (y) cash or cash equivalents held as of or prior to the Effective Time except to the extent taken into account in determining the amount of Net Indebtedness pursuant to Section 3.4 or Closing Net Indebtedness pursuant to Section 3.5 .

In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Trident Retained Assets”, for purposes of determining what is and is not a Fountain Asset: (1) the explicit inclusion of an item on a Schedule referred to in this definition shall take priority over any textual provision of this definition that would otherwise operate to exclude such Asset from the definition of “Fountain Assets” and (2) Assets referred to in clause (iii) of this definition shall take priority over Assets otherwise referred to in clause (v) of Section 1.1(193) .

(70) “ Fountain Balance Sheet ” shall mean the audited combined balance sheet of the Fountain Group, including the notes thereto, as of September 30, 2011, made available to Patriot pursuant to Section 2.05(c) of the Merger Agreement.

(71) “ Fountain Business ” shall mean the business and operations of the Fountain segment of Trident as each is described in the Fountain Draft Form 10 and (ii) any businesses or operations acquired or established by or for Fountain or any of its Subsidiaries after the date of this Agreement.

 

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(72) “ Fountain Common Stock ” shall have the meaning set forth in the recitals hereto.

(73) “ Fountain Contracts ” shall mean the following Contracts (or parts thereof) to which Trident or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, except for any such Contract (or part thereof) that is expressly contemplated to be Transferred to, or to remain with, a member of the Trident Group, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the Fountain Group;

(ii) any Contract that primarily relates to the Fountain Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the Fountain Balance Sheet;

(iv) any Contract (or part thereof), that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the Fountain Group;

(v) any Contract set forth on Schedule 1.1(73)(v) ; and

(vi) to the extent the same is given with respect to, or in favor of, any member of the Fountain Group, any guarantee, indemnity, representation or warranty.

(74) “ Fountain Deferred Compensation Liabilities ” shall have the meaning set forth in Section 6.3(a)(i) .

(75) “ Fountain Distribution ” shall mean the distribution on the Fountain Distribution Date to holders of record of shares of Trident Common Stock as of the Fountain Distribution Record Date of the Fountain Common Stock owned by Trident as set forth in Section 4.1 .

(76) “ Fountain Distribution Date ” shall mean the date on which Trident distributes all of the issued and outstanding shares of Fountain Common Stock to the holders of Trident Common Stock, which shall be on the Closing Date or a date that is no more than one Business Day before the Closing Date, or on such other date that is mutually agreed between Trident and Patriot.

(77) “ Fountain Distribution Record Date ” shall mean such date as may be determined by the Board as the record date for the Fountain Distribution.

(78) “ Fountain Draft Form 10 ” shall mean the draft registration statement on Form 10 as set forth in Section 2.05(b) of the Trident Disclosure Letter (as such term is defined in the Merger Agreement).

 

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(79) “ Fountain Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other approved leaves) who immediately following the Fountain Distribution Date is employed by Fountain or any member of the Fountain Group. Fountain Employee shall also include any employee of an entity in the Fountain Group who, as of the Fountain Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

(80) “ Fountain Group ” shall mean (i) Fountain, (ii) each of the entities set forth on Schedule 1.1(80) and (iii) any Person not set forth on Schedule 1.1(80) but that is as direct or indirect Subsidiary of Fountain immediately following the Effective Time as described in Schedule 4.01(b) of the Trident Disclosure Letter (as defined in the Merger Agreement).

(81) “ Fountain Indemnitees ” shall mean each member of the Fountain Group (including Patriot and its Subsidiaries from and after the Closing) and their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(82) “ Fountain Liabilities ” shall mean:

(i) any and all Liabilities that are (a) expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) to be Assumed by any member of the Fountain Group, (b) expressly Assumed by any member of the Fountain Group under this Agreement or any Ancillary Agreements or (c) set forth on Schedule 1.1(82)(i) ;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(a) the operation or conduct of the Fountain Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(b) the operation or conduct of any business conducted by any member of the Fountain Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(c) any Fountain Assets, whether arising before, on or after the Effective Time;

(iii) any Liabilities (x) to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily owned or managed by or primarily associated with any member of the Fountain Group or the Fountain Business or (B) set forth on Schedule 1.1(82)(iii)(x) or (y) to the extent arising from any of the Contracts set forth in Schedule 1.1(82)(iii)(y) ;

 

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(iv) the Applicable Fountain Percentage of any Assumed Trident Contingent Liability;

(v) any Liabilities relating to any Fountain Employee or Former Fountain Employee in respect of the period prior to, on or after the Effective Time;

(vi) any Liabilities relating to, arising out of or resulting from (x) any Indebtedness (including debt securities and asset-backed debt) of any member of the Fountain Group or Indebtedness (regardless of the issuer of such Indebtedness) incurred after the Effective Time and exclusively relating to the Fountain Business, (y) any Indebtedness (regardless of the issuer of such Indebtedness) incurred after the Effective Time and secured exclusively by any of the Fountain Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such Indebtedness, in its capacity as such) or (z) any Indebtedness arising from the Financing (as defined in the Merger Agreement) or set forth on Schedule 1.1(82)(vi) ; and

(vii) all Liabilities reflected as liabilities or obligations on the Fountain Balance Sheet, and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the Fountain Balance Sheet.

Notwithstanding anything to the contrary herein, the Fountain Liabilities shall not include:

(v) any Liabilities of Yarway whether or not such Liability also was a Liability of the Fountain Group whether as a result of (A) the limited liability of Yarway being disregarded, (B) the transfer of Assets from Yarway or (C) otherwise;

(w) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the Trident Group;

(x) any Contracts expressly Assumed or expressly contemplated to be assumed by any member of the Trident Group under this Agreement or any Ancillary Agreements;

(y) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement; and

(z) any indebtedness for borrowed money or Other Intercompany Payables and Loans (other than obligations under capital leases) outstanding as of the Effective Time except to the extent taken into account in determining the amount of Net Indebtedness pursuant to Section 3.4 or Closing Net Indebtedness pursuant to Section 3.5 .

 

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In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Trident Retained Liabilities”, for the purpose of determining what is and is not a Fountain Liability: (1) the explicit inclusion of an item on a Schedule referred to in this definition shall take priority over any textual provision of this definition that would otherwise operate to exclude such Liability from the definition of “Fountain Liability” and (2) Liabilities referred to in clause (vii) of this definition shall take priority over Liabilities otherwise referred to in clause (ii) of Section 1.1(196) .

(83) “ Fountain Master Trust ” shall have the meaning set forth in Section 6.4(a)(ii)(A) .

(84) “ Fountain Nonqualified Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans listed in Schedule 6.3(a) and any plans established prior to the Fountain Distribution Date the purposes of which are to assume the Fountain Deferred Compensation Liabilities in accordance with Section 6.3(a) .

(85) “ Fountain Option ” shall have the meaning set forth in Section 6.1(a)(i) .

(86) “ Fountain Pension Plans ” shall have the meaning set forth in Section 6.4(a)(i) .

(87) “ Fountain Plan of Separation ” shall have the meaning set forth in the preamble.

(88) “ Fountain Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements established or assumed by the Fountain Group under this Agreement for the benefit of Fountain Employees and where applicable, Former Fountain Employees.

(89) “ Fountain Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Trident or any Subsidiary of Trident, which relate exclusively to the Fountain Business and which Policies are either maintained by Fountain or a member of the Fountain Group or assignable to Fountain or a member of the Fountain Group.

(90) “ Fountain Retiree Medical Plans ” shall have the meaning set forth in Section 6.6 .

(91) “ Fountain RSIP ” shall have the meaning set forth in Section 6.5(a)(i) .

(92) “ Fountain Savings Plans ” shall mean the Fountain RSIP and any defined contribution retirement plans listed in Schedule 6.5(a) .

 

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(93) “ Fountain Separation ” shall have the meaning set forth in the preamble.

(94) “ Fountain Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Trident or any Subsidiary of Trident which relate to the Fountain Business, other than Fountain Policies.

(95) “ Fountain Specified Employees” means tho se individuals listed in Schedule 1.1(95)(A) (the “Fountain Tier I Specified Employees”) and thos e individuals listed on Schedule 1.1(95)(B) (the “Fountain Tier II Specified Employees”), and any other individuals mutually agreed by Trident and Patriot prior to the Fountain Distribution.

(96) “ Fountain Treasury Shares ” shall have the meaning set forth in Section 3.7 .

(97) “ Fountain US Pension Plans ” shall have the meaning set forth in Section 6.4(a)(ii) .

(98) “ GAAP ” means the generally accepted accounting principles in the United States.

(99) “ Governmental Approvals ” shall mean any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

(100) “ Governmental Entity ” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.

(101) “ Group ” shall mean (i) with respect to Trident, the Trident Group, (ii) with respect to Athens NA, the Athens North American R/SB Group and (iii) with respect to Fountain, the Fountain Group.

(102) “ Group Insurance Plans ” when immediately preceded by “Trident,” shall mean any basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance, long term care insurance and executive group universal life insurance programs sponsored by Trident and (ii) when immediately preceded by “Fountain,” shall mean the basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance, long term care insurance and executive group universal life insurance program to be established by Fountain under Section 6.7(e) .

(103) “ Guaranty Release ” shall have the meaning set forth in Section 2.10(b) .

 

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(104) “ Health Plans ” when immediately preceded by “Trident,” shall mean the Trident International employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans and (ii) when immediately preceded by “Fountain,” shall mean employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans program to be established by Fountain under Section 6.7(a) .

(105) “ HIPAA ” shall have the meaning set forth in Section 6.8(e) .

(106) “ Income Taxes ” shall have the meaning set forth in the Tax Sharing Agreement.

(107) “ Indebtedness ” of any Person means, without duplication, (i) the principal of and accreted value and accrued and unpaid interest in respect of (A) indebtedness of such Person for money borrowed and (B) obligations evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement or capital lease (but excluding trade accounts payable and other accrued expenses incurred in the ordinary course of business); (iii) all obligations, contingent or otherwise, of such Person under letters of credit; (iv) all obligations, contingent or otherwise, of such Person under any interest rate, currency or other hedging agreements; and (v) all obligations of the type referred to in clauses (i) through (iv) of any Persons the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise.

(108) “ Indemnifiable Loss ” and “ Indemnifiable Losses ” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect and punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an Indemnitee) and Taxes and any other amounts payable pursuant to the Tax Sharing Agreement.

(109) “ Indemnifying Party ” shall have the meaning set forth in Section 8.5(b) .

(110) “ Indemnitee ” shall have the meaning set forth in Section 8.5(b) .

(111) “ Indemnity Payment ” shall have the meaning set forth in Section 8.9(a) .

(112) “ Information ” shall mean information, content and data in written, oral, electronic, computerized, digital or other tangible or intangible media, including studies, reports, records, books, contracts, instruments, surveys, lists, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks,

 

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diskettes, tapes, 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), communications and other materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data, documents, correspondence, materials, product literature, files, policies, procedures and manuals.

(113) “ Insurance Administration ” shall mean, with respect to each Shared Policy, the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Shared Policies; and the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any Shared Policy to be exceeded, and the distribution of Insurance Proceeds as contemplated by this Agreement.

(114) “ Insurance Proceeds ” shall mean those monies (i) received by an insured from an insurance carrier, including due to premium adjustments, whether or not retrospectively rated, or (ii) paid by an insurance carrier on behalf of an insured, in either case net of any applicable premium deductible or self insured retention. For the avoidance of doubt, “Insurance Proceeds” shall not include any costs or expenses incurred by a Party in pursuing insurance coverage.

(115) “ Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Shared Policies, whether or not subject to deductibles, co-insurance, self-insured retentions, or uncollectibility due to insurer insolvency.

(116) “ Intellectual Property ” shall mean all worldwide intellectual property, proprietary and industrial property rights of any kind or nature, including all U.S. and foreign (i) patents, patent applications, inventions and invention disclosures and utility models, (ii) Trademarks, (iii) copyrights and copyrightable subject matter, including Software, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) technology, trade secrets, know-how, processes, formulae, models, methodologies, discoveries, ideas, concepts, techniques, designs, specifications, drawings, blueprints, diagrams, models and prototypes and all other Confidential Information, (vii) rights of privacy and rights to personal information, (viii) vanity telephone numbers, (ix) all applications, registrations, continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof for any of the foregoing and (x) all rights and remedies against infringement, misappropriation or other violation of the foregoing prior to the Effective Time.

(117) “ Intercompany Trade Payables ” shall mean all intercompany trade payables between any member of the Trident Group, on the one hand, and any member of the Fountain Group, on the other hand, which exist and are reflected in the accounting records of the Parties as of the close of business on the day prior to the Fountain Distribution Date.

(118) “ Intercompany Trade Receivables ” shall mean all intercompany trade receivables between any member of the Trident Group, on the one hand, and any member of the Fountain Group, on the other hand, which exist and are reflected in the accounting records of the Parties as of the close of business on the day prior to the Fountain Distribution Date.

 

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(119) “ Law ” shall mean any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income tax treaty, order, requirement or rule of law (including common law) or other binding directives of any Governmental Entity.

(120) “ Liabilities ” shall mean any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, determined or determinable, and including those arising under any Law, claim, demand, Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto regardless of (i) when or where they arose or arise, (ii) whether the facts upon which they are based occurred prior to, on or subsequent to the Effective Time or (iii) where or against whom they are asserted or determined.

(121) “ Liable Party ” shall have the meaning set forth in Section 2.9(b) .

(122) “ LIBOR ” shall mean an interest rate per annum equal to the applicable three-month London Interbank Offered Rate for deposits in United States dollars published in the Wall Street Journal .

(123) “ License Agreements ” shall mean the license agreements to be negotiated in good faith between Trident, Fountain and Patriot after the date hereof and prior to the Fountain Distribution Date, and having the terms set forth on Schedule 1.1(123) and such other terms as reasonably agreed among the parties thereto.

(124) “ Management Agreement ” shall have the meaning set forth in Section 2.5(c) .

(125) “ Managing Party ” shall have the meaning set forth in 7.2(a) .

(126) “ Merger Agreement ” shall have the meaning set forth in the recitals.

(127) “ Merger Sub ” shall have the meaning set forth in the preamble.

(128) “ Net Indebtedness ” shall mean, as of any date, (i) any outstanding indebtedness for borrowed money or Other Intercompany Payables and Loans (including the Bridge Note but excluding any amounts canceled or otherwise terminated prior to the Effective Time) (which, for the avoidance of doubt, shall not include obligations under capital leases) plus (ii) Separation Expenses incurred prior to the Fountain Distribution Date and not paid by Trident pursuant to Section 11.5 as of the close of business on the day prior to the Fountain Distribution Date, provided that, in the case of Separation Expenses that are Taxes arising from any action or event set forth in the Step Plan, the amount of Separation Expenses shall be net of any refund actually received in respect of such Taxes prior to the date on which the adjustments pursuant to Section 3.5 have been made, minus (iii) all cash and cash equivalents and marketable securities; provided that “Net Indebtedness” shall not include any item to the extent included in the calculation of Current Liabilities.

 

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(129) “ Net Indebtedness Adjustment ” shall have the meaning set forth in Section 3.5(c)(ii) .

(130) “ Notice of Disagreement ” shall have the meaning set forth in Section 3.5(b) .

(131) “ NYSE ” shall mean the New York Stock Exchange.

(132) “ Option ” (i) when immediately preceded by “Trident,” shall mean an option to purchase shares of Trident Common Stock granted pursuant to one of the Trident Equity Plans or (ii) when immediately preceded by “Fountain,” shall mean an option to purchase shares of Fountain Common Stock as of the Fountain Distribution, which Option shall be granted pursuant to the 2012 Fountain Stock and Incentive Plan (as hereinafter defined) as part of the adjustment to Trident Options in connection with the Fountain Distribution.

(133) “ Original Agreement ” shall have the meaning set forth in the recitals.

(134) “ Other Intercompany Payables and Loans ” shall have the meaning set forth in Section 2.4(a) .

(135) “ Other Intercompany Receivables ” shall have the meaning set forth in Section 2.4(a) .

(136) “ Other Parties’ Auditors ” shall have the meaning set forth in Section 5.3(c) .

(137) “ Other Party ” shall have the meaning set forth in Section 2.9(a) .

(138) “ Party ” shall mean each of Trident and Fountain; provided , however , for purposes of the Specified Sections of this Agreement only, “Party” shall also mean Athens NA.

(139) “ Pension Plans ” (i) when immediately preceded by “Trident,” shall mean the pension plans sponsored by Trident described in Section 6.4(c) and (ii) when immediately preceded by “Fountain,” shall mean the pension plans established by Fountain under Section 6.4(b) .

(140) “ Permitted Acquiree ” shall have the meaning set forth in Section 5.2(c) .

(141) “ Patriot ” shall have the meaning set forth in the recitals.

(142) “ Performance Share Unit ” shall mean a unit granted by Trident pursuant to one of the Trident Equity Plans representing a general unsecured promise by Trident to deliver a share of Trident Common Stock and which is subject to certain performance measures.

 

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(143) “ Person ” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

(144) “ PHI ” shall have the meaning set forth in Section 6.8(e) .

(145) “ Policies ” shall mean insurance policies and insurance Contracts of any kind (other than life and benefits policies or Contracts), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, marine, property and casualty, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder, including the insurance policies written by White Mountain Insurance Company.

(146) “ Pre-Distribution Athens NA Stock Price ” shall have the meaning set forth in Section 6.01(c)(ii) .

(147) “ Pre-Distribution Fountain Stock Price ” shall have the meaning set forth in Section 6.1(a)(ii) .

(148) “ Pre-Distribution Trust ” shall have the meaning set forth in Section 6.8(k) .

(149) “ Pre-Distribution Trident Stock Price ” shall have the meaning set forth in Section 6.1(b)(ii) .

(150) “ Provider ” shall have the meaning set forth in Section 2.5(c) .

(151) “ Recipient ” shall have the meaning set forth in Section 2.5(c) .

(152) “ Records ” shall mean any Contracts, documents, books, records or files.

(153) “ Restricted Person ” shall have the meaning set forth in Section 5.1(a) .

(154) “ Restricted Stock Unit ” (i) when immediately preceded by “Trident,” shall mean a unit granted by Trident pursuant to one of the Trident Equity Plans representing a general unsecured promise by Trident to deliver a share of Trident Common Stock and (ii) when immediately preceded by “Fountain” shall mean a unit granted by Fountain representing a general unsecured promise by Fountain to deliver a share of Fountain Common Stock, which unit is granted pursuant to the 2012 Fountain Stock and Incentive Plan as part of the adjustment to Trident Restricted Stock Units in connection with the Fountain Distribution.

 

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(155) “ Retained Fountain Specified Employee ” shall have the meaning set forth in Section 6.13(a) .

(156) “ Retention Letters ” shall have the meaning set forth in Section 6.8(d) .

(157) “ Section 125 Plan ” shall mean the flexible spending accounts or flexible benefit plan qualified under Section 125 of the Internal Revenue Code sponsored by Fountain as described in Section 6.7(b) .

(158) “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

(159) “ Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, right of first refusal, deed of trust, voting or other restriction, right-of-way, covenant, condition, easement, servitude, encroachment, permit restriction, restriction on transfer, restrictions or limitations on use of real personal property or any other encumbrance of any nature whatsoever, excluding, however, restrictions on transfer under securities Laws.

(160) “ Separation Expenses ” shall have the meaning set forth in Section 11.5 .

(161) “ Severance Plan ” (i) when immediately preceded by “Trident,” shall mean any severance program sponsored by Trident and (ii) when immediately preceded by “Fountain,” shall mean the severance program to be established by Fountain under Section 6.7(c) .

(162) “ Share Premium Redemption ” shall mean the obligation of Tyco Flow Control International Finance S.A. to pay an amount equal to $60 million to Tyco International Finance S.A. in satisfaction of a distribution out of capital surplus declared by Tyco Flow Control International Finance S.A. on September 25, 2012.

(163) “ Shared Contract ” shall have the meaning set forth in Section 2.2(b)(i) .

(164) “ Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Trident or any of its Subsidiaries which relate to one or more of the Trident Retained Business, the Athens North American R/SB Business or the Fountain Business.

(165) “ Shareholder Approval ” shall mean the approval by Trident shareholders of the Fountain Distribution and certain related matters necessary to declare and make the Fountain Distribution.

(166) “ Software ” shall mean all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology

 

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supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials and other tangible embodiments related to any of the foregoing.

(167) “ Specified Sections of this Agreement ” shall mean Section 5.1 , Section 5.2 , Section 5.3 , Section 5.5 , Section 5.7 , Section 7.3 , Section 8.4 , Section 8.5 , Section 8.6 , Section 8.7 , Section 8.8 , Section 8.9 , Section 8.10 , Section 9.1 , Section 9.2 , Section 9.5 , Section 9.6 , and Article XI of this Agreement.

(168) “ Statement ” shall have the meaning set forth in Section 3.5(a) .

(169) “ Step Plan ” shall mean the reorganization plan set forth in Schedule 2.2(a) (as such Schedule may be modified from time to time in accordance with Section 5.19(c) of the Merger Agreement); provided that any step or action not directly related to the separation of the Fountain Business from the Trident Retained Business shall not be construed as a prerequisite of any subsequent step or action which is directly related to the separation of the Fountain Business from the Trident Retained Business and the failure to occur of any prior step or action not directly related to the separation of the Fountain Business from the Trident Retained Business shall have no effect on any Parties obligation to undertake any subsequent step or action which is directly related to the separation of the Fountain Business from the Trident Retained Business.

(170) “ Subsidiary ” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity ( e.g. , as the managing partner of a partnership).

(171) “ Tax ” shall have the meaning set forth in the Tax Sharing Agreement.

(172) “ Tax Contest ” shall have the meaning of the definition of “Audit” as set forth in the Tax Sharing Agreement.

(173) “ Tax Return ” shall have the meaning set forth in the Tax Sharing Agreement.

(174) “ Tax Sharing Agreement ” shall mean the Tax Sharing Agreement by and among Trident, Athens NA and Fountain, in the form attached hereto as Exhibit A .

(175) “ Third Party Claim ” shall have the meaning set forth in Section 8.5(b) .

(176) “ Third Party Proceeds ” shall have the meaning set forth in Section 8.9(a) .

 

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(177) “ Trademarks ” shall mean all U.S. and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing.

(178) “ Transfer ” shall have the meaning set forth in Section 2.2(a)(i) ; and the term “Transferred” shall have its correlative meaning.

(179) “ Transition Services Agreement ” shall mean the Transition Services Agreement to be negotiated in good faith between Trident, Fountain and Patriot after the date hereof and prior to the Fountain Distribution Date, and having the terms set forth on Schedule 1.1(179) and such other terms as reasonably agreed among the parties thereto.

(180) “ Trident ” shall have the meaning set forth in the preamble.

(181) “ Trident Balance Sheet ” shall mean the balance sheet of the Trident Group prepared pursuant to Section 5.03(b) of the Merger Agreement.

(182) “ Trident Common Stock ” shall mean the issued and outstanding shares of Trident common stock of Trident International Ltd.

(183) “ Trident Deferred Compensation Liabilities ” shall have the meaning set forth in Section 6.3(b)(i) .

(184) “ Trident Directors ” shall have the meaning set forth in Section 6.1(c)(i) .

(185) “ Trident Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other approved leaves) who, immediately following the Fountain Distribution Date is employed by Trident or any member of the Trident Group. Trident Employee shall also include any employee of an entity in the Trident Group who, as of the Fountain Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

(186) “ Trident Equity Plans ” shall mean, collectively, the equity-based plans set forth on Schedule 1.1(186) .

(187) “ Trident Group ” shall mean Trident and each Person (other than any member of the Fountain Group) that is a direct or indirect Subsidiary of Trident as of the date hereof and, except as provided in the definition of Fountain Group, each Subsidiary to be formed after the date hereof and prior to the Effective Time, which shall include the Athens North American R/SB Group and those entities identified as such on Schedule 1.1(187) .

(188) “ Trident Indemnitees ” shall mean Trident, each member of the Trident Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the Athens North American R/SB Indemnitees and the Fountain Indemnitees.

 

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(189) “ Trident International Management Company Defined Contribution Plans Master Trust ” shall mean the trust created by an agreement between the plan sponsor and trustees of the Trident International Retirement Savings and Investment Plans for purposes of holding assets under such plan.

(190) “ Trident International Master Retirement Trust ” means the trust created by Trident for purposes of holding assets under Trident’s U.S. pension plans.

(191) “ Trident Nonqualified Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans set forth in Schedule 6.3(b) and any other legacy nonqualified deferred compensation plan sponsored by members of the Trident Group.

(192) “ Trident Regulatory Approvals ” shall have the meaning set forth in the Merger Agreement.

(193) “ Trident Retained Assets ” shall mean:

(i) the ownership interests in those Business Entities that are members of the Trident Group;

(ii) all Trident Retained Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any Trident Retained Asset or the Trident Retained Business;

(iii) any and all Assets reflected on the Trident Balance Sheet and any Assets acquired by or for Trident or any member of the Trident Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to Article X, any and all rights of any member of the Trident Group under any Policies;

(v) any and all Assets owned or held immediately prior to the Effective Time by Trident or any of its Subsidiaries that primarily relate to or are primarily used in the Trident Retained Business;

(vi) the Assets set forth on Schedule 1.1(193)(vi) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or that are to be Transferred to Trident or any other member of the Trident Group; and

(vii) any and all furnishings and office equipment located at a physical site to the extent the ownership or leasehold interest with respect to such physical site is being Transferred to or retained by Trident; provided , that personal computers shall be Transferred to Trident if, following the Effective Time, a Trident Group member employs the applicable employee who, prior to the Effective Time, used such personal computer.

 

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Notwithstanding the foregoing, the Trident Retained Assets shall not include any Assets to the extent they are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the Fountain Group.

In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Fountain Assets”, for purposes of determining what is and is not a Trident Retained Asset: (1) the explicit inclusion of an item on a Schedule referred to in this definition shall take priority over any textual provision of this definition that would otherwise operate to exclude such Asset from the definition of “Trident Retained Assets” and (2) Assets referred to in clause (iii) of this definition shall take priority over Assets otherwise referred to in clause (v) of Section 1.1(69) .

(194) “ Trident Retained Business ” shall mean (i) the business and operations of Trident and the Trident Group other than the Fountain Business, (ii) Trident’s ownership of equity in Atkore International Group Inc. and (iii) any businesses or operations acquired or established by or for Trident or any of its Subsidiaries in connection with the operation of the Trident Retained Business after the date of this Agreement.

(195) “ Trident Retained Contracts ” shall mean the following Contracts (or parts thereof) to which Trident or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, except for any such Contract (or part thereof) that is expressly contemplated to be Transferred to, or to remain with, a member of the Fountain Group, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the Trident Group;

(ii) any Contract that primarily relates to the Trident Retained Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the Trident Balance Sheet;

(iv) any Contract (or part thereof), that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the Trident Group;

(v) any Contract set forth on Schedule 1.1(195)(v) ; and

(vi) to the extent the same is given with respect to, or in favor of, any member of the Trident Group, any guarantee, indemnity, representation or warranty.

(196) “ Trident Retained Liabilities ” shall mean:

(i) any and all Liabilities that are (a) expressly contemplated by this Agreement or any Ancillary Agreement to be Assumed by any member of the Trident Group, (b) expressly Assumed by any member of the Trident Group under this Agreement or any Ancillary Agreement or (c) set forth on Schedule 1.1(196)(i) ;

 

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(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the Trident Retained Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation or conduct of any business conducted by any member of the Trident Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(C) any Trident Retained Assets, whether arising before, on or after the Effective Time;

(iii) any Liabilities (x) to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily owned or managed by or primarily associated with any member of the Trident Group or the Trident Retained Business, (B) set forth on Schedule 1.1(196)(iii)(x) or (y) to the extent arising from any of the Contracts set forth in Schedule 1.1(196)(iii)(y) ;

(iv) any Liabilities relating to any Trident Employee or Former Trident Employee that does not become a Fountain Employee or Former Fountain Employee, in each case, immediately following the Effective Time;

(v) any Liabilities relating to, arising out of or resulting from (A) any Indebtedness (including debt securities and asset-backed debt) of any member of the Trident Group or Indebtedness (regardless of the issuer of such Indebtedness) exclusively relating to the Trident Retained Business or (B) any Indebtedness (regardless of the issuer of such Indebtedness) secured exclusively by any of the Trident Retained Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such Indebtedness, in its capacity as such);

(vi) all Liabilities reflected as Liabilities or obligations on the Trident Balance Sheet and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the Trident Balance Sheet; and

 

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(vii) any Liabilities of Yarway whether or not such Liability also was a Liability of the Fountain Group whether as a result of (A) the limited liability of Yarway being disregarded, (B) the transfer of Assets from Yarway or (C) otherwise.

Notwithstanding anything to the contrary herein, the Trident Retained Liabilities shall not include:

(x) any Liabilities that are expressly contemplated by this Agreement, or any Ancillary Agreement as Liabilities to be retained or Assumed by any member of the Fountain Group;

(y) any Contracts expressly Assumed by any member of the Fountain Group under this Agreement or any Ancillary Agreement; and

(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Fountain Liabilities”, for the purpose of determining what is and is not a Trident Retained Liability: (1) the explicit inclusion of an item on a Schedule referred to in this definition shall take priority over any textual provision of this definition that would otherwise operate to exclude such Liability from the definition of “Trident Retained Liability” and (2) Liabilities referred to in clause (vi) of this definition shall take priority over Liabilities otherwise referred to in clause (ii) of Section 1.1(82) and (3) any other Liabilities that are not Fountain Liabilities shall be Trident Retained Liabilities.

(197) “ Trident Retained Pension Plans ” shall have the meaning set forth in Section 6.4(b)(i) .

(198) “ Trident Retained Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements retained by the Trident Group under this Agreement for the benefit of Trident Employees and, where applicable, Former Trident Employees.

(199) “ Trident Retained Savings Plans ” means the savings plans sponsored by Trident described in Section 6.5(b) .

(200) “ Trident Retiree Medical Plans ” shall have the meaning set forth in Section 6.6.

(201) “ Working Capital Adjustment ” shall have the meaning set forth in Section 3.5(c)(i) .

(202) “ Working Capital Target ” shall mean $798,000,000.

(203) “ Yarway ” shall mean Yarway Corporation and Gimpel Corporation.

 

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(204) “ 2012 Fountain Stock and Incentive Plan ” shall have the meaning set forth in Section 6.1(a)(iv) .

Section 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not simply mean “if”. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. All references to any period of days shall be to the relevant number of calendar days unless otherwise specified. All references to dollars or $ shall be references to United States dollars. All accounting terms shall have their respective meanings under GAAP.

ARTICLE II

THE SEPARATION

Section 2.1. General . Subject to the terms and conditions set forth in this Agreement and the Merger Agreement, each of Trident and Fountain shall use its reasonable best efforts to cause the Fountain Separation and the Fountain Distribution to occur as promptly as practicable on the terms contemplated hereby, including using its reasonable best efforts to obtain all consents, permits, authorizations and approvals of, and to make all filings, notifications or registrations with, all Governmental Entities and other Persons and to execute and deliver, and to cause their respective Group members to execute and deliver such instruments of transfer, in each case, which are necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements; provided that, the foregoing notwithstanding but subject to the requirements of Section 5.01 of the Merger Agreement in respect of the obligations of the Parties to obtain the Trident Regulatory Approvals under the Merger Agreement, no Party shall be required to make any payment (except to the extent advanced, Assumed or agreed in advance to be reimbursed by any member of the other Group) other than for fees and disbursements of outside counsel and any other advisors, commit to any third party on behalf of itself or any member of its Group to assume any material obligations or offer or grant any material concession to obtain any such consent, permit, authorization or approval. Notwithstanding anything herein to the contrary, except as mutually agreed by the Parties hereto and Patriot, (x) the Parties intend that the Fountain Distribution Date shall be on September 28, 2012 and (y) the Parties agree that the Fountain Distribution Date and the Closing Date shall be no earlier than September 28, 2012 absent the prior written consent of each of Trident, Fountain and Patriot.

 

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Section 2.2. Transfer of Assets .

(a) Prior to the Effective Time and to the extent not already completed (it being understood that some of such Transfers may occur following the Effective Time in accordance with Section 2.6) , pursuant to the Conveyancing and Assumption Instruments and in accordance with the Step Plan:

(i) Trident shall, on behalf of itself and its Subsidiaries, as applicable, transfer, contribute, assign and convey or cause to be transferred, contributed, assigned and conveyed (“ Transfer ”) to Fountain or another member of the Fountain Group effective no later than the Effective Time, all of its and its Subsidiaries’ right, title and interest in and to the Fountain Assets;

(ii) Fountain shall, on behalf of itself and any other member of the Fountain Group, as applicable, Transfer, effective no later than the Effective Time, to Trident or another member of the Trident Group all of its and its Subsidiaries’ right, title and interest in and to the Trident Retained Assets.

(b) Treatment of Shared Contracts . Without limiting the generality of the obligations set forth in Section 2.2(a) :

(i) Any Contract that is listed on Schedule 2.2(b) (each, a “ Shared Contract ”) shall be assigned in part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to the Effective Time so that each of Trident or Fountain or the members of their respective Groups as of the Effective Time shall be entitled to the rights and benefits, and shall Assume the related portion of any Liabilities, inuring to their respective Businesses; provided , however , that (x) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety 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, subject to Section 2.2(c) ) and (y) 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, the Parties shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause a member of the Fountain Group or the Trident Group, as the case may be, to receive the benefit of that portion of each Shared Contract that relates to the Fountain Business or the Trident Retained Business, as the case may be (in each case, to the extent so related) as if such Shared Contract had been assigned to (or amended to allow) a member of the applicable Group pursuant to this Section 2.2(b) 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 2.2(b) .

(ii) Each of Trident and Fountain shall, and shall cause the members of its Group to, (A) treat for all Income Tax purposes the portion of each Shared Contract inuring to its respective Businesses as Assets owned by, and/or Liabilities of, as

 

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applicable, such Group not later than the Effective Time and (B) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

(iii) Neither Party will amend, renew, extend or otherwise modify any Shared Contract without the consent of the other Party to the extent such amendment, renewal, extension or modification would adversely affect such other Party. Notwithstanding anything to the contrary contained in Section 2.2(b)(i) , upon 90 days’ advance request of Patriot, Trident shall use its reasonable best efforts to terminate, cancel or otherwise render inapplicable to the Fountain Business any portion of any Shared Contract inuring to the Fountain Business; provided that Trident shall not be required to, and shall not be required to cause any member of its Group to, so terminate or cancel such Shared Contract prior to the 12 month anniversary of the Fountain Distribution Date or to make any payments (except to the extent advanced, Assumed or agreed in advance to be reimbursed by Fountain) other than for fees and disbursements of outside counsel and any other advisors, commit to any third party on behalf of itself or any member of its Group to assume any material obligations or offer or grant any material concession to obtain any such termination or cancellation.

(c) Consents . The Parties shall use their reasonable best efforts prior to the Effective Time to obtain the Consents required to Transfer any Assets, Contracts, licenses, permits and authorizations issued by any Governmental Entity or parts thereof as contemplated by this Agreement; provided that (x) neither Party shall be required to, and shall be required to cause any member of its Group to, make any payments (except to the extent advanced, Assumed or agreed in advance to be reimbursed by any member of the other Group) other than for fees and disbursements of outside counsel and any other advisors, commit to any third party on behalf of itself or any member of its Group to assume any material obligations or offer or grant any material concession to obtain any such Consents and (y) Trident shall not, and shall not permit any member of the Trident Group to, commit to any third party on behalf of Fountain or any member of the Fountain Group to assume any material payments, incur any material obligations or offer or grant any material concession to any third party to obtain any such Consents that would be a Fountain Liability, without Fountain’s prior express written consent. For the avoidance of doubt, the required efforts and responsibilities of the Parties to seek the Trident Regulatory Approvals shall be governed by the Merger Agreement.

Section 2.3. Assumption and Satisfaction of Liabilities .

(a) Except as otherwise specifically set forth in any Ancillary Agreement, from and after the Effective Time (i) Trident shall, or shall cause a member of the Trident Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms (“ Assume ”), all of the Trident Retained Liabilities and (ii) Fountain shall, or shall cause a member of the Fountain Group to, Assume all of the Fountain Liabilities.

(b) Fountain shall, or, where applicable, cause one or more members of the Fountain Group to, enter into and/or abide by the terms and conditions of each of those Contracts and arrangements set forth in Schedule 2.3(b) .

 

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Section 2.4. Intercompany Accounts .

(a) All intercompany receivables other than Intercompany Trade Receivables (the “ Other Intercompany Receivables ”) and all intercompany payables and loans other than Intercompany Trade Payables and other than intercompany loans within a Group (the “ Other Intercompany Payables and Loans ”) shall be satisfied and/or settled in full in cash and/or otherwise canceled and terminated or extinguished (in each case with no further liability or obligation) prior to the Effective Time or treated as specifically provided for under this Agreement, under any Ancillary Agreement or under any Continuing Arrangements as set forth on Schedule 1.1(48) , as applicable, including, where applicable, continuing to be outstanding as an obligation of the relevant Party (or the relevant member of such Party’s Group).

(b) As between the Parties (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by a 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 (provided that the Party entitled thereto shall reimburse the Party holding such payment or reimbursement in trust for all out-of-pocket expenses related thereto other than for fees and disbursements of outside counsel and any other advisors) and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay or shall cause the applicable member of its Group to pay over to the applicable Party the amount of such payment or reimbursement without right of set-off.

Section 2.5. Limitation of Liability .

(a) Except in the case of any knowing violation of Law, fraud or misrepresentation, no Party shall have any Liability to any other Party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

(b) No Party or any Subsidiary thereof shall be liable to any other Party or any Subsidiary of any other Party based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the Effective Time (other than trade payables and receivables, this Agreement, any Ancillary Agreement, any Continuing Arrangements, any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the Fountain Plan of Separation) and each Party hereby terminates any and all Contracts, arrangements, courses of dealing or understandings between or among it or a member of such Party’s Group, on the one hand, and the other Party or a member or such other Party’s Group, on the other hand, effective as of the Effective Time (other than trade payables and receivables, this Agreement, any Ancillary Agreement, any Continuing Arrangements, any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the Fountain Plan of Separation).

(c) Certain Payments Under Management Agreement . Certain members of the Fountain Group are parties to a management services agreement (the “ Management Agreement ”) pursuant to which Trident International Management Company, LLC (the “ Provider ”) provides

 

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various management services to certain U.S. subsidiaries of Trident within the Fountain Group (individually, a “ Recipient ” and, collectively, the “ Recipients ”). Prior to the Fountain Distribution Date, Trident shall determine in good faith an estimate of the amounts payable (if any) by the Recipients to Provider for the period up to the Fountain Distribution Date pursuant to the Management Agreement (or any right of the Recipients to a refund of previous payments made under the Management Agreement). Prior to the Fountain Distribution Date, each Recipient owing additional amounts shall pay the Provider any amounts due or, as the case may be, the Provider shall refund any overpaid amounts to each Recipient that overpaid the Provider, in each case, based on the estimates determined by Trident pursuant to the foregoing sentence, which payment or refund shall constitute settlement in full of all amounts owed or owing under the Management Agreement. Prior to the Fountain Distribution Date, Trident shall cause the Provider and the Recipients to terminate the Management Agreement.

Section 2.6. Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time .

(a) To the extent that any Transfers or Assumptions contemplated by this Article II shall not have been consummated on or prior to the Effective Time, the Parties shall use reasonable best efforts to effect such Transfers or Assumptions as promptly following the Effective Time as shall be practicable. Nothing herein shall be deemed to require the Transfer of any Assets or the Assumption of any Liabilities which by their terms or operation of Law cannot be Transferred or Assumed; provided , however , that the Parties and their respective Subsidiaries shall cooperate and use reasonable best efforts to seek to obtain, in accordance with applicable Law, any necessary Consents or Governmental Approvals for the Transfer of all Assets and Assumption of all Liabilities to the fullest extent permitted by applicable Law contemplated to be Transferred and Assumed pursuant to this Article II. In the event that any such Transfer of Assets or Assumption of Liabilities has not been consummated, from and after the Effective Time (i) the Party retaining such Asset shall thereafter hold such Asset for the use and benefit of the Party entitled thereto (provided that the Party entitled thereto shall reimburse the Party retaining such Asset for all out-of-pocket expenses related to such retention other than for fees and disbursements of outside counsel and any other advisors) and (ii) the Party intended to Assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party Assuming such Liability in order to place such Party, insofar as reasonably possible, in the same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Effective Time to the member or members of the Trident Group or the Fountain Group entitled to the receipt of such Asset or required to Assume such Liability.

(b) If and when the Consents, Governmental Approvals and/or conditions, the absence or non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of

 

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the Assumption of any Liability pursuant to Section 2.6(a) , are obtained or satisfied, the Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary Agreement.

(c) The Party retaining any Asset or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability pursuant to Section 2.6(a) shall not be obligated, in connection with the foregoing, to expend any money out-of pocket unless the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability, other than reasonable attorneys’ fees and recording or similar fees all of which shall be promptly reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability.

(d) After the Effective Time, each Party (or any member of its Group) may receive mail, packages and other communications properly belonging to the other Party (or any member of its Group). Accordingly, at all times after the Effective Time, each Party authorizes the other applicable Party to receive and, if necessary to identify the proper recipient in accordance with this Section 2.6(d) , open all mail, packages and other communications received by such Party that belongs to such other Party, and to the extent that they do not relate to the business of the receiving Party, the receiving Party shall promptly deliver such mail, packages or other communications (or, in case the same also relates to the business of the receiving Party or another Party, copies thereof) to such other Party as provided for in Section 11.6 . The provisions of this Section 2.6(d) are not intended to, and shall not, be deemed to constitute an authorization by either Party to permit the other to accept service of process on its behalf and no Party is or shall be deemed to be the agent of any other Party for service of process purposes.

(e) In the event that, at any time from and after the Effective Time, either Party (or any member of the Trident Group or Fountain Group, as applicable) discovers that it or one of the members of its Group is the owner of, receives or otherwise comes to possess or benefit from any Asset (including the receipt of payments made pursuant to Contracts and proceeds from accounts receivable with respect to such Asset) or is liable for any Liability that is otherwise allocated to any Person that is a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any acquisition of Assets or assumption of Liabilities from the other Party for value subsequent to the Effective Time), such Party shall promptly Transfer, or cause to be Transferred, such Asset or Liability to the Person so entitled thereto (and the applicable Party shall cause such entitled Person to accept such Asset or Assume such Liability) for no further consideration. Prior to any such transfer, such Asset shall be held in accordance with the other provisions of this Section 2.6.

(f) With respect to Assets and Liabilities described in Section 2.6(a) , each of Trident and Fountain shall, and shall cause the members of its respective Group to, (i) treat for all Income Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the Party entitled to such Assets not later than the Effective Time and (B) the deferred Liabilities as liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities not later than the Effective Time and (ii) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

 

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Section 2.7. Conveyancing and Assumption Instruments . In connection with, and in furtherance of, the Transfers of Assets and the acceptance and Assumptions of Liabilities contemplated by this Agreement, the Parties shall execute and deliver to each other or cause to be executed and delivered, on or after the date hereof by the appropriate entities, any Conveyancing and Assumption Instruments necessary to evidence the valid and effective Assumption by the applicable Party of its Assumed Liabilities and the valid Transfer to the applicable Party or member of such Party’s Group of all right, title and interest in and to its accepted Assets for Transfers and Assumptions to be effected pursuant to New York Law or the Laws of one of the other states of the United States or, if not appropriate for a given Transfer or Assumption, pursuant to applicable non-U.S. Laws, in such form as Trident, Fountain and Patriot shall reasonably agree, including the Transfer of real property with deeds as may be appropriate and in form and substance as may be required by the jurisdiction in which the real property is located. All Conveyancing and Assumption Instruments shall be prepared, executed and delivered in a manner reasonably agreed by Patriot, Fountain and Trident. Except as reasonably agreed by Trident, Fountain and Patriot, the Conveyancing and Assumption Instruments shall not contain any representations or warranties or indemnities, shall not conflict with this Agreement and, to the extent that any provision of a Conveyancing and Assumption Instrument does conflict with any provision of this Agreement, this Agreement shall govern and control. The Transfer of capital stock shall be effected by means of executed stock powers and notation on the stock record books of the corporation or other legal entities involved, or by such other means as may be required in any non-U.S. jurisdiction to Transfer title to stock and, only to the extent required by applicable Law, by notation on public registries.

Section 2.8. Further Assurances .

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement, including Section 2.6 , each of the Parties shall cooperate with each other and use (and shall cause the members of its respective Group to use) reasonable best efforts, on and after the Effective Time, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, 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 from and after the Effective Time, to execute and deliver, or use reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of Transfer or title, and to make all filings with, and to obtain all Consents and/or Governmental Approvals, any permit, license, Contract, 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 any 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 or the Ancillary Agreements and the Transfers and recordings of the applicable Assets and the assignment and Assumption of the applicable Liabilities and the other

 

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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 such title as possessed by the transferring Party to the Assets allocated to such other Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest.

Section 2.9. Novation of Liabilities .

(a) Each Party, at the request of the other Party, shall use reasonable best efforts to obtain, or to cause to be obtained, any Consent, Governmental Approval, substitution or amendment required to novate or assign to the fullest extent permitted by applicable Law all obligations under Contracts and Liabilities for which a member of such Party’s Group and a member of the other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such other Party as provided in this Agreement (such other Party, the “ Other Party ”), or to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Other Party’s Group which Assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group shall be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration (or otherwise incur any Liability or obligation) therefor to any third party from whom any such Consent, Governmental Authority, substitution or amendment is requested (unless such Party is fully reimbursed or otherwise made whole by the requesting Party).

(b) If the Parties are unable to obtain, or to cause to be obtained, any such Consent, Governmental Approval, release, substitution or amendment required to novate, fully assign or fully release any such obligations under Contracts or any Liabilities, (i) the Other Party shall nonetheless use reasonable best efforts to assign or release, including by executing any such assignment which does not release the Other Party from its obligations under such Contract or from such Liability, to the fullest extent permitted and (ii) the Other Party or a member of such Other Party’s Group shall continue to be bound by such Contract that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who Assumed or retained such Liability as set forth in this Agreement (the “ Liable Party ”) shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the Effective Time in each case in accordance with Section 2.6 . The Other Party shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or, at the direction of the Liable Party, to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, Governmental Approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly Transfer or cause the Transfer of, as applicable, all rights, obligations and other Liabilities thereunder of such Other Party or of any member of such Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group and the Liable Party, or another member of such Liable Party’s Group shall Assume such rights and Liabilities to the fullest extent permitted by applicable Law in accordance with Section 2.6(b) .

 

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Section 2.10. Guarantees .

(a) Except as otherwise specified in any Ancillary Agreement, on or prior to the Effective Time or as soon as practicable thereafter, (i) Trident shall (with the reasonable cooperation of the applicable member of the Fountain Group) use its reasonable best efforts to have any member of the Fountain Group removed as guarantor of or obligor for any Trident Retained Liability, including in respect of those guarantees set forth on Schedule 2.10(a)(i) , to the extent that they relate to Trident Retained Liabilities, and (ii) Fountain shall (with the reasonable cooperation of the applicable member of the Trident Group) use its reasonable best efforts to have any member of the Trident Group removed as guarantor of or obligor for any Fountain Liability, including in respect of those guarantees set forth on Schedule 2.10(a)(ii) , to the extent that they relate to Fountain Liabilities; provided that, the foregoing notwithstanding, Fountain shall have no obligation to remove any member of the Trident Group as guarantor or obligor under any of the guarantees set forth on Schedule 2.10(a)(ii)(B); and provided , however , that no Party shall be obligated to pay any consideration (or otherwise incur any Liability or obligation) therefor to any third party from whom any such Guaranty Release is requested (unless such Party is fully reimbursed or otherwise made whole by the requesting Party).

(b) On or prior to the Effective Time, to the extent required to obtain a release from a guaranty (a “ Guaranty Release ”):

(i) of any member of the Trident Group, Fountain shall execute a guaranty agreement in the form of the existing guaranty or such other form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which Fountain would be reasonably unable to comply or (B) which would be reasonably expected to be breached; and

(ii) of any member of the Fountain Group, Trident shall execute a guaranty agreement in the form of the existing guaranty or such other form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which Trident would be reasonably unable to comply or (B) which would be reasonably expected to be breached.

(c) If Trident or Fountain is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 2.10 (or with respect to those guarantees set forth in Schedule 2.10(a)(ii)(B) , which shall be Fountain Liabilities assumed by Fountain pursuant to this Agreement), (i) the relevant member of the Trident Group or Fountain Group, as applicable, that has assumed the Liability with respect to such guaranty shall indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VIII ) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder provided that, with respect to those guarantees set forth in Schedule 2.10(a)(ii)(B) , Fountain shall only be obligated to indemnify and hold harmless the Tyco Group for any Indemnifiable Loss relating thereto to the extent that the Trident Group does not receive indemnification from

 

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AECOM Technology Corporation pursuant to the Guaranty Indemnification Agreement, dated as of July 25, 2008, as amended, by and among Trident, TIFSA and AECOM Technology Corporation (the “ GIA ”) with respect to any Liabilities under such guarantees (it being agreed that Trident shall use commercially reasonable efforts to exercise its rights under the GIA, including seeking indemnification thereunder provided that Trident shall be indemnified by Fountain for Indemnifiable Losses related to seeking indemnification under the GIA) and (ii) each of Trident and Fountain, on behalf of themselves and the members of their respective Groups, agree not to renew or extend the term of, increase its obligations under, or Transfer to a third party, any loan, guarantee, lease, contract or other obligation for which the other Party or member of such Party’s Group is or may be liable without the prior written consent of such other Party, unless all obligations of such other Party and the other members of such Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such Party; provided , however , with respect to leases, in the event a Guaranty Release is not obtained and the relevant beneficiary wishes to extend the term of such guaranteed lease, then such beneficiary shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease.

(d) Notwithstanding anything to the contrary in this Agreement (including the Schedules hereto), Trident and Tyco International Finance S.A. (“TIFSA”) shall be under no obligation to, and shall not in connection with the Fountain Plan of Separation, assign or otherwise transfer any of their respective rights under the GIA. Trident shall cause TIFSA to, prior to the Fountain Separation Date, assign to Fountain or another member of the Fountain Group, TIFSA’s rights under that certain Purchase Agreement, dated as of February 11, 2008, among TIFSA, AECOM Technology Corporation and the other parties thereto.

Section 2.11. Pre-Closing Actions . Notwithstanding anything to the contrary contained in this Agreement or any Ancillary Agreement, following the Effective Time, Fountain shall have no Liability for the breach or alleged breach of this Agreement related to any actions taken or not taken prior to the Effective Time; provided that, for the avoidance of doubt, nothing in this Section 2.11 shall absolve Fountain of any Liability for breach of any of its obligations under any covenants which contemplate performance after the Effective Time.

Section 2.12. Disclaimer of Representations and Warranties . EACH OF TRIDENT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE TRIDENT GROUP) AND FOUNTAIN (ON BEHALF OF ITSELF AND EACH MEMBER OF THE FOUNTAIN GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT, IN ANY CONTINUING ARRANGEMENT OR IN THE MERGER AGREEMENT, NO PARTY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT IS MAKING ANY REPRESENTATION OR WARRANTY IN ANY WAY. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT, IN ANY CONTINUING ARRANGEMENT OR IN THE MERGER 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 DEED OR CONVEYANCE).

 

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ARTICLE III

CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS

Section 3.1. Organizational Documents . Prior to the Fountain Distribution, all necessary actions shall be taken to adopt the form of Articles of Association and Organizational Regulations as required by Section 1.05(c) of the Merger Agreement.

Section 3.2. Directors . Prior to the Fountain Distribution, Trident shall take all necessary action to cause the Board of Directors of Fountain to be of such size and with such composition as required by Section 1.06(b) of the Merger Agreement.

Section 3.3. Resignations . Prior to the Fountain Distribution, (i) Trident shall cause all its employees and any employees of its Affiliates (excluding any employees of any member of the Fountain Group) to resign, effective as of the Effective Time, from all positions as officers or directors of any member of the Fountain Group in which they serve and (ii) Fountain shall cause all its employees and any employees of its Affiliates, to resign, effective as of the Effective Time, from all positions as officers or directors of any members of the Trident Group in which they serve.

Section 3.4. Certain Debt; Cash .

(a) Prior to the close of business on the day prior to the Fountain Distribution Date, (i)(x) Fountain or a member of the Fountain Group shall issue to Trident or any other member of the Trident Group as directed by Trident, the Trident Note (as defined in the Merger Agreement) in a principal amount up to $500 million in accordance with Section 5.03(d) of the Merger Agreement or (y) in the event that, notwithstanding compliance with the terms and conditions of Section 5.03(c) of the Merger Agreement, the Senior Notes Issuance (as defined in the Merger Agreement) is not consummated and Patriot is unable to execute a credit agreement for the Senior Credit Facility (as defined in the Merger Agreement) on Acceptable Terms, Fountain or a member of the Fountain Group shall issue to Trident or any other member of the Trident Group as directed by Trident, the Bridge Note in a principal amount up to $500 million in accordance with Section 5.03(d) of the Merger Agreement, and (ii) either (A) Fountain will transfer cash and cash equivalents to Trident or a member of the Trident Group, as directed by Trident or (B) Trident or a member of the Trident Group, as directed by Trident will transfer cash and cash equivalents to Fountain, such that, following completion of the transactions contemplated by clauses (i) and (ii), the Net Indebtedness of the Fountain Group as of the close of business on the day prior to the Fountain Distribution Date and as of the Effective Time shall equal $275 million.

(b) Notwithstanding anything to the contrary in this Agreement, (1) the Trident Note (as defined the Merger Agreement) or the Bridge Note, as the case may be, shall be (A) a Fountain Liability, (B) taken into account in determining the amount of Net Indebtedness pursuant to Section 3.4 of the Separation Agreement and Closing Net Indebtedness pursuant to Section 3.5 and (C) to the extent not repaid in full in connection with the Closing, shall be a Continuing Arrangement for all purposes under the Separation Agreement, (2) the Senior Notes (as defined in the Merger Agreement) shall be a Fountain Liability and the net proceeds from the

 

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Senior Notes Issuance shall be a Fountain Asset, (3) the Patriot Escrow Amount (as defined in the Merger Agreement) shall not be a Fountain Asset and (4) the calculations of Net Indebtedness pursuant to this Section 3.4 and of Closing Working Capital and Closing Net Indebtedness pursuant to Section 3.5 of the Separation Agreement shall not take into account the Senior Notes Issuance (including any expenses, fees or other Liabilities incurred in connection therewith or arising therefrom), any indebtedness or net proceeds related thereto or the Patriot Escrow Amount. Fountain shall pay or cause to be paid in cash on the Fountain Distribution Date (A) all amounts outstanding under the Trident Note or the Bridge Note, as applicable, and (B) all amounts in respect of the Share Premium Redemption.

Section 3.5. Post-Closing Working Capital Adjustment .

(a) Within 60 days after the Fountain Distribution Date, Fountain shall prepare and deliver to Trident a statement (the “ Statement ”), setting forth (i) the Current Assets minus the Current Liabilities of the Fountain Business as of the close of business on the day prior to the Fountain Distribution Date (and after giving effect on such date to the completion of the reorganization contemplated by the Step Plan as of the Effective Time, including any related cash movements) (“ Closing Working Capital ”) determined in a manner consistent with the Fountain Balance Sheet and without giving effect to any purchase accounting impact arising by virtue of the Merger or the Separation and (ii) the Net Indebtedness of the Fountain Business as of the close of business on the day prior to the Fountain Distribution Date (“ Closing Net Indebtedness ”). Trident shall provide reasonable assistance to Fountain in the preparation of the Statement.

(b) The Statement shall become final and binding upon the Parties on the 60th day following delivery thereof, unless Trident gives written notice of its disagreement with the Statement (a “ Notice of Disagreement ”) to Fountain prior to such date. Any Notice of Disagreement shall (i) specify in reasonable detail the nature of any disagreement so asserted, and (ii) only include disagreements based on mathematical errors or based on Closing Working Capital or Closing Net Indebtedness not being determined in accordance with this Section 3.5 . If a Notice of Disagreement is received by Fountain in a timely manner, then the Statement (as revised in accordance with this sentence) shall become final and binding upon the Parties on the earlier of (A) the date the Parties resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (B) the date any disputed matters are finally resolved in writing by the Accountant. During the 30–day period following the delivery of a Notice of Disagreement, the Parties shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. At the end of such 30–day period, the Parties shall submit to a nationally recognized independent public accountant (the “ Accountant ”) for arbitration any and all matters that remain in dispute and were properly included in the Notice of Disagreement. The Accountant shall be Ernst & Young LLP or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the Parties in writing. The scope of the disputes to be resolved by the Accountant shall be solely limited to whether the determination of Closing Working Capital was done in accordance with the Working Capital Principles and this Section 3.5 , whether the determination of Closing Net Indebtedness was done in accordance with this Section 3.5 , and whether there were mathematical errors in the Statement. The Parties shall use reasonable best efforts to cause the Accountant to render a decision resolving the matters

 

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submitted to the Accountant within 30 days of receipt of the submission. Judgment may be entered upon the determination of the Accountant in any court having jurisdiction over the Party against which such determination is to be enforced. The fees and expenses of the Accountant pursuant to this Section 3.5 shall be equally shared by the Parties. Other than the fees and expenses referred to in the immediately preceding sentence, the fees and disbursements of Trident’s independent auditors, attorneys and other consultants shall be borne by Trident and the fees and disbursements of Fountain’s independent auditors, attorneys and other consultants shall be borne by Fountain.

(c) (i) “ Working Capital Adjustment ” shall mean (i) if Closing Working Capital is less than the Working Capital Target by an amount greater than $125 million, the amount by which Closing Working Capital is less than the Working Capital Target, (ii) if Closing Working Capital is more than the Working Capital Target by an amount greater than $125 million, the amount by which the Closing Working Capital is more than the Working Capital Target and (iii) in all other cases, zero; provided that, for purposes of calculating the Closing Amount, the Working Capital Adjustment shall be reflected as a positive number in the event the Working Capital Adjustment is determined pursuant to clause (i) and a negative number in the event the Working Capital Adjustment is determined pursuant to clause (ii).

(ii) “ Net Indebtedness Adjustment ” shall mean an amount equal to Closing Net Indebtedness minus $275 million, which amount can be either a positive or negative number.

(iii) If the Working Capital Adjustment plus the Net Indebtedness Adjustment (the “ Closing Amount ”) is greater than zero, Trident shall, within ten Business Days after the Statement becomes final and binding on the parties, pay to Fountain the Closing Amount. If the Closing Amount is less than zero, Fountain shall, within ten Business Days after the Statement becomes final and binding on the parties, pay to Trident the absolute value of the Closing Amount. Any payment made pursuant to this Section 3.5(c) shall be made by wire transfer in immediately available funds to one or more accounts designated in writing at least two Business Days prior to such payment by the Party entitled to receive such payment together with interest thereon (such interest to be calculated on the basis of the actual number of days elapsed on such amount from the Fountain Distribution Date to the date of such payment at a rate of LIBOR plus 175 basis points for the first 120 days and the Default Interest Rate for any time after the first 120 days).

(d) Any payments to Fountain pursuant to this Section 3.5 shall be treated for all Tax purposes as a capital contribution to Fountain. Any payments made by Fountain pursuant to this Section 3.5 shall be treated for all Tax purposes as an adjustment to the transfer described in Section 2.2(a) .

(e) During the period of time from and after the Fountain Distribution Date through the resolution of any payment contemplated by Section 3.5(c) , each of the Parties shall afford to each other and their respective accountants and counsel in connection with any actions contemplated by this Section 3.5 reasonable access during normal business hours to all the properties, personnel and Records of such Party relevant to the Statement, the Notice of Disagreement and any payments contemplated by this Section 3.5 .

 

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(f) Notwithstanding anything to the contrary in this Agreement, (1) the Trident Note (as defined in the Merger Agreement) or the Bridge Note, as the case may be, shall be (A) a Fountain Liability, (B) taken into account in determining the amount of Net Indebtedness pursuant to Section 3.4 and Closing Net Indebtedness pursuant to this Section 3.5 of the Separation Agreement and (C) to the extent not repaid in full in connection with the Closing, shall be a Continuing Arrangement for all purposes under the Separation Agreement, (2) the Senior Notes (as defined in the Merger Agreement) shall be a Fountain Liability and the net proceeds from the Senior Notes Issuance shall be a Fountain Asset, (3) the Patriot Escrow Amount (as defined in the Merger Agreement) shall not be a Fountain Asset and (4) the calculations of Net Indebtedness pursuant to Section 3.4 and of Closing Working Capital and Closing Net Indebtedness pursuant to this Section 3.5 shall not take into account the Senior Notes Issuance (including any expenses, fees or other Liabilities incurred in connection therewith or arising therefrom), any indebtedness or net proceeds related thereto or the Patriot Escrow Amount.

(g) Notwithstanding anything to the contrary in this Agreement (including the Schedules hereto), (i) all out-of-pocket costs and expenses (including the reasonable costs and expenses of outside legal counsel) incurred in connection with or arising out of the matters set forth in Schedule 1.01(j)(i) hereto shall be the obligation of Fountain and shall be paid by Fountain promptly after the Fountain Distribution Date (collectively, “ Schedule 1.01(j)(i) Expenses ”); (ii) for purposes of this Section 3.5 , in calculating Closing Working Capital and Closing Net Indebtedness, all Schedule 1.01(j)(i) Expenses and items 1-3 and 5 set forth in Schedule 1.01(j)(ii) hereto shall be disregarded and not be considered a Current Asset, a Current Liability or Indebtedness of the Fountain Business; and (iii) for purposes of this Section 3.5 , in calculating Closing Working Capital, item 4 set forth in Schedule 1.01(j)(ii) hereto shall be disregarded and not be considered a Current Asset or a Current Liability of the Fountain Business.

(h) Notwithstanding anything to the contrary in this Agreement, with respect to any amounts paid or payable following the Fountain Distribution Date by Trident or any member of the Trident Group, on the one hand, or Fountain or any member of the Fountain Group, on the other hand, pursuant to Section 3 of that certain Agreement, dated September 27, 2012, between Trident and Fountain in respect of an adjustment to the purchase price paid by Fountain to Trident in respect of 3,175,000 shares of Fountain Common Stock to be used as Fountain treasury shares, any such amounts shall (A) be disregarded for the purposes of determining Closing Working Capital pursuant to this Section 3.5 and (B) be taken into account in determining the amount of Net Indebtedness pursuant to Section 3.4 and Closing Net Indebtedness pursuant to this Section 3.5 as if such payments were made in cash immediately prior to the close of business on the day prior to the Fountain Distribution Date.

Section 3.6. Ancillary Agreements . On or prior to the Effective Time, each of Trident and Fountain shall enter into, and/or (where applicable) shall cause a member or members of their respective Group to enter into, the Ancillary Agreements to the extent not entered into on the date hereof.

 

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Section 3.7. Fountain Recapitalization . Prior to the Fountain Distribution, Trident and Fountain will take all actions necessary so that, immediately prior to the Fountain Distribution, Fountain will have sufficient issued and paid up share capital, including a sufficient number of shares, to effect the Distribution and the Merger and to have such amount of additional treasury shares as may be proposed by Patriot and approved by Trident (such approval not to be unreasonably withheld, conditioned or delayed) (the “ Fountain Treasury Shares ”).

ARTICLE IV

THE DISTRIBUTION

Section 4.1. Stock Dividend to Trident Shareholders . On the Fountain Distribution Date, Trident will cause the Distribution Agent to distribute all of the outstanding shares of Fountain Common Stock then owned by Trident to holders of Trident Common Stock on the Fountain Distribution Record Date, and to credit the appropriate number of such shares of Fountain Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of Fountain Common Stock. For stockholders of Trident who own Trident Common Stock through a broker or other nominee, their shares of Fountain Common Stock will be credited to their respective accounts by such broker or nominee. Each holder of Trident Common Stock on the Fountain Distribution Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Fountain Distribution a number of shares of Fountain Common Stock equal to the Distribution Ratio for every one share of Trident Common Stock held by such stockholder. No action by any such stockholder shall be necessary for such stockholder (or such stockholder’s designated transferee or transferees) to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares) Fountain Common Stock such stockholder is entitled to in the Fountain Distribution. On the Distribution Date, Trident shall transfer to Fountain all shares of Fountain Common Stock not distributed to the holders of Trident Common Stock in the Fountain Distribution, including the Fountain Treasury Shares.

Section 4.2. Fractional Shares . Trident stockholders holding a number of shares of Trident Common Stock, on the applicable Record Date, which would entitle such stockholders to receive less than one whole share of Fountain Common Stock in the Fountain Distribution, will receive cash in lieu of fractional shares. Fractional shares of Fountain Common Stock will not be distributed in the Fountain Distribution nor credited to book-entry accounts. The Distribution Agent shall, as soon as practicable after the Fountain Distribution Date (a) determine the number of whole shares and fractional shares of Fountain Common Stock allocable to each holder of record or beneficial owner of Trident Common Stock as of close of business on the Fountain Distribution Record Date, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case, at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of Fountain Common Stock after making appropriate deductions for any amount required to be withheld for Tax purposes and any brokerage fees incurred in connection with these sales of fractional shares. None of Trident, Fountain or the Distribution Agent will guarantee any minimum sale price for the fractional

 

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shares of Fountain Common Stock. Neither Trident nor Fountain will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent acting on behalf of the applicable Party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the broker-dealers through which the aggregated fractional shares are sold will be Affiliates of Trident or Fountain.

Section 4.3. Actions in Connection with the Distribution . On the Fountain Distribution Date, each of Trident and Fountain shall deliver or cause to be delivered to the other Party (to the extent not already in the possession of the other Party) executed counterparts to all Ancillary Agreements to which a member of the Fountain Group is a party, including all Conveyancing and Assumption Instruments relating to the Fountain Business.

Section 4.4. Conditions to Distribution . (a) The consummation of the Fountain Distribution shall be conditioned upon the satisfaction (or waiver by Trident) of each of the conditions to Trident’s obligation to effect the Closing of the transactions contemplated by the Merger Agreement, as provided in Section 6.01 and Section 6.03 of the Merger Agreement (other than those conditions that, by their nature, are to be satisfied between 12:01 a.m., Eastern Daylight Time, on the Closing Date and the Closing or contemporaneously with the Closing and other than the condition set forth in Section 6.01(b)(2) of the Merger Agreement, (b) Trident shall have irrevocably confirmed to Patriot in writing that as of such date each condition to Trident’s, Fountain’s, AcquisitionCo’s and Merger Sub’s obligation to effect the Closing of the transactions contemplated by the Merger Agreement, as provided in Section 6.01 and Section 6.02 of the Merger Agreement, shall have been satisfied or waived (other than those conditions that, by their nature, are to be satisfied between 12:01 a.m., Eastern Daylight Time, on the Fountain Distribution Date and Closing or contemporaneously with the Closing and other than the condition set forth in Section 6.01(b)(2) of the Merger Agreement) and that it is prepared to proceed with the Merger and (c) Patriot shall have irrevocably confirmed to Trident in writing that as of such date each condition to Patriot’s obligation to effect the Closing of the transactions contemplated by the Merger Agreement, as provided in Section 6.01 and Section 6.02 of the Merger Agreement, shall have been satisfied or waived (other than those conditions that, by their nature, are to be satisfied between 12:01 a.m., Eastern Daylight Time, on the Fountain Distribution Date and Closing or contemporaneously with the Closing and other than the condition set forth in Section 6.01(b)(2) of the Merger Agreement) and that it is prepared to proceed with the Merger.

ARTICLE V

CERTAIN COVENANTS

Section 5.1. No Solicit; No Hire

(a) None of Trident, Athens NA or Fountain or any member of their respective Groups (if the Closing occurs, including, with respect to Fountain, Patriot and its Subsidiaries) will, from the Effective Time through and including the second anniversary of the Effective Time, without the prior written consent of the Senior Vice President of Human Resources of the other applicable Party, either directly or indirectly, on their own behalf or in the

 

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service or on behalf of others, hire as an employee or an independent contractor any individual who is a Band 4 or higher employee (or Grade 40, in the case of Patriot and its Subsidiaries) and is employed by any other Party or its Subsidiaries as of the Effective Time (a “ Restricted Person ”).

(b) None of Trident, Athens NA or Fountain or any member of their respective Groups (if the Closing occurs, including, with respect to Fountain, Patriot and its Subsidiaries) will, from the Effective Time through and including the second anniversary of the Effective Time, without the prior written consent of the Senior Vice President of Human Resources of the other applicable Party, either directly or indirectly, on their own behalf or in the service or on behalf of others, solicit, aid, induce or encourage any Restricted Person who is an employee of any other Party’s respective Group to leave his or her employment; provided , however , that nothing in this Section 5.1(b) shall be deemed to prohibit, any general solicitation for employment through advertisements and search firms not specifically directed at employees of another Party; provided , that the soliciting Party has not encouraged or advised such firm to approach any such employee.

Section 5.2. Agreement Not To Compete .

(a) None of Trident and Athens NA or any member of their respective Groups, on the one hand, and Fountain or any member of the Fountain Group, on the other hand, shall, for a period of three (3) years following the Closing Date, establish or acquire any new businesses that involve the sale of products or the provision of services that (i) with respect to Trident or Athens NA or any member of their respective Groups, compete with the Fountain Business or (ii) with respect to Fountain or any member of the Fountain Group compete with the Trident Business or the Athens North American R/SB Business (“ Competitive Activities ”).

(b) Notwithstanding Section 5.2(a) , Trident, Athens NA and Fountain and any member of their respective Groups shall be permitted to continue to conduct their current Businesses and extensions thereof (including any sale of any product or service that otherwise incorporates or uses as a component any of the products that would otherwise constitute Competitive Activities); provided that, for purposes of this Section 5.2, the Trident Retained Business shall be deemed to exclude the Athens North American R/SB Business.

(c) Notwithstanding Section 5.2(a) , Trident, Athens NA and Fountain and any member of their respective Groups shall also be permitted to (I) acquire and own any interests in any publicly-traded Persons that engage in Competitive Activities so long as such interests constitute less than 5% of such Person’s voting securities, (II) acquire and own any interests in any Persons not publicly-traded that engage in Competitive Activities so long as such interests constitute less than 10% of such Person’s voting securities, (III) sell or divest any or all of its assets or businesses to any Person that is not an Affiliate, and such Person shall in no way be bound by the restrictions set forth in Section 5.2(a) and (IV) acquire and own any interests in any Persons that engage in Competitive Activities so long as the Competitive Activities of such Person constitute less than 25% of such Person’s consolidated annual net revenues for its most recently completed fiscal year (a “ Permitted Acquiree ”), and, in the case of clause (IV), each of Trident, Athens NA and Fountain and any member of their respective Groups, as applicable, uses its reasonable best efforts to dispose of the businesses of such Permitted Acquiree in Competitive

 

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Activities within twelve (12) months from the closing of such acquisition; provided that such twelve (12) month period shall be extended in the event that a definitive agreement to dispose of such business within such twelve (12) month period has been entered into (x) for three (3) months, to permit the closing of such transaction or (y) for a reasonable period of time, in the event such definitive agreement is terminated as a result of the failure of a closing condition, the failure to obtain antitrust or other regulatory clearance or a breach by the other party to the agreement, to permit Trident, Athens NA or Fountain or such member of their respective Groups, as applicable to seek an alternative disposition transaction.

Section 5.3. Financial Statements and Accounting .

(a) Each Party agrees to provide the following assistance of access set forth in subsections (b), (c) and (d) of this Section 5.3 , (i) during the three hundred and sixty-five (365) days following the Fountain Distribution Date in connection with the closing of the books and the preparation and audit of each of the Party’s (including for purposes of this Section 5.3 , those of Athens NA) financial statements for the year ended September 28, 2012 or, to the extent the Fountain Distribution Date is after September 28, 2012, the financial statements for the 2013 fiscal year (and September 28, 2012, to the extent the books are not yet closed or audit not yet complete), the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting and management’s assessment thereof and management’s assessment of each Party’s disclosure controls and procedures, if required, in each case made as of September 28, 2012 or, to the extent the Fountain Distribution Date is after September 28, 2012, made as of the end of the 2013 fiscal year (and if applicable, September 28, 2012); (ii) following such initial three hundred and sixty-five (365) day period and until December 31, 2014, with the consent of the other applicable Party (not to be unreasonably withheld or delayed) for reasonable business purposes in connection with the matters addressed in this Section 5.3 ; (iii) in the event that any Party changes its auditors within two (2) years of the Fountain Distribution Date, then such Party may request reasonable access on the terms set forth in this Section 5.3 for a period of up to one hundred and eighty (180) days from such change; and (iv) from time to time following the Fountain Distribution Date, to the extent reasonably necessary to respond (and for the limited purpose of responding) to any written request or official comment from a Governmental Entity, such as in connection with responding to a comment letter from the Commission:

(b) Annual Financial Statements . For fifteen (15) months following the Fountain Distribution Date, each Party shall provide or provide access, at reasonable times and on reasonable advance notice, to the other Party on a timely basis all Information reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for 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 and, 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 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder, if required. Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in reasonably sufficient detail to permit its

 

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auditors to take all steps and perform all reviews necessary to provide sufficient assistance to each other Party’s auditors with respect to Information to be included or contained in such other Party’s annual financial statements and to permit such other Party’s auditors and management to complete the Internal Control Audit and Management Assessments, if required.

(c) Access to Personnel and Records . For fifteen (15) months following the Fountain Distribution Date, each Party shall authorize its respective auditors to make reasonably available to each other Party’s auditors (each such other Party’s auditors, collectively, the “ Other Parties’ Auditors ”) both the personnel who performed or are performing the annual audits of such audited Party (each such Party with respect to its own audit, the “ Audited Party ”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Parties’ Auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. Each Party shall make reasonably available to the Other Parties’ Auditors and management its personnel and Records in a reasonable time prior to the Other Parties’ Auditors’ opinion date and other Parties’ management’s assessment date so that the Other Parties’ Auditors and other Parties’ management are able to perform the procedures they reasonably consider necessary to conduct the Internal Control Audit and Management Assessments.

(d) Annual Reports . Each Party will deliver to the other Parties a substantially final draft, as soon as the same is prepared, of the first report to be filed with the Commission (or otherwise) that includes their respective financial statements (in the form expected to be covered by the audit report of such Party’s independent auditors) for the year ended September 28, 2012 or the end of the 2013 fiscal year (and, if not already completed, September 28, 2012), if the Fountain Distribution Date should occur after September 28, 2012 (such reports, collectively, the “ Annual Reports ”); provided , however , that each Party may continue to revise its respective Annual Report prior to the filing thereof, which changes will be delivered to the other Parties as soon as reasonably practicable; provided , further , that each Party’s personnel will actively consult with the other Party’s personnel regarding any material changes which they may consider making to its respective Annual Report and related disclosures prior to the anticipated filing with the Commission, with particular focus on any changes which could reasonably be expected to have an effect upon the other Party’s financial statements or related disclosures.

(e) Nothing in this Section 5.3 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary Information relating to that third party or its business; provided , however , that in the event that a Party is required under this Section 5.3 to disclose any such Information, such Party shall use reasonable best efforts to seek to obtain such third party’s written consent to the disclosure of such Information; provided , however , that no Party shall be obligated to pay any consideration (or otherwise incur any Liability or obligation) therefor to any third party from whom any such consent is sought (unless such Party is fully reimbursed or otherwise made whole by the requesting Party).

 

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Section 5.4. Certain Securities . Subject to the provisions of Section 6.1 as applicable, following the Fountain Distribution Date, Fountain agrees that, upon exercise of any option, warrant or similar security to purchase Trident Common Stock or the conversion of any note or other security of Trident convertible into Trident Common Stock, in each case that Trident has issued to third persons prior to the Effective Time, Fountain shall, upon request by Trident, promptly (and in any event within any time periods required by the terms of any such option, warrant, note or similar security) issue to Trident, as agent for the holder thereof, such number of shares of Fountain Common Stock that Trident would otherwise be required to deliver to such holder pursuant to the terms of any such security and Trident shall promptly deliver such shares to such holder. It is further agreed that with respect to such options, warrants, notes or similar securities, Fountain shall keep reserved for issuance a sufficient number of shares of Fountain Common Stock to satisfy any future exercises of such options or warrants or conversion of such notes or other securities. In connection with the foregoing, Trident will promptly following receipt of notice that a holder desires to exercise any such options, warrants or similar security or convert such note or other security, in each case of the type described in this Section 5.4 notify, in writing, Fountain so that it may comply with the terms of this Section 5.4 ; provided , that Fountain shall not have any additional Liability beyond the obligation to deliver shares as set forth in this Section 5.4 for failing to deliver such shares of Fountain Common Stock in the time period described in the foregoing sentence if such failure and delay was the result of untimely notification by Trident. Fountain hereby Assumes the obligations set forth in this Section 5.4 .

Section 5.5. Removal of Trident Designations . Without undue delay after the Fountain Distribution Date, but in any event not later than within 180 days after the Fountain Distribution Date, Fountain shall and shall cause the applicable members of the Fountain Group to execute and file in the relevant offices such amended organizational documents so that any reference to “Trident” shall be eliminated from the corporate names of members of the Fountain Group and shall as soon as practicable thereafter pursue such name changes until effective.

Section 5.6. Asbestos Agreements . As promptly as practical after the date hereof, the Parties shall (a) negotiate in good faith, execute and enter into those agreements set forth in Schedule 5.6(a) and (b) take those actions set forth in Schedule 5.6(b) .

Section 5.7. FOL Database . Each Party shall provide or provide access to copies of the UBS Financials Online (FOL) report including the information relating to the stock options, restricted stock and similar securities granted to the employees of each Party prior to the Effective Time in its possession to the other Party promptly (and in any event within two (2) Business Days) following the request by such other Party. Any Party making a request for FOL reports shall provide clear parameters for the FOL reports being requested.

 

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ARTICLE VI

EMPLOYEE MATTERS

Section 6.1. Stock Options . Except as provided on Schedule 6.1 :

(a) Fountain Options .

(i) On behalf of all Fountain Employees and any beneficiary or legal representative thereof who hold Trident Options, prior to the Distribution, Trident shall take all actions necessary such that each Trident Option held by such individual which is outstanding immediately prior to the Distribution, whether vested or unvested, other than any Trident Option subject to the provisions of Section 6.1(c) below, shall, as of 12:00:01 a.m. Eastern Daylight Time on the Fountain Distribution Date, be converted into an option to acquire Fountain Common Stock (a “ Fountain Option ”) in accordance with the succeeding paragraphs of this Section 6.1(a) .

(ii) The number of shares subject to the Fountain Option shall equal the number of shares of Trident Common Stock subject to the Trident Option multiplied by a fraction, the numerator of which is the last per share trading price of Trident Common Stock with due bills on the NYSE in the last trade on the NYSE immediately prior to the Distribution (the “ Closing Trident Stock Price ”) and the denominator of which is the last per share trading price of Fountain Common Stock when-issued in the last trade on the NYSE immediately prior to the Distribution or in the absence of a “when issued” trading market for Fountain Common Stock, the closing price of Patriot Common Stock (as defined in the Merger Agreement) on the last trading day prior to the Distribution (the “ Pre-Distribution Fountain Stock Price ”), with the resulting number of shares subject to the Fountain Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the Fountain Option (the “ Adjusted Fountain Exercise Price ”) shall be equal to the product of (A) the original exercise price of the Trident Option multiplied by (B) a fraction, the numerator of which shall be the Pre-Distribution Fountain Stock Price and the denominator of which shall be the Closing Trident Stock Price, which product shall be rounded up to the nearest hundredth of a cent (four decimal places).

(iv) Prior to the Fountain Distribution Date, Trident shall (A) cause Fountain to adopt the Fountain 2012 Stock and Incentive Plan (the “ 2012 Fountain Stock and Incentive Plan ”), effective as of 12:00:01 a.m. Eastern Daylight Time on the Fountain Distribution Date, (B) ensure or cause Fountain to ensure that the shares issuable under such plan have been registered on Form S-8 (or successor form) promulgated by the Commission under the Securities Act and (C) approve, as the sole stockholder, the adoption of the 2012 Fountain Stock and Incentive Plan. The 2012 Fountain Stock and Incentive Plan shall be in the form as agreed by the Parties no later than 90 days after the date of this Agreement, provided that in preparing such plan Patriot will consult reasonably with Trident and such Stock and Incentive Plan shall be consistent with the terms of this Agreement and further provided, that if the Parties are unable to agree on

 

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the form of such Stock and Incentive Plan, then such plan will be based on Patriot’s 2008 Omnibus Stock Incentive Plan, to the extent permissible under the terms of any current applicable award.

(b) Trident Options .

(i) On behalf of all Trident Employees who hold Trident Options prior to the Distribution, Trident shall take all actions necessary such that each Trident Option which is outstanding immediately prior to the Distribution, whether vested or unvested, other than any Trident Option subject to the provisions of Section 6.1(c) below, shall, as of 12:00:01 a.m. Eastern Daylight Time on the Fountain Distribution Date, be adjusted such that the number of shares subject to each Option and the per-share exercise price reflect the impact of the Distribution in accordance with the succeeding paragraphs of this Section 6.1(b) .

(ii) The adjusted number of shares subject to the Trident Option shall equal the original number of shares of Trident Common Stock subject to the Trident Option multiplied by a fraction, the numerator of which is the Closing Trident Stock Price, and the denominator of which is the last per share trading price of Trident Common Stock when-issued in the last trade immediately prior to the Distribution (the “ Pre-Distribution Trident Stock Price ”), with the resulting number of shares subject to the Trident Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the Trident Option (the “ Adjusted Trident Exercise Price ”) shall be equal to the product of (A) the original exercise price of the Trident Option multiplied by (B) a fraction, the numerator of which is the Pre-Distribution Trident Stock Price and the denominator of which is the Closing Trident Stock Price, which product shall be rounded up to the nearest hundredth of a cent (four decimal places).

(c) Trident Options for Trident Corporate Employees .

(i) Notwithstanding Sections 6.1(a) and (b) , for all Trident Options granted prior to October 12, 2011 to, and held by, the employees listed in Schedule 6.1(c) and for all Trident Options held by non-employee directors of Trident on the Fountain Distribution Date (“ Trident Directors ”), Trident shall take all actions necessary such that each such Trident Option which is outstanding immediately prior to the Distribution, whether vested or unvested, shall, as of 12:00:01 a.m. Eastern Daylight Time on the Fountain Distribution Date, (A) be converted into options to separately acquire shares of Fountain Common Stock and Trident Common Stock and, if the Athens Distribution Date occurs simultaneously, Athens NA Common Stock, and (B) be adjusted such that the number of shares subject to the option and the per-share exercise price reflect the impact of the Distribution in accordance with the succeeding paragraphs of this Section 6.1(c) , except to the extent expressly provided to the contrary in a written agreement with the holder of such Trident Options, in which case such options shall be treated in accordance with the provisions of such individual agreement.

 

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(ii) The adjusted number of shares subject to each option to acquire Trident Common Stock shall equal the original number of shares of Trident Common Stock subject to the Trident Option multiplied by a fraction obtained by dividing (x) the Closing Trident Stock Price minus the original exercise price for such Trident Option, by (y) the sum of (A) the Pre-Distribution Trident Stock Price minus the Adjusted Trident Exercise Price plus (B) the Distribution Ratio times the result obtained by subtracting the Adjusted Fountain Exercise Price from the Pre-Distribution Fountain Stock Price and, if the Athens Distribution Date occurs simultaneously, plus (C) one half of the result obtained by subtracting the Adjusted Athens Exercise Price (as defined in the Athens NA Agreement) from the last per share trading price of Athens NA Common Stock when-issued in the last trade on the NYSE immediately prior to the Distribution (the “ Pre-Distribution Athens NA Stock Price ”), with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire Trident Common Stock shall be the Adjusted Trident Exercise Price.

(iii) The adjusted number of shares subject to each option to acquire Fountain Common Stock shall be equal to the Distribution Ratio times the number of shares of Trident Common Stock determined as set forth in Section 6.1(c)(ii) above, with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire Fountain Common Stock shall be the Adjusted Fountain Exercise Price.

(iv) If the Athens Distribution occurs simultaneously, the adjusted number of shares subject to each option to acquire Athens NA Common Stock shall be equal to one half of the number of shares of Trident Common Stock determined as set forth in Section 6.1(c)(ii) above, with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire Athens NA Common Stock shall be the Adjusted Athens Exercise Price.

(d) Former Employees and Former Trident Directors .

(i) Trident Options held by Former Trident Employees and Former Fountain Employees shall be treated in the same manner as described in Section 6.1(c) above. Notwithstanding the foregoing, if a written agreement between a Party (or any of their Affiliates or Subsidiaries) and the holder of any such Trident Options prior to the Fountain Distribution Date expressly provides for contrary treatment, such options shall be treated in accordance with the provisions of such individual agreement.

(ii) Trident Options held by individuals who formerly served as Trident Directors and on and after the Fountain Distribution Date are not serving as Trident Directors shall be treated in the same manner as described in Section 6.1(c) above, except to the extent expressly provided to the contrary in a written agreement with the holder of such Trident Options, in which case such options shall be treated in accordance with the provisions of such individual agreement.

(e) Adjustments to Equity Awards in Connection With The Distribution . Notwithstanding any other provision of this Agreement, Trident shall have the authority to make

 

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any appropriate adjustments necessary to satisfy the requirements of U.S. Treasury Regulation Section 1.424-1 and Section 1.409A-1 for each option award (without regard to whether such options would otherwise be subject to such regulation) in accordance with the anti-dilution provisions of the governing plan.

(f) Settlement of Options. Subject to the terms of this Agreement and any other agreement made by the Parties from time to time, upon the exercise of any Trident Options or Fountain Options, each of Trident and Fountain, respectively, shall be solely responsible to issue shares in settlement of such options without reimbursement, recourse or other compensation from any other Party; provided, however, that if a Party resolves to amend the vesting schedule and/or exercise period of an employee or former employee’s Trident Options or Fountain Options, as the case may be, then (i) the Party that requested such amendment shall reimburse the Party that made such amendment for any increased compensation or other costs incurred by the amending Party (determined in accordance with the amending Party’s normal practices) in connection with such amendment, and (ii) the amending Party shall make any required changes to implement such requested amendment; provided, further, however, that the foregoing proviso shall in no event apply to any individual who is a member of the Board of Directors of Fountain.

Section 6.2. Restricted Stock Units, Performance Share Units and Deferred Stock Units . Except as provided on Schedule 6.2 :

(a) Restricted Stock Units, Performance Share Units and Deferred Stock Units .

(i) Restricted Stock Units Granted Prior to October 12, 2011 . Each Trident Restricted Stock Unit award granted prior to October 12, 2011 that is outstanding immediately prior to the Distribution shall be converted so that immediately after the Fountain Distribution Date, the holder has, in addition to the original Trident Restricted Stock Unit award, an additional award of Fountain Restricted Stock Units and, if the Athens Distribution Date occurs simultaneously, Athens Restricted Stock Units (as defined in the Athens NA Agreement). The number of additional Fountain Restricted Stock Units and Athens Restricted Stock Units awarded shall be determined pursuant to Section 4.1 as if the Restricted Stock Units award represented actual shares of Trident Common Stock and such Fountain Restricted Stock Units shall generally have the same terms and conditions (including vesting schedule) associated with the original Trident Restricted Stock Units.

(ii) Restricted Stock Units Granted on or After October 12, 2011 . Each Trident Restricted Stock Unit award granted on or after October 12, 2011 that is outstanding immediately prior to the Distribution shall be converted as of 12:00:01 a.m. Eastern Daylight Time on the Fountain Distribution Date into Restricted Stock Units as follows:

(A) On behalf of all Fountain Employees who hold such Restricted Stock Units, Trident shall convert such units into Restricted Stock Units payable solely in Fountain shares which shall generally have the same terms and

 

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conditions (including vesting schedule) associated with such original Trident Restricted Stock Unit award. The number of Fountain Restricted Stock Units shall equal the number of outstanding Trident Restricted Stock Units as of the Fountain Distribution Date, multiplied by a fraction, the numerator of which is the Closing Trident Stock Price and the denominator of which is the Pre-Distribution Fountain Stock Price, which product shall be rounded down to the nearest whole number of units with a cash payment to be made by Fountain for any fractional units. Notwithstanding the foregoing, if the cash payment at such time would cause a Fountain Employee to be subject to the additional taxes of Code Section 409A, then the cash payment shall be made at the time the Fountain Restricted Stock Units are otherwise payable in accordance with the terms of the governing award agreement.

(B) On behalf of all Trident Employees who hold such Restricted Stock Units, Trident shall convert such Units into Restricted Stock Units payable solely in Trident shares which shall generally have the same terms and conditions (including vesting schedule) associated with such original Trident Restricted Stock Unit award. The number of adjusted Trident Restricted Stock Units shall equal the original number of outstanding Trident Restricted Stock Units as of the Fountain Distribution Date, multiplied by a fraction, the numerator of which is the Closing Trident Stock Price and the denominator of which is Pre-Distribution Trident Stock Price, which product shall be rounded down to the nearest whole number of units with a cash payment to be made by Trident for any fractional units.

(iii) Performance Share Units .

(A) Each Performance Share Unit award that is outstanding immediately prior to the Distribution (as adjusted to reflect the number of such units then outstanding based on an adjusted performance period that ends no earlier than the last day of Trident’s 2012 fiscal third quarter) shall be converted in the exact same manner and at the same time that Restricted Stock Units granted on or after October 12, 2011 are converted pursuant to Section 6.2(a)(ii) above; provided, however, that each Performance Share Unit award that is held by an employee listed in Schedule 6.1(c) that was granted prior to October 12, 2011 and is outstanding immediately prior to the Distribution (as adjusted to reflect the number of such units then outstanding based on an adjusted performance period that ends no earlier than the last day of Trident’s 2012 fiscal third quarter) shall be converted into Trident Restricted Share Units, Fountain Restricted Share Units and Athens Restricted Share Units as if such awards were Restricted Stock Unit awards converted pursuant to Section 6.2(a)(i). For the avoidance of doubt, any Performance Share Unit that is adjusted to reflect performance through a date that precedes the Fountain Distribution Date shall continue to be deemed a Performance Share Unit under this Agreement notwithstanding the expiration of the applicable performance period and notwithstanding any employee communications that may refer to such Performance Share Unit as being converted to a Trident Restricted Stock Unit as of a date prior to the Fountain Distribution Date.

 

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(B) The Parties shall take all necessary actions to provide that the terms and conditions of such converted Performance Share Unit awards shall be modified to provide that the converted Performance Share Unit awards shall be payable at the end of the original three-year vesting period without regard to the originally established performance period, provided that the employee remains continuously employed with Trident or Fountain, respectively, through such date (subject to any acceleration of vesting as provided for in the original applicable Performance Share Unit award agreement).

(iv) Deferred Stock Units . Each Deferred Stock Unit that is outstanding immediately prior to the Distribution and which is held by a Trident Employee listed in Schedule 6.1(c) or by a Trident Director shall be adjusted such that the number of Deferred Stock Units reflects the impact of the Distribution as set forth in Section 6.2(a)(i) ; provided that fractional shares will continue to be maintained until the payment of the unit is made. Such converted awards shall remain subject to the terms and conditions in effect with respect to the award immediately preceding the Fountain Distribution Date.

(b) Grant and Settlement of Awards. Trident shall assure that each Trident Stock Option, Restricted Stock Unit and Performance Share Unit is converted into Fountain awards as set forth in Section 6.1 and Section 6.2. All such converted awards will be issued under the 2012 Fountain Stock and Incentive Plan and Trident shall take all commercially reasonable actions to revise award agreements issued with respect to any such converted award to ensure that the terms and conditions of the Fountain awards are substantially similar to the terms and conditions applicable to the corresponding Trident awards, except as specifically provided herein. Subject to the terms of this Agreement and any other agreement in force between the Parties from time to time, upon the vesting or payment of any such award, each of Trident and Fountain shall be solely responsible to issue its shares in settlement of the respective awards payable in its shares without reimbursement, recourse or other compensation from any other Party.

(c) Former Employees and Former Trident Directors .

(i) Trident Restricted Stock Units, Performance Share Units and Deferred Stock Units held by Former Trident Employees and Former Fountain Employees shall be treated in the same manner as described in Section 6.2(a)(i) above. Notwithstanding the foregoing, if a written agreement between a Party (or any of their Affiliates or Subsidiaries) and the holder of any such Trident Restricted Stock Unit, Performance Share Unit or Deferred Stock Unit prior to the Fountain Distribution Date expressly provides for contrary treatment, such units shall be treated in accordance with the provisions of such individual agreement.

(ii) Trident Restricted Stock Units and Deferred Stock Units held by individuals who formerly served as Trident Directors and on and after the Fountain

 

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Distribution Date are not serving as Trident Directors shall be treated in the same manner as described in Section 6.2(a)(i) above, except to the extent expressly provided to the contrary in a written agreement with the holder of such Trident Restricted Stock Unit or Deferred Stock Unit, in which case such units shall be treated in accordance with the provisions of such individual agreement.

Section 6.3. Nonqualified Deferred Compensation Plans .

(a) Fountain Nonqualified Deferred Compensation Plans .

(i) Effective as of the Fountain Distribution Date, Fountain (or any one of its Subsidiaries or Affiliates) shall be the sponsor of, and be solely responsible for the satisfaction of all Liabilities under, the Fountain Nonqualified Deferred Compensation Plans listed in Schedule 6.3(a) . Effective as of the Fountain Distribution Date, Fountain (or any one of its Subsidiaries or Affiliates) also shall be solely responsible for the satisfaction of all Liabilities with respect to nonqualified deferred compensation plan benefits for Fountain Employees and Former Fountain Employees under the Trident Supplemental Savings and Retirement Plan and Trident Supplemental Executive Retirement Plan (the “ Fountain Deferred Compensation Liabilities ”). To the extent necessary to effectuate Fountain’s assumption of the Fountain Deferred Compensation Liabilities, Fountain (or any one of its Subsidiaries or Affiliates), shall establish as of the Fountain Distribution Date one or more nonqualified deferred compensation plans which shall contain terms that are substantially similar to the terms and conditions of the Trident Supplemental Savings and Retirement Plan and Trident Supplemental Executive Retirement Plan as in effect prior to the Fountain Distribution Date (subject to such amendments as necessary to comply with Code Section 409A) and the Fountain Deferred Compensation Liabilities under the Trident Supplemental Savings and Retirement Plan and Trident Supplemental Executive Retirement Plan as of the Fountain Distribution Date shall be transferred to such plans.

(ii) All elections by Fountain Employees, and Former Fountain Employees that were in effect under the terms of the applicable Fountain Nonqualified Deferred Compensation Plans immediately prior to the Fountain Distribution Date shall continue in effect from and after the Fountain Distribution Date until a new election that by its terms supersedes the prior election is made by such Fountain Employee or Former Fountain Employee in accordance with the terms of the applicable Fountain Nonqualified Deferred Compensation Plan and consistent with the provisions of Code Section 409A to the extent applicable.

(iii) As of the Fountain Distribution Date, Fountain shall be solely responsible for the management and administration of the Fountain Nonqualified Deferred Compensation Plans including, but not limited to, the adjudication of claims filed by Fountain Employees or Former Fountain Employees under the Trident Supplemental Savings and Retirement Plan and Trident Supplemental Executive Retirement Plan before the Fountain Distribution Date; provided that (A) the claim relates to a Fountain Deferred Compensation Liability that has been transferred to the applicable Fountain Nonqualified Deferred Compensation Plan; (B) the claim has not been finally adjudicated by Trident

 

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on the day immediately preceding the Fountain Distribution Date; and (C) under the applicable claims procedure Fountain plan administrator or other authorized person or committee will have at least a sixty (60) day period after the Fountain Distribution Date to respond to such claim. Trident shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Trident’s response to such claim does not finally adjudicate the claim, Trident shall upon sending its response to the claimant immediately transfer administration of such claim to Fountain for final adjudication.

(iv) Payments to Fountain Employees and Former Fountain Employees under the Fountain Nonqualified Deferred Compensation Plans shall be made by Fountain or one of its Subsidiaries or Affiliates as determined in the sole discretion of Fountain.

(b) Trident Nonqualified Deferred Compensation Plans .

(i) Effective as of the Fountain Distribution Date, Trident (or any one of its Subsidiaries or Affiliates) shall be solely responsible for the satisfaction of all Liabilities under the Trident Nonqualified Deferred Compensation Plans and all Liabilities with respect to nonqualified deferred compensation plan benefits for Trident Employees and Former Trident Employees under the Trident Supplemental Savings and Retirement Plan and Trident Supplemental Executive Retirement Plan (the “ Trident Deferred Compensation Liabilities ”).

(ii) Payments to Trident Employees and Former Trident Employees under the Trident Nonqualified Deferred Compensation Plans shall be made by Trident or one of its Affiliates as determined in the sole discretion of Trident.

(c) Continued Employment . Consistent with Code Section 409A, Trident and Fountain agree that Fountain Employees who participate in the Trident Nonqualified Deferred Compensation Plans immediately prior to the Fountain Distribution Date and who participate in the Fountain Nonqualified Deferred Compensation Plans immediately following the Fountain Distribution Date, shall not experience a termination of employment or separation from service as a result of the transactions contemplated herein.

Section 6.4. Pension Plans .

(a) Fountain Pension Plans .

(i) As of the Fountain Distribution Date, Fountain shall Assume sponsorship of and be solely responsible for the management and administration of, and except as otherwise provided below, be responsible for all Assets and Liabilities under the pension plans listed in Schedule 6.4(a) (with such plans to be solely Fountain’s responsibility referred to as the “ Fountain Pension Plans ”).

(ii) For Fountain Pension Plans that are intended to be tax-qualified defined benefit pension plans under Sections 401(a) and 501(a) of the Code (the “ Fountain US Pension Plans ”):

(A) Effective no later than the Fountain Distribution Date, Trident shall cause the sponsor of such plans to take all such actions necessary to transfer the sponsorship of such plans to Fountain, and Fountain shall take all such actions necessary to become the plan sponsor of the Fountain US Pension Plans; and, furthermore, effective on, or within seven days after, the Fountain Distribution Date, Patriot shall designate a trust or trusts designed to (i) be tax-exempt under Section 501(a) of the Code and (ii) hold the assets of the Fountain US Pension Plans (the “ Fountain Master Trust ”).

 

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(B) Within 60 days of the Fountain Distribution Date (such 60th day being the “Initial Transfer Date”), Trident shall cause at least 90% of the Assets of the Trident International Master Retirement Trust attributable to the Fountain US Pension Plans (using estimated values as of September 28, 2012) to be transferred to the Fountain Master Trust in accordance with all applicable Laws. The Assets to be transferred will be in the form of cash or other property, as Trident and Fountain shall mutually agree prior to such transfer; and Trident shall cause the balance of the Trident International Master Retirement Trust Assets attributable to such Fountain US Pension Plans to be transferred to the Fountain Master Trust within 120 days of the Fountain Distribution Date.

(C) Fountain and Trident acknowledge and agree that such transfer of Assets and Liabilities will comply with Sections 401(a)(12), 414(l) and 411(d)(6) of the Code and the regulations thereunder and that the value of the Assets to be transferred as determined under Section 414(l) of the Code and the regulations thereunder shall be determined as of the Fountain Distribution Date. Accordingly, the final value of the Assets to be transferred shall be adjusted from the period between the Fountain Distribution Date and the transfer date to reflect (i) the investment experience under the Trident International Master Retirement Trust using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA, (ii) the Fountain Pension Plan’s allocable share of Expenses, (iii) the amount paid at the Initial Transfer Date, and (iv) the Fountain Pension Plan’s benefit distributions as described in the following sentence. Until the Initial Transfer Date, Trident shall cause benefit payments to participants, beneficiaries and alternate payees that are due under the Fountain US Pension Plans to be made in the normal course from the Trident International Master Retirement Trust Assets.

(D) Pending the transfer of assets, the Fountain US Pension Plans will continue to participate in the Trident International Master Retirement Trust, subject to Trident’s direction of the investment of the assets of the Trident International Master Retirement Trust without distinction as to any particular participating plan for a transition period not exceeding 60 days for the initial transfer, and not exceeding 120 days for the final transfer, following the Fountain Distribution Date and Trident will cause the Trident International Master Retirement Trust to be amended to provide for such continued participation.

 

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(iii) Following the Fountain Distribution Date, eligible participants shall accrue benefits (to the extent that such Fountain Pension Plans are not frozen) and receive service credit, as applicable, under the Fountain Pension Plans in accordance with the terms and conditions of the relevant Fountain Pension Plan; provided , however , that the foregoing shall in no way alter any right of Fountain, subsequent to the Fountain Distribution Date, to amend or terminate any of the Fountain Pension Plans in accordance with their terms and applicable Law. Fountain and Trident shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.4 .

(iv) As of the Fountain Distribution Date, Fountain shall be solely responsible for the adjudication of claims filed under a Fountain Pension Plan including, but not limited to, claims filed before the Fountain Distribution Date under such plans as in effect on the date such claim was filed; provided that (A) the claim relates to Assets or Liabilities assumed by Fountain under Section 6.4(a)(i) ; (B) the claim has not been finally adjudicated by Trident on the day immediately preceding the Fountain Distribution Date; and (C) under the applicable claims procedure, Fountain’s plan administrator or other authorized person or committee will have at least a sixty (60) day period after the Fountain Distribution Date to respond to such claim. Trident shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Trident’s response to such claim does not finally adjudicate the claim, Trident shall immediately transfer administration of such claim to Fountain for final adjudication upon sending its response to the claimant.

(v) Notwithstanding any other provision set forth in this Agreement, (i) Fountain and the Fountain Pension Plans shall indemnify and hold harmless Trident and the Trident Retained Pension Plans (and each of their respective affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Fountain Pension Plans relating to the provision of pension benefits pursuant to the Fountain Pension Plans and (ii) Trident and the Trident Retained Pension Plans shall indemnify and hold harmless Fountain and the Fountain Pension Plans (and each of their respective affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Trident Retained Pension Plans relating to the provision of pension benefits pursuant to the Trident Retained Pension Plans.

(b) Trident Retained Pension Plans .

(i) Following the Fountain Distribution Date, Trident shall retain sponsorship of, and sole responsibility for all Assets and Liabilities under the pension plans listed in Schedule 6.4(b) (the “ Trident Retained Pension Plans ”), and Fountain shall have no obligation with respect thereto.

(ii) Effective no later than the Fountain Distribution Date, Trident shall amend the TGL Union Pension Plan Part XIII to provide that, each Fountain Employee whose terms and conditions of employment are covered by a collective bargaining agreement with The Crosby-Ashton Employees’ Union, Unit of Amalgamated Local 1596 UAW, shall be treated as fully vested under such pension plan. Trident shall not be obligated to

 

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amend the TGL Union Pension Plan Part XIII if such amendment would otherwise subject Trident to additional bargaining with The Crosby-Ashton Employees’ Union, Unit of Amalgamated Local 1596 UAW. Notwithstanding anything in this Agreement that permits a Party to amend its benefit plans, Trident shall not be permitted to amend the TGL Union Pension Plan Part XIII to cease providing such service credit.

(c) Following the Fountain Distribution Date, eligible participants in the Trident Retained Pension Plans shall continue to accrue benefits (to the extent that such Trident Retained Pension Plans are not frozen) and receive service credit, as applicable under the Trident Retained Pension Plans in accordance with the terms and conditions of the relevant Trident Retained Pension Plan. Nothing contained in this Agreement shall alter in any way the right of Trident, subsequent to the Fountain Distribution Date, to amend or terminate any Trident Retained Pension Plan in accordance with its terms and applicable Law.

(d) Adjustments. If, during the period from the Fountain Distribution Date through the transfer date, the Parties determine that adjustments are appropriate with respect to the data that was used to calculate pension plan Liabilities under Section 4044 of ERISA for the purposes of effecting the transfer of Assets and Liabilities described in subparagraphs (a)(ii)(B) and (C) of this Section 6.4 with respect to the Fountain US Pension Plans, then the Parties agree to cooperate to conform the net difference in Assets transferred or retained attributable to such data adjustments and to cause additional Assets reflecting such net difference to be transferred between the relevant master trusts as soon as practicable after December 31, 2013. Any such additional Assets shall be adjusted from the period between January 1, 2012 and the transfer date to reflect the investment experience under the Fountain Master Trust or Trident International Master Retirement Trust, as applicable, using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA. Notwithstanding the foregoing, no Assets shall be transferred between the relevant master trusts of the Parties unless the Parties determine that the net result of all such data adjustments is that the Fountain Master Trust or Trident International Master Retirement Trust should have received or retained at least $250,000 of additional Assets (as of January 1, 2012). Any such data adjustments must be communicated to the other relevant Parties in writing on or before December 31, 2013 in order to be considered in determining whether an additional Asset transfer is to be made pursuant to this paragraph (c). The impact of such adjustments on the Liabilities shall be determined for purposes of this paragraph (c) using the same actuarial assumptions and methods used in originally determining such Liabilities.

Section 6.5. Retirement Savings Plans .

(a) Fountain Savings Plans .

(i) As of the Fountain Distribution Date, Fountain shall Assume sponsorship of, and be solely responsible for (except as otherwise provided in this Section 6.5(a) below), the management and administration of all Assets and Liabilities under the Fountain Retirement Savings and Investment Plan (the “ Fountain RSIP ”), and any defined contribution retirement plans listed in Schedule 6.5(a) (collectively, “ Fountain Savings Plans ”). On or shortly after the Fountain Distribution Date, Trident shall cause the value of Assets of the Trident International Management Company Defined

 

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Contribution Plans Master Trust attributable to the Fountain RSIP to be transferred to a trust or trusts created for the Fountain Savings Plans in the United States in a “transfer of assets or liabilities” in accordance with Section 414(l) of the Code and Section 208 of ERISA and the respective rules and regulations promulgated thereunder. The Assets to be transferred will be in the form of cash or other property, as Trident and Fountain shall mutually agree prior to such transfer.

(ii) Effective as of the Fountain Distribution Date, Trident shall cause the sponsor(s) of the Fountain Savings Plans to take all such actions necessary to transfer the sponsorship of such plans to Fountain and Fountain shall take all such actions necessary to become the plan sponsor and establish a new trust or trusts for the Fountain Savings Plans in the United States designed to be tax exempt under Section 501(a) of the Code and hold the assets of the Fountain Savings Plans.

(iii) As of the Fountain Distribution Date, Fountain shall be solely responsible for the adjudication of claims filed by Fountain Employees or Former Fountain Employees under a Fountain Savings Plan including, but not limited to, claims filed before the Fountain Distribution Date under such plans as in effect on the date such claim was filed provided that (A) the claim relates to Assets or Liabilities assumed by Fountain under this Section 6.5(a) ; (B) the claim has not been finally adjudicated by Trident on the day immediately preceding the Fountain Distribution Date; and (C) under the applicable claims procedure, Fountain plan administrator or other authorized person or committee will have at least a sixty (60) day period after the Fountain Distribution Date to respond to such claim. Trident shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Trident’s response to such claim does not finally adjudicate the claim, Trident shall immediately transfer administration of such claim to Fountain for final adjudication upon sending its response to the claimant.

(iv) Nothing contained in this Agreement shall alter in any way the right of Fountain, subsequent to the Fountain Distribution Date, to amend or terminate any of the Fountain Savings Plans in accordance with its terms and applicable Law.

(v) Notwithstanding any other provision set forth in this Agreement, (A) Fountain and the Fountain Saving Plans shall indemnify and hold harmless Trident and the Trident Retained Savings Plans (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Fountain Saving Plans relating to the provision of benefits pursuant to the Fountain Saving Plans and (B) Trident and the Trident Retained Savings Plans shall indemnify and hold harmless Fountain and the Fountain Savings Plans (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Trident Retained Savings Plans relating to the provision of benefits pursuant to the Trident Retained Savings Plans.

(b) Trident Retirement Retained Savings Plans . Following the Fountain Distribution Date, Trident shall retain sole responsibility for all benefit obligations incurred prior

 

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to the Fountain Distribution Date and Liabilities under the Trident International Retirement Savings and Investment Plan and the Trident International Retirement Savings and Investment Plan VI, except to the extent such obligations were transferred to the Fountain RSIP as of the Fountain Distribution Date, any defined contribution retirement plans listed in Schedule 6.5(b) , and any other savings plans in the United States or any other country covering Trident Employees or Former Trident Employees, other than those listed in Schedule 6.5(a) and specifically identified as Fountain Savings Plans (collectively, the “ Trident Retained Savings Plans ”). Eligible Trident participants shall continue accruing benefits under the Trident Retained Savings Plans in accordance with the terms and conditions of the Trident Retained Savings Plans. Nothing contained in this Agreement shall alter in any way the right of Trident, subsequent to the Fountain Distribution Date, to amend or terminate the Trident Retained Savings Plan in accordance with its terms and applicable Law.

Section 6.6. Retiree Medical Benefits . Following the Fountain Distribution Date: (a) Trident shall be solely responsible for the management and administration of and satisfaction of all retiree medical and retiree insurance obligations with respect to the plans identified in Schedule 6.6(a) (the “ Trident Retiree Medical Plans ”); and (b) except as otherwise provided below, Fountain shall be solely responsible for the management and administration of and satisfaction of all retiree medical and retiree insurance obligations with respect to the plans identified in Schedule 6.6(b) (the “ Fountain Retiree Medical Plans ”). The Parties agree that each Party and the retiree medical plans described above for which it is responsible (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) shall indemnify and hold harmless each other Party and the retiree medical plans for which they are responsible (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities with respect to retiree medical and retiree insurance obligations under the retiree medical plans for which they are responsible. Except as provided below, Fountain shall be solely responsible for the adjudication of any claims filed by a Former Fountain Employee before, on or after the Fountain Distribution Date under a Trident Retiree Medical Plan, or Fountain Retiree Medical Plan. Notwithstanding the previous sentence, Trident shall be solely responsible for the adjudication of any claim under a Trident Retiree Medical Plan, or Fountain Retiree Medical Plan that (A) was filed before the Fountain Distribution Date; (B) has not been finally adjudicated by Trident on the day immediately preceding the Fountain Distribution Date; and (C) under the applicable claims procedure, Trident’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the Fountain Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Trident’s response to such claim does not finally adjudicate the claim, Trident shall immediately upon sending its response to the claimant transfer administration of such claim to Fountain for final adjudication.

Section 6.7. Health, Welfare and Fringe Benefit Plans .

(a) Health Plans .

(i) Trident shall cause Fountain to establish the Fountain Health Plans (including the Fountain Retiree Medical Plans) effective no later than the Fountain Distribution Date and, correspondingly, Fountain Employees and their dependents shall cease participating in the Trident Health Plans on the dates the new plans are established

 

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and effective. The newly established Fountain Health Plans shall be substantially similar to the Trident Health Plans. After the Fountain Distribution Date (except as otherwise provided below): (A) Fountain shall be solely responsible for the management and administration of the Fountain Health Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the Fountain Health Plans, and for the collection and remittance of participant contributions and premiums and shall establish and appoint a plan administrator and a HIPAA privacy official, and shall establish a claims and appeals process with its claims administrator(s), and (B) Trident shall retain sole responsibility for all Liabilities under the Trident Health Plans and sole responsibility for the payment of all employer-related costs in maintaining the Trident Health Plans, and for the collection and remittance of participant contributions and premiums.

(ii) Except as provided below, Fountain shall be solely responsible for the adjudication of any claims filed by a Fountain Employee or Former Fountain Employee (or any dependent thereof) before, on or after the Fountain Distribution Date under a Trident Health Plan or Fountain Health Plan. Notwithstanding the previous sentence, Trident shall be solely responsible for the adjudication of any claims filed by a Fountain Employee or Former Fountain Employee (or any dependent thereof) under a Trident Health Plan or Fountain Health Plan before the Fountain Distribution Date that (A) has not been finally adjudicated by Trident on the day immediately preceding the Fountain Distribution Date; and (B) under the applicable claims procedure, Trident’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the Fountain Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Trident’s response to such claim does not finally adjudicate the claim, Trident shall immediately upon sending its response to the claimant transfer administration of such claim to Fountain for final adjudication.

(iii) Any determination made or settlements entered into by Trident prior to the Fountain Distribution Date with respect to claims incurred under the Trident Health Plans by Fountain Employees and Former Fountain Employees (or any dependent thereof) shall be final and binding on Fountain and Trident, as the case may be. On and after the Fountain Distribution Date, Fountain shall retain financial and administrative (“run-out”) Liability and all related obligations and responsibilities for all claims incurred by Fountain Employees and Former Fountain Employees (or any dependent thereof) while Fountain Employees and Former Fountain Employees are participants in the Trident Health Plans, including any claims that were administered by Trident as of, on, or after the Fountain Distribution Date and in a manner consistent with Section 6.7(a)(ii) , except to the extent that Trident retains the obligation and responsibility to adjudicate claims pursuant to clause (ii) above. Any such run-out Liability and all related claims, charges, and expenses shall be settled in a manner consistent with past practices and policies, including an interim accounting and a final accounting between Trident and Fountain. As of the Fountain Distribution Date, the reserve included in Trident’s financial statements for “Incurred But Not Reported” medical and dental expenses attributable to Fountain Employees and Former Fountain Employees shall be transferred to Fountain.

 

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(iv) As of the date that the Fountain Health Plans are established, any COBRA Liabilities attributable to any Fountain Employee or Former Fountain Employees (or a qualified beneficiary, as such term is defined under COBRA, of such individuals) that were originally obligations under the Trident Health Plans shall become a Fountain Liability. Effective as of the date Fountain Employees cease participating in the Trident Health Plans, Fountain shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA and the Fountain Health Plans for Fountain Employees, Former Fountain Employees and their qualified beneficiaries regardless as to whether such obligation arose under the Trident Health Plans or the Fountain Health Plans.

(v) The Fountain Health Plan shall provide that each eligible Fountain Employee or Former Fountain Employee, as applicable, will receive credit in 2012 for any co-payments and deductibles paid under a Trident Health Plan prior to the Fountain Distribution Date in satisfying any applicable deductible or out-of-pocket requirements under the Fountain Health Plan. The Fountain Health Plan shall each also provide that it shall cover any pre-existing conditions that are covered under the Trident Health Plan. Additionally, the Fountain Health Plan shall also provide any other similar benefit in order to provide coverage that is substantially the same as the Trident Health Plan.

(b) Section 125 Plans. Effective as of the Fountain Distribution Date, Fountain shall have established or caused to be established a Fountain Section 125 Plan and on and after that date Fountain shall be solely responsible for the management and administration of the Fountain Section 125 Plan and such plan shall remain in effect on and after the Fountain Distribution Date.

(c) Severance Plans. Trident shall cause Fountain to establish the Fountain Severance Plans, each effective as of the Fountain Distribution Date and each in substantially the same form(s) as the Trident Severance Plans as provided by Trident in the online data room in Folders 8.2.2.3, 8.2.2.4 and 8.2.2.5 as of the date of this Agreement (provided that Trident will, prior to establishing such Fountain Severance Plans, amend Section 3.02(b)(x) of the Trident Severance Plan in Folder 8.2.2.5 to be identical to Section 3.02(b)(x) of the Trident Severance Plan in Folder 8.2.2.3 and such amended plan shall serve as the form for the corresponding Fountain Severance Plan) and, correspondingly, Fountain Employees and Former Fountain Employees who are currently eligible to receive or are receiving severance payments shall cease participating in the Trident Severance Plans on the Fountain Distribution Date. After the Fountain Distribution Date: (i) Fountain shall be solely responsible for (x) the payment of all Liabilities under the Trident Severance Plans (as amended pursuant to the proviso above) or Fountain Severance Plans relating to Fountain Employees and Former Fountain Employees, (y) the management and administration of the Fountain Severance Plans and (z) the payment of all employer-related costs in establishing and maintaining the Fountain Severance Plans, and (ii) Trident shall retain sole responsibility for (w) all Liabilities under the Trident Severance Plans or Fountain Severance Plans relating to Trident Employees and Former Trident Employees, (x) all Liabilities for severance or termination pay or benefits under individual agreements entered into with any Trident Employee or Former Trident Employee prior to the Fountain Distribution Date, (y) the management and administration of the Trident Severance Plans and (z) the payment of all employer-related costs in maintaining the Trident Severance Plans. In no event shall an

 

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employee or former employee receive a duplication of severance benefits. Except as provided below, Fountain shall be solely responsible for the adjudication of any claims filed by a Fountain Employee or Former Fountain Employee before, on or after the Fountain Distribution Date under a Trident Severance Plan. Notwithstanding the previous sentence, Trident shall be solely responsible for the adjudication of any claim filed by a Fountain Employee or Former Fountain Employee under a Trident Severance Plan before the Fountain Distribution Date that (A) has not been finally adjudicated by Trident on the day immediately preceding the Fountain Distribution Date; and (B) under the applicable claims procedure, Trident’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the Fountain Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Trident’s response to such claim does not finally adjudicate the claim, Trident shall immediately upon sending its response to the claimant transfer administration of such claim to Fountain for final adjudication.

(d) Disability Plans . Trident shall cause Fountain to establish the Fountain Disability Plans effective no later than the Fountain Distribution Date and, correspondingly, except as provided below, Fountain Employees shall cease participating in the Trident Disability Plans on the dates the new plans are established and shall begin participating in the Fountain Disability Plans. The newly established Fountain Disability Plans shall be substantially similar to the Trident Disability Plans. After the Fountain Distribution Date: (i) Fountain shall be solely responsible for the management and administration of the Fountain Disability Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the Fountain Disability Plans, and (ii) Trident shall retain sole responsibility for all disability Liabilities that are subject to insurance under the Trident Disability Plans for disabilities incurred prior to the Fountain Distribution Date, including but not limited to those incurred by a Fountain Employee whose disability occurred prior to the Fountain Distribution Date, and shall be solely responsible for the payment of all employer-related costs in maintaining the Trident Disability Plans.

(e) Group Insurance Plans . Trident shall cause Fountain to establish the Fountain Group Insurance Plans, effective no later than the Fountain Distribution Date and, correspondingly, except as provided below, Fountain Employees shall cease participating in the Trident Group Insurance Plans on the dates the new plans are established and shall begin participating in the Fountain Group Insurance Plans. The newly established Fountain Group Insurance Plans shall be substantially similar to the Trident Group Insurance Plans. After the Fountain Distribution Date: (i) Fountain shall be solely responsible for the management and administration of the Fountain Group Insurance Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the Fountain Group Insurance Plans, and (ii) Trident shall retain sole responsibility for all Liabilities for claims incurred prior to the Fountain Distribution Date under the Trident Group Insurance Plans and shall be solely responsible for the payment of all employer-related costs in maintaining the Trident Group Insurance Plans.

(f) Fringe Benefits . Effective as of the Fountain Distribution Date, each of Trident and Fountain shall be responsible for establishing (as necessary) and maintaining its own fringe benefit plans, policies and arrangements, including any employee assistance program, educational assistance program, adoption assistance program and any other fringe benefit plans,

 

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programs and arrangements (which Fountain fringe benefit plans, policies and arrangements shall be substantially similar to the Trident fringe benefit plans, policies and arrangements). Fountain shall be solely responsible for the management and administration of and assume financial and administrative Liability and all related obligations and responsibilities with respect to claims for such fringe benefits incurred by Fountain and Former Fountain Employees (but not paid by Trident) prior to, on or after the Fountain Distribution Date; and Trident shall retain financial and administrative Liability and all related obligations and responsibilities with respect to claims for such fringe benefits incurred by Trident Employees and Former Trident Employees prior to, on or after the Fountain Distribution Date.

(g) Paid Time Off and Payroll . Effective as of the Fountain Distribution Date, Trident and Fountain shall establish or retain its own paid time off policy (which Fountain paid time off policy shall be substantially similar to the Trident paid time off policy) and (i) any earned but unused paid time off (including vacation pay) that a Fountain Employee is entitled to as of the Fountain Distribution Date will be credited to the Fountain Employee under the Fountain paid time off policy and provided in accordance with that policy; and (ii) any earned but unused paid time off (including vacation pay) that a Trident Employee is entitled to as of the Fountain Distribution Date will be continued by the Trident paid time off policy and provided in accordance with that policy. On and after the Fountain Distribution Date, neither Trident nor Fountain shall have any liability for paid time off on behalf of another Party’s employees.

(h) Bonus Plans . With respect to any annual or multi-year bonus or incentive plan not otherwise described in this Agreement, Patriot and Fountain (or their applicable Affiliate or Subsidiary) shall be responsible for all Liabilities and fully perform, pay and discharge all bonus obligations that become due after the Fountain Distribution Date relating to such plan(s) for Fountain Employees and Former Fountain Employees, as applicable. Fountain shall cause (x) the amounts payable under such plan(s) in respect of the fiscal year in which the Fountain Distribution Date occurs to be no less than the amounts accrued on the financial statements of Fountain as of the Fountain Distribution Date, proportionately increased for a full fiscal year and (y) any Fountain Employee whose employment is terminated by Fountain without “cause” after the Fountain Distribution Date and before the date on which such bonuses are payable to receive an amount equal to no less than such Fountain Employee’s target bonus under the applicable plan.

Section 6.8. Cooperation and Administrative Provisions .

(a) Notwithstanding anything herein to the contrary, the Parties shall reasonably cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, board resolutions, government filings, data, payroll and employment Information on regular timetables, make certain that each applicable entity’s data and records are correct and updated on a timely basis, and cooperate as needed with respect to (i) any litigation with respect to an employee benefit plan, compensation plan or other plan or arrangement contemplated by this Agreement, (ii) an audit of an employee benefit plan, compensation plan or other plan or arrangement contemplated by this Agreement by the Internal Revenue Service, Department of Labor or any other Government Entity, (iii) seeking a determination letter, private letter ruling or advisory opinion from the Internal Revenue Service or Department or Labor on behalf of any employee benefit

 

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plan or arrangement contemplated by this Agreement, and (iv) any filings that are required to be made or supplemented to the Internal Revenue Service, Pension Benefit Guaranty Corporation, Department of Labor or any other Government Entity; provided , however , that requests for cooperation must be reasonable and not interfere with daily business operations.

(b) Notwithstanding anything herein to the contrary, the Parties agree that they shall share all necessary data elements to administer the Trident and Fountain equity plans described in Section 6.1 and Section 6.2 for a period of ten (10) years following the Fountain Distribution Date. This data shall be made available to their plan administrators in the formats that exist at the time of the distribution or in any other mutually agreeable format. Data shall be transmitted to these administrators via a mutually agreeable method of data transmission. Each Party also agrees to ensure that their plan administrator will make available all necessary data elements required now or in the future including but not limited to, exercise, lapse and tax data, in a timely fashion and to withhold appropriate taxes at the direction of the employer company of the individual for the time period covered under this provision.

(c) With respect to any employees on international assignment who are listed on Schedule 6.8(c) and who become Fountain Employees, (i) if such employees are repatriated to their home countries or initiate the process of repatriation prior to the Fountain Distribution Date, Trident shall pay the costs of repatriation; and (ii) if such employees remain on international assignment through the Fountain Distribution Date, (A) Trident shall pay the cost of assignment up to the Fountain Distribution Date, as applicable (except that the tax obligation for the year of separation shall be prorated between Trident and Fountain as set forth in Schedule 6.8(c) ), and (B) any costs related to repatriation initiated at some future date shall be the responsibility of Fountain.

(d) With respect to any Fountain Employee listed on Schedule 6.8(d) who is subject to a retention agreement, separation bonus agreement and/or eligible for a lump sum award and who transfers to Fountain prior to the Fountain Distribution Date and/or remains in employment with Fountain through any subsequent vesting date applicable to such agreement or award, Fountain shall recognize and assume the obligation of such agreement or award (the “ Retention Letters ”) and be responsible for the making of all payments and withholding of all taxes (including without limitation any employment taxes) associated with such Retention Letters. Trident shall promptly reimburse Fountain for any payments made by Fountain under the Retention Letters (including without limitation any lump sum salary adjustment payment). In addition, (x) Patriot will honor and pay for all costs and expenses related to the integration incentive bonuses set forth on Schedule 6.8(d)(i) , which shall be disregarded for purposes of calculating the Working Capital Adjustment and (y) notwithstanding anything in this Agreement to the contrary, if Fountain or any member of the Fountain Group retains any of the employees receiving any such integration incentive bonus beyond the first anniversary of the Fountain Distribution Date, Fountain shall be responsible for any severance obligations related to such employee.

(e) The Parties shall share, or cause to be shared, all Information on participants in the Fountain Plans and Trident Retained Plans that is necessary and appropriate for the efficient and accurate administration of the Fountain Plans and Trident Retained Plans, including (but not limited to) Information reasonably necessary to timely respond to claims for

 

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benefits made by participants and Information on expenses incurred by Fountain Plans prior to the Fountain Distribution Date so that Fountain may invoice and pay administrative expenses from their respective plan trusts as described in paragraph (g) below. The Parties and their respective authorized agents shall, subject to applicable laws of confidentiality and data protection and transfer, be given reasonable and timely access to, and may make copies of, all Information relating to the subjects of this Article VI to the extent necessary or appropriate for such administration. Each of the Parties agree, upon reasonable request, to provide financial, operational and other Information on each Fountain Plan and Trident Retained Plan, including (but not limited to) Information on a plan’s assets and liabilities, at a level of detail reasonably necessary and appropriate for the efficient and accurate administration of each of the Fountain Plans and Trident Retained Plans. Notwithstanding the foregoing, if any such Information described in this Section 6.8(e) cannot be reasonably obtained without additional cost, the Parties shall agree to reimburse each of the other Parties for all additional third-party costs and such other reasonable costs of obtaining the Information. To the extent that the Fountain Health Plans and the Trident Health Plans share protected health Information (“ PHI ”), the Fountain Health Plans and Trident Health Plans hereby agree to enter into appropriate business associate agreements to cover the sharing of PHI, as required by the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”).

(f) Fountain agrees to hold Trident harmless with respect to any Liabilities related to actions taken to establish the Fountain Plans (and related third party administrative agreements) prior to, on or after the Fountain Distribution Date, other than any such Liabilities resulting from the gross negligence or willful or reckless misconduct of any Trident Employee or Former Trident Employee (excluding any Fountain Employee or Former Fountain Employee).

(g) To the extent not covered elsewhere in this Agreement, with respect to expenses and costs incurred on behalf of a Fountain Plan or Trident Retained Plan: (i) Fountain shall be responsible, through either direct payment or reimbursement to Trident for its allocable share of actual third party and/or vendor costs and expenses incurred by or on behalf of any member of the Fountain Group or the Fountain Plans, and (ii) Trident shall be responsible, through either direct payment or reimbursement to Fountain for its allocable share of actual third party and/or vendor costs and expenses incurred by any member of the Trident Group or the Trident Retained Plans. An allocable share of any such costs and expenses will be determined in a manner consistent with the manner in which the allocable share of such costs and expenses was determined prior to the Fountain Distribution Date. The Parties agree to pay for any third-party costs associated partially or entirely with their respective employee benefit plans associated with this Distribution following the Fountain Distribution Date.

(h) To the extent not covered elsewhere in this Agreement, with respect to all employee benefit plans, policies, programs, payroll practices, and arrangements maintained outside of the United States, the Parties agree that they shall reasonably cooperate and work together to facilitate any transfer of employee benefit plans, policies, programs, payroll practices, and arrangements as necessary by the Fountain Distribution Date, but in any event no later than three (3) months following the Fountain Distribution Date and in accordance with applicable Law.

 

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(i) With respect to multinational insurance pools that the Parties’ entities participate in, the respective multinational insurance pools will continue to maintain premium, claim and administrative charges for each participating Trident or Fountain entity within each such pool until the end of the policy year following the Fountain Distribution Date. At the end of such policy year, the multinational insurance pools shall be revised so that the Parties participate in separate pools (to the extent that a Party wishes to continue participating in an applicable pool). In addition, in the policy year accounting to be completed at the end of such policy year, (a) if a Trident or Fountain entity’s experience contributed a surplus to the overall pool experience, then that entity will be paid the appropriate dividend from the pool; (b) if a Trident or Fountain entity’s experience created a deficit for the overall pool, then that entity will not receive a dividend, and such deficit will be carried forward to the successor pools established for that entity for subsequent policy years (or if no successor pool is established and any Party incurs any expense with respect to such deficit, then the Party responsible for such deficit shall promptly reimburse the Party incurring such expense.

(j) To the extent not covered elsewhere in this Agreement, it is the intention of Trident and Fountain to provide herein that Fountain shall be responsible for the management and administration of all of its respective employee benefit plans on and after the Fountain Distribution including, but not limited to, the adjudication of claims pending on the Fountain Distribution Date that were filed by Fountain Employees or Former Fountain Employees under a Trident sponsored employee benefit plan. It is also the intention of Trident and Fountain that if Fountain’s plan administrator or any other authorized person or committee does not have at least a sixty (60) day period after the Fountain Distribution Date to respond to a claim, Trident will respond to the claim and, if such response is not a final adjudication of the claim, immediately transfer administration of such claim to Fountain. The Parties agree that they shall reasonably cooperate with each other and work together to facilitate the transfer of any documents, materials or information necessary or appropriate for the timely adjudication of any claim and to do so in a manner that is consistent with applicable Law.

(k) To the extent not otherwise provided in this Agreement, the Parties agree that if an amount in the nature of a recovery (including without limitation, a litigation recovery, subrogation recovery, premium or other fee or cost rebate, or demutualization proceeds) becomes payable as the result of the maintenance of an employee benefit plan covered by this Agreement and such recovery is attributable to events that occurred prior to the Distribution, then (i) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a pre-Distribution master trust or other trust (a “ Pre-Distribution Trust ”) that was split into two or more trusts maintained by the Parties as a result of the Distribution, such recovery will be allocated to the appropriate post-Distribution trusts in the same proportion as was applicable to the Pre-Distribution Trust split; (ii) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a Pre-Distribution Trust that was not split as a result of the Distribution, such recovery will be allocated solely to that trust and (iii) to the extent that a recovery is not covered by subclauses (i) or (ii) above, the Parties will reasonably cooperate with each other and, subject to any applicable fiduciary duties under ERISA or otherwise, determine a fair allocation of the recovery among the appropriate post-Distribution employee benefit plans, associated trusts and/or plan participants.

 

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(l) To the extent not covered elsewhere in this Agreement, the Parties (and their Subsidiaries and Affiliates) are hereby authorized to implement the provisions of this Article VI, including by making appropriate adjustments to employee benefits provided for in this Agreement; provided that such adjustments are intended for administrative or recordkeeping purposes to retain the value of benefits provided in accordance with the provisions of this Agreement.

Section 6.9. Approval of Plans; Terms of Participation by Employees in Plans .

(a) Approval of Plans . On or prior to the applicable Fountain Distribution Date, the Parties shall take all actions as may be necessary to approve the stock-based employee benefit plans of Fountain in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

(b) Non-Duplication of Benefits . The Fountain Plans and Trident Retained Plans shall not provide benefits that duplicate benefits provided to a participant by a corresponding Fountain Plan, or Trident Retained Plans. The Parties shall agree on methods and procedures, including amending the respective plan documents, to prevent Fountain Employees, Former Fountain Employees, Trident Employees, Former Trident Employees and any dependent or beneficiary thereof from receiving duplicate benefits from the Fountain Plans and Trident Retained Plans; provided that nothing shall prevent Fountain from unilaterally amending the Fountain Plans to avoid such duplication, and nothing shall prevent Trident from unilaterally amending the Trident Retained Plans to avoid such duplication.

(c) Service Credits under Plans . Except as may be specified in Schedule 6.9(c) , service with any member of the Trident controlled group prior to the Fountain Distribution Date shall be credited under the Fountain Plans and Trident Retained Plans to the extent and for the express purposes set forth (including, as applicable and without limitation: eligibility, vesting, company match levels, subsidies, recognition of pre-existing credit and credit for amounts of co-pays, out-of-pocket maximums and deductibles, but not for benefit accrual purposes under pension plans) under the applicable Fountain Plan or Trident Retained Plan, except to the extent duplication of benefits would result; provided , however , that in the event an employee or former employee of one of the Parties (or its Subsidiaries or Affiliates) becomes employed by one of the other Parties (or its Subsidiaries or Affiliates) after December 31, 2012, such employee or former employee’s service with any member of the Trident controlled group prior to the Fountain Distribution Date need not be credited by the new employer except to the extent required by Law. Notwithstanding the foregoing, in the event of any conflict between this paragraph (c) and the terms of any Fountain Plan or Trident Retained Plan, the express terms of such plan shall govern.

(d) Plan Elections . Except as may be specifically provided otherwise under this Agreement or applicable Law, all participant elections (including, without limitation, deferral elections, payment elections, beneficiary designations, qualified domestic relations orders, qualified medical child support orders and loan agreements) with respect to the participation of a Fountain Employee or Former Fountain Employee in a Trident employee benefit arrangement shall be transferred to and be in full force and effect under the corresponding and applicable Fountain Plan in accordance with the terms of each such applicable plan and to the extent permissible under such plan, until such elections are replaced or revoked by the employee who made such election.

 

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(e) Amendment and Termination . No provision in this Agreement shall prohibit the Parties, subsequent to the Fountain Distribution Date, from amending or terminating the employee benefit plans, policies and programs described herein in accordance with the provisions of such plans, policies and programs and applicable Law.

(f) Non-Termination of Employment; No Third-Party Beneficiaries . Except as expressly provided for in this Agreement, no provision of this Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Trident Employee, Fountain Employee or any former, present or future employee of the Trident Group, Fountain Group or any of their respective Affiliates under any Trident Plan or Fountain Plan, nor shall any such provision be construed as an amendment to any employee benefit plan or other employee compensatory or benefit arrangement. Furthermore, nothing in this Agreement is intended to confer upon any Trident Employee, Fountain Employee or any former, present or future employee of the Trident Group, Fountain Group or any of their respective Affiliates any right to continued employment, any recall or similar rights to an Employee on layoff or any type of approved leave, or to change the employment status of any Employee from “at will.”

Section 6.10. Tax Consequences . For Tax purposes, the Parties agree that the treatment of all of the equity compensation and deferred compensation arrangements set forth in this Article VI shall be treated in accordance with Section 6 of the Tax Sharing Agreement.

Section 6.11. International Regulatory Compliance . Trident shall have the authority to adjust the treatment otherwise described in this Article VI in order to ensure compliance with the applicable laws or regulations of countries outside the United States or to preserve the Tax benefits provided under local Tax law or regulation prior the Distribution.

Section 6.12. Alternate Procedure . The Parties hereby agree to follow the alternate procedure for United States employment tax withholding as provided in Section 5 of Rev. Proc. 2004-53, I.R.B. 2004-34. Accordingly, Trident and its Subsidiaries shall have no United States employment tax reporting responsibilities, and Fountain shall have full United States employment tax reporting responsibilities, for Fountain Employees and Former Fountain Employees following the close of business on the Fountain Distribution Date, to the extent provided under such Rev. Proc. 2004-53, and except to the extent that any member of the Trident Group provides payroll services to Fountain pursuant to a written agreement among the Parties.

Section 6.13. Employee Transfer; Liabilities .

(a) Transfer . Patriot shall, upon written notice to Trident, during the 30-day period following the date of this Agreement, have the unilateral right to have any Fountain Specified Employee removed from the list of Fountain Tier I Specified Employees set forth on Schedule 1.1(95)(A) . Patriot shall not have any right to remove any Fountain Tier II Specified Employees set forth on Schedule 1.1(95)(B) . Upon Patriot’s exercise of its removal rights as described in this Section 6.13(a) , Trident shall, (i) with respect to any such Fountain Specified

 

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Employee who is so removed, transfer the employment of such Fountain Specified Employee to a Subsidiary of Trident other than Fountain or one of its Subsidiaries and/or terminate the employment of such Fountain Specified Employee (in each case, subject to the allocation of liabilities set forth in Section 6.13(b) ) and (ii) with respect to any such Fountain Specified Employee who is not so removed, transfer the employment of such Fountain Specified Employee to Fountain or one of its Subsidiaries. In addition, Trident shall transfer the employment of the individuals on Schedule 6.13(a) from Fountain and its Subsidiaries to Trident and its Subsidiaries (other than Fountain and its Subsidiaries) prior to the Fountain Distribution Date.

(b) Liabilities with respect to Fountain Specified Employees . Patriot and Fountain shall have the Liabilities with respect to Fountain Specified Employees as set forth on Schedule 6.13(b)(1) . Trident shall have the Liabilities with respect to Fountain Specified Employees as set forth on Schedule 6.13(b)(2) .

ARTICLE VII

ASSUMED TRIDENT CONTINGENT LIABILITIES

Section 7.1. Assumed Trident Contingent Liabilities . Except as otherwise expressly set forth in the Tax Sharing Agreement (with respect to Taxes), the Parties shall each be responsible for its Applicable Percentage of any Indemnifiable Losses paid to third parties in respect of, including any out-of-pocket costs and expenses related to or arising out of any Assumed Trident Contingent Liability. Any out-of-pocket expenses owed in respect of any Assumed Trident Contingent Liabilities (including reimbursement for the out-of-pocket costs and expenses of defending, managing or providing assistance to the Managing Party pursuant to Section 7.3(a) or Section 7.3(b) with respect to any Third Party Claim that is an Assumed Trident Contingent Liability, including, for the avoidance of doubt, any amounts with respect to a bond, prepayment or similar security or obligation required to be posted (or determined to be advisable) by the Managing Party in respect of any claim) shall be remitted promptly after the Party entitled to such amount provides an invoice (including reasonable supporting Information with respect thereto) to the Party owing such amount, and, to the extent not otherwise reimbursed by the applicable Party, such costs and expenses shall be included in the calculation of the amount of the applicable Assumed Trident Contingent Liability in determining the reimbursement obligations of the other Party with respect thereto; provided , however , that in the event that an amount in excess of $50 million in the aggregate is owed by the Parties to any third party or parties with respect to an Assumed Trident Contingent Liability, in lieu of remitting amounts directly to the Party providing the invoice, the invoiced Party may remit the owed amount directly to the appropriate third party or parties or, if applicable, to a trust established by the invoicing Party for the benefit of the Parties. In furtherance of the foregoing, the Managing Party (and any Party providing access as contemplated by Section 7.3(a) ) shall be entitled to reimbursement by the other Party (according to their Applicable Percentages) of any out-of-pocket costs and expenses related to or arising out of defending or managing any such Assumed Trident Contingent Liability, from time to time, when invoiced, including, if applicable, in advance of a final determination or resolution of any Action related to an Assumed Trident Contingent Liability. For U.S. federal income Tax purposes, the Parties shall treat the payment of Assumed Trident Contingent Liabilities (and costs and expenses relating to Assumed Trident Contingent Liabilities, as the case may be) as set forth in the Tax Sharing Agreement. It shall

 

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not be a defense to any obligation of either Party to pay any amounts in respect of any Assumed Trident Contingent Liability that (i) such Party was not consulted in the defense or management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the defense thereof or (iv) that such Assumed Trident Contingent Liability was incurred by reason of a settlement rather than by a judgment or other determination of Liability, even if such settlement was effected without the consent or over the objection of such Party.

Section 7.2. Management of Assumed Trident Contingent Liabilities .

(a) For purposes of this Article VII , “ Managing Party ” shall initially mean Trident; provided , however , that under certain circumstances Fountain may become the Managing Party as may be otherwise agreed to in writing by the Parties.

(b) The Managing Party shall, on behalf of the other Party, have sole and exclusive authority to commence, prosecute, manage, control, conduct or defend (or assume the defense of) or otherwise determine all matters whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other professionals) with respect to any Action or Third Party Claim with respect to an Assumed Trident Contingent Liability. So long as the Managing Party has assumed and is actively and diligently conducting the defense of any Assumed Trident Contingent Liability in accordance with Section 7.2(b) above, the other Party will not consent to the entry of any judgment or enter into any settlement with respect to the Assumed Trident Contingent Liability without the prior written consent of the Managing Party (not to be delayed or withheld unreasonably).

(c) The Managing Party shall on a quarterly basis, or if a material development occurs, as soon as reasonably practicable thereafter, inform the other Party in reasonable detail of the status of and developments relating to any matter involving an Assumed Trident Contingent Liability and provide copies of any material document, notices or other materials related to such matters; provided , that any failure or delay in providing such information shall not be a basis for liability of the Managing Party except and solely to the extent the receiving Party shall have been actually and materially prejudiced by such failure or delay. The other Party shall use reasonable efforts to cooperate fully with the Managing Party in its management of any of such Assumed Trident Contingent Liability and shall take such actions in connection therewith that the Managing Party reasonably requests (including providing reasonable access to such Party’s Records and employees as set forth in Section 7.3 ); provided that such Party shall only be required to take such actions to the extent that the Parties agree any out-of pocket costs and expenses incurred with respect to such actions shall constitute Assumed Trident Contingent Liabilities to be shared and reimbursed according to the Parties’ Applicable Percentages as contemplated by Section 7.1(b) .

Section 7.3. Access to Information; Certain Services; Expenses .

(a) Access to Information and Employees by the Managing Party . Unless otherwise prohibited by Law or more specifically provided in the Tax Sharing Agreement, in connection with the management and disposition of any Assumed Trident Contingent Liability, the other Party shall provide to the Managing Party reasonable access to its authorized

 

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accountants, counsel and other designated representatives, to the employees, properties, and Information of such Party and the members of such Party’s Group to the extent such access relates to the relevant Assumed Trident Contingent Liability; provided that (x) such access shall not unreasonably interfere with any of such Party’s employees’ normal job functions, (y) such Party shall not be required to provide such access to the extent that the provision of such would require such Party (or its applicable Group member) to waive any attorney-client or other legal privilege and (z) any out-of-pocked costs and expenses incurred in connection with the provision of such access shall constitute Assumed Trident Contingent Liabilities to be shared and reimbursed according to the Parties’ Applicable Percentages as contemplated by Section 7.1(b) . Each Party shall, to the extent so requested by the other Party, enter into a joint-defense agreement with the other Party in respect of the Assumed Trident Contingent Liabilities, on terms as are to be reasonably agreed between the Parties. Nothing in this Section 7.3(a) shall require either Party to violate any agreement with any third party regarding the confidentiality of information relating to that third party.

(b) Costs and Expenses Relating to Access by the Managing Party . Except as otherwise provided in any Ancillary Agreement, the provision of access pursuant to this Section 7.3 shall be at no additional cost or expense of the Managing Party or any other Party (other than for actual out-of-pocket costs and expenses, which shall be allocated as set forth in Section 7.1 ).

Section 7.4. Notice Relating to Assumed Trident Contingent Liabilities; Disputes . In the event that the other Party or any member of such Party’s Group or any of their respective Affiliates, becomes aware of any matter reasonably relevant to the Managing Party’s ongoing or future management, prosecution, defense and/or administration of any Assumed Trident Contingent Liability, such Party shall promptly (but in any event within thirty (30) days of becoming aware, unless, by its nature the subject matter of such notice would reasonably require earlier notice) notify the Managing Party of any such matter (setting forth in reasonable detail the subject matter thereof); provided, however , that the failure to provide such notice shall not release the other Party from any of its obligations under this Article VII except and solely to the extent that the other Party shall have been actually and materially prejudiced as a result of such failure.

Section 7.5. Cooperation with Governmental Entity . If, in connection with any Assumed Trident Contingent Liability, a Party is required by Law to respond to or is reasonably requested to cooperate with a Governmental Entity, such Party shall be entitled to cooperate and respond to such Governmental Entity after, to the extent practicable under the specific circumstances, consultation with the Managing Party; provided , that to the extent such consultation is not practicable, the applicable Party shall promptly inform the Managing Party regarding such response or cooperation and the subject matter thereof. In the event that any Party is requested or required by any Governmental Entity in connection with any Assumed Trident Contingent Liability pursuant to any written or oral request for Information or documents in any legal or administrative proceeding, review, interrogatory, subpoena, investigation, demand, or similar process, such Party shall notify the Managing Party promptly of such request or requirement and such Party’s response thereto, and shall use reasonable best efforts to consult with the Managing Party with respect to the nature of such Party’s response to the extent practicable and not in violation of any attorney-client privilege or applicable legal process.

 

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Section 7.6. Default . In the event that one or more of the Parties defaults in any full or partial payment in respect of any Assumed Trident Contingent Liability (including, for the avoidance of doubt, such Party’s Applicable Percentage of the costs and expenses of the Managing Party or any other assisting Party), then the non-defaulting Party (including Trident) shall be required to pay the amount in default; provided , however , that any such payment by a non-defaulting Party shall in no way release the defaulting Party from its obligations to pay such Assumed Trident Contingent Liability (or any future Assumed Trident Contingent Liability when obligated) and any non-defaulting Party may exercise any available legal remedies against such defaulting Party; provided , further , that interest shall accrue on any such defaulted amounts at the Default Interest Rate.

ARTICLE VIII

INDEMNIFICATION

Section 8.1. Release of Pre-Distribution Claims .

(a) Except (i) as provided in Section 8.1(b) , (ii) as may be otherwise expressly provided in this Agreement, any Ancillary Agreement or the Merger Agreement and (iii) for any matter for which any Party is entitled to indemnification or contribution pursuant to this Article VIII, effective as of the Effective Time, each Party, for itself and each member of its respective Group (including, in the case of Fountain, Patriot and its Subsidiaries from and after the Closing), in each case, together with their respective administrators, successors and assigns, do hereby remise, release and forever discharge the other Party and the other members of such other Party’s’ Group and all Persons who at any time prior to the Effective Time were directors, officers, agents or employees of any member of such other Parties (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, including in connection with the Fountain Plan of Separation and all other activities to implement the Fountain Distribution and any of the other transactions contemplated hereunder and under the Ancillary Agreements.

(b) Nothing contained in Section 8.1(a) shall impair or otherwise affect any right of either Party, and as applicable, a member of the Party’s Group to enforce this Agreement, the Merger Agreement, any Ancillary Agreement in each case in accordance with its terms. In addition, nothing contained in Section 8.1(a) shall release any Person from:

(i) (A) with respect to Trident or any member of its Group, any Trident Retained Liability and (B) with respect to Fountain or any member of its Group, any Fountain Liability;

(ii) 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 or on behalf of a member of the other Group prior to the Effective Time;

 

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(iii) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

(iv) any Liability provided in or resulting from any other Contract or understanding that is entered into after the Effective Time between any Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s ‘Group), on the other hand;

(v) any Liability with respect to an Assumed Trident Contingent Liability pursuant to Article VII;

(vi) any Liability with respect to any Continuing Arrangements set forth on Schedule 1.1(48) ;

(vii) any Liability with respect to the insurance policies written by White Mountain Insurance Company;

(viii) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement, the Merger Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article VIII and, if applicable, the appropriate provisions of the Ancillary Agreements or Continuing Arrangements; and

(ix) any Liability for fraud or willful misconduct.

In addition, nothing contained in Section 8.1(a) shall release Trident from (i) indemnifying any director, officer or employee of Fountain who was a director, officer or employee of Trident or any of its Affiliates on or prior to the Effective Time or the Fountain Distribution Date, as the case may be, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then existing obligations or (ii) any Liability owed to Patriot pursuant to the Merger Agreement.

(c) Effective as of the Effective Time, each Party shall not, and shall not permit any member of its Group (including, in the case of Fountain, Patriot and its Subsidiaries, if the Closing occurs under the Merger Agreement) to make, any claim, demand or offset, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against any other Party or any member of any other Party’s Group, or any other Person released pursuant to Section 8.1(a) , with respect to any Liabilities released pursuant to Section 8.1(a) . The release in this Section 8.1 includes a release of any rights and benefits with respect to such Liabilities that Fountain, Trident and each member of the Fountain Group and Trident Group, and their respective successor and assigns, now has or in the future may have conferred upon them by virtue of any statute or common law principle which provides that a general release does not extend to claims which a party does not know or suspect to exist in its favor at the time of executing the release, if knowledge of such claims would have materially affected such party’s settlement with the obligor. In this connection, each of Trident and Fountain hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Liabilities that are presently unknown, unanticipated and

 

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unsuspected, and it further agrees that this release has been negotiated and agreed upon in light of that awareness and it nevertheless hereby intends to release the Persons described in Section 8.1(a) from the Liabilities described in the first sentence of Section 8.1(a). At any time, at the reasonable request of any other Party, each Party shall cause each member of its respective Group and, to the extent practicable, each other Person on whose behalf it released Liabilities pursuant to this Section 8.1 to execute and deliver releases reflecting the provisions hereof.

Section 8.2. Indemnification by Trident . Except as otherwise specifically provided in any provision of this Agreement, any Ancillary Agreement or the Merger Agreement, following the Fountain Distribution Date, Trident shall, and shall cause the other members of the Trident Group to, indemnify, defend and hold harmless the Fountain Indemnitees from and against any and all Indemnifiable Losses of the Fountain Indemnitees, arising out of, by reason of or otherwise in connection with (a) the Trident Retained Liabilities or alleged Trident Retained Liabilities, including, after the Fountain Distribution Date, the failure of Trident or any member of the Trident Group to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities, (b) any breach by Trident of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder and (c) any breach by Trident or any of its Affiliates (including Fountain other than with respect to any post-Closing obligation of Fountain) of any covenant, or inaccuracy of any representation and warranty made by Trident, in the Merger Agreement that survives the Closing under Section 8.01 of the Merger Agreement; provided that any claim with respect to indemnification pursuant to this clause (c) is made in reasonable written detail consistent with Section 8.5(a) or Section 8.5(b) prior to the termination of the relevant covenant, representation or warranty as contemplated by such Section 8.01; provided further that this Section 8.2 shall not apply with respect to any Assumed Trident Contingent Liability, in which case Article VII shall apply.

Section 8.3. Indemnification by Fountain . Except as otherwise specifically provided in any provision of this Agreement, any Ancillary Agreement or the Merger Agreement, following the Fountain Distribution Date, Fountain shall, and shall cause the other members of the Fountain Group, to indemnify, defend and hold harmless the Trident Indemnitees (which, for the avoidance of doubt, shall include the Athens North American R/SB Indemnitees) from and against any and all Indemnifiable Losses of the Trident Indemnitees, arising out of, by reason of or otherwise in connection with (a) the Fountain Liabilities or alleged Fountain Liabilities, including, after the Fountain Distribution Date, the failure of Fountain or any member of the Fountain Group to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities, (b) any breach by Fountain subsequent to the Fountain Distribution Date of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder or (c) any breach by Patriot or any of its Affiliates of any covenant, or inaccuracy of any representation and warranty made by Patriot, in the Merger Agreement that survives the Closing under Section 8.01 of the Merger Agreement; provided that any claim with respect to indemnification pursuant to this clause (c) is made in reasonable written detail consistent with Section 8.5(a) or Section 8.5(b) prior to the termination of the relevant covenant, representation or warranty as contemplated by such Section 8.01; provided further that this Section 8.3 shall not apply with respect to any Assumed Trident Contingent Liability, in which case Article VII shall apply.

 

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Section 8.4. Indemnification with Respect to Athens NA . Following the Fountain Distribution Date, Athens NA shall, and shall cause the other members of its Group to, indemnify, defend and hold harmless the Trident Indemnitees and the Fountain Indemnitees ( provided that, for purposes of this Section 8.4 , the Trident Group shall be deemed to exclude the Athens North American R/SB Group) from and against any and all Indemnifiable Losses of the Trident Indemnitees or the Fountain Indemnitees, arising out of, by reason of or otherwise in connection with any breach by Athens of the Specified Sections of this Agreement. Trident shall, and shall cause its other Group members to, indemnify, defend and hold harmless the Athens North American R/SB Indemnitees from and against any and all Indemnifiable Losses of the Athens North American R/SB Indemnitees, arising out of, by reason of or otherwise in connection with any breach by Trident (or a Trident Group member) of the Specified Sections of this Agreement. Fountain shall, and shall cause its other Group members to, indemnify, defend and hold harmless the Athens North American R/SB Indemnitees from and against any and all Indemnifiable Losses of the Athens North American R/SB Indemnitees, arising out of, by reason of or otherwise in connection with any breach by Fountain (or a Fountain Group member) of the Specified Sections of this Agreement. For the avoidance of doubt, as between Fountain and Trident, the provisions of Section 8.2 and Section 8.3 shall control.

Section 8.5. Procedures for Indemnification .

(a) Direct Claims . An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee has determined has given or would reasonably be expected to give rise to a right of indemnification under this Agreement (other than a Third Party Claim which shall be governed by Section 8.5(b) ), within thirty (30) days of such determination, stating the amount of the Indemnifiable Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided , however , that the failure to provide such written notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure.

(b) Third Party Claims . If a claim or demand is made against a Trident Indemnitee, a Athens North American R/SB Indemnitee or a Fountain Indemnitee (each, an “ Indemnitee ”) by any Person who is not a party to this Agreement or a Subsidiary of a Party (a “ Third Party Claim ”) as to which such Indemnitee is or reasonably expects to be entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the Party (and, if applicable, the Managing Party) which is or may be required pursuant to this Article VIII, or pursuant to any Ancillary Agreement to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim promptly (and in any event within thirty (30) days) after receipt by such Indemnitee of written notice of the Third Party Claim. If any Party shall receive notice or otherwise learn of the assertion of a Third Party Claim which may reasonably be determined to be an Assumed Trident Contingent Liability, such Party, as appropriate, shall give the Managing Party (as determined pursuant to Article VII) written notice thereof within thirty (30) days after such Person becomes aware of such Third Party Claim;

 

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provided , however , that the failure to provide notice of any such Third Party Claim pursuant to this or the preceding sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure. Thereafter, the Indemnitee shall deliver to the Indemnifying Party (and, if applicable, to the Managing Party), promptly (and in any event within ten (10) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim; provided , however , that the failure to forward such notices and documents shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure.

(c) Other than in the case of (i) an Assumed Trident Contingent Liability (the defense of which shall be assumed and controlled by the Managing Party as provided for in Article VII), (ii) indemnification pursuant to the Tax Sharing Agreement or (iii) indemnification by a beneficiary Party of a guarantor Party pursuant to Section 2.10(c) (the defense of which shall be assumed and controlled by the beneficiary Party), an Indemnifying Party shall assume and control the defense of any Third Party Claim, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel, that is reasonably acceptable to the applicable Indemnitees, within thirty (30) days of the receipt of such notice from such Indemnitees. In connection with the Indemnifying Party’s defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, at its own expense and, in any event, shall reasonably cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent Information, materials and information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably required by the Indemnifying Party; provided , however , that in the event of a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s), such Indemnitee(s) shall be entitled to retain, at the Indemnifying Party’s expense, separate counsel as required by the applicable rules of professional conduct with respect to such matter; provided , further , that if (i) the Third Party Claim is not an Assumed Trident Contingent Liability and (ii) the Indemnifying Party has assumed the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions to such defense, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(d) Other than in the case of an Assumed Trident Contingent Liability, if an Indemnifying Party fails for any reason to assume responsibility for defending a Third Party Claim within the time specified, such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnitee is conducting the defense against any such Third Party Claim, the Indemnifying Party shall reasonably cooperate with the Indemnitee in such defense and make available to the Indemnitee all witnesses, pertinent Information, and material in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee.

(e) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim that is not an Assumed Trident Contingent Liability (with

 

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any Assumed Trident Contingent Liability handled in accordance with Article VII) without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.

(f) In the case of a Third Party Claim (except for any Third Party Claim that is an Assumed Trident Contingent Liability, which, with respect to the subject matter of this Section 8.5(f), shall be governed by Section 7.4), no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third Party Claim without the prior written consent of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against any Indemnitee; it being understood that in the case of a Third Party Claim that is an Assumed Trident Contingent Liability, such matters are addressed in Article VII.

(g) Absent fraud or willful misconduct by an Indemnifying Party, the indemnification provisions of this Article VIII shall be the sole and exclusive remedy of an Indemnitee for any monetary or compensatory damages or losses resulting from any breach of this Agreement or any Ancillary Agreement (except as and to the extent otherwise expressly provided in such Ancillary Agreement) and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such Person may have with respect to the foregoing other than under this Article VIII against any Indemnifying Party.

Section 8.6. Cooperation in Defense and Settlement .

(a) The Parties recognize that there are certain common questions of law and fact that will affect their ability to comply with their contractual and legal obligations to third parties and their legal obligations to Taxing Authorities (as defined in the Tax Sharing Agreement), and to respond to any Third Party Claim, and that there exists a mutuality of interest between them in a common response, even though the parties recognize that they also may have different interests in respect of specific inquiries or claims.

(b) With respect to any Third Party Claim that is not an Assumed Trident Contingent Liability and that implicates two or more Parties in a material fashion due to the allocation of Liabilities, responsibilities for management of defense and related indemnities pursuant to this Agreement or any of the Ancillary Agreements, the applicable Parties agree to use reasonable best efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for both Parties the attorney-client privilege, joint defense or other privilege with respect thereto). The Party that is not responsible for managing the defense of such Third Party Claims shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may, if necessary or helpful, retain counsel to assist in the defense of such claims.

(c) Each of Trident, Athens NA and Fountain agrees that at all times from and after the Effective Time, if an Action is commenced by a third party (or any member of such Party’s respective Group) with respect to which one or more named Parties (or any member of such Party’s respective Group) is a nominal defendant and/or such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party or Parties shall use reasonable best efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable.

 

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Section 8.7. Indemnification Payments . Indemnification required by this Article VIII shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability incurred.

Section 8.8. Contribution .

(a) If the indemnification provided for in Sections 8.2 , 8.3 and 8.4 , including in respect of any Assumed Trident Contingent Liability, is unavailable to, or insufficient to hold harmless an Indemnitee under this Agreement or any Ancillary Agreement in respect of any Liabilities referred to herein or therein, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnitee as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnitee in connection with the actions or omissions that resulted in Liabilities as well as any other relevant equitable considerations. With respect to the foregoing, the relative fault of such Indemnifying Party and Indemnitee shall be determined by reference to, among other things, whether the misstatement or alleged misstatement of a material fact or omission or alleged omission to state a material fact relates to Information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to Information and opportunity to correct or prevent such statement or omission.

(b) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 8.8 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8.8(a) . The amount paid or payable by an Indemnitee as a result of the Liabilities referred to in Section 8.8(a) shall be deemed to include, subject to the limitations set forth above, any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating any claim or defending any Action. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(c) Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, for purposes of Section 8.3 , Trident shall be deemed to have supplied all Information relating to the Fountain Group included in any filing made with the Commission pursuant to the Securities Act or the Exchange Act prior to the Fountain Distribution Date, regardless of which entity actually makes such filing and under no circumstances shall Fountain have any Liability or be obligated to indemnify the Trident Indemnitees, in each case, with respect thereto pursuant to Section 8.3 ; provided that this Section 8.8(c) shall not apply in respect of any Assumed Trident Contingent Liability or any Liability with respect thereto, in which case Article VII shall apply.

Section 8.9. Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) Any Indemnifiable Loss subject to indemnification or contribution pursuant to this Article VIII including, for the avoidance of doubt, in respect of any Assumed Trident Contingent Liability, will be calculated (i) net of Insurance Proceeds that actually reduce

 

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the amount of the Indemnifiable Loss, (ii) net of any proceeds received by the Indemnitee from any third party for indemnification for such Liability that actually reduce the amount of the Indemnifiable Loss (“ Third Party Proceeds ”) and (iii) net of any Tax benefits realized in accordance with, and subject to, the principles set forth or referred to in the Tax Sharing Agreement, and increased in accordance with, and subject to, the principles set forth in the Tax Sharing Agreement. Accordingly, the amount which any Indemnifying Party is required to pay pursuant to this Article VIII to any Indemnitee pursuant to this Article VIII will be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an “ Indemnity Payment ”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnitee will 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 Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties acknowledge that the indemnification and contributions hereof do not relieve any insurer who would otherwise be obligated to pay any claim to pay such claim. In furtherance of the foregoing, the Indemnitee shall use commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnified Party is entitled in connection with any Indemnifiable Loss for which the Indemnified Party seeks contribution or indemnification pursuant to this Article VIII; provided that the Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds (despite having used commercially reasonable efforts) shall not limit the Indemnifying Party’s obligations hereunder.

Section 8.10. Additional Matters; Survival of Indemnities .

(a) The indemnity and contribution agreements contained in this Article VIII shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; (ii) the knowledge by the Indemnitee of Indemnifiable Losses for which it might be entitled to indemnification or contribution hereunder; and (iii) any termination of this Agreement.

(b) The rights and obligations of each Party and their respective Indemnitees under this Article VIII shall survive the sale or other Transfer by any Party or its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

(c) Each Party shall, and shall cause the members of its respective Group to, preserve and keep their Records relating to financial reporting, internal audit, employee benefits, past acquisition or disposition transactions, claims, demands, actions, and email files and backup tapes regarding any of the foregoing as such pertains to any period prior to the Separation Date in their possession, whether in electronic form or otherwise, until the date on which such Records are no longer required to be retained pursuant to such Party’s applicable record retention policy and schedules as in effect immediately prior to the Separation Date (as set forth in Schedule 8.10(c) hereto); provided , however , to the extent the Tax Sharing Agreement provides for a longer period of retention of Tax records, such longer period as provided in the Tax Sharing Agreement shall control.

 

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ARTICLE IX

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 9.1. Provision of Corporate Records . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for matters related to provision of Tax records (in which event the provisions of the Tax Sharing Agreement will govern) and without limiting the applicable provisions of Article VII, and subject to any applicable provisions of this Agreement, any Ancillary Agreement or the Merger Agreement:

(a) After the Effective Time, upon the prior written request by Fountain for specific and identified Information which relates to (x) Fountain or the conduct of the Fountain Business, as the case may be, up to the Effective Time, or (y) any Ancillary Agreement, Trident or Athens NA, as applicable, shall (or shall cause its Group member to) provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if Fountain (or its Group member) has a reasonable need for such originals) in the possession or control of Trident or any of its Subsidiaries or Athens NA or any of its Subsidiaries, as applicable, but only to the extent such items so relate; provided , however , that Trident and Athens NA (or its applicable respective Group member) shall not be required to provide such copies to the extent that the provision of such would require Trident or Athens NA (or their applicable respective Group member), as applicable, to breach any confidentiality covenant or waive any attorney-client or other legal privilege.

(b) After the Effective Time, upon the prior written request by Trident for specific and identified Information which relates to (x) Trident or the conduct of the Trident Retained Business, up to the Effective Time, as the case may be, or (y) any Ancillary Agreement, Fountain or Athens NA, as applicable, shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if Trident (or its Group member) has a reasonable need for such originals) in the possession or control of Fountain or any of its Subsidiaries or Athens NA or any of its Subsidiaries, as applicable, but only to the extent such items so relate; provided , however , that Fountain and Athens NA (or their applicable respective Group member) shall not be required to provide such copies to the extent that the provision of such would require Fountain or Athens NA (or its applicable respective Group member), as applicable, to breach any confidentiality covenant or waive any attorney-client or other legal privilege.

(c) After the Effective Time, upon the prior written request by Athens NA for specific and identified Information which relates to (x) Athens NA or the conduct of the Athens North American R/SB Business, as the case may be, up to the Effective Time, or (y) any Ancillary Agreement, Trident or Fountain, as applicable, shall (or shall cause its Group member to) provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if Athens NA (or its Group member) has a reasonable need for such originals) in the possession or control of Trident or any of its

 

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Subsidiaries or Fountain or any of its Subsidiaries, as applicable, but only to the extent such items so relate; provided , however , that Trident and Fountain (or their applicable respective Group member) shall not be required to provide such copies to the extent that the provision of such would require Trident or Fountain (or its applicable respective Group member), as applicable, to breach any confidentiality covenant or waive any attorney-client or other legal privilege.”

Section 9.2. Access to Information . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for access with respect to Tax matters (in which event the provisions of the Tax Sharing Agreement will govern), from and after the Effective Time for a period of seven (7) years, each of Trident, Athens NA and Fountain shall afford to each of the other Parties and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, to the personnel, properties, and Information of such first Party and its Subsidiaries insofar as such access is reasonably required by such other Party and relates to (x) such other Party or the conduct of its business prior to the Effective Time or (y) any Ancillary Agreement; provided that none of the Parties shall be required to provide such access to the extent that the provision of such would require such Party (or one of its Group members) to breach any confidentiality covenant or waive any attorney-client or other legal privilege. Nothing in this Section 9.2 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business.

Section 9.3. Witness Services . At all times from and after the Effective Time, each of Trident and Fountain shall use its reasonable best efforts to make available to the others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees, consultants and agents as witnesses to the extent that (i) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved (except for claims, demands or Actions between members of each Group) and (ii) there is no conflict in the Action between the requesting Party and the requested Party (or any member of the their respective Groups), as applicable. A Party providing a witness to the other Party under this Section 9.3 shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses) as may be reasonably incurred and properly paid under applicable Law.

Section 9.4. Reimbursement; Other Matters . Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, a Party providing Information or access to Information to the other Party under this Article IX shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such Information or access to such Information.

 

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Section 9.5. Confidentiality . Notwithstanding any termination of this Agreement, for a period of seven (7) years from the date of this Agreement, each Party and the members of its Group shall (i) hold in strict confidence (and at a standard of care no less than they use for their own similar information and in accordance with the terms of all applicable third-party agreements), (ii) disclose, provide, transfer, share or make available only to their and their Subsidiaries’ officers, employees, agents, consultants, auditors, attorneys and advisors (or potential buyers, lenders, investors, or similar transaction counterparties pursuant to any due diligence process), only on a “need to know” basis, and (iii) not use for any purpose other than to ensure compliance with the terms and conditions of this Agreement or any Ancillary Agreement, to enforce or defend any of its rights hereunder or thereunder or to the extent otherwise expressly permitted pursuant to this Agreement or any Ancillary Agreement, all Confidential Information to the extent relating to the business of any other Party or any member(s) of such other Party’s Group. To the extent that any Party or any member of its Group has Confidential Information related to another Party or member of such other Party’s Group that is the subject of this Section 9.5, such first Party shall, and shall cause each member of its Group to (in each case, except as otherwise expressly provided in this Agreement or any Ancillary Agreement), to the extent such Confidential Information is documented or exists in written, photographic or other physical form, return such information (and any copies made thereof) to such other Party or Group, and to the extent it is stored in electronic form, make a copy available to such other Party or Group and expunge such information from any computer or other data carrier, in each case, as promptly as reasonably practicable after the discovery thereof. Each Party is liable hereunder for any unauthorized disclosure or use of the other Parties’ Confidential Information by its recipients, including any members of its Group.

Section 9.6. Privileged Matters .

(a) Pre-Separation Services . 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 Trident Group, members of the Fountain Group and members of the Athens North American R/SB Group, and that each of the members of the Trident Group, Fountain Group and/or Athens North American R/SB Group , as applicable, should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

(b) Post-Separation Services . The Parties recognize that legal and other professional services will be provided following the Effective Time which will be rendered solely for the benefit of one or more of Trident, Fountain and Athens NA (and/or one or more members of their respective Groups), as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) Trident shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the Trident Retained Business (other than to the extent relating solely to the Athens North American R/SB Business, which shall be controlled by Athens NA as provided below), whether or not the privileged Information is in the possession of or under the control of Trident, Athens NA or Fountain (or any member of their respective Groups). Trident shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in

 

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connection with privileged Information that relates solely to the subject matter of any claims constituting Trident Retained Liabilities (other than Athens North American R/SB Liabilities, which shall be controlled by Athens NA as provided below), now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Trident (or any member of the Trident Group), whether or not the privileged Information is in the possession of or under the control of Trident, Athens NA or Fountain (or any member of their respective Groups);

(ii) Fountain shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the Fountain Business, whether or not the privileged Information is in the possession of or under the control of Trident, Athens NA or Fountain (or any member of their respective Groups). Fountain shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting Fountain Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Fountain (or any member of the Fountain Group), whether or not the privileged Information is in the possession of or under the control of Trident, Fountain or Athens NA (or any member of their respective Groups).

(iii) Athens NA shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the Athens North American R/SB Business, whether or not the privileged Information is in the possession of or under the control of Trident, Athens NA or Fountain (or any member of their respective Group). Athens NA shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting Athens North American R/SB Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Athens NA (or any member of the Athens North American R/SB Group), whether or not the privileged Information is in the possession of or under the control of Trident, Fountain or Athens NA (or any member of their respective Groups).

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 9.6 , with respect to all privileges not allocated pursuant to the terms of Section 9.6(b) . All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve two or more of Trident, Athens NA or Fountain (or their respective Group members) in respect of which two or more of such Parties retain any responsibility or Liability under this Agreement or under the Tax Sharing Agreement, shall be subject to a shared privilege among them.

(d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of such other Party, which shall not be unreasonably withheld or delayed or as provided in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon such other Party requesting such consent.

 

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(e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, any such Party may waive a privilege in which any other Party or member of such Party’s Group has a shared privilege, without obtaining the consent of the other Parties; provided that such waiver of a shared privilege shall be effective only as to the use of Information with respect to such litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

(f) If a dispute arises between or among the Parties or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of any Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Parties, and shall not unreasonably withhold consent to any request for waiver by another Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by any Party or by any member of its Group of any subpoena, discovery or other request which arguably calls for the production or disclosure of Information subject to a shared privilege or as to which another Party has the sole right hereunder to assert a privilege, or if any Party obtains knowledge that any of its or any member of its Group’s current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged Information, such Party shall promptly notify the other Party or Parties of the existence of the request and shall provide the other Party or Parties a reasonable opportunity to review the Information and to assert any rights it or they may have under this Section 9.6 or otherwise to prevent the production or disclosure of such privileged Information.

(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of Trident and Fountain and Athens NA as set forth in Sections 9.5 and 9.6 to maintain the confidentiality of privileged Information and to assert and maintain all applicable privileges. To the extent applicable to each party, the access to Information being granted pursuant to Sections 7.3 , 8.6 , 9.1 and 9.2 hereof, the agreement to provide witnesses and individuals pursuant to Sections 7.3 , 8.6 and 9.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Sections 7.5 and 8.6 hereof, and the transfer of privileged Information between and among the Parties and their respective Subsidiaries pursuant to this Agreement or under the corresponding provisions of the Tax Sharing Agreement shall not be deemed a waiver of any privilege that has been or may be asserted pursuant to applicable law.

(i) Notwithstanding any provision to the contrary in this Section 9.6 , the Audit Management Party (as defined in the Tax Sharing Agreement) shall have the authority to disclose or not disclose, in its sole discretion, any and all privileged Information to (i) any Taxing Authority (as defined in the Tax Sharing Agreement) conducting a Tax Audit (as defined in the Tax Sharing Agreement) or (ii) to third parties in connection with the defense of a Tax Audit, including, expert witnesses, accountants and other advisors, potential witnesses and other parties whose assistance is deemed, in the sole discretion of the Audit Management Party, to be necessary or beneficial to representing the interests of the Parties hereunder.

 

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Section 9.7. Ownership of Information . Any Information owned by one Party or any of its Subsidiaries that is provided to a requesting Party pursuant to this Article IX shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

Section 9.8. Other Agreements . The rights and obligations granted under this Article IX are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement.

ARTICLE X

INSURANCE

Section 10.1. Policies and Rights Included Within Assets . The Fountain Assets shall include (i) any and all rights of an insured Party under each of the Fountain Shared Policies, subject to the terms of such Fountain Shared Policies and any limitations or obligations of Fountain contemplated by this Article X , specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses which occurred or are alleged to have occurred, in whole or in part, prior to the Fountain Distribution Date by either Party in or in connection with the conduct of the Fountain Business, regardless of whether any suit, claim, action or proceeding is brought before or after the Fountain Distribution Date or, to the extent any claim is made against Fountain or any of its Subsidiaries or the conduct of the Trident Retained Business, and which actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence or wrongful act under one or more of such Fountain Shared Policies; provided , however , that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such Fountain Shared Policies, or any of them, to Fountain, and (ii) the Fountain Policies.

Section 10.2. Claims Made Tail Policies . The claims made tail policies provided for in this Section 10.2 will provide coverage for any Claim arising from any Wrongful Act occurring, in whole or in part, prior to the earlier of the Athens NA Distribution Date and Fountain Distribution Date. For purposes of this Section 10.2 , “Claim” and “Wrongful Act” shall have the respective meanings given to such terms in the current Tyco International Ltd., D&O, Fiduciary and Employment Practices Liability Insurance Policies, as applicable.

(a) Trident shall purchase Directors and Officers Liability Insurance Policies having total limits of $275 million, consisting of $275 million of non-rescindable Side A coverage inclusive and $200 million of Side B coverage and having a policy period incepting on the Athens NA Distribution Date, the expiration date of the current Trident Directors and Officers liability insurance Policies or the Fountain Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the Athens NA Distribution Date and the Fountain Distribution Date (“ D&O Tail Policies ”). The premium for the D&O Tail Policies shall be pre-paid for the full six-year term of the D&O Tail Policies. Such D&O Tail Policies shall cover Trident, Fountain and Athens NA and the insured persons thereof and shall have material

 

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terms and conditions no less favorable than those contained in the Policies comprising the Trident Directors and Officers liability insurance program existing as of the earlier of the Athens NA Distribution Date or the Fountain Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors or omissions, post-dating the earlier of the Athens NA Distribution Date or the Fountain Distribution Date. Trident (i) shall provide Fountain with copies of the D&O Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to Fountain.

(b) Trident shall purchase Fiduciary Liability Insurance Policies having total limits of $50 million and having a policy period incepting on the Athens NA Distribution Date, the expiration date of the current Trident Directors and Officers liability insurance Policies or the Fountain Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the Athens NA Distribution Date and the Fountain Distribution Date (“ Fiduciary Tail Policies ”). The premium for the Fiduciary Tail Policies shall be pre-paid for the full six-year term of the Fiduciary Tail Policies. Such Fiduciary Tail Policies shall cover Trident, Fountain and Athens NA and the insured persons thereof and shall have material terms and conditions no less favorable than those contained in the Policies comprising the Trident fiduciary liability insurance program existing as of the earlier of the Athens NA Distribution Date or the Fountain Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the earlier of the Athens NA Distribution Date and the Fountain Distribution Date. Trident (i) shall provide Fountain with copies of the Fiduciary Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to Fountain.

(c) Trident shall purchase Employment Practices Liability Insurance Policies having total limits of $50 million of coverage and having a policy period incepting on the Athens NA Distribution Date, the expiration date of the current Trident Directors and Officers liability insurance Policies or the Fountain Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the Athens NA Distribution Date and the Fountain Distribution Date (“ EPL Tail Policies ”). The premium for the EPL Tail Policies shall be pre-paid for the full six-year term of the EPL Tail Policies. Such EPL Tail Policies shall cover Trident, Fountain and Athens NA and the insured persons thereof and shall have material terms and conditions no less favorable than those contained in the Policies comprising the Trident Employment Practices liability insurance program existing as of the earlier of the Athens NA Distribution Date and the Fountain Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the earlier of the Athens NA Distribution Date and the Fountain Distribution Date. Trident (i) shall provide Fountain with copies of the EPL Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to Fountain.

(d) To the extent that Trident is unable prior to the Fountain Distribution Date to obtain any of the policies as provided for in paragraphs (a), (b) and (c) of this Section 10.2 , then, with respect to suits or claims based on wrongful acts, errors or omissions on or before the earlier of the Athens NA Distribution Date and the Fountain Distribution Date, Trident shall use

 

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reasonable best efforts to secure alternative insurance arrangements on the standalone insurance policies for Fountain to provide benefits on terms and conditions (including policy limits) in favor of Fountain and the insured persons thereof no less favorable than the benefits (including policy limits) that were to be afforded by the policies described in paragraphs (a), (b) and (c) of this Section 10.2 . With respect to such alternative insurance arrangements, Trident and Fountain shall be responsible for their own costs under their applicable standalone insurance policies. Trident shall not under any circumstances purchase any such alternative coverage containing an exclusion for suits or claims based on wrongful acts, errors or omissions up to and including the earlier of the Athens NA Distribution Date and the Fountain Distribution Date to the extent such exclusion would preclude coverage for Fountain and/or the insured persons thereof, but would not preclude coverage for Trident and/or the insured persons thereof.

Section 10.3. Occurrence Based Policies .

(a) Notwithstanding anything herein to the contrary, the terms, conditions and procedures set forth in the various Shared Policies issued by White Mountain Insurance Company and Third Party Administrator Claims Service Instructions associated with such Shared Policies that are in effect as of the Fountain Distribution Date, which address, among other things, (i) how claims and suits under the Shared Policies will be administered, paid, accounted for, and the level of input each Party will have in claim settlements, (ii) access to Shared Policies claim data, (iii) Large Loss Notification to each Party for which Fountain shall bear full responsibility to notify Excess carriers of any such losses, (iv) dispute resolution and (v) Umbrella and Excess claims handling, shall be provided to Fountain and Patriot and are incorporated hereby by reference. The prior written consent of Patriot not to be unreasonably withheld, conditioned or delayed shall be required for the entry by Fountain into and any modifications or amendments to a Fountain Shared Policy, including the insurance Policy referenced in the immediately preceding sentence.

(b) With respect to all other occurrence based Trident Shared Policies, for suits or claims that are filed or made based upon occurrences that occurred or are alleged to have occurred in whole or in part prior to the Fountain Distribution Date, Trident and Fountain, shall be responsible for bearing the full amount of the deductible and/or any claims, costs and expenses that are not covered under such insurance policies including that portion of any premium adjustments, tax, assessment or similar regulatory surcharges, that relates to claims based on occurrences that predate the Fountain Distribution Date.

Section 10.4. Administration; Other Matters .

(a) Administration . Except as otherwise provided in Section 10.3 hereof, in any Schedule hereto or in any Ancillary Agreement, from and after the Effective Time, (i) Trident shall be responsible for (A) Insurance Administration of the Shared Policies, (B) Claims Administration under such Shared Policies with respect to Trident Retained Liabilities, and (C) Claims Administration under Shared Policies written by White Mountain Insurance Company with respect to Fountain Liabilities and (ii) Fountain shall be responsible for Claims Administration under such Shared Policies with respect to Fountain Liabilities (other than Fountain Liabilities covered under Shared Policies written by White Mountain Insurance Company for which Trident shall be responsible for Claims Administration); provided that if

 

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White Mountain Insurance Company tenders the underlying Insured Claim for such Fountain Liability to the excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any Shared Policy written by White Mountain Insurance Company to be exceeded, then Fountain shall be responsible for any such Claims Administration and Fountain shall administer the Claim in such instance only so long as (1) Trident has notified the excess insurance carrier as and to the extent required under the applicable Policy and (2) Trident provides Fountain with all information in its possession reasonably necessary for such Claims Administration); provided that the retention of such responsibilities by Trident is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Policies as contemplated by the terms of this Agreement; provided further that Trident’s retention of the administrative responsibilities for the Shared Policies shall not relieve the Party submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner or of such Party’s authority to settle any such Insured Claim within any period or amount permitted or required by the relevant Policy; provided further that Trident shall keep Patriot apprised of the status of Claims Administration pertaining to Fountain Liabilities covered by Shared Policies issued by White Mountain Insurance Company and shall promptly furnish Patriot with complete, un-redacted copies of all Shared Policies covering Fountain Liabilities, whether issued by White Mountain Insurance Company or other insurance companies. In connection with Claims Administration for Fountain Liabilities covered under Shared Policies, Trident shall provide any updated loss data, notices, communications, status reports or updates, in each case, in Trident’s possession relating to such Claims Administration as requested by Patriot or Fountain, but no less than on an annual basis. On any claim with Gross Total Incurred reserves greater than $1,000,000 (USD 1 million dollars), Trident shall keep Fountain and Patriot reasonably informed in the ongoing handling of that claim. In addition, Trident shall provide annual updates to Fountain of the condition of the Shared Policies covering Fountain Liabilities and written by White Mountain Insurance Company, including audited financials (excluding footnotes) and actuarial projections concerning the losses within White Mountain Insurance Company, as well as any additional information reasonably requested by Fountain subject to an appropriate confidentiality agreement reasonably agreed between Fountain and Trident. Further, Trident shall annually provide notice to Fountain of any claim or claims which may exceed the White Mountain Insurance Company retention and erode any Excess Liability limits available to Fountain. Trident may discharge its administrative responsibilities under this Section 10.4 by contracting for the provision of services by independent parties. Each of the applicable Parties shall pay any costs relating to defending its respective Insured Claims under Shared Policies to the extent such costs, including defense and out-of-pocket expenses, are not covered under such Policies. Each of the Parties shall be responsible for obtaining or reviewing the appropriateness of releases upon settlement of its respective Insured Claims under Shared Policies.

(b) Exceeding Policy Limits . Where Fountain Liabilities are specifically covered under a Shared Policy for occurrences, acts or events prior to the Fountain Distribution Date, then Fountain may claim coverage for Insured Claims under such Shared Policy as and to the extent that such insurance is available up to the full extent of the applicable limits of liability of such Shared Policy (and may receive any Insurance Proceeds with respect thereto as contemplated by Section 10.2 , Section 10.3 or Section 10.4(c) hereof), subject to the terms of this Section 10.4 . Except as set forth in this Section 10.4 , Trident and Fountain shall not be liable

 

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to one another for claims not reimbursed by insurers for any reason not within the control of Trident or Fountain, as the case may be, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of an insurance carrier, Shared Policy limitations or restrictions, any coverage disputes, any failure to timely claim by Trident, or Fountain or any defect in such claim or its processing. It is expressly understood that the foregoing shall not limit any Party’s liability to any other Party for indemnification pursuant to Article VIII .

(c) Allocation of Insurance Proceeds . Except as otherwise provided in Section 10.3 , Insurance Proceeds received with respect to suits, occurrences, claims, costs and expenses covered under the Shared Policies shall be paid to Trident with respect to Trident Retained Liabilities and to Fountain with respect to Fountain Liabilities. In the event that the aggregate limits on any Shared Policies are exhausted by the payment of Insured Claims to the Parties, each Party shall be responsible for its own costs, expenses and liabilities for which the corresponding insurance coverage under the Shared Policies has been exhausted. Each of the Parties agrees to use their respective reasonable best efforts to maximize available coverage under those Shared Policies applicable to it for the benefit of all Parties, and to take all reasonable best steps to recover from all other responsible parties (except the Parties) in respect of an Insured Claim to the extent coverage limits under a Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(d) Allocation of Aggregate Deductibles . In the event that both Parties have insured claims under any Shared Policy for which an aggregate deductible is payable, the Parties agree that the aggregate amount of the total deductible paid shall be borne by the Parties in the same proportion to which the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Shared Policy (their “ allocable share of the deductible ”), and any Party who has paid more than its allocable share of the deductible shall be entitled to receive from the other Party an appropriate amount such that each Party will only have to bear its allocable share of the deductible.

Section 10.5. Agreement for Waiver of Conflict and Shared Defense . In the event that Insured Claims of both of the Parties exist relating to the same occurrence, both Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this Article X shall be construed to limit or otherwise alter in any way the obligations of the Parties to this Agreement, including those created by this Agreement, by operation of Law or otherwise.

Section 10.6. Cooperation . The Parties agree to use their respective reasonable best efforts to cooperate with respect to the various insurance matters contemplated by this Agreement.

Section 10.7. Certain Matters Relating to Trident’s Organizational Documents . For a period of six (6) years from the Fountain Distribution Date, the Amended and Restated Articles of Association and Amended and Restated Organizational Regulations of Trident shall contain provisions no less favorable with respect to indemnification than are set forth in the Amended and Restated Articles of Association and Amended and Restated Organizational Regulations of Trident immediately after the Effective Time, which provisions shall not be

 

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amended, repealed or otherwise modified for a period of six (6) years from the Fountain Distribution Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of any member of the Trident Group or the Fountain Group, unless such modification shall be required by Law and then only to the minimum extent required by Law.

ARTICLE XI

MISCELLANEOUS

Section 11.1. Complete Agreement; Construction . This Agreement, including the Exhibits and Schedules, the Ancillary Agreements and the Merger Agreement, including any related annexes, schedules and exhibits, shall, together constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all prior negotiations, agreements, and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter, including, without limitation, the Separation and Distribution Agreement, by and among Tyco International Ltd., Tyco Flow Control International Ltd. and The ADT Corporation, dated as of March 27, 2012, as amended by Amendment No. 1, dated as of July 25, 2012. If there is a conflict between any provision of this Agreement and a provision of any Schedule hereto, the Schedule shall control unless specifically provided otherwise in this Agreement. If there is a conflict between any provision of this Agreement and a provision of any Ancillary Agreement or Continuing Arrangement or the Merger Agreement, such Ancillary Agreement or Continuing Arrangement or the Merger Agreement shall control; provided that with respect to any Conveyancing and Assumption Instrument, this Agreement shall control unless specifically stated otherwise in such Conveyancing and Assumption Instrument. Except as expressly set forth in this Agreement, any Ancillary Agreement or the Merger Agreement: (a) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by the Tax Sharing Agreement; and (b) for the avoidance of doubt, in the event of any conflict between this Agreement, any Ancillary Agreement or the Merger Agreement, on the one hand, and the Tax Sharing Agreement, on the other hand, with respect to such matters, the terms and conditions of the Tax Sharing Agreement shall control.

Section 11.2. Ancillary Agreements; Merger Agreement . Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements or the Merger Agreement.

Section 11.3. Counterparts . This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party shall re-execute original forms thereof and deliver them to the requesting Party. No Party shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile machine or other electronic means as a defense to the formation of a Contract and each such Party forever waives any such defense.

 

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Section 11.4. Survival of Agreements . Except as otherwise contemplated by this Agreement, any Ancillary Agreement or the Merger Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their terms.

Section 11.5. Expenses . Except as otherwise provided (i) in this Agreement, (ii) in any Ancillary Agreement or (iii) in the Merger Agreement, the Parties agree that all out-of-pocket fees and expenses incurred by the Parties, or to be incurred by the Parties and directly related to the Fountain Plan of Separation, the Merger or transactions contemplated hereby or by the Merger Agreement (including third party professional fees, fees and expenses incurred in connection with the execution and delivery of this Agreement and such other third party fees and expenses incurred on a non-recurring basis directly as result of the Fountain Plan of Separation) (collectively, “ Separation Expenses ”) shall (A) to the extent incurred and payable prior to the Fountain Distribution Date be paid by Trident and (B) to the extent any such Separation Expenses arise and are payable by any Party following the Fountain Distribution Date be paid by such Party.

Section 11.6. Notices . All notices, requests, permissions, waivers and 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 deemed to have been duly given (a) three Business Days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile; provided that the facsimile transmission is promptly confirmed and any facsimile transmission received after 5:00 p.m. Eastern time shall be deemed received at 9:00 a.m. Eastern time on the following Business Day, (c) when delivered, if delivered personally to the intended recipient and (d) one Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a Party at the following address for such Party:

To Trident:

Tyco International Ltd.

c/o Tyco International Management Company, LLC

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

To Athens NA:

The ADT Corporation

One Town Center Road

Boca Raton, Florida 33486

Attn: General Counsel

Facsimile: (609) 806-2128

 

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To Fountain prior to the Fountain Distribution Date:

Tyco Flow Control International Ltd.

c/o Tyco International Management Company, LLC

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

If to Fountain after the Fountain Distribution Date:

Pentair, Inc.

5500 Wayzata Boulevard, Suite 800

Golden Valley, Minnesota

Attn: Angela D. Lageson

Facsimile: (763) 656-5403

with copies to (which shall not constitute notice):

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attn: Faiza J. Saeed

         Thomas E. Dunn

Facsimile: (212) 474-3700

and to:

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

Attn: Benjamin F. Garmer, III

Facsimile: (414) 297-4900

or to such other address(es) as shall be furnished in writing by any such Party to the other Party in accordance with the provisions of this Section 11.6 . Any notice to Trident shall be deemed notice to all members of the Trident Group, any notice to Athens NA shall be deemed notice to all members of the Athens North American R/SB Group and any notice to Fountain shall be deemed notice to all members of the Fountain Group.

Section 11.7. Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group). Notwithstanding the foregoing, no waiver of any

 

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provision hereof or consent required or permitted to be given by Fountain under this Agreement or failure of Fountain to require strict performance by any other Party of any provision in this Agreement shall be permitted without the prior written consent of Patriot.

Section 11.8. Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties and otherwise in accordance with Section 5.19 of the Merger Agreement.

Section 11.9. Assignment . Except as otherwise provided for in this Agreement, this Agreement is not assignable by any Party without the prior written consent of the other Parties and Patriot, and any attempt to assign this Agreement without such consent shall be void and of no effect; provided that a Party may assign this Agreement in whole in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 11.10. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and each of their respective successors and permitted assigns.

Section 11.11. Certain Termination and Amendment Rights . Notwithstanding any provision hereof, this Agreement may be terminated at any time prior to the Fountain Distribution Date by the mutual consent of the Parties hereto, but only in the event that the Merger Agreement has been terminated pursuant to its terms.

Section 11.12. Payment Terms .

(a) Except as expressly provided to the contrary in this Agreement or any Ancillary Agreement, any amount to be paid or reimbursed by any Party (and/or a member of such Party’s Group), on the one hand, to any other Party or Parties (and/or a member of such Party’s or Parties’ Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within thirty (30) days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

(b) Except as expressly provided to the contrary in this Agreement or any Ancillary Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at the Default Interest Rate, calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

Section 11.13. No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to Article VIII ).

 

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Section 11.14. Subsidiaries . Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Fountain Distribution Date.

Section 11.15. Third Party Beneficiaries . Except (i) as provided in Article VIII relating to Indemnitees and for the release under Section 8.1 of any Person provided therein, (ii) as provided in Section 10.2 relating to insured persons and Section 10.7 relating to the directors, officers, employees, fiduciaries or agents provided therein, (iii) for Patriot, who is an intended third-party beneficiary of this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 11.16. Title and Headings . Headings of the Articles and Sections of this Agreement are for convenience of the Parties and Patriot only and shall be given no substantive or interpretive effect whatsoever. The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 11.17. Exhibits and Schedules . The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Exhibits or Schedules constitutes an admission of any liability or obligation of any member of the Fountain Group or Trident Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the Fountain Group or Trident Group or any of their respective Affiliates.

Section 11.18. Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

Section 11.19. Consent to Jurisdiction . Each of the Parties irrevocably and unconditionally agrees that any legal action or proceeding with respect to this Agreement or any Ancillary Agreement and the rights and obligations arising hereunder or thereunder, or for recognition and enforcement of any judgment in respect of this Agreement or any Ancillary Agreement and the rights and obligations arising hereunder or thereunder brought by the other Party hereto or its successors or assigns, shall be brought and determined exclusively in the United States District Court for the Southern District of New York, or, if United States federal jurisdiction is unavailable, in the Supreme Court of the State of New York, New York County. Each of the Parties hereby irrevocably submits and shall cause the members of its Group to submit with regard to any such action or proceeding for itself or for the members of its Group and in respect of its property or the property of the members of its Group, generally and

 

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unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not and shall cause the members of its Group not to bring any action relating to this Agreement or any of the transactions contemplated by this Agreement or any Ancillary Agreement in any court other than the aforesaid courts. Each of the Parties hereby irrevocably waives, and agrees not to assert, and shall cause the members of its Group to waive and not to assert by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement or any Ancillary Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve in accordance with this Section 11.19, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by the applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement or any Ancillary Agreement, or the subject matter hereof, may not be enforced in or by such courts.

Section 11.20. Specific Performance . The Parties understand and agree that (a) the covenants and agreements on each of their parts herein contained are uniquely related to the desire of the Parties and their respective Affiliates to consummate the Transactions, (b) the Transactions are a unique business opportunity at a unique time for each of Trident and Patriot and their respective Affiliates, (c) irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms, (d) although monetary damages may be available for the breach of such covenants and agreements such monetary damages are not intended to and do not adequately compensate for the harm that would result from a breach of this Agreement, would be an inadequate remedy therefor and shall not be construed to diminish or otherwise impair in any respect any party’s right to specific performance and (e) the right of specific performance is an integral part of the transactions contemplated by this Agreement and without that right none of the parties would have entered into this Agreement. It is accordingly agreed that, in addition to any other remedy that may be available to it, including monetary damages, each of the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or any of the Ancillary Agreements and to enforce specifically the terms and provisions of this Agreement, with any such remedy to be sought exclusively in the United States District Court for the Southern District of New York, or, if United States federal jurisdiction is unavailable, in the Supreme Court of the State of New York, New York County. Each of the Parties further agrees that no Party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 11.20 and each Party waives any objection to the imposition of such relief or any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

Section 11.21. Waiver of Jury Trial . EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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Section 11.22. Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 11.23. Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

Section 11.24. Interpretation . In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

Section 11.25. No Duplication; No Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances (including with respect to the rights, entitlements, obligations and recoveries that may arise out of one or more of the following Sections: Section 3.5 ; Section 7.3 ; Section 8.2 ; Section 8.3 ; Section 8.4 ; and Section 8.5 ).

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

TYCO INTERNATIONAL LTD.
By:  

/s/ John S. Jenkins

  John S. Jenkins, VP and Secretary
PENTAIR LTD.
By:  

/s/ John S. Jenkins

  John S. Jenkins, Director
THE ADT CORPORATION
By:  

/s/ N. David Bleisch

  N. David Bleisch
  Vice President

 

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Exhibit 2.2

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

TYCO INTERNATIONAL LTD.,

TYCO INTERNATIONAL FINANCE S.A.

THE ADT CORPORATION

and

ADT LLC

Dated as of September 26, 2012


TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS AND INTERPRETATION

     2   

Section 1.1.

  

General

     2   

Section 1.2.

  

References; Interpretation

     32   
ARTICLE II THE SEPARATION      32   

Section 2.1.

  

General

     32   

Section 2.2.

  

Transfer of Assets

     32   

Section 2.3.

  

Assumption and Satisfaction of Liabilities

     34   

Section 2.4.

  

Intercompany Accounts

     34   

Section 2.5.

  

Limitation of Liability

     35   

Section 2.6.

  

Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time

     36   

Section 2.7.

  

Conveyancing and Assumption Instruments

     38   

Section 2.8.

  

Further Assurances

     38   

Section 2.9.

  

Novation of Liabilities

     39   

Section 2.10.

  

Guarantees

     40   

Section 2.11.

  

Disclaimer of Representations and Warranties

     41   
ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS      41   

Section 3.1.

  

Organizational Documents

     41   

Section 3.2.

  

Directors

     41   

Section 3.3.

  

Resignations

     42   

Section 3.4.

  

Cash

     42   

Section 3.5.

  

Ancillary Agreements

     45   
ARTICLE IV THE DISTRIBUTION      45   

Section 4.1.

  

Stock Dividend to Tyco Shareholders

     45   

Section 4.2.

  

Fractional Shares

     45   

Section 4.3.

  

Actions in Connection with the Distribution

     46   

Section 4.5.

  

Conditions to Distribution

     47   
ARTICLE V CERTAIN COVENANTS      48   

Section 5.1.

  

Agreement Not To Compete; No Solicit; No Hire

     48   

Section 5.2.

  

Financial Statements and Accounting

     52   

Section 5.3.

  

Certain Securities

     54   

Section 5.4.

  

Removal of Tyco and ADT NA Designations

     54   

 

i


Section 5.5.

  

Administration of Specified Shared Expenses

     55   

Section 5.6.

  

Cooperation

     55   

Section 5.7.

  

FOL Database

     55   

ARTICLE VI EMPLOYEE MATTERS

     56   

Section 6.1.

  

Stock Options

     56   

Section 6.2.

  

Restricted Stock Units, Performance Share Units and Deferred Stock Units

     59   

Section 6.3.

  

Nonqualified Deferred Compensation Plans

     62   

Section 6.4.

  

Pension Plans

     63   

Section 6.5.

  

Retirement Savings Plans

     66   

Section 6.6.

  

Retiree Medical Benefits

     68   

Section 6.7.

  

Health, Welfare and Fringe Benefit Plans

     69   

Section 6.8.

  

Cooperation and Administrative Provisions

     73   

Section 6.9.

  

Approval of Plans; Terms of Participation by Employees in Plans

     76   

Section 6.10.

  

Tax Consequences

     77   

Section 6.11.

  

International Regulatory Compliance

     77   

Section 6.12.

  

Alternate Procedure

     77   

ARTICLE VII TYCO CONTINGENT ASSETS AND ASSUMED TYCO CONTINGENT LIABILITIES

     78   

Section 7.1.

  

Tyco Contingent Assets and Assumed Tyco Contingent Liabilities

     78   

Section 7.2.

  

Management of Assumed Tyco Contingent Assets and Assumed Tyco Contingent Liabilities

     79   

Section 7.3.

  

Access to Information; Certain Services; Expenses

     80   

Section 7.4.

  

Notice Relating to Tyco Contingent Assets and Assumed Tyco Contingent Liabilities; Disputes

     80   

Section 7.5.

  

Cooperation with Governmental Entity

     81   

Section 7.6.

  

Default

     81   

ARTICLE VIII INDEMNIFICATION

     82   

Section 8.1.

  

Release of Pre-Distribution Claims

     82   

Section 8.2.

  

Indemnification by Tyco

     83   

Section 8.3.

  

Indemnification by ADT NA

     84   

Section 8.4.

  

Procedures for Indemnification

     84   

Section 8.5.

  

Cooperation in Defense and Settlement

     86   

Section 8.6.

  

Indemnification Payments

     87   

Section 8.7.

  

Contribution

     87   

 

ii


Section 8.8.

  

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

     87   

Section 8.9.

  

Additional Matters; Survival of Indemnities

     88   

ARTICLE IX CONFIDENTIALITY; ACCESS TO INFORMATION

     88   

Section 9.1.

  

Provision of Corporate Records

     88   

Section 9.2.

  

Access to Information

     89   

Section 9.3.

  

Witness Services

     89   

Section 9.4.

  

Reimbursement; Other Matters

     90   

Section 9.5.

  

Confidentiality

     90   

Section 9.6.

  

Privileged Matters

     91   

Section 9.7.

  

Ownership of Information

     93   

Section 9.8.

  

Other Agreements

     93   

ARTICLE X DISPUTE RESOLUTION

     93   

Section 10.1.

  

Negotiation

     93   

Section 10.2.

  

Mediation

     94   

Section 10.3.

  

Treatment of Negotiations and Mediation

     94   

Section 10.4.

  

Continuity of Service and Performance

     94   

Section 11.1.

  

Policies and Rights Included Within Assets

     94   

Section 11.2.

  

Claims Made Tail Policies

     95   

Section 11.3.

  

Occurrence Based Policies

     97   

Section 11.4.

  

Administration; Other Matters

     97   

Section 11.5.

  

Agreement for Waiver of Conflict and Shared Defense

     98   

Section 11.6.

  

Cooperation

     99   

Section 11.7.

  

Certain Matters Relating to Tyco’s Organizational Documents

     99   

ARTICLE XII MISCELLANEOUS

     99   

Section 12.1.

  

Complete Agreement; Construction

     99   

Section 12.2.

  

Ancillary Agreements

     99   

Section 12.3.

  

Counterparts

     99   

Section 12.4.

  

Survival of Agreements

     100   

Section 12.5.

  

Expenses

     100   

Section 12.6.

  

Notices

     101   

Section 12.7.

  

Waivers and Consents

     101   

Section 12.8.

  

Amendments

     101   

Section 12.9.

  

Assignment

     101   

Section 12.10.

  

Successors and Assigns

     102   

 

iii


Section 12.11.

  

Certain Termination and Amendment Rights

     102   

Section 12.12.

  

Payment Terms

     102   

Section 12.13.

  

No Circumvention

     102   

Section 12.14.

  

Subsidiaries

     102   

Section 12.15.

  

Third Party Beneficiaries

     103   

Section 12.16.

  

Title and Headings

     103   

Section 12.17.

  

Exhibits and Schedules

     103   

Section 12.18.

  

Governing Law

     103   

Section 12.19.

  

Consent to Jurisdiction

     103   

Section 12.20.

  

Specific Performance

     103   

Section 12.21.

  

Waiver of Jury Trial

     104   

Section 12.22.

  

Severability

     104   

Section 12.23.

  

Primary Liability of TIFSA

     104   

Section 12.24.

  

Force Majeure

     104   

Section 12.25.

  

Interpretation

     104   

Section 12.26.

  

No Duplication; No Double Recovery

     105   

 

iv


List of Exhibits

Exhibit A    Form of Brand Agreement
Exhibit B    Form of Canadian Guard Service Agreement
Exhibit C    Form of US Guard Service Agreement
Exhibit D    Form of US Monitoring Agreement
Exhibit E    Form of Canadian Monitoring Agreement
Exhibit F    Form of Patent Agreement
Exhibit G    Form of Records Access Agreement
Exhibit H    Form of Sublease Agreement
Exhibit I    Form of Tax Sharing Agreement
Exhibit J    Form of Non-Income Tax Sharing Agreement

 

v


SEPARATION AND DISTRIBUTION AGREEMENT

SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), effective as of 10 a.m., Eastern Daylight Time, on September 26, 2012, by and among TYCO INTERNATIONAL LTD., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Tyco International ”), TYCO INTERNATIONAL FINANCE S.A., a corporation organized under the laws of Luxembourg (“ TIFSA ”, and, together with Tyco International, “ Tyco ”), THE ADT CORPORATION, a Delaware corporation (“ ADT NA ”) and, solely for purposes of Section 2.2(d), ADT LLC, a Delaware limited liability company.

W I T N E S S E T H:

WHEREAS, Tyco International, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including the ADT North American R/SB Business (as defined herein);

WHEREAS, the Board of Directors of Tyco International (the “ Board ”) has determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders to separate from Tyco the ADT North American R/SB Business (the “ ADT NA Separation ”), which shall be owned and operated and conducted, directly or indirectly, by ADT NA and after which the Tyco Retained Business shall be owned and conducted, directly or indirectly, by Tyco International;

WHEREAS, in order to effect the ADT NA Separation, the Board has determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders (i) to enter into a series of transactions whereby ADT NA and/or one or more members of the ADT North American R/SB Group will, collectively, own all of the ADT North American R/SB Assets and assume (or retain) all of the ADT North American R/SB Liabilities and (ii) for Tyco International to distribute to the holders of Tyco Common Stock on a pro rata basis (without consideration being paid by such stockholders) all of the outstanding shares of common stock, par value $0.01 per share, of ADT (the “ ADT NA Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ ADT NA Plan of Separation ”);

WHEREAS, each of Tyco and ADT NA has determined that it is necessary and desirable, on or prior to the Effective Time (as defined herein), (i) to allocate and transfer to the applicable Party or its Subsidiaries those Assets, and to cause the assumption by the applicable Party or its Subsidiaries of those Liabilities, in respect of the activities of the applicable Businesses of such entities and (ii) to allocate, transfer and/or assume, as applicable, to and/or by the applicable Party or its Subsidiaries those Assets and Liabilities in respect of other current and former businesses and activities of Tyco and its current and former Subsidiaries;

WHEREAS, in addition to the above, the Board had previously determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders to (i) separate from Tyco the Flow Control Business (the “ Flow Control Separation ”), which shall be owned and conducted, directly or indirectly, by Pentair Ltd. (formerly known as Tyco Flow Control International Ltd., “ Flow Control ”) pursuant to the Separation and Distribution


Agreement, by and among Tyco International, Flow Control and (for certain specified sections) ADT NA, dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Flow Control Agreement ”) and (ii) to combine the Flow Control Business with Pentair, Inc., a Minnesota corporation (“ Pentair ”), pursuant to the Merger Agreement, dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Merger Agreement ”), among Tyco International, Flow Control, Panthro Acquisition Co., a Delaware corporation, Panthro Merger Sub, Inc., a Minnesota corporation, and Pentair;

WHEREAS, the Flow Control Agreement governs the allocation of certain obligations among Tyco International, ADT NA and Flow Control following the Flow Control Separation;

WHEREAS, it is the intention of the Parties that the various contributions of Assets by certain Subsidiaries of Tyco International to, and assumptions of Liabilities by, ADT NA, together with the corresponding distributions of the ADT NA Common Stock, qualify as reorganizations within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”) and that this Agreement is, and is hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g);

WHEREAS, it is the intention of the Parties that the distribution of the ADT NA Common Stock to the stockholders of Tyco International will qualify as tax-free under Section 355(a) of the Code to such stockholders, and as tax-free to Tyco International under Section 355(c) of the Code; and

WHEREAS, the Parties desire to set forth the principal arrangements among them regarding the foregoing transactions (to the extent not otherwise addressed in the Flow Control Agreement) and to make certain covenants and agreements specified herein in connection therewith and to prescribe certain conditions relating thereto.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. General .

As used in this Agreement, the following terms shall have the following meanings:

(1) “ Accountant ” shall have the meaning set forth in Section 3.4(d) .

(2) “ Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, case, litigation, proceeding or investigation (whether civil, criminal, administrative or investigative) by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal.

 

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(3) “ Adjusted ADT NA Exercise Price ” shall have the meaning set forth in Section 6.1(a)(iii) .

(4) “ Adjusted Tyco Exercise Price ” shall have the meaning set forth in Section 6.1(b)(iii) .

(5) “ ADT Competitive Activity ” means (A) the designing, selling, leasing, installing, servicing, repairing, monitoring and maintenance of fire detection, fire suppression, retail store performance and electronic article surveillance (including acousto magnetic and radio frequency identification tags and labels) products, systems and services for commercial, industrial, retail, institutional and governmental customers (for the avoidance of doubt, excluding the sale, leasing, installing, servicing, repairing, monitoring and maintenance of fire detection products and RIS Products to Small Governmental Facility, Small Business and residential customers to the extent such customers are not described in (z) of clause (C) immediately below), (B) designing, manufacturing and selling fire protection, security and life safety products or systems, including fire detection and suppression, intrusion security, retail store performance, electronic article surveillance (including acousto magnetic and radio frequency identification tags and labels), access control, video management and breathing apparatus products or systems, and products or systems for remote interactive services that allow customers to remotely monitor and manage the environments in their premises (such products or systems for remote interactive services, “ RIS Products ”), for commercial, industrial, retail, institutional, governmental and residential customers (for the avoidance of doubt, other than the sale, rental, lease, installation (including associated design), service, repair, monitoring or maintenance of electronic security products or systems, fire detection products, RIS Products, access control products or systems or video management products or systems to residential, Small Business or Small Governmental Facility customers, in each case, to the extent such customers are not described in (z) of clause (C) immediately below) and (C) the selling, leasing, installing, servicing, repairing, monitoring and maintenance of any electronic security products or systems, including intrusion, retail store performance, electronic article surveillance (including acousto magnetic and radio frequency identification tags and labels), access control, video management, fire detection and suppression, remote interactive service, carbon dioxide detection, and medical emergency products or systems, to (w) any state, provincial or local governmental facility with a premises of 7,500 square feet or greater, (x) the federal government or any agency, branch or department thereof, (y) any Person for its business enterprise that is not a Small Business or (z) any Person for its business that is a Small Business or for a Small Governmental Facility where the system that has been or would be procured by such Small Business or Small Governmental Facility, as applicable, would either (1) include any fire protection system other than “spot detection”, as determined based upon the Laws of the applicable jurisdiction in which any such location is situated or (2) be required to be a system certificated under the standards of Underwriters Laboratories, Inc. (UL) (or any successor organization providing similar functions) (or Underwriters Laboratories of Canada (ULC), if located in Canada), other than UL CPVX (Central Station) or UL CVSG (Mercantile), in each case of clauses (A), (B) and (C) above, as conducted by the Tyco Group as of immediately prior to the ADT NA Distribution Date.

 

3


(6) “ ADT NA ” shall have the meaning set forth in the preamble.

(7) “ ADT NA Balance Sheet ” shall mean the unaudited combined balance sheet of the ADT North American R/SB Group prepared to give effect to the transactions contemplated hereby, as of August 31, 2012; provided , that to the extent any Assets or Liabilities are Transferred by any Party or any member of its Group to ADT NA or any member of the ADT North American R/SB Group or vice versa solely in connection with the ADT NA Plan of Separation and prior to the ADT NA Distribution Date, such assets and/or liabilities shall be deemed to be included or excluded from the ADT NA Balance Sheet, as the case may be.

(8) “ ADT NA Cash Allocation ” shall have the meaning set forth in Section 3.4(f) .

(9) “ ADT NA Common Stock ” shall have the meaning set forth in the recitals hereto.

(10) “ ADT NA Distribution ” shall mean the distribution on the ADT NA Distribution Date to holders of record of shares of Tyco Common Stock as of the ADT NA Distribution Record Date of the ADT NA Common Stock owned by Tyco International as set forth in Section 4.1 .

(11) “ ADT NA Distribution Date ” shall mean the date on which Tyco International distributes all of the issued and outstanding shares of ADT NA Common Stock to the holders of Tyco Common Stock.

(12) “ ADT NA Distribution Record Date ” shall mean such date as may be determined by the Board as the record date for the ADT NA Distribution.

(13) “ ADT NA Form 10 ” shall mean the registration statement on Form 10 filed by ADT NA with the Commission in connection with the ADT NA Distribution.

(14) “ ADT NA Information Statement ” shall mean the Information Statement attached as an exhibit to the ADT NA Form 10 sent to the holders of shares of Tyco Common Stock in connection with the ADT NA Distribution, including any amendment or supplement thereto.

(15) “ ADT NA Plan of Separation ” shall have the meaning set forth in the preamble.

(16) “ ADT NA Separation ” shall have the meaning set forth in the recitals.

(17) “ ADT NA Target Cash Balance ” shall have the meaning set forth in Section 3.4(a) .

 

4


(18) “ ADT North American R/SB Assets ” shall mean:

(i) the ownership interests in those Business Entities that are members of the ADT North American R/SB Group;

(ii) all ADT North American R/SB Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any ADT North American R/SB Asset or the ADT North American R/SB Business;

(iii) any and all Assets (other than cash subject to the provisions of Section 3.4 ) reflected on the ADT NA Balance Sheet or the accounting records that support or would support such balance sheet and any Assets acquired by or for ADT NA or any member of the ADT North American R/SB Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to Article XI, any and all rights of any member of the ADT North American R/SB Group under any Policies, including any rights thereunder arising after the ADT NA Distribution Date in respect of any Policies that are occurrence policies;

(v) any and all Assets owned or held immediately prior to the Effective Time by Tyco or any of its Subsidiaries that primarily relate to or are primarily used in the ADT North American R/SB Business. The intention of this clause (v) is only to rectify any inadvertent omission of Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as an ADT North American R/SB Asset. No Asset shall be deemed an ADT North American R/SB Asset solely as a result of this clause (v) unless a claim with respect thereto is made by ADT NA within the applicable time period(s) established by Section 2.6(d) ;

(vi) the Assets set forth on Schedule 1.1(18)(vi) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or that are to be Transferred to ADT NA or any other member of the ADT North American R/SB Group;

(vii) any and all furnishings and office equipment located at a physical site to the extent the ownership or leasehold interest with respect to such physical site is being Transferred to or retained by ADT NA; provided that personal computers shall be Transferred to ADT NA if, following the Effective Time, the ADT North American R/SB Group employs the applicable employee who, prior to the Effective Time, used such personal computer; and

(viii) the Applicable ADT NA Percentage of any Tyco Contingent Asset.

Notwithstanding the foregoing, the ADT North American R/SB Assets shall not include any Assets to the extent they are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the Tyco Group (including for these purposes, the Flow Control Group).

 

5


In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Tyco Retained Assets”, for purposes of determining what is and is not an ADT North American R/SB Asset: (1) the explicit inclusion of an item on a Schedule referred to in this definition (or on any applicable Schedule of any Ancillary Agreement) shall take priority over any textual provision of this Agreement that would otherwise operate to exclude such Asset from the definition of “ADT North American R/SB Assets” and (2) Assets referred to in clause (iii) of this definition shall take priority over Assets otherwise referred to in clause (v) of this definition and over clause (v) of Section 1.1(194) .

(19) “ ADT North American R/SB Business ” shall mean (i) the business and operations of the residential and Small Business portions of the Tyco Security Solutions segment of Tyco operating in Canada, the United States, Puerto Rico and the U.S. Virgin Islands as described in the ADT NA Form 10, (ii) any other business conducted primarily through the use of the ADT North American R/SB Assets prior to the Effective Time and (iii) the businesses and operations of Business Entities acquired or established by or for ADT NA or any of its Subsidiaries after the date of this Agreement.

(20) “ ADT North American R/SB Contracts ” shall mean the following Contracts (or parts thereof) to which Tyco or any of its Subsidiaries is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, except for any such Contract (or part thereof) that is expressly contemplated to be Transferred to, or to remain with, a member of the Tyco Group, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the ADT North American R/SB Group;

(ii) any Contract that primarily relates to the ADT North American R/SB Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the ADT NA Balance Sheet;

(iv) any Contract (or part thereof), that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the ADT North American R/SB Group;

(v) any Contract set forth on Schedule 1.1(20)(v) ; and

(vi) to the extent the same is given with respect to, or in favor of, any member of the ADT North American R/SB Group, any guarantee, indemnity, representation or warranty.

(21) “ ADT North American R/SB Deferred Compensation Liabilities ” shall have the meaning set forth in Section 6.3(a)(i) .

 

6


(22) “ ADT North American R/SB Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other approved leaves) who immediately following the ADT NA Distribution Date is employed by ADT NA or any member of the ADT North American R/SB Group. ADT North American R/SB Employee shall also include any employee of an entity in the ADT North American R/SB Group who, as of the ADT NA Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

(23) “ ADT North American R/SB Group ” shall mean (i) ADT NA and (ii) each Person that is a direct or indirect Subsidiary of ADT NA immediately after the Effective Time, and each Person that becomes a Subsidiary of ADT NA after the Effective Time, which shall include those entities identified as such on Schedule 1.1(23) .

(24) “ ADT North American R/SB Indemnitees ” shall mean each member of the ADT North American R/SB Group and their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(25) “ ADT North American R/SB Liabilities ” shall mean:

(i) any and all Liabilities that are (a) expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) to be Assumed by any member of the ADT North American R/SB Group, (b) expressly Assumed by any member of the ADT North American R/SB Group under this Agreement or any Ancillary Agreement or (c) set forth on Schedule 1.1(25)(i) ;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(a) the operation or conduct of the ADT North American R/SB Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(b) the operation or conduct of any business conducted by any member of the ADT North American R/SB Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(c) any ADT North American R/SB Assets, whether arising before, on or after the Effective Time;

(iii) any Liabilities (x) to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and

 

7


primarily owned or managed by or primarily associated with any member of the ADT North American R/SB Group or the ADT North American R/SB Business or (B) set forth on Schedule 1.1(25)(iii)(x) or (y) to the extent arising from any of the Contracts set forth in Schedule 1.1(25)(iii)(y) ;

(iv) the Applicable ADT NA Percentage of any Assumed Tyco Contingent Liability;

(v) any Liabilities relating to any ADT North American R/SB Employee or Former ADT North American R/SB Employee in respect of the period prior to, on or after the Effective Time; provided that to the extent it cannot be determined whether a former employee who terminated employment with all members of the Tyco controlled group of corporations before the ADT NA Distribution Date was a Former ADT North American R/SB Employee in respect of the period prior to the Effective Time, only the Applicable ADT NA Percentage of any Liabilities relating to such employees shall be deemed ADT North American R/SB Liabilities;

(vi) any Liabilities relating to, arising out of or resulting from (x) any Indebtedness (including debt securities and asset-backed debt) of any member of the ADT North American R/SB Group or Indebtedness (regardless of the issuer of such Indebtedness) exclusively relating to the ADT North American R/SB Business, (y) any Indebtedness (regardless of the issuer of such Indebtedness) secured exclusively by any of the ADT North American R/SB Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such Indebtedness, in its capacity as such) or set forth on Schedule 1.1(25)(vi) ;

(vii) Specified Shared Expenses to the extent provided in Section 5.5 ; and

(viii) all Liabilities reflected as liabilities or obligations on the ADT NA Balance Sheet or the accounting records supporting such balance sheet, and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the ADT NA Balance Sheet.

Notwithstanding anything to the contrary herein, the ADT North American R/SB Liabilities shall not include:

(x) any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be retained or Assumed by any member of the Tyco Group (including for these purposes, the Flow Control Group);

(y) any Contracts expressly Assumed or expressly contemplated to be assumed by any member of the Tyco Group under this Agreement or any Ancillary Agreement; and

 

8


(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “Tyco Retained Liabilities”, for the purpose of determining what is and is not an ADT North American R/SB Liability: (1) the explicit inclusion of an item on a Schedule referred to in this definition or on any applicable Schedule of any Ancillary Agreement shall take priority over any textual provision of this Agreement that would otherwise operate to exclude such Liability from the definition of “ADT North American R/SB Liability” and (2) Liabilities referred to in clause (viii) of this definition shall take priority over Liabilities otherwise referred to in clause (ii) of this Section and clause (ii) referred to in Section 1.1(197) .

(26) “ ADT North American R/SB Master Trust ” shall have the meaning set forth in Section 6.4(a)(ii)(A) .

(27) “ ADT North American R/SB Nonqualified Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans listed in Schedule 6.3(a) and any plans established prior to the ADT NA Distribution Date the purposes of which are to assume the ADT North American R/SB Deferred Compensation Liabilities in accordance with Section 6.3(a) .

(28) “ ADT North American R/SB Option ” shall have the meaning set forth in Section 6.1(a)(i) .

(29) “ ADT North American R/SB Pension Plans ” shall have the meaning set forth in Section 6.4(a)(i) .

(30) “ ADT North American R/SB Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements established or assumed by the ADT North American R/SB Group under this Agreement for the benefit of ADT North American R/SB Employees and, where applicable, Former ADT North American R/SB Employees.

(31) “ ADT North American R/SB Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Tyco or any Subsidiary of Tyco, which relate exclusively to the ADT North American R/SB Business and which Policies are either maintained by ADT NA or a member of the ADT North American R/SB Group or assignable to ADT NA or a member of the ADT North American R/SB Group.

(32) “ ADT North American R/SB Retiree Medical Plans ” shall have the meaning set forth in Section 6.6 .

(33) “ ADT North American R/SB RSIP ” shall have the meaning set forth in Section 6.5(a)(i) .

 

9


(34) “ ADT North American R/SB Savings Plans ” shall mean the ADT North American R/SB RSIP and any defined contribution retirement plans listed in Schedule 6.5(a) .

(35) “ ADT North American R/SB Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Tyco or any Subsidiary of Tyco which relate to the ADT North American R/SB Business, other than ADT North American R/SB Policies.

(36) “ ADT North American R/SB US Pension Plans ” shall have the meaning set forth in Section 6.4(a)(ii) .

(37) “ Affiliate ” shall mean, when used with respect to a specified Person, a 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 purposes of this definition, “control”, 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 or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common.

(38) “ Agreement Disputes ” shall have the meaning set forth in Section 10.1 .

(39) [Reserved]

(40) “ Allocable share of the deductible ” shall have the meaning set forth in Section 11.4(d) .

(41) “ Ancillary Agreements ” shall mean all of the written Contracts, instruments, assignments, licenses, guarantees, indemnities or other arrangements (other than this Agreement) entered into in connection with the transactions contemplated hereby, including (i) the Conveyancing and Assumption Instruments, (ii) the Tax Sharing Agreement, (iii) the Brand Agreement, (iv) the Monitoring Agreements, (v) the Patent Agreement, (vi) the Transition Services Agreements, (vii) Master Supply Agreement, (viii) Guard Service Agreements, (ix) Sublease Agreement, (x) the Records Access Agreement and (xi) the Non-Income Tax Sharing Agreement among Tyco International, TIFSA and ADT NA, substantially in the form attached hereto as Exhibit J .

(42) “ Applicable ADT NA Percentage ” shall mean 34.375% for all matters other than for those specified in Schedule 1.1(47) for which a different percentage is specified, in which case, such specified percentage.

(43) “ Applicable Percentage ” shall mean (i) as to Tyco, the Applicable Tyco Percentage and (ii) as to ADT NA, the Applicable ADT NA Percentage.

 

10


(44) “ Applicable Tyco Percentage ” shall mean 65.625% for all matters other than for those specified in Schedule 1.1(47) for which a different percentage is specified, in which case, such specified percentage.

(45) “ Assets ” shall mean assets, properties, claims and rights (including goodwill), 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 Records or financial statements of any Person, including the following:

(i) all accounting and other legal and business books, records, ledgers and files whether printed, electronic or written;

(ii) all apparatuses, computer hardware and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks, aircraft and other transportation equipment, special and general tools, test devices, molds, tooling, dies, prototypes and models and other tangible personal property;

(iii) all inventories of products, goods, materials, parts, raw materials and supplies;

(iv) all interests in and rights with respect to real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(vi) all licenses, Contracts, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other Contracts or commitments;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written (including in electronic form) technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all Intellectual Property;

(x) all Software;

 

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(xi) all Information;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;

(xiii) all rights under Contracts, all claims or rights against any Person, causes in action or similar rights, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations which have been issued by any Governmental Entity;

(xvi) all cash or cash equivalents, bank accounts, lock boxes and other third-party deposit arrangements; and

(xvii) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar Contracts or arrangements.

(46) “ Assume ” shall have the meaning set forth in Section 2.3 ; and the terms “ Assumed ” and “ Assumption ” shall have their correlative meanings.

(47) “ Assumed Tyco Contingent Liabilities ” shall mean any of the Liabilities set forth on Schedule 1.1(47) .

(48) “ Board ” shall have the meaning set forth in the preamble.

(49) “ Brand Agreement ” shall mean the Trademark Agreement among Tyco International, ADT NA, ADT Holdings, Inc. and ADT Services GmbH, substantially in the form attached hereto as Exhibit A (with such changes thereto as mutually agreed between the parties thereto).

(50) “ Business ” shall mean the Tyco Retained Business or the ADT North American R/SB Business, as applicable.

(51) “ Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York or Schaffhausen, Switzerland.

(52) “ Business Entity ” shall mean any corporation, partnership, limited liability company, joint venture or other entity which may legally hold title to Assets.

(53) “ Cash Flow Detail Review Period ” shall have the meaning set forth in Section 3.4(c) .

 

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(54) “ Change of Control ” means the occurrence of any of the following:

(1) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person (other than ADT NA or Tyco International, as applicable, or any member of its respective Group) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of ADT NA’s or Tyco International’s, as applicable, outstanding voting stock or other voting stock into which ADT NA’s or Tyco International’s, as applicable, voting stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of securities; provided , however , that a person shall not be deemed beneficial owner of, or to own beneficially any securities, (A) tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person’s affiliates until such tendered securities are accepted for purchase or exchange thereunder or (B) if such beneficial ownership (i) arises solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to the applicable rules and regulations under the Exchange Act and (ii) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act;

(2) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of ADT NA’s or Tyco International’s, as applicable, assets and the assets of the members of its respective Group, taken as a whole, to one or more persons (other than to other members of its Group); provided , however , that none of the circumstances in this clause (2) shall be a Change of Control if the persons that beneficially own the ADT NA’s or Tyco International’s voting stock immediately prior to the transaction own, directly or indirectly, shares with a majority of the total voting power of all of the outstanding voting stock of the surviving or transferee person immediately after the transaction; or

(3) ADT NA or Tyco International, as applicable, consolidates with, or merges with or into, any person or any such person consolidates with, or merges with or into, ADT NA or Tyco International, as applicable, in either case, pursuant to a transaction in which any of such Party’s outstanding voting stock or the voting stock of such other person is converted into or exchanged for cash, securities or other property, other than pursuant to a transaction in which shares of such Party’s voting stock outstanding immediately prior to the transaction constitute, or are converted into or exchanged for, a majority of the voting stock of the surviving person immediately after giving effect to such transaction.

Notwithstanding the foregoing, a transaction shall not be deemed to involve a Change of Control if (a) the applicable Party becomes a direct or indirect wholly-owned subsidiary of a holding company ( i.e. , a parent company) and (b)(1) the direct or indirect holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of such Party’s voting stock immediately prior to that transaction or (2) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the voting stock of such holding company; provided that any series of related transactions shall be treated as a single transaction.

 

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(55) “ Claims Administration ” shall mean the processing of claims made under the Shared Policies, including the reporting of losses or claims to insurance carriers, management and defense of claims and providing for appropriate releases upon settlement of claims.

(56) “ Closing Tyco Stock Price ” shall have the meaning set forth in Section 6.1(a)(ii) .

(57) “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(58) “ Code ” shall have the meaning set forth in the preamble.

(59) “ Collocation Facility ” means any location that is not otherwise separated by walls and a locked means of ingress and egress where sales personnel of members of each of the Tyco Group and the ADT North American R/SB Group are employed.

(60) “ Commission ” shall mean the United States Securities and Exchange Commission.

(61) “ Competing Person ” shall have the meaning set forth in Section 5.1(a) .

(62) “ Confidential Information ” shall mean all non-public, confidential or proprietary Information concerning a Party and/or its Subsidiaries (including for these purposes with respect to Tyco, each member of the Flow Control Group) or their past, current or future activities, businesses or operations (including, with respect to the ADT North American R/SB Group, any Information solely relating to the ADT North American R/SB Business or, with respect to the Tyco Group, any Information solely relating to the Tyco Retained Business), or that was provided to a Party by a third party in confidence, except for any Information that (i) is publicly available through no fault of the receiving Party or its Subsidiaries, (ii) is lawfully acquired by such Party or its Subsidiaries from other sources, (iii) is independently developed by the receiving Party, (iv) is necessary for a Party to enforce its rights under this Agreement or an Ancillary Agreement or (v) is required to be disclosed pursuant to applicable Law (including in connection with financial statements or Tax Returns), stock exchange rule, subpoena or legal process, provided that the receiving Party promptly notifies the disclosing Party of any such requirement, discloses no more Information than is so required and cooperates at the disclosing Party’s expense in any attempt to obtain a protective order or similar treatment.

(63) “ Consents ” shall mean any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Entity.

(64) “ Continuing Arrangements ” shall mean those arrangements set forth on Schedule 1.1(64) and such other commercial arrangements among the Parties that are intended to survive and continue following the Effective Time; provided , however , that for the

 

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avoidance of doubt, Continuing Arrangements shall not apply to any of the following Contracts, arrangements, course of dealings or understandings (or to any of the provisions thereof) unless expressly set forth on Schedule 1.1(64) :

(i) any agreements, arrangements, commitments or understandings to which any Person other than the Parties and their respective Groups is a party thereto (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such Contracts constitute ADT North American R/SB Assets or ADT North American R/SB Liabilities or Tyco Retained Assets or Tyco Retained Liabilities, such Contracts shall be assigned or retained pursuant to Article II); and

(ii) any agreements, arrangements, commitments or understandings to which any non-wholly-owned Subsidiary of Tyco International or ADT NA, as the case may be, is a Party.

(65) “ Contract ” shall mean any agreement, contract, subcontract, obligation, binding understanding, note, indenture, instrument, option, lease, promise, arrangement, release, warranty, license, sublicense, insurance policy, benefit plan, purchase order or legally binding commitment or undertaking of any nature (whether written or oral and whether express or implied).

(66) “ Conveyancing and Assumption Instruments ” shall mean, collectively, the various Contracts and other documents heretofore entered into and to be entered into to effect the Transfer of Assets and the Assumption of Liabilities in the manner contemplated by this Agreement and the ADT NA Plan of Separation, or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement in such form or forms as Tyco International and ADT NA agree.

(67) “ Current Customer ” means, at any time, a customer of or location serviced by the Tyco Group or ADT North American R/SB Group, respectively, as of such time.

(68) “ Customer Non-Solicit Period ” shall have the meaning set forth in Section 5.1(b) .

(69) “ D&O Tail Policies ” shall have the meaning set forth in Section 11.2(a) .

(70) “ Default Interest Rate ” shall mean a rate of LIBOR plus 500 basis points calculated on the basis of a year of three hundred sixty (360) days.

(71) “ Deferred Stock Unit ” shall mean a unit granted by Tyco International pursuant to one of the Tyco Equity Plans representing a general unsecured promise by Tyco International to deliver a share of Tyco Common Stock.

(72) “ Device Support ” means the remote maintenance and/or support of a networked device, such as pushing updates or upgrades of software or firmware, or tracking the functioning, age, health or connectivity of the networked device.

 

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(73) “ Disability Plan ” (i) when immediately preceded by “Tyco,” shall mean any short-term disability program and long-term disability program sponsored by Tyco International and (ii) when immediately preceded by “ADT NA,” shall mean the short-term disability program and long-term disability program to be established by ADT NA under Section 6.7(d) .

(74) “ Disclosure Documents ” shall mean any registration statement (including any registration statement on Form 10) and any proxy statement filed with the Commission by or on behalf of any Party or any of its controlled Affiliates, and also includes any information statement, prospectus, offering memorandum, offering circular (including franchise offering circular or any similar disclosure statement) or similar disclosure document, whether or not filed with the Commission or any other Governmental Entity, which offers for sale or registers the Transfer or distribution of any security of such Party or any of its controlled Affiliates.

(75) “ Dispute Notice ” shall have the meaning set forth in Section 10.1 .

(76) “ Disputed Item ” shall have the meaning set forth in Section 3.4(d) .

(77) “ Distribution Agent ” shall mean the distribution agent selected by Tyco International in connection with the ADT NA Separation.

(78) “ DOJ ” means the United States Department of Justice.

(79) “ Effective Time ” shall mean 12:01 a.m., Eastern Daylight Time, on the ADT NA Distribution Date.

(80) “ EPL Tail Policies ” shall have the meaning set forth in Section 11.2(c) .

(81) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

(82) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

(83) “ Fiduciary Tail Policies ” shall have the meaning set forth in Section 11.2(b) .

(84) “ Flow Control ” shall have the meaning set forth in the preamble.

(85) “ Flow Control Agreement ” shall have the meaning set forth in the recitals.

(86) “ Flow Control Business ” shall mean the business and operations of the Flow Control segment of Tyco International as each is described in the Flow Control Form 10 and (ii) any businesses or operations acquired or established by or for Flow Control or any of its Subsidiaries after the date of the Flow Control Agreement.

 

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(87) “ Flow Control Common Stock ” shall mean the common stock, par value CHF 0.50 per share, of Flow Control.

(88) “ Flow Control Distribution ” shall mean the distribution on the Flow Control Distribution Date to holders of record of shares of Tyco Common Stock as of the Flow Control Distribution Record Date of the Flow Control Common Stock owned by Tyco International pursuant to the Flow Control Agreement.

(89) “ Flow Control Distribution Date ” shall have the meaning set forth in the Flow Control Agreement.

(90) “ Flow Control Distribution Record Date ” shall mean such date as may be determined by the Board as the record date for the Flow Control Distribution.

(91) “ Flow Control Form 10 ” shall have the meaning set forth in the Flow Control Agreement.

(92) “ Flow Control Group ” shall have the meaning set forth in the Flow Control Agreement.

(93) “ Flow Control Indemnitees ” shall mean each member of the Flow Control Group (including Pentair and its Subsidiaries from and after the Closing) and their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(94) “ Force Majeure ” shall mean, with respect to a Party, an event beyond the control of such Party (or any Person acting on its behalf), which by its nature could not have been foreseen by such Party (or such Person), or, if it could have been foreseen, was unavoidable, and includes, without limitation, acts of God, storms, floods, riots, labor unrest, pandemics, nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources or distribution facilities. Notwithstanding the foregoing, the receipt by a Party of a hostile takeover offer, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure.

(95) “ Former ADT North American R/SB Employee ” shall mean any former employee who terminated employment with all members of the Tyco controlled group of corporations on or before the ADT NA Distribution Date and whose duties primarily related to the ADT North American R/SB Business which shall be deemed to include those individuals identified on Schedule 1.1(95) .

(96) “ Former Tyco Employee ” shall mean any former employee who terminated employment with all members of the Tyco controlled group of corporations on or before the ADT NA Distribution Date and who is either (x) identified on Schedule 1.1(96)(I) or

 

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(y) not a Former ADT North American R/SB Employee; provided , that , notwithstanding any other provision of this Agreement and solely for purposes of Sections 6.1 and 6.2 , any person listed on Schedule 1.1(96)(II) shall be treated as a Former Tyco Employee regardless of the actual date of termination of employment.

(97) “ Free Cash Flow ” shall mean free cash flow determined on a basis consistent with the principles and methodologies applied in the Tyco International January 2012 Management Report as prepared by the Financial Planning & Analysis Department of Tyco.

(98) “ GAAP ” means the generally accepted accounting principles in the United States.

(99) “ Governmental Approvals ” shall mean any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

(100) “ Governmental Entity ” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof.

(101) “ Group ” shall mean (i) with respect to Tyco, the Tyco Group and the Flow Control Group and (ii) with respect to ADT NA, the ADT North American R/SB Group.

(102) “ Group Insurance Plans ” when immediately preceded by “Tyco,” shall mean any basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance, long term care insurance and executive group universal life insurance programs sponsored by Tyco International and (ii) when immediately preceded by “ADT NA,” shall mean the basic life insurance, dependent life insurance, optional life insurance, accidental death and dismemberment insurance, business travel accident insurance, long term care insurance and executive group universal life insurance program to be established by ADT NA under Section 6.7(e) .

(103) “ Guaranty Release ” shall have the meaning set forth in Section 2.10(b) .

(104) “ Guard Service Agreements ” shall mean (i) the Guard Service Agreement between ADT Security Services Canada, Inc. and Intercon Security Limited, substantially in the form attached hereto as Exhibit B (with such changes thereto as mutually agreed between the parties thereto) and (ii) the Guard Service Agreement by and between ADT Holdings, Inc. and Tyco Integrated Security LLC, substantially in the form attached hereto as Exhibit C (with such changes thereto as mutually agreed between the parties thereto).

(105) “ Health Plans ” when immediately preceded by “Tyco,” shall mean the Tyco International employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans and (ii) when immediately preceded by “ADT NA,” shall mean employee health benefit plans, any other medical, HMO, prescription drugs, vision, and dental plans and any similar or successor plans program to be established by ADT NA under Section 6.7(a) .

 

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(106) “ HIPAA ” shall have the meaning set forth in Section 6.8(e) .

(107) “ Income Taxes ” shall have the meaning set forth in the Tax Sharing Agreement.

(108) “ Indebtedness ” of any Person means, without duplication, (i) the principal of and accreted value and accrued and unpaid interest in respect of (A) indebtedness of such Person for money borrowed and (B) obligations evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement or capital lease (but excluding trade accounts payable and other accrued expenses incurred in the ordinary course of business); (iii) all obligations, contingent or otherwise, of such Person under letters of credit; (iv) all obligations, contingent or otherwise, of such Person under any interest rate, currency or other hedging agreements; and (v) all obligations of the type referred to in clauses (i) through (iv) of any Persons the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise.

(109) “ Indemnifiable Loss ” and “ Indemnifiable Losses ” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect and punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an Indemnitee) and Taxes and any other amounts payable pursuant to the Tax Sharing Agreement.

(110) “ Indemnifying Party ” shall have the meaning set forth in Section 8.4(b) .

(111) “ Indemnitee ” shall have the meaning set forth in Section 8.4(b) .

(112) “ Indemnity Payment ” shall have the meaning set forth in Section 8.9(a) .

(113) “ Information ” shall mean information, content and data in written, oral, electronic, computerized, digital or other tangible or intangible media, including studies, reports, records, books, contracts, instruments, surveys, lists, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, 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), communications and other materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data, documents, correspondence, materials, product literature, files, policies, procedures and manuals.

 

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(114) “ Insurance Administration ” shall mean, with respect to each Shared Policy, the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of each of the Shared Policies; and the reporting to excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any Shared Policy to be exceeded, and the distribution of Insurance Proceeds as contemplated by this Agreement.

(115) “ Insurance Proceeds ” shall mean those monies (i) received by an insured from an insurance carrier, including due to premium adjustments, whether or not retrospectively rated, or (ii) paid by an insurance carrier on behalf of an insured, in either case net of any applicable premium deductible or self insured retention. For the avoidance of doubt, “Insurance Proceeds” shall not include any costs or expenses incurred by a Party in pursuing insurance coverage.

(116) “ Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Shared Policies, whether or not subject to deductibles, co-insurance, self-insured retentions, or uncollectibility due to insurer insolvency.

(117) “ Intellectual Property ” shall mean all worldwide intellectual property, proprietary and industrial property rights of any kind or nature, including all U.S. and foreign (i) patents, patent applications, inventions and invention disclosures and utility models, (ii) Trademarks, (iii) copyrights and copyrightable subject matter, including Software, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) technology, trade secrets, know-how, processes, formulae, models, methodologies, discoveries, ideas, concepts, techniques, designs, specifications, drawings, blueprints, diagrams, models and prototypes and all other Confidential Information, (vii) rights of privacy and rights to personal information, (viii) vanity telephone numbers, (ix) all applications, registrations, continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof for any of the foregoing and (x) all rights and remedies against infringement, misappropriation or other violation of the foregoing prior to the Effective Time.

(118) “ Law ” shall mean any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income tax treaty, order, requirement or rule of law (including common law) or other binding directives of any Governmental Entity.

(119) “ Liabilities ” shall mean any and all debts, liabilities, costs, expenses, interest and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, reserved or unreserved, determined or determinable, and including those arising under any Law, claim, demand, Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any Contract or any fines, damages or equitable relief which may be imposed and including all costs and expenses related thereto regardless of (i) when or where they arose or arise, (ii) whether the facts upon which they are based occurred prior to, on or subsequent to the Effective Time or (iii) where or against whom they are asserted or determined.

 

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(120) “ Liable Party ” shall have the meaning set forth in Section 2.9(b) .

(121) “ LIBOR ” shall mean an interest rate per annum equal to the applicable three-month London Interbank Offered Rate for deposits in United States dollars published in the Wall Street Journal .

(122) “ Management Agreement ” shall have the meaning set forth in Section 2.5(c) .

(123) “ Managing Party ” shall have the meaning set forth in Section 7.2(a) .

(124) “ Mediation Period ” shall have the meaning set forth in Section 10.2 .

(125) “ Merger Agreement ” shall have the meaning set forth in the recitals.

(126) “ Minority Investment ” shall have the meaning set forth in Section 5.1(b) .

(127) “ Monitoring ” means the monitoring of electronic event detection systems, including any video surveillance, any RIS Products relating to electronic event detection systems, and any fire detection, carbon dioxide detection, intrusion detection, medical emergency alarm or other electronic event detection components of such electronic event detection systems; provided that “Monitoring” does not include either (i) Device Support or (ii) the service of remotely hosting and processing information from end user RIS Products where the service is provided on a wholesale or resale basis to third parties as contemplated in Section 5.1(b)(x)(1) .

(128) “ Monitoring Agreements ” shall mean (i) the Monitoring Agreement by and between Tyco Integrated Security, Inc. and ADT LLC, substantially in the form attached hereto as Exhibit D (with such changes thereto as mutually agreed between the parties thereto) and (ii) the Monitoring Agreement by and between ADT Security Services Canada, Inc. and Tyco Integrated Security Canada, Inc., substantially in the form attached hereto as Exhibit E (with such changes thereto as mutually agreed between the parties thereto).

(129) “ Non-Competition Period ” shall have the meaning set forth in Section 5.1(a) .

(130) “ North American R/SB Customer ” shall have the meaning set forth in Section 5.1(c) .

(131) “ NYSE ” shall mean the New York Stock Exchange.

(132) “ Option ” (i) when immediately preceded by “Tyco,” shall mean an option to purchase shares of Tyco Common Stock granted pursuant to one of the Tyco Equity Plans or (ii) when immediately preceded by “ADT NA,” shall mean an option to purchase shares

 

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of ADT NA Common Stock as of the ADT NA Distribution, which Option shall be granted pursuant to the 2012 ADT NA Stock and Incentive Plan (as hereinafter defined) as part of the adjustment to Tyco Options in connection with the ADT NA Distribution.

(133) “ Other Parties’ Auditors ” shall have the meaning set forth in Section 5.2(b) .

(134) “ Other Party ” shall have the meaning set forth in Section 2.9(a) .

(135) “ Party ” shall mean each of Tyco and ADT NA.

(136) “ Patent Agreement ” shall mean the Tyco/ADT Patent Agreement between Tyco International and ADT NA, substantially in the form attached hereto as Exhibit F (with such changes thereto as mutually agreed between the parties thereto).

(137) “ Pension Plans ” (i) when immediately preceded by “Tyco,” shall mean the pension plans sponsored by Tyco International described in Section 6.4(b) and (ii) when immediately preceded by “ADT NA,” shall mean the pension plans established by ADT NA under Section 6.4(a) .

(138) “ Pentair ” shall have the meaning set forth in the recitals.

(139) “ Performance Share Unit ” shall mean a unit granted by Tyco International pursuant to one of the Tyco Equity Plans representing a general unsecured promise by Tyco International to deliver a share of Tyco Common Stock and which is subject to certain performance measures.

(140) “ Person ” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

(141) “ PHI ” shall have the meaning set forth in Section 6.8(e) .

(142) “ Policies ” shall mean insurance policies and insurance Contracts of any kind (other than life and benefits policies or Contracts), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, marine, property and casualty, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder, including the insurance policies written by White Mountain Insurance Company.

(143) “ Pre-Distribution ADT NA Stock Price ” shall have the meaning set forth in Section 6.1(a)(ii) .

(144) “ Pre-Distribution Flow Control Stock Price ” shall have the meaning set forth in Section 6.1(c)(ii) .

 

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(145) “ Pre-Distribution Trust ” shall have the meaning set forth in Section 6.8(k) .

(146) “ Pre-Distribution Tyco Stock Price ” shall have the meaning set forth in Section 6.1(b)(ii) .

(147) “ Provider ” shall have the meaning set forth in Section 2.5(c) .

(148) “ Recipient ” shall have the meaning set forth in Section 2.5(c) .

(149) “ Records ” shall mean any Contracts, documents, books, records or files.

(150) “ Records Access Agreement ” shall mean the Records Access Agreement between Tyco International and ADT NA, substantially in the form attached hereto as Exhibit G (with such changes thereto as mutually agreed between the parties thereto).

(151) “ Response Letter ” shall have the meaning set forth in Section 3.4(d) .

(152) “ Restricted Stock Unit ” (i) when immediately preceded by “Tyco,” shall mean a unit granted by Tyco International pursuant to one of the Tyco Equity Plans representing a general unsecured promise by Tyco International to deliver a share of Tyco Common Stock and (ii) when immediately preceded by “ADT NA” shall mean a unit granted by ADT NA representing a general unsecured promise by ADT NA to deliver a share of ADT NA Common Stock, which unit is granted pursuant to the 2012 ADT NA Stock and Incentive Plan as part of the adjustment to Tyco Restricted Stock Units in connection with the ADT NA Distribution.

(153) “ Retention Letters ” shall have the meaning set forth in Section 6.8(d) .

(154) “ Section 125 Plan ” shall mean the flexible spending accounts or flexible benefit plan qualified under Section 125 of the Internal Revenue Code sponsored by ADT NA as described in Section 6.7(b) .

(155) “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

(156) “ Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, right of first refusal, deed of trust, voting or other restriction, right-of-way, covenant, condition, easement, servitude, encroachment, permit restriction, restriction on transfer, restrictions or limitations on use of real personal property or any other encumbrance of any nature whatsoever, excluding, however, restrictions on transfer under securities Laws.

(157) “ Separation Expenses ” shall have the meaning set forth in Section 12.5 .

 

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(158) “ Severance Plan ” (i) when immediately preceded by “Tyco,” shall mean any severance program sponsored by Tyco International and (ii) when immediately preceded by “ADT NA,” shall mean the severance program to be established by ADT NA under Section 6.7(c) .

(159) “ Shared Contract ” shall have the meaning set forth in Section 2.2(b)(i) .

(160) “ Shared Policies ” shall mean all Policies, current or past, which are owned or maintained by or on behalf of Tyco or any of its Subsidiaries which relate to one or more of the Tyco Retained Business, the ADT North American R/SB Business or the Flow Control Business.

(161) “ Shareholder Approval ” shall mean the approval by Tyco International shareholders of the ADT NA Distribution and certain related matters necessary to declare and make the ADT NA Distribution.

(162) “ Small Business ” shall mean any Person that owns and/or operates a non-governmental business or commercial enterprise where the size of the location occupied by such business or enterprise is less than 7,500 square feet. By way of example but without limiting the generality of the foregoing, a Person operating (i) a commercial enterprise from premises of less than 7,500 square feet that is part of a multi-tenanted facility that itself is larger than 7,500 square feet, and (ii) the administration office or other area controlled by the owner or manager of a multi-tenanted storage facility that is less than 7,500 square feet but otherwise forms part of a multi-tenanted storage facility shall be considered a Small Business.

(163) “ Small Governmental Facility ” shall mean any state, provincial or local governmental facility with a premises of less than 7,500 square feet.

(164) “ Software ” shall mean all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials and other tangible embodiments related to any of the foregoing.

(165) “ Specified Shared Expenses ” shall mean any costs and expenses relating to the items or categories set forth on Schedule 1.1(165) and shall be shared in the manner specified in Section 5.5 .

(166) “ Statement of Cash Allocation ” shall have the meaning set forth in Section 3.4(f) .

(167) “ Statement of Cash Flow Detail ” shall have the meaning set forth in Section 3.4(c) .

(168) “ Sublease Agreement ” shall mean the Sublease Agreement between a member of the Tyco Group, on the one hand, and a member of the ADT Group, on the other hand, substantially in the form attached hereto as Exhibit H (with such changes thereto as mutually agreed between the parties thereto).

 

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(169) “ Subsidiary ” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity ( e.g. , as the managing partner of a partnership).

(170) “ Tax ” shall have the meaning set forth in the Tax Sharing Agreement.

(171) “ Tax Contest ” shall have the meaning of the definition of “Audit” as set forth in the Tax Sharing Agreement.

(172) “ Tax Return ” shall have the meaning set forth in the Tax Sharing Agreement.

(173) “ Tax Sharing Agreement ” shall mean the Tax Sharing Agreement by and among Tyco International, TIFSA, ADT NA and Flow Control, substantially in the form attached as Exhibit I .

(174) “ Third Party Claim ” shall have the meaning set forth in Section 8.4(b) .

(175) “ Third Party Proceeds ” shall have the meaning set forth in Section 8.8(a) .

(176) “ TIFSA ” shall have the meaning set forth in the preamble.

(177) “ Trademarks ” shall mean all U.S. and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing.

(178) “ Transfer ” shall have the meaning set forth in Section 2.2(a)(i) ; and the term “Transferred” shall have its correlative meaning.

(179) “ Transition Services Agreements ” shall mean, collectively, (1) the Transition Services Agreement, dated as of June 30, 2012, by and among Tyco International Management Company, LLC, Tyco Integrated Security LLC and ADT LLC (as the same may be amended from time to time) and (2) Transition Services Agreement, dated as of July 3, 2012, by and between ADT Security Services Canada, Inc. and Tyco Integrated Security Canada, Inc. (as the same may be amended from time to time).

 

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(180) “ Tyco ” shall have the meaning set forth in the preamble.

(181) “ Tyco Balance Sheet ” shall mean the unaudited combined balance sheet of the Tyco Group (including, for these purposes, the Flow Control Group) prepared to give effect to the transactions contemplated hereby, as of August 31, 2012; provided , that to the extent any Assets or Liabilities are Transferred by any Party or any member of its Group to Tyco or any member of the Tyco Group or vice versa solely in connection with the ADT NA Plan of Separation and prior to the ADT NA Distribution Date, such assets and/or liabilities shall be deemed to be included or excluded from the Tyco Balance Sheet, as the case may be.

(182) “ Tyco Common Stock ” shall mean the issued and outstanding shares of Tyco common stock of Tyco International Ltd.

(183) “ Tyco Competitive Activity ” means the leasing, installation, servicing, repair, Monitoring and maintenance of (A) security alarm systems, including any video surveillance, any RIS Products relating to security alarm systems, any fire detection, carbon dioxide detection, critical event detection, intrusion detection, and/or medical emergency alarm components of such security alarm systems, and any access control systems for Small Business customers (such activities for Small Business customers, the “ Small Business Activities ”) or for residential customers, and (B) personal emergency response systems for sick or elderly individuals (other than products intended for use by inpatient and outpatient medical service facilities where a critical function of the product is patient response and notification of caregivers from within the facility), in each case of clauses (A) and (B) above, as conducted by members of the ADT North American R/SB Group as of immediately prior to the Distribution Date; provided that the foregoing notwithstanding, Tyco Competitive Activities shall not include (1) Small Business Activities (or seeking new customers in respect of Small Business Activities) where (a) the system that has been or would be procured by the Small Business end-use customer would include any fire protection system other than “spot detection”, as determined based upon the Laws of the applicable jurisdiction in which any such location is situated, (b) the system that has been or would be procured by the Small Business end-use customer is required to be a certificated system under the standards of Underwriters Laboratories, Inc. (UL) (or any successor organization providing similar functions) (or Underwriters Laboratories of Canada (ULC), if located in Canada) or Factory Mutual (FM) (or any successor organization providing similar functions), (c) if located in Canada, the system that has been or would be procured by the Small Business end-use customer requires DVAC (Digital Voice Access Circuit) or Factory Mutual (FM) lines, or (d) the Small Business end-use customer has or is seeking to procure security systems for multiple locations in multiple states (or provinces with respect to Canada) and to the extent such Small Business end-use customer becomes a customer of the Tyco Group after the Distribution Date, such customer is managed by the group of individuals within the Tyco Group responsible for national accounts customers of the Tyco Group or (2) the sale, leasing, installation, servicing, repair and maintenance of fire suppression systems for residential customers.

(184) “ Tyco Contingent Asset ” shall mean any of the Assets set forth on Schedule 1.1(184) .

 

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(185) “ Tyco Deferred Compensation Liabilities ” shall have the meaning set forth in Section 6.3(b)(i) .

(186) “ Tyco Directors ” shall have the meaning set forth in Section 6.1(c)(i) .

(187) “ Tyco Employee ” shall mean an active employee or an employee on vacation or on approved leave of absence (including maternity, paternity, parental, family, short-term or long-term sick leave, qualified military service and other approved leaves) who, immediately following the ADT NA Distribution Date is employed by Tyco or any member of the Tyco Group. Tyco Employee shall also include any employee of an entity in the Tyco Group who, as of the ADT NA Distribution Date, is receiving short-term or long-term disability benefits or workers’ compensation benefits.

(188) “ Tyco Equity Plans ” shall mean, collectively, the equity-based plans set forth on Schedule 1.1(188) .

(189) “ Tyco Group ” shall mean Tyco and each Person (other than any member of the ADT North American R/SB Group) that is a direct or indirect Subsidiary of Tyco immediately after the Effective Time, and each Business Entity that becomes a Subsidiary of Tyco after the Effective Time, which shall include those entities identified as such on Schedule 1.1(189) .

(190) “ Tyco Indemnitees ” shall mean Tyco, each member of the Tyco Group, each member of the Flow Control Group, each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the ADT North American R/SB Indemnitees.

(191) “ Tyco International ” shall have the meaning set forth in the preamble.

(192) “ Tyco International ADT Asset ” shall have the meaning set forth in Section 2.2(d).

(193) “ Tyco International Management Company Defined Contribution Plans Master Trust ” shall mean the trust created by an agreement between the plan sponsor and trustees of the Tyco International Retirement Savings and Investment Plans for purposes of holding assets under such plan.

(194) “ Tyco International Master Retirement Trust ” means the trust created by Tyco International for purposes of holding assets under Tyco’s U.S. pension plans.

(195) “ Tyco Nonqualified Deferred Compensation Plans ” shall mean the nonqualified deferred compensation plans set forth in Schedule 6.3(b) and any other legacy nonqualified deferred compensation plan sponsored by members of the Tyco Group.

(196) “ Tyco Proxy Statement ” shall mean that definitive proxy statement on Form Def 14A filed by Tyco International with the Commission with respect to the

 

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Shareholder Approval at the time it was mailed to Tyco International shareholders as of record as of the record date for the special general meeting of shareholders to be held in connection therewith.

(197) “ Tyco Retained Assets ” shall mean:

(i) the ownership interests in those Business Entities that are members of the Tyco Group (including for these purposes, members of the Flow Control Group);

(ii) all Tyco Retained Contracts, any rights or claims arising thereunder, and any other rights or claims or contingent rights or claims primarily relating to or arising from any Tyco Retained Asset or the Tyco Retained Business;

(iii) any and all Assets (except that cash shall be subject to the provisions of Section 3.4 ) reflected on the Tyco Balance Sheet or the accounting records supporting such balance sheet and any Assets acquired by or for Tyco or any member of the Tyco Group subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any dispositions of any of such Assets subsequent to the date of such balance sheet;

(iv) subject to Article XI , any and all rights of any member of the Tyco Group (including for these purposes, members of the Flow Control Group) under any Policies;

(v) any and all Assets owned or held immediately prior to the Effective Time by Tyco or any of its Subsidiaries (including for these purposes, members of the Flow Control Group) that primarily relate to or are primarily used in the Tyco Retained Business. The intention of this clause (v) is only to rectify any inadvertent omission of Transfer of any Asset that, had the Parties given specific consideration to such Asset as of the date hereof, would have otherwise been classified as a Tyco Retained Asset;

(vi) the Assets set forth on Schedule 1.1(197)(vi) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement as Assets that have been or that are to be Transferred to Tyco or any other member of the Tyco Group (including for these purposes, members of the Flow Control Group); and

(vii) any and all furnishings and office equipment located at a physical site to the extent the ownership or leasehold interest with respect to such physical site is being Transferred to or retained by Tyco; provided , that personal computers shall be Transferred to Tyco if, following the Effective Time, a Tyco Group member employs the applicable employee who, prior to the Effective Time, used such personal computer.

Notwithstanding the foregoing, the Tyco Retained Assets shall not include (x) any Assets to the extent they are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the ADT North American R/SB Group, (y) the Assets set forth or described on Schedule 1.1(184) (in the definition of Tyco Contingent Assets) or (z) any rights of the Flow Control Group pursuant to Sections 5.1 , 5.2 , 5.3 , 8.4 or Article XI of the Flow Control SDA.

 

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In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “ADT North American R/SB Assets”, for purposes of determining what is and is not a Tyco Retained Asset: (1) the explicit inclusion of an item on a Schedule referred to in this definition or on any applicable Schedule referenced to in any Ancillary Agreement shall take priority over any textual provision of this Agreement that would otherwise operate to exclude such Asset from the definition of “Tyco Retained Assets” and (2) Assets referred to in clause (iii) of this definition shall take priority over Assets otherwise referred to in clause (v) of this definition and over clause (v) of Section 1.1(18) .

(198) “ Tyco Retained Business ” shall mean (i) the business and operations of (x) the Fire Protection segment of Tyco, (y) the commercial security segment of Tyco, and (z) the residential and small business security segment of Tyco outside Canada, the United States, Puerto Rico and the U.S. Virgin Islands, in each of clauses (x) through (z), as described in the Tyco Proxy Statement, (ii) any other business conducted primarily through the use of the Tyco Retained Assets prior to the Effective Time, (iii) the Tyco Group’s ownership of equity in Atkore International Group Inc., (iv) the businesses and operations of Business Entities acquired or established by or for Tyco or any of its Subsidiaries in connection with the operation of the Tyco Retained Business after the date of this Agreement and (v) the Flow Control Business.

(199) “ Tyco Retained Contracts ” shall mean the following Contracts (or parts thereof) to which Tyco or any of its Subsidiaries (including for these purposes, members of the Flow Control Group) is a party or by which it or any of its Subsidiaries or any of their respective Assets is bound, whether or not in writing, except for any such Contract (or part thereof) that is expressly contemplated to be Transferred to, or to remain with, a member of the ADT North American R/SB Group, pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the Tyco Group (including for these purposes, members of the Flow Control Group);

(ii) any Contract that primarily relates to the Tyco Retained Business;

(iii) any Contract representing capital or operating equipment lease obligations reflected on the Tyco Balance Sheet;

(iv) any Contract (or part thereof), that is otherwise expressly contemplated pursuant to this Agreement (including pursuant to Section 2.2(b) ) or any of the Ancillary Agreements to be assigned to any member of the Tyco Group (including for these purposes, members of the Flow Control Group);

(v) any Contract set forth on Schedule 1.1(199)(v) ; and

(vi) to the extent the same is given with respect to, or in favor of, any member of the Tyco Group (including for these purposes, members of the Flow Control Group), any guarantee, indemnity, representation or warranty.

 

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(200) “ Tyco Retained Liabilities ” shall mean:

(i) any and all Liabilities that are (a) expressly contemplated by this Agreement or any Ancillary Agreement to be Assumed by any member of the Tyco Group, (b) expressly Assumed by any member of the Tyco Group under this Agreement or any Ancillary Agreement or (c) set forth on Schedule 1.1(200)(i) ;

(ii) any and all Liabilities primarily relating to, arising out of or resulting from:

(A) the operation or conduct of the Tyco Retained Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority));

(B) the operation or conduct of any business conducted by any member of the Tyco Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person’s authority)); or

(C) any Tyco Retained Assets, whether arising before, on or after the Effective Time;

(iii) any Liabilities (x) to the extent relating to, arising out of or resulting from any terminated or divested Business Entity, business or operation (A) formerly and primarily owned or managed by or primarily associated with any member of the Tyco Group or the Tyco Retained Business, (B) set forth on Schedule 1.1(200)(iii)(x) or (y) to the extent arising from any of the Contracts set forth in Schedule 1.1(200)(iii)(y) ;

(iv) any Liabilities relating to any Tyco Employee or Former Tyco Employee that does not become a ADT North American R/SB Employee or Former ADT North American R/SB Employee, in each case, immediately following the Effective Time; provided that to the extent it cannot be determined whether a former employee who terminated employment with all members of the Tyco controlled group of corporations before the ADT NA Distribution Date was a Former Tyco Employee in respect of the period prior to the Effective Time, only the Applicable Tyco Percentage of any Liabilities relating to such employees shall be deemed Tyco Retained Liabilities;

(v) any Liabilities relating to, arising out of or resulting from (A) any Indebtedness (including debt securities and asset-backed debt) of any member of the Tyco Group or Indebtedness (regardless of the issuer of such Indebtedness) exclusively relating to the Tyco Retained Business or (B) any Indebtedness (regardless of the issuer of such Indebtedness) secured exclusively by any of the Tyco Retained Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such Indebtedness, in its capacity as such);

 

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(vi) Specified Shared Expenses to the extent provided in Section 5.5 ; and

(vii) all Liabilities reflected as Liabilities or obligations on the Tyco Balance Sheet or the accounting records that support or would support such balance sheet and all Liabilities arising or Assumed after the date of such balance sheet which, had they arisen or been Assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the Tyco Balance Sheet.

Notwithstanding anything to the contrary herein, the Tyco Retained Liabilities shall not include:

(w) any Liabilities that are expressly contemplated by this Agreement, or any Ancillary Agreement as Liabilities to be retained or Assumed by any member of the ADT North American R/SB Group;

(x) any Contracts expressly Assumed by any member of the ADT North American R/SB Group under this Agreement or any Ancillary Agreement;

(y) any Liabilities of the Flow Control Group under Section 5.1 , 5.2 , 5.3 , 8.4 or Article XI of the Flow Control SDA; and

(z) any Liabilities expressly discharged pursuant to Section 2.4 of this Agreement.

In the event of any inconsistency or conflict that may arise in the application or interpretation of this definition or the definition of “ADT North American R/SB Liabilities”, for the purpose of determining what is and is not a Tyco Retained Liability: (1) the explicit inclusion of an item on a Schedule referred to in this definition or on any applicable Schedule of any Ancillary Agreement shall take priority over any textual provision of this Agreement that would otherwise operate to exclude such Liability from the definition of “Tyco Retained Liability” and (2) Liabilities referred to in clause (vii) of this definition shall take priority over Liabilities otherwise referred to in clause (ii) of this Section and clause (ii) of Section 1.1(25) .

(201) “ Tyco Retained Pension Plans ” shall have the meaning set forth in Section 6.4(b)(i) .

(202) “ Tyco Retained Plans ” shall mean the employee benefit plans, policies, programs, payroll practices, and arrangements retained by the Tyco Group under this Agreement for the benefit of Tyco Employees and, where applicable, Former Tyco Employees.

(203) “ Tyco Retained Savings Plans ” means the savings plans sponsored by Tyco described in Section 6.5(b) .

(204) “ Tyco Retiree Medical Plans ” shall have the meaning set forth in Section 6.6 .

 

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(205) “ Tyco Security Customer ” shall have the meaning set forth in Section 5.1(b) .

(206) “ Tyco Severance Plans ” shall mean the severance plans listed on Schedule 1.1(206) .

(207) “ 2012 ADT NA Stock and Incentive Plan ” shall have the meaning set forth in Section 6.1(a)(iv) .

Section 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. The word “or” shall not be exclusive. The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not simply mean “if”. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. All references to any period of days shall be to the relevant number of calendar days unless otherwise specified. All references to dollars or $ shall be references to United States dollars. All accounting terms shall have their respective meanings under GAAP.

ARTICLE II

THE SEPARATION

Section 2.1. General . Subject to the terms and conditions of this Agreement (including satisfaction or, to the extent permitted, waiver of the conditions to the ADT NA Distribution set forth in Section 4.5 ), the Parties shall use, and shall cause their respective Affiliates to use, their respective reasonable best efforts to consummate the transactions contemplated hereby, a portion of which have already been implemented prior to the date hereof.

Section 2.2. Transfer of Assets .

(a) Prior to the Effective Time and to the extent not already completed (it being understood that some of such Transfers may occur following the Effective Time in accordance with Section 2.6) , pursuant to the Conveyancing and Assumption Instruments:

(i) Tyco shall, on behalf of itself and its Subsidiaries, as applicable, transfer, contribute, assign and convey or cause to be transferred, contributed, assigned and conveyed (“ Transfer ”) to ADT NA or another member of the ADT North American R/SB Group effective no later than the Effective Time, all of its and its Subsidiaries’ right, title and interest in and to the ADT North American R/SB Assets;

 

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(ii) ADT NA shall, on behalf of itself and any other member of the ADT North American R/SB Group, as applicable, Transfer, effective no later than the Effective Time, to Tyco or another member of the Tyco Group all of its and its Subsidiaries’ right, title and interest in and to the Tyco Retained Assets.

(b) Treatment of Shared Contracts . Without limiting the generality of the obligations set forth in Section 2.2(a) :

(i) Unless the Parties otherwise agree or to the extent the benefits or obligations of any Contract described in this Section are expressly conveyed to the applicable Party pursuant to an Ancillary Agreement (or are otherwise expressly the subject of any Ancillary Agreement), any Contract that is listed on Schedule 2.2(b) (each, a “ Shared Contract ”) shall be assigned in part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to the effective time of this Agreement so that each of Tyco or ADT NA or the members of their respective Groups (for the avoidance of doubt, including, with respect to Tyco, members of the Flow Control Group) as of the effective time of this Agreement shall be entitled to the rights and benefits, and shall Assume the related portion of any Liabilities, inuring to their respective Businesses; provided , however , that (x) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety 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, subject to Section 2.2(c) ) and (y) 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, the Parties shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause a member of the ADT North American R/SB Group or the Tyco Group, as the case may be, to receive the benefit of that portion of each Shared Contract that relates to the ADT North American R/SB Business or the Tyco Retained Business, as the case may be (in each case, to the extent so related) as if such Shared Contract had been assigned to (or amended to allow) a member of the applicable Group pursuant to this Section 2.2(b) 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 2.2(b) .

(ii) Each of Tyco and ADT NA shall, and shall cause the members of its Group to, treat for all purposes of this Agreement the portion of each Shared Contract inuring to its respective Businesses as Assets owned by, and/or Liabilities of, as applicable, such Group not later than the effective time of this Agreement.

(c) Consents . The Parties shall use their reasonable best efforts to obtain the Consents required to Transfer any Assets, Contracts, licenses, permits and authorizations issued by any Governmental Entity or parts thereof as contemplated by this Agreement; provided that neither Party shall be required to, and shall be required to cause any member of its Group to, make any payments (except to the extent advanced, Assumed or agreed in advance to be reimbursed by any member of the other Group) other than for fees and disbursements of outside

 

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counsel and any other advisors, commit to any third party on behalf of itself or any member of its Group to assume any material obligations or offer or grant any material concession to obtain any such Consents.

(d) Tyco International ADT Assets . Notwithstanding anything herein or in any Ancillary Agreement to the contrary, Tyco International shall sell and ADT LLC shall purchase for fair market value, as reasonably determined by the Parties, in exchange for cash any ADT North American R/SB Asset (or any other item that is treated as an Asset) that is owned or treated as owned directly by Tyco International, and otherwise would be required to be transferred to ADT NA or another member of the ADT NA R/SB Group either before or after the Effective Time, under this Agreement or any Ancillary Agreement (a “ Tyco International ADT Asset ”). Each of Tyco and ADT NA shall, and shall cause the members of its Group to, (A) treat for all Income Tax purposes the sale of any Asset pursuant to this Section 2.2(d) as a sale or license, as applicable, by Tyco International to ADT LLC and (B) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

Section 2.3. Assumption and Satisfaction of Liabilities . Except as otherwise specifically set forth in any Ancillary Agreement, from and after the effective time of this Agreement (i) Tyco shall, or shall cause a member of the Tyco Group (including, for these purposes, the Flow Control Group) to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms (“ Assume ”), all of the Tyco Retained Liabilities, and (ii) ADT NA shall, or shall cause a member of the ADT North American R/SB Group to, Assume all of the ADT North American R/SB Liabilities. Any Tyco Retained Liability required to be Assumed by Tyco pursuant to clause (i) above or any other Liability required to be Assumed by Tyco under this Agreement or any Ancillary Agreement that is not Assumed by a member of the Tyco Group (including, for these purposes, the Flow Control Group) other than Tyco International or TIFSA shall be Assumed by TIFSA and not by Tyco International.

Section 2.4. Intercompany Accounts .

(a) All intercompany receivables other than Intercompany Trade Receivables and all intercompany receivables, payables and loans other than Intercompany Trade Payables and other than intercompany payables, receivables or loans within a Group shall be satisfied and/or settled in full in cash and/or otherwise canceled and terminated or extinguished (in each case with no further liability or obligation) prior to the Effective Time or treated as specifically provided for under this Agreement, under any Ancillary Agreement or under any Continuing Arrangements as set forth on Schedule 1.1(64) , as applicable, including, where applicable, continuing to be outstanding as an obligation of the relevant Party (or the relevant member of such Party’s Group).

(b) As between the Parties (and the members of their respective Groups (including, with respect to Tyco, members of the Flow Control Group)) all payments and reimbursements received after the Effective Time by a 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

 

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such Party in trust for the use and benefit of the Party entitled thereto (provided that the Party entitled thereto shall reimburse the Party holding such payment or reimbursement in trust for all out-of-pocket expenses related thereto, including for reasonable fees and disbursements of outside counsel and any other advisors) and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay or shall cause the applicable member of its Group to pay over to the applicable Party the amount of such payment or reimbursement without right of set-off.

Section 2.5. Limitation of Liability .

(a) Except as provided in Section 3.4 or in the case of any knowing violation of Law, fraud or misrepresentation, no Party shall have any Liability to any other Party in the event that any Information exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

(b) No Party or any Subsidiary thereof shall be liable to any other Party or any Subsidiary (including, with respect to Tyco, members of the Flow Control Group) of any other Party based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the effective time of this Agreement (other than trade payables and receivables, this Agreement, any Ancillary Agreement, any Continuing Arrangements, the Flow Control SDA, any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the ADT NA Plan of Separation) and each Party hereby terminates any and all Contracts, arrangements, courses of dealing or understandings between or among it or a member of such Party’s Group, on the one hand, and the other Party or a member or such other Party’s Group (including, with respect to Tyco, members of the Flow Control Group), on the other hand, effective as of the effective time of this Agreement (or with respect to the Flow Control Group, as of the Flow Control Effective Time, if earlier) (other than trade payables and receivables, this Agreement, any Ancillary Agreement, any Continuing Arrangements, any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby or by the ADT NA Plan of Separation).

(c) Certain Payments Under Management Agreement . Certain members of the ADT North American R/SB Group are parties to a management services agreement (the “ Management Agreement ”) pursuant to which Tyco International Management Company, LLC (the “ Provider ”) provides various management services to certain U.S. subsidiaries of Tyco within the ADT North American R/SB Group (individually, a “ Recipient ” and, collectively, the “ Recipients ”). Prior to the ADT NA Distribution Date, Tyco shall determine an estimate of the amounts payable (if any) by the Recipients to Provider for the period up to the ADT NA Distribution Date pursuant to the Management Agreement (or any right of the Recipients to a refund of previous payments made under the Management Agreement). Prior to the ADT NA Distribution Date, each Recipient owing additional amounts shall pay the Provider any amounts due or, as the case may be, the Provider shall refund any overpaid amounts to each Recipient that overpaid the Provider, in each case, based on the estimates determined by Tyco pursuant to the foregoing sentence, which payment or refund shall constitute settlement in full of all amounts owed or owing under the Management Agreement. Prior to the ADT NA Distribution Date, Tyco shall cause the Provider and the Recipients to terminate the Management Agreement.

 

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Section 2.6. Transfers Not Effected On or Prior to the Effective Time of this Agreement; Transfers Deemed Effective as of the Effective Time of this Agreement .

(a) To the extent that any Transfers or Assumptions contemplated by this Article II shall not have been consummated on or prior to the effective time of this Agreement, the Parties shall use reasonable best efforts to effect such Transfers or Assumptions as promptly following the effective time of this Agreement as shall be practicable. Nothing herein shall be deemed to require the Transfer of any Assets or the Assumption of any Liabilities which by their terms or operation of Law cannot be Transferred or Assumed; provided , however , that the Parties and their respective Subsidiaries shall cooperate and use reasonable best efforts to seek to obtain, in accordance with applicable Law, any necessary Consents or Governmental Approvals for the Transfer of all Assets and Assumption of all Liabilities to the fullest extent permitted by applicable Law contemplated to be Transferred and Assumed pursuant to this Article II. In the event that any such Transfer of Assets or Assumption of Liabilities has not been consummated, from and after the effective time of this Agreement (i) the Party retaining such Asset shall thereafter hold such Asset for the use and benefit of the Party entitled thereto (provided that the Party entitled thereto shall reimburse the Party retaining such Asset for all out-of-pocket expenses related to such retention including for the reasonable fees and disbursements of outside counsel and any other advisors) and (ii) the Party intended to Assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Asset or Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party Assuming such Liability in order to place such Party, insofar as reasonably possible, in the same position as if such Asset or Liability had been Transferred or Assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the effective time of this Agreement to the member or members of the Tyco Group (including , for these purposes, the Flow Control Group) or the ADT North American R/SB Group entitled to the receipt of such Asset or required to Assume such Liability.

(b) If and when the Consents, Governmental Approvals and/or conditions, the absence or non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of the Assumption of any Liability pursuant to Section 2.6(a) , are obtained or satisfied, the Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary Agreement.

(c) The Party retaining any Asset or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of such Liability pursuant to Section 2.6(a) shall not be obligated, in connection with the foregoing, to expend any money out-of pocket unless the necessary funds are advanced, assumed, or agreed in advance to be reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability, other than reasonable attorneys’ fees and recording or similar fees all of which shall be promptly reimbursed by the Party entitled to such Asset or the Person intended to be subject to such Liability.

 

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(d) On and prior to the eighteen (18) month anniversary following the ADT NA Distribution Date, if any Party owns any Asset, that, although not Transferred pursuant to this Agreement, is agreed by such Party and the other applicable Party in their good faith judgment to be an Asset that more properly belongs to the other Party or a Subsidiary of the other Party, or an Asset that such other Party or Subsidiary was intended to have the right to continue to use (other than (for the avoidance of doubt), as between any two Parties, for any Asset acquired from an unaffiliated third party by a Party or member of such Party’s Group following the ADT NA Distribution Date), then the Party owning such Asset shall, as applicable (i) Transfer any such Asset to the Party identified as the appropriate transferee and following such Transfer, such Asset shall be a ADT North American R/SB Asset or Tyco Retained Asset, as the case may be, or (ii) grant such mutually agreeable rights with respect to such Asset to permit such continued use, subject to, and consistent with this Agreement, including with respect to Assumption of associated Liabilities, in all events, subject to the relevant Parties’ agreement (I) as to the most cost efficient means of effecting such Transfer or grant of rights and (II) to share any incremental costs arising as a result of such Transfer or grant of rights; provided , that if the relevant Parties cannot agree on a means of effecting the Transfer or grant of rights within thirty (30) days from the date that all relevant Parties have notice of the discovery of such Asset, then the Asset shall be immediately Transferred or such rights shall be immediately granted in accordance with Sections 2.2(b) and 2.6(a) .

(e) After the Effective Time, each Party (or any member of its Group) may receive mail, packages and other communications properly belonging to the other Party (or any member of its Group). Accordingly, at all times after the Effective Time, each Party authorizes the other applicable Party to receive and, if necessary to identify the proper recipient in accordance with this Section 2.6(e) , open all mail, packages and other communications received by such Party that belongs to such other Party, and to the extent that they do not relate to the business of the receiving Party, the receiving Party shall promptly deliver such mail, packages or other communications (or, in case the same also relates to the business of the receiving Party or another Party, copies thereof) to such other Party as provided for in Section 11.6 . The provisions of this Section 2.6(e) are not intended to, and shall not, be deemed to constitute an authorization by either Party to permit the other to accept service of process on its behalf and no Party is or shall be deemed to be the agent of any other Party for service of process purposes.

(f) In the event that, at any time from and after the Effective Time, either Party (or any member of the Tyco Group or ADT North American R/SB Group, as applicable) discovers that it or one of the members of its Group is the owner of, receives or otherwise comes to possess or benefit from any Asset (including the receipt of payments made pursuant to Contracts and proceeds from accounts receivable with respect to such Asset) or is liable for any Liability that is otherwise allocated to any Person that is a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any acquisition of Assets or assumption of Liabilities from the other Party for value subsequent to the Effective Time), such Party shall promptly Transfer, or cause to be Transferred, such Asset or Liability to the Person so entitled thereto (and the applicable Party shall cause such entitled Person to accept such Asset or Assume such Liability) for no further consideration, except as provided in Section 2.2(d) . Prior to any such transfer, such Asset shall be held in accordance with the other provisions of this Section 2.6 .

 

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(g) With respect to Assets and Liabilities described in Section 2.6(a) , other than any Tyco International ADT Asset, each of Tyco and ADT NA shall, and shall cause the members of its respective Group to, (i) treat for all Income Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the Party or its applicable Subsidiary entitled to such Assets not later than the effective time of this Agreement and (B) the deferred Liabilities as liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities not later than the effective time of this Agreement and (ii) neither report nor take any Income Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).

Section 2.7. Conveyancing and Assumption Instruments . In connection with, and in furtherance of, the Transfers of Assets and the acceptance and Assumptions of Liabilities contemplated by this Agreement, the Parties shall execute and deliver to each other or cause to be executed and delivered, on or after the date hereof by the appropriate entities to the extent not executed prior to the date hereof, any Conveyancing and Assumption Instruments necessary to evidence the valid and effective Assumption by the applicable Party of its Assumed Liabilities and the valid Transfer to the applicable Party or member of such Party’s Group (including for these purposes with respect to Tyco, the members of the Flow Control Group) of all right, title and interest in and to its accepted Assets for Transfers and Assumptions to be effected pursuant to New York Law or the Laws of one of the other states of the United States or, if not appropriate for a given Transfer or Assumption, pursuant to applicable non-U.S. Laws, in such form as the Parties shall reasonably agree, including the Transfer of real property with deeds as may be appropriate and in form and substance as may be required by the jurisdiction in which the real property is located. The Transfer of capital stock shall be effected by means of executed stock powers and notation on the stock record books of the corporation or other legal entities involved, or by such other means as may be required in any non-U.S. jurisdiction to Transfer title to stock and, only to the extent required by applicable Law, by notation on public registries.

Section 2.8. Further Assurances .

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement, including Section 2.6 , each of the Parties shall cooperate with each other and use (and shall cause the members of its respective Group to use) reasonable best efforts, on and after the Effective Time, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, 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 from and after the Effective Time, to execute and deliver, or use reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of Transfer or title, and to make all filings with, and to obtain all Consents and/or

 

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Governmental Approvals, any permit, license, Contract, 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 any 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 or the Ancillary Agreements and the Transfers and recordings of the applicable Assets and the assignment and Assumption of the applicable 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 such title as possessed by the transferring Party to the Assets allocated to such other 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.

Section 2.9. Novation of Liabilities .

(a) Each Party, at the request of the other Party, shall use reasonable best efforts to obtain, or to cause to be obtained, any Consent, Governmental Approval, substitution or amendment required to novate or assign to the fullest extent permitted by applicable Law all obligations under Contracts and Liabilities for which a member of such Party’s Group and a member of the other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such other Party as provided in this Agreement (such other Party, the “ Other Party ”), or to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Other Party’s Group which Assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group shall be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration (or otherwise incur any Liability or obligation) therefor to any third party from whom any such Consent, Governmental Authority, substitution or amendment is requested (unless such Party is fully reimbursed or otherwise made whole by the requesting Party).

(b) If the Parties are unable to obtain, or to cause to be obtained, any such Consent, Governmental Approval, release, substitution or amendment required to novate, fully assign or fully release any such obligations under Contracts or any Liabilities, (i) the Other Party shall nonetheless use reasonable best efforts to assign or release, including by executing any such assignment which does not release the Other Party from its obligations under such Contract or from such Liability, to the fullest extent permitted and (ii) the Other Party or a member of such Other Party’s Group shall continue to be bound by such Contract that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who Assumed or retained such Liability as set forth in this Agreement (the “ Liable Party ”) shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the effective time of this Agreement in each case in accordance with Section 2.6 . The Liable Party shall indemnify each Other Party and hold each of them harmless against any Liabilities (other than Liabilities of such Other Party) arising in connection therewith; provided , that the Liable Party shall have no obligation to indemnify any Other Party with respect to any matter to the extent that such Liabilities arise from such Other Party’s willful breach, knowing violation of Law, fraud or misrepresentation in connection therewith, in which case such Other Party shall be responsible for such Liabilities. The Other Party shall, without further consideration, promptly

 

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pay and remit, or cause to be promptly paid or remitted, to the Liable Party or, at the direction of the Liable Party, to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, Governmental Approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly Transfer or cause the Transfer of, as applicable, all rights, obligations and other Liabilities thereunder of such Other Party or of any member of such Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group and the Liable Party, or another member of such Liable Party’s Group shall Assume such rights and Liabilities to the fullest extent permitted by applicable Law in accordance with Section 2.6(b) .

Section 2.10. Guarantees .

(a) Except as otherwise specified in any Ancillary Agreement, on or prior to the Effective Time or as soon as practicable thereafter, (i) Tyco shall (with the reasonable cooperation of the applicable member of the ADT North American R/SB Group) use its reasonable best efforts to have any member of the ADT North American R/SB Group removed as guarantor of or obligor for any Tyco Retained Liability, including in respect of those guarantees set forth on Schedule 2.10(a)(i) , to the extent that they relate to Tyco Retained Liabilities, and (ii) ADT NA shall (with the reasonable cooperation of the applicable member of the Tyco Group) use its reasonable best efforts to have any member of the Tyco Group removed as guarantor of or obligor for any ADT North American R/SB Liability, including in respect of those guarantees set forth on Schedule 2.10(a)(ii) , to the extent that they relate to ADT North American R/SB Liabilities.

(b) On or prior to the Effective Time, to the extent required to obtain a release from a guaranty (a “ Guaranty Release ”):

(i) of any member of the Tyco Group, ADT NA shall execute a guaranty agreement in the form of the existing guaranty or such other form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which ADT NA would be reasonably unable to comply or (B) which would be reasonably expected to be breached; and

(ii) of any member of the ADT North American R/SB Group, Tyco shall execute a guaranty agreement in the form of the existing guaranty or such other form as is agreed to by the relevant parties to such guaranty agreement, except to the extent that such existing guaranty contains representations, covenants or other terms or provisions either (A) with which Tyco would be reasonably unable to comply or (B) which would be reasonably expected to be breached.

(c) If Tyco or ADT NA is unable to obtain, or to cause to be obtained, any such required removal as set forth in clauses (a) and (b) of this Section 2.10 , (i) the relevant member of the Tyco Group or ADT North American R/SB Group, as applicable, that has

 

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assumed the Liability with respect to such guaranty shall indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VIII ) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder and (ii) each of Tyco and ADT NA, on behalf of themselves and the members of their respective Groups, agree not to renew or extend the term of, increase its obligations under, or Transfer to a third party, any loan, guarantee, lease, contract or other obligation for which the other Party or member of such Party’s Group is or may be liable without the prior written consent of such other Party, unless all obligations of such other Party and the other members of such Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such Party; provided , however , with respect to leases, in the event a Guaranty Release is not obtained and the relevant beneficiary wishes to extend the term of such guaranteed lease, then such beneficiary shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease.

Section 2.11. Disclaimer of Representations and Warranties . EACH OF TYCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE TYCO GROUP) AND ADT NA (ON BEHALF OF ITSELF AND EACH MEMBER OF THE ADT NORTH AMERICAN R/SB GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT OR IN ANY CONTINUING ARRANGEMENT, NO PARTY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT IS MAKING ANY REPRESENTATION OR WARRANTY IN ANY WAY. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT OR IN ANY CONTINUING ARRANGEMENT, 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 DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

ARTICLE III

CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS

Section 3.1. Organizational Documents . On or prior to the ADT NA Distribution Date, all necessary actions shall be taken to adopt the form of Certificate of Incorporation and By-laws filed by ADT NA with the Commission as exhibits to the ADT NA Form 10.

Section 3.2. Directors . On or prior to the ADT NA Distribution Date, Tyco International shall take all necessary action to cause the Board of Directors of ADT NA to consist of the individuals identified in the ADT NA Information Statement as director nominees of ADT NA.

 

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Section 3.3. Resignations .

(a) Prior to the ADT NA Distribution, (i) Tyco International shall cause all its employees and any employees of its Affiliates (excluding any employees of any member of the ADT North American R/SB Group) to resign, effective as of the Effective Time, from all positions as officers or directors of any member of the ADT North American R/SB Group in which they serve and (ii) ADT NA shall cause all its employees and any employees of its Affiliates, to resign, effective as of the Effective Time, from all positions as officers or directors of any members of the Tyco Group in which they serve.

(b) For the avoidance of doubt, no Person shall be required by any Party to resign from any position or office with another Party if such Person is disclosed in the applicable Information Statement as the Person who is to hold such position or office following the applicable Distribution.

Section 3.4. Cash .

(a) Prior to the ADT NA Distribution Date, either (i) ADT NA will transfer funds to Tyco or (ii) Tyco will transfer funds to ADT NA, such that ADT NA’s cash and cash equivalent balance in its accounts immediately prior to the ADT NA Distribution Date shall equal at least $300 million (net of unpaid Separation Expenses approved by the Executive Vice President and Chief Financial Officer of Tyco International prior to the ADT NA Distribution Date and the amounts attributable to those other items set forth in Schedule 3.4(a) ) (the “ ADT NA Target Cash Balance ”), or such lesser or greater amount as provided in Section 3.4(b).

(b) Notwithstanding Section 3.4(a) , if on the Business Day prior to the ADT NA Distribution Date, the combined cash and cash equivalent balance of ADT NA and Tyco as reflected in ADT NA’s and Tyco’s respective daily liquidity report (net of unpaid Separation Expenses approved by the Executive Vice President and Chief Financial Officer of Tyco International prior to the ADT NA Distribution Date and the amounts attributable to those other items set forth in Schedule 3.4(b) including any cash of or allocated or to be allocated to the Flow Control Group in connection with the Flow Control Separation (including pursuant to the Flow Control Agreement) and after taking into account (1) the net cash impact to Tyco of the Net Indebtedness (as defined in the Flow Control Agreement) adjustment pursuant to the Flow Control Agreement, (2) the repayment in full of the Bridge Note (as defined in the Flow Control Agreement) and the receipt by the Tyco Group of any proceeds pursuant to the Share Premium Redemption (as defined in the Flow Control Agreement) and (3) any funds paid or received by Tyco in respect of the Working Capital Adjustment (as defined in the Flow Control Agreement) pursuant to the Flow Control Agreement and, in each case, giving effect to such payments and net cash impact as if completed as of the Business Day prior to the ADT NA Distribution Date) (such combined balance, giving effect to the adjustments described in the parenthetical above, the “ ADT/Tyco Actual Cash Balance ”) is (i) less than $700 million (such amount, the “ ADT/Tyco Initial Target Cash Balance ”), then the ADT NA Target Cash Balance will be reduced by an amount equal to the amount by which the ADT/Tyco Actual Cash Balance is below the ADT/Tyco Initial Target Cash Balance multiplied by a fraction, the numerator of which is the Free Cash Flow generated in the prior four fiscal quarters by the ADT North American R/SB Group and the denominator of which is the Free Cash Flow generated in the

 

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prior four fiscal quarters by the ADT North American R/SB Group and Tyco Group, collectively (for the avoidance of doubt excluding, for purposes of such calculation, any Free Cash Flow generated by the Flow Control Group during such period) or (ii) greater than ADT/Tyco Initial Target Cash Balance, then the ADT NA Target Cash Balance will be increased by an amount equal to the amount by which the ADT/Tyco Actual Cash Balance is greater than the ADT/Tyco Initial Target Cash Balance multiplied by a fraction, the numerator of which is the Free Cash Flow generated in the prior four fiscal quarters by the ADT North American R/SB Group and the denominator of which is the Free Cash Flow generated in the prior four fiscal quarters by the ADT North American R/SB Group and Tyco Group, collectively (for the avoidance of doubt excluding, for purposes of such calculation, any Free Cash Flow generated by the Flow Control Group during such period). For purposes of this Section 2.3, the Free Cash Flow generated by the North American security business for any applicable period shall be allocated between the Tyco Group and the ADT North American R/SB Group based on the methodology set forth in Schedule 3.4 .

(c) Promptly following the ADT NA Distribution Date, and in any event not later than forty-five (45) days following the ADT NA Distribution Date, ADT NA and Tyco shall each prepare for the period after September 30, 2011 up to the ADT NA Distribution Date an exhibit (a “ Statement of Cash Flow Detail ”) which includes: (A) a complete cash flow statement indicating the Free Cash Flow generated by the ADT North American R/SB Business or Trident Retained Business, as applicable, during such period (for the avoidance of doubt excluding, for purposes of such calculation, any Free Cash Flow generated by the Flow Control Group during such period), (B) a list of acquisitions and divestitures and equity investments consummated by ADT NA (or a member of the ADT North American R/SB Group), or Tyco (or a member of the Tyco Group), as applicable, which quantifies the cash impact to ADT NA or Tyco, as applicable, of such transactions, (C) a list of unpaid Separation Expenses incurred by such Party and the members of its Group approved by the Executive Vice President and Chief Financial Officer of Tyco International prior to the ADT NA Distribution Date and (D) the cash and cash equivalents balance of ADT NA or Tyco, as applicable, as of the ADT NA Distribution Date. In preparing the Statement of Cash Flow Detail, the elements thereof shall (x) be prepared in accordance with the Tyco International January 2012 Management Report as prepared by the Financial Planning & Analysis Department of Tyco, (y) be prepared in a manner consistent with the principles and example set forth in Schedule 3.4 , and (z) be prepared in a manner consistent with the terms of this Agreement.

(d) Within two (2) Business Days following the completion of a Party’s Statement of Cash Flow Detail, such Party shall deliver such Statement of Cash Flow Detail to the other Party for review, and the other Party and such other Party’s accountants shall be entitled to make reasonable inquiries of the first Party and/or its accountants and senior officers, at reasonable times, upon reasonable advance notice, and without unreasonable interference to such Party’s operations, regarding its Statement of Cash Flow Detail. The other Party shall complete its review of the first Party’s Statement of Cash Flow Detail within thirty (30) days of delivery of such Party’s Statement of Cash Flow Detail (the “ Cash Flow Detail Review Period ”). Promptly following completion of its review (but in no event later than two (2) Business Days following the conclusion of the Cash Flow Detail Review Period), a reviewing Party shall submit to the other Party a letter stating its concurrence or disagreement with the accuracy of such other Party’s Statement of Cash Flow Detail (“ Response Letter ”), provided , that if the reviewing Party

 

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submits a Response Letter indicating its disagreement with the Statement of Cash Flow Detail, such letter will specify the specific items on the Statement of Cash Flow Detail with which it disagrees (each, a “ Disputed Item ”), it being understood that all other items in such Statement of Cash Flow Detail other than the Disputed Items shall be deemed agreed to by such reviewing Party. Unless the reviewing Party delivers a Response Letter within two (2) Business Days following the conclusion of the Cash Flow Detail Review Period, the reviewing Party shall be deemed to have accepted the other Party’s Statement of Cash Flow Detail and the calculations therein shall become final and binding upon Tyco and ADT NA.

(e) Following delivery of any Response Letter by either Party, Tyco and ADT NA shall in good faith attempt promptly to resolve all disagreement as to the computation of all Disputed Items within the fifteen (15) day period (or longer, as mutually agreed by Tyco and ADT NA) after delivery of the Response Letter. Any items not in dispute or resolved during such period shall be deemed to be final. Following such 15-day period, Tyco and ADT NA shall submit any remaining Disputed Items (and only such remaining Disputed Items) to KPMG or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by Tyco and ADT NA in writing (in any such case, the “ Accountant ”) for determination. The determination of the Accountant with respect to all remaining Disputed Items shall be completed within thirty (30) days after the appointment of the Accountant, shall be determined in accordance with this Agreement, and shall be final and binding upon Tyco and ADT NA. With respect to each Disputed Item subject to resolution by the Accountant, the Accountant shall adopt a position that is either equal to ADT NA’s proposed position, equal to Tyco’s proposed position, or between the positions proposed by ADT NA and Tyco. The fees, costs and expenses of the Accountant shall be shared equally by Tyco and ADT NA.

(f) Within seven (7) days of the final resolution of all Disputed Items in accordance with Section 3.4(d) and (e)  above, Tyco will submit to ADT NA, a statement calculated based on the example in Schedule 3.4 (the “ Statement of Cash Allocation ”) indicating the final allocation of cash to ADT NA based on ADT NA’s contribution to Free Cash Flow (as finally determined in accordance with this Section 3.4 ), which calculation and allocation will be consistent with the principles set forth in Section 3.4(b) (i.e., that any cash and cash equivalent balance above or below the target cash balance shall be allocated based on relative contribution to Free Cash Flow). The Cash Allocation of ADT NA as set forth in the Statement of Cash Allocation shall be referred to as “ Final ADT NA Cash Allocation ”. Notwithstanding anything herein to the contrary, the Final ADT NA Cash Allocation shall not be determined and finalized until the Cash Flow Detail of each Party has been finalized as provided above, the adjustments are made under Section 3.4 and 3.5 of the Flow Control Agreement and all amounts have been repaid under the Bridge Note and all amounts payable pursuant to the Share Premium Redemption shall have been paid in full. Based on the Statement of Cash Allocation, if the Final ADT NA Cash Allocation is greater than the amount allocated to ADT NA pursuant to Section 3.4(b) (taking into account any adjustments as provided therein), and such difference is greater than $5 million, then Tyco shall be obligated to pay, or cause to be paid, to ADT NA, or its designee, the amount of the difference between the Final ADT NA Cash Allocation and the amount allocated to ADT NA pursuant to Section 3.4(b) (taking into account any adjustments as provided therein) within three (3) Business Days following delivery of the Statement of Cash Allocation. If the Final ADT NA Cash Allocation is less than the ADT NA Distribution Cash

 

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Balance, and such difference is greater than $5 million, then ADT NA shall be obligated to pay, or cause to be paid, to Tyco, or its designee, the amount of the difference between the Final ADT NA Cash Allocation and the amount allocated to ADT NA pursuant to Section 3.4(b) (taking into account any adjustments as provided therein) within three (3) Business Days following delivery of Statement of Cash Allocation.

(g) Any payments made pursuant to this Section 3.4 shall be made by wire transfer of immediately available funds to the account designated in writing by Tyco or ADT NA, as applicable. Any payment made pursuant to this Section 3.4 shall be made with interest (such interest to be calculated on the basis of a year of three-hundred sixty (360) days and the actual number of days elapsed on such amount from the ADT NA Distribution Date to the date of such payment at a rate of LIBOR plus 175 basis points for the first 120 days and the Default Interest Rate for anytime after the first 120 days.

Section 3.5. Ancillary Agreements . On or prior to the Effective Time, each of Tyco International and ADT NA shall enter into, and/or (where applicable) shall cause a member or members of their respective Group to enter into, the Ancillary Agreements to the extent not entered into on or prior to the date hereof.

ARTICLE IV

THE DISTRIBUTION

Section 4.1. Stock Dividend to Tyco Shareholders . On the ADT NA Distribution Date, Tyco International will cause the Distribution Agent to distribute all of the outstanding shares of ADT NA Common Stock then owned by Tyco International to holders of Tyco Common Stock on the ADT NA Distribution Record Date, and to credit the appropriate number of such shares of ADT NA Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of ADT NA Common Stock. For stockholders of Tyco International who own Tyco Common Stock through a broker or other nominee, their shares of ADT NA Common Stock will be credited to their respective accounts by such broker or nominee. Each holder of Tyco Common Stock on the ADT NA Distribution Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the ADT NA Distribution 0.5 of a share of ADT NA Common Stock for every one share of Tyco Common Stock held by such stockholder. No action by any such stockholder shall be necessary for such stockholder (or such stockholder’s designated transferee or transferees) to receive the applicable number of shares of (and, if applicable, cash in lieu of any fractional shares) ADT NA Common Stock such stockholder is entitled to in the ADT NA Distribution.

Section 4.2. Fractional Shares . Tyco International stockholders holding a number of shares of Tyco Common Stock, on the applicable Record Date, which would entitle such stockholders to receive less than one whole share of ADT NA Common Stock in the ADT NA Distribution, will receive cash in lieu of fractional shares. Fractional shares of ADT NA Common Stock will not be distributed in the ADT NA Distribution nor credited to book-entry accounts. Tyco International and ADT shall instruct the Distribution Agent to, as soon as practicable after the ADT NA Distribution Date, (a) determine the number of whole shares and fractional shares of ADT NA Common Stock allocable to each holder of record or beneficial

 

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owner of Tyco Common Stock as of close of business on the ADT NA Distribution Record Date, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case, at then-prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of ADT NA Common Stock after making appropriate deductions for any amount required to be withheld for Tax purposes and any brokerage fees incurred in connection with these sales of fractional shares. None of Tyco International, ADT NA or the Distribution Agent will guarantee any minimum sale price for the fractional shares of ADT NA Common Stock. Neither Tyco International nor ADT NA will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent acting on behalf of the applicable Party will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the broker-dealers through which the aggregated fractional shares are sold will be Affiliates of Tyco International or ADT NA.

Section 4.3. Actions in Connection with the Distribution

(a) ADT NA shall file such amendments and supplements to the ADT NA Form 10 as Tyco International may reasonably request, and such amendments as may be necessary in order to cause the same to become and remain effective as required by Law, including filing such amendments and supplements to the ADT NA Form 10 as may be required by the Commission or federal, state or foreign securities Laws. ADT NA shall mail to the holders of Tyco Common Stock, at such time on or prior to the ADT NA Distribution Date as Tyco International shall determine, the ADT NA Information Statement included in the ADT NA Form 10, as well as any other information concerning ADT NA, its business, operations and management, the ADT NA Plan of Separation and such other matters as Tyco International shall reasonably determine are necessary and as may be required by Law.

(b) ADT NA shall also cooperate with Tyco International in preparing, filing with the Commission or similar (U.S. or international) authority 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 appropriate in connection with the ADT NA Plan of Separation or other transactions contemplated by this Agreement and the Ancillary Agreements. Promptly after receiving a request from Tyco International, to the extent requested, ADT NA shall prepare and, in accordance with applicable Law, file with the Commission or similar authority any such documentation that Tyco International determines is necessary or desirable to effectuate the applicable Distribution, and Tyco International and ADT NA shall each use reasonable best efforts to obtain all necessary approvals from the Commission with respect thereto as soon as practicable.

(c) Promptly after receiving a request from Tyco International, ADT NA shall prepare and file, and shall use best efforts to have approved and made effective, an application for the original listing of the ADT NA Common Stock to be distributed in the ADT NA Distribution on the NYSE, subject to official notice of distribution.

 

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(d) Nothing in this Section 4.3 shall be deemed, by itself, to shift Liability for any portion of the ADT NA Form 10 or the ADT NA Information Statement to Tyco International.

Section 4.4. Sole Discretion of Tyco . Tyco International shall, in its sole and absolute discretion, determine the ADT NA Distribution Date and all terms of the ADT NA Distribution, including the form, structure and terms of any transactions and/or offerings to effect the ADT NA Distribution and the timing of and conditions to the consummation thereof, in each case, (w) subject to any limitations imposed pursuant to Swiss Law, (x) subject to receipt of the Shareholder Approval and (y) provided that if the conditions to the ADT NA Distribution set forth in Section 4.5 have otherwise been satisfied on or before March 31, 2013 (and would be satisfied on the proposed ADT NA Distribution Date), then the ADT NA Distribution shall be effected no later than March 31, 2013.

Section 4.5. Conditions to Distribution . The following are conditions to the consummation of the ADT NA Distribution.

(a) Tyco International shall have obtained the Shareholder Approval;

(b) The ADT NA Form 10 shall have been declared effective by the Commission, with no stop order in effect with respect thereto, and the Information Statement shall have been mailed to the holders of Tyco Common Stock;

(c) The ADT NA Common Stock to be delivered in the ADT NA Distribution shall have been approved for listing on the NYSE, subject to official notice of distribution;

(d) Tyco International shall have received a private letter ruling from the Internal Revenue Service, which ruling shall be in full force and effect at the time of the ADT NA Distribution, to the effect that (i) the ADT NA Distribution will qualify as tax-free under Section 355 of the Code, except for cash received in lieu of fractional shares of ADT NA Common Stock and (ii) certain internal transactions undertaken in anticipation of the ADT NA Distribution will qualify for favorable treatment under the Code;

(e) The ruling obtained by Tyco International from the Swiss Federal Tax Administration regarding the Swiss withholding Tax consequences of the ADT NA Distribution substantially to the effect that the ADT NA Distribution, including for cash received in lieu of a fractional share of ADT NA Common Stock, is not subject to Swiss withholding Tax shall be in full force and effect at the time of the ADT NA Distribution;

(f) Any material Governmental Approvals and other Consents necessary to consummate the ADT NA Distribution or any portion thereof shall have been obtained and be in full force and effect;

(g) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of all or any portion of the ADT NA Distribution shall be pending, threatened, issued or in effect, and no other event outside the control of Tyco International shall have occurred or failed to occur that prevents the consummation of all or any portion of the ADT NA Distribution; and

 

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(h) The aggregate implied market capitalization of ADT NA shall not exceed CHF 17.5 billion based on the closing price of the ADT NA Common Stock trading on the last “when issued” trading day prior to the ADT NA Distribution.

ARTICLE V

CERTAIN COVENANTS

Section 5.1. Agreement Not To Compete; No Solicit; No Hire .

(a) (A) Tyco agrees that from the ADT NA Distribution Date and through the second anniversary of the ADT NA Distribution Date (the “ Non-Competition Period ”), neither Tyco nor any member of the Tyco Group (which, for purposes of this Article V, shall not be deemed to include any member of the Flow Control Group) shall directly or indirectly own, operate or otherwise engage (including through any dealer) in any Tyco Competitive Activity in Canada, the United States, Puerto Rico or the U.S. Virgin Islands and (B) ADT NA agrees that during the Non-Competition Period, neither ADT NA nor any member of the ADT North American R/SB Group shall directly or indirectly own, operate or otherwise engage (including through any dealer) in any ADT Competitive Activity in Canada, the United States, Puerto Rico or the U.S. Virgin Islands; provided , that, the foregoing notwithstanding, if at the end of the Non-Competition Period there exists any Collocation Facilities, then the restrictions set forth in this Section 5.1(a) shall automatically be extended, with respect to each such Collocation Facility, (1) after the Non-Competition Period until such time as the Collocation Facility no longer constitutes a Collocation Facility and (2) solely in respect of the geography covered by the sales function operated out of such Collocation Facility at the end of the two-year Non-Competition Period.

(b) Notwithstanding anything to the contrary in the forgoing, nothing in Section 5.1(a) shall:

(i) prevent any member of the Tyco Group or the ADT North American R/SB Group, as applicable, from collectively owning up to an aggregate of five percent of the outstanding shares of any class of capital stock of any publicly traded Person that engages in any Tyco Competitive Activity or ADT Competitive Activity, as applicable (each, a “ Competing Person ”) so long as no member of the Tyco Group or ADT North American R/SB Group, as applicable, has any participation in the management (excluding directorships or substantially similar positions) of such Competing Person;

(ii) prevent any member of the Tyco Group or the ADT North American R/SB Group, as applicable, from selling or divesting any or all of its assets or businesses to any Person that is not an Affiliate of any member of such Group, and such Person shall not, subject to the requirements of the last paragraph of Section 9.5 , be bound by the restrictions set forth in Sections 5.1(a) or (c) , it being further understood and agreed that upon a Change of Control of either ADT or Tyco, as applicable, the Non-Competition Period and the obligations of both Parties set forth in Section 5.1(a) and (c)  shall automatically cease;

 

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(iii) prohibit any member of the Tyco Group or the ADT North American R/SB Group, as applicable, from acquiring (or entering into any agreement to acquire) the whole or any part of a Person or business which derived not greater than 40% of its consolidated revenues for the prior 12-month period (measured as of the most recently ended fiscal quarter prior to the execution of definitive documentation related to such acquisition) from any Tyco Competitive Activity or ADT Competitive Activity, as applicable; provided , that, where such Tyco Competitive Activity or ADT Competitive Activity, as applicable, of such Person or business represents greater than 25% of the consolidated or combined, as applicable, revenues of such Person or business acquired for the prior 12-month period (measured as of the most recently ended fiscal quarter prior to the execution of definitive documentation related to such acquisition), such member of the Tyco Group or ADT North American R/SB Group, as applicable, shall be required to use its reasonable best efforts to divest such Person, business or portion thereof to the extent engaging in such Tyco Competitive Activity or ADT Competitive Activity, as applicable, within 12 months after the consummation of such acquisition (regardless of when during the Non-Competition Period the acquisition (or entry into definitive documentation with respect thereto) occurs), provided that such 12 month period shall be extended in the event that a definitive agreement to dispose of such business within such 12 month period has been entered into for a reasonable period of time, in the event such definitive agreement is terminated as a result of the failure to obtain antitrust or other regulatory clearance to permit the applicable Party or member of their respective Group to seek an alternative disposition transaction;

(iv) prohibit any member of the Tyco Group or ADT North American R/SB Group, as applicable, from acquiring a Minority Investment in a non-publicly traded Person or business which engages in, or includes, any Tyco Competitive Activity or ADT Competitive Activity, as applicable. As used in this Agreement, the term “ Minority Investment ” means any minority equity investment by any member of the Tyco Group or ADT North American R/SB Group in any Person in which the members of the Tyco Group of ADT North American R/SB Group, as applicable, collectively hold less than 10% of the outstanding voting securities or similar equity interests of such Person entitled to elect the board of directors (or similar governing body) of such Person;

(v) prevent any member of the ADT North American R/SB Group from engaging in any ADT Competitive Activity with respect to any customer who was a Small Business customer or customer that was a Small Governmental Facility at the time the customer relationship was established (and continues to be a customer of the ADT North American R/SB Group as of the time such customer would no longer meet the definition of a Small Business or Small Governmental Facility customer, as applicable) solely to the extent that such competing activity arises solely as a result of the growth in excess of the size limitations included in the definition of Small Business or Small Governmental Facility of the facilities (whether existing or new) of such customer (and provided that none of the other provisions set forth in the definition of ADT Competitive Activity would otherwise apply to such customer);

 

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(vi) prevent any member of the Tyco Group from engaging in any Tyco Competitive Activity with respect to any customer who was larger than a Small Business customer at the time the customer relationship was established (and continues to be a customer of the Tyco Group as of the time such customer meets the definition of a Small Business customer) solely to the extent that such competing activity arises solely as a result of downsizing activities at its existing or new facilities that bring the size of such facilities within the size limitations included in the definition of a Small Business (and provided that none of the other provisions set forth in the definition of Tyco Competitive Activity would otherwise apply to such customer);

(vii) prevent any member of the ADT North American R/SB Group or Tyco Group from marketing and advertising its products and services in the ordinary course of its business, provided that such marketing and advertising is not specifically targeted at a Competitive Activity of the other Group;

(viii) prevent any member of the Tyco Group or ADT North American R/SB Group, as applicable, from selling or continuing to sell any products or systems or providing or continuing to provide any services to (x) any location serviced as of the ADT NA Distribution Date by a member of the Tyco Group or the ADT North American R/SB Group, as applicable, so long as subsequent to such servicing, such location has not been serviced by a third-party security provider or (y) any customer of such Group existing as of the ADT NA Distribution Date regardless of the size or nature of the location at which such products or services are provided; provided that, in any such case, such Group shall not be permitted to sell or provide any new products or services not sold or provided to such customer or location, as applicable, as of the ADT NA Distribution Date (other than (i) in connection with the repair or replacement of existing products with new or upgraded versions or (ii) add on products or services the sale or provision of which would not otherwise be in violation of this Section 5.1, disregarding any size limitations set forth in this Section).

(ix) prevent any member of the Tyco Group in the United States, Canada, Puerto Rico or the U.S. Virgin Islands from (x) entering into a customer agreement with any company, business or governmental entity or agency that includes, in addition to other services provided, the provision of installation, service and monitoring security services in respect of the residences of executives or other officers of such company (including any member of the Tyco Group) or business or executives or governmental officials of such governmental entity or agency or (y) providing installation, service or monitoring security services in respect of the residences of any executives, officers or directors of any member of the Tyco Group, provided that, in any such case, the provision of such services will first be offered to a member of the ADT North American R/SB Group pursuant to a customer employee subcontract arrangement to be prepared and negotiated in good faith between Tyco and ADT NA, it being understood and agreed that to the extent that ADT NA and Tyco cannot agree and finalize such subcontract arrangement after having negotiated in good faith, the Tyco Group may provide such services or subcontract the provision of such services to a third party;

 

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(x) prevent any member of the Tyco Group from designing, manufacturing, selling, hosting, leasing, licensing, or providing any maintenance or support services with respect to, any products, systems or software, provided such products, systems or software are only sold, leased or licensed by a member of the Tyco Group, directly or indirectly to (1) a third party on arms’ length terms that engages in the business of selling, leasing, licensing, servicing, monitoring or installing such products, systems or software for its own account or (2) end users of such products, systems or software pursuant to transactions with such end users that are not included within the definition of Tyco Competitive Activity; provided, however, that this subsection (x) shall not be interpreted to permit a member of the Tyco Group to provide Monitoring for residential or Small Business end users on behalf of a third party provider;

(xi) prevent the SimplexGrinnell business of the Tyco Group from (x) providing any non-monitored access control and/or video installation and maintenance services of the type and in volume not substantially greater than that conducted prior to the ADT NA Distribution Date (and provided that such services are bundled with other services or products that are not a Tyco Competitive Activity and not sold as a standalone offering) or (y) designing, selling, leasing, installing, servicing, repairing, monitoring and maintenance, or testing and inspecting any fire suppression or fire detection products, systems or software, provided that the foregoing exclusion in this clause (y) does not permit the sale, lease, installation, service and/or monitoring to a residential or Small Business customer of a security system that includes a “spot detection” fire detection system; or

(xii) prevent a member of the ADT North American R/SB Group from (a) providing an employee affinity program to any company or business whereby such employees are given promotional offers and/or discounts in consideration for purchasing any products or services that are considered to be a Tyco Competitive Activity, (b) holding any investment or other interest in iControl Networks, Inc. or any successor to iControl Networks, Inc. or its business, or (c) working with or otherwise collaborating with any supplier of products or services in the design or development of any products or services to be used in the ADT North American R/SB Group business to the extent that such use is not an ADT Competitive Activity and such collaboration or work is not in furtherance of an ADT Competitive Activity.

(c) In addition to the Parties’ obligations pursuant to Section 5.1(a) , each of Tyco and ADT NA agree, on behalf of itself and each member of the ADT North American R/SB Group or Tyco Group, as applicable, (x) to undertake the obligations set forth in Schedule 5.1(c)(A) and (y) that from the ADT NA Distribution Date through the second anniversary of the ADT NA Distribution Date (the “ Customer Non-Solicit Period ”), neither such Party nor any member of its Group shall, directly or indirectly, approach or seek business from any North American R/SB Customer (as defined below) (in the case of the Tyco Group) or Tyco Security Customer (as defined below) (in the case of the ADT North American R/SB Group) in the United States, Canada, Puerto Rico or the U.S. Virgin Islands; provided that, with respect to those Persons listed in Schedule 5.1(c)(B) , the Customer Non-Solicit Period shall be deemed to end on the first anniversary of the ADT NA Distribution Date unless during such period prior to the first anniversary of the ADT NA Distribution Date any such Person listed in Schedule 5.1(c)(B)

 

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becomes a customer of the Tyco Group, in which case the Customer Non-Solicit Period with respect to such Person shall be deemed to end on the second anniversary of the ADT NA Distribution Date. For purposes of this Section 5.1(c) , (x) the term “ North American R/SB Customer ” means any Person (A) set forth on Schedule 5.1(c)(C) , or (B) that is a Current Customer and (y) the term “ Tyco Security Customer ” means any Person (A) set forth on Schedule 5.1(c)(D) or (B) that is a Current Customer (for the avoidance of doubt, excluding, for purposes of (A) and (B), any franchisee that is not a Current Customer of the Tyco Group even where the Tyco Group has a customer relationship with the franchisor).

(d) Prior to initiating any legal action in accordance with Article X , any dispute, controversy or claim arising out of, relating to or in connection with this Section 5.1 (including any breach or alleged breach hereof) (a “ Section 5.1 Dispute ”), shall be resolved by submitting such Section 5.1 Dispute first to a dispute resolution designee of each of the Tyco Group and the ADT North American R/SB Group, who shall initially be Daniel Schroeder for the Tyco Group and Steve Gribbon for ADT and who shall seek to resolve such Section 5.1 Dispute through informal good faith negotiation. If the Section 5.1 Dispute is not resolved by such designees within 20 Business Days after the claiming party in writing notifies the other party of the Section 5.1 Dispute, then the Section 5.1 Dispute shall be finally settled in accordance with Sections 10.1 and 10.2 . A Party’s failure to comply with this Section 5.1(d) shall constitute cause for dismissal without prejudice of any legal proceeding.

(e) Neither Tyco nor ADT NA or any member of their respective Groups (excluding for these purposes, with respect to Tyco, the Flow Control Group) will, from the applicable Effective Time through and including the second anniversary of the Effective Time, without the prior written consent of the Senior Vice President of Human Resources of the other applicable Party, and to the extent permitted under local Law, either directly or indirectly, on their own behalf or in the service or on behalf of others, solicit or hire as an employee or an independent contractor any individual who is employed by any other Party or its Subsidiaries as of the Effective Time or at any time through and including the second anniversary of the Effective Time; provided that neither Tyco nor ADT NA or any member of their respective Groups will be precluded from placing general advertisements for employment not directed at the Tyco Group or ADT North American R/SB Group or any member thereof, as applicable or soliciting or hiring any such individual whose employment with such other Party or any member of its Group was involuntarily terminated.

Section 5.2. Financial Statements and Accounting . Each Party agrees to provide the following assistance of access set forth in subsections (a), (b) and (c) of this Section 5.2 , (i) during the three hundred and sixty-five (365) days following the ADT NA Distribution Date in connection with the closing of the books and the preparation and audit of each of the Party’s financial statements for the year ended September 28, 2012 or, to the extent the ADT NA Distribution Date is after September 28, 2012, the financial statements for the year ended September 27, 2013, the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting and management’s assessment thereof and management’s assessment of each Party’s disclosure controls and procedures, if required, in each case made as of September 28, 2012 or, to the extent the ADT NA Distribution Date is after September 28, 2012, made as of September 27, 2013; (ii) following such initial three hundred and sixty-five (365) day period, with the consent of the other applicable Party (not

 

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be unreasonably withheld or delayed) for reasonable business purposes; (iii) in the event that any Party changes its auditors within two (2) years of the ADT NA Distribution Date, then such Party may request reasonable access on the terms set forth in this Section 5.2 for a period of up to one hundred and eighty (180) days from such change; and (iv) from time to time following the ADT NA Distribution Date, to the extent reasonably necessary to respond (and for the limited purpose of responding) to any written request or official comment from a Governmental Entity, such as in connection with responding to a comment letter from the Commission:

(a) Annual Financial Statements . Each Party shall provide or provide access to the other Party on a timely basis all Information reasonably required to meet its schedule for the preparation, printing, filing, and public dissemination of its annual financial statements and for 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 and, 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 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder, if required (such assessments and audit being referred to as the “ 2012 Internal Control Audit and Management Assessments ”). Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to each other Party’s auditors with respect to Information to be included or contained in such other Party’s annual financial statements and to permit such other Party’s auditors and management to complete the Internal Control Audit and Management Assessments, if required.

(b) Access to Personnel and Records . Each Party shall authorize its respective auditors to make reasonably available to each other Party’s auditors (each such other Party’s auditors, collectively, the “ Other Parties’ Auditors ”) both the personnel who performed or are performing the annual audits of such audited Party (each such Party with respect to its own audit, the “ Audited Party ”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Parties’ Auditors are able to perform the procedures they reasonably consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. Each Party shall make reasonably available to the Other Parties’ Auditors and management its personnel and Records in a reasonable time prior to the Other Parties’ Auditors’ opinion date and other Parties’ management’s assessment date so that the Other Parties’ Auditors and other Parties’ management are able to perform the procedures they reasonably consider necessary to conduct the Internal Control Audit and Management Assessments.

(c) Annual Reports . Each Party will deliver to the other Parties a substantially final draft, as soon as the same is prepared, of the first report to be filed with the Commission (or otherwise) that includes their respective financial statements (in the form expected to be covered by the audit report of such Party’s independent auditors) for the year ended September 28, 2012 or September 27, 2013, if the ADT NA Distribution Date should

 

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occur after September 28, 2012 (such reports, collectively, the “ Annual Reports ”); provided , however , that each Party may continue to revise its respective Annual Report prior to the filing thereof, which changes will be delivered to the other Parties as soon as reasonably practicable; provided , further , that each Party’s personnel will actively consult with the other Party’s personnel regarding any material changes which they may consider making to its respective Annual Report and related disclosures prior to the anticipated filing with the Commission, with particular focus on any changes which could reasonably be expected to have an effect upon the other Party’s financial statements or related disclosures.

Nothing in this Section 5.2 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary Information relating to that third party or its business; provided , however , that in the event that a Party is required under this Section 5.2 to disclose any such Information, such Party shall use best efforts to seek to obtain such third party’s written consent to the disclosure of such Information.

Section 5.3. Certain Securities . Subject to the provisions of Section 6.1 as applicable, following the ADT NA Distribution Date, ADT NA agrees that, upon exercise of any option, warrant or similar security to purchase Tyco Common Stock or the conversion of any note or other security of Tyco International convertible into Tyco Common Stock, in each case that Tyco International has issued to third persons prior to the Effective Time, ADT NA shall, upon request by Tyco International, promptly (and in any event within any time periods required by the terms of any such option, warrant, note or similar security) issue to Tyco International, as agent for the holder thereof, such number of shares of ADT NA Common Stock that Tyco International would otherwise be required to deliver to such holder pursuant to the terms of any such security and Tyco International shall promptly deliver such shares to such holder. It is further agreed that with respect to such options, warrants, notes or similar securities, ADT NA shall keep reserved for issuance a sufficient number of shares of ADT NA Common Stock to satisfy any future exercises of such options or warrants or conversion of such notes or other securities. In connection with the foregoing, Tyco International will promptly following receipt of notice that a holder desires to exercise any such options, warrants or similar security or convert such note or other security, in each case of the type described in this Section 5.2 notify, in writing, ADT NA so that it may comply with the terms of this Section 5.2 ; provided , that ADT NA shall not have any additional Liability beyond the obligation to deliver shares as set forth in this Section 5.2 for failing to deliver such shares of ADT NA Common Stock in the time period described in the foregoing sentence if such failure and delay was the result of untimely notification by Tyco International. ADT NA hereby Assumes the obligations set forth in this Section 5.2 .

Section 5.4. Removal of Tyco and ADT NA Designations . Except as otherwise expressly provided in Ancillary Agreement, without undue delay after the ADT NA Distribution Date, but in any event no later than within 180 days after the ADT NA Distribution Date, (a) ADT NA shall and shall cause the applicable members of the ADT North American R/SB Group to execute and file in the relevant offices such amended organizational documents so that any reference to “Tyco” shall be eliminated from the corporate names of members of the ADT North American R/SB Group and shall as soon as practicable thereafter pursue such name changes until effective and (b) Tyco shall and shall cause the applicable members of the Tyco Group to execute and file in the relevant offices in Canada, the United States, Puerto Rico or the U.S.

 

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Virgin Islands such amended organizational documents so that any reference to “ADT” shall be eliminated from the corporate names of members of the Tyco Group organized in Canada, the United States, Puerto Rico or the U.S. Virgin Islands and shall as soon as practicable thereafter pursue such name changes until effective.

Section 5.5. Administration of Specified Shared Expenses . Tyco shall be responsible for administering each Specified Shared Expense. Except as otherwise set forth on Schedule 1.1(165) or with respect to certain Specified Shared Expenses that are otherwise allocated between the Parties pursuant to the Tax Sharing Agreement or other Ancillary Agreements, the Parties shall be responsible for payment of any Specified Shared Expense based on the following allocations: Tyco, 65.625% and ADT NA, 34.375%. Tyco shall invoice ADT NA on a quarterly basis, and ADT NA shall promptly following invoice reimburse the administering Party for its allocable share of such Specified Shared Expenses. In addition, Tyco shall, in connection with each invoice, provide a quarterly estimated budget (for informational and planning purposes only) to ADT NA of Specified Shared Expenses for the proceeding quarter.

Section 5.6. Cooperation . From and after the ADT NA Distribution Date, each Party shall, and shall cause each of its respective Affiliates and employees to (i) provide reasonable cooperation and assistance to each other Party (and any member of their respective Groups) in connection with the completion of the ADT NA Plan of Separation (including assisting in the preparation of the ADT NA Distribution), (ii) provide knowledge transfer regarding the ADT North American R/SB Business or Tyco’s historical business and (iii) reasonably assist each other Party in the orderly and efficient transition in becoming an independent company; in each case, except as may otherwise be agreed to by the Parties in writing or expressly set forth in this Agreement or any Ancillary Agreement, at no additional cost to the Party requesting such assistance other than for the actual out-of-pocket costs (which shall not include the costs of salaries and benefits of employees of such Party or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service with respect to the foregoing) incurred by any such Party, if applicable. The cooperation and assistance provided for in this Section 5.6 shall not be required to the extent such cooperation and assistance would result in an undue burden on any Party or would unreasonably interfere with the operation of any Party’s business or with any Party’s employees’ normal functions and duties. In furtherance of, and without limiting, the foregoing, each Party shall make reasonably available those employees with particular knowledge of any function or service of which another Party was not allocated the employees, agents or consultants involved in such function or service in connection with the ADT NA Plan of Separation (including, employee benefits functions, risk management, etc.).

Section 5.7. FOL Database . Each Party shall provide or provide access to copies of the UBS Financials Online report in its possession to the other Party promptly (and in any event within two (2) Business Days) following the request by such other Party, including the information relating to the stock options, restricted stock and similar securities granted to the employees of each Party prior to the Effective Time. Any Party making a request for FOL reports, including the information relating to the stock options, restricted stock and similar securities granted to the employees of each Party prior to the Effective Time shall provide clear parameters for the FOL reports being requested.

 

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ARTICLE VI

EMPLOYEE MATTERS

Section 6.1. Stock Options . Except as provided on Schedule 6.1 :

(a) ADT North American R/SB Options .

(i) On behalf of all ADT North American R/SB Employees and any beneficiary or legal representative thereof who hold Tyco Options, prior to the ADT NA Distribution, Tyco shall take all actions necessary such that each Tyco Option held by such individual which is outstanding immediately prior to the ADT NA Distribution, whether vested or unvested, other than any Tyco Option subject to the provisions of Section 6.1(c) below, shall, as of 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date, be converted into an option to acquire ADT NA Common Stock (a “ ADT North American R/SB Option ”) in accordance with the succeeding paragraphs of this Section 6.1(a) .

(ii) The number of shares subject to the ADT North American R/SB Option shall equal the number of shares of Tyco Common Stock subject to the Tyco Option multiplied by a fraction, the numerator of which is the last per share trading price of Tyco Common Stock with due bills on the NYSE in the last trade on the NYSE immediately prior to the Distribution (the “ Closing Tyco Stock Price ”) and the denominator of which is the last per share trading price of ADT NA Common Stock when-issued in the last trade on the NYSE immediately prior to the ADT NA Distribution (the “ Pre-Distribution ADT NA Stock Price ”), with the resulting number of shares subject to the ADT North American R/SB Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the ADT North American R/SB Option (the “ Adjusted ADT NA Exercise Price ”) shall be equal to the product of (A) the original exercise price of the Tyco Option multiplied by (B) a fraction, the numerator of which shall be the Pre-Distribution ADT NA Stock Price and the denominator of which shall be the Closing Tyco Stock Price, which product shall be rounded up to the nearest hundredth of a cent (four decimal places).

(iv) Prior to the ADT NA Distribution Date, Tyco shall (A) cause ADT NA to adopt the ADT NA 2012 Stock and Incentive Plan (the “ 2012 ADT NA Stock and Incentive Plan ”), effective as of 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date, (B) ensure or cause ADT NA to ensure that the shares issuable under such plan have been registered on Form S-8 (or successor form) promulgated by the Commission under the Securities Act and (C) approve, as the sole stockholder, the adoption of the 2012 ADT NA Stock and Incentive Plan. On or prior to 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date, Tyco shall take all actions deemed necessary and appropriate to revise award agreements issued with respect to any Tyco Option converted to a ADT North American R/SB Option to ensure that the terms

 

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and conditions of the ADT North American R/SB Options described in Section 6.1(a) above are substantially similar to the terms and conditions applicable to the corresponding Tyco Option, including the terms and conditions relating to vesting and the post-termination exercise period.

(b) Tyco Options .

(i) On behalf of all Tyco Employees who hold Tyco Options prior to the Distribution, Tyco shall take all actions necessary such that each Tyco Option which is outstanding immediately prior to the ADT NA Distribution, whether vested or unvested, other than any Tyco Option subject to the provisions of Section 6.1(c) below, shall, as of 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date, be adjusted such that the number of shares subject to each Option and the per-share exercise price reflect the impact of the ADT NA Distribution in accordance with the succeeding paragraphs of this Section 6.1(b) .

(ii) The adjusted number of shares subject to the Tyco Option shall equal the original number of shares of Tyco Common Stock subject to the Tyco Option multiplied by a fraction, the numerator of which is the Closing Tyco Stock Price, and the denominator of which is the last per share trading price of Tyco Common Stock when-issued in the last trade immediately prior to the Distribution (the “ Pre-Distribution Tyco Stock Price ”), with the resulting number of shares subject to the Tyco Option being rounded down to the nearest whole share.

(iii) The per share exercise price of the Tyco Option (the “ Adjusted Tyco Exercise Price ”) shall be equal to the product of (A) the original exercise price of the Tyco Option multiplied by (B) a fraction, the numerator of which is the Pre-Distribution Tyco Stock Price and the denominator of which is the Closing Tyco Stock Price, which product shall be rounded up to the nearest hundredth of a cent (four decimal places).

(c) Tyco Options for Tyco Corporate Employees .

(i) Notwithstanding Sections 6.1(a) and (b) , for all Tyco Options granted prior to October 12, 2011 to, and held by, the employees listed in Schedule 6.1(c) and for all Tyco Options held by non-employee directors of Tyco International on the ADT NA Distribution Date (“ Tyco Directors ”), Tyco shall take all actions necessary such that each such Tyco Option which is outstanding immediately prior to the Distribution, whether vested or unvested, shall, as of 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date, (A) be converted into options to separately acquire shares of ADT NA Common Stock and Tyco Common Stock and, if the Flow Control Distribution Date occurs simultaneously, Flow Control Common Stock, and (B) be adjusted such that the number of shares subject to the option and the per-share exercise price reflect the impact of the ADT NA Distribution in accordance with the succeeding paragraphs of this Section 6.1(c) , except to the extent expressly provided to the contrary in a written agreement with the holder of such Tyco Options, in which case such options shall be treated in accordance with the provisions of such individual agreement.

 

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(ii) The adjusted number of shares subject to each option to acquire Tyco Common Stock shall equal the original number of shares of Tyco Common Stock subject to the Tyco Option multiplied by a fraction obtained by dividing (x) the Closing Tyco Stock Price minus the original exercise price for such Tyco Option, by (y) the sum of (A) the Pre-Distribution Tyco Stock Price minus the Adjusted Tyco Exercise Price plus (B) 0.5 times the result obtained by subtracting the Adjusted ADT NA Exercise Price from the Pre-Distribution ADT NA Stock Price and, if the Flow Control Distribution Date occurs simultaneously, plus (C) the Distribution Ratio (as defined in the Flow Control Agreement) times the result obtained by subtracting the Adjusted Flow Control Exercise Price (as defined in the Flow Control Agreement) from the last per share trading price of Flow Control Common Stock when-issued in the last trade on the NYSE immediately prior to the Flow Control Distribution or in the absence of a “when issued” trading market for Flow Control Common Stock, the closing price of Patriot Common Stock (as defined in the Merger Agreement) on the last trading day prior to the Flow Control Distribution (the “ Pre-Distribution Flow Control Stock Price ”), with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire Tyco Common Stock shall be the Adjusted Tyco Exercise Price.

(iii) The adjusted number of shares subject to each option to acquire ADT NA Common Stock shall be equal to 0.5 times the number of shares of Tyco Common Stock determined as set forth in Section 6.1(c)(ii) above, with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire ADT NA Common Stock shall be the Adjusted ADT NA Exercise Price.

(iv) If the Flow Control Distribution occurs simultaneously, the adjusted number of shares subject to each option to acquire Flow Control Common Stock shall be equal to the Distribution Ratio (as defined in the Flow Control Agreement) times the number of shares of Tyco Common Stock determined as set forth in Section 6.1(c)(ii) above, with the resulting number of shares rounded down to the nearest whole share. The per-share exercise price of each such option to acquire Flow Control Common Stock shall be the Adjusted Flow Control Exercise Price.

(d) Former Employees and Former Tyco Directors .

(i) Tyco Options held by Former Tyco Employees and Former ADT North American R/SB Employees shall be treated in the same manner as described in Section 6.1(c) above. Notwithstanding the foregoing, if a written agreement between a Party (or any of their Affiliates or Subsidiaries) and the holder of any such Tyco Options prior to the ADT NA Distribution Date expressly provides for contrary treatment, such options shall be treated in accordance with the provisions of such individual agreement.

(ii) Tyco Options held by individuals who formerly served as Tyco Directors and on and after the ADT NA Distribution Date are not serving as Tyco Directors shall be treated in the same manner as described in Section 6.1(c) above, except to the extent expressly provided to the contrary in a written agreement with the holder of such Tyco Options, in which case such options shall be treated in accordance with the provisions of such individual agreement.

 

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(e) Adjustments to Equity Awards in Connection With The Distribution . Notwithstanding any other provision of this Agreement, Tyco shall have the authority to make any appropriate adjustments necessary to satisfy the requirements of U.S. Treasury Regulation Section 1.424-1 and Section 1.409A-1 for each option award (without regard to whether such options would otherwise be subject to such regulation) in accordance with the anti-dilution provisions of the governing plan.

(f) Settlement of Options . Subject to the terms of this Agreement and any other agreement made by the Parties from time to time, upon the exercise of any Tyco Options or ADT NA Options, each of Tyco and ADT NA, respectively, shall be solely responsible to issue shares in settlement of such options without reimbursement, recourse or other compensation from any other Party; provided, however, that if a Party resolves to amend the vesting schedule and/or exercise period of an employee or former employee’s Tyco Options or ADT NA Options, as the case may be, then (i) the Party that requested such amendment shall reimburse the Party that made such amendment for any increased compensation or other costs incurred by the amending Party (determined in accordance with the amending Party’s normal practices) in connection with such amendment, and (ii) the amending Party shall make any required changes to implement such requested amendment.

Section 6.2. Restricted Stock Units, Performance Share Units and Deferred Stock Units . Except as provided on Schedule 6.2 :

(a) Restricted Stock Units, Performance Share Units and Deferred Stock Units .

(i) Restricted Stock Units Granted Prior to October 12, 2011 . Each Tyco Restricted Stock Unit award granted prior to October 12, 2011 that is outstanding immediately prior to the ADT NA Distribution shall be converted so that immediately after the ADT NA Distribution Date, the holder has, in addition to the original Tyco Restricted Stock Unit award, an additional award of ADT NA Restricted Stock Units and, if the Flow Control Distribution Date occurs simultaneously, Flow Control Restricted Stock Units (as defined in the Flow Control Agreement). The number of additional ADT NA Restricted Stock Units awarded shall be determined pursuant to Section 4.1 as if the Restricted Stock Units award represented actual shares of Tyco Common Stock and such ADT NA Restricted Stock Units shall generally have the same terms and conditions (including vesting schedule) associated with the original Tyco Restricted Stock Units. The number of additional Flow Control Restricted Stock Units awarded shall be determined pursuant to Section 4.1 and Section 6.2 of the Flow Control Agreement.

 

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(ii) Restricted Stock Units Granted on or After October 12, 2011 . Each Tyco Restricted Stock Unit award granted on or after October 12, 2011 that is outstanding immediately prior to the Distribution shall be converted as of 12:00:01 a.m. Eastern Daylight Time on the ADT NA Distribution Date into Restricted Stock Units as follows:

(A) On behalf of all ADT North American R/SB Employees who hold such Restricted Stock Units, Tyco shall convert such units into Restricted Stock Units payable solely in ADT NA shares which shall generally have the same terms and conditions (including vesting schedule) associated with such original Tyco Restricted Stock Unit award. The number of ADT NA Restricted Stock Units shall equal the number of outstanding Tyco Restricted Stock Units as of the ADT NA Distribution Date, multiplied by a fraction, the numerator of which is the Closing Tyco Stock Price and the denominator of which is the Pre-Distribution ADT NA Stock Price, which product shall be rounded down to the nearest whole number of units with a cash payment to be made by ADT NA for any fractional units. Notwithstanding the foregoing, if the cash payment at such time would cause an ADT North American R/SB Employee to be subject to the additional taxes of Code Section 409A, then the cash payment shall be made at the time the ADT NA Restricted Stock Units are otherwise payable in accordance with the terms of the governing award agreement.

(B) On behalf of all Tyco Employees who hold such Restricted Stock Units, Tyco shall convert such Units into Restricted Stock Units payable solely in Tyco shares which shall generally have the same terms and conditions (including vesting schedule) associated with such original Tyco Restricted Stock Unit award. The number of adjusted Tyco Restricted Stock Units shall equal the original number of outstanding Tyco Restricted Stock Units as of the ADT NA Distribution Date, multiplied by a fraction, the numerator of which is the Closing Tyco Stock Price and the denominator of which is Pre-Distribution Tyco Stock Price, which product shall be rounded down to the nearest whole number of units with a cash payment to be made by Tyco for any fractional units.

(iii) Performance Share Units .

(A) Each Performance Share Unit award that is outstanding immediately prior to the Distribution (as adjusted to reflect the number of such units then outstanding based on an adjusted performance period that ends no earlier than the last day of Tyco International’s 2012 fiscal third quarter) shall be converted in the exact same manner and at the same time that Restricted Stock Units granted on or after October 12, 2011 are converted pursuant to Section 6.2(a)(ii) above; provided, however, that each Performance Share Unit award that is held by an employee listed in Schedule 6.1(c) that was granted prior to October 12, 2011 and is outstanding immediately prior to the ADT NA Distribution (as adjusted to reflect the number of such units then outstanding based on an adjusted performance period that ends no earlier than the last day of Tyco International’s 2012 fiscal third quarter) shall be converted into Tyco Restricted Share Units, Flow Control Restricted Share Units and ADT NA Restricted Share Units as if such awards were Restricted Stock Unit awards converted pursuant to Section 6.2(a)(i) . For the avoidance of doubt, any Performance Share Unit that is adjusted to reflect performance through a date that precedes the Flow Control Distribution Date shall continue to be deemed a Performance Share Unit under this Agreement notwithstanding the expiration of the applicable performance period and

 

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notwithstanding any employee communications that may refer to such Performance Share Unit as being converted to a Tyco Restricted Stock Unit as of a date prior to the Flow Control Distribution Date.

(B) The Parties shall take all necessary actions to provide that the terms and conditions of such converted Performance Share Unit awards shall be modified to provide that the converted Performance Share Unit awards shall be payable at the end of the original three-year vesting period without regard to the originally established performance period, provided that the employee remains continuously employed with Tyco International or ADT NA, respectively, through such date (subject to any acceleration of vesting as provided for in the original applicable Performance Share Unit award agreement).

(iv) Deferred Stock Units . Each Deferred Stock Unit that is outstanding immediately prior to the Distribution and which is held by a Tyco Employee listed in Schedule 6.1(c) or by a Tyco Director shall be adjusted such that the number of Deferred Stock Units reflects the impact of the ADT NA Distribution as set forth in Section 6.2(a)(i) ; provided that fractional shares will continue to be maintained until the payment of the unit is made. Such converted awards shall remain subject to the terms and conditions in effect with respect to the award immediately preceding the ADT NA Distribution Date.

(b) Grant and Settlement of Awards . Tyco shall assure that each Tyco Stock Option, Restricted Stock Unit and Performance Share Unit is converted into ADT NA awards as set forth in Section 6.1 and Section 6.2 . All such converted awards will be issued under the 2012 ADT NA Stock and Incentive Plan and Tyco shall take all commercially reasonable actions to revise award agreements issued with respect to any such converted award to ensure that the terms and conditions of the ADT NA awards are substantially similar to the terms and conditions applicable to the corresponding Tyco awards, except as specifically provided herein. Subject to the terms of this Agreement and any other agreement in force between the Parties from time to time, upon the vesting or payment of any such award, each of Tyco and ADT NA shall be solely responsible to issue its shares in settlement of the respective awards payable in its shares without reimbursement, recourse or other compensation from any other Party; provided , however , that if a Party resolves to amend the vesting schedule and/or exercise period of an employee or former employee’s award, then (i) the Party that requested such amendment shall reimburse the Party that made such amendment for any increased compensation or other costs incurred by the amending Party (determined in accordance with the issuing Party’s normal practices) in connection with such amendment, and (ii) the amending Party shall make any required changes to implement the requested amendment.

(c) Former Employees and Former Tyco Directors . Tyco Restricted Stock Units, Performance Share Units and Deferred Stock Units held by Former Tyco Employees and Former ADT North American R/SB Employees shall be treated in the same manner as described in Section 6.2(a)(i) above. Notwithstanding the foregoing, if a written agreement between a Party (or any of their Affiliates or Subsidiaries) and the holder of any such Tyco Restricted Stock Unit, Performance Share Unit or Deferred Stock Unit prior to the ADT NA Distribution Date expressly provides for contrary treatment, such units shall be treated in accordance with the

 

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provisions of such individual agreement. Tyco Restricted Stock Units and Deferred Stock Units held by individuals who formerly served as Tyco Directors and on and after the ADT NA Distribution Date are not serving as Tyco Directors shall be treated in the same manner as described in Section 6.2(a)(i) above, except to the extent expressly provided to the contrary in a written agreement with the holder of such Tyco Restricted Stock Unit or Deferred Stock Unit, in which case such units shall be treated in accordance with the provisions of such individual agreement.

Section 6.3. Nonqualified Deferred Compensation Plans .

(a) ADT NA Nonqualified Deferred Compensation Plans .

(i) Effective as of the ADT NA Distribution Date, ADT NA (or any one of its Subsidiaries or Affiliates) shall be the sponsor of, and be solely responsible for the satisfaction of all Liabilities under, the ADT NA Nonqualified Deferred Compensation Plans listed in Schedule 6.3(a) . Effective as of the ADT NA Distribution Date, ADT NA (or any one of its Subsidiaries or Affiliates) also shall be solely responsible for the satisfaction of all Liabilities with respect to nonqualified deferred compensation plan benefits for ADT NA Employees and Former ADT NA Employees under the Tyco Supplemental Savings and Retirement Plan and Tyco Supplemental Executive Retirement Plan (the “ ADT NA Deferred Compensation Liabilities ”). To the extent necessary to effectuate ADT NA’s assumption of the ADT NA Deferred Compensation Liabilities, ADT NA (or any one of its Subsidiaries or Affiliates), shall establish as of the ADT NA Distribution Date one or more nonqualified deferred compensation plans which shall contain terms that are substantially similar to the terms and conditions of the Tyco Supplemental Savings and Retirement Plan and Tyco Supplemental Executive Retirement Plan as in effect prior to the ADT NA Distribution Date (subject to such amendments as necessary to comply with Code Section 409A) and the ADT NA Deferred Compensation Liabilities under the Tyco Supplemental Savings and Retirement Plan and Tyco Supplemental Executive Retirement Plan as of the ADT NA Distribution Date shall be transferred to such plans.

(ii) All elections by ADT North American R/SB Employees, and Former ADT North American R/SB Employees that were in effect under the terms of the applicable ADT North American R/SB Nonqualified Deferred Compensation Plans immediately prior to the ADT NA Distribution Date shall continue in effect from and after the ADT NA Distribution Date until a new election that by its terms supersedes the prior election is made by such ADT North American R/SB Employee or Former ADT North American R/SB Employee in accordance with the terms of the applicable ADT North American R/SB Nonqualified Deferred Compensation Plan and consistent with the provisions of Code Section 409A to the extent applicable.

(iii) As of the ADT NA Distribution Date, ADT NA shall be solely responsible for the management and administration of the ADT North American R/SB Nonqualified Deferred Compensation Plans including, but not limited to, the adjudication of claims filed by ADT North American R/SB Employees or Former ADT North American R/SB Employees under the Tyco Supplemental Savings and Retirement Plan and Tyco

 

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Supplemental Executive Retirement Plan before the ADT NA Distribution Date; provided that (A) the claim relates to a ADT North American R/SB Deferred Compensation Liability that has been transferred to the applicable ADT North American R/SB Nonqualified Deferred Compensation Plan; (B) the claim has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (C) under the applicable claims procedure ADT NA plan administrator or other authorized person or committee will have at least a sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Tyco shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Tyco’s response to such claim does not finally adjudicate the claim, Tyco shall upon sending its response to the claimant immediately transfer administration of such claim to ADT NA for final adjudication.

(iv) Payments to ADT North American R/SB Employees and Former ADT North American R/SB Employees under the ADT North American R/SB Nonqualified Deferred Compensation Plans shall be made by ADT NA or one of its Subsidiaries or Affiliates as determined in the sole discretion of ADT NA.

(b) Tyco Nonqualified Deferred Compensation Plans .

(i) Effective as of the ADT NA Distribution Date, Tyco (or any one of its Subsidiaries or Affiliates) shall be solely responsible for the satisfaction of all Liabilities under the Tyco Nonqualified Deferred Compensation Plans and all Liabilities with respect to nonqualified deferred compensation plan benefits for Tyco Employees and Former Tyco Employees under the Tyco Supplemental Savings and Retirement Plan and Tyco Supplemental Executive Retirement Plan (the “ Tyco Deferred Compensation Liabilities ”).

(ii) Payments to Tyco Employees and Former Tyco Employees under the Tyco Nonqualified Deferred Compensation Plans shall be made by Tyco or one of its Affiliates as determined in the sole discretion of Tyco.

(c) Continued Employment . Consistent with Code Section 409A, Tyco and ADT NA agree that ADT North American R/SB Employees who participate in the Tyco Nonqualified Deferred Compensation Plans immediately prior to the ADT NA Distribution Date and who participate in the ADT North American R/SB Nonqualified Deferred Compensation Plans immediately following the ADT NA Distribution Date, shall not experience a termination of employment or separation from service as a result of the transactions contemplated herein.

Section 6.4. Pension Plans .

(a) ADT North American R/SB Pension Plans .

(i) As of the ADT NA Distribution Date, ADT NA shall Assume sponsorship of and be solely responsible for the management and administration of, and except as otherwise provided below, be responsible for all Assets and Liabilities under the pension plans listed in Schedule 6.4(a) (with such plans to be solely ADT NA’s responsibility referred to as the “ ADT North American R/SB Pension Plans ”).

 

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(ii) For ADT North American R/SB Pension Plans that are intended to be tax-qualified defined benefit pension plans under Sections 401(a) and 501(a) of the Code (the “ ADT North American R/SB US Pension Plans ”):

(A) Effective no later than the ADT NA Distribution Date, Tyco shall cause the sponsor of such plans to take all such actions necessary to transfer the sponsorship of such plans to ADT NA, and ADT NA shall take all such actions necessary to (i) become the plan sponsor of the ADT North American R/SB US Pension Plans, (ii) establish an investment committee and an administrative committee, as appropriate, as named fiduciaries of the ADT North American R/SB Pension Plans and (iii) appoint members of the investment committee and the administrative committee. Effective on, or within seven days after the ADT NA Distribution Date, ADT NA shall establish a new trust or designate a trust or trusts designed to (i) be tax-exempt under Section 501(a) of the Code and (ii) hold the assets of the ADT North American R/SB US Pension Plans (the “ ADT North American R/SB Master Trust ”).

(B) Within 60 days of the ADT NA Distribution Date (such 60th day being the “ Initial Transfer Date ”), Tyco shall cause at least 90% of the Assets of the Tyco International Master Retirement Trust attributable to the ADT North American R/SB US Pension Plans (using estimated values as of September 28, 2012) to be transferred to the ADT North American R/SB Master Trust in accordance with all applicable Laws. The Assets to be transferred will be in the form of cash or other property, as Tyco and ADT NA shall mutually agree prior to such transfer; and Tyco shall cause the balance of the Tyco International Master Retirement Trust Assets attributable to such ADT North American R/SB US Pension Plans to be transferred to the ADT North American R/SB Master Trust within 120 days of the ADT NA Distribution Date.

(C) ADT NA and Tyco acknowledge and agree that such transfer of Assets and Liabilities will comply with Sections 401(a)(12), 414(l) and 411(d)(6) of the Code and the regulations thereunder and that the value of the Assets to be transferred as determined under Section 414(l) of the Code and the regulations thereunder shall be determined as of the ADT NA Distribution Date. Accordingly, the final value of the Assets to be transferred shall be adjusted from the period between the ADT NA Distribution Date and the transfer date to reflect (i) the investment experience under the Tyco International Master Retirement Trust using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA, (ii) the ADT North American R/SB Pension Plan’s allocable share of expenses, (iii) the amount paid at the Initial Transfer Date, and (iv) the ADT North American R/SB Pension Plan’s benefit distributions as described in the following sentence. Until the Initial Transfer Date, Tyco shall cause benefit payments to participants, beneficiaries and alternate payees that are due under the ADT North American R/SB Pension Plans to be made in the normal course from the Tyco International Master Retirement Trust Assets.

 

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(D) Pending the transfer of assets, the ADT North American R/SB US Pension Plans will continue to participate in the Tyco International Master Retirement Trust, subject to Tyco’s direction of the investment of the assets of the Tyco International Master Retirement Trust without distinction as to any particular participating plan for a transition period not exceeding 60 days for the initial transfer, and not exceeding 120 days for the final transfer, following the ADT NA Distribution Date and Tyco will cause the Tyco International Master Retirement Trust to be amended to provide for such continued participation.

(iii) Following the ADT NA Distribution Date, eligible participants shall accrue benefits (to the extent that such ADT North American R/SB Pension Plans are not frozen) and receive service credit, as applicable, under the ADT North American R/SB Pension Plans in accordance with the terms and conditions of the relevant ADT North American R/SB Pension Plan; provided , however , that the foregoing shall in no way alter any right of ADT NA, subsequent to the ADT NA Distribution Date, to amend or terminate any of the ADT North American R/SB Pension Plans in accordance with their terms and applicable Law. ADT NA and Tyco shall reasonably cooperate with each other in order to facilitate the foregoing provisions of this Section 6.4 .

(iv) As of the ADT NA Distribution Date, ADT NA shall be solely responsible for the adjudication of claims filed under a ADT North American R/SB Pension Plan including, but not limited to, claims filed before the ADT NA Distribution Date under such plans as in effect on the date such claim was filed; provided that (A) the claim relates to Assets or Liabilities assumed by ADT NA under Section 6.4(a)(i) ; (B) the claim has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (C) under the applicable claims procedure, ADT NA’s plan administrator or other authorized person or committee will have at least a sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Tyco shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Tyco’s response to such claim does not finally adjudicate the claim, Tyco shall immediately transfer administration of such claim to ADT NA for final adjudication upon sending its response to the claimant.

(v) Notwithstanding any other provision set forth in this Agreement, (i) ADT NA and the ADT North American R/SB Pension Plans shall indemnify and hold harmless Tyco and the Tyco Retained Pension Plans (and each of their respective affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the ADT North American R/SB Pension Plans relating to the provision of pension benefits pursuant to the ADT North American R/SB Pension Plans and (ii) Tyco and the Tyco Retained Pension Plans shall indemnify and hold harmless ADT NA and the ADT North American R/SB Pension Plans (and each of their respective affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Tyco Retained Pension Plans relating to the provision of pension benefits pursuant to the Tyco Retained Pension Plans.

 

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(b) Tyco Retained Pension Plans . Following the ADT NA Distribution Date, Tyco shall retain sponsorship of, and sole responsibility for all Assets and Liabilities under the pension plans listed in Schedule 6.4(b) (the “ Tyco Retained Pension Plans ”), and ADT NA shall have no obligation with respect thereto.

(c) Following the ADT NA Distribution Date, eligible participants in the Tyco Retained Pension Plans shall continue to accrue benefits (to the extent that such Tyco Retained Pension Plans are not frozen) and receive service credit, as applicable under the Tyco Retained Pension Plans in accordance with the terms and conditions of the relevant Tyco Retained Pension Plan. Nothing contained in this Agreement shall alter in any way the right of Tyco, subsequent to the ADT NA Distribution Date, to amend or terminate any Tyco Retained Pension Plan in accordance with its terms and applicable Law.

(d) Adjustments . If, during the period from the ADT NA Distribution Date through the transfer date, the Parties determine that adjustments are appropriate with respect to the data that was used to calculate pension plan Liabilities under Section 4044 of ERISA for the purposes of effecting the transfer of Assets and Liabilities described in subparagraphs (a)(ii)(B) and (C) of this Section 6.4 with respect to the ADT Pension Plans for US Employees, then the Parties agree to cooperate to conform the net difference in Assets transferred or retained attributable to such data adjustments and to cause additional Assets reflecting such net difference to be transferred between the relevant master trusts as soon as practicable after December 31, 2013. Any such additional Assets shall be adjusted from the period between January 1, 2012 and the transfer date to reflect the investment experience under the ADT North American R/SB Master Trust or Tyco International Master Retirement Trust, as applicable, using the assumptions and methodology which the Pension Benefit Guaranty Corporation would have used under Section 4044 of ERISA. Notwithstanding the foregoing, no Assets shall be transferred between the relevant master trusts of the Parties unless the Parties determine that the net result of all such data adjustments is that the ADT North American R/SB Master Trust or Tyco International Master Retirement Trust should have received or retained at least $250,000 of additional Assets (as of January 1, 2012). Any such data adjustments must be communicated to the other relevant Parties in writing on or before December 31, 2013 in order to be considered in determining whether an additional Asset transfer is to be made pursuant to this paragraph (c). The impact of such adjustments on the Liabilities shall be determined for purposes of this paragraph (c) using the same actuarial assumptions and methods used in originally determining such Liabilities.

Section 6.5. Retirement Savings Plans .

(a) ADT North American R/SB Savings Plans .

(i) As of the ADT NA Distribution Date, ADT NA shall Assume sponsorship of, and be solely responsible for (except as otherwise provided in this Section 6.5(a) below), the management and administration of all Assets and Liabilities under the ADT NA Retirement Savings and Investment Plan (the “ ADT North American R/SB RSIP ”), and any defined contribution retirement plans listed in Schedule 6.5(a) (collectively, “ ADT North American R/SB Savings Plans ”). On or shortly after the ADT NA Distribution Date, Tyco shall cause the value of Assets of the Tyco International Management Company Defined Contribution Plans Master Trust attributable to the ADT

 

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North American R/SB RSIP to be transferred to a trust or trusts created for the ADT North American R/SB Savings Plans in the United States in a “transfer of assets or liabilities” in accordance with Section 414(l) of the Code and Section 208 of ERISA and the respective rules and regulations promulgated thereunder. The Assets to be transferred will be in the form of cash or other property, as Tyco and ADT NA shall mutually agree prior to such transfer. In addition, on or shortly after the ADT NA Distribution Date and after the Tyco International Investment Committee confirms that all of the actions described in Section 6.5(a)(ii) have been completed, the deed of trust established for the Tyco International Retirement Savings and Investment Plan VI shall be transferred to ADT NA.

(ii) Effective as of the ADT NA Distribution Date, Tyco shall cause the sponsor(s) of the ADT North American R/SB Savings Plans to take all such actions necessary to transfer the sponsorship of such plans to ADT NA and ADT NA shall take all such actions necessary to become the plan sponsor of the ADT North American R/SB Savings Plans, establish an investment committee and an administrative committee as named fiduciaries of the ADT North American R/SB Savings Plans, appoint members of the investment committee and the administrative committee, as appropriate, and establish a new trust or trusts for the ADT North American R/SB Savings Plans in the United States designed to be tax exempt under Section 501(a) of the Code and hold the assets of the ADT North American R/SB Savings Plans.

(iii) As of the ADT NA Distribution Date, ADT NA shall be solely responsible for the adjudication of claims filed by ADT North American R/SB Employees or Former ADT North American R/SB Employees under a ADT NA Savings Plan including, but not limited to, claims filed before the ADT NA Distribution Date under such plans as in effect on the date such claim was filed provided that (A) the claim relates to Assets or Liabilities assumed by ADT NA under this Section 6.5(a) ; (B) the claim has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (C) under the applicable claims procedure, ADT NA plan administrator or other authorized person or committee will have at least a sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Tyco shall be solely responsible for the adjudication of any claim that satisfies subsections (A) and (B) but not (C); provided , however , that if Tyco’s response to such claim does not finally adjudicate the claim, Tyco shall immediately transfer administration of such claim to ADT NA for final adjudication upon sending its response to the claimant.

(iv) Nothing contained in this Agreement shall alter in any way the right of ADT NA, subsequent to the ADT NA Distribution Date, to amend or terminate any of the ADT North American R/SB Savings Plans in accordance with its terms and applicable Law.

(v) Notwithstanding any other provision set forth in this Agreement, (A) ADT NA and the ADT North American R/SB Savings Plans shall indemnify and hold harmless Tyco and the Tyco Retained Savings Plans (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the ADT North American R/SB

 

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Savings Plans relating to the provision of benefits pursuant to the ADT North American R/SB Savings Plans and (B) Tyco and the Tyco Retained Savings Plans shall indemnify and hold harmless ADT NA and the ADT North American R/SB Savings Plans (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities in respect of the participants in the Tyco Retained Savings Plans relating to the provision of benefits pursuant to the Tyco Retained Savings Plans.

(b) Tyco Retirement Retained Savings Plans . Following the ADT NA Distribution Date, Tyco shall retain sole responsibility for all benefit obligations incurred prior to the ADT NA Distribution Date and Liabilities under the Tyco International Retirement Savings and Investment Plan and the Tyco International Retirement Savings and Investment Plan VI, except to the extent such obligations were transferred to the ADT North American R/SB RSIP, the ADT North American R/SB RSIP (Puerto Rico) or the Flow Control RSIP (as defined in the Flow Control Agreement) as of the ADT NA Distribution Date, any defined contribution retirement plans listed in Schedule 6.5(b) , and any other savings plans in the United States or any other country covering Tyco Employees or Former Tyco Employees, other than those listed in Schedule 6.5(a) and specifically identified as ADT North American R/SB Savings Plans (collectively, the “ Tyco Retained Savings Plans ”). Eligible Tyco participants shall continue accruing benefits under the Tyco Retained Savings Plans in accordance with the terms and conditions of the Tyco Retained Savings Plans. Nothing contained in this Agreement shall alter in any way the right of Tyco, subsequent to the ADT NA Distribution Date, to amend or terminate the Tyco Retained Savings Plan in accordance with its terms and applicable Law.

Section 6.6. Retiree Medical Benefits . Following the ADT NA Distribution Date: (a) Tyco shall be solely responsible for the management and administration of and satisfaction of all retiree medical and retiree insurance obligations with respect to the plans identified in Schedule 6.6(a) (the “ Tyco Retiree Medical Plans ”); and (b) except as otherwise provided below, ADT NA shall be solely responsible for the management and administration of and satisfaction of all retiree medical and retiree insurance obligations with respect to the plans identified in Schedule 6.6(b) (the “ ADT North American R/SB Retiree Medical Plans ”). The Parties agree that each Party and the retiree medical plans described above for which it is responsible (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) shall indemnify and hold harmless each other Party and the retiree medical plans for which they are responsible (and each of their respective Affiliates, Subsidiaries, officers, employees, agents and fiduciaries) with respect to any and all Liabilities with respect to retiree medical and retiree insurance obligations under the retiree medical plans for which they are responsible. Except as provided below, ADT NA shall be solely responsible for the adjudication of any claims filed by a Former ADT North American R/SB Employee before, on or after the ADT NA Distribution Date under a Tyco Retiree Medical Plan, or ADT North American R/SB Retiree Medical Plan. Notwithstanding the previous sentence, Tyco shall be solely responsible for the adjudication of any claim under a Tyco Retiree Medical Plan, or ADT North American R/SB Retiree Medical Plan that (A) was filed before the ADT NA Distribution Date; (B) has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (C) under the applicable claims procedure, Tyco’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Tyco’s

 

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response to such claim does not finally adjudicate the claim, Tyco shall immediately upon sending its response to the claimant transfer administration of such claim to ADT NA for final adjudication.

Section 6.7. Health, Welfare and Fringe Benefit Plans .

(a) Health Plans .

(i) Tyco shall cause ADT NA to establish the ADT NA Health Plans (including the ADT North American R/SB Retiree Medical Plans) effective no later than the ADT NA Distribution Date and, correspondingly, ADT North American R/SB Employees and their dependents shall cease participating in the Tyco Health Plans on the dates the new plans are established and effective. The newly established ADT NA Health Plans shall be substantially similar to the Tyco Health Plans. After the ADT NA Distribution Date (except as otherwise provided below): (A) ADT NA shall be solely responsible for the management and administration of the ADT NA Health Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the ADT NA Health Plans, and for the collection and remittance of participant contributions and premiums and shall establish and appoint a plan administrator and a HIPAA privacy official, and shall establish a claims and appeals process with its claims administrator(s), and (B) Tyco shall retain sole responsibility for all Liabilities under the Tyco Health Plans and sole responsibility for the payment of all employer-related costs in maintaining the Tyco Health Plans, and for the collection and remittance of participant contributions and premiums.

(ii) Except as provided below, ADT NA shall be solely responsible for the adjudication of any claims filed by an ADT North American R/SB Employee or Former ADT North American R/SB Employee (or any dependent thereof) before, on or after the ADT NA Distribution Date under a Tyco Health Plan or ADT NA Health Plan. Notwithstanding the previous sentence, Tyco shall be solely responsible for the adjudication of any claims filed by a ADT North American R/SB Employee or Former ADT North American R/SB Employee (or any dependent thereof) under a Tyco Health Plan or ADT NA Health Plan before the ADT NA Distribution Date that (A) has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (B) under the applicable claims procedure, Tyco’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Tyco’s response to such claim does not finally adjudicate the claim, Tyco shall immediately upon sending its response to the claimant transfer administration of such claim to ADT NA for final adjudication.

(iii) Any determination made or settlements entered into by Tyco prior to the ADT NA Distribution Date with respect to claims incurred under the Tyco Health Plans by ADT North American R/SB Employees and Former ADT North American R/SB Employees (or any dependent thereof) shall be final and binding on ADT NA and Tyco, as the case may be. On and after the ADT NA Distribution Date, ADT NA shall retain financial and administrative (“run-out”) Liability and all related obligations and

 

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responsibilities for all claims incurred by ADT North American R/SB Employees and Former ADT North American R/SB Employees (or any dependent thereof) while ADT North American R/SB Employees and Former ADT North American R/SB Employees are participants in the Tyco Health Plans, including any claims that were administered by Tyco as of, on, or after the ADT NA Distribution Date and in a manner consistent with Section 6.7(a)(ii) , except to the extent that Tyco retains the obligation and responsibility to adjudicate claims pursuant to clause (ii) above. Any such run-out Liability and all related claims, charges, and expenses shall be settled in a manner consistent with past practices and policies, including an interim accounting and a final accounting between Tyco and ADT NA. As of the ADT NA Distribution Date, the reserve included in Tyco International’s financial statements for “Incurred But Not Reported” medical and dental expenses attributable to ADT North American R/SB Employees and Former ADT North American R/SB Employees shall be transferred to ADT NA.

(iv) As of the date that the ADT NA Health Plans are established, any COBRA Liabilities attributable to any ADT North American R/SB Employee or Former ADT North American R/SB Employees (or a qualified beneficiary, as such term is defined under COBRA, of such individuals) that were originally obligations under the Tyco Health Plans shall become a ADT North American R/SB Liability. Effective as of the date ADT North American R/SB Employees cease participating in the Tyco Health Plans, ADT NA shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA and the ADT NA Health Plans for ADT North American R/SB Employees, Former ADT North American R/SB Employees and their qualified beneficiaries regardless as to whether such obligation arose under the Tyco Health Plans or the ADT NA Health Plans.

(v) The ADT NA Health Plan shall provide that each eligible ADT North American R/SB Employee or Former ADT North American R/SB Employee, as applicable, will receive credit in 2012 for any co-payments and deductibles paid under a Tyco Health Plan prior to the ADT NA Distribution Date in satisfying any applicable deductible or out-of-pocket requirements under the ADT NA Health Plan. The ADT NA Health Plan shall each also provide that it shall cover any pre-existing conditions that are covered under the Tyco Health Plan. Additionally, the ADT NA Health Plan shall also provide any other similar benefit in order to provide coverage that is substantially the same as the Tyco Health Plan.

(b) Section 125 Plans . Effective as of the ADT NA Distribution Date, ADT NA shall have established or caused to be established a ADT NA Section 125 Plan and on and after that date ADT NA shall be solely responsible for the management and administration of the ADT NA Section 125 Plan and such plan shall remain in effect on and after the ADT NA Distribution Date.

(c) Severance Plans . Tyco shall cause ADT NA to establish the ADT NA Severance Plans, each effective as of the ADT NA Distribution Date and each in substantially the same form(s) as the Tyco Severance Plans and, correspondingly, ADT North American R/SB Employees and Former ADT North American R/SB Employees who are currently eligible to receive or are receiving severance payments shall cease participating in the Tyco Severance

 

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Plans on the ADT NA Distribution Date. After the ADT NA Distribution Date: (i) ADT NA shall be solely responsible for (x) the payment of all Liabilities under the Tyco Severance Plans or ADT NA Severance Plans relating to ADT North American R/SB Employees and Former ADT North American R/SB Employees, (y) the management and administration of the ADT NA Severance Plans and (z) the payment of all employer-related costs in establishing and maintaining the ADT NA Severance Plans, and (ii) Tyco shall retain sole responsibility for (w) all Liabilities under the Tyco Severance Plans or ADT NA Severance Plans relating to Tyco Employees and Former Tyco Employees, (x) all Liabilities for severance or termination pay or benefits under individual agreements entered into with any Tyco Employee or Former Tyco Employee prior to the ADT NA Distribution Date, (y) the management and administration of the Tyco Severance Plans and (z) the payment of all employer-related costs in maintaining the Tyco Severance Plans. In no event shall an employee or former employee receive a duplication of severance benefits. Except as provided below, ADT NA shall be solely responsible for the adjudication of any claims filed by an ADT North American R/SB Employee or Former ADT North American R/SB Employee before, on or after the ADT NA Distribution Date under a Tyco Severance Plan. Notwithstanding the previous sentence, Tyco shall be solely responsible for the adjudication of any claim filed by an ADT North American R/SB Employee or Former ADT North American R/SB Employee under a Tyco Severance Plan before the ADT NA Distribution Date that (A) has not been finally adjudicated by Tyco on the day immediately preceding the ADT NA Distribution Date; and (B) under the applicable claims procedure, Tyco’s plan administrator or other authorized person or committee will have a less than sixty (60) day period after the ADT NA Distribution Date to respond to such claim. Notwithstanding the previous sentence, if Tyco’s response to such claim does not finally adjudicate the claim, Tyco shall immediately upon sending its response to the claimant transfer administration of such claim to ADT NA for final adjudication.

(d) Disability Plans . Tyco shall cause ADT NA to establish the ADT NA Disability Plans effective no later than the ADT NA Distribution Date and, correspondingly, ADT North American R/SB Employees shall cease participating in the Tyco Disability Plans on the dates the new plans are established and shall begin participating in the ADT NA Disability Plans. The newly established ADT NA Disability Plans shall be substantially similar to the Tyco Disability Plans. After the ADT NA Distribution Date: (i) ADT NA shall be solely responsible for: (x) the payment of all Liabilities under the Tyco Disability Plans or ADT NA Disability Plans relating to ADT North American R/SB Employees and Former ADT North American R/SB Employees, and (y) the management and administration of the ADT NA Disability Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the ADT NA Disability Plans, and (ii) Tyco shall retain sole responsibility for all disability Liabilities that are subject to insurance under the Tyco Disability Plans for disabilities relating to Tyco Employees and Former Tyco Employees and shall be solely responsible for the payment of all employer-related costs in maintaining the Tyco Disability Plans.

(e) Group Insurance Plans . Tyco shall cause ADT NA to establish the ADT NA Group Insurance Plans, effective no later than the ADT NA Distribution Date and, correspondingly, except as provided below, ADT North American R/SB Employees shall cease participating in the Tyco Group Insurance Plans on the dates the new plans are established and shall begin participating in the ADT NA Group Insurance Plans. The newly established ADT NA Group Insurance Plans shall be substantially similar to the Tyco Group Insurance Plans.

 

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After the ADT NA Distribution Date: (i) ADT NA shall be solely responsible for the management and administration of the ADT NA Group Insurance Plans and solely responsible for the payment of all employer-related costs in establishing and maintaining the ADT NA Group Insurance Plans, and (ii) Tyco shall retain sole responsibility for all Liabilities for claims incurred prior to the ADT NA Distribution Date under the Tyco Group Insurance Plans and shall be solely responsible for the payment of all employer-related costs in maintaining the Tyco Group Insurance Plans.

(f) Fringe Benefits . Effective as of the ADT NA Distribution Date, each of Tyco and ADT NA shall be responsible for establishing (as necessary) and maintaining its own fringe benefit plans, policies and arrangements, including any employee assistance program, educational assistance program, adoption assistance program and any other fringe benefit plans, programs and arrangements (which ADT NA fringe benefit plans, policies and arrangements shall be substantially similar to the Tyco fringe benefit plans, policies and arrangements). ADT NA shall be solely responsible for the management and administration of and assume financial and administrative Liability and all related obligations and responsibilities with respect to claims for such fringe benefits incurred by ADT NA and Former ADT North American R/SB Employees (but not paid by Tyco) prior to, on or after the ADT NA Distribution Date; and Tyco shall retain financial and administrative Liability and all related obligations and responsibilities with respect to claims for such fringe benefits incurred by Tyco Employees and Former Tyco Employees prior to, on or after the ADT NA Distribution Date.

(g) Paid Time Off and Payroll . Effective as of the ADT NA Distribution Date, Tyco and ADT NA shall establish or retain its own paid time off policy (which ADT NA paid time off policy shall be substantially similar to the Tyco paid time off policy) and (i) any earned but unused paid time off (including vacation pay) that a ADT North American R/SB Employee is entitled to as of the ADT NA Distribution Date will be credited to the ADT North American R/SB Employee under the ADT NA paid time off policy and provided in accordance with that policy; and (ii) any earned but unused paid time off (including vacation pay) that a Tyco Employee is entitled to as of the ADT NA Distribution Date will be continued by the Tyco paid time off policy and provided in accordance with that policy. On and after the ADT NA Distribution Date, neither Tyco nor ADT NA shall have any liability for paid time off on behalf of another Party’s employees.

(h) Bonus Plans . With respect to any annual or multi-year bonus or incentive plan not otherwise described in this Agreement, ADT NA (or their applicable Affiliate or Subsidiary) shall be responsible for all Liabilities and fully perform, pay and discharge all bonus obligations that become due after the ADT NA Distribution Date relating to such plan(s) for ADT North American R/SB Employees and Former ADT North American R/SB Employees, as applicable. ADT NA shall cause the amounts payable under such plan(s) in respect of the fiscal year in which the ADT NA Distribution Date occurs to be no less than the amounts accrued on the financial statements of ADT NA as of the ADT NA Distribution Date, proportionately increased for a full fiscal year including those payable to any ADT North American R/SB Employee whose employment is terminated by ADT NA without “cause” after the ADT NA Distribution Date and before the date on which such bonuses are payable.

 

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Section 6.8. Cooperation and Administrative Provisions .

(a) Notwithstanding anything herein to the contrary, the Parties shall reasonably cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection laws) all relevant documents, board resolutions, government filings, data, payroll and employment Information on regular timetables, make certain that each applicable entity’s data and records are correct and updated on a timely basis, and cooperate as needed with respect to (i) any litigation with respect to an employee benefit plan, compensation plan or other plan or arrangement contemplated by this Agreement, (ii) an audit of an employee benefit plan, compensation plan or other plan or arrangement contemplated by this Agreement by the Internal Revenue Service, Department of Labor or any other Government Entity, (iii) seeking a determination letter, private letter ruling or advisory opinion from the Internal Revenue Service or Department or Labor on behalf of any employee benefit plan or arrangement contemplated by this Agreement, and (iv) any filings that are required to be made or supplemented to the Internal Revenue Service, Pension Benefit Guaranty Corporation, Department of Labor or any other Government Entity; provided , however , that requests for cooperation must be reasonable and not interfere with daily business operations.

(b) Notwithstanding anything herein to the contrary, the Parties agree that they shall share all necessary data elements to administer the Tyco and ADT NA equity plans described in Section 6.1 and Section 6.2 for a period of ten (10) years following the ADT NA Distribution Date. This data shall be made available to their plan administrators in the formats that exist at the time of the distribution or in any other mutually agreeable format. Data shall be transmitted to these administrators via a mutually agreeable method of data transmission. Each Party also agrees to ensure that their plan administrator will make available all necessary data elements required now or in the future including but not limited to, exercise, lapse and tax data, in a timely fashion and to withhold appropriate taxes at the direction of the employer company of the individual for the time period covered under this provision.

(c) With respect to any employees on international assignment who are listed on Schedule 6.8(c) and who become ADT North American R/SB Employees, (i) if such employees are repatriated to their home countries or initiate the process of repatriation prior to the ADT NA Distribution Date, Tyco shall pay the costs of repatriation; and (ii) if such employees remain on international assignment through the ADT NA Distribution Date, (A) Tyco shall pay the cost of assignment up to the ADT NA Distribution Date, as applicable (except that the tax obligation for the year of separation shall be prorated between Tyco and ADT NA as set forth in Schedule 6.8(c) ), and (B) any costs related to repatriation initiated at some future date shall be the responsibility of ADT NA.

(d) With respect to any ADT North American R/SB Employee listed on Schedule 6.8(d) who is subject to a retention agreement, separation bonus agreement and/or eligible for a lump sum award and who transfers to ADT NA prior to the ADT NA Distribution Date and/or remains in employment with ADT NA through any subsequent vesting date applicable to such agreement or award, ADT NA shall recognize and assume the obligation of such agreement or award (the “ Retention Letters ”) and be responsible for the making of all payments and withholding of all taxes (including without limitation any employment taxes) associated with such Retention Letters.

 

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(e) The Parties shall share, or cause to be shared, all Information on participants in the ADT North American R/SB Plans and Tyco Retained Plans that is necessary and appropriate for the efficient and accurate administration of the ADT North American R/SB Plans and Tyco Retained Plans, including (but not limited to) Information reasonably necessary to timely respond to claims for benefits made by participants and Information on expenses incurred by ADT North American R/SB Plans prior to the ADT NA Distribution Date so that ADT NA may invoice and pay administrative expenses from their respective plan trusts as described in paragraph (g) below. The Parties and their respective authorized agents shall, subject to applicable laws of confidentiality and data protection and transfer, be given reasonable and timely access to, and may make copies of, all Information relating to the subjects of this Article VI to the extent necessary or appropriate for such administration. Each of the Parties agree, upon reasonable request, to provide financial, operational and other Information on each ADT North American R/SB Plan and Tyco Retained Plan, including (but not limited to) Information on a plan’s assets and liabilities, at a level of detail reasonably necessary and appropriate for the efficient and accurate administration of each of the ADT North American R/SB Plans and Tyco Retained Plans. Notwithstanding the foregoing, if any such Information described in this Section 6.8(e) cannot be reasonably obtained without additional cost, the Parties shall agree to reimburse each of the other Parties for all additional third-party costs and such other reasonable costs of obtaining the Information. To the extent that the ADT NA Health Plans and the Tyco Health Plans share protected health Information (“ PHI ”), the ADT NA Health Plans and Tyco Health Plans hereby agree to enter into appropriate business associate agreements to cover the sharing of PHI, as required by the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”).

(f) ADT NA agrees to indemnify and hold Tyco harmless with respect to any Liabilities related to actions taken to establish the ADT North American R/SB Plans (and related third party administrative agreements) prior to, on or after the ADT NA Distribution Date.

(g) To the extent not covered elsewhere in this Agreement, with respect to expenses and costs incurred on behalf of an ADT North American R/SB Plan or Tyco Retained Plan ADT NA shall be responsible, through either direct payment or reimbursement to Tyco for its allocable share of actual third party and/or vendor costs and expenses incurred by or on behalf of any member of the ADT North American R/SB Group or the ADT North American R/SB Plans. An allocable share of any such costs and expenses will be determined in a manner consistent with the manner in which the allocable share of such costs and expenses was determined prior to the ADT NA Distribution Date. The Parties agree to pay for any third-party costs associated partially or entirely with their respective employee benefit plans associated with this Distribution following the ADT NA Distribution Date.

(h) To the extent not covered elsewhere in this Agreement, with respect to all employee benefit plans, policies, programs, payroll practices, and arrangements maintained outside of the United States, the Parties agree that they shall reasonably cooperate and work together to facilitate any transfer of employee benefit plans, policies, programs, payroll practices, and arrangements as necessary by the ADT NA Distribution Date, but in any event no later than three (3) months following the ADT NA Distribution Date and in accordance with applicable Law.

 

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(i) With respect to multinational insurance pools that the Parties’ entities participate in, the respective multinational insurance pools will continue to maintain premium, claim and administrative charges for each participating Tyco or ADT NA entity within each such pool until the end of the policy year following the ADT NA Distribution Date. At the end of such policy year, the multinational insurance pools shall be revised so that the Parties participate in separate pools (to the extent that a Party wishes to continue participating in an applicable pool). In addition, in the policy year accounting to be completed at the end of such policy year, (a) if a Tyco or ADT NA entity’s experience contributed a surplus to the overall pool experience, then that entity will be paid the appropriate dividend from the pool; (b) if a Tyco or ADT NA entity’s experience created a deficit for the overall pool, then that entity will not receive a dividend, and such deficit will be carried forward to the successor pools established for that entity for subsequent policy years (or if no successor pool is established and any Party incurs any expense with respect to such deficit, then the Party responsible for such deficit shall promptly reimburse the Party incurring such expense).

(j) To the extent not covered elsewhere in this Agreement, it is the intention of Tyco and ADT NA to provide herein that ADT NA shall be responsible for the management and administration of all of its respective employee benefit plans on and after the ADT NA Distribution including, but not limited to, the adjudication of claims pending on the ADT NA Distribution Date that were filed by ADT North American R/SB Employees or Former ADT North American R/SB Employees under a Tyco sponsored employee benefit plan. It is also the intention of Tyco and ADT NA that if ADT NA’s plan administrator or any other authorized person or committee does not have at least a sixty (60) day period after the ADT NA Distribution Date to respond to a claim, Tyco will respond to the claim and, if such response is not a final adjudication of the claim, immediately transfer administration of such claim to ADT NA. The Parties agree that they shall reasonably cooperate with each other and work together to facilitate the transfer of any documents, materials or information necessary or appropriate for the timely adjudication of any claim and to do so in a manner that is consistent with applicable Law.

(k) To the extent not otherwise provided in this Agreement, the Parties agree that if an amount in the nature of a recovery (including without limitation, a litigation recovery, subrogation recovery, premium or other fee or cost rebate, or demutualization proceeds) becomes payable as the result of the maintenance of an employee benefit plan covered by this Agreement and such recovery is attributable to events that occurred prior to the Distribution, then (i) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a pre-Distribution master trust or other trust (a “ Pre-Distribution Trust ”) that was split into two or more trusts maintained by the Parties as a result of the Distribution, such recovery will be allocated to the appropriate post-Distribution trusts in the same proportion as was applicable to the Pre-Distribution Trust split; (ii) to the extent that the recovery is payable with respect to the maintenance or management of the assets of a Pre-Distribution Trust that was not split as a result of the Distribution, such recovery will be allocated solely to that trust and (iii) to the extent that a recovery is not covered by subclauses (i) or (ii) above, the Parties will reasonably cooperate with each other and, subject to any applicable fiduciary duties under ERISA or otherwise, determine a fair allocation of the recovery among the appropriate post-Distribution employee benefit plans, associated trusts and/or plan participants.

 

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(l) To the extent not covered elsewhere in this Agreement, the Parties (and their Subsidiaries and Affiliates) are hereby authorized to implement the provisions of this Article VI , including by making appropriate adjustments to employee benefits provided for in this Agreement; provided that such adjustments are intended for administrative or recordkeeping purposes to retain the value of benefits provided in accordance with the provisions of this Agreement.

Section 6.9. Approval of Plans; Terms of Participation by Employees in Plans .

(a) Approval of Plans . On or prior to the applicable ADT NA Distribution Date, the Parties shall take all actions as may be necessary to approve the stock-based employee benefit plans of ADT NA in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable rules and regulations of the NYSE.

(b) Non-Duplication of Benefits . The ADT North American R/SB Plans and Tyco Retained Plans shall not provide benefits that duplicate benefits provided to a participant by a corresponding ADT North American R/SB Plan, or Tyco Retained Plans. The Parties shall agree on methods and procedures, including amending the respective plan documents, to prevent ADT North American R/SB Employees, Former ADT North American R/SB Employees, Tyco Employees, Former Tyco Employees and any dependent or beneficiary thereof from receiving duplicate benefits from the ADT North American R/SB Plans and Tyco Retained Plans; provided that nothing shall prevent ADT NA from unilaterally amending the ADT North American R/SB Plans to avoid such duplication, and nothing shall prevent Tyco from unilaterally amending the Tyco Retained Plans to avoid such duplication.

(c) Service Credits under Plans . Except as may be specified in Schedule 6.9(c) , service with any member of the Tyco controlled group prior to the ADT NA Distribution Date shall be credited under the ADT North American R/SB Plans and Tyco Retained Plans to the extent and for the express purposes set forth (including, as applicable and without limitation: eligibility, vesting, company match levels, subsidies, recognition of pre-existing credit and credit for amounts of co-pays, out-of-pocket maximums and deductibles, but not for benefit accrual purposes under pension plans) under the applicable ADT North American R/SB Plan or Tyco Retained Plan, except to the extent duplication of benefits would result; provided , however , that in the event an employee or former employee of one of the Parties (or its Subsidiaries or Affiliates) becomes employed by one of the other Parties (or its Subsidiaries or Affiliates) after December 31, 2012, such employee or former employee’s service with any member of the Tyco controlled group prior to the ADT NA Distribution Date need not be credited by the new employer except to the extent required by Law. Notwithstanding the foregoing, in the event of any conflict between this paragraph (c) and the terms of any ADT North American R/SB Plan or Tyco Retained Plan, the express terms of such plan shall govern.

(d) Plan Elections . Except as may be specifically provided otherwise under this Agreement or applicable Law, all participant elections (including, without limitation, deferral elections, payment elections, beneficiary designations, qualified domestic relations orders, qualified medical child support orders and loan agreements) with respect to the participation of a ADT North American R/SB Employee or Former ADT North American R/SB Employee in a Tyco employee benefit arrangement shall be transferred to and be in full force and

 

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effect under the corresponding and applicable ADT North American R/SB Plan in accordance with the terms of each such applicable plan and to the extent permissible under such plan, until such elections are replaced or revoked by the employee who made such election.

(e) Amendment and Termination . No provision in this Agreement shall prohibit the Parties, subsequent to the ADT NA Distribution Date, from amending or terminating the employee benefit plans, policies and programs described herein in accordance with the provisions of such plans, policies and programs and applicable Law.

(f) Non-Termination of Employment; No Third-Party Beneficiaries . Except as expressly provided for in this Agreement, no provision of this Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any Tyco Employee, ADT North American R/SB Employee or any former, present or future employee of the Tyco Group, ADT North American R/SB Group or any of their respective Affiliates under any Tyco Plan or ADT North American R/SB Plan, nor shall any such provision be construed as an amendment to any employee benefit plan or other employee compensatory or benefit arrangement. Furthermore, nothing in this Agreement is intended to confer upon any Tyco Employee, ADT North American R/SB Employee or any former, present or future employee of the Tyco Group, ADT North American R/SB Group or any of their respective Affiliates any right to continued employment, any recall or similar rights to an Employee on layoff or any type of approved leave, or to change the employment status of any Employee from “at will”.

Section 6.10. Tax Consequences . For Tax purposes, the Parties agree that the treatment of all of the equity compensation and deferred compensation arrangements set forth in this Article VI shall be treated in accordance with Article VI of the Tax Sharing Agreement.

Section 6.11. International Regulatory Compliance . Tyco shall have the authority to adjust the treatment otherwise described in this Article VI in order to ensure compliance with the applicable laws or regulations of countries outside the United States or to preserve the Tax benefits provided under local Tax law or regulation prior the Distribution.

Section 6.12. Alternate Procedure . The Parties hereby agree to follow the alternate procedure for United States employment tax withholding as provided in Section 5 of Rev. Proc. 2004-53, I.R.B. 2004-34. Accordingly, Tyco and its Subsidiaries shall have no United States employment tax reporting responsibilities, and ADT NA shall have full United States employment tax reporting responsibilities, for ADT NA Employees and Former ADT NA Employees following the close of business on the ADT NA Distribution Date, to the extent provided under such Rev. Proc. 2004-53, and except to the extent that any member of the Tyco Group provides payroll services to ADT NA pursuant to a written agreement among the Parties.

 

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ARTICLE VII

TYCO CONTINGENT ASSETS AND ASSUMED TYCO CONTINGENT LIABILITIES

Section 7.1. Tyco Contingent Assets and Assumed Tyco Contingent Liabilities .

(a) Tyco Contingent Assets . To the extent that a Party or any member of its Group receives from a third party any proceeds of any kind arising out of a Tyco Contingent Asset, to the extent necessary, such Party shall, or shall cause the applicable member of its Group to, promptly (but in no event later than thirty (30) days following receipt thereof, unless there is a good faith open question as to whether such proceeds are in fact Tyco Contingent Assets and the matter has been submitted for resolution pursuant to the terms of this Agreement, in which case, promptly following the final determination thereof) transfer such amounts to the other Parties pursuant to and in accordance with their respective Applicable Percentage. Transfers under this Section 7.1(a) are subject to the relevant Parties’ agreement (I) as to the most cost efficient means of effecting such transfer and (II) to share any incremental costs arising as a result of such transfer; provided , that if the relevant Parties cannot agree on a means of effecting the transfer within thirty (30) days from the date that all relevant Parties have notice of the discovery of such proceeds, then the proceeds shall be immediately transferred.

(b) Assumed Tyco Contingent Liabilities . Except as otherwise expressly set forth in the Tax Sharing Agreement (with respect to Taxes), the Parties shall each be responsible for its (1) portion of Specified Shared Expenses (allocable in accordance with Section 5.5 ) and (2) Applicable Percentage of any Indemnifiable Losses paid to third parties in respect of, including any out-of-pocket costs and expenses related to or arising out of, any Assumed Tyco Contingent Liability. Any amounts owed in respect of any Assumed Tyco Contingent Liabilities (including reimbursement for the out-of-pocket costs and expenses of defending, managing or providing assistance to the Managing Party pursuant to Section 7.3(a) or Section 7.3(b) with respect to any Third Party Claim that is an Assumed Tyco Contingent Liability, including, for the avoidance of doubt, any amounts with respect to a bond, prepayment or similar security or obligation required to be posted (or determined to be advisable) by the Managing Party in respect of any claim) shall be remitted promptly after the Party entitled to such amount provides an invoice (including reasonable supporting Information with respect thereto) to the Party owing such amount, and, to the extent not otherwise reimbursed by the applicable Party, such costs and expenses shall be included in the calculation of the amount of the applicable Assumed Tyco Contingent Liability in determining the reimbursement obligations of the other Party with respect thereto; provided , however , that in the event that an amount in excess of $10 million in the aggregate is owed by the Parties to any third party or parties with respect to an Assumed Tyco Contingent Liability, in lieu of remitting amounts directly to the Party providing the invoice, the invoiced Party may remit the owed amount directly to the appropriate third party or parties or, if applicable, to a trust established by the invoicing Party for the benefit of the Parties. In furtherance of the foregoing, the Managing Party (and any Party providing access as contemplated by Section 7.3(a) ) shall be entitled to reimbursement by the other Party (according to their Applicable Percentages) of any out-of-pocket costs and expenses (which shall include the costs of salaries and benefits of employees who are solely dedicated to the management or defense of such Assumed Tyco Contingent Liability or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as managing the Assumed Tyco Contingent Liability) related to or arising out of defending or managing any such Assumed Tyco Contingent Liability, from time to time, when invoiced, including, if applicable, in advance of a final determination or resolution of any Action related to an Assumed Tyco Contingent Liability. For U.S. federal income Tax purposes, the Parties shall treat the payment of Assumed Tyco Contingent Liabilities (and costs and expenses relating to Assumed Tyco Contingent Liabilities,

 

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as the case may be) as set forth in the Tax Sharing Agreement. It shall not be a defense to any obligation of either Party to pay any amounts in respect of any Assumed Tyco Contingent Liability that (i) such Party was not consulted in the defense or management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the defense thereof or (iv) that such Assumed Tyco Contingent Liability was incurred by reason of a settlement rather than by a judgment or other determination of Liability, even if such settlement was effected without the consent or over the objection of such Party.

Section 7.2. Management of Assumed Tyco Contingent Assets and Assumed Tyco Contingent Liabilities .

(a) For purposes of this Article VII , “ Managing Party ” shall initially mean Tyco; provided , however , that under certain circumstances ADT NA may become the Managing Party as may be otherwise agreed to in writing by the Parties.

(b) The Managing Party shall, on behalf of the other Party, have sole and exclusive authority to commence, prosecute, manage, control, conduct or defend (or assume the defense of) or otherwise determine all matters whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other professionals) with respect to any Tyco Contingent Asset and, on behalf of the other Parties, any Action or Third Party Claim with respect to an Assumed Tyco Contingent Liability. The Managing Party shall use its reasonable best efforts to promptly notify the other Parties in the event that it commences an Action with respect to a Tyco Contingent Asset; provided , that the failure to provide such notice shall not give rise to any rights on the part of the other Parties against the Managing Party or affect any other provision of this Section 7.2 . So long as the Managing Party has assumed and is actively and diligently conducting the defense of any Assumed Tyco Contingent Liability in accordance with Section 7.2(b) above, the other Party will not consent to the entry of any judgment or enter into any settlement with respect to the Assumed Tyco Contingent Liability without the prior written consent of the Managing Party (not to be delayed or withheld unreasonably).

(c) Each Party acknowledges that the Managing Party may elect not to pursue any Tyco Contingent Asset for any reason whatsoever (including a different assessment of the merits of any Action, claim or right than the other Parties or any business reasons that may be in the best interests of the Managing Party or a member of such Managing Party Group, without regard to the best interests of any member of the other Groups) and that no member of the Managing Party Group shall have any Liability to any Person (including any member of the other Parties’ Groups) as a result of any such determination.

(d) The Managing Party shall on a quarterly basis, or if a material development occurs, as soon as reasonably practicable thereafter, inform the other Party in reasonable detail of the status of and developments relating to any matter involving a Tyco Contingent Asset or Assumed Tyco Contingent Liability and provide copies of any material document, notices or other materials related to such matters; provided , that any failure or delay in providing such information shall not be a basis for liability of the Managing Party except and solely to the extent the receiving Party shall have been actually and materially prejudiced by such failure or delay. The other Party shall use reasonable efforts to cooperate fully with the

 

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Managing Party in its management of any of such Tyco Contingent Asset or Assumed Tyco Contingent Liability and shall take such actions in connection therewith that the Managing Party reasonably requests (including providing reasonable access to such Party’s Records and employees as set forth in Section 7.3 ); provided that such Party shall only be required to take such actions to the extent that the Parties agree any out-of pocket costs and expenses incurred with respect to such actions shall constitute Assumed Tyco Contingent Liabilities to be shared and reimbursed according to the Parties’ Applicable Percentages as contemplated by Section 7.1(b) .

(e) Neither Tyco nor ADT NA shall take, or permit any member of its respective Group to take, any action (including commencing any Action) or omit to take any action that may interfere with or that may adversely affect the rights and powers of the Managing Party pursuant to this Article VII .

Section 7.3. Access to Information; Certain Services; Expenses .

(a) Access to Information and Employees by the Managing Party . Unless otherwise prohibited by Law or more specifically provided in the Tax Sharing Agreement, in connection with the management and disposition of any Tyco Contingent Asset and/or Assumed Tyco Contingent Liability, the other Party shall provide to the Managing Party reasonable access to its authorized accountants, counsel and other designated representatives, to the employees, properties, and Information of such Party and the members of such Party’s Group to the extent such access relates to the relevant Tyco Contingent Asset or Assumed Tyco Contingent Liability; provided that (x) such access shall not unreasonably interfere with any of such Party’s employees’ normal job functions, (y) such Party shall not be required to provide such access to the extent that the provision of such would require such Party (or its applicable Group member) to waive any attorney-client or other legal privilege and (z) any out-of-pocked costs and expenses incurred in connection with the provision of such access shall constitute Assumed Tyco Contingent Liabilities to be shared and reimbursed according to the Parties’ Applicable Percentages as contemplated by Section 7.1(b) . Each Party shall, to the extent so requested by the other Party, enter into a joint-defense agreement with the other Party in respect of the Assumed Tyco Contingent Liabilities, on terms as are to be reasonably agreed between the Parties. Nothing in this Section 7.3(a) shall require either Party to violate any agreement with any third party regarding the confidentiality of information relating to that third party.

(b) Costs and Expenses Relating to Access by the Managing Party . Except as otherwise provided in any Ancillary Agreement, the provision of access pursuant to this Section 7.3 shall be at no additional cost or expense of the Managing Party or any other Party (other than for actual out-of-pocket costs and expenses, which shall be allocated as set forth in Section 7.1 ).

Section 7.4. Notice Relating to Tyco Contingent Assets and Assumed Tyco Contingent Liabilities; Disputes . (a) In the event that the other Party or any member of such Party’s Group or any of their respective Affiliates, becomes aware of (i) any Asset or Liability that may be a Tyco Contingent Asset or Assumed Tyco Contingent Liability, (ii) any matter or occurrence that has given or could give rise to an Assumed Tyco Contingent Liability or Tyco Contingent Asset or (iii) any matter reasonably relevant to the Managing Party’s ongoing or future management, prosecution, defense and/or administration of any Assumed Tyco

 

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Contingent Liability or Tyco Contingent Asset, such Party shall promptly (but in any event within thirty (30) days of becoming aware, unless, by its nature the subject matter of such notice would reasonably require earlier notice) notify the Managing Party of any such matter (setting forth in reasonable detail the subject matter thereof); provided, however , that the failure to provide such notice shall not release the other Party from any of its obligations under this Article VII except and solely to the extent that the other Party shall have been actually and materially prejudiced as a result of such failure.

(b) In the event that any Party disagrees whether a claim, obligation, Asset and/or Liability is a Tyco Contingent Asset or an Assumed Tyco Contingent Liability or whether such claim, obligation, Asset or Liability is an Asset or Liability allocated to one of the Parties pursuant to this Agreement or any Ancillary Agreement, then such matter shall be resolved pursuant to and in accordance with the dispute resolution provisions set forth in Article X .

Section 7.5. Cooperation with Governmental Entity . If, in connection with any Tyco Contingent Asset or Assumed Tyco Contingent Liability, a Party is required by Law to respond to or is reasonably requested to cooperate with a Governmental Entity, such Party shall be entitled to cooperate and respond to such Governmental Entity after, to the extent practicable under the specific circumstances, consultation with the Managing Party; provided , that to the extent such consultation is not practicable, the applicable Party shall promptly inform the Managing Party regarding such response or cooperation and the subject matter thereof. In the event that any Party is requested or required by any Governmental Entity in connection with any Tyco Contingent Asset or Assumed Tyco Contingent Liability pursuant to any written or oral request for Information or documents in any legal or administrative proceeding, review, interrogatory, subpoena, investigation, demand, or similar process, such Party shall notify the Managing Party promptly of such request or requirement and such Party’s response thereto, and shall use reasonable best efforts to consult with the Managing Party with respect to the nature of such Party’s response to the extent practicable and not in violation of any attorney-client privilege or applicable legal process.

Section 7.6. Default . In the event that one or more of the Parties defaults in any full or partial payment in respect of any Assumed Tyco Contingent Liability (including, for the avoidance of doubt, such Party’s Applicable Percentage of the costs and expenses of the Managing Party or any other assisting Party), then the non-defaulting Party (including Tyco) shall be required to pay the amount in default; provided , however , that any such payment by a non-defaulting Party shall in no way release the defaulting Party from its obligations to pay such Assumed Tyco Contingent Liability (or any future Assumed Tyco Contingent Liability when obligated) and any non-defaulting Party may exercise any available legal remedies against such defaulting Party; provided , further , that interest shall accrue on any such defaulted amounts at the Default Interest Rate. In connection with the foregoing, it is expressly understood that any defaulting Party’s share of the proceeds from any Tyco Contingent Asset may be used via a right of offset to satisfy, in whole or in part, the obligations of such defaulting Party; such rights of offset shall be applied in favor of the non-defaulting Party or Parties in proportion to the additional amounts paid by any such non-defaulting Party.

 

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ARTICLE VIII

INDEMNIFICATION

Section 8.1. Release of Pre-Distribution Claims .

(a) Except (i) as provided in Section 8.1(b) , (ii) as may be otherwise expressly provided in this Agreement, any Ancillary Agreement or the Flow Control Agreement and (iii) for any matter for which any Party is entitled to indemnification or contribution pursuant to this Article VIII, effective as of the effective time of this Agreement, each Party, for itself and each member of its respective Group, in each case, together with their respective administrators, successors and assigns, do hereby remise, release and forever discharge the other Party and the other members of such other Party’s’ Group and all Persons who at any time prior to the Effective Time were directors, officers, agents or employees of any member of such other Parties (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, including in connection with the ADT NA Plan of Separation and all other activities to implement the ADT NA Distribution and any of the other transactions contemplated hereunder and under the Ancillary Agreements.

(b) Nothing contained in Section 8.1(a) shall impair or otherwise affect any right of either Party, and as applicable, a member of the Party’s Group to enforce this Agreement or any Ancillary Agreement, in each case in accordance with its terms. In addition, nothing contained in Section 8.1(a) shall release any Person from:

(i) (A) with respect to Tyco or any member of its Group, any Tyco Retained Liability and (B) with respect to ADT NA or any member of its Group, any ADT North American R/SB Liability;

(ii) 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 or on behalf of a member of the other Group prior to the Effective Time;

(iii) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value-received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

(iv) any Liability provided in or resulting from any other Contract or understanding that is entered into after the Effective Time between any Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s ‘Group), on the other hand;

(v) any Liability with respect to an Assumed Tyco Contingent Liability pursuant to Article VII;

 

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(vi) any Liability with respect to any Continuing Arrangements set forth on Schedule 1.1(64) ;

(vii) any Liability with respect to the insurance policies written by White Mountain Insurance Company; and

(viii) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article VIII and, if applicable, the appropriate provisions of the Ancillary Agreements or Continuing Arrangements.

In addition, nothing contained in Section 8.1(a) shall release either Party from (i) indemnifying any director, officer or employee of the other Party who was a director, officer or employee of such Party or any of its Affiliates on or prior to the Effective Time or the ADT NA Distribution Date, as the case may be, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to then existing obligations or (ii) any Liability owed by a Party to the other Party pursuant to the Flow Control Agreement.

(c) From and after the effective time of this Agreement, each Party shall not, and shall not permit any member of its Group to make, any claim, demand or offset, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against any other Party or any member of any other Party’s Group, or any other Person released pursuant to Section 8.1(a) , with respect to any Liabilities released pursuant to Section 8.1(a) . The release in this Section 8.1 includes a release of any rights and benefits with respect to such Liabilities that ADT NA, Tyco and each member of the ADT North American R/SB Group and Tyco Group, and their respective successor and assigns, now has or in the future may have conferred upon them by virtue of any statute or common law principle which provides that a general release does not extend to claims which a party does not know or suspect to exist in its favor at the time of executing the release, if knowledge of such claims would have materially affected such party’s settlement with the obligor. In this connection, each of Tyco and ADT NA hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Liabilities that are presently unknown, unanticipated and unsuspected, and it further agrees that this release has been negotiated and agreed upon in light of that awareness and it nevertheless hereby intends to release the Persons described in Section 8.1(a) from the Liabilities described in the first sentence of Section 8.1(a) . At any time, at the reasonable request of any other Party, each Party shall cause each member of its respective Group and, to the extent practicable, each other Person on whose behalf it released Liabilities pursuant to this Section 8.1 to execute and deliver releases reflecting the provisions hereof.

Section 8.2. Indemnification by Tyco . Except as otherwise specifically provided in any provision of this Agreement or any Ancillary Agreement, following the ADT NA Distribution Date, Tyco shall, and shall cause the other members of the Tyco Group to, indemnify, defend and hold harmless the ADT North American R/SB Indemnitees from and against any and all Indemnifiable Losses of the ADT North American R/SB Indemnitees, arising out of, by reason of or otherwise in connection with (a) the Tyco Retained Liabilities or alleged

 

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Tyco Retained Liabilities, including, after the ADT NA Distribution Date, the failure of Tyco or any member of the Tyco Group to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities or (b) any breach by Tyco of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder; provided that this Section 8.2 shall not apply with respect to any Assumed Tyco Contingent Liability, in which case Article VII shall apply. To the extent ADT LLC purchases any Tyco International ADT Asset pursuant to Section 2.2(d) after the ADT Separation Date, TIFSA shall indemnity for and pay to ADT NA in accordance with Section 8.6 an amount equal to the purchase price of such Tyco International ADT Asset.

Section 8.3. Indemnification by ADT NA . Except as otherwise specifically provided in any provision of this Agreement or any Ancillary Agreement, following the ADT NA Distribution Date, ADT NA shall, and shall cause the other members of the ADT North American R/SB Group, to indemnify, defend and hold harmless the Tyco Indemnitees from and against any and all Indemnifiable Losses of the Tyco Indemnitees, arising out of, by reason of or otherwise in connection with (a) the ADT North American R/SB Liabilities or alleged ADT North American R/SB Liabilities, including, after the ADT NA Distribution Date, the failure of ADT NA or any member of the ADT North American R/SB Group to pay, perform, fulfill, discharge and, to the extent applicable, comply with, in due course and in full, any such Liabilities or (b) any breach by ADT NA of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder; provided that this Section 8.3 shall not apply with respect to any Assumed Tyco Contingent Liability, in which case Article VII shall apply.

Section 8.4. Procedures for Indemnification .

(a) Direct Claims . An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee has determined has given or would reasonably be expected to give rise to a right of indemnification under this Agreement (other than a Third Party Claim which shall be governed by Section 8.5(b) ), within thirty (30) days of such determination, stating the amount of the Indemnifiable Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided , however , that the failure to provide such written notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure.

(b) Third Party Claims . If a claim or demand is made against a Tyco Indemnitee or a ADT North American R/SB Indemnitee (each, an “ Indemnitee ”) by any Person who is not a party to this Agreement or a Subsidiary of a Party (a “ Third Party Claim ”) as to which such Indemnitee is or reasonably expects to be entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the Party (and, if applicable, the Managing Party) which is or may be required pursuant to this Article VIII, or pursuant to any Ancillary Agreement to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim promptly (and in any event within thirty (30) days)

 

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after receipt by such Indemnitee of written notice of the Third Party Claim. If any Party shall receive notice or otherwise learn of the assertion of a Third Party Claim which may reasonably be determined to be an Assumed Tyco Contingent Liability, such Party, as appropriate, shall give the Managing Party (as determined pursuant to Article VII) written notice thereof within thirty (30) days after such Person becomes aware of such Third Party Claim; provided , however , that the failure to provide notice of any such Third Party Claim pursuant to this or the preceding sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure. Thereafter, the Indemnitee shall deliver to the Indemnifying Party (and, if applicable, to the Managing Party), promptly (and in any event within ten (10) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim; provided , however , that the failure to forward such notices and documents shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure.

(c) Other than in the case of (i) an Assumed Tyco Contingent Liability (the defense of which shall be assumed and controlled by the Managing Party as provided for in Article VII), (ii) indemnification pursuant to the Tax Sharing Agreement or (iii) indemnification by a beneficiary Party of a guarantor Party pursuant to Section 2.10(c) (the defense of which shall be assumed and controlled by the beneficiary Party), an Indemnifying Party shall assume and control the defense of any Third Party Claim, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel, that is reasonably acceptable to the applicable Indemnitees, within thirty (30) days of the receipt of such notice from such Indemnitees. In connection with the Indemnifying Party’s defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, at its own expense and, in any event, shall reasonably cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent Information, materials and information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably required by the Indemnifying Party; provided , however , that in the event of a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s), such Indemnitee(s) shall be entitled to retain, at the Indemnifying Party’s expense, separate counsel as required by the applicable rules of professional conduct with respect to such matter; provided , further , that if (i) the Third Party Claim is not an Assumed Tyco Contingent Liability and (ii) the Indemnifying Party has assumed the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions to such defense, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

(d) Other than in the case of an Assumed Tyco Contingent Liability, if an Indemnifying Party fails for any reason to assume responsibility for defending a Third Party Claim within the time specified, such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnitee is conducting the defense against any such Third Party Claim, the Indemnifying Party shall reasonably cooperate with the Indemnitee in such defense and make available to the Indemnitee all witnesses, pertinent Information, and material in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee.

 

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(e) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim that is not an Assumed Tyco Contingent Liability (with any Assumed Tyco Contingent Liability handled in accordance with Article VII) without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.

(f) In the case of a Third Party Claim (except for any Third Party Claim that is an Assumed Tyco Contingent Liability, which, with respect to the subject matter of this Section 8.5(f) , shall be governed by Section 7.4 ), no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third Party Claim without the prior written consent of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against any Indemnitee; it being understood that in the case of a Third Party Claim that is an Assumed Tyco Contingent Liability, such matters are addressed in Article VII .

(g) Absent fraud or willful misconduct by an Indemnifying Party, the indemnification provisions of this Article VIII shall be the sole and exclusive remedy of an Indemnitee for any monetary or compensatory damages or losses resulting from any breach of this Agreement or any Ancillary Agreement (except as and to the extent otherwise expressly provided in such Ancillary Agreement) and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such Person may have with respect to the foregoing other than under this Article VIII against any Indemnifying Party.

Section 8.5. Cooperation in Defense and Settlement .

(a) With respect to any Third Party Claim that is not an Assumed Tyco Contingent Liability and that implicates two or more Parties in a material fashion due to the allocation of Liabilities, responsibilities for management of defense and related indemnities pursuant to this Agreement or any of the Ancillary Agreements, the applicable Parties agree to use reasonable best efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for both Parties the attorney-client privilege, joint defense or other privilege with respect thereto). The Party that is not responsible for managing the defense of such Third Party Claims shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may, if necessary or helpful, retain counsel to assist in the defense of such claims.

(b) Each of Tyco and ADT NA agrees that at all times from and after the Effective Time, if an Action is commenced by a third party (or any member of such Party’s respective Group) with respect to which one or more named Parties (or any member of such Party’s respective Group) is a nominal defendant and/or such Action is otherwise not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then the other Party or Parties shall use reasonable best efforts to cause such nominal defendant to be removed from such Action, as soon as reasonably practicable.

 

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Section 8.6. Indemnification Payments . Indemnification required by this Article VIII shall be made by periodic payments of the amount thereof in a timely fashion during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability incurred.

Section 8.7. Contribution .

(a) If the indemnification provided for in Sections 8.2 , 8.3 and 8.4 , including in respect of any Assumed Tyco Contingent Liability, is unavailable to, or insufficient to hold harmless an Indemnitee under this Agreement or any Ancillary Agreement in respect of any Liabilities referred to herein or therein, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnitee as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnitee in connection with the actions or omissions that resulted in Liabilities as well as any other relevant equitable considerations. With respect to the foregoing, the relative fault of such Indemnifying Party and Indemnitee shall be determined by reference to, among other things, whether the misstatement or alleged misstatement of a material fact or omission or alleged omission to state a material fact relates to Information supplied by such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to Information and opportunity to correct or prevent such statement or omission.

(b) The Parties agree that it would not be just and equitable if contribution pursuant to this Section 8.7 were determined by a pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8.7(a) . The amount paid or payable by an Indemnitee as a result of the Liabilities referred to in Section 8.7(a) shall be deemed to include, subject to the limitations set forth above, any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating any claim or defending any Action. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

Section 8.8. Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) Any Indemnifiable Loss subject to indemnification or contribution pursuant to this Article VIII including, for the avoidance of doubt, in respect of any Assumed Tyco Contingent Liability, will be calculated (i) net of Insurance Proceeds that actually reduce the amount of the Indemnifiable Loss, (ii) net of any proceeds received by the Indemnitee from any third party for indemnification for such Liability that actually reduce the amount of the Indemnifiable Loss (“ Third Party Proceeds ”) and (iii) net of any Tax benefits realized in accordance with, and subject to, the principles set forth or referred to in the Tax Sharing Agreement, and increased in accordance with, and subject to, the principles set forth in the Tax Sharing Agreement. Accordingly, the amount which any Indemnifying Party is required to pay pursuant to this Article VIII to any Indemnitee pursuant to this Article VIII will be reduced by any Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an

 

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Indemnity Payment ”) and subsequently receives Insurance Proceeds or Third Party Proceeds, then the Indemnitee will 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 Third Party Proceeds had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties acknowledge that the indemnification and contributions hereof do not relieve any insurer who would otherwise be obligated to pay any claim to pay such claim. In furtherance of the foregoing, the Indemnitee shall use commercially reasonable efforts to seek to collect or recover any third-party Insurance Proceeds and any Third Party Proceeds (other than Insurance Proceeds under an arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums) to which the Indemnified Party is entitled in connection with any Indemnifiable Loss for which the Indemnified Party seeks contribution or indemnification pursuant to this Article VIII ; provided that the Indemnitee’s inability to collect or recover any such Insurance Proceeds or Third Party Proceeds (despite having used commercially reasonable efforts) shall not limit the Indemnifying Party’s obligations hereunder.

Section 8.9. Additional Matters; Survival of Indemnities .

(a) The indemnity and contribution agreements contained in this Article VIII shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; (ii) the knowledge by the Indemnitee of Indemnifiable Losses for which it might be entitled to indemnification or contribution hereunder; and (iii) any termination of this Agreement.

(b) The rights and obligations of each Party and their respective Indemnitees under this Article VIII shall survive the sale or other Transfer by any Party or its respective Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

(c) Each Party shall, and shall cause the members of its respective Group to, preserve and keep their Records relating to financial reporting, internal audit, employee benefits, past acquisition or disposition transactions, claims, demands, actions, and email files and backup tapes regarding any of the foregoing as such pertains to any period prior to the Separation Date in their possession, whether in electronic form or otherwise, until the date on which such Records are no longer required to be retained pursuant to such Party’s applicable record retention policy and schedules as set forth in Schedule 8.9(c) ; provided , however , to the extent the Tax Sharing Agreement provides for a longer period of retention of Tax records, such longer period as provided in the Tax Sharing Agreement shall control.

ARTICLE IX

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 9.1. Provision of Corporate Records . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for matters related to provision of Tax records (in which event the provisions of the Tax Sharing Agreement will govern) and without limiting the applicable provisions of Article VII , and subject to any applicable provisions of this Agreement or any Ancillary Agreement:

(a) After the Effective Time, upon the prior written request by ADT NA for specific and identified Information which relates to (x) ADT NA or the conduct of the ADT North American R/SB Business, as the case may be, up to the ADT NA Distribution Date, or (y) any Ancillary Agreement, Tyco shall (or shall cause its Group member to) provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if ADT NA (or its Group member) has a reasonable need for such originals) in the possession or control of Tyco or any of its Affiliates or Subsidiaries, but only to the extent such items so relate; provided , however , that Tyco (or its applicable Group member) shall not be required to provide such copies to the extent that the provision of such would require Tyco (or its applicable Group member) to breach any confidentiality covenant or waive any attorney-client or other legal privilege.

 

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(b) After the ADT NA Distribution Date, upon the prior written request by Tyco for specific and identified Information which relates to (x) Tyco or the conduct of the Tyco Retained Business, up to the ADT NA Distribution Date, or (y) any Ancillary Agreement, ADT NA shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if Tyco (or its Group member) (including for these purposes any member of the Flow Control Group) has a reasonable need for such originals) in the possession or control of ADT NA or any of its Subsidiaries; provided , however , that ADT NA (or its applicable Group member) shall not be required to provide such copies to the extent that the provision of such would require ADT NA (or its applicable Group member) to breach any confidentiality covenant or waive any attorney-client or other legal privilege.

Section 9.2. Access to Information . Other than in circumstances in which indemnification is sought pursuant to Article VIII (in which event the provisions of such Article will govern) or for access with respect to Tax matters (in which event the provisions of the Tax Sharing Agreement will govern), from and after the Effective Time for a period of seven (7) years, each of Tyco and ADT NA shall afford to the other and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, to the personnel, properties, and Information of such Party and its Subsidiaries insofar as such access is reasonably required by the other Party and relates to (x) such other Party or the conduct of its business prior to the Effective Time or (y) any Ancillary Agreement; provided that neither Party shall be required to provide such access to the extent that the provision of such would require such Party (or one of its Group members) to breach any confidentiality covenant or waive any attorney-client or other legal privilege. Nothing in this Section 9.2 shall require either Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business.

Section 9.3. Witness Services . At all times from and after the Effective Time, each of Tyco and ADT NA shall use its reasonable best efforts to make available to the others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees, consultants and agents as witnesses to the extent that (i) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the

 

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requesting Party may from time to time be involved (except for claims, demands or Actions between members of each Group) and (ii) there is no conflict in the Action between the requesting Party and the requested Party (or any member of the their respective Groups), as applicable. A Party providing a witness to the other Party under this Section 9.3 shall be entitled to receive from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees’ employer regardless of the employees’ service as witnesses) as may be reasonably incurred and properly paid under applicable Law.

Section 9.4. Reimbursement; Other Matters . Except to the extent otherwise contemplated by this Agreement or any Ancillary Agreement, a Party providing Information or access to Information to the other Party under this Article IX shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such Information or access to such Information.

Section 9.5. Confidentiality . Notwithstanding any termination of this Agreement, from the date hereof and for a period ending seven (7) years from the expiration or termination of the Monitoring Agreements (as the term thereof may be extended pursuant to the terms and conditions of the Monitoring Agreements), each Party and the members of its Group shall (i) hold in strict confidence (and at a standard of care no less than they use for their own similar information and in accordance with the terms of all applicable third-party agreements), (ii) disclose, provide, transfer, share or make available only to their and their Subsidiaries’ officers, employees, agents, consultants, auditors, attorneys and advisors (or potential buyers, lenders, investors, or similar transaction counterparties pursuant to any due diligence process), only on a “need to know” basis, and (iii) not use for any purpose other than to ensure compliance with the terms and conditions of this Agreement or any Ancillary Agreement, to enforce or defend any of its rights hereunder or thereunder or to the extent otherwise expressly permitted pursuant to this Agreement or any Ancillary Agreement, all Confidential Information to the extent relating to the business of any other Party or any member(s) of such other Party’s Group. To the extent that any Party or any member of its Group has Confidential Information related to another Party or member of such other Party’s Group that is the subject of this Section 9.5 , such first Party shall, and shall cause each member of its Group to (in each case, except as otherwise expressly provided in this Agreement or any Ancillary Agreement), to the extent such Confidential Information is documented or exists in written, photographic or other physical form, return such information (and any copies made thereof) to such other Party or Group, and to the extent it is stored in electronic form, make a copy available to such other Party or Group and expunge such information from any computer or other data carrier, in each case, as promptly as reasonably practicable after the discovery thereof, provided that either Party or member of its Group may retain such information in their archival or back-up computer storage for the period they normally archive backed-up computer records, which copies shall be subject to the provisions of this Agreement until the same are destroyed, and shall not be accessed by either Party or member of its Group during such period of archival or back-up storage other than as might be required by this Agreement, any Ancillary Agreement or by applicable Law. Each Party is liable hereunder for any unauthorized disclosure or use of the other Parties’ Confidential Information by its recipients, including any members of its Group.

 

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In the event that either Party or any member of its Group pursues discussions or negotiations with respect to, enters into any agreement relating to, or otherwise consummates any sale or divestiture of any assets or business that, prior to such sale or divestiture, possesses or has rights of access to any Confidential Information of the other Party or any member of its Group, such Party shall, and shall cause the applicable members of its Group to either (1) remove any such Confidential Information of the other Party or its Group from such assets or business as of the consummation of any such sale or divestiture (and use reasonable best efforts to prevent the disclosure thereof during any due diligence process relating thereto) and/or (2) cause the confidentiality and non use obligations of such Party (and members of its Group), as it relates to the Confidential Information of such other Party and/or members of its Group under this Agreement (and any applicable Ancillary Agreement) to be assigned to, and assumed by, the acquiror in connection with any such sale or divestiture, such as to apply to such acquiror and its Affiliates to the same extent as if a party hereto. In addition, the Party (or member of its Group) undertaking any such sale or divestiture may, at its election, assign to the acquiror any rights or benefits of such Party as they relate to the confidentiality and non use obligations of the other Party.

Section 9.6. Privileged Matters .

(a) Pre-Separation Services . 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 Tyco Group and the ADT North American R/SB Group, and that each of the members of the Tyco Group and the ADT North American R/SB Group should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

(b) Post-Separation Services . The Parties recognize that legal and other professional services will be provided following the Effective Time which will be rendered solely for the benefit of Tyco or ADT NA (and/or members of their respective Groups), as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) Tyco shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the Tyco Retained Business, whether or not the privileged Information is in the possession of or under the control of Tyco or ADT NA (or any member of their respective Groups). Tyco shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting Tyco Retained Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by Tyco (or any member of the Tyco Group), whether or not the privileged Information is in the possession of or under the control of Tyco or ADT NA (or any member of their respective Group);

 

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(ii) ADT NA shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information which relates solely to the ADT North American R/SB Business, whether or not the privileged Information is in the possession of or under the control of Tyco or ADT NA (or any member of their respective Group). ADT NA shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged Information that relates solely to the subject matter of any claims constituting ADT North American R/SB Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by ADT NA (or any member of the ADT North American R/SB Group), whether or not the privileged Information is in the possession of or under the control of Tyco or ADT NA (or any member of their respective Group).

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 9.6 , with respect to all privileges not allocated pursuant to the terms of Section 9.6(b) . All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve two or more of Tyco or ADT NA (or their respective Group members) in respect of which two or more of such Parties retain any responsibility or Liability under this Agreement, shall be subject to a shared privilege among them.

(d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of the other Party, which shall not be unreasonably withheld or delayed or as provided in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent.

(e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, either such Party may waive a privilege in which the other Party or member of such Group has a shared privilege, without obtaining the consent of the other Party; provided that such waiver of a shared privilege shall be effective only as to the use of Information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

(f) If a dispute arises between or among the Parties or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of either Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Parties, and shall not unreasonably withhold consent to any request for waiver by another Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by either Party or by any Subsidiary thereof of any subpoena, discovery or other request which arguably calls for the production or disclosure of Information subject to a shared privilege or as to which another Party has the sole right hereunder to assert a privilege, or if either Party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any

 

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subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged Information, such Party shall promptly notify the other Party or Parties of the existence of the request and shall provide the other Party or Parties a reasonable opportunity to review the Information and to assert any rights it or they may have under this Section 9.6 or otherwise to prevent the production or disclosure of such privileged Information.

(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of Tyco and ADT NA as set forth in Sections 9.5 and 9.6 , to maintain the confidentiality of privileged Information and to assert and maintain all applicable privileges. The access to Information being granted pursuant to Sections 7.3 , 8.4 , 9.1 and 9.2 hereof, the agreement to provide witnesses and individuals pursuant to Sections 7.3 , 8.4 and 9.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Sections 7.5 and 8.6 hereof, and the transfer of privileged Information between and among the Parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted pursuant to applicable law.

(i) Notwithstanding any provision to the contrary in this Section 9.6 , the Audit Management Party (as defined in the Tax Sharing Agreement) shall have the authority to disclose or not disclose, in its sole discretion, any and all privileged Information to (i) any Taxing Authority (as defined in the Tax Sharing Agreement) conducting a Tax Audit (as defined in the Tax Sharing Agreement) or (ii) to third parties in connection with the defense of a Tax Audit, including, expert witnesses, accountants and other advisors, potential witnesses and other parties whose assistance is deemed, in the sole discretion of the Audit Management Party, to be necessary or beneficial to representing the interests of the Parties hereunder.

Section 9.7. Ownership of Information . Any Information owned by one Party or any of its Subsidiaries that is provided to a requesting Party pursuant to this Article IX shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

Section 9.8. Other Agreements . The rights and obligations granted under this Article IX are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in any Ancillary Agreement.

ARTICLE X

DISPUTE RESOLUTION

Section 10.1. Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but (x) excluding any controversy, dispute or claim arising out of any Contract relating to the use or lease of real property if any third party is a necessary party to such controversy, dispute or claim and (y) subject to the prior requirements of Section 5.1(d) , in the case of any controversy, dispute or claim arising out of or with respect to Sections 5.1(b) or (c))

 

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(collectively, “ Agreement Disputes ”), the general counsels of the relevant Parties and/or such other executive officer designated by the relevant Party shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided , that such reasonable period shall not, unless otherwise agreed by the relevant Parties in writing, exceed forty-five (45) days from the time of receipt by a Party of written notice of such Agreement Dispute (“ Dispute Notice ”); provided , further , that in the event of a negotiation in accordance with this Section 10.1 or mediation in accordance with Section 10.2 , the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement or any Ancillary Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved.

Section 10.2. Mediation . If, within forty-five (45) days after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“ AAA ”), and to bear equally the costs of the mediation; provided , however , that each Party shall bear its own costs in connection with such mediation. The parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”). If the Parties have not succeeded in mediating and negotiating a resolution of the Agreement Dispute after the expiration of the Mediation Period, the Parties shall be entitled to seek further relief through litigation or otherwise, subject to the provisions of Article XII of this Agreement.

Section 10.3. Treatment of Negotiations and Mediation . Unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to and any negotiation, mediation, conference or discussion pursuant to this Article X shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided , that such matters may be disclosed to the extent required by Law or stock exchange. Nothing contained herein is intended to or shall be construed to prevent any Party, from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes.

Section 10.4. Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute resolution.

INSURANCE

Section 11.1. Policies and Rights Included Within Assets . The ADT North American R/SB Assets shall include (i) any and all rights of an insured Party under each of the ADT North American R/SB Shared Policies, subject to the terms of such ADT North American

 

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R/SB Shared Policies and any limitations or obligations of ADT NA contemplated by this Article XI , specifically including rights of indemnity and the right to be defended by or at the expense of the insurer, with respect to all actual, contingent or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses which occurred or are alleged to have occurred, in whole or in part, prior to the ADT NA Distribution Date by either Party in or in connection with the conduct of the ADT North American R/SB Business, regardless of whether any suit, claim, action or proceeding is brought before or after the ADT NA Distribution Date or, to the extent any claim is made against ADT NA or any of its Subsidiaries or the conduct of the Tyco Retained Business, and which actual or alleged wrongful acts, occurrences, events, claims, suits, actions, proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence or wrongful act under one or more of such ADT North American R/SB Shared Policies; provided , however , that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such ADT North American R/SB Shared Policies, or any of them, to ADT NA, and (ii) the ADT North American R/SB Policies.

Section 11.2. Claims Made Tail Policies . The claims made tail policies provided for in this Section 11.2 will provide coverage for any Claim arising from any Wrongful Act occurring, in whole or in part, prior to the earlier of the Flow Control Distribution Date and ADT NA Distribution Date. For purposes of this Section 11.2 , “Claim” and “Wrongful Act” shall have the respective meanings given to such terms in the current Tyco International Ltd., D&O, Fiduciary and Employment Practices Liability Insurance Policies, as applicable.

(a) Tyco shall purchase Directors and Officers Liability Insurance Policies having total limits of $275 million, consisting of $275 million of non-rescindable Side A coverage inclusive and $200 million of Side B coverage and having a policy period incepting on the earlier of the ADT NA Distribution Date, the expiration date of the current Tyco Directors and Officers liability insurance Policies or the Flow Control Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the ADT NA Distribution Date and the Flow Control Distribution Date (“ D&O Tail Policies ”). The premium for the D&O Tail Policies shall be pre-paid for the full six-year term of the D&O Tail Policies. Such D&O Tail Policies shall cover Tyco, Flow Control and ADT NA and the insured persons thereof and shall have material terms and conditions no less favorable than those contained in the Policies comprising the Tyco Directors and Officers liability insurance program existing as of the earlier of the ADT NA Distribution Date or the Flow Control Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors or omissions, post-dating the earlier of the ADT NA Distribution Date or the Flow Control Distribution Date. Tyco (i) shall provide ADT NA with copies of the D&O Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to ADT NA.

(b) Tyco shall purchase Fiduciary Liability Insurance Policies having total limits of $50 million and having a policy period incepting on the earlier of the ADT NA Distribution Date, the expiration date of the current Tyco Directors and Officers liability insurance Policies or the Flow Control Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the ADT NA Distribution Date and the Flow Control Distribution Date (“ Fiduciary Tail Policies ”). The premium for the Fiduciary Tail Policies shall

 

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be pre-paid for the full six-year term of the Fiduciary Tail Policies. Such Fiduciary Tail Policies shall cover Tyco, Flow Control and ADT NA and the insured persons thereof and shall have material terms and conditions no less favorable than those contained in the Policies comprising the Tyco fiduciary liability insurance program existing as of the earlier of the ADT NA Distribution Date or the Flow Control Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the earlier of the ADT NA Distribution Date and the Flow Control Distribution Date. Tyco (i) shall provide ADT NA with copies of the Fiduciary Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to ADT NA.

(c) Tyco shall purchase Employment Practices Liability Insurance Policies having total limits of $50 million of coverage and having a policy period incepting on the earlier of the ADT NA Distribution Date, the expiration date of the current Tyco Directors and Officers liability insurance Policies or the Flow Control Distribution Date, whichever date is earlier, and ending on a date that is six years after the latest of the ADT NA Distribution Date and the Flow Control Distribution Date (“ EPL Tail Policies ”). The premium for the EPL Tail Policies shall be pre-paid for the full six-year term of the EPL Tail Policies. Such EPL Tail Policies shall cover Tyco, Flow Control and ADT NA and the insured persons thereof and shall have material terms and conditions no less favorable than those contained in the Policies comprising the Tyco Employment Practices liability insurance program existing as of the earlier of the ADT NA Distribution Date and the Flow Control Distribution Date, except for the policy period, premium and provisions excluding coverage for wrongful acts, errors and omissions, post-dating the earlier of the ADT NA Distribution Date and the Flow Control Distribution Date. Tyco (i) shall provide ADT NA with copies of the EPL Tail Policies within a reasonable time after the Policies are issued and (ii) shall not amend the terms or cancel or permit cancellation of, any such Policies without ninety (90) days prior written notice to ADT NA.

(d) To the extent that Tyco is unable prior to the ADT NA Distribution Date to obtain any of the policies as provided for in paragraphs (a), (b) and (c) of this Section 11.2 , then, with respect to suits or claims based on wrongful acts, errors or omissions on or before the earlier of the ADT NA Distribution Date and the Flow Control Distribution Date, Tyco shall use commercially reasonable efforts to secure alternative insurance arrangements on the standalone insurance policies for ADT NA to provide benefits on terms and conditions (including policy limits) in favor of ADT NA and the insured persons thereof no less favorable than the benefits (including policy limits) that were to be afforded by the policies described in paragraphs (a), (b) and (c) of this Section 11.2 . With respect to such alternative insurance arrangements, Tyco and ADT NA shall be responsible for their own costs under their applicable standalone insurance policies. Tyco shall not under any circumstances purchase any such alternative coverage containing an exclusion for suits or claims based on wrongful acts, errors or omissions up to and including the earlier of the ADT NA Distribution Date and the Flow Control Distribution Date to the extent such exclusion would preclude coverage for ADT NA and/or the insured persons thereof, but would not preclude coverage for Tyco and/or the insured persons thereof.

 

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Section 11.3. Occurrence Based Policies .

(a) Notwithstanding anything herein to the contrary, the terms, conditions and procedures set forth in the various Shared Policies issued by White Mountain Insurance Company and Third Party Administrator Claims Service Instructions associated with such Policies that are in effect as of the ADT NA Distribution Date and pursuant to which Tyco and its Subsidiaries are insured parties, which address, among other things, (i) how claims and suits under the Tyco Shared Policies will be administered, paid, accounted for, and the level of input each Party will have in claim settlements, (ii) access to Shared Policies claim data, (iii) Large Loss Notification to each Party for which ADT NA shall each bear full responsibility to notify Excess carriers of any such losses, (iv) dispute resolution and (v) Umbrella and Excess claims handling, are incorporated hereby by reference.

(b) With respect to all other occurrence based Tyco Shared Occurrence Policies, for suits or claims that are filed or made based upon occurrences that occurred or are alleged to have occurred in whole or in part prior to the ADT NA Distribution Date, Tyco and ADT NA, shall be responsible for bearing the full amount of the deductible and/or any claims, costs and expenses that are not covered under such insurance policies including that portion of any premium adjustments, tax, assessment or similar regulatory surcharges, that relates to claims based on occurrences that predate the ADT NA Distribution Date.

Section 11.4. Administration; Other Matters .

(a) Administration . Except as otherwise provided in Section 11.3 hereof, in any Schedule hereto or in any Ancillary Agreement, from and after the Effective Time, (i) Tyco shall be responsible for (A) Insurance Administration of the Shared Policies, (B) Claims Administration under such Shared Policies with respect to Tyco Retained Liabilities, and (C) Claims Administration under Shared Policies written by White Mountain Insurance Company with respect to ADT North American R/SB Liabilities and (ii) ADT NA shall be responsible for Claims Administration under such Shared Policies with respect to ADT North American R/SB Liabilities (other than ADT North American R/SB Liabilities under Shared Policies written by White Mountain Insurance Company for which Tyco shall be responsible for Claims Administration; provided that if White Mountain Insurance Company tenders the underlying Insured Claim for such ADT North American R/SB Liability to the excess insurance carriers of any losses or claims which may cause the per-occurrence, per claim or aggregate limits of any Shared Policy to be exceeded, then ADT NA shall be responsible for any such Claims Administration); provided that the retention of such responsibilities by Tyco is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Policies as contemplated by the terms of this Agreement; provided further that Tyco’s retention of the administrative responsibilities for the Shared Policies shall not relieve the Party submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner or of such Party’s authority to settle any such Insured Claim within any period or amount permitted or required by the relevant Policy. Tyco may discharge its administrative responsibilities under this Section 11.4 by contracting for the provision of services by independent parties. Each of the applicable Parties shall pay any costs relating to defending its respective Insured Claims under Shared Policies to the extent such costs, including defense and out-of-pocket expenses, are not covered under such Policies. Each of the Parties shall be responsible for obtaining or reviewing the appropriateness of releases upon settlement of its respective Insured Claims under Shared Policies.

 

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(b) Exceeding Policy Limits . Where ADT North American R/SB Liabilities are specifically covered under a Shared Policy for occurrences, acts or events prior to the ADT NA Distribution Date, then ADT NA may claim coverage for Insured Claims under such Shared Policy as and to the extent that such insurance is available up to the full extent of the applicable limits of liability of such Shared Policy (and may receive any Insurance Proceeds with respect thereto as contemplated by Section 11.2 , Section 11.3 or Section 11.4(c) hereof), subject to the terms of this Section 11.4 . Except as set forth in this Section 11.4 , Tyco and ADT NA shall not be liable to one another for claims not reimbursed by insurers for any reason not within the control of Tyco or ADT NA, as the case may be, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of an insurance carrier, Shared Policy limitations or restrictions, any coverage disputes, any failure to timely claim by Tyco, or ADT NA or any defect in such claim or its processing. It is expressly understood that the foregoing shall not limit any Party’s liability to any other Party for indemnification pursuant to Article VIII .

(c) Allocation of Insurance Proceeds . Except as otherwise provided in Section 11.3 , Insurance Proceeds received with respect to suits, occurrences, claims, costs and expenses covered under the Shared Policies shall be paid to Tyco with respect to Tyco Retained Liabilities and to ADT NA with respect to ADT North American R/SB Liabilities. In the event that the aggregate limits on any Shared Policies are exhausted by the payment of Insured Claims to the Parties, each Party shall be responsible for its own costs, expenses and liabilities for which the corresponding insurance coverage under the Shared Policies has been exhausted. Each of the Parties agrees to use their respective reasonable best efforts to maximize available coverage under those Shared Policies applicable to it for the benefit of all Parties, and to take all reasonable best steps to recover from all other responsible parties (except the Parties) in respect of an Insured Claim to the extent coverage limits under a Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(d) Allocation of Aggregate Deductibles . In the event that both Parties have insured claims under any Shared Policy for which an aggregate deductible is payable, the Parties agree that the aggregate amount of the total deductible paid shall be borne by the Parties in the same proportion to which the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Shared Policy (their “ allocable share of the deductible ”), and any Party who has paid more than its allocable share of the deductible shall be entitled to receive from the other Party an appropriate amount such that each Party will only have to bear its allocable share of the deductible. For the purposes of this Section 11.4(d) , Tyco shall include the members of the Flow Control Group.

Section 11.5. Agreement for Waiver of Conflict and Shared Defense . In the event that Insured Claims of both of the Parties exist relating to the same occurrence, both Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this Article XI shall be construed to limit or otherwise alter in any way the obligations of the Parties to this Agreement, including those created by this Agreement, by operation of Law or otherwise.

 

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Section 11.6. Cooperation . The Parties agree to use their respective reasonable best efforts to cooperate with respect to the various insurance matters contemplated by this Agreement.

Section 11.7. Certain Matters Relating to Tyco’s Organizational Documents . For a period of six (6) years from the ADT NA Distribution Date, the Amended and Restated Articles of Association and Amended and Restated Organizational Regulations of Tyco shall contain provisions no less favorable with respect to indemnification than are set forth in the Amended and Restated Articles of Association and Amended and Restated Organizational Regulations of Tyco immediately after the Effective Time, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the ADT NA Distribution Date in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of any member of the Tyco Group or the ADT North American R/SB Group, unless such modification shall be required by Law and then only to the minimum extent required by Law.

ARTICLE XII

MISCELLANEOUS

Section 12.1. Complete Agreement; Construction . This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements and, with respect to the Specified Sections (as defined in the Flow Control Agreement), the Flow Control Agreement, including in each case any related annexes, schedules and exhibits, shall, together constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all prior negotiations, agreements, and understandings of the Parties of any nature, whether oral or written, with respect to such subject matter. If there is a conflict between any provision of this Agreement and a provision of any Schedule hereto, the Schedule shall control unless specifically provided otherwise in this Agreement. If there is a conflict between any provision of this Agreement and a provision of any Ancillary Agreement or Continuing Arrangement, such Ancillary Agreement or Continuing Arrangement shall control. Except as expressly set forth in this Agreement or any Ancillary Agreement: (a) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by the Tax Sharing Agreement; and (b) for the avoidance of doubt, in the event of any conflict between this Agreement or any Ancillary Agreement, on the one hand, and the Tax Sharing Agreement, on the other hand, with respect to such matters, the terms and conditions of the Tax Sharing Agreement shall control.

Section 12.2. Ancillary Agreements . Except as expressly set forth herein, this Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements or solely with respect to the Specified Sections (as defined in the Flow Control Agreement), the Flow Control Agreement.

Section 12.3. Counterparts . This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. This Agreement, and any amendments hereto, to the extent signed and

 

99


delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party shall re-execute original forms thereof and deliver them to the requesting Party. No Party shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile machine or other electronic means as a defense to the formation of a Contract and each such Party forever waives any such defense.

Section 12.4. Survival of Agreements . Except as otherwise contemplated by this Agreement or any Ancillary Agreement or with respect to the Specified Sections (as defined in the Flow Control Agreement), the Flow Control Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their terms.

Section 12.5. Expenses . Except as otherwise provided (i) in this Agreement (including with respect to Specified Shared Expenses, responsibility for which is allocated pursuant to Section 5.5 ), (ii) in any Ancillary Agreement or (iii) with respect to the Specified Sections (as defined in the Flow Control Agreement), in the Flow Control Agreement, the Parties agree that all out-of-pocket fees and expenses incurred by the Parties, or to be incurred by the Parties and directly related to the ADT NA Plan of Separation or transactions contemplated hereby (including third party professional fees, fees and expenses incurred in connection with the execution and delivery of this Agreement and such other third party fees and expenses incurred on a non-recurring basis directly as result of the ADT NA Plan of Separation) (collectively, “ Separation Expenses ”) shall (A) to the extent incurred and payable prior to the ADT NA Distribution Date be paid by Tyco and (B) to the extent any such Separation Expenses arise and are payable by any Party following the ADT NA Distribution Date be paid by such Party. Notwithstanding the foregoing, each Party shall be responsible for its own internal fees (and reimburse any other Party to the extent such Party has paid such costs and expenses on behalf of the responsible Party), costs and expenses (e.g., salaries of personnel working in its respective Business) incurred in connection with the ADT NA Plan of Separation, any costs and expenses relating to such Party’s (or any member of its Group’s) Disclosure Documents in connection with the ADT NA Plan of Separation (including, printing, mailing and filing fees), any costs and expenses incurred with the listing of such Party’s common stock on the NYSE in connection with the Distribution and any costs and expenses incurred in connection with the registration of any debt securities issued in connection with the ADT NA Plan of Separation pursuant to the Securities Act or any other applicable securities laws.

 

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Section 12.6. Notices . All notices, requests, permissions, waivers and 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 deemed to have been duly given (a) three Business Days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile; provided that the facsimile transmission is promptly confirmed and any facsimile transmission received after 5:00 p.m. Eastern time shall be deemed received at 9:00 a.m. Eastern time on the following Business Day, (c) when delivered, if delivered personally to the intended recipient and (d) one Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a Party at the following address for such Party:

To Tyco International:

Tyco International Ltd.

c/o Tyco International Management Company, LLC

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

To TIFSA:

Tyco International Finance S.A.

c/o Tyco International Management Company, LLC

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

To ADT NA or ADT LLC:

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida 33431

Attn: General Counsel

Facsimile: (561) 431-4624

or to such other address(es) as shall be furnished in writing by any such Party to the other Party in accordance with the provisions of this Section 12.6 . Any notice to Tyco shall be deemed notice to all members of the Tyco Group and any notice to ADT NA shall be deemed notice to all members of the ADT North American R/SB Group.

Section 12.7. Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group).

Section 12.8. Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each of the Parties.

Section 12.9. Assignment . Except as otherwise provided for in this Agreement, this Agreement is not assignable by any Party without the prior written consent of the other

 

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Parties (not to be unreasonably withheld or delayed), and any attempt to assign this Agreement without such consent shall be void and of no effect; provided that a Party may assign this Agreement in whole in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 12.10. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and each of their respective successors and permitted assigns.

Section 12.11. Certain Termination and Amendment Rights . This Agreement may be terminated or amended as among any Parties that remain Affiliates, so long as such amendment does not adversely affect any Party that is no longer an Affiliate, in which case, only with the consent of such Party.

Section 12.12. Payment Terms .

(a) Except as expressly provided to the contrary in this Agreement or any Ancillary Agreement, any amount to be paid or reimbursed by any Party (and/or a member of such Party’s Group), on the one hand, to any other Party or Parties (and/or a member of such Party’s or Parties’ Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within thirty (30) days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

(b) Except as expressly provided to the contrary in this Agreement or any Ancillary Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or demanded and properly payable that is not paid within thirty (30) days of such bill, invoice or other demand) shall bear interest at the Default Interest Rate, calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

Section 12.13. No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to Article VIII ).

Section 12.14. Subsidiaries . Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the ADT NA Distribution Date.

 

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Section 12.15. Third Party Beneficiaries . Except (i) as provided in Article VIII relating to Indemnitees and (ii) as provided in Section 11.2 relating to insured persons and Section 11.7 relating to the directors, officers, employees, fiduciaries or agents provided therein, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 12.16. Title and Headings . Headings of the Articles and Sections of this Agreement are for convenience of the Parties only and shall be given no substantive or interpretive effect whatsoever. The table of contents to this Agreement is for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 12.17. Exhibits and Schedules . The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Exhibits or Schedules constitutes an admission of any liability or obligation of any member of the ADT North American R/SB Group or Tyco Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the ADT North American R/SB Group or Tyco Group or any of their respective Affiliates.

Section 12.18. Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

Section 12.19. Consent to Jurisdiction . Subject to the provisions of Article X hereof, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, or (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action or other proceeding arising out of or relating to this Agreement, and to the non-exclusive jurisdiction of the New York Courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 12.19 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 12.20. Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

 

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Section 12.21. Waiver of Jury Trial . EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.21 .

Section 12.22. Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 12.23. Primary Liability of TIFSA . Each of the Parties acknowledges and agrees that TIFSA shall be primarily liable for and shall satisfy all obligations of Tyco under this Agreement and all obligations of Tyco International to ADT NA under the Flow Control Agreement, without right of contribution, reimbursement, or compensation from Tyco International.

Section 12.24. Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

Section 12.25. Interpretation . In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

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Section 12.26. No Duplication; No Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances (including with respect to the rights, entitlements, obligations and recoveries that may arise out of one or more of the following Sections: Section 3.4 ; Section 7.3 ; Section 8.2 ; Section 8.3 ; and Section 8.4 ).

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

 

TYCO INTERNATIONAL LTD.
By:  

/s/ John S. Jenkins

Name:  John S. Jenkins

Title:    Secretary and Vice President

TYCO INTERNATIONAL FINANCE S.A.
By:  

/s/ Andrea Goodrich

Name:  Andrea Goodrich

Title:    Director

THE ADT CORPORATION
By:  

/s/ N. David Bleisch

Name:  N. David Bleisch

Title:    Vice President

ADT LLC
By:  

/s/ N. David Bleisch

Name:  N. David Bleisch

Title:    Vice President

 

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Exhibit 10.1

TAX SHARING AGREEMENT

by and among

TYCO INTERNATIONAL LTD.,

TYCO INTERNATIONAL FINANCE S.A.,

PENTAIR LTD.

and

THE ADT CORPORATION,

Dated as of September 28, 2012


TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

     2   

Section 1.1

 

Definitions

     2   

Section 1.2

 

References; Interpretation

     18   

Section 1.3

 

Effective Time

     19   

ARTICLE II

 

PREPARATION AND FILING OF TAX RETURNS

     19   

Section 2.1

 

Responsibility of Parties to Prepare and File Pre-Distribution Income Tax Returns

     19   

Section 2.2

 

Responsibility of Parties to Prepare and File Straddle Income Tax Returns

     21   

Section 2.3

 

Responsibility of Parties to Prepare and File Post-Distribution Income Tax Returns and Non-Income Tax Returns

     23   

Section 2.4

 

Time of Filing Tax Returns; Manner of Tax Return Preparation

     23   

ARTICLE III

 

RESPONSIBILITY FOR PAYMENT OF TAXES

     23   

Section 3.1

 

Responsibility of Trident for Taxes

     23   

Section 3.2

 

Responsibility of Athens NA for Taxes

     23   

Section 3.3

 

Responsibility of Fountain for Taxes

     24   

Section 3.4

 

Timing of Payments of Taxes

     24   

ARTICLE IV

 

REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS

     24   

Section 4.1

 

Refunds

     24   

Section 4.2

 

Carrybacks

     25   

Section 4.3

 

Amended Tax Returns

     26   

Section 4.4

 

State RAR Returns

     26   

Section 4.5

 

Agreement from Party Administering and Controlling Audit

     27   

ARTICLE V

 

DISTRIBUTION TAXES

     27   

Section 5.1

 

Liability for Distribution Taxes

     27   

Section 5.2

 

Payment for Use of Tax Attributes by Parties at Fault

     28   

Section 5.3

 

Definition of Fault

     28   

Section 5.4

 

Limits on Proposed Acquisition Transactions and Other Transactions During Restricted Period

     28   

Section 5.5

 

Qualified Tax Counsel Advance Conflict Waiver

     30   

Section 5.6

 

IRS Ruling, Non-U.S. Tax Rulings, Tax Representation Letters, and Tax Opinions; Consistency

     30   

Section 5.7

 

Timing of Payment of Taxes

     30   

ARTICLE VI

 

EMPLOYEE BENEFIT MATTERS

     31   

Section 6.1

 

Deferred Compensation Deductions

     31   

ARTICLE VII

 

INDEMNIFICATION

     32   

 

- i -


TABLE OF CONTENTS

(continued)

 

         Page  

Section 7.1

 

Indemnification Obligations of Trident

     32   

Section 7.2

 

Indemnification Obligations of Fountain

     32   

Section 7.3

 

Indemnification Obligations of Athens NA

     32   

Section 7.4

 

Indemnification for Stub Period Taxes and Uncovered Liabilities

     33   

Section 7.5

 

Indemnification for Athens NA Brand/Secondary Brand Transactions

     33   

ARTICLE VIII

 

PAYMENTS

     33   

Section 8.1

 

Payments

     33   

Section 8.2

 

Treatment of Payments Made Pursuant to Tax Sharing Agreement

     34   

Section 8.3

 

Treatment of Payments Made Pursuant to Separation and Distribution Agreements

     35   

Section 8.4

 

Payments Net of Tax Benefit Realized

     35   

ARTICLE IX

 

AUDITS

     35   

Section 9.1

 

Notice

     35   

Section 9.2

 

Pre-Distribution Audits

     36   

Section 9.3

 

Payment of Audit Amounts and Amounts Under Trident 2007 Tax Sharing Agreement

     42   

Section 9.4

 

Transfer Pricing Adjustment

     45   

Section 9.5

 

Correlative Adjustment

     45   

ARTICLE X

 

COOPERATION AND EXCHANGE OF INFORMATION

     46   

Section 10.1

 

Cooperation and Exchange of Information

     46   

Section 10.2

 

Retention of Records

     46   

ARTICLE XI

  ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED LOSSES AND OTHER TAX MATTERS      47   

Section 11.1

 

Allocation of Tax Attributes

     47   

Section 11.2

 

Dual Consolidated Losses

     47   

Section 11.3

 

Trident 2007 Tax Sharing Agreement

     47   

Section 11.4

 

Allocation of Tax Items

     48   

Section 11.5

 

Pre-Distribution Tax Attributes

     48   

Section 11.6

 

Other Agreements

     48   

Section 11.7

 

Amounts Received under Other Agreements

     48   

Section 11.8

 

Threshold Base Amount Report

     48   

ARTICLE XII

 

DEFAULTED AMOUNTS

     48   

Section 12.1

 

General

     48   

Section 12.2

 

Subsidiary Funding

     49   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE XIII

 

DISPUTE RESOLUTION

     49   

Section 13.1

 

Negotiation

     49   

Section 13.2

 

Mediation

     49   

Section 13.3

 

Arbitration

     50   

Section 13.4

 

Arbitration with Respect to Monetary Damages

     50   

Section 13.5

 

Arbitration Period

     51   

Section 13.6

 

Treatment of Negotiations, Mediation, and Arbitration

     51   

Section 13.7

 

Continuity of Service and Performance

     51   

Section 13.8

 

Costs

     51   

Section 13.9

 

Consolidation

     51   

ARTICLE XIV

 

MISCELLANEOUS

     52   

Section 14.1

 

Counterparts; Facsimile Signatures

     52   

Section 14.2

 

Survival

     52   

Section 14.3

 

Notices

     52   

Section 14.4

 

Waivers and Consents

     53   

Section 14.5

 

Amendments

     53   

Section 14.6

 

Assignment

     53   

Section 14.7

 

Successors and Assigns

     54   

Section 14.8

 

Certain Termination and Amendment Rights

     54   

Section 14.9

 

No Circumvention

     54   

Section 14.10

 

Subsidiaries

     54   

Section 14.11

 

Liability of Trident SA

     54   

Section 14.12

 

Third Party Beneficiaries

     54   

Section 14.13

 

Title and Headings

     54   

Section 14.14

 

Exhibits and Schedules

     54   

Section 14.15

 

Governing Law

     55   

Section 14.16

 

Consent to Jurisdiction

     55   

Section 14.17

 

Specific Performance

     55   

Section 14.18

 

Waiver of Jury Trial

     55   

Section 14.19

 

Force Majeure

     56   

Section 14.20

 

Complete Agreement; Construction

     56   

Section 14.21

 

Changes in Law

     56   

Section 14.22

 

Authority

     56   

Section 14.23

 

Severability

     56   

Section 14.24

 

Tax Sharing Agreements

     57   

Section 14.25

 

Exclusivity

     57   

Section 14.26

 

No Duplication; No Double Recovery

     57   

 

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TABLE OF CONTENTS

 

         Page

Schedules

    

Schedule 1.1(25)

  List of ATOB Entities   
Schedule 1.1(76)(c)   List of U.S. state and local Taxes   
Schedule 1.1(112)   List of Qualified Tax Counsel   
Schedule 1.1(121)   List of Section 355 Entities   
Section 1.1(146)   Certain Payments Excluded from Threshold Base Amount   
Schedule 1.1(148)   List of Transferee Entities   
Schedule 1.1(149)   List of Transferor Entities   
Schedule 2.1(a)   Preparation of Pre-Distribution Income Tax Returns   
Schedule 2.2(a)   Preparation of Straddle Income Tax Returns   
Schedule 9.2(c)(iv)   List of the Documents / Information to be made Available   
Schedule 9.2(e)(ii)   U.S. AMP Internal Costs and Expenses   
Schedule 9.2(g-1)   Form of Power of Attorney   
Schedule 9.2(g-2)   Activities Requiring Signature   


TAX SHARING AGREEMENT

THIS TAX SHARING AGREEMENT (this “ Agreement ”) is made and entered into as of the 28th day of September, 2012, by and among Tyco International Ltd., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Trident International”), Tyco International Finance S.A., a corporation organized under the laws of Luxembourg (“Trident SA,” and, together with Trident International, “Trident”), The ADT Corporation, a Delaware corporation (“ Athens NA ”), and Pentair Ltd., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Fountain ”). Each of Trident International, Trident SA, Athens NA and Fountain is sometimes referred to herein as a “ Party ” and collectively, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, Trident International, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including (i) the Athens North American R/SB Business, (ii) the Fountain Business, and (iii) the Trident Retained Business;

WHEREAS, the Board of Directors of Trident International (the “ Board ”) has determined that it is appropriate, desirable and in the best interests of Trident International and its stockholders to separate the Fountain Business from Trident (the “ Fountain Separation ”) and to divest the Fountain Business in the manner contemplated by the Separation and Distribution Agreement by and among Trident International, Fountain and Athens NA dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, “ Fountain Separation Agreement ”), and the Merger Agreement, dated as of March 27, 2012, among Trident International, Fountain, Panthro Acquisition Co., a Delaware corporation, Panthro Merger Sub, Inc., a Minnesota corporation (“ Merger Sub ”) and Pentair, Inc., a Minnesota corporation (“ Patriot ”) (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Merger Agreement ”);

WHEREAS, the Board has determined that it is appropriate, desirable and in the best interests of Trident International and its stockholders to separate from Trident the Athens North American R/SB Business, which shall be owned and conducted, directly or indirectly, by Athens NA (the “ Athens NA Separation ”) pursuant to the Separation and Distribution Agreement by and between Trident International, Trident SA, Athens NA and ADT LLC, an entity organized and existing under the laws of Delaware, dated as of September 26, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Athens NA Separation Agreement ”);

WHEREAS, in order to effectuate the Fountain Separation and the Athens NA Separation, the Board has determined that it is appropriate, desirable and in the best interests of Trident and its stockholders (i) to enter into a series of transactions whereby (A) Trident and/or one or more members of the Trident Group will, collectively, own all of the Trident Retained Assets and assume (or retain) all of the Trident Retained Liabilities, (B) Athens NA and/or one or more members of the Athens North American R/SB Group will, collectively, own all of the Athens North American R/SB Assets and assume (or retain) all of the Athens North American R/SB Liabilities and (C) Fountain and/or one or more members of the Fountain Group will,

 

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collectively, own all of the Fountain Assets and assume (or retain) all of the Fountain Liabilities and (ii) for Trident to distribute to the holders of Trident Common Stock on a pro rata basis (in each case without consideration being paid by such stockholders) (A) all of the outstanding shares of common stock, par value $0.01 per share, of Athens NA (the “ Athens NA Common Stock ”) and (B) all of the outstanding shares of common stock, par value CHF 0.50 per share, of Fountain (the “ Fountain Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ Plan of Separation ”);

WHEREAS, it is the intention of the Parties that the Athens NA Distribution and the Fountain Distribution pursuant to the Plan of Separation qualify as tax-free to Trident under Section 355(c) and 361(c), respectively, of the Internal Revenue Code of 1986, as amended (the “ Code ”), and as tax-free to holders of Trident Common Stock under Section 355(a) of the Code;

WHEREAS, the parties intend that certain internal transactions undertaken in anticipation of the Athens NA Distribution and the Fountain Distribution will qualify for favorable treatment under the Code; and

WHEREAS, in connection with the Plan of Separation, the Parties desire to set forth their agreement on the rights and obligations with respect to handling and allocating Taxes and related matters.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the following meanings:

(1) “ AAA ” has the meaning set forth in Section 13.2.

(2) “ Acceptance Notice ” has the meaning set forth in Section 9.2(d)(iii).

(3) “ Active Business ” means the business conducted by each of the ATOB Entities as of the date of the applicable Distribution.

(4) “ Administration Vote Notice ” has the meaning set forth in Section 9.2(d)(i).

(5) “ Affiliate ” means, when used with respect to a specified Person, a 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 purposes of this definition, “control,” 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 or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common.

 

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(6) “ Agreement ” has the meaning set forth in the preamble hereto.

(7) “ Ancillary Agreements ” means any agreement defined as an “Ancillary Agreement” in either the Athens NA Separation Agreement or the Fountain Separation Agreement, except that such term shall not include this Agreement.

(8) “ Assets ” has the meaning set forth in the Separation and Distribution Agreements.

(9) “ Athens Brand/Secondary Brands ” shall mean (A) any Source Indictor to the extent comprising or including (i) the wordmark ADT in any style, design or font, (ii) the shape of an octagon in any shade of the color blue (in the case of (i) and (ii), including but not limited to the Source Indicators set forth on Schedule A to that certain Trademark Agreement by and among ADT Services GmbH (“ ADT Services”) , a company organized under the laws of Switzerland, on the one hand, ADT US Holdings, Inc. (“ ADT US ”), a corporation organized under the laws of Delaware, and, solely for purposes of Section 6.3 therein, Trident and Athens (the “ Trademark Agreement ”), (iii) the phrase ALWAYS THERE, and/or (iv) any one or more of the terms SAFEWATCH, SAFEWATCH CELLGUARD and VIDEOVIEW, and (B) any secondary brands to the extent identified as an “ADT Secondary Brand” or a “Tyco Secondary Brand” by the Trademark Agreement.

(10) “ Athens NA ” has the meaning set forth in the preamble.

(11) “ Athens NA Brand/Secondary Brands ” means all property sold, transferred, or assigned pursuant to (A) the Purchase Agreement of Intellectual Property Rights and Domain Names Relating to Residential Security Business in North America Dated 21 September 2012, 14:15 p.m. Swiss Time by and between ADT Services and Tyco International Services Holding GmbH, a company organized under the laws of Switzerland (“TISH”), and (B) the Assignment Agreement of Intellectual Property Rights and Domain Names Relating to Residential Security Business in North America Dated 21 September 2012 at 14:40 p.m. Swiss Time by and between TISH, Tyco International Holding S.a.r.l., a company organized under the laws of Luxembourg (“TSarl”), and ADT Services, in each case, including, without limitation, the Athens Brand (including certain registrations and applications) in the Athens NA Residential Territory (the “ Athens NA Brand ”) and the ADT Secondary Brands as such secondary brands are defined in the Trademark Agreement.

(12) “ Athens NA Brand/Secondary Brands Transactions ” means, collectively, (i) the assignment of the Athens NA Brand/Secondary Brands by ADT Services to TISH and (ii) the assignment of the Athens NA Brand/Secondary Brands by TISH to TSarl, each in accordance with the Plan of Separation and the agreements described in Section 1.1(11) of this Agreement.

(13) “ Athens NA Brand/Secondary Brands Transactions Tax Contingencies ” means any liability of ADT Services or TISH for Swiss federal or cantonal Taxes arising solely as a result of the Athens NA Brand/Secondary Brands Transactions.

 

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(14) “ Athens NA Common Stock ” has the meaning set forth in the recitals hereto.

(15) “ Athens NA Distribution ” has the meaning ascribed to the term “ADT NA Distribution” in the Athens NA Separation Agreement.

(16) “ Athens NA Distribution Date ” has the meaning ascribed to the term “ADT NA Distribution Date” in the Athens NA Separation Agreement.

(17) “ Athens NA Residential Territory ” means Canada, the United States, Puerto Rico and U.S. Virgin Islands.

(18) “ Athens NA Second Sharing Percentage ” means fifty-eight percent (58%).

(19) “ Athens NA Separation Agreement ” has the meaning set forth in the recitals.

(20) “ Athens NA Sharing Percentage ” means twenty-seven and one-half percent (27.5%).

(21) “ Athens North American R/SB Assets ” has the meaning ascribed to the term “ADT North American R/SB Assets” in the Athens NA Separation Agreement.

(22) “ Athens North American R/SB Business ” has the meaning ascribed to the term “ADT North American R/SB Business” in the Athens NA Separation Agreement.

(23) “ Athens North American R/SB Group ” has the meaning ascribed to the term “ADT North American R/SB Group” in the Athens Separation Agreement.

(24) “ Athens North American R/SB Liabilities ” has the meaning ascribed to the term “ADT North American R/SB Liabilities” in the Athens NA Separation Agreement.

(25) “ ATOB Entities” mean the entities listed on Schedule 1.1(25).

(26) “ Audit ” means any audit (including a determination of the status of qualified and non-qualified employee benefit plans), assessment of Taxes, other examination by or on behalf of any Taxing Authority (including notices), application for and negotiation of a voluntary disclosure agreement with a Taxing Authority, proceeding, or appeal of such a proceeding relating to Taxes, whether administrative judicial, including proceedings relating to competent authority determinations initiated by a Party or any of its Subsidiaries, or any reporting obligation arising out of an audit, such as State RAR Returns and other amended Returns.

(27) “ Audit External Advisor ” has the meaning set forth in Section 9.2(c)(iii).

 

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(28) “ Audit Management Party ” means the Party responsible for administering and controlling an Audit pursuant to Section 9.2(a), as may be changed from time to time in accordance with Section 9.2(d).

(29) “ Audit Representative ” means, with respect to each Party, the Chief Tax Officer or such other officer that may be designated by that Party’s Chief Financial Officer from time to time.

(30) “ Bankruptcy ” means, with respect to a Person:

(a) the filing of an application by the Person for, or a consent to, the appointment of a trustee of the Person’s assets;

(b) the filing by the Person of a voluntary petition in bankruptcy or the filing of a pleading in any court of record admitting in writing the Person’s inability to pay debts as they come due;

(c) a general assignment by such Person for the benefit of creditors;

(d) the filing by the Person of an answer admitting the material allegations of, or the Person’s consenting to, or defaulting in answering a bankruptcy petition filed against the Person in any bankruptcy proceeding; or

(e) the entry of an order, judgment or decree by any court of competent jurisdiction adjudicating the Person bankrupt or appointing a trustee, custodian, receiver or liquidator of such Person’s assets, which order, judgment or decree continues unstayed and in effect for any period of sixty (60) days.

(31) “ BHS ” means Brink’s Home Security Holdings, Inc.

(32) “ Brinks Separation Transaction Tax Contingencies ” means any liability of BHS under the tax sharing agreement between BHS and The Brink’s Company dated October 31, 2008.

(33) “ Broadview Acquisition Transaction ” means the merger of BHS with and into Barricade Merger Sub, Inc. as described in the Agreement and Plan of Merger by and among Trident, Barricade Merger Sub, Inc., BHS, and ADT Security Services, Inc. dated as of January 18, 2010, as amended.

(34) “ Broadview Acquisition Transaction Tax Contingencies ” means any Income Tax liability arising solely as a result of and in respect to the Broadview Acquisition Transaction.

(35) “ Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York or Schaffhausen, Switzerland.

 

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(36) “ Canadian Distribution Transaction ” means the transactions pursuant to which ADT Security Services Canada, Inc. will transfer its assets used in the Trident Retained Business to Tyco Fire & Security Canada, Inc.

(37) “ Change of Control ” means the occurrence of any of the following: (i) the direct or indirect sale, transfer or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of a Party and the members of such Party’s Group taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act); (ii) the adoption of a plan relating to the liquidation or dissolution of a Party other than (A) the consolidation with, merger into or transfer of all or part of the properties and assets of any Subsidiary of a Party to such Party or any other Subsidiary of such Party, and (B) the merger of a Party with an Affiliate solely for the purpose of reincorporating (or re-forming) the Party in another jurisdiction; (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above) becomes the Beneficial Owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the voting stock of a Party, measured by voting power rather than number of shares; or (iv) a Party consolidates with, or merges with or into, directly or indirectly, any Person, or any Person consolidates with, or merges with or into, a Party, in any such event pursuant to a transaction in which any of the outstanding voting stock of such Party or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the voting stock of such Party outstanding immediately prior to such transaction is converted into or exchanged for voting stock of the surviving or transferee Person constituting a majority of the outstanding shares of such voting stock of such surviving or transferee Person (immediately after giving effect to such issuance).

(38) “ CIT Tax Sharing Agreement ” means the Tax Agreement by and between Trident and CIT Group Inc. dated July 2, 2002.

(39) “ Claimed Deductions ” has the meaning set forth in Section 6.1(a).

(40) “ Claiming Party ” has the meaning set forth in Section 6.1(a).

(41) “ Closing Date ” has the meaning set forth in the Merger Agreement.

(42) “ Code ” has the meaning set forth in the recitals to this Agreement.

(43) “ Common Parent ” means (a) for U.S. federal income tax purposes, the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated income tax return, or (b) for state, local or non-U.S. income tax purposes, the common parent (or similar term), which need not be a corporation, of a consolidated, unitary, combined, group, Organschaft or similar group.

(44) “ Correlative Benefit ” means a decrease in a Post-Distribution Tax Period Tax payment obligation by a Party (or its Subsidiaries) or an increase in a Post-Distribution Tax Period Tax benefit of a Party (or its Subsidiaries) that occurs as a direct result of an Audit adjustment pursuant to a Pre-Distribution Shared Tax Audit that results in a payment obligation to such Party by another Party or Parties.

 

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(45) “ Correlative Detriment ” means an increase in a Tax payment obligation by a Party (or its Subsidiaries) or a reduction in a Tax benefit of a Party (or its Subsidiaries) that occurs as a direct result of the Tax position that is the basis for a Refund that is described in clause (3) of Section 4.1(a).

(46) “ Covidien ” means Covidien Ltd., a corporation organized under the laws of Bermuda.

(47) “ Deferred Compensation Deduction ” means an Income Tax deduction arising with respect to (a) the Trident Deferred Compensation Liabilities, the Trident Deferred Stock Units, the Fountain Deferred Compensation Liabilities, the Fountain Deferred Stock Units, the Athens NA Deferred Compensation Liabilities, or the Athens NA Deferred Stock Units; (b) the Trident Options, the Fountain Options or the Athens NA Options, including, without limitation, a deduction arising from disqualifying dispositions relating to prior exercises of stock options issued pursuant to the Trident International Ltd. Employee Stock Purchase Plan; or (c) the Trident Restricted Stock, the Trident Restricted Stock Units, the Trident Performance Share Units, the Fountain Restricted Stock, the Fountain Restricted Stock Units, the Fountain Performance Share Units, the Athens NA Restricted Stock, the Athens NA Restricted Stock Units, or the Athens NA Performance Share Units, as such terms are defined in the Fountain Separation Agreement or the Athens NA Separation Agreement.

(48) “ Dispute ” has the meaning set forth in Section 13.1.

(49) “ Dispute Notice ” has the meaning set forth in Section 13.1.

(50) “ Distribution ” or “ Distributions ” means, individually or collectively:

(a) the Athens NA Distribution,

(b) the Fountain Distribution, and

(c) to the extent not otherwise included in (a) or (b), the actual or deemed distributions described in the IRS Ruling and the Tax Representation Letters that are intended to qualify under Sections 355 and/or 361 of the Code.

(51) “ Distribution Date ” means (i) with respect to Athens NA, the Athens NA Distribution Date and (ii) with respect to Fountain, the Fountain Distribution Date.

(52) “ Distribution Taxes ” means any and all Taxes (a) required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with, the failure of a Distribution to qualify under Section 355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of Section 355(d) or (e) of the Code to the Distributions (or the failure to qualify under or the application of corresponding provisions of the Laws of other jurisdictions); (b) required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with the failure of the Canadian

 

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Distribution Transaction to qualify for tax-free treatment, in whole or in part; (c) required to be paid by or imposed on a Party or any of its Affiliates resulting from, or directly arising in connection with, the failure of any transaction undertaken in connection with or pursuant to the Plan of Separation to qualify for tax-free treatment, in whole or in part, or (d) required to be paid by Trident as a result of the failure of either the Athens NA Distribution or the Fountain Distribution to qualify for an exemption from withholding tax in Switzerland; but, with respect to each of (a), (b), (c) and (d) above, only to the extent that such qualification or tax-free treatment both (x) was intended by the Parties, as reflected in the Plan of Separation, the IRS Ruling or any Non-U.S. Ruling, or any written advice of a Qualified Tax Advisor shared with all the Parties no more than thirty (30) days after the Closing Date or the Athens NA Distribution Date, whichever is later, and (y) was claimed by one or more of the Parties (or any of their Affiliates) on a Tax Return for a Pre-Distribution Tax Period or a Straddle Tax Period.

(53) “ Due Date ” means the date (taking into account all valid extensions) upon which a Tax Return is required to be filed with or Taxes are required to be paid to a Taxing Authority, whichever is applicable.

(54) “ Effective Time ” has the meaning (i) with respect to the Fountain Distribution, set forth in the Fountain Separation Agreement and (ii) with respect to the Athens NA Distribution, set forth in the Athens NA Separation Agreement.

(55) “ Elected Party ” has the meaning set forth in Section 9.2(d)(iii).

(56) “ Employing Party ” has the meaning set forth in Section 6.1(a).

(57) “ Fault ” has the meaning set forth in Section 5.3.

(58) “ Final Determination ” means the final resolution of liability for any Tax for any taxable period, by or as a result of:

(a) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed;

(b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the liability for the Taxes addressed in such agreement for any taxable period;

(c) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax;

(d) a concluded voluntary disclosure agreement with any state, or a comparable agreement under the Laws of other jurisdictions;

(e) any reporting obligation arising out of a final resolution of liability for any Tax such as State RAR Returns or other amended Returns; or

 

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(f) any other final disposition.

(59) “ First Tax Contingency Amount ” means five hundred million dollars ($500,000,000).

(60) “ Flow SpinCo U.S. ” means Trident Fountain US Holding Corporation.

(61) “ Former Athens NA Employee ” has the meaning set forth in the Athens NA Separation Agreement.

(62) “ Former Fountain Employee ” has the meaning set forth in the Fountain Separation Agreement.

(63) “ Former Trident Employee ” has the meaning set forth in the Separation and Distribution Agreements.

(64) “ Fountain ” has the meaning set forth in the recitals to this Agreement.

(65) “ Fountain Assets ” has the meaning set forth in the Fountain Separation Agreement.

(66) “ Fountain Business ” has the meaning set forth in the Fountain Separation Agreement.

(67) “ Fountain Common Stock ” has the meaning set forth in the recitals hereto.

(68) “ Fountain Distribution ” has the meaning set forth in the Fountain Separation Agreement.

(69) “ Fountain Distribution Date ” has the meaning set forth in the Fountain Separation Agreement.

(70) “ Fountain Group ” has the meaning set forth in the Fountain Separation Agreement.

(71) “ Fountain Liabilities ” has the meaning set forth in the Fountain Separation Agreement.

(72) “ Fountain Second Sharing Percentage ” means forty-two percent (42%).

(73) “ Fountain Separation Agreement ” has the meaning set forth in the recitals to this Agreement.

(74) “ Fountain Sharing Percentage ” means twenty percent (20%).

 

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(75) “ Group ” means the Trident Group, the Fountain Group, or the Athens North American R/SB Group.

(76) “ Income Taxes ” mean:

(a) all Taxes based upon, measured by, or calculated with respect to (i) net income or profits (including, but not limited to, any capital gains, minimum tax or any Tax on items of tax preference, but not including sales, use, real, or personal property, gross or net receipts, value added, excise, leasing, transfer or similar Taxes), or (ii) multiple bases (including, but not limited to, corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax is determined is described in clause (a)(i) above;

(b) all U.S., state, local or non-U.S. franchise Taxes;

(c) all U.S., state and local Taxes or non-U.S. Taxes not otherwise included in (a) or (b) above that are listed on Schedule 1.1(76)(c) ; and

(d) including in the case of each of (a), (b), and (c) above, any related interest and any penalties, additions to such Tax or additional amounts imposed with respect thereto by any Taxing Authority.

(77) “ Income Tax Returns ” mean all Tax Returns that relate to Income Taxes.

(78) “ Indemnified Party ” means the Party that is or may be entitled pursuant to this Agreement to receive any payments (including reimbursement for Taxes or costs and expenses) from another Party or Parties to this Agreement.

(79) “ Indemnifying Party ” means the Party that is or may be required pursuant to this Agreement to make indemnification or other payments (including reimbursement for Taxes and costs and expenses) to another Party to this Agreement.

(80) “ Initial Audit Management Party ” means Trident.

(81) “ IRS ” means the United States Internal Revenue Service or any successor thereto, including, but not limited to its agents, representatives, and attorneys.

(82) “ IRS Ruling ” means the requests submitted to the IRS for all private letter rulings to be obtained by Trident from the IRS in connection with the Plan of Separation, and any supplemental materials submitted to the IRS relating thereto, and the IRS private letter rulings received by Trident with respect to the Plan of Separation.

(83) “ Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law), or any income tax treaty.

 

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(84) “ LIBOR ” means an interest rate per annum equal to the applicable three-month London Interbank Offered Rate for deposits in United States dollars published in the Wall Street Journal .

(85) “ Majority of the Parties ” means the consent of at least two of the Parties.

(86) “ McDermott ” means McDermott Will & Emery LLP.

(87) “ Mediation Period ” has the meaning set forth in Section 13.2.

(88) “ Merger ” has the meaning set forth in the Merger Agreement.

(89) “ Merger Agreement ” has the meaning set forth in the recitals.

(90) “ New York Courts ” has the meaning set forth in Section 14.16.

(91) “ Non-Income Tax Returns ” mean all Tax Returns other than Income Tax Returns.

(92) “ Non-U.S. Tax Rulings ” means the requests submitted to the Taxing Authorities in Canada, Switzerland, Puerto Rico, and Luxembourg for all Tax rulings to be obtained by Trident from such Taxing Authorities in connection with the Plan of Separation, and any supplemental materials submitted to the Taxing Authorities relating thereto, and the Tax rulings received by Trident with respect to the Plan of Separation from such Taxing Authorities.

(93) “ Participating Party ” has the meaning set forth in Section 9.2(c)(i).

(94) “ Party ” has the meaning set forth in the preamble.

(95) “ Patriot ” has the meaning set forth in the recitals hereto.

(96) “ Person ” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership, or other organization or entity, whether incorporated or unincorporated, or any governmental entity.

(97) “ Plan of Separation ” has the meaning set forth in the recitals.

(98) “ Post-Distribution Income Tax Returns ” means, collectively, all Income Tax Returns required to be filed by a Party or its Affiliates for a Post-Distribution Tax Period.

(99) “ Post-Distribution Ruling ” has the meaning set forth in Section 5.4.

(100) “ Post-Distribution Tax Period ” means a Tax year beginning and ending after the Distribution Date.

 

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(101) “ Pre-Distribution Income Tax Returns ” means, collectively, all Income Tax Returns required to be filed by a Party or its Affiliates for a Pre-Distribution Tax Period.

(102) “ Pre-Distribution Non-Income or Non-U.S. Tax Audit ” means any Audit of any Party or its Affiliates related to any (a) U.S. federal, state, or local Taxes other than Income Taxes, or (b) any non-U.S. Taxes, in each case with respect to a Tax Return filed, or allegedly required to be filed, for any Pre-Distribution Tax Period or Straddle Tax Period.

(103) “ Pre-Distribution Shared Tax Audit ” means (a) Pre-Distribution U.S. Income Tax Audits; provided , however , that if a Preparing Party takes a position on or after the date of the Fountain Separation Agreement with respect to any item, other than an item related to Distribution Taxes, reflected on a Pre-Distribution Income Tax Return or Straddle Income Tax Return filed on or after the date of the Fountain Separation Agreement and such position is not in accordance with Section 2.1(a)(i) or Section 2.2(a)(i), as applicable, then solely for purposes of Section 9.3(a), such item shall not be treated as covered by a Pre-Distribution Shared Tax Audit to the extent that the liability arising under such Audit with respect to such item exceeds the liability that would have arisen under such Audit with respect to such item if the position with respect to such item had been in accordance with Section 2.1(a)(i) or Section 2.2(a)(i), as applicable; (b) any Audit that includes, or may include, an adjustment that gives rise to a Distribution Tax described in Section 5.1(a); and (c) for the avoidance of doubt, any Audit to which section 9.3(a), (b), (d), or (e) of the Trident 2007 Tax Sharing Agreement applies. For the avoidance of doubt, a Preparing Party shall not be treated as having taken a position on or after the date of the Fountain Separation Agreement to the extent such position is reflected in a draft Tax Return prepared before the date of the Fountain Separation Agreement.

(104) “ Pre-Distribution Tax Period ” means a Tax year beginning and ending on or before the Distribution Date.

(105) “ Pre-Distribution U.S. Income Tax Audit ” means any Audit of any U.S. federal, state, or local Income Tax Return filed, or allegedly required to be filed, for any Pre-Distribution Tax Period or Straddle Tax Period by a Party or its Affiliates; provided , further , that any Audit involving competent authority proceedings and that (a) includes an item related to or arising from an intercompany transfer pricing adjustment under Section 482 of the Code and the Treasury Regulations thereunder, or an analogous provision under U.S. state or local or non-U.S. Law, and (b) involves a Taxing Authority outside of the United States, shall be treated as a Pre-Distribution U.S. Income Tax Audit for purposes of such item solely for purposes of the determination as to whether to proceed to competent authority and for purposes of the related U.S. competent authority proceedings.

(106) “ Pre-2007 Distribution Tax Period ” means a Tax year beginning and ending on or before June 29, 2007, or any Tax year beginning before June 29, 2007, and ending after June 29, 2007.

(107) “ Pre-2007 Distribution Transfer Pricing Tax Audit ” means any Audit of any Party or its Affiliates of any Income Taxes related to or arising from (a) an intercompany transfer pricing adjustment under Section 482 of the Code and the Treasury Regulations

 

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thereunder, or an analogous provision under U.S. state or local or non-U.S. Law, or (b) a determination that the activities of a Party or its Affiliates give rise to a “permanent establishment,” presence, or nexus in any jurisdiction that could subject it to Income Tax in such jurisdiction, in each of (a) and (b), for any Tax year beginning and ending on or before June 29, 2007, or any Tax year beginning before June 29, 2007, and ending after June 29, 2007.

(108) “ Preparing Party ” has the meaning set forth in Section 2.1(a).

(109) “ Prime Rate ” has the meaning set forth in the Separation and Distribution Agreements.

(110) “ Proposed Acquisition Transaction ” means a transaction or series of transactions (or any agreement, understanding, arrangement, or substantial negotiations within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of related transactions), as a result of which any of the Parties or any of the Section 355 Entities (or any successor thereto) would merge or consolidate with any other Person, or as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire (through an option or otherwise), from any of the Parties or any of their Affiliates (or any successor thereto) and/or one or more holders of their stock, respectively, any amount of stock of any of the Parties or any of the Section 355 Entities, as the case may be, that would, when combined with any other changes in ownership of the stock of such Party or any of the Section 355 Entities, comprise more than thirty-five percent (35%) of (a) the value of all outstanding stock of such Party or any of the Section 355 Entities 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 stock of such Party or any of the Section 355 Entities 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. For purposes of determining whether a transaction constitutes an indirect acquisition for purposes of the first sentence of this definition, any recapitalization or other action 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 non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by the Parties in good faith.

(111) “ Qualified Tax Advisor ” means any Qualified Tax Counsel or any of PricewaterhouseCoopers LLP or its Affiliates, Deloitte LLP or its Affiliates, Ernst & Young LLP or its Affiliates, or KPMG LLP or its Affiliates.

(112) “ Qualified Tax Counsel ” means any of the law firms listed on Schedule 1.1(112).

(113) “ Refund ” means any refund of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to future Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided , however , that if a refund of Taxes is includible in taxable income based on applicable Tax Law, then the amount of the Refund shall be determined by multiplying (x) the amount of the refund that is required to be

 

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included in taxable income by (y) sixty-two percent (62%); provided , further , that upon any change after the Effective Time in the highest marginal U.S. federal income Tax rate applicable to corporations, the percentage in clause (y) shall be increased or decreased by the amount of the percentage point change in such rate with effect in the same Tax year as the effective date applicable to such change in rate.

(114) “ Replaced Audit Management Party ” has the meaning set forth in Section 9.2(d)(iv).

(115) “ Requesting Party ” has the meaning set forth in Section 5.4.

(116) “ Restricted Period ” means (a) with respect to Trident and Athens NA, the period beginning at the Effective Time of the Fountain Distribution and the Athens NA Distribution, or whichever is earlier, and ending on the two-year anniversary of the day after the Athens NA Distribution Date and the Fountain Distribution Date, or whichever is later, and (b) with respect to Fountain, the period beginning at the Effective Time of the Fountain Distribution and ending on the two-year anniversary of the day after the Fountain Distribution Date.

(117) “ Rules ” has the meaning set forth in Section 13.3.

(118) “ Second Calendar Quarter ” has the meaning set forth in Section 8.1(a)(i).

(119) “ Second Sharing Percentage ” means, with respect to Fountain, the Fountain Second Sharing Percentage, and with respect to Athens NA, the Athens NA Second Sharing Percentage.

(120) “ Second Tax Contingency Amount ” means seven hundred twenty-five million dollars ($725,000,000).

(121) “ Section 355 Entities ” mean the entities listed on Schedule 1.1(121) .

(122) “ Separation and Distribution Agreements ” means the Fountain Separation Agreement and the Athens NA Separation Agreement.

(123) “ Shared Refunds ” has the meaning set forth in Section 4.1(a).

(124) “ Shared Taxes ” means all Taxes the payment of which would be included in the Threshold Base Amount.

(125) “ Sharing Percentages ” means, with respect to Trident, the Trident Sharing Percentage, with respect to Fountain, the Fountain Sharing Percentage, and with respect to Athens NA, the Athens NA Sharing Percentage.

(126) “ Source Indicators ” has the meaning set forth in the Trademark Agreement.

 

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(127) “ Spinco Party ” or “ Spinco Parties ” means, individually or collectively, Fountain and Athens NA.

(128) “ State RAR Returns ” has the meaning set forth in Section 4.4(a).

(129) “ Straddle Income Tax Returns ” means, collectively, all Income Tax Returns required to be filed by a Party or its Affiliates for a Straddle Tax Period.

(130) “ Straddle Tax Period ” means a Tax year beginning before the Distribution Date and ending after the Distribution Date.

(131) “ Stub Period ” means the Tax year or years or portions thereof beginning on the day after the Distribution of Flow SpinCo U.S. by Keystone France Holdings Corp. and ending on the Fountain Distribution Date (regardless of whether the Tax year terminates on the Fountain Distribution Date).

(132) “ Subsidiary ” has the meaning set forth in the Separation and Distribution Agreements.

(133) “ Tax ” or “ Taxes ” whether used in the form of a noun or adjective, means taxes on or measured by income, franchise, gross receipts, sales, use, excise, payroll, personal property, real property, ad-valorem, value-added, leasing, leasing use or other taxes, levies, imposts, duties, charges, or withholdings of any nature. Whenever the term “Tax” or “Taxes” is used it shall include penalties, fines, additions to tax and interest thereon.

(134) “ Tax Attributes ” mean for U.S. federal, state, local, and non-U.S. Income Tax purposes, earnings and profits, tax basis, net operating and capital loss carryovers or carrybacks, alternative minimum Tax credit carryovers or carrybacks, general business credit carryovers or carrybacks, income tax credits or credits against income tax, disqualified interest and excess limitation carryovers or carrybacks, overall foreign losses, research and experimentation credit base periods, and all other items that are determined or computed on an affiliated group basis (as defined in Section 1504(a) of the Code determined without regard to the exclusion contained in Section 1504(b)(3) of the Code), or similar Tax items determined under applicable Tax law.

(135) “ Tax Benefit Realized ” means with respect to a Party and its Subsidiaries an amount equal to the product of (x) any payment made under this Agreement or either of the Separation and Distribution Agreements that is allowable as a deduction for U.S. Income Tax Purposes, and (y) thirty-eight percent (38%); provided , however , upon any change after the Effective Time in the highest marginal U.S. federal income Tax rate applicable to corporations, the percentage in clause (y) shall be increased or decreased by the amount of the percentage point change in such rate with effect in the same Tax year as the effective date applicable to such change in rate.

(136) “ Tax Deposit ” has the meaning set forth in Section 9.3(f).

(137) “ Tax-Free Status ” means the qualification of a Distribution or any other transaction contemplated by the IRS Ruling or any Tax Opinion as a transaction in which

 

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gain or loss is not recognized, in whole or in part, and no amount is included in income, including by reason of Distribution Taxes, for U.S. federal, state, or local income tax purposes (other than intercompany items, excess loss accounts or other items required to be taken into account pursuant to Treasury Regulations promulgated under Section 1502 of the Code) or the qualification of a Distribution or any other transaction contemplated by a Non-U.S. Tax Ruling as a transaction in which gain or loss is not recognized, in whole or in part, and no amount is included in income, including by reason of Distribution Taxes, for purposes of the Tax Laws applicable to such transactions in the relevant jurisdiction.

(138) “ Tax Group ” means any U.S. federal, state, local or non-U.S. affiliated, consolidated, combined, unitary, group relief, Organschaft, or a similar group as determined under applicable Tax Law that files a Tax Return or Tax Returns on a similar group basis.

(139) “ Tax Management Change Event ” has the meaning set forth in Section 9.2(d)(i).

(140) “ Tax Opinions ” means the Tax opinions and memoranda rendered by any Qualified Tax Advisor to Trident or any of its Affiliates in connection with the Plan of Separation.

(141) “ Tax Package ” means: (a) a pro forma Tax Return relating to the operations of a Spinco Party and/or its Subsidiaries that are required to be included in any Tax Group of which such Spinco Party and/or such Subsidiaries is or was a member for one or more days in a Tax year, and (b) all information relating to the operations of a Spinco Party and/or its Subsidiaries that is reasonably necessary to prepare and file the applicable Tax Return required to be filed by any Tax Group of which such Spinco Party or any of its Subsidiaries is or was a member for one or more days in a Tax year.

(142) “ Tax Representation Letter ” means any letter containing representations and covenants delivered by Trident or any of its Affiliates to a Qualified Tax Advisor in connection with a Tax Opinion.

(143) “ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund, or declaration of estimated tax) required to be supplied to, or filed with, a Taxing Authority by a Party or any member of its Group in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations, or administrative requirements relating to any Taxes.

(144) “ Taxing Authority ” means any governmental authority or any subdivision, agency, commission, or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection, or imposition of any Tax (including the IRS).

 

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(145) “ TE ” means TE Connectivity, Ltd., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland, formerly known as Trident Electronics Ltd.

(146) “ Threshold Base Amount ” means at any relevant time the sum of all prior amounts paid by all Parties under Section 5.1(a), Section 9.3(a) and Section 9.3(c), but for the avoidance of doubt not including any amounts paid or required to be paid by one Party to another Party pursuant to such sections (so as to avoid duplication of amounts included herein); provided , however , that such amount shall not include any amount paid with respect to the Brinks Separation Transaction Tax Contingencies, the Broadview Acquisition Transaction Tax Contingencies, the Trident Fountain Chile Transactions Tax Contingencies, Timing Items, Section 7.4, or the items specified on Section 1.1(146) ( up to the amount shown on such schedule); provided , further , that such sum shall be reduced by Shared Refunds actually received by any Party (it being understood by the Parties that such a reduction could result in a Threshold Base Amount that is below zero).

(147) “ Timing Items ” has the meaning set forth in Section 9.3(d).

(148) “ Transferee Entities ” means the entities listed on Schedule 1.1(148) .

(149) “ Transferor Entities ” means the entities listed on Schedule 1.1(149) .

(150) “ Treasury Regulations ” mean the final and temporary (but not proposed) income tax and administrative regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

(151) “ Trident ” has the meaning set forth in the preamble.

(152) “ Trident Common Stock ” has the meaning set forth in the Separation and Distribution Agreements.

(153) “ Trident Fountain Chile Transactions ” means the deemed contribution of all of the issued and outstanding stock of Tyco Flow Control Chile S.A., a corporation organized under the laws of Chile, to Tyco Flow Control Holding Chile LLC, a Delaware limited liability company, through an election pursuant to Treas. Reg. § 301.7701-3 to treat Tyco Flow Control Holding Chile LLC as a corporation for U.S. federal tax purposes, and the distribution by Tyco Fire & Security US Fire Holdings, Inc., a Delaware corporation, of all of the issued and outstanding interests in Tyco Flow Control Holding Chile LLC, to Tyco International Finance Group GmbH, a company organized under the laws of Switzerland.

(154) “ Trident Fountain Chile Transactions Tax Contingencies ” means any Taxes required to be paid by or imposed on a party or any of its Affiliates solely resulting from, or directly arising in connection with, the failure of (i) the Trident Fountain Chile Transactions to qualify as a reorganization described in Section 368(a)(1)(D) of the Code, or (ii) the distribution of Tyco Flow Control Holding Chile LLC by Tyco Fire & Security US Fire Holdings, Inc. to qualify as tax-free under Sections 355(a) and 361(c) of the Code, in either case, only if and to the extent such Taxes are not attributable to the Fault of any Party or any of its Affiliates.

 

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(155) “ Trident Group ” has the meaning set forth in the Separation and Distribution Agreements; provided , however , that the Trident Group shall not include any member of the Athens North American R/SB Group or the Fountain Group.

(156) “ Trident International ” has the meaning set forth in the preamble.

(157) “ Trident Retained Assets ” has the meaning set forth in the Separation and Distribution Agreements.

(158) “ Trident Retained Business ” has the meaning set forth in the Separation and Distribution Agreements.

(159) “ Trident Retained Liabilities ” has the meaning set forth in the Separation and Distribution Agreements.

(160) “ Trident SA ” has the meaning set forth in the preamble.

(161) “ Trident Sharing Percentage ” means fifty-two and one-half percent (52.5%).

(162) “ Trident 2007 Tax Sharing Agreement ” means the tax sharing agreement entered into as of June 29, 2007, by and among Trident, Covidien, and TE, as amended from time to time.

(163) “ Uncovered Liability ” means the excess liability with respect to an item arising under Audit with respect to such item described in the proviso to clause (a) of the definition of “Pre-Distribution Shared Tax Audit.”

(164) “ Unqualified Tax Opinion ” means an unqualified reasoned “will” opinion of Qualified Tax Counsel, which opinion is reasonably acceptable to each of the Parties and upon which each of the Parties may rely to confirm that a transaction (or transactions) will not result in Distribution Taxes. For purposes of this definition, an opinion is reasoned if it describes the reasons for the conclusions, including the facts and analysis supporting the conclusions.

(165) “ U.S. ” means the United States.

(166) “ U.S. Audit Management Party ” means the Audit Management Party with respect to a Pre-Distribution U.S. Income Tax Audit.

Section 1.2 References; Interpretation .

(a) References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes”, and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to,

 

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this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby”, and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

(b) The Parties agree that this Agreement is intended solely to determine the cash tax obligations of the Parties and does not address the manner or method of tax accounting for any item.

Section 1.3 Effective Time .

(a) The Parties acknowledge that the Plan of Separation contemplates a series of interrelated and intermediate internal transactions undertaken preparatory to and in contemplation of the Distributions that must be completed prior to the Effective Time in order to align and properly capitalize the Fountain Business, the Athens North American R/SB Business, and the Trident Retained Business.

(b) Notwithstanding that these interrelated and intermediate internal transactions must be given effect prior to the Distributions, the agreements contained herein, including, but not limited to, the manner in which Taxes are shared amongst the Parties, shall be effective no earlier than and only upon the Effective Time.

ARTICLE II

PREPARATION AND FILING OF TAX RETURNS

Section 2.1 Responsibility of Parties to Prepare and File Pre-Distribution Income Tax Returns .

(a) General . To the extent not previously filed and subject to the rights and obligations of each of the Parties set forth herein, Schedule 2.1(a) sets forth the Parties (each, a “ Preparing Party ”) that are responsible for preparing or causing to be prepared all Pre-Distribution Income Tax Returns and the Parties that are responsible, or whose Affiliate is responsible, pursuant to Section 2.1(b) for providing a Tax Package with respect to such Pre-Distribution Income Tax Returns. The Party responsible, or whose Affiliate is responsible, for filing a Pre-Distribution Income Tax Return under applicable Law shall file or cause to be filed such Pre-Distribution Income Tax Return with the applicable Taxing Authority. Pre-Distribution Income Tax Returns shall be prepared and filed in a manner (i) consistent with (and the Parties and their Affiliates shall not take any position inconsistent with) past practices of the Parties and their Affiliates or supported by an unqualified reasoned “should” or “will” opinion of a Qualified Tax Advisor, unless otherwise modified by a Final Determination or required by applicable Law, the IRS Ruling, the Non-U.S. Tax Rulings, the Tax Representation Letters, or the Tax Opinions; and (ii) to the extent consistent with clause (i), that minimizes the overall amount of Taxes due and payable on Pre-Distribution Income Tax Returns of all of the Parties by cooperating in making such elections or applications for group or other relief or allowances available in the taxing jurisdiction in which the Income Tax Returns are filed. Unless otherwise provided in this Agreement, the Preparing Party is responsible for the costs and expenses associated with such preparation. Payments between a Party or any of its Affiliates and another Party or any of its

 

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Affiliates for reasonable preparation costs and expenses shall be treated as amounts deductible by the paying Party and its Affiliates pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties or any of their Affiliates shall take any position inconsistent with such treatment, except to the extent a Final Determination with respect to the paying entity causes such payment to not be so treated (in which case the payment shall be treated in accordance with such Final Determination).

(b) Tax Package . To the extent not previously provided, each Party other than the Preparing Party shall (at its own cost and expense), to the extent that a Pre-Distribution Income Tax Return includes items of that Party or its Affiliates, prepare and provide or cause to be prepared and provided to the Preparing Party (and make available or cause to be made available to the other Party) a Tax Package relating to that Pre-Distribution Income Tax Return. Such Tax Package shall be provided in a timely manner consistent with the past practices of the Parties and their Affiliates. Schedule 2.1(a) sets forth the Parties that are responsible for providing a Tax Package relating to a Pre-Distribution Income Tax Return. In the event a Party does not fulfill its obligations pursuant to this Section 2.1(b), the Preparing Party shall be entitled, at the sole cost and expense of the defaulting Party, to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Pre-Distribution Income Tax Return.

(c) Procedures Relating to the Preparation and Filing of Pre-Distribution Income Tax Returns .

(i) In the case of Pre-Distribution Income Tax Returns, to the extent not previously filed, no later than thirty (30) days prior to the Due Date of each such Tax Return (reduced to ten (10) days for state or local Pre-Distribution Income Tax Returns), the Preparing Party shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the other Parties. The other Parties shall have access to any and all data and information necessary for the preparation of all such Pre-Distribution Income Tax Returns and the Parties shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than fifteen (15) days after receipt of such Pre-Distribution Income Tax Returns (reduced to five (5) days for state or local Pre-Distribution Income Tax Returns), each Party shall have a right to object to such Pre-Distribution Income Tax Return (or items with respect thereto) by written notice to the other Parties; such written notice shall contain such disputed item (or items) and the basis for its objection.

(ii) With respect to a Pre-Distribution Income Tax Return submitted by the Preparing Party to the other Parties pursuant to Section 2.1(c)(i), if the other Parties do not object by proper written notice within the time period described, such Pre-Distribution Income Tax Return shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for purposes of this Section 2.1(c)(ii). If a Party does object by proper written notice within such applicable time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable; provided , however , that, notwithstanding anything to the contrary contained herein, if the Parties have not reached a final resolution with respect to all disputed items for which proper written notice was given within ten (10) days (reduced to two (2) days for

 

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state or local Pre-Distribution Income Tax Returns) prior to the Due Date for such Pre-Distribution Income Tax Return, such Tax Return shall be filed as prepared pursuant to this Section 2.1 (revised to reflect all initially disputed items that the Parties have agreed upon prior to such date).

(iii) In the event that a Pre-Distribution Income Tax Return is filed that includes any disputed item for which proper notice was given pursuant to this Section 2.1(c) that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Article XIII. In the event that the resolution of such disputed item (or items) in accordance with Article XIII with respect to a Pre-Distribution Income Tax Return is inconsistent with such Pre-Distribution Income Tax Return as filed, the Preparing Party (with cooperation from the other Parties) 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 Pre-Distribution Income Tax Return is adjusted as a result of a resolution pursuant to Article XIII, proper adjustment shall be made to the amounts previously paid or required to be paid in accordance with Article III in a manner that reflects such resolution.

Section 2.2 Responsibility of Parties to Prepare and File Straddle Income Tax Returns .

(a) General . Subject to the rights and obligations of each of the Parties set forth herein, Schedule 2.2(a) sets forth the Preparing Party that is responsible for preparing or causing to be prepared all Straddle Income Tax Returns and the Parties that are responsible, or whose Affiliate is responsible, pursuant to Section 2.2(b) for providing a Tax Package with respect to such Straddle Income Tax Returns. Unless otherwise provided in this Agreement, the Preparing Party is responsible for the costs and expenses associated with such preparation. The Party responsible, or whose Affiliate is responsible, for filing a Straddle Income Tax Return under applicable Law shall file or cause to be filed such Straddle Income Tax Return with the applicable Taxing Authority. All Straddle Income Tax Returns shall be prepared and filed in a manner (i) consistent with (and the Parties and their Affiliates shall not take any position inconsistent with) past practices of the Parties and their Affiliates or supported by an unqualified reasoned “should” or “will” opinion of a Qualified Tax Advisor, unless otherwise modified by a Final Determination or required by applicable Law, the IRS Ruling, the Non-U.S. Tax Rulings, the Tax Representation Letters, or the Tax Opinions; and (ii) to the extent consistent with clause (i), that minimizes the overall amount of Taxes due and payable on Straddle Income Tax Returns of all of the Parties by cooperating in making such elections or applications for group or other relief or allowances available in the taxing jurisdiction in which the Income Tax Returns are filed. No Parties shall take any action inconsistent with the assumptions (including items of income, gain, deduction, loss and credit) made in determining all estimated or advance payments of Income Tax on or prior to the Distribution Date, including the applicable filing assumptions listed in Schedule 2.2(a) . Payments between a Party or any of its Affiliates and another Party or any of its Affiliates for reasonable preparation costs and expenses shall be treated as amounts deductible by the paying Party and its Affiliates pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties or any of their Affiliates shall take any position inconsistent with such treatment, except to the extent a Final Determination with respect to the paying entity causes such payment to not be so treated (in which case the payment shall be treated in accordance with such Final Determination).

 

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(b) Tax Package . Each Party other than the Preparing Party shall (at its own cost and expense), to the extent that a Straddle Income Tax Return includes items of that Party or its Affiliates, prepare and provide or cause to be prepared and provided to the Preparing Party (and make available or cause to be made available to the other Party) a Tax Package relating to that Straddle Income Tax Return. Such Tax Package shall be provided in a timely manner consistent with the past practices of the Parties and their Affiliates. Schedule 2.2(a) sets forth the Parties that are responsible for providing a Tax Package relating to a Straddle Income Tax Return. In the event a Party does not fulfill its obligations pursuant to this Section 2.2(b), the Preparing Party shall be entitled, at the sole cost and expense of the defaulting Party, to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Straddle Income Tax Return.

(c) Procedures Relating to the Preparation and Filing of Straddle Income Tax Returns .

(i) In the case of Straddle Income Tax Returns, no later than thirty (30) days prior to the Due Date of each such Tax Return (reduced to ten (10) days for state or local Straddle Income Tax Returns), the Preparing Party shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to each of the other Parties. The other Parties shall have access to any and all data and information necessary for the preparation of all such Straddle Income Tax Returns and the Parties shall cooperate fully in the preparation and review of such Straddle Income Tax Returns. Subject to the preceding sentence, no later than fifteen (15) days after receipt of such Straddle Income Tax Returns (reduced to five (5) days for state or local Straddle Income Tax Returns), each Party shall have a right to object to such Straddle Income Tax Return (or items with respect thereto) by written notice to the other Parties; such written notice shall contain such disputed item (or items) and the basis for its objection.

(ii) With respect to a Straddle Income Tax Return submitted by the Preparing Party to the other Parties pursuant to Section 2.2(c)(i), if the other Parties do not object by proper written notice within the time period described, such Straddle Income Tax Return shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for purposes of this Section 2.2(c)(ii). If a Party does object by proper written notice within such applicable time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable; provided , however , that, notwithstanding anything to the contrary contained herein, if the Parties have not reached a final resolution with respect to all disputed items for which proper written notice was given within ten (10) days (reduced to two (2) days for state or local Straddle Income Tax Returns) prior to the Due Date for such Straddle Income Tax Return, such Tax Return shall be filed as prepared pursuant to this Section 2.2 (revised to reflect all initially disputed items that the Parties have agreed upon prior to such date).

(iii) In the event that a Straddle Income Tax Return is filed that includes any disputed item for which proper notice was given pursuant to this Section 2.2(c) that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in

 

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accordance with Article XIII. In the event that the resolution of such disputed item (or items) in accordance with Article XIII with respect to a Straddle Income Tax Return is inconsistent with such Straddle Income Tax Return as filed, the Preparing Party (with cooperation from the other Parties) 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 Straddle Income Tax Return is adjusted as a result of a resolution pursuant to Article XIII, proper adjustment shall be made to the amounts previously paid or required to be paid by the Parties in accordance with Article III in a manner that reflects such resolution.

Section 2.3 Responsibility of Parties to Prepare and File Post-Distribution Income Tax Returns and Non-Income Tax Returns . The Party or its Affiliate responsible under applicable Law for filing a Post-Distribution Income Tax Return or a Non-Income Tax Return shall prepare and file or cause to be prepared and filed that Tax Return (at that Party’s own cost and expense).

Section 2.4 Time of Filing Tax Returns; Manner of Tax Return Preparation . Each Tax Return shall be filed on or prior to the Due Date for such Tax Return by the Party responsible for filing such Tax Return hereunder. Unless otherwise required by a Taxing Authority pursuant to a Final Determination, the Parties shall prepare and file or cause to be prepared and filed all Tax Returns and take all other actions in a manner consistent with (and shall not take any position inconsistent with) any assumptions, representations, warranties, covenants, and conclusions provided by the Parties (or any of their Subsidiaries) in connection with the Plan of Separation.

ARTICLE III

RESPONSIBILITY FOR PAYMENT OF TAXES

Section 3.1 Responsibility of Trident for Taxes . Except as otherwise provided in this Agreement, Trident shall be liable for and shall pay or cause to be paid the following Taxes:

(a) to the applicable Taxing Authority, any Taxes due and payable on all Pre-Distribution Income Tax Returns that Trident is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.1;

(b) to the applicable Taxing Authority, any Taxes due and payable on all Straddle Income Tax Returns that Trident is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.2; and

(c) to the applicable Taxing Authority, any Taxes due and payable on all Post-Distribution Income Tax Returns and Non-Income Tax Returns that Trident is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.3.

Section 3.2 Responsibility of Athens NA for Taxes . Except as otherwise provided in this Agreement, Athens NA shall be liable for and shall pay or cause to be paid the following Taxes:

(a) to the applicable Taxing Authority, any Taxes due and payable on all Pre-Distribution Income Tax Returns that Athens NA is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.1;

 

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(b) to the applicable Taxing Authority, any Taxes due and payable on all Straddle Income Tax Returns that Athens NA is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.2; and

(c) to the applicable Taxing Authority, any Taxes due and payable on all Post-Distribution Income Tax Returns and Non-Income Tax Returns that Athens NA is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.3.

Section 3.3 Responsibility of Fountain for Taxes . Except as otherwise provided in this agreement, Fountain shall be liable for and shall pay or cause to be paid the following Taxes:

(a) to the applicable Taxing Authority, any Taxes due and payable on all Pre-Distribution Income Tax Returns that Fountain is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.1;

(b) to the applicable Taxing Authority, any Taxes due and payable on all Straddle Income Tax Returns that Fountain is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.2; and

(c) to the applicable Taxing Authority, any Taxes due and payable on all Post-Distribution Income Tax Returns and Non-Income Tax Returns that Fountain is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.3.

Section 3.4 Timing of Payments of Taxes . All Taxes required to be paid or caused to be paid by a Party to a Taxing Authority pursuant to this Article III shall be paid or caused to be paid by such Party on or prior to the Due Date of such Taxes.

ARTICLE IV

REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS

Section 4.1 Refunds .

(a) The Parties shall share Refunds as follows: (1) a Party shall be entitled to all Refunds that relate to Taxes, other than Shared Taxes, for which such Party (or its Subsidiaries) is liable, (2) a Party shall be entitled to Refunds claimed on an originally filed Tax Return that reflect an overpayment of estimated Taxes as compared to the Tax liability reported on such originally filed Tax Return, and (3) except to the extent described in clause (1) or (2), (x) Refunds that are related to or paid in respect of an Income Tax Return the Audit of which would constitute a Pre-Distribution Shared Tax Audit, and (y) for the avoidance of doubt and without duplication, Trident’s share of Refunds for payments of Taxes subject to Section 9.3(c) and received pursuant to the Trident 2007 Tax Sharing Agreement (collectively, a “ Shared Refund ”) shall be shared by the Parties in the following order:

(i) First, to the extent that the Threshold Base Amount on the date that the Refund is received is in excess of the Second Tax Contingency Amount, Trident, Fountain and Athens NA shall share all Shared Refunds to such extent and in the same proportion as their respective Sharing Percentages.

 

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(ii) Second, to the extent that the Threshold Base Amount on the date that the Refund is received is in excess of the First Tax Contingency Amount but less than or equal to the Second Tax Contingency Amount, Fountain and Athens NA shall share all such Shared Refunds to the extent and in the same proportion as their respective Second Sharing Percentages.

(iii) Third, to the extent that the Threshold Base Amount on the date that the Refund is received is less than or equal to the First Tax Contingency Amount, Trident shall be entitled to all Shared Refunds.

For the avoidance of doubt, it is the Parties’ intention that Shared Refunds shall be paid to the Parties in a manner that refunds aggregate payments made under Sections 5.1(a), 9.3(a), and 9.3(c) on a “last in, first out” basis. To the extent that a Party (or any of its Subsidiaries) receives and is entitled to a Refund under Section 4.1(a)(2) all or a portion of which is attributable to payments of estimated Taxes by another Party (or any of its Subsidiaries), the first Party shall pay to such other Party the portion of the Refund attributable to such other Party’s payments of estimated Taxes.

Notwithstanding the foregoing, in the event a Refund is the result of the carryback by a Party (or one of such Party’s Affiliates) of a Tax Attribute generated in a Post-Distribution Tax Period or a Straddle Tax Period to a Pre-Distribution Tax Period or a Straddle Tax Period permitted pursuant to Section 4.2 solely because such carryback cannot result in one or more other Parties (or their Affiliates) being liable for additional Taxes, such Refund shall not be shared with any other Party.

(b) Notwithstanding Section 4.1(a), to the extent a claim for a Refund by a Party is reasonably likely to result in a Correlative Detriment to another Party or Parties, such Refund shall, to the extent actually received by such claiming Party, be paid proportionately to the Party or Parties that are reasonably likely to realize such Correlative Detriment, but only to the extent of such Correlative Detriment.

(c) Any Refund or portion thereof to which a Party is entitled pursuant to this Section 4.1 that is received or deemed to have been received as described below by another Party (or its Subsidiaries) shall be paid by such other Party to such first Party. To the extent a Party (or its Subsidiaries) applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such Refund, if received, would have been payable by such Party to another Party (or Parties) pursuant to this Section 4.1, such Party shall be deemed to have actually received a Refund to the extent thereof on the date on which the overpayment is applied to reduce Taxes otherwise payable.

(d) For the avoidance of doubt, any reduction of a previously received Refund shall be treated as an additional Tax payable for all purposes of this Agreement.

Section 4.2 Carrybacks . Each of the Parties shall be permitted (but not required) to carryback (or to cause its Affiliates to carryback) a Tax Attribute realized in a Post-Distribution Tax Period or a Straddle Tax Period to a Pre-Distribution Tax Period or a Straddle Tax Period only if such carryback cannot result in one or more other Parties (or their Affiliates) being liable

 

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for additional Taxes. If a carryback could result in one or more other Parties (or their Affiliates) being liable for additional Taxes, such carryback shall be permitted only if all of such Parties consent to such carryback. Notwithstanding anything to the contrary in this Agreement, any Party that has claimed (or caused one or more of its Affiliates to claim) a Tax Attribute carryback, shall be liable for any Taxes that become due and payable as a result of the subsequent adjustment, if any, to the carryback claim; provided , however , if the carryback results in a Refund that is shared or allocated pursuant to Section 4.1(a) or (b), any Taxes arising from and attributable to an adjustment to the claim for such carryback shall be shared or allocated by the applicable Parties, as the case may be, in the same proportion that the Refund was shared by or allocated to each applicable Party.

Section 4.3 Amended Tax Returns .

(a) Subject to Section 4.4 and notwithstanding Section 2.1 and Section 2.2, a Party (or its Subsidiary) that is entitled to file an amended Tax Return for a Pre-Distribution Tax Period or a Straddle Tax Period for members of its Tax Group shall be permitted to prepare and file an amended Tax Return at its own cost and expense; provided , however , that (i) such amended Tax Return shall be prepared in a manner consistent with (and the Parties and their Affiliates shall not take any position inconsistent with) past practices of the Parties and their Affiliates or supported by an unqualified reasoned “should” or “will” opinion of a Qualified Tax Advisor, unless otherwise modified by a Final Determination or required by applicable Law, the IRS Ruling, the Tax Representation Letters, or the Tax Opinions; and (ii) if such amended Tax Return could result in one or more other Parties becoming responsible for a payment of Taxes pursuant to Article III or a payment to a Party pursuant to Article IX, such amended Tax Return shall be permitted only if the consent of such other Parties is obtained. The consent of such other Parties shall not be withheld unreasonably and shall be deemed to be obtained in the event that a Party (or its Subsidiary) is required to file an amended Tax Return as a result of an Audit adjustment that arose in accordance with Article IX.

(b) A Party (or its Subsidiary) that is entitled to file an amended Tax Return for a Post-Distribution Tax Period, shall be permitted to do so at its own cost and expense and without the consent of any Party.

(c) A Party that is permitted (or whose Subsidiary is permitted) to file an amended Tax Return, shall not be relieved of any liability for payments pursuant to this Agreement notwithstanding that another Party consented thereto.

Section 4.4 State RAR Returns .

(a) The Audit Management Party shall be responsible for preparing and filing any and all amended Tax Returns with respect to Pre-Distribution Tax Periods or Straddle Tax Periods required to report the results of an IRS Final Determination to the states (“ State RAR Returns ”). The Audit Management Party shall make available or cause to be made available drafts of such State RAR Returns (together with all related work papers) to each of the other Parties.

 

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(b) The other Parties shall have access to any and all data and information necessary for the preparation of all such State RAR Returns and the Parties shall cooperate fully in the preparation and review of such State RAR Returns. Subject to the preceding sentence, no later than five (5) days after receipt of such State RAR Returns, each Party shall have a right to object only to the calculation of the amount of the payment (but not the basis for the payment) by written notice to the other Parties; such written notice shall contain such disputed item or items and the basis for its objection. If no Party objects by proper written notice to the other Parties within the time period described in this Section 4.4(b), the calculation of the amounts due and owing from each Party shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 4.4(b). If any Party objects by proper written notice to the other Parties within such time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable in accordance with Article XIII. The Audit Management Party shall file such State RAR Returns and pay applicable Taxes on or prior to the Due Date for such reporting and payment. The other Parties shall reimburse the Audit Management Party for the portion of such payments for which such other Parties are liable pursuant to this Section 4.4(b). In the event that a State RAR Return is filed that includes any disputed item for which proper notice was given pursuant to this Section 4.4 that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Article XIII. In the event that the resolution of such disputed item (or items) in accordance with Article XIII with respect to a State RAR Return is inconsistent with such State RAR Return as filed, the Audit Management Party (with cooperation from the other Parties) shall, as promptly as practicable, amend such State RAR Return to properly reflect the final resolution of the disputed item (or items).

Section 4.5 Agreement from Party Administering and Controlling Audit . Notwithstanding anything to the contrary in this Article IV, any carryback (other than a carryback required by applicable Law) or amended Tax Return and any associated payments of Tax otherwise permitted pursuant to Section 4.2, Section 4.3, and Section 4.4 respectively, shall only be made with the written consent, which shall not be unreasonably withheld, conditioned or delayed, of the Party that would be responsible under Article IX for administering and controlling any Audit that arises with respect to the Tax Return to which the carryback or the amended Tax Return relates, if different from the Party (or its Subsidiary) that is exercising its rights under Section 4.2, Section 4.3, or Section 4.4.

ARTICLE V

DISTRIBUTION TAXES

Section 5.1 Liability for Distribution Taxes . In the event that Distribution Taxes become due and payable to a Taxing Authority pursuant to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:

(a) No Fault . If such Distribution Taxes are not attributable to the Fault of any Party or any of its Affiliates, the responsibility for such Distribution Taxes shall be shared by the Parties in accordance with the provisions in Section 9.3(a) that are applicable to Pre-Distribution Shared Tax Audits.

 

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(b) Fault . If such Distribution Taxes are attributable to the Fault of one or more Parties or any of their Affiliates, the responsibility for such Distribution Taxes shall reside with the Party or Parties at Fault. If more than one Party is at Fault, the responsibility for the Distribution Taxes shall be allocated equally among all of the Parties at Fault.

Section 5.2 Payment for Use of Tax Attributes by Parties at Fault . Notwithstanding Section 5.1, if a Party is at Fault within the meaning of Section 5.3, and such Fault would have resulted in Distribution Taxes becoming due and payable but for the use of the Tax Attributes of one or more other Parties (or their Subsidiaries), the Party at Fault shall pay to each such other Party the amount of Distribution Taxes that did not become due and payable as a result of the use of that other Party’s (or its Subsidiaries’) Tax Attributes. Such payment shall be made by the Party using the Tax Attribute to the other Party. For purposes of computing the amount of the payment under this Section 5.2 for the use of the other Party’s Tax Attributes, the Parties shall assume that the other Party (and each of its Subsidiaries) is subject to an effective tax rate of thirty-eight percent (38%); provided , however , that such effective tax rate shall be adjusted from time to time pursuant to Section 14.21(c) of this Agreement. If more than one Party is at Fault, the responsibility for the payment shall be allocated equally among all of the Parties at Fault.

Section 5.3 Definition of Fault . For purposes of this Agreement, Distribution Taxes shall be deemed to result from the fault (“ Fault ”) of a Party if such Distribution Taxes are directly attributable to, or result from:

(a) any act, or failure or omission to act, by such Party or any of such Party’s Affiliates following the Distributions that results in one or more Parties (or any of their Affiliates) being responsible for such Distribution Taxes pursuant to a Final Determination, regardless of whether such act or failure to act (i) is covered by a Post-Distribution Ruling, Unqualified Tax Opinion, or waiver in accordance with Section 5.4, or (ii) occurs during or after the Restricted Period, or

(b) the direct or indirect acquisition of all or a portion of the stock of such Party or of any of such Party’s Affiliates that is a Section 355 Entity (or any transaction or series of related transactions that is deemed to be such an acquisition for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder) by any means whatsoever by any person including pursuant to an issuance of stock by such Party or any of its Affiliates.

Section 5.4 Limits on Proposed Acquisition Transactions and Other Transactions During Restricted Period . During the Restricted Period, no Party shall:

(a) enter into any Proposed Acquisition Transaction, approve any Proposed Acquisition Transaction for any purpose, or allow any Proposed Acquisition Transaction to occur, other than the Merger, with respect to any of the Section 355 Entities;

(b) merge or consolidate with any other Person or liquidate or partially liquidate; or approve or allow any merger, consolidation, liquidation, or partial liquidation of any of the Section 355 Entities or the ATOB Entities;

(c) approve or allow the discontinuance, cessation, or sale or other transfer (to an Affiliate or otherwise) of, or a material change in, any Active Business;

 

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(d) approve or allow the sale, issuance, or other disposition (to an Affiliate or otherwise), directly or indirectly, of any share of, or other equity interest or an instrument convertible into an equity interest in, any of the ATOB Entities;

(e) sell or otherwise dispose of more than thirty-five percent (35%) of its consolidated gross or net assets, or approve or allow the sale or other disposition (to an Affiliate or otherwise) of more than thirty-five percent (35%) of the consolidated gross or net assets of any of the Section 355 Entities (in each case, excluding sales in the ordinary course of business and measured based on fair market values as of the date of the applicable Distribution or other transaction);

(f) amend its certificate of incorporation (or other organizational documents), or take any other action or approve or allow the taking of any action, whether through a stockholder vote or otherwise, affecting the voting rights of the stock of such Party, any of the Section 355 Entities, or any of the Transferee Entities;

(g) issue shares of a new class of nonvoting stock or approve or allow any of the Section 355 Entities or the Transferee Entities to issue shares of a new class of nonvoting stock;

(h) purchase, directly or through any Affiliate, any of its outstanding stock after the Distributions, other than through stock purchases meeting the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 (without regard to the effect of Revenue Procedure 2003-48 on Revenue Procedure 96-30);

(i) approve or allow payment of an extraordinary distribution by any of the Transferee Entities to any of the Transferor Entities, or a redemption of shares of any of the Transferee Entities held by any of the Transferor Entities (in the case of any of the Transferee Entities or the Transferor Entities, including any successor thereto);

(j) approve or allow an extraordinary contribution to any of the Section 355 Entities (or any successor thereto) by its shareholder or shareholders (or any successor(s) thereto);

(k) take any action or fail to take any action, or permit any of its Affiliates to take any action or fail to take any action, that is inconsistent with any representation or covenant made in the IRS Ruling or in the Tax Representation Letters, or that is inconsistent with any ruling or opinion in the IRS Ruling or any Tax Opinion; or

(l) take any action or permit any of its Affiliates to take any action that, in the aggregate (taking into account other transactions described in this Section 5.4) would be reasonably likely to jeopardize Tax-Free Status;

provided , however , that a Party (the “ Requesting Party ”) shall be permitted to take such action or one or more actions set forth in the foregoing clauses (a) through (l) if, prior to taking any such actions: (1) if the Requesting Party is Fountain, (A) Fountain or Trident shall have received a favorable private letter ruling from the IRS, or a ruling from another Taxing Authority (a “ Post-Distribution Ruling ”), in form and substance reasonably satisfactory to Athens NA and Trident

 

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that confirms that such action or actions will not result in U.S. federal or state Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate, or (B) Fountain shall have received an Unqualified Tax Opinion, in form and substance reasonably satisfactory to Athens NA and Trident, that confirms that such action or actions will not result in U.S. federal or state Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate; (2) if the Requesting Party is Trident or Athens NA, (A) such Requesting Party shall have received a Post-Distribution Ruling(s), in form and substance reasonably satisfactory to the other Parties, that confirms that such action or actions will not result in U.S. federal or state, Puerto Rican or Canadian Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate, or (B) such Requesting Party shall have received an Unqualified Tax Opinion(s), in form and substance reasonably satisfactory to the other Parties, that confirms that such action or actions will not result in U.S. federal or state, Puerto Rican or Canadian Distribution Taxes, taking into account such actions and any other relevant transactions in the aggregate; or (3) such Requesting Party shall have received a written statement from each of the other Parties that provides that such other Party waives the requirement to obtain a Post-Distribution Ruling or Unqualified Tax Opinion described in this paragraph. The evaluation of a Post-Distribution Ruling or Unqualified Tax Opinion may consider, among other factors, the appropriateness of any underlying assumptions, representations, and covenants made in connection with such Post-Distribution Ruling or Unqualified Tax Opinion. Each Party shall bear its own costs and expenses in connection with securing or evaluating any such Post-Distribution Ruling or Unqualified Tax Opinion.

Section 5.5 Qualified Tax Counsel Advance Conflict Waiver . Unless prohibited by Law or the ethical rules applicable to attorneys, each of the Parties agrees to waive or to cause its Affiliates to waive in advance any conflicts that must be waived in order to permit Qualified Tax Counsel to (i) evaluate whether a Party’s proposed action or actions constitute any of the actions described in clauses (a) through (l) in Section 5.4 or (ii) issue any Unqualified Tax Opinions to be obtained by a Party pursuant to this Article V.

Section 5.6 IRS Ruling, Non-U.S. Tax Rulings, Tax Representation Letters, and Tax Opinions; Consistency . Each Party represents that the information and representations furnished by it in or with respect to the IRS Ruling, the Non-U.S. Tax Rulings, the Tax Representation Letters, and the Tax Opinions are accurate and complete as of the Effective Time. Each Party covenants (1) to use its best efforts, and to cause its Affiliates to use their best efforts, to verify that such information and representations are accurate and complete as of the Effective Time; and (2) if, after the Effective Time, it or any of its Affiliates obtains information indicating, or otherwise becomes aware, that any such information or representations is or may be inaccurate or incomplete, to promptly inform the other Parties. The Parties shall not take any action or fail to take any action, or permit any of their Affiliates to take any action or fail to take any action, that is or is reasonably likely to be inconsistent with the IRS Ruling, the Non-U.S. Tax Rulings, the Tax Representation Letters, or the Tax Opinions.

Section 5.7 Timing of Payment of Taxes . All Distribution Taxes required to be paid or caused to be paid by a Party to a Taxing Authority under applicable Law shall be paid or caused to be paid by such Party on or prior to the Due Date of such Distribution Taxes. All amounts required to be paid by one Party to another Party (including obligations arising under Article VII) pursuant to this Article V shall be paid or caused to be paid by such first Party to such other Party.

 

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ARTICLE VI

EMPLOYEE BENEFIT MATTERS

Section 6.1 Deferred Compensation Deductions .

(a) Entitlement to Deductions . Any Deferred Compensation Deduction arising after the Distribution Date shall be claimed solely by the Party (or the appropriate Affiliate of that Party) that employs the individual with respect to whom such Deferred Compensation Deduction arises at the time that it arises or, if such individual is not then employed by any Party or a Party’s Affiliate, by Trident or its appropriate Affiliate if the individual is a Former Trident Employee, by Fountain or its appropriate Affiliate if the individual is a Former Fountain Employee, or by Athens NA or its appropriate Affiliate if the individual is a Former Athens NA Employee. If, as a result of a Final Determination, a Deferred Compensation Deduction is disallowed in whole or in part to the Party (the “ Employing Party ”) or its Affiliate claiming such Deferred Compensation Deduction pursuant to the preceding sentence, then any other Party (“ Claiming Party ”) or its Affiliates shall at the request of the Employing Party make a claim for all such deductions (“ Claimed Deductions ”); provided , however , that the Employing Party has delivered to the Claiming Party (i) an opinion of counsel in a form satisfactory to the Claiming Party that confirms that the Claimed Deductions should be sustained based on the Final Determination, and (ii) an acknowledgement that the Employing Party will reimburse the Claiming Party for all reasonable expenses incurred by the Claiming Party or any of its Affiliates as a result of claiming the Claimed Deductions. Upon a subsequent Final Determination in favor of the Claiming Party or one or more of its Affiliates for the Claimed Deductions, the Claiming Party shall pay to the Employing Party any Tax Benefit Realized by the Claiming Party or its Affiliates in the taxable year that the Claiming Party or one or more of its Affiliates asserts its claim to the Claimed Deductions.

(b) Withholding and Reporting . The Employing Party that claims (or any Affiliate of which claims) the Deferred Compensation Deduction described in Section 6.1(a) shall be responsible for all applicable Taxes (including, but not limited to, withholding and excise taxes) and shall satisfy, or shall cause to be satisfied, all applicable Tax reporting obligations in respect of the deferred compensation that gives rise to the Deferred Compensation Deduction. The Parties to this Agreement shall reasonably cooperate (and shall cause their Affiliates to reasonably cooperate) so as to permit the Employing Party or its Affiliates claiming such Deferred Compensation Deduction to discharge any applicable Tax withholding and Tax reporting obligations, including the appointment of the Employing Party or one or more of its Affiliates as the withholding and reporting agent if the Employing Party or one or more of its Affiliates is not otherwise required or permitted to withhold and report under applicable Law.

(c) Payment to Issuer for Benefit of Deduction to Employer .

(i) Trident shall pay an amount equal to twenty-five percent (25%) of any Deferred Compensation Deduction claimed by Trident or any of its Affiliates in accordance with Section 6.1(a) (x) to Fountain with respect to stock issued by Fountain and (y) to Athens NA with respect to stock issued by Athens NA.

 

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(ii) Fountain shall pay an amount equal to twenty-five percent (25%) of any Deferred Compensation Deduction claimed by Fountain or any of its Affiliates in accordance with Section 6.1(a) (x) to Trident with respect to stock issued by Trident and (y) to Athens NA with respect to stock issued by Athens NA.

(iii) Athens NA shall pay an amount equal to thirty-eight percent (38%) of any Deferred Compensation Deduction claimed by Athens NA or any of its Affiliates in accordance with Section 6.1(a) (x) to Trident with respect to stock issued by Trident and (y) to Fountain with respect to stock issued by Fountain.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Indemnification Obligations of Trident . Trident shall indemnify Fountain and Athens NA and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which the Trident Group is responsible under this Agreement, and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant, or obligation of Trident under this Agreement.

Section 7.2 Indemnification Obligations of Fountain . Fountain shall indemnify Trident and Athens NA and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which the Fountain Group is responsible under this Agreement, and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant, or obligation of Fountain under this Agreement.

Section 7.3 Indemnification Obligations of Athens NA . Athens NA shall indemnify Trident and Fountain and hold them harmless from and against (without duplication):

(a) all Taxes and other amounts for which the Athens North American R/SB Group is responsible under this Agreement, and

(b) all Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of Athens NA under this Agreement.

 

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Section 7.4 Indemnification for Stub Period Taxes and Uncovered Liabilities .

(a) Trident shall indemnify Fountain and hold it harmless from and against all Taxes due and payable on an originally filed U.S. Income Tax Return of Flow SpinCo U.S. or any of its Subsidiaries with respect to a Stub Period; provided , however that, if such U.S. Income Tax Return is a Straddle Income Tax Return, Trident shall indemnify Fountain only to the extent that such U.S. Income Tax Return is prepared in accordance with Section 2.2(a)(i) and (ii). Fountain shall pay to Trident an amount equal to the excess of the estimated Taxes paid with respect to any Stub Period of Flow SpinCo U.S. or any of its Subsidiaries over the Tax liability reported on the originally filed U.S. Income Tax Return of such entity for such Stub Period.

(b) If an item is not treated as covered by a Pre-Distribution Shared Tax Audit for purposes of Section 9.3(a) to the extent of an Uncovered Liability and the Preparing Party is not the Party required to file the Tax Return the Audit of which results in such Uncovered Liability, then the Preparing Party shall indemnify the filing Party and hold it harmless from and against such Uncovered Liability.

Section 7.5 Indemnification for Athens NA Brand/Secondary Brand Transactions . Athens NA shall indemnify Trident and hold it harmless from and against all Swiss federal or cantonal Taxes due and payable (i) on any Tax Return required to be filed by ADT Services (and its successors) or TISH (and its successors) or (ii) as the result of a Final Determination with respect to such Tax Return, in each case solely with respect to the Athens NA Brand/Secondary Brand Transactions.

ARTICLE VIII

PAYMENTS

Section 8.1 Payments .

(a) General . Unless otherwise provided in this Agreement, in the event that an Indemnifying Party is required to make a payment to an Indemnified Party pursuant to this Agreement:

(i) Aggregate Payments of Less than $10 Million . If such payments are in the aggregate less than $10 million during any three-month period in which the obligation giving rise to the indemnification payment must be satisfied that includes the last month of a calendar quarter and the first two months of the next calendar quarter (the “ Second Calendar Quarter ”), the Indemnified Party shall deliver written notice of the payments to the Indemnifying Party in accordance with Section 14.3 during the third month of the Second Calendar Quarter, and the Indemnifying Party shall be required to make payment to the Indemnified Party within twenty (20) Business Days after the end of the Second Calendar Quarter.

(ii) Payments Equal to or Greater than $10 Million . If such payments are individually or in the aggregate during the calendar quarter equal to or greater than $10 million, the Indemnified Party shall deliver written notice of the payment to the Indemnifying Party in accordance with Section 14.3 at least ten (10) Business Days in advance

 

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of the date or dates on which the obligations giving rise to the indemnification payment must be satisfied (in the case of aggregate payments in excess of $10 million, the earliest date that any such payment must be satisfied), and the Indemnifying Party shall be required to make payment to the Indemnified Party no later than five (5) Business Days after receipt of such notice. The Indemnified Party shall, within one (1) Business Day after the date on which the obligation giving rise to the indemnification payment is satisfied, pay interest to the Indemnifying Party that accrues (at a rate equal to one (1) week LIBOR minus twenty-five (25) basis points) on the amount of such payment from the date of receipt of such payment by the Indemnified Party until the date on which the obligation is satisfied.

(b) Procedural Matters . The written notice delivered to the Indemnifying Party in accordance with Section 14.3 shall show the amount due and owing together with a schedule calculating in reasonable detail such amount (and shall include any relevant Tax Return, statement, bill or invoice related to Taxes, costs, expenses or other amounts due and owing). All payments required to be made by one Party to another Party pursuant to this Section 8.1 shall be made by electronic, same-day wire transfer. Payments shall be deemed made when received. If the Indemnifying Party fails to make a payment to the Indemnified Party within the time period set forth in this Section 8.1, such Indemnifying Party shall not be considered to be in breach of its covenants and obligations established in this Section 8.1 unless and until such failure exists on the date on which the obligation giving rise to the indemnification payment must be satisfied; provided , however , that the Indemnifying Party shall pay to the Indemnified Party (i) interest that accrues (at a rate equal to the Prime Rate plus two hundred (200) basis points) on the amount of such payment from the time that such payment was due to the Indemnified Party until the date that payment is actually made to the Indemnified Party; and (ii) any costs or expenses, including any breakage costs, incurred by the Indemnified Party to secure such payment or to satisfy the Indemnifying Party’s portion of the obligation giving rise to the indemnification payment.

(c) Right of Setoff . It is expressly understood that an Indemnifying Party is hereby authorized to set off and apply any and all amounts required to be paid to an Indemnified Party pursuant to this Section 8.1 against any and all of the obligations of the Indemnified Party to the Indemnifying Party arising under Section 8.1 of this Agreement that are then either due and payable or past due, but only to the extent that such Indemnifying Party has made any demand for payment with respect to such obligations.

Section 8.2 Treatment of Payments Made Pursuant to Tax Sharing Agreement . Unless otherwise required by Law, a Final Determination or this Agreement, for U.S. federal income Tax purposes, any payment made pursuant to this Agreement by:

(a) a Spinco Party to Trident shall be treated as an adjustment to one or more transfers of assets to such Spinco Party by Trident or one or more of Trident’s Subsidiaries (determined immediately prior to the Athens NA Distribution or the Fountain Distribution, whichever is earlier), as applicable, pursuant to the Plan of Separation;

(b) Trident to a Spinco Party shall be treated as an adjustment to one or more transfers to such Spinco Party by Trident or one or more of Trident’s Subsidiaries (determined immediately prior to the Athens NA Distribution or the Fountain Distribution, whichever is earlier), as applicable, pursuant to the Plan of Separation;

 

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(c) a Spinco Party to another Spinco Party shall be treated as (1) first, an adjustment to one or more transfers as described in Section 8.2(a) and (2) second, as a transfer as described in Section 8.2(b); and

in each case, none of the Parties shall take any position inconsistent with such treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its reasonable best efforts to contest such challenge.

Section 8.3 Treatment of Payments Made Pursuant to Separation and Distribution Agreements . Except as otherwise provided in the Separation and Distribution Agreements and unless otherwise required by a Final Determination or this Article VIII, for U.S. federal Income Tax purposes, payments made pursuant to the Separation and Distribution Agreements shall be treated in accordance with the principles set forth in Section 8.2. Payments made by a Party for costs and expenses relating to Assumed Trident Contingent Liabilities or otherwise pursuant to the Separation and Distribution Agreements shall be treated as amounts deductible by such Party pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties shall take any position inconsistent with such treatment, except to the extent that there is a Final Determination with respect to the paying Party that such payment is not deductible. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to the Separation and Distribution Agreements should be other than as set forth in this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its reasonable best efforts to contest such challenge.

Section 8.4 Payments Net of Tax Benefit Realized . All amounts required to be paid by one Party to another pursuant to this Agreement or the Separation and Distribution Agreements shall be net of the Tax Benefit Realized by the Indemnified Party or its Affiliates.

ARTICLE IX

AUDITS

Section 9.1 Notice . Within fifteen (15) Business Days after a Party or any of its Affiliates receives a written notice from a Taxing Authority (reduced to five (5) Business Days for written notices received from a state or local Taxing Authority) of the existence of an Audit that may require indemnification pursuant to this Agreement, that Party shall notify the other Parties of such receipt and send such notice to the other Parties by delivery in person, by overnight courier service, or by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service). The failure of one Party to notify the other Parties of an Audit shall not relieve such other Party of any liability and/or obligation that it may have under this Agreement, except to the extent that the Indemnifying Party is materially prejudiced by such failure.

 

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Section 9.2 Pre-Distribution Audits .

(a) Determination of Administering Party . Subject to Sections 9.2(b), 9.2(c), and 9.2(d):

(i) The Initial Audit Management Party and its Subsidiaries shall administer and control all Pre-Distribution Shared Tax Audits, Tax Audits related to the Broadview Acquisition Transaction, and Tax Audits related to the Canadian Distribution Transactions.

(ii) All other Audits with respect to a Pre-Distribution Tax Period or a Straddle Tax Period shall be administered and controlled by the Party and its Subsidiaries that would be primarily liable under applicable Law to pay to the applicable Taxing Authority the Taxes resulting from such Audits; provided , however , that if more than one Party is liable under applicable Law for Taxes resulting from such Audit, the controlling Party shall not settle such Audit without the prior written consent of each other Party that would be liable for Taxes resulting from such Audit.

(b) Administration and Control; Cooperation . Subject to Section 9.2(c) and to a Change of Control or a Bankruptcy of the Audit Management Party as provided below, the Audit Management Party shall have absolute authority to make all decisions (determined in its sole discretion) with respect to the administration and control of an Audit described in Section 9.2(a)(i), including the selection of all external advisors. In that regard, the Audit Management Party (i) may in its sole discretion settle or otherwise determine not to continue to contest any issue related to such Audit without the consent of the other Parties, and (ii) shall, as soon as reasonably practicable and prior to settlement of an issue that could cause one or more other Parties to become responsible for Taxes under Section 9.3, notify the Audit Representatives of such other Parties of such settlement. The other Parties shall (and shall cause their Affiliates to) undertake all actions and execute all documents (including an extension of the applicable statute of limitations) that are determined in the sole discretion of the Audit Management Party to be necessary to effectuate such administration and control. The Parties shall act in good faith and use their reasonable best efforts to cooperate fully with each other Party (and their Affiliates) in connection with such Audit and shall provide or cause their Subsidiaries to provide such information to each other as may be necessary or useful with respect to such Audit in a timely manner, identify and provide access to potential witnesses, and other persons with knowledge and other information within its control and reasonably necessary to the resolution of the Audit. Notwithstanding anything to the contrary in this Section 9.2(b) and except with respect to any Pre-2007 Distribution Tax Period, after a Change of Control or a Bankruptcy of the Audit Management Party, the Audit Management Party shall not, prior to the resolution of the vote permitted under Section 9.2(d)(ii) as a result of such Change of Control or Bankruptcy, choose to litigate any issue with respect to an Audit or make any decision to change the forum or jurisdiction with respect to which an issue arising under an Audit is being litigated, without the prior written consent of all of the Parties.

 

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(c) Participation Rights of Parties and Information Sharing with respect to Audits .

(i) Each Party that would be responsible under Section 9.3 for Taxes resulting from an Audit described in Section 9.2(a)(i) (other than the Audit Management Party) (a “ Participating Party ”) shall have limited participation rights as set forth in this Section 9.2(c) with respect to such Audit. Promptly after the Distributions, the Audit Management Party shall arrange for a meeting or conference call that includes all of the Participating Parties to discuss the status of all ongoing Audits. In addition, promptly after notification of an Audit pursuant to Section 9.1, the Audit Management Party shall arrange for a meeting or conference call that includes all of the Participating Parties to plan for the management of such Audit; provided, however, that this requirement shall not apply with respect to notification of an Audit by a U.S. state (or the District of Columbia) of a Pre-Distribution Income Tax Return or a Straddle Income Tax Return. Thereafter, the Participating Parties and the Audit Management Party shall arrange for a meeting or conference call to be held on a monthly basis (or on such other basis as agreed) in order to facilitate regular communication on the status of the Audits. The Participating Parties and the Audit Management Party may determine from time to time to have a separate special meeting to discuss a significant Audit issue. Each Participating Party shall identify any personnel and external advisors who are participating in each of the meetings described above, and shall provide a list of the names of such persons to the Audit Management Party in advance of such meeting.

(ii) Upon the reasonable request of a Participating Party, the Audit Management Party shall make available relevant personnel and external advisors to meet with the Participating Party and its independent auditor in order to review the status of the Audits. The independent auditors of the Participating Parties shall have reasonable access to Audit-related information and personnel. The Participating Parties shall provide the Audit Management Party with reasonable notice of such requested meetings or information.

(iii) Except as provided herein, the Participating Parties shall have no access to the external advisors retained by the Audit Management Party to advise it and its Subsidiaries on matters pertaining to an Audit (“ Audit External Advisor ”) except to the extent that the Audit Management Party reasonably determines that the attendance of an Audit External Advisor at a meeting described in (i) or (ii) above is appropriate. In the event that any such meeting is attended by an Audit External Advisor, the Audit Management Party and the Participating Parties shall have the right to participate in such meeting by telephone or in person. The Audit Management Party shall provide the Participating Parties with notice (including the time and location) of such meeting at least twenty-four (24) hours in advance thereof. Any Participating Party may request a meeting with an Audit External Advisor on matters that are unrelated to the Audit; provided , however , that if the matter involves evaluating Audit-related issues, the requesting Participating Party must give the Audit Management Party and any other Participating Party at least twenty-four (24) hours notice prior to such meeting so that each such Party can elect to participate (failure to respond to the Participating Party’s notice prior to the meeting shall constitute an election to decline participation). No Participating Party shall request an opinion on an Audit-related issue from an Audit External Advisor, except to the extent such Audit-related issue relates to an item in a period other than a Pre-2007 Distribution Tax Period and the Audit Management Party affirmatively declines to obtain such opinion.

(iv) Each Participating Party shall have access to any written documentation in the possession of the Audit Management Party that pertains to the Audit

 

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(including any written summaries of issues that the Audit Management Party has developed in the context of evaluating the financial reporting of the Audit) and the Audit Management Party shall make such information available in the offices of the Audit Management Party; provided , however , that if documentation was prepared solely by or on behalf of a Participating Party, then the documentation must relate to the joint defense of the Audit. Such access shall be provided at such times and in such manner as the Audit Management Party and the Participating Parties agree, but no less frequently than monthly. Copies of the documentation will be made available to the Participating Parties at their sole cost and expense. The Audit Management Party shall undertake to use reasonable efforts to include within the written documentation described above information that is transmitted through electronic means, such as through internet e-mail. Subject to the exceptions listed on Schedule 9.2(c)(iv) , the Audit Management Party shall maintain an internet-based or other electronic document repository system for written documentation related to the Audit, and each of the Participating Parties shall be granted, if so requested, “read only” access to such repository system at such requesting Participating Party’s own cost and expense. Such system shall be managed and controlled by the Audit Management Party and all decisions with respect to the system (including but not limited to the documents to be posted to such system) shall be made by the Audit Management Party in its sole discretion; provided , however , that the U.S. Audit Management Party shall at a minimum post documents that relate to Audits of Trident’s, Athens NA’s and Fountain’s Subsidiaries arising with respect to U.S. federal, state and local Income Taxes in a manner that is consistent with the U.S. Audit Management Party’s document posting practices with respect to such Audits immediately prior to the Distribution Date. An illustrative, but not exclusive, list of the documents and other information to be made available by the Audit Management Party to the Participating Parties is set forth in Schedule 9.2(c)(iv) .

(v) The Participating Parties are encouraged to provide consultation to the Audit Management Party in regards to Audit strategy and shall, upon request of the Audit Management Party, provide such consultation. The Participating Party may elect to employ separate counsel to advise the Participating Party as additional counsel in or in connection with an Audit, but in that event, the fees and expenses of the separate counsel shall be paid solely by the Participating Party. The Audit Management Party shall in good faith consider all advice and other input received from the Participating Parties in connection with their consultations with respect to an Audit. However, the Audit Management Party shall retain the sole authority to make all Audit decisions. In that regard, the Participating Parties and their separate counsels shall not be allowed to participate in any Audit-related meetings other than those described in (i) or (ii) above (unless such a meeting is attended by the personnel of a Participating Party, in which case that Participating Party may attend the meeting but may not actively participate), respond directly to a Taxing Authority conducting the Audit, or in any manner control resolution of the Audit.

(d) Change in Audit Management Party .

(i) Subject to Section 9.2(d)(vi), upon (a) the second anniversary following the Effective Time and annually on each anniversary date thereafter; (b) the expiration of the three (3)-month period following a Change of Control of the Audit Management Party; (c) the expiration of the three (3)-month period following a Bankruptcy of the Audit Management Party; or (d) any point in time at which the Threshold Base Amount has either exceeded the First

 

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Tax Contingency Amount or, following such event, has decreased to an amount below the First Tax Contingency Amount (each of (a), (b), (c) and (d), a “ Tax Management Change Event ”), a Participating Party’s Audit Representative may call for a vote to decide whether the current Audit Management Party should be replaced by another Participating Party by providing written notice of such vote to the other Participating Parties thirty (30) days prior to such Tax Management Change Event (“ Administration Vote Notice ”).

(ii) Within fifteen (15) days after the Audit Management Party and any other Participating Party’s receipt of an Administration Vote Notice, the Audit Management Party’s and any other Participating Party’s Audit Representatives shall meet together (either in person, telephonically or by other electronic means) and discuss any information that is deemed to be relevant to the vote. Thirty (30) days after the Audit Management Party’s and any other Participating Party’s receipt of an Administration Vote Notice, the Board of Directors of the Audit Management Party and any other Participating Party shall submit to each of the other Parties a written vote identifying the one Party that it casts its vote for to be appointed the Audit Management Party.

(iii) In the case of a vote under (ii) above, if a Participating Party other than the current Audit Management Party receives a majority in number of the votes, that Party (the “ Elected Party ”) and its Subsidiaries shall be appointed the new Audit Management Party upon delivery of written acceptance of the appointment to each other Party within five (5) days after the vote (“ Acceptance Notice ”). If the Elected Party delivers the Acceptance Notice, then the Elected Party shall immediately have and assume all of the rights and obligations of the Audit Management Party under this Agreement. Except as provided in Section 9.2(d)(iv), upon delivery of the Acceptance Notice, the Replaced Audit Management Party shall have no further rights or obligations as the Audit Management Party (other than for any expense or cost reimbursements incurred prior to its replacement). If (a) the current Audit Management Party receives a majority in number of votes, (b) no Party receives a majority of the votes cast, or (c) the Elected Party fails to deliver the Acceptance Notice, then the Audit Management Party shall remain the Party then appointed.

(iv) If as a result of a vote under (ii) above, there is a replacement of the then appointed Audit Management Party (the “ Replaced Audit Management Party ”), the Replaced Audit Management Party shall use its reasonable best efforts to transition to the new Audit Management Party the administration and control of the ongoing Audits that the Replaced Audit Management Party was prior to its replacement responsible for administering and controlling pursuant to Section 9.2(a).

(v) The Audit Management Party and each Participating Party has the exclusive right to replace its respective Audit Representative provided that such Audit Representative must be an employee of such Audit Management Party and Participating Party or any of its Affiliates, and in the event of such replacement, the applicable Audit Management Party and Participating Party shall provide written notice of such replacement to the Audit Management Party and the other Participating Parties as applicable.

(vi) Notwithstanding anything to the contrary herein, the Initial Audit Management Party and its Subsidiaries may not be removed until the later to occur of (I)

 

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the termination of the Trident 2007 Tax Sharing Agreement and (II) the incurrence of additional Taxes that are due and payable as a result of a Final Determination with respect to a Pre-Distribution Shared Tax Audit in an amount greater than the First Tax Contingency Amount.

(e) Sharing of Internal and External Costs and Expenses Related to Pre-Distribution Shared Tax Audits .

(i) External Costs and Expenses . All external costs and expenses (including all costs and expenses of calculating Taxes and other amounts payable hereunder) that are incurred by the Audit Management Party with respect to a Pre-Distribution Shared Tax Audit (including any costs and expenses incurred as a result of any reporting obligations that arise out of an Audit, such as the reporting of any Audit adjustments to the various U.S. states) shall be shared in accordance with the Parties’ Sharing Percentages. The Audit Management Party shall provide to the other Parties at the end of each calendar quarter an invoice for each other Party’s share of the external costs (along with supporting invoices received from the external service providers), and each other Party shall remit, within sixty (60) days after receipt of the invoice, payment of its share of the external costs to the Audit Management Party.

(ii) Internal Costs and Expenses . The U.S. Audit Management Party shall estimate the internal costs and expenses (including any costs and expenses incurred as a result of any reporting obligations that arise out of an Audit, such as the reporting of any Audit adjustments to the various U.S. states) that it expects will be incurred by the U.S. Audit Management Party during the period that starts on the Distribution Date and ends on the last day of the 2015 fiscal year and shall provide such estimate on Schedule 9.2(e)(ii) . Each of the other Parties shall pay (or shall cause its Subsidiaries to pay) the U.S. Audit Management Party, within sixty (60) days after the beginning of each fiscal year through 2015, a fixed fee equal to such other Party’s Sharing Percentage multiplied by the internal costs and expenses shown in the estimate provided by the U.S. Audit Management Party on Schedule 9.2(e)(ii) . Prior to the end of fiscal year 2015, the Parties shall renegotiate this fee for succeeding periods. No adjustment shall be made for any difference between the internal costs and expenses estimated by the U.S. Audit Management Party and the amount of such costs and expenses that are actually incurred by the U.S. Audit Management Party. The other Parties acknowledge that they may incur internal costs and expenses related to an Audit that are not reimbursed pursuant to this Agreement and that the only internal costs and expenses that are subject to sharing and reimbursement are the internal costs and expenses incurred by the U.S. Audit Management Party as provided in this Section 9.2(e)(ii).

(iii) Maximum Annual Fountain Share of Costs and Expenses . Notwithstanding anything to the contrary herein, Fountain shall not be required to pay in the aggregate in any year (1) for costs incurred under Section 9.2(e)(i) in connection with the Pre-Distribution Shared Tax Audits related to the U.S. Income Tax Returns for fiscal years 1997 through 2000, more than $1 million or (2) for any other costs incurred under Section 9.2(e)(i) plus any costs incurred under Section 9.2(e)(ii), more than $1 million. To the extent that the annual expenses under this Section 9.2(e) exceed the limitations in the previous sentence, Trident and Athens NA shall share such excess sixty-five and sixty hundred twenty-five thousandths percent (65.625%) and thirty-four and three hundred seventy-five thousandths percent (34.375%), respectively.

 

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(f) Treatment of Costs and Expenses related to Pre-Distribution Shared Tax Audits . Payments borne by the Parties or any of their Subsidiaries for costs and expenses relating to Pre-Distribution Shared Tax Audits shall be treated as amounts deductible by the paying Party (or its Subsidiary) pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties or any of their Subsidiaries shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to the paying Party or its Subsidiary causes any such payment to not be so treated.

(g) Power of Attorney/Officer Signature . Each Party hereby appoints (and shall cause its Subsidiaries to appoint) the Audit Management Party (and its designated representatives) as its agent and attorney-in-fact to take the actions the Audit Management Party deems necessary or appropriate to implement the responsibilities of the Audit Management Party under this Agreement. Each Participating Party also shall (or shall cause its Subsidiaries to) execute and deliver to the Audit Management Party a power of attorney, substantially in the form attached hereto as Schedule 9.2(g-1) , and such other documents as are reasonably requested from time to time by the Audit Management Party (or its designee), including, without limitation, a power of attorney with respect to any Participating Party (or a Subsidiary of a Participating Party) that is sold to an unrelated third party by a Participating Party (or by a Subsidiary of a Participating Party) and with respect to which the Audit Management Party has continued Audit responsibilities under this Agreement or the Trident 2007 Tax Sharing Agreement. Such other documents include, but are not limited to, documents signed by an authorized corporate officer of a Participating Party (or a Subsidiary of a Participating Party), where the Audit Management Party determines that a power of attorney is insufficient (in which case such signed documents shall not be withheld) to allow the Audit Management Party to make the necessary or appropriate filings or to take steps necessary or appropriate to the Audit Management Party’s defense, prosecution, or settlement of an Audit under this Agreement; provided , however , that (i) such power of attorney or such other documents shall not expand the rights or powers of such Audit Management Party beyond those provided by this Agreement; (ii) activities conducted under a power of attorney or such other documents are limited to the activities authorized by that power of attorney or such other documents; (iii) a power of attorney or such other documents delivered by a Participating Party to the Audit Management Party can be revoked only with the approval of the Audit Committee of the Board of Directors of the Participating Party to which the power of attorney or such other documents relates; and (iv) a revocation of a power of attorney or such other documents by a Participating Party’s Audit Committee also effects the immediate revocation of all powers of attorney or such other documents granted under, or derived from, the authority of the power of attorney that is revoked by that Participating Party’s Audit Committee. Examples of activities for which the signature of a Participating Party’s authorized representative could be required are set forth on Schedule 9.2(g-2) .

 

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Section 9.3 Payment of Audit Amounts and Amounts Under Trident 2007 Tax Sharing Agreement .

(a) Pre-Distribution Shared Tax Audits . In connection with any Final Determination with respect to a Pre-Distribution Shared Tax Audit:

(i) Trident shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Fountain, or Athens NA (as the case may be) (x) one hundred percent (100%) of the additional Taxes due and payable as a result of such Final Determination that are attributable to the Trident Fountain Chile Transactions Tax Contingencies, (y) one hundred percent (100%) of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, are less than or equal to the First Tax Contingency Amount, and (z) the Trident Sharing Percentage of the additional taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(ii) Athens NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Trident, or Fountain (as the case may be) (x) one hundred percent (100%) of the additional Taxes due and payable as a result of such Final Determination that are attributable to the Brinks Separation Transaction Tax Contingencies or the Broadview Acquisition Transaction Tax Contingencies, (y) the Athens NA Second Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the First Tax Contingency amount and are less than or equal to the Second Tax Contingency Amount, and (z) the Athens NA Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(iii) Fountain shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Trident, or Athens NA (as the case may be) (x) the Fountain Second Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the First Tax Contingency Amount and are less than or equal to the Second Tax Contingency Amount, and (y) the Fountain Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(b) Pre-Distribution Non-Income or Non-U.S. Tax Audits . In connection with any Final Determination with respect to a Pre-Distribution Non-Income or Non-U.S. Tax Audit:

(i) Trident shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the Taxes imposed upon the Trident Group as a result of such Final Determination; provided , however , that Trident shall not be liable for any additional Taxes due and payable as a result of such Final Determination that are attributable to the Athens NA Brand Transaction Tax Contingencies.

 

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(ii) Athens NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Trident or Fountain (as the case may be) (i) the Taxes imposed upon the Athens North American R/SB Group as a result of such Final Determination, and (ii) one hundred percent (100%) of the additional Taxes due and payable as a result of such Final Determination that are attributable to the Athens NA Brand Transaction Tax Contingencies.

(iii) Fountain shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the Taxes imposed upon the Fountain Group as a result of such Final Determination; provided , however , that Fountain shall not be liable for any additional Taxes due and payable as a result of such Final Determination that are attributable to the Athens NA Brand Transaction Tax Contingencies.

(c) Trident 2007 Tax Sharing Agreement . For the avoidance of doubt and without duplication, in connection with any payments by Trident with respect to the Trident 2007 Tax Sharing Agreement (including payments with respect to a Pre-2007 Distribution Transfer Pricing Audit):

(i) Trident shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Covidien, TE, Fountain, or Athens NA (as the case may be) (x) one hundred percent (100%) of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, are less than or equal to the First Tax Contingency Amount, and (y) the Trident Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(ii) Athens NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Covidien, TE, Trident, or Fountain (as the case may be) (x) the Athens NA Second Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the First Tax Contingency amount and are less than or equal to the Second Tax Contingency Amount, and (y) the Athens NA Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(iii) Fountain shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority, Covidien, TE, Trident, or Athens NA (as the case may be) (x)

 

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the Fountain Second Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the First Tax Contingency Amount and are less than or equal to the Second Tax Contingency Amount, and (y) the Fountain Sharing Percentage of the additional Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, but only to the extent such additional Taxes, when added to the Threshold Base Amount, exceed the Second Tax Contingency Amount.

(d) Timing Items . Notwithstanding anything to the contrary herein, no Party shall be required to make a payment to any other Party for any additional Taxes due and payable by such other Party as a result of a Final Determination that are attributable to a Pre-Distribution Shared Tax Audit to the extent such payment is reasonably likely to result in a Correlative Benefit to such other Party (a “ Timing Item ”). If more than one Party is reasonably likely to realize such Correlative Benefit, then the Party required to make the payment to such other Parties shall reduce the payments to such other Parties in proportion to the Correlative Benefit reasonably likely to be realized by such other Parties.

(e) Payment Procedures . In connection with any Audit that results in an amount to be paid pursuant to Section 9.3(a), (b), or (c), the Audit Management Party shall, within thirty (30) Business Days following a final resolution of such Audit, submit in writing to the other Parties a preliminary determination (calculated and explained in detail reasonably sufficient to enable the Parties to fully understand the basis for such determination and to permit such Parties and their Affiliates to satisfy their financial reporting requirements) of the portion of such amount to be paid by each of the Parties pursuant to Section 9.3(a), (b), or (c), as applicable. Each of the Parties and its Affiliates shall have access to all data and information necessary to calculate such amounts and the Parties and their Affiliates shall cooperate fully in the determination of such amounts. Within twenty (20) Business Days following the receipt by a Party of the information described in this Section 9.3(e), such Party shall have the right to object only to the calculation of the amount of the payment (but not the basis for the payment) by written notice to the other Parties; such written notice shall contain such disputed item or items and the basis for its objection. If no Party objects by proper written notice to the other Parties within the time period described in this Section 9.3(e), the calculation of the amounts due and owing from each Party shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 9.3(e). If any Party objects by proper written notice to the other Parties within such time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable in accordance with Article XIII. The Party or its Affiliate responsible for paying to the applicable Taxing Authority under applicable Law amounts owed pursuant to a Final Determination shall make such payments to such Taxing Authority prior to the due date for such payments. The other Parties shall reimburse the paying Party for the portion of such payments for which such other Parties are liable pursuant to this Section 9.3. The time periods specified above for submitting a preliminary determination and objecting may be shortened to a time period determined by a Majority of the Parties if these Parties ascertain that such shortened time period is necessary to meet the Audit obligations of the Parties and their Affiliates.

 

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(f) Advance Payment of Taxes . In the event that: (i) the Audit Management Party decides to contest the position of a Taxing Authority taken with respect to a Pre-Distribution Shared Tax Audit in a forum or jurisdiction that requires the prepayment or deposit of the Taxes (or security for the Taxes) in order to contest the Taxes determined by the Taxing Authority to be due and payable, or (ii) the Audit Management Party determines in good faith that it is in the best interest of the Parties to make a prepayment or deposit of Taxes with the IRS in respect of a Pre-Distribution U.S. Income Tax Audit in accordance with the procedures required by the IRS to suspend the accrual of interest on a potential underpayment of Taxes, including but not limited to a cash deposit or a deposit in the nature of a cash bond (each of (i) and (ii), a “ Tax Deposit ”), then, in either case (as applicable), each of the other Parties must pay to the Audit Management Party its portion of such Tax Deposit determined in accordance with this Section 9.3, and the Audit Management Party shall promptly remit such Tax Deposit to the applicable Taxing Authority in accordance with such Taxing Authority’s Tax prepayment or deposit procedures, as applicable; provided , however , if (i) the Threshold Base Amount exceeds the First Tax Contingency Amount and (ii) any Party’s portion of such Tax Deposit exceeds $100 million, the Parties shall only be obligated to pay their portions of such Tax Deposit if a Majority of the Parties votes in favor of the Audit Management Party’s decision to make the Tax Deposit. Each of the Parties shall deliver its written vote to the Audit Management Party within ten (10) days of its receipt of written notice of the Audit Management Party’s decision regarding a Tax Deposit and the amount of the required prepayment or deposit. A recoupment of all or a portion of a prepayment or deposit of Taxes resulting from a Final Determination shall be paid to the Party or Parties that contributed to such prepayment or deposit, in proportion to such contributions. No Party shall be liable to any other Party in the event that a Final Determination does not allow for the recovery of all or a portion of a prepayment or deposit.

Section 9.4 Transfer Pricing Adjustment . To the extent that Fountain or Athens NA owes any amount under Sections 9.3(a) or (c) as a result of any Audit involving transfer pricing and that includes an item related to or arising from an intercompany transfer pricing adjustment under Section 482 of the Code and the Treasury Regulations thereunder, or an analogous provision under U.S. state and local or non-U.S. Law, and also involves a Taxing Authority outside of the United States, Fountain and Athens NA shall be entitled to share, to the same extent, in any Tax benefit arising out of any competent authority relief provided by such Taxing Authority.

Section 9.5 Correlative Adjustment . If as a result of a Final Determination, a Party or its Affiliate becomes entitled to an increase of an item of deduction, loss, or credit (or a reduction of an item of income or gain) that is included in a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, and another Party or its Affiliate suffers a correlative disallowance of an item of deduction, loss or credit (or an increase of an item of income or gain) that is included in a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date, the former Party shall pay any amount it actually realizes as a result of the Tax benefit to the latter Party, but only to the extent of the latter Party’s detriment.

 

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ARTICLE X

COOPERATION AND EXCHANGE OF INFORMATION

Section 10.1 Cooperation and Exchange of Information . The Parties shall each cooperate fully (and each shall cause its respective Affiliates to cooperate fully) and in a timely manner (considering the other Party’s normal internal processing or reporting requirements) with all reasonable requests from another Party hereto, or from an agent, representative, or advisor to such Party, in connection with the preparation and filing of Tax Returns, claims for Refund, Audits, determinations of Tax Attributes and the calculation of Taxes or other amounts required to be paid hereunder, and any applicable financial reporting requirements of a Party or its Affiliates, in each case, related or attributable to or arising in connection with Taxes or Tax Attributes of any of the Parties or their respective Subsidiaries covered by this Agreement. Such cooperation shall include, without limitation:

(a) the retention until the expiration of the applicable statute of limitations or, if later, until the expiration of all relevant Tax Attributes (in each case taking into account all waivers and extensions), and the provision upon request, of Tax Returns of the Parties and their respective Subsidiaries for periods up to and including the Distribution Date, books, records (including information regarding ownership and Tax basis of property), documentation, and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

(b) the execution of any document that may be necessary or reasonably helpful in connection with any Audit of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or Refund claim of the Parties or any of their respective Subsidiaries (including the signature of an officer of a Party or its Subsidiary);

(c) the use of the Party’s reasonable best efforts to obtain any documentation and provide additional facts, insights or views as requested by another Party that may be necessary or reasonably helpful in connection with any of the foregoing (including without limitation any information contained in Tax or other financial information databases); and

(d) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records, or other information that may be necessary or helpful in connection with any Tax Returns of any of the Parties or their Affiliates.

Each Party shall make its and its Subsidiaries’ employees and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters. Except for costs and expenses otherwise allocated among the Parties pursuant to this Agreement, including costs incurred under Article II and Article IX, and except for copying costs, which shall be shared equally by the Parties, no reimbursement shall be made for costs and expenses incurred by the Parties as a result of cooperating pursuant to this Section 10.1.

Section 10.2 Retention of Records . Subject to Section 10.1, if any of the Parties or their respective Subsidiaries intends to dispose of any documentation (including, without

 

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limitation, documentation that is being retained pursuant to IRS guidelines, such as Revenue Procedure 98-25 and Revenue Procedure 97-22) relating to the Taxes of the Parties or their respective Subsidiaries for which another Party to this Agreement may be responsible pursuant to the terms of this Agreement (including, without limitation, Tax Returns, books, records, documentation, and other information, accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities), such Party shall provide or cause to be provided written notice to the other Parties describing the documentation to be destroyed or disposed of sixty (60) Business Days prior to taking such action. The other Parties may arrange to take delivery of the documentation described in the notice at their expense during the succeeding sixty (60)-day period.

ARTICLE XI

ALLOCATION OF TAX ATTRIBUTES, DUAL CONSOLIDATED LOSSES AND OTHER TAX MATTERS

Section 11.1 Allocation of Tax Attributes . Each Party shall make its own determination as to the existence and the amount of the Tax Attributes to which it is entitled after the Effective Time; provided , however , that such determination shall be made in a manner that is (a) reasonably consistent with the past practices of the Parties; (b) in accordance with the rules prescribed by applicable Law, including the Code and the Treasury Regulations; (c) consistent with the IRS Ruling, the Tax Representation Letters, and the Tax Opinions; and (d) reasonably determined by the Party to minimize the aggregate cash Tax liability of the Parties for all Pre-Distribution Tax Periods and the portion of all Straddle Tax Periods ending on the Distribution Date. Each Party agrees to provide the other Parties with all of the information supporting the Tax Attribute determinations made by that Party pursuant to this Section 11.1.

Section 11.2 Dual Consolidated Losses . The Parties agree to (and if necessary shall cause their Subsidiaries to) comply with the requirements of Treasury Regulations Sections 1.1503(d)-6(f)(2)(iii), 1.1503(d)-8(b)(4), and 1.1503-2(g)(2)(iv)(B), as applicable, with respect to any “dual consolidated loss” (within the meaning of Section 1503(d) of the Code and Treasury Regulations Sections 1.1503(d)-1(b)(5) and 1.1503-2(c)(5)) that one or more of the Parties (or their Subsidiaries) is reasonably likely to be required to include in income as a result of the Plan of Separation; and if any dual consolidated loss that was incurred prior to the Effective Time is required to be included in the income of any Party (or its Subsidiaries) because the Parties failed or were unable to comply with such requirements, the Parties shall share all Taxes that become due and payable for a Pre-Distribution Tax Period or the portion of a Straddle Tax Period ending on the Distribution Date in accordance with their Sharing Percentages.

Section 11.3 Trident 2007 Tax Sharing Agreement .

(a) Any payment received by Trident from another Party to the Trident 2007 Tax Sharing Agreement pursuant to sections 9.3(a), (b) or (c) thereof, shall be treated as a Refund for all purposes.

(b) Athens NA and Fountain agree to take or refrain from taking, and agree to cause each member of its Group to take or refrain from taking, any and all actions reasonably requested by Trident that would preserve, exercise or contravene, as the case may be, Trident’s rights and obligations under the Trident 2007 Tax Sharing Agreement.

 

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Section 11.4 Allocation of Tax Items . All determinations (whether for purposes of preparing Tax Returns or for purposes of determining a Party’s responsibility for Taxes under this Agreement) regarding the allocation of Tax items between the portion of a Straddle Tax Period that ends on the Distribution Date and the portion of such Straddle Tax Period that begins the day after the Distribution Date shall be made pursuant to the principles of Treasury Regulations Section 1.1502-76(b) or of a corresponding provision under the Laws of the applicable taxing jurisdiction; provided , further , that Tax items may be ratably allocated to the extent provided by and pursuant to the principles of Treasury Regulations Section 1.1502-76(b)(2)(ii). Any such allocation of Tax items shall initially be determined by Trident. To the extent that Athens NA or Fountain disagrees with such determination, the dispute shall be resolved pursuant to the provisions of Article XIII.

Section 11.5 Pre-Distribution Tax Attributes . In determining the amount of Taxes due and payable with regard to a Final Determination, each Party agrees to take any and all actions necessary or helpful, including but not limited to making elections or seeking allowances or group relief, in order to minimize the amount of Taxes that would otherwise be due and payable by a Party (or its Subsidiaries) as a result of such Final Determination.

Section 11.6 Other Agreements . Except with respect to the Trident 2007 Tax Sharing Agreement, and notwithstanding anything to the contrary in this Agreement, the responsibility of the Parties with respect to the Ancillary Agreements shall be determined in accordance with the Separation and Distribution Agreements.

Section 11.7 Amounts Received under Other Agreements . Any amounts received by Trident with respect to the CIT Tax Agreement are for the sole benefit of Trident and shall not be shared.

Section 11.8 Threshold Base Amount Report . On a quarterly basis or as otherwise agreed by the Parties, Trident shall prepare and deliver to the other Parties a schedule documenting the sum of all payments, Refunds or other amounts included in the most current determination of the Threshold Base Amount.

ARTICLE XII

DEFAULTED AMOUNTS

Section 12.1 General . In the event that one or more Parties defaults on its obligation to pay Distribution Taxes for which it is liable pursuant to Article V to another Party, then each non-defaulting Party shall be required to pay an equal portion of such Distribution Taxes to such other Party; provided , however , that no payment obligation shall exist under this Section 12.1 with respect to Distribution Taxes that are attributable to the Fault of one or more Parties; provided , further , that any payment of Distribution Taxes by a non-defaulting Party pursuant to this Section 12.1 shall in no way release the defaulting Party from its obligations to pay such Distribution Taxes and any non-defaulting Party may exercise any available legal remedies

 

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available against such defaulting Party; provided , further , that interest shall accrue on any such payment by a non-defaulting Party at a rate per annum equal to the then applicable Prime Rate plus four percent (4%), or the maximum legal rate, whichever is lower. In connection with the foregoing, it is expressly understood that any defaulting Party’s rights to any amounts to be received by such defaulting Party hereunder may be used via a right of offset to satisfy, in whole or in part, the obligations of such defaulting Party to pay the Distribution Taxes (and obligations for Assumed Trident Contingent Liabilities as such term is defined for purposes of the Separation and Distribution Agreement) that are borne by the non-defaulting Parties; such rights of offset shall be applied in favor of the non-defaulting Party or Parties in proportion to the additional amounts paid by any such non-defaulting Party or Parties.

Section 12.2 Subsidiary Funding . Without limitation of the Parties’ rights and obligations otherwise set forth in this Agreement and provided that no other Party has defaulted on any of its obligations pursuant to this Agreement, each Party agrees to provide or cause to be provided such funding as is necessary to ensure that its respective Subsidiaries are able to satisfy their respective Tax liabilities to a Taxing Authority that arise as a result of a Final Determination under Section 9.3 of this Agreement, including any such Tax liabilities that, upon default by a Party’s Subsidiary, may result in another Party’s Subsidiary paying or being required to pay the defaulted Tax liabilities to a Taxing Authority.

ARTICLE XIII

DISPUTE RESOLUTION

Section 13.1 Negotiation . In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity or breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (“ Dispute ”), the general counsels of the relevant Parties (or such other executive officers designated by the relevant Party) shall negotiate for a reasonable period of time to settle such Dispute; provided , however , that such reasonable period shall not, unless otherwise agreed by the relevant Parties in writing, exceed forty-five (45) days from the date of receipt by a party of written notice of such Dispute (“ Dispute Notice ”); provided , further , that in the event of any arbitration in accordance with Section 13.3 hereof, the relevant Parties shall not assert the defenses of statute of limitations and laches arising during the period beginning after the date of receipt of the Dispute Notice, and any contractual time period or deadline under this Agreement to which such Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Dispute has been resolved. If the general counsels of the relevant Parties (or such other executive officers designated by the relevant Party) are unable to resolve the Dispute within forty-five (45) days from the receipt by a party (or Parties) of a Dispute Notice (or within a different period agreed to by the relevant Parties in writing), the Dispute shall be resolved in accordance with Section 13.2 or Section 13.3, as the case may be.

Section 13.2 Mediation . If, within forty-five (45) days after receipt by a Party of a Dispute Notice, the Parties have not succeeded in negotiating a resolution of the Dispute, the Parties agree to submit the Dispute at the earliest possible date to mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association

 

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(“ AAA ”), and to bear equally the costs of the mediation. The Parties agree to participate in good faith in the mediation and negotiations related thereto for a period of thirty (30) days or such longer period as they may mutually agree following the initial mediation session (the “ Mediation Period ”).

Section 13.3 Arbitration . If the Dispute has not been resolved for any reason after the Mediation Period, such Dispute shall be determined, at the request of any relevant Party, by arbitration conducted in New York City, in accordance with the then-existing Commercial Arbitration Rules of the AAA, except as modified herein (the “ Rules ”). There shall be three arbitrators. If there are only two Parties to the arbitration, each Party shall appoint one arbitrator within twenty (20) days of receipt by respondent of a copy of the demand for arbitration. The two Party-appointed arbitrators shall have twenty (20) days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. If there are three Parties to the arbitration, such Parties shall each appoint one arbitrator within twenty (20) days of receipt by respondent of a copy of the demand for arbitration. Any arbitrator not timely appointed by the Parties under this Section 13.3 shall be appointed by the AAA in accordance with the listing, ranking and striking method in the Rules, and in any such procedure, each Party shall be given a limited number of strikes, excluding strikes for cause. Any controversy concerning whether a Dispute is arbitrable, whether arbitration has been waived, whether a Party to or assignee of this Agreement is bound to arbitrate, or as to the interpretation, applicability or enforceability of this Article XIII shall be determined by the arbitrators. In resolving any Dispute, the Parties intend that the arbitrators shall apply applicable Tax Laws and the substantive Laws of the State of New York, without regard to any choice of Law principles thereof that would mandate the application of the Laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrators shall be final and binding on the Parties. The Parties agree to comply and cause the members of their applicable Group to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award, in any court of competent jurisdiction, including but not limited to (a) the Supreme Court of the State of New York, New York County, or (b) the United States District Court for the Southern District of New York. The arbitrators shall be entitled, if appropriate, to award any remedy in such proceedings in accordance with the terms of this Agreement and applicable Law, including monetary damages, specific performance and all other forms of legal and equitable relief; provided , however , the arbitrators shall not be entitled to award punitive, exemplary, treble or any other form of non-compensatory damages unless in connection with indemnification for a third-party claim (and in such a case, only to the extent awarded in such third-party claim).

Section 13.4 Arbitration with Respect to Monetary Damages . In the event the Dispute involves (a) valuation of a liability under this Agreement, (b) an amount in controversy in a Dispute, or (c) an amount of damages following a determination of liability, the arbitration shall proceed in the following manner: Each Party shall submit to the arbitrators and exchange with each other, on a schedule to be determined by the arbitrators, a proposed valuation, amount or damages, as the case may be, together with a statement, including all supporting documents or other evidence upon which it relies, setting forth such Party’s explanation as to why its proposal is reasonable and appropriate. The arbitrators, within fifteen (15) days of receiving such proposals and supporting documents, shall choose between the proposals and shall be limited to awarding only one of the proposals submitted.

 

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Section 13.5 Arbitration Period . Any arbitration proceeding shall be concluded in a maximum of six (6) months from the commencement of the arbitration. The Parties involved in the proceeding may agree in writing to extend the arbitration period if necessary to appropriately resolve the Dispute.

Section 13.6 Treatment of Negotiations, Mediation, and Arbitration . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to any negotiation, mediation, conference, arbitration, discussion, or arbitration award pursuant to this Article XIII, and any such negotiation, mediation, conference, arbitration, or discussion shall be treated as compromise and settlement negotiations for purposes of Rule 408 of the Federal Rules of Evidence and comparable state rules; provided , however , that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce the award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or stock exchange. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences, and discussions that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any current or future arbitration. Nothing contained herein is intended to or shall be construed to prevent any Party from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Disputes. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the Parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.

Section 13.7 Continuity of Service and Performance . Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article XIII with respect to all matters not subject to such dispute resolution.

Section 13.8 Costs . Except as otherwise may be provided in this Agreement, the costs of any arbitration pursuant to this Article XIII shall be borne by the losing Party or Parties in such proportion as the arbitrator or arbitrators determine based on the facts and circumstances.

Section 13.9 Consolidation . The arbitrators may consolidate an arbitration under this Agreement with any arbitration arising under or relating to the Ancillary Agreements or any other agreement between the Parties entered into pursuant hereto, as the case may be, if the subject of the Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration shall be determined by the arbitrator appointed for the arbitration proceeding that was commenced first in time.

 

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ARTICLE XIV

MISCELLANEOUS

Section 14.1 Counterparts; Facsimile Signatures . 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 such counterparts have been signed by each of the Parties and delivered to the other Parties. For purposes of this Agreement, facsimile signatures shall be deemed originals.

Section 14.2 Survival . Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Distribution Date and remain in full force and effect in accordance with their applicable terms; provided , however , that all indemnification for Taxes shall survive until ninety (90) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification; provided , further , that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

Section 14.3 Notices . All notices, requests, claims, demands, and 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, by facsimile 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 14.3):

To Trident International:

Tyco International Ltd.

c/o Tyco International Management Co.

9 Roszel Road

Princeton, New Jersey 08540

Attn:    General Counsel

Facsimile: (609) 720-4208

To Trident SA:

Tyco International Finance S.A.

c/o Tyco International Management Co.

9 Roszel Road

Princeton, New Jersey 08540

Attn:    General Counsel

Facsimile: (609) 720-4208

 

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To Fountain:

Pentair, Inc.

5500 Wayzata Boulevard, Suite 800

Golden Valley, Minnesota

Attn:    Angela D. Lageson

Facsimile: (763) 656-5403

with copies to (which shall not constitute notice):

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Attn:    Stephen L. Gordon

Facsimile: (212) 474-3700

and to:

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

Attn:    Benjamin F. Garmer, III

Facsimile: (414) 297-4900

To Athens NA:

The ADT Corporation

One Town Center Road

Boca Raton, Florida 33486

Attn:    General Counsel

Facsimile: (561) 988-3719

Section 14.4 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group).

Section 14.5 Amendments . Subject to the terms of Section 14.8, this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

Section 14.6 Assignment . Except as otherwise provided for in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Parties (not to be unreasonably withheld or delayed), and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided , however , that a Party may assign this Agreement

 

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in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided , further , that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 14.7 Successors and Assigns . The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns; provided , however , that in no event shall a Party’s right to vote on a matter set forth herein be construed to permit any duplication of a Party’s vote by a successor, assignee, or other transferee. The Parties acknowledge that it is their intention to permit no more than three (3) parties to vote on any matter set forth herein.

Section 14.8 Certain Termination and Amendment Rights . This Agreement may not be terminated except by written consent of each of the Parties.

Section 14.9 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement, the Separation and Distribution Agreements or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification or payment pursuant to the provisions of this Agreement).

Section 14.10 Subsidiaries . Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Distribution Date.

Section 14.11 Liability of Trident SA . Each of the Parties acknowledges and agrees that (i) Trident SA shall be primarily liable for and shall satisfy all obligations of Trident to Athens NA under this Agreement, without right of contribution, reimbursement, or compensation from Trident International; and (ii) Trident SA shall have no liability to Fountain under this Agreement; provided, however, that clause (ii) shall not reduce or relieve Trident’s obligations to Fountain under this Agreement to any extent.

Section 14.12 Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 14.13 Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 14.14 Exhibits and Schedules . The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Exhibits or Schedules constitutes an admission of any liability

 

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or obligation of any member of the Athens North American R/SB Group, Fountain Group or Trident Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the Athens NA Group, Fountain Group or Trident Group or any of their respective Affiliates.

Section 14.15 Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

Section 14.16 Consent to Jurisdiction . Subject to the provisions of Article XIII, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action, or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article XIII or to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice, or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit, or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 14.16. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit, or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 14.17 Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at Law or in equity.

Section 14.18 Waiver of Jury Trial . EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.17.

 

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Section 14.19 Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

Section 14.20 Complete Agreement; Construction . This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 14.21 Changes in Law .

(a) Any reference to a provision of the Code, Treasury Regulations, or a Law of another jurisdiction shall include a reference to any applicable successor provision or Law.

(b) If, due to any change in applicable Law or regulations or their interpretation by any court of Law or other governing body having jurisdiction subsequent to the date hereof, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

(c) To the extent any provision of this Agreement references an effective Tax rate, such rate shall be adjusted to the extent of, and with concurrent effective date as, any change in such Tax rate under applicable Law.

Section 14.22 Authority . Each of the Parties hereto represents to each of the other Parties that (a) it has the corporate power (corporate or otherwise) and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid, and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 14.23 Severability . If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision hereof. The Parties shall engage in good faith negotiations to replace any provision that is declared invalid, illegal, or unenforceable with a valid, legal, and enforceable provision, the economic effect of which comes as close as possible to that of the invalid, illegal, or unenforceable provision which it replaces.

 

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Section 14.24 Tax Sharing Agreements . All Tax sharing, indemnification and similar agreements, written or unwritten, as between any of the Parties or their respective Subsidiaries, on the one hand, and any other Party or its respective Subsidiaries, on the other hand (other than this Agreement or in any other Ancillary Agreement), shall be or shall have been terminated as of the Distribution Date and, after the Distribution Date, none of such Parties (or their Subsidiaries) to any such Tax sharing, indemnification or similar agreement shall have any further rights or obligations under any such agreement.

Section 14.25 Exclusivity . Except as specifically set forth in the Separation and Distribution Agreements or any Ancillary Agreement, all matters related to Taxes or Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by this Agreement. In the event of a conflict between this Agreement, the Separation and Distribution Agreements or any Ancillary Agreement with respect to such matters, this Agreement shall govern and control.

Section 14.26 No Duplication; No Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation, or recovery with respect to any matter arising out of the same facts and circumstances.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed the day and year first above written.

 

TYCO INTERNATIONAL LTD.
By:  

/s/ John S. Jenkins

Name:   John S. Jenkins
Title:   Vice President and Secretary
TYCO INTERNATIONAL FINANCE S.A.
By:  

/s/ Andrea Goodrich

Name:  

Andrea Goodrich

Title:  

Director

THE ADT CORPORATION
By:  

/s/ N. David Bleisch

Name:   N. David Bleisch
Title:   Vice President and Secretary
PENTAIR LTD.
By:  

/s/ John S. Jenkins

Name:   John S. Jenkins
Title:  

Director

SIGNATURE PAGE TO TAX SHARING AGREEMENT

Exhibit 10.2

TAX SHARING AGREEMENT

NON-INCOME TAXES

by and among

TYCO INTERNATIONAL LTD.

TYCO INTERNATIONAL FINANCE S.A.,

and

THE ADT CORPORATION

Dated as of September 28, 2012


TABLE OF CONTENTS

 

         Page  
ARTICLE I   DEFINITIONS AND INTERPRETATION      3   

Section 1.1

 

Definitions

     3   

Section 1.2

 

References; Interpretation

     13   

Section 1.3

 

Effective Time

     14   
ARTICLE II   PREPARATION AND FILING OF NON-INCOME TAX RETURNS      14   

Section 2.1

 

Responsibility of Parties to Prepare and File Pre-Distribution Non-Income Tax Returns

     14   

Section 2.2

 

Responsibility of Parties to Prepare and File Post-Distribution Non-Income Tax Returns

     15   

Section 2.3

 

Time of Filing Tax Returns; Manner of Non-Income Tax Return Preparation

     16   
ARTICLE III   RESPONSIBILITY FOR PAYMENT OF NON-INCOME TAXES      16   

Section 3.1

 

Responsibility of Tyco for Non-Income Taxes

     16   

Section 3.2

 

Responsibility of ADT NA for Non-Income Taxes

     16   

Section 3.3

 

Timing of Payments of Non-Income Taxes

     16   
ARTICLE IV   REFUNDS      17   

Section 4.1

 

Refunds Other than ADT Canada Refunds and ADT Canada Non-Income Tax Prepayment Refunds

     17   

Section 4.2

 

ADT Canada Refunds

     18   

Section 4.3

 

ADT Canada Non-Income Tax Prepayment Refunds.

     18   
ARTICLE V   UNCLAIMED PROPERTY      19   

Section 5.1

 

Limitation

     19   

Section 5.2

 

Escheatment Schedule

     19   

Section 5.3

 

Ownership and Administration of Unclaimed Property Relating to Tyco Retained Business or Unidentified Unclaimed Property

     19   

Section 5.4

 

Ownership and Administration of Unclaimed Property Relating to ADT NA Business Other than ADT Customer Credits

     19   

Section 5.5

 

Ownership and Administration of ADT Customer Credits

     19   

Section 5.6

 

Settlements of Disputes with State Unclaimed Property Administrators or similar State Authorities Relating to Unclaimed Property

     20   

Section 5.7

 

Payment of Audit Amounts with Respect to Unclaimed Property

     20   
ARTICLE VI   BUSINESS LICENSE MATTERS      20   

Section 6.1

 

Limitation

     20   

 

- ii -


TABLE OF CONTENTS (continued)

 

         Page  

Section 6.2

 

ADT NA Business License Returns and Payments

     21   

Section 6.3

 

Tyco Business License Returns and Payments

     21   

Section 6.4

 

Payment of Business License Audit Amounts

     21   
ARTICLE VII   INDEMNIFICATION      21   

Section 7.1

 

Indemnification Obligations of Tyco

     21   

Section 7.2

 

Indemnification Obligations of ADT NA

     21   
ARTICLE VIII   PAYMENTS      22   

Section 8.1

 

Payments

     22   

Section 8.2

 

Treatment of Payments Made Pursuant to Tax Sharing Agreement

     23   

Section 8.3

 

Payments Net of Tax Benefit Realized

     23   
ARTICLE IX   AUDITS      23   

Section 9.1

 

Notice

     23   

Section 9.2

 

Pre-Distribution Audits

     24   

Section 9.3

 

Payment of Audit Amounts

     26   

Section 9.4

 

Payment Procedures

     27   
ARTICLE X   COOPERATION AND EXCHANGE OF INFORMATION      28   

Section 10.1

 

Cooperation and Exchange of Information

     28   

Section 10.2

 

Retention of Records

     29   
ARTICLE XI   OTHER TAX MATTERS      29   

Section 11.1

 

Other Agreements

     29   

Section 11.2

 

Threshold Base Amount Report

     29   

Section 11.3

 

Meetings

     29   
ARTICLE XII   DEFAULTED AMOUNTS      30   

Section 12.1

 

General

     30   
ARTICLE XIII   DISPUTE RESOLUTION      30   

Section 13.1

 

Dispute Resolution

     30   
ARTICLE XIV   MISCELLANEOUS      30   

Section 14.1

 

Counterparts; Facsimile Signatures

     30   

Section 14.2

 

Survival

     30   

Section 14.3

 

Notices

     30   

Section 14.4

 

Waivers and Consents

     31   

Section 14.5

 

Amendments

     31   

Section 14.6

 

Assignment

     31   

Section 14.7

 

Successors and Assigns

     32   

 

- iii -


TABLE OF CONTENTS (continued)

 

         Page  

Section 14.8

 

Certain Termination and Amendment Rights

     32   

Section 14.9

 

No Circumvention

     32   

Section 14.10

 

Subsidiaries

     32   

Section 14.11

 

Primary Liability of TIFSA

     32   

Section 14.12

 

Third Party Beneficiaries

     32   

Section 14.13

 

Title and Headings

     32   

Section 14.14

 

Exhibits and Schedules

     32   

Section 14.15

 

Governing Law

     33   

Section 14.16

 

Consent to Jurisdiction

     33   

Section 14.17

 

Specific Performance

     33   

Section 14.18

 

Waiver of Jury Trial

     33   

Section 14.19

 

Force Majeure

     34   

Section 14.20

 

Complete Agreement; Construction

     34   

Section 14.21

 

Changes in Law

     34   

Section 14.22

 

Authority

     34   

Section 14.23

 

Severability

     34   

Section 14.24

 

Tax Sharing Agreements

     35   

Section 14.25

 

Exclusivity

     35   

Section 14.26

 

No Duplication; No Double Recovery

     35   

 

- iv -


TABLE OF CONTENTS

 

         Page  

Schedules

    

Schedule 5.2

  Escheatment Schedule      38   

Schedule 9.2(g)(ii)

  Internal Costs and Expenses      39   

 

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TAX SHARING AGREEMENT

NON-INCOME TAXES

TAX SHARING AGREEMENT FOR NON-INCOME TAXES (this “ Agreement ”), dated as of September 28, 2012, by and among TYCO INTERNATIONAL LTD., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Tyco International ”), Tyco International Finance S.A., a corporation organized under the laws of Luxembourg (“ TIFSA ,” and, together with Tyco International, “Tyco”), and THE ADT CORPORATION, a Delaware corporation (“ ADT NA ”). Each of Tyco International, TIFSA and ADT NA is sometimes referred to herein as a “ Party ” and collectively, as the “ Parties ”.

W I T N E S S E T H:

WHEREAS, Tyco International, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including the ADT North American R/SB Business (as defined herein);

WHEREAS, the Board of Directors of Tyco International (the “ Board ”) has determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders to separate from Tyco the ADT North American R/SB Business (the “ ADT NA Separation ”), which shall be owned and operated and conducted, directly or indirectly, by ADT NA and after which the Tyco Retained Business shall be owned and conducted, directly or indirectly, by Tyco International;

WHEREAS, in order to effect the ADT NA Separation, the Board has determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders (i) to enter into a series of transactions whereby ADT NA and/or one or more members of the ADT North American R/SB Group will, collectively, own all of the ADT North American R/SB Assets and assume (or retain) all of the ADT North American R/SB Liabilities (as defined herein) and (ii) for Tyco International to distribute to the holders of Tyco International Common Stock on a pro rata basis (without consideration being paid by such stockholders) all of the outstanding shares of common stock, par value $0.01 per share, of ADT NA (the “ ADT NA Common Stock ”) (such transactions as they may be amended or modified from time to time, collectively, the “ ADT NA Plan of Separation ”);

WHEREAS, each of Tyco and ADT NA has determined that it is necessary and desirable, on or prior to the Effective Time (as defined herein), (i) to allocate and transfer to the applicable Party or its Subsidiaries those Assets, and to cause the assumption by the applicable Party or its Subsidiaries of those Liabilities, in respect of the activities of the applicable Businesses of such entities and (ii) to allocate, transfer and/or assume, as applicable, to and/or by the applicable Party or its Subsidiaries those Assets and Liabilities in respect of other current and former businesses and activities of Tyco and its current and former Subsidiaries pursuant to the Separation and Distribution Agreement between Tyco International, TIFSA, ADT NA, and ADT LLC, a Delaware limited liability company, dated as of September 26, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ ADT NA Separation Agreement ”);

 

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WHEREAS, in addition to the above, the Board had previously determined that it is appropriate, desirable and in the best interests of Tyco International and its stockholders to (i) separate from Tyco the Flow Control Business (as defined herein) (the “ Flow Control Separation ”), which shall be owned and conducted, directly or indirectly, by Tyco Flow Control International Ltd. (“ Flow Control ”) pursuant to the Separation and Distribution Agreement, by and among Tyco International, Flow Control and (for certain specified sections) ADT NA, dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Flow Control Separation Agreement ”) and (ii) to combine the Flow Control Business with Pentair, Inc., a Minnesota corporation (“ Pentair ”), pursuant to the Merger Agreement, dated as of March 27, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms, the “ Merger Agreement ”), among Tyco International, Flow Control, Panthro Acquisition Co., a Delaware corporation, Panthro Merger Sub, Inc., a Minnesota corporation, and Pentair;

WHEREAS, the Flow Control Separation Agreement governs the allocation of certain obligations among Tyco International, ADT NA and Flow Control following the Flow Control Separation;

WHEREAS, it is the intention of the Parties that the various contributions of Assets by certain Subsidiaries of Tyco International to, and assumptions of Liabilities by, ADT NA, together with the corresponding distributions of the ADT NA Common Stock, qualify as reorganizations within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and that this Agreement is, and is hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g);

WHEREAS, it is the intention of the Parties that the distribution of the ADT NA Common Stock to the stockholders of Tyco International will qualify as tax-free under Section 355(a) of the Code to such stockholders, and as tax-free to Tyco International under Section 355(c) of the Code;

WHEREAS, the parties intend that certain internal transactions undertaken in anticipation of the ADT NA Distribution and the Flow Distribution will qualify for favorable treatment under the Code;

WHEREAS, in connection with the Plan of Separation, the Tyco, TIFSA, ADT NA and Flow Control intend to enter into a tax sharing agreement setting forth their agreement on the rights and obligations with respect to handling and allocating Taxes and related matters (the “ Tyco 2012 Tax Sharing Agreement ”);

WHEREAS, in accordance with the ADT NA Separation Agreement, an amount of cash equal to the Non-Income Tax Contingency Amount (as defined below), the ADT Canada Non-Income Tax Contingency Amount (as defined below), and the amounts on Schedule 5.2 will be allocated to the Party (or Party’s Subsidiary) responsible for the payment of such amounts hereunder; and

 

- 2 -


WHEREAS, Tyco International, TIFSA and ADT NA intend to further define rights and obligations with respect to handling and allocating non-income taxes with respect to specified legal entities and in furtherance thereof are hereby entering into this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the following meanings:

(1) “ ADT Canada ” means ADT Security Services Canada, Inc., an Ontario corporation.

(2) “ ADT Canada Balance Sheet ” means the unaudited balance sheet of ADT Canada as of August 31, 2012.

(3) “ ADT Canada Non-Income Tax Contingency Amount ” means 1,200,000 (Canadian).

(4) “ ADT Canada Non-Income Tax Prepayment ” means that certain Non-Income Tax prepaid by ADT Canada to the Quebec Non-Income Tax Authority in the approximate amount of 1,300,000 (Canadian).

(5) “ ADT Canada Non-Income Tax Prepayment Refund ” means a refund of all or a portion of the ADT Canada Non-Income Tax Prepayment.

(6) “ ADT Canada Non-Income Tax Threshold Base Amount ” means at any relevant time the sum of all prior amounts paid by all Parties under Section 9.3(b) with respect to ADT Canada Non-Income Taxes, but for the avoidance of doubt not including any amounts paid or required to be paid by one Party to another Party pursuant to such sections (so as to avoid duplication of amounts included herein); provided , however , that such amount shall not include (i) any amount included in the Non-Income Tax Threshold Base Amount, (ii) any amount paid with respect to the Broadview Non-Income Tax Contingencies, (iii) any amount paid with respect to Unclaimed Property, or (iv) the ADT Canada Non-Income Tax Prepayment; provided , further , that such sum shall be reduced by ADT Canada Shared Refunds actually received by any Party (it being understood by the Parties that such reduction could result in an ADT Canada Non-Income Tax Threshold Base Amount that is below zero).

(7) “ ADT Canada Shared Refunds ” has the meaning set forth in Section 4.2; provided , however , that ADT Canada Shared Refunds shall not include the ADT Canada Non-Income Tax Prepayment Refund.

 

- 3 -


(8) “ ADT Canada Shared Non-Income Taxes ” means all ADT Canada Non-Income Taxes the payment of which would be included in the ADT Canada Non-Income Tax Threshold Base Amount.

(9) “ ADT Customer Credits ” means Customer Credits that arose in connection with the ADT NA Business prior to the ADT Separation Date.

(10) “ ADT NA ” has the meaning set forth in the preamble.

(11) “ ADT NA Common Stock ” has the meaning set forth in the recitals hereto.

(12) “ ADT NA Distribution ” has the meaning set forth in the ADT NA Separation Agreement.

(13) “ ADT NA Distribution Date ” has the meaning set forth in the ADT NA Separation Agreement.

(14) “ ADT NA Separation Agreement ” has the meaning set forth in the recitals hereto.

(15) “ ADT NA Sharing Percentage ” means sixty percent (60%).

(16) “ ADT North American R/SB Business ” has the meaning set forth in the ADT NA Separation Agreement.

(17) “ ADT North American R/SB Group ” has the meaning set forth in the ADT NA Separation Agreement.

(18) “ ADT North American R/SB Liabilities ” has the meaning set forth in the ADT NA Separation Agreement.

(19) “ ADT Puerto Rico ” means ADT Security Services Puerto Rico Inc., a company organized under the laws of Puerto Rico.

(20) “ ADT Puerto Rico Balance Sheet ” means the unaudited balance sheet of ADT Puerto Rico as of August 31, 2012.

(21) “ ADTSS ” means ADT Security Services LLC, a limited liability company organized under the laws of Delaware (now known as Tyco Integrated Security LLC) and the successor to Old ADTSS following the conversion of Old ADTSS to a limited liability company on June 29, 2012.

(22) “ ADTSS Balance Sheet ” means the unaudited balance sheet of ADTSS as of August 31, 2012.

(23) “ ADTSS Business Separation Date ” means June 30, 2012.

(24) “ ADTSS Business Separation Transactions ” means the series of transactions separating the ADT NA Business and the Tyco Business, in each case, solely with respect to ADTSS.

 

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(25) “ Affiliate ” means, when used with respect to a specified Person, a 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 purposes of this definition, “control,” 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 or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common.

(26) “ Agreement ” has the meaning set forth in the preamble hereto.

(27) “ Ancillary Agreements ” means any agreement defined as an “Ancillary Agreement” in the ADT NA Separation Agreement, except that such term shall not include this Agreement.

(28) “ Assessment Date ” means the date on which real or personal property is valued to the owner of record, generally coinciding with the date on which the Tax lien attaches.

(29) “ Assets ” has the meaning set forth in the ADT NA Separation Agreement.

(30) “ Audit ” means any audit assessment of Non-Income Taxes, other examination by or on behalf of any Non-Income Taxing Authority (including notices), application for and negotiation of a voluntary disclosure agreement with an Non-Income Taxing Authority, proceeding, or appeal of such a proceeding relating to Non-Income Taxes, whether administrative judicial, or any reporting obligation arising out of an audit.

(31) “ Audit Management Party ” means the Party responsible for administering and controlling an Audit pursuant to Section 9.2(a), as may be changed from time to time in accordance with Section 9.2(d).

(32) “ Audit Representative ” means, with respect to each Party, the Chief Tax Officer or such other officer that may be designated by that Party’s Chief Financial Officer from time to time.

(33) “ Bankruptcy ” means, with respect to a Person:

(a) the filing of an application by the Person for, or a consent to, the appointment of a trustee of the Person’s assets;

(b) the filing by the Person of a voluntary petition in bankruptcy or the filing of a pleading in any court of record admitting in writing the Person’s inability to pay debts as they come due;

(c) a general assignment by such Person for the benefit of creditors;

 

- 5 -


(d) the filing by the Person of an answer admitting the material allegations of, or the Person’s consenting to, or defaulting in answering a bankruptcy petition filed against the Person in any bankruptcy proceeding; or

(e) the entry of an order, judgment or decree by any court of competent jurisdiction adjudicating the Person bankrupt or appointing a trustee, custodian, receiver or liquidator of such Person’s assets, which order, judgment or decree continues unstayed and in effect for any period of sixty (60) days.

(34) “ BHS ” means Brink’s Home Security Holdings, Inc., a Virginia corporation, that merged with and into BMS on May 14, 2010.

(35) “ BHS Non-Income Tax Contingencies ” means any Non-Income Tax liabilities of BHS.

(36) “ BMS ” means Barricade Merger Sub, Inc., a Delaware corporation, and the survivor of the merger transaction by and among BHS and BMS on May 14, 2010.

(37) “ BMS Non-Income Tax Contingencies ” means any Non-Income Tax liabilities of BMS; provided , however , that the BMS Non-Income Tax Contingencies shall not include the SHC Non-Income Tax Contingencies.

(38) “ Broadview Non-Income Tax Contingencies ” means the Broadview Security Non-Income Tax Contingencies, the BHS Non-Income Tax Contingencies and the BMS Non-Income Tax Contingencies.

(39) “ Broadview Security ” means Broadview Security, Inc., a Delaware corporation, former subsidiary of BMS, that was merged with and into ADTSS on September 24, 2010.

(40) “ Broadview Security Non-Income Tax Contingencies ” means any Non-Income Tax liabilities of Broadview Security.

(41) “ Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in The City of New York or Schaffhausen, Switzerland.

(42) “ Business License ” means any Non-Income Tax measured by gross receipts for the privilege of doing business related to the ADT NA Business or the Tyco Business.

(43) “ Change of Control ” means the occurrence of any of the following: (i) the direct or indirect sale, transfer or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of a Party and the members of such Party’s Group taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act); (ii) the adoption of a plan relating to the liquidation or dissolution of a Party other than (A) the consolidation with, merger into or transfer of all or part of the properties and assets of any Subsidiary of a Party to such Party or any other Subsidiary of such Party, and (B) the merger of a Party with an Affiliate solely for the purpose of reincorporating (or re-forming) the Party in another jurisdiction; (iii) the consummation of any

 

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transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as defined above) becomes the Beneficial Owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the voting stock of a Party, measured by voting power rather than number of shares; or (iv) a Party consolidates with, or merges with or into, directly or indirectly, any Person, or any Person consolidates with, or merges with or into, a Party, in any such event pursuant to a transaction in which any of the outstanding voting stock of such Party or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the voting stock of such Party outstanding immediately prior to such transaction is converted into or exchanged for voting stock of the surviving or transferee Person constituting a majority of the outstanding shares of such voting stock of such surviving or transferee Person (immediately after giving effect to such issuance).

(44) “ Code ” has the meaning set forth in the recitals to this Agreement.

(45) “ Customer Accounts ” means an account maintained with respect to the activities of a particular customer, which includes credits associated with that customer.

(46) “ Customer Credits ” means the credits associated with Customer Accounts.

(47) “ Distribution ” or “ Distributions ” means, individually or collectively:

(a) the ADT NA Distribution, and

(b) to the extent related to the ADT NA Separation and not otherwise included in (a), the actual or deemed distributions described in the IRS Ruling and the Tax Representation Letters that are intended to qualify under Sections 355 and/or 361 of the Code.

(48) “ Distribution Date ” means the ADT NA Distribution Date.

(49) “ Dormant Funds ” means Unclaimed Property with respect to which the time period for statutory reporting has expired.

(50) “ Due Date ” means the date (taking into account all valid extensions) upon which an Non-Income Tax Return is required to be filed with or Non-Income Taxes are required to be paid to an Non-Income Taxing Authority, whichever is applicable.

(51) “ Effective Time ” has the meaning set forth in the ADT NA Separation Agreement.

(52) “ Employing Entity ” means the legal entity responsible for Payroll Based Taxes with respect to an employee.

(53) “ Escheatment Schedule ” means that certain schedule prepared by the Parties pursuant to and in accordance with Section 5.2.

 

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(54) “ Final Determination ” means the final resolution of liability for any Non-Income Tax for any taxable period, by or as a result of:

(a) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed;

(b) a final settlement with a Non-Income Tax authority, a closing agreement, or a comparable agreement under the Laws of any jurisdiction, which resolves the liability for the Non-Income Taxes addressed in such agreement for any taxable period;

(c) any allowance of a refund or credit in respect of an overpayment of Non-Income Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Non-Income Tax;

(d) a concluded voluntary disclosure agreement with any state;

(e) any reporting obligation arising out of a final resolution of liability for any Tax; or

(f) any other final disposition.

(55) “ Flow Control ” has the meaning set forth in the recitals to this Agreement.

(56) “ Flow Control Business ” has the meaning ascribed to the term “Fountain Business” in the Flow Control Separation Agreement.

(57) “ Flow Control Distribution ” has the meaning set forth in the recitals to this Agreement.

(58) “ Flow Control Separation Agreement ” has the meaning set forth in the recitals to this Agreement.

(59) “ Group ” means the Tyco Group or the ADT NA Group.

(60) “ Income Taxes ” has the meaning set forth in the Tyco 2012 Tax Sharing Agreement.

(61) “ Indemnified Party ” means the Party that is or may be entitled pursuant to this Agreement to receive any payments (including reimbursement for Taxes or costs and expenses) from another Party or Parties to this Agreement.

(62) “ Indemnifying Party ” means the Party that is or may be required pursuant to this Agreement to make indemnification or other payments (including reimbursement for Taxes and costs and expenses) to another Party to this Agreement.

(63) “ Information Returns ” means a document required to be filed to report certain business transactions to a Taxing Authority; provided , however , that Information Returns shall not include any documents required to be filed in connection with Payroll Based Taxes.

 

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(64) “ Law ” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).

(65) “ LIBOR ” means an interest rate per annum equal to the applicable three-month London Interbank Offered Rate for deposits in United States dollars published in the Wall Street Journal .

(66) “ New York Courts ” has the meaning set forth in Section 14.16.

(67) “ Non-Income Taxes ” means whether used in the form of a noun or adjective, means Sales and Use Taxes, Payroll Based Taxes, Business License payments, payments arising in connection with compliance under any Unclaimed Property Law (including escheats), sales tax permit fees, business and occupational Taxes, education Taxes, and any Taxes based on gross or net receipts (excluding Income Taxes), value added, excise, leasing, privilege, rental, transfer or similar Taxes. By way of example, and without limiting the generality of the foregoing, Non-Income Taxes includes the following: Washington Business and Occupation Tax, D.C. Ballpark Tax, Los Angeles Business Tax, California Electronic Waste, NE Waste and Recycle, Quebec Sales Tax, Goods and Services Tax, Harmonized Sales Tax, Provincial Sales Tax, Manitoba Retail Sales Tax, and Saskatchewan Retail Sales Tax. Whenever the term “Non-Income Tax” or “Non-Income Taxes” is used it shall include penalties, fines, additions to tax and interest thereon.

(68) “ Non-Income Tax Contingency Amount ” means USD $8,300,000.

(69) “ Non-Income Tax Returns ” means all Tax Returns that relate to Non-Income Taxes.

(70) “ Non-Income Tax Threshold Base Amount ” means at any relevant time the sum of all prior amounts paid by all Parties under Section 9.3(a) with respect to Non-Income Taxes, but for the avoidance of doubt not including any amounts paid or required to be paid by one Party to another Party pursuant to such sections (so as to avoid duplication of amounts included herein); provided , however , that such amount shall not include (i) any amount paid with respect to the Broadview Non-Income Tax Contingencies, (ii) any amount paid with respect to Unclaimed Property, (iii) any amount included in the ADT Canada Non-Income Tax Threshold Base Amount, or (iv) the ADT Canada Non-Income Tax Prepayment; provided, further, that such sum shall be reduced by Shared Refunds actually received by any Party (it being understood by the Parties that such a reduction could result in a Non-Income Tax Threshold Base Amount that is below zero).

(71) “ Old ADTSS ” means ADT Security Services, Inc., a Delaware corporation.

(72) “ Participating Party ” has the meaning set forth in Section 9.2(c).

(73) “ Party ” has the meaning set forth in the preamble.

(74) “ Payroll Based Taxes ” includes Taxes imposed with respect to employee compensation including, without limitation, Taxes required to be withheld from employee

 

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compensation in respect of Income Taxes, Taxes required to be withheld as and for Supplement Unemployment Insurance, Taxes required to be withheld under the Federal Unemployment Tax Act, and similar Taxes. For the avoidance of doubt, the term Payroll Based Taxes shall exclude garnishments.

(75) “ Person ” means any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership, or other organization or entity, whether incorporated or unincorporated, or any governmental entity.

(76) “ Plan of Separation ” has the meaning set forth in the recitals.

(77) “ Post-Distribution Non-Income Tax Returns ” means, collectively, all Non-Income Tax Returns required to be filed by a Party or its Affiliates for a Post-Distribution Tax Period.

(78) “ Post-Distribution Tax Period ” means any Tax period applicable to a Non-Income Tax beginning and ending after the Distribution Date.

(79) “ Pre-Distribution ADT Canada Shared Non-Income Tax Audit ” means Pre-Distribution Non-Income Tax Audits of ADT Canada.

(80) “ Pre-Distribution ADTSS Payroll Tax Audit ” means any Audit for a Pre-Distribution Tax Period of payroll taxes for ADTSS; provided, however, that a Pre-Distribution ADTSS Payroll Tax Audit shall not include a Pre-Distribution Broadview Payroll Tax Audit.

(81) “ Pre-Distribution Broadview Payroll Tax Audit ” means any audit for a Pre-Distribution Tax Period of payroll taxes for Broadview, BMS, or BHS.

(82) “ Pre-Distribution Non-Income Tax Audit ” means any Audit of any return related to a Non-Income Tax Return filed, or allegedly required to be filed, for any Pre-Distribution Tax Period by a Party or its Affiliates.

(83) “ Pre-Distribution Non-Income Tax Returns ” means, collectively, all Non-Income Tax Returns required to be filed by a Party or its Affiliates for a Pre-Distribution Tax Period.

(84) “ Pre-Distribution Payroll Tax Audit ” means a Pre-Distribution ADTSS Payroll Tax Audit or a Pre-Distribution Broadview Payroll Tax Audit.

(85) “ Pre-Distribution Shared Non-Income Tax Audit ” means Pre-Distribution Non-Income Tax Audits of ADTSS and ADT Puerto Rico.

(86) “ Pre-Distribution Tax Period ” means any Tax period applicable to a Non-Income Tax beginning and ending on or before the Distribution Date.

(87) “ Preparing Party ” means the Party (or Party’s Affiliate) responsible for preparing and filing (or causing to be filed) a Pre-Distribution Non-Income Tax Return.

 

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(88) “ Prime Rate ” has the meaning set forth in the Separation and Distribution Agreements.

(89) “ Real or Personal Property Taxes ” means Taxes on real or personal property.

(90) “ Refund ” means any refund of Non-Income Taxes (including any overpayment of Non-Income Taxes that can be refunded or, alternatively, applied to future Non-Income Taxes payable), including any interest paid on or with respect to such refund of Non-Income Taxes; provided , however , that if a refund of Non-Income Taxes is includible in taxable income based on applicable Tax Law, then the amount of the Refund shall be determined by multiplying (x) the amount of the refund that is required to be included in taxable income by (y) sixty-two percent (62%); provided , further , that upon any change after the Effective Time in the highest marginal U.S. federal income Tax rate applicable to corporations, the percentage in clause (y) shall be increased or decreased by the amount of the percentage point change in such rate with effect in the same Tax year as the effective date applicable to such change in rate. For purposes of this Section 1.1(87), to the extent the refund is taxable in Canada, the rate referenced in clause (y) shall be one hundred percent (100%) minus the combined Canadian federal and Ontario rate applicable to corporations and to the extent the refund is taxable in Puerto Rico, the rate referenced in clause (y) shall be one hundred percent (100%) minus the combined Puerto Rico federal and local rate applicable to corporations. Upon any change after the Effective time in the highest marginal federal income Tax rate applicable to corporations in Canada or Puerto Rico, the percentages determined in the preceding sentence shall be increased or decreased by the mount of the percentage point change in such rate with effect in the same Tax year as the effective date applicable to such change in rate.

(91) “ Sales and Use Taxes ” means taxes assessed on or measured by the exchange price at the point of sale or that are based upon the fair market value of a taxable item that is either (i) exported into a jurisdiction from a location outside of that jurisdiction or (ii) used in a manner which under state or local law changes its taxable classification from exempt to taxable. Where the context requires, a Sales Tax or Use Tax may be separately referenced.

(92) “ Separation and Distribution Agreements ” means the Flow Control Separation Agreement and the ADT NA Separation Agreement.

(93) “ Shared Refunds ” has the meaning set forth in Section 4.1(a).

(94) “ Shared Non-Income Taxes ” means all Non-Income Taxes the payment of which would be included in the Non-Income Tax Threshold Base Amount.

(95) “ Sharing Percentages ” means, with respect to Tyco, the Tyco Sharing Percentage, and with respect to ADT NA, the ADT NA Sharing Percentage.

(96) “ SHC ” means Sensormatic Holding Corp., a Nevada corporation that merged with and into BMS on May 26, 2010.

(97) “ SHC Non-Income Tax Contingencies ” means any Non-Income Tax liabilities of SHC.

 

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(98) “ Subsidiary ” has the meaning set forth in the Separation and Distribution Agreements.

(99) “ Tax ” or “ Taxes ” whether used in the form of a noun or adjective, means (i) taxes on or measured by income, franchise, gross receipts, sales, use, excise, payroll, personal property, real property, ad-valorem, value-added, leasing, leasing use or other taxes, levies, imposts, duties, charges, or withholdings of any nature, (ii) payments in respect to business licenses; and (iii) payments in respect to Unclaimed Property. Whenever the term “Tax” or “Taxes” is used it shall include penalties, fines, additions to tax and interest thereon.

(100) “ Tax Benefit Realized ” means with respect to a Party and its Subsidiaries an amount equal to the product of (x) any payment made under this Agreement that is allowable as a deduction for Income Tax purposes in the jurisdiction in which the Party making the payment is subject to Income Tax, and (y) the combined federal, state, provincial or local Income Tax rate applicable to corporations. For purposes of this Section 1.1(97), the rate referenced in clause (y) shall be thirty eight percent (38%) for the United States, shall be the combined federal and Ontario rate for Canada, and shall be the combined federal and local rate in Puerto Rico; provided , however , upon any change after the Effective Time in the highest marginal U.S. Canadian, or Puerto Rican (in each case at the federal level) income Tax rate applicable to corporations, the percentage in clause (y) shall be increased or decreased by the amount of the percentage point change in such rate with effect in the same Tax year as the effective date applicable to such change in rate.

(101) “ Tax Package ” means all information relating to the operations of a Party and/or its Subsidiaries that is reasonably necessary for the other Party to prepare and file the applicable Non-Income Tax Return required to be filed by ADTSS, ADT Canada or ADT Puerto Rico, as the case may be.

(102) “ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund, or declaration of estimated tax) required to be supplied to, or filed with, a Taxing Authority by a Party or any member of its Group in connection with the determination, assessment or collection of any Tax or the administration of any Laws, regulations, or administrative requirements relating to any Taxes.

(103) “ Taxing Authority ” means any governmental authority or any subdivision, agency, commission, or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection, or imposition of any Tax (including the IRS), including any Non-Income Tax.

(104) “ TIFSA ” has the meaning set forth in the preamble.

(105) “ Transition Services Agreement ” means that certain transition services agreement by and among Tyco International Management Company, LLC, a Nevada limited liability company, ADT LLC, a Delaware limited liability company, and ADTSS, governing the provision of certain transition services among the parties thereto, including services with respect to Payroll Based Taxes.

 

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(106) “ Treasury Regulations ” mean the final and temporary (but not proposed) income tax and administrative regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

(107) “ Tyco ” has the meaning set forth in the preamble.

(108) “ Tyco 2012 Tax Sharing Agreement ” means the Tax Sharing Agreement by and among Tyco, Flow Control and ADT NA dated as of September 28, 2012 (as the same may be amended, restated or otherwise modified from time to time in accordance with its terms).

(109) “ Tyco Common Stock ” has the meaning set forth in the Separation and Distribution Agreements.

(110) “ Tyco Group ” has the meaning set forth in the Separation and Distribution Agreements; provided , however , that the Tyco Group shall not include any member of the ADT NA Group or the Flow Group.

(111) “ Tyco International ” has the meaning set forth in the preamble.

(112) “ Tyco Retained Business ” has the meaning set forth in the Separation and Distribution Agreements.

(113) “ Tyco Sharing Percentage ” means forty percent (40%).

(114) “ Unclaimed Property ” means property subject to custody under any unclaimed property Law including, without limitation, any credit account carried on the books and records of any U.S. Affiliate of ADT NA or Tyco including, without limitation, uncashed employee pay checks, uncashed checks to vendors, customer overpayments or credits, unused gift certificates, unidentified remittances, and any other similar account with a credit balance.

(115) “ U.S. ” means the United States.

Section 1.2 References; Interpretation .

(a) References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes”, and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby”, and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

(b) Except as otherwise provided in this Agreement, a reference to a legal entity shall include predecessor entities and entities to which such referenced legal entity is a successor in interest.

 

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(c) The Parties agree that this Agreement is intended solely to determine the cash tax obligations of the Parties and does not address the manner or method of accounting for any item.

(d) The Parties agree that this Agreement applies only to Non-Income Taxes with respect to which primary statutory liability lies with ADTSS, ADT Canada or ADT Puerto Rico.

Section 1.3 Effective Time .

(a) The Parties acknowledge that the Plan of Separation contemplates a series of interrelated and intermediate internal transactions undertaken preparatory to and in contemplation of the Distributions that must be completed prior to the Effective Time in order to align and properly capitalize the Flow Control Business, the ADT NA Business, and the Tyco Retained Business.

(b) Notwithstanding that these interrelated and intermediate internal transactions must be given effect prior to the Distributions, the agreements contained herein, including, but not limited to, the manner in which Non-Income Taxes are shared amongst the Parties, shall be effective no earlier than and only upon the Effective Time.

ARTICLE II

PREPARATION AND FILING OF NON-INCOME TAX RETURNS

Section 2.1 Responsibility of Parties to Prepare and File Pre-Distribution Non-Income Tax Returns . To the extent not previously filed and subject to the rights and obligations of each of the Parties set forth herein, the rights and obligations with respect to preparation and filing of Pre-Distribution Non-Income Tax Returns are as follows:

(a) Sales and Use Tax Returns . Sales and Use Tax Returns for the Pre-Distribution Tax Period shall be prepared and filed by the Party (or Party’s Affiliate) that recorded the sale or purchase or qualifying use that gave rise to the Sales or Use Tax.

(b) Real and Personal Property Tax Returns . Real and Personal Property Tax Returns shall be prepared and filed by the Party (or Party’s Affiliate) that owned the property that gave rise to the Real or Personal Property Tax on the Assessment Date.

(c) Payroll Based Taxes . Payroll Based Tax Returns, including, by way of example, but without limiting the generality of the foregoing, Forms W-2, shall be prepared and filed in accordance with the Transition Services Agreement.

(d) Reporting With Respect to Unclaimed Property . Reporting with respect to Unclaimed Property (including escheat reporting) shall be governed exclusively by the provisions of Article V of this Agreement.

(e) Business Licenses . Reporting with respect to Business Licenses shall be governed exclusively by the provisions of Article VI of this Agreement.

 

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(f) Information Returns . The Party responsible, or whose Affiliate is responsible, for filing an Information Return under applicable Law shall prepare and file or cause to be filed such Pre-Distribution Information Non-Income Tax Return with the applicable Taxing Authority.

(g) Other . To the extent not covered by Section 2.1(a) through (f) hereof, the Party responsible, or whose Affiliate is responsible, for filing a Pre-Distribution Non-Income Tax Return under applicable Law shall prepare and file or cause to be filed such Pre-Distribution Non-Income Tax Return with the applicable Taxing Authority.

(h) Filing Protocol . Pre-Distribution Non-Income Tax Returns shall be prepared and filed in a manner (i) consistent with (and the Parties and their Affiliates shall not take any position inconsistent with) past practices of the Parties and their Affiliates, unless otherwise modified by a Final Determination or required by applicable Law; and (ii) to the extent consistent with clause (i), that minimizes the overall amount of Non-Income Taxes due and payable on Pre-Distribution Non-Income Tax Returns of all of the Parties by cooperating in making such elections or applications for group or other relief or allowances available in the taxing jurisdiction in which the Pre-Distribution Non-Income Tax Returns are filed. Unless otherwise provided in this Agreement, the Preparing Party is responsible for the costs and expenses associated with such preparation. Payments between a Party or any of its Affiliates and another Party or any of its Affiliates for reasonable preparation costs and expenses shall be treated as amounts deductible by the paying Party and its Affiliates pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties or any of their Affiliates shall take any position inconsistent with such treatment, except to the extent a Final Determination with respect to the paying entity causes such payment to not be so treated (in which case the payment shall be treated in accordance with such Final Determination).

(i) Tax Package . To the extent not previously provided, each Party other than the Preparing Party shall (at its own cost and expense), to the extent that a Pre-Distribution Non-Income Tax Return includes items of that Party or its Affiliates, prepare and provide or cause to be prepared and provided to the Preparing Party (and make available or cause to be made available to the other Party) a Tax Package relating to that Pre-Distribution Non-Income Tax Return. Such Tax Package shall be provided in a timely manner consistent with the past practices of the Parties and their Affiliates. To the extent not previously provided, the Party (or Party’s Affiliate) responsible for administration of the Admin/Carm system shall (at its own cost and expense), provide the other Party with (i) Non-Income Tax information related to such other Party’s business arising out of transactions recorded in the Admin/Carm system, and (ii) applicable reports to track exemption certificates related to the such other Party’s business. For the avoidance of doubt, references to a Party’s business in this Section 2.3(i) means the ADT North American R/SB Business if such other Party is ADT NA and the Tyco Retained Business if such other Party is Tyco.

Section 2.2 Responsibility of Parties to Prepare and File Post-Distribution Non-Income Tax Returns . The Party or its Affiliate responsible under applicable Law for filing a Post-Distribution Non-Income Tax Return shall prepare and file or cause to be prepared and filed that Non-Income Tax Return (at that Party’s own cost and expense).

 

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Section 2.3 Time of Filing Tax Returns; Manner of Non-Income Tax Return Preparation . Each Non-Income Tax Return shall be filed on or prior to the Due Date for such Non-Income Tax Return by the Party responsible for filing such Non-Income Tax Return hereunder. Unless otherwise required by a Taxing Authority pursuant to a Final Determination, the Parties shall prepare and file or cause to be prepared and filed all Non-Income Tax Returns and take all other actions in a manner consistent with (and shall not take any position inconsistent with) any assumptions, representations, warranties, covenants, and conclusions provided by the Parties (or any of their Subsidiaries) in connection with the Plan of Separation.

ARTICLE III

RESPONSIBILITY FOR PAYMENT OF NON-INCOME TAXES

Section 3.1 Responsibility of Tyco for Non-Income Taxes . Except as otherwise provided in this Agreement, Tyco shall be liable for and shall pay or cause to be paid:

(a) to the applicable Taxing Authority, any Non-Income Taxes due and payable on all Pre-Distribution Non-Income Tax Returns that Tyco is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.1, and

(b) to the applicable Taxing Authority, any Non-Income Taxes due and payable on all Post-Distribution Non-Income Tax Returns that Tyco is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.2.

Section 3.2 Responsibility of ADT NA for Non-Income Taxes . Except as otherwise provided in this Agreement, ADT NA shall be liable for and shall pay or cause to be paid the following Non-Income Taxes:

(a) to the applicable Taxing Authority, any Non-Income Taxes due and payable on all Pre-Distribution Non-Income Tax Returns that ADT NA is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.1, and

(b) to the applicable Taxing Authority, any Non-Income Taxes due and payable on all Post-Distribution Non-Income Tax Returns that ADT NA is required to file or cause to be filed with such Taxing Authority pursuant to Section 2.2.

Section 3.3 Timing of Payments of Non-Income Taxes . All Non-Income Taxes required to be paid or caused to be paid by a Party to a Taxing Authority pursuant to this Article III shall be paid or caused to be paid by such Party on or prior to the Due Date of such Non-Income Taxes.

 

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ARTICLE IV

REFUNDS

Section 4.1 Refunds Other than ADT Canada Refunds and ADT Canada Non-Income Tax Prepayment Refunds .

(a) The Parties shall share Refunds other than ADT Canada Refunds and ADT Canada Non-Income Tax Prepayment Refunds as follows: (1) Tyco shall be entitled to all Refunds that relate to Non-Income Taxes, other than Shared Non-Income Taxes, and (2) except to the extent described in clause (1) or Section 4.1(a)(iii), Refunds that are related to or paid in respect of a Non-Income Tax Return the Audit of which would constitute a Pre-Distribution Shared Non-Income Tax Audit (collectively, a “ Shared Refund ”) shall be shared by the Parties in the following order:

(i) First, to the extent that the Non-Income Tax Threshold Base Amount on the date that the Refund is received is in excess of the Non-Income Tax Contingency Amount, Tyco and ADT NA shall share all Shared Refunds to such extent and in the same proportion as their respective Sharing Percentages.

(ii) Thereafter to the extent that the Non-Income Tax Threshold Base Amount on the date that the Refund is received is less than or equal to the Non-Income Tax Contingency Amount applicable to such Non-Income Tax, Tyco shall be entitled to all Shared Refunds.

(iii) Refunds with respect to Sales or Use Taxes subject to Section 9.3(a)(iii) shall be shared in the same manner as the Parties share the liability related to such Sales or Use Taxes pursuant to such Section 9.3(a)(iii).

For the avoidance of doubt, it is the Parties’ intention that Refunds shall be paid to the Parties in a manner that refunds aggregate payments made under Section 9.3(a) on a “last in, first out” basis.

(b) Any Refund or portion thereof to which a Party is entitled pursuant to this Section 4.1 that is received or deemed to have been received as described below by another Party (or its Subsidiaries) shall be paid by such other Party to such first Party. To the extent a Party (or its Subsidiaries) applies or causes to be applied an overpayment of Non-Income Taxes as a credit toward or a reduction in Non-Income Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such Refund, if received, would have been payable by such Party to another Party (or Parties) pursuant to this Section 4.1, such Party shall be deemed to have actually received a Refund to the extent thereof on the date on which the overpayment is applied to reduce Non-Income Taxes otherwise payable.

(c) For the avoidance of doubt, any reduction of a previously received Refund shall be treated as an additional Non-Income Tax payable for all purposes of this Agreement.

 

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Section 4.2 ADT Canada Refunds .

(a) The Parties shall share ADT Canada Refunds as follows: (1) ADT NA shall be entitled to all ADT Canada Refunds that relate to ADT Canada Non-Income Taxes, other than ADT Canada Shared Non-Income Taxes, and (2) except to the extent described in clause (1), ADT Canada Refunds that are related to or paid in respect of an ADT Canada Non-Income Tax Return the Audit of which would constitute a Pre-Distribution ADT Canada Shared Non-Income Tax Audit (collectively, an “ ADT Canada Shared Refund ”) shall be shared by the Parties in the following order:

(i) First, to the extent that the ADT Canada Non-Income Tax Threshold Base Amount on the date that the ADT Canada Refund is received is in excess of the ADT Canada Non-Income Tax Contingency Amount, Tyco and ADT NA shall share all ADT Canada Shared Refunds to such extent and in the same proportion as their respective Sharing Percentages.

(ii) Thereafter to the extent that the ADT Canada Non-Income Tax Threshold Base Amount on the date that the ADT Canada Refund is received is less than or equal to the ADT Canada Non-Income Tax Contingency Amount applicable to such ADT Canada Non-Income Tax, ADT NA shall be entitled to all ADT Canada Shared Refunds.

For the avoidance of doubt, it is the Parties’ intention that ADT Canada Refunds shall be paid to the Parties in a manner that refunds aggregate payments made under Section 9.3(b) on a “last in, first out” basis.

(b) Any ADT Canada Refund or portion thereof to which a Party is entitled pursuant to this Section 4.2 that is received or deemed to have been received as described below by another Party (or its Subsidiaries) shall be paid by such other Party to such first Party. To the extent a Party (or its Subsidiaries) applies or causes to be applied an overpayment of Non-Income Taxes as a credit toward or a reduction in Non-Income Taxes otherwise payable (or a Taxing Authority requires such application in lieu of an ADT Canada Refund) and such ADT Canada Refund, if received, would have been payable by such Party to another Party (or Parties) pursuant to this Section 4.2, such Party shall be deemed to have actually received an ADT Canada Refund to the extent thereof on the date on which the overpayment is applied to reduce Non-Income Taxes otherwise payable.

(c) For the avoidance of doubt, any reduction of a previously received ADT Canada Refund shall be treated as an additional Non-Income Tax payable for all purposes of this Agreement.

Section 4.3 ADT Canada Non-Income Tax Prepayment Refunds .

(a) An ADT Canada Non-Income Tax Prepayment Refund shall be shared by the Parties in accordance with their Sharing Percentages.

(b) Any ADT Canada Non-Income Tax Prepayment Refund or portion thereof to which a Party is entitled pursuant to this Section 4.3 that is received or deemed to have been received as described below by another Party (or its Subsidiaries) shall be paid by such other Party to such first Party.

 

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(c) For the avoidance of doubt, any reduction of a previously received ADT Canada Non-Income Tax Prepayment Refund (i) shall not be treated as a Refund or an ADT Canada Refund, and (ii) shall not be taken into account for purposes of determining the Non-Income Tax Threshold Base Amount or the ADT Canada Non-Income Tax Base Amount.

ARTICLE V

UNCLAIMED PROPERTY

Section 5.1 Limitation. The Parties acknowledge and agree that the Unclaimed Property provisions of this Agreement apply solely with respect to ADTSS.

Section 5.2 Escheatment Schedule. The Escheatment Schedule attached hereto as Schedule 5.2 reflects all Unclaimed Property that the Parties have determined is either (i) escheatable (reportable) in accordance with the Unclaimed Property Law of the applicable state, or (ii) Dormant Funds as of the date of the ADTSS Balance Sheet. For the avoidance of doubt, the Escheatment Schedule includes Unclaimed Property that the Parties intend to voluntarily disclose to the applicable state pursuant to such state’s voluntary disclosure program.

Section 5.3 Ownership and Administration of Unclaimed Property Relating to Tyco Retained Business or Unidentified Unclaimed Property. All Unclaimed Property including unidentified Unclaimed Property that either (i) relates to the Tyco Retained Business for transactions that occurred prior to the ADTSS Separation Date or (ii) is otherwise not specifically identifiable with the ADT NA Business as of the ADTSS Business Separation Date, shall be retained by Tyco after the ADTSS Business Separation Date and the administration, remittance and any escheatment of such Unclaimed Property shall be the responsibility of Tyco.

Section 5.4 Ownership and Administration of Unclaimed Property Relating to ADT NA Business Other than ADT Customer Credits. All Unclaimed Property, other than ADT Customer Credits, that relate to the ADT NA Business in connection with any transaction that occurred prior to the ADTSS Business Separation Date shall be retained by Tyco after the ADTSS Business Separation Date and the administration, remittance and any escheatment of such Unclaimed Property shall be the responsibility of Tyco.

Section 5.5 Ownership and Administration of ADT Customer Credits. The ownership, administration, remittance and any escheatment of all ADT Customer Credits shall be transferred to ADT LLC on the ADTSS Business Separation Date and the administration, remittance and any escheatment of such ADT Customer Credits shall be the responsibility of ADT NA. ADT NA shall use commercially reasonable efforts to settle each such ADT Customer Credit with the associated customer or otherwise escheat the ADT Customer Credit in accordance with the Unclaimed Property Law of the applicable state.

 

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Section 5.6 Settlements of Disputes with State Unclaimed Property Administrators or similar State Authorities Relating to Unclaimed Property.

(a) Tyco shall have the sole authority to settle any claims with any State Unclaimed Property Administrator or similar State Authority relating to the Unclaimed Property described in Section 5.3 and Section 5.4.

(b) ADT NA shall have the sole authority to settle any claims with any State Unclaimed Property Administrator or similar State Authority relating to the Unclaimed Property described in Section 5.5; provided , however , that Tyco and ADT NA shall cooperate in settling any claims with any State Unclaimed Property Administrator or similar State Authority relating to ADT Customer Credits.

Section 5.7 Payment of Audit Amounts with Respect to Unclaimed Property.

(a) In connection with any Final Determination with respect to an Unclaimed Property Audit for any Pre-Distribution Tax Period:

(i) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority an amount up to and including the amount set forth on the Escheatment Schedule.

(ii) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the Tyco Sharing Percentage of such additional amounts in excess of the amount set forth on the Escheatment Schedule due pursuant to such Final Determination.

(iii) ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or Tyco (as the case may be) the ADT NA Sharing Percentage of such additional amounts in excess of the amount set forth on the Escheatment Schedule due pursuant to such Final Determination.

(b) In connection with any Final Determination with respect to an Unclaimed Property Audit with respect to the ADT North American R/SB Business for any Post-Distribution Tax Period, ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority such additional amounts due pursuant to such Final Determination.

(c) In connection with any Final Determination with respect to an Unclaimed Property Audit with respect to the Tyco Retained Business for any Post-Distribution Tax Period, Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority such additional amounts due pursuant to such Final Determination.

ARTICLE VI

BUSINESS LICENSE MATTERS

Section 6.1 Limitation. The Parties acknowledge and agree that the Business License Matters provisions of this Agreement apply solely with respect to ADTSS.

 

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Section 6.2 ADT NA Business License Returns and Payments. ADT NA shall be responsible for and shall (i) file any and all Business License Returns required to be filed by any entity that is a member of the ADT NA Group on the due date for such return (without extensions) and (ii) remit to the applicable Taxing Authority any and all payments required to be paid with such returns.

Section 6.3 Tyco Business License Returns and Payments. Tyco shall be responsible for and shall (i) file any and all Business License Returns required to be filed by any entity that is a member of the Tyco Group on the due date for such return (without extensions) and (ii) remit to the applicable Taxing Authority any and all payments required to be paid with such returns.

Section 6.4 Payment of Business License Audit Amounts. In connection with any Final Determination with respect to a Business License Audit for any period ending on or before the ADTSS Business Separation Date:

(a) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or ADT NA (as the case may be) the Tyco Sharing Percentage of such additional amounts due pursuant to such Final Determination.

(b) ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or Tyco (as the case may be) the ADT NA Sharing Percentage of such additional amounts due pursuant to such Final Determination.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Indemnification Obligations of Tyco. Tyco shall indemnify ADT NA and hold it harmless from and against (without duplication):

(a) all Non-Income Taxes and other amounts for which the Tyco Group is responsible under this Agreement, and

(b) all Non-Income Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant, or obligation of Tyco under this Agreement.

Section 7.2 Indemnification Obligations of ADT NA. ADT NA shall indemnify Tyco and hold it harmless from and against (without duplication):

(a) all Non-Income Taxes and other amounts for which the ADT NA Group is responsible under this Agreement, and

(b) all Non-Income Taxes and reasonable out-of-pocket costs for advisors and other expenses attributable to a breach of any representation, covenant or obligation of ADT NA under this Agreement.

 

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ARTICLE VIII

PAYMENTS

Section 8.1 Payments.

(a) General . Unless otherwise provided in this Agreement, in the event that an Indemnifying Party is required to make a payment to an Indemnified Party pursuant to this Agreement:

(i) Aggregate Payments of Less than $2 Million . If such payments are in the aggregate less than $2 million during any three-month period in which the obligation giving rise to the indemnification payment must be satisfied that includes the last month of a calendar quarter and the first two months of the next calendar quarter (the “ Second Calendar Quarter ”), the Indemnified Party shall deliver written notice of the payments to the Indemnifying Party in accordance with Section 14.3 during the third month of the Second Calendar Quarter, and the Indemnifying Party shall be required to make payment to the Indemnified Party within ten (10) Business Days after the end of the Second Calendar Quarter.

(ii) Payments Equal to or Greater than $2 Million . If such payments are individually or in the aggregate during the calendar quarter equal to or greater than $2 million, the Indemnified Party shall deliver written notice of the payment to the Indemnifying Party in accordance with Section 14.3 at least ten (10) Business Days in advance of the date or dates on which the obligations giving rise to the indemnification payment must be satisfied (in the case of aggregate payments in excess of $2 million, the earliest date that any such payment must be satisfied), and the Indemnifying Party shall be required to make payment to the Indemnified Party no later than five (5) Business Days after receipt of such notice. The Indemnified Party shall, within one (1) Business Day after the date on which the obligation giving rise to the indemnification payment is satisfied, pay interest to the Indemnifying Party that accrues (at a rate equal to one (1) week LIBOR minus twenty-five (25) basis points) on the amount of such payment from the date of receipt of such payment by the Indemnified Party until the date on which the obligation is satisfied.

(b) Procedural Matters . The written notice delivered to the Indemnifying Party in accordance with Section 14.3 shall show the amount due and owing together with a schedule calculating in reasonable detail such amount (and shall include any relevant Non-Income Tax Return, statement, bill or invoice related to Non-Income Taxes, costs, expenses or other amounts due and owing). All payments required to be made by one Party to another Party pursuant to this Section 8.1 shall be made by electronic, same-day wire transfer. Payments shall be deemed made when received. If the Indemnifying Party fails to make a payment to the Indemnified Party within the time period set forth in this Section 8.1, such Indemnifying Party shall not be considered to be in breach of its covenants and obligations established in this Section 8.1 unless and until such failure exists on the date on which the obligation giving rise to the indemnification payment must be satisfied; provided , however , that the Indemnifying Party shall pay to the Indemnified Party (i) interest that accrues (at a rate equal to the Prime Rate plus two hundred (200) basis points) on the amount of such payment from the time that such payment was due to the Indemnified Party until the date that payment is actually made to the Indemnified

 

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Party; and (ii) any costs or expenses, including any breakage costs, incurred by the Indemnified Party to secure such payment or to satisfy the Indemnifying Party’s portion of the obligation giving rise to the indemnification payment.

(c) Right of Setoff . It is expressly understood that an Indemnifying Party is hereby authorized to set off and apply any and all amounts required to be paid to an Indemnified Party pursuant to this Section 8.1 against any and all of the obligations of the Indemnified Party to the Indemnifying Party arising under Section 8.1 of this Agreement that are then either due and payable or past due, but only to the extent that such Indemnifying Party has made any demand for payment with respect to such obligations.

Section 8.2 Treatment of Payments Made Pursuant to Tax Sharing Agreement. Unless otherwise required by Law, a Final Determination or this Agreement, for U.S. federal income Tax purposes, any payment made pursuant to this Agreement by:

(a) ADT NA to Tyco shall be treated as an adjustment to one or more transfers of assets to ADT NA by Tyco or one or more of Tyco’s Subsidiaries (determined immediately prior to the ADT NA Distribution or the Flow Distribution, whichever is earlier), as applicable, pursuant to the Plan of Separation;

(b) Tyco to ADT NA shall be treated as an adjustment to one or more transfers to ADT NA by Tyco or one or more of Tyco’s Subsidiaries (determined immediately prior to the ADT NA Distribution or the Flow Distribution, whichever is earlier), as applicable, pursuant to the Plan of Separation; and

(c) in each case, none of the Parties shall take any position inconsistent with such treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its reasonable best efforts to contest such challenge.

Section 8.3 Payments Net of Tax Benefit Realized. All amounts required to be paid by one Party to another pursuant to this Agreement or the Separation and Distribution Agreements shall be net of the Tax Benefit Realized by the Indemnified Party or its Affiliates.

ARTICLE IX

AUDITS

Section 9.1 Notice. Within five (5) Business Days after a Party or any of its Affiliates receives a written notice from a Taxing Authority of the existence of an Audit that may require indemnification pursuant to this Agreement, that Party shall notify the other Parties of such receipt and send such notice to the other Parties by delivery in person, by overnight courier service, or by facsimile or electronic mail with receipt confirmed (followed by delivery of an original via overnight courier service). The failure of one Party to notify the other Parties of an Audit shall not relieve such other Party of any liability and/or obligation that it may have under this Agreement, except to the extent that the Indemnifying Party is materially prejudiced by such failure.

 

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Section 9.2 Pre-Distribution Audits.

(a) Determination of Administering Party . ADT NA shall administer and control (i) Pre-Distribution Non-Income Tax Audits related to Broadview, BHS or BMS, and (ii) Pre-Distribution ADT Canada Non-Income Tax Audits. All other Pre-Distribution Non-Income Tax Audits shall be administered and controlled by Tyco.

(b) Administration and Control; Cooperation . Subject to Section 9.2(c) and to a Change of Control or a Bankruptcy of the Audit Management Party as provided below, the Audit Management Party shall have absolute authority to make all decisions (determined in its sole discretion) with respect to the administration and control of an Audit described in Section 9.2(a), including the selection of all external advisors. In that regard, the Audit Management Party (i) may in its sole discretion settle or otherwise determine not to continue to contest any issue related to such Audit without the consent of the other Parties, and (ii) shall, as soon as reasonably practicable and prior to settlement of an issue that could cause one or more other Parties to become responsible for Non-Income Taxes under Section 9.3, notify the Audit Representatives of such other Parties of such settlement. The other Parties shall (and shall cause their Affiliates to) undertake all actions and execute all documents (including an extension of the applicable statute of limitations) that are determined in the sole discretion of the Audit Management Party to be necessary to effectuate such administration and control. The Parties shall act in good faith and use their reasonable best efforts to cooperate fully with each other Party (and their Affiliates) in connection with such Audit and shall provide or cause their Subsidiaries to provide such information to each other as may be necessary or useful with respect to such Audit in a timely manner, identify and provide access to potential witnesses, and other persons with knowledge and other information within its control and reasonably necessary to the resolution of the Audit. Notwithstanding anything to the contrary in this Section 9.2(b), after a Change of Control or a Bankruptcy of the Audit Management Party, the Audit Management Party shall not, prior to the determination of whether there will be a replacement of the Audit Management Party as permitted under Section 9.3(d) as a result of such Change of Control or Bankruptcy, choose to litigate any issue with respect to an Audit or make any decision to change the forum or jurisdiction with respect to which an issue arising under an Audit is being litigated, without the prior written consent of all of the Parties.

(c) Participation Rights of Parties and Information Sharing with respect to Audits . Subject to applicable Department of Defense restrictions, each Party that would be responsible under Section 9.3 for Non-Income Taxes resulting from an Audit described in Section 9.2(a) (other than the Audit Management Party) (a “ Participating Party ”) shall have the right to access information related to such Audit at its own cost and at the time and manner as reasonably determined by the Audit Management Party.

(d) Change in Audit Management Party . Unless prohibited by Law, upon (a) the expiration of the three (3)-month period following a Change of Control of the Audit Management Party; or (b) the expiration of the three (3)-month period following a Bankruptcy of the Audit Management Party; (each of (a) and (b), a “ Tax Management Change Event ”), the Party not then acting as Audit Management Party shall become the Audit Management Party; provided , however , that with respect to a Tax Management Change Event due to a Change of Control of the Audit Management Party, the Party not then acting as Audit Management Party

 

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shall become the Audit Management Party only if the Non-Income Tax Threshold Base Amount exceeds the Non-Income Tax Contingency Amount or the ADT Canada Non-Income Tax Threshold Base Amount exceeds the ADT Canada Non-Income Tax Contingency Amount, as the case may be, unless such other party provides written notice to the current Audit Management Party within forty-five (45) days of the Tax Management Change Event that such other Party declines to become the Audit Management Party (“ Audit Management Party Replacement Declination Notice ”).

(e) If there is a replacement of the then appointed Audit Management Party (the “ Replaced Audit Management Party ”) pursuant to Section 9.2(d), the Replaced Audit Management Party shall use its reasonable best efforts to transition to the new Audit Management Party the administration and control of the ongoing Audits that the Replaced Audit Management Party was prior to its replacement responsible for administering and controlling pursuant to Section 9.2(a).

(f) Each Party has the exclusive right to replace its respective Audit Representative provided that such Audit Representative must be an employee of such Party or any of its Affiliates, and in the event of such replacement, the applicable Party shall provide written notice of such replacement to the other Party.

(g) Sharing of Internal and External Costs and Expenses Related to Pre-Distribution Shared Tax Audits .

(i) External Costs and Expenses . All external costs and expenses (including all costs and expenses of calculating Non-Income Taxes and other amounts payable hereunder) that are incurred by the Audit Management Party with respect to a Pre-Distribution Shared Non-Income Tax Audit (including any costs and expenses incurred as a result of any reporting obligations that arise out of an Audit and any costs and expenses incurred in connection with a reverse Non-Income Tax Audit to mitigate Audit exposure) shall be shared equally by the Parties. The Audit Management Party shall provide to the other Parties at the end of each calendar quarter an invoice for each other Party’s share of the external costs (along with supporting invoices received from the external service providers), and each other Party shall remit, within sixty (60) days after receipt of the invoice, payment of its share of the external costs to the Audit Management Party.

(ii) Internal Costs and Expenses . Schedule 9.2(g)(ii) sets forth the internal costs and expenses to be shared by the Parties, if any, and the manner in which such internal costs and expenses shall be shared.

(h) Treatment of Costs and Expenses related to Pre-Distribution Shared Non-Income Tax Audits . Payments borne by the Parties or any of their Subsidiaries for costs and expenses relating to Pre-Distribution Shared Tax Audits shall be treated as amounts deductible by the paying Party (or its Subsidiary) pursuant to Section 162 of the Code (and any corresponding provision of U.S. state or local or non-U.S. Tax Law), and none of the Parties or any of their Subsidiaries shall take any position inconsistent with such treatment, except to the extent that a Final Determination with respect to the paying Party or its Subsidiary causes any such payment to not be so treated.

 

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Section 9.3 Payment of Audit Amounts.

(a) Pre-Distribution Shared Non-Income Tax Audits . Except as provided in Section 9.3(a)(iii) and Section 9.3(a)(iv), in connection with any Final Determination with respect to a Pre-Distribution Shared Non-Income Tax Audit:

(i) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or ADT NA (as the case may be) (x) one hundred percent (100%) of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period, but only to the extent such additional Non-Income Taxes, when added to the Non-Income Tax Threshold Base Amount, are less than or equal to the Non-Income Tax Contingency Amount, and (y) the Tyco Sharing Percentage of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period, but only to the extent such additional Non-Income Taxes, when added to the Non-Income Tax Threshold Base Amount, exceed the Non-Income Tax Contingency Amount.

(ii) ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or Tyco (as the case may be) (x) one hundred percent (100%) of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to the Broadview Non-Income Tax Contingencies, (y) the ADT NA Sharing Percentage of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period but only to the extent such additional Non-Income Taxes, when added to the Non-Income Tax Threshold Base Amount, exceed the Non-Income Tax Contingency Amount.

(iii) To the extent a Sales Tax Audit subject to this Section 9.3(a) results in Audit payments in excess of the Non-Income Tax Threshold Base Amount, such payments shall be shared as follows: (A) Audit payment obligations arising out of transactions recorded in the Informix and Mastermind systems shall be paid solely by ADT NA, (B) Audit payment obligations arising out of transactions recorded in the Baan and Chameleon systems shall be paid solely by Tyco, and (C) Audit payment obligations arising out of transactions recorded in the Admin/Carm system shall be shared by ADT NA and Tyco in accordance with their Sharing Percentages. To the extent that a Sales or Use Tax Audit Final Determination results in Tyco for the first time exceeding its Non-Income Tax Threshold Base Amount, the amount that exceeds the Non-Income Tax Threshold Base Amount shall be prorated among the Parties based on a percentage of the Sales or Use Tax errors related to a particular billing system over the total errors identified in the Audit as if the entire Audit had exceeded the Non-Income Tax Threshold Base Amount. Liability for the audit payment in excess of the Non-Income Tax Threshold Base Amount shall be determined by applying these percentages to such excess amount. Interest and penalties should be prorated between the Parties based on a ratio of each Party’s overall liability for Non-Income Taxes over the total liability for Non-Income Taxes for each specific Audit.

(iv) Audit Amounts in respect to Information Returns shall be subject to this Agreement only to the extent such amounts relate to period ending on or before December 31, 2011.

 

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(b) Pre-Distribution ADT Canada Shared Non-Income Tax Audits . In connection with any Final Determination with respect to a Pre-Distribution ADT Canada Shared Non-Income Tax Audit:

(i) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or ADT NA (as the case may be) the Tyco Sharing Percentage of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period, but only to the extent such additional Non-Income Taxes, when added to the ADT Canada Non-Income Tax Threshold Base Amount, exceed the ADT Canada Non-Income Tax Contingency Amount.

(ii) ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority or Tyco (as the case may be) (x) one hundred percent (100%) of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period, but only to the extent such additional Non-Income Taxes, when added to the ADT Canada Non-Income Tax Threshold Base Amount, are less than or equal to the ADT Canada Non-Income Tax Contingency Amount, (y) the ADT NA Sharing Percentage of the additional Non-Income Taxes due and payable as a result of such Final Determination that are attributable to a Pre-Distribution Tax Period but only to the extent such additional Non-Income Taxes, when added to the ADT Canada Non-Income Tax Threshold Base Amount, exceed the ADT Canada Non-Income Tax Contingency Amount

(c) Pre-Distribution ADTSS Payroll Tax Audits . In connection with any Final Determination with respect to a Pre-Distribution ADTSS Payroll Tax Audit

(i) Tyco shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the Tyco Sharing Percentage of the amount owed as a result of such Final Determination.

(ii) ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority the ADT NA Sharing Percentage of the amount owed as a result of such Final Determination.

(d) Pre-Distribution Broadview Payroll Tax Audits . In connection with any Final Determination with respect to a Pre-Distribution Broadview Payroll Tax Audit, ADT NA shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority one hundred percent (100%) of the amount owed as a result of such Final Determination.

Section 9.4 Payment Procedures. In connection with any Audit that results in an amount to be paid pursuant to Section 9.3(a), (b), or (c), the Audit Management Party shall, within thirty (30) Business Days following a final resolution of such Audit, submit in writing to the other Party a preliminary determination (calculated and explained in detail reasonably sufficient to enable such other Party to fully understand the basis for such determination and to permit such Party and its Affiliates to satisfy their financial reporting requirements) of the portion of such amount to be paid by each of the Parties pursuant to Section 9.3(a), (b), or (c), as applicable. Each of the Parties and its Affiliates shall have access to all data and information necessary to calculate such amounts and the Parties and their Affiliates shall cooperate fully in

 

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the determination of such amounts. Within twenty (20) Business Days following the receipt by a Party of the information described in this Section 9.4, such Party shall have the right to object only to the calculation of the amount of the payment (but not the basis for the payment) by written notice to the other Party; such written notice shall contain such disputed item or items and the basis for its objection. If no Party objects by proper written notice to the other Party within the time period described in this Section 9.4, the calculation of the amounts due and owing from each Party shall be deemed to have been accepted and agreed upon, and final and conclusive, for purposes of this Section 9.4. If any Party objects by proper written notice to the other Party within such time period, the Parties shall act in good faith to resolve any such dispute as promptly as practicable in accordance with Article XIII. The Party or its Affiliate responsible for paying to the applicable Taxing Authority under applicable Law amounts owed pursuant to a Final Determination shall make such payments to such Taxing Authority prior to the due date for such payments. The other Parties shall reimburse the paying Party for the portion of such payments for which such other Parties are liable pursuant to Section 9.3. The time periods specified above for submitting a preliminary determination and objecting may be shortened if the Parties ascertain that such shortened time period is necessary to meet the Audit obligations of the Parties and their Affiliates.

ARTICLE X

COOPERATION AND EXCHANGE OF INFORMATION

Section 10.1 Cooperation and Exchange of Information . The Parties shall each cooperate fully (and each shall cause its respective Affiliates to cooperate fully) and in a timely manner (considering the other Party’s normal internal processing or reporting requirements) with all reasonable requests from another Party hereto, or from an agent, representative, or advisor to such Party, in connection with the preparation and filing of Non-Income Tax Returns, claims for Refund, Audits and the calculation of Non-Income Taxes or other amounts required to be paid hereunder, and any applicable financial reporting requirements of a Party or its Affiliates, in each case, related or attributable to or arising in connection with Non-Income Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement. Such cooperation shall include, without limitation:

(a) the retention until the expiration of the applicable statute of limitations (taking into account all waivers and extensions), and the provision upon request, of Non-Income Tax Returns of the Parties and their respective Subsidiaries for periods up to and including the Distribution Date, books, records (including information regarding ownership and Tax basis of property), documentation, and other information relating to such Non-Income Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

(b) the execution of any document that may be necessary or reasonably helpful in connection with any Audit of any of the Parties or their respective Subsidiaries, or the filing of a Non-Income Tax Return or Refund claim of the Parties or any of their respective Subsidiaries (including the signature of an officer of a Party or its Subsidiary);

 

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(c) the use of the Party’s reasonable best efforts to obtain any documentation and provide additional facts, insights or views as requested by another Party that may be necessary or reasonably helpful in connection with any of the foregoing (including without limitation any information contained in Tax or other financial information databases); and

(d) the use of the Party’s reasonable best efforts to obtain any Non-Income Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records, or other information that may be necessary or helpful in connection with any Non-Income Tax Returns of any of the Parties or their Affiliates.

Each Party shall make its and its Subsidiaries’ employees (including subject matter experts) and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters. Except for costs and expenses otherwise allocated among the Parties pursuant to this Agreement, including costs incurred under Article II and Article IX, and except for copying costs, which shall be shared equally by the Parties, no reimbursement shall be made for costs and expenses incurred by the Parties as a result of cooperating pursuant to this Section 10.1.

Section 10.2 Retention of Records. Subject to Section 10.1, if any of the Parties or their respective Subsidiaries intends to dispose of any documentation relating to the Non-Income Taxes of the Parties or their respective Subsidiaries for which another Party to this Agreement may be responsible pursuant to the terms of this Agreement (including, without limitation, Non-Income Tax Returns, books, records, documentation, and other information, accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities), such Party shall provide or cause to be provided written notice to the other Parties describing the documentation to be destroyed or disposed of sixty (60) Business Days prior to taking such action. The other Parties may arrange to take delivery of the documentation described in the notice at their expense during the succeeding sixty (60)-day period.

ARTICLE XI

OTHER TAX MATTERS

Section 11.1 Other Agreements. Notwithstanding anything to the contrary in this Agreement, the responsibility of the Parties with respect to the Ancillary Agreements shall be determined in accordance with the Separation and Distribution Agreements.

Section 11.2 Threshold Base Amount Report. On a quarterly basis or as otherwise agreed by the Parties, (i) Tyco shall prepare and deliver to ADT NA a schedule documenting the sum of all payments, Refunds or other amounts included in the most current determination of the Non-Income Tax Threshold Base Amount, and (ii) ADT NA shall prepare and deliver to Tyco a schedule documenting the sum of all payments, Refunds or other amounts included in the most current determination of the ADT Canada Non-Income Tax Threshold Base Amount.

Section 11.3 Meetings. The Parties will meet (in person or by telephone) once per quarter to discuss status of Audits, budgets, and other items relevant to the administration of this Agreement. No later than sixty (60) days prior to the end of each fiscal year, the Parties shall meet (in person or by telephone) to determine the budget for the next fiscal year.

 

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ARTICLE XII

DEFAULTED AMOUNTS

Section 12.1 General. Without limitation of the Parties’ rights and obligations otherwise set forth in this Agreement and provided that no other Party has defaulted on any of its obligations pursuant to this Agreement, each Party agrees to provide or cause to be provided such funding as is necessary to ensure that its respective Subsidiaries are able to satisfy their respective Tax liabilities to a Taxing Authority that arise as a result of a Final Determination under Section 9.3 of this Agreement, including any such Tax liabilities that, upon default by a Party’s Subsidiary, may result in another Party’s Subsidiary paying or being required to pay the defaulted Tax liabilities to a Taxing Authority.

ARTICLE XIII

DISPUTE RESOLUTION

Section 13.1 Dispute Resolution. The provisions of the ADT NA Separation Agreement regarding dispute resolution shall govern resolution of any and all disputes under this Agreement.

ARTICLE XIV

MISCELLANEOUS

Section 14.1 Counterparts; Facsimile Signatures. 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 such counterparts have been signed by each of the Parties and delivered to the other Parties. For purposes of this Agreement, facsimile signatures shall be deemed originals.

Section 14.2 Survival. Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Distribution Date and remain in full force and effect in accordance with their applicable terms; provided , however , that all indemnification for Non-Income Taxes shall survive until ninety (90) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Non-Income Tax that gave rise to the indemnification; provided , further , that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.

Section 14.3 Notices. All notices, requests, claims, demands, and 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, by facsimile or electronic mail with receipt confirmed (followed by delivery of

 

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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 14.3):

To Tyco International:

Tyco International Ltd.

c/o Tyco International Management Co.

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

To TIFSA:

Tyco International Finance S.A.

c/o Tyco International Management Co.

9 Roszel Road

Princeton, New Jersey 08540

Attn: General Counsel

Facsimile: (609) 720-4208

To ADT NA:

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida 33431

Attn: General Counsel

Facsimile: (561) 988-3719

Section 14.4 Waivers and Consents. The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Parties under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party (and its Group).

Section 14.5 Amendments. Subject to the terms of Section 14.8, this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

Section 14.6 Assignment. Except as otherwise provided for in this Agreement, this Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party without the prior written consent of the other Parties (not to be unreasonably withheld or delayed), and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided , however , that a Party may assign this Agreement

 

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in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets; provided , further , that the surviving entity of such merger or the transferee of such Assets shall agree in writing, reasonably satisfactory to the other Parties, to be bound by the terms of this Agreement as if named as a “Party” hereto.

Section 14.7 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns; provided , however , that in no event shall a Party’s right to vote on a matter set forth herein be construed to permit any duplication of a Party’s vote by a successor, assignee, or other transferee. The Parties acknowledge that it is their intention to permit no more than three (3) parties to vote on any matter set forth herein.

Section 14.8 Certain Termination and Amendment Rights. This Agreement may not be terminated except by written consent of each of the Parties.

Section 14.9 No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement, the Separation and Distribution Agreements or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification or payment pursuant to the provisions of this Agreement).

Section 14.10 Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party on and after the Distribution Date.

Section 14.11 Primary Liability of TIFSA. Each of the Parties acknowledges and agrees that TIFSA shall be primarily liable for and shall satisfy all obligations of Tyco under this Agreement, without right of contribution, reimbursement, or compensation from Tyco International.

Section 14.12 Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 14.13 Title and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 14.14 Exhibits and Schedules. The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Exhibits or Schedules constitutes an admission of any liability or obligation of any member of the ADT NA Group or the Tyco Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the ADT NA Group or the Tyco Group or any of their respective Affiliates.

 

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Section 14.15 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

Section 14.16 Consent to Jurisdiction. Subject to the provisions of Article XIII, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action, or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article XIII or to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice, or document by U.S. registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit, or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 14.16. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit, or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 14.17 Specific Performance. The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to an injunction or injunctions to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at Law or in equity.

Section 14.18 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.18.

 

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Section 14.19 Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

Section 14.20 Complete Agreement; Construction. This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 14.21 Changes in Law.

(a) Any reference to a provision of the Code, Treasury Regulations, or a Law of another jurisdiction shall include a reference to any applicable successor provision or Law.

(b) If, due to any change in applicable Law or regulations or their interpretation by any court of Law or other governing body having jurisdiction subsequent to the date hereof, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.

(c) To the extent any provision of this Agreement references an effective Tax rate, such rate shall be adjusted to the extent of, and with concurrent effective date as, any change in such Tax rate under applicable Law.

Section 14.22 Authority. Each of the Parties hereto represents to each of the other Parties that (a) it has the corporate power (corporate or otherwise) and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid, and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium, or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 14.23 Severability. If any provision of this Agreement or the application of any such provision to any Person or circumstance shall be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision hereof. The Parties shall engage in good faith negotiations to replace any provision that is declared invalid, illegal, or unenforceable with a valid, legal, and enforceable provision, the economic effect of which comes as close as possible to that of the invalid, illegal, or unenforceable provision which it replaces.

 

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Section 14.24 Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between Tyco or its Subsidiaries, on the one hand, and ADT NA or its Subsidiaries, on the other hand (other than this Agreement or in any other Ancillary Agreement), shall be or shall have been terminated as of the Distribution Date and, after the Distribution Date, none of such Parties (or their Subsidiaries) to any such Tax sharing, indemnification or similar agreement shall have any further rights or obligations under any such agreement. For the avoidance of doubt, the Tyco 2012 Tax Sharing Agreement shall not be terminated.

Section 14.25 Exclusivity. Except as specifically set forth in the Separation and Distribution Agreements or any Ancillary Agreement, all matters related to Non-Income Taxes or Non-Income Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by this Agreement. In the event of a conflict between this Agreement, the Separation and Distribution Agreements or any Ancillary Agreement with respect to such matters, this Agreement shall govern and control.

Section 14.26 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation, or recovery with respect to any matter arising out of the same facts and circumstances.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed the day and year first above written.

 

TYCO INTERNATIONAL LTD.
By:  

/s/ John S. Jenkins

Name:   John S. Jenkins
Title:   Vice President and Secretary
TYCO INTERNATIONAL FINANCE S.A.
By:  

/s/ Andrea Goodrich

Name:   Andrea Goodrich
Title:   Director
THE ADT CORPORATION
By:  

/s/ N. David Bleisch

Name:   N. David Bleisch
Title:   Vice President and Secretary

Signature Page of Non-Income Tax Sharing Agreement

Exhibit 10.3

EXECUTION COPY

TRADEMARK AGREEMENT

Between

ADT SERVICES GMBH (“ Tyco ”)

and

ADT US HOLDINGS, INC. (“ADT Residential”)

and, solely for purposes of Section 6.3 herein

TYCO INTERNATIONAL LTD. (“ Tyco Parent ”)

and

THE ADT CORPORATION (“ ADT Parent ”)

Effective Date: September 25, 2012


TRADEMARK AGREEMENT

This TRADEMARK AGREEMENT (this “ Agreement ”) dated as of September 25, 2012, by and among ADT SERVICES GMBH, a company organized under the laws of Switzerland (“ Tyco ”), on the one hand, ADT US HOLDINGS, INC., a corporation organized under the laws of Delaware (“ ADT Residential ”, and together with Tyco, the “ Parties ”) and, solely for purposes of Section 6.3 herein, TYCO INTERNATIONAL LTD., a corporation limited by shares ( Aktiengesellschaft ) organized under the laws of Switzerland (“ Tyco Parent ”) and THE ADT CORPORATION, a Delaware corporation (“ ADT Parent ”).

WHEREAS, Tyco Parent and ADT Parent are currently Affiliates (as defined below) and Tyco Parent and ADT Parent, directly or indirectly through their respective Affiliates (as defined below), have used the ADT Brand in connection with their businesses;

WHEREAS, Tyco Parent, intends to divest its residential and small business security business and its flow control business (the “ Businesses ”) pursuant to (a) that certain Separation and Distribution Agreement dated as of March 27, 2012 by and among Tyco Parent, Tyco Flow Control International Ltd., a company organized under the laws of Switzerland, and ADT Parent, which relates primarily to the separation and distribution of the flow control business of Tyco Parent and the subsequent merger of the flow control business with and into Pentair, Inc., a corporation organized under the laws of Minnesota (the “ Flow Distribution Agreement ”), and (b) that certain Separation and Distribution Agreement to be entered into by and between Tyco Parent, Tyco International Finance S.A., a corporation organized under the laws of Luxembourg, ADT Parent, and ADT LLC, an entity organized under the laws of Delaware, which relates primarily to the separation and distribution of the residential and small business security business of Tyco Parent (the “ ADT Distribution Agreement ”);

WHEREAS, prior to and to facilitate such divestment, Tyco Parent and its Affiliates (as defined below) intend to carry out an intra-group corporate reorganization to separate the Businesses from Tyco Parent’s other businesses (the “ Reorganization ”);

WHEREAS, in furtherance of the Reorganization and pursuant to the Purchase Agreement dated as of September 26, 2012 by and among Tyco and Tyco International Services Holding GmbH, a company organized under the laws of Switzerland (“ TISH ”), Tyco will sell its rights in the ADT Brand to TISH and simultaneously therewith, TISH will agree to be bound by the terms of this Agreement;

WHEREAS, in furtherance of the Reorganization and pursuant to the Assignment Agreement dated as of September 26, 2012 by and among TISH and Tyco International Holding S.a.r.l., a company organized under the laws of Luxembourg (“ TSarl ”), TISH will assign its rights in the ADT Brand in the ADT Residential Territory to TSarl and simultaneously therewith, TSarl will agree to be bound by the terms of this Agreement;

WHEREAS, in furtherance of the Reorganization and pursuant to the Purchase Agreement dated as of September 26, 2012 by and among TSarl and ADT Residential, TSarl will sell, and ADT Residential will purchase, the ADT Brand in the ADT Residential Territory and


simultaneously therewith, ADT Residential will acknowledge the continued effectiveness of this Agreement and will agree to be bound by this Agreement in its capacity as assignee and purchaser under the Purchase Agreement;

WHEREAS, in furtherance of the Reorganization, certain secondary brands subject to this Agreement will be transferred by and among Tyco (or its Affiliates) and ADT Residential (or its Affiliates), and each transferee of the secondary brands will agree to be bound by the terms of this Agreement;

WHEREAS, after the Reorganization, the Parties will no longer be affiliated, but each of Tyco and ADT Residential wish to continue to use the ADT Brand in the Tyco Territory and the ADT Residential Territory (each as defined below), respectively, and the Parties have agreed to allow such use, subject to the terms and conditions herein;

WHEREAS, each Party recognizes that the ADT Brand is valuable in many countries worldwide, and due to the global nature of the Internet and social media, each Party’s conduct of its business under the ADT Brand in its respective territory has the potential to damage the goodwill of the ADT Brand in the other Party’s territory, and therefore, the Parties need to take certain actions to minimize the possibility of such damage;

WHEREAS, given the Parties’ relationship as Affiliates prior to the Reorganization, each Party is willing to agree on certain restrictions on each Party’s use of the ADT Brand in the other Party’s territory beyond those restrictions set by trademark Law for use by an unrelated third party; and

WHEREAS, this Agreement is an Ancillary Agreement that must be executed pursuant to Section 3.5 of the ADT Distribution Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements herein contained, and for good and valuable consideration, including that set forth in the ADT Distribution Agreement, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:

ARTICLE 1 - DEFINITIONS

1.1 Definitions . The following capitalized terms used in this Agreement shall have the meanings set forth below.

Action ” shall mean any demand, action, claim, suit, countersuit, arbitration, inquiry, subpoena, case, litigation, proceeding or investigation (whether civil, criminal, administrative or investigative) by or before any court or grand jury, any Governmental Entity or any arbitration or mediation tribunal.

ADT Brand ” shall mean any Source Indicator to the extent comprising or including (i) the wordmark ADT in any style, design or font, (ii) the shape of an octagon in any shade of the color blue (in the case of (i) and (ii), including but not limited to the Source Indicators set forth on Schedule A ), (iii) the phrase ALWAYS THERE, and/or (iv) any one or more of the terms SAFEWATCH, SAFEWATCH CELLGUARD and VIDEOVIEW.


ADT Parent Group ” shall mean ADT Parent and any Person that is a direct or indirect Subsidiary of ADT Parent as of the Trademark Assignment Date.

ADT Residential Territory ” shall mean Canada, the United States, Puerto Rico and the U.S. Virgin Islands.

Affiliate ” shall mean, when used with respect to a specified Person, a 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 purposes of this definition, “control”, 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 or otherwise. It is expressly agreed that no Party or member of any Group shall be deemed to be an Affiliate of another Party or member of such other Party’s Group by reason of having one or more directors in common. For purposes of this Agreement, after the Trademark Assignment Date, no member of the ADT Parent Group shall be considered an “Affiliate” of Tyco, and no member of the Tyco Parent Group, other than any member that is a member of the ADT Parent Group, shall be considered an “Affiliate” of ADT Residential. “ Person ” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

Source Indicators ” shall mean trademarks, service marks, corporate names (including d/b/a, f/k/a and similar designations), trade names, domain names, logos, slogans, designs, trade dress and other designations of source or origin, together with the goodwill symbolized by any of the foregoing.

Subsidiary ” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting or capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (ii) any other partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

Trademark Assignment Date ” shall mean September 26, 2012.

Tyco Parent Group ” shall mean Tyco Parent and any Person that is a direct or indirect subsidiary of Tyco Parent as of the date hereof.

Tyco Territory ” shall mean any country, jurisdiction or territory outside of the ADT Residential Territory.

1.2 Terms Generally . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Unless the context otherwise requires, the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”.


Unless the context otherwise requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement. Capitalized terms used but not defined herein shall have the meaning provided for them in the ADT Distribution Agreement.

ARTICLE 2 - BRAND OWNERSHIP/USE

2.1 Ownership of ADT Brand .

(a) As between the Parties, as of the Trademark Assignment Date, ADT Residential shall be the sole owner of (i) the ADT Brand (including the registrations and applications for the ADT Brand set forth on Schedule B ) and (ii) the registrations and applications set forth on Schedule B other than those for the ADT Brand, in each case in the ADT Residential Territory. Tyco will not challenge or contest such rights or the validity or enforceability of the foregoing in the ADT Residential Territory. For clarity, in light of the Parties’ prior status as Affiliates, Tyco agrees that it and its Affiliates will not register, attempt to register or (subject to Sections 2.6 and 2.7) use the ADT Brand as or as part of any type of Source Indicator in the ADT Residential Territory, in connection with any type of goods or services, or the advertising, marketing or promotion thereof.

(b) As between the Parties, as of the Trademark Assignment Date, Tyco shall be the sole owner of (i) the ADT Brand (including the registrations and applications for the ADT Brand set forth on Schedule C ) and (ii) the registrations and applications set forth on Schedule C other than those for the ADT Brand, in each case in the Tyco Territory. ADT Residential will not challenge or contest such rights or the validity or enforceability of the foregoing in the Tyco Territory. For clarity, in light of the Parties’ prior status as Affiliates, ADT Residential agrees that it and its Affiliates will not register, attempt to register or (subject to Section 2.6) use the ADT Brand as or as part of any type of Source Indicator in the Tyco Territory, in connection with any type of goods or services, or the advertising, marketing or promotion thereof.

2.2 Current Secondary Brands .

(a) Tyco acknowledges that, after the Trademark Assignment Date, ADT Residential shall, as between the Parties, own all Source Indicators worldwide containing the terms set forth on Schedule D (the “ ADT Secondary Brands ”). ADT Residential acknowledges that Tyco currently owns multiple trademark registrations for the term “ADT” together with the ADT Secondary Brands. Tyco agrees that, after the Trademark Assignment Date, Tyco will not use or register or attempt to register (including in New Media) any ADT Secondary Brands (whether alone or together with an ADT Brand) as any type of Source Indicator in any country or jurisdiction, but at ADT Residential’s request and expense, Tyco will, to the fullest extent permitted by applicable Law: (i) maintain any existing registrations and prosecute all existing applications (and maintain any registrations issuing therefrom) containing the ADT Secondary Brands, in all applicable countries and jurisdictions, until ADT Residential obtains its own registration for the ADT Secondary Brands in such countries or jurisdictions, (ii) take all


appropriate actions, including abandoning or cancelling any such applications or registrations or granting consents to ADT Residential with respect thereto, to permit ADT Residential to obtain its own registrations for the ADT Secondary Brands in such countries or jurisdictions and (iii) take all appropriate and reasonable actions, at ADT Residential’s expense, to assist ADT Residential in enforcing the ADT Secondary Brands against third parties. For clarity, ADT Residential may use and register the ADT Secondary Brands outside of the ADT Residential Territory, but shall not use, register or attempt to register any ADT Secondary Brand together with the ADT Brand outside of the ADT Residential Territory.

(b) ADT Residential acknowledges that, after the Trademark Assignment Date, Tyco shall, as between the Parties, own all Source Indicators worldwide containing the terms set forth on Schedule E (the “ Tyco Secondary Brands ”). Tyco acknowledges that ADT Residential currently owns multiple trademark registrations for the term “ADT” together with the Tyco Secondary Brands. ADT Residential agrees that, after the Trademark Assignment Date, ADT Residential will not use or register or attempt to register (including in New Media) any Tyco Secondary Brands (whether alone or together with an ADT Brand) as any type of Source Indicator in any country or jurisdiction, but at Tyco’s request and expense, ADT Residential will, to the fullest extent permitted by applicable Law: (i) maintain any existing registrations and prosecute all existing applications (and maintain any registrations issuing therefrom) containing the Tyco Secondary Brands, in all applicable countries and jurisdictions, until Tyco obtains its own registration for the Tyco Secondary Brands in such countries or jurisdictions, (ii) take all appropriate actions, including abandoning or cancelling any such applications or registrations or granting consents to Tyco with respect thereto, to permit Tyco to obtain its own registration for the Tyco Secondary Brands in such countries or jurisdictions and (iii) take all appropriate and reasonable actions, at Tyco’s expense, to assist Tyco in enforcing the Tyco Secondary Brands against third parties. For clarity, Tyco may use and register the Tyco Secondary Brands outside of the Tyco Territory, but shall not use, register or attempt to register any Tyco Secondary Brand together with the ADT Brand outside of the Tyco Territory.

(c) The Parties acknowledge that the ADT Secondary Brands and Tyco Secondary Brands do include (and a Designated Secondary Brand in Section 2.4 may include) certain words that are found in the dictionary. A Party will not breach Section 2.2(a), 2.2(b) or 2.3, and 2.4, as applicable, by using any such words in a generic sense, so long as such Party does not use such words as a Source Indicator.

2.3 Shared Secondary Brands .

(a) Notwithstanding anything to the contrary in this Agreement, the Distribution or other Ancillary Agreements, the Parties acknowledge that the Parties have used, and may continue to use, secondary Source Indicators that are not included in the ADT Brand and, after the Trademark Assignment Date, wish to share use of the SECURITYLINK (as one or two words) and SELECT, SELECT LINK and SELECT FLEET MANAGER (collectively, the “SELECT Marks”) secondary Source Indicators, as set forth below (the SECURITYLINK and the SELECT Marks shall be collectively hereinafter referred to as the “Shared Secondary Brands”).


(b) After the Trademark Assignment Date, ADT Residential may use, attempt to register and register (including in New Media), in the ADT Residential Territory, the Shared Secondary Brands alone , together or in association with any ADT Brand, ADT Residential Source Indicator and/or word, so long as such SECURITYLINK mark or SELECT Mark, as the case may be, is not identical or confusingly similar to a Shared Secondary Brand registered or applied-for by Tyco or its Affiliates in the ADT Residential Territory. Accordingly, ADT Residential may use either or both Shared Secondary Brands alone (as one or more words) provided such Shared Secondary Brands are used in association with an ADT Residential Source Indicator (e.g., a SECURITYLINK tab on its or its Affiliates websites, in ADT Residential marketing materials). For the avoidance of doubt, the Parties acknowledge and agree that a mark comprised of ADT SECURITYLINK, ADT SECURITY LINK or SECURITYLINK with an ADT Source Indicator, is not identical or confusingly similar to the SECURITYLINK marks registered by Tyco or its Affiliates.

(c) After the Trademark Assignment Date, Tyco may use, attempt to register and register (including in New Media), worldwide, the Shared Secondary Brands alone, or together or in association with any Tyco Source Indicator and/or word, so long as such SECURITYLINK or SELECT Mark, as the case may be, is not identical or confusingly similar to a Shared Secondary Brand registered or applied-for by ADT Residential or its Affiliates in the ADT Residential Territory. Accordingly, Tyco may use either or both Shared Secondary Brands alone (as one or more words) provided such Shared Secondary Brands are used in association with a Tyco Source Indicator (e.g., a SELECT tab on its or its Affiliates websites, in Tyco marketing materials). For the avoidance of doubt, the Parties acknowledge and agree that a mark comprised of TYCO SELECT, TYCO SELECT LINK, TYCO SELECT FLEET MANAGER or SELECT together with a Tyco Source Indicator, is not identical or confusingly similar to the ADT SELECT and ADT SELECT LINK marks registered by ADT Residential or its Affiliates.

(d) At a Party’s request and expense, the other Party agrees to, to the fullest extent permitted by applicable Law: (i) take all appropriate actions, including granting consents to the requesting Party with respect thereto, to permit the requesting Party to obtain its own registrations for the Shared Secondary Brands as permitted under this Agreement; and (ii) cooperate and take all appropriate and reasonable actions, at the requesting Party’s expense, to assist the requesting Party in enforcing the Shared Secondary Brands against third parties not authorized by either Party or their Affiliates. In the event that, for any reason whatsoever, only one of the Parties is permitted by the competent administrative jurisdiction to register its Shared Secondary Brand in the ADT Residential Territory, the Party whose trademark is so registered shall not challenge, oppose, impede or hinder the other Party’s ownership and/or use of such Shared Secondary Brand in accordance with this Agreement.

(e) The Parties intend and agree that their permitted uses of their respective Shared Secondary Brands as contemplated in this Section 2.3, will not create a likelihood of confusion among consumers in the ADT Residential Territory. After the Trademark Assignment Date, the Parties agree to cooperate with each other as may be reasonably necessary to minimize or eliminate any confusion or potential confusion that may arise as a result of the use of the Shared Secondary Brands in the ADT Residential Territory.


(f) For the avoidance of doubt, none of the rights conferred in this Section 2.3 grants either Party the right to infringe the other Party’s legal rights in any manner.

2.4 Future Secondary Brands . The Parties acknowledge that the Parties have used major secondary Source Indicators that are not included in the ADT Brand (e.g., PULSE) and may, after the Trademark Assignment Date, wish to adopt as major secondary trademarks one or more new words or terms that are not included in the definition of “ADT Brand” herein. Given the Parties’ prior status as Affiliates, the Parties acknowledge the need for a Party to restrict its use of certain new, significant secondary Source Indicators of the other Party beyond the boundaries set by trademark Law for use by an unrelated third party. Therefore, each Party has the right, during the term of this Agreement, to provide written notice to the other Party of a maximum of fifteen (15) new secondary Source Indicators as proposed “ Designated Secondary Brands ”. If (i) the notifying Party owns a registration or has filed an application to register such new secondary Source Indicator (either standing alone or in connection with the term “ADT” or the phrase “ALWAYS THERE”) in a country or jurisdiction in such Party’s territory, (ii) such secondary Source Indicator qualifies for registration on a standalone basis (e.g., it is not a generic or descriptive term such as “security,” “protection,” “alarm” or “supervision”) and (iii) such secondary Source Indicator has not been used as a material Source Indicator by the other Party or its Affiliates in any territory in the previous seven (7) years, then such secondary Source Indicator will be deemed a “Designated Secondary Brand” of that notifying Party, effective thirty (30) days after the above notice, unless the other Party provides written objection to the designating Party before such effective date, claiming that such secondary Source Indicator does not meet all of the above criteria. If the other Party makes such timely objection, the provisions of Section 8.9 shall apply to resolve the issue. Once a new secondary Source Indicator becomes a Designated Secondary Brand of a Party, the other Party shall not use, register or attempt to register it (including in New Media) as any type of Source Indicator in any country, jurisdiction or territory, in connection with any goods or services, whether standing alone or in connection with an ADT Brand. For example, if Tyco or ADT Residential, as the case may be, adopts ADT SUPERNOVA or SUPERNOVA as a Designated Secondary Brand, ADT Residential or Tyco, as the case may be, may not use SUPERNOVA (either alone or in combination with the term “ADT”, the phrase “ALWAYS THERE”, TYCO or other Source Indicators) in connection with any goods or services in any country or jurisdiction in its territory. For clarity, the provisions of this Section 2.4 do not modify Sections 2.1 or 2.2 and/or the Parties’ rights under applicable trademark Law with respect to any new secondary Source Indicator that is not a Designated Secondary Brand.

2.5 No Restriction on Competition . For clarity, without limiting a Party’s rights under Section 2.6, nothing in this Agreement is intended to restrict either Party from operating any business in any territory under a Source Indicator that is not otherwise restricted under the terms of this Agreement and that does not infringe the other Party’s legal rights.

2.6 No Other Restrictions . Notwithstanding Section 2.1, each Party may (i) use the term “ADT” at all times after the Trademark Assignment Date in any territory (a) in plain text and in a neutral manner, not as a trademark, to describe the history of the ADT business and (b) as required by applicable Law, and (ii) use the ADT Brand on (a) archival copies of legal documents, business correspondence and similar items that cannot be modified or have the ADT Brand covered or deleted therefrom, (b) printed or hard copy corporate documents and other


materials describing the worldwide operations of each Party’s and its Affiliates’ businesses, provided that such materials shall not reasonably suggest or convey that such Party or its Affiliates are offering goods or services under the ADT Brand in the other Party’s territory, and (c) printed or hard copy corporate or promotional materials provided to actual or potential customers outside a Party’s territory, solely to promote or advertise such Party’s or its Affiliates’ businesses within its respective territory. For clarity, (x) neither Party is required hereunder to use the ADT Brand at any time, and any such non-use will not affect the other Party’s covenants hereunder, subject to Section 5.2 and (y) nothing in this Agreement is intended to limit or restrict each Party’s right to assert its rights under applicable trademark Law against the other Party, with respect to the other Party’s use or registration of any ADT Brand, ADT Secondary Brand, Tyco Secondary Brand, Shared Secondary Brand, or Designated Secondary Brand that is not expressly permitted by this Agreement.

2.7 Transitional License . ADT Residential, on behalf of itself and its Affiliates, hereby grants Tyco and its Affiliates a transitional, non-exclusive, non-transferable and royalty-free license to use the ADT Brand in the ADT Residential Territory, solely in connection with any existing business that Tyco has previously operated under the ADT Brand in the ADT Residential Territory, solely in a manner that is both consistent with the nature and quality of Tyco’s past practice and in accordance with the sunset provisions in Schedule F hereto. Tyco acknowledges and agrees that this transitional license expressly excludes the right, after the Trademark Assignment Date, to grant any third party any new sublicense to use the ADT Brand in the ADT Residential Territory. All rights not expressly set forth in this Section 2.7 are expressly reserved by ADT Residential.

2.8 Licensees/Affiliates . Each Party may freely license the ADT Brand within its respective territory, provided that a Party is liable hereunder for any action or inaction by a licensee that would breach this Agreement if committed by a Party. Neither Party shall license or authorize a licensee to take any action that would violate this Agreement if committed by a Party. A Party’s obligations hereunder shall extend to its Affiliates as if they were Parties hereto.

ARTICLE 3 - PARTIES’ OBLIGATIONS

3.1 Quality Control . Each Party shall use the ADT Brand solely: (i) in good faith, in a dignified manner and in accordance with good trademark practice in the applicable territory; (ii) in a manner that does not harm or jeopardize the value of the ADT Brand or its associated goodwill; and (iii) in connection with activities, products, and services that maintain at all times the high levels of quality associated with Tyco Parent’s and its Affiliates’ use of the ADT Brand prior to the Trademark Assignment Date. Each Party agrees that the other Party’s use of the ADT Brand directly or through its Affiliates as of and prior to the Trademark Assignment Date complies with the foregoing. After the Trademark Assignment Date, a Party shall not take any action (and shall not engage in any inaction) that materially harms or jeopardizes (or could reasonably be expected to materially harm or jeopardize) the value, validity, reputation or goodwill of the ADT Brand.

3.2 Compliance With Laws . Each Party shall, in connection with any products or services offered under the ADT Brand: (i) comply with all applicable Laws (including all Laws relating to data protection, security, privacy and personal or sensitive


information); (ii) employ at all times commercially reasonable security, system, content and data protection measures consistent with the standards of the information security industry (including, in respect of any subscriber business offered under the ADT Brand, those data protection standards set forth on Schedule G hereof and/or the current ISO 27001 standard); (iii) engage reputable, industry-recognized outside vendors to perform its security, system, content and data protection services as necessary for its business operations and to meet its obligations under this Agreement; and (iv) use all notices and legends required by applicable Law so as to preserve and maintain the validity of and each Party’s rights in the ADT Brand. Each Party shall have the right, upon one (1) month prior written notice, to inspect and audit the other Party’s relevant records and systems, solely as necessary to determine such Party’s compliance with subsections (ii) and (iii) above and in the event of a Security Breach (as defined below), provided that such inspection and audit is at the inspecting and auditing Party’s expense, during regular business hours, subject to reasonable, mutually-agreed confidentiality arrangements and conducted by an independent third party.

3.3 Security Breach . A Party will notify the other Party, as promptly as possible under the circumstances and without unreasonable delay, of any Security Breach involving any Protected Data (as defined on Schedule G hereof). As used herein, “ Security Breach ” is defined as any event involving a known, actual, or suspected compromise of the security, confidentiality or integrity of (i) the Protected Data (as defined on Schedule G hereof) of more than 5,000 customers of a Party or (ii) the video of the premises of one or more customers of a Party, including but not limited to any unauthorized access or use of such video, except where such Security Breach is due to the sole fault of a customer. The Party undergoing a Security Breach will use commercially reasonable efforts to contain such a breach and provide the other Party with a detailed description of the Security Breach, the type of data that was the subject of the Security Breach and the identity of each affected business (or person, to the extent permitted by Law), promptly after such information can be collected or otherwise becomes available. The Party undergoing the Security Breach agrees to take action immediately, at its own expense, to investigate the Security Breach, to take all commercially reasonable actions to identify, prevent, and mitigate the effects of any such Security Breach, and to carry out any recovery or other action (e.g., mailing statutory notices, providing credit monitoring services) necessary to remedy the Security Breach. The Party undergoing the Security Breach shall make commercially reasonable efforts to give the other Party a reasonable opportunity to consult in advance on any filings, communications, notices, press releases or reports related to any Security Breach, but the final decision on their contents shall belong to the Party undergoing the Security Breach. The Parties agree that any Person (to the extent engaging in a subscriber business) or subscriber business purchased or acquired by a Party via equity or asset sale or otherwise shall (x) comply with the standards set forth in Schedule G within one (1) year from such purchase or acquisition and (y) to the extent such Person does not offer services related to video surveillance that involves storing such video on such Person’s servers or other systems directly or through a vendor (“ Hosted Video ”) as of the date of such purchase or acquisition, not offer Hosted Video in any subscriber business until such time as such Person complies with the standards set forth on Schedule G .

3.4 Approval . Neither Party shall be required to seek approval from the other Party for any advertising, promotional or marketing materials or other uses of the ADT Brand in its respective territory.


3.5 Enforcement . Each of Tyco and ADT Residential has the sole right to assert and enforce its rights in the ADT Brand against third parties in the Tyco Territory and the ADT Residential Territory, respectively. Each Party shall use commercially reasonable efforts to notify the other Party when the first Party or its Affiliates commences any offensive or defensive litigations, arbitrations, cancellation, invalidity or similar proceedings with respect to the ADT Brand. For clarity, the above obligation does not apply to “cease and desist” letters, routine Office Actions or oppositions or other non-public or immaterial matters. Absent a later agreement to the contrary, the Party bringing any infringement, misappropriation, dilution, tarnishment, or other unauthorized use (“ Infringement ”) Action against a third party shall control its prosecution and settlement and pay all costs and expenses associated therewith, and shall have the sole right to any and all damages, settlements and proceeds received in connection therewith. Any joint prosecution of an Infringement Action shall be governed by a later agreement between the Parties. The Parties shall cooperate in good faith in all Actions brought pursuant to this Section 3.5 (including by assisting the requesting Party to claim that the ADT Brand is famous or distinctive in the requesting Party’s territory, based upon use in the non-requesting Party’s territory), and shall keep each other informed of all material developments relating thereto.

3.6 Cooperation . Each Party agrees to cooperate in good faith to avoid and correct any potential or actual consumer confusion over (i) the proper owner of the ADT Brand in any particular territory and (ii) the current and past relationship between the Parties.

ARTICLE 4 - INTERNET/NEW MEDIA

4.1 Internet/New Media Access . The Parties acknowledge the worldwide accessibility of Internet websites, social media, mobile applications and other forms of new, electronic or digital media (collectively, “ New Media ”) and agree that the ability of persons to access New Media websites, pages, channels and other venues from outside such Party’s applicable territory shall not violate Section 2.1, provided that such Party complies with its obligations in this Article 4.

4.2 ADT.com . During the Non-Competition Period (as that term is defined in the ADT Distribution Agreement), ADT Residential shall direct Internet traffic that is identifiable through its IP address as coming from outside of the ADT Residential Territory and is directed to the website located at adt.com to a mutually agreed landing page (the “ Landing Page ”) within the adt.com website, which shall be substantially similar to the design, language and features indicated on Schedule H hereof (and any mutually agreed revisions thereto), present content of each Party in approximately the relative proportions and prominence shown on Schedule H , and enable Internet users to visit any ADT website in any country or jurisdiction, including those websites within the ADT Residential Territory (the “ ADT Residential Sites ”), including by utilizing cookies (subject to applicable user consents) to enable automatic direction of return-users to their applicable countries. Notwithstanding the foregoing, in the event that the Landing Page has a material adverse effect, including a material impact on lead flow, on any ADT Residential Site, ADT Residential shall use commercially reasonable efforts to remedy the situation as soon as possible, but may suspend operation of the Landing Page and direct all Internet users to the general home page of adt.com until such material adverse effect is remedied to the mutual satisfaction of both Parties. For clarity, only Internet traffic that demonstrably originates outside the ADT Residential Territory will be directed to the Landing Page, and all other Internet traffic (e.g., if access to an IP address is blocked such that it is not clear where an Internet user is located) will route to adt.com.


4.3 Domain Names/Websites .

(a) As between ADT Residential and Tyco, ADT Residential or one of its Affiliates has the sole right to register (i) the domain names (including adt.com and adt.ca) that are listed in Schedule I hereto and (ii) any new domain names containing the ADT Brand that end in any ccTLD for any country or jurisdiction within the ADT Residential Territory or in any current or new gTLD that is targeted exclusively to one or more countries or jurisdictions within the ADT Residential Territory (e.g., .northamerica). As between ADT Residential and Tyco, Tyco or one of its Affiliates has the sole right to register (x) the domain names that are listed in Schedule J hereto and (y) any new domain names containing the ADT Brand that end in any ccTLD for any country or jurisdiction within the Tyco Territory or in any current or new gTLD that is targeted exclusively to one or more countries or jurisdictions within the Tyco Territory (e.g., .asia). Neither Party shall register any domain name pursuant to Section 4.3(a)(ii) or 4.3(a)(y), as applicable, that contains within the secondary domain name a term designating the territory of the other Party. For example, ADT Residential may not register adtasia.ca, and Tyco may not register adtusa.jp.

(b) As between the Parties, each Party shall have the sole right to register all secondary domain names that (i) contain the ADT Brand ; (ii) end in .com, .biz, .net, .info, .org or any other current or new gTLD that is not targeted exclusively to one Party’s territory (e.g., .ADT, .me, .security) (a “ Common gTLD ”) and (iii) contain a term that clearly indicates a website targeted exclusively towards such Party’s applicable territory ( e.g ., adtasia.com or adtcalifornia.biz).

(c) After the Trademark Assignment Date, if a Party wishes to register a domain name with a Common gTLD that does not contain a term that clearly indicates a website targeted exclusively towards such Party’s applicable territory (e.g., adtbusiness.com, safewatchsecurity.com) (a “ Common Domain ”), it shall notify the other Party promptly upon making such registration. If the notified Party does not respond within thirty (30) days of such notice that such Party also wishes to use such Common Domain, then the notifying Party shall be the sole owner of such Common Domain. If the notified Party timely responds that it also wishes to use such Common Domain, then the Parties will cooperate in good faith to establish reasonable guidelines for the shared use of such Common Domain. The registering Party shall not use any Common Domain in connection with an active website until (i) if the other Party does not timely respond that it wishes to use such Common Domain, the expiration of the above thirty (30) day period; or (ii) if the other Party timely responds that it wishes to use such Common Domain, the resolution of the situation. For example, the Parties may in their discretion agree that the website adtbusiness.com must be linked to a common landing page that will display a map of the world and direct customers’ inquiries to each Party’s territory.

(d) A Party shall not use any ADT Brand in New Media (including as a domain name), directly or indirectly, if a material purpose of such use is to target consumers outside its respective territory. By way of illustration, but not of limitation, a Party may link between its business websites inside and outside its respective territory in the manner shown in


Schedule K . During the Non-Competition Period, a Party shall not use any ADT Brand as an Internet key word or similar method (or buy or bid to acquire any of the foregoing) to increase the rankings for its own websites by Internet search engines (or similar future devices and activities in other New Media) in the other Party’s territory. For clarity, nothing in this Agreement prevents a Party from asserting its trademark rights against any activity described in the foregoing sentence by the other Party after the Non-Competition Period.

4.4 New gTLD Registries . After the Trademark Assignment Date, if a Party or one of its Affiliates wishes to become a registry for a Common gTLD that clearly relates to the goods and services currently offered under the ADT Brand (e.g., .ADT or .security) (an “ ADT gTLD ”), it shall notify the other Party in advance. If the notified Party does not respond within thirty (30) days (or a shorter period specified in such notice, if reasonably justified under the circumstances) that such Party also wishes to use such ADT gTLD, then the notifying Party may become a registry for such ADT gTLD in its own name, subject to the domain name restrictions in this Article 4. If the notified Party timely responds that it also wishes to become a registry for such ADT gTLD, then the Parties will agree in good faith on how the Parties may serve jointly or jointly benefit from such registry.

4.5 Third Party New Media .

(a) As between the Parties, ADT Residential has the sole right to use and register the ADT Brand in third-party New Media pages, channels and venues (or sections thereof) that clearly designate countries or jurisdictions within the ADT Residential Territory (e.g., an “ADT Canada” page on Facebook, channel on YouTube or @adtusa on Twitter), and any new third party New Media page, channel or venue (or section thereof) in the control of (or operated with the written approval of) ADT Residential or its Affiliates (e.g., not an unauthorized “fan” site or complaints site) must contain and display such country or jurisdiction designation. As between the Parties, Tyco has the sole right to use and register the ADT Brand in third-party New Media pages, channels and venues (or sections thereof) that clearly designate a country or jurisdiction within the Tyco Territory (e.g., an “ADT Asia” page on Facebook, channel on YouTube or @adtfrance on Twitter) and any new third-party New Media page, channel or venue (or section thereof) in the control of (or operated with the written approval of) Tyco or its Affiliates (e.g., not an unauthorized “fan” site or complaints site) must contain and display such country or jurisdiction designation. The Parties will comply with the procedures on Schedule L with respect to certain uses of the ADT Brand in certain existing third-party New Media, and shall use commercially reasonable efforts to include country or jurisdiction designations with all other existing third-party New Media pages, channels and venues that are in the control of either Party or its Affiliates and use the ADT Brand.After the Trademark Assignment Date, if a Party wishes to use or register the ADT Brand for any new third party New Media page, channel or venue (or section thereof) that is not targeted to any specific country or jurisdiction (e.g., a general ADT page on Tumblr.com) (a “ Common Page ”), it shall notify the other Party promptly upon making such registration. If the notified Party does not respond within thirty (30) days of such notice that such Party also wishes to use such Common Page, then the notifying Party shall be the sole owner of such Common Page. If the notified Party timely responds that it also wishes to use such Common Page, then the Parties will cooperate in good faith to establish reasonable guidelines for the shared use of all Common Pages. The registering Party shall not use any Common Page in connection with a new third-party


New Media page, channel or venue (or section thereof) until (i) if the other Party does not timely respond that it wishes to use such Common Page, the expiration of the above thirty (30) day period; or (ii) if the other Party timely responds that it wishes to use such Common Page, the resolution of the situation.

(b) A non-exhaustive list of the Parties’ current uses of the ADT Brand in third party New Media is set forth on Schedule L . Within thirty (30) days of the Trademark Assignment Date, the Parties will take the actions on Schedule M to allocate use of certain existing New Media, and to deliver to the proper Party all information accessible to either Party via such New Media and in existence as of the Trademark Assignment Date.

ARTICLE 5 - TERM/ABANDONMENT

5.1 Term . The term of this Agreement (“ Term ”) commences on the Trademark Assignment Date and lasts in perpetuity. Without limiting the Parties’ other rights and remedies hereunder, the Parties agree that termination is not an available remedy for either Party’s breach of this Agreement.

5.2 Abandonment . If a Party (the “ Abandoning Party ”) intends to abandon (or is imminently about to abandon, for any reason) its use of all of the ADT Brands included in subsection (i) of the definition of “ADT Brand” (including logos) in any country or jurisdiction in its territory listed in Schedule M hereof, the Abandoning Party shall notify the other Party in advance in writing. If the other Party becomes aware that the Abandoning Party is about to engage in such abandonment in any country or jurisdiction listed in Schedule M hereof, the other Party may notify the Abandoning Party in writing. Regardless of which Party sends the first notice, at the written request of the other Party, the Abandoning Party will, at its option: (x) take all actions necessary to prevent such abandonment, solely for the time period requested by the other Party; and/or (y) transfer its affected trademark rights (including registrations) in such country or jurisdiction to the other Party. The Abandoning Party hereby consents to the other Party’s taking all actions (including registering the ADT Brand) in the other Party’s or the Abandoning Party’s name (at the other Party’s expense), if the Abandoning Party does not perform its obligations in subsection (x) or (y) in a sufficient timely manner to prevent such abandonment. If, pursuant to this Section 5.2, the other Party succeeds to the Abandoning Party’s rights in the ADT Brand in any country or jurisdiction, the other Party will no longer be bound by Section 2.1(a) or 2.1(b), as applicable, with respect to the ADT Brand in such country or jurisdiction. This Section 5.2 does not require any Party to initiate any new uses or registrations for the ADT Brand in any country or jurisdiction. For clarity, the provisions of this Section 5.2 do not apply to the abandonment of any ADT Secondary Brand, Tyco Secondary Brand, Shared Secondary Brand, Designated Secondary Brand or the ADT Brands in subsections (ii)-(iv) of the definition of “ADT Brand”.

ARTICLE 6 - REPRESENTATIONS AND WARRANTIES

6.1 By Each Party . Each Party represents and warrants to the other Party that: (i) the warranting Party has full power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement and (ii) this Agreement has been duly executed and delivered by the warranting Party and, assuming the due execution and delivery of this Agreement by both Parties, constitutes a valid and binding agreement of the warranting Party enforceable against the warranting Party in accordance with its terms.


6.2 Disclaimer . E XCEPT AS EXPRESSLY SET FORTH IN S ECTION  6.1 , EACH P ARTY DISCLAIMS ANY REPRESENTATIONS AND WARRANTIES , EITHER EXPRESS OR IMPLIED , WITH RESPECT TO THIS A GREEMENT AND THE ADT B RAND , INCLUDING ANY WARRANTIES OF TITLE , OWNERSHIP , VALUE , SUITABILITY , CONDITION , MERCHANTABILITY , FITNESS FOR USE OR NON - INFRINGEMENT OF THIRD PARTY RIGHTS .

6.3 Tyco Parent and ADT Parent Guaranty . Tyco Parent hereby unconditionally and irrevocably guarantees to ADT Residential the performance in full by Tyco and its Affiliates of their obligations under this Agreement. ADT Parent hereby unconditionally and irrevocably guarantees to Tyco the performance in full by ADT Residential and its Affiliates of their obligations under this Agreement.

ARTICLE 7 - ASSIGNMENT

7.1 Assignment .

(a) Permitted Assignments of Rights and Delegation of Obligations . Neither Party may assign this Agreement or the rights under this Agreement, or delegate the obligations under this Agreement without the prior written consent of the other Party and except as provided in this Section 7.1. A Party must assign this Agreement and its rights and delegate its obligations hereunder in their entirety to any Person who acquires or purchases the assigning Party’s entire interest in the rights related to the ADT Brand governed by this Agreement. If any Person acquires or purchases less than the assigning Party’s entire interest in the rights related to the ADT Brand governed by this Agreement, the assigning Party must delegate the corresponding obligations, but may not assign the rights, under this Agreement. The rights of the other Parties under this Agreement shall continue in full force and effect against the permitted assignee with respect to such delegated obligations. The Parties intend and agree that the obligations under this Agreement are encumbrances upon and inseparable from the rights related to ownership of the ADT Brand. Any transaction that purports to enact such separation shall be null and void at the outset. For purposes of this Section 7.1(a), an assignment shall include a change of control, merger, reorganization (in bankruptcy or otherwise), assumption in bankruptcy or equity and asset sale, regardless of whether such transaction is considered an “assignment” under governing law.

(b) Conditions on Assignment . For any assignment of this Agreement, the assignee is deemed to assume automatically (but nonetheless must assume in writing) the assigning Party’s obligations under this Agreement in writing.

(c) Conditions on Delegation. For any delegation of the obligations under this Agreement, the assignee with respect to such obligations is deemed to assume automatically (but nonetheless must assume in writing) the delegating Party’s obligations under this Agreement in writing. A delegation of obligations to a permitted assignee pursuant to this Section 7.1 shall release the assignor and its parent (pursuant to Section 6.3) with respect to such delegated obligations prospectively, but it shall not release the assignor or its parent from any breach of those obligations preceding the date of the delegation to the permitted assignee.


(d) Assignment to Affiliates . For the avoidance of doubt, Section 6.3 of this Agreement shall remain in full force and effect in the event either Party assigns this Agreement, or any rights or delegates any obligations hereunder, in connection with the acquisition or purchase of any or all of its interests in the ADT Brand governed by this Agreement by an Affiliate of the assigning Party.

7.2 Effect of Assignment . Any purported transaction in violation of this Section 7 shall be null and void ab initio and of no force and effect. In the event of a permitted assignment, this Agreement shall be binding upon and inure to the benefit of the Party’s permitted successors and assigns. If the assigning Party assigns this Agreement and its rights and delegates its obligations hereunder, this Agreement shall no longer bind the assigning Party or its parent (pursuant to Section 6.3), but it shall not release the assigning Party or its parent from any breach of the Agreement obligations preceding the date of the assignment to the permitted assignee.

ARTICLE 8 - MISCELLANEOUS

8.1 Notice . All notices, requests, claims, demands and other communications under this Agreement shall be in English, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile 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 8.1):

if to Tyco, to:

Tyco International Ltd.

c/o Tyco International (US) Inc.

9 Roszel Road

Princeton, New Jersey

Attn: General Counsel

Facsimile: (609) 720-4208

if to ADT Residential, to:

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida 33431

Attn: General Counsel

Facsimile: (561) 431-4624

8.2 Waivers and Consents . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish


that Party’s right to demand strict performance thereafter of that or any other provision hereof. Any consent required or permitted to be given by any Party to the other Party under this Agreement shall be in writing and signed by the Party giving such consent and shall be effective only against such Party.

8.3 Amendments . This Agreement may not be modified or amended except by an agreement in writing signed by a duly authorized representative of each Party.

8.4 No Third Party Beneficiaries . Except as specifically provided in this Agreement, this Agreement shall not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns.

8.5 Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

8.6 Exhibits and Schedules . The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

8.7 Governing Law . This Agreement shall be governed by and construed in accordance with the Laws of the State of New York. Notwithstanding the foregoing, any dispute related to a breach of this Agreement that materially harms or jeopardizes the ownership, validity, value or goodwill of the ADT Brand in the non-breaching Party’s applicable territory shall be governed by the governing Laws and practices in such territory.

8.8 Counterparts . This Agreement may be signed in counterparts and may be delivered by facsimile or other electronic transmission.

8.9 Dispute Resolution . If a Party believes that the other Party has committed a breach of this Agreement, the non-breaching Party may notify the other Party in writing. Representatives of the Parties shall then use their reasonable best efforts to resolve the dispute within thirty (30) days (or a mutually-agreed extension). If the dispute is not timely resolved, members of the Parties’ senior management shall use their reasonable best efforts to resolve the dispute within thirty (30) additional days (or a mutually-agreed extension). If such persons cannot timely resolve such dispute, then the Parties’ CEOs shall use their reasonable best efforts to resolve the dispute within thirty (30) additional days (or a mutually-agreed extension). If the CEOs cannot timely resolve such dispute, the Parties shall be entitled to seek relief through litigation or otherwise. Notwithstanding the foregoing, the above prior resolution periods shall not be mandatory if a Party (the “ Notifying Party ”) reasonably believes that any action taken by the other Party is reasonably likely to materially harm or materially jeopardize the ADT Brand in the Notifying Party’s respective territory, and in such circumstances, the Notifying Party may immediately, upon notice to the other Party, seek relief through litigation or otherwise.

8.10 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.


8.11 Bankruptcy . The Parties intend and agree that this Agreement intends primarily to allocate the Parties’ ownership rights, as of the Trademark Assignment Date, with respect to the Source Indicators governed thereby, and that all of the Parties’ covenants constitute clarifications, limitations or protections of such ownership rights. Therefore, if either Party files for bankruptcy, the Parties intend and agree that this Agreement shall be deemed an encumbrance on the Source Indicators governed hereby. Each Party hereby stipulates, acknowledges and agrees that this Agreement is integral to, and integrated with, the Source Indicators, and is not a severable undertaking that may be assumed, assigned or rejected pursuant to 11 U.S.C. § 365 independently from the interests in the Source Indicators. Each Party hereby further stipulates, acknowledges and agrees that this Agreement is not intended to be, nor shall it be construed as, an “executory contract” within the meaning of 11 U.S.C. § 365 that is independent of or severable from the interests in the Source Indicators. Accordingly, this Agreement may not be assumed or assigned in bankruptcy except as provided under Section 7.1 hereof.

8.12 Specific Performance . Each Party acknowledges and agrees that the other Party would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any breach of this Agreement could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which any Party may be entitled at law or in equity, each Party shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement, without posting any bond or other undertaking.

8.13 Further Assurances . The Parties agree to execute such further documents and perform such further actions as may be reasonably requested by the other Party to evidence and effectuate further the purposes and intents set forth in this Agreement.


IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

ADT SERVICES GMBH
By:  

/s/ James Graham

  Name:   James Graham
  Title:   Managing Director
ADT US HOLDINGS, INC.
By:  

/s/ N. David Bleisch

  Name:   N. David Bleisch
  Title:   Vice President
Solely for purposes of Section 6.3 herein,
TYCO INTERNATIONAL LTD.
By:  

/s/ Andrea Goodrich

  Name:   Andrea Goodrich
  Title:   Authorized Signatory
Solely for purposes of Section 6.3 herein,
THE ADT CORPORATION
By:  

/s/ N. David Bleisch

  Name:   N. David Bleisch
  Title:   Vice President

Exhibit 10.4

TYCO INTERNATIONAL LTD.

2012 STOCK AND INCENTIVE PLAN

ARTICLE I

PURPOSE

1.1  Purpose.  The purposes of this Tyco International Ltd. 2012 Stock and Incentive Plan (the “Plan”) are to promote the interests of Tyco International Ltd. (and any successor thereto) by (i) aiding in the recruitment and retention of Directors and Employees, (ii) providing incentives to such Directors and Employees by means of performance-related incentives to achieve short-term and long-term performance goals, (iii) providing Directors and Employees an opportunity to participate in the growth and financial success of the Company, and (iv) promoting the growth and success of the Company’s business by aligning the financial interests of Directors and Employees with that of the other stockholders of the Company.

1.2  Effective Date . The effective date of this Plan is October 1, 2012.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms have the following meanings, unless another definition is clearly indicated by particular usage and context:

Acquired Company ” means any business, corporation or other entity acquired by the Company or any Subsidiary.

“Acquired Grantee ” means the grantee of a stock-based award of an Acquired Company and may include a current or former Director of an Acquired Company.

Award ” means any form of incentive or performance award granted under the Plan, whether singly or in combination, to a Participant by the Committee pursuant to any terms and conditions that the Committee may establish and set forth in the applicable Award Certificate. Awards granted under the Plan may consist of:

 

  (a) Stock Options ” awarded pursuant to Section 4.3;

 

  (b) Stock Appreciation Rights ” awarded pursuant to Section 4.3;

 

  (c) Short-Term Performance Awards ” awarded pursuant to Section 4.4;

 

  (d) Long-Term Performance Awards ” awarded pursuant to Section 4.5;

 

  (e) Other Stock-Based Awards ” awarded pursuant to Section 4.6;

 

  (f) Nonemployee Director Awards ” awarded pursuant to Section 4.7; and

 

  (g) Substitute Awards ” awarded pursuant to Section 4.8.

Award Certificate ” means the document issued, either in writing or an electronic medium, by the Committee to a Participant evidencing the grant of an Award.


Board ” means the Board of Directors of the Company.

Cause ” means misconduct that is willfully or wantonly harmful to the Company or any of its Subsidiaries, monetarily or otherwise.

Change in Control ” means the first to occur of any of the following events:

(a) any “person” (as defined in Section 13(d) and 14(d) of the Exchange Act), excluding for this purpose, (i) the Company or any Subsidiary or (ii) any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities of the Company representing more than 30 percent of the combined voting power of the Company’s then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company; or

(b) persons who, as of the Effective Date of the Plan constitute the Board (the “Incumbent Directors”) cease for any reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof, provided that any person becoming a director of the Company subsequent to the Effective Date of the Plan shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least 50 percent of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened proxy contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

(c) consummation of a reorganization, merger or consolidation or sale or other disposition of at least 80 percent of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own directly or indirectly more than 50 percent of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities of the Company; or

(d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

Change in Control Termination ” shall mean a Participant’s Involuntary Termination that occurs during the period beginning 60 days prior to the date of a Change in Control and ending two years after the date of such Change in Control.

Code ” means the United States Internal Revenue Code of 1986, as amended.

Committee ” means the Compensation and Human Resources Committee of the Board or any successor thereof or any subcommittee of the Board to which the Board has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock ” means the common stock of the Company and such other securities or property as may become subject to Awards pursuant to an adjustment made under Sections 5.3 and 5.4 of the Plan.

 

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Company ” means Tyco International Ltd., or any successor thereto.

Consultant ” means an individual who provides bona fide services to the Company or any Subsidiary, other than an Employee or Director.

Deferred Stock Unit ” means a Unit granted under Section 4.6 or 4.7 to acquire Shares upon Termination of Employment or Termination of Directorship, subject to any restrictions that the Committee, in its discretion, may determine.

Director ” means a member of the Board.

Disabled ” or “ Disability ” means the inability of the Director or Employee to perform the material duties pertaining to such Director’s directorship or such Employee’s employment due to a physical or mental injury, infirmity or incapacity for 180 days (including weekends and holidays) in any 365-day period. The existence or nonexistence of a Disability shall be determined by an independent physician selected by the Company and reasonably acceptable to the Director or Employee.

Dividend Equivalent ” means an amount equal to the cash dividend or the Fair Market Value of the stock dividend that would be paid on each Share underlying an Award if the Share were duly issued and outstanding on the date on which the dividend is payable.

Effective Date ” means October 1, 2012.

Employee ” means any individual who performs services as an officer or employee of the Company or a Subsidiary (including any Director who is also an Employee).

Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

Exercise Price ” means the price of a Share, as fixed by the Committee, which may be purchased under a Stock Option or with respect to which the amount of any payment pursuant to a Stock Appreciation Right is determined.

Fair Market Value ” means, on a given date, (i) the closing sale price of the Shares on the New York Stock Exchange (NYSE) Composite Tape on such date (or the next preceding day if no sales were reported for such date), or (ii) if the Shares are not listed or admitted on the NYSE, but are traded on another national securities exchange or in an over-the-counter market, the last sales price on such date, or if no last sales price is reported, the average of the closing bid and ask price for the Shares on such date (or the next preceding day if no such information was reported for such date) or (iii) if the Shares are neither listed on a national securities exchange nor traded in an over-the-counter market, a price determined by the Committee by the reasonable application of a reasonable valuation method.

Fair Market Value Stock Option ” means a Stock Option with an Exercise Price that is fixed by the Committee at a price equal to the Fair Market Value of a Share on the date of grant.

GAAP ” means United States generally accepted accounting principles.

Incentive Stock Option ” means a Stock Option granted under Section 4.3 of the Plan that meets the requirements of Code Section 422 and any related regulations and is designated in the Award Certificate to be an Incentive Stock Option.

Involuntary Termination ” means a Termination of Employment of the Participant initiated by the Company or a Subsidiary for any reason other than Cause, Disability or death.

Key Employee ” means an Employee who is a “covered employee” within the meaning of Code Section 162(m)(3).

 

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Long-Term Performance Award ” means an Award granted under Section 4.5 of the Plan.

Non-Employee Director ” means any member of the Board, elected or appointed, who is not an Employee of the Company or a Subsidiary.

Nonqualified Stock Option ” means any Stock Option granted under Section 4.3 of the Plan that is not an Incentive Stock Option.

Participant ” means an Employee, a Director, a prospective Employee or Director, and a Consultant who, in each case, is selected by the Committee to participate in the Plan. Participant shall also include any Acquired Grantee.

Performance Cycle ” means, with respect to any Award that is intended to be a Short-Term Performance Award or Long-Term Performance Award, a period of no less than six months over which the level of performance will be assessed.

Performance Measure ” means, with respect to any Short-Term Performance Award or Long-Term Performance Award, the business criteria selected by the Committee to measure the level of performance during the Performance Cycle. The Performance Measures, which must be objective, shall be based on one or more of the following criteria:

 

  a. Earnings (including earnings before or after interest, taxes, depreciation and amortization);

 

  b. Net income;

 

  c. Operating income;

 

  d. Return on shareowners’ equity;

 

  e. Return on assets

 

  f. Return on investment before or after the cost of capital;

 

  g. Changes in net assets (whether or not multiplied by a constant percentage intended to represent the cost of capital);

 

  h. Expense management;

 

  i. Improvements in capital structure;

 

  j. Profitability of an identifiable business unit or product;

 

  k. Maintenance or improvement of profit margins;

 

  l. Stock price;

 

  m. Market share;

 

  n. Revenues or sales;

 

  o. Costs;

 

  p. Cash flow (including free cash flow);

 

  q. Working capital;

 

  r. Credit rating;

 

  s. Improvement in workforce diversity;

 

  t. Employee retention;

 

  u. Closing of corporate transactions;

 

  v. Strategic plan development and implementation;

 

  w. Independent industry ratings or assessments; and

 

  x. Total shareowners’ return.

Any Performance Measure used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including the passage of time and/or against other companies or financial metrics), (iii) on a per share basis, (iv) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company, (v) on a pre-tax or after-tax basis, and (vi) in tandem with any other Performance Measure. Awards issued to persons who are not Key Employees on the date of grant may take into account any other factors deemed appropriate by the Committee.

Performance Unit ” means a Long-Term Performance Award or Short-Term Performance Award denominated in dollars or Units (other than a performance based Stock Option).

 

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Plan ” means the Tyco International Ltd. 2012 Stock and Incentive Plan, as it may be amended from time to time.

Premium-Priced Stock Option ” means a Stock Option, the Exercise Price of which is fixed by the Committee at a price that exceeds the Fair Market Value of a Share on the date of grant.

Reporting Person ” means a Director or an Employee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

Restricted Stock ” means Shares issued pursuant to Section 4.6 that are subject to any restrictions that the Committee, in its discretion, may impose.

Restricted Unit ” means a Unit granted under Section 4.6 to acquire Shares or an equivalent amount in cash, which Unit is subject to any restrictions that the Committee, in its discretion, may impose.

Securities Act ” means the United States Securities Act of 1933, as amended.

Share ” means a share of Common Stock.

Short-Term Performance Award ” means an Award of cash or Shares granted under Section 4.4 of the Plan.

Stock Appreciation Right ” means a right granted under Section 4.3 of the Plan in an amount in cash or Shares equal to any difference between the Fair Market Value of the Shares as of the date on which the right is exercised and the Exercise Price.

Stock-Based Award ” means an Award granted under Section 4.6 of the Plan and denominated in Shares.

Stock Option ” means a right to purchase from the Company a stated number of Shares at a specified price for a defined period of time. Stock Options awarded under the Plan may be in the form of Incentive Stock Options or Nonqualified Stock Options.

Subsidiary ” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

“Target Amount ” means, for any Short-Term Performance Award or Long-Term Performance Award, the targeted amount of compensation that would be achieved if the relevant Performance Measure is fully (100%) attained, as determined by the Committee.

Target Vesting Percentage ” means the percentage of any Short-Term Performance Award or Short-Term Performance Award that would vest assuming the Performance Measure(s) applicable to such Award are fully (100%) attained, as determined by the Committee.

Termination of Directorship ” means the date of cessation of a Director’s membership on the Board for any reason, with or without Cause, as determined by the Company.

Termination of Employment ” means the date of cessation of a Participant’s employment or consulting relationship (or directorship in the case of a Nonemployee Director) with the Company or a Subsidiary for any reason, with or without Cause, as determined by the Company.

Unit ” means, for purposes of Performance Units, the potential right to an Award equal to a specified amount denominated in such form as is deemed appropriate in the discretion of the Committee and, for purposes of Restricted Units or Deferred Stock Units, the potential right to acquire one Share.

 

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ARTICLE III

ADMINISTRATION

3.1 Committee.  The Plan will be administered by the Committee

3.2 Authority of the Committee.  The Committee or, to the extent required by applicable law, the Board, will have the authority, in its sole and absolute discretion and subject to the terms of the Plan, to:

(a) Interpret and administer the Plan and any instrument or agreement relating to the Plan;

(b) Prescribe the rules and regulations that it deems necessary for the proper operation and administration of the Plan, and amend or rescind any existing rules or regulations relating to the Plan;

(c) Select Participants to receive Awards under the Plan;

(d) Determine the form of an Award, the number of Shares subject to each Award, all the terms and conditions of an Award, including, without limitation, the conditions on exercise or vesting, the designation of Stock Options as Incentive Stock Options or Nonqualified Stock Options, and the circumstances in which an Award may be settled in cash or Shares or may be cancelled, forfeited or suspended, and the terms of the Award Certificate;

(e) Determine whether Awards will be granted singly, in combination or in tandem;

(f) Establish and interpret Performance Measures in connection with Short-Term Performance Awards and Long-Term Performance Awards, evaluate the level of performance over a Performance Cycle and certify the level of performance attained with respect to Performance Measures;

(g) Subject to Section 6.1 and 4.3(g), waive or amend any terms, conditions, restriction or limitation in the Plan or in an Award Certificate, or correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award Certificate;

(h) Make any adjustments to the Plan (including but not limited to adjustment of the number of Shares available under the Plan or any Award) and any Award granted under the Plan as may be appropriate pursuant to Sections 5.3 and 5.4;

(i) Determine and set forth in the applicable Award Certificate the circumstances under which Awards may be deferred and the extent to which a deferral will be credited with dividend equivalents and interest thereon;

(j) Subject to Section 7.1, determine whether an Award may be transferable;

(k) Establish any subplans and make any modifications to the Plan or to Awards made hereunder (including the establishment of terms and conditions not otherwise inconsistent with the terms of the Plan) that the Committee may determine to be necessary or advisable for grants made in countries outside the United States to comply with, or to achieve favorable tax treatment under, applicable foreign laws or regulations;

(l) Appoint such agents as it shall deem appropriate for proper administration of the Plan; and

(m) Take any and all other actions it deems necessary or advisable for the proper operation or administration of the Plan.

3.3 Effect of Determinations.  All determinations of the Committee will be final, binding and conclusive on all persons having an interest in the Plan.

 

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3.4 Delegation of Authority.  The Board or the Committee, in its discretion and consistent with applicable law and regulations, may delegate to the Chief Executive Officer of the Company or any other officer or group of officers as it deems to be advisable, the authority to select Participants to receive an Award and to determine the number of Shares under any such Award, subject to any terms and conditions that the Board or the Committee may establish. When the Board or the Committee delegates authority pursuant to the foregoing sentence, it will limit, in its discretion, the number of Shares or aggregate value that may be subject to Awards that the delegate may grant. Only the Committee will have authority to grant and administer Awards to Directors, Key Employees and other Reporting Persons or to delegates of the Committee, and to establish and certify Performance Measures.

3.5 Employment of Advisors.  The Committee may employ attorneys, consultants, accountants and other advisors, including Employees, and the Committee, the Company and the officers and directors of the Company may rely upon the advice, opinions or valuations of the advisors so employed.

3.6 No Liability; Indemnification.  No member of the Committee or any person acting as a delegate of the Committee with respect to the Plan will be liable for any losses resulting from any action, interpretation or construction made in good faith with respect to the Plan or any Award granted under the Plan. To the maximum extent permitted by applicable laws, each member of the Committee shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonable incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by any reason of any action taken or failure to act under the Plan or any Award, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter documents, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

ARTICLE IV

AWARDS

4.1 Eligibility.  All Participants and Employees are eligible to be designated to receive Awards granted under the Plan, except as otherwise provided in this Article IV.

4.2 Form of Awards.  Awards will be in the form determined by the Committee, in its discretion, and will be evidenced by an Award Certificate. Awards may be granted singly or in combination or in tandem with other Awards.

4.3  Stock Options and Stock Appreciation Rights.  The Committee may grant Stock Options and Stock Appreciation Rights under the Plan to those Participants whom the Committee may from time to time select, in the amounts and pursuant to the other terms and conditions that the Committee, in its discretion, may determine and set forth in the Award Certificate, subject to the provisions below:

(a) Form.  Stock Options granted under the Plan will, at the discretion of the Committee and as set forth in the Award Certificate, be in the form of Incentive Stock Options, Nonqualified Stock Options or a combination of the two. If an Incentive Stock Option and a Nonqualified Stock Option are granted to the same Participant under the Plan at the same time, the form of each will be clearly identified, and they will be deemed to have been granted in separate grants. In no event will the exercise of one Award affect the right to exercise the other Award. Stock Appreciation Rights may be granted either alone or in connection with concurrently or previously granted Nonqualified Stock Options.

(b) Exercise Price.  The Committee will set the Exercise Price of Fair Market Value Stock Options or Stock Appreciation Rights granted under the Plan at a price that is equal to the Fair Market Value of a Share on the date of grant, subject to adjustment as provided in Sections 5.3 and 5.4. The Committee will set the Exercise Price of Premium-Priced Stock Options at a price that is higher than the

 

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Fair Market Value of a Share as of the date of grant. The Exercise Price of Incentive Stock Options will be equal to or greater than 110 percent of the Fair Market Value of a Share as of the date of grant if the Participant receiving such Stock Options owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any Subsidiary, as defined in Code Section 424. The Exercise Price of a Stock Appreciation Right granted in tandem with a Stock Option will equal the Exercise Price of the related Stock Option. The Committee will set forth the Exercise Price of a Stock Option or Stock Appreciation Right in the Award Certificate. Stock Options granted under the Plan will, at the discretion of the Committee and as set forth in the Award Certificate, be Fair Market Value Stock Options, Premium-Priced Stock Options or a combination of Fair Market Value Stock Options and Premium-Priced Stock Options.

(c) Term and Timing of Exercise.  Each Stock Option or Stock Appreciation Right granted under the Plan will be exercisable in whole or in part, subject to the following conditions, unless determined otherwise by the Committee:

(i) The Committee will determine and set forth in the Award Certificate the date on which any Award of Stock Options or Stock Appreciation Rights to a Participant may first be exercised. Unless the applicable Award Certificate provides otherwise, a Stock Option or Stock Appreciation Right will become exercisable in equal annual installments over a period of four years from the date of grant, and will lapse 10 years after the date of grant, except as otherwise provided herein.

(ii) Except as set forth in Sections 5.4 and 5.5, upon a Participant’s Termination of Employment , any unvested Stock Options or Stock Appreciation Rights will be forfeited unless the Award Certificate provides otherwise. Any Stock Options or Stock Appreciation Rights that are vested as of such Termination of Employment will lapse, and will not thereafter be exercisable, upon the earlier of (A) their original expiration date or (B) the date that is 90 (ninety) days after the date of such Termination of Employment, unless the Award Certificate provides otherwise.

(iii) Stock Options and Stock Appreciation Rights of a deceased Participant may be exercised only by the estate of the Participant or by the person given authority to exercise the Stock Options or Stock Appreciation Rights by the Participant’s will or by operation of law. If a Stock Option or Stock Appreciation Right is exercised by the executor or administrator of a deceased Participant, or by the person or persons to whom the Stock Option or Stock Appreciation Right has been transferred by the Participant’s will or the applicable laws of descent and distribution, the Company will be under no obligation to deliver Shares or cash until the Company is satisfied that the person exercising the Stock Option or Stock Appreciation Right is the duly appointed executor or administrator of the deceased Participant or the person to whom the Stock Option or Stock Appreciation Right has been transferred by the Participant’s will or by applicable laws of descent and distribution.

(iv) Unless the applicable Award Certificate provides otherwise, a Stock Appreciation Right granted in tandem with a Stock Option is subject to the same terms and conditions as the related Stock Option and will be exercisable only to the extent that the related Stock Option is exercisable.

(d) Payment of Exercise Price.  The Exercise Price of a Stock Option must be paid in full when the Stock Option is exercised. Payment of the Exercise Price may be made in cash or by certified check, bank draft, wire transfer, or postal or express money order, provided that the format is approved by the Company or a designated third-party administrator. The Committee, in its discretion may also allow payment to be made by any of the following methods, as set forth in the Award Certificate:

(i) Delivering a properly executed exercise notice to the Company or its agent, together with irrevocable instructions to a broker to deliver to the Company, within the typical settlement cycle for the sale of equity securities on the relevant trading market (or otherwise in accordance with the provisions of Regulation T issued by the Federal Reserve Board), the amount of sale proceeds with respect to the portion of the Shares to be acquired having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the Exercise Price being so paid;

 

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(ii) Tendering (actually or by attestation) to the Company previously acquired Shares that have been held by the Participant for at least six months, subject to paragraph (iv), and that have a Fair Market Value on the date of exercise equal to the applicable portion of the Exercise Price being so paid; or

(iii) Provided such payment method has been expressly authorized by the Board or the Committee in advance and subject to any requirements of applicable law and regulations, instructing the Company to reduce the number of Shares that would otherwise be issued by such number of Shares as have in the aggregate a Fair Market Value on the date of exercise equal to the applicable portion of the Exercise Price being so paid.

(iv) The Committee, in consideration of applicable accounting standards, may waive any holding period on Shares required to tender pursuant to clause (ii).

(e)  Incentive Stock Options.  Incentive Stock Options granted under the Plan will be subject to the following additional conditions, limitations and restrictions:

(i)  Eligibility.  Incentive Stock Options may be granted only to Employees of the Company or a Subsidiary that is a subsidiary of the Company within the meaning of Code Section 424.

(ii)  Timing of Grant.  No Incentive Stock Option will be granted under the Plan after the 10-year anniversary of the date on which the Plan was adopted by the Board or, if earlier, the latest date on which the Plan was approved by the Company’s stockholders.

(iii)  Amount of Award.  Subject to Sections 5.3 and 5.4 of the Plan, no more than 10 million Shares may be available for grant in the form of Incentive Stock Options.

(iv)  Transfer Restrictions.  In no event will the Committee permit an Incentive Stock Option to be transferred by an Employee other than by will or the laws of descent and distribution, and any Incentive Stock Option awarded under this Plan will be exercisable only by the Employee during the Employee’s lifetime.

(v) Any Incentive Stock Option awarded to a Participant who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any Subsidiary, as defined in Code Section 424, shall terminate on a date not later than the day preceding the fifth anniversary of the date the Incentive Stock Option was granted.

(f) Exercise of Stock Appreciation Rights.  Upon exercise of a Participant’s Stock Appreciation Rights, the Company will pay cash or Shares or a combination of cash and Shares, in the discretion of the Committee and as described in the Award Certificate. Cash payments will be equal to the excess of the Fair Market Value of a Share on the date of exercise over the Exercise Price, for each Share for which a Stock Appreciation Right was exercised. If Shares are paid for the Stock Appreciation Right, the Participant will receive a number of whole Shares equal to the quotient of the cash payment amount divided by the Fair Market Value of a Share on the date of exercise.

(g) No Repricing.  Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the Exercise Price of outstanding Stock Options or Stock Appreciation Rights or to cancel outstanding Stock Options or Stock Appreciation rights in exchange for cash, other Awards or Stock Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Stock Options or Stock Appreciation Rights without shareholder approval.

 

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4.4  Short-Term Performance Awards.  The Committee may grant Short-Term Performance Awards to Participants in the form of cash or Shares (including Stock Options) that are subject to Performance Measures and other terms and conditions that the Committee shall determine and set forth in the applicable Award Certificate; provided , that any Short-Term Performance Awards granted to Key Employees shall be subject to the provisions below:

(a)  Performance Cycles.  Short-Term Performance Awards shall be awarded in connection with a Performance Cycle of no longer than 12 months.

(b)  Eligible Participants.  Within 90 days after the commencement of a Performance Cycle, or such shorter period as complies with the applicable requirements of Code Section 162(m), the Committee will determine the Key Employees who are eligible to receive a Short-Term Performance Award.

(c)  Performance Measures; Targets; Award Criteria.

(i) Within 90 days after the commencement of a Performance Cycle, or such shorter period as complies with the applicable requirements of Code Section 162(m), the Committee will fix and establish in writing (A) the Performance Measures that will apply to that Performance Cycle; (B) the Target Amount applicable to each Award; and (C) subject to subsection (d) below, the criteria for computing the amount that will be paid with respect to each level of attained performance. The Committee will also set forth the minimum level of performance, based on objective factors, that must be attained during the Performance Cycle before any Short-Term Performance Award will be paid and the percentage of the Target Amount that will become payable upon attainment of various levels of performance that equal or exceed the minimum required level. In applying Performance Measures, the Committee may, in its discretion, exclude unusual, infrequently occurring or other items that it deems appropriate (including any event listed in Sections 5.3 and 5.4 and the cumulative effect of changes in the law, regulations or accounting rules) in compliance with the applicable requirements of Code Section 162(m).

(ii) The Committee may reduce, but not increase, the amount payable to any Key Employee with respect to any given Performance Cycle.

(d) Payment, Certification.  No Short-Term Performance Award will vest with respect to any Key Employee until the Committee certifies in writing the level of performance attained for the Performance Cycle in relation to the applicable Performance Measures.

(e) Form of Payment.  Short-Term Performance Awards may be paid in cash or full Shares, in the discretion of the Committee, and as set forth in the Award Certificate. All such Awards shall be paid no later than the 15th day of the third month following the end of the calendar year (or, if later, following the end of the Company’s fiscal year) in which such Awards are no longer subject to a substantial risk of forfeiture (as determined for purposes of Code Section 409A), except to the extent that a Participant has elected to defer payment under the terms of a duly authorized deferred compensation arrangement, in which case the terms of such arrangement shall govern.

(f) Acceleration.  Unless the applicable Award Certificate or the terms of an Award provides otherwise, each Participant who has been granted a Short-Term Performance Award that is outstanding as of the date of a Change in Control will be deemed to have achieved a level of performance, as of the date of Change in Control, that would cause all (100%) of the Participant’s Target Amount to become payable.

4.5 Long-Term Performance Awards. The Committee may grant Long-Term Performance Awards to Participants in the form of cash or Shares (including Stock Options) that are subject to Performance Measures and other terms and conditions that the Committee shall determine and set forth in the applicable Award Certificate; provided , that any Long -Term Performance Awards granted to Key Employees shall be subject to the provisions below:

(a) Performance Cycles.  Long-Term Performance Awards will be awarded in connection with a Performance Cycle that is no shorter than 12 months and no longer than 5 years.

 

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(b)  Eligible Participants.  Within 90 days after the commencement of a Performance Cycle, the Committee will determine the Key Employees who will be eligible to receive a Long-Term Performance Award for the Performance Cycle.

(c) Performance Measures; Targets; Award Criteria.

(i) Within 90 days after the commencement of a Performance Cycle, the Committee will fix and establish in writing (A) the Performance Measures that will apply to that Performance Cycle; (B) the Target Amounts and/or Target Vesting Percentages applicable to each Award; and (C) subject to subsection (d) below, the criteria for computing the amount that will be paid or will vest with respect to each level of attained performance. The Committee will also set forth the minimum level of performance, based on objective factors, that must be attained during the Performance Cycle before any Long-Term Performance Award will be paid or will vest, and the percentage of the Awards that will become payable or will vest upon attainment of various levels of performance that equal or exceed the minimum required level. In applying Performance Measures, the Committee may, in its discretion, exclude unusual, infrequently occurring or other items that it deems appropriate (including any event listed in Sections 5.3 and 5.4 and the cumulative effect of changes in the law, regulations or accounting rules) in compliance with the applicable requirements of Code Section 162(m).

(ii) The Committee may reduce, but not increase, the amount of Long-Term Performance Awards payable to any Key Employee with respect to any given Performance Cycle.

(d) Payment, Certification.  No Long-Term Performance Award will vest with respect to any Key Employee until the Committee certifies in writing the level of performance attained for the Performance Cycle in relation to the applicable Performance Measures.

(e) Form of Payment.  Long-Term Performance Awards may be paid in cash or full Shares, in the discretion of the Committee, and as set forth in the Award Certificate. All such Long-Term Performance Awards shall be paid no later than the 15th day of the third month following the end of the applicable Performance Cycle, except as otherwise provided in the applicable Award Certificate or to the extent that a Participant has elected to defer payment under the terms of a duly authorized deferred compensation arrangement, in which case the terms of such arrangement shall govern.

4.6 Other Stock-Based Awards.  The Committee may, from time to time, grant Awards (other than Stock Options, Stock Appreciation Rights, Short-Term Performance Awards or Long-Term Performance Awards) to any Participant who the Committee may from time to time select, which Awards consist of, or are denominated in, payable in, valued in whole or in part by reference to, or otherwise related to, Shares. These Awards may include, among other forms, Restricted Stock, Restricted Units, or Deferred Stock Units. The Committee will determine, in its discretion, the terms and conditions that will apply to Awards granted pursuant to this Section 4.6, which terms and conditions will be set forth in the applicable Award Certificate.

(a) Vesting.  Unless the Award Certificate provides otherwise, restrictions on Stock-Based Awards granted under this Section 4.6 will lapse in equal annual installments over a period of four years beginning immediately after the date of grant. Except as set forth in Sections 5.4 and 5.5, if the restrictions on Stock-Based Awards have not lapsed or been satisfied as of the Participant’s Termination of Employment, such Awards will be forfeited by the Participant, and, as the case may be, the Participant shall be required to retransfer any Shares to the Company previously delivered to the Company in respect of such Awards.

(b) Grant of Restricted Stock.  The Committee may grant Restricted Stock to any Participant. The Participant will have all rights of a stockholder with respect to the Shares, including the right to vote and to receive dividends or other distributions, except that the Shares may be subject to a vesting schedule and will be forfeited if the Participant attempts to sell, transfer, assign, pledge or otherwise encumber or dispose of the Shares before the restrictions are satisfied or lapse. Upon forfeiture, the Participant shall be required to retransfer the Shares to the Company.

 

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(c) Grant of Restricted Units.  The Committee may grant Restricted Units to any Participant, which Units will be paid in cash or whole Shares or a combination of cash and Shares, in the discretion of the Committee, when the restrictions on the Units lapse and any other conditions set forth in the Award Certificate have been satisfied. For each Restricted Unit that vests, one Share will be paid or an amount in cash equal to the Fair Market Value of a Share as of the date on which the Restricted Unit vests.

(d) Grant of Deferred Stock Units.  The Committee may grant Deferred Stock Units to any Participant, which Units will be paid in whole Shares if the restrictions on the Units have lapsed. One Share will be paid for each Deferred Stock Unit that becomes payable.

4.7  Nonemployee Director Awards.

(a) Annual Awards. Annually, the Committee shall grant an Award to each Nonemployee Director in such an amount as the Board, in its discretion, may approve in advance; provided that the fair market value (as determined under GAAP) on the grant date of such Award does not exceed $200,000. Unless the Committee determines otherwise, the form of such Awards shall be Restricted Stock Units with a one year vesting period, and shall be granted on the business day following the annual general meeting of shareholders.

(b) Additional Awards . In addition to the annual Awards provided for above, the Committee may, in its discretion, grant additional Awards to Nonemployee Directors or prospective Nonemployee Directors, provided that in no event shall such an Award be granted with respect to more than 20,000 Shares in any fiscal year.

4.8 Substitute Awards.  The Committee may make Awards under the Plan to Acquired Grantees through the assumption of, or in substitution for, outstanding stock-based awards previously granted to such Acquired Grantees. Unless otherwise agreed in the relevant documentation related to the acquisition, such assumed or substituted Awards will be subject to the terms and conditions of the original awards made by the Acquired Company, with such adjustments therein as the Committee considers appropriate to give effect to the relevant provisions of the acquisition agreement. Any grant of Incentive Stock Options pursuant to this Section 4.8 will be made in accordance with Code Section 424 and any final regulations published thereunder.

4.9 Limit on Individual Grants.  Subject to Sections 5.1, 5.3 and 5.4, no Participant may be granted an Award with respect to more than 6 million Shares in any calendar year, provided , that additional Awards in excess of such limitation and up to 10 million Shares may be granted to a Reporting Person who has been hired within the calendar year so long as such additional Awards are made in the form of Stock Options, Stock Appreciation Rights or Long-Term Performance Based Awards. The maximum amount that may be paid in cash or Shares to any Participant pursuant to Short-Term Performance Awards is $5 million per calendar year. The maximum amount that may be paid in cash to any Participant pursuant to Long-Term Performance Awards is $5 million per calendar year and the maximum number of Shares payable with respect to Long-Term Performance Awards shall not exceed 6 million Shares for any calendar year (or 10 million Shares in the circumstance described in the proviso of the preceding sentence) less the number of Shares related to any other Awards granted in the same calendar year to such Participant (pro rated, in each case, as appropriate over the applicable Performance Cycles).

4.10 Termination for Cause.  Notwithstanding anything to the contrary herein, if a Participant incurs a Termination of Directorship or Termination of Employment for Cause, then all of such Participant’s Awards will immediately be cancelled. The exercise of any Stock Option or Stock Appreciation Right or the payment of any Award may be delayed, in the Committee’s discretion, in the event that a potential termination for Cause is pending.

 

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ARTICLE V

SHARES SUBJECT TO THE PLAN; ADJUSTMENTS

5.1 Shares Available.  The Shares issuable under the Plan may consist of Shares issued from the Company’s authorized share capital or conditional share capital or treasury shares of the Company (including, for the avoidance of doubt, Shares owned by any Subsidiary). The total number of Shares reserved for Awards under the Plan is the sum of (i) 50,000,000 and (ii) any Shares subject, as of the Effective Date of the Plan, to the outstanding awards under the Tyco International Ltd. 2004 Stock and Incentive Plan that cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable Shares) as may be adjusted by Sections 5.3 and 5.4. Awards denominated in Shares that are granted as Stock Options or Stock Appreciation Rights shall at the time of grant, reduce, on a 1-for-1 basis, the number of Shares available under the Plan. Awards denominated in Shares that are granted as Restricted Stock, Restricted Units, Performance Units, Other Stock-Based Awards, or in respect of Short-Term Performance Awards or Long-Term Performance Awards (other than performance based Stock Options) shall at the time of grant, reduce, on a 1-for-3.32 basis, the number of Shares available under the Plan.

5.2 Counting Rules.  The following Shares related to Awards under this Plan shall restore Shares available in the same amount in which the Award reduced the Shares available set forth in Section 5.1:

(a) Shares related to Awards paid in cash;

(b) Shares related to Awards that expire, are forfeited or cancelled, or terminate for any other reason without issuance of Shares;

(c) Any Shares issuable in connection with Awards that are assumed, converted or substituted as a result of the acquisition of an Acquired Company by the Company or a combination of the Company with another company; and

(d) Any Shares of Restricted Stock that are returned to the Company as Restricted Stock.

Any Shares that become issuable under the Plan as a result of an adjustment to an outstanding Award in connection with the Company’s spin-offs of The ADT Corporation and Tyco Flow Control International Ltd. and related transactions (the “Separation”) shall not be counted against the number of Shares available set forth in Section 5.1. For the avoidance of doubt, the full number of Stock Appreciation Rights granted that are to be settled by the issuance of Shares shall be counted at the time of grant against the number of Shares available set forth in Section 5.1, regardless of the number of Shares actually issued upon settlement of such Stock Appreciation Rights. Furthermore, any Shares withheld to satisfy tax withholding obligations on an Award issued under the Plan, Shares tendered to pay the exercise price of an Award under the Plan, and Shares repurchased on the open market with the proceeds of an Option exercise shall not restore Shares available for grant under this Plan.

5.3 Adjustments.  In the event of a change in the outstanding Shares by reason of a stock split, reverse stock split, dividend or other distribution (whether in the form of cash, Shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of Shares or other securities or similar corporate transaction or event, the Committee shall make appropriate adjustments to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan (including adjustments to Shares available).

5.4 Change in Control.

(a) Acceleration.  Unless the applicable Award Certificate provides otherwise, for any Participant who incurs a Change in Control Termination, all unvested Stock Options and Stock Appreciation Rights will become exercisable as of the later of (i) the effective date of the Change in Control and (ii) the effective date of the Change in Control Termination, and all conditions to vesting will be waived with respect to all other unvested Awards that are denominated in Shares. In such a case, with

 

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respect to Short-Term Performance Awards and Long-Term Performance Awards, performance will be deemed to have been achieved at a level of performance, as determined in the sole discretion of the Committee, at the higher of 100% of the Participant’s Target Amount and the level of actual performance as of the date of the Change in Control.

(b) Adjustment, Conversion and Payment.  In addition to the foregoing, no later than 90 days after the date of Change in Control, the Committee (as constituted prior to the date of Change in Control) shall provide for the following actions to apply to each Award that is outstanding as of the date of Change in Control: (i) an adjustment to such Award as the Committee deems appropriate to reflect such Change in Control, (ii) the acquisition of such Award, or substitution of a new right therefor, by the acquiring or surviving entity after such Change in Control, or (iii) the purchase of such Award for an amount of cash equal to the amount that could have been attained upon the exercise or redemption of such Award immediately prior to the Change in Control had such Award been exercisable or payable at such time. Any payment made pursuant to this Section 5.4(b) shall include the value of any dividend equivalents credited with respect to such Award and accrued interest on such dividend equivalents. The Committee may specify how an Award will be treated in the event of a Change in Control either when the Award is granted or at any time thereafter, except as otherwise provided herein.

5.5 Vesting upon Death, Disability and Retirement. Unless the applicable Award Certificate provides otherwise:

(a) upon the death or Disability of a Participant, all unvested Awards held by such Participant shall vest, and with respect to all of such Participant’s Stock Options and Stock Appreciation Rights, such Awards will be exercisable until the earlier of (i) their original expiration date and (ii) the date that is three years after the date on which the Participant dies or incurs a Disability.

(b) upon the Termination of Employment of a Participant for any reason other than the Participant’s death or Disability or due to a Change in Control, if the Participant has attained age 55, and the sum of the Participant’s age and years of service with the Company is 60 or higher, a pro rata portion of each Award held by such Participant shall vest based on the number of full months of service completed commencing on the grant date of such Award and ending on the date of Termination of Employment divided by the full number of months required to achieve complete vesting. With respect to all of such Participant’s Stock Options and Stock Appreciation Rights, such Awards will be exercisable until the earlier of (i) their original expiration date and (ii) the date that is three years after the date of Termination of Employment.

5.6 Fractional Shares.  The Committee may, in its discretion, determine whether fractional shares may be settled in cash, shares or cancelled.

5.7 Dividends and Dividend Equivalents.  At the discretion of the Committee and as set forth in the applicable Award Certificate, dividends issued on Shares may be credited with respect to any Award other than a Stock Option or Stock Appreciation Right in the form of dividend equivalents. Dividend equivalents will be subject to such vesting and other terms as are determined by the Committee and set forth in the applicable Award Certificate. For any Award that is entitled to dividend equivalents, (i) unless the Award Certificate provides otherwise, such dividend equivalent shall equal, on a per Share basis, the quotient produced by dividing the cash value of the dividend by the Fair Market Value of one Share as of the date the dividend is paid, (ii) such dividend equivalent shall vest at the same time, and only to the extent that, the underlying Award vests (taking into account any applicable performance conditions).

ARTICLE VI

AMENDMENT AND TERMINATION

6.1 Amendment.  The Plan may be amended at any time and from time to time by the Board or the Committee without the approval of stockholders of the Company, except that no material revision to the terms of the

 

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Plan will be effective until the amendment is approved by the stockholders of the Company. A revision is “material” for this purpose if it materially increases the number of Shares that may be issued under the Plan (other than an increase pursuant to Sections 5.3 and 5.4 of the Plan), expands the types of Awards available under the Plan, materially expands the class of persons eligible to receive Awards under the Plan, materially extends the term of the Plan, materially decreases the Exercise Price at which Stock Options or Stock Appreciation Rights may be granted, reduces the Exercise Price of outstanding Stock Options or Stock Appreciation Rights, results in the replacement of outstanding Stock Options and Stock Appreciation Rights with new Awards that have an Exercise Price that is lower than the Exercise Price of the replaced Stock Options and Stock Appreciation Rights, or otherwise requires the consent of shareholders under applicable law, regulation or exchange listing standard; provided , that the Board may, in its discretion, amend Section 4.7 to increase the maximum amount of Awards permitted to be granted to Nonemployee Directors in any calendar year. No amendment of the Plan or any outstanding Award made without the Participant’s written consent may adversely affect any right of a Participant with respect to an outstanding Award.

6.2 Termination.  The Plan will terminate upon the earlier of the following dates or events to occur:

(a) the adoption of a resolution of the Board terminating the Plan; or

(b) the day before the 10th anniversary of the most recent effective date following shareholder approval of the Plan.

No Awards will be granted under this Plan after it has terminated. The termination of the Plan, however, will not alter or impair any of the rights or obligations of any person under any Award previously granted under the Plan without such person’s consent. After the termination of the Plan, any previously granted Awards will remain in effect and will continue to be governed by the terms of the Plan and the applicable Award Certificate.

ARTICLE VII

GENERAL PROVISIONS

7.1 Nontransferability of Awards.  No Award under the Plan will be subject in any manner to alienation, anticipation, sale, assignment, pledge, encumbrance or transfer, and no other persons will otherwise acquire any rights therein, except as provided below.

(a) Any Award may be transferred by will or by the laws of descent or distribution.

(b) The Committee may provide in the applicable Award Certificate that all or any part of an Award (other than an Incentive Stock Option) may be transferred to a family member. For purposes of this subsection (b), “family member” includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Participant, including adoptive relationships, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests.

Any transferred Award will be subject to all of the same terms and conditions as provided in the Plan and the applicable Award Certificate. The Participant or the Participant’s estate will remain liable for any withholding tax that may be imposed by any federal, state or local tax authority. The Committee may, in its discretion, disallow all or a part of any transfer of an Award pursuant to this subsection (b) unless and until the Participant makes arrangements satisfactory to the Committee for the payment of any withholding tax.

(c) Except as otherwise provided in the applicable Award Certificate, any Nonqualified

 

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Stock Option transferred by a Participant pursuant to this subsection (c) may be exercised by the transferee only to the extent that the Award would have been exercisable by the Participant had no transfer occurred. The transfer of Shares upon exercise of the Award will be conditioned on the payment of any withholding tax.

(d) Restricted Stock may be freely transferred after the restrictions lapse or are satisfied and the Shares are delivered, and, if applicable, in compliance with Rule 144 under the Securities Act, or pursuant to an effective registration for resale under the Securities Act.

(e) In no event may a Participant transfer an Incentive Stock Option other than by will or the laws of descent and distribution.

7.2 Withholding of Taxes.  The Committee, in its discretion, may satisfy a Participant’s tax withholding obligations by any of the following methods or any method as it determines to be in accordance with the laws of the jurisdiction in which the Participant resides, has domicile or performs services.

(a) Stock Options and Stock Appreciation Rights.  As a condition to the delivery of Shares pursuant to the exercise of a Stock Option or Stock Appreciation Right, the Committee may require that the Participant, at the time of exercise, pay to the Company by cash, certified check, bank draft, wire transfer or postal or express money order an amount sufficient to satisfy any applicable tax withholding obligations. The Committee may also, in its discretion, accept payment of tax withholding obligations through any of the Exercise Price payment methods described in Section 4.3(d).

(b) Other Awards Payable in Shares.  The Participant shall satisfy the applicable tax withholding obligations arising in connection with the release of restrictions on Restricted Units, Restricted Stock and other Stock-Based Awards by payment to the Company in cash or by certified check, bank draft, wire transfer or postal or express money order, provided that the format is approved by the Company or a designated third-party administrator. However, subject to any requirements of applicable law, the Participant may also satisfy the tax withholding obligations by other methods, including selling or withholding Shares that would otherwise be available for delivery, provided that the Board or the Committee has specifically approved such payment method in advance.

(c) Awards Paid in Cash.  The Company may satisfy a Participant’s tax withholding obligation arising in connection with the payment of any Award in cash by withholding cash from such payment.

7.3 Code Section 162(m).  The Committee or, to the extent required by applicable law, the Board, may, in its discretion grant Awards that are intended to be “performance-based compensation” under Section 162(m). The Committee or, to the extent required by applicable law, the Board, will have the authority, in its sole and absolute discretion, to interpret and administer the Plan consistent with Code Section 162(m) with respect to Key Employees. For the purposes of the Plan, it shall be presumed, unless the Committee indicates to the contrary, that all Awards to Key Employees are intended to qualify as “performance-based compensation” under Code Section 162(m). If the Committee does not intend an Award to a Participant to qualify as performance-based compensation under Code Section 162(m), the Committee shall reflect its intent in its records in such manner as the Committee determines to be appropriate

7.4  No Implied Rights.  A Participant’s rights, if any, in respect of or in connection with any Award are derived solely from the discretionary decision of the Company to permit the individual to participate in the Plan and to benefit from a discretionary Award. By accepting an Award under the Plan, a Participant expressly acknowledges that there is no obligation on the part of the Company to continue the Plan and/or grant any additional Awards. Any Award granted hereunder is not intended to be compensation of a continuing or recurring nature, or part of a Participant;s normal or expected compensation, and in no way represents any portion of a Participant’s salary, compensation, or other remuneration for purposes of pension benefits, severance, redundancy, resignation or any other purpose.

 

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Neither the Plan, nor any Award granted under the Plan, shall be deemed to give any individual a right to remain an Employee or Director of the Company or any Subsidiary. The Company and its Subsidiaries reserve the right to terminate the service of any person at any time, and for any reason, subject to applicable laws, the Company’s charter documents and any other applicable written agreement (if any), and such terminated person shall be deemed irrevocably to have waived any claim to damages or specific performance for breach of contract or dismissal, compensation for loss of office, tort or otherwise with respect to the Plan or any outstanding Award that is forfeited and/or is terminated by its terms or to any future Award.

7.5 No Obligation to Exercise Awards.  The grant of a Stock Option or Stock Appreciation Right will impose no obligation upon the Participant to exercise the Award.

7.6 No Rights as Stockholders.  Except as otherwise specifically provided herein or in the applicable Award Certificate, a Participant who is granted an Award under the Plan will have no rights as a stockholder of the Company with respect to the Award unless and until the Shares underlying the Award are issued in the Participant as evidenced by an appropriate entry on the books of the Company or a duly authorized transfer agent of the Company. The right of any Participant to receive an Award by virtue of participation in the Plan will be no greater than the right of any unsecured general creditor of the Company.

7.7 No Required Segregation of Assets.  Neither the Company nor any Subsidiary will be required to segregate any assets that may at any time be represented by Awards granted pursuant to the Plan.

7.8 Nature of Payments.  All Awards made pursuant to the Plan are in consideration of services for the Company or a Subsidiary. Any gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and will not be taken into account as compensation for purposes of any other employee benefit plan of the Company or a Subsidiary, except as the Committee otherwise provides. The adoption of the Plan will have no effect on awards made or to be made under any other benefit plan covering an employee of the Company or a Subsidiary or any predecessor or successor of the Company or a Subsidiary.

7.9 Securities Law Compliance.  Awards under the Plan are intended to satisfy the requirements of Rule 16b-3 under the Exchange Act. If any provision of this Plan or any grant of an Award would otherwise frustrate or conflict with this intent, that provision will be interpreted and deemed amended so as to avoid conflict. No Participant will be entitled to a grant, exercise, transfer or payment of any Award if the grant, exercise, transfer or payment would violate the provisions of the Sarbanes-Oxley Act of 2002 or any other applicable law.

7.10 Section 409A of the Code.  Notwithstanding other provisions of the Plan, or any applicable Award Certificate, no Award shall be granted, deferred, accelerated, extended, paid out or modified under this Plan in a manner that would result in the imposition of an additional tax upon a Participant under Code Section 409A. In the event that it is reasonably determined by the Committee that, as a result of Code Section 409A, payments in respect of any Award under the Plan may not be made at a time contemplated by the terms of the Plan or the applicable Award Certificate, as the case may be, without causing the Participant holding such Award to be subject to taxation under Code Section 409A, the Company shall make such payment on the first day that would not result in the Participant incurring any tax liability under Code Section 409A. References under the Plan or the terms of the applicable Award Certificate to the Participant’s termination of employment shall be deemed to refer to the date upon which the Participant has experienced a “separation from service” within the meaning of Code Section 409A. Notwithstanding anything herein to the contrary, (a) if at the time of the Participant’s separation from service with any Service Recipient, the Participant is a “specified employee” as defined in Code Section 409A, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such separation from service is necessary in order to prevent the imposition of any accelerated or additional tax under Code Section 409A, then the Company will defer the commencement of the payment of any such payments or benefits hereunder to the minimum extent necessary to satisfy Code Section 409A until the date that is six months and one day following the Participant’s separation from service with all Service Recipients (or the earliest date that is permitted under Code Section 409A), if such payment or benefit is payable upon a termination of employment, and (b) if any other payments of money or other benefits due to the Participant hereunder would cause the application of an accelerated or additional tax under Code Section 409A, such payments or other benefits shall be deferred, if deferral will make such payment or other benefits compliant under Code Section 409A, or otherwise such payment or other benefits shall be restructured, ot the minimum extent necessary, in a manner, reasonably determined by the Committee, that does not cause such an accelerated or additional tax or result in an additional cost to the Company.

 

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7.11 Governing Law, Severability.  The Plan and all determinations made and actions taken under the Plan will be governed by the law of the Company’s place of incorporation and construed accordingly. If any provision of the Plan is held unlawful or otherwise invalid or unenforceable in whole or in part, the unlawfulness, invalidity or unenforceability will not affect any other parts of the Plan, which parts will remain in full force and effect.

7.12 Forfeiture; Clawback.  The Committee may, in its discretion, provide in an Award Certificate provisions it deems appropriate related to non-competition, non-solicitation, confidentiality, anti-disparagement and similar matters. The Committee may, in its discretion, specify in an Award or a policy that will be incorporated into an Award agreement by reference, that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, termination of Employment for cause, termination of the Participant’s provision of services to the Company or any of its Subsidiaries, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or restatement of the Company’s financial statements to reflect adverse results from those previously released financial statements, as a consequence of errors, omissions, fraud, or misconduct.

 

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Exhibit 99.1

 

LOGO

 

Investor Relations Contacts:

Joe Longo

+1-609-720-4545

jlongo@tyco.com

 

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Ira Gottlieb

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FOR IMMEDIATE RELEASE:

Tyco Completes Separation Process

Tyco is the Largest Global Fire Protection and Security Solutions Company with $10+ Billion in Revenue

SCHAFFHAUSEN, Switzerland, Sept. 28, 2012 –– Today Tyco (NYSE: TYC), the world’s largest dedicated fire protection and security company, completed its separation transaction.

Tyco is a $10+ billion global leader in fire protection and security solutions. Tyco designs, manufactures, installs and services fire protection and security solutions focused on finding smarter ways to save lives, improve businesses and protect where people live and work.

Tyco’s broad portfolio of products and services allows the company to partner with customers to help them protect people and assets around the world. Tyco’s solutions address these critical needs with leading edge innovations in fire detection and suppression, intrusion, video surveillance, access control, retail security solutions and personal protective equipment as well as monitoring, maintenance and service.

“This is an exciting day for Tyco,” said George Oliver, Tyco’s new chief executive officer. “As a more focused company, we are positioned to continue to invest in technology and innovation to provide industry-leading fire and security solutions.”

George Oliver joined Tyco in July 2006, after serving in various senior executive positions at General Electric. Oliver succeeds Ed Breen, who was chairman and CEO of Tyco International Ltd. since July 2002. Breen will serve as the non-executive chairman of Tyco’s Board of Directors.

 

 

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LOGO

In connection with the closing of the spin-off transactions, each Tyco shareholder will receive: (i) one share of common stock of The ADT Corporation for every two shares of Tyco common stock held at the close of business on September 17, 2012 (the record date) and (ii) 0.239943 shares of Pentair Ltd. (formerly known as Tyco Flow Control International Ltd.) (“New Pentair”) common stock for every share of Tyco common stock held at the close of business on the record date. Fractional shares of ADT and/or New Pentair will not be distributed and any Tyco shareholder who would otherwise be entitled to receive a fractional share will instead receive a cash payment. Immediately following the distributions, Pentair, Inc. (“Pentair”) merged with and into a wholly-owned subsidiary of New Pentair.

The distributions have been structured to qualify as tax-free dividends to Tyco shareholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable. Shareholders are urged to consult with their tax advisor as to the specific tax consequences of the distributions to them.

Tyco currently has approximately 462 million basic shares outstanding. Based on the distribution ratios noted above, approximately 231 million shares of ADT common stock and 111 million shares of New Pentair common stock will be distributed to Tyco shareholders. As consideration for the merger, shareholders of Pentair will receive one newly issued common share of New Pentair for every Pentair common share that they hold at the time of the merger. After giving effect to the merger, Tyco shareholders as of the record date will own approximately 52.5% of the common shares of Pentair Ltd. on a fully-diluted basis (excluding treasury shares).

About Tyco

Tyco (NYSE: TYC) is the world’s largest pure-play fire protection and security company. Tyco provides more than three million customers around the globe with the latest fire protection and security products and services. A $10+ billion company, Tyco has more than 69,000 employees in more than 1,000 locations across 50 countries serving various end markets, including commercial, institutional, governmental, retail, industrial, energy, residential and small business. For more information, visit the new www.tyco.com .

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